TIDMHVO
RNS Number : 3596R
hVIVO plc
21 September 2017
For immediate release 7.00am: 21 September 2017
HVIVO PLC
("hVIVO" or the "Company")
HALF-YEAR FINANCIAL REPORT
FOR THE SIX MONTHSED 30 JUNE 2017
Strengthening our position as a specialised centre of excellence
in clinical research and development of treatments for respiratory
and infectious diseases
hVIVO plc (AIM: HVO), a specialty biopharma company with
clinical testing capabilities, is pleased to announce its half-year
financial report for the six months ended 30 June 2017.
Financial Highlights
-- Revenue was GBP3.9 million this financial period (H1'16:
GBP8.9 million), with focus on the advancement of our equity
investment pipeline and the completion of the PrEP-001 studies and
significant work on the FLU-v study. Given our currently contracted
pipeline, we expect revenue to be significantly higher in the
second half of 2017.
-- Gross profit was GBP1.0 million and gross margin 25.6% (H1'16
GBP0.9 million and 10.4%) which is illustrative of the ongoing cost
and process efficiencies being achieved across the platform.
-- Research and development expense was GBP2.8 million (H1'16:
GBP2.9 million) as we prioritised discovery research and clinical
trial capabilities.
-- Loss before tax was GBP9.1 million (H1'16: GBP11.8 million)
and loss for the period was GBP7.7 million (H1'16: GBP9.7
million).
-- Short-term deposits, cash and cash equivalents at 30 June
2017 was GBP15.4 million (30 June 2016: GBP34.1 million; 31
December 2016 GBP25.7 million) before receipt, post-period, of a
R&D tax credit of GBP4.0 million. We continue to focus on
implementing cost and process efficiencies, as well as prioritising
investment spend to achieve near term value inflection milestones
in our equity investment pipeline.
Operational Highlights
-- Completed two Phase IIb studies for Imutex's universal flu
vaccine (FLU-v) with US NIAID (National Institute of Allergy and
Infectious Diseases, part of US National Institutes of Health) and
EU UNISEC (Universal Influenza Vaccines Secured Consortium). On
track for results to be available at year end.
-- Initiated a first-in-man Phase I study for Imutex's
mosquito-borne illness vaccine platform (AGS-v) with NIAID expected
to be completed at year end.
-- Announced PrEP-001 Phase IIa dosing and asthma study results.
Analysis of PrEP-001 potential asthma responder groups is underway
with results expected at year end.
-- Launched a novel asthma precision development capability
enabled by our proprietary platform.
-- Public health grants awarded to hVIVO from US DARPA (Defense
Advanced Research Projects Agency) for a flu contagiousness R&D
project and to Imutex from the UK's innovation agency, Innovate UK,
for further development of AGS-v (GBP3.0 million), both post period
end.
Kym Denny, Chief Executive Officer, commented:
"During the first six months of the year, we continued to
generate and consolidate proprietary insights from our Pathomics
platform, strengthening our position as a specialised centre of
excellence for clinical research and development in respiratory and
infectious disease. While this allows us to offer a unique suite of
offerings to clients in our services business, it is their
application to our own development pipeline that has facilitated
the most progress during the period.
The coming months will see us focused on conducting a number of
studies for clients, providing higher billable utilisation of our
quarantine unit. We will also begin to leverage our new precision
development approach to tackle the stubborn development challenges
of asthma therapeutics and we are seeing a lot of interest from
global pharma regarding this. We expect candidate selection against
our Pathomics-derived HVO-001 drug target for severe flu to be
completed in the coming months. Additionally, we are looking
forward to results from Imutex's FLU-v Phase IIb studies with NIAID
and with UNISEC in late 2017, with data readouts from AGS-v
following close on their heels.
Our drive for operational efficiencies continues, with an
ongoing focus to maximise our cash reserves and prioritise our
investment spend to achieve near term value inflection milestones,
such that for 2017 we currently believe that our revenue and gross
margin will be in line with market expectations, while our year end
cash position will be markedly ahead."
For further information please contact:
+44 207 756
hVIVO plc 1300
Kym Denny (Chief Executive
Officer)
Graham Yeatman (Chief Financial
& Business Officer)
Media Enquiries
+1 919 710
Susan Flood 9658
+44 207 260
Numis Securities Limited 1000
Michael Meade / Freddie Barnfield
(Nominated Adviser)
James Black / Michael Burke
(Corporate Broking)
FTI Consulting
Simon Conway / Victoria Foster +44 203 727
Mitchell (UK) 1000
Notes to Editors:
hVIVO plc ("hVIVO"), a specialty biopharma company with
discovery and clinical testing capabilities, is pioneering a
human-based analytical platform to accelerate drug discovery and
development in respiratory and infectious diseases. Leveraging
human disease models in flu, RSV and asthma exacerbation, the hVIVO
platform captures disease in motion, illuminating the entire
disease life cycle from healthy to sick and back to health. Based
in the UK, market leader hVIVO has conducted more than 50 clinical
studies, inoculated over 2500 volunteers and has three
first-in-class therapies currently in development with a growing
pre-clinical pipeline.
hVIVO plc
Statement from Chief Executive Officer
Introduction
I am pleased to present the hVIVO half-year financial report for
the six months ended 30 June 2017. During this period, we continued
to develop and leverage our suite of proprietary Pathomics platform
technologies that are based on sophisticated human disease models
in respiratory diseases such as flu, RSV, and asthma.
The hVIVO platform captures 'disease in motion', illuminating
the entire disease life cycle as otherwise-healthy human subjects
progress to sickness and then recover. When coupled to our
extensive expertise, these models, and the unique insights that
they provide, drive clients to our clinical trials services
business, inform clinical development decisions for assets that we
control and allow us to evaluate opportunities to acquire, or
in-licence, rights to others. We believe this multi-pronged
approach positions us well for creating significant and sustainable
shareholder value as we move forward.
In particular, the first half of 2017 saw us progress our three
first-in-class clinical stage assets, access grant funding to
progress our programmes that address threats to public health, and
cultivate significant interest in our new asthma precision
development service. We have also further bolstered our IP
portfolio with additional patent application filings. In addition,
we welcomed a new member to the Board, Dr Trevor Phillips, formerly
Chief Operations Officer and President of US Operations at Vectura
Group, who joined as a Non-Executive Director in June. Trevor's
extensive drug development and corporate development experience
will be invaluable as we progress our precision medicine based
inventions and products towards commercialisation.
Operational Review
Precision Clinical Development: Asthma
Since 2015, hVIVO has been validating new human models that we
can add to our service business and that will also enable us to
gain proprietary insights to drive decision making in the
identification of compelling new drug candidates for our own
account. We have arrived at this stage with asthma.
The complexity of asthma arises from the existence of many
disease subtypes with differing underlying pathologies. We believe
that being able to elucidate and exploit these subtle differences
in clinical trials is vital in developing new, effective and
targeted treatments.
In 2016, hVIVO data mined samples from our newest human model in
asthma exacerbation and as a result developed an asthma-worsening
predictor. We have built on 2016's progress, creating additional
models that we believe will allow us to progress the concept of
precision development in asthma that in a way is analogous to the
approach in oncology that has led to the approval of precision, or
targeted, medicines in oncology. Multiple, highly visible failures
in late stage clinical trials of once promising asthma drug
candidates have occurred, causing pharma and biotech companies
focused on asthma to look for other approaches to minimise risk. We
believe that hVIVO is well positioned to capitalise from this
change in thinking.
In the first new model in our service, the hVIVO platform is
used to define a 'responder toolkit' of biomarkers, patient
characteristics and study designs for early development in asthma.
After launching this service only in May 2017, we have already seen
significant client response with multiple discussions with big
pharma ongoing.
Steady Progress in Pipeline Products: FLU-v, AGS-v and
PrEP-001
Our own development pipeline arises from equity investments in
Imutex Limited (FLU-v and AGS-v) and PrEP Biopharm Limited
(PrEP-001). hVIVO works with both companies to guide the clinical
development of these assets and to conduct clinical studies using
our model and clinical trials management expertise.
Universal Flu Vaccine, FLU-v
FLU-v is a 'universal flu' vaccine that is designed to provide
broad spectrum coverage against multiple flu strains, with two
Phase IIb studies underway. The Phase IIb study for FLU-v being
conducted by hVIVO and PepTcell Limited (trading as the SEEK Group)
as sponsor (together being the Imutex joint venture) and in
collaboration with National Institutes of Allergy and Infectious
Diseases (NIAID), part of the US National Institutes of Health
(NIH), completed this Spring. With few specific guidelines
established for universal flu vaccines, we are working with NIAID
to capture a wide range of potentially meaningful endpoints for
such T-cell vaccines and are currently defining the statistical
analysis plan before analysis commences. We remain on track for
data to read out at the end of the year.
In addition, the FLU-v Phase IIb study with the Universal
Influenza Vaccines Secured Consortium (UNISEC) has completed dosing
and is progressing according to plan with results also expected at
the end of 2017.
Mosquito-borne Disease Vaccine, AGS-v
AGS-v is a mosquito-borne disease vaccine with a novel proposed
dual action mechanism: preventing infection in humans whilst
controlling the mosquito population. An AGS-v Phase I first-in-man
study with NIAID began in early 2017 as part of a clinical trial
agreement with PepTcell, with results expected in early 2018.
Unlike other vaccines targeting specific mosquito-borne
diseases, AGS-v is designed to trigger an immune response to
mosquito saliva rather than a specific virus or parasite carried by
mosquitoes. When the mosquito feeds, blood containing the AGS-v
specific immune response is taken up in the blood meal and binds to
salivary glands. This shortens the survival of mosquitos by
blocking feeding and therefore prevents the transmission of the
disease to other humans while simultaneously reducing the overall
mosquito population.
Just after the H1'17 period end, Imutex was awarded a GBP3.0
million Small Business Research Initiative (SBRI) contract by the
UK's innovation agency, Innovate UK, to accelerate development of
the AGS-v vaccine. On the heels of this Innovate UK award, Imutex
is also investigating vector control funding opportunities for
Aedes mosquitos in third-world countries where mosquito-borne
diseases such as dengue and malaria are endemic. Malaria is a
considerable public health threat with over 212 million cases
reported worldwide (2015). Vector control is an essential component
of malaria prevention, with insecticide-treated mosquito nets (ITN)
a well-utilised method - with over 500 million nets delivered to
sub-Saharan Africa alone. However, resistance to pyrethroids,
commonly ones used in ITNs, are frequently reported.
Novel Pan-Viral Prophylactic, PrEP-001
PrEP-001 is a novel, nasally administered, broad-spectrum agent
designed to leverage the body's innate immune system to prevent
respiratory tract viral infections. We have previously reported
positive proof-of-concept challenge studies in healthy volunteers
challenged with influenza and human rhinovirus 16, HRV-16 (common
cold). In February 2017, we announced data from two additional
Phase IIa clinical studies. One that profiled PrEP-001 in
asthmatics and another that explored additional dosing schedules.
While these exploratory studies did not meet their primary
endpoints, analysis of the results is providing valuable insights.
In the first half of 2017, we began investigations into a potential
treatment effect in an asthma responder subgroup for this complex
respiratory disease where, as we have indicated above, multiple
phenotypes are recognised but not fully understood. Work regarding
the responder analysis is ongoing in the second half of 2017.
PrEP Biopharm has also conducted two additional biomarker
studies to further investigate safety and dosing for planning
future studies. These are completed and are awaiting publication in
a peer reviewed journal. We continue to work closely with PrEP
Biopharm to elucidate the further development pathway for this
drug.
Pathomics at Work: Mapping of Severe Flu and Associated Novel
Drug Targets
In 2015 and 2016, we developed the first Pathomics maps in
influenza which describe the host response to flu and that allows
us to qualify potential biomarkers and targets. Importantly, this
work has enabled us to bifurcate flu into two related conditions,
'normal' flu and 'severe' flu. In turn this discovery has led us to
identify a new and specific drug target (HVO-001) for severe flu
that we believe is highly relevant to tackling this area of high
unmet need.
This year we have used this proprietary insight to begin
evaluating potential drug candidates, from a number of sources,
specifically for severe flu and we expect to be in a position to
in-licence the selected compound around year end. This work has
generated several opportunities to generate novel intellectual
property and patent filings are on-going.
DARPA Award
Post period end and building upon our patent in flu
contagiousness, hVIVO was recently awarded a cost share grant from
the US Defense Advanced Research Projects Agency (DARPA) through
its Prometheus program. Our patent protects our discovery of a
minimal set of biological signals in a person recently infected
with disease that would indicate within 24 hours of exposure to the
pathogen whether that individual will become contagious to flu.
hVIVO has been awarded funding to further develop this invention
in the context of influenza and identifying molecular biomarkers
for the transmission and spread of the virus. DARPA will be
leveraging hVIVO's know-how on contagiousness with hVIVO collecting
disease in motion samples to qualify, enrich and fine tune the
Company's contagiousness algorithm. This approach has utility in
hVIVO's clinical unit to shorten patient isolation duration during
studies, becoming a valuable clinical trial management tool
exclusive to hVIVO - but more broadly, the approach could improve
forecasting of infectious disease outbreaks.
Clinical Trial Services Business
In the first half of 2017, hVIVO's quarantine unit actively
worked to complete the Phase IIb FLU-v study in 123 volunteers, as
well as completion of work relating to the PrEP-001 studies. A
third-party client asthma study was cancelled by the client at very
short notice due to a change in their strategic priorities, which
created unutilised capacity in the quarantine unit in April and May
2017. We also commenced work for a number of other client projects
with quarantines in the second half of the year.
As we readied for the launch of our new precision development
service in asthma in May, we made significant progress in the
honing of our operational excellence, particularly around patient
recruitment and subject management. It has been an ongoing focus of
hVIVO to develop clinical trial management methodology that ensures
we perform well above industry norms for patient enrolment and data
delivery.
Financial Review
Condensed Consolidated Statement of Comprehensive Income
hVIVO operates a hybrid business model where revenues arise from
the provision of specialist clinical research and development
services, principally the execution of clinical trials or human
'challenge' studies in our dedicated quarantine unit. Contracting
customers are either third-party clients or partners whose assets
we partly own through equity investments (PrEP Biopharm and
PrEP-001; Imutex and FLU-v).
Revenue for the six months ended 30 June 2017 was GBP3.9 million
(H1'16: GBP8.9 million; 2016: GBP19.9 million) and arose primarily
from the conduct of the majority of quarantines for the PepTcell
FLU-v study in H1'17, as well as completion of work relating to the
PrEP-001 studies. Additionally, workload and costs arising from a
scope change that required additional quarantines in the FLU-v
study have been reported in the income statement as 'provision of
services to joint ventures', with income expected to be recognised
in H2'17.
Gross profit for the period was GBP1.0 million and gross margin
25.6% (H1'16: GBP0.9 million and 10.4%; 2016: GBP4.2 million and
21.3%), which is illustrative of the ongoing cost and process
efficiencies being achieved in the platform, offset by a cancelled
client engagement in this financial period.
Research and development expense was GBP2.8 million (H1'16:
GBP2.9 million; 2016: GBP6.3 million) and reflects hVIVO's
continued investment in discovery research and clinical trial
capabilities. hVIVO's R&D spend is being managed tightly to
prioritise investment to near term value inflection and
collaboration opportunities.
Administration expense was GBP6.1 million (H1'16: GBP6.3
million; 2016: GBP13.8m). Reductions of approximately GBP0.7
million (10%) have been achieved in H1'17 through the continuation
of cost savings initiatives during the period, balanced by
associated termination costs and provisions in the period together
with our investment in the implementation of a medical management
technology application, and we expect 2017 administration expense
to reduce further as we benefit from the results of these
initiatives.
The share of the loss of associate was GBP0.6 million (H1'16:
GBP3.9 million; 2016: GBP7.4 million), which reflects the share of
results of hVIVO's investments in PrEP Biopharm and Imutex. This
has reduced year-on-year due to the completion of the clinical
study work with hVIVO Services Limited.
Loss before taxation was GBP9.1 million (H1'16: GBP11.8 million;
2016: GBP22.6 million).
Condensed Consolidated Statements of Financial Position and Cash
Flows
As at 30 June 2017, net assets amounted to GBP38.4 million
(H1'16: GBP54.0 million; 2016: GBP46.1 million), including
short-term deposits and cash and cash equivalents of GBP15.4
million (H1'16: GBP34.1 million; 2016: GBP25.7 million). A 2016
R&D tax credit refund of GBP4.0 million was received from HM
Revenue & Customs on 5 July 2017, three working days following
the end of the H1'17 financial period.
Net cash used in operating activities over the six months to 30
June 2017 was GBP10.1 million (H1'16: GBP10.1 million; 2016:
GBP17.8 million).
Summary and Outlook
We continue to generate and consolidate proprietary insights
from our Pathomics platform, strengthening our position as a
specialised centre of excellence for clinical research and
development in respiratory and infectious disease. While this
allows us to provide a unique suite of offerings to clients in our
services business, it is their application to our own development
pipeline and service offerings that has facilitated the most
progress in the first half of 2017.
The coming months will see us focused on conducting on a number
of client studies. We will also begin to leverage our new precision
development approach to tackle the stubborn development challenges
of asthma therapeutics and start to build out a pipeline. We expect
to complete candidate selection against our Pathomics-derived
HVO-001 drug target for severe flu in the coming months. Given the
potential risk to public health that severe flu presents, we will
also investigate non-dilutive funding from government and
charitable sources to help facilitate and accelerate development.
Additionally, we are looking forward to results from Imutex's FLU-v
Phase IIb studies with NIAID and with UNISEC in late 2017, with
data readouts from AGS-v following close on their heels.
From a financial performance perspective, we enter the second
half of the year with higher billable utilisation of the quarantine
unit. Our drive for operational efficiencies continues, with an
ongoing focus to maximise our cash reserves and prioritise our
investment spend to achieve near term value inflection milestones,
such that for 2017 we currently believe that our revenue and gross
margin will be in line with market expectations, while our year end
cash position will be markedly ahead.
I look forward to updating you further as we achieve key
milestones, and I would like to thank our staff, volunteers,
clients, partners and investors for their invaluable, continuing
support.
Kym Denny
Chief Executive Officer
20 September 2017
hVIVO plc
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2017
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'000
---------- ---------- --------------
Revenue 2 3,924 8,855 19,850
Cost of sales (2,920) (7,934) (15,629)
Gross profit 1,004 921 4,221
Other income 95 147 276
Research and development
expense (2,817) (2,886) (6,282)
Administrative expense (6,063) (6,256) (13,767)
Loss on provision of services
to joint ventures 4 (744) - -
Share of loss of associates
and joint ventures 5 (606) (3,868) (7,371)
Loss from operations (9,131) (11,942) (22,923)
Finance income 42 188 310
Finance costs (27) (9) (18)
------------------------------------ ----- ---------- ---------- ------------
Loss before taxation (9,116) (11,763) (22,631)
Taxation 6 1,393 2,098 4,750
------------------------------------ ----- ---------- ---------- ------------
Loss for the period (7,723) (9,665) (17,881)
Other comprehensive income,
net of tax
Items that may be reclassified
subsequently to profit or
loss
Share of other comprehensive
income of associates and
joint ventures (21) (29) 207
Exchange differences arising
on translating foreign operations (8) 8 (65)
----- ---------- ---------- ------------
Total comprehensive loss for
the period attributable to owners
of the parent (7,752) (9,686) (17,739)
------------------------------------------- ---------- ---------- ------------
Loss per share - basic (pence) 7 (9.9p) (12.4p) (22.9p)
Loss per share - diluted
(pence) 7 (9.9p) (12.4p) (22.9p)
------------------------------------ ----- ---------- ---------- ------------
All results derive from continuing
operations.
The accompanying notes are an integral part of
the Condensed Consolidated Statement of Comprehensive
Income.
hVIVO plc
Condensed Consolidated Statement of Financial Position
As at 30 June 2017
30 June 30 June 31 December
2017 2016 2016
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'000
------------------------------- ----- ---------- ---------- ------------
Assets
Non-current assets
Goodwill 1,722 1,722 1,722
Intangible assets 3,411 3,184 3,375
Property, plant and equipment 936 2,081 1,552
Investment in associates
and joint ventures 8 13,522 17,496 14,150
19,591 24,483 20,799
------------------------------- ----- ---------- ---------- ------------
Current assets
Inventories 1,978 2,027 1,986
Current intangible asset 9 - 1,394 -
Trade and other receivables 3,060 3,539 3,704
Research and development
tax credit receivable 6,031 6,369 4,558
Short-term deposits 5,000 25,022 -
Cash and cash equivalents 10,355 9,063 25,679
---------- ---------- ------------
26,424 47,414 35,927
---------- ---------- ------------
Total assets 46,015 71,897 56,726
------------------------------- ----- ---------- ---------- ------------
Equity and liabilities
Equity
Share capital 3,906 3,904 3,905
Share premium account 93,256 93,180 93,217
Other reserve 211 211 211
Share-based payment reserve 286 201 238
Merger reserve 4,199 4,199 4,199
Retained deficit (63,470) (47,665) (55,718)
------------------------------- ----- ---------- ---------- ------------
Total equity 38,388 54,030 46,052
------------------------------- ----- ---------- ---------- ------------
Non-current liabilities
Other payables 363 438 400
Provisions 2,925 2,638 3,131
3,288 3,076 3,531
------------------------------- ----- ---------- ---------- ------------
Current liabilities
Trade and other payables 10 4,339 14,791 7,143
------------------------------- ----- ---------- ---------- ------------
4,339 14,791 7,143
------------------------------- ----- ---------- ---------- ------------
Total liabilities 7,627 17,867 10,674
------------------------------- ----- ---------- ---------- ------------
Total liabilities and equity 46,015 71,897 56,726
------------------------------- ----- ---------- ---------- ------------
The accompanying notes are an integral part of the Condensed
Consolidated Statement of Financial Position.
The Interim Condensed Consolidated Financial Statements of hVIVO
plc (registered company number 08008725) were approved by the Board
of Directors and authorised for issue on 20 September 2017 and
signed on its behalf by:
Graham E Yeatman
Chief Financial & Business Officer
hVIVO plc
Condensed Consolidated Statement of Changes in Equity
As at 30 June 2017
Share-
Share based
Share premium payment Merger Other Retained Total
capital account reserve reserve reserve deficit equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------- -------- -------- -------- -------- --------- ---------
As at 1 January
2016 3,903 93,145 144 4,199 211 (37,979) 63,623
Share-based payments - - 94 - - - 94
Proceeds from shares
issued:
Issue of new shares 2 72 - - - - 74
--------------------- -------- -------- -------- -------- -------- --------- ---------
Total transactions
with owners in
their
capacity as owners 2 72 94 - - - 168
Loss for the year - - - - - (17,881) (17,881)
Share of other
comprehensive
income of
associates
and joint ventures - - - - - 207 207
--------------------- -------- -------- -------- -------- -------- --------- ---------
Total comprehensive
income 2 72 94 - - (17,674) (17,506)
Exchange differences
on translation of
foreign assets - - - - - (65) (65)
--------------------- -------- -------- -------- -------- -------- --------- ---------
As at 31 December
2016 3,905 93,217 238 4,199 211 (55,718) 46,052
Loss for the period - - - - - (7,723) (7,723)
Other comprehensive
income - - - - - (29) (29)
--------------------- -------- -------- -------- -------- -------- --------- ---------
Total comprehensive
income - - - - - (7,752) (7,752)
Issue of new shares 1 39 - - - - 40
Share-based payments - - 48 - - - 48
As at 30 June 2017 3,906 93,256 286 4,199 211 (63,470) 38,388
--------------------- -------- -------- -------- -------- -------- --------- ---------
As at 1 January
2016 3,903 93,145 144 4,199 211 (37,979) 63,623
Loss for the period - - - - - (9,665) (9,665)
Other comprehensive
income - - - - - (21) (21)
--------------------- -------- -------- -------- -------- -------- --------- ---------
Total comprehensive
income - - - - - (9,686) (9,686)
Issue of new shares 1 35 - - - - 36
Share-based payments - - 57 - - - 57
As at 30 June 2016 3,904 93,180 201 4,199 211 (47,665) 54,030
--------------------- -------- -------- -------- -------- -------- --------- ---------
The accompanying notes are an integral part of the Condensed
Consolidated Statement of Changes in Equity.
hVIVO plc
Condensed Consolidated Statement of Cash Flows
For the six months ended 30 June 2017
6 months 6 months Year ended
ended ended
30 June 30 June 31 December
2017 2016 2016
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
--------------------------------- --- ---------- ---------- ------------
Net cash used in operating
activities 11 (10,092) (10,136) (17,832)
Cash flows from investing
activities
Acquisition of intangible
assets (194) (312) (660)
Acquisition of property,
plant and equipment (38) (84) (162)
(Increase)/decrease in balances
on short-term deposit (5,000) 12,009 37,031
Investment in associates
and joint ventures - (6,792) (7,138)
Interest received 42 138 310
---------- ---------- ------------
Net cash (used in)/generated
from investing activities (5,190) 4,959 29,381
Cash flows from financing
activities
Net proceeds from issue - - -
of shares
Other payables repaid (37) (37) (75)
Net cash used in financing
activities (37) (37) (75)
--------------------------------- --- ---------- ---------- ------------
Net (decrease)/increase
in cash and cash equivalents (15,319) (5,214) 11,474
Exchange (loss)/gain on
cash and cash equivalents (5) 72 -
Cash and cash equivalents
at the start of financial
period 25,679 14,205 14,205
Cash and cash equivalents
at the end of financial
period 10,355 9,063 25,679
--------------------------------- --- ---------- ---------- ------------
The accompanying notes are an integral part of the Condensed
Consolidated Statement of Cash Flows.
hVIVO plc
Notes to the Condensed Consolidated Interim Financial
Statements
1. Accounting policies
Basis of preparation and approval of the Interim Financial
Statements
The accounting policies adopted in the preparation of the
Interim Financial Statements are consistent with those set out in
the Group's Annual Report and Financial Statements 2016, which were
prepared in accordance with International Financial Reporting
Standards ("IFRS") as adopted by the European Union and as issued
by the International Accounting Standards Board ("IASB"), and are
expected to be consistent with the accounting policies that will be
applied in the Group's Annual Report and Financial Statements 2017.
They are prepared in accordance with IAS 34, "Interim Financial
Reporting".
The Interim Financial Statements for the six months ended 30
June 2017 do not include all the information required for full
Annual Financial Statements and should be read in conjunction with
the Consolidated Financial Statements for the year ended 31
December 2016. The financial information for the six months ended
30 June 2017 and for the six months ended 30 June 2016 is
unaudited.
The Interim Financial Statements do not comprise statutory
accounts within the meaning of Section 434 of the Companies Act
2006. Statutory accounts for the year ended 31 December 2016 were
approved by the Board on 19 April 2017 and delivered to the
Registrar of Companies. The report of the auditors on those
accounts was unqualified, did not contain an emphasis of matter
paragraph and did not contain any statement under Section 498(2) or
Section 498(3) of the Companies Act 2006.
Management prepares detailed working capital forecasts which are
reviewed by the Board on a regular basis. The forecasts include
assumptions regarding the status of client engagements and sales
pipeline, future revenues and costs together with various scenarios
which reflect growth plans, opportunities, risks and mitigating
actions. The forecasts also include assumptions regarding the
timing and quantum of investment in the Group's research and
development programme. The Directors are satisfied that there is
sufficient discretion and control as to the timing and quantum of
cash outflows to ensure that the Group will meet its liabilities as
they fall due for the foreseeable future. The Directors have a
reasonable expectation that the Group will have adequate cash
resources to continue to meet the requirements of the business for
at least the next twelve months. Accordingly, the Board continues
to adopt the going concern basis in preparing the Interim Financial
Statements.
The Company is a limited liability company incorporated and
domiciled in England & Wales and whose shares are quoted on
AIM, a market operated by The London Stock Exchange. The Group
Financial Statements are presented in pounds Sterling (GBP), which
is the Group's presentational currency, and all values are rounded
to the nearest thousand (GBP'000) except where indicated
otherwise.
The Interim Financial Statements were approved by the Board of
Directors on 20 September 2017.
2. Segmental information
The Group's Chief Operating Decision Maker, the Chief Executive
Officer, is responsible for resource allocation and the assessment
of performance. In the performance of this role, the Chief
Executive Officer reviews the Group's activities, in the aggregate.
The Group has therefore determined that it has only one reportable
segment under IFRS 8 Operating Segments, which is "medical and
scientific services".
The Group carries out its main activities from the United
Kingdom. The Group conducts sales activities in the US and in
Europe which are carried out through hVIVO Inc and hVIVO Services
Limited respectively. All revenue is derived from activities
undertaken in the UK.
3. Interpretations of accounting standards
The Group has not adopted any standards or interpretations early
in either the current or comparative periods. The Directors are of
the opinion that the only standards in issue but not yet effective
which could have an impact on the Financial Statements are IFRS 15
Revenue from Contracts with Customers and IFRS 16 Leases.
Management are considering the likely impact of the adoption of
IFRS 15 but do not expect it to have a material impact on the
financial statements.
4. Loss on provision of services to joint ventures
During H1'17 hVIVO Services performed a scope change for
additional study work for a joint venture partner of hVIVO plc.
This quarantines were successfully completed by 30 June 2017, but
due to the timing of ongoing contract negotiations the income from
work done has not been invoiced or recognised before the period
end.
5. Share of loss of associates and joint ventures
hVIVO plc holds equity investments in development stage
Biopharmaceutical Companies. As the invested companies are
incurring expenditure to develop products no revenue will be
generated, and losses will be presented, until the products are
successfully developed.
At 30 June 2017, the Group held an investment in one associate,
PrEP Biopharm Limited, and one joint venture, Imutex Limited (see
Note 8).
The Group's share of after tax losses of associates and joint
ventures is set out below:
6 months 6 months Year
ended ended ended
30 Jun 30 Jun 31 Dec
2017 2016 2016
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Share of loss of
associate and joint
venture (606) (3,868) (7,371)
Share of comprehensive
income (21) (29) 207
------------------------------ ----------- ----------- --------------
Share of total comprehensive
income (627) (3,897) (7,164)
------------------------------ ----------- ----------- --------------
Summarised combined income statement information in respect of
PrEP Biopharm Limited and Imutex Limited is set out below:
6 months 6 months Year
ended ended ended
30 Jun 30 Jun 31 Dec
2017 2016 2016
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Revenue - - -
R&D Expenditure (1,429) (6,301) (11,613)
Loss after taxation (1,765) (6,231) (11,591)
Comprehensive income (108) (46) (125)
Total comprehensive
income (1,873) (6,277) (11,716)
---------------------- ----------- ----------- ----------
In the Company's unaudited half-year financial report for the
six months ended 30 June 2016, it was reported that the Company had
entered into a joint venture with PepTcell Limited and acquired
49.0% of the share capital of Imutex Limited. It was also reported
that, due to the linked nature of hVIVO plc's equity investment in
Imutex Limited and the clinical services contracted to be provided
by the Company's subsidiary hVIVO Services Limited to PepTcell
Limited, the GBP5.5 million value of contracted services was
recorded as an obligation to provide services and which is
extinguished through delivery of services, with any resulting gains
being recognised in the income statement.
On 13 April 2017, the Company announced in its trading update
that having further reviewed the position and considered the nature
and substance of the arrangement, the accounting treatment for the
contract for clinical services with PepTcell returned to the
original expectation, as announced on 22 April 2016. hVIVO plc
recognises the GBP5.5 million FLU-v Phase IIb clinical study as
revenue as the work is completed. The revenue recognised in
relation to the work completed for this contract for the period
ended 30 June 2017 was GBP2.6 million (H1'16: GBP0.2 million; 2016:
GBP2.8 million). The comparative period to 30 June 2016 has been
re-presented in these financials to reflect the subsequently
reversed final presentation of these results.
6. Taxation
6 months 6 months Year
ended ended ended
30 Jun 30 Jun 31 Dec
2017 2016 2016
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------------------ ----------- ----------- ---------
Tax Benefit:
R&D tax credit (1,459) (1,649) (4,293)
Adjustments in respect
of prior periods 28 (473) (473)
Foreign current tax 38 24 16
------------------------ ----------- ----------- ---------
(1,393) (2,098) (4,750)
------------------------ ----------- ----------- ---------
The Group continues to account for its recurring annual SME
R&D tax credit as an income tax benefit due to the requirement
to surrender tax losses in exchange for recoverable R&D
credits.
The Group has not recognised any deferred tax assets including
carried forward losses and other temporary differences. These
deferred tax assets have not been recognised as the Group's
management considers that there is insufficient taxable income,
taxable temporary differences and feasible tax planning strategies
to utilise all the cumulative losses and it is probable that the
deferred tax assets will not be realised in full.
7. Loss per share (LPS)
The calculation of the basic and diluted LPS is based on the
following data:
6 months 6 months Year
ended ended ended
30 Jun 30 Jun 31 Dec
2017 2016 2016
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------------------- ----------- ----------- -----------
Loss:
Loss for the period (7,723) (9,665) (17,881)
------------------------- ----------- ----------- -----------
Number of shares:
Weighted average
number of ordinary
shares for the purpose
of basic LPS 78,120,802 78,064,355 78,076,407
Effect of dilutive
potential ordinary
shares:
- share options - - -
- warrants - - -
------------------------- ----------- ----------- -----------
Weighted average
number of ordinary
shares for the purpose
of diluted LPS 78,120,802 78,064,355 78,076,407
------------------------- ----------- ----------- -----------
In the six months ended 30 June 2017 and in the comparative
periods presented, the potential ordinary shares were not treated
as dilutive as the Group is loss making, therefore the weighted
average number of ordinary shares for the purposes of the basic and
diluted loss per share were the same.
8. Investment in associates and joint ventures
At 30 June 2017, the Group held investments in one associate,
PrEP Biopharm Limited, and one joint venture, Imutex Limited. A
reconciliation of the carrying value of the Group's investments in
joint ventures and associates is as follows:
2017 2016
GBP'000 GBP'000
------------------------------ -------------- --------------
At 1 January 14,150 14,254
Additions - 7,139
Loss after tax recognised
in the consolidated
statement of comprehensive
income (606) (3,868)
Other comprehensive
income recognized
in the consolidated
income statement (22) (29)
------------------------------- -------------- --------------
At 30 June 13,522 17,496
------------------------------- -------------- --------------
2016
GBP'000
------------------------------ -------------- --------------
At 1 January 14,254
Additions 7,138
Loss after tax recognised
in the consolidated
statement of comprehensive
income (7,371)
Share of other comprehensive
income 129
------------------------------- -------------- --------------
At 31 December 14,150
------------------------------- -------------- --------------
PrEP Biopharm Limited
hVIVO management has concluded that despite holding 62.6% of
PrEP Biopharm Limited equity and having significant influence, the
terms of the Investment and Shareholders' Agreement means that it
does not have the power to direct the relevant activities of PrEP
Biopharm Limited.
Accordingly, hVIVO's investment in PrEP Biopharm Limited has
been accounted for as an investment in an associate.
Imutex Limited
hVIVO holds 49.0% of the equity of Imutex Limited and, under the
terms of the Joint Venture Agreement, appoints two of the current
four Directors. hVIVO management have concluded that the relevant
activities of Imutex Limited are jointly controlled by the
investors and therefore it is appropriate for hVIVO to equity
account for the investment as a joint venture with joint
control.
9. Current intangible asset
30 Jun 30 Jun 31 Dec
2017 2016 2016
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
--------------------- ------------ ----------- ---------
Opening balance - 2,935 2,935
Additions - 1,982 3,475
Released to cost of
sales - (3,523) (6,410)
Closing balance - 1,394 -
--------------------- ------------ ----------- ---------
Where hVIVO commences clinical studies with a view to the study
data generating future economic benefit the cost of performing
these studies is capitalised. As income is recognised the cost is
released to the P&L. In 2016 this balance related to work being
performed on licensing agreements for the PrEP-001 clinical
studies.
10. Trade and other payables
30 Jun 30 Jun 31 Dec
2017 2016 2016
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------------------ ----------- ----------- ---------
Trade payables 1,605 1,903 2,204
Other taxes and social
security 278 367 350
VAT payable - 233 -
Other payables 79 89 178
Foreign current tax 14 - -
payable
Accruals 1,065 1,023 1,347
Deferred income 1,298 11,176 3,064
4,339 14,791 7,143
------------------------ ----------- ----------- ---------
11. Net cash used in operations
6 months 6 months Year Ended
ended ended
30 Jun 30 Jun 31 Dec
2017 2016 2016
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
--------------------------------- ---------- ---------- -----------
Cash flow from operating
activities
Loss before taxation (9,116) (11,763) (22,631)
Adjustments for:
Gain on provision of - (114) -
services to joint venture
Share of loss of associates
and joint ventures 606 3,868 7,371
Depreciation of property,
plant and equipment 655 682 1,288
Amortisation of intangible
assets 158 158 315
Share-based payments 48 57 94
Payment of Non-Executive
Director fees by issue
of shares 40 36 74
Finance costs 27 9 18
Finance income (42) (188) (310)
Gain on foreign exchange (3) (64) -
R&D Expenditure Credit
included in other income (40) (170) (267)
Decrease in provisions (206) (502) (9)
Changes in working capital:
Decrease in inventories 8 114 155
Decrease in current
intangible asset - 1,541 2,935
Decrease/(increase)
in trade and other receivables 633 (847) (1,062)
Decrease in trade and
other payables (2,818) (2,944) (10,359)
Cash used in operations (10,050) (10,127) (22,388)
Finance costs (27) (9) (18)
Income tax refund - - 4,574
Foreign tax paid (15) - -
--------------------------------- ---------- ---------- -----------
Net cash used in operating
activities (10,092) (10,136) (17,832)
--------------------------------- ---------- ---------- -----------
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR VBLFLDKFLBBZ
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