Filed pursuant to Rule 424(b)(3)
Registration No.: 333-240984
PROSPECTUS SUPPLEMENT
MIDATECH PHARMA PLC
9,888,640 Ordinary Shares Representing 1,977,728
American Depositary Shares
This prospectus supplement
(the “Prospectus Supplement”) amends and supplements our prospectus contained in our Post-Effective Amendment No. 2 to our
Registration Statement on Form F-1, effective as of April 29, 2022 (the “Prospectus”), related to the resale by the selling
shareholders identified in the Prospectus of up to an aggregate of 9,888,640 of our ordinary shares, nominal value 0.1p per share (the
“Ordinary Shares”), represented by 1,977,728 American Depositary Shares (the “Depositary Shares”).
This Prospectus Supplement
is being filed in order to incorporate into and include in the Prospectus the information set forth in our Form 6-K/A filed with the Securities
and Exchange Commission on October 4, 2022, which is attached hereto. This Prospectus Supplement should be read in conjunction with the
Prospectus and is qualified by reference to the Prospectus except to the extent that the information in this Prospectus Supplement supersedes
the information contained therein.
Our Depositary Shares are
listed on the NASDAQ Capital Market under the symbol “MTP.” The last reported closing price of Depositary Shares on the NASDAQ
Capital Market on October 3, 2022 was $1.94.
Our Ordinary Shares are admitted
for trading on AIM, a market operated by the London Stock Exchange plc (“AIM”) under the listing code “MTPH.”
The last reported closing price of our Ordinary Shares on AIM on October 3, 2022 was £0.765.
Investing in our securities
involves risks. See “Risk Factors” beginning on page 12 of the Prospectus and in the documents incorporated by reference in
the Prospectus for a discussion of the factors you should carefully consider before deciding to purchase these securities.
Neither the Securities
and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus
is truthful or complete. Any representation to the contrary is a criminal offense.
______________________________
The date of this Prospectus Supplement is October
4, 2022.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K/A
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the month
of October 2022 June 30,2022
Commission File Number 001-37652
Midatech
Pharma PLC
(Translation of registrant’s name into English)
1 Caspian Point,
Caspian Way
Cardiff, CF10 4DQ, United Kingdom
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F:
Form 20-F x Form 40-F o
Indicate by check mark if the registrant is submitting the
Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o
Indicate by check mark if the registrant is submitting the
Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o
This Report on Form 6-K, including Exhibit 99.1, is hereby
incorporated by reference into the Company’s Registration Statement on Form F-3 (File No. 333-233901).
EXPLANATORY
NOTE
This
Amendment No. 1 to the Report on Form 6-K for the month of September 2022, originally filed with the U.S. Securities and Exchange
Commission on September 14, 2022 (the “Form 6-K”), is being filed solely for the purposes of updating Exhibit 99.1 to include
iXBRL tagging information.
Other
than as expressly set forth above, this Form 6-K/A does not, and does not purport to, amend, update or restate the information in any
other item of the Form 6-K, or reflect any events that have occurred after the Form 6-K was originally filed.
SUBMITTED
HEREWITH
Attached to
the Registrant’s Form 6-K filing for the month of October 2022, and incorporated by reference herein, is:
Exhibit No. |
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Description |
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99.1 |
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Press Release, dated September 14, 2022 entitled
“Interim results for the six months ended 30 June 2022 |
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101.INS |
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XBRL Instance Document - the instance document does
not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
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101.SCH |
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INLINE XBRL Taxonomy Extension Schema Document. |
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101.DEF |
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INLINE XBRL Taxonomy Extension Calculation Linkbase Document. |
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101.CAL |
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INLINE XBRL Taxonomy Extension Definition Linkbase Document. |
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101.LAB |
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INLINE XBRL Taxonomy Extension Label Linkbase Document. |
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101.PRE |
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INLINE XBRL Taxonomy Extension Presentation Linkbase Document. |
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104 |
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Cover Page Interactive Data File (formatted as Inline XBRL and
contained in Exhibit 101) |
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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Midatech Pharma PLC |
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Date: October 4, 2022 |
By: |
/s/ Stephen Stamp |
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Stephen Stamp
Chief
Executive Officer and Chief Financial Officer |
Exhibit 99.1
14 September 2022
Midatech Pharma
Plc
(“Midatech”
or the “Company”)
December 31
Interim results
for the six months ended 30 June 2022
Midatech Pharma
Plc (AIM: MTPH; NASDAQ: MTP), a drug delivery technology company focused on improving the bio-delivery and biodistribution of medicines,
announces its unaudited interim results for the six months ended 30 June 2022 which will also be made available on the Company’s
website at www.midatechpharma.com.
OPERATIONAL
HIGHLIGHTS
The Company announced
the following in the six months ended 30 June 2022:
Q-Sphera
| · | In January, an extension of its R&D collaboration
with Janssen Pharmaceutica NV (Janssen) to focus on maximising drug loading and optimising
in vitro duration of release for an undisclosed Janssen experimental molecule; |
| · | In March, another R&D collaboration with
Janssen on a second large molecule, also focused on maximising drug loading and optimising
in vitro duration of release; |
MTX110
| · | In June, granting by the FDA of Fast Track Designation
for MTX110 in the treatment of recurrent glioblastoma (rGBM); and |
| · | Also in June, granting of Orphan Medicine Designation
for MTX110 for the treatment of glioma by the European Medicines Agency. |
FINANCIAL HIGHLIGHTS
|
· |
Total revenue for
1H22 was £0.47m (1H21: £0.40m). Total revenue represents income from R&D collaborations;
|
|
· |
Research and development
costs in 1H22 increased by 20% to £2.41m (1H21: £2.01m) as a result of increased costs associated with MTX110 as the Company
prepares for its Phase I study in rGBM;
|
|
· |
Administrative
expenses increased by 12% in 1H22 to £1.85m (1H21: £1.66m) primarily due to increased legal and professional expenses;
|
|
· |
Net cash used in
operating activities (after changes in working capital) in 1H22 was £3.54m, compared with £3.11m in 1H21.
|
|
· |
The Company’s cash balance at 30 June 2022 was £6.42m. |
For more information,
please contact:
Midatech Pharma Plc
Stephen Stamp, CEO, CFO
Tel: +44 (0)29 2048 0180
www.midatechpharma.com
Strand Hanson Limited
(Nominated and Financial Adviser)
James Dance / Matthew
Chandler / Rob Patrick
Tel: +44 (0)20 7409 3494
Turner Pope Investments
(TPI) Limited (Joint Broker)
Andrew Thacker / James
Pope (Corporate Broking)
Tel: +44(0)20 3657
0050
IFC Advisory Limited
(Financial PR and UK Investor Relations)
Tim Metcalfe / Graham
Herring
Tel: +44 (0)20 3934 6630
Email:
midatech@investor-focus.co.uk
Edison Group
(US Investor Relations)
Alyssa Factor
Tel: +1 (860) 573
9637
Email: afactor@edisongroup.com
About Midatech Pharma
Plc
Midatech Pharma Plc (dual
listed on LSE AIM: MTPH; and NASDAQ: MTP) is a drug delivery technology company focused on improving the bio-delivery and biodistribution
of medicines. The Company combines approved and development medications with its proprietary and innovative drug delivery technologies
to provide compelling products that have the potential to powerfully impact the lives of patients.
The Company has developed
three in-house technology platforms, each with its own unique mechanism to improve delivery of medications to sites of disease. All of
the Company’s technologies have successfully entered human use in the clinic, providing important validation of the potential for
each platform:
| • | Q-Sphera™ platform: a disruptive micro-technology used for sustained release to prolong and control
the release of therapeutics over an extended period of time (from weeks to months). |
| • | MidaSolve™ platform: an innovative nanotechnology used to dissolve insoluble drugs so that they
can be administered in liquid form directly and locally into tumours. |
| • | MidaCore™ platform: a leading-edge nanotechnology used for targeting medications to sites of disease. |
The platform nature of
the technologies offers the potential to develop multiple drug assets rather than being reliant on a limited number of programmes. Midatech’s
technologies are supported by 37 patent families including 120 granted patents and an additional 70 patent applications. Midatech's headquarters
and R&D facility is in Cardiff, UK. For more information please visit www.midatechpharma.com
Forward-Looking Statements
Certain statements in
this press release may constitute "forward-looking statements" within the meaning of legislation in the United Kingdom and/or
United States Private Securities Litigation Reform Act. All statements contained in this press release that do not relate to matters of
historical fact should be considered forward-looking statements.
Reference should be made
to those documents that Midatech shall file from time to time or announcements that may be made by Midatech in accordance with the London
Stock Exchange’s AIM Rules for Companies (AIM Rules), the Disclosure and Transparency Rules (DTRs) and the rules and regulations
promulgated by the US Securities and Exchange Commission, which contains and identifies other important factors that could cause actual
results to differ materially from those contained in any projections or forward-looking statements. These forward-looking statements speak
only as of the date of this announcement. All subsequent written and oral forward-looking statements by or concerning Midatech are expressly
qualified in their entirety by the cautionary statements above. Except as may be required under the AIM Rules or the DTRs or by relevant
law in the United Kingdom or the United States, Midatech does not undertake any obligation to publicly update or revise any forward-looking
statements because of new information, future events or otherwise arising.
CHIEF EXECUTIVE’S
REVIEW
In the first half
of 2022 we focused on two things: building on our Q-protein discovery work in 2021 and preparing MTX110 for a Phase I study in rGBM. We
have also expanded our business development efforts through outreach and partnering conferences.
Q-Sphera pipeline
The Company’s
Q-Sphera technology employs proprietary 3-D printing techniques to encapsulate drugs in polymer-based bioresorbable microspheres which
may be injected to form depots in the body which release drugs over predictable, sustained periods from one week to several months. Progress
of the Q-Sphera pipeline in 1H22 includes:
Proteins
(incl mAb) formulation
There
are no approved long-acting injectable formulations of biologic products such as mAbs or other high molecular weight proteins primarily
because they are delicate and easily de-natured in manufacture. In 2021 we demonstrated the successful encapsulation of an exemplar monoclonal
antibody (mAb) and most importantly, preservation of its functional and structural integrity and antigen binding in vitro.
In
1H22, we continued to expand and develop our in-house capabilities around the encapsulation of high molecular weight proteins. We are
developing methods for the successful encapsulation of bispecific T cell engager molecules (BiTEs) and Antibody Drug Conjugates (ADCs),
both of which have shown utility in oncology settings.
MTX213
and MTX223
In
1H22, we signed R&D collaboration agreements with Janssen to focus on maximising drug
loading and optimising in vitro duration of release for two large molecules nominated by Janssen. Thus far, we have completed the
first work package and are currently engaged on the second.
We
believe there are opportunities to leverage the Company’s Q-Sphera technology through the targeted, intratumoral delivery of metabolic
modulating agents in combination with standard-of-care treatments. Such an approach could delay (or help to overcome) resistance to standard-of-care
treatment and increase patient survival. Targeted, intratumoral delivery could also improve efficacy and lower systemic side effects.
The Company’s experiments in intratumoral delivery, while promising, are at an early stage and will require more time, effort and
cost before validation. The Company has recently filed a patent designed to protect its early findings.
MTX110
MTX110, a novel
formulation of panobinostat administered through convection enhanced delivery, is in clinical development for intractable brain cancers
including Diffuse Intrinsic Pontine Glioma (DIPG) and Glioblastoma (GBM).
Building on the
in vivo data that were presented at the 2020 annual meeting of The Society of Neuro-Oncology which demonstrated the efficacy of
MTX110 against two GBM cell lines in an ectopic tumour model and subsequent in vitro data which demonstrated the potency, at therapeutic
concentrations, of MTX110 against a further four patient-derived GBM cell lines we began planning a Phase I pilot study in recurrent GBM
patients. All preparations for the study are complete and we expect to enrol the first patient at the beginning of the fourth quarter
2022 at the Preston Robert Tisch Brain Tumor Center, Duke University. GBM is the most common and devastating primary malignant brain tumour
in adults encompassing 14.3% of all primary brain and central nervous system neoplasms(1). With an incidence of approximately
3.2 per 100,000 population in the USA, approximately 12,300 people in the USA are diagnosed with GBM per annum(2).
The ongoing second
Phase I study in DIPG at Columbia University is in the process of recruiting the last of 10 patients.
Funding
The Company had
£6.42 million cash in hand as at 30 June 2022. Consistent with previous announcements, the Company has sufficient cash resources
to fund operations into the first quarter of 2023. The Board is actively considering options for extending the Group’s cash runway.
Outlook
Overall, we are
pleased with the progress we have made in the first half of 2022. We are particularly excited about the impending start of our first study
in GBM using the same drug and delivery system that demonstrated encouraging results in the first Phase I study in DIPG.
Sources:
| 1. | (1) Low JT, Ostrom QT, Cioffi G, Neff C, Waite KA, Kruchko C, Barnholtz-Sloan
JS. Primary brain and other central nervous system tumors in the United States (2014-2018): A summary of the CBTRUS statistical report
for clinicians. Neurooncol Pract. 2022 Feb 22;9(3):165-182. doi: 10.1093/nop/npac015. PMID: 35601966; PMCID: PMC9113389. |
| 2. | (2) Stupp R, Taillibert S, Kanner AA, et al. Maintenance Therapy With Tumor-Treating
Fields Plus Temozolomide vs Temozolomide Alone for Glioblastoma: A Randomized Clinical Trial. JAMA : the journal of the American Medical
Association. 2015;314(23):2535-2543. |
FINANCIAL REVIEW
The unaudited results
for the six months ended 30 June 2022 are discussed below:
Key performance
indicators:
| |
| 1H 2022 | | |
| 1H 2021 | |
| |
| | | |
| | |
Total gross revenue(1) | |
£ | 0.47 | m | |
£ | 0.40 | m |
Customer revenue (2) | |
£ | 0.47 | m | |
£ | 0.40 | m |
R&D costs | |
£ | 2.41 | m | |
£ | 2.01 | m |
R&D as % of operating costs | |
| 57 | % | |
| 55 | % |
Loss from operations | |
£ | 3.78 | m | |
£ | 3.23 | m |
Net cash outflow for the period | |
£ | 3.63 | m | |
£ | 3.34 | m |
| |
| | | |
| | |
(1) Total revenue represents income from R&D collaborations plus grant revenue. |
(2) Customer revenue represents collaboration income only. |
Midatech’s
KPIs focus on the key areas of operating results, R&D spend and cash management. These measures provide information on the core R&D
operations. Additional financial and non-financial KPIs may be adopted in due course.
Revenues
Total revenue for
the six months to 30 June 2022 was £0.47m compared to £0.40m in the first six months of 2021, an increase of 17%. Revenue
in 1H22 and 1H21 was entirely comprised of income from R&D collaborations with Janssen. There was no grant income in 2022 or 2021.
Research and
Development
R&D costs in
1H22 increased by £0.40m or 20% to £2.41m compared with £2.01m in 1H21. The percentage of R&D costs as a percentage
of operating costs also increased in the period to 57% from 55%. R&D costs in 1H22 reflected increases in MTX110 clinical costs of
£0.2m as the company prepares for its Phase 1 clinical trial and an increase in staff costs of £0.4m as the company increases
its in-house capabilities. This was offset by a reduction of £0.1m in R&D expense on pre-clinical programs and patent costs
as the Group rationalised its patent portfolio.
Administrative
Costs
Administrative
expenses in 1H22 increased by 12% to £1.85m from £1.66m. Administrative costs in 1H22 reflected an increase in legal and professional
fees of £0.1m and travel costs of £0.1m as a result of the lifting of Covid-19 restrictions and resumption of in-person conferences.
Finance Income
and Expense
Finance income
during the period included a gain in respect of an equity settled derivative financial liability of £0.4m in addition to interest
earned on cash deposits. There was no interest income in the prior period.
Finance expense
in the period related to lease liabilities. In the prior period this included a loss in respect of an equity settled derivative financial
liability of £0.1m.
Cash Flows
Cash outflows from
operating activities in 1H22 were £3.54m compared to £3.11m in 1H21 driven by a net loss of £3.06m (1H21: £3.15m)
and after negative working capital of £0.05m (1H21: negative £0.05m) and other negative non-cash items totalling £0.43m
(1H21: positive £0.09m).
Net cash used in
investing activities in 1H22 of £0.02m (1H21: £0.15m) included purchases of property, plant and equipment of £0.03m.
Net cash used in
financing activities in 1H22 was £0.08m (1H21: £0.08m) reflecting principally the payments on lease liabilities in 2022. In
1H21 the Group repaid the final Spanish government loan of £0.1m which was offset by the proceeds from the exercise of warrants
of £0.08m.
Overall, cash decreased
by £3.63m in 1H22 compared to a decrease of £3.34m in 1H21. This resulted in a cash balance at 30 June 2022 of £6.42m
compared with £4.20m at 30 June 2021 and £10.06m at 31 December 2021.
Going concern
Midatech has experienced
net losses and significant cash outflows from cash used in operating activities over the past years as it has developed its portfolio.
As at 30 June 2022 the Group had total equity of £7.49m (£10.45m at 31 December 2021), it incurred a net loss after tax for
the six months to 30 June 2022 of £3.06m (1H20: £3.15m) and used cash in operating activities of £3.54m (1H21: £3.12m)
for the same period. As at 30 June 2022, the Company had cash and cash equivalents of £6.42m.
The Group’s
future viability is dependent on its ability to raise cash from financing activities to finance its development plans until commercialisation,
generate cash from operating activities and to successfully obtain regulatory approval to allow marketing of its development products.
The Group’s failure to raise capital as and when needed could have a negative impact on its financial condition and ability to pursue
its business strategies
The Directors have
prepared cash flow forecasts and considered the cash flow requirement for the Company for the next three years including the period 12
months from the date of approval of this interim financial information. These forecasts show that further financing will be required during
the first quarter of 2023 assuming, inter alia, that certain development programmes and other operating activities continue as currently
planned. This requirement for additional financing in the short term represents a material uncertainty that may cast doubt upon the Group
and Parent Company’s ability to continue as a going concern.
The Directors are
currently evaluating a number of near-term funding options potentially available to the Group, including fundraising and the partnering
of assets and technologies of the Company. After considering the uncertainties, the Directors consider it is appropriate to continue to
adopt the going concern basis in preparing these financial statements.
Stephen Stamp
Chief Executive
Officer and Chief Financial Officer
Consolidated
Statements of Comprehensive Income
For the year
six month period ended 30 June
| |
| | | |
| | | |
| | |
| |
Note | | |
2022 unaudited £’000 | | |
2021 unaudited £’000 | |
Revenue | |
| | | |
| 468 | | |
| 401 | |
Other income | |
| | | |
| 16 | | |
| 31 | |
Research and development costs | |
| | | |
| (2,413 | ) | |
| (2,010 | ) |
Administrative costs | |
| | | |
| (1,849 | ) | |
| (1,656 | ) |
Loss from operations | |
| | | |
| (3,778 | ) | |
| (3,234 | ) |
Finance income | |
| 2 | | |
| 404 | | |
| - | |
Finance expense | |
| 2 | | |
| (24 | ) | |
| (156 | ) |
Loss before tax | |
| | | |
| (3,398 | ) | |
| (3,390 | ) |
Taxation | |
| 3 | | |
| 337 | | |
| 236 | |
Loss for the period attributable to the owners of the parent | |
| | | |
| (3,061 | ) | |
| (3,154 | ) |
Other comprehensive income: | |
| | | |
| | | |
| | |
Items that will or may be reclassified subsequently to profit or loss: | |
| | | |
| | | |
| | |
Total other comprehensive gain net of tax | |
| | | |
| - | | |
| - | |
Total comprehensive loss attributable to the owners of the parent | |
| | | |
| (3,061 | ) | |
| (3,154 | ) |
Loss per share | |
| | | |
| | | |
| | |
Basic and diluted loss per ordinary share - pence | |
| 4 | | |
| (3 | )p | |
| (5 | )p |
The accompanying notes
form part of these financial statements
Distribution costs,
sales and marketing are immaterial in 2022 and 2021 and have been included within administrative costs.
Consolidated
Statements of Financial Position
| |
| | | |
| | | |
| | |
| |
Note | | |
As at 30 June 2022 unaudited £’000 | | |
As at 31 December 2021 £’000 | |
Assets | |
| | | |
| | | |
| | |
Non-current assets | |
| | | |
| | | |
| | |
Property, plant and equipment | |
| | | |
| 993 | | |
| 1,152 | |
Total Non-Current Assets | |
| | | |
| 993 | | |
| 1,152 | |
Current assets | |
| | | |
| | | |
| | |
Trade and other receivables | |
| | | |
| 1,243 | | |
| 1,034 | |
Taxation | |
| | | |
| 1,023 | | |
| 670 | |
Cash and cash equivalents | |
| | | |
| 6,423 | | |
| 10,057 | |
Total Current Assets | |
| | | |
| 8,689 | | |
| 11,761 | |
Total assets | |
| | | |
| 9,682 | | |
| 12,913 | |
Liabilities | |
| | | |
| | | |
| | |
Non-current liabilities | |
| | | |
| | | |
| | |
Borrowings | |
| 5 | | |
| 546 | | |
| 620 | |
Total Non-Current Liabilities | |
| | | |
| 546 | | |
| 620 | |
Current liabilities | |
| | | |
| | | |
| | |
Trade and other payables | |
| | | |
| 1,280 | | |
| 1,092 | |
Borrowings | |
| 5 | | |
| 167 | | |
| 146 | |
Provisions | |
| 6 | | |
| 43 | | |
| 50 | |
Derivative financial liability | |
| 7 | | |
| 155 | | |
| 553 | |
Total current Liabilities | |
| | | |
| 1,645 | | |
| 1,841 | |
Total liabilities | |
| | | |
| 2,191 | | |
| 2,461 | |
Issued capital and reserves attributable to owners of the parent | |
| | | |
| | | |
| | |
Share capital | |
| 8 | | |
| 1,098 | | |
| 1,098 | |
Share premium | |
| | | |
| 83,434 | | |
| 83,434 | |
Merger reserve | |
| | | |
| 53,003 | | |
| 53,003 | |
Warrant reserve | |
| | | |
| 720 | | |
| 720 | |
Accumulated deficit | |
| | | |
| (130,764 | ) | |
| (127,803 | ) |
Total equity | |
| | | |
| 7,491 | | |
| 10,452 | |
Total equity and liabilities | |
| | | |
| 9,682 | | |
| 12,913 | |
The accompanying notes
form part of these financial statements
Consolidated
Statements of Cash Flows
For the six
month period ended 30 June
| |
| | |
| | |
| |
| |
Note | | |
2022 unaudited £’000 | | |
2021 unaudited £’000 | |
Cash flows from operating activities | |
| | | |
| | | |
| | |
Loss for the period | |
| | | |
| (3,061 | ) | |
| (3,154 | ) |
Adjustments for: | |
| | | |
| | | |
| | |
Depreciation of property, plant and equipment | |
| | | |
| 96 | | |
| 117 | |
Depreciation of right of use asset | |
| | | |
| 86 | | |
| 62 | |
(Profit)/Loss on disposal of fixed assets | |
| | | |
| 2 | | |
| (42 | ) |
Finance income | |
| 2 | | |
| (404 | ) | |
| - | |
Finance expense | |
| 2 | | |
| 24 | | |
| 156 | |
Share-based payment expense/(credit) | |
| | | |
| 100 | | |
| 37 | |
Taxation | |
| 3 | | |
| (337 | ) | |
| (236 | ) |
Foreign exchange (gains)/losses | |
| | | |
| - | | |
| (3 | ) |
Cash flows from operating activities before changes in working capital | |
| | | |
| (3,494 | ) | |
| (3,063 | ) |
Increase in trade and other receivables | |
| | | |
| (224 | ) | |
| (859 | ) |
Increase in trade and other payables | |
| | | |
| 187 | | |
| 814 | |
Decrease in provisions | |
| | | |
| (8 | ) | |
| - | |
Cash used in operations | |
| | | |
| (3,539 | ) | |
| (3,108 | ) |
Taxes payments | |
| | | |
| - | | |
| - | |
Net cash used in operating activities | |
| | | |
| (3,539 | ) | |
| (3,108 | ) |
Consolidated
Statements of Cash Flows (continued)
For the six
month period ended 30 June
| |
Note | | |
2022 unaudited £’000 | | |
2021 unaudited £’000 | |
Investing activities | |
| | | |
| | | |
| | |
Purchases of property, plant and equipment | |
| | | |
| (33 | ) | |
| (189 | ) |
Proceeds from disposal of fixed assets | |
| | | |
| 9 | | |
| 42 | |
Interest received | |
| | | |
| 7 | | |
| - | |
Net cash used in investing activities | |
| | | |
| (17 | ) | |
| (147 | ) |
Financing activities | |
| | | |
| | | |
| | |
Interest paid | |
| | | |
| (5 | ) | |
| (11 | ) |
Amounts paid on lease liabilities | |
| | | |
| (73 | ) | |
| (47 | ) |
Repayment of Government loan | |
| | | |
| - | | |
| (104 | ) |
Share issues including warrants, net of costs | |
| 8 | | |
| - | | |
| 81 | |
Net cash used in financing activities | |
| | | |
| (78 | ) | |
| (81 | ) |
Net decrease in cash and cash equivalents | |
| | | |
| (3,634 | ) | |
| (3,336 | ) |
Cash and cash equivalents at beginning of period | |
| | | |
| 10,057 | | |
| 7,546 | |
Exchange (losses)/gains on cash and cash equivalents | |
| | | |
| - | | |
| (6 | ) |
Cash and cash equivalents at end of period | |
| | | |
| 6,423 | | |
| 4,204 | |
The accompanying notes
form part of these financial statements
Consolidated
Statements of Changes in Equity (unaudited)
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
Share capital £’000 | | |
Share premium £’000 | | |
Merger reserve £’000 | | |
Warrant reserve £’000 | | |
Foreign exchange reserve £’000 | | |
Accumulated deficit £’000 | | |
Total equity £’000 | |
At 1 January 2022 | |
| 1,098 | | |
| 83,434 | | |
| 53,003 | | |
| 720 | | |
| - | | |
| (127,803 | ) | |
| 10,452 | |
Loss for the period | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (3,061 | ) | |
| (3,061 | ) |
Total comprehensive loss | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (3,061 | ) | |
| (3,061 | ) |
Transactions with owners: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Exercise of warrants on 22 March 2022 | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Shares issued on 3 May 2022 | |
| - | | |
| | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
Share-based payment charge | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 100 | | |
| 100 | |
Total contribution by and distributions to owners | |
| - | | |
| | | |
| - | | |
| - | | |
| - | | |
| 100 | | |
| 100 | |
At 30 June 2022 | |
| 1,098 | | |
| 83,434 | | |
| 53,003 | | |
| 720 | | |
| - | | |
| (130,764 | ) | |
| 7,491 | |
| |
Share capital £’000 | | |
Share premium £’000 | | |
Merger reserve £’000 | | |
Warrant reserve £’000 | | |
Foreign exchange reserve £’000 | | |
Accumulated deficit £’000 | | |
Total equity £’000 | |
At 1 January 2021 | |
| 1,063 | | |
| 74,364 | | |
| 53,003 | | |
| 720 | | |
| - | | |
| (122,432 | ) | |
| 6,718 | |
Loss for the period | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (3,154 | ) | |
| (3,154 | ) |
Total comprehensive loss | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (3,154 | ) | |
| (3,154 | ) |
Transactions with owners: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Exercise of warrants on 16 February 2021 | |
| - | | |
| 161 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 161 | |
Costs associated with share issue on 16 February 2021 | |
| - | | |
| (10 | ) | |
| - | | |
| - | | |
| - | | |
| - | | |
| (10 | ) |
Share-based payment charge | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 37 | | |
| 37 | |
Total contribution by and distributions to owners | |
| - | | |
| 151 | | |
| - | | |
| - | | |
| - | | |
| 37 | | |
| 188 | |
At 30 June 2021 | |
| 1,063 | | |
| 74,515 | | |
| 53,003 | | |
| 720 | | |
| - | | |
| (125,549 | ) | |
| 3,752 | |
The accompanying notes
form part of these financial statements
Notes Forming
Part of The Consolidated Unaudited Interim Financial Information
For the six
month period ended 30 June 2022
The unaudited interim
consolidated financial information for the six months ended 30 June 2022 has been prepared following the recognition and measurement principles
of the International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRS) issued
by the International Accounting Standards Board (IASB), and as adopted by the UK and in accordance with International Accounting Standard
34 Interim Financial Reporting (‘IAS 34’). The interim consolidated financial information does not include all the information
and disclosures required in the annual financial information and should be read in conjunction with the audited financial statements for
the year ended 31 December 2021.
The condensed interim
financial information contained in this interim statement does not constitute statutory financial statements as defined by section 434(3)
of the Companies Act 2006. The condensed interim financial information has not been audited. The comparative financial information for
the six months ended 30 June 2021 and the year ended 31 December 2021 in this interim financial information does not constitute statutory
accounts for that year. The statutory accounts for 31 December 2021 have been delivered to the UK Registrar of Companies. The auditor’s
report on those accounts was unqualified and did not contain a statement under section 498(2) or 498(3) of the Companies Act 2006. The
auditor’s report did draw attention to a material uncertainty related to going concern and the requirement, as of the date of the
report, for additional funding to be raised by the Company by the first quarter of 2023.
Midatech Pharma’s
annual reports may be downloaded from the Company’s website at https://www.midatechpharma.com/investors/financial-reports-accounts
or a copy may be obtained from 1 Caspian Point, Caspian Way, Cardiff CF10 4DQ.
Going Concern
Midatech has
experienced net losses and significant cash outflows from cash used in operating activities over the past years as it has developed
its portfolio. As at 30 June 2022 the Group had total equity of £7.49m 7,491
(£10.45m at 31 December 2021),10,452
it incurred a net loss after tax for the six months to 30 June 2022 of £3.06m 3,061
(1H 21: £3.15m) 3,154
and used cash in operating activities of £3.54m 3,539
(1H21: £3.11m) 3,108
for the same period. As at 30 June 2022, the Company had cash and cash equivalents of £6.42m 6,423.
The Group’s
future viability is dependent on its ability to raise cash from financing activities to finance its development plans until commercialisation,
generate cash from operating activities and to successfully obtain regulatory approval to allow marketing of its development products.
The group’s failure to raise capital as and when needed could have a negative impact on its financial condition and ability to pursue
its business strategies.
The Directors have
prepared cash flow forecasts and considered the cash flow requirement for the Company for the next three years including the period 12
months from the date of approval of this interim financial information. These forecasts show that further financing will be required during
the first quarter of 2023 assuming, inter alia, that certain developments programs and other operating activities continue as currently
planned. This requirement for additional financing in the short term represents a material uncertainty that may cast doubt upon the Group
and Parent Company’s ability to continue as a going concern.
The Directors are
evaluating a number of near-term funding options potentially available to the Group, including fundraising and the partnering of assets
and technologies of the Company. After considering the uncertainties, the Directors consider it is appropriate to continue to adopt the
going concern basis in preparing these financial statements.
| 2. | Finance income and expense |
The gain on the
equity settled derivative financial liability in 2022 arose as a result of the reduction in the Midatech share price.
| |
Six months ended 30 June 2022 unaudited £’000 | | |
Six months ended 30 June 2021 unaudited £’000 | |
Finance expense | |
| | | |
| | |
Interest expense on lease liabilities | |
| 24 | | |
| 13 | |
Other loans | |
| - | | |
| 9 | |
Loss on equity settled derivative financial liability | |
| - | | |
| 134 | |
Total finance expense | |
| 24 | | |
| 156 | |
The loss on the
equity settled derivative financial liability in 2021 arose as a result of the increase in the Midatech share price.
Income tax is recognised
or provided at amounts expected to be recovered or to be paid using the tax rates and tax laws that have been enacted or substantively
enacted at the Group Statement of Financial Position date. Research and development tax credits are recognised on an accruals basis and
are included as an income tax credit under current assets. The research and development tax credit recognised is based on management’s
estimate of the expected tax claim for the period and is recorded within taxation under the Small and Medium-sized Enterprise Scheme.
Basic loss per
share amounts are calculated by dividing the net loss for the period from continuing operations, attributable to ordinary equity holders
of the parent company, by the weighted average number of ordinary shares outstanding during the period. As the Group made a loss for the
period the diluted loss per share is equal to the basic loss per share.
The Group has made
a loss in the current and previous years presented, and therefore the options and warrants are anti-dilutive. As a result, diluted earnings
per share is presented on the same basis for all periods shown.
Book values approximate
to fair value at 30 June 2022 and 31 December 2021.
Obligations under
finance leases are secured by a fixed charge over the fixed assets to which they relate.
The provision relates
to the ‘making good’ clause on the Cardiff office which was vacated during the fourth quarter of 2021. Management reached
agreement with the landlord; this was settled in July 2022. The provision as at 31 December 2021 was managements best estimate.
| 7. | Derivative financial liability – current |
Schedule of derivative financial liability | |
As at 30 June 2022 unaudited £’000 | | |
As at 31 December 2021 £’000 | |
At 1 January | |
| 553 | | |
| 1,559 | |
Transfer to share premium on exercise of warrants | |
| - | | |
| (70 | ) |
Gain recognised in finance income within the consolidated statement of comprehensive income | |
| (398 | ) | |
| (936 | ) |
| |
| 155 | | |
| 553 | |
Equity settled
derivative financial liability is a liability that is not to be settled for cash.
On 16 February
2021 306,815 pre-existing warrants were exercised at $0.41. The gross proceeds received by the company was $126,561. The fair value of
the warrants on the date of exercise was £70,339.
May 2020
warrants
In May 2020 the
Company issued 9,545,456 warrants in the ordinary share capital of the Company as part of a registered direct offering in the US. The
number of ordinary shares to be issued when exercised is fixed, however the exercise price is denominated in US Dollars being different
to the functional currency of the Company. Therefore, the warrants are classified as equity settled derivative financial liabilities recognised
at fair value through the profit and loss account (‘FVTPL’). The financial liability is valued using the Monte Carlo model.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on re-measurement recognised in profit or loss.
The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the ‘finance
income’ or ‘finance expense’ lines item in the income statement. A key input in the valuation of the instrument is the
Company share price. Exercise price per ADR is $2.05 and $2.0625.
October 2019
warrants
In October 2019
the Company issued 3,150,000 warrants in the ordinary share capital of the Company as part of a registered direct offering in the US.
The number of ordinary shares to be issued when exercised is fixed, however the exercise price is denominated in US Dollars. The warrants
are classified equity settled derivative financial liabilities and accounted for in the same way as those issued in May 2020. The financial
liability is valued using the Monte Carlo model. The exercise price per ADR is $6.25.
DARA warrants
and share options
The Group also
assumed fully vested warrants and share options on the acquisition of DARA Biosciences, Inc. (which took place in 2015). The number of
ordinary shares to be issued when exercised is fixed, however the exercise prices are denominated in US Dollars. The warrants are classified
equity settled derivative financial liabilities and accounted for in the same way as those detailed above. The financial liability is
valued using the Black-Scholes option pricing model. The exercise price of the warrants and options is $61.03 and $95.17 respectively.
The following table
details the outstanding warrants as at 30 June 2022, 31 December 2021 and also the movement in the period:
Schedule of warrants outstanding |
At 1
January
2021 |
Lapsed |
Exercised |
At 31
December
2021 |
Lapsed |
Exercised |
At 30 June
2022 |
May 2020 grant |
7,045,456 |
– |
(306,815) |
6,738,641 |
– |
– |
6,738,641 |
October 2019 grant |
3,150,000 |
– |
– |
3,150,000 |
– |
– |
3,150,000 |
DARA Warrants |
4,624 |
(544) |
– |
4,080 |
– |
– |
4,080 |
DARA Options |
2,835 |
– |
– |
2,835 |
(13) |
– |
2,822 |
Fair value hierarchy
The Group uses
the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: quoted
(unadjusted) prices in active markets for identical assets and liabilities;
Level 2: other
techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly;
and
Level 3: techniques
which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.
The fair value
of the Group’s derivative financial liability is measured at fair value on a recurring basis. The following table gives information
about how the fair value of this financial liability is determined.
Schedule of consolidated financial assets and liabilities at fair value |
|
|
|
|
|
|
|
|
|
|
|
|
Financial
liabilities |
|
Fair value as
at 30 June
2022 |
|
Fair value as
at 31
December
2021 |
|
Fair value
hierarchy |
|
Valuation
technique(s)
and key input(s) |
|
Significant unobservable
input(s)
|
|
Relationship of
unobservable
inputs to fair value
|
Equity settled financial derivative liability – May 2020 Warrants |
|
£146,000 |
|
£467,000 |
|
Level 3 |
|
Monte Carlo simulation model |
|
Volatility rate of 105% determined using historical volatility of comparable companies. |
|
The higher the volatility the higher the fair value. |
|
|
|
|
|
|
|
|
|
|
Expected life between a range of 0.1 and 3.39 years determined using the remaining life of the share options. |
|
The shorter the expected life the lower the fair value. |
|
|
|
|
|
|
|
|
|
|
Risk-free rate between a range of 1.68% determined using the expected life assumptions. |
|
The higher the risk-free rate
the higher the fair value. |
Equity settled financial derivative liability – October 2019 Warrants |
|
£9,000 |
|
£86,000 |
|
Level 3 |
|
Monte Carlo simulation model |
|
Volatility rate of 108.5% determined using historical volatility of comparable companies. |
|
The higher the volatility the higher the fair value. |
|
|
|
|
|
|
|
|
|
|
Expected life between a range of 0.1 and 3.00 years determined using the remaining life of the share options. |
|
The shorter the expected life the lower the fair value. |
|
|
|
|
|
|
|
|
|
|
Risk-free rate between a range of 1.68% determined using the expected life assumptions. |
|
The higher the risk-free rate
the higher the fair value. |
Equity settled financial derivative liability – DARA Bioscience warrants and options |
|
– |
|
– |
|
Level 3 |
|
Black-Scholes option pricing model |
|
Volatility rate of 108.5%% determined using historical volatility of comparable companies. |
|
The higher the volatility the higher the fair value. |
|
|
|
|
|
|
|
|
|
Expected life between a range of 0.1 and 0.4 years determined using the remaining life of the share options |
|
The shorter the expected life
the lower the fair value. |
|
|
|
|
|
|
|
|
|
|
Risk-free rate between a range of 1.68% determined using the expected life assumptions. |
|
The higher the risk-free rate
the higher the fair value. |
Total |
|
£155,000 |
|
£553,000 |
|
|
|
|
|
|
|
|
Changing the unobservable
risk free rate input to the valuation model by 10% higher while all other variables were held constant, would not impact the carrying
amount of shares (2021: nil).
There were no transfers
between Level 1 and 2 in the period.
The financial liability
measured at fair value on Level 3 fair value measurement represents consideration relating to warrants issued in May 2020 and October
2019 as part of Registered Direct offerings and also a business combination.
Schedule of detailed information about share capital | |
| | |
| | |
| | |
| |
Authorised, allotted and fully paid – classified as equity | |
As at 30 June 2022 unaudited Number | | |
As at 30 June 2022 unaudited £ | | |
As at 31 December 2021 Number | | |
As at 31 December 2021 £ | |
Ordinary shares of £0.001 each | |
| 98,493,413 | | |
| 98,493 | | |
| 98,468,387 | | |
| 98,468 | |
Deferred shares of £1 each | |
| 1,000,001 | | |
| 1,000,001 | | |
| 1,000,001 | | |
| 1,000,001 | |
Total | |
| | | |
| 1,098,494 | | |
| | | |
| 1,098,469 | |
Ordinary and deferred
shares were recorded as equity.
Schedule Of Ordinary and Deferred Shares | | |
| |
| | |
| | |
| | |
| |
2022 | | |
| |
Ordinary Shares Number | | |
Deferred Shares Number | | |
Share Price £ | | |
Total consideration £’000 | |
At 1 January 2022 | | |
| |
| 98,468,387 | | |
| 1,000,001 | | |
| | | |
| 106,517 | |
22 March 2022 | | |
Exercise of warrants | |
| 26 | | |
| – | | |
| 10.000 | | |
| – | |
3 May 2022 | | |
Share issue to SIPP trustee* | |
| 25,000 | | |
| – | | |
| 0.001 | | |
| – | |
At 30 June 2022 (unaudited) | | |
| |
| 98,493,413 | | |
| 1,000,001 | | |
| | | |
| 106,517 | |
| | |
| |
| | | |
| | | |
| | | |
| | |
2021 | | |
| |
| | | |
| | | |
| | | |
| | |
At 1 January 2021 | | |
| |
| 63,073,852 | | |
| 1,000,001 | | |
| | | |
| 96,426 | |
19 February 2021 | | |
Exercise of warrants | |
| 306,815 | | |
| – | | |
| 0.298 | | |
| 91 | |
6 July 2021 | | |
Placing | |
| 35,087,720 | | |
| – | | |
| 0.285 | | |
| 10,000 | |
At 31 December 2021 | | |
| |
| 98,468,387 | | |
| 1,000,001 | | |
| | | |
| 106,517 | |
* |
Share issued to Midatech Pharma Plc employee benefit trust |
| 9. | Related party transaction |
The Directors consider
there to be no related party transactions during the periods reported other than Directors Remuneration.
| 10. | Contingent liabilities |
The Group had no contingent
liabilities as at 30 June 2022 (30 June 2021: Nil).
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