REG - Verici Dx PLC - Final Results
19/05/2022 07:00
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RNS Number : 0248M Verici Dx PLC 19 May 2022
Verici Dx plc
("Verici Dx" or the "Company")
Final Results and Post Year-End Update
Well placed and funded to build on excellent progress to date
Positioned to have a commercial-stage product by end of 2022
Verici Dx plc (AIM: VRCI), a developer of advanced clinical diagnostics for
organ transplant, announces its audited final results for the period ended 31
December 2021. In addition, the Company provides a further update on its
progress in 2022 to date and summarises expected next steps for the
progression of its product portfolio, which now comprises:
· Clarava™, a pre-transplant prognosis test for the risk of early
acute rejection;
· Tuteva™, a post-transplant test focused upon acute cellular
rejection, including sub-clinical rejection; and
· Protega™, a liquid biopsy that aims to predict the risk of
fibrosis and long-term graft failure.
Strategic and operational highlights
· In January 2021, expanded the scope of licence agreement with Mount
Sinai to include an additional patent filing; this formed the basis of the
Company's Protega™ product and broadened the Verici Dx portfolio;
· In July 2021, received CLIA-certification(1) from the Centres for
Medicare & Medicaid Services (CMS) for the clinical laboratory in
Franklin, Tennessee, ahead of schedule, allowing the Company to initiate
operations as a diagnostic laboratory;
· In April 2021, entered into an agreement to allow access to
de-identified samples from the CTOT-19 study(2), to further validate the
clinical performance of Clarava™ and Tuteva™ and providing data for an
independent publication in 2022. The Company also agreed to provide full
transcriptomic sequencing for all patient samples in the study to facilitate
further studies and to increase the pace of innovation in transplantation;
· Completed the testing requirements of the multi-centre validation
study for the two lead products, Clarava™ and Tuteva™ in December 2021.
- An extension in April 2022 ensured that the studies exceeded their
enrolment objectives in terms of numbers of sites and participants, assuring a
robust data package for analysis;
- Successful recruitment is now paving the way for efficient clinical
validation work on the next study for Protega™ and further studies on the
integration of all products into an integrated suite of transplant testing.
Financial highlights
· Adjusted EBITDA(4) loss of $7.1m (2020: loss of $1.4m)
· Cash balance at 31 December 2021 of $10.3m (2020: $17.8m)
· On 11 March 2022 the Company closed a successful funding of gross
GBP10.m by the issue of 28,571,429 new ordinary shares
Post-period end
· In January 2022, received, ahead of schedule, CPT® Proprietary
Laboratory Analyses ("PLA") codes(3) for Clarava™ and Tuteva™;
· Announced a collaboration with Illumina, Inc., to expedite the
operational launch of data analysis processing and predictive artificial
intelligence component of our products, using early access to the Illumina
Connected Analytics (ICA) platform;
· Completed analytical validation for Clarava™ and Tuteva™ in
February 2022, an essential element of defining the performance
characteristics and platform capabilities of in vitro diagnostic assays and
milestone towards commercialisation;
· Raised gross proceeds of £10.0m in March 2022 via Placing and
Subscription (the "Fundraise").
· Successful headline results from multi-centre validation study for
Tuteva™, establishing new industry standard in blood sample detection of
acute kidney transplant rejection, positioning Tuteva™ for commercial launch
later in 2022.
Commenting on the performance and outlook, Sara Barrington, Chief Executive
Officer, said: "We have been delighted with the progress that Verici Dx has
made, both during 2021 and at the start of 2022, either delivering strongly or
exceeding against the expectations and strategic milestones set out at IPO. We
are well placed to continue this momentum throughout the rest of the year, and
by the end of 2022 we will have firmly moved from being a research and
development company to one with a commercial product.
"Following our March 2022 fundraise, we have the necessary resources to not
only commercialise our well-differentiated core products, but also progress
the development of Protega™, and to find new exciting growth opportunities.
Our recent announcement regarding the positive headline data from our
international validation study for Tuteva™ was a significant milestone, as
it demonstrated the significantly higher Positive Predictive Value (PPV) of
Tuteva™ versus currently available blood tests. This paves the way for a
commercial launch in the United States later in 2022. We look forward to
announcing the outcomes from the validation study for Clarava™ in the coming
weeks.
"Over the rest of the year, a health economics model is expected to be
completed to help support our imminent commercial launches, and we will also
work to engage in clinical utility and real-world evidence studies to support
adoption of our two lead products."
Notes:
1. The CLIA (Clinical Laboratory Improvement Amendments) regime is used by
the Center for Medicare and Medicaid Services (CMS) to regulate laboratory
testing in the US, and requires all clinical laboratories to be certified
before they can accept human samples for diagnostic testing.
2. CTOT Home (ctotstudies.org)
(https://urldefense.proofpoint.com/v2/url?u=https-3A__www.ctotstudies.org_index.htm&d=DwMFAg&c=euGZstcaTDllvimEN8b7jXrwqOf-v5A_CdpgnVfiiMM&r=1nMs9_ptZtfsK-kSZTRbZW-zBzR_4SSPiX1xvVa-xK0&m=fVFqavv4sO210snCgcrQQLQw1Mk0y9aDVmw-BOMz_5c&s=U4SOSpxiNI51psuHMZV9VqdSAt3gP2wgJgNYTNlEOMw&e=)
CTOT is a cooperative research programme sponsored by the National Institute
of Allergy and Infectious Diseases (NIAID). CTOT is an investigative
consortium for conducting clinical and associated mechanistic studies that
will lead to improved outcomes for transplant recipients. The purpose of these
studies is to improve short and long-term graft and patient survival.
3. PLA codes are CPT codes including a corresponding descriptor for
laboratories or manufacturers wanting to identify a test more specifically.
4. Earnings before income tax, depreciation and amortisation, adjusted to
exclude exceptional items.
Investor briefing
Sara Barrington, Chief Executive Officer, and David Anderson, Chief Financial
Officer, will provide a live presentation relating to the Final Results and
Post Year-End Update via the Investor Meet Company platform on Wednesday 25
May 2022 at 4.30pm (BST).
The presentation is open to all existing and potential shareholders. Questions
can be submitted pre-event via your Investor Meet Company dashboard up until
9.00 am the day before the meeting or at any time during the live
presentation.
Investors can sign up to Investor Meet Company for free and add to meet VERICI
DX PLC via:
https://www.investormeetcompany.com/verici-dx-plc/register-investor
(https://www.investormeetcompany.com/verici-dx-plc/register-investor)
Investors who already follow Verici Dx plc on the Investor Meet Company
platform will automatically be invited.
Enquiries:
Verici Dx www.vericidx.com (http://www.vericidx.com)
Sara Barrington, CEO Via Walbrook PR
Julian Baines, Chairman
Singer Capital Markets (Nominated Adviser & Broker) Tel: 020 7496 3000
Aubrey Powell / Kailey Aliyar / Tom Salvesen
Walbrook PR Limited Tel: 020 7933 8780 or vericidx@walbrookpr.com
(mailto:renalytix@walbrookpr.com)
Paul McManus / Sam Allen / Mob: 07980 541 893 / 07502 558 258 /
Phillip Marriage 07867 984 082
About Verici Dx plc www.vericidx.com (http://www.vericidx.com)
Verici Dx is a developer of a complementary suite of leading-edge tests
forming a kidney transplant platform for personalised patient and organ
response risk to assist clinicians in medical management for improved patient
outcomes. The underlying technology is based upon artificial intelligence
assisted transcriptomic analysis to provide RNA signatures focused upon the
immune response and other biological pathway signals critical for transplant
prognosis of risk of injury, rejection and graft failure from pre-transplant
to late stage. The Company also has a mission to accelerate the pace of
innovation by research using the fully characterised data from the underlying
technology and through collaboration with medical device, biopharmaceutical
and data science partners.
The foundational research was driven by a deep understanding of cell-mediated
immunity and is enabled by access to expertly curated collaborative studies in
highly informative cohorts in kidney transplant.
Forward-Looking Statements
Certain statements made in this announcement are forward-looking statements.
These forward-looking statements are not historical facts but rather are based
on the Company's current expectations, estimates, and projections about its
industry; its beliefs; and assumptions. Words such as 'anticipates,'
'expects,' 'intends,' 'plans,' 'believes,' 'seeks,' 'estimates,' and similar
expressions are intended to identify forward-looking statements. These
statements are not guarantees of future performance and are subject to known
and unknown risks, uncertainties, and other factors, some of which are beyond
the Company's control, are difficult to predict, and could cause actual
results to differ materially from those expressed or forecasted in the
forward-looking statements. The Company cautions security holders and
prospective security holders not to place undue reliance on these
forward-looking statements, which reflect the view of the Company only as of
the date of this announcement. The forward-looking statements made in this
announcement relate only to events as of the date on which the statements are
made. The Company will not undertake any obligation to release publicly any
revisions or updates to these forward-looking statements to reflect events,
circumstances, or unanticipated events occurring after the date of this
announcement except as required by law or by any appropriate regulatory
authority.
Chairman's Statement
I am pleased to report on the twelve months ended 31 December 2021 for Verici
Dx plc, representing the first full year of the Company being listed on AIM.
2021 was a year of significant progress against the strategy set out at IPO in
November 2020, as we look to commercialise our platform of innovative kidney
transplant tests. Along with our two lead products, Clarava™ and Tuteva™,
we are also developing a third related product, Protega™, resulting from a
January 2021 expansion of our licence agreement with Mount Sinai. Our full
platform of tests will allow us to offer end-to-end testing for kidney
transplant patients and their clinicians, enabling us to improve outcomes for
patients and also establish a strong competitive advantage.
Our three products are:
· Clarava™, a pre-transplant prognosis test for the risk of early
acute rejection;
· Tuteva™, a post-transplant test focused upon acute cellular
rejection, including sub-clinical rejection; and
· Protega™, a liquid biopsy that aims to predict the risk of
fibrosis and long-term graft failure.
There is an urgent clinical need in the kidney transplantation market.
Globally, there are c. 300,000 people waiting for kidney transplants, with
approximately c.100,000 transplants currently performed each year, of which
c.24,000 are performed in the US and 25,000 in Europe.
During 2021, we completed all of our expected milestones either on time or
ahead of schedule. We obtained a CLIA(1) Certification of Registration from
the Centers for Medicare & Medicaid Services (CMS) for our US clinical
laboratory in Franklin, Tennessee, ahead of schedule, a significant commercial
step at it allows Verici to initiate operations as a diagnostic laboratory. We
were also granted, ahead of schedule, CPT(®) Proprietary Laboratory Analyses
codes for Clarava™ and Tuteva™ from the American Medical Association,
which support the commercial use and tracking of these products within the US
healthcare system. Critically, we completed the testing requirements of our
multi-centre validation study for Clarava™ and Tuteva™ in December 2021,
following a highly successful enrolment programme of partnering clinical sites
and study participants over the course of the year; we exceeded our target
numbers in both of these.
During the year, we appointed Lorenzo Gallon, MD, as Non-Executive Director,
and Chair of Science Advisory Board. An expert in nephrology and hypertension
as well as organ transplantation, Dr. Gallon is currently the Medical Director
of the Translational Medicine Programme, the Director of International
Relations and the Director of the Renal Transplant Fellowship at Northwestern
University. Dr. Gallon's appointment followed the sad and untimely passing of
Dr. Barbara Murphy, who was of course an integral part of the formation of
Verici Dx and whose legacy lives on in the work she inspired.
Post-period end, Verici's momentum has continued in the early stages of 2022.
Significantly, we recently announced that the headline results of our
international multi-centre validation study for Tuteva™ have shown a highly
positive outcome, vindicating our decision to prolong the final close of the
trial for Tuteva™ and Clarava™ to ensure greater numbers of qualified
European patients were eligible for inclusion in the full study results. We
believe this establishes a new industry standard in the detection of acute
kidney transplant rejection, and positions Tuteva™ for commercial launch in
the United States later this year. In January, we established a collaboration
with Illumina, Inc. (NASDAQ: ILMN), a leading developer, manufacturer, and
marketer of life science tools and integrated systems for large scale analysis
of genetic variation and function, whereby Verici gained early access to the
Illumina Connected Analytics (ICA) platform. In February, we also announced
the major milestone of successfully completing analytical validation for
Clarava™ and Tuteva™.
We recently completed the Fundraise, procuring a further £10m in gross
proceeds which will be used, along with our existing resources, to advance
towards key milestones for Protega™, and continue to push the
commercialisation strategy for Clarava™ and Tuteva™, whilst carrying out
planned improvements to the CLIA approved laboratory. These laboratory
upgrades will accelerate capabilities ahead of marketing the Company's two
leading products.
We have been delighted with the progress of the Company in its first full year
listed on AIM, and across the rest of 2022 we look forward to the read-out of
the key findings from our multi-centre validation study for Clarava™, to
further publications including on the fuller implications of the Tuteva(TM)
validation study and continuing to work towards the commercial launch of both
lead products, as well as performing the necessary steps to efficiently
validate our third product, Protega™.
On behalf of the Board, I would like to thank our employees, shareholders and
partners for their support, and we look forward to providing further updates
on progress throughout the rest of the year.
Julian Baines
Non-executive Chairman
Chief Executive Officer's Report
In our first full year as a listed Company, Verici Dx has made great progress,
achieving all of our milestones either on or ahead of schedule.
We believe we have unique products that support accurate, data-driven clinical
decisions, such as the most appropriate immunosuppressive therapy for that
patient. This has not only near-term scope to reduce the unnecessary and
serious consequences from over- or under-dosing for immunosuppression in
conjunction with kidney transplant, but also to improve the longevity of
transplanted kidneys and, by reducing the risk and rate of transplant failure,
much broader potential to deliver huge health economic benefits by improving
transplant outcomes.
Our platform of innovative kidney transplant tests use advanced
next-generation sequencing that we believe can define a personalised risk
profile for each patient.
With the expansion of our product portfolio to cover fibrosis, we aim to
address the patient's entire transplant journey, from pre-transplant through
to long-term risks, with a view to minimising the risk of transplant
rejection.
Pipeline
Our two lead products, Clarava™ and Tuteva™, together with our third
product Protega™, aim to understand how a patient will respond and is
responding to a kidney transplant.
The three products are underpinned by extensive patented and published
scientific research from the leading Mount Sinai Medical Center, for which the
Company holds an exclusive worldwide licence. Patient enrolment for our
collaborative, multi-centre observational clinical validation study, which we
conducted alongside 14 leading US and EU medical centres in addition to
Australia, was completed for Clarava™ and Tuteva™ in December 2021,
in-line with expectations.
We recently announced highly positive data from the validation study for
Tuteva™, with the test having demonstrated a significantly higher Positive
Predictive Value ("PPV") than other currently available blood tests, without
enhancement from clinical features. Importantly, the validation study utilised
a generalised 'all-comers' patient population, rather than a specific
subgroup. This means that we were able to test the power of Tuteva™ within a
clinically realistic context that included all types of rejection, including
sub-clinical, borderline, T Cell-mediated, and antibody-mediated rejection,
across 14 international transplant centres. We believe that the highly
positive results reflect the wide clinical applicability of the test for
comprehensive commercial adoption in a real-world setting, and position
Tuteva™ for commercial launch in the US later this year. We expect to
receive the results from the validation study for Clarava™ in the coming
weeks.
In July 2021, we achieved CLIA-certification for our newly established
laboratory in Tennessee, a key step in commercialising our two lead products,
subject to the successful conclusion of our validation studies.
Post-period end in January 2022, we were granted CPT(®) Proprietary
Laboratory Analyses ("PLA") codes for both Clarava™ and Tuteva™. Receiving
these codes, ahead of schedule, marked the first step on the path for
commercial reimbursement for our two lead products. Reimbursement in the US is
comprised of three components: code, price and coverage. CPT(®) codes offer
health care professionals a uniform language for coding medical services and
procedures and allows clinical laboratories to more specifically identify
their tests when billing Medicare and commercial insurers.
Partnerships and agreements
In January 2021, we expanded the scope of our licence agreement with Mount
Sinai to include an additional patent filing related to the analysis of gene
expression in a liquid biopsy to predict risk of fibrosis and rejection of the
graft. This led has led to the ongoing development of Protega™, which is
currently undergoing patient enrolment for its validation, with enrolment
expected to complete by Q3 2022 using the same site network already
established for validation of our lead products. The end points of the
Protega(TM) validation study are expected to be reached up to two years after
the completion of enrolment, reflecting the longitudinal follow-up of patients
over this period, with data expected shortly thereafter around year-end 2024.
In April 2021, the Company announced that it had entered into a Material
Transfer Agreement with Mount Sinai and Principal Investigator Dr Peter
Heeger, to allow access to de-identified samples generated from participants
from the CTOT-19 study, in an effort to validate the performance and
development of commercial tests designed to improve short and long-term graft
and patient survival.
Access to samples from this important clinical trial was initially intended to
be included in the Company's clinical validation studies for Clarava™ and
Tuteva™, but the Company decided to keep the study separate to provide
Verici Dx with a further large and well-characterised sample group that will
be independently reported. The Company's laboratory will conduct a blinded
evaluation of samples in Clarava™ and Tuteva™ and work with investigators,
including Dr. Peter Heeger, to characterise results after the Company's
validation study in 2022.
Post-period end, we announced a collaboration with Illumina, Inc. to expedite
the operational launch of data analysis processing and predictive artificial
intelligence component of our products, using early access to the Illumina
Connected Analytics (ICA) platform. Our science depends on the ability to
process vast amounts of data into meaningful and interpretable segments, and
we were delighted to partner with such a world-class provider as Illumina, to
help us do so. The partnership represented a key step in the readiness of both
the near-term launches of Clarava™ and Tuteva™, as well as the longer-term
strategy for building the computational data analytics tools that will power
the future of Verici Dx's data science and insights.
Management and staff
Currently, the Company employs 12 full-time members of staff.
In November 2021, we launched the Barbara T. Murphy Endowed Lectureship and
the Career Development Research Grant in conjunction with the American Society
of Transplantation, in honour of our late co-founder and Board member, Dr.
Barbara Murphy. These two initiatives will help further the research base
within the transplant and immunology fields, within which Barbara was a
leading voice.
Financials
Statement of Comprehensive Income
The adjusted EBITDA, being the loss for the year before the deduction of
interest, taxation, amortisation and depreciation, and excluding the
share-based payments charge and the costs of listing in 2020, was $7,151,244
(2020: $1,402,926). This represents the first full year of activity, as the
prior period's activity occurred mainly following the admission to AIM on 3
November 2020. The largest items of expenditure in this loss were staff
costs of $1,961,622 (2020: $258,852) and research and development costs of
$2,809,435 (2020: $355,107). We started the year with 3 full-time employees
and ended the year with 10 full-time employees. No employee costs are included
in the research and development cost which relates to the development of our
two core products in the year.
Statement of Financial Position and Cash Flows
Cash balance at year end was $10,339,788, following a total cash outflow in
the year of $7,375,851 and a foreign exchange adjustment of $35,448 reducing
the carrying value of cash balances at year end. We spent $617,940 (2020:
$25,851) on tangible assets and $347,919 (2020: $132,259) on legal costs in
the development of our patents and licenses.
Post-period end in March 2022, we raised £10.0m, before expenses, via a
Placing and a Subscription. The net proceeds of the Fundraise will be used,
together with the Company's prior resources, to:
· Maintain momentum on the development of the Company's third
product, Protega™, to maximise the efficiency gains in using existing
validation sites set up for the Company's two lead products, Clarava™ and
Tuteva™;
· Carry out planned construction of the Company's expanded CLIA
approved laboratory facilities in Tennessee to support the scale-up of
business operations in advance of commercialisation;
· Accelerate the commercialisation of lead products Clarava™ and
Tuteva™ including through advocacy with clinicians;
· Explore potential growth opportunities including adding new
technology (including possible in-licence or acquisition) and Artificial
Intelligence ("AI") capability to support and enhance the use of Verici Dx
product tests alongside digital histopathology imagery;
· Develop the Company's nascent data assets; and
· Support general working capital purposes.
Outlook
We are well placed and funded to build on the excellent progress made over the
course of 2021, and to continue the momentum established at the start of 2022
during the remainder of the year. By the end of 2022, we intend to have
clearly moved from being a research and development company to one with a
commercial product.
Following the March 2022 Fundraise, we now have the necessary resources to not
only commercialise our well-differentiated core products, but also to progress
the development of Protega™, as well as to find new exciting growth
opportunities. Having already obtained CPT codes, we will seek to determine
pricing for both of our lead products, and coverage determinations for
Clarava™. Tuteva™ is expected to be eligible for and covered by an
existing local coverage determination issued by Palmetto under the MolDX
system.
To support our commercialisation efforts, a health economics model is expected
to be completed in the first half of 2022. We are also expected to engage in
clinical utility and real-world evidence studies to support product adoption
by the end of 2022.
Sara Barrington
Chief Executive Officer
Verici Dx plc
Consolidated statement of profit or loss and other comprehensive income
for the year ended 31 December 2021
Period
Year to 22 April to
31 December 31 December
Note 2021 2020
US$ US$
Administrative expenses 5 (7,151,244) (1,402,926)
Depreciation and amortisation (437,756) (192,235)
Exceptional expense - share based payments 19 (740,829) (2,794,625)
Exceptional expense - costs of listing - (275,508)
_________ _________
Loss from operations (8,329,829) (4,665,294)
Finance expense 9 - (69,713)
_________ _________
Loss before tax (8,329,829) (4,735,007)
Tax expense 10 - -
_________ _________
Loss from continuing operations (8,329,829) (4,735,007)
Other comprehensive income:
Exchange gains arising on translation of foreign operations (50,002) 1,028,907
_________ _________
Loss and total comprehensive income attributable to the owners of the Company (8,379,831) (3,706,100)
_________ _________
Earnings per share attributable to the 11
ordinary equity holders of the parent
Loss per share
Basic and diluted (US$ ($0.059) ($0.0546)
_________ _________
The results reflected above relate to continuing operations
Verici Dx plc
Consolidated statement of financial position
as at 31 December 2021
Note 2021 2020
US$ US$
Assets
Current assets
Trade and other receivables 15 655,847 323,224
Cash and cash equivalents 10,339,788 17,751,087
_________ _________
10,995,635 18,074,311
_________ _________
Non-current assets
Property, plant and equipment 12 785,736 464,042
Intangible assets 13 2,007,623 1,767,424
_________ _________
2,793,359 2,231,466
_________ _________
Total assets 13,788,994 20,305,777
_________ _________
Liabilities
Current liabilities
Trade and other payables 16 1,804,109 681,890
_________ _________
NET ASSETS 11,984,885 19,623,887
_________ _________
Issued capital and reserves attributable to
owners of the parent
Share capital 17 181,614 181,614
Share premium reserve 18 20,353,748 20,353,748
Share-based payments reserve 18 3,535,454 2,794,625
Foreign exchange reserve 978,905 1,028,907
Retained earnings (13,064,836) (4,735,007)
_________ _________
TOTAL EQUITY 11,984,885 19,623,887
_________ _________
Verici Dx plc
Consolidated statement of cash flows
for the year ended 31 December 2021
Period
Year to 22 April to
31 December 31 December
Note 2021 2020
US$ US$
Cash flows from operating activities
Loss from operations (8,329,829) (4,665,294)
Adjustments for:
Depreciation of property, plant and equipment 295,178 123,242
Amortisation of intangible fixed assets 142,578 68,993
Finance expense - (69,713)
Share-based payment expense 740,829 2,794,625
_________ _________
(7,151,244) (1,748,147)
Increase in trade and other receivables (330,967) (323,224)
Increase in trade and other payables 1,145,7674 681,890
Settled by Convertible Loan Note 23 - 535,164
Income taxes paid - -
_________ _________
Net cash outflow from operating activities (6,336,444) (854,317)
_________ _________
Cash flows from investing activities
Purchases of property, plant and equipment (617,940) (25,851)
Purchase of intangibles (347,919) (132,259)
_________ _________
Net cash used in investing activities (965,859) (158,110)
Cash flows from financing activities
Issue of ordinary shares - 18,795,500
Expenses of share issue - (959,993)
Loan repayments (73,548) -
_________ _________
Net cash from financing activities (73,548) 17,835,507
Net (reduction) / increase in cash and cash equivalents (7,375,851) 16,823,080
Cash and cash equivalents at beginning of year 17,751,087 -
Exchange (losses) / gains on cash and cash equivalents (35,448) 928,007
_________ _________
Cash and cash equivalents at end of year 4 10,339,788 17,751,087
_________ _________
Verici Dx plc
Consolidated statement of changes in equity
for the year ended 31 December 2021
Share Share Share-based Convertible Foreign Retained Total Total
capital premium payment debt option exchange earnings attributable equity
reserve reserve to equity
holders of
parent
US$ US$ US$ US$ US$ US$ US$ US$
22 April 2020 1 - - - - - 1 1
Comprehensive income for the period
Loss - - - - - (4,735,007) (4,735,007) (4,735,007)
Other comprehensive Income - - - - 1,028,907 - 1,028,907 1,028,907
_________ _________ _________ _________ _________ _________ _________ _________
Total comprehensive Income for the period - - - - 1,028,907 (4,735,007) (3,706,100) (3,706,100)
_________ _________ _________ _________ _________ _________ _________ _________
Contributions by and distributions to owners
Issue of share capital 181,613 20,283,029 - - - - 20,464,642 20,464,642
Issue of Convertible Loan Note - - 165,138 - - 165,138 165,138
Conversion of Convertible Loan Note into shares - - - (94,419) - - (94,419) (94,419)
Transfer of balance following conversion of Convertible Loan Note - 70,719 - (70,719) - - - -
Share-based payment - - 2,794,625 - - - 2,794,625 2,794,625
_________ _________ _________ _________ _________ _________ _________ _________
Total contributions by and 181,613 20,353,748 2,794,625 - - - 23,329,986 23,329,986
distributions to owners
_________ _________ _________ _________ _________ _________ _________ _________
31 December 2020 181,614 20,353,748 2,794,625 - 1,028,907 (4,735,007) 19,623,887 19,623,887
_________ _________ _________ _________ _________ _________ _________ _________
Verici Dx plc
Consolidated statement of changes in equity
for the year ended 31 December 2021 (continued)
Share Share Share-based Convertible Foreign Retained Total Total
capital premium payment debt option exchange earnings attributable equity
reserve reserve to equity
holders of
parent
US$ US$ US$ US$ US$ US$ US$ US$
1 January 2021 181,614 20,353,748 2,794,625 - 1,028,907 (4,735,007) 19,623,887 19,623,887
Comprehensive income for the period
Loss - - - - - (8,329,829) (8,329,829) (8,329,829)
Other comprehensive Income - - - - (50,002) - (50,002) (50,002)
_________ _________ _________ _________ _________ _________ _________ _________
Total comprehensive Income for the period - - - - (50,002) (8,329,829) (8,379,831) (8,379,831)
_________ _________ _________ _________ _________ _________ _________ _________
Contributions by and distributions to owners
Share-based payment - - 740,829 - - - 740,829 740,829
_________ _________ _________ _________ _________ _________ _________ _________
Total contributions by and - - 740,829 - - - 740,829 740,829
distributions to owners
_________ _________ _________ _________ _________ _________ _________ _________
31 December 2021 181,614 20,353,748 3,535,454 - 978,905 (13,064,836) 11,984,885 11,984,885
_________ _________ _________ _________ _________ _________ _________ _________
Verici Dx plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2021
1 General information
The principal activity of Verici Dx plc (the "Company") is the development of
prognostic and diagnostic tests for kidney transplant patients.
The Company is a public limited company incorporated in England and Wales and
domiciled in the UK. The address of the registered office is Avon House, 19
Stanwell Road, Penarth, Cardiff CF64 2EZ and the company number is 12567827.
The Company was incorporated as Verici Dx Limited on 22 April 2020 as a
private company and on 9 September 2020 the Company was re-registered as a
public company and changed its name to Verici Dx plc.
2 Summary of significant accounting policies
The principal accounting policies adopted in the preparation of the historical
financial information of the Company, which have been applied consistently to
the period presented, are set out below:
Basis of preparation
The financial statements have been prepared in accordance with International
Financial Reporting Standards as adopted by the UK in conformity with the
Companies Act 2006. The financial statements of the Company for the year ended
31 December 2021 are prepared in accordance with applicable law and UK
Accounting Practice, included FRS 101 "Reduced Disclosure Framework".
The functional currency and the presentational currency of the Company is
United States dollars ("USD" or "US$") as this is the currency of the primary
economic environment that the Company operates in.
New standards are not expected to impact the Company or Group as they are
either not relevant to the Company's or Group's activities or require
accounting which is consistent with the Company's and Group's current
accounting policies. The Directors have considered those standards and
interpretations which have not been applied in these financial statements but
which are relevant to the Company's or Group's operations that are in issue
but not yet effective and do not consider that they will have a material
effect on the future results of the Company or Group.
Other
The Group does not expect any other standards issued by the IASB, but not yet
effective, to have a material impact on the group.
Measurement convention
The financial information has been prepared under the historical cost
convention. Historical cost is generally based on the fair value of the
consideration given in exchange for assets.
The preparation of the financial information in compliance with IFRS requires
the use of certain critical accounting estimates and management judgements in
applying the accounting policies. The significant estimates and judgements
that have been made and their effect is disclosed in note 3.
Basis of consolidation
Where the Company has control over an investee, it is classified as a
subsidiary. The Company controls an investee if all three of the following
elements are present: power over the investee, exposure to variable returns
from the investee, and the ability of the investor to use its power to affect
those variable returns. Control is reassessed whenever facts and circumstances
indicate that there may be a change in any of these elements of control.
Verici Dx Plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2021 (continued)
2 Summary of significant accounting policies (continued)
Basis of consolidation (continued)
The consolidated financial statements present the results of the Company and
its subsidiaries ("the Group") as if they formed a single entity. Intercompany
transactions and balances between group companies are therefore eliminated in
full.
The consolidated financial statements incorporate the results of business
combinations using the acquisition method. In the statement of financial
position, the acquiree's identifiable assets, liabilities and contingent
liabilities are initially recognised at their fair values at the acquisition
date. The results of acquired operations are included in the consolidated
statement of profit or loss and other comprehensive income from the date on
which control is obtained. They are deconsolidated from the date on which
control ceases.
Going concern
The Group is in the development phase of its business and has not generated
any revenues. At 31 December 2021 the Group has available cash resources of
$10,339,788. Subsequent to the year end on 11 March 2022 the Company closed
a funding raising GBP10.0m before expenses by the issue of 28,571,429 new
shares.
The Board has considered the impact of the ongoing COVID-19 pandemic. There
has been minimal impact on the Company to date. Given the impact of COVID-19
in the economy generally, the Board has performed a number of stress tests to
assess the ability of the Company to continue as a going concern.
The Directors have prepared cash flow forecasts for the Group for a review
period of 12 months from the date of approval of this historical financial
information. These forecasts reflect an assessment of current and future
market conditions and their impact on the Company's future cash flow
performance.
The forecasts have been sensitised for additional costs which may be incurred
in the review period. In the sensitised scenario, the forecasts indicate the
Company would still have sufficient cash to continue as a going concern.
Having considered the points above, the Directors remain confident in the
long-term future prospects for the Group, and their ability to continue as a
going concern for the foreseeable future. They therefore adopt the going
concern basis in preparing the historical financial information of the Group.
Taxation
Income tax expense represents the sum of the tax currently payable and
deferred tax.
Current tax
Current tax payable is based on taxable profit for the year. Taxable profit
differs from net profits as reported in the income statement because it
excludes items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The
Company's liability for current tax is calculated using tax rates that have
been enacted or substantially enacted by the reporting end date.
Verici Dx Plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2021 (continued)
2 Summary of significant accounting policies (continued)
Deferred tax
Deferred tax is the tax expected to be payable or
recoverable on temporary differences between the carrying amounts of assets
and liabilities in the historical 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
differences arises from goodwill or from the initial recognition of other
assets and liabilities in a transaction that affects neither the tax profit
nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at
each reporting end 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 is realised. Deferred tax is charged or credited in the income
statement, 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 the company has a legally
enforceable right to offset current tax assets and liabilities and the
deferred tax assets and liabilities relate to taxes levied by the same tax
authority.
Share-based payments
Where equity settled share options are awarded to employees, the fair value of
the options at the date of grant is charged to the consolidated statement of
comprehensive income over the vesting period. Non-market vesting conditions
are taken into account by adjusting the number of equity instruments expected
to vest at each reporting date so that, ultimately, the cumulative amount
recognised over the vesting period is based on the number of options that
eventually vest. Non-vesting conditions and market vesting conditions are
factored into the fair value of the options granted. As long as all other
vesting conditions are satisfied, a charge is made irrespective of whether the
market vesting conditions are satisfied. The cumulative expense is not
adjusted for failure to achieve a market vesting condition or where a
non-vesting condition is not satisfied.
Where equity instruments are granted to persons other than employees, the
consolidated statement of comprehensive income is charged with the fair value
of goods and services received.
Foreign currency translation
· Function and presentational currency
Items included in the financial statements of the Group are
measured using USD, the currency of the primary economic environment in which
the entity operates ('the functional currency'), which is also the Company's
presentation currency.
· Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions
and from the translation at year-end exchange rates, of monetary assets and
liabilities denominated in foreign currencies to USD, are recognised in the
income statement.
Verici Dx Plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2021 (continued)
2 Summary of significant accounting policies (continued)
Intangible assets
Intangible assets are measured at cost less accumulated amortisation and any
accumulated impairment losses.
Patents are recognised at fair value at the acquisition date. Patents have a
finite useful life and are subsequently carried at cost less accumulated
amortisation and impairment losses.
The Company amortises intangible assets with a limited useful life on a
straight-line basis. The following rates are applied:
Licence and patents - the shorter of the remaining life of the licence and 15
years
Tangible assets
Tangible fixed assets are stated at cost net of accumulated depreciation and
accumulated impairment losses. Costs comprise purchase costs together with any
incidental costs of acquisition.
Depreciation is provided to write down the cost less the estimated residual
value of all tangible fixed assets by equal instalments over their estimated
useful economic lives on a straight-line basis. The following rates are
applied:
Plant and machinery - 3 years
The assets' residual values, useful lives and depreciation methods are
reviewed, and adjusted prospectively if appropriate, if there is an indication
of a significant change since the last reporting date. Low value equipment
including computers is expensed as incurred.
Impairment of tangible and intangible assets
At each reporting end date, the Company reviews the carrying amounts of its
tangible and intangible 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). Where it is not possible to
estimate the recoverable amount of an individual asset, the Company estimates
the recoverable amount of the cash-generating unit to which the asset belongs.
The recoverable amount is the higher of fair value less costs 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 (or cash-generating unit) is estimated
to be less than its carrying amount, the carrying amount of the asset (or
cash-generating unit) is reduced to its recoverable amount. An impairment loss
is recognised immediately in profit and loss, unless the relevant asset is
carried at a revalued amount, in which case the impairment loss is treated as
a revaluation decrease.
Where an impairment subsequently reverses, the carrying amount of the asset
(or cash-generating unit) is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not exceed
the carrying amount that would have been determined had no impairment loss
been recognised for the asset (or cash-generating unit) in prior years. A
reversal of an impairment loss is recognised immediately in profit and loss.
Verici Dx Plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2021 (continued)
2 Summary of significant accounting policies (continued)
Financial instruments
The Company classifies financial instruments, or their component parts, on
initial recognition as a financial asset, a financial liability or an equity
instrument in accordance with the substance of the contractual arrangement.
Financial assets and financial liabilities are recognised on the statement of
financial position when the Company becomes a party to the contractual
provisions of the instrument.
· Financial assets
Financial assets are classified, at initial recognition, at amortised cost or
carrying value. The classification of financial assets at initial
recognition depends on the financial asset's contractual cash flow
characteristics and the Company's business model for managing them.
The classification depends on the purpose for which the financial assets were
acquired. Management determines the classification of its financial assets at
initial recognition and re-evaluates this classification at every reporting
date.
As at the reporting date, the Company did not have any financial assets
subsequently measured at fair value.
· Financial liabilities
All financial liabilities are initially measured at fair value and, in the
case of loans and borrowings, net of directly attributable transaction costs.
They are subsequently measured at amortised cost, where applicable, using the
effective interest method, with interest expense recognised on an effective
yield basis.
· Cash and cash equivalents
Cash and cash equivalents comprise cash balances and deposits with a maturity
of less than three months at balance sheet date.
Provisions
A provision is recognised in the statement of financial position when the
Group has a present legal or constructive obligation as a result of a past
event, that can be reliably measured, and it is probably that an outflow of
economic benefits will be required to the settle the obligation. Provisions
are determined by discounting the expected future cash flows at a pre-tax rate
that reflects risks specific to the liability.
Financing expenses
Financing expenses comprise interest payable and finance charges on shares
classified as liabilities. Foreign exchange gains and losses arising on
foreign currency transactions are reported within administrative expenses in
the statement of comprehensive income.
Interest payable is recognised in the statement of comprehensive income as it
accrues, using the effective interest method.
Exceptional items
Items considered of such significance to enable the reader to better
understand the results for the year are presented separately as exceptional
items on the face of the statement of comprehensive income.
Verici Dx Plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2021 (continued)
2 Summary of significant accounting policies (continued)
Operating segments
The directors are of the opinion that the business of the Group comprises a
single activity, that of the development of prognostic and diagnostic tests
for kidney transplant patients. Consequently, all activities relate to this
segment.
All the non-current assets of the Company are located in, or primarily relate
to, the USA
3 Judgements and key sources of estimation uncertainty
The preparation of the Company's historical financial information under UK
IFRS requires the Directors to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities. 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 Directors consider that the following estimates and judgements are likely
to have the most significant effect on the amounts recognised in the financial
information.
Carrying value of intangible assets, property, plant and equipment
In determining whether there are indicators of impairment of the Company's
intangible assets, the Directors take into consideration various factors
including the economic viability and expected future financial performance
of the asset and when it relates to the intangible assets arising on a
business combination, the expected future performance of the business
acquired.
4 Financial instruments - Risk Management
The Group is exposed through its operations to the following financial risks:
· Credit risk
· Foreign exchange risk
· Liquidity risk and
· Capital disclosures
The Group is exposed to risks that arise from its use of financial
instruments. This note describes the Group's objectives, policies and
processes for managing those risks and the methods used to measure them.
Further quantitative information in respect of these risks is presented
throughout these financial statements.
(i) Principal financial instruments
The principal financial instruments used by the Group, from which financial
instrument risk arises, are as follows:
· Cash and cash equivalents
· Trade and other payables
Verici Dx plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2021 (continued)
4 Financial instruments - Risk Management (continued)
Principal financial instruments (continued)
(ii) Financial instruments by category
Financial asset
Group Group
Amortised Amortised
cost cost
2021 2020
US$ US$
Cash and cash equivalents 10,339,788 17,751,087
Trade and other receivables 610,944 323,224
_________ _________
10,950,732 18,074,311
Total financial assets _________ _________
Financial liabilities
Group Group
Amortised Amortised
cost cost
2021 2020
US$ US$
Trade and other payables and loan 1,754,109 681,890
_________ _________
Total financial liabilities 1,754,109 681,890
_________ _________
(iii) Financial instruments not measured at fair value
Financial instruments not measured at fair value includes cash and cash
equivalents, trade and other receivables, and trade and other payables.
Due to their short-term nature, the carrying value of cash and cash
equivalents, trade and other receivables, and trade and other payables
approximates their fair value.
Verici Dx plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2021 (continued)
4 Financial instruments - Risk Management (continued)
(iv) Financial instruments measured at fair value
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group's risk
management objectives and policies and, whilst retaining ultimate
responsibility for them, it has delegated the authority for designing and
operating processes that ensure the effective implementation of the objectives
and policies to the Group's finance function.
The overall objective of the Board is to set policies that seek to reduce risk
as far as possible without unduly affecting the Group's competitiveness and
flexibility. Further details regarding these policies are set out below:
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. Due to the absence of revenue, the Group's exposure to credit
risk is on cash at bank. The Company only deposits cash with major banks
with high quality credit standing for amounts in excess of US$500,000.
Cash in bank and short-term deposits
The credit quality of cash has been assessed by reference to external credit
rating, based on Standard and Poor's long-term / senior issuer rating:
Group Group
2021 2021
Cash
Rating at bank
US$
Bank A A+ 10,024,102
Bank B 315,686
_________
10,339,788
_________
Group Group
2020 2020
Cash
Rating at bank
US$
Bank A A+ 17,578,901
Bank B 172,186
_________
17,751,087
_________
Verici Dx plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2021 (continued)
4 Financial instruments - Risk Management (continued)
Foreign exchange risk
Foreign exchange risk arises when individual Group entities enter into
transactions denominated in a currency other than their functional currency.
The Group's policy is, where possible, to allow group entities to settle
liabilities denominated in their functional currency. In the period before
commercial revenues US dollars are transferred from the Company to its US
subsidiary to enable it to meet its local obligations. Currently the Group's
liabilities are either US dollar or UK sterling. No forward contracts or
other financial instruments are entered into to hedge foreign exchange
movements, with funds being transferred from the Company to its US subsidiary
using spot rates.
As at 31 December 2021 assets held in Sterling amounted to US$3,538,160 (2020
- US$15,844,022) and liabilities held in Sterling amounted to US$131,129 (2020
- US$187,979).
The effect of a 5% strengthening of the Sterling against US dollar at the
reporting date on the Sterling denominated net assets carried at that date
would, all other variables held constant, have resulted in a decrease in
post-tax loss for the period and increase of net assets of US$170,351 (2020 -
US$782,802). A 5% weakening in the exchange rate would, on the same basis,
have increased post-tax loss and decreased net assets by US$170,351 (2020 -
US$782,802).
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting
its financial obligations as they fall due. This risk is managed by the
production of rolling cash flow projections. The Group's continued future
operations depend on its ability to raise sufficient working capital through
the issue of share capital and generating revenue.
The following table sets out the contractual maturities (representing
undiscounted contractual cash-flows) of financial liabilities which can all be
met from the cash resources currently available:
Between
Group Up to 3 3 and 12
months months
At 31 December 2021 US$ US$
Trade and other payables 159,534 -
_________ _________
Total 159,534 -
_________ _________
Verici Dx plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2021 (continued)
4 Financial instruments - Risk Management (continued)
Between
Group Up to 3 3 and 12
months months
At 31 December 2020 US$ US$
Trade and other payables 394,331 -
Loan 73,548 -
_________ _________
Total 467,879 -
_________ _________
Capital Disclosures
The Group monitors "adjusted capital" which comprises all components of equity
(i.e. share capital, share premium, and accumulated losses).
The Group's objectives when maintaining capital are to safeguard the entity's
ability to continue as a going concern.
5 Expenses by nature
Period
Year to 22 April to
31 December 31 December
2021 2020
US$ US$
Employee benefit expenses (see note 7) 2,393,384 2,852,641
Depreciation of property, plant and equipment 295,178 123,242
Amortisation of intangible assets 142,578 68,993
Research and development costs 2,809,435 355,107
Licenses 250,000 -
Professional costs 921,270 553,454
Share-based payment expense for non-employees 309,067 200,836
Foreign exchange (gain) / losses (182,010) 159,538
Other costs 1,390,927 75,975
Verici Dx plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2021 (continued)
6 Auditors' remuneration
During the year the Group obtained the following services from the Company's
auditor:
Period
Year to 22 April to
31 December 31 December
2021 2020
US$ US$
Fees payable to the Company's auditor for the audit of the parent Company and 43,270 47,049
consolidated financial statements
Fees payable to the Company's auditor for other services:
Tax advisory and compliance services 818 6,933
Service for finance related transactions - 57,024
_________ _________
Total 44,088 111,006
_________ _________
7 Employee benefit expenses
Period
Year to 22 April to
31 December 31 December
2021 2020
US$ US$
Employee benefit expenses (including directors) comprise:
Wages and salaries 1,658,314 244,848
Benefits 142,829 9,223
Share-based payment expense (note 1 (#_37._Share-based_payment) 9) 431,762 2,593,789
Social security contributions and similar taxes 103,970 4,781
Pension contributions 56,509 -
_________ _________
2,393,384 2,852,641
_________ _________
Key management personnel compensation
Key management personnel are those persons having authority and responsibility
for planning, directing and controlling the activities of the Group, including
the Directors of the Company.
Period
Year to 22 April to
31 December 31 December
2021 2020
US$ US$
Salary 560,040 121,421
Share based payment expense - 2,577,826
_________ _________
560,040 2,699,247
_________ _________
The average number of employees (including Directors) in the Group in the
period was 13 (2020 - 8).
Verici Dx plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2021 (continued)
8 Segment information
The Group has one division being the development of prognostic and diagnostic
tests for kidney transplant patients.
9 Finance expense
Period
Year to 22 April to
31 December 31 December
2021 2020
US$ US$
Finance expense
Interest expense on Convertible Loan Note - 68,807
Loan interest - 906
_________ _________
Total finance expense - 69,713
_________ _________
10 Tax expense
Period
Year to 22 April to
31 December 31 December
2021 2020
US$ US$
Current tax expense
Current tax on loss for the period - -
_________ _________
Total current tax - -
Deferred tax asset
On losses generated in the period - -
_________ _________
- -
_________ _________
Verici Dx plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2021 (continued)
10 Tax expense (continued)
The reasons for the difference between the actual tax charge for the year and
the standard rate of corporation tax in the United Kingdom applied to profits
for the year are as follows:
Period
Year to 22 April to
31 December 31 December
2021 2020
US$ US$
Loss for the period (8,329,829) (4,735,007)
_________ _________
Tax using the Company's domestic tax rate of 19% (1,582,668) (899,651)
Expenses not deductible for tax purposes 58,475 41,987
Accelerated capital allowances (143,521) -
Unrecognised deferred tax assets 2,327,906 931,344
Different tax rates applied in overseas jurisdictions (660,192) (73,680)
_________ _________
Total tax expense - -
_________ _________
The unrecognised deferred tax relates to two elements: the unrecognised
deferred tax arising on share-based payments of US$198,786 (2020 - US$583,081)
and unrecognised deferred tax on taxable losses of US$2,129,120 (2020 -
US$348,263). Total taxable losses carried forward are US$9,256,260 (2020
-US$1,490,633). No deferred tax asset is recognised for these losses due to
early stage in the development of the Group's activities. The losses do not
expire but can only be used against trading profits from the same trade.
11 Earnings per share
Period
Year to 22 April to
31 December 31 December
2021 2020
Total Total
Numerator US$ US$
Loss for the period used in basic EPS (8,329,829) (4,735,007)
Denominator
Weighted average number of ordinary shares used in basic EPS 141,747,816 86,728,156
Resulting loss per share (US$0.059) (US$0.0546)
The Company has one category of dilutive potential ordinary share, being share
options (see note 19). The potential shares were not dilutive in the period as
the Group made a loss per share in line with IAS 33.
Verici Dx plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2021 (continued)
12 Tangible assets
Plant & machinery
Group Total
US$ US$
Cost or valuation
At 22 April 2020
Additions 25,851 25,851
Acquired business assets (Note 23) 531,484 531,484
Foreign exchange movements 36,565 36,565
_________ _________
At 31 December 2020 593,900 593,900
Additions 617,940 617,940
Foreign exchange movements (5,826) (5,826)
_________ _________
At 31 December 2021 1,206,014 1,206,014
_________ _________
Accumulated depreciation and impairment
At 22 April 2020
Depreciation (123,242) (123,242)
Foreign exchange movements (6,616) (6,616)
_________ _________
At 31 December 2020 (129,858) (129,858)
Depreciation (295,178) (295,178)
Foreign exchange movements 4,758 4,758
_________ _________
At 31 December 2021 (420,278) (420,278)
_________ _________
Net book value
At 31 December 2021 785,736 785,736
_________ _________
At 31 December 2020 464,042 464,042
_________ _________
Verici Dx plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2021 (continued)
13 Intangible assets
Group License and patents Total
US$ US$
Cost
At 22 April 2020
Additions 234,095 234,095
Acquired business assets (Note 23) 1,468,516 1,468,516
Foreign exchange movements 136,584 136,584
_________ _________
At 31 December 2020 1,839,195 1,839,195
Additions 397,919 397,919
Foreign exchange movements (17,663) (17,663)
_________ _________
At 31 December 2021 2,219,451 2,219,451
_________ _________
Accumulated amortisation and impairment
At 22 April 2020
Amortisation charge (68,993) (68,993)
Foreign exchange movements (2,778) (2,778)
_________ _________
At 31 December 2020 (71,771) (71,771)
Amortisation charge (142,578) (142,578)
Foreign exchange movements 2,521 2,521
_________ _________
At 31 December 2021 (211,828) (211,828)
_________ _________
Net book value
At 31 December 2021 2,007,623 2,007,623
_________ _________
At 31 December 2020 1,767,424 1,767,424
_________ _________
Verici Dx plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2021 (continued)
13 Intangible assets (continued)
The licence was acquired from Renalytix AI Plc on 4 May 2020 pursuant to a
purchase of business assets (see Note 23). This license in turn was granted
to Renaltix AI Plc by the Icahn School of Medicine at Mount Sinai for rights
to intellectual property and data to support the FractalDx families of
diagnostic assays. In addition amounts are spent on the prosecution and
protection of patent applications.
The Group has tested the carrying value for impairment at 31 December 2021.
The recoverable amount was assessed in the basis of value in use. The assessed
value exceeded the carrying value and no impairment loss was recognised. The
key assumptions in the calculation to assess value in use are future revenues
and costs and the ability to generate future cash flows. Recent working
capital projections approved by the Board were used as well as forecasts for a
further four years, followed by an extrapolation of expected cash flows and
the calculation of a terminal value.
Verici Dx plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2021 (continued)
14 Subsidiary
The principal subsidiary of Verici Dx plc, which has been included in these
consolidated financial statements at a cost of US$10, is as follows:
Country of incorporation and Proportion of ownership
Name principal place of business interest at 31 December
2021
Verici Dx Inc United States of America 100%
15 Trade and other receivables
Group Group
2021 2020
US$ US$
Prepayments 406,191 202,546
Other debtors 249,656 120,678
Amount due from wholly owned subsidiary undertaking - -
_________ _________
655,847 323,224
_________ _________
16 Trade and other payables
Group Group
2021 2020
US$ US$
Trade payables 159,534 394,331
Accruals 1,644,575 210,953
Loan - 73,548
_________ _________
Total financial liabilities classified as financial liabilities measured at 1,804,109 678,832
amortised cost
Other payables - tax and social security payments - 3,058
_________ _________
Total trade and other payables 1,804,109 681,890
_________ _________
The carrying value of trade and other payables classified as financial
liabilities measured at amortised cost approximates fair value.
The loan was interest bearing at 4% and repayable by monthly instalment with
the last instalment paid in March 2021.
Verici Dx plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2021 (continued)
17 Share capital
Issued and fully paid
2021 2021
Number US$
Ordinary shares of £1 each
On incorporation 1 1
__________ __________
Ordinary shares of £0.001 each
Sub-division of existing shares into 1,000 ordinary shares 1,000 1
Issue of new shares 59,415,135 74,864
Issue of shares on conversion of Convertible Loan Notes 9,831,681 12,771
Placing and offer of shares on admission to AIM 72,500,000 93,978
__________ __________
At 31 December 2020 and 2021 141,747,816 181,614
__________ __________
On 7 July 2020 the entire issued share capital of the Company was sub divided
to create 1,000 ordinary shares of £0.001 each and 59,415,135 ordinary shares
of £0.001 each were allotted pursuant to a dividend in specie by the then
parent company, Renalytix AI Plc. Those 59,416,135 shares were then
immediately reclassified as 59,416,134 A shares and one Golden Share and all A
shares and the Golden Share converted into ordinary shares at the time of the
Company's admission to AIM on 3 November 2020.
On 28 October 2020 pursuant to the conversion of the Convertible Loan Notes is
issue at that time of $2,500,000, a further 9,831,681 new ordinary shares were
issued.
On 3 November 2020 pursuant to the Company's shares being admitted to AIM, a
market operated by the London Stock Exchange, 72,500,000 new ordinary shares
were issued at an issue price of £0.20 per share raising gross proceeds of
US$18,795,500 (£14,500,000).
18 Reserves
The following describes the nature and purpose of each reserve within equity:
Reserve Description and purpose
Share premium Amount subscribed for share capital in excess of nominal value.
Foreign exchange reserve Gains/losses arising on retranslating the net assets of parent company
operations into US dollars.
Convertible debt option reserve Amount of proceeds on issue of convertible debt relating to the equity
component (i.e. option to convert the debt into share capital).
Retained earnings All other net gains and losses and transactions with owners (e.g. dividends)
not recognised elsewhere.
Verici Dx plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2021 (continued)
19 Share-based payment
On 28 October 2020, the Board adopted the Share Option Plan to incentivise
certain of the Group's employees and Directors. The Share Option Plan provides
for the grant of both EMI Options and non-tax favoured options. Options
granted under the Share Option Plan are subject to exercise conditions as
summarised below.
The Share Option Plan has a non-employee sub-plan for the grant of Options to
the Company's advisors, consultants, non-executive directors, and entities
providing, through an individual, such advisory, consultancy, or office holder
services and a US sub-plan for the grant of Options to eligible participants
in the Share Option Plan and the Non-Employee Sub-Plan who are US residents
and US taxpayers.
With the exception of options over 10,631,086 shares, which vested immediately
on grant in 2020, the options vest equally over twelve quarters from the grant
date. If options remain unexercised after the date one day before the tenth
anniversary of grant such options expire. The Options are subject to exercise
conditions such that they shall, subject to certain exceptions, vest in equal
quarterly instalments over the three years immediately following the date of
grant, which vesting shall accelerate in full in the event of a change of
control of the Company.
Weighted
average
exercise
price (p) Number
Outstanding at 22 April 2020 - -
Granted during the period 32 14,574,782
Exercised during the period 20 (10,631,086)
_________ _________
Outstanding at 31 December 2020 32 3,943,696
Granted during the year 62.61 990,000
Exercisable at 31 December 2020 26.03 4,933,696
_________ _________
The exercise price of options outstanding at 31 December 2021 ranged
between 20p and 69.5p and their weighted average contractual life was 3.85
years.
The weighted average fair value of each option granted during the year was
26.46p.
The fair value of each share option granted has been estimated using a
Black-Scholes model and ranges from 10p to 23p. The inputs into the model are
a share prices of 20p, 40p,45.5p, 50p and 69.5p and exercise prices of 20p,
40p,45.5p, 50p and 69.5p and expected volatility of 48.5%, no expected
dividend yield, contractual life of between 2.9 and 1.9 years and a risk-free
interest rate of 0.34%. As of 31 December 2021, none of the granted stock
options have been exercised.
The Group recognised total expenses of $740,829 (2020 - $2,794,625) within
administrative expenses relating to equity-settled share-based payment
transactions during the period.
Verici Dx plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2021 (continued)
20 Related party transactions
As noted in Note 23, on 4 May 2020 the Company entered into an Asset Purchase
Agreement with Renalytix AI Plc. Renalytix Plc is a shareholder on the
Company and James McCullough, a Director of the Company, is also a Director
and CEO of Renalytix Plc.
In connection with this transaction the Company also entered into a
Convertible Loan Agreement to both fund this transaction and also provide
working capital until the admission of the shares onto AIM. The total amount
advanced under the Convertible Loan Note at the time of its redemption in full
into ordinary shares of the Company was $2,500,000.
In the year to 31 December 2021 an amount of US$351,863 was paid to Renalytix
Plc as full reimbursement for expenses incurred on behalf of the Company. As
of 31 December 2021 the amount owed to Renalytix Plc was US$22,312.
21 Loans and borrowings
Group Group
2021 2020
US$ US$
Issue of Convertible Loan Notes - 2,500,000
Amount classified as equity - (165,138)
Accreted interest - 68,807
Converted into ordinary shares - (2,403,669)
_________ _________
As at 31 December 2020 - -
_________ _________
The initial Convertible Loan Note Instrument of US$2,000,000
("the Note") was issued on 4 May 2020. It had a nil % coupon, which has been
accounted for at fair value at inception and the difference recognised as a
capital contribution. As the conversion feature resulted in the conversion
of a fixed amount of stated principal into a variable number of shares, it did
not satisfy the 'fixed for fixed' criterion and, therefore, it was classified
as a financial liability. The fair value of the financial liability was
calculated using a market interest rate for an equivalent instrument without a
conversion option. The discount rate applied was 9%.
22 Events after the reporting date
On 11 March 2022 the Company closed a fundraising for GBP10.0m before expenses
by the issue of 28,571,429 new shares.
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