REG - N4 Pharma PLC - Interim Results
29/09/2022 07:01
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RNS Number : 0516B N4 Pharma PLC 29 September 2022
29 September 2022
N4 Pharma Plc
("N4 Pharma" or the "Company")
Interim Results
N4 Pharma Plc (AIM: N4P), the specialist pharmaceutical company developing
Nuvec®, a novel delivery system for vaccines and cancer treatments, announces
its unaudited interim results for the six months ended 30 June 2022.
Highlights:
· Exciting opportunities identified for progression into phase 1 clinical trials
in oncology and siRNA delivery.
· Studies conducted with Nanomerics to evaluate the potential of Nuvec® as a
nano-carrier of a DNA plasmid expressing TNFalpha ("TNF"), a cytokine with
immune-modulating properties against tumours, demonstrated a significant
inhibition of tumour growth derived from a human cell line.
· Positive preliminary results from ongoing oral studies undertaken at the
University of Queensland showing Nuvec® delivered orally has transfected
cells in the small intestine.
· Nuvec® patents granted in the US and China. Company now has strong IP
protection in key territories around the world.
· Reduced operating loss for the period £750,102 (30 June 2021: £973,216) and
R&D and general expenditure in line with budget.
· Cash position remains strong which at 30 June 2022 was £1,579,948 (31
December 2021: £1,784,024), again in line with budget.
Nigel Theobald, Chief Executive Officer of N4 Pharma Plc, commented:
"We have continued to make excellent progress in the period and have refined
our focus in line with changing market conditions to provide us with the best
opportunities to progress Nuvec® into the clinic. Cash expenditure has been
tightly controlled to allow us to maximise outcomes whilst preserving our cash
resource as far as possible. I look forward with optimism to the excellent
progress we have made continuing throughout the remainder of the financial
year."
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 which has been incorporated into UK law by the European
Union (Withdrawal) Act 2018. Upon the publication of this announcement via
Regulatory Information Service, this inside information is now considered to
be in the public domain.
Enquiries:
N4 Pharma Plc Via IFC Advisory
Nigel Theobald, CEO
Luke Cairns, Executive Director
SP Angel Corporate Finance LLP Tel: +44 (0)20 3470 0470
Nominated Adviser and Joint Broker
Matthew Johnson/Caroline Rowe (Corporate Finance)
Vadim Alexandre/Rob Rees (Corporate Broking)
Turner Pope Investments (TPI) Limited Tel: +44 (0)20 3657 0050
Joint Broker
Andy Thacker
IFC Advisory Limited 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 vaccines and cancer treatments using its unique silica nanoparticle
delivery system called Nuvec®.
N4 Pharma's business model is to partner with companies developing novel
antigens for vaccines and cancer 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 pre clinical and
clinical programs, N4 Pharma will seek to receive upfront payments, milestone
payments and ultimately royalty payments once products reach the market.
Chairman's Statement
Half year results
I am pleased to report that in the six months ended 30 June 2022, the
operating loss for the period was £750,102 (30 June 2021: £973,216) and in
line with planned expenditure.
Our cash balance at 30 June 2022 was £1,579,948 (31 December 2021:
£1,784,024), again in line with budget.
Operational update
Following the significant data accumulated in the preceding periods in respect
of the potential for the use of Nuvec® in DNA vaccines, the Company's focus
for 2022 was fourfold:
· to expand its knowledge around Nuvec® in oncology and gene
therapy;
· to undertake more substantive studies into the potential of
Nuvec® loaded with SiRNA;
· to support the University of Queensland in its oral studies using
Nuvec®;
· Ongoing work under the Material Transfer Agreement ("MTA").
Market Background
The market for vaccine development has shown considerable change over the last
few years, mainly due to the arrival of Covid 19 and the rapid acceleration
into the market of vaccines, including novel mRNA vaccines to treat this
disease. The speed of development and approval was unsurpassed by any other
area and, as a consequence, companies chose to use their existing delivery
systems, albeit with some potential issues and side effects, but the need for
rapid vaccine development offset any such concerns. This meant that novel
technologies like Nuvec®, which have huge potential in this space, found it
hard to get into development pipelines alongside existing systems.
On top of this, covid vaccine development attracted much of the available
funding in this space and many companies which had initiated very expensive
development programmes found these programmes were no longer needed as the
established two or three vaccines dominated this space, leaving little room
for other products.
This has led to one of the most challenging periods in biotech development for
most companies, with many now looking to reassess how they are best placed in
this new environment.
Whilst the Company has been impacted by this rapidly changing environment, the
versatility of our Nuvec® delivery system still leaves us very well placed as
major biotechs reassess their plans and switch to develop novel RNA products
both for vaccines and importantly cancer and gene therapy.
Having done a lot of proof of concept work showing antibody production using
Nuvec® and how Nuvec® can be formulated to produce a monodisperse
formulation it became clear that the Company would not be able to get any
products into the clinic without a collaborative partner and the changing
focus of the major biotechs meant the Company needed to look at how Nuvec®
would work in areas these companies were now focusing on.
That said, the Company has not stopped its work in vaccines. The Company will
continue to look for MTA opportunities in this space as any product being
developed for a vaccine is going to need a lot of formulation development.
Because the Company cannot take relevant generic vaccines into the clinic
itself without significantly increased expenditure, we have decided to focus
our development work on oncology and siRNA delivery as these sectors have
proven clinical models the Company can access and also because Nuvec® can be
used to work with generic siRNA and plasmids capable of being used in phase 1
clinical trials.
There are over 300 companies working in this space with 106 clinical trials
already in place using siRNA. This focus has two clear advantages: the Company
has a wider audience and the number of compounds it can use to collaborate
with provide the opportunity to get into the clinic much more rapidly than if
we focus purely on vaccines.
The Company therefore decided to start working with intravenous injection
(which it could now do having solved how to produce a monodisperse
formulation) and to investigate both how it works as a tumour suppressant and
how it works in delivering siRNA.
We are very excited by the potential for this work.
Oncology work
The first part of 2022 saw the Company focus on an oncology work programme
with Medicines Discovery Catapult ("MDC") to follow up the successful studies
undertaken last year where Nuvec® was used as a nano-carrier of a DNA plasmid
expressing TNF which had demonstrated a significant inhibition of tumour
growth derived from a human cell line. Having established that Nuvec® could
deliver an appropriate biological load, the work at MDC was to help determine
the mechanism of action that produced the tumour suppression. Amongst other
things, it was to seek to identify whether the Nuvec® loaded with TNF was
directly taken up within the tumour or whether other organs took up the
Nuvec® and produced the TNF and then released it systemically to suppress the
tumour.
The result of the MDC study again showed clear tumour suppression with 10ug of
TNF loaded onto Nuvec® which, positively, was a lower dose than used in
previous studies. It also became clear that formulation is pivotal to every
study as the higher dose preparation was sub-optimal, due to some observed
agglomeration resulting in data unable to be obtained.
The Biochemical analysis of the 10ug arm of the study confirmed an increase in
circulating plasma TNF levels. It indicated that tissues including the liver
and the tumour cells may have been responsible for the transfection with the
TNF plasmid and subsequent release of TNF-alpha into the circulation to
suppress the tumour. The resulting data indicated that the most appropriate
use of Nuvec® in the oncology field will likely be to combine it with one or
more nucleic acids alongside a targeting ligand to allow specific cancer cells
to be targeted.
TNF was chosen as a proof of concept compound to show the ability of Nuvec®
to achieve tumour suppression and given this systemic response it means that
TNF itself would not be the best compound to do further work in this space yet
the successful tumour suppression seen using this has been excellent
validation of Nuvec® as an i.v. solution for oncology.
siRNA
Having historically evaluated the potential of Nuvec® to carry DNA and mRNA,
experiments in the period were undertaken to show that Nuvec® could also be
loaded with siRNA and maintain a colloidally stable formulation. Since period
end and as announced on 14 September 2022 the Company has shown the successful
loading of Nuvec® with two different generic siRNA probes, GFP (Green
Fluorescent protein) and EHMT-2 (Euchromatic Histone Lysine Methyltransferase
2) and both of which were shown to be easy to load and produce a monodisperse
formulation and successful in meeting their respective endpoints of silencing
the particular gene.
The Company has now completed initial testing on loading Nuvec® with both
these siRNA probes, GFP and EHMT-2 at the same time. Our next step will be to
test in vitro that the particle with combined siRNA is still able to meet both
their respective gene silencing endpoints, as previously demonstrated with
singular loading.
Following this work on TNF and initial siRNA compounds, the Company has
undertaken a review of where it believes it will likely get greatest traction
to allow a commercial license deal to be agreed.
After the development of successful mRNA vaccines as highlighted in the
'Market Background' section above, major companies in this space now appear to
be focusing future development on gene therapy treatments using, in
particular, siRNA to silence identified pathways involved in cancer. Given the
pre-clinical status of Nuvec® the Company believes that focusing its work on
loading more than one siRNA sequence onto the same nanoparticle will result in
silencing of complementary pathways leading to an increased therapeutic
response and establish a significant differential in this marketplace.
Having established the capability of Nuvec® to carry two siRNA simultaneously
and assuming the combination still provides a functional response, the Company
is undertaking a series of experiments over the coming months using two siRNA
sequences directed against known, and clinically validated, oncology targets.
Specifically, the targets are the EGFR signalling pathway, which regulates
cell cycle progression and BCl-2, which regulates apoptosis. Silencing of the
EGFR will inhibit cell division while silencing BCl-2 will promote apoptosis
and the potential for additive or synergistic effects will be explored.
Initial studies will be conducted in vitro using a PC9 lung cancer cell line
and this will be followed by in vivo studies in xenograft tumours of the same
cell line.
Successful completion of this work will give strong clinical validation for
using Nuvec® in this space and will be presented to collaboration partners
who have their own siRNA in early clinical development with a view to
licensing Nuvec®
The Company believes this is the most appropriate way to commercialise Nuvec®
Oral Studies at the University of Queensland ("UQ")
During the period UQ has, utilising the grant funding obtained by N4 Pharma
and UQ, pursued the longer term study on oral applications for Nuvec®. Early
results were promising with UQ successfully demonstrating via an in vivo
pre-clinical study that Nuvec® loaded with a red fluorescent protein
(mCherry) DNA and formulated and administered in capsules was able to
successfully transfect cells in the small intestine. Whilst this first study
was limited in scope this is a significant step in establishing how Nuvec®
could be delivered orally.
The next step in this work is for UQ to repeat the success of this in vivo
study which the Company understands will be undertaken soon.
MTA
As announced in the results for the year ended 31 December 2021, due to the
strict confidentiality around MTAs, we have decided to only announce further
MTAs when able to without restrictions of confidentiality or in respect of a
defined commercial agreement. With regard to the MTA previously announced,
work remains ongoing but the degree of progress is largely determined by our
partner's own R&D work and drug launches.
Going Forward
As outlined above, whilst we continue to seek partners to work with based on
the data accumulated to date utilising DNA plasmids with Nuvec® for oncology
and vaccines, the focus of our controllable R&D spend will be both on
siRNA loaded onto Nuvec® and building on the encouraging data obtained to
date. In the background, we are keeping a keen eye on developments at UQ with
the oral work, which could be hugely significant if successful. We also remain
open to acquiring additional assets.
Intellectual Property
In January of this year, we were pleased to announce that the UQ had informed
the Company that it had been notified by the US Patent Attorney of the
granting of its patent application in relation to Nuvec® in the United States
and that the Chinese authorities had granted a patent in China. The granting
of patents in these two large markets, together with those previously granted,
gives the Company strong intellectual property protection in key territories
around the world, a vital component for potential licensing deals.
Outlook and strategy
Our strategy remains unchanged - to generate sufficient proof of concept data
with a view to attracting large pharma and biotech partners to enter into
collaborations with us to explore using Nuvec® as their chosen delivery
system to get products into clinic. What is clear is that the formulation is
different for each plasmid and a critical path when working with any new
plasmids. The early results from our siRNA work is extremely encouraging and
if, as we hope, results continue to be positive, this would indicate that we
are significantly closer to a breakthrough point for Nuvec® in achieving
commerciality.
We have remained extremely prudent in our R&D and general expenditure.
There is almost unprecedented economic uncertainty at the moment which has
undoubtedly impacted our share price. Markets in general have been hit badly
and N4 Pharma has been no exception. Whilst, as a pre revenue business, it is
almost inevitable we will at some point need to access further funding be it
from grants, equity markets or other means, I want to assure shareholders that
we remain well funded, certainly for our medium term needs.
On behalf of the Board, I would like to thank all of our shareholders for
their continued support and look forward to providing further updates on our
progress.
John Chiplin
Chairman
29 September 2022
N4 Pharma Plc and its controlled entities
Condensed Consolidated Interim Statement of Comprehensive Income (unaudited)
for the six months ended 30 June 2022
Six months to 30 June 2022 Six months to 30 June 2021 Twelve months to 31 December 2021
(Unaudited) (Unaudited) (Audited)
£ £ £
Expenses
Research and development costs (411,417) (602,927) (1,179,425)
General and administration costs (338,019) (367,701) (663,865)
Operating loss for the period (749,436) (970,628) (1,843,290)
Finance (expenditure)/income (666) (2,588) 677
Loss for the period before tax (750,102) (973,216) (1,842,613)
Taxation - - 298,267
Loss for the period after tax (750,102) (973,216) (1,544,346)
Other comprehensive income net of tax - - -
Total comprehensive loss for the period attributable to equity owners of N4 (750,102) (973,216) (1,544,346)
Pharma Plc
Loss per share attributable to owners of the parent
Weighted average number of shares:
Basic 181,080,349 181,080,349 181,080,349
Diluted 181,080,349 184,137,774 181,080,349
Basic loss per share (0.41p) (0.54p) (0.85p)
Diluted loss per share (0.41p) (0.53p) (0.85p)
All activities derive from continuing operations.
The notes below form an integral part of these financial statements.
N4 Pharma Plc and its controlled entities
Condensed Consolidated Interim Statement of Financial Position (unaudited) for
the six months ended 30 June 2022
Notes 30 June 2022 30 June 2021 31 December 2021
(Unaudited) (Unaudited) (Audited)
£ £ £
Assets
Current assets
Trade and other receivables 27,804 273,097 558,359
Cash and cash equivalents 1,579,948 2,542,680 1,784,024
1,607,752 2,815,777 2,342,383
Total Assets 1,607,752 2,815,777 2,342,383
Liabilities
Current liabilities
Trade and other payables (158,157) (74,284) (184,820)
Accruals and deferred income (62,612) (49,043) (27,910)
Total assets less current liabilities 1,386,983 2,692,450 2,129,653
Net Assets 1,386,983 2,692,450 2,129,653
Equity
Share capital 4 8,995,146 8,995,146 8,995,146
Share premium 5 13,945,602 13,945,602 13,945,602
Share option reserve 6 87,387 71,622 79,955
Reverse acquisition reserve 5 (14,138,244) (14,138,244) (14,138,244)
Merger relief reserve 5 279,347 279,347 279,347
Retained earnings (7,782,255) (6,461,023) (7,032,153)
Total Equity 1,386,983 2,692,450
2,129,653
N4 Pharma Plc and its controlled entities
Condensed Consolidated Interim Statement of Changes in Equity (unaudited) for
the six months ended 30 June 2022
(i) Six months ended 30 June 2022 - Unaudited
Share Capital Share Premium Share Option Reserve Reverse Acquisition Reserve Merger Relief 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 period - - - - - (750,102) (750,102)
Share option reserve - - 7,432 - - - 7,432
At 30 June 2022 8,995,146 13,945,602 87,387 (14,138,244) 279,347 (7,782,255) 1,386,983
(ii) Six months ended 30 June 2021 - Unaudited
Share Capital Share Premium Share Option Reserve Reverse Acquisition Reserve Merger Relief 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 period - - - - - (973,216) (973,216)
Share option reserve - - 8,332 - - - 8,332
At 30 June 2021 8,995,146 13,945,602 71,622 (14,138,244) 279,347 (6,461,023) 2,692,450
N4 Pharma Plc and its controlled entities
Condensed Consolidated Interim Statement of Changes in Equity (unaudited) for
the six months ended 30 June 2022 (continued)
(iii) Twelve months ended 31 December 2021 - Audited
Share Capital Share Premium Share Option Reserve Reverse Acquisition Reserve Merger Relief 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 option reserve - - 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
The notes below form an integral part of these financial statements.
N4 Pharma Plc and its controlled entities
Condensed Consolidated Interim Statement of Cash Flows (unaudited) for the six
months ended 30 June 2022
Six months to 30 June 2022 Six months to 30 June 2021 Twelve months to 31 December 2021
(Unaudited) (Unaudited) (Audited)
£ £ £
Operating activities
Loss after tax (750,102) (973,216) (1,544,346)
Finance expenditure/(income) 666 2,588 (677)
Share based payments to employees 7,432 8,332 16,665
Taxation credit - - (298,267)
Operating loss before changes in working capital (742,004) (962,296) (1,826,625)
Movements in working capital:
Decrease/ (increase) in trade and other receivables 530,555 (2,260) 10,745
(Decrease)/increase in trade, payables and accruals 8,039 (45,755) 43,648
Cash used in operations (203,410) (1,010,311) (1,772,232)
Net cash flows used in operating activities (203,410) (1,010,311) (1,772,232)
Financing activities
Finance (expenditure)/income (666) (2,588) 677
Net cash flows (used in)/from financing activities (666) (2,588) 677
(204,076) (1,012,899)
(1,771,555)
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of the period/ year 1,784,024 3,555,579
3,555,579
1,579,948 2,542,680 1,784,024
Cash and cash equivalents at 30 June/ 31 December
The notes below form an integral part of these financial statements.
N4 Pharma Plc and its controlled entities
Notes to the condensed interim financial statements for the six months ended
30 June 2022
1. Corporate Information
N4 Pharma Plc (the "Company") is the holding 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 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.
2. Accounting Policies
Adoption of New and Revised International Financial Reporting Standards
The standards and interpretations that are issued, but not yet effective, up
to the date of the issuance of the consolidated interim financial statements
are disclosed below. The Group intends to adopt these standards, if
applicable, when they become effective.
Title As Issued by the IASB, mandatory for accounting periods starting
Amendments to IAS 1: Classification of Liabilities as Current or Non-Current Accounting periods beginning on or after 1 January 2023
Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting Accounting periods beginning on or after 1 January 2023
Policies
Amendments to IAS 12: Deferred Tax related to Assets and Liabilities arising Accounting periods beginning on or after 1 January 2023
from a Single Transaction
IFRS 17 - Insurance Contracts Accounting periods beginning on or after 1 January 2023
Amendments to IAS 8: Definition of Accounting Estimates Accounting periods beginning on or after 1 January 2023
Basis of Preparation:
The Group's condensed consolidated interim financial statements have been
prepared in accordance with International Accounting Standard ("IAS") 34,
"Interim Financial Reporting".
The annual consolidated financial statements for the year ended 31 December
2021 were prepared in accordance with International Financial Reporting
Standards ("IFRS") as adopted by the European Union.
The condensed consolidated interim financial information for the six months
ended 30 June 2022 are unaudited. In the opinion of the Directors, the
condensed consolidated interim financial information presents fairly the
financial position, and results from operations and cash flows for the period.
These condensed consolidated interim financial statements 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 condensed consolidated interim financial statements. For this reason,
they continue to adopt the going concern basis in preparing the condensed
consolidated interim financial statements.
The financial statements are presented in Sterling, which is the Group's
functional currency as the UK is the primary environment in which it operates.
Basis of Consolidation:
These condensed consolidated interim financial statements have been prepared
in accordance with IFRS 2, as a result of the consolidation of the Company and
N4 UK, constituting a reverse takeover transaction, for the comparative six
month period ended 30 June 2021 and the comparative twelve month period to 31
December 2021 and the current six month period ended 30 June 2022.
Significant Accounting Policies:
The condensed consolidated interim financial statements have been prepared
under the historical cost convention, as modified for the following items, in
accordance with International Financial Reporting Standards ('IFRS') as
adopted by the European Union:
• 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.
• The associated Share Options are measured at fair value using the
Black Scholes model (see note 9).
All accounting policies are consistent with those applied in the Annual Report
and there have been no amendments or changes in accounting policies during the
period.
Segmental reporting:
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.
Seasonality
The nature of the business is not deemed to be impacted by seasonal
fluctuations and as such performance is expected to be consistent.
3. Critical Accounting Judgements and Estimates
The preparation of the condensed consolidated interim financial statements in
conformity with IFRS requires management to make certain estimates,
assumptions and judgements that affect the application of accounting policies
and the reported amounts of assets and liabilities and the reported amounts of
income and expenses during the reporting period.
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, management has
decided the following estimates and assumptions are material to the carrying
amounts of assets and liabilities recognised in the condensed consolidated
interim 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 period 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.
4. Share Capital
Allotted, called up and fully paid 30 June 2022 (Unaudited) 30 June 2021 (Unaudited) 31 Dec 2021 (Audited)
£ £ £
181,080,349 Ordinary Shares of 0.4p each (30 June 2021 and 31 December 2021: 724,321 724,321 724,321
181,080,349 Ordinary shares of 0.4p each)
137,674,431 Deferred Shares of 4p each (30 June 2021 and 31 December 2021: 5,506,977 5,506,977 5,506,977
137,674,431 Deferred shares of 4p each)
279,176,540 Deferred Shares of 0.099p each (30 June 2021 and 31 December 2021: 2,763,848 2,763,848 2,763,848
279,176,540 Deferred shares of 0.099p each)
8,995,146 8,995,146 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.
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 the sum of £1,000,000 for each ordinary share held by
them.
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.
5. Reserves
The share premium account represents the amount received on the issue of
ordinary shares by the Company in excess
of their nominal value and issue costs and is non-distributable.
The merger relief reserve arose on the Company's acquisition of N4 UK and
consists of both the consideration shares and deferred consideration amounting
to £279,347. There is no legal share premium on the shares issued as
consideration as section 612 of the Companies Act 2006, which deals with
merger relief, applies in respect of the acquisition.
The reverse acquisition reserve arises due to the elimination of the Company's
investment in N4 UK. Since the shareholder in N4 UK became a shareholder of
the Company, the acquisition is accounted for as though the legal acquiree (N4
UK) is the accounting acquirer.
6. Share-based Payments and Share Option Reserve
Options
The Company has the ability to issue options to Directors to compensate them
for services rendered and incentivise 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
Comprehensive Income Statement on a straight-line basis over the vesting
period based on the Group's estimate of the number of shares that will vest.
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 have been adjusted based on management's best
estimate for the effects of non-transferability, exercise restrictions and
behavioral considerations. The inputs into the model were as follows:
2017 Options 2018 Options 2019 Options 2020 Options
Share price 6.375p 6.6p 3.55p 4.8p
Exercise price 7p 6.6p 3.55p 4.8p
Expected volatility 27.2% 45.2% 37.4% 29.9%
Expected option life 3 years 6.5 years 6.5 years 6.5 years
Risk free rate 4.75% 5.00% 5.00% 5.00%
As at 30 June 2022, there were 7,046,513 (30 June 2021: 7,046,513, 31 December
2021: 7,046,513) options in existence over ordinary shares of the Company.
Options in existence during the current and previous periods and year are as
follows:
Ordinary shares under option
Name Date of Grant Expiry Date Exercise Price £
2015 Options
Gavin Burnell 14.10.15 1,351,210 14.10.25 0.0280
Luke Cairns 14.10.15 675,302 14.10.25 0.0280
2017 Options
Luke Cairns 03.05.17 717,143 03.05.27 0.0700
David Templeton 03.05.17 717,143 03.05.27 0.0700
Paul Titley 03.05.17 717,143 03.05.27 0.0700
2019 Options
John Chiplin 21.05.19 717,143 21.05.29 0.0355
Christopher Britten 21.05.19 717,143 21.05.29 0.0355
2020 Options
David Templeton 18.05.20 717,143 18.05.30 0.0480
Luke Cairns 18.05.20 717,143 18.05.30 0.0480
Total options 7,046,513
Each option entitles the holder to subscribe for one ordinary share in N4
Pharma Plc. Options do not confer any voting rights on the holder.
The aggregate fair value of the share options issued is as follows:
30 June 2022 (Unaudited) 30 June 2020 (Unaudited) 31 Dec 2021 (Audited)
£ £ £
2015 Options 18,492 18,492 18,492
2017 Options 26,884 26,884 26,884
2019 Options 22,793 16,066 19,861
2020 Options 19,218 10,180 14,718
87,387 71,622 79,955
7. Earnings per Share
Basic earnings per share is calculated by dividing the loss after tax
attributable (excluding the deemed cost of acquisition) to the equity holders
of the Company by the weighted average number of shares in issue during the
period.
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.
8. Related Party Transactions
During the period to 30 June 2022, the non-executive directors' fees amounted
to £24,000 (6 months to 30 June 2021: £25,046, 12 months to 31 December
2021: £55,590).
During the period to 30 June 2022, the Company charged N4 UK £22,000 in
respect of 50 per cent. of the fees paid to Directors for the services
rendered to N4 UK (6 months to 30 June 2021: £22,000, 12 months to 31
December 2021: £44,000).
9. Subsequent Events
There are no significant subsequent events that require adjustment or
disclosure in these condensed consolidated interim financial statements.
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