REG - LungLife AI, INC - Preliminary results for year ended 31 Dec 2022
20/02/2023 07:00
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RNS Number : 3593Q LungLife AI, INC 20 February 2023
LungLife AI, Inc.
(the "Company" or "LungLife")
Preliminary audited results for year ended 31 December 2022
LungLife to report financial results for full-year 2022
LungLife AI (AIM: LLAI), a developer of clinical diagnostic solutions for lung
cancer, announces its audited preliminary results for the year ended 31
December 2022.
Summary and Highlights for the year:
· Cash as of 31 December 2022 of $8.01m (2021: $14.62m)
· Loss before tax of $7.60m (2021: $7.43m)
· Adjusted EBITDA(1) loss of $6.84m (2021: $5.40m)
· Enrolled first participant into multi-centre clinical validation
study in February 2022, and on track to complete study enrolment in the next
2-3 months. Total of 14 sites enrolled in the study, including seven from
Veterans Affairs Hospitals(2)
· Centers for Medicare & Medicaid Services ("CMS") granted a national
price of $2,030 per test for the LungLB®,
November 2022
· LungLB® test approved and Clinical Laboratory Evaluation Programme
("CLEP") permit awarded by the New York State Department of Health, allowing
the Company to perform clinical utility studies and offer LungLB®
commercially in New York state, September 2022
· Selected to participate in the US National Cancer Institute's Early
Detection Research Network ("EDRN") as part of Boston University-University of
California Los Angeles Lung Cancer Biomarker Development Laboratory
· CPT® Proprietary Laboratory Analyses (PLA code), a key component
towards reimbursement in the US market, awarded and became effective on 1
April 2022
· Appointment of Dr Drew Moghanaki, an internationally recognised lung
cancer specialist, to the Company's Scientific Advisory Board, March 2022
(1) Earnings before interest, tax, depreciation and amortisation, adjusted to
exclude exceptional items, share based payments and other operating income
(2) Federal government charged with providing life-long healthcare services to
eligible veterans
Commenting, Paul Pagano, Chief Executive Officer of LungLife, said: "2022 was
a significant year for LungLife and I'm proud of the team for the
accomplishments made in fulfilment of our milestones. We initiated our
multi-centre validation study in February, expanded the number of
participating sites throughout the year and is on track to complete
participant enrolment in the next 2-3 months. We ended the year with CMS
confirming a price of $2,030 for LungLB® under crosswalk - avoiding a year
long process of gapfill price determination and accelerating progress on
reimbursement.
"We also received two independent reviews of LungLB® with the New York CLEP
permit and selection to participate in the US National Cancer Institute's
Early Detection Research Network. These have provided external evaluation of
our technology's analytical and clinical data and are important steps in
increasing awareness of LungLB® and moving towards the Company's
commercialisation plan.
"We remain focused on completing our clinical validation study, commencing our
clinical utility study later this year and expanding patient access to
LungLB® through implementation of our commercial reimbursement plan. We are
very excited by the opportunities ahead and the potential for LungLB® to
transform the early detection of lung cancer".
For further information please contact:
LungLife AI, Inc. www.lunglifeai.com (https://www.lunglifeai.com/)
Paul Pagano, CEO Via Walbrook PR
David Anderson, CFO
Investec Bank plc (Nominated Adviser & Broker) Tel: +44 (0)20 7597 5970
Virginia Bull / Cameron MacRitchie / Lydia Zychowska
Walbrook PR Limited Tel: +44 (0)20 7933 8780 or LungLifeAI@walbrookpr.com
(mailto:LungLifeAI@walbrookpr.com)
Stephanie Cuthbert / Alice Woodings / Phillip Marriage Mob: 07980 541 893 / 07407 804 654 / 07867 984 082
About LungLife
LungLife AI is a developer of clinical diagnostic solutions designed to make a
significant impact in the early detection of lung cancer, the deadliest cancer
globally. Using a minimally invasive blood draw, the Company's LungLB® test
is designed to deliver additional information to clinicians who are evaluating
indeterminate lung nodules. For more information visit www.lunglifeai.com
(http://www.lunglifeai.com)
Our Purpose is to be a driving force in the early detection to lung cancer.
And our Vision is to invert the 20:80 ratio such that in years to come at
least 80% of lung cancer is detected early.
Chairman's Statement
I am delighted to report on the Company's results for the year ended 31
December 2022. We have continued to deliver on the Company's objectives and
remain committed to creating shareholder value as we proceed with the aim of
being a driving force in the early detection of lung cancer through the
completion of our LungLB(®) test multi-centre clinical validation study.
LungLB(®) test
According to the World Health Organization, over 2.2 million new cases of lung
cancer were diagnosed in 2020 and approximately 1.8 million deaths from lung
cancer were recorded in 2020 globally. Nearly 80% of all lung cancers in the
United States are diagnosed in later stages when survival rates are low
because the options for curative treatment are then limited. This is in part
due to the lack of effective early detection solutions and the fact that lung
cancer largely develops asymptomatically.
LungLB(®) is a blood-based test that uses circulating tumour cells ("CTC") to
stratify indeterminant lung nodules as either cancerous or benign following
their identification by CT scan. Biopsy is currently part of the standard care
pathway for lung nodules and the LungLB(®) test is designed to support the
physician's decision to biopsy only when necessary, or to monitor
non-invasively using additional imaging. There are estimated to be over 1.5
million indeterminant lung nodules identified each year in the United
States(1) and LungLife's estimated one week turnaround from receipt of the
blood sample to results can save a significant amount of stressful waiting
time for the participant as well as unnecessary costly and often dangerous
procedures.
(1) Gould MK et al. Am J Respir Crit Care Med. 2015 PMID: 26214244.
Progress
Our focus this year has been on our clinical validation study and charting a
course to subsequent commercialisation.
We enrolled our first participant in February 2022 in our multi-centre
clinical validation study. Currently we have activated 14 sites in our
clinical validation study, which include seven from the Veterans Affairs
hospitals. Our study currently requires us to enrol 425 participants.
As we collect more data on enrolment trends from various sites, we become more
able to precisely estimate timing of completion, which we forecast to be
completed in the next 2-3 months. Hand-in-hand with enrolment, the Clinical
Research Organization (CRO) monitors the usable sample rate (unusable samples
may result from a failed biopsy, or insufficient blood draw, for example) and
distribution of the study arms (cancer vs benign nodules) to ensure we are
still in-line with our initial projections; so that we can make adjustments to
final enrolment numbers, should it be necessary, which is standard practise
for clinical studies.
While COVID, nursing and research strikes impacted sites at times from
reaching their full enrolment rates, our actions, including activating
additional sites across the country, have helped keep us broadly on track with
our initial estimates. Within approximately three months following the
enrolment of the last participant we anticipate the data will be available for
analysis and subsequent study readout. These timelines are well-accounted for
within our current cash runway, which we continue to expect will take us
through to mid-2024.
We received two important, independent evaluations of our test this year.
In September the New York State Department of Health ("NYSDOH") awarded
LungLife a Clinical Laboratory Evaluation Program ("CLEP") permit following
their on-site audit, during which there were no deficiencies found.
The CLEP permit allows LungLife to perform clinical utility studies and offer
the LungLB(®) test commercially in New York state, in addition to 46 other
states permitted by the Company's existing Clinical Laboratory Improvement
Amendments ("CLIA") certification.
This is an important step in LungLife's commercialisation plan, given its
relationship with the Icahn School of Medicine at Mount Sinai in New York, a
key site in the ongoing pivotal validation trial, and from which the Company
is now able to accept study participants in future utility studies. Securing a
CLEP permit is a requirement to consider participants from New York state in
the utility studies planned for 2023, from which the Company expects first
nominal revenues.
The audit was performed to ensure that the premises, laboratory practice,
equipment, personnel, and record-keeping methods meet state requirements.
Issuance of the CLEP permit follows a rigorous, independent scientific review
of both analytical and clinical data for LungLB(®), as well as evaluation of
adherence to the Company's quality management system.
In October we announced we will be one of two industry partners to participate
in the Boston University ("BU") -University of California Los Angeles ("UCLA")
Lung Cancer Biomarker Development Laboratory of the US National Cancer
Institute's Early Detection Research Network ("EDRN").
The EDRN is a division of the US National Cancer Institute, the federal
government's principal agency for cancer research and training. The EDRN's
mission is to discover, develop, and validate new biomarkers and medical
imaging technologies to detect early-stage cancers, and to translate them into
clinical tests. It is comprised of over 300 investigators from academic
institutions and industry partners working collaboratively to bring new
diagnostic biomarkers to clinical use.
LungLife's clinical laboratory will operate as a Biomarker Reference
Laboratory, processing blood samples from the participating academic centres
at UCLA and BU where the LungLB(®) test will be combined with imaging to
assist their early detection research, as well as validate combined test
performance in patients with indeterminate lung nodules. It is expected the
blood samples will be collected over a number of years with progress and
results presented to EDRN members at annual meetings, representing the first
independent study of LungLB(®). These activities are independent of
LungLife's ongoing pivotal validation study and do not impact on the progress
of this study.
The work of the EDRN closely aligns with LungLife's mission to increase the
early detection of lung cancer and will provide further clinical evidence for
the LungLB(®) technology as well as widen awareness of our technology with
leading US investigators. It also affords LungLife the potential to offer
novel cell-based diagnostic biomarkers discovered at UCLA and BU to physicians
from its clinical laboratory, thereby potentially expanding its lung cancer
testing capabilities.
We were pleased to conclude the year with the announcement in November that
the Centers for Medicare & Medicaid Services ("CMS") has granted a price
at $2,030 per test for the LungLB(®) early lung cancer detection diagnostic.
This final CMS payment determination is listed in the Calendar Year 2023
Clinical Laboratory Fee Schedule (CLFS) and will apply to all eligible
Medicare patients tested by LungLB(®).
Medicare, a national health insurance program in the US, covers 63.9 million
people and indeterminate lung nodules are often found in patients of an age
typically covered by Medicare. Securing a favourable crosswalk* decision means
Medicare beneficiaries now have a national price for the LungLB(®) test
effective since 1 January 2023. This represents completion of a key Company
milestone as it supports the plan to seek comprehensive reimbursement for the
test.
* Crosswalk applies if the new test is comparable to an existing test (that
may use a similar technology but for a different indication, for example), in
which case it is assigned the market-based payment rate of that comparable
existing test.
People
The team currently comprises of 14 full time and 2 part time employees, having
hired our Director of Quality Assurance in the year.
In March we announced the appointment of Dr Drew Moghanaki, MD, MPH, an
internationally recognised lung cancer specialist, to our Scientific Advisory
Board. Dr Moghanaki is Professor and Chief of Thoracic Oncology at the UCLA
Department of Radiation Oncology. He has brought extensive leadership to our
Scientific Advisory Board as the Director of the VA Partnership to increase
Access to Lung Cancer Screening programme (VA-PALS), and the co-chair of the
VA Lung Cancer Surgery or Stereotactic Radiotherapy (VALOR) Phase III study,
investigating treatment options for Stage I lung cancer.
On behalf of the Board, I would like to thank our employees, clinical
partners, study participants, professional advisors, suppliers and
shareholders for their support, and we look forward to providing further
updates on progress throughout the current year.
Outlook
Our focus is the conclusion of our clinical validation study and, while
optional, subsequent submission to FDA, and planning for the clinical utility
study as part of our commercialisation pathway. We were delighted to have
received confirmation of our price; our focus is now on securing coverage.
The next two years are incredibly exciting for LungLife and we look forward to
updating shareholders on our progress during that time.
Roy Davis
Chairman
20 February 2023
( )
( )
Financial Review
The financial performance of the Company in the year to 31 December 2022
reflects the first full year of activity post our IPO in July 2021.
Statement of Comprehensive Income
The Company generated revenues of US$24,000 in the year (2021 - US$195,000)
comprising wholly of royalty income from its sub licensee in China. In 2021
royalty income accounted for US$88,000 with the balance of US$107,000 being
consumable sales of fluorescent in situ hybridisation (FISH) probes. The
royalty income is calculated at 6% of underlying net sales, and the Company
pays a 3% royalty on this income to MD Anderson Cancer Center.
The largest cost incurred in the year was employee expenses of US$3,264,000
(2021 - $1,760,000) followed by research and development costs US$1,981,000
(2021 - US$1,343,00), being those external costs incurred on our clinical
validation trial and in the continued development of our LungLB(®) test and
AI algorithm. In the year we increased headcount by one additional full-time
member of the team, one intern and hired a new member of the team as
replacement for a leaver. At the end of December 2022, and at the date of this
report, we have 14 full time and 2 part time employees.
Other operating income of US$102,000 (2021 - US$206,000) relates to claims
made under the US Government Employee Retention Credits scheme, designed as
COVID related support for businesses, whilst in 2021 other operating income
related to payment received under the US Government Paycheck Protection
Program, akin to the UK furlough scheme. Finance income of US$88,000 (2021 -
US$12,000) was generated from funds held on deposit, and we incurred finance
expense of US$52,000 (2021 - US$417,000). Finance expense in the year related
to that arising on lease liabilities for certain tangible assets and the
leasehold premises occupied by the Company, whereas last year $309,000 related
to interest charged on the Convertible Loan Notes, which formed part of the
balance on the Notes subsequently converted into new common shares at the time
of the IPO.
Total loss for the year was US$7,606,000, the loss of 2021 was US$7,444,000
but included exceptional costs of the IPO of US$1,101,000, so a true
comparable loss of US$6,343,000. EBITDA loss for 2022 excluding share-based
payments was $6,841,000 and a comparable EBITDA for 2021, excluding the
exceptional costs, of US$5,396,000.
Statement of Financial Position
Cash and cash equivalents at the end of the year was US$3,088,000 (2021 -
US$9,217,000). In addition, the Company holds money on short term deposit,
on which notice is 95 days with the balance at year end US$4,922,000 (2021 -
US$5,411,000). We continue to hold the cost of acquiring the option under the
License Agreement with the Icahn School of Medicine of Mount Sinai ("Mount
Sinai") at its original purchase cost, without amortisation. The option fee
gives the Company access in the future to the de-identified participant
records held by Mount Sinai to assist in the development of future products.
As this asset is therefore not currently being utilised no amortisation has
been charged to date.
Statement of Cash Flows
The net outflow from operating activities was US$5,845,000 (2021 -
US$7,540,000), with minimal outflows for investing and financing activities
such that net cash outflow for the year was US$6,129,000 (2021 - inflow of
$9,089,000). The prior year benefited from the gross proceeds from the AIM
admission of $23,444,000.
David Anderson
Chief Financial Officer
20 February 2023
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2022
Year to Year to
31 December 31 December
Note 2022 2021
US$'000 US$'000
Revenue 4 24 195
Cost of sales (-) (96)
_________ _________
Gross margin 24 99
Administrative expenses 6 (6,865) (5,495)
Share-based payments 6 (614) (409)
Depreciation 6 (285) (323)
Exceptional expense - costs of listing - (1,101)
_________ _________
Loss from operations (7,740) (7,229)
Other operating income 6 102 206
Finance income 9 88 12
Finance expense 9 (52) (417)
_________ _________
Loss before tax (7,602) (7,428)
Tax expense 10 (4) (16)
_________ _________
Loss from continuing operations (7,606) (7,444)
Other comprehensive income - -
_________ _________
Loss and total comprehensive income attributable to the owners of the Company (7,606) (7,444)
_________ _________
Earnings per share attributable to the 11
ordinary equity holders of the parent
Loss per share
Basic and diluted (US$ cents) ($0.298) ($0.469)
_________ _________
The results reflected above relate to continuing operations
STATEMENT OF FINANCIAL POSITION
As at 31 December 2022
Note 2022 2021
US$'000 US$'000
Assets
Current assets
Trade and other receivables 14 613 741
Short term deposits 5 4,922 5,411
Cash and cash equivalents 5 3,088 9,217
_________ _________
8,623 15,369
_________ _________
Non-current assets
Property, plant and equipment 12 566 766
Intangible assets 13 5,818 5,818
Other receivables 14 13 13
_________ _________
6,397 6,597
_________ _________
Total assets 15,020 21,966
_________ _________
Liabilities
Current liabilities
Trade and other payables 15 1,055 804
Lease liabilities 16 255 207
Discontinued operations 174 174
_________ _________
1,484 1,185
Non-current liabilities
Lease liabilities 16 346 601
Provisions 17 50 50
_________ _________
Total liabilities 1,880 1,836
_________ _________
NET ASSETS 13,140 20,130
_________ _________
Issued capital and reserves attributable to
owners of the parent
Share capital 19 3 3
Share premium reserve 20 91,266 91,264
Share based payment reserve 1,574 960
Accumulated losses (79,703) (72,097)
_________ _________
TOTAL EQUITY 13,140 20,130
_________ _________
STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2022
Share Share Share-based Other equity Accumulated losses Total Total
capital premium payment attributable equity
reserve to equity
holders of
parent
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
1 January 2021 9 52,194 551 843 (64,903) (11,306) (11,306)
Comprehensive income for the year
Loss - - - - (7,444) (7,444) (7,444)
Other comprehensive Income - - - - - - -
_________ _________ _________ _________ _________ _________ _________
Total comprehensive Income for the year - - - - (7,444) (7,444) (7,444)
_________ _________ _________ _________ _________ _________ _________
Contributions by and distributions to owners
Issue of Convertible Loan Notes - - - 99 - 99 99
Reverse split (8) 8 - - - - -
Issue of common shares on conversion of preference shares and Convertible Loan 1 12,601 - - - 12,602 12,602
Notes
Issue of share capital 1 27,461 - - - 27,462 27,462
Transfer of balance following conversion of Convertible Loan Notes - - - (942) 250 (692) (692)
Share issue costs - (1,000) - - - (1,000) (1,000)
Share-based payment - - 409 - - 409 409
_________ _________ _________ _________ _________ _________ _________
Total contributions by and (6) 39,070 409 (843) 250 38,880 38,880
distributions to owners
_________ _________ _________ _________ _________ _________ _________
31 December 2021 3 91,264 960 - (72,097) 20,130 20,130
_________ _________ _________ _________ _________ _________ _________
STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2022 (continued)
Share Share Share-based Other equity Accumulated losses Total Total
capital premium payment attributable equity
reserve to equity
holders of
parent
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
1 January 2022 3 91,264 960 - (72,097) 20,130 20,130
Comprehensive income for the year
Loss - - - - (7,606) (7,606) (7,606)
Other comprehensive Income - - - -
_________ _________ _________ _________ _________ _________ _________
Total comprehensive Income for the year - - - - (7,606) (7,606) (7,606)
_________ _________ _________ _________ _________ _________ _________
Contributions by and distributions to owners
Exercise of share options - 2 - - - 2 2
Share-based payments - - 614 - - 614 614
_________ _________ _________ _________ _________ _________ _________
Total contributions by and - 2 614 - 616 616
distributions to owners
_________ _________ _________ _________ _________ _________ _________
31 December 2022 3 91,266 1,574 - (79,703) 13,140 13,140
_________ _________ _________ _________ _________ _________ _________
STATEMENT OF CASH FLOWS
For the year ended 31 December 2022
Year to Year to
31 December 31 December
Note 2022 2021
US$'000 US$'000
Cash flows from operating activities
Loss for the year (7,606) (7,444)
Adjustments for:
Depreciation of property, plant and equipment 285 323
Forgiveness of Paycheck Protection Program Loan (206)
Gain on sale of tangible assets (43) (36)
Foreign exchange loss on short term deposit 562 -
Finance income (88) (12)
Finance expense 52 417
Taxation 4 16
Share-based payments expense 614 409
_________ _________
(6,220) (6,533)
(Increase) / decrease in trade and other receivables 128 (569)
(Decrease) / increase in trade and other payables 251 (422)
Income taxes paid (4) (16)
_________ _________
Net cash outflow from operating activities (5,845) (7,540)
_________ _________
Cash flows from investing activities
Purchases of tangible assets (85) (47)
Proceeds from sale of tangible assets 43 36
Short term deposits (73) (5,411)
Landlord improvement contribution - 15
Purchase of intangibles - (1,800)
_________ _________
Net cash used in investing activities (115) (7,207)
_________ _________
Cash flows from financing activities
Issue of Convertible Notes - 1,612
Issue of Common Stock 2 23,444
Expenses of issue of Common Stock - (1,000)
Interest received 88 10
Interest paid (52) (107)
Repayment of lease liabilities (207) (123)
_________ _________
Net cash (used in) / from financing activities (169) 23,836
Net (decrease) / increase in cash and cash equivalents (6,129) 9,089
Cash and cash equivalents at beginning of year 9,217 128
_________ _________
Cash and cash equivalents at end of year 5 3,088 9,217
_________ _________
Notes forming part of the financial statements
For the year ended 31 December 2022
1 General Information
LungLife AI, Inc, (the "Company") is a company based in Thousand Oaks,
California which is developing a diagnostic test for the early detection of
lung cancer. The Company was incorporated under the laws of the state of
Delaware, USA, on 30 December 2009.
The Company's costs associated with developing and commercialising its test
include costs associated with the development of intellectual property
optimising the technology, and obtaining regulatory approval. To complete
clinical trials the Company will continue to require additional operating
funds. The Company has raised funds through offerings of debt, common stock
and Series A Preferred Shares.
There are no restrictions on the Company's ability to access or use its assets
and settle its liabilities.
2 Basis of preparation
Information in this preliminary announcement does not constitute statutory
accounts of the company. The financial information presented in this
preliminary announcement is based on, and is consistent with, that in the
company's audited financial statements for the year ended 31 December 2022,
which will be delivered to shareholders for approval at the Company's Annual
General Meeting. The independent auditors have reported on those financial
statements and their report is unqualified and unmodified.
The financial statements have been prepared in accordance with UK adopted
International Accounting Standards ("UK IFRS").
These financial statements are prepared in accordance with UK IFRS under the
historical cost convention, as modified by the use of fair value for financial
instruments measured at fair value. The historical financial information is
presented in United States Dollars ("US$") except where otherwise indicated.
The principal accounting policies adopted in the preparation of the financial
statements are set out below. The policies have been consistently applied to
all the years presented, unless otherwise stated.
(a) Going concern
These financial statements have been prepared on the going concern basis.
The directors of the Company have a reasonable expectation that the Company
has adequate resources to continue in operational existence for the
foreseeable future and for at least one year from the date of approval of
the financial statements. As of 31 December 2022 the Company had total
available cash resources of US$8,010,000, split between cash and cash
equivalents of US$3,088,000 and monies of short term deposit (with notice of
95 days) of US$4,922,000. The Company will be concluding its clinical trial in
early 2023 and together with other operational impacts our expenditure levels
are expected to be reduced. For that reason, they continue to adopt the
going concern basis in preparing the Company's financial statements.
(b) New standards, amendments and interpretations
New standards are not expected to impact the Company as they are either not
relevant to the Company's activities or require accounting which is consistent
with the Company's current accounting policies.
The Directors have considered those standards and interpretations which have
not been applied in these financial statements but which are relevant to the
Company's operations that are in issue but not yet effective and do not
consider that they will have a material effect on the future results of the
Company.
(c) Revenue recognition
Sale of goods
Revenue comprises the fair value of the sale of FISH probes used to identify
the properties of blood samples under the terms of a sub license agreement
with a third party, net of applicable sales taxes. Revenue is recognised on
the sale of goods when the significant risks and rewards of ownership of the
goods have passed to the buyer and the amount of revenue can be measured
reliably. Revenue on goods delivered is recognised when the customer accepts
delivery and on services when those services have been rendered.
Royalty income
Under the terms of a patent and technology sub license agreement the company
is entitled to receive royalty income at 6% of the quarterly net sales
invoiced by the sub licensee in the relevant quarter. Income is recognised
in the period in which the underlying net sales are generated.
Cash is received from revenues recognised according to terms of trade within
the relevant contractual relationship, usually in accordance with agreed
events such as placing of order, fulfilment of order and delivery.
(d) Intangible assets
Research expenditure is recognised as an expense when incurred. Development
expenditure is recognised as an expense except those costs incurred on
development projects are capitalised as long term assets to the extent that
such expenditure is expected to generate future economic benefits. Development
expenditure is capitalised only if it meets the criteria for capitalisation
under IAS 38. Capitalised development expenditure is measured at cost less
accumulated amortisation and impairment losses, if any. Development
expenditure initially recognised as an expense is not recognised as an asset
in future years. Capitalised development expenditure is amortised on a
straight-line basis over the estimated useful life of the asset when the asset
is available for use.
(e) Property, plant and equipment
Owned assets
Items of property, plant and equipment are stated at cost less accumulated
depreciation and impairment losses. Cost includes the original purchase
price of the asset and the costs attributable to bringing the asset to its
working condition for its intended use. When parts of an item of property,
plant and equipment have different useful lives, those components are
accounted for as separate items of property, plant and equipment.
Subsequent costs are included in the asset's carrying amount or recognised as
a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Company and the
cost of the item can be measured reliably.
(e) Property, plant and equipment (continued)
Depreciation
Depreciation is charged to profit or loss on a straight-line basis over the
estimated useful lives of each part of an item of property, plant and
equipment. The estimated useful lives are as follows:
· computer and IT equipment - 33 per cent. straight line
· leasehold improvements - shorter of lease term and useful life
· plant and machinery - 20 per cent. straight line
· laboratory equipment - 20 per cent. straight line
The residual values, useful lives and depreciation methods are reviewed, and
adjusted if appropriate, or if there is an indication of a significant change
since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with
the carrying amount and are recognised within "other operating income" in the
statement of income.
(f) Impairment of non-financial assets
Non-financial assets are reviewed for impairment annually in the case of not
being available for use, and whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An impairment loss
is recognised for the amount by which the asset's carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of an asset's fair
value less costs to sell and value in use. For the purposes of assessing
impairment, assets are considered at the lowest levels for which there are
separately identifiable cash flows (cash- generating units).
Non-financial assets other than goodwill that suffered impairment are reviewed
for possible reversal of the impairment at each reporting date.
2 Basis of preparation (continued)
(g) Financial assets
Classification
The Company classifies its financial assets as loans and receivables. The
classification depends on the purpose for which the investments were acquired.
Management determines the classification of its investments at initial
recognition.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or
determinable payments. They are initially recognised at fair value and are
subsequently stated at amortised cost using the effective interest method.
Impairment of financial assets
Impairment provisions are recognised when there is objective evidence (such as
significant financial difficulties on the part of the counterparty or default
or significant delay in payment) that the Company will be unable to collect
all of the amounts due under the term's receivable, the amount of such a
provision being the difference between the net carrying amount and the present
value of the future expected cash flows associated with the impaired asset.
(h) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with an
original maturity of three months or less.
2 Basis of preparation (continued)
(i) Financial liabilities
Trade and other payables
Trade and other payables are initially recognised at fair value and
subsequently measured at amortised cost. Accounts payable are classified as
current liabilities if payment is due within one year or less. If not, they
are presented as non-current liabilities.
Convertible debt
The proceeds received on issue of the Company's convertible debt are allocated
into their liability and equity components. The amount initially attributed
to the debt component equals the discounted cash flows using a market rate of
interest that would be payable on a similar debt instrument that does not
include an option to convert. Subsequently, the debt component is accounted
for as a financial liability measured at amortised cost until extinguished on
conversion or maturity of the bond. The remainder of the proceeds is allocated
to the conversion option and is recognised in the "Other equity" within
shareholders' equity, net of income tax effects.
(j) Borrowings
Borrowings are recognised initially at fair value, net of transaction costs
incurred. Borrowings are subsequently carried at amortised cost; any
difference between the proceeds (net of transaction costs) and the redemption
value is recognised in the income statement over the period of the borrowings
using the effective interest method.
Borrowings are de-recognised from the statement of financial position when the
obligation specified in the contract is discharged, is cancelled or expires.
The difference between the carrying amount of a financial liability that has
been extinguished or transferred to another party and the consideration paid,
including any non-cash assets transferred or liabilities assumed, is
recognised in the income statement as other operating income or finance costs.
Borrowings are classified as current liabilities unless the Company has an
unconditional right to defer settlement of the liability for at least 12
months after the reporting period.
(k) Provisions
A provision is recognised in the statement of financial position when the
Company has a present legal or constructive obligation as a result of a past
event, and it is probable that an outflow of economic benefits will be
required to settle the obligation. If the effect is material, provisions are
determined by discounting the expected future cash flows at a pre- tax rate
that reflects current market assessments of the time value of money and, when
appropriate, the risks specific to the liability. The increase in the
provision due to the passage of time is recognised in finance costs.
(l) Share capital
Ordinary shares are classified as equity. There are various classes of
ordinary shares in issue, as detailed in note 19. Incremental costs directly
attributable to the issue of new shares are shown in share premium as a
deduction from the proceeds.
2 Basis of preparation (continued)
(m) Net finance costs
Finance costs
Finance costs comprise interest payable on borrowings, direct issue costs and
dividends on preference shares, and are expensed in the period in which they
are incurred.
Finance income
Finance income comprises interest receivable on funds invested, and foreign
exchange gains.
Interest income is recognised in the income statement as it accrues using the
effective interest method.
(n) Leases
All leases are accounted for by recognising a right-of-use asset and a lease
liability except for:
· Leases of low value assets; and
· Leases with a duration of 12 months or less.
Lease liabilities are measured at the present value of the contractual
payments due to the lessor over the lease term, with the discount rate
determined by reference to the rate inherent in the lease unless (as is
typically the case) this is not readily determinable, in which case the
Company's incremental borrowing rate on commencement of the lease is used.
Variable lease payments are only included in the measurement of the lease
liability if they depend on an index or rate. In such cases, the initial
measurement of the lease liability assumes the variable element will remain
unchanged throughout the lease term. Other variable lease payments are
expensed in the period to which they relate.
On initial recognition, the carrying value of the lease liability also
includes:
· amounts expected to be payable under any residual value guarantee
· the exercise price of any purchase option granted in favour of
the Company if it is reasonably certain to assess that option
· any penalties payable for terminating the lease, if the term of
the lease has been estimated on the basis of termination option being
exercised.
Right of use assets are initially measured at the amount of the lease
liability, reduced for any lease incentives received, and increased for:
· lease payments made at or before commencement of the lease
· initial direct costs incurred; and
· the amount of any provision recognised where the Company is
contractually required to dismantle, remove or restore the leased asset
(typically leasehold dilapidations - see note 19).
Subsequent to initial measurement lease liabilities increase as a result of
interest charged at a constant rate on the balance outstanding and are reduced
for lease payments made. Right-of-use assets are amortised on a straight-line
basis over the remaining term of the lease or over the remaining economic life
of the asset if, rarely, this is judged to be shorter than the lease term.
2 Basis of preparation (continued)
(n) Leases (continued)
When the company revises its estimate of the term of any lease (because, for
example, it re-assesses the probability of a lessee extension or termination
option being exercised) it adjusts the carrying amount of the lease liability
to reflect the payments to make over the revised term, which are discounted
using a revised discount rate. The carrying value of lease liabilities is
similarly revised when the variable element of future lease payments dependent
on a rate or index is revised, except the discount rate remains unchanged. In
both cases an equivalent adjustment is made to the carrying value of the
right-of-use asset, with the revised carrying amount being amortised over the
remaining (revised) lease term. If the carrying amount of the right-of-use
asset is adjusted to zero, any further reduction is recognised in profit or
loss.
(o) Income tax
Income tax for the years presented comprises current and deferred tax. Income
tax is recognised in the income statement except to the extent that it relates
to items recognised directly in equity, in which case it is recognised in
equity. Current tax is the expected tax payable on the taxable income for the
year, using tax rates enacted or substantively enacted at the statement of
financial position date, and any adjustment to tax payable in respect of
previous years.
Deferred tax is recognised on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts.
The following temporary differences are not recognised if they arise from (a)
the initial recognition of goodwill; and (b) for the initial recognition of
other assets or liabilities in a transaction other than a business combination
that at the time of the transaction affects neither accounting nor taxable
profit or loss. The amount of deferred tax provided is based on the expected
manner of realisation or settlement of the carrying amount of assets and
liabilities, using tax rates enacted or substantively enacted at the statement
of financial position date.
A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the asset can be
utilised. Deferred tax assets are reduced to the extent that it is no longer
probable that the related tax benefit will be realised.
Deferred income tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets against current tax liabilities
and when the deferred income taxes assets and liabilities relate to income
taxes levied by the same taxation authority on either the taxable entity or
different taxable entities where there is an intention to settle the balances
on a net basis.
(p) Foreign currency translation
i) Function and presentational currency
Items included in the financial statements of the Company are measured using
USD, the currency of the primary economic environment in which the entity
operates ('the functional currency'), which is also the Company's presentation
currency.
ii) Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions
and from the translation at year-end exchange rates, of monetary assets and
liabilities denominated in foreign currencies to USD, are recognised in the
income statement.
3 Critical accounting judgements and estimates
The preparation of the Company's historical financial information under UK
IFRS requires the directors to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities. 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.
Actual results may differ from these estimates.
The Directors consider that the following estimates and judgements are likely
to have the most significant effect on the amounts recognised in the financial
information.
Carrying value of intangible assets, property, plant and equipment
In determining whether there are indicators of impairment of the Company's
assets, the directors make a number of estimates in relation to assets
including the economic viability and expected future financial performance of
the asset and when it relates to the intangible assets arising on a business
combination, the expected future performance of the business acquired.
Classification of the Mount Sinai License as an intangible asset
As set out in note 13, on 18 June 2021, the Company entered into the Mount
Sinai License Agreement, pursuant to which Mount Sinai granted an option to
the Company to obtain a licence, on a non-exclusive basis, to use certain
information held by Mount Sinai. After considering the criteria in IAS38 the
directors have judged that the recognition criteria therein have been met and
classified the Mount Sinai license as an intangible asset.
4 Segment analysis
IFRS 8 requires operating segments to be identified on the basis of internal
reports about components of the Company that are regularly reviewed by the
chief operating decision maker (which takes the form of the Board of
Directors) as defined in IFRS 8, in order to allocate resources to the segment
and to assess its performance.
The chief operating decision maker has determined that the Company has one
operating segment, the development and commercialisation of its lung cancer
early detection test. Revenues are reviewed based on the products and services
provided.
The Company operates in the United States of America. Revenue by origin of
geographical segment is as follows:
Year to Year to
31 December
31 December
2022
2021
US$'000 US$'000
Revenue
People's Republic of China 24 195
________ ________
24 195
________ ________
4 Segment analysis (continued)
2022 2021
US$'000 US$'000
Non-current assets
United States of America 6,397 6,597
________ ________
6,397 6,597
________ ________
Year to Year to
31 December 31 December
2022 2021
US$'000 US$'000
Product and service revenue
Royalty income 24 88
Consumable items - 107
________ ________
24 195
________ ________
5 Financial instruments - Risk management
The Company is exposed through its operations to the following financial
risks:
- Credit risk
- Foreign exchange risk and
- Liquidity risk
The Company is exposed to risks that arise from its use of financial
instruments. This note describes the Company's objectives, policies and
processes for managing those risks and the methods used to measure them.
Further quantitative information in respect of these risks is presented
throughout these financial statements.
(i) Principal financial instruments
The principal financial instruments used by the Company, from which financial
instrument risk arises, are as follows:
- Cash and cash equivalents
- Short term cash deposits
- Trade and other payables
5 Financial instruments - Risk management (continued)
(ii) Financial instruments by category
Financial asset
Amortised Amortised
cost cost
2022 2021
US$'000 US$'000
Cash and cash equivalents* 3,088 9,217
Short term cash deposits* 4,922 5,411
Trade and other receivables 607 741
_________ _________
Total financial assets 8,617 15,369
_________ _________
* Comparative amounts at 31 December 2021 have been re-presented to reflect
the reclassification of fixed term deposits of $5,411,000 with a maturity date
of greater than three months at inception. There were no fixed term deposits
at 31 December 2020.
Financial liabilities
Amortised Amortised
cost cost
2022 2021
US$'000 US$'000
Trade and other payables 1,055 804
_________ _________
Total financial liabilities 1,055 804
_________ _________
(iii) Financial instruments not measured at fair value
Financial instruments not measured at fair value includes cash and cash
equivalents, trade and other receivables, and trade and other payables.
Due to their short-term nature, the carrying value of cash and cash
equivalents, trade and other receivables, and trade and other payables
approximates their fair value.
See note 16 for information on lease liabilities.
5 Financial instruments - Risk management (continued)
(iv) Financial instruments
General objectives, policies and processes
The Board has overall responsibility for the determination of the Company's
risk management objectives and policies and, whilst retaining ultimate
responsibility for them, it has delegated the authority for designing and
operating processes that ensure the effective implementation of the objectives
and policies to the Company's finance function.
The overall objective of the Board is to set policies that seek to reduce risk
as far as possible without unduly affecting the Company's competitiveness and
flexibility. Further details regarding these policies are set out below:
Credit risk
Credit risk is the risk of financial loss to the Company if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations. Due to the current low level of revenue, the Company's exposure
to credit risk is on cash at bank. The Company only deposits cash with major
banks with high quality credit standing.
Cash in bank and short-term deposits
The credit quality of cash has been assessed by reference to external credit
rating, based on Standard and Poor's long-term / senior issuer rating:
2022 2022 2021 2021
Cash in bank Cash Cash
Rating at bank Rating at bank
US$'000 US$'000
Bank A A+ 981 A+ 8,140
Bank B BBB+ 2,002 BBB+ 1,015
Bank C A+ 105 A+ 62
_________ _________
3,088 9,217
_________ _________
2022 2022 2021 2021
Short term deposits
Rating Rating
US$'000 US$'000
Bank B BBB+ 4,922 BBB+ 5,411
_________ _________
4,922 5,411
_________ _________
5 Financial instruments - Risk management (continued)
Foreign exchange risk
Foreign exchange risk arises when the Company enters into transactions
denominated in a currency other than its functional currency. The Company's
policy is, where possible, to settle liabilities denominated in its functional
currency. Currently the Company's liabilities are either US dollar or UK
sterling. No forward contracts or other financial instruments are entered
into to hedge foreign exchange movements, with funds raised in the UK being
transferred to fund US operations using spot rates.
As at 31 December 2022 assets held in Sterling amounted to US$5,275,000 (2021
- US$6,488,000) and liabilities held in Sterling amounted to US$65,000 (2021 -
US$66,000).
The effect of a 5% strengthening of the Sterling against US dollar at the
reporting date on the Sterling denominated net assets carried at that date
would, all other variables held constant, have resulted in a decrease in
post-tax loss for the year and increase of net assets of US$260,000 (2021 -
US$321,000). A 5% weakening in the exchange rate would, on the same basis,
have increased post-tax loss and decreased net assets by US$260,000 (2021 -
US$321,000).
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in
meeting its financial obligations as they fall due. This risk is managed by
the production of annual cash flow projections. The Company's continued
future operations depend on its ability to raise sufficient working capital
through the issue of share capital and generating revenue.
The following table sets out the contractual maturities (representing
undiscounted contractual cash-flows) of financial liabilities which can all be
met from the cash resources currently available:
Between
Up to 3 3 and 12
months months
At 31 December 2022 US$'000 US$'000
Trade and other payables 371 -
_________ _________
Total 371 -
_________ _________
Between
Up to 3 3 and 12
months months
At 31 December 2021 US$'000 US$'000
Trade and other payables 275 -
_________ _________
Total 275 -
_________ _________
5 Financial instruments - Risk management (continued)
Capital Disclosures
The Company monitors its capital which comprises all components of equity
(i.e., share capital, share premium, and accumulated losses).
The Company's objectives when maintaining capital are to safeguard the
entity's ability to continue as a going concern.
6 Expenses by nature
Year to Year to
31 December 31 December
2022 2021
US$'000 US$'000
Employee benefit expenses (see note 8) 3,264 1,760
Share-based payments charge - non-employee and directors 37 87
Depreciation of property, plant and equipment 285 323
Gain on disposal of equipment (43) (36)
Research and development expenditure 1,981 1,343
Professional costs 643 720
Legal settlement - 687
Foreign exchange losses 659 97
Other costs 938 1,210
Other operating income is claims made for Employee Retention Credits. Other
operating income for the prior year represented forgiveness of the Paycheck
Protection Program Loan.
7 Auditors' remuneration
During the year the Company obtained the following services from the Company's
auditor:
Year to Year to
31 December 31 December
2022 2021
US$'000 US$'000
Fees payable to the Company's auditor for the audit of the Company 48 48
Fees payable to the Company's auditor for other services:
Services in connection with listing - 108
_________ _________
Total 48 156
_________ _________
8 Employee benefit expenses
Year to Year to
31 December 31 December
2022 2021
US$'000 US$'000
Employee benefit expenses (including Directors) comprise:
Wages and salaries 2,262 1,304
Benefits 164 75
Share-based payments expense 577 323
Social security contributions and similar taxes 177 53
Pension 84 5
_________ _________
3,264 1,760
_________ _________
Key management personnel compensation
Key management personnel are those persons having authority and responsibility
for planning, directing and controlling the activities of the Company,
including the Directors of the Company.
Year to Year to
31 December 31 December
2022 2021
US$ US$
Salary 696 599
Share based payment expense 495 313
_________ _________
1,191 912
_________ _________
The average number of employees (including Directors) in the Company in the
year was 18 (2021 - 14).
9 Net finance costs
Year to Year to
31 December 31 December
2022 2021
US$'000 US$'000
Finance expense
Interest expense on lease liabilities 52 108
Interest expense on liabilities measured at amortised cost - 309
_________ _________
Total finance expense 52 417
_________ _________
9 Net finance costs (continued)
Year to Year to
31 December 31 December
2022 2021
US$'000 US$'000
Finance income
Bank interest 88 12
_________ _________
Total finance income 88 12
_________ _________
10 Tax expense
Year to Year to
31 December 31 December
2022 2021
US$'000 US$'000
Current tax expense
Current tax on loss for the year - -
Withholding tax on royalties 4 16
_________ _________
Total current tax 4 16
Deferred tax asset
On losses generated in the year - -
_________ _________
4 16
_________ _________
10 Tax expense (continued)
There were no charges to current corporation taxation due to the losses
incurred by the Company in the year. The reasons for the difference between
the actual tax charge for the year and the US federal income tax rate of 21%
and state of California income tax rate of 8.84% are as follows:
Year to Year to
31 December 31 December
2022 2021
US$'000 US$'000
Loss for the year (7,606) (7,428)
_________ _________
Tax using 29.84% (2,270) (2,217)
Expenses not deductible for tax purposes 34 689
Unrecognised deferred tax assets for losses carried forward 2,236 1,528
_________ _________
Total tax expense - -
_________ _________
The unrecognised deferred tax is based on Federal taxable losses carried
forward of US$53,485,000 (2021 - US$49,393,000) and a Federal capital loss of
US$4,583,333 (2021 - US$4,583,333). No deferred tax asset is recognised for
these losses due to early stage in the development of the Company's
activities. Of the total Federal losses carried forward US$35,281,000 (2021
- US$35,281,000) expire in 2030 and can only be used against trading profits
from the same trade. Losses of US$18,204,000 (2021 - US$14,112,000) do not
expire but can only offset against 80% of taxable profits from the same trade.
11 Loss per share
Year to Year to
31 December 31 December
2022 2021
Total Total
Numerator US$ US$
Loss for the year used in basic EPS (7,605,585) (7,444,188)
Denominator
Weighted average number of ordinary shares used in basic EPS 25,481,800 15,870,143
Resulting loss per share (US$0.298) (US$0.469)
The Company has one category of dilutive potential ordinary share, being share
options (see note 21). The potential shares were not dilutive in the year as
the Company made a loss per share in line with IAS 33. As described in note
19, between 2 July 2021 and 7 July 2021 the Company implemented a
pre-Admission reorganisation of its capital which included the conversion of
Series A and B Preferred Shares into Common Shares and a reverse share split
by way of the issue of one new Common Share and Preferred Share for every 18
old Common Shares and Preferred Shares held.
As required by IAS33, the number of shares presented as the denominator in
calculating loss per share has been adjusted from 1 January 2020, the
beginning of the earliest period for which loss per share information is
presented in order to maintain comparability.
12 Tangible assets
Furniture Computers
Leasehold and and IT Plant &
improvements equipment equipment machinery Total
US$'000 US$'000 US$'000 US$'000 US$
Cost or valuation
At 1 January 2021 982 56 50 1,051 2,139
Landlord contribution (15) - - - (15)
Additions 349 - 35 258 642
________ ________ ________ _________ _________
At 31 December 2021 1,316 56 85 1,309 2,766
Additions - - 31 54 85
________ ________ ________ ________ ________
At 31 December 2022 1,316 56 116 1,363 2,851
________ ________ ________ ________ ________
Accumulated depreciation and impairment
At 1 January 2021 712 56 50 859 1,677
Depreciation 233 - 3 87 323
________ ________ ________ ________ ________
At 31 December 2021 945 56 53 946 2,000
Depreciation 140 - 19 126 285
________ ________ ________ ________ ________
At 31 December 2022 1,085 56 72 1,072 2,285
________ ________ ________ ________ ________
Net book value
At 31 December 2022 231 - 44 291 566
________ ________ ________ ________ ________
At 31 December 2021 371 - 32 363 766
________ ________ ________ ________ ________
Included in leasehold improvements at 31 December 2022 are right of use assets
with a cost of $1,282,052 (2021 - $1,282,052) and accumulated depreciation of
$1,042,261 (2021 - $911,119).
13 Intangible assets
License Total
US$'000 US$'000
Cost
_________ _________
At 31 December 2021 and 2022 5,818 5,818
_________ _________
Accumulated amortisation and impairment
At 1 January 2021 - -
Amortisation charge - -
_________ _________
At 31 December 2021 - -
Amortisation charge
_________ _________
At 31 December 2022 - -
_________ _________
Net book value
At 31 December 2022 5,818 5,818
_________ _________
At 31 December 2021 5,818 5,818
_________ _________
On 18 June 2021, the Company entered into the Mount Sinai Licence Agreement,
pursuant to which the Icahn School of Medicine at Mount Sinai ("Mount Sinai")
granted an option to the Company to obtain a licence, on a non-exclusive
basis, to use certain information held by Mount Sinai. The Mount Sinai Licence
Agreement automatically became effective on Admission. Exercise of the option
contained in the Mount Sinai Licence Agreement is conditional on: (i)
Admission; (ii) clearance by Mount Sinai's information security team; and
(iii) IRB, data security and data use approvals. Mount Sinai is under an
obligation to use commercially reasonable efforts to obtain such clearances
and approvals (other than Admission). Pursuant to the Mount Sinai Licence
Agreement, Mount Sinai has granted the Company an option to obtain a licence,
on a non-exclusive basis, to use certain information held by Mount Sinai to be
able to develop future products.
14 Trade and other receivables
2022 2021
US$'000 US$'000
Amounts falling due within one year
Prepayments and accrued income 463 692
Other debtors 150 49
_________ _________
613 741
_________ _________
2022 2021
US$'000 US$'000
Amounts falling due after one year
Rent deposit 13 13
_________ _________
13 13
_________ _________
15 Trade and other payables
2022 2021
US$'000 US$'000
Trade payables 358 212
Accruals and other payables 684 571
_________ _________
Total financial liabilities classified as financial liabilities measured at 1,042 783
amortised cost
Other payables - tax and social security payments 13 21
_________ _________
Total trade and other payables 1,055 804
_________ _________
The carrying value of trade and other payables classified as financial
liabilities measured at amortised cost approximates fair value.
16 Lease Liabilities
Land and Plant and
buildings machinery Total
US$'000 US$'000 US$'000
At 1 January 2021 571 360 931
Interest expense 89 18 107
Repayments (156) (74) (230)
________ ________ ________
At 31 December 2021 504 304 808
________ ________ ________
Additions - - -
Repayments (134) (125) (259)
Interest expense 37 15 52
________ ________ ________
At 31 December 2022 407 194 601
________ ________ ________
2022 2021
US$'000 US$'000
Maturity of lease liabilities
Within 3 months 62 57
Between 3 - 12 months 193 150
Between 1 - 2 years 233 255
Between 2 - 5 years 113 346
________ ________
601 808
________ ________
17 Provisions
Dilapidations Total
US$'000 US$'000
At 1 January 2021 50 50
Movement - -
_________ _________
At 31 December 2021 50 50
_________ _________
Movement - -
_________ _________
At 31 December 2022 50 50
_________ _________
Provision is made for the anticipated cost of returning the Company's premises
to their prior state on termination of the lease.
18 Net cash /(debt) reconciliation
2022 2021
US$'000 US$'000
Cash and cash equivalents 3,088 9,217
Lease liabilities (601) (808)
_________ _________
Net cash / (debt) 2,487 8,409
_________ _________
Cash and Borrowings
cash equivalents and loans Net Debt
US$'000 US$'000 US$'000
Net debt at 1 January 2021 128 (10,630) (10,502)
Cash flows 9,089 - 9,089
Other non-cash movements:
Conversion of Convertible Loan Notes - 10,396 10,396
Forgiveness of Payroll Protection Program loan - 206 206
Lease liabilities - (471) (471)
Accretion of interest on convertible notes - (309) (309)
_________ _________ _________
Net debt at 31 December 2021 9,217 (808) 8,409
_________ _________ _________
Cash flows (6,129) - (6,129)
Other non-cash movements:
Lease liabilities 207 207
_________ _________ _________
Net debt at 31 December 2022 3,088 (601) 2,487
_________ _________ _________
19 Share capital
Issued and fully paid
Number US$
Shares of US$0.0001 par value each
At 1 January 2020
Common shares 5,092,839 510
Preference shares, Series A and B 79,738,560 7,973
Issue of common shares in the year 1,820,407 182
_________ _________
Total at 31 December 2020 86,651,806 8,665
Reverse stock split, at ratio of 1 new common share (81,837,883) (8,184)
Issue of common shares on conversion of the Convertible Loan Notes and 9,350,888 935
Warrants
Issue of common shares for cash 9,659,091 966
Issue of common shares for non-cash consideration 1,656,888 166
_________ _________
Total issued share capital at 31 December 2021 25,480,790 2,548
Exercise of 5,192 options in the year 5,192 5
_________ _________
Total issued share capital at 31 December 2022 25,485,982 2,553
_________ _________
Between 2 July 2021 and 7 July 2021 the Company implemented a pre-Admission
reorganisation of its capital which included, inter alia, the following:
· A reverse share split by way of the issue of one new Common or
Preferred Share for every 18 old Common or Preferred Shares held
· Conversion of Series A-1 and Series A-2 Convertible Notes and
related Warrants into Common Shares
· Conversion of Series A Preferred Shares and Series B Preferred
Shares into Common Shares
20 Reserves
The following describes the nature and purpose of each reserve within equity:
Reserve Description and purpose
Share premium Amount subscribed for share capital in excess of nominal value.
Share based payment reserve Amount charged to date in respect of share based payment expense
Retained earnings All other net gains and losses and transactions with owners (e.g., dividends)
not recognised elsewhere.
21 Share-based payment
Prior to Admission to AIM the Company operated two share option plans: the
2010 Stock Incentive Plan and approved by the Board on 1 January 2010 and the
2020 Stock Incentive Plan was approved on 14 May 2020:
(a) options granted under the 2010 Stock Incentive Plan fall into
two groups:
(i) options granted in or before 2016 over a total of 2,183,634
shares, with exercise prices ranging from $0.10 to $0.16 per share, these
options are now fully vested; and
(ii) options granted in 2019 over a total of 6,951,463 shares, with
an exercise price of $0.025 per share: these options generally vest on a
monthly basis over three or four years from the date of grant. However, those
granted to current employees of the Company were amended so that they became
exercisable in full on Admission.
(b) Options were granted in 2020 and 2021 under the 2020 Stock
Incentive Plan over a total of 5,364,385 shares with an exercise price of
$0.0044 per share. These options vest over four years from the date of grant
on a monthly basis, but certain of these options accelerated immediately
before Admission, and became fully exercisable at Admission.
On 14 May 2021 the Board approved the Company's 2021 Omnibus Long-Term
Incentive Plan ("LTIP") and it was approved by shareholders on 27 May 2021 to
become effective approximately three days prior to Admission. The LTIP
provides for the grant of both EMI Options and non-tax favoured options.
Options granted under the LTIP are subject to exercise conditions as
summarised below.
The LTIP has a non-employee sub-plan for the grant of Options to the Company's
advisors, consultants, non-executive directors, and entities providing,
through an individual, such advisory, consultancy, or office holder services
and a US sub-plan for the grant of Options to eligible participants in the
LTIP and the Non-Employee Sub-Plan who are US residents and US taxpayers.
With the exception of options over 384,924 shares, which vested immediately on
Admission, the options issued under the LTIP vest 25% on the first anniversary
of the vesting commencement date and an additional one forty-eighth of the
total number of options after each subsequent calendar month for employees.
For consultants options issued under the LTIP vest 25% on the first
anniversary of the vesting commencement date and an additional one sixteenth
of the total number of options after each subsequent quarter. If options
remain unexercised after the date one day before the tenth anniversary of
grant such options expire. Vesting shall accelerate in full in the event of a
change of control of the Company.
As described in note 19, between 2 July 2021 and 7 July 2021 the Company
implemented a pre-Admission reorganisation of its capital which included a
reverse share split by way of the issue of one new Common or Preferred Share
for every 18 old Common or Preferred Shares held.
At the date of the reorganisation there were 14,499,482 pre-Admission options
outstanding to 32 option holders comprising Directors, former Directors and
employees with exercise prices between $0.0044 and $0.16 per share. Those
options were varied to reflect the reverse share split so that they were
replaced with 805,492 options with exercise prices of between $0.0792 and
$2.88 per share. The directors consider that this was a mechanical variation
modification of the awards and not a modification for the purposes of IFRS2.
Comparative figures have been adjusted to restate numbers and values of share
options issued as if the reverse share split had been in effect from 1 January
2020.
On Admission on 8 July 2021 the Board approved grants of 769,707 to Paul
Pagano and 386,703 options to David Anderson and on 23 November 2021 and 27
December 2021 the Board approved further grants, of 112,500 and 5,000 options
respectively, to employees and consultants.
21 Share-based payment (continued)
Weighted
average
exercise
price US$ Number
Outstanding at 1 January 2020 - 12,230,198
Granted during the year - 2,345,845
Cancelled - (25,000)
Exercised during the year - (51,561)
_________ _________
Outstanding at 31 December 2020 and 1 January 2021 - 14,499,482
Reverse share split - (13,693,990)
_________ _________
Revised balance outstanding at 31 December 2020 0.74 805,492
Granted during the year 2.19 1,260,035
Exercised or expired during the year 0.74 (13,913)
_________ _________
Outstanding at 31 December 2021 1.74 2,065,527
_________
Granted during the year 2.37 75,000
Exercised during the period 0.45 (5,192)
Expired during the year 1.80 (18,356)
_________ _________
Outstanding at 31 December 2022 1.76 2,116,979
_________ _________
Exerciseable at 31 December 2022 1.62 1,506,180
_ _
The exercise price of options outstanding at 31 December 2022 ranged
between US$0.08 and US$2.70 and their weighted average contractual life was
5.03 years and weighted average expected life was 3.55 years. The fair value
of each share option granted has been estimated using a Black-Scholes model.
The weighted average inputs into the model for the 2022 grants are a share
price of $2.37, exercise price of $2.37, expected volatility of 55.21%,
expected dividend yield of 0%, expected life of 5.03 years and a risk-free
interest rate of 1.26%. In the absence of historic volatility data available
at the grant date the expected volatility of 55.21% was estimated based on
comparable companies.
The Company recognised total expenses of US$614,000 (2021: US$409,000) within
administrative expenses relating to equity-settled share-based payment
transactions during the year.
22 Related party transactions
During the year an amount of US$130,000 (2021 - US$2,190,000) was invoiced by
The Icahn School of Medicine at Mount Sinai for services rendered in the
year. As of 31 December 2022 no amounts were owed to The Icahn School of
Medicine at Mount Sinai (2021 - Nil).
During the year Paul Pagano and David Anderson, both directors of the Company,
each purchased 5,000 shares in the Company using their own funds.
23 Events after the reporting date
There have been no events subsequent to the year-end that require disclosure
in these financial statements.
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