TIDMSALV
RNS Number : 9451R
SalvaRx Group plc
27 September 2017
SalvaRx Group plc
("SalvaRx", or the "Company")
Half Yearly Report to 30 June 2017
SalvaRx Group plc (AIM: SALV), the drug development company
focused on immunotherapy for cancer, is pleased to announce its
interim results for the six months ended 30 June 2017.
Highlights
-- Collaborated with Nekonal S.A.R.L to form Nekonal Oncology
Ltd. and invested to acquire 33% of the joint venture company
-- Acquired 31% of the equity in RIFT Biotherapeutics Inc., a
company focused on the development of antibodies for use in
oncology
-- Advanced Intensity Therapeutics' first product into the clinic
-- Streamlined business so that all investments will be held by
SalvaRx Limited, the Group's BVI subsidiary
-- SalvaRx Limited constituted a loan note instrument of up to
US$5 million - approximately US$3m in debt issued to date to
finance new transactions
-- Post period end announced the formation of Saugatuck
Therapeutics in conjunction with Immunova LLC to focus on the use
of nanolipogel technology in the delivery of DNA aptamers and
certain aptamer-based combination products
Chief Executive Officer's Statement
In the first half of 2017, we have continued to execute our
strategy to build a pipeline of novel cancer immunotherapies. I am
pleased that we have added two antibody companies to the SalvaRx
group. Each has developed, what we believe are multiple first in
class/best in class antibodies against unique targets in the tumor
microenvironment. Both RIFT and Nekonal Oncology have begun to test
their products and to advance them towards the clinic. RIFT has a
small lab in San Diego which can be leveraged for other programs
and provides the group with added capabilities in research and
development.
Our first set of products from iOx Therapeutics Ltd ("iOx") have
been advancing through development. During this period, we have
been working with our contract manufacturing partners to scale up
the production to enable large scale runs. Our plan is to initiate
multiple human clinical studies next year.
By mid-year, the group has interest in eight products in
development, including our first to enter into human testing being
Intensity Therapeutics' ("Intensity") lead product. We see this as
a major milestone and value driver for our business.
In order to streamline the group, in March 2017 we announced
that we had placed all our assets into our BVI subsidiary SalvaRx
Limited. We have also issued debt with warrants amounting to nearly
US$3m to finance the company formations and initial work on our new
technologies. The Company continues to pursue strategic deals and
will raise the necessary funding to implement these in order to
create value for shareholders
SalvaRx's goal is to develop products and take them through to
human proof of concept, focusing on safety and efficacy in humans
with some scientific evidence of activity against the target.
Intensity's lead product, which the SalvaRx management team has
helped develop, is being tested in two countries on patients with
advanced malignancies. This milestone demonstrates our ability to
advance products through early testing and to prepare and defend
applications to health authorities in multiple countries. Intensity
anticipates having preliminary data from this trial next year.
We are focused on preparing more products for human testing in
2018. Cancer immunotherapy remains a very exciting investment area,
and many advances have come to fruition to help patients. I remain
optimistic about the positive contribution SalvaRx can make towards
advancing treatment for cancer patients. In the US, a new cancer
immunotherapy (Kymriah) was approved for paediatric leukaemia. This
approval was based on a small study of 63 patients who achieved an
overall remission rate within three months of treatment of 83%.
Never before in refractory cancer treatment have we seen such
extraordinary outcomes. Our understanding of the science coupled
with rapid and bold drug development have given these children and
their families hope for returning to a normal life.
Outlook
I am very pleased with the progress in the period and what we
have achieved in the last three months to advance our products. We
continue to get referred many new exciting opportunities in this
space and several of these are under review. We have built an
expanded team with additional capabilities, and I look forward to
sharing more updates soon.
Dr Ian Walters
Chief Executive Officer
Enquiries
SalvaRx Group plc
Ian Walters (Chief Executive) Tel: +1 203 441
5451
Northland Capital Partners Tel: +44 (0)20 3861
Limited 6625
Nominated Adviser and Broker
Matthew Johnson / Edward Hutton
(Corporate Finance)
John Howes / (Corporate Broking)
Peterhouse Corporate Finance Tel: +44 (0)20 7469
Limited (Joint Broker) 0932
Lucy Williams / Duncan Vasey
SalvaRx Group plc
Consolidated income statement
For the six months ended 30 June 2017
Unaudited Unaudited
Note Six Six Year
months months ended
ended ended 31 December
30 June 30 June 2016
2017 2016 GBP'000
GBP'000 GBP'000
Research and development (570) (240) (693)
Exceptional item (non-cash
charge arising on reverse
takeover transaction) - (563) (871)
Share of losses in associates 2 (96) - -
Other operating costs (665) (575) (913)
Operating loss (1,331) (1,378) (2,477)
Finance cost 5 (72) (25) 1
-------------------- --------------------- --------------------
Loss before tax (1,403) (1,403) (2,476)
Tax 15 15 31
Net loss and comprehensive
loss for the period (1,388) (1,388) (2,445)
-------------------- --------------------- --------------------
Net loss and comprehensive
loss attributable to
Owners of the company (1,091) (1,273) (2,038)
Non-controlling interest (297) (115) (407)
(1,388) (1,388) (2,445)
-------------------- --------------------- --------------------
Loss per ordinary shares
Basic and diluted 6 (0.03p) (0.05p) (0.06p)
-------------------- --------------------- --------------------
SalvaRx Group plc
Consolidated statement of financial position
As at 30 June 2017
Note Unaudited Unaudited
30 June 2017 30 June 2016 31 December 2016
GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Investments 2 1,804 1,375 1,431
Investment in associates 2 1,046 - -
Intangible assets 3 1,093 1,210 1,184
3,943 2,585 1,210
-------------- --------------- -------------------
Current assets
Trade and other receivables 139 71 34
Cash and cash equivalents 909 1,876 967
1,048 1,947 1,001
-------------- --------------- -------------------
Total assets 4,991 4,532 3,616
============== =============== ===================
Liabilities
Non-current liabilities
Convertible loan notes 5 - 399 616
Unsecured loan notes 4 2,034 - -
Equity option on convertible loan 5 - 386 78
Warrant liabilities 4 276 - -
Deferred tax liabilities 186 - 201
2,496 785 895
-------------- --------------- -------------------
Current liabilities
Trade and other payables 529 512 295
529 512 244
-------------- --------------- -------------------
Total liabilities 3,025 1,297 1,190
Net assets 1,966 3,235 2,426
============== =============== ===================
Equity
Share capital 7 911 911 911
Share premium account - 62,353 -
Other reserves 3,065 (59,288) 3,065
Equity, purchase of own shares (215) (215) (215)
Share-based payment reserves 500 134 382
Accumulated deficit (3,455) (1,599) (2,364)
-------------- --------------- -------------------
Equity attributable to equity holders of the parent 806 2,296 1,779
Non-controlling interest 1,160 939 647
Total equity 1,966 3,235 2,426
============== =============== ===================
SalvaRx Group
Consolidated statement
of cash flows
For the six months
ended 30 June 2017
Note Unaudited Unaudited Year ended 31 December
six months ended 30 six months ended 30 2016
June 2017 June 2016
GBP'000
GBP'000 GBP'000
Loss for the period (1,388) (1,388) (2,445)
Adjustments for:
Deferred taxation (15) (15) (31)
Amortisation 91 91 182
Share of losses in 96 - -
associates
Share-based payments 118 108 357
Finance cost 29 25 (1)
Non-cash exceptional
item - 563 563
Operating cash flows
before movements in
working capital (1,069) (616) (1,375)
(Increase)/decrease in
receivable (105) 165 202
(Decrease)/increase in
payables 234 (189) (332)
----------------------- ---------------------- -----------------------
Cash used in operations (940) (640) (1,505)
Taxation paid - - -
Net cash outflow from
operating activities (940) (640) (1,505)
----------------------- ---------------------- -----------------------
Investing activities
Cash acquired through
reverse acquisition - 2,564 2,564
Purchase of investments (1,419) (1,375) (1,431)
Net cash used in
investing activities (1,419) 1,189 1,133
----------------------- ---------------------- -----------------------
Financing activities
Proceeds from the issue 2,295 - -
of unsecured loan notes
Proceeds on issue of
convertible loan notes - 760 760
Net cash from financing
activities 2,295 760 760
----------------------- ---------------------- -----------------------
Net increase in cash
and cash equivalents (64) 1,309 388
Cash and cash
equivalents at
beginning of period 967 567 567
Effect of exchange rate
on cashflow 6 - 12
Cash and cash
equivalents at end of
period 909 1,876 967
======================= ====================== =======================
SalvaRx Group plc
Consolidated statement of changes in equity
As at 30 June 2017
Attributable to the owners of the
company
Share Share Other Purchase Share-based Accumulated Equity Non-controlling Total
Capital premium reserves of payments deficit attributable interest equity
own reserves to owners
shares
GBP'000 GBP'000
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
GBP'000
At 31
December
2015 155 52,533 (51,748) - 25 (326) 639 1,054 1,693
Issue of
equity
shares
by parent 756 9,820 (7,540) (215) - - 2,821 - 2,821
Share based
payments - - - - 109 - 109 - 109
Net loss
for the
period - - - - - (1,273) (1,273) (115) (1,388)
-------- ---------- --------- --------- ------------ ------------ ------------- ---------------- --------
At 30 June
2016 911 62,353 (59,288) (215) 134 (1,599) 2,296 939 3,235
Cancellation
of share
premium
account - (62,353) 62,353 - - - - - -
Share based
payments - - - - 248 - 248 - 248
Net loss
for the
period - - - - - (765) (765) (292) (1,057)
-------- ---------- --------- --------- ------------ ------------ ------------- ---------------- --------
At 31
December
2016 911 - 3,065 (215) 382 (2,364) 1,779 647 2,426
Share based
payments - - - - 118 - 118 - 118
Shares issued
at
subsidiary - - - - - - - 810 810
Net loss
for the
period - - - - - (1,091) (1,091) (297) (1,388)
At 30 June
2017 911 - 3,065 (215) 500 (3,455) 806 1,160 1,966
======== ========== ========= ========= ============ ============ ============= ================ ========
SalvaRx Group plc
Notes to the interim financial statements for the six months
ended 30 June 2017
1 General information
SalvaRx Group plc (the 'Company' and, together with its
subsidiaries, the 'Group') is incorporated in the Isle of Man,
British Isles under the Isle of Man Companies Act 2006. The address
of the registered office is Commerce House, 1 Bowring Road, Ramsey,
Isle of Man, British Isles, IM8 2LQ.
The principal activity of the Group is drug development,
pre-clinical development with particular focus on developing series
of compounds for cancer immunotherapy.
Basis of preparation
The consolidated interim financial information has been prepared
using policies based on International Financial Reporting Standards
('IFRSs') as issued by the International Accounting Standards Board
(the 'IASB') and as adopted by the European Union (the 'EU'). These
policies and practices are consistent with those adopted in the
Group's financial statements for the year ended 31 December
2016.
The consolidated interim financial statements have not been
audited, and have not been prepared in compliance with
International Accounting Standard ('IAS') 34, 'Interim Financial
Reporting'. In the opinion of the Directors, the consolidated
interim financial information for the period represents fairly the
financial position, results from operation and cash flows for the
period in conformity with generally accepted accounting principles
consistently applied.
These consolidated interim financial statements include the
accounts of the Company and:
i. SalvaRx Limited, ("SalvaRx") incorporated on 6 May 2015 in
the British Virgin Islands. SalvaRx was a fully-owned subsidiary of
the Company until 2 March 2017. Effective 2 March 2017, the
Company's equity in SalvaRx decreased to 94.15% due to an issue of
shares by SalvaRx.
ii. IOX Therapeutics Limited ("IOX") incorporated in the U.K. as
a private company (Company Number 9430782) under the Companies Act
2006 on 10 February 2015. SalvaRx acquired 60.49% equity in IOX on
1 July, 2015.
The Group's interim financial statements are presented in pounds
sterling, which is the Group's functional and presentational
currency, and all values are rounded to the nearest thousands
(GBP000) except loss per ordinary share and figures and numbers in
the Notes.
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 Company is in the pre-clinical stage, and as such no revenue
has been generated from its operations. The Company has accumulated
losses of approximately GBP3.6m and has negative cash flows from
operating activities of approximately GBP1m during the six months
ended 30 June 2017.
The group has prepared a cash flow forecast which indicates that
the group does not have sufficient cash to meet its minimum
expenditure commitments and support its current level of corporate
overheads for the next twelve months and therefore needs to raise
additional funds to continue as a going concern.
To address the future additional funding requirements of the
group, since 30 June 2017, the Directors have undertaken the
following initiatives:
-- entered discussions to secure additional debt funding from current or new investors
-- received pledges of support of up to US$1m from the existing shareholders
-- undertaken a programme to continue to monitor the group's
ongoing working capital requirements and minimum expenditure
commitments; and
-- continued their focus on maintaining an appropriate level of
corporate overheads in line with the available cash resources.
The Directors are confident that they will be able to secure
further funding that will provide the group with sufficient funding
to meet its minimum expenditure commitments and support its planned
level of expenditures, and therefore that it is appropriate to
prepare the financial statements on the going concern basis.
However, in the event that the group is not able to successfully
complete the fundraising referred to above, significant uncertainty
would exist as to whether the Company and the group will continue
as going concerns and, therefore, whether they will realise their
assets and extinguish their liabilities in the normal course of
business and at the amounts stated in the financial statements.
The financial statements do not include adjustments relating to
the recoverability and classification of recorded asset amounts nor
to the amounts and classification of liabilities that might be
necessary should the Company and the group not continue as going
concerns.
2. Investments
Unaudited Unaudited
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Available-for-sale
investments
Investment in Intensity i 1,540 1,375 1,395
Loan receivable
at amortised cost - - -
RIFT iv. - - 36
Nekonal S.A.R.L. ii 264 - -
1,804 1,375 1,431
--------------------- ------------------- --------------------
Investment in Associates
Nekonal Oncology
Ltd iii 276 - -
RIFT iv 770 - -
1,046 - -
--------------------- ------------------- --------------------
i. On 22 April 2016, the Company acquired 1m Series A preferred
stock in Intensity Therapeutics Inc., a Delaware corporation
("Intensity") for US$2m (GBP1.5m as at 30 June 2017) in cash. All
Series A Preferred stock is convertible into equal number of common
shares in Intensity. On 2 March 2017, the Company transferred this
investment at cost together with related convertible loan notes of
US$1m to SalvaRx. The Company's holdings represent less than 10% of
the equity of Intensity.
ii. On 1 March 2017, SalvaRx invested EUR0.3m (GBP0.3m as at 30
June 2017) in cash in Nekonal S.A.R.L. by way of a convertible loan
to participate in the funding of their auto-immune programs.
SalvaRx also committed to invest additional EUR0.3m subject to
achievement of certain milestones. The loan carries no
interest.
iii. On 1 March 2017, SalvaRx made an equity investment of
EUR0.3 (GBP0.3m as at 30 June 2017) in cash in Nekonal Oncology
Ltd., ("Nekonal") incorporated on 17 February 2017 in British
Virgin Islands. SalvaRx holds 35,000 common shares representing
approximately 33% equity in Nekonal and the Company's director, Dr.
Ian Walters is a director and CEO of Nekonal. SalvaRx thus has
significant influence over Nekonal and therefore the investment in
Nekonal has been accounted for on an equity basis.
iv. On 17 March 2017, SalvaRx invested $1m in RIFT
Biotherapeutics Inc. ("RIFT"), a Delaware private corporation. The
amount invested together with $90,000 already loaned to date along
with accumulated interest on loan and cost sharing payment of
$15,000 receivable, were converted into 811,853 series A preferred
stock convertible into equal number of common shares in RIFT.
SalvaRx holds approximately 31% equity in RIFT, its CEO, Dr. Ian
Walters is a director in RIFT and SalvaRx provides scientific
assistance to RIFT under a consulting agreement. SalvaRx thus has
significant influence over RIFT and therefore the investment in
RIFT has been accounted for on an equity basis.
SalvaRx also agreed to invest further $1m in achievement of
certain milestones by RIFT and an optional additional $0.5m to
increase its equity to approximately 96%.
The effect of equity accounting on the investment was as
follows:
Nekonal Rift Total
GBP'000 GBP'000 GBP'000
Original investment
in cash and services 290 782 1,072
Conversion of loans
and related interest 70 70
share of losses from
the date of acquisition
to 30 June 2017 (14) (82) (96)
Balance as at 30 June
2017 276 770 1,046
--------------- ---------------- ----------------
As at 30 June 2017, the Company has determined that there was no
evidence of any impairment in the value of the investments and as a
result no adjustment was considered necessary in their carrying
value.
3. Intangible assets
In process research
Unaudited
30 June Unaudited 31 December
2017 30 June 2016 2016
GBP'000 GBP'000 GBP'000
Cost
Beginning of period 1,457 - -
Additions 1,301 1,457
end of period 1,457 1,301 1,457
------------------ ------------------- --------------------
Amortisation
Beginning of period (273) - (91)
Charge for the
period (91) (91) (182)
end of period (364) (91) (273)
------------------ ------------------- --------------------
Balance at end
of period 1,093 1,210 1,184
--------------------- ------------------ ------------------- --------------------
The intangible asset arising from the acquisition of iOx on 1
July 2015 is being amortised over 8 years, being the Directors
assessment of the period over which the technologies are likely to
be developed and at the end of which commercial products will
hopefully be available for sale. The remaining life of the
intangible asset is 6 years. Given that the progress of iOx is
satisfactory, there is no indication of impairment.
4. Unsecured Loan Notes
On March 2, 2017, the Company approved a private placement of
unsecured notes in the aggregate principal amount of US$5m by
SalvaRx. The notes bear interest at a rate of 7% per annum, payable
annually on each anniversary date. The notes were not redeemable by
the Company prior to maturity. The notes holders were granted a
warrant to subscribe for $7,500 new ordinary shares for every
$10,000 of note held, provided that certain qualifying event occurs
within the four anniversary years of issuance. The exercise price
of the warrant will be based on the price of equity shares
determined by the qualifying event and the year in which it takes
place. Given that there was an obligation to issue a variable
number of shares, the warrant was classified as a financial
liability.
Up to 30 June 2017, approximately US$2.9m was raised through
issuance of these notes. Approximately $2.6m (GBP2m) of the face
value was ascribed to the note payable component and $0.3(GBP0.3)
fair value was ascribed to the warrant. The value of note payable
component was further increased by $20,501 as at 30 June 2017
representing the difference between the notional interest at 11%
and actual interest at 7% being charged to interest expense.
Fair value was determined by reference to market transactions
and similar debt instruments without warrants. The Company did not
incur financing costs in connection with this placement of
notes.
5. Convertible Loan Notes
On 21 April 2016, the Company issued US$1 million of zero coupon
convertible unsecured loan notes ("Loan Notes") to Jim Mellon, the
Non-Executive Chairman and Greg Bailey, a Non-Executive Director
("the Noteholders"), who are both substantial shareholders in the
Company. Mr Mellon and Dr Bailey subscribed for US$0.5 million of
Loan Notes each.
On 2 March 2017, the notes were transferred to SalvaRx and the
note holders agreed to convert their loan into 4,000 shares in
SalvaRx at US$250 per share, giving them 5.85% equity in SalvaRx.
As a result, liabilities relating to loan note and related equity
option value were reversed and the difference between the transfer
value and the carrying value expensed.
6. Loss per Ordinary Share
Basic loss per Ordinary Share is calculated by dividing the net
loss for the year attributable to Ordinary equity holders of the
parent by the weighted average number of Ordinary Shares
outstanding during the period. The calculation of the basic and
diluted loss per Ordinary Share is based on the following data:
The calculation of the basic and diluted loss per share is based
on the following data:
Unaudited Unaudited Year ended
six months six months 31 December
ended ended 2016
30 June 30 June
2017 2016
GBP'000 GBP'000 GBP'000
Loss
Loss for the purposes of
basic loss per share from
continuing operations being
net loss attributable to
equity holders of the parent (1,091) (1,273) (2,038)
Number of shares
Weighted average number
of Ordinary Shares for the
purposes of basic profit/(loss)
per share 36,466,619 26,372,722 34,561,950
Loss per Ordinary Share GBP GBP GBP
From continuing operations
Basic and diluted (0.03p) (0.05p) (0.06p)
The weighted average number of shares for the purpose of
calculating the basic and diluted measures is the same. This is
because the outstanding share options would have the effect of
reducing the loss per ordinary share and therefore would be
anti-dilutive under IAS 33 Earnings per Share.
7. Share capital
Unaudited Unaudited
30 June 30 June 31 December
2017 2016 2016
Number GBP'000 Number GBP'000 Number GBP'000
in 000 in 000 in 000
Authorised
Ordinary
Shares
of 2.5p
each 80,000 2,000 80,000 2,000 80,000 2,000
============ ================ ============ =================== =============== ===================
Issued and
fully
paid
Ordinary
Shares
of 2.5p
each 36,467 911 36,467 911 36,467 911
============ ================ ============ =================== =============== ===================
The Company has one class of Ordinary Shares, which carry no
right to fixed income.
The Company has 3,225,941 options issued and outstanding as at
30 June 2017 of which 1,672,518 options have not yet vested. These
options expire between February 2018 and March 2021 and are
convertible into equal number of Ordinary shares of the Company at
an exercise prices ranging from 23.2p to 71p per share.
iOx has 1,324 options issued and outstanding as at 30 June 2017
of which 311 options have not yet vested. These options expire
between 2020 and 2021 and are convertible into equal number of
Common shares of iOx at an exercise price of GBP120 per share.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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