TIDMETX
RNS Number : 3470Y
e-Therapeutics plc
04 May 2023
e-therapeutics plc
("e-therapeutics" or the "Company")
Final results for the year ended 31 January 2023
Successful year executing the Company's strategy resulting in
the creation of a rapidly growing in-house pipeline of promising
preclinical candidates
London, UK, 4 May 2023 - e-therapeutics plc (AIM: ETX; OTCQX;
ETXPF), a company integrating computational power and biological
data to discover life-transforming RNAi medicines, announces its
audited results for the year ended 31 January 2023.
Operational highlights
-- RNAi strategy delivering a rapidly growing in-house pipeline
of early first-in-class candidates, against target genes discovered
using our HepNet (TM) computational platform. Comprehensive in vivo
proof-of-concept data packages being generated.
-- Active across a variety of areas of high unmet medical need,
including cardiovascular disease, non-alcoholic steatohepatitis
("NASH") and haematology. Investing in the cardiometabolic space as
a key focus area.
-- Expansion of world's most comprehensive knowledge base of
hepatocyte-centric biology to capture and model complex biological
processes in the liver and tissues influenced by the liver,
completing proprietary curation of 100s of data sources.
-- Increased integration of HepNet (TM) functionality and
continued validation of our tools, in particular our
hepatocyte-specific knowledge graph and proprietary target
identification approaches.
-- Mapping of human genetic validation of potential targets
completed for more informed target triage.
-- Integration of large language models ("LLMs"), such as
OpenAI's GPT model, to radically enhance computational capabilities
and transform HepNet (TM) into a dynamic knowledge resource.
-- Expansion of artificial intelligence ("AI") approaches that
learn from experimental data deployed into siRNA (short interfering
RNA) drug design.
-- Sustained intellectual property ("IP") activity with patent
applications filed on eight further inventions arising from the
Company's proprietary GalNAc-siRNA technology, GalOmic(TM) .
-- New collaboration with iTeos Therapeutics in immuno-oncology
announced on 5 April 2022. Several milestone payments received
since, in addition to upfront consideration, following the
successful identification of potential targets and small molecule
compounds.
-- Successful completion of Galapagos NV collaboration in
idiopathic pulmonary fibrosis ("IPF"), with all near-term
milestones achieved demonstrating our ability to effectively
identify potential therapeutic strategies and targets.
Post Period Highlights
-- Filing of four new patent applications to protect innovation
around novel gene targets and associated disease relevant biology
as well as proprietary siRNA stabilisation chemistries.
-- Additional milestone achieved in collaboration with iTeos
Therapeutics, resulting in an additional payment to the
Company.
Financial Highlights
-- Successful fundraise of GBP13.5 million announced in September 2022
-- Cash and short-term investment bank deposits at 31 January
2023 of GBP31.7 million (2022: GBP26.4 million)
-- Revenues of GBP0.5 million (2022: GBP0.5 million)
-- R&D spend of GBP7.2 million (2022: GBP6.1 million)
-- Operating loss of GBP10.2 million (2022: GBP9.6 million)
-- Loss for the year of GBP8.3 million (2022: GBP8.1 million)
-- GBP1.5 million R&D tax credit receivable (2022: GBP1.5 million)
Ali Mortazavi, Chief Executive Officer of e-therapeutics,
commented: "2022/23 was a pivotal year for e-therapeutics as we
made significant progress towards realising our goal of Computing
the Future of Medicine. Through our innovative computational
approach and RNAi-based therapeutic modality, we were able to
rapidly identify and pursue promising targets in multiple disease
areas. We are now well-positioned to advance our pipeline of
first-in-class preclinical RNAi candidates, making significant
progress in just one year.
By placing LLMs at the core of our computation and harnessing
GPT-4's capabilities, we can now create specialised LLM "agents"
which will transform HepNet (TM) into a dynamic knowledge resource.
GPT-4 and LLM integration will provide a unifying framework from
which to drive every aspect of our pipeline and position
e-therapeutics as a global leader in hepatocyte biology and related
diseases.
Our long-term vision is to fully automate the preclinical drug
discovery process, using GPT-4 and LLMs to access real-time
information and interface with external applications, ultimately
accelerating the development of life-saving treatments. Through our
computational approach, we have been able to generate a multitude
of potential target hypotheses and progress an in-house pipeline.
Given our established position in computational drug discovery, we
are ideally positioned to capitalise on this opportunity and look
forward to the future with great confidence".
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 as it forms part of
UK domestic law by virtue of the European Union (Withdrawal) Act
2018 ('MAR'). Upon the publication of this announcement via a
Regulatory Information Service, this inside information is now
considered to be in the public domain.
Enquiries:
e-therapeutics plc
Ali Mortazavi, CEO Tel: +44 (0)20 4551
Laura Roca-Alonso, COO/CBO 8888
www.etherapeutics.co.uk
------------------------------------------------ -------------------------
SP Angel Corporate Finance LLP Tel: +44(0)20 3470
0470
Nominated Adviser and Broker
Matthew Johnson/Harry Davies-Ball (Corporate
Finance)
Vadim Alexandre/Rob Rees (Corporate Broking)
------------------------------------------------ -------------------------
About e-therapeutics plc
e-therapeutics plc ("ETX") integrates computational power and
biology information to discover life-transforming RNAi medicines.
The Company's technology uses computation to capture and model
human biology, identify novel targets, and develop RNAi medicines
against those targets that can be rapidly progressed to the
clinic.
ETX's proprietary HepNet(TM) platform enables the generation and
analysis of biological network models, providing a novel and
mechanistic approach to drug discovery. This approach explicitly
considers the true complexity of biology to make more reliable
predictions from large complex data sets and ETX's proprietary
hepatocyte knowledgebase - the world's most comprehensive and
integrated hepatocyte-centric data resource. The Company generates,
prioritises and tests millions of hypotheses in silico to identify
better therapeutic targets with higher confidence.
GalOmic (TM) , ETX's proprietary RNAi platform, enables the
targeted delivery to hepatocytes in the liver and the specific
silencing of novel disease-associated genes, identified by
HepNet(TM) . The focus on hepatocytes offers the opportunity to
tackle a wide variety of diseases. The liver is a highly
metabolically active organ which performs a key role in many
biological processes and vital functions crucial for human health.
ETX's GalOmic (TM) constructs have demonstrated compelling in vivo
performance in terms of depth of gene silencing and duration of
action.
The Company is progressing a pipeline of first-in-class
preclinical RNAi candidates across several high unmet medical needs
in cardiometabolic indications and targeting promising
hepatocyte-expressed targets with effects in other disease areas.
ETX has also partnered with biopharma companies such as Novo
Nordisk, Galapagos NV and iTeos Therapeutics using its
computational network biology approach across a diverse range of
drug discovery projects.
The Company is based in London, UK and listed on the Alternative
Investment Market of the London Stock Exchange ("AIM"), with ticker
symbol ETX. E-therapeutics is also traded on the OTCQX Best Market
(OTCQX) in the United States, under ticker symbol ETXPF.
Chair's Statement
I am pleased to report a year of significant progress across all
elements of the business culminating in the rapid establishment of
an in-house pipeline of RNAi candidates and the continued
advancement of our highly differentiated computational tools and
approach.
Our RNAi focus
The focus on RNAi as a modality of choice enables the Company to
realise some key advantages associated with this ground-breaking
technology which include:
-- High specificity against their target gene, thus minimising potential off-target effects
-- No druggability issues, being able to silence virtually any gene in the genome
-- Long duration of action, supporting infrequent administration and reduced patient burden
-- Reversible effects (no changes to DNA)
-- Good safety profile
The recent strategic focus on RNAi, together with the use of
sophisticated computational approaches to identify novel therapies,
has resulted in a frenetic period of innovation which is outlined
throughout this report.
Our hepatocyte expertise
Whilst our methodology is applicable to a wide range of
diseases, our focus is specific to diseases associated with the
liver. Hepatocytes are highly metabolically active cells, and their
targeting enables the Company to develop therapeutic strategies in
a broad variety of therapeutic areas including cardiovascular,
metabolic, renal, and rare diseases.
Developing and protecting a pipeline
During the year the Company has further leveraged its HepNet
(TM) computational biology platform to identify novel gene targets
resulting in the initiation of our own in-house therapeutic
pipeline. This represents a move away from earlier stage partnering
towards prosecuting our own ideas where we believe there is greater
potential for later-stage higher value commercial
opportunities.
The in-house pipeline contains a number of novel targets
undergoing advanced experimental evaluation and prosecution. Behind
this sits a large portfolio of additional target ideas being
discovered and assessed in silico as well as experimentally.
Importantly, we continue to protect our innovation through
patent applications for Intellectual Property Rights around novel
gene targets and associated disease relevant biology discoveries as
well as proprietary siRNA stabilisation chemistries. During the
reported year, and continuing into the new financial year, we have
filed a series of patent applications to protect 17 inventions.
Board and governance
As an AIM-quoted company we have chosen to apply the 2018 Quoted
Companies Alliance Corporate Governance Code (the "QCA Code"). The
Board remains committed to high standards of corporate governance
that ensure the Company operates in a transparent and ethical way
that delivers value for employees, shareholders and stakeholders.
This includes activities undertaken during the period across the
areas of risk management control, financial planning,
organisational structure and resource allocation.
People and culture
The Board is committed to building a diversified inclusive
workplace and creating a thriving culture of integrity and trust
where people can freely innovate. During the period we have sought
ways to further develop initiatives that promote employee wellbeing
and engagement. We continue to seek and attract high calibre talent
with plans to add further expert resource to the existing team in
the year ahead.
Our move from Oxford to London has been completed successfully
and places us in a position to access a larger pool of talent
attracted by the opportunity to work in a popular vibrant
international city without losing our close proximity to the
centres of excellence in Oxford and Cambridge.
Financial position
Through the activities of the Audit Committee, the Board and the
Executive Management Team the Company continues to implement and
maintain robust financial controls and reporting.
Via a GBP13.5m fundraise announced in September 2022 we
strengthened our financial position which provides us with the
capital to support the execution of our immediate strategy. The
fundraising also provided an important endorsement of our
differentiated approach and expertise in integrating computational
power and biological data to accelerate the discovery of novel RNAi
medicines. I would like to acknowledge and thank our shareholders
for their continued support.
I am delighted to represent this dynamic and progressive company
as its Chair. We are in a strong position financially, making good
progress scientifically and committed to creating value for all our
stakeholders.
Prof Trevor M Jones CBE FMedSci
Independent Non-Executive Chair
4 May 2023
Chief Executive's Statement
2022/23 was a pivotal year for e-therapeutics as we made
significant progress towards realising our goal of Computing the
Future of Medicine(TM) . Through our innovative computational
approach and RNAi-based therapeutic modality, we were able to
rapidly identify and pursue promising targets in multiple disease
areas. We are now well-positioned to advance our pipeline of
first-in-class preclinical RNAi candidates across multiple
therapeutic areas, making significant progress in just one
year.
Pivot from small molecules to RNAi: GalOmic(TM)
The opportunity to pivot into RNAi as a modality of choice to
prosecute our novel target ideas presented several key advantages.
In particular, focussing on GalNAc-conjugated siRNA, using our
proprietary GalOmic(TM) platform, allows us to leverage the
existing safety and performance precedent of a commercial-stage
technology and take more biological risks by pursuing novel
targets. In addition, RNAi enables rapid and comparatively
inexpensive candidate generation once a target is selected. This
allows us to have multiple 'shots on goal' for the same cost as a
single small molecule programme with a much higher probability of
success. Critically, domain knowledge of the RNAi therapeutics
space is extremely niche, and I believe that the previous
experience in the field of our senior leadership team will prove to
be a crucial component of our success.
We have now shown across multiple targets that we can design and
synthesise lead GalNAc-conjugated siRNAs in approximately 6 months
and at a cost of c. $500K (including healthy in vivo pharmacology).
This capability has enabled us to generate and progress drug
candidates at a greatly accelerated pace and scale compared to more
traditional modalities, and we believe that RNAi-based therapeutics
have the potential to transform the treatment landscape across
multiple disease areas.
Significant progress in RNAi IP, drug design and speed of
execution
During the year, we have also made significant progress in our
intellectual property ("IP") portfolio, with the filing of multiple
patent applications to protect both our RNAi platform (GalOmic(TM)
) inventions and novel targets. We have gained significant new
know-how whilst optimising our drug design process and reducing the
associated timelines. These include the protection of siRNA
chemical modification "stamps" thereby reducing the number of
permutations and combinations in our screening cascades as well as
predictive methodologies to reduce the number of sequences that
need to be tested for in vivo studies.
This is part of our goal to apply computation across all aspects
of our business, eventually allowing us to confidently predict the
attributes of our siRNA molecules without the need for cell-based
or in vivo screening. This will allow us to progress our siRNA
molecules from in silico drug design straight to in vivo
experiments, increasing our speed of execution. In addition,
following the success of the mRNA-based COVID-19 vaccines, we have
noted a significant change in policy from regulators to use
compelling computational data to help reduce preclinical timelines
and start first in human ("FIH") clinical trials as quickly as
possible. We believe, given that computation and data is used at
every step of our drug discovery efforts, ETX is extremely
well-positioned to take advantage of the changing regulatory
landscape going forward.
HepNet(TM) : Our computational solution to human biology
modelling and novel target ID
We continue to make significant strides in our expansion of
HepNet(TM) , the most comprehensive hepatocyte data and analytics
resource in the world. HepNet(TM) enables generation and analysis
of biological network models, providing a novel and mechanistic
approach to drug discovery that explicitly considers the true
complexity of biology. Our computational network models represent,
as closely as possible, the biological systems ETX is seeking to
impact. The approach allows us to identify, prioritise and test
millions of hypotheses in silico to make more reliable predictions
with higher confidence and generate gene target hypotheses based on
large complex data sets.
HepNet(TM) was built on the Company's previously established
proprietary network biology knowledge, tools and algorithms to
model and interrogate human biology. This powerful modular platform
was originally cell type agnostic. Extensive work has recently been
undertaken to extend its capability and to leverage the focus on a
single modality, RNAi, to create the most comprehensive and
integrated proprietary hepatocyte-centric data resource.
We have invested in the licensing and generation of a range of
proprietary liver omics data resources to support disease related
process and target discovery, particularly in the realm of
cardiometabolic disorders. The Company's proprietary
hepatocyte-focused Knowledge Graph has been further enhanced with
additional data derived from both experimental Natural Language
Processing ("NLP") approaches and through AI-driven predictive
approaches to knowledge inference. This allows the discovery of
hidden relationships in data whilst providing the capability to
impute missing information. Furthermore, the application of robust
standards of validation for all our tools and approaches remains an
important focus, and this rigour will continue to be a critical
part of our development going forward.
In terms of scalability, the HepNet(TM) platform and data
resources are now entirely cloud-based, ushering in a new era of
effectively unlimited computational power and data storage. Using
cutting-edge technologies we have been able to speed up our
analytical pipelines by orders of magnitude, reducing compute times
from weeks or months to a few hours. This has enabled the
development of proprietary large-scale statistical approaches to
analysis that were previously unfeasible.
HepNet(TM) has been instrumental in enabling us to develop a
deep understanding of hepatocyte biology and giving us the ability
to identify novel targets for potential drug candidates. We have
continued to build on the platform, generating proprietary data
inputs, exploring additional datasets of interest and keeping our
data foundation updated. Through this, we have been able to
generate a multitude of potential target hypotheses, enabling us to
rapidly prosecute many high conviction, computationally-derived
gene targets in relevant disease areas as possible.
Target nomination and pipeline
We believe that we now have a robust process to assess and
prosecute any hepatocyte gene target from idea to FIH studies. In
addition, we are continually refining and improving our
methodologies, algorithms, datasets and implementing one of the
fastest cascades in preclinical drug development. This has resulted
in the Company having a number of high conviction therapeutic
target-indication pairs which can be prosecuted at speed, dependent
on our capital position.
Our preclinical pipeline has progressed at a rapid rate and we
have initiated preclinical activities for additional targets while
continuing to pursue previous projects. We expect to nominate our
first candidate for IND/CTA enabling studies before the end of
2023, while we continue to advance projects through construct
design and in vitro studies into in vivo testing. Cardiometabolic
indications continue to be a key focus, but we remain open to
pursuing promising hepatocyte-expressed targets identified by our
computational methods that have effects in other disease areas, as
exemplified by our active haematology programmes.
Through this pipeline, we aim to translate our discoveries into
real-world, highly specific, and effective medicines in record
time. We have also continued to nominate new targets, with a key
pipeline priority being targets within cardiometabolic indications,
such as cardiovascular disease ("CVD") and non-alcoholic
steatohepatitis ("NASH"). We have active programmes in these areas,
and we plan to continue to add projects across metabolic syndrome
indications.
Non-dilutive funding opportunities via
collaborations/partnerships remains a key component of the
Company's strategy. Future collaborations will be in line with our
current liver and RNAi focus, with an expectation for later-stage
partnerships that maximise value retention and reflect the
development of ETX's early in-house RNAi pipeline. A balance will
be found between preclinical assets to partner and assets that the
Company will progress to early clinical trials to reach a more
significant value inflection point.
Large Language Models and GPT-4
I believe that the most significant development at
e-therapeutics over the past year occurred during Q4 2022, when we
began investigating the integration of large language models
("LLMs") and GPT-4 as a core component and enabling technology
within all of our computational efforts. The drug discovery
landscape is on the brink of a transformative revolution, driven by
LLMs such as GPT-4. As I have already stated, e-therapeutics has
made remarkable progress in multiple discovery programs,
transitioning from small molecule discovery to hepatocyte-targeted
GalNAc-siRNA drugs and our HepNet (TM) proprietary platform for
insights and predictions.
Nevertheless, a weakness in our computation has been the
immaturity of NLP algorithms to couple large corpora of text
alongside our machine learning ("ML") and statistical approaches.
However, LLMs, such as GPT-4, now offer a unique opportunity to
revolutionise e-therapeutics' text capabilities and materially
enhance HepNet (TM) 's capabilities.
By placing LLMs at the core of our computation and harnessing
GPT-4's capabilities, we can create specialised LLM "agents" and
transform HepNet (TM) into a dynamic knowledge resource.
Integration of GPT-4 and LLMs integration will provide a unifying
framework from which to drive every aspect of our pipeline and
position e-therapeutics as a global leader in hepatocyte biology
and related diseases. Our long-term vision is to fully automate the
preclinical drug discovery process, using GPT-4 and LLMs to access
real-time information and interface with external applications,
ultimately accelerating the development of life-saving
treatments.
Immediate use cases for LLMs include our "Straight to In Vivo"
project, target identification, patent extraction and an in silico
cell type delivery project. We aim to create a robust pipeline and
business model leveraging GPT-4 and LLMs' full potential, ensuring
our place at the forefront of the AI-driven drug discovery
revolution. By integrating GPT-4 and LLMs, e-therapeutics will
continue to break new ground in drug discovery, create novel
therapeutic strategies, and improve patient outcomes. Central to
this vision is the ongoing advancement of our RNAi chemistry
platform (GalOmic (TM) ) for developing hepatocyte targeted
GalNAc-siRNA drugs. These cutting-edge AI technologies hold the key
to unlocking new treatments for various diseases and conditions,
transforming the future of medicine.
In conclusion, integrating GPT-4 and LLMs into our drug
discovery pipeline will revolutionise hepatocyte biology, RNAi
chemistry, and the development of novel therapeutics. By harnessing
these AI technologies, we can accelerate the development of
life-saving treatments, improve patient outcomes and realise our
vision of computing the future of medicine.
Collaborations
In April, we announced a new collaboration with iTeos
Therapeutics. We are using our unique computational methodology to
enable the discovery of highly differentiated novel immuno-oncology
therapeutics. The work is progressing well against pre-defined
plans and milestones. As well as receiving near-term cash payments
material to the revenue of the Company, we are eligible to receive
undisclosed milestone payments through preclinical and clinical
development, in addition to regulatory milestones, per programme.
Several milestone payments have been received since we first
announced this collaboration and, after the period, we have
achieved an additional success milestone associated with a further
cash payment to the Company.
The collaboration with Galapagos NV ("Galapagos") in idiopathic
pulmonary fibrosis ("IPF") has now successfully concluded and
offers further evidence and third-party validation of our ability
to effectively identify potential therapeutic strategies and
targets computationally. We achieved all near-term milestones
resulting in several cash payments to the Company. The future of
the identified hits and targets will be determined by Galapagos
according to its strategic priorities. If progressed, we are
eligible to receive further milestones throughout development and
commercial stages.
Capital Raise
2022/23 was an extremely difficult year for the biotechnology
sector. However, in September 2022 we successfully raised GBP13.5m
through a share placing and subscription with M&G Investments
which we believe is a recognition of our unique business model.
This capital injection enables us to continue our growth and
development. I would like to take this opportunity to thank M&G
for their continued support.
Conclusion
In conclusion, I believe that 2022/23 will be seen as a
transformative year for e-therapeutics. Through our computational
approach, we have been able to generate a multitude of potential
target hypotheses and progress an in-house pipeline of preclinical
RNAi candidates across multiple therapeutic areas. I would like to
reiterate that we believe that LLMs such as GPT-4 are a new
enabling technology that will completely transform our business.
Given our established position in computational drug discovery, we
are ideally positioned to capitalise on this opportunity and look
forward to the future with great confidence.
Ali Mortazavi
Chief Executive Officer
4 May 2023
CFO's Review
This has been another year of significant progress towards
building and populating an internal pipeline of high-conviction
early RNAi assets. In addition, the Company raised net proceeds of
GBP13.4m through an equity issue in order to fund its ongoing
R&D activities, including expansion of the Company's GalOmic
(TM) and HepNet (TM) computational platform capabilities.
Revenue
Revenue of GBP0.5m for the year (2022: GBP0.5m) relates mainly
to the recognition of upfront payments and the achievement of
milestones under the immuno-oncology collaboration agreement with
iTeos in addition to a remaining milestone payment with Galapagos
on successful conclusion of the collaboration in idiopathic
pulmonary fibrosis.
We are actively generating valuable data packages for several
target genes and indications and currently also have live targets
progressing through in vivo studies and disease models, together
with three additional targets in earlier stages. In addition, we
continue target identification and triaging, continuously
generating additional targets ready for project initiation. This is
further validation of the Company's ultimate goal of developing a
highly differentiated in-house RNAi pipeline with future scope for
early-stage partnering and revenue generation.
Fundraise
An equity fundraise of GBP13.4m (gross GBP13.5m less related
costs and commissions of GBP0.1m) was announced in September by way
of a direct subscription by funds managed by M&G Investment
Management Limited. The net proceeds are being used to expand the
Company's platform capabilities and RNAi asset pipeline.
R&D expenditure
R&D expenditure totalled GBP7.2m this year (2022: GBP6.1m).
Significant progress has been made in further developing the
Company's RNAi therapeutics platform and we have now filed patent
applications to protect 17 inventions, including around stabilising
chemical modifications enabling specific hepatocyte (liver cell)
targeting. The Company has also continued to advance its HepNet
(TM) computational platform and to leverage the focus on a single
modality, RNAi, to create the most comprehensive and integrated
proprietary hepatocyte-centric data resource. This platform enables
generation and analysis of biological network models, providing a
novel and mechanistic approach to drug discovery that explicitly
considers the true complexity of biology.
Administrative expenditure
Administrative expenditure for the year totalled GBP3.5m (2022:
GBP3.9m) inclusive of a share-based payment employee option charge
of GBP0.2m (2022: GBP0.5m). The decreased administration cost is
mainly due to a reduction of the share-based payment charge which
results from a significant number of options lapsing in relation to
employee leavers during the year.
Operating loss
The operating loss for the year of GBP10.2m is GBP0.6m higher
than that in the prior year. This is mainly attributable to
increased R&D expenditure reflecting further progress and
development of our business strategy of computing the future of
medicine.
Interest and investment income
Interest and investment income for the year amounted to GBP0.5m
(2022: GBP0.1m). The increase includes interest income higher by
GBP0.2m on higher cash deposit balances and improved deposit rates,
coupled with receipt of a GBP0.2m dividend from a non-operating
subsidiary which was dissolved in the year and following which the
Company no longer has any subsidiaries.
R&D tax credits and loss for the year
The income statement includes an R&D tax credit of GBP1.5m
(2022: GBP1.5m) in relation to the current year, bringing down the
loss for the year to GBP8.3m (2022: GBP8.1m). The R&D tax
credit claim has not yet been submitted to HM Revenue and Customs,
but historically the amounts received have been materially in line
with our calculated tax receivable estimate included at the year
end.
Cash flow
Year-end cash and short term investment bank deposits amounted
to GBP31.7m, which is GBP5.1m higher than at the previous year end.
The increase reflects an equity fundraise inflow of GBP13.4m,
together with R&D tax credits received of GBP1.5m, partially
offset by an underlying net outflow cash burn of GBP9.6m. That cash
burn relates mainly to operating losses exclusive of non-cash
charges in respect of share-based payment employee option costs of
GBP0.2m, and depreciation, amortisation and impairment costs of
GBP0.5m. In addition, GBP0.2m was spent on the acquisition of
capital equipment and capitalised patents and IP during the
year.
Financial outlook
In the coming financial year, we will drive forward with our
strategic plans for nomination and execution of pre-clinical
targets using our GalOmic (TM) platform. Non-dilutive funding
opportunities via collaborations/partnerships remains a key
component of the Company's strategy and a balance will be found
between preclinical assets to partner and assets that the Company
will progress to early clinical trials.
Our budget, which has been prepared to reflect the above
strategic plans, shows that we have sufficient funds to continue in
operational existence for at least 12 months from the signing of
these financial statements. We anticipate a considerable increase
in our rate of spend and our budget remains prudent and
incorporates discretionary spend which could be scaled back if
considered appropriate.
Michael Bretherton
Chief Financial Officer
4 May 2023
Income Statement
For the year ended 31 January 2023
2023 2022
Notes GBP'000 GBP'000
----------------------------------------- ------- ------------ ------------
Revenue 475 477
Cost of sales - -
========================================= ======= ============ ============
Gross pro t 475 477
Research and development expenditure (7,224) (6,109)
Administrative expenses (3,490) (3,935)
========================================= ======= ============ ============
Operating loss (10,239) (9,567)
Interest income 490 61
Interest expense (23) (10)
========================================= ======= ============ ============
Loss before tax (9,772) (9,516)
Taxation 5 1,498 1,449
========================================= ======= ============ ============
Loss for the year attributable to equity
holders of the Company (8,274) (8,067)
========================================= ======= ============ ============
Loss per share: basic and diluted 6 (1.54)p (1.65)p
========================================= ======= ============ ============
Statement of Comprehensive Income
For the year ended 31 January 2023
2023 2022
GBP'000 GBP'000
--------------------------------------------------- ----------------------- ----------------
Loss for the nancial year (8,274) (8,067)
Other comprehensive income - -
=================================================== ======================= ================
Total comprehensive loss for the year attributable
to equity holders of the Company (8,274) (8,067)
=================================================== ======================= ================
Statement of Changes in Equity
For the year ended 31 January 2023
Share Share Retained
capital premium earnings Total
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- -------------------------------- ----------------- ---------- -----------------
As at 31 January 2021 421 77,668 (64,455) 13,634
Total comprehensive income
for year
Loss for the nancial year - - (8,067) (8,067)
================================== ================================ ================= ========== =================
Total comprehensive loss for
year - - (8,067) (8,067)
---------------------------------- -------------------------------- ----------------- ---------- -----------------
Transactions with owners, recorded
directly in equity
Issue of ordinary shares 94 21,575 - 21,669
Equity-settled share-based
payment transactions - - 490 490
================================== ================================ ================= ========== =================
Total contributions by and
distribution to owners 94 21,575 490 22,159
================================== ================================ ================= ========== =================
As at 31 January 2022 515 99,243 (72,032) 27,726
Total comprehensive income
for year
Loss for the nancial year - - (8,274) (8,274)
---------------------------------- -------------------------------- ----------------- ---------- -----------------
Total comprehensive loss for
year - - (8,274) (8,274)
---------------------------------- -------------------------------- ----------------- ---------- -----------------
Transactions with owners, recorded
directly in equity
Issue of ordinary shares 67 13,370 - 13,437
Equity-settled share-based
payment transactions - - 155 155
---------------------------------- -------------------------------- ----------------- ---------- -----------------
Total contributions by and
distribution to owners 67 13,370 155 13,592
---------------------------------- -------------------------------- ----------------- ---------- -----------------
As at 31 January 2023 582 112,613 (80,151) 33,044
================================== ================================ ================= ========== =================
Statement of Financial Position
As at 31 January 2023
2023 2022
Notes GBP'000 GBP'000
------------------------------------ ------- -------- --------
Non-current assets
Intangible assets 7 239 102
Property, plant and equipment 8 400 805
Investments - -
==================================== ======= ======== ========
639 907
==================================== ======= ======== ========
Current assets
Tax receivable 5 1,500 1,474
Trade and other receivables 259 236
Prepayments 553 501
Cash and cash equivalents 9 31,689 11,346
Short term investments 9 - 15,051
34,001 28,608
==================================== ======= ======== ========
Total assets 34,640 29,515
==================================== ======= ======== ========
Current liabilities
Trade and other payables 1,301 1,103
Lease liability 295 391
1,596 1,494
==================================== ======= ======== ========
Non-current liabilities
Lease liability - 295
==================================== ======= ======== ========
Total liabilities 1,596 1,789
==================================== ======= ======== ========
Net assets 33,044 27,726
==================================== ======= ======== ========
Equity
Share capital 10 582 515
Share premium 112,613 99,243
Retained earnings deficit (80,151) (72,032)
==================================== ======= ======== ========
Total equity attributable to equity
holders of the Company 33,044 27,726
==================================== ======= ======== ========
Statement of Cash Flow
For the year ended 31 January 2023
2023 2022
Notes GBP'000 GBP'000
------------------------------------------ ------- ---------------- ----------------
Loss for the year (8,274) (8,067)
Adjustments for:
Depreciation, amortisation and impairment 7,8 468 218
Loss on disposal of fixed assets 8 10 -
Equity-settled share-based payment
expense 155 490
Interest income (490) (61)
Interest expense 23 10
Taxation 5 (1,522) (1,484)
========================================== ======= ================ ================
Operating cash flows before movements
in working capital (9,630) (8,894)
Increase in trade and other receivables (75) (384)
Increase in trade and other payables 198 700
R&D Tax received 1,496 779
========================================== ======= ================ ================
Net cash used in operating activities (8,011) (7,799)
========================================== ======= ================ ================
Interest received 490 61
Interest expense (23) (10)
Acquisition of intangible assets 7 (142) (55)
Acquisition of property, plant and
equipment 8 (68) (908)
Increase in short term investments 9 15,051 (9,029)
========================================== ======= ================ ================
Net cash (used in)/from investing
activities 15,308 (9,941)
========================================== ======= ================ ================
Proceeds from issue of share capital 13,437 21,669
Proceeds from lease liability - 793
Repayment of lease liability (391) (130)
========================================== ======= ================ ================
Net cash generated/(used) nancing
activities 13,046 22,332
========================================== ======= ================ ================
Net increase/(decrease) in cash and
cash equivalents 20,343 4,592
Cash and cash equivalents at 1 February 11,346 6,754
Cash and cash equivalents at 31 January 31,689 11,346
========================================== ======= ================ ================
Short term investments/bank deposits - 15,051
========================================== ======= ================ ================
Cash and cash equivalents and short
term investments as at 31 January 31,689 26,397
========================================== ======= ================ ================
The acquisition of property, plant and equipment in the year to
31 January 2022 includes a non-cash amount of GBP0.79 million
capitalised in respect of a right of use property for which a
corresponding non-cash amount has been recognised in proceeds from
lease liability.
Notes
1. Status of Audit
The financial information set out herein does not constitute
statutory accounts as defined in Section 434 of the Companies Act
2006. The financial information for the year ended 31 January 2023
has been extracted from the Company's audited financial statements
which were approved by the Board of Directors on 4 May 2023 and
which, if adopted by the members at the Annual General Meeting,
will be delivered to the Registrar of Companies for England and
Wales.
The financial information for the year ended 31 January 2022 has
been extracted from the Company's audited financial statements
which were approved by the Board of Directors on 4 May 2022 which
have been delivered to the Registrar of Companies for England and
Wales.
The report of the auditor on these financial statements was
unqualified, did not contain a statement under Section 498(2) or
Section 498(3) of the Companies Act 2006. The report of the auditor
on the 31 January 2022 financial statements was unqualified, did
not contain a statement under Section 498(2) or Section 498(3) of
the Companies Act 2006, and did not include a matter to which the
auditors drew attention by way of emphasis without qualifying their
report.
The information in this preliminary statement has been extracted
from the audited financial statements for the year ended 31 January
2023 and as such, does not contain all the information required to
be disclosed in the financial statements prepared in accordance
with International Accounting Standards in Conformity with the
provisions of the Companies Act 2006.
The Company is a public limited company incorporated and
domiciled in England & Wales and whose shares are quoted on
AIM, a market operated by The London Stock Exchange.
2. Basis of preparation
While the financial information included in this preliminary
announcement has been prepared in accordance with the recognition
and measurement criteria of International accounting standards in
conformity with the requirements of the Companies Act 2006, this
announcement does not in itself contain sufficient information to
comply with IFRS. This preliminary announcement has been prepared
using the accounting policies that are expected to be published in
the Company's accounts for the year ended 31 January 2023, which
are consistent with the accounting policies published in the
Company's accounts for the year ended 31 January 2022 and that are
available on the Company's website at www.etherapeutics.co.uk, with
the exception of those new standards, interpretations and
amendments which became effective during the year and were adopted
by the Company, albeit with no impact on the Company's loss for the
year or equity on initial recognition.
This announcement contains forward-looking statements that are
based on current expectations or beliefs, as well as assumptions
about future events. These forward-looking statements can be
identified by the fact that they do not relate only to historical
or current facts. Forward-looking statements often use words such
as anticipate, target, expect, estimate, intend, plan, goal,
believe, will, may, should, would, could, is confident, or other
words of similar meaning. Undue reliance should not be placed on
any such statements because they speak only as at the date of this
document and, by their very nature, they are subject to known and
unknown risks and uncertainties and can be affected by other
factors that could cause actual results, plans and objectives, to
differ materially from those expressed or implied in the
forward-looking statements. There are a number of factors which
could cause actual results to differ materially from those
expressed or implied in forward-looking statements. The Company
undertakes no obligation to revise or update any forward-looking
statement contained within this announcement, regardless of whether
those statements are affected as a result of new information,
future events or otherwise, save as required by law and
regulations.
Going concern
Although the Company has recognised revenue from commercial
deals during the current and prior year, it is still largely
reliant on its cash balance to fund ongoing operations.
At 31 January 2023, we reported cash and cash equivalents and
short term investments of GBP31,689,000 versus an underlying cash
burn during the year of GBP9,642,000, excluding R&D tax credits
received and net proceeds from the equity fundraise.
We prepared detailed strategic plans as part of the fundraise
process announced in September 2022, which raised total gross
proceeds of GBP13,500,000. We have also prepared a detailed annual
budget and follow-on projections, which together cover a 24-month
period, and provide support for the view that the Company has
sufficient cash to meet its operational requirements for at least
12 months from the signing of these financial statements. The
budget includes a considerable increase in R&D expenditure, in
line with progressing our strategic aims. This expenditure is
largely uncommitted and discretionary and would be reduced or
postponed if required to manage the Company's cash resources.
The financial performance and position of the Company are
discussed in more detail in the CFO's Review above.
The preliminary announcement has been prepared on the going
concern basis since, given the points discussed above, the
Directors have a reasonable expectation that the Company has
adequate resources to continue in operational existence for the
foreseeable future.
3. Accounting judgements and sources of estimation uncertainty
The preparation of financial statements requires management to
make judgements, estimates and assumptions that may affect the
application of accounting policies and the reported amounts of
assets, liabilities, income and expenses. The estimates and
underlying assumptions are reviewed on an ongoing basis.
The following are the key judgements that management have made
in the process of applying the Company's accounting policies and
that have the most significant effect on the amounts recognised in
these financial statements:
-- There are various revenue streams from collaborative
partnerships. Management review these revenue streams against the
IFRS 15 criteria to establish whether revenue should be recognised
over time or at a point in time. Revenue recognised over time
results in a difference between up-front cash receipts and revenue
recognised, the balance of which is recorded on the Balance Sheet.
Revenue recognised from collaborative partnerships and
corresponding contract liabilities reflect management's best
estimate of each contract's stage of completion. Management
estimates project progress at each reporting date, with
consideration to project plans outlined in customer contracts, and
remeasures revenue accordingly. At the year end, deferred revenue
liability was GBPnil (2022: GBPnil). Revenue of GBP475,000 (2022:
GBP477,000) is made up of GBP475,000 (2022: GBP400,000) recognised
at a point in time and GBPnil (2022: GBP77,000) over time.
-- The Directors have not recognised a deferred tax asset based
on an assessment of the probability that future taxable income will
be available against which the deductible temporary differences and
tax loss carry-forwards can be utilised. The potential deferred tax
asset is disclosed in Note 5.
The following are the key assumptions concerning estimation
uncertainty that may have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within
the next financial year:
-- The current tax receivable, of GBP1,500,000 (2022:
GBP1,474,000), represents an R&D tax credit based on an advance
claim with HMRC. The final receivable is subject to judgement and
the correct application of complex R&D tax rules. The minimum
receipt approved by HMRC could be GBPnil. Historically, final
claims have been successful and materially in line with the
receivable recognised in the financial statements. The Company
expects the current year to be successful too.
4. Staff numbers
The average number of persons employed by the Company (including
Executive Directors and excluding Non-Executive Directors) during
the year, analysed by category, was as follows:
Number of
employees
----------------------------------------------------------------------------------------------------------------------
2023 2022
R&D staff 26 21
Finance and administration
staff 11 10
Executive Directors 1 1
====================================================================================== ============== ==============
38 32
====================================================================================== ============== ==============
5 . Taxation
2023 2022
GBP'000 GBP'000
Current tax:
SME R&D tax credit receivable for the current
year (1,483) (1,439)
Adjustments for prior year in respect of
SME R&D tax credit (15) (10)
================================================ ======== ===============
Current tax credit (1,498) (1,449)
================================================ ======== ===============
Deferred tax - -
================================================ ======== ===============
Total tax credit on loss on ordinary activities (1,498) (1,449)
================================================ ======== ===============
The standard rate of corporation tax applied to reported profit
is 19% (2022: 19%). The credit for the year can be reconciled to
the Income Statement as follows:
2023 2022
GBP'000 GBP'000
Loss before tax (9,772) (9,519)
Tax at the UK corporation tax rate of 19%
(2020: 19%) (1,857) (1,809)
Expenses not deductible for tax purposes (3) (4)
Enhanced relief for SMEs in relation to
R&D (635) (619)
Unrelieved tax losses 1,034 920
Income not taxable (47) -
Other 25 73
Adjustments in respect of prior year (15) (10)
========================================== ======== ================
Total tax credit for the year (1,498) (1,449)
========================================== ======== ================
The total tax credit recognised within the Income Statement is
GBP1,522,000 (2022: GBP1,484,000), which is made up the small or
medium- sized enterprise ("SME") R&D tax relief of GBP1,498,000
(2022: GBP1,449,000) and Research and Development Expenditure
Credit ("RDEC") of GBP24,000 (2022: GBP35,000). The SME tax credit
is shown within taxation, as reconciled above. The RDEC is included
within administrative expenses in the Income Statement on the basis
that the RDEC is treated as taxable income, being an 'above the
line' relief.
The tax receivable on the Balance Sheet, of GBP1,500,000 (2022:
GBP1,474,000), is made up of current year SME tax relief of
GBP1,483,000 (2022: GBP1,439,000) and RDEC of GBP17,000 (2022:
GBP35,000). Historically, R&D credits relating to both the SME
scheme and the RDEC scheme have been received from HMRC as a single
payment.
The Company has accumulated losses available to carry forward
against future trading profits of GBP38,162,000 (2022:
GBP33,623,000). No deferred tax has been recognised in respect of
tax losses since it is uncertain at the Balance Sheet date as to
whether future profits will be available against which the unused
tax losses can be utilised. The estimated value of the deferred tax
asset not recognised, measured at the main rate of 25% (2022: 19%),
is GBP10,237,000 (2022: GBP9,792,000).
The current year R&D credit has not yet been approved by
HMRC and, therefore, there is a risk that this claim may not be
successful.
6. Loss per share
2023 2022
Earnings for the purposes of basic earnings per share
and diluted earnings per share, being loss attributable
to owners of the Company (GBP'000) (8,274) (8,067)
Weighted average number of ordinary shares for the purposes
of basic earnings per share and diluted earnings per
share (number) 537,346,310 488,342,124
Loss per share - basic and diluted (p) (1.54) (1.65)
============================================================ =========== ===========
The calculation of the basic and diluted earnings per share is
based on the following data:
Diluted EPS is calculated in the same way as basic EPS but also
with reference to reflect the dilutive effect of share options in
existence at the year end over 21,172,836 (2022: 22,100,614)
ordinary shares. The diluted loss per share is, however, identical
to the basic loss per share, as potential dilutive shares are not
treated as dilutive where they would reduce the loss per share.
7. Intangible assets
Patents and
Goodwill trademarks Total
GBP'000 GBP'000 GBP'000
------------------------------ ---------- --------------- ------------
Cost
As at 1 February 2021 2,824 1,350 4,174
Additions - 55 55
============================== ========== =============== ============
As at 31 January 2022 2,824 1,405 4,229
Additions - 142 142
Disposals (2,824) - (2,824)
------------------------------ ---------- --------------- ------------
As at 31 January 2023 - 1,547 1,547
============================== ========== =============== ============
Amortisation and impairment
As at 1 February 2021 2,824 1,267 4,091
Impairment losses - 25 25
Amortisation charge for the
year - 11 11
============================== ========== =============== ============
As at 31 January 2022 2,824 1,303 4,127
Amortisation charge for the
year - 5 5
Disposals (2,824) - (2,824)
------------------------------ ---------- --------------- ------------
As at 31 January 2023 - 1,308 1,308
============================== ========== =============== ============
Net book value
As at 31 January 2021 - 83 83
============================== ========== =============== ============
As at 31 January 2022 - 102 102
============================== ========== =============== ============
As at 31 January 2023 - 239 239
============================== ========== =============== ============
Research and development costs of GBP7,224,000 (2022:
GBP6,109,000) have been recognised in the Income Statement.
Amortisation
Amortisation has been charged on patents for which the
registration process is complete, over the term granted.
Amortisation is included within administrative expenses.
The goodwill in the Balance Sheet arose following the hive-up of
the trade and assets of InRotis Technologies Limited in 2007. That
goodwill was fully impaired during 2020, reflecting the fact that
the Company's business model was then founded upon a very
different, and significantly advanced, technological capability
versus that at the date of the hive-up in 2007. This goodwill was
accounted for as disposed in the current year following an
application for dissolution and strike off of InRotis Technologies
that was made in the final quarter of 2022. InRotis Technologies
was subsequently removed from the UK Companies House register.
8. Property, plant and equipment
Right-of-use Plant and Fixtures
Property equipment and Total
GBP'000 GBP'000 fittings GBP'000
GBP'000
Cost
As at 31 January 2021 123 214 103 440
Additions 802 64 42 908
Disposals (123) - - (123)
======================== =============================================== ============== ========= ================
As at 31 January 2022 802 278 145 1,225
Additions - 68 - 68
Disposals - (23) - (23)
------------------------ ----------------------------------------------- -------------- --------- ----------------
As at 31 January 2023 802 323 145 1,270
======================== =============================================== ============== ========= ================
Depreciation
As at 31 January 2021 92 168 101 361
Depreciation charge for
the year 148 31 3 182
Disposals (123) - - (123)
======================== =============================================== ============== ========= ================
As at 31 January 2022 117 199 104 420
Depreciation charge for
the year 401 55 7 463
Disposals - (13) - (13)
------------------------ ----------------------------------------------- -------------- --------- ----------------
As at 31 January 2023 518 241 111 870
======================== =============================================== ============== ========= ================
Net book value
As at 31 January 2021 31 46 2 79
======================== =============================================== ============== ========= ================
As at 31 January 2022 685 79 41 805
======================== =============================================== ============== ========= ================
As at 31 January 2023 284 82 34 400
======================== =============================================== ============== ========= ================
9. Cash and cash equivalents and short term investments
2023 2022
GBP'000 GBP'000
-------------------------------------- -------- --------
Cash at bank and in hand 3,616 3,316
Bank deposits on 32 days notice 12,879 8,030
Bank deposits on 35 days notice 15,194 -
-------------------------------------- -------- --------
Cash and cash equivalents 31,689 11,346
====================================== ======== ========
Short term investments (bank deposits
on 95 day notice) - 15,051
====================================== ======== ========
Total cash and cash equivalents
and short term investments 31,689 26,397
====================================== ======== ========
The Company's primary objective is to minimise the risk of a
loss of capital and to eliminate any loss of liquidity which would
have a detrimental effect on the business. Short term surplus funds
are deposited with reputably rated banks for maturities of not more
than 35 days.
10. Capital and reserves
No. of ordinary shares
2023 2022
'000 '000
In issue at 1 February 514,571 420,773
Share issue 67,588 93,798
======================================== ======= =======
Total shares authorised and in issue at
31 January - fully paid 582,159 514,571
======================================== ======= =======
The Company has one class of ordinary shares with a nominal
value of GBP0.001 each and carry no right to fixed income.
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END
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(END) Dow Jones Newswires
May 04, 2023 02:00 ET (06:00 GMT)
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