REG - Sareum Holdings PLC - Final Results for the Year Ended 30 June 2022
24/10/2022 07:00
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RNS Number : 7905D Sareum Holdings PLC 24 October 2022
Sareum Holdings PLC
("Sareum" or the "Company")
Final Results for the Year Ended 30 June 2022
Cambridge, UK, 24 October 2022 - Sareum Holdings plc (AIM: SAR), a
biotechnology company developing next generation kinase inhibitors for
autoimmune disease and cancer, announces its audited results for the year
ended 30 June 2022.
Sareum also provides a broader update on operational activities and pipeline
progress.
OPERATIONAL HIGHLIGHTS - INCLUDING POST-PERIOD UPDATES
SDC-1801 (autoimmune disease)
· SDC-1801 is a TYK2/JAK1 inhibitor being developed as a potential new
therapeutic for a range of autoimmune diseases with an initial focus on
psoriasis, an autoimmune condition affecting the skin
· A Clinical Trial Application for a Phase 1a/b study with SDC-1801 has
been submitted to the Medicines and Healthcare products Regulatory Agency
(MHRA)
· Sareum is advancing SDC-1801 towards clinical development and plans
to initiate Phase 1 clinical trials in 2022 in healthy subjects, with a study
in psoriasis patients planned for 2023
SDC-1802 (cancer immunotherapy)
· Sareum continues to work on the translational studies needed to
support its cancer immunotherapy candidate, SDC-1802, defining the optimal
cancer application prior to completing toxicology and manufacturing studies
· New patent issued by the European Patent Office (granted April 2022
and effected 4 May 2022), protecting the SDC-1802 molecule and pharmaceutical
preparations as a therapeutic to treat T-cell acute lymphoblastic leukaemia
SRA737 (cancer)
· After the period end, Sareum and its development partner, the Cancer
Research Technology Pioneer Fund ("CPF") were informed by Sierra Oncology,
Inc. ("Sierra") (a subsidiary of GSK plc ("GSK") that it intends to return the
rights for SRA737 to CPF
· Sareum will discuss with CPF the potential options for future
development opportunities for SRA737 and evaluate its next steps accordingly
FINANCIAL HIGHLIGHTS
• Raised £3.6m after expenses in the financial year through
subscriptions
• Cash at the bank as of 30 June 2022 of £4.3m (£2.7m as of 30
June 2021)
• R&D tax credit of £0.2m received in December 2021,
anticipating a further £0.4m in December 2022
• Loss on ordinary activities (after taxation) for the year ended 30
June 2022 of £2.2m (2021: loss of £1.5m), reflecting the increased R&D
investment required for late preclinical development
Dr Tim Mitchell, CEO of Sareum, commented:
"We close this financial year with growing excitement around the potential for
our portfolio of differentiated TYK2/JAK1 inhibitors.
"Our lead programme, SDC-1801, is a TYK2/JAK1 inhibitor which we believe has
significant potential for superior efficacy in autoimmune disease compared to
oral therapies currently available and in development. We have submitted a
Clinical Trial Authorisation (CTA) application to the UK Medicines and
Healthcare products Regulatory Agency (MHRA) and, subject to the required
approval, hope to begin clinical trials in healthy volunteers before the end
of 2022, with a psoriasis trial planned for 2023. This comes against a
background of increased recognition around the potential for the TYK2/JAK1
class, and we have been encouraged by the recent FDA approval of BMS's
Sotyktu, the first approved TYK2 therapeutic, and the interest building around
the space."
"Our expertise in kinase inhibition, alongside momentum in our translational
work, also supports confidence in SDC-1802, our immunotherapy programme
targeting cancer. We are working to further define an appropriate patient
population for clinical work and look forward to continued progress with this
and our other programmes.
"We are pleased to have clarity on SRA737 and to be able to plan the next
steps for SRA 737 together with CPF. We continue to believe that SRA737 has
great potential for the treatment of cancer, particularly in combination
settings."
For further information, please contact:
Sareum Holdings plc
Tim Mitchell, CEO 01223 497700
Strand Hanson Limited (Nominated Adviser)
James Dance / James Bellman 020 7409 3494
Peel Hunt LLP (Joint Corporate Broker)
James Steel / Oliver Duckworth 020 7418 8900
Hybridan LLP (Joint Corporate Broker)
Claire Noyce 020 3764 2341
Consilium Strategic Communications (Financial PR)
Jessica Hodgson / Davide Salvi / Stella Lempidaki 020 3709 5700
About Sareum
Sareum Holdings (AIM:SAR) is a biotechnology company developing next
generation kinase inhibitors for autoimmune disease and cancer.
The Company is focused on developing next generation small molecules which
modify the activity of the JAK kinase family and have best-in-class potential.
Its lead candidate, SDC-1801, simultaneously inhibits TYK2 and JAK1. SDC-1801
is a potential treatment for a range of autoimmune diseases, which, subject to
MHRA approval, will shortly enter clinical development with an initial focus
on psoriasis.
Sareum has an economic interest in SRA737, a clinical-stage Chk1 inhibitor
which it originally developed in collaboration with several Cancer Research
UK-related organisations. SRA737 has shown promising safety and efficacy in
two Phase 1/2 clinical trials.
Sareum is also developing SDC-1802, a TYK2/JAK1 inhibitor with a potential
application for cancer immunotherapy.
Sareum Holdings plc is based in Cambridge, UK, and is listed on the AIM market
of the London Stock Exchange, trading under the ticker SAR. For further
information, please visit the Company's website at www.sareum.com
(about%3Ablank)
CHAIRMAN'S STATEMENT
Sareum is making exciting progress in advancing its programme of next
generation kinase inhibitors for autoimmune disease and cancer into clinical
development.
The Company has emerged strongly from the challenges of the COVID-19 pandemic
with a new focus on autoimmune disease and particularly psoriasis, an area of
high unmet need and one with significant commercial potential.
Management believes that dual inhibition of both TYK2 and JAK1 has the
potential to offer superior efficacy, in comparison to other small molecule
approaches, for the treatment of autoimmune diseases, and that the Company has
a compelling and differentiated offering.
With this goal in mind, for much of the year, the Company has been focused on
preparatory work to begin clinical development. All preliminary work,
including toxicology studies, drug manufacture and formulation, and regulatory
submission, is now complete and we look forward to advancing into the clinic
soon, subject to approval from the MHRA.
Although SDC-1801 is the Company's primary focus, translational studies are
also progressing in SDC-1802, an immunomodulating molecule that has
demonstrated good efficacy in preclinical models of cancer.
Post-period, Sareum was advised that Sierra intends to return the rights for
SRA737 to CPF. The Company and CPF will discuss the potential options for
future development opportunities for SRA737 and evaluate its next steps
accordingly.
Sareum continues to believe that, based on preclinical and early clinical
data, SRA737 holds strong promise for the treatment of cancer, particularly in
combination settings and are confident in the potential of this molecule.
COMPANY STRATEGY
Sareum is a clinical-stage small molecule drug development company which is
focused on advancing inhibitors of the JAK kinase family into clinical
development for autoimmune disease and cancer. It is led by a highly
experienced team with expertise in kinase inhibition and decades of experience
in R&D and public company management.
Sareum's pipeline is focused on TYK2/JAK1 inhibitors, which are involved in
signalling pathways that are deregulated in multiple autoimmune diseases.
Inhibition of TYK2 and JAK1 has the potential to yield a superior efficacy
compared with agents that block just one of these two kinases and with a
superior safety profile than "first generation" JAK family inhibitors that
also modulate JAK2 and JAK3.
Our approach is to discover and develop programmes to late preclinical or
early clinical stages before licensing or partnering.
We maintain a lean cost base with a small, highly specialised team and use
trusted third-party providers to maximise return on investment.
PROGRAMME UPDATES
SDC-1801
SDC-1801 is a TYK2/JAK1 inhibitor being developed as a potential new
therapeutic for a range of autoimmune diseases with an initial focus on
psoriasis, an autoimmune condition affecting the skin.
Preclinical development activities required to apply for the CTA have been
concluded and, consistent with the Company's clinical development plan, an
application for a CTA has now been filed with the MHRA for the development of
SDC-1801.
TYK2/JAK1 inhibition has demonstrated benefits in maintaining a healthy immune
system and has strong clinical validation in psoriasis and psoriatic
arthritis. Psoriasis is an autoimmune dermatological condition affecting more
than 60 million adults worldwide, with a market size for potential treatments
worth more than US$30 billion. Sareum believes that TYK2/JAK1 inhibition
offers the potential for increased efficacy in psoriasis, compared with
existing approved oral therapies.
Sareum, working alongside a specialist contract drug development organisation,
has designed a Phase 1a/b clinical trial with SDC-1801 in healthy subjects and
psoriasis patients. Subject to regulatory approval from the MHRA, the Phase 1a
trial is planned to commence in Q4 2022 and will investigate the safety and
tolerability of an oral formulation of SDC-1801 in ascending doses
administered to healthy subjects. In addition, the trial will evaluate the
effect of SDC-1801 on certain biomarkers of autoimmune disease that could be
predictive of efficacy when tested in patients.
The Phase 1a part of the trial is expected to provide safety and dosing
information applicable for any future trials in patients with other autoimmune
diseases and the acute respiratory symptoms of viral infections, including
COVID-19, should the Company decide to progress such trials.
Provided satisfactory safety data is obtained from this initial study, and
subject to additional funding, a Phase 1b clinical study will commence in
psoriasis patients in 2023. The Clinical Research Organisation conducting and
managing the studies has extensive experience in conducting trials in
inflammatory diseases and up to 120 subjects will be recruited at a site in
Manchester, UK.
Synthesis of SDC-1801 drug substance under GMP conditions has been completed
successfully, with a surplus of material for the planned Phase 1 clinical
trials. GMP-compliant manufacture of capsules of SDC-1801, intended for use in
the Phase 1 trial, is also complete, and the capsules are undergoing rigorous
quality control checks before delivery to the clinical unit.
SDC-1802
SDC-1802 is a TYK2/JAK1 inhibitor being developed for cancer and cancer
immunotherapy applications.
Sareum continues to work on the translational studies needed to define the
optimal cancer application prior to completing toxicology and manufacturing
studies.
In April 2022, the Company was granted a new patent, protecting the SDC-1802
molecule and pharmaceutical preparations thereof as a therapeutic to treat
T-cell acute lymphoblastic leukaemia (T-ALL - a cancer of a particular type of
white blood cell called a T lymphocyte) and other cancers that are dependent
on TYK2 kinase for survival.
SRA737
SRA737 is a clinical-stage oral, selective Chk1 inhibitor that targets cancer
cell replication and DNA damage repair mechanisms.
The asset was originally developed by Sareum in collaboration with several
Cancer Research UK-related organisations, including CPF with whom the Company
entered a co-development agreement in 2013. Under the terms of the agreement,
Sareum is entitled to a 27.5% share of any commercialisation revenues.
CPF has been informed by Sierra Oncology that it intends to terminate the
SRA737 licence agreement and return the rights for SRA737. Sareum will discuss
with CPF the potential options for future development opportunities for SRA737
and evaluate its next steps accordingly. The SRA737 licence agreement has a
90-day notice period for termination, therefore the Company expects the rights
to the programme to be returned to CPF during January 2023 and further updates
will be made in due course, as and when appropriate.
Sierra had reported positive preliminary efficacy and safety data in two
clinical trials evaluating it as a monotherapy and in combination with
chemotherapy in 2019, and preclinical data have been reported that support the
potential for SRA737 in combination against hard-to-treat cancers.
We continue to believe that, based on preclinical and early clinical data,
SRA737 holds strong promise for the treatment of cancer, particularly in
combination settings and are confident in the potential of this molecule.
FINANCIAL REVIEW
Sareum ended the full year to 30 June 2022 with a robust cash position
following subscriptions in July, August and December 2021 that raised £3.6m
after expenses.
As a result, the cash at the bank as of 30 June 2022 was £4.3m (£2.7m as of
30 June 2021).
The Company also received an R&D tax credit of £0.2m in December 2021 and
expects to receive £0.4m in R&D tax credit in December 2022.
Loss on ordinary activities (after taxation) for the year ended 30 June 2022
was £2.2m (2021: loss of £1.5m), which reflects the increased R&D
investment required for late preclinical development and preparation for
clinical trials.
OUTLOOK
Sareum plans to initiate clinical trials for SDC-1801 by the end of 2022 to
provide critical safety and dosing information, with a planned trial in
psoriasis patients in 2023. Preparatory work has largely concluded, and we
look forward to advancing this study as soon as possible.
Our preclinical work, combined with the growing commercial and scientific
momentum building around the TYK2/JAK1 class, gives us growing optimism about
the commercial potential for this molecule and we are excited to be nearing
clinical development.
Our experienced team continues to advance translational studies around
SDC-1802, which we believe has attractive potential in cancer immunotherapy.
We have a robust data package to support partnering activities for both these
assets.
Following its acquisition by GSK, Sierra informed SRA737 co-development
partner, CPF, of its intention to return the rights to SRA737. Sareum plans to
discuss the potential for future development opportunities with CPF. While it
is too early to comment on future strategy, we continue to believe that there
is strong potential for this molecule in 'hard-to-treat' cancers. The Company
currently expect these rights to revert in January 2023 and we will update the
market accordingly.
The Board and management of Sareum continue to apply a rigorous approach to
capital allocation to the development of our assets, particularly in the
current challenging economic environment, and maintain a clear focus on
bringing these medicines to patients as efficiently as possible, while
maximising value for shareholders.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2022
Note 2022 2021
£'000 £'000
As restated
CONTINUING OPERATIONS
Revenue - -
Other operating income - 171
Administrative expenses (2,577) (1,875)
Share of loss of associates (3) (14)
-------------- -------------
OPERATING LOSS (2,580) (1,718)
Finance income 5 1 -
LOSS BEFORE TAXATION 6 (2,579) (1,718)
Taxation 7 407 218
LOSS FOR THE YEAR (2,172) (1,500)
TOTAL COMPREHENSIVE EXPENSE FOR THE YEAR (2,172) (1,500)
Loss attributable to owners of the parent (2,172) (1,500)
======== =======
Total comprehensive income attributable to owners of the parent (2,172) (1,500)
Basic and diluted loss per share expressed in pence per share 8, 21 (3.2) p (2.3) p
The accompanying notes form part of these financial statements.
CONSOLIDATED BALANCE SHEET
30 JUNE 2022
Note 2022 2021
£'000 £'000
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 9 2 1
Investment in associate 10 23 26
25 27
CURRENT ASSETS
Trade and other receivables 11 500 366
Cash and cash equivalents 12 4,261 2,686
4,761 3,052
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 13 (455) (284)
NET CURRENT ASSETS 4,306 2,768
NET ASSETS 4,331 2,795
SHAREHOLDERS' EQUITY
Called up share capital 16 851 833
Share premium 17 20,925 17,235
Share-based compensation reserve 17 325 362
Retained earnings 17 (17,770) (15,635)
TOTAL EQUITY 4,331 2,795
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2022
Called up share capital Share premium Share-based compensation reserve
£'000 £'000 £'000
Balance at 1 July 2020 810 14,766 408
Issue of share capital 23 2,469 -
Transfer for options exercised / expired - - (46)
Total comprehensive income - -
Balance at 30 June 2021 833 17,235 362
Issue of share capital 18 3,690 -
Total comprehensive income - - -
Transfer for options exercised / expired - - (37)
Balance at 30 June 2022 851 20,925 325
Retained earnings Total equity
£'000 £'000
Balance at 1 July 2020 (14,181) 1,803
Issue of share capital - 2,492
Transfer for options exercised / expired 46 -
Total comprehensive income (1,500) (1,500)
Balance at 30 June 2021 (15,635) 2,795
Issue of share capital - 3,708
Total comprehensive income (2,172) (2,172)
Transfer for options exercised / expired 37 -
Balance at 30 June 2022 (17,770) 4.331
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 JUNE 2022
Note 2022 2021
£'000 £'000
Cash flows from operating activities
Cash used in operations 19 (2,349) (1,705)
Tax received 218 134
Net cash outflow from operating activities (2,131) (1,571)
Cash flows from investing activities
Purchase of tangible fixed assets (3) -
Investment in associate - (38)
Interest received 1 -
Net cash inflow from investing activities (2) (38)
Cash flows from financing activities
Share issue 3,708 2,492
Net cash inflow from financing activities 3,708 2,492
------------- -------------
Increase in cash and cash equivalents 1,575 883
Cash and cash equivalents at beginning of year 2,686 1,803
------------ ------------
Cash and cash equivalents at end of year 20 4,261 2,686
======= =======
NOTES TO THE FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
The financial statements of Sareum Holdings plc ("the Company") have been
prepared in accordance with UK-adopted international accounting standards, and
in accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006, with IFRIC interpretations. On 1
January 2021 the UK-adopted IAS and EU-adopted IFRS were identical. Since this
date timing differences in endorsement have arisen, however no amendments
would be required to these financial statements if they were prepared in
accordance with EU-adopted IFRS as at 30 June 2022. The financial statements
have been prepared under the historical cost convention.
Going concern
The Group made a loss after tax of £2.2 million (2021: £1.5 million), as it
continued to progress its research and development activities. These
activities, and the related expenditure, are in line with the budgets
previously set and are funded by regular cash investments.
The Directors consider that the cash held at the year-end, together with that
projected to be received, will be sufficient for the Group to meet its
forecast expenditure for at least one year from the date of signing the
financial statements. If there is a shortfall the Directors will implement
cost savings to ensure that the cash resources last for this period of time.
For these reasons the financial statements have been prepared on a going
concern basis.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company (its subsidiary and an
associate, together, "the Group") made up to 30 June each year. Control is
achieved where the Company has the power to govern the financial and operating
policies of another entity or business, so as to obtain benefits from its
activities. The consolidated financial statements present the results of the
Company and its subsidiary as if they formed a single entity. Inter-company
transactions and balances between group companies are eliminated on
consolidation.
2. STATUTORY INFORMATION
Sareum Holdings plc is a public limited company, registered in England and
Wales.
3. ACCOUNTING POLICIES
The principal accounting policies applied are set out below.
Property, plant and equipment
Depreciation is provided on a straight-line basis over three years in order to
write off each asset over its estimated useful life.
Financial instruments
Financial instruments are classified and accounted for, according to the
substance of the contractual arrangement, as either financial assets,
financial liabilities or equity instruments. An equity instrument is any
contract that evidences a residual interest in the assets of the Company after
deducting all of its liabilities.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and demand deposits and other
short term highly liquid investments that are readily convertible to a known
amount of cash and are subject to insignificant risk of change in value.
Pension contributions
The Group does not operate a pension scheme for the benefit of its employees
but instead makes contributions to their personal pension plans. The
contributions due for the period are charged to the profit and loss account.
Employee share schemes
The Group has in place a share option scheme for employees, which allows them
to acquire shares in the Company. Equity settled share-based payments are
measured at fair value at the date of grant. The fair value of options granted
is recognised as an expense spread over the estimated vesting period of the
options granted. Fair value is measured using the Black-Scholes model, taking
into account the terms and conditions upon which the options were granted.
Research and development
Research expenditure is written off in the period in which it is incurred.
Development expenditure incurred is capitalised as an intangible asset only
when all of the following criteria are met:
- It is technically feasible to complete the intangible asset so that
it will be available for use or sale;
- There is the intention to complete the intangible asset and use or
sell it;
- There is the ability to use or sell the intangible asset;
- The use or sale of the intangible asset will generate probable
future economic benefits;
- There are adequate technical, financial and other resources
available to complete the development and to use or sell the intangible asset;
and
- The expenditure attributable to the intangible asset during its
development can be measured reliably.
Expenditure that does not meet the above criteria is expensed as incurred.
Taxation
Current taxes are based on the results shown in the financial statements and
are calculated according to local tax rules, using tax rates enacted or
substantially enacted by the balance sheet date.
Deferred tax is recognised in respect of all timing differences that have
originated but not reversed at the balance sheet date where transactions or
events have occurred at that date that will result in an obligation to pay
more, or a right to pay less or to receive more tax, with the following
exception:
Deferred tax is measured on an undiscounted basis at the tax rates that are
expected to apply in the periods in which timing differences reverse, based on
the tax rates and laws enacted or substantively enacted at the balance sheet
date. Deferred tax assets are recognised only to the extent that the
Directors consider that it is more likely than not that there will be suitable
taxable profits from which the future reversal of the underlying timing
differences can be deducted.
Revenue recognition
Revenue is measured as the fair value of the consideration received or
receivable in the normal course of business, net of discounts, VAT and other
sales related taxes and is recognised to the extent that it is probable that
the economic benefits associated with the transaction will flow to the Group.
Revenues from licensing agreements are recognised in line with the performance
obligations being met, as outlined in the terms of the agreement. Grant income
is recognised as earned based on contractual conditions, generally as expenses
are incurred. Such income is recognised as Other Operating Income.
Critical accounting estimates and areas of judgement
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. Actual results may differ
from these estimates. The estimates and assumptions that have the most
significant effects on the carrying amounts of the assets and liabilities in
the financial information are considered to be research and development costs
and equity settled share-based payments.
Investment in associates
An associate is an entity over which the Company has significant influence.
Significant influence is the power to participate in the financial and
operating policy decisions of the Investee but is not control or joint control
over those policies. Investments in associates are accounted for using the
equity method, whereby the investment is initially recognised at cost and
adjusted thereafter for the post-acquisition change in the associate's net
assets with recognition in the profit and loss of the share of the associate's
profit or loss.
Impairment of assets
At the date of the statement of financial position, the Group reviews the
carrying amounts of its non-current assets to determine whether there is any
indication that those assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated in order
to determine the extent of the impairment loss (if any).
Recoverable amount is the higher of fair value less cost to sell and value in
use. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the
asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset is estimated to be less than its
carrying amount, the carrying amount of the asset is reduced to its
recoverable amount. An impairment loss is recognised as an expense
immediately, unless the relevant asset is carried at a revalued amount, in
which case the impairment loss is treated as a revaluation decrease.
New or revised accounting standards
Certain new accounting standards and interpretations have been published that
are not mandatory for 30 June 2022 reporting periods and have not been early
adopted by the Company or the Group. These standards are not expected to have
a material impact on the entity in the current or future reporting periods and
on foreseeable future transactions.
4. EMPLOYEES AND DIRECTORS
2022 2021
£'000 £'000
Directors' remuneration
Directors' emoluments 450 450
Directors' pension contributions to money purchase schemes 26 26
£'000 £'000
Remuneration of the highest paid Director
Directors' emoluments 175 175
Director's pension contributions to money purchase schemes 14 14
There are 2 (2021: 2) Directors who are members of third party held money
purchase retirement benefits schemes.
Average monthly number of persons employed Number Number
Office and management 4 5
Research 1 1
5 6
£'000 £'000
Staff costs during the year
Wages and salaries 450 452
Social security costs 48 48
Pension costs 26 26
524 526
The Directors comprise the key management personnel of the Company. All
Directors and staff are employed and paid by the subsidiary, Sareum Limited.
5. NET FINANCE INCOME
2022 2021
£'000 £'000
Deposit account interest 1 -
6. LOSS BEFORE INCOME TAX
The loss before income tax is stated after charging: 2022 2021
£'000 £'000
Depreciation - owned assets 2 1
Research and development 1,780 1,239
Other operating leases 19 17
Foreign exchange differences 6 10
Auditor's remuneration 13 13
Auditor's remuneration for non-audit work
- taxation services 1 1
- other work - 1
7. INCOME TAX
2022 2021
£'000 £'000
Current tax
Adjustment to prior years (1) -
UK corporation tax credit on losses for the period 408 218
------------ ------------
407 218
The credit for the year can be reconciled to the accounting loss as follows: 2022 2021
£'000 £'000
Loss before tax (2,579) (1,718)
Notional tax credit at average rate of 19% 490 326
Effects of:
Capital allowances more than depreciation 7 -
Other timing differences (1) -
Unutilised tax losses (258) (209)
Losses surrendered for research and development tax credits (239) (113)
Tax on RDEC tax credit - (4)
Research and development tax credits claimed 408 218
Actual current tax credit in the year 407 218
The tax rate of 19% used above is the average corporation tax rate applicable
in the United Kingdom.
A potential deferred tax asset as at 30 June 2022 of £2.8 million (2021:
£1.9 million) has not been recognised, as there remains a significant degree
of uncertainty that the Group will make sufficient profits in the foreseeable
future to justify recognition.
8. EARNINGS PER SHARE
The calculation of loss per share is based on the following data: 2022 2021
Loss on ordinary activities after tax £2,172,000 £1,500,000
Weighted average number of shares in issue (*) 67,679,329 65,332,046
Basic and diluted loss per share (* (pence) (3.2) (2.3)
As the Group has generated a loss for the period, there is no dilutive effect
in respect of share options.
* The weighted average number of shares in issue during 2022 and 2021 has been
restated as if the share consolidation referred to in note 16 had been in
effect for the whole of each year.
9. PROPERTY PLANT AND EQUIPMENT
Fixtures and computers
£'000
Cost
At 1 July 2021 10
Additions 3
At 30 June 2022 13
Depreciation
At 1 July 2021 9
Charge for the year 2
At 30 June 2022 11
Carrying amount
At 30 June 2021 1
=======
At 30 June 2022 2
10. INVESTMENTS
Interest in associate
£'000
Cost
At 1 July 2021 1,176
Additions -
At 30 June 2022 1,176
Provision for impairment
At 1 July 2021 1,150
Impairment for year 3
At 30 June 2022 1,153
Net book value
At 30 June 2021 26
At 30 June 2022 23
Interest in associate
The investment in associate represents the investment by the Group in the
partnership with the Cancer Research Technology Pioneer Fund to advance the
SRA737 programme and has been accounted for using the equity method. Sareum's
interest in the associate partnership is 27.5%. As at 30 June 2022 the
partnership had net assets of £0.1 million (2021: £0.1 million) and had
incurred cumulative losses of £0.7 million (2021: £0.7 million).
11. TRADE AND OTHER RECEIVABLES
2022 2021
£'000 £'000
Amounts falling due within one year:
Taxation receivable 455 236
Prepayments and accrued income 45 44
Other debtors - 86
500 366
12. CASH AND CASH EQUIVALENTS S
2022 2021
£'000 £'000
Bank deposit accounts 4,261 2,686
13. TRADE AND OTHER PAYABLES
2022 2021
£'000 £'000
Amounts falling due within one year:
Trade creditors 387 100
Social security and other taxes 18 12
Other creditors 5 156
Accrued expenses 45 16
455 284
Trade payables and accruals principally comprise amounts outstanding for trade
purchases and ongoing costs. The average credit term agreed with suppliers is
30 days and payment is generally made within the agreed terms.
14. LEASING AGREEMENTS
The lease on the office occupied by the Group is of low value, expiring in
December 2023. The rent payments in the year are also not material to the
financial statements
15. FINANCIAL INSTRUMENTS
The Group's principal financial instruments are trade and other receivables,
trade and other payables and cash. The main purpose of these financial
instruments is to finance the Group's ongoing operational requirements. The
Group does not trade in derivative financial instruments.
The major financial risks faced by the Group, which remained unchanged
throughout the year, are interest rate risk, foreign exchange risk and
liquidity risk. Policies for the management of these risks are shown below
and have been consistently applied.
MARKET RISKS
Interest rate risk
The Group is exposed to interest rate risk as cash balances in excess of
immediate needs are placed on short term deposit. The Group seeks to optimise
the interest rates received by continuously monitoring those available. The
value of the Group's financial instruments is not considered to be materially
sensitive to these risks and therefore no sensitivity analysis has been
provided.
Foreign exchange risk
The Group's activities expose it to fluctuations in the exchange rate for the
Euro and the US dollar. Funds are maintained in sterling and foreign currency
is acquired on the basis of committed expenditure. The value of the Group's
financial instruments is not considered to be materially sensitive to these
risks and therefore no sensitivity analysis has been provided.
NON-MARKET RISKS
Liquidity risk
The Board has responsibility for reducing exposure to liquidity risk and
ensures that adequate funds are available to meet anticipated requirements
from existing operations by a process of continual monitoring. The value of
the Group's financial instruments is not considered to be materially sensitive
to these risks and therefore no sensitivity analysis has been provided.
16. SHARE CAPITAL
Called up, allotted and fully paid (*) 2022 2021
£ £
68,069,416 (2021: 66,657,313) Ordinary Shares of 1.25p each (*) 850,867 833,215
The Ordinary Shares carry equal rights in respect of voting at a general
meeting of shareholders, payment of dividends and return of assets in the
event of a winding up.
On 20 July 2021, 6,428,581 new Ordinary Shares of 0.025 pence were issued at
2.8 pence per share in respect of a warrant exercise that raised, in
aggregate, £180,000 before expenses.
On 23 July 2021, 14,285,714 new Ordinary Shares of 0.025 pence were issued at
7 pence per share in respect of a fundraise that raised, in aggregate,
£1,000,000 before expenses.
On 17 August 2021, 12,121,212 new Ordinary Shares of 0.025 pence were issued
at 8.25 pence per share in respect of a fundraise that raised, in aggregate,
£1,000,000 before expenses.
On 10 November 2021, 5,133,332 new Ordinary Shares of 0.025 pence were issued
at 0.6 pence per share in respect of a fundraise that raised, in aggregate,
£30,800 before expenses.
On 23 December 2021, 32,636,311 new Ordinary Shares of 0.025 pence were issued
at 5 pence per share in respect of a fundraise that raised, in aggregate,
£1,631,816 before expenses.
On 28 February 2022, in order to facilitate the Consolidation, 9 new Ordinary
Shares of 0.025 pence were issued at 3.4 pence per share in respect of a
fundraise that raised, in aggregate, £nil before expenses.
* On 28 February 2022, a resolution was made to consolidate every 50 shares
with a nominal value of 0.025 pence into 1 share with a nominal value of 1.25
pence per share (the "Consolidation"). The number of shares as at 30 June 2021
has been restated assuming that the Consolidation had happened at that date.
17. RESERVES
Reserve Description and purpose
Share capital Amount of the contributions made by shareholders in return for the issue of
shares.
Share premium Amount subscribed for share capital in excess of nominal value.
Retained earnings Cumulative net gains and losses recognised in the consolidated and the Company
Balance Sheet.
Share-based compensation reserve Cumulative fair value of share options granted and recognised as an expense in
the Income Statement.
Details of movements in each reserve are set out in the Consolidated Statement
of Changes in Equity.
18. PENSION COMMITMENTS
The Group makes contributions to its employees' own personal pension
schemes. The contributions for the period of £26,000 (2021: £26,000) were
charged to the profit and loss account. At the balance sheet date
contributions of £4,000 (2021: £4,000) were owed and are included in
creditors.
19. RECONCILIATION OF LOSS BEFORE INCOME TAX TO CASH GENERATED FROM OPERATIONS
2022 2021
£'000 £'000
Operating loss from continuing operations (2,580) (1,718)
Adjustments for:
Depreciation 2 1
Share of loss of associate 3 14
Finance income (1) -
Operating cash flows before movements in working capital (2,576) (1,703)
Decrease/(increase) in receivables 56 (88)
Increase in payables 171 86
Cash used in operations (2,349) (1,705)
======= =======
20. RECONCILIATION CASH AND CASH EQUIVALENTS
The amounts disclosed on the Cash Flow Statement in respect of cash and cash
equivalents are in respect of these Balance Sheet amounts which comprise bank
balances only:
2022 2021
£'000 £'000
Cash and cash equivalents 4,261 2,686
21. PRIOR YEAR ADJUSTMENT
Earnings per share has been restated for the share consolidation in February
2022 referred to in note 16. The impact of this has £nil impact on equity.
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