17:00 Thu 30 Apr 2020
Verona Pharma plc: Operational Update and Financial Results for the Three Months Ended March 31, 202
Reported positive Phase 2b results in symptomatic patients with moderate to severe COPD with nebulized ensifentrine
Reported positive efficacy and safety with single dose pMDI ensifentrine
Conference Call Today at
OUTLOOK AND STRATEGY
Ensifentrine is a novel, investigational inhaled therapy that has been shown to act as both a bronchodilator and an anti-inflammatory agent in one compound. Initially, the Company is advancing the development of nebulized ensifentrine for the maintenance treatment of COPD in moderate to severe patients.
The Company's key objectives include:
- Completing an End-of-Phase 2 meeting with the
U.S. Food and Drug Administration ("FDA") in the second quarter of 2020 to receive guidance on the design of the Phase 3 program with nebulized ensifentrine; - Securing sufficient capital to fund the Phase 3 program for nebulized ensifentrine; and
- Initiating the Phase 3 program with nebulized ensifentrine in moderate to severe COPD patients.
RECENT CORPORATE DEVELOPMENTS
Clinical
- In
January 2020 , the Company reported positive top-line data from a Phase 2b clinical study with nebulized ensifentrine added on to tiotropium (Spiriva®), a long acting anti-muscarinic (“LAMA”) bronchodilator in symptomatic patients with moderate to severe COPD. The study met the primary endpoint at all doses and also met clinically relevant secondary endpoints. The Company believes these data support dose selection for Phase 3 clinical trials. The study was accepted as a late-breaking abstract at the 2020American Thoracic Society International Conference . - In
March 2020 , the Company reported positive efficacy and safety data with a single dose of the pressurized metered-dose inhaler ("pMDI") formulation of ensifentrine in a Phase 2 clinical trial in patients with moderate to severe COPD. With these results and those observed in previous Phase 2 clinical trials, ensifentrine has demonstrated statistically significant and clinically meaningful improvements in lung function in COPD patients when delivered via any of the three widely used inhaled modes: nebulizer, DPI and pMDI. - Results from the single dose part of the study (Part A) demonstrated a statistically significant and clinically meaningful increase in lung function as measured by ("FEV1")1 compared to placebo.
- Positive data support initiation of the second, multiple dose, part of the study (Part B), which will evaluate the pMDI formulation in this patient population over 7 days of twice-daily treatment.
Verona Pharma has postponed the initiation of Part B due to concerns regarding the safety of trial subjects, caregivers and medical staff during the novel coronavirus (COVID-19) pandemic. As a result the Company does not expect to announce results from Part B of this trial in 2020. The Company will continue to monitor this evolving situation and will provide an updated timeline for the initiation of Part B at a later date. - Also during the first quarter of 2020, the Company requested an End-of-Phase 2 meeting with the FDA. As a result of the COVID-19 pandemic, the FDA has advised that it will provide a written response to the Company on its End-of-Phase 2 package, rather than holding a meeting. The Company is expecting to receive this response during the second quarter of 2020.
- Based on the positive Phase 2 data and subject to receiving the
FDA's response to the End-of-Phase 2 package, the Company plans to seek the necessary funding and initiate the Phase 3 clinical program. - Additionally, in
February 2020 , the Company published its Phase 2b clinical results with nebulized ensifentrine as a monotherapy for maintenance treatment of COPD in the peer reviewed journal,Respiratory Research . The 403-patient trial, which was reported inMarch 2018 , met its primary endpoint demonstrating that ensifentrine produced clinically and statistically significant improvements in lung function at all doses. In addition, clinically relevant secondary endpoints were met including significant progressive improvements in COPD symptoms.
Management
- In
February 2020 , the Company appointed Dr.David Zaccardelli as President and Chief Executive Officer and as an executive director.Mark Hahn , was appointed as Chief Financial Officer in March.
FINANCIAL HIGHLIGHTS
- Net cash, cash equivalents and short-term investments at
March 31, 2020 amounted to £20.8 million (December 31, 2019 : £30.8 million). InApril 2020 the Company received a fiscal 2019 tax credit of £7.3 million in cash. - For the three months ended
March 31, 2020 , the Company reported operating loss of £11.2 million (three months endedMarch 31, 2019 : £7.8 million) and reported loss after tax of £9.6 million (three months endedMarch 31, 2019 : £5.4 million). - The increase in operating costs was predominantly due to increased general and administrative expenses, which were driven primarily by costs relating to executive changes and costs associated with the closure of our
New York office and relocation of our US base of operations toNorth Carolina . Included in net profit and partly offsetting the rise in operating loss is a fall in the net amount of finance income and expense of £0.7 million. - Reported loss per share was
9.1 pence for the three months endedMarch 31, 2020 (three months endedMarch 31, 2019 :5.1 pence ). - Net cash used in operating activities for the three months ended
March 31, 2020 was £10.1 million (three months endedMarch 31, 2019 : £9.9 million).
"We continue to execute on the clinical development plan for ensifentrine in COPD for both nebulizer and handheld inhaler formulations. We recently reported significant improvements in lung function and a continued favorable safety profile demonstrated by the single dose Phase 2 results with the pMDI formulation of ensifentrine," said
"We look forward to the
COVID-19 IMPACT AND BUSINESS CONTINUITY
To help protect the health and safety of the patients, caregivers and healthcare professionals involved in its ongoing clinical trials of ensifentrine, as well as its employees and independent contractors, in response to the COVID-19 pandemic,
Ongoing and Planned Clinical Trials of Ensifentrine and Interactions with Regulators
Corporate Operations and Financial Impact
The COVID-19 pandemic has caused significant disruption to the financial markets.
COVID-19 risk factor
1FEV1 Forced Expiratory Volume in one second, a standard measure of lung function
Conference Call and Webcast Information
Analysts and investors may participate by dialing one of the following numbers and reference conference ID: 2667888:
- 866-940-4574 for callers in
the United States - 0800 028 8438 for callers in the
United Kingdom - 0800 181 5287 for callers in
Germany
A live webcast will be available on the Events and Presentations link on the Investors page of the Company's website, www.veronapharma.com, and an audio replay will be available there for 30 days. An electronic copy of the Q1 2020 results release will also be made available today on the Company’s website. This press release does not constitute an offer to sell or the solicitation of an offer to buy any of the Company’s securities, and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of that jurisdiction.
This press release contains inside information for the purposes of Article 7 Regulation (EU) No. 596/2014.
About
Forward Looking Statements
This press release, operational review, outlook and financial review contain forward-looking statements. All statements contained in this press release, operational review, outlook and financial review that do not relate to matters of historical fact should be considered forward-looking statements, including, but not limited to, statements regarding the development and potential of ensifentrine, the initiation, progress and timing of clinical trials, our expectations surrounding clinical trial results and responses from the FDA, the market opportunity for various formulations of ensifentrine, including estimates of the market size for COPD, the impact of the novel coronavirus COVID-19 pandemic on our business and operations and the Company’s future financial results, the sufficiency of our cash and cash equivalents, and our expectations surrounding additional funding.
These forward-looking statements are based on management's current expectations. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from our expectations expressed or implied by the forward-looking statements, including, but not limited to, the following: our limited operating history; our need for additional funding to complete development and commercialization of ensifentrine, which may not be available and which may force us to delay, reduce or eliminate our development or commercialization efforts; the reliance of our business on the success of ensifentrine, our only product candidate under development; economic, political, regulatory and other risks involved with international operations; the lengthy and expensive process of clinical drug development, which has an uncertain outcome; serious adverse, undesirable or unacceptable side effects associated with ensifentrine, which could adversely affect our ability to develop or commercialize ensifentrine; potential delays in enrolling patients, which could adversely affect our research and development efforts; we may not be successful in developing ensifentrine for multiple indications; our ability to obtain approval for and commercialize ensifentrine in multiple major pharmaceutical markets; misconduct or other improper activities by our employees, consultants, principal investigators, and third-party service providers; the loss of any key personnel and our ability to recruit replacement personnel, as well as the impact of our management team transition; material differences between our “top-line” data and final data; our reliance on third parties, including clinical investigators, manufacturers and suppliers, and the risks related to these parties’ ability to successfully develop and commercialize ensifentrine; lawsuits related to patents covering ensifentrine and the potential for our patents to be found invalid or unenforceable; the impact of the novel coronavirus COVID-19 pandemic on our operations, the continuity of our business and general economic conditions; and our vulnerability to natural disasters, global economic factors and other unexpected events, including health epidemics or pandemics like COVID-19.
These and other important factors under the caption “Risk Factors” in our Annual Report on Form 20-F filed with the Securities and Exchange Commission (“SEC”) on February 27, 2020, under the caption “Supplemental Risk Factor Disclosures” in our Report on Form 6-K to be filed with the
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF REGULATION (EU) NO 596/2014
For further information please contact:
Tel: +44 (0)20 3283 4200 | |
info@veronapharma.com | |
N+1 Singer | Tel: +44 (0)20 3283 4200 |
(Nominated Adviser and | |
Tel: +44 (0)20 950 9144 | |
(European Media and Investor Enquiries) | verona@optimumcomms.com |
Mary Clark / | |
Tel: +1 212-600-1902 | |
(US Investor Enquiries) | verona@argotpartners.com |
OPERATIONAL REVIEW
Company overview
Ensifentrine highlights:
- First-in-class dual bronchodilator and anti-inflammatory agent in a single molecule
- Potentially the first novel class of bronchodilator in COPD in over 40 years
- Potentially the only bronchodilator option as an add-on to existing dual / triple therapy
COPD is a progressive respiratory disease without a cure. It damages the airways and lungs, leading to debilitating breathlessness, hospitalizations and death. COPD has a major impact on everyday life. Patients struggle with basic activities such as getting out of bed, showering and walking. COPD affects approximately 384 million people worldwide. It is projected to be the third leading cause of death globally by 2030, according to the
COPD patients are frequently treated with bronchodilators, to relieve airway constriction and make it easier to breathe, and with corticosteroids, to reduce lung inflammation. Despite receiving maximum therapy, many patients, more than 1.2 million in the US alone, remain symptomatic and urgently need additional treatment. We believe that ensifentrine can provide significant benefits for these patients.
Initially, we are developing nebulized ensifentrine for the maintenance treatment of moderate to severe COPD patients. During the first quarter we made significant clinical progress, reporting positive data from our second four-week Phase 2b clinical trial with nebulized ensifentrine in over 400 symptomatic COPD patients. In this trial, ensifentrine demonstrated that it provides additional bronchodilation when given in addition to tiotropium (Spiriva®), a long acting anti-muscarinic antagonist ("LAMA") widely used for the treatment of COPD. Our first 4-week Phase 2b clinical trial in over 400 COPD patients, which was reported in
Summary of Phase 2b clinical results in moderate to severe COPD patients:
- Statistically significant and clinically meaningful improvements in lung function
- Statistically significant improvements in symptoms and Quality of Life measures
- Improvements as monotherapy or as an addition to background therapy
- Well-tolerated in 15 clinical trials in over 1300 subjects
Also during the first quarter of 2020, we requested an End-of-Phase 2 meeting with the FDA. The FDA has advised that it will provide a written response to the Company about its End-of Phase 2 package, rather than holding a meeting. We expect to receive this response during the second quarter of 2020. The
Our DPI and pMDI formulations of ensifentrine have also demonstrated positive efficacy and safety data in Phase 2 clinical trials in moderate to severe COPD. An estimated 5.5 million people in the US use inhaled delivery, or DPI formulations delivered via handheld inhalers, for COPD maintenance treatment. The availability of these formulations of ensifentrine, if successfully developed and approved, creates new opportunities for using ensifentrine with existing inhaled medications. US sales of inhaled COPD maintenance medication were approximately
Management update
Senior executive changes bring substantial leadership, operational and clinical expertise.
In
In
FINANCIAL REVIEW
Financial review of the three month period ended
The operating loss for the three months ended
Research and development costs
Research and development costs were £5.9 million for the three months ended
In the same period in 2019 this included the cost for the Phase 2 trial using the dry powder inhaler formulation, costs for the Phase 2b study for nebulized ensifentrine added on to tiotropium and related drug product manufacturing costs. In addition there were preparatory costs for the dose-ranging Phase 2b study for ensifentrine added on to tiotropium.
General and administrative costs
General and administrative costs were £5.3 million for the three months ended
Finance income and expense
Finance income was £0.4 million for the three months ended
Finance expense was £0.1 million for the three months ended
Taxation
Taxation for the three months ended
Cash flows
Net cash used in operating activities increased to £10.1 million for the three months ended
Net cash generated from investing activities predominantly reflects the net movement of cash being placed on deposit for more than three months and such deposits maturing, because deposits of more than three months are disclosed as short term investments, separately from cash. The decrease in net cash generated in investing activities to £7.2 million for the three months ended
Cash, cash equivalents and short-term investments
Cash, cash equivalents and short-term investments at
The Group intends to initiate its Phase 3 program for the maintenance treatment of COPD once it believes it has alignment with the
Additionally the ongoing COVID-19 pandemic could impact the Group's ability to initiate its planned Phase 3 development program and could cause further disruption to capital markets, either of which could adversely affect Group's ability to raise the necessary capital.
Net assets
Net assets decreased to £25.8 million in the three month period ended
VERONA PHARMA PLC
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
AS OF
Notes | As of | As of | ||||||
£'000s | £'000s | |||||||
ASSETS | ||||||||
Non-current assets: | ||||||||
441 | 441 | |||||||
Intangible assets | 2,772 | 2,757 | ||||||
Property, plant and equipment | 42 | 43 | ||||||
Right-of-use assets | 9 | 1,210 | 971 | |||||
Total non-current assets | 4,465 | 4,212 | ||||||
Current assets: | ||||||||
Prepayments and other receivables | 1,972 | 2,770 | ||||||
Current tax receivable | 8,667 | 7,396 | ||||||
Short term investments | 10 | 700 | 7,823 | |||||
Cash and cash equivalents | 20,059 | 22,934 | ||||||
Total current assets | 31,398 | 40,923 | ||||||
Total assets | 35,863 | 45,135 | ||||||
EQUITY AND LIABILITIES | ||||||||
Capital and reserves attributable to equity holders: | ||||||||
Share capital | 5,311 | 5,266 | ||||||
Share premium | 118,862 | 118,862 | ||||||
Share-based payment reserve | 11,811 | 10,364 | ||||||
Accumulated loss | (110,160 | ) | (100,627 | ) | ||||
Total equity | 25,824 | 33,865 | ||||||
Current liabilities: | ||||||||
Derivative financial instrument | 11 | 783 | 895 | |||||
Lease liabilities | 623 | 460 | ||||||
Trade and other payables | 6,619 | 8,261 | ||||||
Total current liabilities | 8,025 | 9,616 | ||||||
Non-current liabilities: | ||||||||
Assumed contingent obligation | 12 | 1,156 | 1,103 | |||||
Non-current Lease Liability | 809 | 491 | ||||||
Deferred income | 49 | 60 | ||||||
Total non-current liabilities | 2,014 | 1,654 | ||||||
Total equity and liabilities | 35,863 | 45,135 |
The accompanying notes form an integral part of these consolidated financial statements.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED
Notes | Three Months Ended | Three Months Ended | |||||
£'000s | £'000s | ||||||
Research and development costs | (5,872 | ) | (5,928 | ) | |||
General and administrative costs | (5,301 | ) | (1,831 | ) | |||
Operating loss | (11,173 | ) | (7,759 | ) | |||
Finance income | 6 | 391 | 1,860 | ||||
Finance expense | 6 | (52 | ) | (820 | ) | ||
Loss before taxation | (10,834 | ) | (6,719 | ) | |||
Taxation — credit | 7 | 1,261 | 1,313 | ||||
Loss for the period | (9,573 | ) | (5,406 | ) | |||
Other comprehensive loss: | |||||||
Items that might be subsequently reclassified to profit or loss | |||||||
Exchange differences on translating foreign operations | 40 | (13 | ) | ||||
Total comprehensive loss attributable to owners of the Company | (9,533 | ) | (5,419 | ) | |||
Loss per ordinary share — basic and diluted (pence) | 8 | (9.1 | ) | (5.1 | ) |
The accompanying notes form an integral part of these consolidated financial statements.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY
FOR THE THREE MONTHS ENDED
Share Capital | Share Premium | Share-based Expenses | Total Accumulated Losses | Total Equity | ||||||||||
£'000s | £'000s | £'000s | £'000s | £'000s | ||||||||||
Balance at | 5,266 | 118,862 | 7,923 | (68,633 | ) | 63,418 | ||||||||
Impact of change in accounting policy (1) | — | — | — | (20 | ) | (20 | ) | |||||||
Adjusted Balance at | 5,266 | 118,862 | 7,923 | (68,653 | ) | 63,398 | ||||||||
Loss for the period | — | — | — | (5,406 | ) | (5,406 | ) | |||||||
Other comprehensive loss for the period: | ||||||||||||||
Exchange differences on translating foreign operations | — | — | — | (13 | ) | (13 | ) | |||||||
Total comprehensive loss for the period | — | — | — | (5,419 | ) | (5,419 | ) | |||||||
Share-based payments | — | — | 620 | — | 620 | |||||||||
Balance at | 5,266 | 118,862 | 8,543 | (74,072 | ) | 58,599 | ||||||||
Balance at | 5,266 | 118,862 | 10,364 | (100,627 | ) | 33,865 | ||||||||
Loss for the period | — | — | — | (9,573 | ) | (9,573 | ) | |||||||
Other comprehensive loss for the period: | ||||||||||||||
Exchange differences on translating foreign operations | — | — | — | 40 | 40 | |||||||||
Total comprehensive loss for the period | — | — | — | (9,533 | ) | (9,533 | ) | |||||||
New share capital issued | 45 | — | — | — | 45 | |||||||||
Share-based payments | — | — | 1,447 | — | 1,447 | |||||||||
Balance at | 5,311 | 118,862 | 11,811 | (110,160 | ) | 25,824 |
The currency translation reserve for
(1) This relates to the adoption of IFRS 16. See note 2.17 of the 20-F 2019.
VERONA PHARMA PLC
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
Three Months Ended | Three Months Ended | ||||
£'000s | £'000s | ||||
Cash used in operating activities: | |||||
Loss before taxation | (10,834 | ) | (6,719 | ) | |
Finance income | (391 | ) | (1,860 | ) | |
Finance expense | 52 | 820 | |||
Share-based payment charge | 1,447 | 620 | |||
Decrease in prepayments and other receivables | 753 | 84 | |||
Decrease in trade and other payables | (1,553 | ) | (2,899 | ) | |
Depreciation of property, plant and equipment and right of use assets | 122 | 78 | |||
Impairment of right of use asset | 232 | — | |||
Unrealized foreign exchange losses / (gains) | 1 | (11 | ) | ||
Amortization of intangible assets | 30 | 24 | |||
Net cash used in operating activities | (10,141 | ) | (9,863 | ) | |
Cash flow from investing activities: | |||||
Interest received | 98 | 125 | |||
Purchase of plant and equipment | (4 | ) | (2 | ) | |
Payment for patents and computer software | (45 | ) | (61 | ) | |
Maturity of short term investments | 7,148 | 8,972 | |||
Net cash generated in investing activities | 7,197 | 9,034 | |||
Cash flow from financing activities: | |||||
Repayment of finance lease liabilities | (132 | ) | (84 | ) | |
Net cash used in financing activities | (132 | ) | (84 | ) | |
Net decrease in cash and cash equivalents | (3,076 | ) | (913 | ) | |
Cash and cash equivalents at the beginning of the period | 22,934 | 19,784 | |||
Effect of exchange rates on cash and cash equivalents | 201 | (145 | ) | ||
Cash and cash equivalents at the end of the period | 20,059 | 18,726 |
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED
1. General information
Verona Pharma plc (the "Company") and its subsidiaries are a clinical-stage biopharmaceutical company focused on developing and commercializing innovative therapeutics for the treatment of respiratory diseases with significant unmet medical needs.
The Company is a public limited company, which is dual listed, with its ordinary shares listed on the AIM market operated by the
The address of the registered office is
2. Basis of accounting
The unaudited condensed consolidated interim financial statements of Verona Pharma Plc and its subsidiaries, Verona Pharma, Inc., and
The 2019 accounts, on which the Company’s auditors delivered an unqualified audit report, have been delivered to the Registrar of Companies.
These unaudited condensed interim financial statements were authorized for issue by the Company’s board of directors (the “Directors”) on
The Group’s activities and results are not exposed to any seasonality. The Group operates as a single operating and reportable segment.
Going concern
The Group has incurred recurring losses since inception, including net losses of £31.9 million, £19.9 million and £20.5 million for the years ended
The Group intends to initiate its Phase 3 program for the maintenance treatment of COPD once it believes it has alignment with the
Additionally the ongoing COVID-19 pandemic could impact the Group's ability to initiate its planned Phase 3 development program and could cause further disruption to capital markets, either of which could adversely affect the Group's ability to raise the necessary capital.
The Group is monitoring the effect of the COVID-19 pandemic and reviewing the possible impact on its operations, planned clinical trials and the potential disruption to financial markets in the near and the long term. Management has determined that this currently does not affect the going concern assumption under which the condensed consolidated interim financial statements are prepared.
Impairment of intangible assets, goodwill and non-financial assets
The Group is constantly reviewing the effect of the COVID-19 pandemic on its operations, ongoing and planned clinical trials and the potential disruption to financial markets. Management has determined that the current effect on the Group does not require an impairment of intangible assets or goodwill as the Company's market value still supports the value of the assets. However, management will continue to monitor the situation.
Dividend
The Directors do not recommend the payment of a dividend for the three months ended
3. Segmental reporting
The Group’s activities are covered by one operating and reporting segment: Drug Development. There have been no changes to management’s assessment of the operating and reporting segment of the Group during the period.
All non-current assets are based in the
4. Financial Instruments
The Group’s activities expose it to a variety of financial risks: market risk (including foreign currency risk); cash flow and fair value interest rate risk; and credit risk and liquidity risk. The condensed consolidated interim financial statements do not include all financial risk management information and disclosures required in the annual financial statements, and they should be read in conjunction with the Group’s annual financial statements for the year ended
5. Critical estimates and judgments
The preparation of condensed consolidated interim financial statements require management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from those estimates.
In preparing these condensed consolidated interim financial statements, the significant judgments made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements for the year ended
We have assessed whether the COVID-19 pandemic has any impact on the key estimates and judgments previously reported in respect of the derivative financial instruments and the assumed contingent obligation and concluded that there is no impact.
6. Finance income and expense
Three months ended | Three months ended | ||||
Finance income: | £'000s | £'000s | |||
Interest received on cash balances | 53 | 250 | |||
Foreign exchange gain on translating foreign currency denominated bank balances | 226 | — | |||
Fair value adjustment on derivative financial instruments (note 11) | 112 | 1,610 | |||
Total finance income | 391 | 1,860 |
Three months ended | Three months ended | ||||
Finance expense: | £'000s | £'000s | |||
Interest on discounted lease liability | 20 | 9 | |||
Foreign exchange loss on translating foreign currency denominated balances | — | 783 | |||
Unwinding of discount factor related to the assumed contingent arrangement (note 12) | 32 | 28 | |||
Total finance expense | 52 | 820 |
7. Taxation
The tax credit for the three months ended
8. Loss per share calculation
The basic loss per share of 9.1p (
Each ADS represents 8 shares of the Company, so the loss per ADS is any period is equal to 8 times the loss per share.
9. Right-of-use assets
ln the three months to
As at
10. Short term investments
Short term investments as at
11. Derivative financial instrument
On
The warrant holders can opt for a cashless exercise of their warrants, whereby they can choose to exchange the warrants held for a reduced number of warrants exercisable at nil consideration. The reduced number of warrants is calculated based on a formula considering the share price and the exercise price of the warrants. The warrants are therefore classified as a derivative financial liability, since their exercise could result in a variable number of shares to be issued.
The warrants entitled the investors to subscribe for, in aggregate, a maximum of 12,401,262 shares. The warrants can be exercised until
At
At | At | ||||||
Shares available to be issued under warrants | 12,401,262 | 12,401,262 | |||||
Exercise price | £ | 1.7238 | £ | 1.7238 | |||
Risk-free interest rate | 0.10 | % | 0.54 | % | |||
Time to expiry | 2.09 years | 2.34 years | |||||
Annualized volatility | 76.32 | % | 65.56 | % | |||
Dividend rate | 0.00 | % | 0.00 | % |
As at
The variance for the three months ended
Derivative financial instrument | Derivative financial instrument | ||||
2020 | 2019 | ||||
£'000s | £'000s | ||||
At | 895 | 2,492 | |||
Fair value adjustments recognized in profit or loss | (112 | ) | (1,610 | ) | |
At | 783 | 882 |
For the amount recognized as at
| Volatility (up / down 10 % pts) |
£'000s | |
Variable up | 1,100 |
Base case, reported fair value | 783 |
Variable down | 500 |
12. Assumed contingent obligation related to the business combination
The value of the assumed contingent obligation as of
The assumed contingent liability is measured at the expected value of the milestone payment and royalty payments. This expected value is based on estimated future royalties payable, derived from sales forecasts, and an assessment of the probability of success using standard market probabilities for respiratory drug development. The risk-weighted value of the assumed contingent arrangement is discounted back to its net present value applying an effective interest rate of 12%.
The assumed contingent liability is accounted for as a liability and its value is measured at amortized cost using the effective interest rate method, and is re-measured for changes in estimated cash flows or when the probability of success changes. Re-measurements relating to changes in estimated cash flows and probabilities of success are recognized in the IP R&D asset it relates to. The unwind of the discount is recognized in finance expense. In 2019 and the three months ended
2020 | 2019 | ||||
£'000s | £'000s | ||||
At | 1,103 | 996 | |||
Impact of changes in foreign exchange rates | 21 | (6 | ) | ||
Unwinding of discount factor | 32 | 28 | |||
At | 1,156 | 1,018 |
There is no material difference between the fair value and carrying value of the financial liability.
For the amount recognized as at
| Revenue (up / down 10 % pts) | Foreign Exchange (up / down 1% pt) | |
£'000s | £'000s | ||
Variable up | 1,191 | 1,152 | |
Base case, reported fair value | 1,156 | 1,156 | |
Variable down | 1,121 | 1,159 |
13. Share option scheme
During the three months ended
During the three months ended
The movement in the number of the Company’s share options is set out below:
Weighted average exercise price | 2020 | Weighted average exercise price | 2019 | ||||||||
£ | £ | ||||||||||
Outstanding at | 1.15 | 14,179,196 | 1.53 | 8,752,114 | |||||||
Granted during the period | 0.55 | 1,605,000 | — | — | |||||||
Forfeited during the period | 1.02 | (1,628,799 | ) | — | — | ||||||
Outstanding options at | 1.10 | 14,155,397 | 1.53 | 8,752,114 |
The movement in the number of the Company’s RSUs is set out below:
2020 | 2019 | ||||
Outstanding at | 1,602,969 | 862,473 | |||
Granted during the period | 8,442,049 | — | |||
Expired during the period | (44,846 | ) | — | ||
Exercised during the period | (887,080 | ) | — | ||
Outstanding RSUs at | 9,113,092 | 862,473 |
1,069,184 of the RSUs issued related to an element of annual base salary and 7,372,865 related to additional equity grants for
The share‑based payment expense for the three months ended
14. Related party transactions
The Directors and Officers have authority and responsibility for planning, directing and controlling the activities of the Company and they therefore comprise key management personnel as defined by IAS 24 ("Related Party Disclosures").
During the three months ended
Dr.
Pursuant to the terms of his employment agreement
Pursuant to the terms of his employment agreement
Convenience translation
The Company maintains its books and records in pounds sterling and prepares its financial statements in accordance with IFRS, as issued by the IASB. It reports its results in pounds sterling. For the convenience of the reader the Company has translated pound sterling amounts in the tables below as of
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION AS AT
As of | As of | As of | ||||||
£'000s | $'000s | £'000s | ||||||
ASSETS | ||||||||
Non-current assets: | ||||||||
441 | 550 | 441 | ||||||
Intangible assets | 2,772 | 3,452 | 2,757 | |||||
Property, plant and equipment | 42 | 52 | 43 | |||||
Right-of-use assets | 1,210 | 1,507 | 971 | |||||
Total non-current assets | 4,465 | 5,561 | 4,212 | |||||
Current assets: | ||||||||
Prepayments and other receivables | 1,972 | 2,456 | 2,770 | |||||
Current tax receivable | 8,667 | 10,794 | 7,396 | |||||
Short term investments | 700 | 872 | 7,823 | |||||
Cash and cash equivalents | 20,059 | 24,981 | 22,934 | |||||
Total current assets | 31,398 | 39,103 | 40,923 | |||||
Total assets | 35,863 | 44,664 | 45,135 | |||||
EQUITY AND LIABILITIES | ||||||||
Capital and reserves attributable to equity holders: | ||||||||
Share capital | 5,311 | 6,614 | 5,266 | |||||
Share premium | 118,862 | 148,031 | 118,862 | |||||
Share-based payment reserve | 11,811 | 14,709 | 10,364 | |||||
Accumulated loss | (110,160 | ) | (137,193 | ) | (100,627 | ) | ||
Total equity | 25,824 | 32,161 | 33,865 | |||||
Current liabilities: | ||||||||
Derivative financial instrument | 783 | 975 | 895 | |||||
Lease liabilities | 623 | 776 | 460 | |||||
Trade and other payables | 6,619 | 8,243 | 8,261 | |||||
Total current liabilities | 8,025 | 9,994 | 9,616 | |||||
Non-current liabilities: | ||||||||
Assumed contingent obligation | 1,156 | 1,440 | 1,103 | |||||
Non-current Lease Liability | 809 | 1,008 | 491 | |||||
Deferred income | 49 | 61 | 60 | |||||
Total non-current liabilities | 2,014 | 2,509 | 1,654 | |||||
Total equity and liabilities | 35,863 | 44,664 | 45,135 |
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED
Three months ended | Three months ended | Three months ended | ||||||
£'000s | $'000s | £'000s | ||||||
Research and development costs | (5,872 | ) | (7,313 | ) | (5,928 | ) | ||
General and administrative costs | (5,301 | ) | (6,602 | ) | (1,831 | ) | ||
Operating loss | (11,173 | ) | (13,915 | ) | (7,759 | ) | ||
Finance income | 391 | 487 | 1,860 | |||||
Finance expense | (52 | ) | (65 | ) | (820 | ) | ||
Loss before taxation | (10,834 | ) | (13,493 | ) | (6,719 | ) | ||
Taxation — credit | 1,261 | 1,570 | 1,313 | |||||
Loss for the period | (9,573 | ) | (11,923 | ) | (5,406 | ) | ||
Other comprehensive loss: | ||||||||
Items that might be subsequently reclassified to profit or loss | ||||||||
Exchange differences on translating foreign operations | 40 | 50 | (13 | ) | ||||
Total comprehensive loss attributable to owners of the Company | (9,533 | ) | (11,873 | ) | (5,419 | ) | ||
Loss per ordinary share — basic and diluted (pence / cents) | (9.1 | ) | (11.3 | ) | (5.1 | ) |
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