C4XD C4x Discovery Holdings Plc

C4X Discovery Holdings plc

("C4XD", "C4X Discovery" or the "Company")

Half-year results for the six months ended 31 January 2024

Excellent portfolio progress supported by a robust balance sheet

$11 million preclinical milestone payment by AstraZeneca

C4XD seeks voluntary delisting from the London Stock Exchange AIM

27 March 2024 - C4X Discovery Holdings plc (AIM: C4XD), a pioneering Drug Discovery company, today announces its half-year results for the six months ended 31 January 2024.

Operational Highlights (including post-period events)

·      Announced today: C4XD seeks voluntary delisting from the London Stock Exchange AIM (see separate release)

·      Receipt of $11 million preclinical milestone payment from AstraZeneca under the exclusive worldwide licence agreement worth up to $400 million, for C4XD's NRF2 Activator programme.

·      α4β7 integrin inhibitor programme for inflammatory bowel disease ("IBD") delivered compounds showing improved activity at a lower dose compared to example competitor compounds in a pharmacodynamic model after oral dosing. The project is moving towards the selection of a pre-clinical candidate.

·      C4XD internal portfolio expanded in inflammatory diseases with new programmes identified progressing towards Lead Optimisation.

·      Indivior acquired C4XD's oral Orexin-1 receptor antagonist, C4X_3256 (INDV-2000), for substance use disorder under an asset purchase agreement for £15.95 million.

·      In April 2021, C4XD signed a world-wide exclusive agreement with Sanofi, for an oral pre-clinical IL-17A inhibitor programme worth up to €414 million with first milestone payment of €3 million received in July 2022.

·      MALT-1 inhibitor programme progressing towards candidate shortlist as partnering process ongoing.

Financial Highlights

·      Revenue was £24.6 million (January 2023: £1.7m) reflecting receipt of £15.9 million from sale of Orexin-1 receptor antagonist programme and $11 million milestone payment from AstraZeneca.

·      Total profit after tax of £17.8 million or 7.06 pence per share (January 2023: loss of £3.9m or 1.55 pence per share).

·      R&D expenses remained at £5.2 million (January 2023: £5.2m), reflecting focused investment in key drug discovery programmes focused on immune-inflammatory diseases.

·      Net assets of £24.6 million (January 2023: £13.6m).

·      Net cash as at 31 January 2024: £13.1 million (31 January 2023: £9.6m), before post-period receipt of $11 million milestone payment from AstraZeneca in February 2024.

Dr Clive Dix, Executive Chairman of C4X Discovery, said: "C4XD has demonstrated time and again our expertise to discover and develop high value, novel small molecule drugs. We have announced three major deal partnerships with world leading pharmaceutical companies, one of which has since acquired the programme outright demonstrating our scientific and deal-making capabilities. The Company is in a strong financial position with the potential for further milestone payments over the next 18 months. As we progress our lead programme through the discovery phase towards the clinic and with a clear focus on immuno-inflammatory diseases, the Board feel it necessary to address the perceived under-valuation of our business in the public market and the subsequent inability to access the future funding the Board believes is required to allow C4XD to flourish.

"The healthcare sector in the financial markets has proved challenging in recent years and has been further hindered by wider macro and economic events happening worldwide, which have collectively had a negative impact on the valuations of smaller companies in general. At the same time, funding for private companies has continued to remain resilient. The Board has concluded that the current public market valuation does not reflect the underlying potential of our business or our achievements to date and believe that this is unlikely to change in the short-to-medium term. Consequently, the Board believes that C4XD's growth prospects, and the ability to execute its strategy to develop precision therapeutics in immuno-inflammatory diseases, will be best accomplished as a private company, where we can potentially access a larger quantum of future funding required to accelerate our strategy and drive towards discovery and development inflection points to maximise revenue from our portfolio. We therefore believe that a cancellation of the Company's admission on AIM is in the best interest for shareholders and for the future of our business as a whole, and we are excited for the road ahead."

This announcement contains inside information for the purpose of the UK Market Abuse Regulations.

- Ends -

Contacts

Notes to Editors:

About C4X Discovery

C4X Discovery (C4XD) is a pioneering Drug Discovery company, combining scientific expertise with cutting-edge technologies to efficiently deliver world‑leading medicines. We have a highly valuable and differentiated approach to Drug Discovery through our enhanced molecular design and patient stratification capabilities, generating small molecule drug candidates across multiple disease indications focused on immuno-inflammation. We are advancing our internal portfolio which ranges from early-stage target opportunities to late-stage Drug Discovery programmes and we have two commercially partnered programmes with Sanofi and AstraZeneca, and one clinical stage candidate which has been acquired by Indivior.

For more information visit us at www.c4xdiscovery.com or follow us on twitter @C4XDiscovery.

Corporate Overview

The latter half of 2023 saw excellent progress across our portfolio with each of our programmes successfully advancing during the period, supporting our strategic decision to focus on immuno-inflammatory diseases. The outright £15.95 million acquisition by Indivior of our Orexin-1 receptor antagonist programme for the treatment of substance abuse disorder, laid a solid financial base to advance our newly focused portfolio towards, and potentially, into the clinic. Our balance sheet was further bolstered post period in February 2024 by the $11 million milestone payment from AstraZeneca triggered by preclinical progress of our NRF2 Activator programme, positioning us with a robust cash position.

With immuno-inflammation drug discovery expertise at our core, we are building a valuable and commercially relevant, small-molecule drug portfolio. Our molecules have Best-in-Class and First-in-Class potential to treat patients across a range of immuno-inflammatory diseases. Our aim to develop alternative oral treatments not only has the potential to broaden patient access to much needed treatments, but also enable easier treatment regimens and potentially reduce the healthcare burden.

Our lead internal programme, focused on oral small molecule inhibitors of α4β7, has the potential to deliver a low dose Best-In-Class α4β7 inhibitor therapy for the treatment of inflammatory bowel disease ("IBD") where an effective oral therapy remains highly sought-after. This programme is progressing through late-stage discovery studies and towards selection of a pre-clinical candidate. In addition, insights garnered from our PatientSeek platform to identify stratification signals in IBD patients could both inform and potentially de-risk the clinical development path for the α4β7 programme.

We continue to advance our portfolio of early-stage discovery immuno-inflammatory projects towards Lead Optimisation. These projects target clear unmet medical need, combined with significant commercial potential. Through our Conformetrix technology, we are able to produce valuable chemical equity through the interpretation of conformational insight into the behaviour of molecules. These insights enable a more accurate molecule design that is best suited to our therapeutics targets. We use PatientSeek to inform our target selection choices, based on identification of patient stratification opportunities. We anticipate moving two of these projects into Lead Optimisation by the end of 2024, when we will be able to provide greater detail.

We have out-licensed two programmes to leading pharmaceutical companies, AstraZeneca and Sanofi. We were thrilled to receive the first milestone payment under our exclusive worldwide licensing agreement worth up to $400 million with AstraZeneca, signed only a little over a year earlier, for C4XD's NRF2 Activator programme. The worldwide exclusive license with Sanofi worth up to €414 million for C4XD's oral IL-17A inhibitor programme previously paid its first milestone payment of €3 million in July 2022.

Underpinning the significant progress made during the period, the Company has a robust cash position and manageable fixed cost base. Cash, cash equivalents, short-term investments and deposits were £13.1 million at 31 January 2024 (31 January 2023: £9.6 million) before post-period receipt of the $11 million milestone payment in February 2024. R&D investment remained at £5.2 million in the six months ending 31 January 2024 (January 2023: £5.2 million), reflecting focused investment in key drug discovery programmes. Administrative expenses were £1.8 million for the six months ended January 2024 (January 2023: £1.6 million).

Outlook

C4XD has demonstrated time and again our expertise to discover and develop high value, novel small molecule drugs. We have announced three major deal partnerships with world leading pharmaceutical companies, one of which has since acquired the programme outright demonstrating our scientific and deal-making capabilities. The Company is in a strong financial position with the potential for further milestone payments over the next 18 months. As we progress our lead programme through the discovery phase towards the clinic and with a clear strategic focus on immuno-inflammatory diseases, the Board feel it necessary to address the perceived under-valuation of our business in the public market and the subsequent inability to access the future funding the Board believes is required to allow C4XD to flourish.

The healthcare sector in the financial markets has proved challenging in recent years and has been further hindered by wider macro and economic events happening worldwide, which have collectively had a negative impact on the valuations of smaller companies in general. At the same time, funding for private companies has continued to remain resilient. The Board has concluded that the current public market valuation does not reflect the underlying potential of our business or our achievements to date and believe that this is unlikely to change in the short-to-medium term. Consequently, the Board believes that C4XD's growth prospects, and the ability to execute its strategy to develop precision therapeutics in immuno-inflammatory diseases, will be best accomplished as a private company, where we can potentially access a larger quantum of future funding required to accelerate our strategy and drive towards discovery and development inflection points to maximise revenue from our portfolio. We therefore believe that a cancellation of the Company's admission on AIM is in the best interest for shareholders and for the future of our business as a whole, and we are excited for the road ahead.

Interim consolidated statement of comprehensive income

For the six months ended 31 January 2024

Interim consolidated statement of changes in equity

For the six months ended 31 January 2024

Interim consolidated statement of financial position

As at 31 January 2024

Approved by the Board and authorised for issue on 27 March 2024

Brad Hoy

Chief Financial Officer

26 March 2024

Interim consolidated cash flow statement

For the six months ended 31 January 2024

Notes to the interim financial report

For the six months ended 31 January 2024

1.   Corporate information

The principal activity of the C4X Discovery Holdings plc is research and development, a review of which is included in the Chairman's and CEO's Statement.

C4XD is incorporated and domiciled in the United Kingdom and its registered number is 09134041. The address of the registered office is Manchester One, 53 Portland Street, Manchester, M1 3LD.

The interim financial information was approved for issue on 25 March 2024.

2.   Accounting policies

Basis of preparation

The accounting policies adopted in this interim financial report are consistent with those followed in the preparation of the Group's annual report and accounts for the year to 31 July 2023.

The interim financial information for the six months ended 31 January 2024 and 31 January 2023 is unaudited and does not constitute statutory accounts as defined in the Companies Act 2006.  This interim financial report includes audited comparatives for the year to 31 July 2023.  The 2023 annual report and accounts received an unqualified audit opinion and have been filed with the Registrar of Companies.

These interim financial statements have been prepared in accordance with IAS34 Interim Financial Reporting.  They do not include all the information required for a complete set of IFRS financial statements.  However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual consolidated financial statements as at and for the year ended 31 July 2023.

Basis of consolidation

This interim financial report consolidates the financial statements of C4X Discovery Holdings plc and the entities it controls (its subsidiaries).

3.    Revenue

Revenue in the current period has been generated from contracts with two customers.

Revenue of £15.9 million from the agreement with Indivior for the outright acquisition of Orexin-1 Receptor Antagonist Programme executed on 31 July 2023 was subject to certain performance obligations which were met on 4 August 2023 resulting in this revenue being recognised within the six months to 31 January 2024.

The revenue attributed to Milestone attainment was generated from one customer and is recognised at a point in time.

Revenue In the prior periods was generated from contracts with a two customer. In the prior period, the milestone revenue was determined to have one performance obligation and was recognised at a point in time.

The revenue from the right-to-use licence agreement was recognised at a single point in time when transfer of intellectual property was completed. The revenue from provision of consulting and technical support services under the same agreement was recognised over time when the services were provided.

The revenue attributed to the delivery of research services was recognised on the same basis as in the previous period.

4.    Taxation

5.Loss per share

The number of exercisable share options and warrants above are those deemed to be potentially dilutive in nature as their exercise price is less than the average share price for the period. As the group made a loss in the comparative period the effects of these potential ordinary shares are not dilutive.

6. Issued share capital and share premium

7.  Interim financial report

A copy of this interim condensed financial report is available on C4XD's website at www.c4xdiscovery.com.