REG - Roquefort Theraptcs. - Annual Report & Financial Statements - 31 Dec 2022
05/06/2023 07:00
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RNS Number : 5727B Roquefort Therapeutics PLC 05 June 2023
Roquefort Therapeutics plc
("Roquefort Therapeutics" or the "Company")
Annual Report & Financial Statements - 31 Dec 2022
Foundation & team in place to deliver key R&D and commercial
milestones
Roquefort Therapeutics plc (LSE:ROQ), the Main Market listed biotech company
focused on developing first in class medicines in the high value and high
growth oncology market, announces its audited results for year ended 31
December 2022.
Copies of the Annual Report and Financial Statements will be made available on
the Company's website at: https://www.roquefortplc.com/results-centre
(https://www.roquefortplc.com/results-centre)
Highlights
· Acquisition of Oncogeni in September 2022 through the issue of
50,000,000 new ordinary shares in the Company, together with successful
Placing raising gross proceeds of £1,015,000
· Further strengthened Board and senior management team through the
appointment of Ajan Reginald as CEO, Professor Sir Martin Evans as Chief
Scientific Officer and Dr Darrin Disley as Non-Executive Director
· Reinforced the Company's foundation through Oncogeni's state of the
art laboratory located in Stratford-upon-Avon which has the infrastructure
required for the pre-clinical development of the Group's portfolio of
antibodies, oligonucleotides and cell and gene therapies - significant cost
advantages
· Cash at year end 31 December 2022 of £2,322,974
Pre-clinical highlights
· Acquisition of Oncogeni significantly increased pre-clinical
portfolio to four fully funded pre-clinical drug development programs
providing multiple opportunities for success
· Highly synergistic programs focused on the pre-clinical development
of the Midkine antibodies, Midkine RNA, MK Cell Therapies and STAT-6, siRNA
· Signed partnership agreements and commenced pre-clinical development
programs with leading academic cancer research centres
Post Period End Highlights
· Key milestone achieved with ROQ-A1 and ROQ-A2 Midkine antibody
programs, targeting metastatic breast cancer, and lung and liver metastasis,
successfully demonstrated in vivo safety in pre-clinical development
programs and progressed into in vivo efficacy studies
· siRNA, MK cell therapy and Midkine oligonucleotide programs
progressing pre-clinical development
· Signed exclusive worldwide license agreement (excluding Japan) with
Randox Laboratories for 10 years to utilise Midkine antibodies in medical
diagnostics
o Highly synergetic - deal will accelerate ability to diagnose patients and
therefore reduce time and costs when it reaches clinical trials
· Randox deal expected to strengthen balance sheet and highlights the
Company's deal making capabilities
· Portfolio further enhanced to a total of five programmes with the
in-house development of a platform of novel mRNA cancer medicines
· Formation of Scientific Advisory Board
Outlook
· On course with targets for clinical readiness for one of the
Company's development programs during H2 2023
· Near-term IND and licensing opportunities from advanced stage of
development of Midkine portfolio products, MK cell and siRNA products
· Strategic goal to take advantage of the paradigm shift that 90% of
successful biotech programs are acquired
· Create value by identifying early innovation, developing it either
in-house or with a research partner towards clinical trials and utilise
experience to licence or sell to big pharma
Commenting on the Annual Results, Chief Executive Officer, Ajan Reginald said:
"In 2022 Roquefort Therapeutics made significant progress, notably with the
successful fundraise and completion of the acquisition of Oncogeni in
September 2022 which pivoted the Company into a material oncology group. Post
the acquisition of Oncogeni, the Group's portfolio consisted of four highly
complementary fully funded programs with multiple novel patent-protected
pre-clinical anti-cancer medicines. Each lead program is capable of becoming a
first-in-class medicines targeting some of the hardest to treat cancers."
"In 2023, the Midkine antibody program has successfully demonstrated in vivo
safety and progressed into in vivo efficacy studies. In March 2023, the
Company announced the successful development of a fifth program, the mRNA
Midkine cancer program, the third in its Midkine family. Anti-cancer mRNA is
a highly attractive field with a relatively small number of highly innovative
companies able to develop mRNA cancer therapeutics."
"In H1 2023, the Group made significant strategic and commercial progress by
completing a licence and royalty agreement with Randox Laboratories to utilise
the Group's Midkine antibody portfolio for clinical diagnostics. The
transaction highlights the Group's in-house deal making capabilities and
strategic focus in therapeutics. The partnership with Randox for cancer
diagnostics validates the Company's strategy to target Midkine and brings a
companion diagnostic, which increases the likelihood of clinical trial success
and reduces the associated time and cost."
"In summary, in the first 6 months of 2023, we have successfully integrated
Oncogeni to form a material oncology group, accelerated the cancer programs to
meet critical R&D milestones on-time and on-budget and demonstrated our
business model of realising value through licensing transactions. This has
established the strategic and commercial foundation from which the Group will
deliver shareholder value in 2023-4."
Enquiries:
Roquefort Therapeutics plc
Stephen West (Chairman) / Ajan Reginald (CEO) +44 (0)20 3290 9339
Hybridan LLP (Joint Broker)
Claire Louise Noyce +44 (0)203 764 2341
Optiva Securities Limited (Joint Broker)
Christian Dennis +44 (0)20 3411 1881
Buchanan (Public Relations)
Jamie Hooper / Ben Romney / George Beale +44 (0)20 7466 5000
LEI: 254900P4SISIWOR9RH34
CHAIRMAN'S STATEMENT
I am pleased to report the audited financial statements to shareholders for
the year ended 31 December 2022. During the year Roquefort Therapeutics (the
"Company" and together with its subsidiaries, the "Group") has made
substantial progress towards its corporate goals.
Most notably, in September 2022, Roquefort Therapeutics successfully completed
a fundraise via the issue of 7,249,998 ordinary shares raising total gross
cash proceeds of £1,015,000 and the acquisition of Oncogeni for an aggregate
equity consideration fair value of £3.75 million through the issue of
50,000,000 new ordinary shares in the Company (the "Acquisition"),
transforming Roquefort Therapeutics into a material oncology Group.
Roquefort Therapeutics completed the integration of the Oncogeni portfolio and
enhanced the Group's network of partnerships with leading academic cancer
research centres. These partners complement the Group's own world-class
in-house expertise and laboratory infrastructure and enable Roquefort
Therapeutics to implement a broader and more effective development strategy.
The Group believes its distributed R&D model is highly scalable and cost
effective.
In parallel, business development activities were significantly enhanced by
meeting a number of leading pharmaceutical companies to introduce Roquefort
Therapeutics and present the novel portfolio. This has enabled the Group to
accelerate the out-licensing strategy in both core and non-core
applications.
Acquisition of Oncogeni
The acquisition of Oncogeni, diversified Roquefort Therapeutics into a
material oncology group with a pre-clinical anti-cancer portfolio that is
patent protected and fully funded to complete pre-clinical development
activities and submit applications to commence clinical trials. In addition to
significantly expanding the portfolio, Roquefort Therapeutics now has a
state-of-the-art laboratory in the UK which provides the Group with major cost
saving and time advantages as the Group progresses through the pre-clinical
stage of development. The Acquisition also strengthened the Roquefort
Therapeutics Board and senior management with complementary skills and
expertise. The team in place has exceptional experience in drug development
and driving and realising value in biotech. The Acquisition introduced new
shareholders into the Group, including Daiichi Sankyo, a global pharmaceutical
Group and CH Health, a specialist biotech venture capital investor -
validating the high potential of the Group's investment proposition and growth
strategy.
Oncogeni has developed two families of innovative cell and RNA oncology
medicines, both in pre-clinical development, which are protected by nine
patents and complement the existing Midkine programs well:
· Mesodermal Killer ("MK") cells: a new class of cellular medicine
engineered to kill cancer cells both directly and by enhancing the activity of
natural killer cells; and
· Small interfering RNA ("siRNA") therapeutics: kill cancer cells by
inhibiting a novel cancer target STAT6 (signal transducer and activator of
transcription 6).
The MK and siRNA families consist of six and four drug candidates each i.e.,
MK1-6 and siRNA 1-4. Each candidate is protected by composition of matter
patents and has the potential to be a new medicine subject to the successful
completion of development.
The Board and senior management team was significantly expanded with the
acquisition of Oncogeni with Ajan Reginald joining as CEO of Roquefort
Therapeutics. Ajan has a strong track record in drug development, biotech
transactions and commercialisation. Over 20 years, he has served as the Global
Head of Emerging Technologies for Roche Group (SWX: ROG), Chief Operating
Officer and Chief Technology Officer of Novacyt S.A (LON: NCYT) and CEO of
Celixir Ltd.
In addition, Professor Sir Martin Evans was appointed as Chief Scientific
Officer. Sir Martin was the first scientist to identify embryonic stem
cells, which can be adapted for a wide variety of medical purposes. His
discoveries are now being applied in virtually all areas of biomedicine - from
basic research to the development of new therapies. In 2007, he was awarded
the Nobel Prize for Medicine, the most prestigious honour in world science,
for these "ground-breaking discoveries concerning embryonic stem cells and DNA
recombination in mammals."
Further, Dr Darrin Disley was appointed Non-Executive Director, and is a
renowned scientist, entrepreneur, angel investor and enterprise champion who
has started, grown, or invested in over 40 start-up life science, technology
and social enterprises, raising US$600 million in business financing and
closing US$700 million in commercial deals. He was CEO of Horizon Discovery
Group plc for 11 years, during which he led the company from start-up through
a US$113 million IPO, and rapid scale-up powered by multiple acquisitions of
US peer companies to become a global market leader in gene editing and gene
modulation technologies.
Since listing in March 2021, Roquefort Therapeutics has established a quality
team, underpinned by a proven collective track record in the development,
progression and commercialisation of relevant medicines, a key aspect of
Roquefort Therapeutics' investment proposition and leaves the Group well
placed, subject to further funding, to deliver its growth objectives.
Pre-clinical development during 2022
During the period, the Group enhanced the portfolio significantly, completed
the integration of the Oncogeni portfolio. Post the Acquisition, the Group's
portfolio consisted of four fully funded, novel patent-protected pre-clinical
anti-cancer medicines. The highly complementary profile of four
best-in-class medicines consists of:
· Midkine antibodies with significant in vivo efficacy and toxicology
studies;
· Midkine RNA oligonucleotide therapeutics with novel anti-cancer gene
editing action;
· STAT-6 siRNA therapeutics targeting solid tumours with significant in
vivo efficacy; and
· MK cell therapy with direct and NK-mediated anti-cancer action.
The Group continued to progress its four novel patent-protected pre-clinical
anti-cancer medicines during the period through a combination of partnerships
with leading academic cancer research centres and at the Group's state of the
art laboratory.
With the programs focused on the pre-clinical development of the Midkine
antibodies, Midkine RNA oligonucleotide and STAT-6 siRNA, the Group signed
partnership agreements and commenced pre-clinical development programs with
the following leading academic cancer research centres:
· Olivia Newton-John Cancer Research Institute, La Trobe University,
Melbourne
o Breast cancer metastasis, Midkine antibody program
· Lowy Cancer Research Centre, University of New South Wales
o Liver and Colorectal cancer, Midkine RNA oligonucleotide and STAT-6 siRNA
programs
· Hawkins Laboratory Biochemistry and Genetics, La Trobe University,
Melbourne
o Lung cancer metastasis, Midkine antibody program
· School of Medical Sciences, University of Sydney
o Midkine RNA oligonucleotide program
In addition, the Group is utilising its state of the art laboratory in
Stratford-upon-Avon to develop the MK cell therapy program in-house. The
laboratory includes a clean room, laminar flow cabinets and cryopreservation
infrastructure required for pre-clinical development of innovative new
medicines, particularly cell and gene therapies.
Post Period End
2023 started with significant momentum, with the Group's Midkine antibody
program, targeting metastatic breast cancer and metastatic lung cancer,
successfully demonstrating in vivo safety in pre-clinical development programs
carried out by leading cancer research groups (stated above), a key
development milestone. ROQ-A1 and ROQ-A2 are the patented humanised
antibody medicines designed by Roquefort Therapeutics to target the novel
Midkine target prevalent in hard-to-treat cancers. These milestones were
completed on schedule and within budget. Both Midkine antibody candidates
will now progress into in vivo pre-clinical efficacy studies to assess cancer
killing ability in primary and metastatic breast cancer and lung cancer.
Both antibodies are valuable assets that fit the established Big Pharma
paradigm of treating cancer with novel antibody therapeutics. The siRNA, MK
cell therapy and Midkine RNA oligonucleotide programs are also progressing
well and are expected to complete pre-clinical development milestones in Q2
2023.
The Group has always believed Midkine to be a truly novel target and has been
optimistic in the therapeutic potential of Midkine. In February 2023 Roquefort
Therapeutics validated Midkine as a target by signing a Licence and Royalty
agreement with leading diagnostics group, Randox Laboratories in relation to
the Group's Midkine antibody portfolio. The Group is eligible to receive
upfront and potential marketing milestone receipts, as well as royalties on
diagnostics products sold. The Group received from Randox an upfront amount of
£200,000 and can earn further potential milestone receipts of up to £150,000
for marketing approval in certain jurisdictions. The Group will also receive
royalties from Randox on net sales of any commercialised diagnostic
products. Randox is developing a diagnostic to identify patients with
cancers that overexpress Midkine which is highly synergistic with Roquefort
Therapeutics' development of first-in-class cancer medicines. The Licence
and Royalty agreement also benefits the Group's preparation for clinical trial
readiness because diagnosing patients early will accelerate the ability to
diagnose patients for clinical trials which will dramatically reduce time and
costs associated, and in addition, clinical trials with companion diagnostics
have a much higher success rate - 15.9% vs 7.6% (BIO, QSL Advisors and Informa
UK 2021 Report).
Finally in March 2023, Roquefort Therapeutics announced the successful
development of a fifth program and a third in its Midkine family. The
Roquefort Therapeutics team led by Vice President of Drug Discovery, Professor
Graham Robertson, has delivered a pioneering mRNA anti-cancer program. This
new platform of mRNA therapeutics was developed in-house and consists of four
mRNA pre-clinical therapeutics targeting Roquefort Therapeutics' novel Midkine
target. Developing the mRNA anti-cancer program is highly synergistic with
the Group's existing Midkine RNA oligonucleotide program in development at the
University of New South Wales, ensuring development continues to remain on
budget and on schedule. The addition of the mRNA family expanded Roquefort
Therapeutics' portfolio to five highly innovative programs which remain fully
funded to the critical value inflection point of clinical trial readiness.
The Group is now working towards demonstrating efficacy of the mRNA
therapeutics in specific cancer targets, alongside the Group's existing
Midkine RNA oligonucleotide program.
Strategy & Outlook
Roquefort Therapeutics' strategy is to identify the next generation of
medicines for the most difficult to treat cancers which have a high mortality
rate, and develop medicines in-house and with academic partners through the
pre-clinical phase to clinical trial readiness and IND filings. The Group
has the necessary expertise and experience to package up the programs for
licence or sale to big pharma which is the Group's ultimate aim to realise
value. Through the material strategic progress delivered over the course of
the prior year, Roquefort Therapeutics is well positioned with currently five
pre-clinical programs, and a considerably strengthened team to deliver
significant progress in a focused and cost-effective manner, through a
combination of partnerships with leading academic cancer research centres and
a high-quality in-house laboratory.
2023 has started with significant momentum and the Group has laid the
foundations to realise this strategy having expanded the Group in September
2022 and by its pre-clinical and commercial successes announced during Q1
2023. The Randox licensing agreement has demonstrated the Group's ability to
achieve deals, and out licencing to strategic partners, both in diagnostics
and therapeutics, is a key priority for Roquefort Therapeutics during
2023. The pre-clinical progress is highly encouraging and the Group will
update shareholders as to its further progress in due course.
The Chairman's statement should be read as part of the strategic report.
Stephen West, Executive Chairman
4 June 2023
DIRECTORS' REPORT
The Directors present their report with the audited financial statements of
Roquefort Therapeutics plc ("the Company") and its subsidiaries Lyramid Pty
Limited ("Lyramid"), Oncogeni Limited ("Oncogeni") and Tumorkine Pty Limited
("Tumorkine") (together "the Group") for the year ended 31 December 2022. A
commentary on the business for the year is included in the Chairman's
Statement. A review of the business is also included in the Strategic Report.
The Company's Ordinary Shares are listed on the London Stock Exchange, on the
Official List pursuant to Chapter 14 of the Listing Rules, which sets out the
requirements for Standard Listings.
Directors
The Directors of the Company during the year and their beneficial interest in
the Ordinary shares of the Company at 31 December 2022 were as follows:
Director Position Appointed Ordinary Warrants
shares
Stephen West(1) Executive Chairman 17/08/2020 5,313,264 7,500,000
Ajan Reginald Chief Executive Officer 16/09/2022 11,627,786 -
Sir Martin Evans Chief Scientific Officer 16/09/2022 - -
Dr Michael Stein Non-Executive Director 22/03/2021 - 2,000,000
Ms Jean Duvall Non-Executive Director 05/04/2022 - 300,000
Dr Simon Sinclair(2) Non-Executive Director 20/04/2022 60,415 300,000
Dr Darrin Disley Non-Executive Director 16/09/2022 1,225,966 -
(1) 4,628,485 Ordinary shares and 7,500,000 warrants held by Cresthaven
Investments Pty Ltd ATF The Bellini Trust; and 684,779 Ordinary shares were
held by Stephen West direct
(2) 300,000 warrants held by Livingstone Investment Holdings Ltd; and 60,415
Ordinary shares were held by Simon Sinclair direct
Qualifying Third Party Indemnity Provision
At the date of this report, the Company has a third-party indemnity policy
in place for all Directors.
Substantial shareholders
As at 31 December 2022, the total number of issued Ordinary Shares with
voting rights in the Company was 129,149,998. Details of the Company's capital
structure and voting rights are set out in note 18 to the financial
statements.
The Company has been notified of the following interests of 3 per cent or more
in its issued share capital as at the date of approval of this report.
Party Name Number of Ordinary Shares % of
Share Capital
Ajan Reginald 11,627,786 9.00%
Abdelatif Lachab 7,750,000 6.00%
Jane Whiddon(1) 7,300,000 5.65%
M Sheikh 5,744,870 4.45%
Stephen West(2) 5,313,264 4.11%
Provelmare SA 5,000,000 3.87%
Z Sheikh 4,018,910 3.11%
M Rollins 4,000,000 3.10%
K Fallon 3,905,215 3.02%
(1) 2,500,000 shares held by MIMO Strategies Pty Ltd (ATF the MIMO Trust);
4,100,000 shares held by 6466 Investments Pty Ltd; 700,000 shares held by
Nautical Holdings WA Pty Ltd - all of which are entities controlled by J
Whiddon
(2) 4,628,484 shares held by Cresthaven Investments Pty Ltd (ATF the Bellini
Trust) - an entity associated with S West
Financial instruments
Details of the Company's financial risk management objectives and policies as
well as exposure to financial risk are contained in the accounting policies
and note 21 of the financial statements.
Greenhouse Gas (GHG) Emissions
The Company is aware that it needs to measure its operational carbon footprint
in order to limit and control its environmental impact. However, due to its
operational footprint being limited to a laboratory leased from August 2022,
consuming less than 40,000 kWh of energy, the Company is currently exempt from
GHG reporting requirements.
In the future, the Company will only measure the impact of its direct
activities, as the full impact of the entire supply chain of its suppliers
cannot be measured practically.
TCFD Disclosure
The Group was incorporated in August 2020, and operated virtually until its
acquisition of Oncogeni Limited in September 2022, at which point the Group
commenced a short-term lease of laboratory and office facilities. The Group
therefore will begin to consider its impact on the environment and the risks
it faces from climate change, for the first time during 2023 and expects to
develop its sustainability plans over a 5 year period, commensurate with the
size of its operations. Climate change was not considered a principal risk or
uncertainty for the year ended 31 December 2022.
In line with the requirements of the Financial Conduct Authority's Listing
Rule 14.3.27R, and for the above reasons, we note that we have not made the
disclosures, in respect of the financial year ended 31 December 2022, in line
with the recommendations and recommended disclosures of the TCFD.
Dividends
The Directors do not propose a dividend in respect of the year ended 31
December 2022.
Research and development, Future developments and events subsequent to the year end
Further details of the Company's research and development, future developments
and events subsequent to the year-end are set out in the Strategic Report.
Research and development costs incurred for the year ended 31 December 2022
were £319,315 (2021 - £698).
Corporate Governance
The Governance report forms part of the Director's Report.
Going Concern
The Directors have prepared financial forecasts to estimate the likely cash
requirements of the Group over the period to 30 June 2024, given its stage of
development and lack of recurring revenues. In preparing these financial
forecasts, the Directors have made certain assumptions with regards to the
timing and amount of future expenditure over which they have control. The
Directors have considered the sensitivity of the financial forecasts to
changes in key assumptions, including, among others, potential cost overruns
within committed spend and changes in exchange rates.
The Group's available resources are sufficient to cover the Group's plans to
complete pre-clinical development activities and submit applications to
commence clinical trials during 2023, however, they are not sufficient to
cover existing committed costs and the costs of planned activities for at
least 12 months from the date of signing these consolidated and company
financial statements.
The Directors plan to raise further funds during 2023 (either through
licencing deals and/or equity placements) and have reasonable expectations
that sufficient cash will be raised to fund the planned operations of the
Group for a period of at least 12 months from the date of approval of these
financial statements. The funding requirement indicates that a material
uncertainty exists which may cast significant doubt over the Group's and
Company's ability to continue as a going concern, and therefore its ability to
realise its assets and discharge its liabilities in the normal course of
business.
After due consideration of these forecasts, current cash resources, including
the sensitivity of key inputs, and plans to raise further funds, the Directors
consider that the Group will have adequate financial resources to continue in
operational existence for the foreseeable future (being a period of at least
12 months from the date of this report) and, for this reason, the financial
statements have been prepared on a going concern basis. The financial
statements do not include the adjustments that would be required should the
going concern basis of preparation no longer be appropriate.
Principal Activities
The Company's principal activity in the reporting period was the preclinical
development of next generation medicines focused on hard to treat cancers.
Auditors
On 1 December 2022, Jeffreys Henry LLP resigned as the Company's auditors and
confirmed that there are no circumstances connected with their resignation
which they considered should be brought to the attention of the Company's
members or creditors in accordance with Section 519 of the Companies Act 2006.
On 16 January 2023 it was announced that the Company had appointed BDO LLP as
its auditors with immediate effect. The appointment of BDO LLP will be subject
to approval by shareholders at the next Annual General Meeting of the Company.
Statement of Directors' responsibilities
The Directors are responsible for preparing the Annual Report alongside the
financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors have prepared the financial
statements in accordance with UK adopted International Accounting Standards.
Under company law the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the Company and of the profit or loss of the Company for that year.
The Directors are also required to prepare financial statements in accordance
with the rules of the London Stock Exchange for companies with a Standard
Listing.
In preparing these financial statements, the Directors are required to:
• Select suitable accounting policies and then apply them
consistently;
• Make judgments and accounting estimates that are reasonable
and prudent;
• State whether applicable UK adopted International Accounting
Standards have been followed, subject to any material departures disclosed and
explained in the financial statements; and
• Prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will continue in
business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements and the Remuneration
Committee Report comply with the Companies Act 2006. They are also responsible
for safeguarding the assets of the Company and hence for taking reasonable
steps for the prevention and detection of fraud and other irregularities. They
are also responsible to make a statement that they consider that the annual
report and accounts, taken as a whole, is fair, balanced, and understandable
and provides the information necessary for the shareholders to assess the
Company's position and performance, business model and strategy.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website.
Legislation in the United Kingdom governing the preparation and dissemination
of the financial statements may differ from legislation in other
jurisdictions.
Statement of Directors' responsibilities pursuant to Disclosure and Transparency Rules
Each of the Directors confirm that, to the best of their knowledge and belief:
• the financial statements prepared in accordance with UK adopted
International Accounting Standards, give a true and fair view of the assets,
liabilities, financial position and loss of the Group and Company; and
• the Annual Report and financial statements, including the
Strategic Report, includes a fair review of the development and performance of
the business and the position of the Group and Company, together with a
description of the principal risks and uncertainties that they face.
Disclosure of Information to Auditors
So far as the Directors are aware, there is no relevant audit information of
which the Company's auditors are unaware, and each Director has taken all the
steps that they ought to have taken as a Director in order to make themselves
aware of any relevant audit information and to establish that the Company's
auditors are aware of that information.
This directors' report was approved by the Board of Directors on 4 June 2023
and is signed on its behalf by:
Stephen West, Executive Chairman
STRATEGIC REPORT
The Directors present the Strategic Report of the Company and the Group for
the year ended 31 December 2022.
Section 172(1) Statement - Promotion of the Company for the benefit of the members as a whole
The Directors believe they have acted in the way most likely to promote the
success of the Company for the benefit of its members as a whole, as required
by s172 of the Companies Act 2006.
The requirements of s172 are for the Directors to:
• Consider the likely consequences of any decision in the long term;
• Act fairly between the members of the Company;
• Maintain a reputation for high standards of business conduct;
• Consider the interests of the Company's employees;
• Foster the Company's relationships with suppliers, customers and
others; and
• Consider the impact of the Company's operations on the community
and the environment.
The Company acquired Lyramid Pty Ltd in late 2021 and then subsequently
acquired Oncogeni Limited in September 2022. The pre-revenue nature of the
business is important to the understanding of the Company by its members and
suppliers, and the Directors are as transparent about the cash position and
funding requirements as is allowed under LSE regulations.
We aim to work responsibly with our stakeholders, including suppliers. The key
Board decisions made in the year and post year end are set out below:
Significant events / decisions Key s172 matter(s) affected Actions and Consequences
Entering into an agreement to purchase the entire issued share capital of Shareholders and Business Relationships Completion of the acquisition and associated Placing, with the enlarged share
Oncogeni Limited and the associated Share Placing capital listed on the London Stock Exchange, leading to greater likely
outcomes for shareholders in the future. Shareholders were communicated to and
decisions made by the Directors were notified via the Regulatory New Service.
Interests of Employees
The Company's Corporate Governance Statement of this Annual Report sets out
(under board responsibilities) the processes in place to safeguard the
interests of employees.
Foster business relationships with suppliers, joint venture partners and
others
Potential suppliers and joint venture partners are considered in the light of
their suitability to comply with the Company's policies.
Impact of operations on the community and environment
The Company will continue to monitor the impact of its research facilities on
the community and environment.
Maintain a reputation for high standards of business conduct
The Corporate Governance section of this Annual Report sets out the Board and
Committee structures and Board and Committee meetings held during the year,
together with the experience of executive management and the Board and the
Company's policies and procedures.
Act fairly as between members of the Company
The Board takes feedback from a wide range of shareholders (large and small)
and endeavours at every opportunity to pro-actively engage with all
shareholders (via regulatory news reporting-RNS) and engage with any specific
shareholders in response to particular queries they may have from time to
time. The Board considers that its key decisions during the year have impacted
equally on all members of the Company.
Review of Business in the Year
Operational Review
The Company's principal activity is set out in the Directors' Report.
During the first nine months of the year under review the Company was
primarily focused on the pre-clinical development of RNA oligonucleotide drugs
targeting Midkine. These RNA oligonucleotide drugs interfere with processing
of the Midkine mRNA ultimately leading to reduced active Midkine protein
produced in diseased tissues and tumours.
On 22 June 2022 the Company announced that it had entered into a conditional
sale and purchase agreement with the shareholders of Oncogeni Limited
("Oncogeni") to acquire 100% of the total issued equity in Oncogeni for an
aggregate consideration of £3,750,000 to be satisfied by the issue of
50,000,000 new ordinary shares in the Company.
Oncogeni was established in 2019 by Nobel Laureate Professor Sir Martin Evans.
It had an experienced leadership team developing novel cell and RNA based
cancer medicines, which the Board believed were complementary to the Company's
existing pre-clinical drug development business.
To fund the future pre-clinical drug development work of Oncogeni and the
working capital requirements of the enlarged Group, the Company also announced
a placing of 7,249,998 new ordinary shares to new and existing investors to
raise funds of £1.015 million.
The transaction and placing were successfully completed on 16 September 2022
with 57,249,998 new ordinary shares being issued and admitted to the Official
List of the UKLA by way of a standard listing under Chapter 14 of the UKLA's
Listing Rules and to trading on the London Stock Exchange's main market for
listed securities on that date.
On completion of the transaction Professor Sir Martin Evans, Ajan Reginald and
Dr Darrin Disley (all directors of Oncogeni) were appointed to the Board of
the Company.
Post-acquisition of Oncogeni the Company was focused on integrating the
Oncogeni business into the existing business and progressing development of
the enlarged pre-clinical drug portfolio.
Events since the year end
On 20 February 2023 the Company announced that it had signed an exclusive
licence and royalty agreement, for the field of medical diagnostics only, with
a leading international diagnostics company, Randox Laboratories Ltd
("Randox"), in relation to its Midkine antibody portfolio. Randox and
Roquefort Therapeutics will now engage in collaborative research programs to
develop new cancer diagnostics that will identify patients treatable with the
Company's Midkine therapeutics.
On 8 March 2023 the Company announced that it had successfully developed a new
novel platform of anti-cancer mRNA therapeutics.
Financial review
Results for the year to 31 December 2022
The Consolidated Statement of Comprehensive Income for the year shows a loss
of £1,615,417 (2021: £917,433) and the Consolidated Statement of Financial
Position at 31 December 2022 shows net assets of £7,206,638 (2021:
£4,082,606) for the Group.
The total comprehensive loss for the year of £1,630,406 (2021: loss of
£916,809) occurred as a result of on-going research and development costs,
and administrative expenses required to operate the Company, and costs in
relation to the completion of the acquisition of Oncogeni.
Administrative expenses increased to £1,306,561 (2021: £252,392) mainly due
to Directors' and employee costs increasing to £365,564 (2021: £59,607),
consulting and professional fees increasing to £209,768 (2021: £125,807),
the audit fee increasing to £157,336 (2021: £22,000) and other expenditure
(excluding audit fees) increasing to £527,520 (2021: £13,818) - reflecting
an increase in staff and operational activities during the year. Research
and development expenditure increased to £319,315 (2021: £698) as the Group
carried out external studies with Murdoch University for the Midkine RNA
oligonucleotide pre-clinical program in the first half of the year and
commenced internal and external studies on the other programs later in the
year.
The intangible assets of the Group increased to £5,343,506 (2021:
£1,481,530) as a result of accounting for the fair value of shares issued for
the acquisition of Oncogeni Limited (Refer to note 12).
Other receivables reduced significantly to £45,154 (2021: £2,135,031) due to
the receipt of outstanding placing proceeds of £2,106,202 in January 2022.
Cash flow
Net cash inflow for the Group for 2022 was £1,421,258 (2021: £900,335).
Net cash used in investing activities for 2022 decreased to £122,468 (2021:
£606,226) reflecting the acquisition of Oncogeni Limited in 2022 for equity
consideration and associated costs, compared with the acquisition of Lyramid
Pty Ltd in 2021 for a mixture of cash consideration, equity consideration and
associated costs.
Net flows from financing activities for 2022 was £3,121,202 reflecting the
receipt of proceeds from an equity placement undertaken in December 2021 of
£2,106,202 and an equity placement in September 2022 raising £1,014,999.
This compares to the net flows from financing activities for 2021 of
£2,023,393 reflecting, after costs of £159,405, pre-IPO equity placements in
2020 raising £124,000, the IPO equity placement in March 2021 raising
£1,000,000, the exercise of broker warrants for £15,000, an equity placement
in August 2021 raising £150,000 and an equity placement in December 2021
raising £3,000,000 (less proceeds outstanding and received in early 2022 of
£2,106,202).
Closing cash
As at 31 December 2022, the Group held £2,322,974 (2021: £899,721) of cash.
Key Performance Indicators
The Company's non-financial KPIs are the development of new novel anti-cancer
therapeutics, the registration of new patents to protect the clinical
advancements in anti-cancer therapeutics being achieved during the
pre-clinical stages of drug discovery and entering into licencing deals with
other companies.
The Company's financial KPIs are the Company's cash runway and budgeted
R&D spend compared to actuals.
Position of Company's Business
At the year end
At the year end the Company's Statement of Financial Position shows net assets
totalling £7,481,382 (2021: £4,014,683). The Company's current cash
resources are sufficient to cover the Company's plans to complete pre-clinical
development activities and submit applications to commence clinical trials for
all of the Company's pre-clinical programs. However, the ability of the
Company to continue as a going concern, for at least 12 months from the date
of signing this Annual Report, is dependent upon the completion of licencing
deals that include upfront consideration and/or the successful future raising
of further capital, which the Directors are confident of achieving. There can
be no assurance that these plans will be successful and so there is a material
uncertainty over the Company's ability to continue as a going concern.
Environmental matters
The Board contains personnel with a good history of running businesses that
have been compliant with all relevant laws and regulations and there have been
no instances of non-compliance in respect of environmental matters.
Employee information
As at the date of this report, the Company has an Executive Chairman, two
Executive Directors and four Non-Executive Directors. The Company is committed
to gender equality and, as future roles are identified, a wide-ranging search
would be completed with the most appropriate individual being appointed
irrespective of gender.
A split of our employees and directors by gender at the date of this report,
is shown below:
Male Female
Directors 6 1
Employees - 2
Total employees (including directors) 6 3
Social/Community/Human rights matters
The Company ensures that employment practices take into account the necessary
diversity requirements and compliance with all employment laws. The Board has
experience in dealing with such issues and sufficient training and
qualifications to ensure they meet all requirements.
Anti-corruption and anti-bribery policy
The government of the United Kingdom has issued guidelines setting out
appropriate procedures for companies to follow to ensure that they are
compliant with the UK Bribery Act 2010. The Company has conducted a review
into its operational procedures to consider the impact of the Bribery Act 2010
and the Board has adopted an anti-corruption and anti-bribery policy.
Principal Risks and Uncertainties
The Group operates in an uncertain environment and is subject to a number of
risk factors. The Directors consider the following risk factors are of
particular relevance to the Group's activities although it should be noted
that this list is not exhaustive and that other risk factors not presently
known or currently deemed immaterial may apply.
Issue Risk/Uncertainty Mitigation
The Group is a pre-revenue business and there is no guarantee that it will The generation of revenues is difficult to predict and there is no guarantee The Directors have appointed a CEO to actively manage the commercial
generate significant or any revenue in the near future that the Group will generate significant or any revenues in the foreseeable activities of the Group as it develops.
future.
The CEO and the Directors will oversee the progress of the development of the
The Group will face risks frequently encountered by pre-revenue businesses Group's research programs and associated technologies and will ensure funding
looking to bring new products and devices to the market. There is also no is in place to support the necessary trials and further development steps as
guarantee that the intellectual property held will ultimately result in a these come on stream.
commercially viable product. It is also possible that technical and/or
regulatory hurdles could lengthen the time required for the delivery of such a
testing product.
The Group's future growth will also depend on its ability to secure
commercialisation partnerships on appropriate terms, to manage growth and to
expand and improve operational, financial and management information, quality
control systems and its commercialisation function on a timely basis, whilst
at the same time maintaining effective cost controls.
Research and development risks carry technical risks, including the programs All therapeutic research and development programs carry technical risks, The Directors will engage in continuous dialogue with the Chief Scientific
undertaken by the Group and there is no guarantee that these technical risks including the programs undertaken by the Group. These risks include: those Officer to critically review the technical risks. The Board has established a
can be effectively overcome, and a successful, approved product can be associated with delays in development of effective and potent drugs; failure Scientific Advisory Board to support them in this review process.
developed of delivery by third party suppliers of research services or materials
essential to the programs; and outcomes of clinical testing. There is no
guarantee that these technical risks can be effectively overcome, and a
successful, approved product can be developed. Furthermore, the Group is
pursuing relatively new drug classes. Whilst several examples of approved
drugs now exist in these classes, as yet no such drug has been developed for
the Group's targets. There is a risk that these novel classes of drugs may not
be an effective way of modulating the target's expression to exert appropriate
clinical benefit in the target conditions.
Biotechnology programs are subject to the most stringent regulatory oversight Biotechnology programs are subject to the most stringent regulatory oversight The Scientific Advisory Board will be critical in supporting the Board in
by various government agencies and ethics committees and there is no guarantee by various government agencies and ethics committees. Key regulatory focus understanding and mitigating these risks. Even so, a sudden unforeseen change
that the proposed development work will result in an efficacious treatment, or areas are safety and efficacy, and future clinical trials conducted by the in the regulations could have a material adverse impact on the development
even if it does, that the drug will be approved by regulatory authorities Group may be suspended or abandoned entirely in the event that regulatory program.
agencies consider that continuation of these trials could expose participants
to undue risks. Before obtaining regulatory approval of a product for a target The Group cannot guarantee that the proposed development work will result in
indication, substantial evidence must be gathered in controlled clinical an efficacious treatment, or even if it does, that the drug will be approved
trials that the product candidate is safe and effective for use for that by regulatory authorities.
clinical setting. Similar approvals must be obtained from the relevant
regulatory authorities in each country in which the product may be made
available, including Australia, US and the EU.
Even where the Group is successful in terms of technical and regulatory There may be other companies developing effective treatments for the same During 2022, the Board appointed new Directors, senior management and advisors
approvals, there is no guarantee it will be successful in securing an conditions as the Group, which could make commercialising any drug more with appropriate experience and expertise to give the Group the best chance of
appropriate licensing deal or in achieving alternative means of difficult. The research and development programs planned are expected to take commercialising any successful drug in the future.
commercialising its drugs several years before any drug might be ready and the market for such drugs may
contract significantly or become too competitive for an economically viable
drug launch. In addition, even post regulatory approval, any drug may need to
be withdrawn from the market, as well as expose the Group to claims for
compensation as a result of serious adverse events associated with the
treatment. Historically, very few drugs make it from discovery to regulatory
approval and commercialisation.
Existing patents and licences are subject to the terms and conditions of the The Group's subsidiary Lyramid Pty Ltd operates its Midkine antibody research The CEO has a good understanding of the details of the licence agreements and
relevant licence agreement which could be terminated for non-compliance with and development programs under a worldwide, licence agreement with Anagenics the Group's obligations under them. Should any areas of concern arise, legal
the terms of such licence agreement Ltd, the owner of the Midkine patents. Similarly, the Group's subsidiary counsel will be sought before further steps are taken.
Oncogeni Ltd operates its MK Cell and siRNA programs under worldwide licencing
agreements with Cell Therapy Limited and Sirna Limited respectively. Whilst
the Group is currently compliant, there is a risk that the rights to these
patents, as defined by the relevant licence agreement, will be forfeited by
virtue of either party failing to meet licence conditions.
The Group's ability to compete will depend in part, upon the successful The Group's ability to compete will depend in part, upon the successful The Group seeks to protect its intellectual property through the filing of
protection of its intellectual property, in particular its patents and protection of its intellectual property, in particular its Patents Rights and patent applications, as well as robust confidentiality obligations on its
know-how Know-How. Filing, prosecuting and defending patents in all countries employees.
throughout the world would be prohibitively expensive. It is possible that
competitors will use the technologies in jurisdictions where the Group has not The Board intends to defend the Group's intellectual property vigorously,
registered patents. where necessary through litigation and other means.
Any such claims are likely to be expensive to defend, and the other litigating
parties may be able to sustain the costs of complex patent litigation more
effectively than the Group can, because they have substantially greater
resources. Moreover, even if the Group is successful in defending any
infringement proceedings, it may incur substantial costs and divert
management's time and attention in doing so, which may have a material adverse
effect on the Group's business, financial condition, capital resources,
results and/or future operations. Further, disputes can often last for a
number of years, and can be subject to lengthy appeals processes before any
final resolution is achieved through the various different courts and/or
tribunals. Furthermore, it cannot be guaranteed that a court will not rule
against the Group were such claims to be defended.
Despite these precautions that may be taken by the Group to protect its
intellectual technology and products, unauthorised third parties may attempt
to copy, or obtain and use its technology and products. A third party may
infringe upon the Group's intellectual property, release information
considered confidential about the Group's intellectual property and/or claim
technology that is registered to the Group. In addition, the Group may fail to
discover infringement of its intellectual property, and/or any steps taken or
that will be taken by it may not be sufficient to protect its intellectual
property rights or prevent others from seeking to invalidate its intellectual
property (for example, in response to a claim for infringement or where an
attempt is made to "clear a path" for a new competing product) or block sales
of its products by alleging a breach of their intellectual property. Third
parties can bring material and arguments which the patent office granting the
patent may not have seen at the time of granting the patent. Therefore, whilst
a patent may be granted to the Group it could in the future be found by a
court of law or by a patent office to be invalid or unenforceable or in need
of further restriction. As a result of a validity challenge, a patent may be
amended so as to narrow its scope to an extent that it may be more difficult
to restrict activities of competitors. Applications filed by the Group in
respect of new patents and trademarks may also not be granted or, if granted,
may still be subject to opposition. In addition, there can be no guarantee
that the patents or trademarks will be granted on a timely basis. Subject to
certain time limits, there may, in certain circumstances, also be claims to
entitlement, and/or compensation arising from contributions made, to granted
patents by those who have assisted with the relevant research or project.
In the event that litigation is necessary in the future in order to enforce
the Group's intellectual property rights, determine the scope and validity of
proprietary rights of other companies, and/or defend claims of infringement or
invalidity, it could require the Group to commit significant resource to
pursue the protection of its intellectual property and there is no guarantee
that the result of such litigation would result in a favourable outcome to the
Group, or the damages or other remedies awarded, if any, may not be
commercially meaningful or represent acceptable compensation in respect to the
infringement.
The Group is not currently aware of any such active or pending litigation
risk.
Competition and the pace of development in the biotechnology sector could lead The Group operates within the biotechnology sector, a complex area of The Board will be monitoring the speed and output of the programs closely and
to the market participants creating the healthcare industry. Rapid scientific and technological change within the challenging where it believes things could be done more quickly.
approaches, products and services equivalent or superior to the diagnostic biotechnology sector could lead to other market participants creating
testing products and services than those to be offered by the Group approaches, products and services equivalent or superior to the diagnostic The Board is aware of the potential need for further funding as the programs
testing products and services than those to be offered by the Group, which develop. Being a listed company gives the Group the ability to raise more
could adversely affect the Group's performance and success. Better resourced funds in the future should they be required.
competitors may be able to devote more time and capital towards the research
and development process, which, in turn, could lead to scientific and/or
technological breakthroughs that may materially alter the outlook or focus for
markets in which the Group will operate.
If the Group is unable to keep pace with the changes in the biotechnology
sector and in the wider healthcare industry, the demand for its platforms and
associated products and services could fall, which may have a material adverse
effect on the Group's business, financial condition, capital resources,
results and/or future operations. In addition, certain of the Group's
competitors may have significantly greater financial and human resource
capacity and, as such, better manufacturing capability or sales and marketing
expertise. New companies with alternative technologies and products may also
emerge.
The successful operation of the Group will depend partly upon the performance The successful operation of the Group will depend partly upon the performance The Group offers incentives to Directors and employees through share warrants,
and expertise of its current and future management and employees and expertise of its current and future management and employees. The loss of which makes them linked to the long-term success of the business.
the services of certain of these members of the Group's key management,
including Ajan Reginald, the CEO, Professor Sir Martin Evans, the Chief
Scientific Officer, and Dr Graham Robertson, the Vice President of Drug
Discovery or the inability to identify, attract and retain a sufficient number
of suitably skilled and qualified employees may have a material adverse effect
on the Group. Any future expansion of the Group may require considerable
management time which may in turn inhibit management's ability to conduct the
day to day business of the Group.
Composition of the Board
A full analysis of the Board, its function, composition and policies, is
included in the Governance Report.
Capital structure
The Company's capital consists of ordinary shares which rank pari passu in all
respects which are traded on the Standard segment of the Main Market of the
London Stock Exchange. There are no restrictions on the transfer of securities
in the Company or restrictions on voting rights and none of the Company's
shares are owned or controlled by employee share schemes. There are no
arrangements in place between shareholders that are known to the Company that
may restrict voting rights, restrict the transfer of securities, result in
the appointment or replacement of Directors, amend the Company's Articles of
Association or restrict the powers of the Company's Directors, including in
relation to the issuing or buying back by the Company of its shares or any
significant agreements to which the Company is a party that take effect after
or terminate upon, a change of control of the Company following a takeover bid
or arrangements between the Company and its Directors or employees providing
for compensation for loss of office or employment (whether through
resignation, purported redundancy or otherwise) that may occur because of a
takeover bid.
Approved by the Board on 4 June 2023
Stephen West, Executive Chairman
Consolidated Statement of Comprehensive Income
Year ended Period ended
31 December 31 December 2021
2022
Note
Revenue 7 - 719
Other income - 130
Cost of goods sold - (10,069)
Administrative expenses 9 (1,306,561) (252,392)
Costs associated with the IPO 9 - (182,053)
Share based payments - directors and senior managers 9 (8,427) (248,326)
Costs associated with acquisition of subsidiary 9 - (224,744)
Research and development expenditure 9 (319,315) (698)
Operating loss & loss before taxation (1,634,303) (917,433)
Taxation 10 18,886 -
Loss for the period (1,615,417) (917,433)
Other comprehensive (loss) income 8 (14,989) 624
Total comprehensive loss for the period attributable to equity (1,630,406) (916,809)
holders of the parent
Loss per share (basic and diluted) attributable to the equity holders (pence) 11 (1.56) (3.71)
The notes to the financial statements form an integral part of these financial
statements.
Consolidated Statement of Financial Position
Note As at Restated As at 31 December 2021
31 December £
2022
£
Assets
Non-current assets
Intangible assets 12 5,343,505 1,481,530
Total non-current assets 5,343,505 1,481,530
Current assets
Trade and other receivables 14 101,738 2,178,783
Cash and cash equivalents 15 2,322,974 899,721
Total current assets 2,424,712 3,078,504
Total assets 7,768,217 4,560,034
Equity and liabilities
Equity attributable to shareholders
Share capital 18 1,291,500 719,000
Share premium 18 4,403,094 3,460,595
Share based payments reserve 19 375,135 366,708
Merger relief reserve (1) 20 3,700,000 450,000
Retained deficit (2,548,728) (914,321)
Currency translation reserve (14,365) 624
Total equity 7,206,636 4,082,606
Liabilities
Non-Current liabilities
Deferred tax liabilities 17 281,911 281,911
Current liabilities
Trade and other payables 16 279,670 195,517
Total liabilities 561,581 477,428
Total equity and liabilities 7,768,217 4,560,034
(1) In the prior period Merger relief reserve was not applied for the consideration shares issued for the acquisition of Lyramid, in error. £450,000 previously recorded as share premium has been reclassified into a merger relief reserve in accordance with the UK Companies Act. There has been no impact to the prior period's consolidated statement of comprehensive income or net asset position.
The notes to the financial statements form an integral part of these financial
statements.
Statement of Financial Position
Note As at 31 Restated As at 31 December
2021
December
£
2022
£
Assets
Non-current assets
Investments 13 4,874,774 1,015,695
Intercompany receivables 451,622 132,800
Total non-current assets 5,326,396 1,148,495
Current assets
Trade and other receivables 14 64,309 2,136,224
Cash and cash equivalents 15 2,274,478 857,614
Total current assets 2,338,787 2,993,838
Total assets 7,665,183 4,142,333
Equity and liabilities
Equity attributable to shareholders
Share capital 18 1,291,500 719,000
Share premium 18 4,403,094 3,460,595
Share based payments reserve 19 375,135 366,708
Merger relief reserve (1) 20 3,700,000 450,000
Retained deficit (2,288,350) (981,620)
Total equity 7,481,379 4,014,683
Liabilities
Current liabilities
Trade and other payables 16 183,804 127,650
Total liabilities 183,804 127,650
Total equity and liabilities 7,665,183 4,142,333
1- In the prior period Merger relief reserve was not applied for the
consideration shares issued for the acquisition of Lyramid, in error.
£450,000 previously recorded as share premium has been reclassified into a
merger relief reserve in accordance with the UK Companies Act. There has been
no impact to the prior period's consolidated statement of comprehensive income
or net asset position.
The notes to the financial statements form an integral part of these financial
statements.
Consolidated Statement of Changes in Equity
Ordinary Share Premium Share Merger relief reserve Translation Reserve
Share capital Based Payment Reserve Retained earnings Total equity
£ £ £ £ £ £ £
On Incorporation - - - - 3,112 - 3,112
Loss for the period - - - - (917,433) - (917,433)
Exchange differences - - - - - 624 624
Total comprehensive income / (loss) for the period - - - - (914,321) 624 (913,697)
Transactions with owners 450,000 -
Ordinary Shares issued (restated) (1) 719,000 3,620,000 - - 4,789,000
Share issue costs - (159,405) - - - - (159,405)
Warrants charge - - 366,708 - - - 366,708
Total transactions with owners (restated) 719,000 3,460,595 366,708 450,000 - - 4,996,303
As at 31 December 2021 (restated) 719,000 3,460,595 366,708 450,000 (914,321) 624 4,082,606
Loss for the period - - - - (1,615,417) - (1,615,417)
Exchange differences - - - - - (14,989) (14,989)
Total comprehensive income / (loss) for the year - - - (1,615,417) (14,989) (1,630,406)
Transactions with owners 572,500 942,499 - 3,250,000 - - 4,764,999
Ordinary shares issued
Stamp duty on share issue (18,990) (18,990)
Warrants charge - - 8,427 - - - 8,427
Total transactions with owners 572,500 942,499 3,250,000 (18,990) - 4,754,436
8,427
As at 31 December 2022 1,291,500 4,403,094 3,700,000 (2,548,728) (14,365) 7,206,636
375,135
(1) In the prior period Merger relief reserve was not applied for the
consideration shares issued for the acquisition of Lyramid, in error.
£450,000 previously recorded as share premium has been reclassified into a
merger relief reserve in accordance with the UK Companies Act. There has been
no impact to the prior period's consolidated statement of comprehensive income
or net asset position.
The notes to the financial statements form an integral part of these financial
statements.
Statement of Changes in Equity
Ordinary Share Premium Merger relief reserve Share
Share capital Based Payment Reserves Retained earnings Total equity
£ £ £ £ £ £
On Incorporation - - - - -
Loss for the period - - - (981,620) (981,620)
Total comprehensive loss for the period - - - (981,620) (981,620)
Transactions with owners 719,000 3,620,000 450,000 - - 4,789,000
Ordinary Shares issued (restated)(1)
Share issue costs - (159,405) - - - (159,405)
Warrants issued - - - 366,708 - 366,708
Total transactions with owners (restated) 719,000 3,460,595 450,000 366,708 - 4,996,303
As at 31 December 2021 (restated) 719,000 3,460,595 450,000 366,708 (981,620) 4,014,683
Loss for the year - - - - (1,287,740) (1,287,740)
Total loss for the year - - - - (1,287,740) (1,287,740)
Transactions with owners 3,250,000 - - 4,764,999
Ordinary Shares issued
572,500 942,499
Stamp duty on share issue (18,990) (18,990)
Warrants issued - - - 8,427 - 8,427
Total transactions with owners 572,500 942,499 3,250,000 8,427 (18,990) 4,754,436
As at 31 December 2022 1,291,500 4,403,094 3,700,000 375,135 (2,288,350) 7,481,379
(1) In the prior period Merger relief reserve was not applied for the
consideration shares issued for the acquisition of Lyramid, in error.
£450,000 previously recorded as share premium has been reclassified into a
merger relief reserve in accordance with the UK Companies Act. There has been
no impact to the prior period's consolidated statement of comprehensive income
or net asset position.
The notes to the financial statements form an integral part of these financial
statements.
Consolidated Statement of Cash Flow
Note Year ended 31 December 2022 Restated Period ended 31 December 2021
£ £
Cash flow from operating activities
Loss before income tax (1,634,303) (996,068)
Adjustments for:
Amortisation - -
Foreign Exchange (9,918) 765
Non-cash adjustment - (2,602)
Share based payment 19 8,427 366,708
Taxation 18,886 -
Changes in working capital:
Increase in trade and other receivables(2) (20,318) (24,434)
Increase in trade and other payables 59,750 129,525
Decrease in Inventory - 9,273
Net cash used in operating activities (1,577,476) (516,833)
Cash flow from Investing activities
Acquisition of subsidiary, net of cash acquired(1) (103,478) (606,226)
Net Cash used in investing activities (103,478) (606,226)
Cash flows from financing activities
Proceeds from the issue of ordinary shares (1,2) 18 3,121,202 2,182,798
Share issue costs 18 (18,990) (159,405)
Net cash from financing activities 3,102,212 2,023,393
Net increase in cash and cash equivalents 1,421,258 900,335
Cash and cash equivalents at the beginning of the period 899,721 -
Foreign exchange impact on cash 1,995 (614)
Cash and cash equivalents at the end of the period 15 2,322,974
899,721
(1) An error was identified in the prior year's cash flow statement. The error
pertains to £500,000 of consideration shares issued for the acquisition of
Lyramid Pty Ltd, with no cashflow, that was incorrectly included in these line
items. This was incorrectly considered as cash inflow from 'Proceeds from the
issue of ordinary shares' and cash outflow for 'Acquisition of subsidiary, net
of cash acquired'. There is no impact on the company and consolidated
statement of comprehensive income or statement of financial position.
(2) An error was identified in the prior year's cash flow statement. The error
pertains to £2,106,202 of proceeds from share issues which was recorded in
2021 but not received until after period end. As a result, the Group has
restated the cash flow from 'Proceeds from the issue of ordinary shares' and
'Increase in trade and other receivables'. The impact of the correction on the
prior year's financial results is a decrease in the cash used in operating
activities of £2,106,202 and a decrease in cash from financing activities for
the same amount. There is no impact on the consolidated and company statements
of comprehensive income or statements of financial position.
Statement of Cash Flow
Note Year ended 31 December 2022 Unaudited period ended 31 December 2021(1)
£ £
Cash flow from operating activities
Loss before income tax (1,287,740) (981,620)
Adjustments for:
Non-cash adjustment
Share based payment 19 8,427 366,708
Changes in working capital:
Increase in trade and other receivables (34,288) (30,222)
Increase in trade and other payables 56,153 127,649
Net cash used in operating activities (1,257,448) (517,485)
Cash flow from Investing activities
Acquisition of subsidiary (109,079) (648,496)
Borrowings to subsidiaries (318,822) -
Net Cash used in investing activities (427,901) (648,496)
Cash flows from financing activities
Proceeds from the issue of ordinary shares 18 3,121,202 2,183,000
Share issue costs 18 (18,990) (159,405)
Net Cash from financing activities 3,102,212 2,023,595
Net increase in cash and cash equivalents 1,416,863 857,614
Cash and cash equivalents at the beginning of the period 857,614 -
Foreign exchange impact on cash - -
Cash and cash equivalents at the end of the period 15 2,274,477 857,614
( )
(1) The Company Statement of Cashflow was incorrectly excluded from the 2021
Annual Report and as such the 2021 comparative amounts presented above have
not been audited.
The notes to the financial statements form an integral part of these financial
statements.
Notes to the Financial Statements
1. General Information
Roquefort Therapeutics plc, the Group's ultimate parent company, was
incorporated on 17 August 2020 as a public company in England and Wales with
company number 12819145 under the Companies Act.
The address of its registered office is 85 Great Portland Street, First Floor,
London W1W 7LT, United Kingdom.
The principal activity of the Company is to develop pre-clinical next
generation medicines focused on hard to treat cancers.
The Company listed on the London Stock Exchange ("LSE") on 22 March 2021.
The consolidated financial statements of the Group have been prepared in
accordance with UK adopted International Accounting Standards as issued by the
UK Accounting Standards Board (ASB). They have been prepared under the
assumption that the Group operates on a going concern basis.
The financial information set out in this announcement does not constitute the
Group's statutory accounts for the year ended 31 December 2022 or 31 December
2021. The auditors reported on those accounts and their report (i) was
unqualified; (ii) included references to the following two matters to which
the auditors drew attention by way of emphasis without qualifying their report
- material uncertainty over going concern, as disclosed by the Directors in
note 3b; and that the Parent Company statement of cashflow for the year ended
31 December 2021 is unaudited; and (iii) did not contain statements under
section 498 (2) or (3) of the Companies Act 2006. The statutory accounts for
the year ended 31 December 2022 have not yet been delivered to the Registrar
of Companies.
2. New Standards and Interpretations
New and revised accounting standards adopted for the year ended 31 December 2022 did not have any material impact on the Group's accounting policies. There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future accounting periods that the Group has decided not to adopt early. The following amendments are effective for the period beginning 1 January 2023:
- Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2);
- Definition of Accounting Estimates (Amendments to IAS 8); and
- Deferred Tax Related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12).
The following amendments are effective for the period beginning 1 January 2024:
- FRS 16 Leases (Amendment - Liability in a Sale and Leaseback);
- IAS 1 Presentation of Financial Statements (Amendment - Classification of Liabilities as Current or Non-current); and
- IAS 1 Presentation of Financial Statements (Amendment - Non-current Liabilities with Covenants)
The Group is currently assessing the impact of these new accounting standards and amendments. The Group does not believe that the amendments to IAS 1 will have a significant impact on the classification of its liabilities. The Group does not expect any other standards issued by the IASB, but not yet effective, to have a material impact on the Group.
3. Summary of Significant Accounting Policies
The principal accounting policies applied in the preparation of these
financial statements are set out below. These policies have been consistently
applied to all the period presented, unless otherwise stated.
a) Basis of Preparation
The financial statements of Roquefort Therapeutics plc have been prepared in
accordance with UK adopted International Accounting Standards, and the
Companies Act 2006.
The financial statements have been prepared on an accrual basis and under the
historical cost convention.
b) Going Concern
The Directors have prepared financial forecasts to estimate the likely cash
requirements of the Group over the period to 30 June 2024, given its stage of
development and lack of recurring revenues. In preparing these financial
forecasts, the Directors have made certain assumptions with regards to the
timing and amount of future expenditure over which they have control. The
Directors have considered the sensitivity of the financial forecasts to
changes in key assumptions, including, among others, potential cost overruns
within committed spend and changes in exchange rates.
The Group's available resources are sufficient to cover the Group's plans to
complete pre-clinical development activities and submit applications to
commence clinical trials during 2023, however, they are not sufficient to
cover existing committed costs and the costs of planned activities for at
least 12 months from the date of signing these consolidated and company
financial statements.
The Directors plan to raise further funds during 2023 (either through
licencing deals and/or equity placements) and have reasonable expectations
that sufficient cash will be raised to fund the planned operations of the
Group for a period of at least 12 months from the date of approval of these
financial statements. The funding requirement indicates that a material
uncertainty exists which may cast significant doubt over the Group's and
Company's ability to continue as a going concern, and therefore its ability to
realise its assets and discharge its liabilities in the normal course of
business.
After due consideration of these forecasts, current cash resources, including
the sensitivity of key inputs, and plans to raise further funds, the Directors
consider that the Group will have adequate financial resources to continue in
operational existence for the foreseeable future (being a period of at least
12 months from the date of this report) and, for this reason, the financial
statements have been prepared on a going concern basis. The financial
statements do not include the adjustments that would be required should the
going concern basis of preparation no longer be appropriate.
c) Basis of Consolidation
The Group's financial statements consolidate those of the parent company and
its subsidiaries as of 31 December 2022. Lyramid and Oncogeni have a reporting
date at 31 December and 31 May respectively.
All transactions and balances between Group companies are eliminated on
consolidation, including unrealised gains and losses on transactions between
Group companies. Where unrealised losses on intra-group asset sales are
reversed on consolidation, the underlying asset is also tested for impairment
from a Group perspective. Amounts reported in the financial statements of its
subsidiary have been adjusted where necessary to ensure consistency with the
accounting policies adopted by the Group.
Profit or loss and other comprehensive income of subsidiaries acquired or
disposed of during the year are recognised from the effective date of
acquisition, or up to the effective date of disposal, as applicable.
The Group attributes total comprehensive income or loss of subsidiaries
between the owners of the parent and the non-controlling interests based on
their respective ownership interests.
d) Business combinations
The Group applies the acquisition method in accounting for business
combinations. The consideration transferred by the Group to obtain control of
a subsidiary is calculated as the sum of the acquisition-date fair values of
assets transferred, liabilities incurred and the equity interests issued by
the Group, which includes the fair value of any asset or liability arising
from a contingent consideration arrangement. Acquisition costs are expensed as
incurred.
Assets acquired and liabilities assumed are generally measured at their
acquisition-date fair values.
e) Foreign Currency Translation
i) Functional and Presentation Currency
The financial statements are presented in Pounds Sterling (GBP), which is the
Group's functional and presentation currency.
ii) Transactions and Balances
Foreign currency monetary assets and liabilities are translated at the rates
ruling at the reporting date. Exchange differences arising on the
retranslation of assets and liabilities are recognised immediately in profit
or loss.
iii) Foreign operations
In the Group's financial statements, all assets, liabilities and transactions
of Group entities with a functional currency other than GBP are translated
into GBP upon consolidation. The functional currencies of entities within the
Group have remained unchanged during the reporting period.
On consolidation, assets and liabilities have been translated into GBP at the
closing rate at the reporting date. Goodwill and fair value adjustments
arising on the acquisition of a foreign entity have been treated as assets and
liabilities of the foreign entity and translated into GBP at the closing rate
on the acquisition date. Income and expenses have been translated into GBP at
the average rate of over the reporting period. Exchange differences are
charged or credited to other comprehensive income and recognised in the
currency translation reserve in equity. On disposal of a foreign operation,
the related cumulative translation differences recognised in equity are
reclassified to profit or loss and are recognised as part of the gain or loss
on disposal.
f) Segment Reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-makers. The chief operating
decision-makers, who are responsible for allocating resources and assessing
performance of the operating segments, has been identified as the executive
Board of Directors.
All operations and information are reviewed together so that at present there
is only one reportable operating segment.
In the opinion of the Directors, during the period the Group operated in the
single business segment of biotechnology.
g) Goodwill and Intangible assets
Goodwill represents the future economic benefits arising from a business
combination that are not individually identified and separately recognised.
Goodwill is carried at cost less accumulated impairment losses. Refer to Note
(h) for a description of impairment testing procedures.
Transactions where the definition of a business combination, per IFRS 3, is
not met due to the asset or group of assets not meeting the definition of a
business, or where the concentration test affords the Directors the option not
to treat as a business, are recognised as an asset acquisition. The Group
identifies and recognises the individual identifiable assets acquired and
liabilities assumed and allocates the cost of the group of assets and
liabilities (including directly attributable costs of making the acquisition)
to the individual identifiable assets and liabilities on the basis of their
relative fair values at the date of purchase.
Other intangible assets, including licences and patents, that are acquired by
the Group and have finite useful lives are measured at cost less accumulated
amortisation and any accumulated impairment losses. Refer to Note (h) for
amortisation procedures.
h) Impairment testing of goodwill, other intangible assets and
property, plant and equipment
For impairment assessment purposes, assets are grouped at the lowest levels
for which there are largely independent cash inflows (cash-generating units).
As a result, some assets are tested individually for impairment, and some are
tested at cash-generating unit level. Goodwill is allocated to those
cash-generating units that are expected to benefit from synergies of a related
business combination and represent the lowest level within the Group at which
management monitors goodwill.
Cash-generating units to which goodwill has been allocated are tested for
impairment at least annually. All other individual assets or cash-generating
units are tested for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset's (or
cash-generating unit's) carrying amount exceeds its recoverable amount, which
is the higher of fair value less costs of disposal and value-in-use. To
determine the value-in-use, management estimates expected future cash flows
from each cash-generating unit and determines a suitable discount rate in
order to calculate the present value of those cash flows. The data used for
impairment testing procedures are directly linked to the Group's latest
approved budget, adjusted as necessary to exclude the effects of future
reorganisations and asset enhancements. Discount factors are determined
individually for each cash-generating unit and reflect current market
assessments of the time value of money and asset-specific risk factors.
Impairment losses for cash-generating units reduce first the carrying amount
of any goodwill allocated to that cash-generating unit. Any remaining
impairment loss is charged pro rata to the other assets in the cash-generating
unit.
Amortisation is calculated to write off the cost of intangible assets less
their estimated residual values using the straight‐line method over their
estimated useful lives, from the date the assets are available for use and is
recognised in profit or loss. The available for use date is determined as the
date from which a product is commercialised - this had yet to occur, for all
intangible assets, at 31 December 2022 and 2021. Goodwill is not amortised.
i) Financial Instruments
IFRS 9 requires an entity to address the classification, measurement and
recognition of financial assets and liabilities.
i) Classification
The Group classifies its financial assets in the following measurement
categories:
· those to be measured at amortised cost.
The classification depends on the Group's business model for managing the
financial assets and the contractual terms of the cash flows.
The Group classifies financial assets as at amortised cost only if both of the
following criteria are met:
· the asset is held within a business model whose objective is to collect
contractual cash flows; and
· the contractual terms give rise to cash flows that are solely payment
of principal and interest.
ii) Recognition
Purchases and sales of financial assets are recognised on trade date (that is,
the date on which the Group commits to purchase or sell the asset). Financial
assets are derecognised when the rights to receive cash flows from the
financial assets have expired or have been transferred and the Group has
transferred substantially all the risks and rewards of ownership.
iii) Measurement
At initial recognition, the Group measures a financial asset at its fair value
plus, in the case of a financial asset not at fair value through profit or
loss (FVPL), transaction costs that are directly attributable to the
acquisition of the financial asset.
Transaction costs of financial assets carried at FVPL are expensed in profit
or loss.
Receivables
Amortised cost: Assets that are held for collection of contractual cash flows,
where those cash flows represent solely payments of principal and interest,
are measured at amortised cost. Interest income from these financial assets is
included in finance income using the effective interest rate method. Any gain
or loss arising on derecognition is recognised directly in profit or loss and
presented in other gains/(losses) together with foreign exchange gains and
losses. Impairment losses are presented as a separate line item in the
statement of profit or loss.
iv) Impairment
The Group assesses, on a forward-looking basis, the expected credit losses
associated with any debt instruments carried at amortised cost. For trade
receivables, the Group applies the simplified approach permitted by IFRS 9,
which requires expected lifetime losses to be recognised from initial
recognition of the receivables.
j) Taxation
Taxation comprises current and deferred tax.
Current tax is based on taxable profit or loss for the period. Taxable profit
or loss differs from profit or loss as reported in the income statement
because it excludes items of income and expense that are taxable or deductible
in other years and it further excludes items that are never taxable or
deductible. The asset or liability for current tax is calculated using tax
rates that have been enacted or substantively enacted by the balance sheet
date.
Deferred tax is recognised on differences between the carrying amounts of
assets and liabilities in the financial information and the corresponding tax
bases used in the computation of taxable profit and is accounted for using the
balance sheet liability method. Deferred tax liabilities are generally
recognised for all taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits will be
available against which deductible temporary differences can be utilised. Such
assets and liabilities are not recognised if the temporary difference arises
from initial recognition of goodwill or from the initial recognition (other
than in a business combination) of other assets and liabilities in a
transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries and associates, and interests in joint
ventures, except where the Group is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet
date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled, or the asset realised. Deferred tax is
charged or credited to profit or loss, except when it relates to items charged
or credited directly to equity, in which case the deferred tax is also dealt
with in equity.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation
authority and the Group intends to settle its current tax assets and
liabilities on a net basis.
R&D tax rebate receivable represents refundable tax offsets, in cash, from
the Australian Taxation Office ("ATO") in relation to expenditure incurred in
the current year for eligible research and development activities. Research
and development activities are refundable at a rate of 43.5% for each dollar
spent, subject to meeting certain eligibility criteria. Funds are expected to
be received subsequent to the lodgement of the income tax return and research
and development tax incentive schedule for the current financial year. The
Group recognises a taxation credit, in the year the cash is received, which
generally relates to expenses during the prior period. In future periods
(which will include UK R&D tax credits), once an established pattern of
successful claims is recorded, the Group will consider an accruals basis,
recording the tax credit and a receivable in the period the eligible
expenditure was incurred.
k) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and demand
deposits with banks and other financial institutions, that are readily
convertible into known amounts of cash, and which are subject to an
insignificant risk of changes in value.
l) Equity, reserves and dividend payments
Share capital represents the nominal (par) value of shares that have been
issued.
Share premium includes any premiums received on issue of share capital. Any
transaction costs directly associated with the issuing of shares are deducted
from share premium, net of any related income tax benefits.
Share based payments represents the value of equity settled share-based
payments provided to employees, including key management personnel, and third
parties for services provided.
Translation reserve comprises foreign currency translation differences arising
from the translation of financial statements of the Group's foreign entities
into GBP on consolidation.
Retained losses represent the cumulative retained losses of the Group at the
reporting date.
All transactions with owners of the parent are recorded separately within
equity.
No dividends are proposed for the period.
m) Earnings per Ordinary Share
The Company presents basic and diluted earnings per share data for its
Ordinary Shares.
Basic earnings per Ordinary Share is calculated by dividing the profit or loss
attributable to Shareholders by the weighted average number of Ordinary Shares
outstanding during the period.
Diluted earnings per Ordinary Share is calculated by adjusting the earnings
and number of Ordinary Shares for the effects of dilutive potential Ordinary
Shares.
n) Employee benefits
Provision is made for Lyramid's liability for employee benefits arising from
services rendered by employees up to the end of the reporting period. In
determining the liability, consideration is given to employee wage increases
and the probability that the employee may satisfy vesting requirements.
Short term obligations
Liability for wages and salaries, including non-monetary benefits, annual
leave, long service leave and accumulating sick leave expected to be settled
within 12 months of the reporting date are recognised in other payables in
respect of employees' services up to the reporting date and are measured at
the amounts expected to be paid when the liabilities are settled.
Other long-term employee benefit obligations
Liability for annual leave and long service leave not expected to be settled
within 12 months from the reporting date is recognised in the provision for
employee benefits and measured as the present value of expected future
payments to be made in respect of services provided by employees up to the
reporting date, using the projected unit credit method. Consideration is given
to expected future wage and salary levels, of employee departures and period
of service.
Retirement benefit obligations
Contributions for retirement benefit obligations are recognised as an expense
as they become payable. Prepaid contributions are recognised as an asset to
the extent that a cash refund or a reduction in the future payment is
available. Contributions are paid into the fund nominated by the employee.
Employee benefits provision
The liability for employee benefits expected to be settled more than 12 months
from the reporting date are recognised and measured at the present value of
the estimated future cash flows to be made in respect of all employees at the
reporting date. In determining the present value of the liability, estimates
of attrition rates and pay increases through promotion and inflation have been
taken into account.
o) Leases
Leases are accounted for by recognising a right-of-use asset and a lease
liability, except for leases of low value assets and leases with a duration of
12 months or less, for which the lease cost is expensed in the period to which
it relates.
A lease liability is recognised at the commencement date of a lease. The lease
liability is initially recognised at the present value of the lease payments
to be made over the term of the lease, discounted using the interest rate
implicit in the lease or, if that rate cannot be readily determined, the
consolidated entity's incremental borrowing rate.
Lease payments comprise of fixed payments less any lease incentives
receivable, variable lease payments that depend on an index or a rate, amounts
expected to be paid under residual value guarantees, exercise price of a
purchase option when the exercise of the option is reasonably certain to
occur, and any anticipated termination penalties.
The variable lease payments that do not depend on an index or a rate are
expensed in the period in which they are incurred. Lease liabilities are
measured at amortised cost using the effective interest method. The carrying
amounts are remeasured if there is a change in the following: future lease
payments arising from a change in an index or a rate used; residual guarantee;
lease term; certainty of a purchase option and termination penalties. When a
lease liability is remeasured, an adjustment is made to the corresponding
right-of use asset, or to profit or loss if the carrying amount of the
right-of-use asset is fully written down.
Right-of-use assets are initially measured at the amount of the lease
liability, reduced for any lease incentives received, and increased for: lease
payments made at or before commencement of the lease; initial direct costs
incurred; and the amount of any provision recognised where the Group is
contractually required to dismantle, remove or restore the leased asset.
For contracts that both convey a right to the Group to use an identified asset
and require services to be provided to the Group by the lessor, the Group has
elected to account for the entire contract as a lease, i.e. it does not
allocate any amount of the contractual payments to, and account separately
for, any services provided by the supplier as part of the contract.
p) Share-based payments
The Company has applied the requirements of IFRS 2 Share-based payments.
The Company issues equity settled share-based payments to the Directors and to
third parties for the provision of services provided for assistance in raising
private equity. Equity settled share-based payments are measured at fair value
at the date of grant, or the date of the service provided. The fair value
determined at the grant date or service date of the equity settled share-based
payment is recognised as an expense, or recognised against share premium where
the service received relates to assistance in raising equity, with a
corresponding credit to the share based payment reserve. The fair value
determined at the grant date of equity settled share based payment is expensed
on a straight-line basis over the life of the vesting period, based on the
Company's estimate of shares that will eventually vest. Once an option or
warrant vests, no further adjustment is made to the aggregate expensed.
The fair value Is measured by use of the Black Scholes model as the Directors
view this as providing the most reliable measure of valuation. The expected
life used in the model has been adjusted, based on management's best
estimates, for the effects of non-transferability, exercise restrictions and
behavioural considerations. The market price used in the model is the quoted
LSE closing price. The fair value calculated is inherently subjective and
uncertain due to the assumptions made and the limitation of the calculation
used.
q) Financial Risk Management Objectives and Policies
The Group does not enter into any forward exchange rate contracts.
The main financial risks arising from the Group's activities are market risk,
interest rate risk, foreign exchange risk, credit risk, liquidity risk and
capital risk management. Further details on the risk disclosures can be found
in Note 21.
r) Significant accounting judgements, estimates and assumptions
The preparation of the financial statements in conformity with International
Financial Reporting Standards 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.
Estimates and judgements are continually evaluated, and are based on
historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances. The
Directors consider the significant accounting judgements, estimates and
assumptions used within the financial statements to be:
Impairment of non-financial assets and goodwill
In assessing impairment, management estimates the recoverable amount of each
asset or cash-generating unit based on estimated cashflows from similar market
transactions.
Business combinations
Management uses valuation techniques when determining the fair values of
certain assets and liabilities acquired in a business combination (see Notes
1d and 4.2). In particular, the fair value of contingent consideration is
dependent on the market capitalisation of the Group exceeding a threshold
amount.
Management has performed the optional concentration test available under
IFRS3, in order to determine that the acquisition of Oncogeni Ltd can be
treated as an asset acquisition. Judgement is required to determine whether
'substantially all' the fair value is concentrated in a single asset or group
of assets, and when considering a group of assets, assessing whether those
assets are similar. In determining whether assets are similar, judgement is
required to consider the nature of each single identifiable asset and the
risks associated with managing and creating outputs from the assets (that is,
the risk characteristics). Management has considered that the two separate
in-progress research and development programs, MK cell therapy and STAT-6
siRNA therapeutics, are similar as they are both pre-clinical stage oncology
treatments.
Share Based Payments
In the year to 31 December 2022, 900,000 (31 December 2021: 35,875,000)
warrants were granted. When accounting for the share-based payment expense in
respect of those warrants granted, management must calculate the fair value of
the share warrants issued. Management have done so using the Black Scholes
model, however, a number of the inputs in this model are subjective and thus
management must make estimates.
4. Acquisitions
4.1. Acquisition of Oncogeni Limited
On 16 September 2022, the Group acquired 100% of the equity instruments of
Oncogeni Limited, a UK based business, thereby obtaining control. The
acquisition was assessed as being complementary to the Group's existing
pre-clinical drug development business. The Group applied the concentration
test under IFRS3 and considered it as an asset acquisition.
The details of the asset acquisition are as follows:
Fair value of consideration transferred £
Equity consideration 3,750,000
Costs directly attributable to acquisition 109,079
Total 3,859,079
Recognised amounts of identifiable net assets at book values
Trade and other receivables 7,294
Cash and cash equivalents 5,601
Total current assets 12,895
Trade and other payables 15,792
Total current liabilities 15,792
Identifiable net liabilities 2,897
Intangible asset at cost 3,861,975
Consideration transferred settled in cash -
Cash and cash equivalents acquired 5,601
Net cash inflow on acquisition 5,601
Consideration transferred
The acquisition of Oncogeni was settled for a consideration of £3,750,000,
all of which was payable in shares. £109,079 of costs directly attributable
to the acquisition have been included in the consideration of the transaction.
Identifiable net assets
The carrying value of the trade and other receivables acquired as part of the
business combination amounted to £7,294. As of the acquisition date, the
Group's best estimate of the contractual cash flow not expected to be
collected amounted to zero.
4.2. Acquisition of Lyramid Pty Limited
On 21 December 2021, Roquefort Therapeutics acquired 100% of the equity
instruments of Lyramid Pty Limited, an Australian based business, thereby
obtaining control. The acquisition was made in line with the Group's stated
strategic objective to pursue investments in the global biotechnology sector.
The details of the business combination as follows:
Fair value of consideration transferred £
Amount settled in cash 648,495
Equity consideration 500,000
Loans assigned at acquisition (132,800)
Fair value of contingent consideration -
Total 1,015,695
Recognised amounts of identifiable net assets at book values
Inventories 9,273
Trade and other receivables 42,674
Cash and cash equivalents 42,270
Total current assets 94,217
Borrowings 212,065
Deferred tax liabilities 281,911
Total non-current liabilities 493,976
Other liabilities 28,195
Trade and other payables 37,881
Total current liabilities 66,076
Identifiable net liabilities 465,835
Intangible asset at fair value 1,481,530
Consideration transferred settled in cash 648,496
Cash and cash equivalents acquired (42,270)
Net cash outflow on acquisition 606,226
Acquisition costs charged to expenses 224,744
Consideration transferred
The acquisition of Lyramid was settled for a consideration of £1,148,495;
£648,495 being payable in cash and £500,000 payable in shares. On
acquisition, loans of £132,800 were assigned from the previous owner to the
Company.
The purchase agreement included an additional contingent deferred
consideration to the Seller to be satisfied in the form of Ordinary Shares as
follows:
(a) if prior to fifth anniversary of Admission (on 21 December 2021),
the Company's market capitalisation exceeds £25,000,000 for a period of 5 or
more consecutive trading days the Company shall issue to the Seller (or its
nominee) 5,000,000 Ordinary Shares; and
(b) if prior to fifth anniversary of Admission (on 21 December 2021) the
Company's market capitalisation exceeds £50,000,000 for a period of 5 or
more consecutive trading days the Company shall issue to the Seller (or its
nominee) a further 5,000,000 Ordinary Shares.
The fair value of contingent deferred consideration was estimated to be nil at
acquisition, at 31 December 2021 and at 31 December 2022.
Acquisition-related costs amounting to £224,744 are not included as part of
consideration transferred and have been recognised as an expense in the
consolidated statement of profit or loss, as part of other expenses.
Identifiable net assets
The fair value of the trade and other receivables acquired as part of the
business combination amounted to £42,674. As of the acquisition date, the
Group's best estimate of the contractual cash flow not expected to be
collected amounted to zero.
Lyramid's contribution to the Group results
Lyramid incurred a loss of £14,449, for the eleven days from 21 December 2021
to the reporting date. Revenue for this period was £719.
If Lyramid had been acquired on 17 August 2020, revenue of the Group for the
period would have been £23,857, and loss for the period would have increased
by £193,881.
5. Investments in subsidiaries
The parent company has investments in the following subsidiary undertakings
which are unlisted:
NName Country of incorporation Holding Proportion of voting rights Principal activity
Subsidiary undertakings
Oncogeni Limited England Ordinary shares 100% Biotechnology research company
Lyramid Pty Limited Australia Ordinary shares 100% Biotechnology research company
Tumorkine Pty Limited Australia Ordinary shares 100% Dormant
6. Directors' and Employees' Remuneration
Directors' Remuneration
Year ended 31 December 2022 Period ended
£ 31 December 2021
£
Fees to directors 308,692 47,301
Bonus - 10,000
Post-employment benefits 12,162 -
Share based payment charge 5,616 178,053
326,470 235,354
The total remuneration of the highest paid director was £118,305 (2021:
£160,825), including pension contributions of £4,054 (2021: £Nil).
Further information about the remuneration of individual directors are
provided in the Directors' Remuneration Report.
Remuneration of Key Management Personnel
Year ended 31 December 2022 Restated Period ended
£ 31 December 2021
£
Salaries and short-term employee benefits 308,692 49,200
Long term benefits - 10,221
Post-employment benefits 12,162 186
Share based payment charge 5,616 240,517
326,470 300,124
2021 Remuneration of key management personnel has been restated to include all
directors and Graham Robertson; it was previously disclosed incorrectly as
Graham Robertson only, which does not meet the IAS24 definition of key
management personnel as requiring the inclusion of directors. Total key
management personnel remuneration was therefore restated from £64,770 to
£300,124.
For 2022, upon the appointment of Ajan Reginald as director and Chief
Executive Officer, key management personnel has been re-defined as the
directors of Roquefort Therapeutics plc only.
Average number of employees during the year (including Directors full time
equivalent)
Year ended 31 December 2022 Period ended
£ 31 December 2021
£
Continuing operations 5 1
At 31 December 2022 the Company had nine (9) employees in total; seven (7)
Directors: Stephen West, Ajan Reginald, Martin Evans, Michael Stein, Simon
Sinclair, Darrin Disley, Jean Duvall and two (2) laboratory staff: Sabena
Sultan and Emma Morris.
Lyramid's sole employee is Graham Robertson.
Oncogeni has no employees.
7. Revenue
Revenue in the period was £NIL (2021: £716).
8. Other comprehensive income
Items credited/(charged) to the other comprehensive income line of the
statement of comprehensive income relate to the impact of foreign exchange
movements on cash and cash equivalents balances. The corresponding movement is
offset against the foreign exchange reserve in the statement of financial
position :
31 December 2022 31December 2021
£
£
Opening Balance 624 -
Foreign exchange impact (14,989) 624
Closing Balance (14,365) 624
9. Operating Loss
The following items have been charged/(credited) to the statement of
comprehensive income in arriving at the Group's operating loss from continuing
operations:
Year ended Period ended
31 December 31 December
2022
2021
£ £
Directors' and employee costs 365,564 59,607
Legal fees 46,373 31,165
Consulting and professional fees 209,768 125,807
Other expenditure 684,854 35,818
Administrative expenses 1,306,561 252,392
Costs associated with the IPO - 182,053
Share based payments to directors and senior management 8,427 248,326
Costs associated with acquisition of subsidiary - 224,744
Research and development expenditure(1) 319,315 698
Total operating expenditure 1,634,303 908,213
(1) Includes short term lease expense of £81,250 for rental of laboratory
during the year (2021: £Nil).
During the year the Group obtained the following services from its auditor:
Year ended Period ended
31 December 31 December 2021
2022 £
£
Audit Services
Statutory audit - Group and Company 157,336 22,000
The Group incurred no finance costs during the year ended 31 December 2022
(2021: £nil).
10. Taxation
Year ended Period ended
31 December 2022 31 December 2021
£ £
Current tax - -
Deferred tax - -
Australian R&D rebate (1) 18,886 -
Income tax credit 18,886 -
(1) R&D tax rebate receivable represents refundable tax offsets, in cash,
from the Australian Taxation Office ("ATO") in relation to expenditure
incurred in the prior year for eligible research and development activities
Income tax can be reconciled to the loss in the statement of comprehensive
income as follows:
Restated
Period ended
Year ended
31 December 2021
31 December 2022
£
£
Loss (1,615,417) (917,433)
R&D tax rebate 18,886 -
(1,634,303) (917,433)
Tax at the UK Corporation rate of 19% 310,517 174,312
Effect of overseas tax rates 21,642 -
Expenditure disallowable for taxation (82,705) (75,850)
Share based payment temporary difference on which no deferred tax asset has (1,067) (47,181)
been recognised
Remeasurement of deferred tax for changes in tax rates 74,363 12,377
Tax losses on which no deferred tax asset has been recognised (322,750) (63,658)
Total tax (charge)/credit - -
UK - -
Overseas - -
Total tax (charge)/credit) - -
The above tax reconciliation and unrecognised deferred tax disclosure in the
2021 Annual Report was incorrectly calculated based on the 2021 financial year
tax rate of 19% applied to the consolidated accounting loss of £917,433,
rather than the substantively enacted expected future tax rate when the
differences reverse, applied to the taxable loss, and incorrectly disclosed
all such deferred tax (£175,000) as relating to losses. The 2021 deferred tax
disclosures have been restated to reflect the expenditure disallowable for
taxation to derive the taxable losses and share-based payment timing
differences, the substantively enacted expected future tax rate when the
differences reverse of 25%, and to disclose tax losses separately from other
timing differences such as share-based payments, and deferred tax thereon.
Disclosures have been expanded to separate UK from Australian tax losses and
deferred tax thereon.
The Group has accumulated tax losses of approximately £1,557,117 (Restated
2021: £254,638) that are available, under current legislation, to be carried
forward indefinitely against future profits. An error was identified in the
prior year's accumulated tax losses and the amount has been restated.
The tax losses can be broken down to the following:
Year ended Restated Period ended
31 December 2022 31 December 2021
£ £
AU (125,138) (62,784)
UK (1,431,979) (191,854)
Carried forward tax losses (1,557,117) (254,638)
A deferred tax asset has not been recognised in respect of these losses due to
the uncertainty of future profits. The amount of the deferred tax asset not
recognised is approximately £389,279 (2021: £63,660). An error was
identified in the prior year's deferred tax asset amount and the amount has
been restated.
Restated
Year ended Period ended
31 December 2022 31 December 2021
£ £
UK AU UK AU
Tax effect of temporary differences:
Accumulated losses (357,995) (31,285) (47,964) (15,696)
Deductible temporary differences (14,181) - (53,502) -
Deferred tax (asset)/liability not recognised (372,176) (31,285) (101,466) (15,696)
On 3 March 2021, the Chancellor announced that the corporation tax rate would
be increasing to 25% from 1 April 2023 for Companies with profits over
£250,000. The Company calculated the UK deferred tax balances at 25% and the
Australian deferred tax balances at the current small company tax rate of 25%,
which is expected to continue in future periods.
11. Earnings per share
Year ended 31 December 2022 Period ended
£ 31 December 2021
£
Loss attributable to equity shareholders (1,615,417) (917,433)
Weighted average number of ordinary shares 103,479,476 24,701,793
Loss per share in pence
Basic (1.56) (3.71)
Diluted (1.56) (3.71)
There is no difference between the basic and diluted earnings per share as the
effect would be to decrease earnings per share.
As at the end of the financial period there were 35,272,000 (2021: 34,375,000)
warrants in issue, which could potentially have an anti-dilutive impact
depending on the results of the Company.
12. Intangible Assets
In-progress R&D Goodwill Total
£ £ £
Cost
At 1 January 2022 1,199,619 281,911 1,481,530
Acquired through asset acquisition 3,861,975 - 3,861,975
At 31 December 2022 5,061,594 281,911 5,343,505
Amortisation
At 1 January 2022 - -
Amortisation - - -
Impairment Charge - - -
At 31 December 2022 - - -
Carrying value
At 31 December 2022 5,061,594 281,911 5,343,505
The Directors have concluded that there has been no impairment of the goodwill
associated with the acquisition of Lyramid Pty Limited at 31 December 2022.
The Goodwill represents the offsetting balance to the deferred tax liability
for the acquisition of Lyramid.
In-progress R&D Goodwill Total
£ £ £
Cost
At 17 August 2020 - - -
Acquisition through business combination 1,119,619 281,911 1,481,530
At 31 December 2021 1,119,619 281,911 1,481,530
Amortisation
At 17 August 2020 - - -
Impairment Charge - - -
At 31 December 2021 - - --
Carrying value
At 17 August 2020 -
At 31 December 2021 1,119,619 281,911 1,481,530
At 31 December 2022, the Group performed its annual impairment test in
relation to intangible assets not yet available for use and identified no
indicators of impairment in line with IAS 36 Impairment of Assets, as all
acquired in-progress R&D programs are in active development and
progressing as planned. At the test date, it was determined that due to the
ongoing pre-clinical research and development using in-progress R&D
acquired, there was too much uncertainty to estimate a value-in-use, based on
discounted future cash flows from the assets. The Group estimated fair value
less costs to sell, by referring to market transactions for pre-clinical and
clinical oncology drug candidates. Due to the nature of oncology drug
development, the fair value is not considered to be particularly sensitive to
any one underlying valuation assumption other than the ultimate outcome of
drug development and commercialisation, which is binary.
Accordingly, the Group has concluded that the estimated recoverable amount of
the assets did exceed the carrying amount and therefore no impairment was
identified.
13. Investments
Investment in Lyramid Ltd Investment in Oncogeni Ltd Shares in subsidiary
£ undertakings
£
Company £
Cost at 1 January 2022 1,015,695 - 1,015,695
Additions - 3,859,079 3,859,079
Cost at 31 December 2022 1,015,695 3,859,079 4,874,774
Impairment
At 1 January 2022 - - -
Charge for the period - - -
At 31 December 2022 - - -
Net book value at 31 December 2022 1,015,695 3,859,079 4,874,774
Investment in Lyramid Ltd
£
Company
Cost at 17 August 2020 -
Additions 1,015,695
Cost at 31 December 2021 1,015,695
Impairment
At 17 August 2020 -
Charge for the period -
At 31 December 2021 -
Net book value at 17 August 2020 -
Net book value at 31 December 2021 1,015,695
In the period the Company acquired 100% of the issued shares of Oncogeni
Limited. The Directors have concluded that there has been no impairment to the
investment in Oncogeni Limited at 31 December 2022.
In 2021 the Company acquired 100% of the issued shares of Lyramid Pty Limited.
The Directors have concluded that there has been no impairment to the
investment in Lyramid Pty Limited at 31 December 2022 or 31 December 2021.
Impairment review disclosures required by IAS36 are included in note 12 to the
financial statements.
14. Trade and other receivables
Group Group Company Company
31 December 2022 31 December 2021 31 December 2022 31 December 2021
£ £ £ £
Trade receivables - 17,825 - -
Other receivables 45,124 2,135,031 - 2,130,875
Prepayments and accrued income 56,614 25,927 64,309 5,349
101,738 2,178,783 64,309 2,136,224
There are no material differences between the fair value of trade and other
receivables and their carrying value at the year end.
The other receivables balance in the prior year relates primarily to shares
issued in December 2021 as part of the acquisition of Lyramid. These monies
were collected in full in January 2022.
No receivables were past due or impaired at the year end.
15. Cash and cash equivalents
Group Group Company Company
31 December 2022 31 December 2021 31 December 2022 31 December 2021
£ £ £ £
Cash at bank and in hand 2,322,974 899,721 2,274,478 857,614
The Directors consider the carrying amount of cash and cash equivalents
approximates to their fair value.
16. Trade and other payables
Group Group Company Company
31 December 2022 31 December 2021 31 December 2022 31 December 2021
£ £ £ £
Trade creditors 68,379 40,718 26,209 962
Accruals and other creditors 211,291 154,799 157,593 126,688
279,670 195,517 183,802 127,650
The fair value of trade and other payables approximates their current book
values.
17. Deferred tax assets and liabilities
Group Company
£ £
At 1 January 2022 281,911 -
Released in year - -
Deferred tax liability recognised in business combination - -
At 31 December 2022 281,911 -
At 17 August 2020 - -
Deferred tax liability recognised in business combination 281,911 -
At 31 December 2021 281,911 -
See note 4.2 - Acquisition of Lyramid Pty Limited.
18. Share capital
Group and Company Ordinary Shares Share Capital Share Premium Total
No. £ £ £
Issue of ordinary shares on incorporation(1) 5,000,000 50,000 - 50,000
Issue of ordinary shares (2) 7,400,000 74,000 - 74,000
Issue of ordinary shares (3) 20,000,000 200,000 800,000 1,000,000
Exercise of broker warrants (4) 1,500,000 15,000 - 15,000
Issue of ordinary shares (5) 3,000,000 30,000 120,000 150,000
Issue of ordinary shares (6) 30,000,000 300,000 2,700,000 3,000,000
Issue of ordinary shares (7) 5,000,000 50,000 - 50,000
Share issue costs - - (159,405) (159,405)
At 31 December 2021 (restated) 71,900,000 719,000 3,460,595 4,179,595
Issue of ordinary shares(8) 50,000,000 500,000 - 500,000
Issue of ordinary shares(9) 7,249,998 72,500 942,499 1,014,999
At 31 December 2022 129,149,998 1,291,500 4,403,094 5,694,594
The share premium account balance for the year ended 31 December 2021 has been
restated due to an amount of £450,000 previously recognised in 2021 as being
credited to the share premium account, reclassified as being credited to the
merger reserve (refer to the consolidated and company statements of financial
position, and to Note 20).
(1 ) On incorporation on 17 August 2020, the Company issued 5,000,000
ordinary shares of £0.01 at their nominal value of £0.01 per share.
(2 ) On 20 November 2020, the Company issued 7,400,000 ordinary shares at
their nominal value of £0.01 per share.
(3 ) On admission to the Standard List of the LSE on 22 March 2021,
20,000,000 shares were issued at a placing price of £0.05 per share.
(4 ) On 19 April 2021 1,500,000 brokers warrants were exercised at the
exercise price of £0.01 per share, resulting in the issue of 1,500,000
ordinary shares.
(5 ) On 18 August 2021, the Company issued 3,000,000 ordinary shares of
£0.01 at an issue price of £0.05 per share.
(6 ) On 21 December 2021, the Company issued 30,000,000 ordinary shares of
£0.01 at an issue price of £0.10 per share.
(7 ) On 21 December 2021, the Company issued 5,000,000 ordinary shares of
£0.01 at an issue price of £0.10 per share.
(8 ) On 16 September 2022, the Company issued 50,000,000 ordinary shares of
£0.01 to acquire Oncogeni Limited, recorded at the market price of £0.075
per share.
(9 ) On 16 September 2022, the Company issued 7,249,998 ordinary shares of
£0.01 for cash at a placing price of £0.14 per share.
19. Share Based Payment Reserves
Group and Company 2022 2021
£ £
Opening balance 366,708 -
Directors warrants issued (1) ( ) - 6,833
Broker seed warrants issued (2) - 60,002
Broker placing warrants issued (3) - 8,076
Completion warrants issued (4) - 100,947
Senior management warrants issued (5) - 140,544
Optiva warrants issued (6) - 44,417
Orana warrants issued (7) - 5,889
NED and Advisor warrants issued(8) 8,427 -
At 31 December 375,135 366,708
(1) On admission to LSE on 22 March 2021 750,000 directors' warrants were
issued that entitle the warrant holder to subscribe for one Ordinary Share at
£0.05 per ordinary share and a further 750,000 directors warrants were issued
that entitle the warrant holder to subscribe for one ordinary share at £0.10
per ordinary share. Upon issue all warrants vested on the earlier of 12 months
or the Company completing the acquisition of a company or business. All
warrants vested on 21 December 2021 when the Company completed the acquisition
of Lyramid Pty Ltd.
(2) On admission to LSE on 22 March 2021 1,500,000 brokers warrants were
issued that entitle the warrant holder to subscribe for one Ordinary Share at
£0.01 per ordinary share. The warrants vested immediately upon grant.
(3) On admission to LSE on 22 March 2021, 480,000 Broker Placing Warrants were
issued that entitle the warrant holder to subscribe for one ordinary share at
the placing price of £0.05 per ordinary share. The warrants vested
immediately upon grant.
(4) On readmission to LSE on 21 December 2021, 3,000,000 Completion Warrants
were issued that entitle, Stephen West (the warrant holder) to subscribe for
one ordinary share at £0.10 per ordinary share. The warrants vested
immediately upon grant.
(5) On readmission to LSE on 21 December 2021, 4,500,000 Senior Management
Warrants were issued that entitle the warrant holder to subscribe for one
ordinary share at £0.15 per ordinary share. One third of the warrants vest on
21 December 2022, 21 December 2023 and 21 December 2024.
(6) On readmission to LSE on 21 December 2021, 1,320,000 Optiva Warrants were
issued that entitle the warrant holder to subscribe for one ordinary share at
£0.10 per ordinary share. The warrants vested immediately upon grant.
(7) On re-admission to LSE on 21 December 2021, 175,000 Orana Warrants were
issued that entitle the warrant holder to subscribe for one ordinary share at
£0.10 per ordinary share. The warrants vested immediately upon grant.
(8) On 26 June 2022, Ms Jean Duvall, Dr Simon Sinclair and Professor Trevor
Jones were awarded 300,000 NED and Advisor warrants each. These warrants
entitle the warrant holder to subscribe for one ordinary share at £0.15 per
ordinary share. 50% Warrants are exercisable one year after grant date with
the remaining balance exercisable two years after grant date.
The fair value of the services received in return for the warrants granted are
measured by reference to the fair value of the warrants granted. The estimate
of the fair value of the warrants granted is measured based on the
Black-Scholes valuations model. Measurement inputs and assumptions are as
follows:
Warrant Number of warrants Share Price Exercise Price Expected volatility Expected life Risk free rate* Expected dividends
Director 750,000 £0.05 £0.05 50.00% 5 0.15% 0.00%
Director 750,000 £0.05 £0.10 50.00% 5 0.15% 0.00%
Broker 1,500,000 £0.05 £0.01 50.00% 0.08 0.15% 0.00%
Broker Placing 480,000 £0.05 £0.05 50.00% 3 0.15% 0.00%
Completion 3,000,000 £0.10 £0.10 50.00% 3 0.15% 0.00%
Senior Mgt 4,500,000 £0.10 £0.15 50.00% 5 0.15% 0.00%
Optiva 1,320,000 £0.10 £0.10 50.00% 3 0.15% 0.00%
Orana 175,000 £0.10 £0.10 50.00% 3 0.15% 0.00%
NED and Advisor 900,000 £0.08 £0.15 50.00% 5 0.15% 0.00%
TOTAL 13,375,000
* restated - the risk-free rate for all 2021 warrants was incorrectly
disclosed as 15% in the 2021 Annual Report. The correct figure (0.15%) was
used in the underlying share-based payment calculations and therefore there is
no effect on the 2021 performance or position of the Group and Company.
Warrants
Number of Warrants Exercise Price Expiry date
On incorporation - - -
Issued on 25 November 2020 5,000,000 £0.10 22 March 2026
Issued on 25 November 2020 7,000,000 £0.10 22 March 2026
Issued on 17 March 2021 1,500,000 £0.01 20 April 2021
Issued on 17 March 2021 480,000 £0.05 22 March 2024
Issued on 17 March 2021 750,000 £0.05 22 March 2026
Issued on 17 March 2021 750,000 £0.10 22 March 2026
Issued on 17 March 2021 10,000,000 £0.10 21 March 2023
Exercised on 19 April 2021 (1,500,000) £0.01 20 April 2021
Issued on 18 August 2021 1,500,000 £0.10 22 March 2023
Issued on 13 October 2021 3,000,000 £0.10 21 December 2024
Issued on 13 October 2021 4,500,000 £0.15 21 December 2026
Issued on 13 October 2021 1,320,000 £0.10 21 December 2024
Issued on 13 October 2021 175,000 £0.10 21 December 2024
At 31 December 2021 34,475,000 £0.105
Issued on 28 April 2022(1) 900,000 £0.15 28 April 2027
At 31 December 2022 35,375,000 £0.106
(1)50% of the warrants vest on 28 April 2023 and the remainder vest on 28
April 2024
The weighted average time to expiry of the warrants as at 31 December 2022 is
3.10 years (2021: 3.05 years).
The expected volatility was calculated using the Exponentially Weighted Moving
Average Mode. Due to limited trading history comparable listed peer company
information was used.
20. Merger Relief Reserve
Group and Company
£
At 1 January 2021 -
Acquisition of Lyramid Pty Ltd (1) 450,000
At 31 December 2021 450,000
Acquisition of Oncogeni Limited (2) 3,250,000
At 31 December 2022 3,700,000
(1) The issue on 21 December 2021 of 5,000,000 new shares relating to the
acquisition of Lyramid Pty Ltd. The reserve reflects the difference between
the nominal value of shares at the date of issue of £0.01 and the share price
immediately preceding the issue of £0.10 per share. The shares issued formed
part of the consideration for the acquisition of 100% of the equity of Lyramid
and therefore qualify for merger relief.
(2) The issue on 16 September 2022 of 50,000,000 new shares relating to the
acquisition of Oncogeni Ltd. The reserve reflects the difference between the
nominal value of shares at the date of issue of £0.01 and the share price
immediately preceding the issue of £0.75 per share. The shares issued formed
part of the consideration for the acquisition of 100% of the equity of
Oncogeni and therefore qualify for merger relief.
21. Financial Instruments and Risk Management
Capital Risk Management
The Group manages its capital to ensure that it will be able to continue as a
going concern while maximising the return to stakeholders. The overall
strategy of the Group is to minimise costs and liquidity risk.
The capital structure of the Group consists of equity attributable to equity
holders of the Group, comprising issued share capital, reserves and retained
earnings as disclosed in the Statement of Changes of Equity.
The Group is exposed to a number of risks through its normal operations, the
most significant of which are interest, credit, foreign exchange, commodity
and liquidity risks. The management of these risks is vested to the Board of
Directors.
The sensitivity has been prepared assuming the liability outstanding was
outstanding for the whole period. In all cases presented, a negative number in
profit and loss represents an increase in finance expense / decrease in
interest income.
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 receivables from
customers. Indicators that there is no reasonable expectation of recovery
include, amongst others, failure to make contractual payments for a period of
greater than 120 days past due.
The carrying amount of financial assets represents the maximum credit
exposure.
The principal financial assets of the Group are bank balances. The Group
deposits surplus liquid funds with counterparty banks that have high credit
ratings, and the Directors consider the credit risk to be minimal.
The Group's maximum exposure to credit by class of individual financial
instrument is shown in the table below:
Carrying value at Maximum exposure at
31 December 2022 31 December 2022
£ £
Trade receivables 56,613 56,613
Other receivables 45,124 45,124
Cash and cash equivalents 2,322,974 2,322,974
2,424,741 2,424,741
Currency Risk
The Group operates in a global market with income and costs possibly arising
in a number of currencies and is exposed to foreign currency risk arising from
commercial transactions, translation of assets and liabilities and net
investment in foreign subsidiaries. Exposure to commercial transactions arise
from sales or purchases by operating companies in currencies other than the
Group's functional currency. Currency exposures are reviewed regularly.
The Group has a limited level of exposure to foreign exchange risk through
their foreign currency denominated cash balances and a portion of the Group's
costs being incurred in Australian Dollars. Accordingly, movements in the
Sterling exchange rate against these currencies could have a detrimental
effect on the Group's results and financial condition.
Currency risk is managed by maintaining some cash deposits in currencies other
than Sterling.
The table below shows the currency profiles of cash and cash equivalents:
Cash and cash equivalents At 31 December 2022
£
Sterling 2,279,240
Australian Dollars 43,734
2,322,974
Foreign currency sensitivity analysis
As at 31 December 2022, the sensitivity analysis assumes a +/-10% change of
the AUD/GBP, exchange rates, which represents management's assessment of a
reasonably possible change in foreign exchange rates (2021: 10%). The
sensitivity analysis was applied on net loss on the Australian operations and
the carrying value of financial assets and liabilities.
At 31 December 2022 At 31 December 2021
£ £
+10% weaker (10%) stronger +10% weaker (10%) stronger
Net Loss(1) (34,181) 34,181 (1,445) 1,445
Carrying value of net assets (594) 594 (167) 167
(1) 10% weaker relates to the Great British Pound weakening against the
currency and therefore the Group would incur greater expenditure in its
functional currency
(2) 10% weaker relates to the Great British Pound weakening against the
currency and therefore the net liabilities (excluding intercompany
borrowings) denominated in AUD will increase
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 have sufficient
liquidity to meet its liabilities when they are due, under both normal and
stressed conditions, without incurring unacceptable losses or risking damage
to the Group's reputation.
The Group seeks to manage liquidity risk by regularly reviewing cash flow
budgets and forecasts to ensure that sufficient liquidity is available to meet
foreseeable needs and to invest cash assets safely and profitably. The Group
deems there is sufficient liquidity for the foreseeable future.
The principal current asset of the business is cash and cash equivalents and
is therefore the principal financial instrument employed by the Group to meet
its liquidity requirements. The Board ensures that the business maintains
surplus cash reserves to minimise any liquidity risk.
The financial liabilities of the Group and Company, predominantly trade and
other payables, are mostly due within 3 months (2021: 3 months) of the
Consolidated Statement of Financial Position date; therefore, the undiscounted
amount payable is the same as their carrying value. Further analysis of the
lease commitment is provided in note 23. All other non-current liabilities are
due between 1 to 5 years after the period end. The Group does not have any
borrowings or payables on demand which would increase the risk of the Group
not holding sufficient reserves for repayment.
The Group had cash and cash equivalents at period end as below:
At 31 December 2022
£
Cash and cash equivalents 2,322,974
2,322,974
Interest Rate Risk
The Group is exposed to interest rate risk whereby the risk can be a reduction
of interest received on cash surpluses held and an increase in interest on
borrowings the Group may have. The maximum exposure to interest rate risk at
the reporting date by class of financial asset was:
At 31 December 2022
£
Bank balances 2,322,974
2,322,974
The Group does not currently earn interest on its cash deposits.
22. Financial assets and financial liabilities
Group Financial Financial Total
Assets Liabilities £
At amortised At amortised
31 December 2022 Cost Cost
Financial assets/liabilities
£ £
Trade and other receivables 101,737 - 101,737
Cash and cash equivalents 2,322,974 - 2,322,974
Trade and other payables - (279,668) (279,668)
2,424,711 (279,668) 2,145,043
Company Financial Financial Total
Assets Liabilities £
At amortised At amortised
31 December 2022 Cost Cost
Financial assets/liabilities
£ £
Trade and other receivables 515,931 - 515,931
Cash and cash equivalents 2,274,478 - 2,274,478
Trade and other payables - (183,802) (183,802)
2,790,409 (183,802) 2,606,607
23. Commitments
At 31 December 2022 At 31 December 2021
£ £
Committed at the reporting date but not recognised as liabilities, payable:
Laboratory rental 37,500 -
Research & Development 105,655 -
24. Contingent Liabilities
There were no contingent liabilities at 31 December 2022 or 31 December 2021.
Details of deferred contingent consideration are disclosed in note 4.2.
25. Related party transactions
There were no related party transactions during the years ended 31 December
2021 and 2022.
26. Post reporting date events
On 20 February 2023 the Company announced that it had signed an exclusive
licence and royalty agreement, for the field of medical diagnostics only, with
a leading international diagnostics company, Randox Laboratories Ltd
("Randox"), in relation to its Midkine antibody portfolio. Randox and
Roquefort Therapeutics will now engage in collaborative research programs to
develop new cancer diagnostics that will identify patients treatable with the
Company's Midkine therapeutics. The Group is eligible to receive upfront and
potential marketing milestone receipts, as well as royalties on diagnostics
products sold. The Group received from Randox an upfront amount of £200,000
and can earn further potential milestone receipts of up to £150,000 for
marketing approval in certain jurisdictions.
On 8 March 2023 the Company announced that it had successfully developed a new
novel platform of anti-cancer mRNA therapeutics.
27. Ultimate controlling party
As at 31 December 2022, there was no ultimate controlling party
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. END FR FIMRTMTIMBBJRecent news on Roquefort Therapeutics
See all newsREG - Roquefort Theraptcs. - Annual Report & Financial Statements - 31 Dec 2024
AnnouncementREG - Official List - Official List Notice
AnnouncementREG - Stock Exch Notice - Admission to Trading - 24/03/2025
AnnouncementREG - Roquefort Theraptcs. - Private Placing and Conversion of CLNs
AnnouncementREG - Roquefort Theraptcs. - Board Changes
Announcement