Preliminary Results for the Year Ended 31 December 2023
19 April 2024
*Biodexa Pharmaceuticals PLC*
(“Biodexa” or the “Company” or, together with its subsidiaries, the “Group”)
*Preliminary Results for the Year Ended 31 December 2023*
Biodexa Pharmaceuticals PLC (NASDAQ: BDRX), a clinical stage biopharmaceutical company developing a pipeline of products aimed at primary and metastatic cancers of the brain, announces its audited preliminary results for the year ended 31 December 2023.
For more information, please contact:*Biodexa Pharmaceuticals PLC*
Stephen Stamp, CEO, CFO
Tel: +44 (0)29 2048 0180
www.biodexapharma.com
*About Biodexa Pharmaceuticals PLC*
Biodexa Pharmaceuticals PLC (listed on NASDAQ: BDRX) is a clinical stage biopharmaceutical company developing a pipeline of innovative products for the treatment of diseases with unmet medical needs. The Company’s lead development programmes include tolimidone, under development as a novel agent for the treatment of type 1 diabetes and MTX110, which is being studied in aggressive rare/orphan brain cancer indications.
Tolimidone is an orally delivered, potent and selective inhibitor of Lyn kinase. Lyn is a member of the Src family of protein tyrosine kinases, which is mainly expressed in hematopoietic cells, in neural tissues, liver, and adipose tissue. Tolimidone demonstrates glycemic control via insulin sensitization in animal models of diabetes and has the potential to become a first in class blood glucose modulating agent.
MTX110 is a solubilised formulation of the histone deacetylase (HDAC) inhibitor, panobinostat. This proprietary formulation enables delivery of the product via convection-enhanced delivery (CED) at chemotherapeutic doses directly to the site of the tumour, by-passing the blood-brain barrier and potentially avoiding systemic toxicity.
Biodexa is supported by three proprietary drug delivery technologies focused on improving the bio-delivery and bio-distribution of medicines. Biodexa’s headquarters and R&D facility is in Cardiff, UK. For more information visit www.biodexapharma.com.
*Forward-Looking Statements*
Certain statements in this announcement are forward-looking statements or information (collectively, forward-looking statements). Biodexa hereby provides cautionary statements identifying important factors that could cause the actual results to differ materially from those projected in the forward-looking statements. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of words or phrases such as “may”, “is expected to”, “anticipates”, “estimates”, “intends”, “plans”, “projection”, “could”, “vision”, “goals”, “objective” and “outlook”) are not historical facts and may be forward-looking and may involve estimates, assumptions and uncertainties which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements.
By their nature, forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, which contribute to the possibility that the predicted outcomes may not occur or may be delayed. The risks, uncertainties and other factors many of which are beyond the control of Biodexa, that could influence actual results include, but are not limited to: a limited operating history; regulatory risks; substantial capital and liquidity requirements; financing risks and dilution to shareholders; competition; reliance on management and dependence on key personnel; conflicts of interest of management; exposure to potential litigation, and other factors beyond the control of Biodexa.
Forward looking statements are based on estimates and assumptions made by management in light of their experience of historical trends, current conditions and expected future developments, as well as factors that are believed to be appropriate. Such factors include, among others, Biodexa’s future product revenues, stage of development, additional capital requirements, risks associated with the completion and timing of clinical trials and obtaining regulatory approval to market Biodexa’s products, the ability to protect its intellectual property, dependence upon collaborative partners, changes in government regulation or regulatory approval processes and rapid technological change in the industry. These factors should be considered carefully and readers are cautioned to not place undue reliance on such forward-looking statements.
Further, any forward-looking statement speaks only as of the date on which such statement is made, and, except as required by applicable law, Biodexa undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statements are made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for management to predict all such factors and to assess in advance the impact of each such factor on the business of the Company or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement.
Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data. You should, however, review the factors and risks we describe in the reports we will file from time to time with the US Securities and Exchange Commission after the date of this announcement. As a result of these factors, we cannot assure you that the forward-looking statements in this announcement will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified timeframe, or at all.*INTRODUCTION*
Headquartered in Cardiff, UK, with its American Depositary Shares (“ADSs”) quoted on the NASDAQ exchange in the US, Biodexa is a clinical-stage biotechnology company developing a pipeline of innovative products for the treatment of diseases with unmet medical needs including Type 1 diabetes and rare / orphan brain cancers. The Company de-listed from the AIM market as of 26 April 2023.
*STRATEGY*
In the course of seeking additional funding for the Company, it became clear that raising significant funds for a drug delivery platform company was going to be difficult, if not impossible, in the then prevailing financial markets. Accordingly, we decided to re-position the Company as a therapeutics company and began looking for assets to complement our MTX110 programmes.
Following the re-positioning of the Company, our priorities for 2024 reflect our modified strategy as follows:
*Strategic Imperatives* *Progress in 2023* *Priorities for 2024*
Advance our clinical -stage assets through to proof-of-concept data We announced the completion of recruitment into Cohort A of our MAGIC-G1 study of MTX110 in patients with recurrent glioblastoma (rGBM).
In an Investigator Initiated Trial, Columbia University completed recruitment of a Phase I study of MTX110 in patients with Diffuse Midline Glioma (DMG).
In respect of our Phase I study in rGBM, deliver interim safety and efficacy data (in the form of Progression Free Survival data) in respect of Cohort A patients and begin recruitment of Cohort B patients.
Initiate recruitment of a Phase IIa dose confirmation study of tolimidone in Type 1 diabetes patients.
Seek an IND from FDA to commence a Phase II study of MTX110 in DMG.
Develop and broaden our drug development pipeline We in-licensed tolimidone, a Phase II ready asset with very substantial preclinical and toxicology data which has been studied in over 700 patients. In preclinical experiments, tolimidone showed potential to be disease modifying in Type 1 diabetes.
We initiated a new research programme, coded MTD217, to explore the potential for MTX110 in combination with an OXPHOS inhibitor for the treatment of Leptomeningeal Disease, a severe complication of solid cancers with metastasis in the leptomeningeal space of the CNS.
Generate in vitro data to support the disease modifying potential of tolimidone in Type 1 diabetes.
Generate in vitro and in vivo data to demonstrate the effectiveness of MTD217 in Leptomeningeal Disease models.
Seek additional pre-IND and/or clinical-stage assets to acquire or in-license.
Expand further our patent portfolio to cover new inventions and divisionals to strengthen existing patent families.
Provide a healthy and stimulating environment in which our staff members can continue to thrive We have been compliant with ISO 9001 since 2014.
Implement the new COSHH assessment procedures developed in 2023. Continue to monitor third party advice and regulation to maintain a safe environment for our staff members.
Develop individualised learning programmes for staff members through participation in conferences, webinars and/or training programmes.
*BUSINESS MODEL*
In order to make the Company more investable and secure additional financing, the Board decided to re-position the Company as a therapeutics (as opposed to drug delivery) company in early 2023. As a result, the delivery of proof-of-concept clinical data is the primary focus of our business model going forward.
*Development*
Our intention is to build a balanced portfolio of clinical-stage development assets, ideally with a focus on rare / orphan indications. Tolimidone, which was in-licensed in December 2023, is a Phase II ready asset which we intend to develop for Type 1 diabetes. MTX110 is currently in Phase I development for three rare / orphan brain cancers.
Our aim is to develop our clinical assets to proof of concept stage before securing partners to undertake the most expensive, later stage development.
*Manufacturing*
We do not intend to establish our own manufacturing capabilities. For clinical trial material we utilise GMP-certified contract manufacturers.
*Commercialisation*
Once proof-of-concept has been established, we intend to seek to license our products to a partner who would complete the clinical development and subsequently market and sell them in the licensed territory. In addition to reimbursement of development costs, the partner would be expected to make milestone payments based on sales targets and royalty payments.
Our development pipeline now includes five projects, four of which are at clinical stage, as follows:
*CLINICAL-STAGE ASSETS*
Tolimidone
Tolimidone was originally discovered by Pfizer Inc. (“Pfizer”) and was developed through Phase II for the treatment of gastric ulcers. Pfizer undertook a broad pre-clinical program to characterise the pharmacology, pharmacokinetics, metabolism and toxicology of tolimidone. Pfizer discontinued development of the drug due to lack of efficacy for that indication in Phase II. Tolimidone is a selective activator of the enzyme Lyn kinase which increases phosphorylation of insulin substrate -1, thereby amplifying the signalling cascade initiated by the binding of insulin to its receptor.
We intend to develop tolimidone for the treatment of Type-1 diabetes (“T1D”). As a Lyn kinase activator, tolimidone has been shown in preclinical experiments to have a role in beta cell survival and proliferation. If replicated in clinical studies, tolimidone could have the potential to be disease modifying and change the treatment paradigm for T1D. T1D affects approximately 8.4 million people worldwide and there are approximately 500,000 new diagnoses per annum.
As a first step in the planned continued clinical development of tolimidone, we intend to initiate a Phase IIa dose confirmation study to establish the optimum dose of tolimidone in patients with T1D. The Phase IIa study will be open-label in approximately 15 patients with T1D treated over a period of three months with endpoints of change in C-peptide levels, HbA1c and number of hyperglycaemic events.
MTX110
Using our MidaSolve technology in combination with panobinostat, an otherwise insoluble drug, MTX110 is designed for direct-to-tumour administration via a catheter system (Convection Enhanced Delivery, or "CED") thereby bypassing the blood-brain barrier and allowing for high drug concentrations and broader drug distribution in and around the tumour while simultaneously minimising systemic toxicity and other side effects. Panobinostat is currently marketed under the brand Farydak® which is used orally in combination therapy for the treatment of multiple myeloma. We are currently researching the utility of MTX110 to proof of concept stage in three indications:
Glioblastoma Multiforme (GBM):
GBM is the most common and aggressive form of brain cancer in adults, usually occurring in the white matter of the cerebrum. Treatments include radiation, surgical resection and chemotherapy although, in almost all cases, tumours recur. There are approximately 2-3/100,000^(1) population diagnoses of GBM per annum. Survival with standard of care treatment ranges from approximately 13 months in unmethylated MGMT patients to approximately 30 months in highly methylated MGMT patients^(^2). Once it has recurred, median survival is 6.5 months^(^3).
During 2023 we completed recruitment of patients in the first cohort of a Phase I study to assess the utility of MTX110 in recurrent GBM. The Phase I study is an open-label, dose escalation study designed to assess the feasibility and safety of intermittent infusions of MTX110 administered by convection enhanced delivery (CED) via implanted refillable pump and catheter. The study aims to recruit two cohorts, each with a minimum of four patients; the first cohort received MTX110 only and the second cohort will also receive MTX110 but, at the option of the treating clinician, the catheter may be re-positioned once recurrence occurs.
Diffuse Midline Glioma (DMG), formerly known as Diffuse Intrinsic Pontine Glioma, or DIPG:
DMG tumours are located in the pons (middle) of the brain stem and are diffusely infiltrating. Occurring mostly in children, approximately 1,000 patients^(^4) worldwide are diagnosed with DIPG per annum and median survival is approximately 10 months^(5). There is no effective treatment since surgical resection is not possible. The standard of care is radiotherapy, which transiently improves symptoms and survival. Chemotherapy does not improve survival and one likely reason is that many anti-cancer drugs cannot cross the blood-brain barrier to access the tumour.
In October 2020, we reported the first-in-human study by the University of California, San Francisco (“UCSF”) of MTX110 in DIPG using a convection enhanced delivery (“CED”) system. The Phase I study established a recommended dose range for Phase II, a good safety and tolerability profile but also encouraging median survival data of 26 months in the seven patients treated.
An additional Phase I Investigator Initiated Trial by Columbia University is expected to report data in 2Q24. Thereafter, we intend to explore the possibility of seeking an IND for a Phase II study of MTX110 in DMG.
Medulloblastoma:
Medulloblastomas are malignant embryonal tumours that start in the cerebellum. They are invasive and, unlike most brain tumours, spread through the cerebrospinal fluid (“CSF”) and frequently metastasize to different locations in the brain and spinal cord. Treatments include resection, radiation and chemotherapy. Approximately 350 patients^(^6) are diagnosed with medulloblastoma per annum and 3,800 people are living with the disease in the US. The cumulative survival rate is approximately 60%, 52%, and 47% at 5 years, 10 years, and 20 years, respectively^(^7); however, recurrence is nearly always fatal with no established standard of care.
The University of Texas is undertaking a Phase I exploratory study in recurrent medulloblastoma patients using direct administration of MTX110 into the fourth ventricle, enabling it to circulate throughout the central spinal fluid.
*PRECLINICAL ASSET*
MTD217
Our programme is centred around a water-soluble drug formulation that can be easily infused or injected simultaneously, or sequentially, directly into the cancer microenvironment, disrupting metabolic functions in a highly localised manner and limiting off-target toxicity. Our initial target is treatment of leptomeningeal disease (“LMD”), a lethal complication in which metastatic cancer cells invade the cerebrospinal fluid and central nervous system. Approximately 5% of all cancer patients develop LMD and, with no effective treatments currently available, median overall survival is just three to six months post- diagnosis^(^8).
(1) American Association of Neurosurgeons
(2) Radke et al (2019). Predictive MGMT status in a homogeneous cohort of IDH wildtype glioblastoma patients. Acta Neuropathologica Communications 7:89 Online: https://doi.org/10.1186/s40478-019-0745-z
(3) J Neurooncol. 2017; 135(1): 183–192
(4) Louis DN, Ellison DW, et al. The 2016 World Health Organization Classification of Tumors of the Central Nervous System: a summary. Acta Neuropathol 2016; 131:803–820
(5) Jansen et al, 2015. Neuro-Oncology 17(1):160-166
(6) Aboian et al (2018). Neuro-Oncology Practice, Volume 5, Issue 4, December 2018
(7) Smoll NR (March 2012). "Relative survival of childhood and adult medulloblastomas and primitive neuroectodermal tumors (PNETs)". Cancer. 118 (5): 1313–22
(8) https://my.clevelandclinic.org/health/diseases/22737-leptomeningeal-disease
*CHIEF EXECUTIVE’S REVIEW*
*Introduction*
With the backdrop of a continued difficult market for financing biotech companies, 2023 was again dominated by efforts to re-finance the Company and bring in additional clinical-stage assets into the development pipeline to diversify risk, enhance news flow and provide more opportunities for success.
*R&D Update*
Tolimidone
In December 2023 we were delighted to secure the global rights to develop and commercialise tolimidone. It is not often a company of Biodexa’s size and resources has an opportunity to in-license a Phase II ready product supported by very substantial preclinical data, that has been exposed to more than 700 patients and has demonstrated compelling preclinical data to support our chosen indication of T1D.
In T1D, the body’s immune system attacks pancreatic beta cells such that they can no longer produce insulin which is required to regulate plasma glucose levels. The causes of T1D are not fully understood and there is currently no cure. Patients with T1D are dependent on daily administration of insulin (via injection or infusion).
Tolimidone is a Lyn kinase activator and its potential utility in T1D was first demonstrated by several ground-breaking preclinical studies conducted at the University of Alberta, where Lyn kinase was identified as a key factor for beta cell survival and proliferation in in vitro and in vivo models. Tolimidone was shown to both prevent beta cell degradation and to stimulate beta cell proliferation.
As soon as we closed the in-license of tolimidone we began preparing for a Phase IIa dose confirming study which is expected to begin recruitment in the second quarter of 2024. The Phase IIa study will be open-label and include three doses with approximately 15 patients studied over three months with a follow up period. End points are expected to include C-peptide levels (a marker for insulin), HbA1c levels (a marker for plasma glucose) and number of severe hyperglycaemic events. Thereafter, we expect to follow up by a double-blind, placebo-controlled Phase IIb study in approximately 40-45 patients with similar clinical endpoints.
MTX110
In October 2023, we announced completion of recruitment of Cohort A of our ongoing open-label Phase I dose-escalation study which is designed to assess the feasibility and safety of intermittent infusions of MTX110 administered by CED via implanted refillable pump and catheter. Because no drug-related adverse events were observed within the first 30 days from the start of treatment, the minimum number of four patients were recruited into Cohort A. Patient #1 received weekly infusions of 60µM of MTX110 and Patients # 2, 3 and 4 each received 90µM, the expected optimum dose. The study site reported 12 months of survival from the start of the treatment in the 1st patient (OS=12 months).
We initially began developing MTX110 for DMG, the ultra-rare, highly aggressive and inoperable form of childhood brain cancer. In February 2024 we announced the results of a Phase I study conducted by Columbia University Irving Medical Center. As this was the first ever study of repeated infusions to the pons via an implanted CED catheter, the primary objective of the study was safety and tolerability and, accordingly, the number of infusions was limited to two, each of 48 hours, 7 days apart. Nine patients were treated in the study (30 M group, n=3; 60 M group, n=4; 90 M group (optimal dose), n=2). One patient in the 60 M group suffered a severe adverse event assessed by the investigators as not related to the study drug but related to the infusion and tumour anatomy. Although the study was not powered to reliably demonstrate efficacy, median overall survival (OS) of patients in the study was 16.5 months.
We are also evaluating the utility of MTX110 in medulloblastoma in a pilot study at the University of Texas.
MTD217
During the year we initiated a new preclinical programme, coded MTD217, to explore the simultaneous inhibition of two key metabolic pathways used by cancer cells to generate ATP. Blocking mitochondrial oxidative phosphorylation limits metabolic plasticity that enables cancer cells to adapt and survive. Our initial target for MTD217 is treatment of Leptomeningeal Disease, a lethal complication in which metastatic cancer cells invade the cerebrospinal fluid and central nervous system. In collaboration with a CRO, we developed a Leptomeningeal Disease in vivo model and awaiting results.
*Financings*
Private Placement, February 2023
On 15 February 2023 we raised $6.0 million before expenses through a Private Placement in the US of 3,250,200 Ordinary Shares (8,125 ADSs) and 62,184,525 Pre-funded Warrants (155,461 ADSs). We also issued to investors Series A Warrants exercisable into 12,931,200 Ordinary Shares (32,327 ADSs) and Series B Warrants exercisable into 19,396,400 Ordinary Shares (48,491 ADSs). We also issued Series A Warrants exercisable into 625,000 Ordinary Shares (1,562 ADSs) to a former investor in return for a waiver from an obligation under a prior financing. All of the Series A and Series B Warrants have been exercised.
Registered Direct Offering, May 2023
On 26 May 2023 we raised $3.3 million before expenses via a Registered Direct Offering in the US of 110,679,610 Ordinary Shares (279,999 ADSs). We also issued to investors Series C Warrants exercisable into 166,017,700 Ordinary Shares (415,044 ADSs) and Series D Warrants exercisable into 110,679,610 Ordinary Shares (279,699 ADSs). All of the Series C Warrants have been exercised. None of the Series D Warrants, exercisable at $16.00 per ADS, have been exercised. The Series D Warrants may be exercised at any time until May 2028.
Registered Offering, December 2023
In connection with Assignment and Exchange Agreement with Adhera Therapeutics, Inc and the in-license from Melior Pharmaceuticals I, Inc. of tolimidone, on 21 December 2023 we raised $6.0 million in an F-1 offering in the US of
435,544,800 Ordinary Shares (1,088,887 ADSs) and 1,911,176 Pre-funded Warrants (764,470,400 Ordinary Shares). We also issued to investors Series E Warrants exercisable into 1,200,025,200 Ordinary Shares (3,000,063 ADSs) and Series F Warrants exercisable into 1,200,025,200 Ordinary Shares (3,000,063 ADSs). None of the Series E Warrants or the Series F Warrants have been exercised. The Series E Warrants and the Series F Warrants are exercisable at $2.20 per ADS and expire in December 2024 and December 2028, respectively. In addition, because the Adhera Secured Noteholders, as a group, subscribed for $4.0 million in total of Class A and Class B Units in the offering, we paid a further $0.4 million in cash to Adhera and issued a further $3.0 million of our ADSs, valued at the Class A Offering Price, to the Adhera Secured Noteholders. This resulted in the issue of 49,836,400 ordinary shares (328,000 ADSs) and 550,163,200 pre-funded warrant ordinary shares (1,375,408 pre-funded warrant ADSs).
*De-listing from AIM*
Following shareholder approval at a General meeting on 24 March 2023, the Company was de-listed from the AIM market with effect from 26 April 2023. The Board decided to recommend cancelling the Company’s AIM listing for a number of reasons including: an increasingly smaller proportion of trading in the Ordinary Shares is conducted on AIM compared to NASDAQ ; improved liquidity through concentration of trading in the Company’s securities on a single market; and, the cost, management time commitment and the burden of complying with the AIM Rules and maintaining a quotation on AIM is duplicative of that for complying with the NASDAQ rules. In addition, as was demonstrated with the in-licensing of tolimidone, we intend to seek opportunities to expand our pipeline through the acquisition and / or in-licensing of additional development programmes. Given our market capitalisation, most transactions are likely to be deemed reverse takeovers under AIM rules, requiring suspension and re-listing via a new Admission Document which is both time-consuming and costly.
*Change of Name*
Our intention is that re-positioning as a therapeutics company should represent a “fresh start” for the Company. To reflect this change the Company’s name was changed to Biodexa Pharmaceuticals PLC following a General Meeting on 24 March 2023.
*Outlook*
Taking into account the $15.3 million (gross) we raised in 2023, we have the resources to deliver two sets of preclinical data and three sets of clinical data in 2024. Our development pipeline now includes five programs, of which four are at clinical stage. With the pipeline stronger than it has ever been, we are enthusiastic about the potential for our Company in 2024 and beyond.
*FINANCIAL REVIEW*
*Introduction *
Biodexa Pharmaceuticals PLC (the "Company") was incorporated as a company on 12 September 2014 and is domiciled in England and Wales.
*Financial analysis*
Key performance indicators
*2023* 2022 Change
Total gross revenue^(^1) *£0.38m* £0.70m (46)%
R&D expenditure *£4.07m* £5.11m (20)%
R&D as % of operating costs *48%* 53% n/a
Net cash inflow/(outflow) for the year * £3.14m* (£7.22m) n/m ============ ============ ============
(1)
Total gross revenue represents collaboration income.
Revenue
In the year ended 31 December 2023, Biodexa generated consolidated total gross revenue of £0.38m (2022: £0.70m), a decrease of 46% on the prior year, this arose from customer revenue as in 2022. Customer revenue was derived entirely from the Group’s R&D collaboration agreements with Janssen in both years which has now ceased.
Research and development expenditure
Research and development costs were £4.07m, a reduction of £1.04m, or 20% on 2022 (2022: £5.11m). The percentage of R&D costs as a percentage of operating costs also reduced to 48% from 53% in the prior year. The reduction in the year reflects the Directors decision to reposition as a therapeutics company and to not expand our internal drug delivery platform, resulting in a reduction in pre-clinical expense of £0.87m. Personnel costs also reduced by £0.39m as a result of the cost reduction program in March 2023 where eight staff members were made redundant at a one-time cost of £105k. Expenditure on the MTX110 clinical program increased during the year by £0.41m offsetting in part the reduced expense on pre-clinical programs and staffing.
Administrative costs
Administrative costs in the year reduced by £0.2m to £4.34m (2022: £4.54m). During the year the Company expensed £1.31m on legal and professional fees in connection with the successful financing transactions in the year, the acquisition of the tolimidone licence in December 2023 and aborted acquisitions, this compares to £1.36m spent in 2022 on the aborted acquisition of Bioasis Technologies Inc (“Bioasis”). During the year the Company provided a loan to Adhera Therapeutics, Inc. (“Adhera”) of £0.08m, which was forgiven on completion of the acquisition of the global rights to develop and commercialise tolimidone in December 2023 transaction.
Staff costs
During the year, the average number of staff decreased to decreased to 21 (2022: 27), reflecting the cost reduction program undertaken in March 2023. Total staff cost reduced 19% to £2.06m (2022: £2.52m).
Taxation
During 2023 and 2022 we recognized U.K research and development tax credits of £0.41m and £0.83m in respect of R&D expenditure incurred. The lower tax credit in the current year is due to the reduced R&D spend compared to 2022.
Capital expenditure
Purchase of tangible fixed assets in 2023 was £0.03m (2022: £0.06m) and related to investment in laboratory equipment. In addition, in December 2023, the Company purchased an intangible asset being the global rights to develop and commercialise tolimidone for total consideration of £2.94m, this was satisfied £0.24m in cash and £2.70m by the issue of ordinary shares and pre-funded warrants.
Cash flow
Net cash outflow from operating activities in 2023 was £6.83m (2022: outflow £7.05m) driven by a net loss of £7.08 (2022: loss £7.66m) and after negative movements in working capital of £0.05m (2022: positive £0.52m), taxes received of £0.84m (2022: £0.68m), and other net negative adjustments for non-cash items totalling £0.54m (2022: negative £0.59m).
Investing activities outflow in 2023 of £0.27m (2022: outflow of £0.22m) included purchases of property, plant and equipment of £0.03m (2022: £0.06m), purchase of tolimidone licence for total consideration of £2.94m including cash of £0.24m. These cash outflows are offset interest income from bank deposits of £0.07m (2022: £0.03m).
Financing activities inflow in 2023 of £10.23m (2021: inflow of £0.05m) was driven by receipts from share issues of £10.43m (2022: £0.24m). The other principal outflows related interest paid of £0.01m (2022: £0.02m) and payments on lease liabilities of £0.19m (2022: £0.18m).
As a result of the foregoing, net cash inflow for the year was £3.14m (2022: outflow of £7.22 m).
*Share consolidation and ADS Ratio*
At a General Meeting on 24 March 2023, shareholders approved a consolidation of the Company’s Ordinary Shares on a one for 20 basis. As a result the par value of the Ordinary Shares was changed from £0.001 per share to £0.02 per share. At the same time, the ratio of the Company’s Ordinary Shares to ADSs was changed from each ADS representing 25 Ordinary Shares to each ADS representing 5 Ordinary Shares.
At a General Meeting on 14 June 2023, shareholders approved the subdivision and redesignation of the Company’s Issued Ordinary Shares of £0.02 each into to one Ordinary Share of £0.001 each and 19 ‘B’ Deferred Shares of £0.001 each. The ‘B’ Deferred Shares have limited rights and are effectively valueless.
On 5 July 2023 the Company affected a change in the ratio of the Company’s Ordinary Shares from each ADS representing 5 Ordinary Shares to each ADS representing 400 Ordinary Shares.
*Going Concern – material uncertainty*
The Group and Company has experienced net losses and significant cash outflows from cash used in operating activities over the past years as it develops its portfolio. For the year ended 31 December 2023, the Group incurred a consolidated loss for the year of £7.08m and negative cash flows from operations of £6.83m. As of 31 December, 2023, the Group had an accumulated deficit of £142.82 m.
The Group’s future viability is dependent on its ability to raise cash from financing activities to finance its development plans until milestones and/or royalties can be secured from partnering the Company’s assets. The Group’s failure to raise capital as and when needed could have a negative impact on its financial condition and ability to pursue its business strategies.
The Directors believe there are adequate options and time available to secure additional financing for the Company and after considering the uncertainties, the Directors consider it is appropriate to continue to adopt the going concern basis in preparing these financial statements. The Group's consolidated financial statements have therefore been presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
As at 31 December 2023, the Group had cash and cash equivalents of £5.97m. The Directors have prepared cash flow forecasts and considered the cash flow requirement for the Group for the next three years including the period 12 months from the date of approval of the consolidated financial statements. These forecasts show that further financing will be required before the fourth quarter of 2024 assuming, inter alia, that certain development programs and other operating activities continue as currently planned. If the Company does not secure additional funding before the fourth quarter of 2024, it will no longer be a going concern and would likely be placed in Administration.
Our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement and involves risks and uncertainties, and actual results could vary as a result of a number of factors, including the timing of clinical trials. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect. If we lack sufficient capital to expand our operations or otherwise capitalize on our business opportunities, our business, financial condition and results of operations could be materially adversely affected.
If we raise additional funds through the issuance of debt securities or additional equity securities, it could result in dilution to our existing shareholders, increased fixed payment obligations and these securities may have rights senior to those of our ordinary shares (including the ADSs) and could contain covenants that would restrict our operations and potentially impair our competitiveness, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. Any of these events could significantly harm our business, financial condition and prospects.
In the Directors’ opinion, the environment for financing of small and micro-cap biotech companies remains challenging. While this may present acquisition and/or merger opportunities with other companies with limited or no access to financing, as noted above, any attendant financings by Biodexa are likely to be dilutive. The Directors continue to evaluate financing options, including those connected to acquisitions and/or mergers, potentially available to the Group. Any alternatives considered are contingent upon the agreement of counterparties and accordingly, there can be no assurance that any alternative courses of action to finance the Company would be successful.
This requirement for additional financing in the short term represents a material uncertainty that may cast significant doubt upon the Group and Parent Company’s ability to continue as a going concern. Should it become evident in the future that there are no realistic financing options available to the Company which are actionable before its cash resources run out then the Company will no longer be a going concern. In such circumstances, we would no longer be able to prepare financial statements under paragraph 25 of IAS 1. Instead, the financial statements would be prepared on a liquidation basis and assets would be stated at net realizable value and all liabilities would be accelerated to current liabilities.
*Macro-economic environment*
The invasion by the Russian Federation military in Ukraine in early 2022 and the recent Israeli/Palestinian conflict in the Middle East has had a destabilising impact on the global economy. Although there has been no immediate impact on the Group, it is not possible to assess the medium- and long-term impact of these conflicts on the Group and the global economy generally.
*Environmental matters, community, human rights issues and employees*
As at 31 December 2023 the Group had 16 employees, of whom 10 were routinely based at its offices in Cardiff, Accordingly the Company believes it has a relatively modest environmental impact. All materials imported into the Company’s laboratories are assessed for safety purposes and appropriate handling and storage safeguards imposed as necessary. Any small quantities of hazardous materials are removed by licensed waste management contractors. A number of policies and procedures governing expectations of ethical standards and the treatment of employees and other stakeholders are set out in the Company’s Employee Handbook. The Company has also established an anti-slavery policy pursuant to the Modern Slavery Act 2015.
The Company strives to be an equal opportunity employer, irrespective of race or gender. At 31 December 2023, the number of male/female employees was 31%/69%, the number of male/female senior managers was 67%/33% and the number of male/female Directors was 80%/20%.
*Annual greenhouse gas emissions*
We measure our environmental performance by reporting our carbon footprint in terms of tonne CO[2] equivalent. We report separately on our indirect emissions from consumption of electricity (Scope 2) and emissions consisting of employee travel in cars on Group business estimated on the basis of miles travelled (Scope 3). The Group have elected to monitor and report its energy efficiency using tonnes of CO[2] per employee as an intensity ratio.
Methodology
In calculating the reported energy usage and equivalent greenhouse gas emissions the Group have referred to the HM Government Environment Reporting Guidelines and the GHG Reporting Protocol. A location-based allocation methodology was used to calculate electricity usage.
*Tonnes CO*[*2*]*e* *2023* *2022*
Scope 2 18 15
Scope 3 3 3
*Total* *21* *18*
*Intensity ratio (tonnes of CO*[*2*]* per employee)* *1.0* *0.7*
The Group’s electricity costs for 2023 were approximately £30,000 (2022: £23,000). The kWh usage in the year was 87,780 (2022: 78,017). The Group has no immediate plans to improve energy efficiency.
*CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME*
*For the year ended 31 December*
*Note* *2023*
*£’000* *2022*
*£’000* *2021*
*£’000*
Revenue 381 699 578
Other income 14 22 24
Research and development costs (4,067) (5,111) (4,654)
Administrative costs (4,342) (4,542) (2,946)
*Loss from operations* (8,014) (8,932) (6,998)
Finance income 2 570 497 936
Finance expense 2 (41) (53) (44)
*Loss before tax* (7,485) (8,488) (6,106)
Taxation 3 406 832 646
*Loss for the year attributable to the owners of the parent* (7,079) (7,656) (5,460)
*Other comprehensive income:*
Items that will or may be reclassified subsequently to profit or loss:
*Total other comprehensive income net of tax* – – –
*Total comprehensive loss attributable to the owners of the parent* (7,079) (7,656) (5,460)
*Loss per share *
Continuing operations
Basic and diluted loss per ordinary share - pence 4 (2)p (155) p (136) p
The notes form an integral part of these consolidated financial statements.
*CONSOLIDATED STATEMENTS OF FINANCIAL POSITION*
*At 31 December*
*Company number 09216368* *Note* *2023*
*£’000* *2022*
*£’000* *2021*
*£’000*
*Assets*
*Non-current assets*
Property, plant and equipment 571 831 1,152
Intangible assets 5 2,941 6 – *3,512* *837* *1,152*
*Current assets*
Trade and other receivables 637 1,006 1,034
Current taxation receivable 422 846 670
Cash and cash equivalents 5,971 2,836 10,057 *7,030* *4,688* *11,761*
*Total assets* *10,542* *5,525* *12,913*
*Liabilities*
*Non-current liabilities*
Borrowings 6 295 463 620 *295* *463* *620*
*Current liabilities*
Trade and other payables 1,240 1,447 1,092
Borrowings 6 169 161 146
Provisions 7 – 207 50
Derivative financial liability 8 4,160 85 553 *5,569* *1,900* *1,841*
*Total liabilities* *5,864* *2,363* *2,461*
*CONSOLIDATED STATEMENTS OF FINANCIAL POSITION**(CONTINUED)*
*At 31 December* *Note* *2023*
*£’000* *2022*
*£’000* *2021*
*£’000*
*Issued capital and reserves attributable to owners of the parent*
Share capital 9 6,253 1,108 1,098
Share premium 86,732 83,667 83,434
Merger reserve 53,003 53,003 53,003
Warrant reserve 3,457 720 720
Accumulated deficit (144,767) (135,336) (127,803)
*Total equity* *4,678* *3,162* *10,452*
*Total equity and liabilities* *10,542* *5,525* *12,913*
*CONSOLIDATED STATEMENTS OF CASH FLOWS*
*For the year ended 31 December*
*Note* *2023*
*£’000* *2022*
*£’000* *2021*
*£’000*
*Cash flows from operating activities*
Loss for the year (7,079) (7,656) (5,460)
Adjustments for:
Depreciation of property, plant and equipment 143 174 213
Depreciation of right of use asset 137 166 190
Amortisation of intangible fixed assets 5 3 3 –
Loss/(Profit) on disposal of property, plant and equipment 2 14 (39)
Impairment of loan 79 207 –
Finance income 2 (570) (497) (936)
Finance expense 2 41 53 44
Share-based payment charge 28 123 89
Taxation 3 (406) (832) (646)
Foreign exchange gains – (1) (3)
*Cash flows from operating activities before changes in working capital* *(7,622)* *(8,246)* *(6,548)*
Decrease/(Increase) in trade and other receivables 365 7 (487)
(Decrease)/Increase in trade and other payables (207) 356 (130)
(Decrease)/Increase in provisions 7 (207) 157 –
*Cash used in operations* *(7,671)* *(7,726)* *(7,165)*
Taxes received 845 678 1,157
*Net cash used in operating activities* *(6,826)* *(7,048)* *(6,008)*
*CONSOLIDATED STATEMENTS OF CASH FLOWS**(CONTINUED)*
*For the year ended 31 December*
*Note* *2023*
*£’000* *2022*
*£’000* *2021*
*£’000*
*Investing activities*
Purchases of property, plant and equipment (26) (62) (320)
Proceeds from disposal of fixed assets 4 20 42
Purchase intangible asset 5 (237) – –
Loan granted (79) (207) –
Interest received 73 29 –
*Net cash (used in)/generated from investing activities* *(265)* *(220)* *(278)*
*Financing activities*
Interest paid (13) (18) (15)
Amounts paid on lease liabilities (188) (178) (112)
Repayment from Government loan – – (103)
Share issues including warrants, net of costs 10,427 243 9,035
*Net cash generated from financing activities* *10,226* *47* *8,805*
*Net increase/(decrease) in cash and cash equivalents* *3,135* *(7,221)* *2,519*
*Cash and cash equivalents at beginning of year* *2,836* *10,057* *7,546*
Exchange (losses)/gains on cash and cash equivalents *–* *–* *(8)*
Cash and cash equivalents at end of year *5,971* *2,836* *10,057*
*CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY*
*For the year ended 31 December*
*Note* *Share*
*capital*
*£’000* *Share*
*premium*
*£’000* *Merger reserve*
*£’000* *Warrant reserve £’000* *Accumulated*
*deficit*
*£’000* *Total*
*equity*
*£’000*
*At 1 January 2023* *1,108* *83,667* *53,003* *720* *(135,336)* *3,162*
Loss for the year – – – – (7,079) (7,079)
Total comprehensive loss – – – *–* *(7,079)* *(7,079)*
*Transactions with owners*
Shares issued on 15 February 2023 9 *1,956* *3,013* *–* *–* *–* *4,969*
Costs associated with share issue on 15 February 2023 9 *–* *(903)* *–* *–* *–* *(903)*
Shares issued on 26 May 2023 9 *2,380* *–* *(355)* *2,025*
Costs associated with share issue on 26 May 2023 9 *–* *–* *–* *(527)* *(527)*
Shares issued on 21 December 2023 9 *485* *– * *–* *1,315* *(1,273)* *527*
Costs associated with share issue on 21 December 2023 9 *–* *–* *–* *–* *(441)* *(441)*
Issue of shares to purchase intangible asset 5 *324* *955* – *1,422* – *2,701*
Share-based payment charge *–* *–* *–* *–* *244* *244*
*Total contribution by and distributions to owners* *5,145* *3,065* – *2,737* *(2,352)* *8,595*
*At 31 December 2023* *6,253* *86,732* *53,003* *3,457* *(144,767)* *4,678*
*CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY**(CONTINUED)*
*Note* *Share*
*capital*
*£’000* *Share*
*premium*
*£’000* *Merger reserve*
*£’000* *Warrant reserve £’000* *Accumulated*
*deficit*
*£’000* *Total*
*equity*
*£’000*
*At 1 January 2022* *1,098* *83,434* *53,003* *720* *(127,803)* *10,452*
Loss for the year – – – – (7,656) (7,656)
Total comprehensive loss – – – *–* *(7,656)* *(7,656)*
*Transactions with owners*
Exercise of warrants on 22 March 2022 14,21 – – – – – –
Shares issued on 19 December 2022 14,21 10 311 – – – 321
Costs associated with share issue on 19 December 2022 14,21 – (78) – – – (78)
Share-based payment charge – – – – 123 123
*Total contribution by and distributions to owners* *10* *233* – – *123* *366*
*At 31 December 2022* *1,108* *83,667* *53,003* *720* *(135,336)* *3,162*
*NOTES FORMING PART OF THE FINANCIAL STATEMENTS*
*For the year ended 31 December 2023*
1. *Basis of preparation*
The consolidated financial statements have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006, and they are prepared in accordance with international financial reporting standards. The consolidated financial statements have been prepared on a historical cost basis except that the following assets and liabilities are stated at their fair value: certain financial assets and financial liabilities measured at fair value, and liabilities for cash-settled share-based payments.
The financial information contained in this final announcement does not constitute statutory financial statements as defined in Section 435 of the Companies Act 2006. The financial information has been extracted from the financial statements for the year ended 31 December 2023 which have been approved by the Board of Directors, and the comparative figures for the year ended 31 December 2022 and 31 December 2021 are based on the financial statements for that year.
The financial statements for 2022 and 2021 have been delivered to the Registrar of Companies and the 2023 financial statements will be delivered after the Annual General Meeting.
The auditor’s report for the Company’s 2023 Annual Report and Accounts was unqualified but did draw attention to the material uncertainty relating to going concern. The auditor’s report did not contain statements under s498(2) or (3) of the Companies Act 2006.
Whilst the financial information included in this results announcement has been prepared in accordance with International Financial Reporting Standards (IFRSs) this announcement does not itself contain sufficient information to comply with IFRSs. The information in this results announcement was approved by the board on • April 2024.
*Going concern – material uncertainty*
The Group and Company has experienced net losses and significant cash outflows from cash used in operating activities over the past years as it develops its portfolio. For the year ended 31 December 2023, the Group incurred a consolidated loss for the year of £7.08m and negative cash flows from operating activities of £6.83m. As of 31 December 2023, the Group had an accumulated deficit of £142.82m.
The Group’s future viability is dependent on its ability to raise cash from financing activities to finance its development plans until milestones and/or royalties can be secured from partnering the Company’s assets. The Group’s failure to raise capital as and when needed could have a negative impact on its financial condition and ability to pursue its business strategies.
The Directors believe there are adequate options and time available to secure additional financing for the Company and after considering the uncertainties, the Directors consider it is appropriate to continue to adopt the going concern basis in preparing these financial statements. The Group's consolidated financial statements have therefore been presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
As at 31 December 2023, the Group had cash and cash equivalents of £5.97m. The Directors have prepared cash flow forecasts and considered the cash flow requirement for the Group for the next three years including the period 12 months from the date of approval of the consolidated financial statements. These forecasts show that further financing will be required before the fourth quarter of 2024 assuming, inter alia, that certain development programs and other operating activities continue as currently planned. If the Company does not secure additional funding before the fourth quarter of 2024, it will no longer be a going concern and would likely be placed in Administration.
Our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement and involves risks and uncertainties, and actual results could vary as a result of a number of factors, including the timing of clinical trials. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect. If we lack sufficient capital to expand our operations or otherwise capitalize on our business opportunities, our business, financial condition and results of operations could be materially adversely affected.
If we raise additional funds through the issuance of debt securities or additional equity securities, it could result in dilution to our existing shareholders, increased fixed payment obligations and these securities may have rights senior to those of our ordinary shares (including the ADSs) and could contain covenants that would restrict our operations and potentially impair our competitiveness, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. Any of these events could significantly harm our business, financial condition and prospects.
In the Directors’ opinion, the environment for financing of small and micro-cap biotech companies remains challenging. While this may present acquisition and/or merger opportunities with other companies with limited or no access to financing, as noted above, any attendant financings by Biodexa are likely to be dilutive. The Directors continue to evaluate financing options, including those connected to acquisitions and/or mergers, potentially available to the Group. Any alternatives considered are contingent upon the agreement of counterparties and accordingly, there can be no assurance that any alternative courses of action to finance the Company would be successful.
This requirement for additional financing in the short term represents a material uncertainty that may cast significant doubt upon the Group and Parent Company’s ability to continue as a going concern. Should it become evident in the future that there are no realistic financing options available to the Company which are actionable before its cash resources run out then the Company will no longer be a going concern. In such circumstances, we would no longer be able to prepare financial statements under paragraph 25 of IAS 1. Instead, the financial statements would be prepared on a liquidation basis and assets would be stated at net realizable value and all liabilities would be accelerated to current liabilities.
*2** **Finance income and expense*
*2023*
*£’000* *2022*
*£’000* *2021*
*£’000*
*Finance income*
Interest received on bank deposits 73 29 –
Other interest receivable 10 – –
Gain on equity settled derivative financial liability 487 468 936
*Total finance income* *570* *497* *936*
*2023*
*£’000* *2022*
*£’000* *2021*
*£’000*
*Finance expense*
Interest expense on lease liabilities 28 43 36
Other loans 13 10 8
*Total finance expense* 41 53 44
The gain on the equity settled derivative financial liability in 2023, 2022 and 2021 arose as a result of the movement in share price.
*3 ** **Taxation*
*2023*
*£’000* *2022*
*£’000* *2021*
*£’000*
*Current tax credit*
Current tax credited to the income statement 407 825 646
Adjustment in respect of prior year (1) 7 – 406 832 646
*Deferred tax credit*
Reversal of temporary differences – – –
*Total tax credit* *406* *832* *646*
The reasons for the difference between the actual tax charge for the year and the standard rate of corporation tax in the United Kingdom applied to losses for the year are as follows:
*2023*
*£’000* *2022*
*£’000* *2021*
*£’000*
Loss before tax (7,485) (8,488) (6,106)
Expected tax credit based on the standard rate of United Kingdom corporation tax at the domestic rate of 23.52% (2021: 19%; 2020: 19%) (1,764) (1,613) (1,160)
Expenses not deductible for tax purposes 408 392 75
Income not taxable (5) (4) (2)
Adjustment in respect of prior period 1 (7) –
Effect of R&D relief 26 (357) (280)
Deferred tax not recognised 928 757 721
*Total tax credited to the income statement* *(406)* *(832)* *(646)*
The taxation credit arises on the enhanced research and development tax credits accrued for the respective periods.
*4** **Loss per share*
*2023*
*£’000* *2022*
*£’000* *2021*
*£’000*
Numerator
Loss used in basic EPS and diluted EPS:
Continuing operations (7,079) (7,656) (5,460)
Denominator
Weighted average number of ordinary shares used in basic EPS: 315,849,600 4,941,793 4,027,345
Basic and diluted loss per share:
Continuing operations – pence (2)p (155) p (136) p
At a General Meeting on 24 March 2023, shareholders approved a consolidation of the Company’s Ordinary Shares on a one for 20 basis. As a result, the par value of the Ordinary Shares was changed from £0.001 per share to £0.02 per share. The denominator has been calculated to reflect the share consolidation in the current and prior periods.
At a General Meeting on 14 June 2023, shareholders approved the subdivision and redesignation of the Company’s Issued Ordinary Shares of £0.02 each into to one Ordinary Share of £0.001 each and 19 ‘B’ Deferred Shares of £0.001 each. The ‘B’ Deferred Shares have limited rights and are effectively valueless. The share sub-division and redesignation did not impact the calculation of the denominator as the number of Issued Ordinary Shares did not change.
During the year the Company issued warrants that were accounted through the Warrant Reserve as detailed in note 9.
The Company has considered the guidance set out in IAS 33 in calculating the denominator in connection with the issuance of Pre-Funded, Series A, Series B and Series C warrants as disclosed in note 9. Management have recognised the warrants from the date of grant rather than the date of issue of the corresponding Ordinary Shares when calculating the denominator.
The Group has made a loss in the current and previous periods presented, and therefore the options and warrants are anti-dilutive. As a result, diluted earnings per share is presented on the same basis as basic earning per share.
*5** **Intangible assets*
*In-process research and development*
*£’000* *Goodwill*
*£’000* *IT/Website costs*
*£’000* *Total*
*£’000*
*Cost*
*At 1 January 2021* *13,378* *2,291* *–* *15,669*
*At 31 December 2021* *13,378* *2,291* *–* *15,669*
Transfer from property, plant and equipment – – 122 122
Disposal – – (12) (12)
*At 31 December 2022* *13,378* *2,291* *110* *15,779*
Acquisition 2,938 – – 2,938
*At 31 December 2023* *16,316* *2,291* *110* *18,717* *In-process*
*research and*
*development*
*£’000* *Goodwill*
*£’000* *IT/Website*
*Costs*
*£’000* *Total*
*£’000*
*Accumulated amortisation and impairment*
*At 1 January 2021* *13,378* *2,291* *–* *15,669*
*At 31 December 2021* *13,378* *2,291* *–* *15,669*
Amortisation charge for the year – – 3 3
Transfer from property, plant and equipment – – 113 113
Disposal – – (12) (12)
*At 31 December 2022* *13,378* *2,291* *104* *15,773*
Amortisation charge for the year – – 3 3
Disposal – – – –
*At 31 December 2023* *13,378* *2,291* *107* *15,776*
*Net book value*
*At 31 December 2023* *2,938* – *3* *2,941*
At 31 December 2022 – – 6 6
At 31 December 2021 – – – –
The individual intangible asset which is material to the financial statements is as follows:
*Carrying amount* *Remaining amortisation period*
*2023*
*£’000* *2022*
*£’000* *2021 *
*£’000* *2023*
*(years)* *2022*
*(years)* *2021*
*(years)*
MTX228 tolimidone acquired IPRD* 2,938 – – n/a n/a n/a
*asset is not yet in use and has not started amortising
On 21 December 2023 the Company executed an Assignment and Exchange Agreement with Adhera for assignment of Adhera’s rights and a new licence for tolimidone (MTX228) with Melior for total consideration of $11.12million. The initial consideration was settled as follows:
*$’000* *£’000*
Cash paid to Adhera 300 237
100,356 ADSs, valued at the Offer price issued to Adhera Loan Noteholders 201 159
899,642 Pre-funded warrants at the Offering price issued to Adhera Loan Noteholders 1,799 1,422
708,856 ADSs at the Offer price issued to Melior 1,418 1,120
*Recognised as intangible asset purchase* *3,718* *2,938*
In addition, conditional upon Adhera Loan Noteholders subscribing for not less than $4 million in the Registered Offering the company paid a further $0.4million in cash and as an adjustment to equity of $3.0million satisfied by the issue of 124,591 ADSs and 1,375,408 pre-funded warrants and not as consideration for the acquisition of the intangible asset. These have been accounted for within the December 2023 Registered Offering
The Assignment and Exchange Agreement also provides for deferred consideration totalling $4.0 million payable upon in part upon the completion of a positive Phase II clinical study of Tolimidone in Type-1 diabetes and in part upon the first commercial sale of tolimidone. In addition, the Company is obligated to pay single digit tiered royalties on net sales of tolimidone to Melior.
The ADSs issued under the transaction are subject to restrictions on their resale.
The Group reviews the carrying amounts of its intangible assets to determine whether there are any indications that those assets have suffered an impairment loss. If any such indications exist, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. Impairment indications include events causing significant changes in any of the underlying assumptions used in the income approach utilised in valuing in process R&D. The key assumptions are : estimation of future cash flows which is dependent on the probability of success, the discount factor, the timing of future revenue flows, market penetration and peak sales assumptions, and expenditure required to complete development, estimation of the long-term rate of growth for the business, estimation of the useful life over which cash flows will occur and determination of our weighted-average cost of capital.
*6** **Borrowings*
*2023*
*£’000* *2022*
*£’000* *2021*
*£’000*
*Current*
Lease liabilities 169 161 146
Total 169 161 146
*Non-current*
Lease liabilities 295 463 620
Total 295 463 620
Book values approximate to fair value at 31 December 2023, 2022 and 2021.
Obligations under finance leases are secured by a fixed charge over the fixed assets to which they relate.
*Government loans in Spain *
During 2021 a euro denominated government and research loan of £103k was repaid. This amount translated at year end rate was £107k. The loan was repaid in February 2021 prior to the liquidation of MPE.
*7** **Provisions*
*2023*
*£’000* *2022*
*£’000* *2021*
*£’000*
Opening provision at 1 January 207 50 50
Utilisation of provision (207) (43) –
Provision recognised in the year – 200 –
*At 31 December* – *207* *50*
Less: non-current portion – – –
*Current portion* *–* *207* *50*
The provision as at 31 December 2021 represents management’s best estimate of the ‘making good’ clause on the Cardiff office which was vacated during the fourth quarter of 2021. This liability was settled during 2022.
*Bioasis Loans*
On 19 December 2022 the Company entered into a Promissory Note and Security Agreement with Bioasis to assist in the short term with Bioasis’ working capital requirements. Under the agreement the Company agreed to advance Bioasis up to US$750,000 in 3 tranches payable on 19 December 2022, 3 January 2023 and 6 February 2023.
The Company advanced US$250,000 to Bioasis in the year to 31 December 2022. A further advance of US$250,000 was made to Bioasis on 3 January 2023.
Management considered recovery of the debt to be uncertain and in 2022 recognised an impairment provision of £207,000 against the advance made in December 2022, and a provision of £207,000 against future credit losses resulting from the Promissory Note.
On 3 February 2023 Bioasis announced they were ‘urgently exploring and evaluating all financing and strategic alternatives that may be