TIDMMTFB
RNS Number : 7061B
Motif Bio PLC
12 October 2020
Motif Bio plc
("Motif Bio," or the "Company")
Half-year Report
Motif Bio plc (AIM: MTFB), an AIM Rule 15 cash shell, announces
its unaudited financial results for the half year ended 30 June
2020 and reports on its strategic progress for the year to
date.
The re-organisation of the Company, as approved in the November
2019 shareholder vote, has allowed Motif Bio to be unencumbered of
obligations related to its former operating subsidiary, Motif
Biosciences Inc (the "Subsidiary"). This has given the Board the
flexibility to pursue a strategy of seeking an appropriate Reverse
Takeover ("RTO") candidate for the Company. The Board is
maintaining its focus on sourcing and completing an appropriate RTO
candidate in an effort to deliver value to shareholders. More than
30 opportunities have been carefully reviewed by the Board and
discussions have progressed to the term sheet stage with several
companies. The search is continuing for an appropriate RTO
candidate with the goal of completing a transaction before 28
January 2021, when the Company's shares would be de-listed absent
an RTO or other qualifying transaction.
The Company no longer has control of Motif BioSciences Inc. but
does retain a contractual interest in any upside in consideration,
above what is owed to Hercules Capital Inc. ("Hercules"), at the
time of monetisation, should the iclaprim asset be monetised by
Hercules. To date, the Subsidiary and Hercules have been
unsuccessful in monetising the iclaprim asset, and it is not clear
when or if they will be able to do so. If there is a monetisation
of the iclaprim asset, it is also unclear if there would be any
residual available to the Company's shareholders above what
Hercules will be owed at that time.
The Company appreciates the support and patience of its
shareholders through the restructuring and current period and will
continue its efforts to deliver value to shareholders, ideally by
completing an RTO as opposed to de-listing from the AIM Market of
the London Stock Exchange ("AIM"). Though the Board has been and
continues to actively seek RTO opportunities, there can be no
guarantee that the Company will be successful in sourcing an
appropriate RTO candidate or completing an RTO transaction in the
time remaining before its shares are de-listed trading on AIM in
late January 2021.
The Board looks forward to providing additional updates to
shareholders as and when it is appropriate.
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) 596/2014.
For further information, please contact:
Motif Bio plc ir@motifbio.com
Jonathan Gold (President and Chief
Business Officer)
SP Angel Corporate Finance LLP (NOMAD
& BROKER) +44 (0) 20 3470 0470
David Hignell/Caroline Rowe (Corporate
Finance)
Vadim Alexandre/Abigail Wayne (Sales
& Broking)
Walbrook PR Ltd. (UK FINANCIAL PR
& IR) +44 (0) 20 7933 8780
Paul McManus/ Lianne Cawthorne motifbio@walbrookpr.com
Forward-Looking Statements
When used in this Press Release, the words or phrases "intends,"
"anticipates," "expected to be" or similar expressions are intended
to identify "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements
are subject to certain risks and uncertainties including, but not
limited to, changes in economic conditions in the Company's market
area, changes in policies by regulatory agencies, fluctuations in
interest rates, competition that could cause actual results to
differ materially from historical earnings and those presently
anticipated or projected, and other risks described in the
Company's filings with the Securities and Exchange Commission. The
Company cautions readers not to place undue reliance on any such
forward-looking statements, which speak only as of the date made.
The Company advises readers that the factors listed above could
affect the Company's financial performance and could cause the
Company's actual results for future periods to differ materially
from any opinions or statements expressed with respect to future
periods in any current statements. The Company does not undertake,
and specifically disclaims any obligation to publicly release the
result of any revision that may be made to any forward-looking
statements to reflect events or circumstances after the date of
such statements or to reflect the occurrence of anticipated or
unanticipated events.
Interim Strategic Report
Overview
Pursuant to the successful completion of the 2019 corporate
restructuring, as announced on 28 January 2020 and further
described in the Company's 2019 Annual Report and Accounts issued
on 9 September 2020, the Company was reclassified as an AIM Rule 15
cash shell.
On 29 July 2020, the London Stock Exchange suspended trading in
the Company's AIM securities pursuant to AIM Rule 40. The AIM Rules
provide that the Company has an additional six months from the
suspension date to complete a qualifying transaction. The Company
is currently required to make an acquisition, or acquisitions,
which constitutes a reverse takeover under AIM Rule 14 by 28
January 2021 to continue to be listed on AIM.
The restructuring and discontinuance of operation of the
Subsidiary, has created the opportunity for the Company to pursue
an RTO transaction in an effort to deliver additional value to
shareholders. The Board continues to advance discussions with RTO
candidates; however, there are no assurances that the Company will
be able to complete an RTO or other qualifying transaction before
the end of January 2021.
Financial Overview
The Subsidiary, Motif BioSciences Inc., was previously reported
as discontinued operations in the consolidated statements of
comprehensive loss and the related assets and liabilities were
presented as held-for-sale in the consolidated balance sheet as of
31 December 2019.
In the first quarter of 2020, the Company determined that it no
longer had control over Motif BioSciences Inc. and, in accordance
with IFRS 10, determined that it will no longer consolidate the
financial results of the entity for financial reporting periods
commencing in 2020.
Results of Operations:
Comparison of the six months ended 30 June 2020 and 30 June
2019
General and Administrative Expenses
General and administrative expenses decreased by US $0.16
million to US $0.65 million in the six months ended 30 June 2020
from US $0.81 million in the six months ended 30 June 2019. This
decrease was primarily attributable to a US $0.04 million reduction
in Board and employee relates expenses and US $0.12 million
reduction in legal, investor relations and other services.
Gain (Loss) from Revaluation of Derivative Liabilities
In November 2016, the Company issued warrants that are
classified as a liability due to potential variability in the
number of shares that may be issued upon exercise if we fail to
maintain an effective registration statement. The Company issued
additional warrants in 2017 and 2020 that are also classified as a
derivative liability. These derivative liabilities are carried at
fair value and are remeasured each reporting period using the
Black-Scholes option pricing model. Our stock price has a
significant impact on the value of the liability and, in general, a
decrease in our stock price will decrease our derivative liability
balance and decrease the loss from revaluation of our derivative
liabilities, or cause us to recognise a gain from revaluation of
our derivative liabilities. A loss of US$0.3 million was recorded
for the six months ended 30 June 2020, compared to a gain of US
$5.6 million for the six months ended 30 June 2019.
Net Foreign Exchange Gain (Loss)
The net foreign exchange loss for the six months ended 30 June
2020 was US $0.03 million, compared to a gain of US $0.02 million
in the six months ended 30 June 2019. In both periods the gain and
loss recognised relates to the re-measurement of the Company's
liability classified ordinary share warrants (Note 5), Sterling
denominated cash deposits to US dollars at the closing US dollar to
Sterling exchange rate as well as the gains and losses resulting
from the settlement of transactions denominated in foreign
currency.
Liquidity and Capital Resources
The Company had US $0.8 million at 30 June 2020 and US $0.6
million in cash at 30 September 2020. The Company may require
additional capital in the future and to the extent that the Company
raises additional funds by issuing equity, its existing
stockholders may experience significant dilution.
The Company's Directors are focused on sourcing an appropriate
reverse takeover candidate for the Company. There is no assurance
that the effort will be successful to source and/or complete a
reverse takeover transaction. In addition, as of the date these
financial statements were approved, the Company can provide no
assurance that additional capital will be available if/when
required and/or on acceptable terms.
Cash Flows
Six months ended
-----------------------------
30 June 2020 30 June 2019
-------------- -------------
(in thousands) US$ US$
Net cash (used in) / provided by:
Operating activities (676) (830)
Investing activities - 2,471
Financing activities 827 3,541
Effect of exchange rate changes on
cash and cash equivalents (17) (57)
151 240
============== =============
Operating Activities
Net cash used in operating activities in the six months ended 30
June 2020 and 2019, primarily reflects the Company's operating loss
for the periods.
Investing Activities
Net cash used in investing activities of US $2.5 million in the
six months ended 30 June 2019 represents the Company's net capital
contribution to its then operating subsidiary Motif BioSciences
Inc. In 2020, Motif BioSciences Inc. is no longer treated as a
consolidated subsidiary (Note 1). No investments in Motif
BioSciences Inc. were, or will be, incurred in 2020.
Financing Activities
Net cash provided by financing activities amounts to US $0.83
million for the six months ended 30 June 2020. This includes net
proceeds of US $0.77 million from the 5 May 2020 placement of
162,500,000 new ordinary shares at 0.004 pence per share and US
$0.06 million of proceeds from a warrant exercise. Net cash
provided by financing activities amounts to US $3.5 million for the
six month ended June 30, 2019. This includes net proceeds of US
$3.3 million from 25 March 2019 placement of 45,000,000 new
ordinary shares at GBP0.06 per share and US $0.2 million of
proceeds from warrant exercises.
Financial Statements:
Motif Bio plc
Unaudited interim condensed statements of comprehensive loss
For the six months 30 June 2020 and 2019
(in thousands, except share and per share data)
Six months ending
30 June
-------------------------
2020 2019
Note US $ US $
---- ------------ -----------
Restated
Operations
General and administrative expenses............................ 2 (650) (812)
Research and development expenses........................... - -
------------ -----------
Operating loss
............................................................... (650) (812)
Interest
income............................................................. - 2
Net foreign exchange gains (losses)............................... (32) 20
Gain (loss) from revaluation of derivative liabilities......... 5 (305) 5,597
------------ -----------
Gain (loss) before income taxes..................................... (987) 4,807
Income tax
expense...................................................... 3 - -
------------ -----------
Net gain (loss) from operations ..................................... (987) 4,807
------------ -----------
Total comprehensive gain (loss) for the year ................. (987) 4,807
============ ===========
Net earnings (loss) per share - diluted ........................... 4
Basic.................................................................
............ (0.002) 0.015
Diluted...............................................................
........... (0.002) 0.015
============ ===========
Weighted average number of ordinary shares ...............
Basic.................................................................
............ 539,017,710 321,751,131
Diluted...............................................................
........... 539,017,710 321,751,131
============ ===========
The accompanying footnotes are an integral part of these
condensed interim financial statements.
Motif Bio plc
Unaudited interim condensed statements of financial position
At 30 June 2020 and 31 December 2019
(in thousands)
30 June 2020 31 December 2019
Note US $ US $
----- ------------ ----------------
ASSETS
Current assets
Cash and cash equivalents............................................. 797 663
Prepaid expenses and other receivables........................ 80 145
Total current
assets....................................................... 877 808
------------ ----------------
Total assets
................................................................... 877 808
============ ================
LIABILITIES
Trade payables and accrued liabilities............................. 124 214
Derivative
liabilities........................................................ 5 546 227
------------ ----------------
Total current
liabilities.................................................... 670 441
------------ ----------------
Total liabilities
.............................................................. 670 441
============ ================
Net assets (liabilities)
................................................... 207 367
============ ================
EQUITY
Share
capital..............................................................
.... 6 4,798 4,777
Share
premium.............................................................. 6 97,809 97,003
Group reorganization reserve........................................ 6 (544) (544)
Accumulated
deficit....................................................... 6 (101,586) (100,869)
------------ ----------------
Total Equity
.................................................................. 207 367
============ ================
The accompanying footnotes are an integral part of these
condensed interim financial statements.
Unaudited interim condensed statements of changes in equity
For the six months ended 30 June 2020 and 2019
(in thousands)
Group
Share Share reorganization Accumulated
capital premium reserve deficit Total
Note US $ (000's) US $ (000's) US $ (000's) US $ (000's) US $ (000's)
---- ------------ ------------ -------------- ------------ ------------
Balance at 31 December
2018 ............... 4,032 93,456 (544) (1,784) 95,160
============ ============ ============== ============ ============
Gain for the
period...................
........... - - - 4,807 4,807
------------ ------------ -------------- ------------ ------------
Total comprehensive loss
for the
period...................
.........................
.. - - 4,807 4,807
Issue of share
capital..................
......... 6 594 2,971 - - 3,565
Cost of
issuance.................
.................. 6 - (268) - - (268)
Exercise of share options
and warrants 5 7 295 - - 302
Share-based
payments.................
....... 7 - - - 56 56
------------ ------------ -------------- ------------ ------------
Balance at 30 June 2019
....................... 4,633 96,454 (544) 3,079 103 622
============ ============ ============== ============ ============
Balance at 31 December
2019 4,777 97,003 (544) (100,869) 367
============ ============ ============== ============ ============
Loss for the
period...................
............ - - - (987) (987)
------------ ------------ -------------- ------------ ------------
Total comprehensive loss
for the
period...................
.........................
.. - - (987) (987)
Issue of share
capital..................
......... 6 20 789 - - 809
Cost of
issuance.................
.................. 6 - (41) - - (41)
Exercise of share options
and warrants 5 1 58 - - 59
Share-based
payments.................
....... 7 - - - - -
------------ ------------ -------------- ------------ ------------
Balance at 30 June 2020
....................... 4,798 97,809 (544) (101,856) 207
============ ============ ============== ============ ============
The accompanying footnotes are an integral part of these
condensed interim financial statements.
Unaudited interim condensed statements of changes in cash
flows
For the six months ended 30 June 2020 and 2019
(in thousands)
Six months ended Six months ended
30 June 2020 30 June 2019
Note US $ US $
---- ------------------------- ----------------------------
Operating activities
Operating loss for the
period......................................
..... (650) (812)
Adjustments to reconcile net loss to net
cash used in activities:
Share-based
payments....................................
................ 7 - 56
Interest
received....................................
......................... - 2
Changes in operating assets and liabilities:
Prepaid expenses and other
receivables....................... 65 6
Trade payables and accrued
liabilities............................ (91) (82)
------------------------- ----------------------------
Net cash used in operating
activities................................ (676) (830)
Investing activities
Capital contributions to
subsidiary..................................
.. - (3,240)
Due from Motif Bio
Inc.........................................
........... - 769
------------------------- ----------------------------
Net cash used in investing
activities................................. - (2,471)
Financing activities
Proceeds from issue of share
capital................................ 6 809 3,565
Costs of issuance of share
capital..................................... 6 (41) (268)
Proceeds from exercise of warrants and
options.............. 5 59 244
------------------------- ----------------------------
Net cash provided by financing
activities.......................... 827 3,541
------------------------- ----------------------------
Net change in
cash........................................
.................. 151 240
Cash, beginning of the
year........................................
..... 663 560
Effect of foreign exchange rate
changes.......................... (17) (57)
------------------------- ----------------------------
Cash, end of the period
............................................
....... 797 743
========================= ============================
The accompanying footnotes are an integral part of these
condensed interim financial statements.
1. General information and basis of preparation
Motif Bio plc (the "Company" or "Motif") is domiciled in England
and Wales having originally been incorporated on November 20, 2014
as Motif Bio Limited, a private company, with company registration
number 09320890. On 1 April 2015, the Company was re-registered as
a public company limited by shares and changed its name to Motif
Bio plc. The Company's registered office is at: 201 Temple
Chambers, 3-7 Temple Avenue, London EC4Y 0DT, U.K.
The Company's ordinary shares are listed on AIM. On 28 January
2020, the Company announced that it was reclassified as an AIM Rule
15 Cash Shell and, as such, was required to make an acquisition or
acquisitions which constitute(s) a reverse takeover under AIM Rule
14 within six months to continue to have its shares traded on the
AIM market. On 29 July 2020, the London Stock Exchange suspended
trading in the Company's AIM listed ordinary shares pursuant to AIM
Rule 40. The AIM rules provide that the Company has an additional
six months from the suspension date to complete a qualifying
transaction. If the Company does not complete a qualifying
transaction by 28 January 2021, the Company's shares will be
delisted from AIM.
From November 2016 until December 2019, the Company had American
Depository Shares ("ADS's") and ADS warrants that were traded on
the NASDAQ Capital Market. Effective December 2019 following a
voluntary delisting, the Company's ADS's and ADS warrants are no
longer traded on the NASDAQ Capital Market.
The Subsidiary, Motif BioSciences Inc., was previously reported
as discontinued operations in the consolidated statements of
comprehensive loss and the related assets and liabilities were
presented as held-for-sale in the consolidated balance sheet as of
31 December 2019. In the first quarter of 2020, the Company
determined that it no longer had control over Motif BioSciences
Inc. and, in accordance with IFRS 10, determined that it will no
longer consolidate the financial results of the entity for
financial reporting periods commencing in 2020. The comparatives
similarly comprise the results and position of the Company only and
have been described as restated as a consequence of this change in
the basis of preparation.
These unaudited interim condensed financial statements for the
six months ended 30 June 2020 together with the notes thereto (the
"Unaudited Interim Condensed Financial Statements") of the Company
have been prepared in accordance with International Financial
Reporting Standards ("IFRS") as issued by the International
Accounting Standards Board ("IASB") and as adopted by the European
Union. As permitted by International Accounting Standard 34 -
"Interim financial reporting" ("IAS 34"), the Unaudited Interim
Condensed Financial Statements do not include all disclosures
required for a full presentation and do not constitute statutory
financial statements. The Unaudited Interim Condensed Financial
Statements should be read in conjunction with the Company's Annual
Consolidated Financial Statements for the years ended 31 December
2019 and 2018, which have been prepared in accordance with IFRS as
issued by IASB and in conformity with IFRS as adopted by the
European Union.
The Unaudited Interim Condensed Financial Statements were
approved for issuance by the Board of Directors on 12 October
2020.
The Unaudited Interim Condensed Financial Statements are
presented in United States Dollars (US $), which is the Company's
functional and presentation currency. However, during the reporting
period the Company had foreign currency exposure. Foreign currency
transactions are translated into the functional currency using the
exchange rates at the dates of the transactions. Foreign exchange
gains and losses resulting from the settlement of such transactions
and from the translation of monetary assets and liabilities
denominated in foreign currencies at period end exchange rates are
generally recognized in profit or loss.
Going concern
The Company had US $0.8 million 30 June 2020 and may require
additional capital in the future. To the extent that the company
raises additional funds by issuing equity securities, its existing
stockholders may experience significant dilution.
The Company's Directors are focused on sourcing an appropriate
reverse takeover candidate for the Company. There is no assurance
that the effort will be successful to source and/or complete a
reverse takeover transaction. In addition, as of the date these
financial statements were approved, the Company can provide no
assurance that additional capital will be available if/when
required and/or on acceptable terms.
The Directors have concluded that these conditions, including
recurring and expected continuing operating losses, indicate a
material uncertainty that may cast a significant doubt about the
Company's ability to continue as a going concern and, therefore,
that it may be unable to realize its assets and discharge its
liabilities in the normal course of business.
The financial statements have been prepared on the basis that
the Company is a going concern, which contemplates the continuity
of normal business activity, realization of assets and settlement
of liabilities in the normal course of business. Should the entity
not be able to continue as a going concern, it may be required to
realize its assets and discharge its liabilities other than in the
ordinary course of business, and at amounts that differ from those
stated in the financial statements. The financial statements do not
include any adjustments relating to the recoverability and
classification of recorded asset amounts or liabilities that might
be necessary should the Company not continue as a going
concern.
Significant Events Subsequent to 30 June 2020
On 29 July 2020, the London Stock Exchange suspended the trading
in the Company's AIM securities pursuant to AIM Rule 40. The AIM
rules provide that the Company will have an additional six months
from the suspension date to complete a qualifying transaction. If
the Company does not complete a qualifying transaction by 28
January 2021, the Company's shares will be delisted from the AIM
market.
Segment Information
The chief operating decision-maker is considered to be the Board
of Directors of Motif Bio plc. The chief operating decision-maker
allocates resources and assesses performance of the business and
other activities at the operating segment level. In addition, they
review the IFRS financial statements.
The chief operating decision-maker had determined that the
Company currently has one segment-to support its strategy as an AIM
15 cash shell entity focused on sourcing a reverse-take-over
candidate.
Fair value disclosures
The Company's cash, prepaid expenses and other current assets
and trade and other payables are stated at their respective
historical carrying amounts, which approximates fair value due to
their short-term nature. The Company's derivative liability is
measured at fair value using Level 1 and 2 inputs. See discussion
in Note 5 on the inputs utilized in the Black-Scholes option
pricing model and for a rollforward of the derivative
liability.
2. Breakdown of expenses by nature
Six months ended
30 June 2020 30 June 2019
(in thousands) US $ US $
----------------------------------------------------------------------------------- ------------ ------------
General and administrative expenses
Director fees, employee/consultant compensation, including share-based
payments...........................................................................
... 332 373
Legal and professional fees....................................................... 159 223
Investor and public relations and related fees ........................... 120 206
Other
expenses........................................................................ 39 10
------------ ------------
650 812
------------ ------------
No research and development expenses were incurred in 2020. All
research and development expenses incurred prior to 2020 were
recorded by the Company's previously consolidated subsidiary (Note
1).
The expenses above do not reflect obligations that are
contingent on the completion of a reverse takeover or similar
transaction.
3. Income tax expense
The Company has recorded a net operating loss for the six months
ended 30 June 2020 and 2019. The Company does not expect to have a
material tax obligation.
4. Loss per share
Basic loss per share is calculated by dividing the loss
attributable to equity holders of the Company by the weighted
average number of shares in issue during the year. Diluted EPS is
computed by dividing net income (loss) by the weighted average of
all potentially diluted shares of common stock that were
outstanding during the periods presented.
The treasury stock method is used in the calculation of diluted
EPS for potentially dilutive liability classified options and
warrants, which assumes that any proceeds received from the
exercise of in-the-money options and warrants, would be used to
purchase common shares at the average market prices for the period.
The Company did not have a dilutive impact from applicable warrants
and options during the periods presented.
Six months ended
--------------------------
30 June 2020 30 June 2019
(in thousands, except share and per share data) US $ US $
------------ ------------
Basic
Net
loss.................................................................................
.. (987) 4,807
------------ ------------
Basic weighted average shares in issue..................................... 539,017,710 321,751,131
------------ ------------
Basic loss per share.................................................................. (0.002) 0.015
============ ============
Diluted
Net
loss.................................................................................
.. (987) 4,807
Effect of dilutive securities: liability-classified warrants.............. - -
------------ ------------
Diluted net
loss........................................................................ (987) 4,807
Weighted average shares in issue - basic................................... 539,017,710 321,751,131
Incremental dilutive shares from liability-classified warrants (treasury stock
method)....................................................... - -
------------ ------------
Weighted average shares in issue - diluted............................... 539,017,710 321,751,131
------------ ------------
Diluted loss per share............................................................... (0.002) 0.015
============ ============
The following potentially dilutive securities outstanding at 30
June 2020 and 2019 have been excluded from the computation of
diluted weighted average shares outstanding, as they would be
antidilutive.
Six months ended
2020 2019
----------- ----------
Warrants........................................................................ 822,083 10,767,520
Share options................................................................. 165,955,148 18,109,081
----------- ----------
166,777,231 28,876,601
=========== ==========
5. Warrants
Warrant activity
The Company has issued warrants for services performed and in
conjunction with various equity financings. The Company's warrants
have either a Sterling or US Dollar exercise price. The following
is a summary of the Company's warrant activity during the six
months ended June 30, 2020:
Weighted Average
Number of Warrants Exercise Price
-------------------------- ------------------------
Ordinary shares ADS Ordinary shares ADS
--------------- --------- ----------------- -----
Outstanding as of 1 January 2020 155,564,670 1,212,902 GBP 0.273 $8.02
Granted - - - -
Cancelled (724,705) - GBP 0.200 -
Exercised (7,142,857) - GBP 0.007 -
--------------- --------- --------- ----
Outstanding as of 30 June 2020 147,697,108 1,212,902 GBP 0.042 $8.02
--------------- --------- --------- ----
The Company's warrants outstanding and exercisable as of 30 June
2020 were as follows:
Type of Warrant Outstanding Number Outstanding and Exercisable Exercise Price Expiration Date
---------------------------- ---------------------------------- ---------------- ----------------
Ordinary shares (1) 1,082,384 GBP GBP 0.50 July 21, 2020
Ordinary shares (2) 10,317,252 GBP GBP 0.322 23 November 2021
ADS (2)(3) 1,202,902 US $ 8.03 23 November 2021
Ordinary shares (1) 8,960,431 GBP GBP 0.20 April 2, 2025
ADS (2)(3) 10,000 US $ 7.26 July 31, 2022
Ordinary shares (2)(4) 121,337,047 GBP GBP 0.004 27 January 2025
Ordinary shares (2)(4) 6,000,000 GBP GBP 0.002 27 January 2025
(1) Warrants totaling 10,042,815 of ordinary shares are equity
classified.
(2) Warrants totaling 137,654,293 of ordinary shares and
1,212,902 of ADS are liability classified.
(3) Each ADS represents 20 ordinary shares.
(4) Warrants totaling 134,479,904 of ordinary shares were issued
on 27 January 2020. The accounting treatment thereof was recorded
as of 31 December 2019 as an adjusting subsequent event. A total of
7,142,857 of these warrants were exercised prior to 30 June
2020.
Liability classified warrants
ADS warrants
On 23 November 2016, the Company closed an initial U.S. offering
of 2,438,491 ADS and 1,219,246 ADS warrants at a price of US $6.98
per ADS/Warrant combination. Each ADS represented 20 ordinary
shares. The warrants have an exercise price of US $8.03 per ADS and
expire on 23 November 2021. As the Company failed to maintain the
effectiveness of its Registration Statement, the warrant is only
exercisable on a cashless basis. This results in variability in the
number of shares issued and therefore, the warrants were designated
as a financial liability carried at fair value through profit and
loss. On issuance of the ADS warrants, the Company recorded a
derivative liability of US $3.8 million using the Black-Scholes
model.
On 1 August 2017, the Company issued to a third party a warrant
to purchase up to 60,000 ADSs at an exercise price of US $7.26 per
ADS. A total of 10,000 ADSs were vested and outstanding as of 30
June 2020. The remaining 50,000 ADSs were forfeited. On issuance of
the ADS warrants, the Company recorded a derivative liability of
$0.1 million using the Black-Scholes model.
The Company develops its own assumptions for use in the
Black-Scholes option pricing model that do not have observable
inputs or available market data to support the fair value. This
method of valuation involves using inputs such as the fair value of
the Company's common stock, stock price volatility of comparable
companies, the contractual term of the warrants, risk free interest
rates and dividend yields. November 26, 2019, the Company notified
NASDAQ Capital Market of its intention to delist the ADS shares and
ADS warrants from trading. The ADS shares and ADS warrants were
voluntarily delisted from trading in December 2019.
The liability classified ADS warrants had a nil fair value at 30
June 2020 and 31 December 2019, using the following
weighted-average assumptions in the Black-Scholes model:
30 June 31 December
2020 2019
------- -----------
Share price (US $) (1) ................................................................ 0.11 0.10
Exercise price (US $)................................................................ 8.02 8.08
Expected volatility................................................................... 131% 92 %
Number of periods to exercise................................................ 1.41 1.90
Risk free rate.......................................................................... 0.16 % 1.58 %
Expected dividends................................................................. - -
(1) Effective December 2019 following a voluntary delisting, the
Company's ADS shares are no longer traded on the NASDAQ Capital
Market. The share price utilized represents the Company's ordinary
share price adjusted to reflect the conversion to ADS equivalents
and conversion to the U.S. dollar.
Ordinary warrants
On 23 November 2016, the Company placed 22,863,428 ordinary
shares together with 11,431,714 warrants over ordinary shares at a
price of GBP0.28 per share/warrant combination. The warrants have
an exercise price of GBP0.322 per warrant and expire on 23 November
2021. As the Company has not maintained an effective Registration
Statement, the warrant is now only exercisable on a cashless basis.
This results in variability in the number of shares issued and
therefore, the warrants were designated as a financial liability
carried at fair value through profit and loss. On issuance of the
warrants, the Company recorded a derivative liability of US $1.8
million using the Black-Scholes model.
On 27 January 2020, the Company granted to Hercules Capital Inc.
warrants over an aggregate of 121,337,041 ordinary shares. These
warrants will expire on 27 January 2025 and have an exercise price
of 0.42 pence per share. The Company also granted warrants over
6,000,000 ordinary shares to certain former board members at an
exercise price of 0.24 pence per share that will expire on 27
January 2025. The issuance of these warrants was presented as an
adjusting subsequent event at 31 December 2019 (Note 1).
At 30 June 2020 and 31 December 2019, the liability classified
ordinary warrants had a fair value of US $0.5 million and $0.2
million using the following weighted-average assumption in the
Black-Scholes model:
30 June 31 December
2020 2019
------- -----------
Share price (GBP).................................................................... 0.005 0.002
Weighted exercise price (GBP)................................................ 0.028 0.028
Expected volatility................................................................... 106 % 85 %
Number of periods to exercise................................................ 4.34 4.77
Risk-free rate.......................................................................... 0.28 % 1.68 %
Expected dividends................................................................. - -
The following is a summary of the Company's liability classified
warrant activity, including both ADS and Ordinary warrants, during
the six-months ended 30 June 2020.
(in thousands) Fair value
Liability classified warrants US $
------------------------------------------------------------------------------------ ----------
Balance at 31 December 2019.................................................. 227
Issued during the year............................................................. -
Exercised during the year........................................................ -
Impact of foreign exchange..................................................... 14
Loss from revaluation of derivative liabilities............................ 305
----------
Balance at 30 June 2020 ........................................................... 546
----------
6. Share capital
On 14 November 2019, each of the Company's ordinary shares of 1
pence par value were divided into one new ordinary share of 0.01
pence par value and one deferred share of 0.99 pence stated value.
The deferred shares have no rights and the Company did not issue
any share certificates or credit CREST accounts in respect of them.
The deferred shares are not admitted to trading on AIM and have no
rights to participate in the profits of the Company. In the event
of a wind-down or dissolution of the Company, the deferred shares
shall be entitled to participate pari-passu in the dissolution of
the Company's assets that are in excess of GBP GBP1 trillion.
The number of new ordinary shares in issue and held by each
Shareholder at the time of the Share Capital Reorganisation, was
equal to the number of existing ordinary shares in issue
immediately prior to the Share Capital Reorganisation. Only the
nominal value changed with respect to the new ordinary share. The
new ordinary shares will continue to carry the same rights as those
attached in the previously existing ordinary shares, save for the
reduction in nominal value.
The net effect is that the par value for the Company's ordinary
shares changed to 0.01 pence as a result of this sub-division.
Allotted, called up and fully paid: Number US $
--------------------------------------------------------------------------------------------- ----------- -----
(in thousands, except share data)
In issue at 31 December
2019............................................................................ 485,348,166 4,777
----------- -----
Issued:
Ordinary shares of 0.01p
each.................................................................... 162,500,000 20
Ordinary shares of 0.01p
each.................................................................... 7,142,857 1
In issue at 30 June
2020.................................................................................... 654,991,023 4,798
----------- -----
Deferred shares at 30 June 2020(1)
....................................................................... 342,491,023 -
----------- -----
(1) On 14 November 2019, each ordinary share of 1 pence par
value were divided into one new ordinary share of 0.01 pence par
value and one deferred share of 0.99 pence stated value, as
previously described. The deferred shares have no rights to
participate in the profits and losses of the company.
On 5 May 2020, the Company issued 162,500,000 new ordinary
shares at 0.004 pence per share and received US $0.8 million of net
proceeds.
On 14 May 2020, the Company issued 7,142,857 new ordinary shares
upon the exercise of a warrant.
Share premium represents the excess over nominal value of the
fair value consideration received for equity shares net of expenses
of the share issue
The deferred shares were issued pursuant to a corporate
restructuring and consequent capital reorganisation approved by the
Company's shareholders on 14 November 2019 in accordance with which
each Ordinary Share of 1 penny was subdivided into one new ordinary
share of 0.01 pence and one deferred share of 0.99 pence. The
deferred shares have no rights to participate in the profits of the
company and the Company has not issued any share certificates or
credited CREST accounts in respect of them. The deferred shares
were not admitted to trading on AIM.
Retained deficit represents accumulated losses.
The Group re-organization reserve arose when Motif Bio plc
became the parent of the consolidated Group in 2015. Being a common
control transaction and, therefore, outside the scope of IFRS 3, it
was accounted for as a Group re-organization and not a business
combination. The re-organization reserve can be derived by
calculating the difference between the nominal value of the shares
in Motif Bio plc issued to the former shareholders in Motif
BioSciences Inc. and the share capital and share premium of Motif
BioSciences Inc. at the date of the merger. The nominal value of
the Company shares was used in the calculation of the
reorganization reserve.
11. Share-based payments
Motif Bio plc adopted a Share Option Plan (the "New Plan") on 1
April 2015. The exercise price for each option will be established
at the discretion of the Board provided that the exercise price for
each option shall not be less than the nominal value of the
relevant shares if the options are to be satisfied by a new issue
of shares by the Company and provided that the exercise price per
share for an option shall not be less than the fair market value of
a share on the effective date of grant of the option. Options will
be exercisable at such times or upon such events and subject to
such terms, conditions and restrictions as determined by the Board
on grant date. However, no option shall be exercisable after the
expiration of ten years after the effective date of grant of the
option.
The following is a summary of the Company's option activity for
the six months ending 30 June 2020.
Weighted average
Number of exercise price
share options US $
------------- ----------------
Outstanding at 31 December 2019
....................................................... 3,778,563 0.50
Granted during the
period................................................................... - -
Forfeited during the
period................................................................. (2,432,560) 0.43
Exercised during the period
................................................................ - -
Expired during the
period.................................................................... (523,920) 0.70
-------------
Outstanding at 30 June 2020
................................................................ 822,083 0.14
Exercisable at 30 June 2020
.................................................................. 822,083 0.14
=============
The total expense recognized for the periods arising from
stock-based payments are as follows:
Six months ended
30 June 2020(1) 30 June 2019
US $ US $
--------------- ------------
General and administrative
expense...................................................... - 327
Research and development
expense..................................................... - 34
--------------- ------------
Total share-based payment
expense..................................................... - 361
=============== ============
(1) All stock-based compensation for the options outstanding and
exercisable at 30 June 2020 was recorded in prior periods and did
not have an impact on the 2020 interim financial results.
14. Subsequent Events
On 29 July 2020, the London Stock Exchange suspended the trading
in the Company's AIM securities pursuant to AIM Rule 40. The AIM
rules provide that the Company will have an additional six months
from the suspension date to complete a qualifying transaction. If
the Company does not complete a qualifying transaction by 28
January 2021, the Company's shares will be delisted from the AIM
market.
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END
IR EAPEEFEXEFEA
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October 12, 2020 02:00 ET (06:00 GMT)
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