TIDMREDX
RNS Number : 0419A
Redx Pharma plc
21 March 2017
21 March 2017
AIM: REDX
REDX PHARMA PLC
("Redx" or "the Company")
Final results for the year ended 30 September 2016
Redx (AIM: REDX) announces its results for the year ended 30
September 2016
-- Discovery engine delivers two assets to progress into
clinical stage from extensive pipeline
-- Strategic refocus:
o Redx restructures to become a research and development focused
company
-- GBP12 million gross raised post the period end and GBP10 million gross raised in March 2016
Pipeline produces first development assets:
-- RXC004 - our best-in-class Porcupine inhibitor
o Development candidate nominated for pancreatic, biliary and
gastric cancer
o Shown to have the potential to be used in combination with
other immune-oncology products such as immune checkpoint inhibitors
(anti-PD-1), with data presented at EORTC-AACR meeting in November
2016
o Scheduled to enter first-in-human studies post clinical trial
application (CTA) submission in Q2
o Potential to treat fibrotic disease being investigated
-- RXC005 - our best-in-class reversible BTK inhibitor
o In vivo proof of concept achieved for the reversible BTK
program
o Development candidate nominated for drug resistant chronic
lymphocytic leukaemia (CLL) post -period
o Pre-clinical profile presented at ASH meeting in December
2016
o Investigational new drug (IND) application and CTA to be filed
around the end of 2017
Strategic Refocus
-- Redx will refocus its business to concentrate on its key
assets in oncology and immunology, namely Porcupine and BTK
-- Anti-infectives research proposed to continue only under external collaborations
-- Redx remains committed to discovery research, but at a reduced investment level
-- Head count will be significantly reduced by around 86
positions. This equates to an approximately 60% reduction in
staff.
Key Financials
-- Net cash at 30 September 2016: GBP5.8m (2015: GBP9.4m)
-- Other operating income: GBP2.4m (2015: GBP2.6m)
Changes to the Board of Redx Pharma
The Board has received notifications from two directors, Dr.
Frank M. Armstrong, Chairman of the Board of Directors and Mr.
Peter McPartland, Non-Executive Director, have decided not to stand
for re-election at the upcoming Annual General Meeting for
shareholders. Dr. Peter Jackson, Non-Executive Director, co-founder
of Redx and Executive Chairman up to August 2014, will be stepping
down from the Board on 31 March 2017.
Neil Murray, Chief Executive of Redx Pharma Plc, commented,
"Redx has created a world-class capability in small molecule drug
discovery in oncology and immunology. We have a strong research
engine that continues to deliver an innovative pipeline, but we
must now shift our focus towards developing our key portfolio
assets, specifically our Porcupine and BTK programs for hard to
treat diseases. To reflect this new focus, we are reorganizing our
business, including plans to reduce headcount.
"On behalf of the Board of Redx I would like to thank Dr. Frank
M. Armstrong, Dr. Peter Jackson and Mr. Peter McPartland for their
immense contributions to the success of Redx, both as a private and
as a public company. Dr. Peter Jackson has worked tirelessly for
Redx since he helped found the business. I would also like to
extend my personal thanks to Frank, Pete and Peter for the support
they have given me and for the highly professional way in which
they have carried out their roles."
Dr Frank M. Armstrong, Chairman of Redx Pharma Plc, added, "I am
pleased to have been a part of Redx, guiding the Company through
the transition from private to public markets. Redx has made
substantial progress with the portfolio since the IPO and I look
forward to the Company's continued progress as it makes this
critical transition to clinical development and wish the
Management, staff and shareholders every success for the
future."
Conference Call
Redx Pharma will host a conference call today at 14:00 GMT /
10:00 EST to discuss its final results for the year ended 30
September 2016. A presentation will be available on the Redx Pharma
website 10 minutes before the start of the call at
http://redxpharma.com/investors.html. To access the conference
call, please dial one of the appropriate numbers below quoting the
conference ID 86599055.
UK: +44 (0)1452 55 55 66
US: +1 (866) 966-9439
The call will be conducted in English and a replay will be
available on the Company website for 30 days.
For further information, please contact:
Redx Pharma Plc
+44 1625 469
Neil Murray, Chief Executive 900
Karl Hård, Head of IR & Corporate +44 7491 651
Communications 406
Cantor Fitzgerald Europe (Nomad +44 207 894
& Broker) 7000
Phil Davies/ Michael Reynolds
WG Partners (Joint Broker)
Claes Spång/ Chris Lee/ David
Wilson
+44 203 705
Consilium Strategic Communications 9317
Amber Fennell/ Matthew Neal/ Melissa Gardiner +44 203 709 5701
redx@consilium-comms.com
About Redx Pharma Plc
Company website: Redxpharma.com
Redx is focused on the discovery and development of proprietary,
small molecule therapeutics to address areas of high, unmet medical
need, principally in cancer, immunology and infection providing a
pipeline of assets to larger and emerging companies. By improving
the characteristics of existing drug classes to create highly
differentiated, novel, best-in-class drugs, Redx has already
established a broad portfolio of proprietary drug programs.
Chairman's Statement
Overview
It has been another important year for Redx and I am pleased to
report the Company's second set of annual results as a publicly
listed company. Redx's GBP10m (gross) share placing at the end of
March 2016 allowed the Company to aggressively continue to progress
its pipeline.
Redx has made significant progress with its proprietary research
programs over the year. We identified two drug development
candidates in oncology, in our Porcupine (RXC004) and reversible
BTK (RXC005) programs. BTK was announced after financial year end
in October 2016. During the year, we demonstrated that our
Porcupine inhibitor could have a crucial role in improving the
immune system response of some cancer patients when used in
combination with an existing immunotherapy, anti-programmed cell
death-1 (anti-PD-1). We also achieved our seventh pre-clinical
proof of concept, with our reversible BTK program in oncology.
The newly established immunology research team at Redx made good
progress during 2016. One of the key disease areas for the team is
fibrotic diseases of the lung, kidney and liver. There remains a
huge unmet medical need in this area, and we believe we already
have a range of potent and novel compounds which are being
progressed into further research studies.
One of the key developments for the anti-infective team was the
identification of novel antibiotic compounds against drug resistant
Gram-negative bacteria. In vivo testing confirmed that these
compounds are highly effective and they have the potential to
provide a new class of antibiotic agents in the fight against
Anti-microbial Resistance (AMR) which is an area of medical
concern.
In developing new therapies, all our research teams will
continue to focus on targets which are both commercially attractive
and scientifically validated. Our objective is to create valuable,
novel drug candidates that we can progress into development
ourselves or in partnership with large pharmaceutical companies or
well-financed emerging companies.
Our Team
We have established an outstanding senior executive team, with
breadth and depth of scientific and commercial experience. The
success we have achieved so far reflects the talent and ambition
within the business as a whole and on behalf of the Board, I would
like to thank everyone at Redx for their continued hard work and
commitment over the year.
During the year, we were delighted to further strengthen our
Board of Directors with the appointments of Bernd Kirschbaum and
David Lawrence as Non-Executive Directors. Bernd has over 25 years'
experience in the industry having held research leadership
positions in Merck/Merck Serono, Sanofi-Aventis, Aventis and
Hoechst Marion Roussel and brings expert knowledge in drug research
across a range of therapeutic areas. David also has over 25 years'
experience in the biotech and pharmaceutical industries including
companies such as Chiron, Acambis and GlaxoSmithKline. He has a
strong track record in strategy, business development and
commercial management, including working with a number of
investors, biotech start-ups and SMEs.
At the end of September 2016 our CFO Phil Tottey left the
Company and Andrew Booth, formerly Financial Controller, has been
acting as Interim Finance Director pending a permanent
appointment.
Outlook
We look forward with confidence to further developments of the
business in 2017, which the Board expects will be a
transformational year for Redx as it transitions from a
pre-clinical to a clinical stage Company. As we make that change,
our investment focus will be on driving our high-value, clinical
development programs. We will continue to support the right level
of pre-clinical projects to maintain the breadth of our pipeline
and provide the next generation of clinical programs for the
Company, however the implementation of this restructuring will mean
a reduction in the current headcount of Redx. Although,
unfortunately, this will have a major impact on many valued
employees of the Group, the Board has agreed that this is the right
thing to do to enable Redx to progress its emerging clinical
pipeline. The business will make every effort to support and assist
those affected.
We also aim to seek further opportunities to develop the
business, including potential new commercial partnerships.
On a personal note, after careful consideration I have decided
not to offer myself for re-election at the next Annual General
Meeting. I am pleased to have been a part of Redx, guiding the
Company through the transition from private to public markets. Redx
has made substantial progress with the portfolio since the IPO in
2015 and I look forward to monitoring the Company's continued
progress as it makes this critical transition to clinical
development and wish the management, staff and shareholders every
success for the future.
Dr. Frank Armstrong, Non-Executive Chairman
Operational Review
The successful share placing (GBP10m gross) in March 2016
established the financial foundations for Redx to progress its
pipeline during the year. The progress of our two leading programs,
Porcupine (RXC004) and BTK (RXC005), has been rapid and, as these
programs transition into the clinic, the Company will need to focus
and balance its resources on the clinical development of these key
assets in addition to continuing to maintain a steady flow of
projects through the research pipeline.
Pipeline Progress
The Redx pipeline has continued to advance significantly over
the last year. During the period, we achieved in vivo proof of
concept for the reversible BTK program, taking the total to seven.
We currently have two programs, reversible BTK and Porcupine, which
we are progressing into first-in-human clinical studies.
Oncology
During the financial year, our oncology research team nominated
a development candidate in our Porcupine program (RXC004). This
compound is now in formal development studies in preparation for
progress into first-in-human clinical studies and RXC004 is
expected to enter clinic in the next few months. We also secured
proof of concept in our reversible BTK program and aim to initially
develop this compound for Chronic Lymphocytic Leukaemia (CLL). Post
financial year-end, we nominated a clinical candidate in this BTK
program (RXC005). RXC005 is now in formal development studies and
is targeted to be ready for the clinic by the end of 2017.
Reversible Bruton's Tyrosine Kinase program
Bruton's Tyrosine Kinase (BTK) is a key biological enzyme target
which has been validated by the approval of the drug ibrutinib
(Imbruvica(TM)) in the treatment of a range of blood cancers, such
as chronic lymphocytic leukaemia. Redx's reversible BTK inhibitor
RXC005 has shown potent inhibitory activity towards wild-type
(normal) BTK as well as mutant BTK (C481S), the latter of which is
refractory to ibrutinib inhibition.
Porcupine program
Porcupine is a key enzyme in the oncogenic Wnt signalling
pathway. This pathway is implicated in a range of hard-to-treat
cancers with poor prognosis such as pancreatic, biliary and gastric
cancers. Our Porcupine inhibitor, RXC004, is a potent inhibitor of
this enzyme and pathway, leading to strong tumour growth inhibitory
effects in a variety of cancer models. We have also shown that
RXC004, when administered together with an immune checkpoint
inhibitor (anti-PD-1) has a synergistic immune system modifying
effect. Our initial clinical studies with RXC004 will be as a
monotherapy but we have included the option for a combination
therapy expansion arm together with a checkpoint inhibitor in our
clinical study design.
Pan-Raf program
Raf kinases have been implicated in a multitude of cancers.
Although there are already several Raf inhibitors approved there is
scope for improving the characteristics of these drugs. Redx is
developing novel small molecule therapeutics with activity against
several Raf isoforms. These novel compounds target mechanisms of
resistance associated with first generation Raf inhibitors.
Currently these compounds are in lead-optimisation phase.
Immunology
The immunology group is focussing on BTK and Porcupine targets
for a variety of immunology indications, with an emphasis on
fibrotic diseases such as Idiopathic Pulmonary Fibrosis (IPF),
Diabetic Nephropathy and Non-alcoholic Steatohepatitis (NASH) and
autoimmune conditions. This is supplemented by work on
Rho-associated protein kinase 2 (ROCK2), a target that is also
implicated in fibrotic disease.
Anti-infectives
The anti-infectives group made significant progress in its
infection portfolio during the period - particularly in its Gram
negative antibacterial program which shows great promise. Whilst
Redx's antibacterial assets continue to offer the prospect of
value, future research and development activities will be conducted
under external collaboration arrangements in order that we can
focus our efforts on priority programs in oncology and
immunology.
Industry Overview
The pharmaceutical industry continues to struggle with drug
pricing which was a key topic in the US Presidential election. It
remains to be seen how the new Trump administration will interact
with the industry but there are clear signs that pricing will
remain on the agenda. There are early indications that this may be
off-set by a more liberal regulatory approach that could make it
easier for companies to get new therapies approved. Following the
surge in new drug approvals in the US over the last 5 years which
alleviated concerns over the industry's R&D productivity,
approvals in 2016 dropped to lows not seen since 2007 with only 19
new drugs sanctioned during the year.
Deal-making activity continued apace in the year although the
move back to a preference for clinical-stage assets was further
confirmed. In addition to continued attention on immuno-oncology
assets and, particularly, combination therapies, one key trend that
emerged during the year was the increased focus on fibrotic
disease. Novel agents for conditions such as diabetic nephropathy
(affecting the kidneys), non-alcoholic hepatosteatitis (NASH -
affecting the liver) and idiopathic pulmonary fibrosis (IPF -
affecting the lungs) are sought after as the industry turns its
attention to a slate of chronic life-threatening conditions that
are inadequately served by current therapies. When we established
our immunology group in 2015, fibrotic disease was one of the key
pillars that our research portfolio was built around.
All of this reinforces Redx's strategy to focus on cancer and
immunology taking our lead programs into clinic so increasing their
value and lining up the potential for higher value deals once
clinical proof of concept is secured.
Collaborations and Partnerships
Redx continues to build on the partnerships that have been
secured to date. In particular, our collaboration with AstraZeneca
focused on an undisclosed oncology target has made good
progress.
Our pipeline assets have been carefully chosen as programs that
not only match the demand for new therapies that will improve
patient outcomes but which are attractive to potential
commercialisation partners. Looking forward, we continue to have
encouraging discussions for out- and in-licensing programs with a
number of parties regarding future commercial collaborations across
our pipeline.
Strategy
Redx is entering a pivotal period in its growth. Over the last
few years, we have created a world-class capability in small
molecule drug discovery. The Company's discovery engine has created
an innovative pipeline that has delivered two development assets -
the Porcupine inhibitor RXC004 and the BTK inhibitor RXC005. As we
take these assets forwards towards first-in-man clinical studies,
the Company needs to concentrate its resources on ensuring that we
secure the best return possible from our portfolio.
To this end, moving forwards, Redx will focus its business on
its key assets in oncology and immunology. Whilst we continue to
see value in our infectious disease portfolio, we will seek to
continue to progress these assets under collaborative arrangements
with external partners.
Redx remains committed to discovery research in order to ensure
that we maintain an effective, high-value pipeline but the balance
of resource allocation will shift to support a greater degree of
development activity as we move forward into clinic in 2017. One
result of this rebalancing will be a reduction in fixed costs as we
decrease the number of research staff during the year.
Senior Management Team
At the beginning of the financial year, we were delighted to
announce the appointment of Nicholas Adams as Chief Business
Officer and at the end of the financial year Karl Hård joined as
Head of Investor Relations and Corporate Communications. These key
appointments have significantly strengthened the senior management
team.
Financial Review
Other operating income
The Group generated other operating income of GBP2.4 million
during the year ended 30 September 2016 (2015: GBP2.6 million).
This principally comprised GBP2.2 million in respect of Regional
Growth fund grants for immunology research administered by the
Department of Business, Energy and industrial Strategy.
There were no new sources of other operating income during the
year.
Share based compensation
During the year a Save as You Earn scheme was launched for all
staff, resulting in the granting of 1.1m new options, this together
with other new and existing options resulted in a charge of GBP0.2m
being recognised in the Consolidated Statement of Comprehensive
Income. (2015: GBP0.6m)
Non recurring relocation costs
During late summer 2016 the Group relocated its oncology
research facilities from Liverpool to Alderley Park in Cheshire,
consolidating the Redx Pharma group on a single site. For clarity,
the employment, removal and other costs associated with the move
have been disclosed separately in the consolidated Statement of
Comprehensive Income, and amounted to GBP0.56m. It is not expected
that there will be any further costs incurred in relation to the
relocation.
Taxation
This year the financial statements record a tax charge of
GBP0.1m (2015: credit of GBP0.7m), As part of it's continued
discussions with HMRC regarding the impact of RGF funding on the
recoverability of R&D tax credits, the group took the decision
not to include any provision for R&D tax credits until the
position has been clarified, leading to a reduction in the
provision for amounts receivable for prior years of GBP0.75m.
Amounts due under Research and Development Expenditure credit are
unaffected.
Losses
The loss before taxation was GBP15.4 million (2015:
GBP8.8million). The net loss for the year was GBP15.5 million
(2015: GBP8.2 million) representing a loss of 19.8 pence per share
(2015: 14.1 pence per share).
Cash Flows
The Group had a net cash outflow of GBP3.7 million for the year
ended 30 September 2016 as compared to a net cash inflow of GBP6.5
million for the previous year.
Cash used by operating activities increased by GBP6.6 million to
GBP13.3 million for the year compared to GBP6.7 million in the
previous year. This was driven by increased research activity in
immunology (its' first full year), increased staff costs, and the
progress of programs to more expensive pre-clinical stages.
Tax credits received in the year increased by GBP0.65 million to
GBP0.75 million.
Cash inflow from financing activities was GBP 9.3 million, being
the net proceeds of the equity placing in April 2016. (2015:
GBP13.4 million).
Financial Position
As at 30 September 2016, total cash and cash equivalents held
were GBP5.8 million (2015: GBP9.4 million).
Headcount
Average headcount of the Group for the year was 199 (2015: 145).
The increase in headcount is attributable to the further
strengthening of the management team, together with a first full
year of immunology research.
Outlook
We anticipate that 2017 will be an important year for Redx as
our first programs are being prepared for entry to first-in-human
clinical studies. The GBP12m (gross) fundraising in early 2017
leaves the Group well placed to implement its strategy. While the
planned restructuring will be a time of uncertainty for some, we
firmly believe that this is the correct course of action to allow
us to focus on our core high value assets whilst maintaining
sufficient research capability and progressing our anti-infectives
research through collaborations.
Dr. Frank Armstrong is stepping down as Chairman of the Group,
and together with Dr. Peter Jackson and Peter McPartland, will not
seek re-election at the Annual General Meeting. The appointment of
a new Chairman will be announced in due course.
A number of commercial discussions are underway across our
pipeline assets and the Board is confident that we will secure
further partnerships.
We are also exploring options to broaden Redx's capability and
asset base as we seek to further increase the growth capacity for
the business. The Board remains confident that Redx will continue
to adapt its strategy to ensure optimal shareholder returns in the
medium to long-term.
Dr. Neil Murray, Chief Executive Officer
Consolidated Statement of Comprehensive Income
For the year ended 30 September 2016
Note Year ended Year ended
30 September 30 September
2016 2015
GBP'000 GBP'000
Continuing operations
Operating expenses (16,527) (11,471)
Non recurring relocation
costs (556) -
Share based compensation (245) (608)
Other operating
income 2,380 2,648
___________ ___________
Loss from operations (14,948) (9,431)
Gain on disposal
of subsidiary undertaking - 895
Finance costs (526) (348)
Finance income 67 59
___________ __________
Loss before taxation (15,407) (8,825)
Income tax (114) 650
___________ __________
Total comprehensive
loss for the year
attributable to
owners of Redx
Pharma plc (15,521) (8,175)
========= ==========
Loss per share
(pence)
From continuing
operations
Basic & diluted 4 (19.8) (14.1)
Consolidated Statement of Financial Position
At 30 September 2016 Company No. 7368089
2016 2015
GBP'000 GBP'000
Assets
Non-current
assets
Property, plant
and equipment 533 353
Intangible assets 309 309
Other receivables 605 750
___________ __________
Total non-current
assets 1,447 1,412
___________ __________
Current assets
Trade and other
receivables 1,553 1,407
Cash and cash
equivalents 5,758 9,436
Current tax 637 1,501
___________ __________
Total current
assets 7,948 12,344
___________ __________
___________ __________
Total assets 9,395 13,756
___________ __________
Liabilities
Current liabilities
Trade and other
payables 5,675 4,056
Borrowings 2,000 -
___________ __________
Total current
liabilities 7,675 4,056
Non-current
liabilities
Non-current
borrowings - 2,000
___________ __________
Total liabilities 7,675 6,056
___________ __________
Net assets 1,720 7,700
=========== ==========
Equity
Share capital 936 650
Share premium 22,526 13,516
Share-based
compensation 867 622
Capital redemption
reserve 1 1
Retained deficit (22,610) (7,089)
___________ __________
Equity attributable
to shareholders 1,720 7,700
=========== ==========
Consolidated Statement of Changes in Equity
For the year ended 30 September 2016
Share Share Share Capital Retained Total
capital premium based Redemption Deficit Equity
payment Reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 October
2014 7 12,313 152 - (10,652) 1,820
---------- ------------ ---------- ------------- ------------ ------------
Share issue 177 14,823 - - - 15,000
Exercise
of share
options - 14 (138) - 138 14
Share issue
costs - (1,567) - - - (1,567)
Cancellation
of share
premium - (11,600) - - 11,600 -
Creation
of capital
redemption
reserve (1) - - 1 - -
Bonus issue 467 (467) - - - -
Transactions
with owners
in their
capacity
as owners 643 1,203 (138) 1 11,738 13,447
Loss and
total comprehensive
income for
the year - - - - (8,175) (8,175)
Share based
compensation - - 608 - - 608
Movement
in year 643 1,203 470 1 3,563 5,880
---------- ------------ ---------- ------------- ------------ ------------
At 30 September
2015 650 13,516 622 1 (7,089) 7,700
---------- ------------ ---------- ------------- ------------ ------------
Share issue 286 9,714 - - - 10,000
Share issue
costs - (704) - - - (704)
Transactions
with owners
in their
capacity
as owners 286 9,010 - - - 9,296
Loss and
total comprehensive
income for
the period - - - - (15,521) (15,521)
Share based
compensation - - 245 - - 245
Movement
in year 286 9,010 245 - (15,521) (5,980)
---------- ------------ ---------- ------------- ------------ ------------
At 30 September
2016 936 22,526 867 1 (22,610) 1,720
========== ============ ========== ============= ============ ============
Consolidated Statement of Cash Flows
For the year ended 30 September 2016
Year ended Year ended
30 September 30 September
2016 2015
GBP'000 GBP'000
Net cash flows from
operating activities
Loss for the year (15,521) (8,175)
Adjustments for:
Income tax 114 (650)
Finance costs (net) 459 289
Gain on disposal of
subsidiary undertaking - (895)
Depreciation and amortisation 262 139
Share based compensation 245 608
Movements in working
capital
(Increase)/decrease
in trade and other receivables (124) 1,194
Increase in trade and
other payables 1,272 815
Decrease in items held
for sale - 21
__________ __________
Cash used in operations (13,293) (6,654)
Tax credit received 750 97
Interest received 36 19
__________ __________
Net cash used in operations (12,507) (6,538)
__________ __________
Cash flows from investing
activities
Sale of property, plant 2 -
and equipment
Purchase of property,
plant and equipment (444) (362)
__________ __________
Net cash used in investing
activities (442) (362)
__________ __________
Cash flows from financing
activities
Proceeds from share
issue 10,000 15,014
Share issue costs (704) (1,567)
Interest paid - (3)
Loan granted (25) -
__________ __________
Net cash from financing
activities 9,271 13,444
__________ __________
Net (decrease)/increase
in cash and cash equivalents (3,678) 6,544
Cash and cash equivalents
at beginning of the
year 9,436 2,892
__________ __________
Cash and cash equivalents
at end of the year 5,758 9,436
__________ __________
Notes to the financial information
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 30 September
2016 has been extracted from the Group's audited financial
statements which were approved by the Board of Directors on 20
March 2017 and will be delivered to the Registrar of Companies for
England and Wales.
The financial information for the year ended 30 September 2015
has been extracted from the Group's audited financial statements
which were approved by the Board of Directors on 19 January 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 these financial statements 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.
2. Going concern
As part of their going concern review the Directors have
followed the guidelines published by the Financial Reporting
Council entitled "Guidance on Risk Management and Internal Control
and Related Financial and Business Reporting".
The Group incurred a net loss of GBP15.5m during the year;
however, the Directors are satisfied, based on detailed cash flow
projections and after the consideration of reasonable
sensitivities, that sufficient working capital is available to meet
the Group's needs as they fall due for the foreseeable future and
at least 12 months from the date of signing the accounts.
The detailed cash flow assumptions are based on the Group's
annual budget, prepared and approved by the Board, which reflects a
number of key assumptions in respect of costs and revenue
forecasts, underpinned by the current pipeline. The Board have also
taken into consideration the effects of the successful post year
end fundraise of GBP12m (gross), and the cost savings expected from
the restructuring explained elsewhere in the Financial Statements.
Sensitivity analysis has been performed on both cost and revenue
forecasts to reflect a variety of opportunities, risks and
mitigating actions, both in timing and quantum. These projections
are reviewed by the Board on a regular basis.
Within the revenue forecasts, and as discussed in the Principal
Risks and Uncertainties section of the Strategic Report, there are
inherent judgements regarding the commercial and technical risk of
programs. Whilst acknowledging the uncertainties in the operating
environment and their resultant impact on revenues, the Directors
have identified a number of further opportunities to manage working
capital, to mitigate against any deteriorations and uncertainties
in trading conditions.
On the basis of the above review, the Directors are confident
that the Group has sufficient working capital to honour all of its
obligations to creditors as and when they fall due. Accordingly,
the Directors continue to adopt the going concern basis in
preparing the Financial Statements.
3. Segmental information
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The Board of Directors and the Chief Financial Officer are together
considered the chief operating decision-maker and as such are
responsible for allocating resources and assessing performance of
operating segments.
The Directors consider that there are no identifiable business
segments that are subject to risks and returns different to the
core business. The information reported to the Directors, for the
purposes of resource allocation and assessment of performance is
based wholly on the overall activities of the Group.
The Group has therefore determined that it has only one
reportable segment under IFRS8.
4. Loss per share
Basic loss per share is calculated by dividing
the net income for the period attributable
to ordinary equity holders by the weighted
average number of ordinary shares outstanding
during the period.
In the case of diluted amounts, the denominator
also includes ordinary shares that would be
issued if any dilutive potential ordinary
shares were issued following conversion of
loans or exercise of share options.
The basic and diluted calculations are based
on the following:
2016 2015
GBP000 GBP000
Loss for the period
attributable to
the owners of
the Company (15,521) (8,175)
Number Number
Weighted average
number of shares
- basic and diluted 78,360,552 58,021,962
============= =============
Pence Pence
Loss per share
- basic and diluted (19.8) (14.1)
============= =============
The loss and the weighted average number of
shares used for calculating the diluted loss
per share are identical to those for the basic
loss per share. This is because the outstanding
share options would have the effect of reducing
the loss per share and would therefore not
be dilutive under IAS 33 Earnings per Share.
5. Related parties
Balances and transactions between the Company and its
subsidiaries, which are related parties, have been eliminated on
consolidation and are not disclosed in this note. Transactions
between the Group and other related parties are disclosed
below:-
Trading transactions
The Group has purchased services in the normal course of
business from the following companies related to individuals who
are or were Directors of the Group:
Intelia Consulting Ltd - owned by P. Jackson
Acceleris Capital Ltd - of which N. Molyneux is a Director
Norman Molyneux Consultancy Ltd - owned by N. Molyneux
Dr Frank M Armstrong Consulting Ltd - owned by F. Armstrong
The Group has purchased arms length administration services from
Mrs. J. Murray, who is the wife of N. Murray.
The Group has purchased other services, and has paid deal fees
and commissions, in connection with external fundraising from
Acceleris Capital Ltd. These are also set out below, and were
charged to the share premium account.
The Group has provided services in the normal course of business
to the following companies related to individuals who are or were
Directors of the Group:
Redag Crop Protection Ltd - of which N. Molyneux is a Director.
A loan has also been granted as part of the sale of this
company.
The amounts outstanding are unsecured.
The Group has a loan of GBP605,000 due from Redag Crop
Protection Ltd. N. Molyneux, N. Murray, D. Lindsay, P. Jackson and
P. McPartland are all shareholders in Redag Crop Protection
Ltd.
On 10 June 2016, a short term, interest free loan of GBP25,000
was made to AMR Centre Ltd, of which P Jackson is a Director.
2016 2015
Purchases from/(charges GBP'000 GBP'000
to) related parties
Intelia Consulting Ltd - 84
Redag Crop Protection
Ltd (163) (91)
Acceleris Capital Ltd 88 59
Acceleris Capital Ltd
(fundraising items) 309 295
Norman Molyneux Consultancy
Ltd 10 18
Dr Frank M Armstrong
Consulting Ltd (fees) - 32
Dr Frank M Armstrong 5 -
Consulting Ltd (expenses)
Mrs J Murray 24 18
__________ __________
273 415
__________ __________
2016 2015
Amounts owed to/(by) GBP'000 GBP'000
related parties
Intelia Consulting
Ltd - 25
Redag Crop Protection
Ltd (33) (21)
Redag Crop Protection
Ltd - loan (605) (750)
Acceleris Capital
Ltd 18 3
AMR Centre Ltd - (25) -
short term loan
Norman Molyneux
Consultancy Ltd - 6
Dr Frank M Armstrong
Consulting Ltd 1 9
Mrs J Murray 2 -
__________ __________
(642) (728)
__________ __________
Amounts owed to/by related parties are disclosed in other
receivables, other non current receivables, and within trade
payables.
6. Contingent liabilities
The Group has continued to receive Regional Growth Fund grants
administered by the Department of Business, Energy and Industrial
Strategy of the UK Government in support of its research programs
around early stage proprietary small molecule therapeutics. At the
end of the year the Group had received total grants carried forward
as follows:
2016 2015
GBP'000 GBP'000
RGF 2 5,920 5,920
RGF 3 4,700 4,700
RGF 5 2,630 470
__________ __________
13,250 11,090
__________ __________
Receipt of these grant monies is subject to various performance
criteria, the most significant of which are the obligation to
defray specific operational expenditure in relation to the research
programs before the claims were made (considered to be the funded
expenditure); and the requirement to confirm the reasonable belief
that funded expenditure will lead to the creation or safeguarding
of a specific average number of jobs connected with those programs
to the end of the monitoring periods which are for RGF2 31 March
2017, for RGF3 17 April 2019 and 31 March 2020 for RGF5 (considered
to be the long term results). If the Group fails to create or
safeguard an average number of jobs connected with the research
programs through to the end of the monitoring periods, which are
160 for RGF2, 99 for RGF3 and 70 for RGF5, it may be required to
repay GBP37,000, GBP47,475 and GBP58,756 in relation to RGF2, RGF3
and RGF5 respectively for each job not created or safeguarded. The
Group has never been asked to make any such repayment in the past
and believes it has satisfied the Monitoring Officer appointed by
the Department of Business, Energy and Industrial Strategy. The
Group has therefore made no provision for such repayment. There
were no other contingent liabilities at the year end.
7. Events after the reporting period
On 11 October 2017, pursuant to the exercise of options, 145,319
Ordinary shares were issued (110,025 at GBP0.50 each and 35,294 at
GBP0.425 each).
On 15 February 2017, the Company issued 5,999,999 Ordinary
shares at GBP0.375 each pursuant to a placing and admission to
trading on AIM. On 1 March 2017 the Company issued a further
26,779,958 Ordinary shares pursuant to a placing and open offer,
and admission to trading on AIM. The gross amount raised being
GBP12m.
As part of this transaction, and Pursuant to a Subscription
Agreement with the Company, Lanstead Capital agreed to subscribe
for 11,500,000 Subscription Shares at the Issue Price representing
gross proceeds of GBP4,312,500. GBP646,875 of the Subscription
proceeds (being 15 per cent. of the gross proceeds of the
Subscription) were retained by the Company and GBP3,665,625 (being
85 per cent. of the gross proceeds of the Subscription) were
pledged to Lanstead under a Sharing Agreement pursuant to which
Lanstead will make monthly settlements (subject to adjustment
upwards or downwards, as measured against a Benchmark Price of 50
pence per Ordinary Share) to the Company over 18 months.
As a result of entering into the Sharing Agreement the aggregate
amount received by the Company under the Subscription and the
related Sharing Agreement may be more or less than GBP4,312,500
On 20 March 2017 the Board of directors agreed a proposal to
undertake a restructuring of the Group, which is likely to lead to
a significant reduction in headcount across all areas of operation.
In line with the proposed strategic refocus, we envisage making an
estimated fixed cost saving of GBP4.2m, which is of course subject
to consultation. The Group proposes to continue it's
Anti-Infectives research under external collaborations.
The Board has also received notification from three directors,
Dr. Frank Armstrong, Dr. Peter Jackson and Peter McPartland that
they will not be seeking re-election at the forthcoming Annual
General Meeting.
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 shortly and
will also be available to download from the Group's website at
www.redxpharma.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR KMGZFVMRGNZG
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March 21, 2017 05:05 ET (09:05 GMT)
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