TIDMAREC
RNS Number : 6853M
Arecor Therapeutics PLC
23 September 2021
Arecor Therapeutics plc
("Arecor", the "Company" or the "Group")
INTERIM RESULTS FOR THE SIX MONTHSED 30 JUNE 2021
Positive results from Phase I clinical trial for AT278
ultra-concentrated ultra-rapid acting insulin candidate for
diabetes
Three new partnership agreements
Successful GBP20 million AIM IPO
Cambridge, UK, 23 September 2021: Arecor Therapeutics plc (AIM:
AREC), a globally focused biopharmaceutical company advancing
today's therapies to enable healthier lives, today announces its
interim results for the six months ended 30 June 2021.
Sarah Howell, Chief Executive Officer of Arecor, said: "We have
made tremendous progress across the business during the first six
months of the year with our successful IPO on AIM and very
successful Phase I clinical results for AT278 being key highlights.
Earlier this week, we announced positive results from the Phase I
clinical trial for our ultra-concentrated ultra-rapid acting
insulin, AT278, the second product in our diabetes franchise. This
follows the positive results of the Phase I clinical trial for
AT247, our ultra-rapid acting insulin, and positions Arecor with a
combination of rapid concentrated and ultra-rapid insulins to
advance diabetes treatment. In addition, our new partnership
agreements with Lilly and Par, and most recently with Intas
Pharmaceuticals, further demonstrate the strength and breadth of
our Arestat(TM) platform. With the GBP20 million raised, we are now
well-placed to advance our proprietary pipeline with further
clinical trials for our lead products planned in the coming year,
including the expected completion of the US Phase I clinical trial
for AT247."
Operational Highlights (including post-period events):
-- Positive results from Phase I clinical trial for AT278, an
ultra-concentrated ultra-rapid acting insulin, demonstrating
significantly early accelerated PK/PD profile compared to market
leading comparator, NovoRapid(R)
-- Positive Phase I clinical data of AT247 presented at ATTD,
the leading international diabetes conference
-- Received FDA clearance of IND application for AT247, an
ultra-rapid acting insulin, paving the way for the US clinical
trial
-- Signed three new partnership agreements with Eli Lilly and
Company ('Lilly'), Par Sterile Products ('Par') and Intas
Pharmaceuticals ('Intas')
-- Awarded GBP2.8 million Innovate UK grant to support Phase II development of AT247
-- Grant of US patent as part of a global patent portfolio
underpinning the Arestat(TM) platform
Financial Highlights:
-- Successful IPO on AIM, raising GBP20 million
-- Revenue of GBP0.5 million (H1 2020: GBP0.8 million, including
GBP0.3 million milestone payment)
-- Investment in R&D of GBP1.9 million (H1 2020: GBP1.6 million)
-- Loss after tax for the period of GBP3.1 million (H1 2020: GBP1.0 million)
-- Cash and cash equivalents of GBP22.1 million at 30 June 2021 (30 June 2020: GBP2.5 million)
-- Debt free at 30 June 2021, following the conversion of GBP4.4
million loan notes into new ordinary shares, immediately prior to
the IPO
Analyst conference call today
Dr Sarah Howell, Chief Executive Officer, and Susan Lowther,
Chief Financial Officer, will host a meeting and webcast for
analysts and investors at 11.00 am UK time today. A copy of the
interim results presentation will be released later this morning on
the Company website at www.arecor.com. Please contact Consilium
Strategic Communications for details on arecor@consilium-comms.com
/ +44 203709 5700.
For more information, please contact:
Arecor Therapeutics plc www.arecor.com
Dr Sarah Howell, Chief Executive Officer Tel: +44 (0) 1223 426060
Email: info@arecor.com
Susan Lowther, Chief Financial Officer Tel: +44 (0) 1223 426060
Email: info@arecor.com
Mo Noonan, Communications Tel: +44 (0) 7876 444977
Email: mo.noonan@arecor.com
Panmure Gordon (UK) Limited (NOMAD and
Broker)
Freddy Crossley, Emma Earl (Corporate
Finance)
Rupert Dearden (Corporate Broking) Tel: +44 (0) 20 7886 2500
Consilium Strategic Communications
Chris Gardner, David Daley, Angela Gray Tel: +44 (0) 20 3709 5700
Email: arecor@consilium-comms.com
Notes to Editors
About Arecor
Arecor Therapeutics plc is a globally focused biopharmaceutical
company transforming patient care by bringing innovative medicines
to market through the enhancement of existing therapeutic products.
By applying our innovative proprietary formulation technology
platform, Arestat(TM), we are developing an internal portfolio of
proprietary products in diabetes and other indications, as well as
working with leading pharmaceutical and biotechnology companies to
deliver enhanced formulations of their therapeutic products. The
Arestat(TM) platform is supported by an extensive patent
portfolio.
For further details please see our website, www.arecor.com
This announcement contains inside information for the purposes
of the retained UK version of the EU Market Abuse Regulation (EU)
596/2014 ("UK MAR").
Corporate Overview
Arecor has continued to make strong progress in the first six
months of the financial year including its Admission to AIM on 3rd
June 2021 and associated successful placing which raised GBP20
million from new and existing shareholders.
During the period and in the lead up to these results, our
proprietary portfolio has made great advancements, with AT247, our
ultra-rapid insulin, presented at key conferences, receipt of a
substantial grant toward its Phase II development, and importantly,
U.S. Food and Drug Administration (FDA) clearance of the IND for a
Phase I clinical trial in the US. In addition, the positive results
of our first Phase I clinical trial for AT278, our
ultra-concentrated ultra-rapid insulin, further build on and
validate our diabetes franchise. These results are clinically
significant and signal AT278's potential to disrupt the market for
insulin treatment in people with diabetes. With no concentrated
(>200 U/mL) rapid acting insulin products currently on the
market, not only does AT278 have the potential to be the first such
product available to patients, it would be a critical enabler in
the development of next generation miniaturised insulin delivery
systems. There remains an urgent need for new insulin products that
can deliver improved patient outcomes. Progress in our portfolio
shows the potential of our enhanced therapeutics to deliver
significant clinical benefits to patients.
We have also continued to strengthen our portfolio of products
partnered with major pharmaceutical companies, demonstrating how
our formulation technology can bring enhanced products to market
for partners that simplify care and improve medicine
management.
Operational highlights (including post period end)
In March, we were awarded a GBP2.8 million grant from Innovate
UK to support the Phase II development of AT247, Arecor's
ultra-rapid acting insulin for the treatment of diabetes which has
been developed using our ground-breaking Arestat(TM) platform.
In June, we presented data at the leading international diabetes
conference ATTD (Advanced Technologies & Treatments for
Diabetes) following the successful results of our Phase I study of
AT247 ultra-rapid acting insulin, in which AT247 demonstrated
faster insulin absorption with an accelerated Pharmacokinetic (PK)
and Pharmacodynamic (PD) profile compared to NovoRapid(R) and
Fiasp(R).
In September, we received clearance from the FDA of our
Investigational New Drug (IND) application for AT247 allowing a
clinical trial to commence in the US. The IND supports a Phase I
clinical trial in approximately 24 participants with type I
diabetes, to further explore the clinical benefits of AT247. In a
recently published European Phase I clinical study, AT247 exhibited
an earlier insulin appearance, exposure, and offset, with
corresponding enhanced early glucose-lowering effect compared with
NovoRapid(R) and Fiasp(R). This new US clinical trial is expected
to complete in 2022.
In September, we announced positive results from a Phase I
clinical trial of our second product in the diabetes franchise,
AT278, an ultra-concentrated ultra-rapid acting insulin, which
demonstrated superiority over current market leading comparator,
NovoRapid(R). In the double-blind, randomised, two-way cross over
Phase I clinical study in 38 participants with Type I diabetes, the
pharmacokinetics (PK), pharmacodynamics (PD) and safety of a single
subcutaneous (SC) dose of 0.3 U/Kg AT278 (500 U/mL) were compared
with those of a single SC dose of 0.3 U/Kg NovoRapid(R) (100 U/mL),
a currently available gold standard rapid acting insulin treatment,
in a euglycemic clamp setting. The trial met the primary endpoint
of non-inferiority with respect to glucose lowering action as
compared with NovoRapid(R) (100 U/mL rapid acting insulin). In
addition to meeting this primary endpoint, AT278 also demonstrated
a significantly accelerated early PK/PD profile compared to
NovoRapid(R). No safety signals were detected. AT278 has the
potential to enable more effective management of blood glucose
levels to the increasing number of people with diabetes with high
daily insulin requirements (>200 units/day) whilst maintaining
the convenience and compliance benefits of being able to deliver
their required insulin doses in a lower injection volume via a
single injection. A truly rapid acting concentrated insulin is a
critical enabler in the development of the next generation
miniaturised insulin delivery devices.
Partnership agreements
During the period, and in the lead up to the financial results,
we added three new agreements to our partner portfolio of global
pharmaceutical companies including agreements with Lilly and Par in
the period and an agreement with Intas in September. In each of
these collaborations we apply our Arestat(TM) technology, which
enhances the properties of therapeutic proteins, peptides and
vaccines, to deliver superior reformulations of our partners'
proprietary products.
Our partners fully fund the development work and have the option
to acquire rights to the new proprietary formulation and associated
Intellectual Property under a technology licensing model, with
associated milestone and royalty payments.
In May, we signed an agreement to develop a differentiated,
thermostable formulation of one of Lilly's global, proprietary
products intended for self-administration. The thermostable
formulation would allow greater convenience of use of the product
by patients, whilst maintaining its integrity.
In June, we signed an agreement to develop a differentiated,
stable, single dose, Ready-to-Use ("RTU") formulation of one of
Par's products for intravenous administration. The new product
formulation supports safe medication practices and operational
efficiency by eliminating the need for reconstitution.
In September, we signed an agreement with Intas to develop a new
formulation to improve its usability for the patient compared to
current marketed products and in particular facilitate home use
outside of a healthcare environment. Upon successful completion of
development, Accord Healthcare, an affiliate of Intas, will promote
this product across all major markets.
Intellectual Property portfolio
In May, we were granted a patent by the United States Patent and
Trademark Office of U.S., Utility Patent No. 10,925,965 B2, that
contributes to the Group' global patent portfolio underpinning our
Arestat(TM) platform. This US patent claims proprietary formulation
technology aimed at enabling stabilised multi-dose protein products
that are desirable in the market but are often challenging to
achieve.
The US is an important international market for
biopharmaceuticals and one where Arecor has established commercial
and development partnerships.
Finance
Revenue recognised in the period of GBP0.5 million was derived
from formulation development projects and was in line with
expectations. In the prior period, revenue recognised of GBP0.8
million included a GBP0.3 million milestone from an existing
license agreement.
Other operating income of GBP51,000 (H1 2020: GBP0.3 million)
reflected start-up activities relating to a GBP2.8 million grant,
which was awarded by Innovate UK in March 2021. Other operating
income of GBP0.3 million in the prior period, was derived from two
Innovate grant projects which ended during 2020.
Investment in R&D increased to GBP1.9 million (H1 2020:
GBP1.6 million) and included Phase I clinical trial costs for
AT278, an ultra-concentrated ultra-rapid acting insulin. Other
administrative expenses increased to GBP1.4 million (H1 2020:
GBP0.7 million) which reflected the placing costs of GBP0.5 million
incurred in the period.
The total loss after tax for the period was GBP3.1 million (H1
2020: GBP1.0 million).
Following the admission to AIM on 3(rd) June, the Group closed
the first half of the financial year with a strong cash balance of
GBP22.1 million, compared to GBP2.5 million at 30 June 2020.
Summary and Outlook
"We have made tremendous progress across the business during the
first six months of the year with key highlights including our
successful IPO on AIM and, earlier this week, positive results from
the Phase I clinical trial for our ultra-concentrated ultra-rapid
acting insulin, AT278, the second product in our diabetes
franchise. This follows the positive results of the Phase I
clinical trial for AT247, our ultra-rapid insulin for diabetes, and
positions Arecor with a combination of rapid concentrated and
ultra-rapid insulins to advance diabetes treatment. In addition, we
have secured three new technology partnership collaborations with
Lilly, Par and Intas, further demonstrating the strength and
breadth of our Arestat(TM) technology platform. With the GBP20
million raised, we are now well-placed to rapidly advance our
proprietary pipeline with further clinical trials for our lead
products planned in the coming year, including the expected
completion of a US Phase I clinical trial for AT247."
Arecor Therapeutics plc
INTERIM RESULTS FOR THE SIX MONTHSED 30 JUNE 2021
Consolidated Statement of Comprehensive Income
Notes Period ended Period Year ended
30 June 2021 ended 30 31 December
June 2020 2020
Unaudited Unaudited Audited
GBP GBP GBP
Revenue 3 460,021 817,043 1,697,593
Other operating income 51,341 342,608 452,456
Research and development (1,892,459) (1,620,575) (3,936,557)
Sales, General and Administrative 4 (1,440,899) (721,449) (1,323,692)
Share based compensation 5 (134,340) (158,911) (317,822)
Operating loss (2,956,336) (1,341,284) (3,428,022)
Finance income 4,556 3,548 2,976
Finance expense 6 (500,278) (6,249) (87,289)
Loss before tax (3,452,058) (1,343,985) (3,512,335)
Taxation 346,511 297,156 759,968
Loss for the period (3,105,547) (1,046,829) (2,752,367)
Basic and diluted loss per
share (GBP) 7 (0.17) (0.06) (0.17)
There were no other items of comprehensive income during the
periods under review.
Arecor Therapeutics plc
INTERIM RESULTS FOR THE SIX MONTHSED 30 JUNE 2021
Consolidated Statement of Financial Position
Notes 30 June 2021 30 June 2020 31 December
2020
Unaudited Unaudited Audited
GBP GBP GBP
Assets
Non-current assets
Intangible Assets 34,030 42,363 38,196
Property, Plant and Equipment 361,000 371,089 375,346
Other receivables 48,000 48,000 48,000
443,030 461,452 461,542
Current assets
Trade and other receivables 612,003 227,812 165,536
Current tax receivable 346,511 295,445 758,257
Cash and cash equivalents 22,149,496 2,476,731 2,898,460
------------ ------------ ------------
23,108,010 2,999,988 3,822,253
Current liabilities
Trade and other payables (1,996,533) (864,432) (1,303,118)
Lease liabilities (124,813) (62,622) (105,215)
(2,121,346) (927,054) (1,408,333)
Non-current liabilities
Lease liabilities (168,314) (213,992) (191,903)
Borrowings 9 - - (1,698,229)
Derivative financial instruments - - (211,543)
------------ ------------ ------------
(168,314) (213,992) (2,101,675)
Net Assets 21,261,380 2,320,394 773,787
============ ============ ============
Equity
Share capital 10 276,835 27,135 27,155
Share premium 10 23,348,020 11,593,688 11,593,688
Other reserves 11,454,787 - -
Share-based compensation reserve 297,359 885,920 1,044,831
Retained earnings (14,115,621) (10,186,349) (11,891,887)
------------ ------------ ------------
Shareholder's funds 21,261,380 2,320,394 773,787
Arecor Therapeutics plc
INTERIM RESULTS FOR THE SIX MONTHSED 30 JUNE 2021
Consolidated Statement of Changes in Equity
Share-based
Share Share Other compensation Retained Total
capital premium reserves reserve earnings equity
GBP GBP GBP GBP GBP GBP
For the period ended
30 June 2021
Balance at 1 January
2021 27,155 11,593,688 - 1,044,831 (11,891,887) 773,787
Loss for the period -- - - - (3,105,547) (3,105,547)
- - - -
--------------------------- ---------- ------------- ----------- -------------- ------------- ------------
Total comprehensive
loss for the period - - - - (3,105,547) (3,105,547)
Contributions by and
distributions to owners:
Shares issued by Arecor
Limited 625 - - - - 625
Share-based compensation:
reversal of Arecor
Limited charge - - - (881,813) 881,813 -
Capitalisation of
shares 138,901 (138,901) - - - -
Incorporation of Arecor
Therapeutics Limited - (11,454,787) 11,454,787 - - -
Share-based compensation: - - - 134,340 - 134,340
Arecor Therapeutics
plc charge
Shares issued by Arecor
Therapeutics plc 110,154 24,784,798 - - - 24,894,952
Share issue expense - (1,436,778) - - - (1,436,778)
Total contributions
by and distributions
to owners 249,680 11,754,332 11,454,787 (747,473) 881,813 23,593,139
---------- -------------
Balance at 30 June
2021 (Unaudited) 276,835 23,348,020 11,454,787 297,359 (14,115,621) 21,261,380
--------------------------- -------------- ------------- ------------
For the period ended
30 June 2020
Balance at 1 January
2020 26,732 11,593,688 - 727,009 (9,139,520) 3,207,909
Loss for the period - - - - (1,046,829) (1,046,829)
- - - - -
--------------------------- ---------- ------------- ----------- -------------- ------------- ------------
Total comprehensive
loss for the period - - - - (1,046,829) (1,046,829)
Contributions by and
distributions to owners:
Issue of shares 403 - - - - 403
Share-based compensation - - - 158,911 - 158,911
--------------------------- ---------- ------------- ----------- -------------- ------------- ------------
Total contributions
by and distributions
to owners 403 - - 158,911 - 159,314
Balance at 30 June
2020 (Unaudited) 27,135 11,593,688 - 885,920 (10,186,349) 2,320,394
--------------------------- -------------- ------------- ------------
For the year ended
31 December 2020
Balance at 1 January
2020 26,732 11,593,688 - 727,009 (9,139,520) 3,207,909
Loss for the year - - - - (2,752,367) (2,752,367)
- - - - - -
Total comprehensive
loss for the year - - - - (2,752,367) (2,752,367)
Contributions by and
distributions to owners:
Issue of shares 423 - - - - 423
Share-based compensation - - - 317,822 - 317,822
--------------------------- ---------- ------------- ----------- -------------- ------------- ------------
Total contributions
by and distributions
to owners 423 - - 317,822 - 318,245
--------------------------- ---------- ------------- ----------- -------------- ------------- ------------
Balance at 31 December
2020 (Audited) 27,155 11,593,688 - 1,044,831 (11,891,887) 773,787
=========================== ========== ============= =========== ============== ============= ============
Arecor Therapeutics plc
INTERIM RESULTS FOR THE SIX MONTHSED 30 JUNE 2021
Consolidated Statement of Cash Flows
Period ended 30 June 2021 Period ended 30 June 2020 Year ended 31 December 2020
Unaudited Unaudited Audited
GBP GBP GBP
Cash flow from operating
activities
Loss before tax (3,452,058) (1,343,985) (3,512,335)
Finance income (4,556) (3,548) (2,976)
Finance costs 500,278 6,249 87,289
Share-based compensation 134,340 158,911 317,822
Depreciation 78,054 108,645 160,292
Amortisation 4,167 4,167 8,334
Foreign exchange movements (2,711) 43,371 42,944
-------------------------- -------------------------- ----------------------------
(2,742,486) (1,026,190) (2,898,630)
Changes in working capital
(Increase)/ decrease in trade
and other receivables (446,467) 321,446 383,722
Increase/(decrease) in trade and
other payables 693,415 (75,133) 363,553
Tax received 758,257 294,713 294,713
-------------------------- -------------------------- ----------------------------
1,005,205 541,026 1,041,988
Net cash used in operating
activities (1,737,281) (485,164) (1,856,642)
Cash flow from investing
activities
Purchase of property, plant &
equipment (14,510) (44,307) (52,295)
Interest received 258 3,548 2,976
Net cash used in investing
activities (14,252) (40,759) (49,319)
Cash flow from financing
activities
Issue of ordinary shares 20,000,626 403 423
Share issue costs (1,436,778) - -
Shareholder loans 2,500,000 - 1,905,474
Transaction costs on loan
received - - (65,006)
Capital payments on lease
liabilities (53,190) (21,813) (49,225)
Interest paid on lease
liabilities (10,800) (6,249) (17,985)
-
-------------------------- -------------------------- ----------------------------
Net cash generated by / (used
in) financing activities 20,999,858 (27,659) 1,773,681
Net increase / (decrease) in
cash and cash equivalents 19,248,325 (553,582) (132,280)
Cash and cash equivalents at
beginning of period or
financial year 2,898,460 3,073,684 3,073,684
Exchange rate movement 2,711 (43,371) (42,944)
-------------------------- -------------------------- ----------------------------
Cash and cash equivalents at end
of period or financial year 22,149,496 2,476,732 2,898,460
Arecor Therapeutics plc
INTERIM RESULTS FOR THE SIX MONTHSED 30 JUNE 2021
Notes to the financial information
COMPANY INFORMATION
Arecor Therapeutics plc ("Arecor" or "the Company") is a public
limited company incorporated and registered in England and Wales on
13 April 2021 at Chesterford Research Park, Little Chesterford,
Saffron Walden, CB10 1XL with registered number 13331147.
The business of the Company and its principal activity is to act
as a holding company. The Group's activities and operations are
carried on by Arecor Limited, the Company's wholly owned
subsidiary.
On 24 May 2021 Arecor Limited undertook a bonus issue of shares
and share options on the basis of five shares for every one share
or share option held.
On 24 May 2021 all shareholders and convertible loan note
holders in Arecor Limited and the Company entered into a Share and
CLN Exchange Agreement, pursuant to which the Company acquired the
entire issued share capital and convertible loan notes in Arecor
Limited.
On 24 May 2021 the Company was re-registered under section 92 of
the Companies Act as a public limited company.
On 2 June 2021, pursuant to a Shareholders' resolution passed on
26 May 2021 and class consents:
a) the A ordinary shares, A1 ordinary shares and B ordinary
shares were converted into ordinary shares;
b) the ordinary shares were converted into C ordinary shares; and
c) the Company renamed the C ordinary shares into ordinary shares
On 3 June 2021 the Company's shares were admitted to trading on
AIM, a market operated by The London Stock Exchange.
1. BASIS OF PREPARATION
The financial statements for the period ended 30 June 2021
incorporate the results of Arecor Therapeutics plc and Arecor
Limited. The Group's consolidated interim financial information for
the period to 30 June 2021 are unaudited. They were approved by the
board of directors on 20th September 2021.
International Financial Reporting Standards as adopted for use
in the European Union ("IFRS") is subject to amendment and
interpretation by the International Accounting Standards Board
("IASB") and the IFRS Interpretations Committee and there is an
on-going process of review and endorsement by the European
Commission. The financial information has been prepared on the
basis of IFRS that the Directors expect to be applicable at 31
December 2021.
The consolidated statements have been prepared and are presented
as a continuation of the financial statements of Arecor Limited,
adjusted to reflect the share capital of the new parent. The
results presented for the comparative periods relate to Arecor
Limited.
The financial information contained in these interim financial
statements does not constitute statutory accounts as defined in
section 434 of the Companies Act 2006. These interim financial
statements do not include all of the information and disclosures
required in the annual financial statements. The financial
information for the six months ended 30 June 2021 and 30 June 2020
is unaudited.
Financial statements for year ended 31 December 2020 have been
filed with the Registrar of Companies for Arecor Limited (Company
registration number 06256698). The audit report for this period,
previously filed, was unmodified.
Since the registration of Arecor Therapeutics plc in April 2021,
audited financial statements have yet to be filed with the
Registrar of Companies.
All intra-Group transactions, balances, income and expenses have
been eliminated in full on consolidation.
The financial information is presented in Sterling, which is the
functional currency of the Group and has been rounded to the
nearest GBP.
2. PRINCIPAL ACCOUNTING POLICIES
The interim financial statements have been prepared in
accordance with the accounting policies set out in the audited
financial statements for the period ended 31 December 2020 and
IFRS.
a) Going Concern
The Directors are pleased to present the financial information
on a going concern basis. Having carefully considered the cash
position of GBP22.1 million at the 30 June 2021 reporting date and
the cashflow forecast for the 12 months from the date of approval
of the interim results, the Directors are confident that the Group
has sufficient cash to make the necessary investments to grow in
line with its strategic vision and to meet the liabilities of the
business as they fall due.
The current COVID-19 pandemic has the potential to materially
impact the ability of the Group to execute its strategy and to
negatively impact the Group's cashflow forecast. At the date of
approval of the interim results, the Company's operations have not
been significantly impacted by the crisis.
The Directors are confident that at this time of economic
uncertainty, the Group has a stable cash position and all necessary
actions have been taken to protect the business from the impact of
the COVID-19 pandemic.
b) Revenue
Revenue is measured based on the consideration that the Company
expects to be entitled to in exchange for transferring promised
goods and services. There are two main revenue types: the first
arises from the performance of formulation development studies and
the second from granting of licences.
Formulation development
Revenue from the performance of formulation development projects
is recognised as the performance obligation defined in a contract
is performed over time. The progress of the work is dictated by
project phases, hence time passed best indicates the stage of
completion of a service performed over time, over the life of each
element of the contract. The Company's performance does not create
an asset with an alternative use to the Company and the Company has
an enforceable right to payment for performance completed to
date.
Transaction prices are determined based on prices agreed in the
contracts, each of which is negotiated individually with the
customer. This includes the allocation of the whole contract price
between each distinct performance obligation within each
contract.
The types of contracts entered into by the Company do not
include any obligations for returns or refunds nor are warranties
offered relating to the work performed.
None of the practical expedients in IFRS 15 have been
applied.
In general, revenue is billed in advance of performance of work
for each phase of a contract, meaning most arrangements give rise
to contract liabilities as each invoice is raised, and these
liabilities are fully released before the next billing point.
Licence agreements
Revenue from licence agreements where it has been assessed as
giving the right to use the underlying intellectual property, is
recognised at the granting of the licence.
Where agreements combine the grant of a licence and the
provision of services the consideration is allocated between the
two elements based on the identifiable elements of the separate
performance obligations, being the licence grant and the distinct
obligations included in the agreement.
Where licences include variable consideration, typically in the
form of milestone payments, revenue is recognised when a milestone
is achieved.
Non-government grants
Where the Company receives non-government grants, they are
treated as revenue as they have comparable performance obligations
and conditions to other revenue contracts. These grants typically
relate to research projects rather than licences.
c) Government grants
The Company receives UK government grants for research work.
Grants are agreed for named projects, offering reimbursement of
specified costs incurred on these projects. The grants are paid
after each grant reporting period when the claim is submitted, and
there are no clauses requiring the Company to repay any amounts as
the funding is cost-based rather than outcome-based. The
administering body has the right to request information on any
items within each grant claim and to request an independent
auditor's report. There are no clawback provisions relating to the
grants as they are not paid until after the relevant expenditure
has been incurred and agreed, and this is the only condition.
Revenue-based grants have been credited to the statement of
comprehensive income in the period to which they relate.
d) Research and development costs
Research expenditure is expensed as it is incurred. Development
costs relating to internally developed products are capitalised
from the date at which all of the following criteria are met for a
product:
-- The technical feasibility of completing the project (so that
an intangible asset thereby generated will be available for use or
sale) can be demonstrated;
-- An intention to complete the project can be demonstrated;
-- An ability to use or sell an intangible asset generated by
the project can be demonstrated;
-- It is possible to demonstrate how an intangible asset
generated by the project will generate probable future economic
benefits for the Company;
-- It is possible to demonstrate the availability of adequate
technical, financial & other relevant resources to complete the
development and to use or sell an intangible asset generated by the
project;
-- An ability to measure reliably the expenditure attributable
to the project can be demonstrated.
Until all of the above criteria are met, such costs are
classified as research expenditure and expensed accordingly. As
drug products cannot be commercialised until they have completed
Phase III clinical trials and received regulatory approval, the
Company considers that the above criteria have not been met for any
current products and therefore all costs will continue to be
expensed until such time as they are met.
Included within research expenditure are all costs relating to
the development and protection of the Company's intellectual
property. These are expensed through the Statement of Comprehensive
Income.
e) Share based compensation
The Company operates an All-Employee Share Option Plan (AESOP)
and grants EMI share options to all eligible employees. The
Company's Long Term Incentive Plan (LTIP) is principally used to
grant options to senior management. A grant of options under the
AESOP and the LTIP was made on 3 June 2021.
On 2 June, certain employees entered into an EMI option exchange
agreement where they agreed to release an option over shares in
Arecor Limited ('Old Option') for a replacement option over shares
in the Company ('Rollover Option'). The Rollover Options are
treated as having been granted on the date on which the Old Option
was granted and are exercisable subject to the same conditions as
applied to the Old Option.
f) Impairment of non-financial assets
At each balance sheet date, the Directors review the carrying
amounts of the Company's tangible and intangible assets to
determine whether there is any indication that those assets have
suffered an impairment loss. If any indication of impairment
exists, the recoverable amount of the asset is estimated in order
to determine the extent of the impairment loss, if any.
g) Leases
The Company has taken the IFRS 1 exemption in relation to the
adoption of IFRS 16, thereby measuring the lease liability at the
present value of the remaining lease payments, discounted using the
lessee's incremental borrowing rate at the date of transition to
IFRS. The right of use asset is measured at the transition date at
an amount equal to the lease liability, adjusted by the amount of
any prepaid or accrued lease payments relating to that lease
recognised in the statement of financial position immediately
before the date of transition to IFRS.
The Company assesses whether a contract is or contains a lease,
at inception of the contract. The Company recognises a right of use
asset and a corresponding lease liability with respect to all lease
arrangements in which it is the lessee.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted by using the rate implicit in the lease. If this rate
cannot be readily determined, the lessee uses its incremental
borrowing rate.
Right of use assets are recognised in a separate category of
property, plant and equipment and are depreciated over the shorter
period of lease term and useful life of the underlying asset,
starting at the commencement date of the lease.
3. REVENUE AND OPERATING SEGMENT
Year ended
Period ended Period ended 31 December
30 June 2021 30 June 2020 2020
UK - - -
Europe 46,539 369,158 735,675
Rest of World 413,482 447,885 961,918
Total revenue 460,021 817,043 1,697,593
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision maker.
The Board of Directors has been identified as the chief operating
decision maker, who is responsible for allocating resources,
assessing the performance of the operating segment and making
strategic decision.
For the period ending 30 June 2021, five customers (period to 30
June 2020, three customers) each contributed more than 10% of the
Company's revenue, with the largest three customers contributing
30%, 19% and 18% respectively (period to June 2020, 42%, 33%,
11%).
Year ended
Period ended Period ended 31 December
30 June 2021 30 June 2020 2020
Formulation development projects 375,648 389,631 666,089
Licence agreements - 339,443 920,015
Non-Government grants 84,373 87,969 111,489
Total revenue 460,021 817,043 1,697,593
Revenue from formulation development projects is recognised as
the performance obligations set out in agreements are satisfied
over time.
Revenue from licence agreements which include a right to use the
underlying intellectual property is recognised at the granting of a
licence. Where agreements combine the grant of a licence and the
provision of services the recognition is allocated between the two
elements based on the identifiable elements of performance
obligations set out in each agreement. Milestones defined in
license agreements are recognised when a milestone is achieved.
4. SALES, GENERAL AND ADMINISTRATIVE COSTS
Operating expenditure which is not considered as Research and
Development is treated as Sales, General and Administrative costs.
This includes Finance, HR, Administrative and Business Development
teams, building facilities and costs relating to the Board of
Directors.
In the period Sales, General and Administrative included GBP0.5
million non-recurring costs associated with the Admission of Arecor
Therapeutics plc to AIM.
Expenditure from continuing operations for the period of GBP1.0
million was broadly in line with the prior period (H1 2020: GBP0.9
million).
5. SHARE BASED COMPENSATION
On 2 June, certain employees entered into an EMI option exchange
agreement where they agreed to release an option over shares in
Arecor Limited ('Old Option') for a replacement option over shares
in the Company ('Rollover Option'). The Rollover Options are
treated as having been granted on the date on which the Old Option
was granted, with the earliest grant date being 12 December 2018
and the latest grant date being 3 November 2020.
The Rollover Options are subject to graded vesting: one third
vest on the first anniversary of the date of grant and two thirds
vest in equal instalments over the following 24 months. The
Rollover Options are subject to the same conditions which applied
to the Old Option. The exercise price is GBP0.01 per share.
The Company operates an All-Employee Share Option Plan (AESOP)
and grants EMI share options to eligible employees. A grant of
options under the AESOP was made on 3(rd) June at an exercise price
of GBP2.26 per share. The options are subject to graded vesting
with one third vesting on the first, second and third anniversary
of the date of grant.
The Company's Long Term Incentive Plan (LTIP) is principally
used to grant options to Executive directors and senior management.
A grant of options under the LTIP was made on 3rd June at an
exercise price of GBP0.01 per share. The LTIP options will vest
after three years subject to meeting a performance criteria of
total shareholder return in relation to the techMARK mediscience
index over the same period. Ordinary shares acquired on exercise of
the LTIP options are subject to a holding period of a minimum of
one year from the date of vesting.
The movement in share options in the period was as follows:
Number of Options
Opening Balance at 1 January 2020 144,100
Options vested and exercised (42,299)
Options lapsed (1,319)
Options granted 21,250
Balance at 31(st) December 2020 121,732
Options vested and exercised (62,493)
Options lapsed (5,250)
Bonus issue (five to one basis) 269,945
EMI Options granted 404,750
LTIP options granted 700,000
Balance at 30 June 2021 1,428,684
Charges to the Statement of Comprehensive Income GBP
Period to June 2021 134,340
Period to June 2020 37,822
Year to December 2020 79,723
The Rollover Options have been treated as a modification of the
original options, adjusted for the bonus issue of five share
options for every one share option held and the corresponding
dilution of the fair value of each option. The vesting period of
the Rollover Options is unchanged.
6. FINANCE EXPENSES
Included in Finance expense is a charge of GBP0.5 million
relating to the conversion of the convertible loan note instruments
into ordinary shares at a subscription price which was at a
discount of 10% to the placing price at Admission.
7. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the loss
attributable to ordinary shareholders by the
weighted average number of ordinary shares outstanding during
the period.
Given the Company's reported loss for the periods and financial
year, share options were not taken into account when determining
the weighted average number of ordinary shares in issue during the
year as they would be anti-dilutive, and therefore the basic and
diluted loss per share are the same.
On 3 June, 8,849,558 ordinary shares were issued by the Company
pursuant to the placing and admission to AIM.
These share issues have been included in the earnings per share
calculation of the prior period and year ended 31 December 2020, to
provide a comparable calculation.
Basic and diluted loss per share
Period ended Period ended Year ended
30 June 2021 30 June 31 December 2020
2020
Loss for the period (GBP) (3,105,547) (1,046,829) (2,752,367)
Weighted average number of ordinary shares (number) 18,237,593 16,202,890 16,247,322
Loss per share from continuing operations (GBP per share) (0.17) (0.06) (0.17)
============== ============= ==================
8. RELATED PARTY TRANSACTIONS
In the period and pre-Admission to AIM the Company paid
consultancy fees of GBP42,217 (2020: GBP23,882) to one
non-executive director and one former non-executive director who
are also shareholders.
9. BORROWINGS AND DERIVATIVES
At 30 June At 30 June At 31 December
2021 2020 2020
GBP GBP GBP
Non-current
Convertible loan notes - - 1,698,229
============ ============ ===============
- - 1,698,229
============ ===================================== ===============
Total borrowings - - 1,698,229
============ ============ ===============
At 30 June At 30 June At 31 December
2021 2020 2020
GBP GBP GBP
Non-current
Embedded derivative - - 211,543
============ ============ ===============
- - 211,543
============ ================================== ===============
Convertible loan note instruments
On 28 October 2020, Arecor Limited executed a convertible loan
note instrument which constituted GBP1,905,474 unsecured
convertible loan notes. On 31 March 2021, Arecor Limited executed a
supplemental loan note instrument for GBP2,500,000 unsecured
convertible loan notes.
The terms of these instruments included interest payable at the
rate of eight per cent. per annum. The loan notes plus accrued,
unpaid interest could be:
a) converted into shares on the admission to a recognised
investment exchange including AIM;
b) converted into shares upon raising equity capital of at least GBP8,000,000; or
c) redeemed on the first business day after the fifth anniversary of the date of issue.
Following the adoption by the Company of the convertible loan
notes and completion of the Share and CLN Exchange on 24 May 2021,
the convertible loan notes in Arecor Limited were released. The
convertible loan stock of GBP4,405,474 in the Company was converted
into ordinary shares, immediately prior to Admission, at a 10%
discount to the placing price. This has been treated as a finance
expense in the Consolidated Statement of Comprehensive Income.
Interest accrued was disregarded on conversion in accordance
with the terms of the instruments.
10. EQUITY
Share Capital
At 30 June At 30 June At 31 December
2021 2020 2020
Number Number Number
Allotted, called up and fully
paid
Ordinary shares of GBP0.01 27,683,532 134,676 135,245
A Ordinary shares of GBP0.01 1,397,715 1,397,715
A1 Ordinary shares of GBP0.01 24,600 24,600
B Ordinary shares of GBP0.01 243,386 244,776
C Ordinary shares of GBP0.01 913,182 913,182
----------- ----------- ---------------
Total share capital 27,683,532 2,713,559 2,715,518
=========== =========== ===============
At 30 June At 30 June At 31 December
2021 2020 2020
GBP GBP GBP
Allotted, called up and fully
paid
Ordinary shares of GBP0.01 276,835 1,347 1,352
A Ordinary shares of GBP0.01 13,977 13,977
A1 Ordinary shares of GBP0.01 246 246
B Ordinary shares of GBP0.01 2,434 2,448
C Ordinary shares of GBP0.01 9,132 9,132
----------- ----------- ---------------
Total share capital 276,835 27,136 27,155
=========== =========== ===============
On 2 June 2021, pursuant to a Shareholders' resolution passed on
26 May 2021 and class consents:
a) the A ordinary shares, A1 ordinary shares and B ordinary
shares were converted into ordinary shares;
b) the ordinary shares were converted into C ordinary shares; and
c) the Company renamed the C ordinary shares as ordinary shares
This resulted in 16,668,066 existing ordinary shares.
On 2 June 2021, 2,165,908 ordinary shares were issued pursuant
to the share and convertible loan note conversion.
On 3 June 2021 8,849,558 ordinary shares were issued by the
Company pursuant to the placing and admission to AIM, raising GBP20
million before expenses.
Share Premium
Proceeds received in addition to the nominal value of the shares
issued during the period have been included in share premium less
registration and other regulatory fees and net of related tax
benefits. Costs of new shares issued to share premium in the period
amounted to GBP24,754,332. Registration and other regulatory fees
incurred as a result of these transactions amounted to
GBP1,436,778.
11. EVENTS AFTER THE BALANCE SHEET DATE
There have been no events since the 30 June 2021 reporting date
that have had a material impact on the financial results
announced.
12. COPIES OF INTERIM REPORT
Copies of the interim report are available to the public free of
charge from the Company at Chesterford Research Park, Little
Chesterford, Saffron Walden, CB10 1 XL during normal business hours
for 14 days from today.
Copies are also available on the Company's website at
www.arecor.com.
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END
IR EAENAAFKFEAA
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September 23, 2021 02:00 ET (06:00 GMT)
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