REG - N4 Pharma PLC - Final Results
09/03/2023 07:00
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RNS Number : 3561S N4 Pharma PLC 09 March 2023
9 March 2023
N4 Pharma plc
("N4 Pharma" or the "Company")
Final Results
N4 Pharma Plc (AIM: N4P), the specialist pharmaceutical company developing
Nuvec®, a novel delivery system for cancer treatments and vaccines, is
pleased to announce its audited results for the year ended 31 December 2022.
Highlights:
• Nuvec® as a delivery system has consistently been shown to deliver DNA and
RNA payloads into the cell where the compound is able to escape the endosome
and be released into the cell
• Strategic review highlighted that Nuvec® was best suited to applications
where intra cellular delivery by itself was a key element of product
development
• The Company has designed an experimental plan to develop, formulate and
deliver a double loaded Nuvec with siRNA against EGFR and BCL-2 and test this
in a xenograft cancer model
• The Company to start business development outreach of its siRNA data working
alongside a US company, Partner International, who have extensive biotech
business development experience
• The Company has filed its own patent on using Nuvec® to enhance the
performance of viral vectors which is now entering the national phases of
patent execution
• Operating loss for the year was reduced to £1,029,261 (2021: £1,843,290)
• Cash balance at period end of approximately £1.9m (2021: £1.8m)
Nigel Theobald, Chief Executive Officer of the Company, commented:
"It is important that the Company is able to react to the fast changing nature
of the vaccines and oncology treamtment markets and, by focusing our internal
development work on the significant opportunity for siRNA delivery, this will
allow us to be best placed to do this.
"The work we have done with monodisperse formulations of Nuvec® show how well
suited it is to the intracellular delivery of siRNA and our longer term
R&D on oral delivery and the use of Nuvec® to enhance viral vector
delivery shows the wide potential of its application in this space."
Enquiries:
N4 Pharma plc
Nigel Theobald, CEO Via IFC Advisory
Luke Cairns, Executive Director
SP Angel Corporate Finance LLP Tel: +44(0)20 3470 0470
Nominated Adviser and Joint Broker
Matthew Johnson/Kasia Brzozowska (Corporate Finance)
Vadim Alexandre/Abigail Wayne/Rob Rees (Corporate Broking)
Turner Pope Investments (TPI) Limited Tel: +44(0)20 3657 0050
Joint Broker
Andy Thacker
James Pope
IFC Advisory Ltd Tel: +44(0)20 3934 6630
Financial PR
Graham Herring
Zach Cohen
About N4 Pharma
N4 Pharma is a specialist pharmaceutical company developing a novel delivery
system for cancer and vaccine treatments using its unique silica nanoparticle
delivery system called Nuvec®.
N4 Pharma's business model is to partner with companies developing novel
antigens for cancer and vaccine treatments to use Nuvec® as the delivery
vehicle to get their antigen into cells to express the protein needed for the
required immunity. As these products progress through preclinical and
clinical programs, N4 Pharma will seek to receive up front payments, milestone
payments and ultimately royalty payments once products reach the market.
Chairman's Report
N4 Pharma Plc (the "Company"), is the holding company and Parent Company for
N4 Pharma UK Limited ("N4 UK"), and together form the Group (the "Group").
N4 UK is a specialist pharmaceutical company engaged in the development of
silica nanoparticle delivery systems to improve the cellular delivery of
cancer treatments and vaccines.
Review of operations for the financial year ended 31 December 2022
During the year to 31 December 2022 no revenue was generated by the Group (31
December 2021: £nil).
The operating loss for the year was reduced to £1,029,261 (31 December 2021:
£1,843,290 loss). Expenditure was broadly in line with budget and decreased
as less work was undertaken on in vivo vaccine and oncology studies in 2022
compared to 2021.
Cash at the year-end stood at £1,919,529 (31 December 2021: £1,784,024)
having raised £1,054,000 towards the end of 2022. Our cash position remains
good and leaves us well positioned to complete our current work streams for
the year ahead.
Key Operational Events and Opportunities
2022 saw further significant changes in the field of vaccine and oncology
product. The success of the mRNA lipid nanoparticle covid vaccines from Pfizer
and Moderna firmly established RNA products in this field however their
success also led others such as Astra Zeneca to reassess their approach in
this area. Having launched covid vaccines the key players in this area turned
their attention to launching new vaccines addressing other illnesses such as
influenza using their existing lipid delivery systems, meaning opportunities
for novel delivery systems other than lipid nanoparticles in the vaccine space
would be in less demand. However there remains significant opportunities for
novel delivery system in earlier stage development using RNA in oncology,
especially siRNA products of which there are over 200 in clinical development
and delivery is often cited as a major issue in product development in this
field.
The Company therefore undertook a strategic review of all the findings from
the Nuvec® proof of concept in vivo and in vitro work including its vaccine
work, the successful intravenous tumour reduction study and a series of in
vitro experiments looking at the ability to bind Nuvec® with multiple siRNA
compounds for gene silencing to determine the most appropriate commercial area
where it is most likely to be able to secure a commercial licensing deal.
Strategic review of Nuvec® as a delivery system
Nuvec® has consistently been shown to deliver DNA and RNA payloads into the
cell where the compound is able to escape the endosome and be released into
the cell. Its unique structure allows strong binding and protection of RNA/DNA
leading to good stability for the formulated product. It is also able to be
formulated into a monodisperse formulation making it suitable for intravenous
injection as well as sub-cutaneous or intra muscular injection. It is also
much cheaper to make and formulate than lipid nanoparticles.
The field of vaccine development is complex and delivery of RNA into the cell
is just the first step on the medical pathway of a successful product. Once
inside the cell, for a successful vaccine sufficient RNA needs to produce the
right amount of protein which in turn needs to attract the right amount and
type of antibodies to teach the body to ultimately fight an invading virus.
The review clearly highlighted that as well as being able to deliver RNA/DNA
into a cell Nuvec® would require optimisation with a partner's payload in
order to achieve these downstream effects and the studies to do this are
extremely expensive.
The review highlighted that Nuvec® was best suited to applications where
intra cellular delivery by itself was a key element of product development.
The tumour suppression work also showed that monodisperse Nuvec® could be
delivered intravenously and be safe and effective. The Company therefore
decided to focus its internal development work on loading and delivering siRNA
intra cellularly for applications in the field of oncology treatments and gene
therapy since once inside the cell, the payload needs to silence a gene inside
the cell and a successful product is not dependent on multiple downstream
pathways.
The Company's work also highlighted that Nuvec® can load multiple siRNA onto
each particle and deliver each into the cell allowing a product to work intra
cellularly on different pathways within the same cell. This is a novel and
highly differentiated aspect of Nuvec® as a delivery system.
siRNA programme
In September 2022, the Company announced a research programme looking to
extend its work with siRNA and load two clinically relevant siRNAs onto
Nuvec® with the goal to test in vivo the ability for tumour regression.
After several discussions with opinion leaders in oncology, lung cancer was
identified as the most appropriate target cancer type for this test. Most of
these cancers are characterised by overexpressing a receptor called the
Epidermal growth factor receptor (EGFR), which prevents apoptosis. Apoptosis
is a type of cell death which the body uses to get rid of unneeded or abnormal
cells. The process of apoptosis may be blocked in cancer cells which are then
prevented from naturally dying and this can lead to uncontrolled growth.
Silencing this mutated receptor would lead to re-establishing apoptosis in the
tumor cells and could potentially restore sensitivity to other treatments.
This work has been researched extensively however often the body develops a
resistance to such single siRNA treatments. To strengthen the effect, the
Company identified another target protein BCL-2, which it would simultaneously
load onto the same Nuvec® particle alongside EGFR to give a second line of
defence against the cancer cells growing.
The Company chose BCL-2 which belongs to the family of proteins that regulate
apoptosis. This mechanism is controlled by the ratio between the
anti-apoptotic BCL-2 and the pro-apoptotic protein BH3-only. When silencing
BCL-2, BH3-only proteins will not be blocked and are therefore more likely to
induce apoptosis.
By targeting both EGFR and BCL-2 a double loaded Nuvec® can combat both the
mechanism that causes uncontrolled cell growth and the mechanism that prevents
cell death which it believes will give a greater chance to push the tumor cell
into apoptosis and lead to tumour regression.
The Company has designed an experimental plan to develop, formulate and
deliver a double loaded Nuvec with siRNA against EGFR and BCL-2 and test this
in a xenograft cancer model. This work will provide relevant clinical proof of
concept data which the Company believes will greatly showcase Nuvec®'s
potential in this space and lead to a better chance of establishing a
commercial license deal with one of the many companies operating in this
space. The programme of work is as follows:
Step 1: Loading, characterisation and formulation of Nuvec with EGFR and BCL-2
siRNA.
Step 2: In vitro testing of delivery and ratios of the siRNAs
Step 3: Biodistribution and preliminary toxicology in both tumour and
non-tumour models
Step 4: In vivo efficacy model of tumour regression
Globally, there is a shortage and delays in acquiring research grade materials
and the Company suffered delays towards the end of 2022 in getting the
materials to start the work. These materials have now arrived and the work is
underway. Full results are expected by the end of Q2 2023.
Material Transfer Agreements ("MTAs")
MTAs are seen by the Company as a good means of establishing relationships
with potential partners but are totally dependent on the speed and ability of
the partner to prioritise the research and subject to strict confidentiality
which means the Company is limited in any meaningful information it can
divulge. The Company still has one active MTA and the pursuit of MTAs remains
a key strategy as a means to see how Nuvec® may work with a potential
partner's proprietary technology. However, the field of siRNA gives the
Company greater ability to undertake its own clinically relevant work to
establish how Nuvec® behaves in this space, hence its decision to operate
both elements together so it is not overly exposed to one particular MTA
partner.
Intellectual Property
The Company has the exclusive worldwide rights for therapeutic uses in humans
and animals for technology developed by The University of Queensland ("UQ").
2022 now sees this technology having patents granted in Europe, Australia,
Japan, China and the US.
The Company has also filed its own patent on using Nuvec® to enhance the
performance of viral vectors which is now entering the national phases of
patent execution.
Future Prospects
The Company is well funded to deliver its siRNA programme and will now start
business development outreach of its siRNA data working alongside a US
company, Partner International, who have extensive biotech business
development experience.
Alongside the siRNA programme the Company, in conjunction with UQ, is
continuing to research the application of Nuvec® as an oral delivery system.
Recent work has shown how Nuvec® can be loaded with DNA and encapsulated by a
pH-controlled polymer to deliver the DNA and transfect cells locally in the
intestine. The work will continue to test the ability to produce a localised
intestinal effect in vivo which could have applications either in the vaccine
field or more likely as a locally delivered intestinal medicine.
The Company also announced in 2022 work to support its patent for viral vector
improvements whereby loading a lentivirus or adenovirus onto Nuvec® could
reduce the amount of vector required to deliver an enhance effect.
Importantly, Adeno-Associated Virus (AAV) is seen as a key improvement on
other viral vectors and products have been developed to treat various
conditions, including hepatitis. However, due to the nature of the AAV, these
products are very expensive and can have toxicity issues. The Company intends
to continue working in collaboration with Brunel University to investigate
improving Associated-Adeno Virus (AAV) as AAVs are at the forefront of
approved products in this area.
On behalf of the Board, I would like to thank all of our shareholders for
their continued patient support and look forward to providing further updates
on our progress.
By order of the Board
John Chiplin
Chairman
8 March 2023
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2022
Notes 2022 2021
£ £
(577,525) (1,179,425)
Research and development costs
(615,735) (663,865)
General and administration costs
(1,193,260) (1,843,290)
Operating loss for the year
1 677
Net finance income 4
(1,193,259) (1,842,613)
Loss for the year before tax 5
163,998 298,267
Taxation 6
(1,029,261) (1,544,346)
Loss for the year after tax
Other comprehensive income net of tax - -
Total comprehensive loss for the year attributable to equity owners of N4 (1,029,261) (1,544,346)
Pharma Plc
Loss per share attributable to owners of the parent 12
Weighted average number of shares:
Basic 186,422,541 181,080,349
Diluted 186,422,541 181,080,349
Basic loss per share (0.55) (0.85)
Diluted loss per share (0.55) (0.85)
All results were derived from continuing operations.
Consolidated Statement of Financial Position
as at 31 December 2022
Notes 2022 2021
£ £
Current assets
Trade and other receivables 8 246,518 558,359
Cash and cash equivalents 1,919,529 1,784,024
2,166,047 2,342,383
Total assets 2,166,047 2,342,383
Liabilities
Current liabilities
Trade and other payables 9 (40,722) (184,820)
Accruals and deferred income (37,167) (27,910)
Total liabilities (77,889) (212,730)
Total assets less current liabilities 2,088,158 2,129,653
Net assets 2,088,158 2,129,653
Equity
Share capital 11 9,205,946 8,995,146
Share premium 11 14,698,569 13,945,602
Share option reserve 11 103,954 79,955
Reverse acquisition reserve 11 (14,138,244) (14,138,244)
Merger reserve 11 279,347 279,347
Retained earnings 11 (8,061,414) (7,032,153)
Total equity 2,088,158 2,129,653
The Consolidated Financial Statements were approved by the Board of Directors
on 8 March 2023 and signed on its behalf:
Nigel Theobald
Company Statement of Financial Position
as at 31 December 2022
Notes 2022 2021
£ £
Assets
Non-current assets
Investments 7 1,094,747 1,094,747
Intercompany loan receivable 14 5,659,000 5,259,000
6,753,747 6,353,747
Current assets
Trade and other receivables 8 992,325 629,113
Cash and cash equivalents 1,761,330 1,538,615
2,753,655 2,167,728
Total assets 9,507,402 8,521,475
Liabilities
Current liabilities
Trade and other payables 9 (13,381) (8,966)
Accruals and deferred income (20,465) (19,493)
Total liabilities (33,846) (28,459)
Total assets less current liabilities 9,473,556 8,493,016
Net assets 9,473,556 8,493,016
Equity
Share capital 11 9,205,946 8,995,146
Share premium 11 14,698,569 13,945,602
Share option reserve 11 103,954 79,955
Merger reserve 11 279,347 279,347
Retained earnings 11 (14,814,260) (14,807,034)
Total equity 9,473,556 8,493,016
The Company recorded a loss of £7,226 for the year (31 December 2021:
£63,388 loss).
The Company Financial Statements were approved by the Board of Directors on 8
March 2023 and signed on its behalf:
Nigel Theobald
Consolidated Statement of Changes in Equity
for the year ended 31 December 2022
(i) Year ended 31 December 2022 Share capital Share premium Share option reserve Reverse acquisition reserve Merger reserve Retained earnings Total equity
£ £ £ £ £ £ £
Balance at 1 January 2022 8,995,146 13,945,602 79,955 (14,138,244) 279,347 (7,032,153) 2,129,653
Total comprehensive loss for the year - - - - - (1,029,261) (1,029,261)
Share issue 210,800 843,200 - - - - 1,054,000
Share issue costs - (90,233) - - - - (90,233)
Share based payment charge - - 23,999 - - - 23,999
9,205,946 14,698,569 103,954 (14,138,244) 279,347 (8,061,414) 2,088,158
At 31 December 2022
(ii) Year ended 31 December 2021 Share capital Share premium Share option reserve Reverse acquisition reserve Merger reserve Retained earnings Total equity
£ £ £ £ £ £ £
Balance at 1 January 2021 8,995,146 13,945,602 63,290 (14,138,244) 279,347 (5,487,807) 3,657,334
Total comprehensive loss for the year - - - - - (1,544,346) (1,544,346)
Share based payment charge - - 16,665 - - - 16,665
At 31 December 2021 8,995,146 13,945,602 79,955 (14,138,244) 279,347 (7,032,153) 2,129,653
Company Statement of Changes in Equity for the year ended 31 December 2022
(i) Year ended 31 December 2022 Share capital Share Share option reserve Merger reserve Retained earnings Total equity
premium
£ £ £ £ £ £
Balance at 1 January 2022 8,995,146 13,945,602 79,955 279,347 (14,807,034) 8,493,016
Total comprehensive loss for the year - - - - (7,226) (7,226)
Share issue 210,800 843,200 - - - 843,200
Share issue costs - (90,233) - - - (90,233)
Share based payment charge - - 23,999 - - 23,999
9,205,946 14,698,569 103,954 279,347 (14,814,260) 9,473,556
At 31 December 2022
(ii) Year ended 31 December 2021 Share capital Share premium Share option reserve Merger reserve Retained earnings Total equity
£ £ £ £ £ £
Balance at 1 January 2021 8,995,146 13,945,602 63,290 279,347 (14,743,646) 8,539,739
Total comprehensive loss for the year - - - - (63,388) (63,388)
Share based payment charge - - 16,665 - - 16,665
8,995,146 13,945,602 79,955 279,347 (14,807,034) 8,493,016
At 31 December 2021
Consolidated Statement of Cash Flows
for the year ended 31 December 2022
2022 2021
Notes £ £
Operating activities
(1,029,261) (1,544,346)
Loss after tax
Finance expenditure and other income (1) (677)
Share based payment charge 23,999 16,665
Taxation credit (163,998) (298,267)
Operating loss before changes in working capital (1,169,261) (1,826,625)
Movements in working capital:
(Increase)/decrease in trade and other receivables (37,312) 10,745
(Decrease)/increase in trade, other payables and accruals (134,841) 43,648
Cash used in operations (1,341,414) (1,772,232)
Taxation credit received 513,151 -
Net cash flows used in operating activities (828,263) (1,772,232)
Financing activities
Finance expenditure and other income 1 677
Proceeds of ordinary share issue 1,054,000 -
Costs of share issue (90,233) -
Net cash flows from financing activities 963,768 677
Net increase/(decrease) in cash and cash equivalents 135,505 (1,771,555)
Cash and cash equivalents at beginning of the year 1,784,024 3,555,579
Cash and cash equivalents at 31 December 1,919,529 1,784,024
Company Statement of Cash Flows
for the year ended 31 December 2022
2022 2021
£ £
Operating activities
(7,226) (63,388)
Loss before tax
Interest (271,772) (228,588)
Share based payment charge 23,999 16,665
Operating loss before changes in working capital (254,999) (275,311)
Movements in working capital:
(Increase)/decrease in trade and other receivables (91,440) 16,787
Increase/(decrease) in trade and other payables 5,387 (14,678)
Cash used in operations (341,052) (273,202)
Net cash flows used in operating activities (341,052) (273,202)
Investing activities
Loan receivable advancements (400,000) (1,600,000)
(400,000) (1,600,000)
Net cash flows used in investing activities
Financing activities
Net proceeds of ordinary share issue 1,054,000 -
Costs of share issue (90,233) -
963,767 -
Net cash flows from financing activities
Net increase/(decrease) in cash and cash equivalents 222,715 (1,873,202)
1,538,615 3,411,817
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at 31 December 1,761,330 1,538,615
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
1. Accounting policies
1.1 Reporting entity
N4 Pharma Plc (the "Company"), is the holding Company for N4 Pharma UK Limited
("N4 UK"), and together form the Group (the "Group"). N4 Pharma UK Limited is
a specialist pharmaceutical company engaged in the development of
mesoparticulate silica delivery systems to improve the cellular delivery and
potency of vaccines. The nature of the business is not deemed to be impacted
by seasonal fluctuations and as such performance is expected to be consistent.
The Company is domiciled in England and Wales and was incorporated and
registered in England and Wales on 6 July 1979 as a public limited company and
its shares are admitted to trading on AIM (LSE: N4P). The Company's registered
office is located at 6th Floor, 60 Gracechurch Street, London, EC3V 0HR.
The Consolidated Financial Statements have been prepared in accordance with
UK-adopted international accounting standards and applied to the Parent
Company Accounts in accordance with the provisions of the Companies Act 2006.
The Consolidated Financial Statements are presented in Great British Pounds
("GBP" or "£"), rounded to the nearest £.
The accounting policies set out below have, unless otherwise stated, been
applied consistently to all periods presented in these Consolidated Financial
Statements.
The Company has taken advantage of the exemption granted by Section 408 of the
Companies Act 2006 from presenting its own Income Statement. The loss
generated by the Company is disclosed under the Company Statement of Financial
Position.
1.2 Measurement convention
The Consolidated Financial Statements are prepared on the historical cost
basis, except for the following items:
• Share-based payments related to investment acquisition are measured at fair
value shown in the Merger Reserve.
• Share-based payments related to employee costs are measured at fair value
shown in the Statement of Comprehensive Income.
• Share-based payments related to share issue costs are measured at fair value
shown in Share Premium.
• The associated Share Options and Warrants are measured at fair value using the
Black Scholes model (see note 10).
1.3 Going concern
These Consolidated Financial Statements have been prepared on the basis of
accounting principles applicable to a going concern. The Directors consider
that the Group will have access to adequate resources, to meet the operational
requirements for at least 12 months from the date of approval of these
Consolidated Financial Statements. For this reason, they continue to adopt the
going concern basis in preparing the Consolidated Financial Statements.
The Group currently has no source of operating cash inflows, other than
interest and grant income, and has incurred net operating cash outflows before
tax for the year ended 31 December 2022 of £828,263 (2021: £1,772,232
outflow). At 31 December 2022, the Group had cash balances of £1,919,529
(2021: £1,784,024) and a surplus in net working capital (current assets,
including cash, less current liabilities) of £2,088,158 (2021: £2,129,653).
The Group prepares regular business forecasts and monitors its projected cash
flows, which are reviewed by the Board. Forecasts are adjusted for reasonable
sensitivities that address the principal risks and uncertainties to which the
Group is exposed, thus creating a number of different scenarios for the Board
to challenge. In those cases, where scenarios deplete the Group's cash
resources too rapidly, consideration is given to the potential actions
available to management to mitigate the impact of one or more of these
sensitivities, in particular the discretionary nature of costs incurred by the
Group, in order to ensure the continued availability of funds.
As the Group did not have access to bank debt and future funding is reliant on
issues of shares in the Parent Company, the Board has derived a mitigation
plan for the scenarios modelled as part of the going concern review.
On the basis of this analysis, the Board has concluded that there is a
reasonable expectation that the Company will have adequate resources to
continue in operational existence for the foreseeable future being a period of
at least 12 months from the Consolidated Statement of Financial Position date.
1.4 Basis of consolidation
The consolidated Group financial statements consist of the financial
statements of the Company together with the only entity controlled by the
parent company (its subsidiary), N4 UK.
All financial statements are made up to 31 December 2022. Where necessary,
adjustments are made to the financial statements of N4 UK to bring the
accounting policies used into line with those used by the Group.
All intra-group transactions, balances and unrealised gains on transactions
between Group companies are eliminated on consolidation. Unrealised losses are
also eliminated unless the transaction provides evidence of an impairment of
the asset transferred.
Subsidiaries are consolidated in the Group's financial statements from the
date that control commences until the date that control ceases.
1.5 Revenue
The Group has not recognised any revenue to date.
1.6 Government grant income
Government grants are recognised only when there is reasonable assurance that
the Group will comply with the conditions attaching to them and that the
grants will be received.
Government grants are recognised in the Consolidated Statement of
Comprehensive Income on a systematic basis over the periods in which the Group
recognises and expenses the related costs for which the grants are intended to
compensate.
Government grants that are receivable as compensation for expenses or losses
already incurred or for the purpose of giving immediate financial support to
the Group with no future related costs are recognised in Consolidated
Statement of Comprehensive Income in the period in which they become
receivable, and against the associated cost.
1.7 Expenses
Financing income and expenses
Financing expenses comprise interest expense and finance charges. Financing
income comprises interest receivable on funds invested.
Financing income and expenses are recognised in the Consolidated Statement of
Comprehensive Income as it accrues, using the effective interest method.
Research and development
Research costs are charged against the Consolidated Statement of Comprehensive
Income as they are incurred. Certain development costs will be capitalised as
intangible assets when it is probable that the future economic benefits will
flow to the Group. Such intangible assets will be amortised on a straight-line
basis from the point at which the assets are ready for use, over the period of
the expected benefit, and are reviewed for impairment at each year end date.
Other development costs are charged against income as incurred since the
criteria for their recognition as an asset is not met.
The criteria for recognising expenditure as an asset are:
• It is technically feasible to complete the product;
• Management intends to complete the product and use or sell it;
• There is an ability to use or sell the product;
• It can be demonstrated how the product will generate probable future economic
benefits;
• Adequate technical, financial and other resources are available to complete
the development, use and sale of the product; and
• Expenditure attributable to the product can be reliably measured.
The costs of an internally generated intangible asset comprise all directly
attributable costs necessary to create, produce and prepare the asset to be
capable of operating in the manner intended by management. Directly
attributable costs include employee costs incurred on technical development,
testing and certification, materials consumed and any relevant third-party
cost. The costs of internally generated developments are recognised as
intangible assets and are subsequently measured in the same way as externally
acquired intangible assets. However, until completion of the development
project, the assets are subject to impairment testing only.
To date, the criteria for recognition of an internally generated intangible
asset have not been met as explained in note 1.17.
1.8 Taxation
Taxation
Taxation for the year comprises current and deferred tax. Tax is recognised in
the Consolidated Statement of Comprehensive Income, except to the extent that
it relates to items recognised directly in equity.
Current or deferred taxation assets and liabilities are not discounted.
Current tax
Current tax is recognised at the amount of tax payable using the tax rates and
laws that have been enacted or substantively enacted by the Consolidated
Statement of Financial Position date.
Deferred tax
Deferred tax is recognised in respect of all timing differences that have
originated but not reversed at the Consolidated Statement of Financial
Position date.
Timing differences arise from the inclusion of income and expenses in tax
assessments in periods different from those in which they are recognised in
the Consolidated Financial Statements. Deferred tax is measured using tax
rates and laws that have been enacted or substantively enacted by the year end
and that are expected to apply to the reversal of the timing difference.
Unrelieved tax losses and other deferred tax assets are recognised only to the
extent that it is probable that they will be recovered against the reversal of
deferred tax liabilities or other future taxable profits.
1.9 Foreign Currencies
Monetary assets and liabilities denominated in foreign currencies are
translated into Sterling at the rate of exchange ruling at the Consolidated
Statement of Financial Position date. Transactions in foreign currencies are
translated at the rate of exchange ruling at the date of the transaction.
Foreign exchange gains and losses are included in the Consolidated Statement
of Comprehensive Income.
1.10 Earnings per share
The Group presents basic and diluted earnings or loss per share data for its
ordinary shares. Basic earnings/loss per share is calculated by dividing the
profit or loss attributable to ordinary shareholders of the Company by the
weighted average number of ordinary shares outstanding during the period,
adjusted for own shares held. Diluted earnings/loss per share is determined
by adjusting the profit or loss attributable to ordinary shareholders and the
weighted average number of ordinary shares outstanding, adjusted for own
shares held, for the effects of all dilutive potential ordinary shares, which
comprise of share options granted.
1.11 Operating segments
The Group operated in one business segment, that of the development and
commercialisation of medicines via its delivery system called Nuvec®. No
revenue has yet been generated by any of the work undertaken by the Group.
The Directors consider that there are no identifiable business segments that
are subject to risks and returns different to the core business. The
information reported to the Directors, for the purposes of resource allocation
and assessment of performance, is based wholly on the overall activities of
the Group.
1.12 Presentation and classification of financial instruments issued by the
Group
In accordance with IAS 32, financial instruments issued by the Group are
treated as equity only to the extent that they meet the following two
conditions:
a) they include no contractual obligations upon the Group to deliver cash or
other financial assets or to exchange financial assets or financial
liabilities with another party under conditions that are potentially
unfavourable to the Group; and
b) where the instrument will or may be settled in the Company's own equity
instruments, it is either a non-derivative that includes no obligation to
deliver a variable number of the Company's own equity instruments or is a
derivative that will be settled by the Company exchanging a fixed amount of
cash or other financial assets for a fixed number of its own equity
instruments.
To the extent that this definition is not met, the proceeds of issue are
classified as a financial liability. Where the instrument so classified
takes the legal form of the Company's own shares, the amounts presented in
these Consolidated Financial Statements for called up share capital and share
premium account exclude amounts in relation to those shares.
Where a financial instrument that contains both equity and financial liability
components exists these components are separated and accounted for
individually under the above policy.
1.13 Non-derivative financial instruments
Non-derivative financial instruments comprise investments, trade and other
receivables, cash and cash equivalents and trade and other payables.
Investments
Investments are investments held in subsidiaries accounted for at cost less
provision for impairment under IAS 27.
Trade and other receivables
Trade and other receivables are recognised initially at fair value. Subsequent
to initial recognition they are measured at amortised cost less impairment.
Trade and other payables
Trade and other payables are recognised initially at fair value. Subsequent to
initial recognition they are measured at amortised cost using the effective
interest method.
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and comprise of cash at
bank. Any overdrafts are shown within borrowings in current liabilities.
1.14 Impairment
A financial asset not carried at fair value through profit or loss is assessed
at each reporting date to determine whether there is objective evidence that
it is impaired. A financial asset is impaired if objective evidence indicates
that a loss event has occurred after the initial recognition of the asset, and
that the loss event had a negative effect on the estimated future cash flows
of that asset that can be estimated reliably.
An impairment loss in respect of a financial asset measured at amortised cost
is calculated as the difference between its carrying amount and the present
value of the estimated future cash flows discounted at the asset's original
effective interest rate. Interest on the impaired asset continues to be
recognised through the unwinding of the discount. When a subsequent event
causes the amount of impairment loss to decrease, the decrease in impairment
loss is reversed through the Consolidated Statement of Comprehensive Income.
The carrying amounts of the Group's non-financial assets are reviewed at each
reporting date to determine whether there is any indication of impairment. If
any such indication exists, then the asset's recoverable amount is estimated.
The recoverable amount of an asset is the greater of its value in use and its
fair value less costs to sell. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the
risks specific to the asset. For the purpose of impairment testing, assets
that cannot be tested individually are grouped together into the smallest
Group of assets that generates cash inflows from continuing use that are
largely independent of the cash inflows of other assets or Groups of assets
(the "cash-generating unit").
An impairment loss is recognised if the carrying amount of an asset or its
cash generating unit exceeds its estimated recoverable amount. Impairment
losses are recognised in profit or loss. Impairment losses recognised in
respect of cash generated units are allocated first to reduce the carrying
amount of any goodwill allocated to the units, and then to reduce the carrying
amounts of the other assets in the unit (Group of units) on a pro rata basis.
Impairment losses recognised in prior periods are assessed at each reporting
date for any indications that the loss has decreased or no longer exists. An
impairment loss is reversed if there has been a change in the estimates used
to determine the recoverable amount. An impairment loss is reversed only to
the extent that the asset's carrying amount does not exceed the carrying
amount that would have been determined, net of depreciation or amortisation,
if no impairment loss had been recognised.
1.15 Share based payment arrangements
Share-based payment arrangements in which the Group receives goods or services
as consideration for its own equity instruments are accounted for as
equity-settled share-based payment transactions, regardless of how the equity
instruments are obtained by the Group.
Share-based payment transactions, other than those with employees, are
measured at the value of goods or services received where this can be reliably
measured. Where the services received are not identifiable, their fair value
is determined by reference to the grant date fair value of the equity
instruments provided. Should it not be possible to measure reliably the fair
value of identifiable goods and services received, their fair value shall be
determined by reference to the fair value of the equity instruments provided
measured over the period of time that the goods and services are received.
The expense is recognised in the Consolidated Statement of Comprehensive
Income or capitalised as part of an asset when the goods are received or as
services are provided, with a corresponding increase in equity.
The grant date fair value of share-based payment awards granted to employees
is recognised as an employee expense, with a corresponding increase in equity,
over the period that the employees become unconditionally entitled to the
awards. The fair value of the options granted is measured using an option
valuation model, taking into account the terms and conditions upon which the
options were granted. The amount recognised as an expense is adjusted to
reflect the actual number of awards for which the related service and
non-market vesting conditions are expected to be met, such that the amount
ultimately recognised as an expense is based on the number of awards that do
meet the related service and non-market performance conditions at the vesting
date. For share-based payment awards with non-vesting conditions, the grant
date fair value of the share-based payment is measured to reflect such
conditions and there is no "true-up" for differences between expected and
actual outcomes.
Share-based payment transactions in which the Group receives goods or services
by incurring a liability to transfer cash or other assets that is based on the
price of the Group's equity instruments are accounted for as cash-settled
share-based payments. The fair value of the amount payable to recipients is
recognised as an expense, with a corresponding increase in liabilities, over
the period in which the recipients become unconditionally entitled to payment.
The liability is re-measured at each Consolidated Statement of Financial
Position date and at settlement date. Any changes in the fair value of the
liability are recognised in the Consolidated Statement of Comprehensive
Income.
1.16 Adoption of new and revised International Financial Reporting Standards
The following IFRS standards, amendments or interpretations became effective
during the year ended 31 December 2022 but have not had a material effect on
this Consolidated Financial Information:
Standard Effective date
Amendments to IFRS 3 Reference to the Conceptual Framework 1 January 2022
Amendments to IAS 16 Property Plant and Equipment (Proceeds before intended use) 1 January 2022
Amendments to IAS 37 Onerous Contracts (Cost of fulfilling a contract) 1 January 2022
Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41 Annual Improvements to IFRS Standards 2018-2020 1 January 2022
All new standards and amendments to standards and interpretations effective
for annual periods beginning on or after 1 January 2022 that are applicable to
the Group have been applied in preparing these Consolidated Financial
Statements.
The standards and interpretations that are issued and relevant to the Group,
but not yet effective, up to the date of issuance of the Consolidated
Financial Statements are disclosed below. The Group intends to adopt these
standards, if applicable, when they become effective.
Standard Effective date
Amendments to IAS 1 Disclosure of accounting policies 1 January 2023
Amendments to IAS 8 Definition of accounting estimates 1 January 2023
Amendments to IAS 12 Deferred tax related to assets and liabilities arising from a single 1 January 2023
transaction
The Directors are continuing to assess the potential impact that the adoption
of the standards listed above will have on the Consolidated Financial
Statements for the year ended 31 December 2022.
1.17 Use of estimates and judgements
The preparation of Consolidated Financial Statements in conformity with IFRSs
requires management to make certain judgements, estimates and assumptions that
affect the application of accounting policies and the reported amounts of
assets, liabilities, income and expenses during the period. Actual results
may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimates are revised and in any future periods affected.
In the process of applying the Group's accounting policies, the Directors have
decided the following estimates and assumptions are material to the carrying
amounts of assets and liabilities recognised in the Consolidated Financial
Statements.
Critical judgements
Research and development expenditure
The key judgements surrounding the Research & Development expenditure is
whether the expenditure meets the criteria for capitalisation. Expenditure
will only be capitalised when the recognition criteria is met and is otherwise
written off to the Consolidated Statement of Comprehensive Income. The
recognition criteria include the identification of a clearly defined project
with separately identifiable expenditure where the outcome of the project, in
terms of its technical feasibility and commercial viability, can be measured
or assessed with reasonable certainty and that sufficient resources exist to
complete a profitable project. In the event that these criteria are met, and
it is probable that future economic benefit attributable to the product will
flow to the Group, then the expenditure will be capitalised.
Impairment of investments and intercompany debtors
N4 UK has sustained losses and the Statement of Financial position is in
deficit. The recoverability of the intercompany debtor and the cost of
investment is dependent on the future profitability and success of the entity,
which is in a research phase and has not therefore generated any revenue to
date. Having considered research progress during the year and future prospects
of N4 UK, the Directors do not consider that there are indicators of
impairment in respect of these balances. This is a significant judgement.
2. Risk management
Overview
The Group has exposure to the following risks:
- Credit risk;
- Liquidity risk;
- Tax risk;
- Market risk; and
- Operational risk
- Regulatory and legislative risk
This note presents information about the Group's exposure to each of the above
risks, its objectives, policies and processes for measuring and managing risk,
and its management of capital. Further quantitative disclosures are included
throughout these Consolidated Financial Statements.
Risk management framework
The Board has overall responsibility for the establishment and oversight of
the risk management framework and developing and monitoring the Group's risk
management policies. Key risk areas have been identified and the Group's risk
management policies and systems will be reviewed regularly to reflect changes
in market conditions and the Group's activities.
The Audit Committee oversees how management monitors compliance with the
Group's risk management policies and procedures and reviews the adequacy of
the risk management framework in relation to the risks faced by the Group.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations and arises principally from the Group's bank deposits and
receivables. See Note 13 for further detail. The risk of non-collection is
considered to be low. This risk is deemed low at present due to the Group not
yet trading and generating revenue but is a consideration for future risks.
There is an intercompany debtor balance between the Company and N4 UK. The
recoverability of this debtor is dependent on the future profitability of the
entity. As N4 UK has sustained losses and the Statement of Financial
position is in deficit it is currently not in a position to repay this amount
and this therefore poses a credit risk to the Company, but not to the Group.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting
the obligations associated with its financial liabilities that are settled by
delivering cash or another financial asset. The Group's approach to managing
liquidity is to ensure, as far as possible, that it will always have
sufficient liquidity to meet its liabilities when due, under both normal and
stressed conditions, without incurring unacceptable losses or risking damage
to the Group's reputation. The Group monitors cash flow on a monthly basis
through forecasting to help mitigate this risk.
Tax risk
Any change in the Group's tax status or in taxation legislation or its
interpretations could affect the value of the investments held by the Group or
the Group's ability to provide returns to shareholders or alter post-tax
returns to shareholders.
Market risk and competition
The Group operates as a specialist pharmaceutical Company engaged in the
development of mesoparticulate silica delivery systems to improve the cellular
delivery and potency of vaccines. The Group is entering into a market with
existing competitors and the prospect of new entrants entering the current
market. There is no guarantee that current competitors or new entrants to the
market will not appeal to a wider portion of the Group's target market or
command broader band awareness.
In addition, the Group's future potential revenues from product sales will be
affected by changes in the market price of pharmaceutical drugs and could also
be subject to regulatory controls or similar restrictions.
Market risk is monitored continuously by the Group and the Board reacts to any
changes in market conditions as and when they arise.
Operational risk
The Group is at an early stage of development and is subject to several
operational risks. The commencement of the Group's material revenues is
difficult to predict and there is no guarantee the Group will generate
material revenues in the future. The Group has a limited operational history
upon which its performance and prospects can be evaluated and faces the risks
frequently encountered by developing companies. The risks include the
uncertainty as to which areas of pharmaceuticals to target for growth.
Operational risk is managed by adapting the future plans of the Group based on
results and feedback from employees, suppliers and contractors.
Regulatory and legislative risk
The operations of the Group are such that it is exposed to the risk of
litigation from its suppliers, employees and regulatory authorities. Exposure
to litigation or fines imposed by regulatory authorities may affect the
Group's reputation even though monetary consequences may not be significant.
Any changes to regulations or legislation are reviewed by the Board on a
regular basis and the Group applies any that are relevant accordingly.
Changes to legislation, regulations, rules and practices may change and is
often the case in the pharmaceutical industry which is highly regulated and
susceptible to regular change. Any changes may have an adverse effect on the
Group's operations.
Regulatory and legislative risk will become more significant once the current
research generates revenue.
Protection of intellectual property
The Group's ability to compete significantly relies upon the successful
protection of its intellectual property, in particular its licenced and owned
patent applications for Nuvec®. The Group seeks to protect its intellectual
property through the filing of worldwide patent applications, as well as
robust confidentiality obligations on its employees. However, this does not
provide assurance that a third party will not infringe on the Group's
intellectual property, release confidential information about the intellectual
property or claim technology which is registered to the Group.
Capital management
The Group has no loans or borrowings and has sufficient resources, in the view
of the Directors, to meet its working capital requirements for the next 12
months.
The Group manages its capital through the preparation of detailed forecasts,
and tracks actual receipts and outlays against the forecasts on a regular
basis, to ensure that the Group will be able to continue as a going concern
while maximising the return to shareholders.
The capital structure of the Group consists of cash and cash equivalents and
equity comprising, capital, reserves and accumulated losses.
3. Employees and directors
The average monthly number of employees during the year was 5 (2021: 5). The
Directors of the Group are employed by both the Company and N4 UK and as such
are included in the employee figure. Total Directors remuneration is detailed
in Note 14 of these Consolidated Financial Statements.
2022 2021
£ £
Wages and Salaries 213,333 208,000
Social security costs 17,562 16,518
230,895 224,518
4. Net finance income and (expenditure)
2022 2021
£ £
Interest received on financial assets measured at amortised cost
1 677
1 677
5. Loss before tax
2022 2021
£ £
Loss before taxation is arrived after charging:
Fees payable to the Group's auditors for the audit 28,640 24,675
of the Group's financial statements
6. Taxation
2022 2021
£ £
Current tax
Research and development tax credit receivable for the current period (163,998) (298,267)
Adjustments in respect of prior periods - -
(163,998) (298,267)
Deferred tax
Origination and reversal of temporary differences - -
Tax in income statement (163,998) (298,267)
The tax charge for the year can be reconciled to the loss in the Consolidated
Statement of Comprehensive Income as follows:
2022 2021
£ £
Loss before taxation (1,029,261) (1,842,613)
Tax at the UK corporation tax rate of 19% (2021: 19%) (195,560) (350,096)
Net Research and development tax credits (163,998) (298,267)
Changes in unrecognised deferred tax 195,560 350,096
Adjustments in respect of prior periods - -
Tax charge for the year (163,998) (298,267)
At the year end the Group had trading losses carried forward of £9,969,504
(2021: £9,011,815) for use against future profits. There are no other
factors which may impact future tax charges. A deferred tax asset has not
been recognised on unrelieved trading losses as the timing, extent and
availability of future profits is not yet certain.
7. Investments
Investment in subsidiary
Company
2022 2021
Cost £ £
Balance at 1 January 1,094,747 1,094,747
Balance at 31 December 1,094,747 1,094,747
Details of the Company's subsidiary at 31 December 2022 are as follows:
Registered Office Principal activity Proportion of ownership and voting rights held
N4 Pharma UK Limited The Mills, Canal Street, Derby, DE1 2RJ Delivery of vaccines and therapeutics 100%
The accounting reference date of the subsidiary are co-terminous with that of
the Company.
8. Trade and other receivables
Group Group Company Company
2022 2021 2022 2021
£ £ £ £
Prepayments 36,888 7,013 36,029 6,514
VAT due 18,632 23,553 13,352 6,361
R&D tax credits receivable 163,998 513,151 - -
Interest receivable - 677 883,610 611,838
Other debtors 27,000 13,965 59,334 4,400
246,518 558,359 992,325 629,113
Loan interest receivable relates to the intra-group loan disclosed in Note 14.
9. Trade and other payables
Group Group Company Company
2022 2021 2022 2021
£ £ £ £
Trade payables 35,756 180,346 12,196 7,848
Other payables 4,966 4,474 1,185 1,118
40,722 184,820 13,381 8,966
10. Share-based payments
Options
The Company has the ability to issue options to Directors to compensate them
for services rendered and recognised them to add value to the Group's
longer-term share value. Equity settled share-based payments are measured at
fair value at the date of grant. The fair value determined is charged to the
Consolidated Statement of Comprehensive Income on a straight-line basis over
the vesting period based on the Group's estimate of the number of shares that
will vest.
The vesting period is defined as the period in which the options are unable to
be exercised. The period commences on the date the options are issued. For
the options to vest, the holder must remain an employee of the group
throughout the vesting period. Once the vesting period is complete the options
may be exercised on any date up to the lapse date.
Cancellations of equity instruments are treated as an acceleration of the
vesting period and any outstanding charge is recognised in full immediately.
Fair value is measured using a Black Scholes pricing model. The key
assumptions used in the model at the grant date were adjusted based on
management's best estimate for the effects of non-transferability, exercise
restrictions and behavioral considerations.
As at 31 December 2022, there were 7,046,513 (2021: 7,046,513) options in
existence over ordinary shares of the Company. Options in existence during
the current and/or previous financial year are as follows:
Name Date of Grant Ordinary shares under option Vesting Date Expiry Date Exercise Price £
2015 Options
Gavin Burnell 14.10.15 1,351,210 14.10.15 14.10.25 0.0280
Luke Cairns 14.10.15 675,302 14.10.15 14.10.25 0.0280
2017 Options
Luke Cairns 03.05.17 717,143 03.05.20 03.05.27 0.0700
David Templeton 03.05.17 717,143 03.05.20 03.05.27 0.0700
Paul Titley 03.05.17 717,143 03.05.20 03.05.27 0.0700
2019 Options
John Chiplin 21.05.19 717,143 21.05.22 21.05.29 0.0355
Christopher Britten 21.05.19 717,143 21.05.22 21.05.29 0.0355
2020 Options
David Templeton 18.05.20 717,143 18.05.23 18.05.30 0.0480
Luke Cairns 18.05.20 717,143 18.05.23 18.05.30 0.0480
Total options 7,046,513
The weighted average remaining contractual life of the share options
outstanding as at 31 December 2022 was 4.93 years (2021: 5.93 years).
Each option entitles the holder to subscribe for one ordinary share in the
Company. Options do not confer any voting rights on the holder.
An amount of £12,006 has been recognised in the Consolidated Statement of
Comprehensive Income and in the Share Option Reserve in relation to the share
options (2021: £16,665).
The aggregate fair value of the share options in issue was £91,961 (2021
£79,955), with amounts recorded at each reporting date being as follows:
2022 2021
£ £
2015 Options 18,492 18,492
2017 Options 26,884 26,884
2019 Options 22,793 19,861
2020 Options 23,792 14,718
91,961 79,955
Warrants
As part of the placing in November 2022 which raised £1,054,000 before fees
and expenses, the Company issued 3,162,000 warrants at an exercise price of 2p
per warrant to the Company's brokers on the transaction as part of their fees.
The warrants entitle holders to subscribe for new ordinary shares at any time
in the period of three years following the grant of the warrants. The expiry
date for the warrants is 23 November 2025.
Fair value is measured using a Black Scholes pricing model.
An amount of £11,993 has been recognised in the Share Premium and in the
Share Option Reserve in relation to the warrants (2021: £nil).
Date of Grant Ordinary shares under option Expiry Date Exercise Price £ Fair value at 31 December 2022
£
25.11.22 3,162,000 24.11.25 0.02 11,993
11. Capital and reserves
Issued, allotted and fully paid 2022 2021
£ £
233,780,349 Ordinary Shares of 0.4p each (2021: 181,080,349) 935,121 724,321
137,674,431 Deferred Shares of 4p each (2021: 137,674,431) 5,506,977 5,506,977
279,176,540 Deferred Shares of 0.99p each (2021: 279,176,540) 2,763,848 2,763,848
9,205,946 8,995,146
All ordinary shares rank equally in all respects, including for dividends,
shareholder attendance and voting rights at meetings, on a return of capital
and in a winding-up.
Authorised ordinary shares at 31 December 2022 totalled 334,682,497
(2021:334,682,497).
During the year 52,700,000 new ordinary shares of 0.4p each were issued
through two placings in November 2022 at a share price of 2p per share.
The 137,674,431 deferred shares of 4p, have no right to dividends nor do the
holders thereof have the right to receive notice of or to attend or vote at
any general meeting of the Company. On a return of capital or on a winding up
of the Company, the holders of the deferred shares shall only be entitled to
receive the amount paid up on such shares after the holders of the ordinary
shares have received their return on capital.
The 279,176,540 deferred shares of 0.99p shall be entitled to receive a
special dividend, which is payable upon the repayment to the Company of any
amount owed under certain loan agreements, after which the Company shall, in
priority to any distribution to any other class of share, pay to the holders
of the Special Deferred Shares an aggregate amount equal to the amount repaid
pro rata according to the number of such shares paid up as to their nominal
value held by each shareholder. They shall be entitled to no other
distribution save for a special dividend and shall not be entitled to receive
notice of or attend or vote at a general meeting of the Company. On a return
of capital on a winding up of the Company, they shall only be entitled to
receive the amount paid up on such shares up to a maximum of 0.9 pence per
share after the holders of the Ordinary Shares and the Deferred Shares have
received their return on capital.
Reserves
The equity structure presented in the Consolidated Financial Statements
reflects the equity structure of the Group, including the equity instruments
issued as part of the Reverse Takeover transaction which occurred in 2017 and
followed accounting treatment in accordance with IFRS 2.
The reverse acquisition reserve and the merger reserve are derived as part of
the Reverse Takeover transaction and the balances within these reserves have
had no movement since the point of the Reverse takeover in 2017.
Share premium reserve
The share premium reserve comprises the excess of consideration received over
the par value of the shares issued, plus the nominal value of share capital at
the date of redesignation at no par value.
Share option reserve
The share option reserve comprises the fair value of options granted, less the
fair value of lapsed and expired options.
Retained earnings
Retained earnings comprises of accumulated results of the Group to date.
12. Earnings per share
The calculation of basic loss per share at 31 December 2022 was based on the
loss of £1,029,261 (2021: £1,544,346), and a weighted average number of
ordinary shares outstanding of 186,422,541 (2021:181,080,349), calculated as
follows:
2022 2021
£ £
Losses attributable to ordinary shareholders (1,029,261) (1,544,346)
Weighted average number of ordinary shares
Issued ordinary shares at 1 January 181,080,349 181,080,349
Effect of shares issued during the year 5,342,192 -
186,422,541 181,080,349
Weighted average number of shares at 31 December
2022 pence per share
2021 pence per share
Basic loss per share (0.55) (0.85)
Diluted loss per share
Diluted earnings per share is calculated by adjusting the weighted average
number of shares outstanding to assume conversion of all potential dilutive
shares, namely share options and warrants. The calculation of diluted loss per
share at 31 December 2022 was based on the loss of £1,029,261 (31 December
2021: £1,544,346), and a weighted average number of ordinary shares
outstanding of 186,422,541 (2021: 181,080,349).
2022 pence per share 2021 pence per share
Diluted loss per share (0.55) (0.85)
13. Risk management and analysis
(a) Credit risk
Financial risk management
Credit risk is the risk of financial loss to the Group if a customer or
counterparty to a financial instrument fails to meet its contractual
obligations and arises principally from the Group's receivables and cash and
cash equivalents. The carrying amount of cash, cash equivalents and term
deposits represents the maximum credit exposure on those assets. The cash
and cash equivalents are held with UK bank and financial institution
counterparties which are rated at least A.
There is an intercompany debtor balance between the Company and N4 UK. The
recoverability of this debtor is dependent on the future profitability of the
entity. As N4 UK has sustained losses and the Statement of Financial
position is in deficit it is currently not in a position to repay this amount
and this therefore poses a credit risk to the Company, but not to the Group.
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit
exposure. Therefore, the maximum exposure to credit risk at the reporting date
of the Group was £2,002,049 (2021: £2,342,383), being the total of the
carrying amount of financial assets, shown in the Consolidated Statement of
Financial Position.
(b) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its
financial obligations as they fall due.
The following are the contractual maturities of financial liabilities,
including estimated interest payments and excluding the impact of netting
agreements.
Group:
Financial liabilities Carrying amount Contractual cash flows 6 months or less 6-12 months 1 -2 years
£ £ £ £ £
31 December 2022
Trade and other payables 40,722 40,722 40,722 - -
31 December 2021
Trade and other payables 184,820 184,820 184,820 - -
Company:
Financial liabilities Carrying amount Contractual cash flows 6 months or less 6-12 months 1 -2 years
£ £ £ £ £
31 December 2022
Trade and other payables 13,381 13,381 13,381 - -
31 December 2021
Trade and other payables 8,966 8,966 8,966 - -
(c) Currency risk
The Group does not have significant exposure to foreign currency risk at
present. The Group does not have any monetary financial instruments which are
held in a currency that differs from that entity's functional currency.
(d) Interest rate risk
Profile
At the reporting date the interest rate profile of interest-bearing financial
instruments was:
Carrying amount
Group: 2022
£
2021
£
Variable rate instruments
Cash and cash equivalents 1,919,529 1,784,024
Carrying amount
Company: 2022
£
2021
£
Variable rate instruments
Cash and cash equivalents 1,761,330 1,538,615
Cash flow sensitivity analysis for variable rate instruments
The Group's interest-bearing assets at the reporting date were invested with
financial institutions in the United Kingdom with a S&P rating of A2 and
comprised solely of bank accounts.
A change in interest rates would have increased/(decreased) profit or loss by
the amounts shown below. This analysis assumes that all other variables remain
constant. This analysis is performed on the same basis for 2021.
Group: 2022 2021
Profit or loss Profit or loss
100 bp increase 100 bp decrease 100 bp increase 100 bp decrease
Variable rate instruments 19,195 (19,195) 17,840 (17,840)
Company: 2022 2021
Profit or loss Profit or loss
100 bp increase 100 bp decrease 100 bp increase 100 bp decrease
Variable rate instruments 17,613 (17,613) 15,386 (15,386)
14. Related parties
Key management personnel
The below remuneration relates to key management personnel, there are no key
management personnel employed by the Group in addition to the Directors.
2022 2021
£ £
Short-term employee benefits 230,895 224,518
Share based payments 12,006 16,665
242,901 241,183
Directors' remuneration and interests
The below remuneration relates to the Directors of the Group.
2022 Remuneration Interests
Cash-based payments Share-based payments Shares Options
Director Totals
£ £ £ No. No.
Nigel Theobald (Chief Executive Officer) 77,500 - 77,500 16,981,319 -
David Templeton 46,500 4,537 51,037 - 1,434,286
Luke Cairns 41,333 4,537 45,870 142,857 2,109,588
Christopher Britten 24,000 1,466 25,466 - 717,143
John Chiplin 24,000 1,466 25,466 - 717,143
213,333 12,006 225,339 17,124,176 4,978,160
2021 Remuneration Interests
Cash-based payments Share-based payments Shares Options
Director Totals
£ £ £ No. No.
Nigel Theobald (Chief Executive Officer) 75,000 - 75,000 16,981,319 -
David Templeton 45,000 4,538 49,538 - 1,434,286
Luke Cairns 40,000 4,537 44,537 142,857 2,109,588
Christopher Britten 24,000 3,795 27,795 - 717,143
John Chiplin 24,000 3,795 27,795 - 717,143
208,000 16,665 224,665 17,124,176 4,978,160
No contributions are paid by the Group to a pension scheme on behalf of the
Directors.
Nigel Theobald is the Group's highest paid director (2021: Nigel Theobald).
His remuneration in each year is disclosed above.
N4 Pharma PLC has a loan receivable from N4 Pharma UK Limited at 31 December
2022 of £5,659,000 (2021: £5,259,000). It is repayable in December 2025,
accrues interest at a rate of 5% and is unsecured.
There are no further related parties identified. There is no ultimate
controlling party of the Company or Group.
15. Subsequent events
There have been no material events subsequent to the Consolidated Statement of
Financial Position date that require adjustment or disclosure in these
Consolidated Financial Statements.
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