TIDMAREC
RNS Number : 6878Y
Arecor Therapeutics PLC
08 September 2022
Arecor Therapeutics plc
("Arecor", the "Company" or the "Group")
INTERIM RESULTS FOR THE SIX MONTHSED 30 JUNE 2022
- Excellent progress across proprietary clinical pipeline with
key data for ultra-rapid acting insulin AT247 expected in H2
- Continued strong progress across partnered programmes with
addition of a new collaboration with a Top 5 global pharmaceutical
company
- Acceleration of commercially driven strategy, with post-period
acquisition of Tetris Pharma Ltd ("Tetris Pharma") and GBP6 million
Placing to add key commercial diabetes product and build out
Arecor's specialty hospital products franchise with scalable sales,
marketing and distribution platform
Cambridge, UK, 8 September 2022: 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 2022.
Sarah Howell, Chief Executive Officer of Arecor, said :
"Arecor's ambition is to build a significant self-sustaining
biopharmaceutical company and we expect the next six months to
bring further progress within our diabetes franchise and continuing
discussions with potential partners to expand our portfolio of
revenue generating partnership deals. Clinical data for AT247 is
expected later in 2022 and is key to further demonstrating its
superiority against current gold standard treatments and its
potential to facilitate a fully closed loop artificial pancreas.
This could provide a significant inflexion point for the Group. In
H2, we also expect to initiate a further clinical trial for AT278
in people living with Type 2 diabetes".
"Our acquisition of Tetris Pharma brings an opportunity to
accelerate our commercially-driven strategy alongside our core
diabetes and partnered programmes. We have gained a
revenue-generating sales, marketing and distribution platform which
complements our existing specialty hospitals products franchise.
The lead product, Ogluo(R), meets a key patient need for people
living with diabetes at risk of severe hypoglycaemia, which is a
therapeutic area we know well. We believe that the platform the
Tetris team has established adds the optionality of taking selected
products to market in the UK and Europe, where appropriate, as an
addition to Arecor's already proven partnering strategy."
Operational highlights
-- Phase I US clinical trial of AT247, an ultra-rapid acting
insulin product candidate, delivered by continuous subcutaneous
infusion via insulin pump over three days, initiated in January,
with t op-line data expected in H2 2022
-- Positive Phase I clinical data of AT278, an ultra-rapid
acting, ultra-concentrated insulin product candidate, presented at
leading international diabetes conference, ATTD, in April
-- Exclusive formulation study collaboration signed with top
five global pharmaceutical company in June
-- IP position strongly enhanced through the grant of three
European (two post-period) and one US patent
-- Post period events
-- Acquisition of Tetris Pharma Ltd, a commercial stage
specialty pharmaceutical company with a sales and distribution team
and a platform focused on injectable specialty products across the
UK and Europe, and a Placing which raised GBP6 million in
August
Financial highlights
-- Revenue of GBP0.7 million (H1 2021: GBP0.5 million)
-- Total income of GBP1.1 million (H1 2021: GBP0.6 million)
-- Investment in R&D of GBP4.8 million (H1 2021: GBP1.9 million)
-- Loss after tax for the period of GBP4.4 million (H1 2021: GBP3.1 million)
-- Cash and cash equivalents of GBP13.7 million at 30 June 2022 (30 June 2021: GBP22.1 million)
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 pipeline 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
We have had a strong start to the year, with our portfolio of
investigational proprietary therapeutic products, particularly in
the diabetes franchise, continuing to make strong clinical progress
and our partnered portfolio continuing to grow and advance in line
with expectations.
We continue to deliver on our strategy for our lead proprietary
diabetes product candidates AT247 and AT278, generating additional
clinical data to further demonstrate their superiority compared
with gold standard insulins available to patients today and to
position these products for partnering under our existing licensing
model.
Further building on our vision to become a significant
self-sustaining biopharmaceutical company, in August we raised GBP6
million and acquired Tetris Pharma, a commercial stage speciality
pharmaceutical company with a marketing and distribution platform
across the UK and European markets with a core focus on niche
injectable and hospital-based prescription products, including a
ready-to-use glucagon auto-injector pen, Ogluo(R) to treat severe
Hypoglycaemia. The Tetris Pharma platform has the potential to add
future optionality to our specialty hospital products franchise by
providing the capability to take select products to market in the
UK and Europe where appropriate. There is no change to the Group's
overall strategy, and we believe the deal is a strong strategic fit
for the Group, bringing a key commercial diabetes product into our
portfolio, complementing our existing specialty hospital products
franchise and offering the potential to accelerate significant
revenue growth.
To support our growing profile as a leader in transforming
patient care by enhancing existing therapeutic medicines, we
presented, and were nominated for awards at, key investor and
industry events. In March, we won the HCR Hewitsons Award for
Innovation in Business, and our CEO, Sarah Howell, won Business
Person of the Year at the UK Cambridgeshire Live Business Awards.
In May, we received a Highly Commended award for Biotech Company of
the Year and Sarah Howell received a Highly Commended award for CEO
of the Year at the Cambridge Science & Technology Awards.
Operational highlights (including post period end)
During the period we continued to make excellent clinical
progress in our diabetes franchise:
In January, we commenced a US Phase I clinical trial
investigating the potential of AT247, our ultra-rapid acting
insulin product candidate, when delivered by continuous
subcutaneous infusion via insulin pump, with the last patient dosed
in July. The trial is a double blind, randomised, three-way
crossover study in 24 participants with type I diabetes, comparing
the pharmacokinetics (PK) and pharmacodynamics (PD) of AT247 with
Novo Nordisk's NovoRapid(R) and Fiasp(R), two market-leading rapid
and ultra-rapid acting insulin treatments. We remain on track to
report headline data later in 2022. This is our first US clinical
study and the data is key, both as an important next step in
determining whether AT247 can facilitate a fully closed loop
artificial pancreas, a transformational treatment option for people
living with diabetes and, in turn, potentially generating a
compelling partnering package demonstrating the superiority of
AT247 compared to gold standard insulins available to patients
today.
In May, we presented positive data at the 15th International
Advanced Technologies and Treatments for Diabetes (ATTD) meeting
from a Phase I clinical trial investigating our ultra-rapid acting,
ultra-concentrated insulin product candidate, AT278. The data,
which were at the high end of expectations, were well received at
the international congress and support both the candidate's
continued development and its potential to significantly improve
outcomes and quality of life for the growing population of people
living with diabetes who have high daily insulin needs,
particularly those with type 2 diabetes. We will also present data
from the trial at the upcoming 58(th) Annual Meeting of the
European Association for the Study of Diabetes (EASD), being held
from 19-23 September 2022 in Stockholm, Sweden and online.
Also in May, we hosted a key opinion leader webinar, entitled
"The Need for Concentrated and Rapid Acting Insulin Treatments in
Diabetes Care", which brought together four world-class experts in
the field of diabetes care to discuss the AT278 clinical data, as
well as the clear clinical and patient need.
A further clinical trial of AT278, in people living with type 2
diabetes, is expected to begin dosing patients later this year. The
randomised, double-blind Phase I study in obese type 2 diabetes
patients will recruit approximately 28 adult patients with each
receiving one subcutaneous dose (0.5 U/kg) of AT278, NovoRapid(R)
and Humulin(R) R U 500 in three separate treatment periods. The
PK/PD profile will be measured in each treatment period in a
glycemic clamp setting.
Partnership agreements
In June, we signed an exclusive formulation study collaboration
with a top five global pharmaceutical company to apply our
Arestat(TM) technology to develop improved, stable, high
concentration liquid formulations of the partner company's
proprietary products. This technology partnership continues to
validate the strength of and need for the Arestat(TM) technology
platform.
We continue to build a strong pipeline of potential
collaborations and future revenue opportunities with further deals
anticipated in H2 and beyond. 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, or equivalent.
Our four licensed programmes continue to progress in line with
expectations and we still expect the first partnered product
incorporating the Arestat(TM) technology to be AT220. This is our
most advanced partnered programme and is a novel and differentiated
formulation of a product licensed to a global pharmaceutical and
healthcare company, targeting a multi-billion market opportunity.
Arecor will receive development milestones and royalties on sales
on continued development and commercialisation.
Intellectual Property portfolio
We have a broad and robust global patent portfolio protecting
both the Arestat(TM) technology platform as well as the enhanced
versions of therapeutic medicines that we develop leveraging
Arestat(TM). To date, during 2022, we have further strengthened the
portfolio with four significant patents protecting our proprietary
Arestat(TM) technology and novel formulations of existing
therapeutic medicines with enhanced features:
-- In January, the European Patent Office granted patent
EP3496734B protecting novel compositions of insulin glargine with
improved thermostability.
-- In March, the United States Patent and Trademark Office
granted patent US11278624, protecting novel formulations of the
Group's proprietary insulin products, AT247 and AT278.
-- In August, the European Patent Office granted two patents,
EP3592383B1 and EP3592385B1, protecting the Group's novel
formulations of high-concentration adalimumab.
Arecor has over 60 granted patents protecting our Arestat(TM)
technology platform and enhanced products developed utilising the
technology.
Finance
Total income increased to GBP1.1 million (H1 2021: GBP0.6
million) due to increases in both revenue and grant income.
Revenue recognised in the period of GBP0.7 million (H1 2021:
GBP0.5 million), derived from formulation development projects, was
in line with expectations.
Other operating income of GBP0.4 million (H1 2021: GBP0.1
million) was part of the GBP2.8 million grant from Innovate UK to
support the further clinical development of AT247. The period ended
30 June 2021 reflected preliminary activities in Q2 2021, following
approval of the grant award in March 2021.
Investment in R&D increased to GBP4.8 million (H1 2021:
GBP1.9 million) reflecting the clinical development of our
proprietary pipeline including the US Phase 1 clinical trial for
AT247 and preliminary costs for the further clinical trial in
AT278, ahead of the planned dosing of patients later this year.
Sales, General and Administrative costs were GBP1.6m (H1 2021:
GBP1.5 million). The increased investment in R&D resulted in a
total loss after tax for the period of GBP4.4 million (H1 2021:
GBP3.1 million).
The Group ended H1 with a cash balance of GBP13.7 million, (H1
2021: GBP22.1 million).
Post the period end, the Company raised GBP6 million through the
issue of an aggregate of 2,000,000 Placing Shares with
institutional and other investors at a Placing Price of 300 pence
per ordinary share before expenses. This included participation in
the Placing by certain of the Company's Directors, who subscribed
an aggregate of GBP113,271 at the Placing Price for 37,755 Placing
Shares.
Summary and outlook
Arecor is a dynamic and growing company with an ambition to
build a significant self-sustaining biopharmaceutical company. We
are committed to transforming patient care as evidenced by the
strong momentum across our portfolio of best-in-class proprietary
and partnered programmes.
Looking forward to the next six months, we expect to see further
clinical progress within our diabetes franchise and continuing
discussions with potential partners to expand our portfolio of
revenue generating partnership deals. The data for AT247, expected
later in 2022, is key to further demonstrating the superiority of
AT247 and its potential to facilitate a fully closed loop
artificial pancreas, and could be a significant inflexion point for
Arecor. Alongside our core business, we look forward to working
closely with the Tetris Pharma team to continue the roll-out of
Ogluo(R).
In H2, we also expect to initiate a further Phase I clinical
trial for AT278 in Type 2 diabetes.
Arecor Therapeutics plc
INTERIM RESULTS FOR THE SIX MONTHSED 30 JUNE 2022
Consolidated Statement of Comprehensive Income
Notes Period ended Period Year ended
30 June 2022 ended 30 31 December
June 2021 2021
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Revenue 3 693 460 1,158
Other operating income 429 51 640
Research and Development (4,763) (1,934) (5,386)
Sales, General and Administrative 4 (1,587) (1,533) (2,851)
Operating loss (5,228) (2,956) (6,439)
Finance income 3 5 1
Finance expense 6 (9) (500) (507)
Loss before tax (5,234) (3,452) (6,945)
Taxation 867 347 776
Loss for the period (4,367) (3,106) (6,169)
Basic and diluted loss per
share (GBP) 7 (0.16) (0.17) (0.27)
There were no other items of comprehensive income during the
periods under review.
Arecor Therapeutics plc
INTERIM RESULTS FOR THE SIX MONTHSED 30 JUNE 2022
Consolidated Statement of Financial Position
Notes 30 June 30 June 2021 31 December
2022 2021
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Assets
Non-current assets
Intangible Assets 26 34 30
Property, Plant and Equipment 346 361 328
Other receivables 48 48 48
420 443 406
Current assets
Trade and other receivables 1,466 612 1,423
Inventory 8 68 - -
Current tax receivable 1,642 347 776
Cash and cash equivalents 13,717 22,149 18,316
--------- ------------ -----------
16,893 23,108 20,515
Current liabilities
Trade and other payables (2,568) (1,997) (2,141)
Lease liabilities (127) (125) (126)
(2,695) (2,121) (2,267)
Non-current liabilities
Lease liabilities (42) (168) (105)
(42) (168) (105)
Net Assets 14,576 21,261 18,549
========= ============ ===========
Equity
Share capital 9 278 277 278
Share premium account 9 23,348 23,348 23,348
Share-based payment reserve 11,455 297 519
Other reserves 912 11,455 11,455
Retained earnings (21,417) (14,116) (17,051)
--------- ------------ -----------
Shareholder's funds 14,576 21,261 18,549
Arecor Therapeutics plc
INTERIM RESULTS FOR THE SIX MONTHSED 30 JUNE 2022
Consolidated Statement of Changes in Equity
Share-based
Share Share Other compensation Retained Total
capital premium reserves reserve earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
For the period ended
30 June 2021
Balance at 1 January
2021 27 11,594 - 1,045 (11,892) 774
Loss for the period - - - - (3,106) (3,106)
- - - -
--------------------------- ---------- ---------- ----------- -------------- ---------- ---------
Total comprehensive
loss for the period - - - - (3,106) (3,106)
Transactions with
owners:
Shares issued by Arecor
Limited 1 - - - - 1
Share-based compensation:
reversal of Arecor
Limited charge - - - (882) 882 -
Capitalisation of
shares 139 (139) - - - -
Incorporation of Arecor
Therapeutics Limited - (11,455) 11,455 - - -
Share-based compensation: - - - 134 - 134
Arecor Therapeutics
plc charge
Shares issued by Arecor
Therapeutics plc 110 24,785 - - - 24,895
Share issue expense - (1,437) - - - (1,437)
Total transactions
with owners 250 11,754 11,455 (748) 882 23,593
---------- ----------
Balance at 30 June
2021 (Unaudited) 277 23,348 11,455 297 (14,116) 21,261
--------------------------- -------------- ---------- ---------
For the period ended
31 December 2021
Balance at 1 July
2021 277 23,348 11,455 297 (14,116) 21,261
Loss for the period - - - - (3,063) (3,063)
Total comprehensive
loss for the period - - - - (3,063) (3,063)
Transactions with
owners:
Issue of shares on
exercise of options 1 - - - - 1
Reserve transfer - - - (128) 128 -
Share-based compensation - - - 350 - 350
--------------------------- ---------- ---------- ----------- -------------- ---------- ---------
Total transactions
with owners 1 - - 222 128 351
Balance at 31 December
2021 (Audited) 278 23,348 11,455 519 (17,051) 18,549
--------------------------- -------------- ---------- ---------
For the period ended
30 June 2022
Balance at 1 January
2022 278 23,348 11,455 519 (17,051) 18,549
Loss for the year - - - - (4,367) (4,367)
Total comprehensive
loss for the year - - - - (4,367) (4,367)
Transactions with
owners:
Share-based compensation - - - 393 - 393
--------------------------- ---------- ---------- ----------- -------------- ---------- ---------
Total transactions
with owners - - - 393 (4,367) (3,974)
--------------------------- ---------- ---------- ----------- -------------- ---------- ---------
Balance at 30 June
2022 (Unaudited) 278 23,348 11,455 912 (21,417) 14,576
=========================== ========== ========== =========== ============== ========== =========
Arecor Therapeutics plc
INTERIM RESULTS FOR THE SIX MONTHSED 30 JUNE 2022
Consolidated Statement of Cash Flows
Period ended 30 June 2022 Period ended 30 June 2021 Year ended 31 December 2021
Unaudited Unaudited Audited
GBP000 GBP000 GBP000
Cash flow from operating
activities
Loss before tax (5,234) (3,452) (6,945)
Finance income (3) (5) (1)
Finance costs 9 500 507
Share-based compensation 393 134 484
Depreciation 85 78 163
Amortisation 4 4 8
Foreign exchange movements 76 (3) (5)
-------------------------- -------------------------- ----------------------------
(4,670) (2,742) (5,789)
Changes in working capital
(Increase)/ decrease in
inventory (68) - -
(Increase)/ decrease in trade
and other receivables (43) (447) (1,257)
Increase/(decrease) in trade and
other payables 427 693 838
Tax received - 758 758
-------------------------- -------------------------- ----------------------------
316 1,005 339
Net cash used in operating
activities (4,354) (1,737) (5,450)
Cash flow from investing
activities
Purchase of property, plant &
equipment (100) (15) (69)
Interest received 3 - 1
Net cash used in investing
activities (97) (15) (68)
Cash flow from financing
activities
Issue of ordinary shares - 20,001 20,002
Share issue costs - (1,437) (1,437)
Shareholder loans - 2,500 2,500
Capital payments on lease
liabilities (63) (53) (112)
Interest paid on lease
liabilities (9) (11) (22)
Net cash (used in) / generated
by financing activities (72) 21,000 20,931
Net (decrease) / increase in
cash and cash equivalents (4,523) 19,248 15,413
Exchange rate movement (76) 3 5
Cash and cash equivalents at
beginning of period or
financial year 18,316 2,898 2,898
Cash and cash equivalents at end
of period or financial year 13,717 22,149 18,316
========================== ========================== ============================
Arecor Therapeutics plc
INTERIM RESULTS FOR THE SIX MONTHSED 30 JUNE 2022
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.
1. BASIS OF PREPARATION
The financial statements for the period ended 30 June 2022
incorporate the results of Arecor Therapeutics plc and Arecor
Limited. The Group's consolidated interim financial information for
the period to 30 June 2022 are unaudited. They were approved by the
board of directors on 7 September 2022.
The consolidated financial statements have been prepared in
accordance with UK-adopted International Accounting Standards
("IFRS") in conformity with the requirements of the Companies Act
2006. The financial information has been prepared on the basis of
IFRS that the Directors expect to be applicable at 31 December
2022.
The results presented for the comparative period to 30 June 2021
are presented as a continuation of the financial statements of
Arecor Limited, adjusted to reflect the share capital of Arecor
Therapeutics plc as parent, following the acquisition of Arecor
Limited by Arecor Therapeutics plc on 3 June 2021.
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 2022 and 30 June 2021
is unaudited.
Financial statements for year ended 31 December 2021 have been
filed with the Registrar of Companies for Arecor Therapeutics plc
(Company registration number 13331147). The audit report for this
period, previously filed, was unmodified.
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 GBP000.
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 2021 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 GBP13.7 million at the 30 June 2022 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.
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. Revenue arises from the performance of
formulation development studies and from granting of licences.
Formulation development
Revenue from the performance of formulation development
collaborations is recognised as the performance obligation defined
in a contract is performed over time. Possible performance
obligations can include, but are not exclusively limited to,
completion of method development and pre-formulation activities,
completion of rounds of formulation optimisation, or completion of
stability studies. 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 nature of this type of work is that it takes places
evenly within each phase of each contract. During main contract
phases, the progress of the work is dictated by physical
constraints e.g., required periods of observation which dictate the
pace of work, hence time passed best indicates the stage of
completion of a service performed over time, which is even over the
life of each element of the contract. The Group's performance does
not create an asset with an alternative use to the Group and the
Group 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 Group 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 normally fully released before the next billing
point. Dependent on the nature of work involved in the different
phases of a contract, it can, on occasion be the case that phases
overlap.
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 research element, as described
above.
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 Group operates equity-settled share-based payment schemes.
Where share-based payments (options) have been granted to
employees, the fair value of the share-based payments is measured
at the grant date and charged to the statement of comprehensive
income over the vesting period.
A valuation model is used to assess the fair value, taking into
account the terms and conditions attached to the share-based
payments. The fair value at grant date is determined including the
effect of market-based vesting conditions, to the extent such
vesting conditions have a material impact. It also takes into
account non-vesting conditions. These are either factors beyond the
control of either party (such as a target based on an index) or
factors which are within the control of one or other of the parties
(such as the Company keeping the scheme open or the employee
maintaining any contributions required by the scheme).
The cumulative expense recognised for equity-settled
transactions at each reporting date until the vesting date reflects
the extent to which the vesting period has expired and the Group's
best estimate of the number of equity instruments that will
ultimately vest.
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 2022 30 June 2021 2021
UK 101 - 71
Europe 55 47 76
USA 492 383 940
Rest of World 45 30 71
Total revenue 693 460 1,158
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision makers.
Information reported includes revenue by project, expenditure by
type and department, cashflows and EBITDA for the Group.
The Board of Directors has been identified as the chief
operating decision makers, who are responsible for allocating
resources, assessing the performance of the operating segment and
making strategic decisions.
Year ended
Period ended Period ended 31 December
30 June 2022 30 June 2021 2021
Formulation development projects 693 376 1,014
Licence agreements - - -
Non-Government grants - 84 114
Total revenue 693 460 1,158
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.
In the period ended 30 June 2022, five customers (period ended
30 June 2021, five customers) each contributed more than 10% of the
Company's revenue, with the largest three customers contributing
16%, 15% and 15% respectively (period ended 30 June 2021, 30%, 19%,
18%).
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.
Sales, General and Administrative costs for the period ended 30
June 2021 included GBP0.5 million non-recurring costs associated
with the Admission of Arecor Therapeutics plc to AIM.
5. SHARE BASED COMPENSATION
The Company operates an All-Employee Share Option Plan (AESOP)
and grants EMI share options to eligible employees. The options
vest over time.
The Company's Long Term Incentive Plan (LTIP) is principally
used to grant options to Executive directors and senior management.
The 2021 LTIP options will vest after three years subject to
meeting 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
Balance at 31 December 2020 121,732
Options vested and exercised (62,493)
Options lapsed pre bonus issue (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
Options vested and exercised (151,492)
Options lapsed (24,748)
EMI options granted 87,500
LTIP options granted 75,000
Balance at 31 December 2021 1,414,944
Options lapsed (13,497)
Balance at 30 June 2022 1,401,447
Charges to the Statement of Comprehensive Income GBP000
Period to June 2022 393
Period to June 2021 134
Year to December 2021 484
6. FINANCE EXPENSES
In the period ended 30 June 2022, the finance expenses of
GBP9,000 were interest costs on finance leases (period ended 30
June 2021: GBP11,000).
Finance expenses for the period ended 30 June 2021 included a
charge of GBP0.5 million relating to finance costs arising from the
conversion of loan note instruments.
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.
Basic and diluted loss per share
Period ended Period ended Year ended
30 June 2022 30 June 31 December 2021
2022
Loss for the period (GBP000) (4,367) (3,106) (6,169)
Weighted average number of ordinary shares (number) 27,835,024 18,237,593 23,033,420
Loss per share from continuing operations (GBP per share) (0.16) (0.17) (0.27)
============== ============= ==================
8. INVENTORY
Inventory includes active pharmaceutical ingredients, which will
be consumed over a period of more than 12 months.
9. EQUITY
Share Capital
At 30 June At 30 June At 31 December
2022 2021 2021
Number Number Number
Allotted, called up and fully
paid
Ordinary shares of GBP0.01 27,835,024 27,683,532 27,835,024
Total share capital 27,835,024 27,683,532 27,835,024
=========== =========== ===============
At 30 June At 30 June At 31 December
2022 2021 2021
GBP'000 GBP'000 GBP'000
Allotted, called up and fully
paid
Ordinary shares of GBP0.01 278 277 278
Total share capital 278 277 278
=========== =========== ===============
10. EVENTS AFTER THE BALANCE SHEET DATE
On 4(th) August, pursuant to the terms of the acquisition of
Tetris Pharma Ltd ('Tetris Pharma'), the Company agreed to acquire
the entire issued share capital of Tetris Pharma for initial
consideration consisting of the issue of 651,726 new ordinary
shares to the Tetris Pharma sellers. The Company also agreed to
discharge certain existing liabilities of Tetris Pharma with an
aggregate value of approximately GBP2 million, including payments
related to the purchase of initial Ogluo(R) inventory and certain
non-recurring liabilities.
Deferred consideration of up to GBP4 million in aggregate is
payable to the Tetris Pharma Sellers through three earn out
payments on the first, second and third anniversaries of completion
of the acquisition. Such deferred consideration is subject to
revenue and EBITDA performance targets. The ordinary shares will be
issued at a price equal to the greater of 405 pence per share and
the 30-day volume weighted average price of the ordinary shares
immediately preceding the date such earn out payment is
determined.
On 4th August, the Company raised GBP6 million through an
aggregate of 2,000,000 Placing Shares with institutional and other
investors at a Placing Price of 300 pence per ordinary share before
expenses.
Certain of the Company's Directors participated in the Placing
and subscribed an aggregate of GBP113,271 at the Placing Price for
37,755 Placing Shares.
11. 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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IR EANNXELNAEFA
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September 08, 2022 02:01 ET (06:01 GMT)
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