REG - Oncimmune Hldgs PLC - Final Results
27/02/2023 07:00
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RNS Number : 0666R Oncimmune Holdings PLC 27 February 2023
This announcement contains inside information
for the purposes of the UK Market Abuse Regulation
27 February 2023
Oncimmune Holdings plc
("Oncimmune" or the "Company")
Final results for the 15-month period to 31 August 2022
Continued ImmunoINSIGHTS penetration into top 15 global pharma companies
ImmunoINSIGHTS moving to preferred or master service contract model with large
pharma
Medicare coverage in US for EarlyCDT Lung Blood Test
Stronger growth in current financial year, with first half FY2023 revenue
already exceeding level for the 15 months to 31 August 2022
In discussions for realization of value from non-core assets
Oncimmune Holdings plc (AIM: ONC.L), the leading global immunodiagnostics
group, today announces its audited results for the 15-month period ended 31
August 2022 ("FY2022") and provides and update on recent trading and the
outlook for the current financial year ("FY2023").
Operational and commercial highlights for FY 2022
· ImmunoINSIGHTS pharma services business continued to progress in
the face of a challenging global economic environment. The number of
commercial contracts delivered increased in the period, as it has done in the
prior two financial years.
· ImmunoINSIGHTS commercial pipeline was dominated by large pharma
customers and increasingly populated by multiple contracts from the same
customers. The number of customers awarding repeat contracts grew, as did the
overall value of the commercial pipeline.
· ImmunoINSIGHTS business transitioned towards a master service
agreement model, which brings benefits including speed of contracting on
future projects and extensions, a deepening of customer engagement and
preferred supplier status for autoantibody profiling services.
· EarlyCDT(®) Lung product business was restructured in the period,
substantially reducing the ongoing cost base, which, combined with increased
contracted revenues, has created an EBITDA profitable business (before the
allocation of central overheads).
· Contracted customers in the UK and US for the EarlyCDT(®) Lung
business delivered increasing revenues. The Company's US distributor,
Biodesix, Inc. (NASDAQ: BDSX), received Medicare coverage for EarlyCDT(®)
Lung at an in-market selling price which was nine times the average in-market
selling price achieved prior to the determination.
Financial highlights (including post period)
· Revenue for the period was £3.79M (2021: £3.72M).
· Gross profit for the period was £1.83M (2021: £2.86M) which
reflects the planned expansion of the ImmunoINSIGHTS Dortmund team.
· Administrative expenses were £8.70M (2021: £5.65M), which
incorporates the planned investment in the ImmunoINSIGHTS Commercial team,
particularly in the US.
· Research & development expenses were stable at £1.85M (2021:
£1.62M).
· Share-based payments were £1.69M (2021: £1.41M), representing the
non-cash cost of expensing the Group's LTIP, share options plans and warrants.
· Loss after tax was £11.52M (2021: £5.08M).
· Gross cash balance at the period end of £1.43M (2021: £8.63M) and
net debt at the period end of £9.2M (2021: £0.8M), after investment
including capacity expansion. The Company drew down an additional €3.0M
(c.£2.50M) in December 2021 from its debt facility with IPF Partners to fund
the acceleration in the expansion of the US-based Commercial team, serviceable
by cash generation from ImmunoINSIGHTS.
Business highlights and outlook
· Revenue for first 6 months of FY2023 expected to exceed the revenue
generated in the whole of the 15-month period to 31 August 2022.
· Business continues to perform in line with previously reported
expectations, and the Group is now expecting to be operating cashflow
positive in FY2023.
ImmunoINSIGHTS
· Over the past 12 months an increasing number of top 15 global
pharma companies have required Master Service Agreements ("MSA") to be put in
place to cover the supply of services. In some cases this has been an
evolution from using ad hoc purchase orders, indicating the development of
customer relationships and the increasing importance of the ImmunoINSIGHTS
offering to customers. This trend has continued post year end.
· Notwithstanding the difficult global economic conditions, the
pipeline of potential contracts continues to grow. In December 2022, the
pipeline for the ImmunoINSIGHTS service business stood at approximately £13M
and was growing steadily at approximately £0.75M a month, bolstered by an
increased number of larger repeat customer projects than previously seen.
Although the timelines between initial discussions and contracting are
lengthening, partly due to increasing financial constraints experienced by
customers, the impact of this is countenanced through an enlarged commercial
team, leading to more contact points being made and an increase in the number
of commercial opportunities.
EarlyCDT(®) Lung
· In July 2022 the product business, based in Nottingham, was
restructured to substantially lower its cost base and ensure the business
became EBITDA profitable (before the allocation of central overheads) on
existing contracted revenues. These contracted revenues are expected to
continue to grow.
· At the same time, Biodesix, Inc. (Nasdaq: BDSX) ("Biodesix"), the
Group's US distributor of the EarlyCDT Lung product (marketed in the US as
NodifyCDT(®)), announced that WPS Government Health Administrators, the
Medicare Administrative Contractor with jurisdiction for Biodesix's Kansas
laboratory, has provided a coverage determination for the NodifyCDT(®) Lung
nodule test at an in-market selling price which is nine times the current
price. Medicare coverage is expected to drive faster and wider adoption of the
test across the US which will in turn provide increased revenues to the Group.
· Biodesix also recently announced that Royal Philips is to
incorporate the results from tests performed on the NodifyCDT(®) Lung nodule
into the Philips Lung Cancer Orchestrator lung cancer patient management
system.
Other events (including post period)
New Board appointments
· On 8 July 2022 Alastair Macdonald was appointed as Non-Executive
Chair. Alistair succeeds Meinhard Schmidt, who has retired from the Board.
· On 13 January 2023 John Goold was appointed as Non-Executive
Director, bringing additional capital markets and investment relations
experience to the Board.
Queen's Award for Enterprise in Innovation 2022
· Oncimmune was awarded the Queen's Award for Enterprise 2022 in the
innovation category, endorsing Oncimmune as a leading developer of applied
immunodiagnostics for the early detection of disease, drug discovery and
development.
Divestment of non-core assets
· As previously indicated, the Directors are considering several
options for the realisation of value from non-core assets, including
discussions on a possible divestment or separate IPO.
Funding strategy
In December 2022, at the time of the successful capital raising which raised
gross proceeds of £2.1M, the Directors expected that following the capital
raising the Company would have sufficient cash headroom to meet its short-term
working capital, debt service and growth needs, based on current trading and
the ongoing growth of the ImmunoINSIGHTS pipeline and expectations for higher
revenues from the EarlyCDT(®) business, with the understanding that, in the
event that trading volumes and cash generation were lower than anticipated,
the Board, if required, would need to take actions to generate further cash
inflows and/or conserve cash. In preparing the audited accounts on a going
concern basis the Company has prepared a budget for the 12 months to 31 August
2023 and a forecast for the period to 31 March 2024, both of which include
certain assumptions including the impact of the Group's debt obligations (base
case scenario). The Company's debt facility with IPF Partners is subject to a
covenant which requires the Group to ensure that cash plus forecast operating
cashflows for the following nine months exceed the total debt service
requirement for same period. Whilst the base case scenario indicates that
resources would be sufficient to cover interest and debt repayments in the
near term, it also illustrates that the growth in cashflow would be
insufficient to meet the capital repayments currently due from September 2023.
This forecast therefore indicates a possible breach of the financial covenant
in March 2023. Following discussions, IPF Partners has confirmed that, in
the event of a breach and subject to certain conditions being met, it is
prepared to consider a waiver in respect of the requirement to submit a
compliant financial covenant. The Directors have ensured that the conditions
for the waiver can be satisfied and, in light of actions being taken, have
therefore formed a judgement that there is a reasonable expectation that the
Group has sufficient resources to continue in operational existence for the
foreseeable future. Further detail of the Company's debt position is
contained in the Chief Financial Officer's Review below and in the notes to
the Company's financial statements contained within the Annual Report and
Accounts.
Dr Adam M Hill, CEO of Oncimmune commented:
"FY2022 was a period of investment in the ImmunoINSIGHTS platform following a
successful, oversubscribed fundraise in March 2021, which allowed us to evolve
our offering, substantially increase capacity and drive our pipeline. The
short-term impact of investment and effort has been to increase the quality of
our revenue, with more partners opting for multi-year Master Service
Agreements in order to access the platform across multiple studies. The
medium-term impact is likely to result from the development of novel IP
related to immune-related diseases, in which Oncimmune is recognised as
expert, and their treatment. These developments would not have been possible
without both our people and all of our stakeholders, including our finance
providers, who remain steadfast in their commitment and unwavering support and
who we would like to thank.
"The ImmunoINSIGHTS business is now seeing improving growth in the first half
of this financial year and has a growing number of contracts. Whilst
short-term challenges remain in the operating environment and in financing,
the Board is determined to meet these and to enable conversion of the growing
pipeline of opportunities to deliver the significant returns available from
our differentiated offering and expertise."
For further information:
Oncimmune Holdings plc
Dr Adam M Hill, Chief Executive Officer
Matthew Hall, Chief Financial Officer
contact@oncimmune.co.uk (mailto:contact@oncimmune.co.uk)
Singer Capital Markets (Nominated Adviser and Broker)
Aubrey Powell, Harry Gooden, George Tzimas, James Fischer
+44 (0)20 7496 3000
Zeus (Joint Broker)
Dominic King, Victoria Ayton, Dan Bate
+44 (0)20 3829 5000
About Oncimmune
ImmunoINSIGHTS Service Business
Oncimmune is a leading immunodiagnostics developer, primarily focused on the
growing fields of immuno-oncology, autoimmune disease and infectious diseases.
The ImmunoINSIGHTS service business leverages Oncimmune's technology platform
and methodologies across multiple diseases, to offer life-science
organizations actionable insights for therapies across the development and
product lifecycle. Our core immune-profiling technology is underpinned by our
library of over eight thousand immunogenic proteins, one of the largest of its
kind. This helps identify trial participants and patients into clinically
relevant subgroups, enabling development of targeted and more effective
treatments.
Oncimmune's ImmunoINSIGHTS service business is based at the Company's
discovery research centre in Dortmund, Germany. The business platform enables
life science organizations to optimize drug development and delivery, leading
to more effectively targeted and safer treatments for patients.
The ImmunoINSIGHTS development team is based in the US and Europe and
Oncimmune is seeking to replicate the Dortmund facility in the US in the
medium term.
EarlyCDT(®) Product Business
Oncimmune's immunodiagnostic technology, EarlyCDT(®), can detect and help
identify cancer on average four years earlier than standard clinical
diagnosis. Our lead diagnostic test, EarlyCDT® Lung, targets a vast market
estimated to grow to £3.8bn by 2024. With over 200,000 tests already
performed for patients worldwide and its use being supported by peer reviewed
data in over 12,000 patients, we are poised to become an integral component of
future lung cancer detection programs, globally.
Oncimmune's diagnostic products business is located at its laboratory facility
in Nottingham, UK.
For more information, visit www.oncimmune.com (http://www.oncimmune.com)
Certain statements in this announcement are forward-looking statements, which
include all statements other than statements of historical fact and which are
based on the Company's expectations, intentions and projections regarding its
future performance, anticipated events or trends and other matters that are
not historical facts. These forward-looking statements, which may use words
such as "aim", "anticipate", "believe", "could", "may", "intend", "estimate",
"expect" and words of similar meaning, include all matters that are not
historical facts. These forward-looking statements involve risks, assumptions
and uncertainties that could cause the actual results of operations, financial
condition, liquidity and dividend policy and the development of the industries
in which the Company's businesses operate to differ materially from the
impression created by the forward-looking statements. These statements are not
guarantees of future performance and are subject to known and unknown risks,
uncertainties and other factors that could cause actual results to differ
materially from those expressed or implied by such forward-looking statements.
Given those risks and uncertainties, prospective investors are cautioned not
to place undue reliance on forward-looking statements. Forward-looking
statements speak only as of the date of such statements and, except as
required by the FCA, the London Stock Exchange or applicable law, the Company
undertakes no obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events or
otherwise.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER'S REVIEW
We are pleased to report the Group's audited results to 31 August 2022, a
15-month accounting period following a decision to move Oncimmune's year end,
and provide an update on the further operational and strategic progress made
since period end.
Oncimmune is a leading immunology testing business, primarily focused on the
growing fields of immuno-oncology, autoimmune disease and infectious diseases.
As a specialist immunology testing business, the Group has a diversified and
growing revenue stream from its discovery and development service-based
platform, delivering actionable insights into therapies under development to
its pharmaceutical and biotech partners, as well as a portfolio of diagnostic
products to detect early-stage cancer. Oncimmune is headquartered at its
product laboratory facility in Nottingham, UK, and its ImmunoINSIGHTS pharma
services commercial laboratory facility is based in Dortmund, Germany. The
ImmunoINSIGHTS commercial team is based in Boston, USA, and across Europe.
Our understanding of the immune system enables us to harness its sophisticated
response to disease, in order to detect cancer earlier and to support the
development of better therapies. The lowest hanging fruit able to improve
disease outcomes is early detection and better selection for therapy, and
hence the Group has two operational divisions providing immune services to
meet these needs:
· Oncimmune's ImmunoINSIGHTS platform enables life science
organisations to optimise drug development and delivery, leading to more
effective targeting, as well as safer, treatments for patients. Underpinned by
our proprietary library of over 8,000 immunogenic proteins, we help identify
clinical trial participants and patients in clinically relevant subgroups,
enabling the development of more effective treatments with lower risk of
adverse events.
· Oncimmune's immunodiagnostic technology, EarlyCDT(®), can detect
and help identify cancer earlier than standard clinical diagnosis. With over
200,000 tests already performed for patients worldwide and a substantial
evidence base, we believe EarlyCDT Lung will increasingly become integral to
lung cancer diagnosis globally.
Business update
2022 has been a period of challenge, as global economies have emerged from the
COVID-19 pandemic into a cost-of-living crisis and conflict on Europe's
borders. Not only has this economic instability affected company valuations,
but it also meant that the life science sector has struggled to access
capital, impacting our biotech customers most significantly. However, the
technology platform we have established, led by the ImmunoINSIGHTS service
offering to pharmaceutical partners, we believe will prove itself robust and
resilient in the medium term.
Once again, delivering high quality, differentiated results every time for our
ImmunoINSIGHTS customers has allowed us to not only broaden our pipeline of
opportunities, but also further deepen our engagement with key customers;
increasingly, we have been focused on signing preferred or master service
agreements (MSAs), rather than one-off pilot projects, and we have had the
benefit of an increasing percentage of our pipeline made up of repeat
customers. This strategy will persist through 2023, where we will look to not
only maximise the value of those MSAs in place, but also continue to mature
relationships at the pilot stage through to multi contract commercial
engagements with top 20 pharma companies.
Once again, we would like to take this opportunity to thank our staff,
suppliers and customers for their continued support over the last financial
period, without whom our performance would not have been as robust throughout
this challenging time. In addition, we would like to thank Oncimmune's current
shareholders for their continued support to the Group during turbulent market
conditions, and to both Oncimmune's Board and management team for their
resourcefulness and resilience.
Services - ImmunoINSIGHTS
Since launching ImmunoINSIGHTS in February 2020, Oncimmune has delivered 31
commercial projects for 18 customers, seven of whom are in the top 15 pharma
companies by revenue. In FY2022, the Oncimmune team doubled the number of
ImmunoINSIGHTS contracts year-on-year - 18 new contracts or extensions signed
in the period, an increase from nine contracts signed in the 12 months to 31
May 2021 and three contracts signed in the 12 months to 31 May 2020.
ImmunoINSIGHTS utilises two proprietary biomarker discovery platform
technology tools:
· SeroTag discovery arrays: drawing from our library of over 8,800
immunogenic proteins, one of the largest of its kind, to discover and validate
biomarkers which can support life science partners in stratifying patients in
multiple cancer indications, infectious diseases and with different autoimmune
diseases. SeroTag acts as the primary discovery engine that drives the
creation of Oncimmune's NavigAID panels.
· NavigAID disease-specific characterisation panels: thoroughly
validated and containing well-defined antigens of interest for each of the
disease types being investigated, these tools can be used for targeting
identifiable patients for whom a treatment may be more effective, whilst
avoiding those patients more likely to experience adverse drug effects.
As at January 2023, Oncimmune was contracted to deliver a further six projects
over the coming months, and has a building pipeline of contracts, 50% of which
are with repeat customers. This is all testament to the quality of our
ImmunoINSIGHTS deliverable, completing every project to time and budget.
Product - EarlyCDT(®)
Much of FY2022, like FY2021 before it, was disrupted by healthcare systems
globally dealing with the response to the COVID-19 pandemic which impacted
critical services, not least cancer diagnosis and care. As such, the sale of
EarlyCDT(®) products has been difficult for the Group to forecast. However,
as global economies have emerged from the pandemic, we have seen a
stabilisation of demand for EarlyCDT(®) products, and important developments
in the US affecting the sale of the product.
In the fifth quarter, the Board agreed to restructure the EarlyCDT(®) Lung
product business, substantially reducing the ongoing cost base by £0.5M.
This, combined with increased contracted revenues, created an immediately
EBITDA profitable EarlyCDT(®) Lung product business. Now that the business
has been right sized, it is delivering more efficiently than before, and is on
a clear growth trajectory underpinned largely by long-term contracts with its
major customers.
Biodesix, Inc. (Nasdaq: BDSX) (Biodesix), which is the US partner of our
EarlyCDT(®) Lung product, announced in the fifth quarter that WPS Government
Health Administrators, the Medicare Administrative Contractor with
jurisdiction for Biodesix's Kansas laboratory, has provided a coverage
determination for the NodifyCDT(®) lung nodule test (the marketing name for
EarlyCDT Lung in the US) at an in-market selling price which was nine times
the average in-market selling price achieved prior to the determination. This
represented a significant milestone and has assisted access and availability
to the NodifyCDT(®) lung nodule test, for US patients with lung nodules.
Medicare coverage also ensures physicians have access to the NodifyCDT(®)
lung nodule test, which is expected in turn to drive faster and wider adoption
of the NodifyCDT(®) lung nodule test across the US. Oncimmune receives
royalties on every in-market sale of a NodifyCDT(®) lung nodule test, as well
as revenue from the supply of the test to Biodesix.
Furthermore, Biodesix announced in the same quarter that Royal Philips
(Philips) had agreed to incorporate the results from tests performed on the
NodifyCDT(®) lung nodule into the Philips Lung Cancer Orchestrator lung
cancer patient management system. This important commercial agreement is
expected to drive an increase in NodifyCDT(®) lung nodule test volumes and
act as a force multiplier to raise the profile of the NodifyCDT(®) lung
nodule test markedly across the US.
In the UK, we continued our collaboration with the Eastern Academic Health
Science Network, delivered through five GP practices a screening pilot using
EarlyCDT(®) Lung in a community setting in high-risk patients. Positive test
results were triaged into CT imaging. Both clinical evaluation and health
economic assessment are due for publication in 2023, but early data(1.) has
had an impact on the ongoing discussions with the screening community in the
UK, which we anticipate will impact activities in 2023.
Scientific publications, reports and awards
In line with the Group's core objectives, during the period we have continued
to demonstrate the leading potential of our platforms in world class
scientific publications and awards.
The versatility of the ImmunoINSIGHTS platform was demonstrated during the
pandemic as the Oncimmune team rapidly developed an infectious disease
programme, which was validated in June 2021 with the pre-publication of the
initial work of Oncimmune's collaboration with Cedars-Sinai Medical Center in
Los Angeles, entitled: 'Paradoxical Sex-Specific Patterns of Autoantibodies
Response to SARS-CoV-2 Infection'. The paper focuses on the characterisation
of sex-specific prevalence and selectivity of autoantibody responses to the
SARS-CoV-2 virus, using the SeroTag Infectious Diseases discovery array to
detect autoantibodies to over 90 antigens previously linked to a range of
classic autoimmune diseases. The collaborators sought to comprehensively
examine the diversity of autoantibody responses in male and female healthcare
workers who were exposed to SARS-CoV-2 and were asymptomatic, or experienced
minor symptoms, and the paper reveals a remarkable sex specific prevalence and
selectivity of autoantibody responses to SARS-CoV-2.
This work was later published in the Journal of Translational Medicine(2.) and
then supplemented in September 2021 with the pre-publication of 'Predominance
of Distinct Autoantibodies in Response to SARS-CoV-2 Infection' from the same
collaboration, in which we were able to map the serological diversity
underlying the clinical heterogeneity of COVID-19 infection and its sequelae,
including the long-Covid phenotypes.
Following successful profiling of patients with urothelial carcinoma
undergoing immunotherapy in collaboration with Dana-Faber Cancer Institute,
the team were able to demonstrate further utility of the ImmunoINSIGHTS
platform as an orthogonal data source to genomic and transcriptomic data; this
work was published in the Journal of Clinical Oncology entitled 'Multiplexed
autoantibody (AA) profiling of patients (pts) with metastatic urothelial
carcinoma (mUC) receiving immune checkpoint inhibitors or platinum-based
chemotherapy(3).
After a number of years of collaboration with the RA-MAP consortia, the
ImmunoINSIGHTS team was able to participate in the publication of the most
comprehensive map of molecular immunological landscapes in rheumatoid
arthritis(4).
This seminal work required the aggregation of data from a number of different
lenses through which to view the immune response in rheumatoid arthritis, and
clearly evidenced the role of ImmunoINSIGHTS in profiling these patients.
In August 2021, the three-year follow-up data for the Early detection of
Cancer of the Lung Scotland (ECLS) trial in was pre-published entitled
'Targeted screening for lung cancer with autoantibodies'. The pre-publication
shows that after three years, the number of late-stage cancers and deaths were
lower in patients tested with the EarlyCDT(®) Lung blood test. Crucially,
all-cause mortality, as well as cancer specific and lung cancer mortality was
reduced. The ECLS trial, believed to be the largest randomised controlled
trial for the detection of cancer using blood-based biomarkers, published
two-year follow-up results in 2020 in the European Respiratory Journal showing
a 36% reduction in late-stage diagnoses of lung cancer, and the three-year
data now shows a continued trend towards a reduction in mortality.
More recently, in April 2022, Oncimmune was awarded the Queen's Award for
Enterprise 2022 in the innovation category, endorsing the company as a leading
developer of applied immunodiagnostics for the early detection of disease,
drug discovery and development. The Queen's Award for Enterprise 2022
acknowledges the innovation behind Oncimmune's immunodiagnostic and discovery
technology.
Finally, our collaboration with the Eastern Academic Health Science Network
(EAHSN) in Norfolk throughout 2021 delivered a community-led screening
programme for patients at high risk of lung cancer to evaluate the role of
EarlyCDT(®) Lung in the community setting, 4,890 patients were invited for
screening, 1,919 attended (39.2% response rate), 298 (15.53%) had a positive
test, of which 291 had follow-up CT scan leading to 20 patients (6.87%)
requiring further investigations, and nine patients (45%) found to have lung
cancer, with the remaining 11 patients sufficiently at risk to warrant six-12
monthly follow-up. Of the nine patients diagnosed with cancer, seven had
primary lung tumours, all early stage (five stage 1; two stage 2). This work
is expected to be published in 2023.
Board changes
In the fifth quarter of the year, Oncimmune's Board of Directors appointed
Alistair Macdonald as Chair of the Board, bringing to the Board a wealth of
experience in delivering Clinical Research services to the Pharmaceutical
sector. Alistair replaced Meinhard Schmidt, who had served six successful
years on Oncimmune's Board. In addition, and following the end of the reported
period, the Board decided to also appoint John Goold as Non-Executive
Director, bringing with him a depth of experience in small cap markets in the
UK.
Following these changes, the Board is now comprised of one Executive Director
and five Non-Executive Directors, two of which are Independent Non-Executive
Directors. The Board members are Alistair Macdonald, Non-Executive Chairman;
Dr Adam M Hill, Chief Executive Officer; Dr Annalisa Jenkins, Senior
Independent Non-Executive Director; Andrew Unitt, Independent Non-Executive
Director; Tim Bunting, Non-Executive Director; and John Goold, Non-Executive
Director.
Outlook
The financial period to 31 August 2022 and the period post year-end have seen
significant and continuing progress for the Company. In December 2022, the
pipeline for our ImmunoINSIGHTS service business stood at approximately £13M
and was growing steadily at approximately £0.75M a month, bolstered by more
larger repeat customer projects than previously seen. As we started to see
last year, initial pilot contracts have indeed broadened into multiple
projects and deeper strategic commercial partnerships, with associated
opportunities for additional, long-term revenue.
The Board sees the potential to not only build upon the MSAs established so
far, but also to continue to add new customers to the portfolio. In addition,
the Board is increasingly excited about the potential to further evolve
Oncimmune's business model by exploiting the substantial intellectual property
developed throughout 2022, albeit a medium-term investment of resource.
On behalf of the Board, we would like to thank our shareholders for their
continued support throughout FY2022, and we look forward to updating the
market on Oncimmune's further progress periodically.
Alistair Macdonald
Dr Adam M Hill
Chairman
Chief Executive Officer
(1.) https://www.easternahsn.org/impact-story/detectinglung-cancer-earlier/
(https://www.easternahsn.org/impact-story/detectinglung-cancer-earlier/)
(2.) Liu, Y., Ebinger, J.E., Mostafa, R. et al. Paradoxical sex-specific
patterns of autoantibody response to SARS-CoV-2 infection. J Transl Med 19,
524 (2021). https://doi.org/10.1186/s12967-021-03184-8
(3.) Sonpavde, G et al. Multiplexed autoantibody (AA) profiling of patients
(pts) with metastatic urothelial carcinoma (mUC) receiving immune checkpoint
inhibitors or platinum-based chemotherapy. Journal of Clinical Oncology 40,
no. 6_suppl (20 February, 2022) 558-558. DOI: 10.1200/JCO.2022.40.6_ suppl.558
(4.) The RA-MAP Consortium. RA-MAP, molecular immunological landscapes in
early rheumatoid arthritis and healthy vaccine recipients. Sci Data 9, 196
(2022). https://doi.org/10.1038/s41597-022
(https://doi.org/10.1038/s41597-02201264-y) 01264-y
(https://doi.org/10.1038/s41597-02201264-y)
CHIEF FINANCIAL OFFICER'S REVIEW
Revenues and commercial progress
Revenue for the 15-month period to 31 August 2022 reflects the steady
progression of commercial activities within the ImmunoINSIGHTS and
EarlyCDT(®) businesses. Within the ImmunoINSIGHTS business, the Group has
particularly benefited from the considerable time and resources devoted to our
growing portfolio of global pharmaceutical clients. These clients are
providing a growing base of ongoing commercial contracts, which improves the
overall quality of our commercial pipeline. The EarlyCDT(®) business is
largely underpinned by existing commercial contracts which are providing
growing revenues. The reorganisation of the EarlyCDT(®) business, which was
undertaken in July 2022, has substantially reduced the ongoing cost base of
this business, to ensure it is EBITDA profitable on existing revenues.
ImmunoINSIGHTS
During the reporting period, the business signed 18 new or extensions to
existing contracts, compared with nine in the 12 months to 31 May 2021.
Encouragingly, this increase coincided with a period of challenging market
conditions.
Furthermore, the value of the commercial pipeline of potential contracts also
increased throughout the period and has continued this momentum post the
period end. Throughout the reporting period, there has been a focus on
generating the majority of revenue from large pharmaceutical companies, and as
at the end of the reporting period, ImmunoINSIGHTS counted seven of the top
fifteen global pharma companies as clients.
Since the end of the reporting period, the business has continued to sign
commercial contracts, notably in December 2022, when it signed further
contracts with an existing global pharma client, with a combined value of
approximately $1.25M. Also in December 2022 the business signed a MSA with
another global pharma client, which is expected to support multiple
autoantibody profiling projects throughout calendar 2023.
EarlyCDT(®) Lung
In July 2022, the Nottingham-based product business was restructured, to
substantially lower its cost base and ensure that this business is immediately
EBITDA profitable on existing contracted revenues before the benefit of any
further product volume growth.
Biodesix, Inc. (Nasdaq: BDSX) (Biodesix), the Group's US distributer of the
EarlyCDT(®) Lung product (marketed in the US as NodifyCDT(®)), recently
announced that WPS Government Health Administrators, the Medicare
Administrative Contractor with jurisdiction for Biodesix's Kansas laboratory,
has provided a coverage determination for the NodifyCDT(®) Lung nodule test.
Medicare coverage is expected to drive faster and wider adoption of the test
across the US, which will in turn provide increased revenues to the Group over
time. Overall sales in the US are also underpinned by our existing commercial
contract with Biodesix, which provides minimum sales volumes.
EarlyCDT(®) Lung revenues are also derived from an ongoing contract with the
iDx-Lung programme, a collaboration between the University of Leeds and the
Southampton Clinical Trials Unit at the University of Southampton. The Group
also anticipates an uplift in sales volumes following the recently published
real-world screening evaluation pilot with the Norfolk and Waveney Clinical
Commissioning Group.
Equity fundraise
In December 2022, the Company completed an equity fundraise, raising gross
proceeds of £2.1M to provide the Group with additional near-term working
capital and enable funding of future collaborations in biomarker tool
development.
Debt funding
In October 2022, the Group reprofiled its debt banking facility (the "IPF
Facility") with IPF Management SA ("IPF Partners"). The new terms provide for
a deferral of all principal repayments until June 2023, no further issue of
warrants and the continued repayment of interest as from September 2022. An
arrangement fee of €1.5M has been agreed, which is payable at final maturity
of the debt, with up to 50% (€0.75M) of this fee able to be offset against
any warrants already issued to IPF Partners.
Under the terms of the renewed facility, the Group is required to make total
capital repayments of €11.6M, of which, €6.9M is required to be repaid in
the 2023 calendar year. The Group is also required to satisfy a cash covenant
which is reported quarterly at month end in March, June, September and
December of each year, and which requires the Group to maintain sufficient
cash to cover operating cash flows as well as all scheduled interest and
principal debt repayments for a period of nine months from each quarterly test
point. In the process of preparing the Company's accounts the Directors have a
budget for the 12 months to 31 August 2023 and a forecast for the period to 31
March 2024, both of which include the impact of the Group's debt obligations
(base case scenario). Whilst the forecast operating cash flow for the Group to
December 2023 in the base case scenario is sufficient to cover operating cash
flow and interest repayments, under the base case scenario the Group does not
expect to be able to generate sufficient cash to meet the capital repayments
from September 2023 and, therefore, is forecast to breach its March 2023 debt
covenant. Such a situation gives rise to a material uncertainty which may cast
doubt about the Group's ability to continue as a going concern.
The Board is in the process of reviewing its options for the potential sale or
IPO of certain of the Group's assets, with the intention that a proportion of
any proceeds received will be directed towards the repayment of debt.
Furthermore, the Board has discussed with IPF Partners the possible breach of
the financial covenants, and the Group's inability to pay the principal
amounts scheduled under the reprofiled IPF Facility during the forecast
period, together with the strategic options currently being considered by the
Board. IPF Partners has confirmed to the Board that it is prepared to consider
a waiver in respect of the requirement to submit a compliant financial
covenant certificate in the event of a breach provided the Group complies with
certain conditions. At the date of approval of the financial statements the
Directors have ensured the actions requested by IPF Partners have been
completed.
Commentary on financial statements
Research and development activities continued throughout the period, with two
major projects successfully delivered. The Group's strategy is centred on the
commercial exploitation of its ImmunoINSIGHTS services and EarlyCDT(®)
product businesses and, in future years, research and development costs are
anticipated to be materially lower.
For the 15-month period to 31 August 2022, gross profit for the period was
£1.8M (2021: £2.9M), which for the reporting period includes the majority of
the costs of the ImmunoINSIGHTS Dortmund production team. During the reporting
period the planned head count in Dortmund increased substantially compared to
the prior year, in order to deliver the increase in commercial contracts.
Administrative expenses for the 15-month period were £8.7M (2021: £5.7M).
Certain costs were higher in the reporting period, including one-off
recruitment costs of £0.2M associated with the buildout of our ImmunoINSIGHTS
production head count and US commercial team, £0.1M of IT costs to move staff
to home-working during the COVID-19 pandemic, £2.6M of increased staff
remuneration and £0.4M of increased insurance costs. Also included is a
non-cash £0.8M increased amortisation charge against Intangible assets. The
restructuring of the cost base of the EarlyCDT Lung business is delivering
lower ongoing costs.
Cash balance at period end was £1.4M (2021: £8.6M) and net debt was £9.2M
including lease liabilities (FY2021: net debt £0.8M), with net debt of £8.6M
excluding lease liabilities (2021: net cash £0.1M).
During the year the Company continued to invest in the ImmunoINSIGHTS services
business. This continued funding together with the approval and procurement
process associated with awarding by large pharmaceutical companies of new
contracts, has resulted in funding challenges. However, the growing number of
awarded contracts, the signing of MSAs and the increasing percentage of signed
contracts and pipeline made up of repeat customers, gives the Board confidence
for the future of the Group.
Matthew Hall
Chief Financial Officer
Consolidated statement of comprehensive income
For the period ended 31 August 2022
Period
to Year to
31 August 31 May
2022 2021
(restated)
£'000 £'000
Total Total
Revenue 3,788 3,722
Cost of sales (1,962) (865)
Gross profit/(loss) 1,826 2,857
Research and development expenses (1,851) (1,615)
Administrative expenses (8,702) (5,652)
Share-based payment (1,691) (1,046)
Total administrative expenses (12,244) (8,313)
Other income 413 311
Operating loss (10,005) (5,5509)
Finance income 8 403
Finance costs (1,562) (1,318)
Finance costs - net (1,554) (915)
Loss before income tax (11,559) (6,060)
Income tax credit 173 1,068
Loss for the financial period/year (11,386) (4,992)
Other comprehensive income
Items that may be subsequently reclassified to profit or loss, net of tax
Currency translation differences (130) (91)
Loss after tax and total comprehensive income for the period/year attributable (11,516) (5,083)
to equity holders
Basic and diluted loss per share (pence) (16.49)p (7.73)p
All activities of the Group in the current and prior periods are classed as
continuing. All of the comprehensive income for the period is attributable to
the shareholders of Oncimmune Holdings Plc.
The accompanying notes form an integral part of these consolidated financial
statements.
Consolidated statement of financial position
As at August 2022
Audited Audited
31 August 31 May
2022 2021
£'000 £'000
Assets
Non-current assets
Goodwill 1,578 1,578
Intangible assets 3,017 4,116
Property, plant and equipment 788 664
Right-of-use assets 552 930
Deferred tax asset 613 937
6,548 8,225
Current assets
Inventories 430 143
Trade and other receivables 1,340 2,161
Contract assets 417 200
Cash and cash equivalents 1,425 8,631
3,612 16,053
Total assets 10,160 19,360
Equity
Capital and reserves attributable to the equity holders
Share capital 695 691
Share premium 40,634 40,497
Merger reserve 31,882 31,882
Foreign currency translation reserve (42) 88
Own shares (1,926) (1,926)
Retained earnings (75,422) (66,005)
Total equity (4,179) 5,227
Liabilities
Non-current liabilities
Deferred tax 311 374
Lease liability 295 671
Borrowings 3,917 6,239
Other liabilities 2,000 2,000
6,523 9,284
Current liabilities
Trade and other payables 1,176 1,979
Contract liabilities 180 257
Other statutory liabilities 34 55
Lease liability 321 310
Borrowings 6,105 2,248
7,816 4,849
Total liabilities 14,339 14,133
Total equity and liabilities 10,160 19,360
Adam M Hill
Director and Chief Executive Officer
The accompanying notes form an integral part of these consolidated financial
statements.
The financial statements were approved by the Board on 27 February 2023.
Company registration number: 09818395 (England and Wales)
Consolidated statement of changes in equity
For the period ended 31 August 2022
Share Share Merger Foreign currency translation reserve Own shares Retained earnings Total
capital premium reserve
£'000 £'000 £'000 £'000 £'000 £'000 £'000
As at 1 June 2020 635 31,459 31,882 179 (1,926) (62,423) (194)
Loss for the year (restated) - - - - - (4,992) (4,628)
Other comprehensive income:
Currency translation differences - - - (91) - - (91)
Total comprehensive expense - - - (91) - (4,992) (5,083)
Transactions with owners:
Shares issued in year 50 8,331 - - - - 8,381
Options exercised 2 106 - - - - 108
Shares issued in relation to prior year acquisition 4 601 - - - - 605
Share option charge - - - - - 1,046 1,046
Warrants issued - - - - - 364 364
As at 31 May 2021 691 40,497 31,882 88 (1,926) (66,005) 5,227
Loss for the period - - - - - (11,386) (11,386)
Other comprehensive income:
Currency translation differences - - - (130) - - (130)
Total comprehensive expense - - - (130) - (11,386) (11,516)
Transactions with owners:
Options exercised 4 137 - - - - 141
Warrants issued - - - - - 278 278
Share option charge - - - - - 1,691 1,691
As at 31 August 2022 695 40,634 31,882 (42) (1,926) (75,422) (4,179)
The accompanying notes form an integral part of these consolidated financial
statements.
Consolidated statement of cash flows
For the period ended 31 August 2022
Period to Year to
31 August 31 May
2022 2021
(restated)
£'000 £'000
Cash flows from operating activities
Loss before income tax (11,559) (6,060)
Adjusted by:
Depreciation and amortisation 1,643 740
Share-based payment charge 1,691 1,046
Interest receivable (8) (403)
Interest expense 1,562 1,318
Fair value movement on contingent consideration and liabilities - 176
- -
Changes in working capital:
(Increase)/decrease in inventories (287) 31
Decrease/(increase) in trade and other receivables 5,547 (5,837)
(Decrease)/increase in trade and other payables (5,281) 4,841
Cash used in operating activities (6,692) (4,148)
Interest paid (597) (885)
Interest received 8 3
Income tax received 409 503
Net cash used by operating activities (6,872) (4,527)
Cash flows from investing activities
Purchase of property, plant and equipment (306) (446)
Purchase of intangible assets (625) (625)
Proceeds from sale of assets - 215
Net cash used in investing activities (931) (856)
Cash flows from financing activities
Net funds raised through share issue 141 8,489
Loan advances 2,546 2,728
Loan repayments (1,643) (1,135)
Principal elements of lease repayments (392) (303)
Net cash generated from financing activities 652 9,779
Net (decease)/increase in cash and cash equivalents (7,151) 4,391
Movement in cash attributable to foreign exchange (55) (5)
Cash and cash equivalents at the beginning of the period 8,631 4,240
Cash and cash equivalents at the end of the period 1,425 8,631
The accompanying notes form an integral part of these consolidated financial
statements.
1. General information
Oncimmune Holdings Plc (the "Company") is a limited company incorporated and
domiciled in England and Wales. The registered office of the company is
MediCity - D6 Building, 1 Thane Road, Nottingham, NG90 6BH. The registered
company number is 09818395.
The Group's principal activity is the development and commercialisation of
technologies that enable cancer diagnosis.
The Directors of Oncimmune Holdings Plc are responsible for the financial
information and contents of the financial information.
Electronic communications
The Company is not proposing to distribute hard copies of the financial
statements for the 15 months to 31 August 2022 unless specifically requested
by individual shareholders.
The Board believes that by utilising electronic communication it delivers
savings to the Company in terms of administration, printing and postage, and
environmental benefits through reduced consumption of paper and inks, as well
as speeding up the provision of information to shareholders.
News updates, Regulatory News and Financial statements can be viewed and
downloaded from the Company's website, www.oncimmune.com. Copies can also be
requested from; The Company Secretary, Oncimmune Holdings plc, MediCity D6
Building, 1 Thane Road, Nottingham, NG90 6BH or by email:
contact@oncimmune.com
2. Accounting policies
The principal accounting policies applied in the preparation of the
consolidated financial information are set out below. These policies have been
consistently applied to all periods presented, unless otherwise stated. The
financial statements are for the Group consisting of Oncimmune Holdings Plc
and its subsidiaries.
Basis of preparation
The Group has prepared its consolidated financial statements in accordance
with UK-adopted international accounting standards (IFRSs) in conformity with
the requirements of the Companies Act 2006.
The financial statements have been prepared on a historical cost basis, except
certain financial assets and liabilities which are measured at fair value.
The Company was incorporated on 9 October 2015 and was re-registered as a
public limited company on 14 December 2015. On 23 November 2015, a Group
re-organisation was completed, by means of a share for share exchange, as a
result of which the newly incorporated company, Oncimmune Holdings Plc, became
the parent company of the Group.
The companies involved in the above share for share exchange had not
previously been presented in the consolidated financial statements of a single
legal entity. However, the underlying business was ultimately controlled and
managed by the same parties before and after the share for share exchange, and
that control was not transitory. The transactions outlined above, therefore,
met the definition of a common control transaction in accordance with IFRS 3
Business Combinations.
IFRS does not provide any specific guidance on accounting for common control
transactions and IFRS 3 excludes common control transactions from its scope;
therefore the Directors had selected an accounting policy in accordance with
paragraphs 10-12 of IAS 8 Accounting Policies, Changes in Accounting Estimates
and Errors. The consolidated entity met the definition of a Group
reconstruction under FRS 102 19,27 and was therefore accounted for under the
principals of merger accounting as outlined in FRS 102, paragraphs 19.29 -
19.33, merger accounting. The consolidated financial statements have been
prepared as if Oncimmune Limited and its subsidiaries had been held by
Oncimmune Holdings Plc from inception, and the results and position of
Oncimmune Limited have been reflected in the comparatives.
The preparation of financial statements in accordance with IFRS requires the
use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Group's accounting
policies. The areas involving a high degree of judgement or complexity, or
areas where assumptions and estimates are significant to the consolidated
financial statements, are disclosed in note 3.
The reporting period for this set of financial statements is the 15-month
period to 31 August 2022. The accounting dates were changed in order to better
align the year end with the commercial cycle of large pharma companies.
Generally pharmaceutical companies' year ends are 31 December, and so they
start January with a new budget. An August year end allows the Group to win
contracts in the first 6 months of each calendar year and recognise the
majority of the revenue. As this period is 3 months longer than the preceding
period (the year to 31 May 2021), the amounts presented in these financial
statements are not fully comparable.
The consolidated financial statements are presented in Sterling and have been
rounded to the nearest thousand (£'000).
Principles of consolidation and equity accounting
Subsidiaries are all entities (including structured entities) over which the
Group has control. The Group controls an entity when the Group is exposed to,
or has rights to, variable returns from its involvement with the entity and
has the ability to affect those returns through its power to direct the
activities of the entity. Subsidiaries are fully consolidated from the date on
which control is transferred to the Group. They are deconsolidated from the
date that control ceases.
The Group uses the acquisition method of accounting to account for business
combinations.
Inter-company transactions, balances and unrealised gains and losses on
transactions between Group companies are eliminated. Accounting policies of
subsidiaries have been changed where necessary, to ensure consistency with the
policies adopted by the Group.
Where a Group company has acquired an investment in a subsidiary undertaking
and applies merger relief, under section 612 of the Companies Act 2006, the
difference between the nominal value and fair value of the shares issued is
credited to the merger reserve.
Going concern
In respect of the Group's funding position, the Parent Company's subsidiary
(Oncimmune Limited) entered into a €8.5M credit facility with IPF Management
SA ("IPF Partners") in September 2019 which was further extended by €6.0M in
October 2020 ("IPF Facility"). Each tranche of the total loan is repayable
over a four-year term, interest-only for the first 12 months, with principal
repayments commencing thereafter. In October 2022, the Group reprofiled its
debt banking facility with IPF Partners. The new terms provide for a deferral
of all principal repayments until June 2023, no further issue of warrants, and
the continued repayment of interest as from September 2022. An arrangement fee
of €1.5M has been agreed which is payable at final maturity of the debt,
with up to 50% (€0.75M) of this fee able to be offset against any warrants
already issued to IPF Partners. As is customary with a debt facility such as
this, there is a cash covenant requiring the Group to maintain nine months of
cash which is tested each calendar quarter. To monitor compliance with the
terms of the IPF Facility, the Board prepares and reviews monthly financial
accounts.
The Group has prepared the 2022 financial statements on a going concern basis.
In preparing the accounts on a going concern basis the Directors have a budget
for the 12 months to 31 August 2023 and a forecast for the period to 31 March
2024, both of which include the impact of the Group's debt obligations (base
case scenario). The base case scenario assumes cash from contracts with
customers for the forecast period being a mix of contracted amounts, contracts
currently under negotiation, repeat business from already contracted work
together with contracts from as yet unidentified opportunities. It is assumed
under the base case scenario that forecast operating costs are sufficient to
support the forecast revenue without the need for material additional cost
increases.
However, under the same base case scenario, the Group is forecast to breach
the cash covenant under the debt facility in March 2023. The cash covenant
requires the Group to have sufficient cash to meet its operating cash flow as
well as all interest and principal debt repayments for the following nine
months from each quarterly test point. The existing principal debt repayment
schedule requires debt repayments of €1.2M in June 2023, €2.4M in
September 2023 and €3.3M in December 2023, a total of €6.9M. Whilst the
operating forecast cash flow for the Group to December 2023 in the base case
scenario is sufficient to cover operating cash flow and interest repayments,
under the base case scenario the Group does not expect to be able to generate
sufficient cash to meet the capital repayments currently due from September
2023. Such a situation gives rise to a material uncertainty which may cast
significant doubt about the Group's ability to continue as a going concern.
The Board is in the process of reviewing its options for the potential sale or
IPO of certain of the Group's assets, with the intention that a proportion of
any proceeds received will be directed towards the repayment of debt.
Furthermore, the Board has discussed with IPF Partners the possible breach of
the financial covenants, and the Group's inability to pay the principal
amounts scheduled under the reprofiled IPF Facility during the forecast
period, together with the strategic options currently being considered by the
Board. IPF Partners has confirmed to the Board that it is prepared to consider
a waiver in respect of the requirement to submit a compliant financial
covenant certificate in the event of a breach provided the Group complies with
certain conditions. At the date of approval of the financial statements the
Directors have ensured the actions requested by IPF Partners have been
completed.
Based on the strategic options being considered and the ongoing funding
negotiations with IPF Partners, the Board is confident in being able to settle
the Group's debt obligations in full or renegotiating the current covenant
obligations with IPF Partners to enable the Group and the Company to be able
to meet their obligations as and when they fall due for the foreseeable
future. However, given that neither sale proceeds have been secured or a
formal waiver of covenants has been received at the date of approving these
financial statements, a material uncertainty exists that may cast significant
doubt on the Group's and the Parent Company's ability to continue as a going
concern.
Accepting the material uncertainty, the Directors have a reasonable
expectation that the Company has adequate resources to continue in operational
existence for the foreseeable future. For these reasons, they continue to
adopt the going concern basis in preparing the Annual Report and Accounts.
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