TIDMN4P
RNS Number : 3561S
N4 Pharma PLC
09 March 2023
9 March 2023
N4 Pharma plc
("N4 Pharma" or the "Company")
Final Results
N4 Pharma Plc (AIM: N4P), the specialist pharmaceutical company
developing Nuvec(R), a novel delivery system for cancer treatments
and vaccines, is pleased to announce its audited results for the
year ended 31 December 2022.
Highlights:
-- Nuvec(R) as a delivery system has consistently been shown
to deliver DNA and RNA payloads into the cell where the compound
is able to escape the endosome and be released into the cell
-- Strategic review highlighted that Nuvec(R) was best suited
to applications where intra cellular delivery by itself was
a key element of product development
-- The Company has designed an experimental plan to develop,
formulate and deliver a double loaded Nuvec with siRNA against
EGFR and BCL-2 and test this in a xenograft cancer model
-- The Company to start business development outreach of its
siRNA data working alongside a US company, Partner International,
who have extensive biotech business development experience
-- The Company has filed its own patent on using Nuvec(R) to
enhance the performance of viral vectors which is now entering
the national phases of patent execution
-- Operating loss for the year was reduced to GBP1,029,261 (2021:
GBP1,843,290)
-- Cash balance at period end of approximately GBP1.9m (2021:
GBP1.8m)
Nigel Theobald, Chief Executive Officer of the Company,
commented:
"It is important that the Company is able to react to the fast
changing nature of the vaccines and oncology treamtment markets
and, by focusing our internal development work on the significant
opportunity for siRNA delivery, this will allow us to be best
placed to do this.
"The work we have done with monodisperse formulations of
Nuvec(R) show how well suited it is to the intracellular delivery
of siRNA and our longer term R&D on oral delivery and the use
of Nuvec(R) to enhance viral vector delivery shows the wide
potential of its application in this space. "
Enquiries:
N4 Pharma plc
Nigel Theobald, CEO Via IFC Advisory
Luke Cairns, Executive Director
SP Angel Corporate Finance LLP Tel: +44(0)20 3470
0470
Nominated Adviser and Joint Broker
Matthew Johnson/Kasia Brzozowska (Corporate
Finance)
Vadim Alexandre/Abigail Wayne/Rob Rees
(Corporate Broking)
Turner Pope Investments (TPI) Limited Tel: +44(0)20 3657
0050
Joint Broker
Andy Thacker
James Pope
IFC Advisory Ltd Tel: +44(0)20 3934
6630
Financial PR
Graham Herring
Zach Cohen
About N4 Pharma
N4 Pharma is a specialist pharmaceutical company developing a
novel delivery system for cancer and vaccine treatments using its
unique silica nanoparticle delivery system called Nuvec(R).
N4 Pharma's business model is to partner with companies
developing novel antigens for cancer and vaccine treatments to use
Nuvec(R) as the delivery vehicle to get their antigen into cells to
express the protein needed for the required immunity. As these
products progress through preclinical and clinical programs, N4
Pharma will seek to receive up front payments, milestone payments
and ultimately royalty payments once products reach the market.
Chairman's Report
N4 Pharma Plc (the "Company"), is the holding company and Parent
Company for N4 Pharma UK Limited ("N4 UK"), and together form the
Group (the "Group").
N4 UK is a specialist pharmaceutical company engaged in the
development of silica nanoparticle delivery systems to improve the
cellular delivery of cancer treatments and vaccines.
Review of operations for the financial year ended 31 December
2022
During the year to 31 December 2022 no revenue was generated by
the Group (31 December 2021: GBPnil).
The operating loss for the year was reduced to GBP1,029,261 (31
December 2021: GBP1,843,290 loss). Expenditure was broadly in line
with budget and decreased as less work was undertaken on in vivo
vaccine and oncology studies in 2022 compared to 2021.
Cash at the year-end stood at GBP1,919,529 (31 December 2021:
GBP1,784,024) having raised GBP1,054,000 towards the end of 2022.
Our cash position remains good and leaves us well positioned to
complete our current work streams for the year ahead.
Key Operational Events and Opportunities
2022 saw further significant changes in the field of vaccine and
oncology product. The success of the mRNA lipid nanoparticle covid
vaccines from Pfizer and Moderna firmly established RNA products in
this field however their success also led others such as Astra
Zeneca to reassess their approach in this area. Having launched
covid vaccines the key players in this area turned their attention
to launching new vaccines addressing other illnesses such as
influenza using their existing lipid delivery systems, meaning
opportunities for novel delivery systems other than lipid
nanoparticles in the vaccine space would be in less demand. However
there remains significant opportunities for novel delivery system
in earlier stage development using RNA in oncology, especially
siRNA products of which there are over 200 in clinical development
and delivery is often cited as a major issue in product development
in this field.
The Company therefore undertook a strategic review of all the
findings from the Nuvec(R) proof of concept in vivo and in vitro
work including its vaccine work, the successful intravenous tumour
reduction study and a series of in vitro experiments looking at the
ability to bind Nuvec(R) with multiple siRNA compounds for gene
silencing to determine the most appropriate commercial area where
it is most likely to be able to secure a commercial licensing
deal.
Strategic review of Nuvec(R) as a delivery system
Nuvec(R) has consistently been shown to deliver DNA and RNA
payloads into the cell where the compound is able to escape the
endosome and be released into the cell. Its unique structure allows
strong binding and protection of RNA/DNA leading to good stability
for the formulated product. It is also able to be formulated into a
monodisperse formulation making it suitable for intravenous
injection as well as sub-cutaneous or intra muscular injection. It
is also much cheaper to make and formulate than lipid
nanoparticles.
The field of vaccine development is complex and delivery of RNA
into the cell is just the first step on the medical pathway of a
successful product. Once inside the cell, for a successful vaccine
sufficient RNA needs to produce the right amount of protein which
in turn needs to attract the right amount and type of antibodies to
teach the body to ultimately fight an invading virus. The review
clearly highlighted that as well as being able to deliver RNA/DNA
into a cell Nuvec(R) would require optimisation with a partner's
payload in order to achieve these downstream effects and the
studies to do this are extremely expensive.
The review highlighted that Nuvec(R) was best suited to
applications where intra cellular delivery by itself was a key
element of product development. The tumour suppression work also
showed that monodisperse Nuvec(R) could be delivered intravenously
and be safe and effective. The Company therefore decided to focus
its internal development work on loading and delivering siRNA intra
cellularly for applications in the field of oncology treatments and
gene therapy since once inside the cell, the payload needs to
silence a gene inside the cell and a successful product is not
dependent on multiple downstream pathways.
The Company's work also highlighted that Nuvec(R) can load
multiple siRNA onto each particle and deliver each into the cell
allowing a product to work intra cellularly on different pathways
within the same cell. This is a novel and highly differentiated
aspect of Nuvec(R) as a delivery system.
siRNA programme
In September 2022, the Company announced a research programme
looking to extend its work with siRNA and load two clinically
relevant siRNAs onto Nuvec(R) with the goal to test in vivo the
ability for tumour regression.
After several discussions with opinion leaders in oncology, lung
cancer was identified as the most appropriate target cancer type
for this test. Most of these cancers are characterised by
overexpressing a receptor called the Epidermal growth factor
receptor (EGFR), which prevents apoptosis. Apoptosis is a type of
cell death which the body uses to get rid of unneeded or abnormal
cells. The process of apoptosis may be blocked in cancer cells
which are then prevented from naturally dying and this can lead to
uncontrolled growth. Silencing this mutated receptor would lead to
re-establishing apoptosis in the tumor cells and could potentially
restore sensitivity to other treatments.
This work has been researched extensively however often the body
develops a resistance to such single siRNA treatments. To
strengthen the effect, the Company identified another target
protein BCL-2, which it would simultaneously load onto the same
Nuvec(R) particle alongside EGFR to give a second line of defence
against the cancer cells growing.
The Company chose BCL-2 which belongs to the family of proteins
that regulate apoptosis. This mechanism is controlled by the ratio
between the anti-apoptotic BCL-2 and the pro-apoptotic protein
BH3-only. When silencing BCL-2, BH3-only proteins will not be
blocked and are therefore more likely to induce apoptosis.
By targeting both EGFR and BCL-2 a double loaded Nuvec(R) can
combat both the mechanism that causes uncontrolled cell growth and
the mechanism that prevents cell death which it believes will give
a greater chance to push the tumor cell into apoptosis and lead to
tumour regression.
The Company has designed an experimental plan to develop,
formulate and deliver a double loaded Nuvec with siRNA against EGFR
and BCL-2 and test this in a xenograft cancer model. This work will
provide relevant clinical proof of concept data which the Company
believes will greatly showcase Nuvec(R)'s potential in this space
and lead to a better chance of establishing a commercial license
deal with one of the many companies operating in this space. The
programme of work is as follows:
Step 1: Loading, characterisation and formulation of Nuvec with
EGFR and BCL-2 siRNA.
Step 2: In vitro testing of delivery and ratios of the
siRNAs
Step 3: Biodistribution and preliminary toxicology in both
tumour and non-tumour models
Step 4: In vivo efficacy model of tumour regression
Globally, there is a shortage and delays in acquiring research
grade materials and the Company suffered delays towards the end of
2022 in getting the materials to start the work. These materials
have now arrived and the work is underway. Full results are
expected by the end of Q2 2023.
Material Transfer Agreements ("MTAs")
MTAs are seen by the Company as a good means of establishing
relationships with potential partners but are totally dependent on
the speed and ability of the partner to prioritise the research and
subject to strict confidentiality which means the Company is
limited in any meaningful information it can divulge. The Company
still has one active MTA and the pursuit of MTAs remains a key
strategy as a means to see how Nuvec(R) may work with a potential
partner's proprietary technology. However, the field of siRNA gives
the Company greater ability to undertake its own clinically
relevant work to establish how Nuvec(R) behaves in this space,
hence its decision to operate both elements together so it is not
overly exposed to one particular MTA partner.
Intellectual Property
The Company has the exclusive worldwide rights for therapeutic
uses in humans and animals for technology developed by The
University of Queensland ("UQ"). 2022 now sees this technology
having patents granted in Europe, Australia, Japan, China and the
US.
The Company has also filed its own patent on using Nuvec(R) to
enhance the performance of viral vectors which is now entering the
national phases of patent execution.
Future Prospects
The Company is well funded to deliver its siRNA programme and
will now start business development outreach of its siRNA data
working alongside a US company, Partner International, who have
extensive biotech business development experience.
Alongside the siRNA programme the Company, in conjunction with
UQ, is continuing to research the application of Nuvec(R) as an
oral delivery system. Recent work has shown how Nuvec(R) can be
loaded with DNA and encapsulated by a pH-controlled polymer to
deliver the DNA and transfect cells locally in the intestine. The
work will continue to test the ability to produce a localised
intestinal effect in vivo which could have applications either in
the vaccine field or more likely as a locally delivered intestinal
medicine.
The Company also announced in 2022 work to support its patent
for viral vector improvements whereby loading a lentivirus or
adenovirus onto Nuvec(R) could reduce the amount of vector required
to deliver an enhance effect. Importantly, Adeno-Associated Virus
(AAV) is seen as a key improvement on other viral vectors and
products have been developed to treat various conditions, including
hepatitis. However, due to the nature of the AAV, these products
are very expensive and can have toxicity issues. The Company
intends to continue working in collaboration with Brunel University
to investigate improving Associated-Adeno Virus (AAV) as AAVs are
at the forefront of approved products in this area.
On behalf of the Board, I would like to thank all of our
shareholders for their continued patient support and look forward
to providing further updates on our progress.
By order of the Board
John Chiplin
Chairman
8 March 2023
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2022
Notes 2022 2021
GBP GBP
------------ ------------
Research and development
costs (577,525) (1,179,425)
General and administration
costs (615,735) (663,865)
Operating loss for the year (1,193,260) (1,843,290)
Net finance income 4 1 677
Loss for the year before
tax 5 (1,193,259) (1,842,613)
Taxation 6 163,998 298,267
Loss for the year after
tax (1,029,261) (1,544,346)
Other comprehensive income
net of tax - -
Total comprehensive loss
for the year attributable
to equity owners of N4 Pharma
Plc (1,029,261) (1,544,346)
-------------------------------- ------ ------------ ------------
Loss per share attributable
to owners of the parent 12
Weighted average number of
shares:
Basic 186,422,541 181,080,349
Diluted 186,422,541 181,080,349
Basic loss per share (0.55) (0.85)
Diluted loss per share (0.55) (0.85)
All results were derived from continuing operations.
Consolidated Statement of Financial Position
as at 31 December 2022
Notes 2022 2021
GBP GBP
Current assets
Trade and other receivables 8 246,518 558,359
Cash and cash equivalents 1,919,529 1,784,024
2,166,047 2,342,383
Total assets 2,166,047 2,342,383
----------------------------- ------ ------------- -------------
Liabilities
Current liabilities
Trade and other payables 9 (40,722) (184,820)
Accruals and deferred
income (37,167) (27,910)
----------------------------- ------ ------------- -------------
Total liabilities (77,889) (212,730)
----------------------------- ------ ------------- -------------
Total assets less
current liabilities 2,088,158 2,129,653
----------------------------- ------ ------------- -------------
Net assets 2,088,158 2,129,653
----------------------------- ------ ------------- -------------
Equity
Share capital 11 9,205,946 8,995,146
Share premium 11 14,698,569 13,945,602
Share option reserve 11 103,954 79,955
Reverse acquisition
reserve 11 (14,138,244) (14,138,244)
Merger reserve 11 279,347 279,347
Retained earnings 11 (8,061,414) (7,032,153)
----------------------------- ------ ------------- -------------
Total equity 2,088,158 2,129,653
----------------------------- ------ ------------- -------------
The Consolidated Financial Statements were approved by the Board
of Directors on 8 March 2023 and signed on its behalf:
Nigel Theobald
Company Statement of Financial Position
as at 31 December 2022
Notes 2022 2021
GBP GBP
------------- -------------
Assets
Non-current assets
Investments 7 1,094,747 1,094,747
Intercompany loan
receivable 14 5,659,000 5,259,000
----------------------------- ------ ------------- -------------
6,753,747 6,353,747
Current assets
Trade and other receivables 8 992,325 629,113
Cash and cash equivalents 1,761,330 1,538,615
2,753,655 2,167,728
Total assets 9,507,402 8,521,475
----------------------------- ------ ------------- -------------
Liabilities
Current liabilities
Trade and other payables 9 (13,381) (8,966)
Accruals and deferred
income (20,465) (19,493)
----------------------------- ------ ------------- -------------
Total liabilities (33,846) (28,459)
----------------------------- ------ ------------- -------------
Total assets less
current liabilities 9,473,556 8,493,016
----------------------------- ------ ------------- -------------
Net assets 9,473,556 8,493,016
----------------------------- ------ ------------- -------------
Equity
Share capital 11 9,205,946 8,995,146
Share premium 11 14,698,569 13,945,602
Share option reserve 11 103,954 79,955
Merger reserve 11 279,347 279,347
Retained earnings 11 (14,814,260) (14,807,034)
----------------------------- ------ ------------- -------------
Total equity 9,473,556 8,493,016
----------------------------- ------ ------------- -------------
The Company recorded a loss of GBP7,226 for the year (31
December 2021: GBP63,388 loss).
The Company Financial Statements were approved by the Board of
Directors on 8 March 2023 and signed on its behalf:
Nigel Theobald
Consolidated Statement of Changes in Equity
for the year ended 31 December 2022
(i) Year ended 31 Share Share Share Reverse Merger reserve Retained Total equity
December capital premium option acquisition earnings
2022 reserve reserve
GBP GBP GBP GBP GBP GBP GBP
---------- ----------- --------- ------------- ---------------- ------------ -------------
Balance at 1
January 2022 8,995,146 13,945,602 79,955 (14,138,244) 279,347 (7,032,153) 2,129,653
Total comprehensive
loss for
the year - - - - - (1,029,261) (1,029,261)
Share issue 210,800 843,200 - - - - 1,054,000
Share issue costs - (90,233) - - - - (90,233)
Share based payment
charge - - 23,999 - - - 23,999
---------- ----------- --------- ------------- ---------------- ------------ -------------
9,205,946 14,698,569 103,954 (14,138,244) 279,347 (8,061,414) 2,088,158
At 31 December 2022
---------- ----------- --------- ------------- ---------------- ------------ -------------
(ii) Year ended 31 Share Share Share Reverse Merger Retained Total equity
December capital premium option acquisition reserve earnings
2021 reserve reserve
GBP GBP GBP GBP GBP GBP GBP
---------- ----------- --------- ------------- --------- ------------ -------------
Balance at 1 January 2021 8,995,146 13,945,602 63,290 (14,138,244) 279,347 (5,487,807) 3,657,334
Total comprehensive loss
for
the year - - - - - (1,544,346) (1,544,346)
Share based payment charge - - 16,665 - - - 16,665
At 31 December 2021 8,995,146 13,945,602 79,955 (14,138,244) 279,347 (7,032,153) 2,129,653
Company Statement of Changes in Equity for the year ended 31
December 2022
(i) Year ended 31 Share capital Share Share option Merger reserve Retained Total equity
December premium reserve earnings
2022
GBP GBP GBP GBP GBP GBP
-------------- ----------- ------------- ---------------- ------------- -------------
Balance at 1 January 2022 8,995,146 13,945,602 79,955 279,347 (14,807,034) 8,493,016
Total comprehensive loss
for
the year - - - - (7,226) (7,226)
Share issue 210,800 843,200 - - - 843,200
Share issue costs - (90,233) - - - (90,233)
Share based payment
charge - - 23,999 - - 23,999
-------------- ----------- ------------- ---------------- ------------- -------------
At 31 December 2022 9,205,946 14,698,569 103,954 279,347 (14,814,260) 9,473,556
(ii) Year ended 31 Share capital Share Share option Merger reserve Retained earnings Total equity
December premium reserve
2021
GBP GBP GBP GBP GBP GBP
-------------- ----------- ------------- --------------- ------------------ -------------
Balance at 1 January
2021 8,995,146 13,945,602 63,290 279,347 (14,743,646) 8,539,739
Total comprehensive
loss for
the year - - - - (63,388) (63,388)
Share based payment
charge - - 16,665 - - 16,665
At 31 December 2021 8,995,146 13,945,602 79,955 279,347 (14,807,034) 8,493,016
Consolidated Statement of Cash Flows
for the year ended 31 December 2022
2022 2021
Notes GBP GBP
------------------------------------------ ------------ ------------
Operating activities
Loss after tax (1,029,261) (1,544,346)
Finance expenditure and other
income (1) (677)
Share based payment charge 23,999 16,665
Taxation credit (163,998) (298,267)
Operating loss before changes
in working capital (1,169,261) (1,826,625)
Movements in working capital:
(Increase)/decrease in trade
and other receivables (37,312) 10,745
(Decrease)/increase in trade,
other payables and accruals (134,841) 43,648
Cash used in operations (1,341,414) (1,772,232)
------------------------------------------- ------------ ------------
Taxation credit received 513,151 -
Net cash flows used in operating
activities (828,263) (1,772,232)
------------------------------------------- ------------ ------------
Financing activities
Finance expenditure and other
income 1 677
Proceeds of ordinary share 1,054,000 -
issue
Costs of share issue (90,233) -
Net cash flows from financing
activities 963,768 677
------------------------------------------- ------------ ------------
Net increase/(decrease) in
cash and cash equivalents 135,505 (1,771,555)
Cash and cash equivalents at
beginning of the year 1,784,024 3,555,579
Cash and cash equivalents
at 31 December 1,919,529 1,784,024
Company Statement of Cash Flows
for the year ended 31 December 2022
2022 2021
GBP GBP
------------------------------------------ ---------- ------------
Operating activities
Loss before tax (7,226) (63,388)
Interest (271,772) (228,588)
Share based payment charge 23,999 16,665
Operating loss before changes
in working capital (254,999) (275,311)
Movements in working capital:
(Increase)/decrease in trade and
other receivables (91,440) 16,787
Increase/(decrease) in trade and
other payables 5,387 (14,678)
Cash used in operations (341,052) (273,202)
------------------------------------------- ---------- ------------
Net cash flows used in operating
activities (341,052) (273,202)
------------------------------------------- ---------- ------------
Investing activities
Loan receivable advancements (400,000) (1,600,000)
Net cash flows used in investing
activities (400,000) (1,600,000)
------------------------------------------- ---------- ------------
Financing activities
Net proceeds of ordinary share 1,054,000 -
issue
Costs of share issue (90,233) -
Net cash flows from financing
activities 963,767 -
------------------------------------------ ---------- ------------
Net increase/(decrease) in cash
and cash equivalents 222,715 (1,873,202)
Cash and cash equivalents at beginning
of the year 1,538,615 3,411,817
Cash and cash equivalents at 31
December 1,761,330 1,538,615
Notes to the Consolidated Financial Statements
for the year ended 31 December 2022
1. Accounting policies
1.1 Reporting entity
N4 Pharma Plc (the "Company"), is the holding Company for N4
Pharma UK Limited ("N4 UK"), and together form the Group (the
"Group"). N4 Pharma UK Limited is a specialist pharmaceutical
company engaged in the development of mesoparticulate silica
delivery systems to improve the cellular delivery and potency of
vaccines. The nature of the business is not deemed to be impacted
by seasonal fluctuations and as such performance is expected to be
consistent.
The Company is domiciled in England and Wales and was
incorporated and registered in England and Wales on 6 July 1979 as
a public limited company and its shares are admitted to trading on
AIM (LSE: N4P). The Company's registered office is located at 6th
Floor, 60 Gracechurch Street, London, EC3V 0HR.
The Consolidated Financial Statements have been prepared in
accordance with UK-adopted international accounting standards and
applied to the Parent Company Accounts in accordance with the
provisions of the Companies Act 2006.
The Consolidated Financial Statements are presented in Great
British Pounds ("GBP" or "GBP"), rounded to the nearest GBP.
The accounting policies set out below have, unless otherwise
stated, been applied consistently to all periods presented in these
Consolidated Financial Statements.
The Company has taken advantage of the exemption granted by
Section 408 of the Companies Act 2006 from presenting its own
Income Statement. The loss generated by the Company is disclosed
under the Company Statement of Financial Position.
1.2 Measurement convention
The Consolidated Financial Statements are prepared on the
historical cost basis, except for the following items:
-- Share-based payments related to investment acquisition
are measured at fair value shown in the Merger Reserve.
-- Share-based payments related to employee costs are measured
at fair value shown in the Statement of Comprehensive Income.
-- Share-based payments related to share issue costs are measured
at fair value shown in Share Premium.
-- The associated Share Options and Warrants are measured
at fair value using the Black Scholes model (see note 10).
1.3 Going concern
These Consolidated Financial Statements have been prepared on
the basis of accounting principles applicable to a going concern.
The Directors consider that the Group will have access to adequate
resources, to meet the operational requirements for at least 12
months from the date of approval of these Consolidated Financial
Statements. For this reason, they continue to adopt the going
concern basis in preparing the Consolidated Financial
Statements.
The Group currently has no source of operating cash inflows,
other than interest and grant income, and has incurred net
operating cash outflows before tax for the year ended 31 December
2022 of GBP828,263 (2021: GBP1,772,232 outflow). At 31 December
2022, the Group had cash balances of GBP1,919,529 (2021:
GBP1,784,024) and a surplus in net working capital (current assets,
including cash, less current liabilities) of GBP2,088,158 (2021:
GBP2,129,653).
The Group prepares regular business forecasts and monitors its
projected cash flows, which are reviewed by the Board. Forecasts
are adjusted for reasonable sensitivities that address the
principal risks and uncertainties to which the Group is exposed,
thus creating a number of different scenarios for the Board to
challenge. In those cases, where scenarios deplete the Group's cash
resources too rapidly, consideration is given to the potential
actions available to management to mitigate the impact of one or
more of these sensitivities, in particular the discretionary nature
of costs incurred by the Group, in order to ensure the continued
availability of funds.
As the Group did not have access to bank debt and future funding
is reliant on issues of shares in the Parent Company, the Board has
derived a mitigation plan for the scenarios modelled as part of the
going concern review.
On the basis of this analysis, the Board has concluded that
there is a reasonable expectation that the Company will have
adequate resources to continue in operational existence for the
foreseeable future being a period of at least 12 months from the
Consolidated Statement of Financial Position date.
1.4 Basis of consolidation
The consolidated Group financial statements consist of the
financial statements of the Company together with the only entity
controlled by the parent company (its subsidiary), N4 UK.
All financial statements are made up to 31 December 2022. Where
necessary, adjustments are made to the financial statements of N4
UK to bring the accounting policies used into line with those used
by the Group.
All intra-group transactions, balances and unrealised gains on
transactions between Group companies are eliminated on
consolidation. Unrealised losses are also eliminated unless the
transaction provides evidence of an impairment of the asset
transferred.
Subsidiaries are consolidated in the Group's financial
statements from the date that control commences until the date that
control ceases.
1.5 Revenue
The Group has not recognised any revenue to date.
1.6 Government grant income
Government grants are recognised only when there is reasonable
assurance that the Group will comply with the conditions attaching
to them and that the grants will be received.
Government grants are recognised in the Consolidated Statement
of Comprehensive Income on a systematic basis over the periods in
which the Group recognises and expenses the related costs for which
the grants are intended to compensate.
Government grants that are receivable as compensation for
expenses or losses already incurred or for the purpose of giving
immediate financial support to the Group with no future related
costs are recognised in Consolidated Statement of Comprehensive
Income in the period in which they become receivable, and against
the associated cost.
1.7 Expenses
Financing income and expenses
Financing expenses comprise interest expense and finance
charges. Financing income comprises interest receivable on funds
invested.
Financing income and expenses are recognised in the Consolidated
Statement of Comprehensive Income as it accrues, using the
effective interest method.
Research and development
Research costs are charged against the Consolidated Statement of
Comprehensive Income as they are incurred. Certain development
costs will be capitalised as intangible assets when it is probable
that the future economic benefits will flow to the Group. Such
intangible assets will be amortised on a straight-line basis from
the point at which the assets are ready for use, over the period of
the expected benefit, and are reviewed for impairment at each year
end date. Other development costs are charged against income as
incurred since the criteria for their recognition as an asset is
not met.
The criteria for recognising expenditure as an asset are:
-- It is technically feasible to complete the product;
-- Management intends to complete the product and use or sell
it;
-- There is an ability to use or sell the product;
-- It can be demonstrated how the product will generate probable
future economic benefits;
-- Adequate technical, financial and other resources are available
to complete the development, use and sale of the product;
and
-- Expenditure attributable to the product can be reliably
measured.
The costs of an internally generated intangible asset comprise
all directly attributable costs necessary to create, produce and
prepare the asset to be capable of operating in the manner intended
by management. Directly attributable costs include employee costs
incurred on technical development, testing and certification,
materials consumed and any relevant third-party cost. The costs of
internally generated developments are recognised as intangible
assets and are subsequently measured in the same way as externally
acquired intangible assets. However, until completion of the
development project, the assets are subject to impairment testing
only.
To date, the criteria for recognition of an internally generated
intangible asset have not been met as explained in note 1.17.
1.8 Taxation
Taxation
Taxation for the year comprises current and deferred tax. Tax is
recognised in the Consolidated Statement of Comprehensive Income,
except to the extent that it relates to items recognised directly
in equity.
Current or deferred taxation assets and liabilities are not
discounted.
Current tax
Current tax is recognised at the amount of tax payable using the
tax rates and laws that have been enacted or substantively enacted
by the Consolidated Statement of Financial Position date.
Deferred tax
Deferred tax is recognised in respect of all timing differences
that have originated but not reversed at the Consolidated Statement
of Financial Position date.
Timing differences arise from the inclusion of income and
expenses in tax assessments in periods different from those in
which they are recognised in the Consolidated Financial Statements.
Deferred tax is measured using tax rates and laws that have been
enacted or substantively enacted by the year end and that are
expected to apply to the reversal of the timing difference.
Unrelieved tax losses and other deferred tax assets are
recognised only to the extent that it is probable that they will be
recovered against the reversal of deferred tax liabilities or other
future taxable profits.
1.9 Foreign Currencies
Monetary assets and liabilities denominated in foreign
currencies are translated into Sterling at the rate of exchange
ruling at the Consolidated Statement of Financial Position date.
Transactions in foreign currencies are translated at the rate of
exchange ruling at the date of the transaction. Foreign exchange
gains and losses are included in the Consolidated Statement of
Comprehensive Income.
1.10 Earnings per share
The Group presents basic and diluted earnings or loss per share
data for its ordinary shares. Basic earnings/loss per share is
calculated by dividing the profit or loss attributable to ordinary
shareholders of the Company by the weighted average number of
ordinary shares outstanding during the period, adjusted for own
shares held. Diluted earnings/loss per share is determined by
adjusting the profit or loss attributable to ordinary shareholders
and the weighted average number of ordinary shares outstanding,
adjusted for own shares held, for the effects of all dilutive
potential ordinary shares, which comprise of share options
granted.
1.11 Operating segments
The Group operated in one business segment, that of the
development and commercialisation of medicines via its delivery
system called Nuvec(R). No revenue has yet been generated by any of
the work undertaken by the Group.
The Directors consider that there are no identifiable business
segments that are subject to risks and returns different to the
core business. The information reported to the Directors, for the
purposes of resource allocation and assessment of performance, is
based wholly on the overall activities of the Group.
1.12 Presentation and classification of financial instruments
issued by the Group
In accordance with IAS 32, financial instruments issued by the
Group are treated as equity only to the extent that they meet the
following two conditions:
a) they include no contractual obligations upon the Group to
deliver cash or other financial assets or to exchange financial
assets or financial liabilities with another party under conditions
that are potentially unfavourable to the Group; and
b) where the instrument will or may be settled in the Company's
own equity instruments, it is either a non-derivative that includes
no obligation to deliver a variable number of the Company's own
equity instruments or is a derivative that will be settled by the
Company exchanging a fixed amount of cash or other financial assets
for a fixed number of its own equity instruments.
To the extent that this definition is not met, the proceeds of
issue are classified as a financial liability. Where the instrument
so classified takes the legal form of the Company's own shares, the
amounts presented in these Consolidated Financial Statements for
called up share capital and share premium account exclude amounts
in relation to those shares.
Where a financial instrument that contains both equity and
financial liability components exists these components are
separated and accounted for individually under the above
policy.
1.13 Non-derivative financial instruments
Non-derivative financial instruments comprise investments, trade
and other receivables, cash and cash equivalents and trade and
other payables.
Investments
Investments are investments held in subsidiaries accounted for
at cost less provision for impairment under IAS 27.
Trade and other receivables
Trade and other receivables are recognised initially at fair
value. Subsequent to initial recognition they are measured at
amortised cost less impairment.
Trade and other payables
Trade and other payables are recognised initially at fair value.
Subsequent to initial recognition they are measured at amortised
cost using the effective interest method.
Cash and cash equivalents
Cash and cash equivalents are basic financial assets and
comprise of cash at bank. Any overdrafts are shown within
borrowings in current liabilities.
1.14 Impairment
A financial asset not carried at fair value through profit or
loss is assessed at each reporting date to determine whether there
is objective evidence that it is impaired. A financial asset is
impaired if objective evidence indicates that a loss event has
occurred after the initial recognition of the asset, and that the
loss event had a negative effect on the estimated future cash flows
of that asset that can be estimated reliably.
An impairment loss in respect of a financial asset measured at
amortised cost is calculated as the difference between its carrying
amount and the present value of the estimated future cash flows
discounted at the asset's original effective interest rate.
Interest on the impaired asset continues to be recognised through
the unwinding of the discount. When a subsequent event causes the
amount of impairment loss to decrease, the decrease in impairment
loss is reversed through the Consolidated Statement of
Comprehensive Income.
The carrying amounts of the Group's non-financial assets are
reviewed at each reporting date to determine whether there is any
indication of impairment. If any such indication exists, then the
asset's recoverable amount is estimated.
The recoverable amount of an asset is the greater of its value
in use and its fair value less costs to sell. 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 the purpose of impairment testing,
assets that cannot be tested individually are grouped together into
the smallest Group of assets that generates cash inflows from
continuing use that are largely independent of the cash inflows of
other assets or Groups of assets (the "cash-generating unit").
An impairment loss is recognised if the carrying amount of an
asset or its cash generating unit exceeds its estimated recoverable
amount. Impairment losses are recognised in profit or loss.
Impairment losses recognised in respect of cash generated units are
allocated first to reduce the carrying amount of any goodwill
allocated to the units, and then to reduce the carrying amounts of
the other assets in the unit (Group of units) on a pro rata
basis.
Impairment losses recognised in prior periods are assessed at
each reporting date for any indications that the loss has decreased
or no longer exists. An impairment loss is reversed if there has
been a change in the estimates used to determine the recoverable
amount. An impairment loss is reversed only to the extent that the
asset's carrying amount does not exceed the carrying amount that
would have been determined, net of depreciation or amortisation, if
no impairment loss had been recognised.
1.15 Share based payment arrangements
Share-based payment arrangements in which the Group receives
goods or services as consideration for its own equity instruments
are accounted for as equity-settled share-based payment
transactions, regardless of how the equity instruments are obtained
by the Group.
Share-based payment transactions, other than those with
employees, are measured at the value of goods or services received
where this can be reliably measured. Where the services received
are not identifiable, their fair value is determined by reference
to the grant date fair value of the equity instruments provided.
Should it not be possible to measure reliably the fair value of
identifiable goods and services received, their fair value shall be
determined by reference to the fair value of the equity instruments
provided measured over the period of time that the goods and
services are received.
The expense is recognised in the Consolidated Statement of
Comprehensive Income or capitalised as part of an asset when the
goods are received or as services are provided, with a
corresponding increase in equity.
The grant date fair value of share-based payment awards granted
to employees is recognised as an employee expense, with a
corresponding increase in equity, over the period that the
employees become unconditionally entitled to the awards. The fair
value of the options granted is measured using an option valuation
model, taking into account the terms and conditions upon which the
options were granted. The amount recognised as an expense is
adjusted to reflect the actual number of awards for which the
related service and non-market vesting conditions are expected to
be met, such that the amount ultimately recognised as an expense is
based on the number of awards that do meet the related service and
non-market performance conditions at the vesting date. For
share-based payment awards with non-vesting conditions, the grant
date fair value of the share-based payment is measured to reflect
such conditions and there is no "true-up" for differences between
expected and actual outcomes.
Share-based payment transactions in which the Group receives
goods or services by incurring a liability to transfer cash or
other assets that is based on the price of the Group's equity
instruments are accounted for as cash-settled share-based payments.
The fair value of the amount payable to recipients is recognised as
an expense, with a corresponding increase in liabilities, over the
period in which the recipients become unconditionally entitled to
payment. The liability is re-measured at each Consolidated
Statement of Financial Position date and at settlement date. Any
changes in the fair value of the liability are recognised in the
Consolidated Statement of Comprehensive Income.
1.16 Adoption of new and revised International Financial
Reporting Standards
The following IFRS standards, amendments or interpretations
became effective during the year ended 31 December 2022 but have
not had a material effect on this Consolidated Financial
Information:
Effective
Standard date
------------------- --------------------------------------- ----------
Amendments to IFRS Reference to the Conceptual Framework 1 January
3 2022
Amendments to IAS Property Plant and Equipment (Proceeds 1 January
16 before intended use) 2022
Amendments to IAS Onerous Contracts (Cost of fulfilling 1 January
37 a contract) 2022
Amendments to IFRS Annual Improvements to IFRS Standards 1 January
1, IFRS 9, IFRS 2018-2020 2022
16 and IAS 41
All new standards and amendments to standards and
interpretations effective for annual periods beginning on or after
1 January 2022 that are applicable to the Group have been applied
in preparing these Consolidated Financial Statements.
The standards and interpretations that are issued and relevant
to the Group, but not yet effective, up to the date of issuance of
the Consolidated Financial Statements are disclosed below. The
Group intends to adopt these standards, if applicable, when they
become effective.
Effective
Standard date
-------------- ----------------------------------- ----------
Amendments to Disclosure of accounting policies 1 January
IAS 1 2023
Amendments to Definition of accounting estimates 1 January
IAS 8 2023
Amendments to Deferred tax related to assets and 1 January
IAS 12 liabilities arising from a single 2023
transaction
The Directors are continuing to assess the potential impact that
the adoption of the standards listed above will have on the
Consolidated Financial Statements for the year ended 31 December
2022.
1.17 Use of estimates and judgements
The preparation of Consolidated Financial Statements in
conformity with IFRSs requires management to make certain
judgements, estimates and assumptions that affect the application
of accounting policies and the reported amounts of assets,
liabilities, income and expenses during the period. Actual results
may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the
period in which the estimates are revised and in any future periods
affected.
In the process of applying the Group's accounting policies, the
Directors have decided the following estimates and assumptions are
material to the carrying amounts of assets and liabilities
recognised in the Consolidated Financial Statements.
Critical judgements
Research and development expenditure
The key judgements surrounding the Research & Development
expenditure is whether the expenditure meets the criteria for
capitalisation. Expenditure will only be capitalised when the
recognition criteria is met and is otherwise written off to the
Consolidated Statement of Comprehensive Income. The recognition
criteria include the identification of a clearly defined project
with separately identifiable expenditure where the outcome of the
project, in terms of its technical feasibility and commercial
viability, can be measured or assessed with reasonable certainty
and that sufficient resources exist to complete a profitable
project. In the event that these criteria are met, and it is
probable that future economic benefit attributable to the product
will flow to the Group, then the expenditure will be
capitalised.
Impairment of investments and intercompany debtors
N4 UK has sustained losses and the Statement of Financial
position is in deficit. The recoverability of the intercompany
debtor and the cost of investment is dependent on the future
profitability and success of the entity, which is in a research
phase and has not therefore generated any revenue to date. Having
considered research progress during the year and future prospects
of N4 UK, the Directors do not consider that there are indicators
of impairment in respect of these balances. This is a significant
judgement.
2. Risk management
Overview
The Group has exposure to the following risks:
- Credit risk;
- Liquidity risk;
- Tax risk;
- Market risk; and
- Operational risk
- Regulatory and legislative risk
This note presents information about the Group's exposure to
each of the above risks, its objectives, policies and processes for
measuring and managing risk, and its management of capital. Further
quantitative disclosures are included throughout these Consolidated
Financial Statements.
Risk management framework
The Board has overall responsibility for the establishment and
oversight of the risk management framework and developing and
monitoring the Group's risk management policies. Key risk areas
have been identified and the Group's risk management policies and
systems will be reviewed regularly to reflect changes in market
conditions and the Group's activities.
The Audit Committee oversees how management monitors compliance
with the Group's risk management policies and procedures and
reviews the adequacy of the risk management framework in relation
to the risks faced by the Group.
Credit risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations and arises principally from the Group's
bank deposits and receivables. See Note 13 for further detail. The
risk of non-collection is considered to be low. This risk is deemed
low at present due to the Group not yet trading and generating
revenue but is a consideration for future risks.
There is an intercompany debtor balance between the Company and
N4 UK. The recoverability of this debtor is dependent on the future
profitability of the entity. As N4 UK has sustained losses and the
Statement of Financial position is in deficit it is currently not
in a position to repay this amount and this therefore poses a
credit risk to the Company, but not to the Group.
Liquidity risk
Liquidity risk is the risk that the Group will encounter
difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash or another
financial asset. The Group's approach to managing liquidity is to
ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due, under both normal and
stressed conditions, without incurring unacceptable losses or
risking damage to the Group's reputation. The Group monitors cash
flow on a monthly basis through forecasting to help mitigate this
risk.
Tax risk
Any change in the Group's tax status or in taxation legislation
or its interpretations could affect the value of the investments
held by the Group or the Group's ability to provide returns to
shareholders or alter post-tax returns to shareholders.
Market risk and competition
The Group operates as a specialist pharmaceutical Company
engaged in the development of mesoparticulate silica delivery
systems to improve the cellular delivery and potency of vaccines.
The Group is entering into a market with existing competitors and
the prospect of new entrants entering the current market. There is
no guarantee that current competitors or new entrants to the market
will not appeal to a wider portion of the Group's target market or
command broader band awareness.
In addition, the Group's future potential revenues from product
sales will be affected by changes in the market price of
pharmaceutical drugs and could also be subject to regulatory
controls or similar restrictions.
Market risk is monitored continuously by the Group and the Board
reacts to any changes in market conditions as and when they
arise.
Operational risk
The Group is at an early stage of development and is subject to
several operational risks. The commencement of the Group's material
revenues is difficult to predict and there is no guarantee the
Group will generate material revenues in the future. The Group has
a limited operational history upon which its performance and
prospects can be evaluated and faces the risks frequently
encountered by developing companies. The risks include the
uncertainty as to which areas of pharmaceuticals to target for
growth.
Operational risk is managed by adapting the future plans of the
Group based on results and feedback from employees, suppliers and
contractors.
Regulatory and legislative risk
The operations of the Group are such that it is exposed to the
risk of litigation from its suppliers, employees and regulatory
authorities. Exposure to litigation or fines imposed by regulatory
authorities may affect the Group's reputation even though monetary
consequences may not be significant.
Any changes to regulations or legislation are reviewed by the
Board on a regular basis and the Group applies any that are
relevant accordingly.
Changes to legislation, regulations, rules and practices may
change and is often the case in the pharmaceutical industry which
is highly regulated and susceptible to regular change. Any changes
may have an adverse effect on the Group's operations.
Regulatory and legislative risk will become more significant
once the current research generates revenue.
Protection of intellectual property
The Group's ability to compete significantly relies upon the
successful protection of its intellectual property, in particular
its licenced and owned patent applications for Nuvec(R). The Group
seeks to protect its intellectual property through the filing of
worldwide patent applications, as well as robust confidentiality
obligations on its employees. However, this does not provide
assurance that a third party will not infringe on the Group's
intellectual property, release confidential information about the
intellectual property or claim technology which is registered to
the Group.
Capital management
The Group has no loans or borrowings and has sufficient
resources, in the view of the Directors, to meet its working
capital requirements for the next 12 months.
The Group manages its capital through the preparation of
detailed forecasts, and tracks actual receipts and outlays against
the forecasts on a regular basis, to ensure that the Group will be
able to continue as a going concern while maximising the return to
shareholders.
The capital structure of the Group consists of cash and cash
equivalents and equity comprising, capital, reserves and
accumulated losses.
3. Employees and directors
The average monthly number of employees during the year was 5
(2021: 5). The Directors of the Group are employed by both the
Company and N4 UK and as such are included in the employee figure.
Total Directors remuneration is detailed in Note 14 of these
Consolidated Financial Statements.
2022 2021
GBP GBP
Wages and Salaries 213,333 208,000
Social security costs 17,562 16,518
230,895 224,518
---------- ----------
4. Net finance income and (expenditure)
2022 2021
GBP GBP
Interest received on financial assets
measured at amortised cost 1 677
------- -------
1 677
------- -------
5. Loss before tax
2022 2021
GBP GBP
Loss before taxation is arrived
after charging:
Fees payable to the Group's auditors
for the audit
of the Group's financial statements 28,640 24,675
------- -------
6. Taxation
2022 2021
GBP GBP
Current tax
Research and development tax credit
receivable for the current period (163,998) (298,267)
Adjustments in respect of prior periods - -
---------- ----------
(163,998) (298,267)
---------- ----------
Deferred tax
Origination and reversal of temporary
differences - -
---------- ----------
Tax in income statement (163,998) (298,267)
---------- ----------
The tax charge for the year can be reconciled to the loss in the
Consolidated Statement of Comprehensive Income as follows:
2022 2021
GBP GBP
Loss before taxation (1,029,261) (1,842,613)
------------ ------------
Tax at the UK corporation tax rate
of 19% (2021: 19%) (195,560) (350,096)
Net Research and development tax
credits (163,998) (298,267)
Changes in unrecognised deferred
tax 195,560 350,096
Adjustments in respect of prior periods - -
------------ ------------
Tax charge for the year (163,998) (298,267)
------------ ------------
At the year end the Group had trading losses carried forward of
GBP9,969,504 (2021: GBP9,011,815) for use against future profits.
There are no other factors which may impact future tax charges. A
deferred tax asset has not been recognised on unrelieved trading
losses as the timing, extent and availability of future profits is
not yet certain.
7. Investments
Investment in subsidiary
Company
2022 2021
Cost GBP GBP
Balance at 1 January 1,094,747 1,094,747
---------- ----------
Balance at 31 December 1,094,747 1,094,747
---------- ----------
Details of the Company's subsidiary at 31 December 2022 are as
follows:
Registered Principal activity Proportion
Office of ownership
and voting rights
held
The Mills, Canal Delivery of
Street, Derby, vaccines and
N4 Pharma UK Limited DE1 2RJ therapeutics 100%
The accounting reference date of the subsidiary are co-terminous
with that of the Company.
8. Trade and other receivables
Group Group Company Company
2022 2021 2022 2021
GBP GBP GBP GBP
Prepayments 36,888 7,013 36,029 6,514
VAT due 18,632 23,553 13,352 6,361
R&D tax credits receivable 163,998 513,151 - -
Interest receivable - 677 883,610 611,838
Other debtors 27,000 13,965 59,334 4,400
-------- -------- -------- --------
246,518 558,359 992,325 629,113
-------- -------- -------- --------
Loan interest receivable relates to the intra-group loan
disclosed in Note 14.
9. Trade and other payables
Group Group Company Company
2022 2021 2022 2021
GBP GBP GBP GBP
Trade payables 35,756 180,346 12,196 7,848
Other payables 4,966 4,474 1,185 1,118
------- -------- -------- --------
40,722 184,820 13,381 8,966
------- -------- -------- --------
10. Share-based payments
Options
The Company has the ability to issue options to Directors to
compensate them for services rendered and recognised them to add
value to the Group's longer-term share value. Equity settled
share-based payments are measured at fair value at the date of
grant. The fair value determined is charged to the Consolidated
Statement of Comprehensive Income on a straight-line basis over the
vesting period based on the Group's estimate of the number of
shares that will vest.
The vesting period is defined as the period in which the options
are unable to be exercised. The period commences on the date the
options are issued. For the options to vest, the holder must remain
an employee of the group throughout the vesting period. Once the
vesting period is complete the options may be exercised on any date
up to the lapse date.
Cancellations of equity instruments are treated as an
acceleration of the vesting period and any outstanding charge is
recognised in full immediately.
Fair value is measured using a Black Scholes pricing model. The
key assumptions used in the model at the grant date were adjusted
based on management's best estimate for the effects of
non-transferability, exercise restrictions and behavioral
considerations.
As at 31 December 2022, there were 7,046,513 (2021: 7,046,513)
options in existence over ordinary shares of the Company. Options
in existence during the current and/or previous financial year are
as follows:
Ordinary
shares Exercise
Date under Vesting Expiry Price
Name of Grant option Date Date GBP
2015 Options
Gavin Burnell 14.10.15 1,351,210 14.10.15 14.10.25 0.0280
Luke Cairns 14.10.15 675,302 14.10.15 14.10.25 0.0280
2017 Options
Luke Cairns 03.05.17 717,143 03.05.20 03.05.27 0.0700
David
Templeton 03.05.17 717,143 03.05.20 03.05.27 0.0700
Paul Titley 03.05.17 717,143 03.05.20 03.05.27 0.0700
2019 Options
John Chiplin 21.05.19 717,143 21.05.22 21.05.29 0.0355
Christopher
Britten 21.05.19 717,143 21.05.22 21.05.29 0.0355
2020 Options
David
Templeton 18.05.20 717,143 18.05.23 18.05.30 0.0480
Luke Cairns 18.05.20 717,143 18.05.23 18.05.30 0.0480
Total options 7,046,513
-----------
The weighted average remaining contractual life of the share
options outstanding as at 31 December 2022 was 4.93 years (2021:
5.93 years).
Each option entitles the holder to subscribe for one ordinary
share in the Company. Options do not confer any voting rights on
the holder.
An amount of GBP12,006 has been recognised in the Consolidated
Statement of Comprehensive Income and in the Share Option Reserve
in relation to the share options (2021: GBP16,665).
The aggregate fair value of the share options in issue was
GBP91,961 (2021 GBP79,955), with amounts recorded at each reporting
date being as follows:
2022 2021
GBP GBP
2015 Options 18,492 18,492
2017 Options 26,884 26,884
2019 Options 22,793 19,861
2020 Options 23,792 14,718
------- -------
91,961 79,955
-------------- ------- -------
Warrants
As part of the placing in November 2022 which raised
GBP1,054,000 before fees and expenses, the Company issued 3,162,000
warrants at an exercise price of 2p per warrant to the Company's
brokers on the transaction as part of their fees.
The warrants entitle holders to subscribe for new ordinary
shares at any time in the period of three years following the grant
of the warrants. The expiry date for the warrants is 23 November
2025.
Fair value is measured using a Black Scholes pricing model.
An amount of GBP11,993 has been recognised in the Share Premium
and in the Share Option Reserve in relation to the warrants (2021:
GBPnil).
Exercise
Date Ordinary shares Expiry Price Fair value at 31
of Grant under option Date GBP December 2022
GBP
25.11.22 3,162,000 24.11.25 0.02 11,993
11. Capital and reserves
Issued, allotted and fully paid 2022 2021
GBP GBP
233,780,349 Ordinary Shares of 0.4p
each (2021: 181,080,349) 935,121 724,321
137,674,431 Deferred Shares of 4p
each (2021: 137,674,431) 5,506,977 5,506,977
279,176,540 Deferred Shares of 0.99p
each (2021: 279,176,540) 2,763,848 2,763,848
9,205,946 8,995,146
---------- ----------
All ordinary shares rank equally in all respects, including for
dividends, shareholder attendance and voting rights at meetings, on
a return of capital and in a winding-up.
Authorised ordinary shares at 31 December 2022 totalled
334,682,497 (2021:334,682,497).
During the year 52,700,000 new ordinary shares of 0.4p each were
issued through two placings in November 2022 at a share price of 2p
per share.
The 137,674,431 deferred shares of 4p, have no right to
dividends nor do the holders thereof have the right to receive
notice of or to attend or vote at any general meeting of the
Company. On a return of capital or on a winding up of the Company,
the holders of the deferred shares shall only be entitled to
receive the amount paid up on such shares after the holders of the
ordinary shares have received their return on capital.
The 279,176,540 deferred shares of 0. 99p shall be entitled to
receive a special dividend, which is payable upon the repayment to
the Company of any amount owed under certain loan agreements, after
which the Company shall, in priority to any distribution to any
other class of share, pay to the holders of the Special Deferred
Shares an aggregate amount equal to the amount repaid pro rata
according to the number of such shares paid up as to their nominal
value held by each shareholder. They shall be entitled to no other
distribution save for a special dividend and shall not be entitled
to receive notice of or attend or vote at a general meeting of the
Company. On a return of capital on a winding up of the Company,
they shall only be entitled to receive the amount paid up on such
shares up to a maximum of 0.9 pence per share after the holders of
the Ordinary Shares and the Deferred Shares have received their
return on capital.
Reserves
The equity structure presented in the Consolidated Financial
Statements reflects the equity structure of the Group, including
the equity instruments issued as part of the Reverse Takeover
transaction which occurred in 2017 and followed accounting
treatment in accordance with IFRS 2.
The reverse acquisition reserve and the merger reserve are
derived as part of the Reverse Takeover transaction and the
balances within these reserves have had no movement since the point
of the Reverse takeover in 2017.
Share premium reserve
The share premium reserve comprises the excess of consideration
received over the par value of the shares issued, plus the nominal
value of share capital at the date of redesignation at no par
value.
Share option reserve
The share option reserve comprises the fair value of options
granted, less the fair value of lapsed and expired options.
Retained earnings
Retained earnings comprises of accumulated results of the Group
to date.
12. Earnings per share
The calculation of basic loss per share at 31 December 2022 was
based on the loss of GBP1,029,261 (2021: GBP1,544,346), and a
weighted average number of ordinary shares outstanding of
186,422,541 (2021:181,080,349), calculated as follows:
2022 2021
GBP GBP
Losses attributable to ordinary
shareholders (1,029,261) (1,544,346)
Weighted average number of ordinary
shares
Issued ordinary shares at 1 January 181,080,349 181,080,349
Effect of shares issued during the
year 5,342,192 -
------------ ------------
Weighted average number of shares
at 31 December 186,422,541 181,080,349
------------ ------------
2022 pence 2021 pence
per share per share
Basic loss per share (0.55) (0.85)
----------- -------------
Diluted loss per share
Diluted earnings per share is calculated by adjusting the
weighted average number of shares outstanding to assume conversion
of all potential dilutive shares, namely share options and
warrants. The calculation of diluted loss per share at 31 December
2022 was based on the loss of GBP1,029,261 (31 December 2021:
GBP1,544,346), and a weighted average number of ordinary shares
outstanding of 186,422,541 (2021: 181,080,349).
2022 pence 2021 pence
per share per share
Diluted loss per share (0.55) (0.85)
----------- -----------
13. Risk management and analysis
(a) Credit risk
Financial risk management
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations and arises principally from the Group's
receivables and cash and cash equivalents. The carrying amount of
cash, cash equivalents and term deposits represents the maximum
credit exposure on those assets. The cash and cash equivalents are
held with UK bank and financial institution counterparties which
are rated at least A .
There is an intercompany debtor balance between the Company and
N4 UK. The recoverability of this debtor is dependent on the future
profitability of the entity. As N4 UK has sustained losses and the
Statement of Financial position is in deficit it is currently not
in a position to repay this amount and this therefore poses a
credit risk to the Company, but not to the Group.
Exposure to credit risk
The carrying amount of financial assets represents the maximum
credit exposure. Therefore, the maximum exposure to credit risk at
the reporting date of the Group was GBP2,002,049 (2021:
GBP2,342,383), being the total of the carrying amount of financial
assets, shown in the Consolidated Statement of Financial
Position.
(b) Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due.
The following are the contractual maturities of financial
liabilities, including estimated interest payments and excluding
the impact of netting agreements.
Group:
Financial liabilities Carrying Contractual 6 months 6-12 1 -2
amount cash flows or less months years
GBP GBP GBP GBP GBP
31 December 2022
Trade and other
payables 40,722 40,722 40,722 - -
--------- ------------ --------- -------- -------
31 December 2021
Trade and other
payables 184,820 184,820 184,820 - -
--------- ------------ --------- -------- -------
Company:
Financial liabilities Carrying Contractual 6 months 6-12 1 -2
amount cash flows or less months years
GBP GBP GBP GBP GBP
31 December 2022
Trade and other
payables 13,381 13,381 13,381 - -
--------- ------------ --------- -------- -------
31 December 2021
Trade and other
payables 8,966 8,966 8,966 - -
--------- ------------ --------- -------- -------
(c) Currency risk
The Group does not have significant exposure to foreign currency
risk at present. The Group does not have any monetary financial
instruments which are held in a currency that differs from that
entity's functional currency.
(d) Interest rate risk
Profile
At the reporting date the interest rate profile of
interest-bearing financial instruments was:
Carrying amount
Group:
2022 2021
GBP GBP
Variable rate instruments
---------- ----------
Cash and cash equivalents 1,919,529 1,784,024
---------- ----------
Carrying amount
Company:
2022 2021
GBP GBP
Variable rate instruments
---------- ----------
Cash and cash equivalents 1,761,330 1,538,615
---------- ----------
Cash flow sensitivity analysis for variable rate instruments
The Group's interest-bearing assets at the reporting date were
invested with financial institutions in the United Kingdom with a
S&P rating of A2 and comprised solely of bank accounts.
A change in interest rates would have increased/(decreased)
profit or loss by the amounts shown below. This analysis assumes
that all other variables remain constant. This analysis is
performed on the same basis for 2021.
Group: 2022 2021
Profit or loss Profit or loss
100 bp 100 bp
100 bp increase decrease 100 bp increase decrease
Variable rate instruments 19,195 (19,195) 17,840 (17,840)
---------------- ---------- ---------------- ----------
Company: 2022 2021
Profit or loss Profit or loss
100 bp 100 bp
100 bp increase decrease 100 bp increase decrease
Variable rate instruments 17,613 (17,613) 15,386 (15,386)
---------------- ---------- ---------------- ----------
14. Related parties
Key management personnel
The below remuneration relates to key management personnel,
there are no key management personnel employed by the Group in
addition to the Directors.
2022 2021
GBP GBP
Short-term employee benefits 230,895 224,518
Share based payments 12,006 16,665
-------- --------
242,901 241,183
-------- --------
Directors' remuneration and interests
The below remuneration relates to the Directors of the
Group.
2022 Remuneration Interests
Cash-based Share-based Shares Options
Director payments payments Totals
GBP GBP GBP No. No.
Nigel Theobald (Chief
Executive Officer) 77,500 - 77,500 16,981,319 -
David Templeton 46,500 4,537 51,037 - 1,434,286
Luke Cairns 41,333 4,537 45,870 142,857 2,109,588
Christopher Britten 24,000 1,466 25,466 - 717,143
John Chiplin 24,000 1,466 25,466 - 717,143
213,333 12,006 225,339 17,124,176 4,978,160
=========== ============ ========= =========== ==========
2021 Remuneration Interests
Cash-based Share-based Shares Options
Director payments payments Totals
GBP GBP GBP No. No.
Nigel Theobald (Chief
Executive Officer) 75,000 - 75,000 16,981,319 -
David Templeton 45,000 4,538 49,538 - 1,434,286
Luke Cairns 40,000 4,537 44,537 142,857 2,109,588
Christopher Britten 24,000 3,795 27,795 - 717,143
John Chiplin 24,000 3,795 27,795 - 717,143
----------- ------------ --------- ----------- ----------
208,000 16,665 224,665 17,124,176 4,978,160
=========== ============ ========= =========== ==========
No contributions are paid by the Group to a pension scheme on
behalf of the Directors.
Nigel Theobald is the Group's highest paid director (2021: Nigel
Theobald). His remuneration in each year is disclosed above.
N4 Pharma PLC has a loan receivable from N4 Pharma UK Limited at
31 December 2022 of GBP5,659,000 (2021: GBP5,259,000). It is
repayable in December 2025, accrues interest at a rate of 5% and is
unsecured.
There are no further related parties identified. There is no
ultimate controlling party of the Company or Group.
15. Subsequent events
There have been no material events subsequent to the
Consolidated Statement of Financial Position date that require
adjustment or disclosure in these Consolidated Financial
Statements.
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END
FR BRGDXIXGDGXI
(END) Dow Jones Newswires
March 09, 2023 02:00 ET (07:00 GMT)
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