TIDMDDDD
RNS Number : 4761D
4d Pharma PLC
27 April 2017
This announcement contains inside information
27 APRIL 2017
4D PHARMA PLC
("4D", the "Company" or, together with its subsidiaries, the
"Group")
Final Results for the year ended 31 December 2016
4D pharma plc (AIM: DDDD), a pharmaceutical company focusing on
the development of live biotherapeutics, is pleased to announce the
final results for the Company and its subsidiaries (together "the
Group") for the year ended 31 December 2016.
Financial highlights for the year:
-- Net assets of GBP86.5 million (2015: GBP92.7 million)
-- Cash and cash equivalents (including cash on deposit) of
GBP68.8 million (2015: GBP85.4 million)
-- Loss after tax of GBP9.9 million (2015: GBP7.7 million)
-- Loss per share (basic and diluted) of 15.2 pence (2015: 12.6 pence)
`
Operational highlights for the year:
-- Successful phase 1 clinical trial in respect of Blautix, 4D's
proprietary programme for the treatment of Irritable Bowel
Syndrome, achieving the primary objective of establishing safety
and tolerability
-- Analysis of patient data from phase 1 clinical trial showing
a positive improvement in patient symptoms over placebo
-- Analysis of IBS patient microbiome showing Blautix both
stabilises and increases diversity of the microbiome
-- Commencement of the phase 1 clinical trial in respect of
Thetanix, 4D's proprietary programme for the treatment of
Paediatric Crohn's Disease
-- Acquisition of 4D Pharma Cork Limited (formerly Tucana Health
Limited), a start-up company from University College Cork founded
to investigate the use of microbiome signatures to aid the
diagnosis and treatment of diseases; the year has also seen the
successful development of its proprietary diagnostic platform,
MicroDx, which uses microbiome signatures to allow patient
stratification
-- Acquisition of the production assets of Instituto Biomar,
S.A. via a newly incorporated Spanish subsidiary, 4D Pharma León,
S.L.U., establishing 4D's own development and manufacturing
facility in León, Spain
Following the year end:
-- Interim analysis of data generated in the MicroDx clinical
trial showing: significant differences between the microbiota
profiles of IBS patients and healthy subjects; that microbiota of
IBS clinical subtypes are not significantly different (supporting
the rationale for Blautix as a therapy for all IBS subtypes); and
that MicroDx is able to differentiate IBS patients from healthy
subjects based on metabolite profiles
The Annual Report, together with a notice of the Company's
Annual General Meeting, will be posted to shareholders and made
available on the Company's website www.4dpharmaplc.com at a later
date. The Annual General Meeting will be held on Friday 26 May 2017
at 1 p.m. at the Gridiron Building, 1 Pancras Square, London N1C
4AG.
David Norwood, Chairman of 4D, commented: "I am pleased to be
able to announce the Group's final results for the year ended 31
December 2016. The year has seen substantial and critical advances
towards our goal of producing Live Biotherapeutics as safe and
effective therapies: successfully concluding our first clinical
trial; generating supportive clinical data; establishing our
proprietary diagnostic platform; and acquiring our own development
and manufacturing facility. I would like thank everyone in the
Group for their contribution to the advances we have made in
2016."
For further information please contact:
4D + 44 (0) 113 895 0130
Duncan Peyton, Chief Executive Officer
Zeus Capital Limited - Nomad and Joint Broker
Dan Bate +44 (0) 161 831 1512
Dominic Wilson +44 (0) 203 829 5000
Investec Bank plc - Joint Broker +44 (0) 207 597 5970
Patrick Robb
Daniel Adams
Carlton Nelson
Information on 4D
www.4dpharmaplc.com
Chairman's Statement
David Norwood, Non-executive Chairman
2016 has seen 4D move into clinical trials in patients, and the
results reinforce our belief that Live Biotherapeutics will bring
safer, more effective treatments to the market.
Strategic objectives
All drug companies want to provide drugs that are safe and
effective; they want to do so rapidly and cost-effectively. With
the completion of our trial in patients with Irritable Bowel
Syndrome (or IBS), and commencement of our trial in Paediatric
Crohn's Disease, 4D is doing just that.
The clinical progression has been made without losing focus on
expanding and broadening our research base. The year saw major
advances in the Group's continuing goal to grow its knowledge and
understanding of the microbiome.
In February we acquired 4D Pharma Cork Limited and with it
established MicroDx, our proprietary diagnostic platform using
microbiome signatures allowing stratification and diagnosis of
patient populations. Since then we have swiftly developed the
platform, setting up its first clinical trial (also in IBS), whose
initial results point for the first time towards a biomarker for
IBS.
The year also saw the Group acquire its development facility in
León, Spain. Securing this dedicated facility is a vital part of
being able to move our programmes through the clinic, and from
there to plan for manufacture.
Governance and Board
Ever since the Company's initial public offering, as the Company
and the Group have grown, the Board has maintained a regular review
and evaluation of its effectiveness, and that of the wider
governance structure of the Group.
As an AIM-quoted company, the Company is not required to comply
with the UK Corporate Governance Code. The Board has nevertheless
always sought to apply policies and procedures which reflect the
principles of good governance and best practice reflected in the
Code, as appropriate to the size, nature and stage of development
of the Company.
We believe the Company's governance structure has facilitated
the growth and development of the Group. However, as set out in the
Corporate Governance Statement, as the Group continues to grow, we
will maintain this evaluation and take the governance steps
necessary to support the Group's development.
Our people
Both a significant cause and effect of our continued successful
development is our greater ability to recruit high quality people,
across all aspects of the Group. We now employ 85 people over five
sites across Europe. I would like to thank everyone in 4D for their
contribution to the advances we made in 2016.
The steps we have taken in the year give us huge confidence in
our strategy and in our long-term future.
David Norwood
Non-executive Chairman
26 April 2017
Chief Executive Officer's Report
Duncan Peyton, Chief Executive Officer
In 2016, 4D continued to build its world-leading position in
Live Biotherapeutics through its understanding of the microbiome,
the role of the microbiome in disease, and the development of Live
Biotherapeutics as a potential cure.
What 4D is about
In 2014, 4D was set up to investigate the potential of two
bacteria that showed promise in modulating the immune system and
therefore had potential as a drug. The simple questions 4D
asked:
-- Do bacteria act like a drug?
-- Are they safe?
-- Can they be delivered simply?
-- If so, are there further bacteria (in addition to the two
original bacteria that had been isolated) that could have
therapeutic effect in other diseases?
If the answers to the above questions were yes, then 4D had the
potential for what could be called a "perfect" drug, a drug that is
safe and effective, and easy to deliver; that has a rapid
development pathway; and that is capable of reliable and
cost-effective production.
Moving through 2016, 4D has a lot of the answers to the above
questions.
Our work in understanding how our Live Biotherapeutics function
as drugs has made significant progress; we understand not only the
pathways and mechanisms our Live Biotherapeutics leverage, but in
some instances we also understand and have patented the agent the
bacteria produce to exert its effect.
From a safety perspective 4D has worked with the regulators
since the Company's inception to understand the potential of Live
Biotherapeutics as a drug free from the significant side effects or
toxicity normally associated with pharmaceuticals. In 2016, Blautix
was shown to be safe and well tolerated in IBS patients.
With the acquisition of our development facility in León, 4D has
now manufactured five different Live Biotherapeutics at a clinical
scale. We have also worked with our encapsulation partners to bring
a new delivery technology to the market enabling simple oral
delivery of our drugs to patients participating in our IBS and
Paediatric Crohn's trials.
4D also understands that there are additional bacteria that have
the potential to impact disease as a Live Biotherapeutic. Our
proprietary platform, MicroRx, has identified Live Biotherapeutics
that in industry standard models demonstrate therapeutically
relevant effects in diseases such as cancer and asthma and
autoimmune conditions such as Rheumatoid Arthritis and Multiple
Sclerosis.
The questions originally asked in 2014 are just as relevant in
2016; however, the research and development 4D has undertaken have
raised more.
Understanding disease - targeting cures
IBS is not a well understood disease, with calls for better
diagnostics and more targeted drugs.
It is a functional bowel disorder characterised by discomfort,
pain and changes in bowel habits. Symptoms can be mild, moderate or
severe. Mild symptoms, which occur infrequently, can sometimes
interfere with normal daily functioning. Moderate symptoms are more
intense, occur more frequently, and often interfere with daily
functioning. Severe symptoms chronically interfere with daily
functioning.
The disease is characterised according to symptoms into three
subtypes: constipation (IBS-C), diarrhoea (IBS-D) and mixed
(IBS-M). The treatments are directed at only one of the symptoms,
and are not able to address the root cause of the disease.
Furthermore, as no biomarker for IBS exists, current treatment
protocols are heavily dependent on patient reported symptoms, with
clinicians having difficulty in addressing and prescribing adequate
treatment.
It is estimated that 10-15% of the population have IBS, with
only 30-35% of subjects seeking medical attention, the majority of
which have persistent symptoms.
We believe 4D has taken significant steps in moving a
misunderstood disease forward.
In 2014 with our Blautix programme, a drug targeting IBS, 4D
pioneered the use of germ-free models to study the effects of human
microbiota. This involved the transplantation of IBS patient
microbiome to study the effects in a germ-free environment. The
results of this work showed that the translation of IBS patient
microbiome led to the development of IBS symptoms, pointing towards
the microbiome as potentially being the root cause of the
disease.
Moving forward to 2016, we conducted a safety and tolerability
placebo controlled trial in IBS patients and healthy volunteers
(the "Blautix Trial"). As part of that trial 4D also took the
opportunity to look, as a secondary measure, at the changes in the
microbiome before, during and after dosing and also for any
improvement in patient symptoms.
In addition, 4D recognised that diagnosis of IBS is difficult
for clinicians; with no recognised biomarker, clinicians are left
to make therapeutic decisions on symptoms reported by patients,
which may not always be clear or accurate.
In early 2016, 4D began a separate study (the "Diagnostic
Study") looking at the difference between IBS patients and healthy
volunteers. The aim of this study was to understand if there were
differences between the microbiome of these two groups, and whether
4D could exploit this difference as a diagnostic tool.
The results of the above trials conducted with IBS patients
showed:
-- the microbiome of patients and healthy volunteers is significantly different;
-- the microbiome of the subtypes of IBS patients (IBS-C, IBS-D
and IBS-M) is not significantly different;
-- those IBS patients on Blautix showed an increased diversity
and stability of microbiome compared to placebo;
-- Blautix to be safe and well tolerated, meeting the primary
endpoint of the Blautix Trial; and
-- those patients on Blautix showed a greater improvement in symptoms than those on placebo.
The above results suggest:
-- the microbiome is potentially the root cause of the disease,
as shown in the pre-clinical models;
-- there are significant differences seen between healthy
volunteer and patient microbiomes, further suggesting that the
microbiome is potentially the root cause of the disease;
-- the difference between the microbiome of healthy volunteers
and patients points to a biomarker based on metabolites that could
aid diagnosis of IBS; and
-- analysis of IBS patient microbiota showed no significant
difference between any of the subtypes, suggesting that all
subtypes of IBS could potentially be treated by a Live
Biotherapeutic intervention, and current characterisation of
subtypes is not a true representation of the disease, but rather of
the treatments currently available.
We are progressing with our Blautix programme through 2017 with
even greater confidence; later in 2017, 4D will begin a larger,
multi-centre phase 2 trial.
Building development - delivering drugs
An issue seen with any new breakthrough technology are the
questions concerning whether it can be manufactured repeatedly and
reliably, and whether it is easy to deliver.
We do not use consortia of bacteria, where multiple different
types of bacteria are used in combination to try to recreate a
"healthy gut"; it is clear every person has a different "healthy
gut" and isolates of the same strains from different people can
have very different functionality.
The Live Biotherapeutics developed by 4D are single strain; they
are selected on the basis of their functionality and potential to
impact a specific disease pathway. Using single strains allows for
a simpler more straightforward manufacturing process.
From the perspective of delivery, 4D has worked with its
partners to develop and (through our trials) prove encapsulation
technology that is viable both scientifically and commercially.
The key issue for the emerging microbiome field is to understand
development and manufacturing.
At 4D the process of manufacture is straightforward:
fermentation, separation, lyophilisation and encapsulation. Whilst
the core process remains constant, the conditions for each of the
programmes is different, requiring different media, processing
times, etc. However, to date we have successfully been able to
manufacture all of our Live Biotherapeutics that 4D has so far
chosen to take in to the clinic. With patient trials completed and
several in planning, 4D has addressed the issues surrounding
manufacture and delivery; the issue for 4D is flexibility and
recognising a lack of pharmaceutical grade facilities capable of
producing Live Biotherapeutics at development and commercial
scale.
In 2016, 4D decided to delay the clinical development of
Rosburix, our programme in Ulcerative Colitis, in favour of our
cancer programme. The decision was strategic; it was important that
4D moved away from gastrointestinal disease to diseases not
generally associated with the gut (such as cancer and Rheumatoid
Arthritis), demonstrating the breadth of the our live programmes
and development speed.
From a development pipeline perspective, in 2017 4D plans to
have trials commencing in cancer and severe asthma, to have
completed the phase 1 trial in Paediatric Crohn's Disease, and to
have commenced a phase 2 trial in IBS. In 2018, 4D will potentially
add an additional three new clinical programmes.
If 4D worked solely with contract providers, shifting programmes
and timings would not have been possible due to capacity and
scheduling constraints, nor would 4D be able to find sufficient
capacity to address our need going forward.
The reason 4D is confident in meeting its development goals is
due to the in-house development and manufacturing capability
acquired by 4D during 2016.
In April 4D acquired the production assets of Instituto Biomar,
S.A. (or "Biomar"), a Spanish-based contract research organisation
specialising in microbial fermentation. (see note 6)
This facility gives the flexibility and scale to take all 4D's
current research through the clinic, and gives the Company the
capacity to manufacture enough active pharmaceutical ingredient for
up to around 20 million capsules per annum.
Better diagnostics - improving patient outcomes
As 4D began to understand more about the therapeutic effect of
Live Biotherapeutics and the impact on the microbiome, we
recognised the potential in using the microbiome to aid the
diagnosis and treatment of disease.
In February 2016 we acquired 4D Pharma Cork (then Tucana
Health), a start-up company from University College Cork. (see note
6)
The concept at 4D Pharma Cork was initially to combine our
understanding of Live Biotherapeutics (from the research generated
by our MicroRx therapeutic platform) with the knowledge held within
4D Pharma Cork, to build a new diagnostic platform, called MicroDx,
based around the microbiome.
The concept for MicroDx is the ability to identify "signatures"
based on the functionality of the gut microbiome and also on
metabolite profiles (small molecules produced by the microbiome).
This could allow the development of rapid methods of diagnosis,
which could be readily transferred into the clinical setting.
The Diagnostic Trial mentioned earlier was a completely
stand-alone trial, independent from the Blautix Trial. The trial
was set up to look at the microbiota of patients with IBS and that
of healthy volunteers, and from that information investigate the
potential for a marker that could distinguish between patients and
healthy volunteers.
Whilst the trial is still continuing, interim analysis of data
has demonstrated MicroDx is able to differentiate IBS patients from
healthy subjects based on metabolite profile.
This work demonstrates the potential within the microbiome to
provide markers capable of use in a point of care diagnostic.
4D intends to use the MicroDx IBS test in our Blautix phase 2
trial to help stratify patients and monitor progression, and will
look to expand on and include it in its trials for cancer and
asthma which start later in 2017.
Increased patent coverage
4D is breaking new ground on a number of fronts, use of bacteria
as a drug and mechanisms associated, process development,
diagnostics, etc., all of which creates intellectual property.
The development of our patent portfolio in some way reflects the
pace of our development; from start up in 2014 we now have 85
granted patents and over 100 applications.
As we continue our understanding and progress in this emerging
field, 4D will continue to develop its leading position in
intellectual property coverage.
Financial summary
In the year to December 2016, our cash and cash equivalents and
short-term deposits reduced from GBP85.4 million to GBP68.8
million, with a loss before tax of GBP11.7 million (compared with
GBP10.1 million in the year to December 2015). Our claim for
research and development tax credit was GBP1.8 million (compared
with GBP1.4 million in the year to December 2015).
Our cash burn for the year was in line with expectation, and
reflected among other things the increased costs of taking our most
advanced programmes through phase 1 trials and preparing our next
wave of programmes for upcoming phase 1 trials.
The Group continues to manage its cash deposits prudently and
invests its funds across a number of financial institutions which
have investment grade credit ratings. The deposits range from
instant access to twelve-month term deposits and are regularly
reviewed by the Board. Cash forecasts are updated monthly to ensure
that there is sufficient cash available for the Group's foreseeable
requirements.
Outlook
In summary, 2016 saw 4D continue its successful development,
building on its existing research and also making strategic
acquisitions which we believe will play a vital role in the
Company's goal to successfully develop Live Biotherapeutics as safe
and effective drugs.
Duncan Peyton
Chief Executive Officer
26 April 2017
Group Statement of Total Comprehensive Income
For the year ended 31 December 2016
31 December 31 December
2016 2015
Notes GBP000 GBP000
--------------------------------------------------------------- ----------- -----------
Research and development costs (10,220) (8,386)
Administrative expenses (2,866) (2,248)
Foreign currency gains 799 124
-------------------------------------------------------------- ----------- -----------
Operating loss (12,287) (10,510)
Finance income 652 451
Finance expense (71) -
-------------------------------------------------------------- ----------- -----------
Loss before taxation (11,706) (10,059)
Taxation 1,843 2,328
-------------------------------------------------------------- ----------- -----------
Loss for the year (9,863) (7,731)
Other comprehensive income:
Foreign currency translation differences - foreign operations (389) -
-------------------------------------------------------------- ------------ -----------
Total comprehensive income for the year (10,252) (7,731)
-------------------------------------------------------------- ------------ -----------
Loss for the year and total comprehensive income for the year attributable to:
Owners of the parent undertaking (10,252) (7,547)
Non-controlling interests - (184)
-------------------------------------------------------------- ------------ -----------
Loss for the year and total comprehensive income for the year (10,252) (7,731)
-------------------------------------------------------------- ------------ -----------
Loss per share
-----------------------------------------------------------------------------------------
Basic and diluted for the year 4 (15.21)p (12.62)p
-------------------------------------------------------------- ----------- -----------
The loss for the year arises from the Group's continuing
operations and is attributable to the equity holders of the
parent.
The basic and diluted loss per share are the same as the effect
of share options is anti-dilutive.
Group Statement of Financial Position
At 31 December 2016
At
At 31 December
31 December 2016 2015
GBP000 GBP000
Assets
Non-current assets
Property, plant and equipment 3,859 1,115
Intangible assets 14,299 6,171
Taxation receivables 23 -
------------------------------------------ ----------------- ------------
18,181 7,286
--------------------------------------------------------------- ------------
Current assets
Inventories 238 28
Trade and other receivables 2,651 2,013
Taxation receivables 3,315 2,623
Short-term investments and cash on deposit 40,111 83,664
Cash and cash equivalents 28,661 1,777
------------------------------------------ ----------------- ------------
74,976 90,105
--------------------------------------------------------------- ------------
Total assets 93,157 97,391
------------------------------------------ ------------------- ------------
Liabilities
Current liabilities
Trade and other payables 4,937 4,309
------------------------------------------ ----------------- ------------
4,937 4,309
--------------------------------------------------------------- ------------
Non-current liabilities
Deferred tax 963 385
Other payables 774 -
------------------------------------------ ----------------- ------------
1,737 385
--------------------------------------------------------------- ------------
Total liabilities 6,674 4,694
------------------------------------------ ------------------- ------------
Net assets 86,483 92,697
------------------------------------------ ------------------- ------------
Capital and reserves
Share capital 162 161
Share premium account 105,909 102,003
Merger reserve 958 958
Translation reserve (389) -
Other reserve (864) (864)
Share-based payments reserve 138 7
Retained earnings (19,431) (9,568)
------------------------------------------ ------------------- ------------
Total equity 86,483 92,697
------------------------------------------ ------------------- ------------
Group Statement of Changes in Equity
For the year ended 31 December 2016
Attributable to owners of parent
----------------------------------------------------------------------------
Share-
based Non-
Share Share Merger Translation Other payment Retained controlling Total
capital premium reserve reserve reserve reserve earnings Total interest equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 January 2015 130 38,259 958 - - - (2,021) 37,326 (278) 37,048
------------------ --- -------- -------- ----------- -------- -------- --------- ------- ----------- -------
Issue of share
capital (net of
expenses) 31 63,744 - - - - - 63,775 - 63,775
Acquisition of
minority interest - - - - (864) - - (864) 462 (402)
------------------ --- -------- -------- ----------- -------- -------- --------- ------- ----------- -------
Total transactions
with owners for
the year 31 63,744 - - (864) - - 62,911 462 63,373
Loss and total
comprehensive
income for the
year - - - - - - (7,547) (7,547) (184) (7,731)
Issue of
share-based
compensation - - - - - 7 - 7 - 7
------------------ --- -------- -------- ----------- -------- -------- --------- ------- ----------- -------
At 31 December
2015 161 102,003 958 - (864) 7 (9,568) 92,697 - 92,697
------------------ --- -------- -------- ----------- -------- -------- --------- ------- ----------- -------
Issue of share
capital (net of
expenses) 1 3,906 - - - - - 3,907 - 3,907
------------------ --- -------- -------- ----------- -------- -------- --------- ------- ----------- -------
Total transactions
with owners
recognised in
equity for the
year 1 3,906 - - - - - 3,907 - 3,907
Loss for the year - - - - - - (9,863) (9,863) - (9,863)
Foreign currency
translation
differences -
foreign
operations - - - (389) - - - (389) - (389)
Issue of
share-based
compensation - - - - - 131 - 131 - 131
------------------ --- -------- -------- ----------- -------- -------- --------- ------- ----------- -------
At 31 December
2016 162 105,909 958 (389) (864) 138 (19,431) 86,483 - 86,483
------------------ --- -------- -------- ----------- -------- -------- --------- ------- ----------- -------
Group Cash Flow Statement
For the year ended 31 December 2016
Year to Year to
31 December 31 December
2016 2015
Notes GBP000 GBP000
Loss after taxation (9,863) (7,731)
Adjustments for:
Depreciation of property, plant and equipment 405 143
Amortisation of intangible assets 213 110
(Profit)/loss on disposal of property, plant and equipment (2) 2
Finance income (652) (451)
Finance expense 71 -
Share-based compensation 131 7
Cash flows from operations before movements in working capital (9,697) (7,920)
Changes in working capital:
(Increase)/decrease in inventories (210) 87
Increase in trade and other receivables (762) (1,375)
Increase in taxation receivables (715) (2,389)
(Decrease)/increase in trade and other payables (2,142) 2,524
--------------------------------------------------------------- ------------- ------------
Cash outflow from operating activities (13,526) (9,073)
--------------------------------------------------------------- ------------- ------------
Cash flows from investing activities
Purchases of property, plant and equipment (2,243) (845)
Purchase of software and other intangibles (76) (14)
Acquisition of subsidiaries net of cash acquired 6 (1,615) -
Acquisition of non-controlling interest - (402)
Cash received on disposal of assets 15 -
Interest received 776 170
Monies drawn from/(placed on) deposit 43,553 (80,657)
--------------------------------------------------------------- ------------- ------------
Net cash inflow/(outflow) from investing activities 40,410 (81,748)
--------------------------------------------------------------- ------------- ------------
Cash flows from financing activities
Proceeds from issues of ordinary share capital - 64,751
Expenses on issue of shares - (976)
--------------------------------------------------------------- ------------ ------------
Net cash inflow from financing activities - 63,775
--------------------------------------------------------------- ------------- ------------
Increase/(decrease) in cash and cash equivalents 26,884 (27,046)
Cash and cash equivalents at the start of the year 1,777 28,823
--------------------------------------------------------------- ------------- ------------
Cash and cash equivalents at the end of the year 28,661 1,777
--------------------------------------------------------------- ------------ ------------
Notes to the Financial Information
For the year ended 31 December 2016
1. Basis of preparation
The financial information set out herein does not constitute
statutory accounts as defined in Section 434 of the Companies Act
2006. The financial information for the year ended 31 December 2016
has been extracted from the Company's audited financial statements
which were approved by the Board of Directors on 26 April 2017 and
which, if adopted by the members at the Annual General Meeting,
will be delivered to the Registrar of Companies for England and
Wales.
The financial information for the year ended 31 December 2015
has been extracted from the Company's audited financial statements
which were approved by the Board of Directors on 30 March 2016 and
which have been delivered to the Registrar of Companies for England
and Wales.
The reports of the auditor on both these financial statements
were unqualified, did not include any references to any matters to
which the auditors drew attention by way of emphasis without
qualifying their report and did not contain a statement under
Section 498(2) or Section 498(3) of the Companies Act 2006.
The information included in this preliminary announcement has
been prepared on a going concern basis under the historical cost
convention, and in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the EU and the
International Financial Reporting Interpretations Committee (IFRIC)
interpretations issued by the International Accounting Standards
Board ("IASB") that are effective or issued and early adopted as at
the date of this financial information and in accordance with the
provisions of the Companies Act 2006.
The Company is a public limited company incorporated and
domiciled in England & Wales and whose shares are quoted on
AIM, a market operated by The London Stock Exchange. The Company is
incorporated in England and Wales. The registered office is 3(rd)
Floor, 9 Bond Court, Leeds LS1 2JZ
2. Going concern
Having prepared management forecasts and made appropriate
enquiries, the directors are satisfied that the Group has adequate
resources for the foreseeable future as the Group is at the
development stage of its business lifecycle. Accordingly they have
continued to adopt the going concern basis in preparing the
information.
3. Segmental reporting
An operating segment is a component of an entity that engages in
business activities from which it may earn revenues and incur
expenses, whose operating results are regularly reviewed by the
Group's chief operating decision maker, being the Chief Executive
Officer, to make decisions about resources to be allocated to the
segment and assess its performance, and for which discrete
financial information is available. As at the reporting date the
Group operated as a single segment.
4. Loss per share
Year to Year to
31 December 31 December
2016 2015
GBP000 GBP000
Loss for the year attributable to equity shareholders (9,863) (7,547)
------------------------------------------------------ ----------- ------------
Weighted average number of shares:
Ordinary shares in issue 64,858,150 59,823,755
------------------------------------------------------ ----------- ------------
Basic loss per share (pence) (15.21)p (12.62)p
------------------------------------------------------ ----------- ------------
The basic and diluted loss per share are the same as the effect
of share options is anti-dilutive.
5. Reclassification
During the year the Group reviewed the basis of the disclosure
of costs in the accounts relative to the expenses incurred and the
nature of the expense. Although there was no net change in the
reported loss following on from this review, the totals
disclosed
Original Current disclosure
disclosure Movement
GBP000 GBP000
Research and development expense 6,895 8,386 1,491
Administrative expenses 3,615 2,248 (1,367)
Foreign currency gains - (124) (124)
--------------------------------- ------ ------------------ --------
10,510 10,510 -
--------------------------------- ------ ------------------ --------
6. Business combinations
Acquisition of 4D Pharma Cork Limited (formerly Tucana Health
Limited)
On 10 February 2016 4D acquired 100% of the issued share capital
of Tucana Health Limited ("Tucana") for an initial consideration of
EUR4 million which was satisfied by the issue of 410,603 shares in
4D at a price per share of GBP7.55. Tucana is a start-up company
investigating the use of the microbiome signatures to aid the
diagnosis and treatment of diseases including those targeted by 4D.
On completion of further technical and clinical milestones a
further consideration of up to EUR8 million will become due which
will be satisfied by the issue of up to 1 million additional shares
in 4D.
Proportion
of voting
equity
interests
Principal Date of acquired Consideration
Year activity acquisition % GBP000
--------------------------------------------- ------------------------ ---------------- ---------- -------------
2016 Research and development 10 February 2016 100 3,803
-------------------------------------------- ------------------------- ---------------- ---------- -------------
Consideration: GBP000 GBP000
--------------------------------------------- ------------------------------------------------------ -------------
Initial share consideration 3,100
Contingent consideration to be satisfied in
shares 985
Discounting of estimated future cash flows (282)
Net contingent consideration 703
--------------------------------------------- ---------------------------------------------------------------------
Total consideration on acquisition 3,803
--------------------------------------------- ---------------------------------------------------------------------
Fair value of assets acquired and liabilities recognised at the date of acquisition
Non-current assets
Intellectual property 2,584
Non-current liabilities
Deferred tax on acquisition (555)
--------------------------------------------- ---------------------------------------------------------------------
Fair value of identifiable net assets
acquired 2,029
--------------------------------------------- ---------------------------------------------------------------------
Goodwill arising on acquisition
Consideration transferred 3,803
Less: fair value of identifiable net assets
acquired (2,029)
--------------------------------------------- ---------------------------------------------------------------------
Goodwill arising on acquisition 1,774
--------------------------------------------- ---------------------------------------------------------------------
For the 11 months to 31 December 2016 4D Pharma Cork Limited
recorded a loss of GBP0.233 million after tax. On a pro-rata basis
this equates to an annualised loss of GBP0.254 million.
Acquisition of 4D Pharma Leon, S.L.U.
On 8 April 2016 4D invested GBP2,000 into 4D Pharma Leon,
S.L.U., a newly incorporated Spanish subsidiary, which in turn
acquired the production assets of Biomar, S.A. ("Biomar"). The
consideration for the production assets was an initial EUR3 million
on completion of which EUR2 million was paid in cash and EUR1
million satisfied by the issue of 82,349 4D pharma plc shares at a
price of GBP9.805. In addition a further EUR3 million will become
payable in cash upon successful GMP certification in respect of the
production of Live Biotherapeutics at the Leon premises which is
accounted for under financial liabilities in the Statement of
Financial Position as at 31 December 2016.
Proportion
of voting
equity
interests
Principal Date of acquired Consideration
Year activity acquisition % GBP000
------------------------------------- ----------------------------------- ------------- ---------- -------------
2016 Production of Live Biotherapeutics 8 April 2016 100 4,845
------------------------------------ ------------------------------------ ------------- ---------- -------------
Consideration: GBP000
------------------------------------- -----------------------------------------------------------------------------
Initial share consideration 807
Initial cash consideration 1,615
Contingent consideration to be
settled in cash 2,423
------------------------------------- -----------------------------------------------------------------------------
Total consideration on acquisition 4,845
------------------------------------- -----------------------------------------------------------------------------
Fair value of assets acquired and liabilities recognised at the date of acquisition
Non-current assets
Property, plant and equipment 959
Non-current liabilities
Deferred tax on acquisition (23)
------------------------------------- -----------------------------------------------------------------------------
Fair value of identifiable net assets
acquired 936
------------------------------------- -----------------------------------------------------------------------------
Goodwill arising on acquisition
Consideration transferred 4,845
Less: fair value of identifiable net
assets acquired (936)
------------------------------------- -----------------------------------------------------------------------------
Goodwill arising on acquisition 3,909
------------------------------------- -----------------------------------------------------------------------------
For the nine months to 31 December 2016, 4D Pharma Leon, S.L.U.
recorded a loss of GBP0.039 million after tax. On a pro-rata basis
this equates to an annualised loss of GBP0.052 million.
7. Related party transactions
Group
Transactions with Directors and related entities
During the year Aquarius Equity Partners Limited, an entity
controlled by Duncan Peyton and Dr Alexander Stevenson, charged the
Group GBP8,368 for other office expenses (31 December 2015:
GBP94,206). As at 31 December 2016 GBP3,144 was due from Aquarius
Equity Partners Limited (31 December 2015: GBPNil).
During the year, Thomas Engelen charged the Group GBPNil for
consultancy services (31 December 2015: GBP9,210) and was owed
GBPNil at 31 December 2016 (31 December 2015: GBPNil).
In November 2012, Thomas Engelen was issued with 6,372 nil-paid
shares in 4D Pharma Research Limited. On purchase of the remaining
non-controlling interest in 4D Pharma Research Limited in March
2015 by the Company, the valuation clause associated with these
shares was triggered at GBP30 per share. This resulted in a payment
from the Company to 4D Pharma Research Limited for the outstanding
value on the shares of GBP191,160.
Transactions with key personnel and related entities
There were no trading transactions with Fommir Limited during
the year, a company where Douglas Thomson was a director and
majority shareholder. During the year to 31 December 2015 the
company charged the Group GBP120,000 for consultancy services,
GBP150,000 in performance-related bonuses and GBP5,197 for other
costs. At the year end the Group owed Fommir Limited GBPNil (31
December 2015: GBP102,229).
During the year summ.it assist llp, an entity in which Stephen
Dunbar is a partner, recharged the Group GBP23,690 for IT equipment
and software (31 December 2015: GBP14,158), GBP4,126 for IT support
(31 December 2015: GBP7,650), GBP60,328 for accounting and
bookkeeping services (31 December 2015: GBP94,755) and GBP3,199 for
other costs (31 December 2015: GBP989). At the year end GBP6,766
was due to summ.it assist llp (31 December 2015: GBP7,402).
3C SAS, an entity owned by Christophe Carité, provided
consultancy services to the Group of GBP182,324 (31 December 2015:
GBP113,322) and recharged costs of GBP73,029 (31 December 2015:
GBP63,805). At the year end GBPNil was due to 3C SAS (31 December
2015: GBPNil).
8. Report and accounts
A copy of the Annual Report and Accounts will be sent to all
shareholders with notice of the Annual General Meeting.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR BCGDSSUDBGRL
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