REG - N4 Pharma PLC - Final Results
23/04/2024 07:00
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RNS Number : 5917L N4 Pharma PLC 23 April 2024
23 April 2024
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 2023.
Highlights:
Oncology
· In vitro results for Nuvec® loaded with two different clinically
relevant siRNA, EGFR and BCL-2, show comparable cellular apoptosis to two
commercially available products
· Further work has demonstrated that Nuvec® can bind not only
single, but dual siRNAs aimed at simultaneously targeting pathways responsible
for cancer progression and that there is an improved reduction in cell
viability from treatment with dual loaded siRNA
· Results suggest that the dual loading of Nuvec® has the
potential to be a hugely useful tool for combination therapy treatments
Oral Delivery
· Completion of in vivo studies demonstrating that Nuvec® loaded
with OVA m-cherry DNA and encapsulated within an acid protective polymer can
be dosed orally, penetrate the mucus layer, and successfully express the OVA
m-cherry locally in the intestine epithelial cells
· Studies show that administering enteric coated PEGylated Nuvec®
capsules with a subsequent dose 3 days later can produce and maintain protein
expression
· Post period end, results of further testing show that
administering enteric coated PEGylated Nuvec® capsules, on a staged basis
over a period of 21 days, can maintain the protein expression for even longer
and produce antibodies
Patents
· Patents on using Nuvec® to enhance the performance of viral
vectors granted in Europe, Australia, Japan, China, the U.S. and India
Nanogenics
· Placing of £350,000 to fund the acquisition of a controlling
stake in Nanogenics Limited, a company with a complementary lipid and
peptide-based delivery system (Liptide®) that is developing a novel product
(ECP105) for the prevention of scarring following surgery for the treatment of
glaucoma
· Work underway with the University of Strathclyde on the
formulation of the product needed to begin in vivo studies with Kings College
London, studies expected to commence in May 2024
· Investigating potential for orphan drug designation for ECP105
· Non-viral, non-lipid delivery systems are high in demand in the gene
therapy space and the Company now has two such delivery systems and expect
considerable technical synergies in developing programmes using both Nuvec®
and Liptide®
Collaborations
· Company continues to seek partners to develop its Nuvec®
technology and is in the advanced stages of finalising a collaboration with an
independent global R&D leader based in the US with the aim of securing a
co-marketing agreement following initial studies
Financial
· Total comprehensive loss for the year was £1,276,778 (2022:
£1,029,261)
· Cash at period end of approximately £1.0m (2022: £1.9m)
Oral Delivery
· Completion of in vivo studies demonstrating that Nuvec® loaded
with OVA m-cherry DNA and encapsulated within an acid protective polymer can
be dosed orally, penetrate the mucus layer, and successfully express the OVA
m-cherry locally in the intestine epithelial cells
· Studies show that administering enteric coated PEGylated Nuvec®
capsules with a subsequent dose 3 days later can produce and maintain protein
expression
· Post period end, results of further testing show that
administering enteric coated PEGylated Nuvec® capsules, on a staged basis
over a period of 21 days, can maintain the protein expression for even longer
and produce antibodies
Patents
· Patents on using Nuvec® to enhance the performance of viral
vectors granted in Europe, Australia, Japan, China, the U.S. and India
Nanogenics
· Placing of £350,000 to fund the acquisition of a controlling
stake in Nanogenics Limited, a company with a complementary lipid and
peptide-based delivery system (Liptide®) that is developing a novel product
(ECP105) for the prevention of scarring following surgery for the treatment of
glaucoma
· Work underway with the University of Strathclyde on the
formulation of the product needed to begin in vivo studies with Kings College
London, studies expected to commence in May 2024
· Investigating potential for orphan drug designation for ECP105
· Non-viral, non-lipid delivery systems are high in demand in the gene
therapy space and the Company now has two such delivery systems and expect
considerable technical synergies in developing programmes using both Nuvec®
and Liptide®
Collaborations
· Company continues to seek partners to develop its Nuvec®
technology and is in the advanced stages of finalising a collaboration with an
independent global R&D leader based in the US with the aim of securing a
co-marketing agreement following initial studies
Financial
· Total comprehensive loss for the year was £1,276,778 (2022:
£1,029,261)
· Cash at period end of approximately £1.0m (2022: £1.9m)
Nigel Theobald, Chief Executive Officer of the Company, commented:
"2023 was a year of good progress for the Company with material advancements
in the capabilities of Nuvec® both in its ability to dual load and in its
potential for oral delivery. We achieved our objective of expanding our
portfolio through our interest in Nanogenics which brings us a clear path for
taking a product to market and the potential for orphan drug designation.
"Our IP position has strengthened and we believe we are closer than ever
before to agreeing a collaboration which would see Nuvec® being applied to
other technologies with a view to co-marketing the resultant technology to big
pharma and I look forward to making further announcements on this in the near
future.
"We continue to manage our cash position tightly and look forward to the rest
of 2024 with great optimism."
Enquiries:
N4 Pharma plc
Nigel Theobald, CEO Via N4 Pharma Investor Hub
Luke Cairns, Executive Director
Engage with us directly at N4 Pharma Investor Hub Sign up at investors.n4pharma.com (https://investors.n4pharma.com/)
To hear more, visit https://investors.n4pharma.com/link/DP429e
(https://investors.n4pharma.com/link/DP429e)
SP Angel Corporate Finance LLP Tel: +44(0)20 3470 0470
Nominated Adviser and Joint Broker
Matthew Johnson/Caroline Rowe/ Kasia Brzozowska (Corporate Finance)
Vadim Alexandre/Rob Rees (Corporate Broking)
Turner Pope Investments (TPI) Limited Tel: +44(0)20 3657 0050
Joint Broker
Andy Thacker
James Pope
About N4 Pharma
N4 Pharma is a specialist pharmaceutical company developing a novel delivery
system for oncology, gene therapy and vaccines using its unique silica
nanoparticle delivery system called Nuvec®.
N4 Pharma's business model is to partner with companies developing novel
antigens in these fields to use Nuvec® as the delivery vehicle for these
antigens. As these products progress through pre‐clinical and clinical
programs, N4 Pharma will seek to receive upfront payments, milestone payments
and ultimately royalty payments once products reach the market.
For further information on the Company visit www.n4pharma.com or sign up at
investors.n4pharma.com.
Chairman's Report
N4 Pharma Plc ("N4 Pharma" or the "Company"), is the Parent Company for N4
Pharma UK Limited ("N4 UK") and Nanogenics Limited ("Nanogenics"), 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, gene therapy and vaccines.
Nanogenics is a specialist pharmaceutical company engaged in the development
of a Liptide@ platform to deliver a proprietary siRNA sequence to silence a
fibrotic gene for the treatment of glaucoma.
Review of operations for the financial year ended 31 December 2023
During the year to 31 December 2023 £1,953 of revenue was generated by the
Group (31 December 2022: £nil).
The operating loss for the year increased to £1,276,778 (31 December 2022:
£1,029,261 loss). Expenditure was broadly in line with budget and increased
compared to prior year as more work was undertaken on in vivo vaccine and
oncology studies in 2023.
Cash at the year-end was £1,027,112 (31 December 2022: £1,919,529) having
raised £350,000 towards the end of 2023 primarily to fund the investment into
Nanogenics. Our cash position remains sufficient to continue our current work
streams albeit further funds may be required to expand our activities as set
our further in the Directors' Report.
Section 172 Disclosures
In discharging their duties, the Directors of the Group give due regard to
their duties to promote the success of the Group under Section 172(1) of the
Companies Act 2006.
Given the size and nature of the Group all key decisions in the promotion of
the success of the Group are taken at board level with delegation to the
Executive Directors for the execution of such decisions.
All actions and decisions taken are in good faith with the long-term success
of the Group in mind and in doing so the Directors have considered (amongst
other matters):
n the likely consequences of any decision in the long term - all key decisions
are taken at board level and are focussed on what is required to achieve
commerciality for the Group's core projects, Nuvec® and ECP105, the glaucoma
product being developed by Nanogenics;
n the interests of the Group's employees - save for the Directors, the Company
has no other employees. The interests of the Directors are very much aligned
with the success of the Group and Company;
n the need to foster the Group's business relationships with suppliers,
customers and others - the Group is reliant on third party providers such as
clinical research organisations ("CROs") to progress the business and
maintains good work relationships with all its counterparties;
n the impact of the Group's operations on the community and the environment -
all CROs are required to adhere to strict ethical standards particularly in
the use of animals in studies;
n the desirability of the Group maintaining a reputation for high standards of
business conduct; and
n the need to act fairly between stakeholders of the Group.
Where or to the extent that the purposes of the Group consist of or include
purposes other than the benefit of its members, subsection (1) has effect as
if the reference to promoting the success of the Group for the benefit of its
members were to achieve those purposes.
The duty imposed by this section has effect subject to any enactment or rule
of law requiring Directors, in certain circumstances, to consider or act in
the interests of creditors of the Group.
Key Operational Events and Opportunities
The Company has continued to add further pre-clinical proof of concept data to
the significant data accumulated in the prior periods in respect of the
potential for the use of Nuvec®. For 2023, the Company's focus for Nuvec®
was threefold:
· to expand its knowledge around Nuvec® in oncology and gene
therapy using siRNA to silence genes;
· to continue to investigate the oral delivery of Nuvec® to the
intestine; and
· to further investigate the use of Nuvec® to improve the
performance of viral vectors.
In parallel to this ongoing work, we continued to explore potential
collaborations to find appropriate partners with whom to develop Nuvec® in a
way that could lead to it being marketed to pharma companies with
commercialisation in mind. As stated previously, the Company has always been
open to adding further, complimentary assets and this was achieved through
investment resulting in a controlling stake in Nanogenics.
siRNA
The Company is focusing its research on the ability of Nuvec® nanoparticles
to be loaded with, and deliver at the same time, two different siRNA known to
inhibit relevant oncology targets. This is cutting edge research in the use
of nanoparticles as delivery systems in oncology and consequently the Company
is proceeding carefully to ensure that it gains the maximum understanding of
the cellular processes involved.
Through the use of multiple different siRNA constructs, the Company has
demonstrated that two separate siRNA molecules can be loaded onto Nuvec®
without changing the size or charge of Nuvec®, both parameters being
essential for successful cellular uptake.
The initial work on cell growth involved investigating the combination of
inhibition of EGFR (epidermal growth factor receptor) and BCL-2: (B-cell
lymphoma 2) using PC-9 cancer cells. Each siRNA when separately loaded onto
Nuvec® achieved cell inhibition. The work identified that the expression
level of BCL-2 in PC9 cells was low even though cellular inhibition was
observed. The Company then began investigating alternative cellular pathways
that may be inhibited using siRNA loaded alongside EGFR. The first was BRD4
(Bromodomain-containing-protein 4) a target for which inhibitors are currently
being evaluated in clinical trials for the treatment of uveal melanoma,
leukemia and carcinoma. The second target was PLK1 (Polo Like Kinase 1),
inhibitors of which are in early clinical development for lymphoma and
pancreatic cancer.
As with the other siRNAs explored to date, Nuvec® can be loaded with the
individual siRNA, as above, and cause knockdown of the respective targets and
reduce cell viability in a dose-related manner.
Having confirmed dual loading of Nuvec®, the Company subsequently tested the
effect of both BRD4 combined with EGFR and PLK1 combined with EGFR on
knockdown and cell viability. Although individually both siRNA had
demonstrated the expected results of a dose-dependent inhibition of cell
growth and target knockdown, critically when loaded together there was a
synergistic effect which resulted in a reduction in knockdown of EGFR
receptor but importantly the reduction on cell viability was retained. These
findings give Nuvec® a unique position in using siRNA to treat oncology and
other diseases as multiple siRNA molecules can be loaded onto Nuvec® and
different cellular pathways inhibited at the same time, a hugely useful tool
for combination therapy treatments.
Oncology Strategy
It is likely that the precise combinations of siRNA, both in terms of target
and concentration of siRNA, will vary depending on which cell type they are
tested in. Both these elements will be determined by the clinical outcome
desired.
Chemotherapy treatments for cancers are broad stroked and have very high
toxicity which has led to the emergence of alternative immuno-oncology
treatments. These have had remarkable success for some cancers but have
proved ineffective in curbing the progression of numerous cancers.
Single pathway treatments can have an initial effect but many see the post
treatment emergence of cancer cells that have developed "immune escape"
pathways leaving retreatment as futile.
Novel approaches to the treatment of cancer that do not rely on the immune
response, nor incur the general toxicity induced by chemotherapy or
radiotherapy, but rather rely on targeting the well-known growth factor
pathways spurring tumour growth are key to addressing the shortfalls of
immunotherapeutic and chemotherapeutic approaches. Although some monoclonal
antibody treatments (mAbs) do target tumour growth dependent pathways, they
have highly significant off-target effects, must be dosed repeatedly, can be
immunogenic, and target only one pathway at a time, allowing for emergence of
tumour populations that proliferate by other growth pathways. None have been
curative.
The work the Company is doing shows that Nuvec® can bind not only single, but
multiple siRNAs aimed at simultaneously targeting identified pathways
responsible for cancer progression after initial treatments. Knocking down
both (or more) pathways will give a greater chance that tumours will not
develop resistance, escape and again proliferate by the emergence of a
significant alternative growth pathway, which is common in treatments blocking
just one growth factor pathway.
Oral Studies at the University of Queensland ("UQ")
During the period UQ has, utilising the grant funding obtained by N4 Pharma
and the Australian Research Council, made considerable progress in the
longer-term study on oral applications for Nuvec®. We have demonstrated via
in vivo pre-clinical studies that an enterically-coated capsule containing
Nuvec® loaded with DNA encoding ovalbumin is able to pass through the lining
of the stomach to successfully transfect the upper intestine. Using a single
dose, ovalbumin expression was observed after 3 days. In a second study a
second capsule was administered on day 3 and a much higher sustained level of
expression was observed on days 4-7.
This work clearly shows that Nuvec® can be successfully used as an oral
delivery system with many potential applications such as a vaccine, a product
for gastrointestinal disorders (e.g. Inflammatory Bowel Disease, Ulcerative
Colitis etc) or to treat colon cancer among many possible examples.
As recently announced further studies at UQ show that administering capsules
on subsequent days can maintain the protein expression for even longer and
produce antibodies. The Company is in active discussions with UQ as to the
appropriate next steps and likely costings to maximise this opportunity.
Viral vectors
Viral vectors remain the go to delivery vehicle for use in gene therapy but
they remain fraught with problems, most notably they are expensive to make and
cause side effects due to their inflammatory nature.
The Company has taken a novel approach to how Nuvec® might initially be used
in this area. The Company has shown that Nuvec® can be combined with the
viral vector to significantly improve its efficiency. This could mean products
formulated with viral vectors could achieve their same efficacy but from a
reduced amount thereby significantly reducing the cost of manufacture and
potentially reducing the unwanted side effects from the viral vector.
Post the year end, The Company announced that it had also shown through its
research programme with the University of Brunel, that Nuvec® can deliver
increased transduction efficacy, when complexed with Adeno-Associated virus 8
("AAV8"). AAV8 was chosen for investigation as this virus is currently being
used for products already in clinical development.
The number of approvals of new gene therapies and the need for appropriate
delivery systems have reached unprecedented highs and demand is growing
exponentially. For in vivo gene therapy, the Adenovirus (AV) and
Adeno-Associated virus (AAV) are acknowledged as the most used delivery
vehicles. However relatively high amounts of AV and AAV are needed to be
clinically efficient and this appears directly correlated with adverse events
in patients such as unwanted immunogenicity and potential safety
implications. The incorporation of Nuvec® into the treatment protocol has
the potential to both increase efficacy and reduce side effects.
These three work streams are the focus of the Company in demonstrating both
the viability and the flexibility of Nuvec® as a unique delivery system in
this space. It remains a key priority for the Company to present this data to
third parties developing novel products in this space with a view to licensing
Nuvec® to use as part of their developments.
Collaborations
The Company is at advanced stages of finalising a collaboration with an
independent global leader in R&D based in the US which, on the back of
successful initial studies utilising our combined technologies, would lead to
a co-marketing agreement to allow both parties to promote the resultant
combined technology. We anticipate being able to make a further announcement
on this in the coming weeks.
Additional Assets
We have been investigating potential assets to add to the Company for some
time and after seeing a number of opportunities, we were delighted to take a
controlling stake in Nanogenics in September 2023. The RNA sector is an
exciting one with a lot of investor and commercial interest. The addition of
the Liptide® delivery system and siRNA sequence adds significant potential
value to our business. As well as glaucoma, the MRTF-B gene is also
responsible for fibrosis of the liver and lung, two large areas into which
Nanogenics could develop its portfolio.
Non-viral, non-lipid delivery systems are high in demand in the gene therapy
space and we now have two such delivery systems and expect considerable
technical synergies in developing programmes using both Nuvec® and Liptide®.
Since the investment Nanogenics has been working with the University of
Strathclyde on the formulation to take into in vivo studies with Kings College
London. These studies are expected to commence in May 2024. In parallel we
have been looking into the preparatory work required to undertake safety and
toxicology testing and move into clinical trials, achieving pre-IND approval
from the FDA and what is required to obtain orphan designation for the product
which, if achieved, would potentially give 7 years exclusivity to market our
product upon FDA approval which, in itself, would be hugely value enhancing.
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").
2023 now sees this technology having patents granted in Europe, Australia,
Japan, China and the US and post year end the patent was also granted in
India.
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
As the Company looks forward, we are consolidating our efforts on Nuvec® and
actively seeking commercial solutions for the product. Future development of
the product as a drug delivery vehicle requires significant capital so we are
seeking a suitable partner to work with us to deliver Nuvec@'s potential.
Through the investment in Nanogenics, the Company has an additional exciting
development candidate and we will be looking to progress this opportunity
towards clinical trials as quickly as possible.
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
Chris Britten
Chairman
22 April 2024
N4 Pharma Plc
Consolidated Statement of Comprehensive Income for the year ended 31 December
2023
Notes 2023 2022
£ £
Revenue 1,953 -
Gross Profit 1,953 -
(619,392) (577,525)
Research and development costs
(717,980) (615,735)
General and administration costs
Costs of purchase of investments 15 (89,175) -
(1,424,594) (1,193,260)
Operating loss for the year
- 1
Net finance income 4
(1,424,594) (1,193,259)
Loss for the year before tax 5
147,816 163,998
Taxation 6
(1,276,778) (1,029,261)
Loss for the year after tax
Other comprehensive income net of tax - -
Total comprehensive loss for the year (1,276,778) (1,029,261)
Total comprehensive loss for the year is attributable to:
Equity owners of N4 Pharma Plc (1,269,331) (1,029,261)
NCI (7,447) -
(1,276,778) (1,029,261)
Loss per share attributable to owners of the parent 12
Weighted average number of shares:
Basic 242,889,938 186,422,541
Diluted 242,889,938 186,422,541
Basic loss per share (0.52) (0.55)
(0.52) (0.55)
Diluted loss per share
All results were derived from continuing operations.
The notes are an integral part of the Consolidated Financial Statements
N4 Pharma Plc
Consolidated Statement of Financial Position as at 31 December 2023
Notes 2023 2022
£ £
Assets
Non-current assets
Goodwill 15 61,210 -
61,210 -
Current assets
Trade and other receivables 8 187,045 246,518
Cash and cash equivalents 1,027,112 1,919,529
1,214,157 2,166,047
Total assets 1,275,367 2,166,047
Liabilities
Current liabilities
Trade and other payables 9 (26,224) (40,722)
Accruals and deferred income (55,502) (37,167)
Total liabilities (81,726) (77,889)
Net current assets 1,132,431 2,088,158
Total assets less current liabilities 1,203,080 2,088,158
Net assets 1,193,641 2,088,158
Equity
Share capital 11 9,345,946 9,205,946
Share premium 11 14,874,469 14,698,569
Share option reserve 11 107,385 103,954
Reverse acquisition reserve 11 (14,138,244) (14,138,244)
Merger reserve 11 279,347 279,347
Retained earnings 11 (9,341,267) (8,061,414)
Non Controlling interest 16 66,005 -
Total equity 1,193,641 2,088,158
The Consolidated Financial Statements were approved by the Board of Directors
on ________ 2024 and signed on its behalf:
Nigel Theobald
N4 Pharma Plc
Company Statement of Financial Position as at 31 December 2023
Notes 2023 2022
£ £
Assets
Non-current assets
Investments 7 478,843 1,094,747
Intercompany loan receivable 14 - 5,659,000
478,843 6,753,747
Current assets
Trade and other receivables 8 20,625 992,325
Cash and cash equivalents 697,850 1,761,330
718,475 2,753,655
Total assets 1,197,318 9,507,402
Liabilities
Current liabilities
Trade and other payables 9 (2,146) (13,381)
Accruals and deferred income (38,835) (20,465)
Total liabilities (40,981) (33,846)
Total assets less current liabilities 1,156,337 9,473,556
Net assets 1,156,337 9,473,556
Equity
Share capital 11 9,345,946 9,205,946
Share premium 11 14,874,469 14,698,569
Share option reserve 11 107,385 103,954
Merger reserve 11 279,347 279,347
Retained earnings 11 (23,450,810) (14,814,260)
Total equity 1,156,337 9,473,556
The Company recorded a loss of £8,636,650 for the year (31 December 2022:
£7,226 loss) primarily attributable to impairment of the intra company loan
and investment as set out in the Company Statement of Cash Flows for the year
ended 31 December 2023. The policy on impairment is dealt with in 1.14 of the
Accounting Policies.
The Company Financial Statements were approved by the Board of Directors on 7
March 2024 and signed on its behalf:
Nigel Theobald
N4 Pharma Plc
Consolidated Statement of Changes in Equity for the year ended 31 December
2023
(i) Year ended 31 December 2023 Share capital Share premium Share option reserve Reverse acquisition reserve Merger reserve Retained earnings Non-controlling Interest Total equity
£ £ £ £ £ £ £ £
Balance at 1 January 2023 9,205,946 14,698,569 103,954 (14,138,244) 279,347 (8,061,414) - 2,088,158
Non-controlling interest on acquisition of subsidiary - - - - - - 62,930 62,930
Shares in subsidiary issued to NCI - - - - - (10,522) 10,522 -
Total comprehensive loss for the year - - - - - (1,269,331) (7,447) (1,276,778)
Share issue 140,000 210,000 - - - - - 350,000
Share issue costs - (34,100) - - - - - (34,100)
Share based payment charge - - 3,431 - - - - 3,431
9,345,946 14,874,469 107,385 (14,138,244) 279,347 (9,341,267) 66,005 1,193,641
At 31 December 2023
(ii) Year ended 31 December 2022 Share capital Share premium Share option reserve Reverse acquisition reserve Merger reserve Retained earnings Non-controlling Interest 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
At 31 December 2022 9,205,946 14,698,569 103,954 (14,138,244) 279,347 (8,061,414) - 2,088,158
N4 Pharma Plc
Company Statement of Changes in Equity for the year ended 31 December 2023
(i) Year ended 31 December 2023 Share capital Share Share option reserve Merger reserve Retained earnings Total equity
premium
£ £ £ £ £ £
Balance at 1 January 2023 9,205,946 14,698,569 103,954 279,347 (14,814,260) 9,473,556
Total comprehensive loss for the year - - - - (8,636,550) (8,636,550)
Share issue 140,000 210,000 - - - 350,000
Share issue costs - (34,100) - - - (34,100)
Share based payment charge - - 3,431 - - 3,431
9,345,946 14,874,469 107,385 279,347 (23,450,810) 1,156,337
At 31 December 2023
(ii) 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 - - - 1,054,000
Share issue costs - (90,233) - - - (90,233)
Share based payment charge - - 23,999 - - 23,999
9,205,946 14,698,569 103,954 279,347 (14,814,260) 9,473,556
At 31 December 2022
N4 Pharma Plc
Consolidated Statement of Cash Flows for the year ended 31 December 2023
2023 2022
Notes £ £
Operating activities
(1,276,778) (1,029,261)
Loss after tax
Finance expenditure and other income - (1)
Share based payment charge 3,431 23,999
Taxation credit (147,816) (163,998)
Operating loss before changes in working capital (1,421,163) (1,169,261)
Movements in working capital:
Decrease/(increase) in trade and other receivables 44,230 (37,312)
Increase/decrease in trade, other payables and accruals 3,838 (134,841)
Cash used in operations (1,373,095) (1,341,414)
Taxation credit received 163,997 513,151
Net cash flows used in operating activities (1,209,098) (828,263)
Investing activities
Net cash on acquisition of Subsidiary 781 -
Net cash flows from investing activities 781 -
Financing activities
Finance expenditure and other income - 1
Proceeds of ordinary share issue 350,000 1,054,000
Costs of share issue (34,100) (90,233)
Net cash flows from financing activities 315,900 963,768
Net (decrease)/increase in cash and cash equivalents (892,417) 135,505
Cash and cash equivalents at beginning of the year 1,919,529 1,784,024
Cash and cash equivalents at year end 1,027,112 1,919,529
N4 Pharma Plc
Company Statement of Cash Flows for the year ended 31 December 2023
2023 2022
£ £
Operating activities
(8,636,650) (7,226)
Loss before tax
Interest (305,416) (271,772)
Share based payment charge 3,431 23,999
Impairment of investment 866,004 -
Impairment of Loan 6,459,000 -
Operating loss before changes in working capital (1,613,631) (254,999)
Movements in working capital:
Decrease/(increase) in trade and other receivables 1,277,116 (91,440)
Increase in trade and other payables 7,135 5,387
Cash used in operations (329,380) (341,052)
Net cash flows used in operating activities (329,380) (341,052)
Investing activities
Acquisition of investment (250,000) -
Loan receivable advancements (800,000) (400,000)
(1,050,000) (400,000)
Net cash flows used in investing activities
Financing activities
Net proceeds of ordinary share issue 350,000 1,054,000
Costs of share issue (34,100) (90,233)
315,900 963,767
Net cash flows from financing activities
Net (decrease)/increase in cash and cash equivalents (1,063,480) 222,715
1,761,330 1,538,615
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at year end 697,850 1,761,330
N4 Pharma Plc
Notes to the Consolidated Financial Statements for the year ended 31 December
2023
1. Accounting policies
1.1 Reporting entity
N4 Pharma Plc (the "Company"), is the holding Company for N4 Pharma UK Limited
("N4 UK"), and Nanogenics Limited ("Nanogenics"), 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.
Nanogenics is a specialist pharmaceutical company engaged in the development
of a Liptide platform to deliver a proprietary siRNA sequence to silence a
fibrotic gene. 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 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
International Financial Reporting 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 Statement of Comprehensive Income.
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 Group currently has no source of operating cash inflows, other than
interest, grant income and license fees, and has incurred net operating cash
outflows before tax for the year ended 31 December 2023 of £1,209,098 (2022:
£828,263 outflow). At 31 December 2023, the Group had cash balances of
£1,027,112 (2022: £1,919,529) and a surplus in net working capital (current
assets, including cash, less current liabilities) of £1,132,430 (2022:
£2,088,158).
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.
1
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.
Notwithstanding such different scenarios and mitigation options available to
the Board it is highly probable that, in the absence of a commercial deal
bringing in immediate revenue, further funding will need to be raised from
third parties prior to the year-end in order for the Company to meaningfully
fund operations and continue as a going concern. At this point in time the
Board plans to raise funds against delivery of further milestones and to fund
specific, value enhancing studies ideally in collaboration with partners with
the ability to then commercialise the outcomes of such studies. Any
fundraising will be done on the advice of its professional advisers and in
such a way as to minimise dilution taking into account the prevailing market
conditions and the share price at the time. Any such fundraising would also
rely on shareholders authorising the Board to issue such shares as it deemed
appropriate in order to raise sufficient funds for the Group.
Whilst the Board remains confident that necessary funds will be available as
and when required, as at the date of this report the future funding
requirements are not secured and, accordingly, there is material uncertainty
that casts doubt over the Group's ability to continue as a going concern.
Whilst the financial statements have been prepared on a going concern basis
they do not include the adjustments that would result if the Group was unable
to continue as a going concern.
1.4 Basis of consolidation
The consolidated Group financial statements consist of the financial
statements of the Company together with the entities controlled by the parent
company (its subsidiaries), N4 UK and Nanogenics.
The financial statements for N4 UK are made up to 31 December 2023. Nanogenics
prepares individual financial statements to 31 May 2023. These consolidated
financial statements for N4 Pharma include the results of Nanogenics from the
date of acquisition to 31 December 2023 based on interim management accounts.
Where necessary, adjustments are made to the financial statements of N4 UK and
Nanogenics 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. Nanogenics was
acquired by the Company on 27 September 2023.
1.5 Revenue
The Group recognises revenue based on the consideration specified in a
contract with a customer and excludes amounts collected on behalf of third
parties. The Group follows a 5 steps process in recognising revenue:
1. Identifying the contract with a customer.
2. Identifying the performance obligations.
3. Determining the transaction price.
4. Allocating the transaction price to the performance obligations.
5. Recognising revenue when/as performance obligation(s) are satisfied.
Revenue is recognised over time, when (or as) the Group satisfies the
performance obligations by transferring the promised services to its
customers.
If the Group satisfies a performance obligation before it received the
consideration, the Group recognises either a contract asset or a receivable in
its Consolidation Statement of Financial Position.
The Group generates license fees for the licencing of its products. Fee income
is recognised on the accruals basis.
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® and its
liptide platform called ECP105.
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. Accounting policies
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 2023 but have not had a material effect on
this Consolidated Financial Information:
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 1 January 2023
from
a
single transaction
All new standards and amendments to standards and interpretations effective
for annual periods beginning on or after 1 January 2023 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 IFRS Leases on sale and leaseback 1 January 2024
Amendments to IAS 1 Non-current liabilities with covenants 1 January 2024
Amendments to IAS 7 Supplier finance 1 January 2024
and IFRS 7
At the date of authorisation of these financial statements, the following
standards and interpretations relevant to the Group and which have not been
applied in these financial statements, have not been endorsed for use in the
UK and will not be adopted until such time as endorsement is confirmed.
Standard Effective date
Amendments to IAS 21 Lack of Exchangeability 1 January 2025
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 2023.
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 consider that there are indicators of impairment in
respect of these balances. This is a significant judgement.
1. 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® and ECP105. 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.
1. Employees and directors
The average monthly number of employees during the year was 5 (2022: 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.
2023 2022
£ £
Wages and Salaries 214,000 213,333
Social security costs 17,778 17,562
231,778 230,895
4. Net finance income and (expenditure)
2023 2022
£ £
Interest received on financial assets measured at amortised cost
- 1
5. Loss before tax
2023 2022
£ £
Loss before taxation is arrived after charging:
Fees payable to the Group's auditors for the audit 26,985 28,640
of the Group's Consolidated Financial Statements
Fee payable for audit of subsidiaries 10,015 5,940
6. Taxation
2023 2022
£ £
Current tax
Research and development tax credit receivable for the current period (147,816) (163,998)
Adjustments in respect of prior periods - -
(147,816) (163,998)
Deferred tax
Origination and reversal of temporary differences - -
Tax in Statement of Comprehensive Income (147,816) (163,998)
The tax charge for the year can be reconciled to the loss in the Consolidated
Statement of Comprehensive Income as follows:
2023 2022
£ £
Loss before taxation (1,276,778) (1,029,261)
Tax at the UK corporation tax rate of 25% (2022: 19%) (319,195) (195,560)
Net Research and development tax credits (147,816) (163,998)
Changes in unrecognised deferred tax 319,195 195,560
Adjustments in respect of prior periods - -
Tax charge for the year (147,816) (163,998)
At the year end the Group had trading losses carried forward of £11,357,986
(2022: £9,969,504) 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 subsidiaries
Company
2023 2022
Cost £ £
Balance at 1 January 1,094,747 1,094,747
Impairment of investment in subsidiary (866,004) -
Investment in Nanogenics Limited 250,000 -
Balance at 31 December 478,843 1,094,747
The Directors have considered the carrying amount for the investment in N4 UK
and decided to impair this to £228,743 in accordance with the accounting
policies.
In 2023 the Company acquired 75% (subsequently diluted to 70.82% following the
issuance of management shares) of the issued shares of Nanogenics Limited. The
information related to this acquisition is stated in the note 15.
Details of the Company's subsidiaries at 31 December 2023 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%
Nanogenics Limited 6th Floor 60 Gracechurch Street, London, United Kingdom, EC3V 0HR Research and experimental development on biotechnology 70.82%
8. Trade and other receivables
Group Group Company Company
2023 2022 2023 2022
£ £ £ £
Prepayments 10,613 36,888 9,916 36,029
VAT due 24,972 18,632 10,709 13,352
R&D tax credits receivable 147,816 163,998 - -
Interest receivable - - - 883,610
Other debtors 3,644 27,000 - 59,334
187,045 246,518 20,625 992,325
Loan interest receivable relates to the intra-group loan disclosed in Note 14.
9. Trade and other payables
Group Group Company Company
2023 2022 2023 2022
£ £ £ £
Trade payables 20,202 35,756 961 12,196
Other payables 6,022 4,966 1,185 1,185
26,224 40,722 2,146 13,381
10. Share-based payments
Options
The Company has the ability to issue options to Directors to compensate them
for services rendered and incentivize 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 behavioural considerations.
As at 31 December 2023, there were 7,046,513 (2022: 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 2023 was 3.93 years (2022: 4.93 years).
Weighted average exercise price of options outstanding as at 01 January 2023
and as at 31 December 2023 was £0.05 (as at 01 January 2022 and as at 31
December 2022: £0.05).
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 £3,431 has been recognised in the Consolidated Statement of
Comprehensive Income and in the Share Option Reserve in relation to the share
options (2022: £12,006).
The aggregate fair value of the share options in issue was £95,391 (2022
£91,961), with amounts recorded at each reporting date being as follows:
2023 2022
£ £
2015 Options 18,492 18,492
2017 Options 26,884 26,884
2019 Options 22,793 22,793
2020 Options 27,222 23,792
95,391 91,961
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 was recognised in the year ended 31 December 2022 in the
Share Premium and in the Share Option Reserve in relation to the warrants.
There was no amount in the year ended 31 December 2023 in the Share Premium
and in the Share Option Reserve in relation to the warrants.
11. Capital and reserves
Issued, allotted and fully paid 2023 2022
£ £
268,780,349 Ordinary Shares of 0.4p each (2022: 233,780,349) 1,075,121 935,121
137,674,431 Deferred Shares of 4p each (2022: 137,674,431) 5,506,977 5,506,977
279,176,540 Deferred Shares of 0.99p each (2022: 279,176,540) 2,763,848 2,763,848
9,345,946 9,205,946
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 2023 totalled 334,682,497
(2022:334,682,497).
During the year 35,000,000 new ordinary shares of 0.4p each were issued
through a placing in September 2023 at a share price of 1p 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 to date.
12. Earnings per share
The calculation of basic loss per share at 31 December 2023 was based on the
loss of £1,269,331 (2022: £1,029,261), and a weighted average number of
ordinary shares outstanding of 242,889,938 (2022: 186,422,541), calculated as
follows:
2023 2022
£ £
Losses attributable to ordinary shareholders (1,269,331) (1,029,261)
Weighted average number of ordinary shares
Issued ordinary shares at 1 January 233,780,349 181,080,349
Effect of shares issued during the year 9,109,589 5,342,192
242,889,938 186,422,541
Weighted average number of shares at 31 December
2023 pence per share
2022 pence per share
Basic loss per share (0.52) (0.55)
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 which could be bought for less than
a market price. The calculation of diluted loss per share at 31 December 2023
was based on the loss of £1,269,331 (31 December 2022: £1,029,261), and a
weighted average number of ordinary shares outstanding of 242,889,938 (2022:
186,422,541).
2023 pence per share 2022 pence per share
Diluted loss per share (0.52) (0.55)
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 by S&P at least A-2.
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 £1,214,157 (2022: £2,166,047), 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 2023
Trade and other payables 25,024 25,024 25,024 - -
31 December 2022
Trade and other payables 40,722 40,722 40,722 - -
Company:
Financial liabilities Carrying amount Contractual cash flows 6 months or less 6-12 months 1 -2 years
£ £ £ £ £
31 December 2023
Trade and other payables 2,146 2,146 2,146 - -
31 December 2022
Trade and other payables 13,381 13,381 13,381 - -
(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: 2023
£
2022
£
Variable rate instruments
Cash and cash equivalents 1,027,112 1,919,529
Carrying amount
Company: 2023
£
2022
£
Variable rate instruments
Cash and cash equivalents 697,850 1,761,330
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 A-2 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 2022.
Group: 2023 2022
Profit or loss Profit or loss
100 bp increase 100 bp decrease 100 bp increase 100 bp decrease
Variable rate instruments 10,271 (10,271) 19,195 (19,195)
Company: 2023 2022
Profit or loss Profit or loss
100 bp increase 100 bp decrease 100 bp increase 100 bp decrease
Variable rate instruments 6,979 (6,979) 17,613 (17,613)
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.
2023 2022
£ £
Short-term employee benefits 231,778 230,895
Share based payments 3,431 12,006
235,209 242,901
Directors' remuneration and interests
The below remuneration relates to the Directors of the Group.
2023 Remuneration Interests
Cash-based payments Share-based payments Shares Options
Director Totals
£ £ £ No. No.
Nigel Theobald (Chief Executive Officer) 82,500 - 82,500 16,981,319 -
David Templeton 49,500 1,715 51,215 - 1,434,286
Luke Cairns 44,000 1,716 45,716 142,857 2,109,588
Christopher Britten 24,000 - 24,000 - 717,143
John Chiplin (resigned on 1 August 2023) 14,000 - 14,000 - 717,143
214,000 3,431 217,431 17,124,176 4,978,160
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 (resigned on 1 August 2023) 24,000 1,466 25,466 - 717,143
213,333 12,006 225,339 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 (2022: 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
2023 of £6,459,000 (2022: £5,659,000). It is repayable in December 2025,
accrues interest at a rate of 5% and is unsecured.
The Directors have considered the carrying amount for the loan to subsidiary
and decided to impair this loan together with the accrued interest balance to
£nil in accordance with the accounting policies.
There are no further related parties identified. There is no ultimate controlling party of the Company or Group.
15. Interests in other entities
The Group's principal subsidiaries at 31 December 2023 are set out below.
Unless otherwise stated, they have share capital consisting solely of ordinary
shares that are held directly by the Group, and the proportion of ownership
interests held equals the voting rights held by the Group. The country of
incorporation or registration is also their principal place of business.
Name of entity Place of business/country of incorporation Ownership interest held by the group Ownership interest held by non-controlling interests Principal activities
2023 2022 2023 2022
% % % %
Nanogenics Limited UK 70.82 - 29.18 - Research and experimental development on biotechnology
N4 Pharma UK Limited UK 100 100 - - Delivery of vaccines and therapeutics
On 27 September 2023 the Company acquired 75% of the issued shares of
Nanogenics Limited. The fair value of assets and liabilities acquired were
equal to the net book value therefore no fair value adjustments are required.
In connection with the subsequent issue of shares the Company's ownership
interest was reduced to 70.82%.
Below is a financial information for Nanogenics and calculation of
Non-controlling interest and Goodwill on acquisition date 27 September
2023.
£
Current
assets
252,470
Current
liabilities
(750)
Net
assets
251,720
Consideration
paid
(250,000)
Non-Controlling Interest, 25% of Net
assets
(62,930)
Goodwill
61,210
The Goodwill represents the knowledge of ECP105.
Below is the information about the costs incurred that related to the
investment in Nanogenics.
£
Broker commission 21,000
Advisory fee 12,500
Settlement fees 600
Survey of designated patent rights 8,075
Exclusivity payment 25,000
Legal services 22,000
89,175
Nanogenics is exempt from audit under s479a of the companies act (parental
guarantee).
16. Non-controlling interest
Below is financial information for Nanogenics given that it has
non-controlling interest that is material to the group. The amounts disclosed
are before inter-company eliminations and relate to results after 27 September
2023.
Statement of Financial Position 2023 2022
£ £
Current Assets 239,833 -
Current liabilities (13,633) -
Current Net assets 226,200 -
Accumulated NCI 66,005 -
Statements of Comprehensive Income 2023 2022
£ £
Revenue 1,953 -
Expenses (27,475) -
Loss for the period (25,522) -
Loss allocated to NCI (7,447) -
17. 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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