TIDMCIR
RNS Number : 7085N
Circassia Pharmaceuticals Plc
26 September 2019
CIRCASSIA PHARMACEUTICALS PLC
INTERIM RESULTS FOR THE SIX MONTHSED 30 JUNE 2019
Oxford, UK - 26 September 2019: Circassia Pharmaceuticals plc
("Circassia" or "the Company") (LSE: CIR), a specialty
pharmaceutical company focused on respiratory disease, today
announces its unaudited interim results for the six months ended 30
June 2019 and a post-period update.
Highlights
-- 40% revenue growth to GBP27.9 million in H1 2019 vs GBP19.9 million H2 2018
-- 25% reduction in underlying continuing non-commercial costs
to GBP7.6 million vs GBP10.1 million H2 2018
-- Growth drivers in place to achieve GBP60 million - GBP65
million full year 2019 revenues (2018: GBP48.3 million)
-- Dramatic reduction in net cash outflow post period end
-- Strong focus on cost control to continue transition to self-sustainability
Financial progress
Key H1 2019 H2 2018 H1 2019 H2 2018
performance underlying underlying total total
indicators* continuing continuing
(KPIs) operations operations
Revenue GBP27.9m GBP19.9m GBP27.9m GBP19.9m
---------------------- ---------------------- ---------------------- -----------------------
R&D(1) (GBP2.8m) (GBP4.0m) (GBP2.8m) (GBP81.4m)
---------------------- ---------------------- ---------------------- -----------------------
G&A(1) (GBP4.8m) (GBP6.1m) (GBP4.8m) (GBP6.2m)
---------------------- ---------------------- ---------------------- -----------------------
S&M(1) (GBP25.1m) (GBP25.8m) (GBP25.1m) (GBP28.7m)
---------------------- ---------------------- ---------------------- -----------------------
EBITDA (GBP12.4m) (GBP20.7m) (GBP12.4m) (GBP101.1m)
---------------------- ---------------------- ---------------------- -----------------------
Cash(2) at GBP21.0m GBP40.7m GBP21.0m GBP40.7m
period end
---------------------- ---------------------- ---------------------- -----------------------
*KPI six-month comparison (H1 2019 vs H2 2018) reflects rapid
and significant change following the establishment of dedicated
sales forces in the US, Tudorza(R) option exercise on 31 December
2018 and transition to NIOX(R) direct sales in China
Post-period update and outlook
-- Cash balance of GBP19.8 million at 31 August 2019 (GBP21.0 million at 30 June 2019)
-- Net cash outflow expected to dramatically reduce during H2 2019 compared to H1 2019
-- Key revenue drivers in place (NIOX(R) direct sales in China;
Duaklir(R) launch imminent; Tudorza(R) full control; LungFit PH(3)
(previously AirNOvent) launch planning)
-- Full year 2019 revenue expectation GBP60 million - GBP65 million
-- Focus on cost control to achieve positive EBITDA on
approximately GBP75 million net annual sales
-- AstraZeneca five-year loan draw down to address outstanding transaction-related consideration
NIOX(R) progress
-- Sales increased 32% to GBP18.5 million (H1 2018 CER(4) :
GBP14.0 million) and 40% compared with H2 2018 (CER GBP13.2
million)
-- Clinical (non-research(5) ) revenues increased 38% compared with H1 2018 CER
-- US and China sales increased 10% and 193% respectively vs H1 2018 CER
-- Italy direct sales team launched September 2019
Tudorza(R) progress
-- Revenues GBP9.3 million (H1 2018 CER: GBP14.4 million
following release of accrued rebates); revenues 43% higher than H2
2018 CER (GBP6.5 million)
-- Product licence transferred to Circassia at end of June 2019
providing additional commercial flexibility; distribution, pricing
and market access strategies introduced to drive net revenue
growth
-- Rebates significantly reduced in first two months of H2 2019
and revenues increased 61% to GBP5.0 million vs H1 2019 two-month
average
-- Exacerbation reduction and cardiovascular safety data added to label
Duaklir(R) progress
-- NDA approved March 2019
-- Launch preparations complete; launch imminent
LungFit PH progress (previously AirNOvent)
-- FDA filing anticipated in Q4 2019
Steven Harris, Circassia's Chief Executive, said: "Circassia
made good financial and commercial progress in the first half of
2019, and we are delighted this has accelerated significantly in
the past two months as our recent strategic changes begin to
deliver results. During 2019, NIOX(R) revenues increased in all our
direct markets, as well as those served by our partners, with
particularly impressive growth in China following the launch of our
new sales team. Since taking full control of Tudorza(R) in the
United States at the end of June we have seen encouraging growth in
net revenues, validating our newly-introduced commercial
strategy."
"As a result Circassia continues to make strong progress,
dramatically reducing net cashflow outflow in the first two months
of H2 2019, which we anticipate maintaining during the remainder of
the year. With our ongoing focus on controlling our cost base and
with multiple growth drivers in place, including the imminent
launch of Duaklir(R) in the US and our new sales teams in China and
Italy focused on growing NIOX(R) revenues, we look forward to
further boosting our performance over the rest of the year. By
building on our performance in the first two months of the second
half, we plan to continue our drive towards profitability and our
goal of building a self-sustaining specialty pharmaceutical
business."
Analyst meeting and webcast
An analyst meeting will take place today at 9.30am at finnCap,
60 New Broad Street, London, EC2M 1JJ. A webcast of the
presentation will be available on the Company's website.
Contacts
Circassia
Steven Harris, Chief Executive Officer Tel: +44 (0) 1865 405 560
Julien Cotta, Chief Financial Officer
Rob Budge, Corporate Communications
Peel Hunt (Nominated Adviser and Joint Broker)
James Steel / Dr Christopher Golden Tel: +44 (0) 20 7418 8900
finnCap (Joint Broker)
Geoff Nash / Alice Lane Tel: +44 (0) 20 7220 0500
Numis Securities (Joint Broker)
James Black / Freddie Barnfield Tel: +44 (0) 20 7260 1000
FTI Consulting
Simon Conway / Ciara Martin Tel: +44 (0) 20 3727 1000
About Circassia
Circassia is a world-class specialty pharmaceutical business
focused on respiratory disease. The Company sells its novel,
market-leading NIOX(R) asthma management products directly to
specialists in the United States, China, United Kingdom, Germany
and Italy, and in a wide range of other countries through its
network of partners. In the United States, Circassia has a
collaboration with AstraZeneca in which it has the commercial
rights to chronic obstructive pulmonary disease (COPD) treatments
Tudorza(R) and Duaklir(R). Circassia also has the US and Chinese
commercial rights to the late-stage ventilator-compatible nitric
oxide product LungFit PH. For more information please visit
www.circassia.com.
(1) Excludes depreciation and amortisation
(2) Includes cash, cash equivalents and short-term deposits
(3) LungFit PH is not an approved name and may not be the final
commercial name
(4) Constant exchange rates (CER) for H1 and H2 2018 represent
reported numbers re--stated using H1 2019 average exchange rates;
management believes CER comparisons better represent underlying
performance due to currency fluctuations against sterling
(5) Clinical revenues represent sales to clinicians, hospitals
and distributors; research revenues represent sales to
pharmaceutical companies for use in clinical studies
Forward-looking statements
This press release contains certain projections and other
forward-looking statements with respect to the financial condition,
results of operations, businesses and prospects of Circassia. The
use of terms such as "may", "will", "should", "expect",
"anticipate", "project", "estimate", "intend", "continue", "target"
or "believe" and similar expressions (or the negatives thereof) are
generally intended to identify forward-looking statements. These
statements are based on current expectations and involve risk and
uncertainty because they relate to events and depend upon
circumstances that may or may not occur in the future. There are a
number of factors that could cause actual results or developments
to differ materially from those expressed or implied by these
forward-looking statements. Any of the assumptions underlying these
forward-looking statements could prove inaccurate or incorrect and
therefore any results contemplated in the forward-looking
statements may not actually be achieved. Nothing contained in this
press release should be construed as a profit forecast or profit
estimate. Investors or other recipients are cautioned not to place
undue reliance on any forward-looking statements contained herein.
Circassia undertakes no obligation to update or revise (publicly or
otherwise) any forward-looking statement, whether as a result of
new information, future events or other circumstances.
OPERATING REVIEW
During 2019 Circassia has made good progress across its
business. The Company has capitalised on its new sales force in
China and dedicated NIOX(R) and COPD teams in the United States,
completed the transfer of Tudorza(R)'s US licence to Circassia from
AstraZeneca, introduced a focused market access strategy for the
product and completed preparations for the US launch of Duaklir(R),
which we expect imminently. At the beginning of the year, the
Company further expanded its portfolio, acquiring the US and
Chinese commercial rights to the late-stage nitric oxide product,
LungFit PH (previously AirNOvent).
As a result of these strategic initiatives, the foundations for
ongoing growth are now in place, and therefore the Company expects
to accelerate its financial transformation. Notably, during the
past two months Circassia has dramatically reduced its net cash
outflow and drawn down on a five-year vendor loan from AstraZeneca
that addresses the outstanding consideration related to the
companies' Tudorza(R) and Duaklir(R) transaction.
In the coming months, Circassia plans to build on this progress
as it launches Duaklir(R) in the United States, establishes its new
direct sales team in Italy and focuses on continuing to grow
Tudorza(R) net revenues since gaining full commercial control of
the product in June. With LungFit PH's US filing anticipated in the
near future, and potential launch in the second half of 2020,
Circassia is advancing ever closer to achieving its goal of
building a successful, self-sustaining specialty pharmaceutical
business.
NIOX(R)
NIOX(R) is used around the world to improve asthma diagnosis and
management by measuring fractional exhaled nitric oxide (FeNO), an
important biomarker of the major underlying cause of asthma, type 2
airway inflammation. Circassia sells the product directly in the
United States, China, UK and Germany, and recently launched a
direct sales team in Italy. The Company also sells NIOX(R) through
its international network of partners in more than 40 further
countries.
Increasing sales
During the first half of 2019, NIOX(R) sales increased
significantly, with global revenues of GBP18.5 million 32% ahead of
the same period the previous year at constant exchange rates (CER)
and 40% higher than the second half of 2018 (CER). Revenues grew
across the Company's NIOX(R) business, with sales for clinical use
38% higher (CER) compared with H1 2018 and research use remaining
at a similar level. In Circassia's direct markets sales continued
to grow, with revenues in the US, UK and Germany 10%, 29% and 9%
(CER) ahead respectively compared with the same period the prior
year, while in China NIOX(R) achieved substantial growth of 193%
(CER) following the launch of the Company's direct sales team at
the end of 2018. Circassia's partner markets also achieved growth
during the first half of 2019, with revenues 22% higher (CER) than
the same period the year before.
Market expansion
During 2019, Circassia continued its market expansion
activities. The Company completed recruitment of its new direct
sales force in China following the team's launch at the end of the
previous year, and focused on consolidating and extending NIOX(R)'s
footprint beyond the installed base serviced by its previous
distribution partners. In addition, the China commercial team
maintained its focus on market access and reimbursement for FeNO
testing is now in place in 13 provinces.
In the UK, the Company strengthened its commercial platform,
adding further analyst and marketing expertise. In Italy, Circassia
recently launched a modest direct sales force, which it anticipates
expanding as this potentially significant market becomes
established. In the United States, payor coverage continued to
grow, with over 234 million Americans now having access to NIOX(R),
and Circassia was awarded a group purchasing contract by Premier,
one of the leading healthcare improvement companies in the
country.
The Company continued to roll out its digital strategy to
support local market expansion. In China, it launched a
country-specific version of the NIOX.com web portal. In the UK and
Ireland, it maintained its online advertising presence, and in the
United States introduced search engine advertising and continued
its email marketing campaign.
In addition to the activities in the Company's direct markets,
Circassia also extended the territories served by its partners. It
received approvals in Malaysia, Saudi Arabi and Thailand allowing
promotion of NIOX(R) in these new markets. Circassia also increased
its international network, which now covers over 40 countries,
adding new partners in Albania, Bulgaria and the United Arab
Emirates.
Product innovation and recognition
During 2019, NIOX VERO(R) was recognised for its innovative
contribution to healthcare by a number of organisations. In the
United States, Circassia was awarded the Innovative Technology
Supplier of the Year for 2018 by Vizient Inc., the largest
healthcare performance improvement company in the country. In the
UK, the Company received a manufacturer of the year award from the
Association for Respiratory Technology & Physiology.
Circassia intends to build on its market-leading position in the
FeNO field with the launch of NIOX VERO(R) PLUS at the forthcoming
European Respiratory Society International Congress. This
innovative accessory expands the NIOX(R) franchise, building on
previous market research that showed strong satisfaction with the
VERO(R) device and identified a number of areas to enhance the user
experience. The new easy-to-install upgrade offers customers major
enhancements to the system's screen and graphical interface while
retaining the VERO(R)'s core technology.
Tudorza(R)
Tudorza(R) (aclidinium bromide, twice-daily administered via the
easy-to-use Pressair(R) inhaler) is a long-acting muscarinic
antagonist (LAMA) indicated in the United States for the
maintenance treatment of COPD. LAMA therapies achieved estimated
revenues of $2 billion in the US in 2018, with Tudorza(R)
accounting for approximately 2.6% of prescriptions. As a result,
Tudorza(R) has significant potential, with a modest improvement in
market share and / or a move to higher value channels representing
a growth opportunity.
Circassia acquired the full US rights to Tudorza(R) from
AstraZeneca on the exercise of its option at the end of 2018. From
the start of 2019 the Company has recorded Tudorza(R)'s in-market
sales and receives the full profits from its commercialisation.
During 2019, Circassia refocused its sales capabilities with the
launch of a dedicated COPD sales force, improving promotional
efficiency, customer targeting and sales territory definition, and
preparing for the imminent launch of Duaklir(R). At the end of June
2019, Tudorza(R)'s licence transferred to Circassia providing the
Company with the additional flexibility to introduce focused
distribution, pricing and market access strategies at the beginning
of the second half of the year. The Company also launched its
Tudorza(R) healthcare professional and patient websites featuring a
new $10 copay guarantee for commercial channels.
Increasing sales
During the first half of 2019, despite the disruption associated
with the launch of the dedicated COPD sales force, Tudorza(R)
revenues of GBP9.3 million were more than 43% higher (CER) than the
second half of 2018, although they were lower than the same period
the year before (H1 2018: GBP14.4 million CER) following the
release of accrued rebates during H1 2018 by AstraZeneca.
During H1 2019, Circassia introduced a new sales model with
rapid re-targeting and hyper-frequency calls following its
successful piloting at the end of 2018. At the beginning of 2019,
Tudorza(R)'s largest competitors reduced the scale of their sales
teams and Circassia leveraged its competitive share of voice,
improving physician interaction and introducing a 'no hassle' brand
promise ensuring commercial prescriptions are filled. Following the
transfer of the product's licence, Circassia has built on this
model, introducing a commercial strategy to reduce rebates and
distribution costs, move away from unfavourable contracts, target
growth in higher value channels and increase the wholesale
acquisition cost which was previously significantly lower than the
market leader Spiriva(R). Initial results from this approach are
encouraging. Despite the disruption due to the change of
prescription identification codes associated with the product's
transfer to Circassia, net revenues totalling GBP5.0 million in
July and August were approximately 61% higher than the two-month
average during the first half of the current year, with overall
rebate levels reduced to under 60% compared with over 70% in H1
2019.
Label expansion
In March 2019, the United States Food and Drug Administration
(FDA) approved the expansion of Tudorza(R)'s label to include
clinical data from the phase IV ASCENT study. These new data
demonstrate that Tudorza(R) is effective at reducing COPD
exacerbations and associated hospitalisations with no increase in
major cardiovascular adverse events in patients with
moderate-to-very severe COPD and cardiovascular disease and / or
significant risk factors. Tudorza(R) is the only LAMA with these
data in its US prescribing information, which provides an important
differentiation from other products as an estimated 30% of COPD
patients die from cardiovascular conditions. Since taking control
of the product's market access strategy, the Company is now
leveraging these data in payor discussions.
Duaklir(R)
Duaklir(R) is a combination therapy approved in the United
States for the maintenance treatment of COPD. It combines the
long-acting beta agonist (LABA) formoterol fumarate with the LAMA
aclidinium bromide, administered twice-daily via the Pressair(R)
inhaler. The product targets the significant US LAMA / LABA market,
which is predicted to grow rapidly from an estimated $1 billion in
2019 to over $1.5 billion in the coming five years.
Launch planning
In March 2019, the FDA approved Duaklir(R)'s New Drug
Application. The approval was based on a broad clinical database,
which included data from three phase III studies and the Tudorza(R)
phase IV ASCENT study. The product's label offers a number of
competitive advantages. It is the only twice-daily LAMA / LABA in
the US to feature in its prescribing information exacerbation
reduction data and 24-hour profile demonstrating FEV1 improvement.
Duaklir(R)'s label also includes data demonstrating its rapid onset
of action with a clinically significant improvement in FEV1 within
five minutes.
During 2019, Duaklir(R) launch planning has progressed well and
with the product's launch imminent preparations are now complete.
Following FDA approval, the Company launched Duaklir.com with an
email sign-up facility for launch information, and has recently
introduced paid-for search advertising. The Company plans
complementary positioning for Tudorza(R) and Duaklir(R), with
continuity of the user-friendly Pressair(R) inhaler used by both
products, a seamless fit with twice-daily dosing providing
additional night-time bronchodilation and the aclidinium LAMA
component providing the proven ability to reduce exacerbations.
Circassia also has full commercial control of the product from
launch and intends to build on its recent learnings with
Tudorza(R). Consequently, it will leverage its COPD sales force's
competitive share-of-voice with a high frequency, rapid
re-targeting sales model, introduce a 'no hassle' brand promise
guaranteeing commercial prescriptions are filled and focus on high
value, profitable accounts.
LungFit PH (previously AirNOvent)
In early 2019, Circassia further expanded its specialty
respiratory portfolio, acquiring the US and Chinese commercial
rights to ventilator-compatible nitric oxide product AirNOvent (now
LungFit PH) from AIT Therapeutics Inc. (now BeyondAir Inc.). Under
the terms of the acquisition, Circassia paid $10.5 million in
upfront and milestone payments, following the successful completion
of a pre-submission FDA meeting in February. This consideration was
satisfied through the issuance of new ordinary shares in the
Company, with future milestones also payable in Circassia shares.
Milestones include $12.6 million on FDA approval for use in the
treatment of hypoxic respiratory failure associated with persistent
pulmonary hypertension of the newborn (PPHN) and $1.05 million on
the product's launch in China, both of which are payable in cash or
shares. Additional royalty payments will be based on gross profits
from product sales.
BeyondAir is responsible for LungFit PH's development,
manufacture and US regulatory filings and plans to submit the
product to the FDA in Q4 2019 seeking Premarket Approval (PMA) for
use in the treatment of PPHN. Following approval, Circassia
anticipates launching the product in H2 2020. Circassia is
responsible for managing the regulatory process in China, and is
planning a submission strategy under the Chinese NMPA (National
Medical Products Administration) process that references an
existing approval of the product, such as the United States' PMA
once granted.
Product overview
LungFit PH uses an electric voltage to produce nitric oxide from
the nitrogen and oxygen in air. Inhaled nitric oxide is approved
for use in the US in the treatment of hypoxic respiratory failure
associated with PPHN. PPHN is potentially fatal and occurs in
approximately 1,500 - 26,200 newborns in the United States.
Management of the condition can be complex, involving a number of
treatments, including supplemental oxygen and inhaled nitric
oxide.
In the US, the currently available nitric oxide product,
INOMAX(R), is used in neonatal intensive care units (NICUs) and its
delivery system administers nitric oxide from pressurised cylinders
in conjunction with ventilator systems. In 2018, the product
generated revenues estimated at over $400 million in the US. In
China, the annual number of births is over four times higher than
the United States, and market intelligence indicates local use of
industrial gases with INOMAX(R) not currently available.
Circassia intends to commercialise LungFit PH through its
existing commercial platform in the United States and China where
its NIOX(R) sales teams already target top hospitals. In the US,
the product offers a number of potential benefits compared with the
local competition. LungFit PH is smaller, significantly lighter and
more convenient than INOMAX(R), and because it has no cylinders
does not require special storage and handling facilities. This
offers the potential to take market share in the NICU segment, as
well as extending the market to smaller clinics that do not have
the facilities required to manage nitric oxide cylinders.
Corporate progress
During 2019, Circassia has maintained its resolute focus on
building a self-sustaining, commercially-focused specialty
pharmaceutical business. The Company has made good progress
building on the second half of 2018, and with multiple growth
drivers now in place is well positioned to continue to advance
during the remainder of the year.
Financial progress
During the first half of 2019, Circassia continued to control
its costs. The Company reduced its underlying R&D expenditure
compared with the previous six months and its regulatory, medical
affairs, quality and supply chain teams are now focused on
commercial support activities. Additionally, its administrative
expenditure decreased compared with H2 2018. Commercial expenditure
was maintained at a similar level to the second half of 2018 while
the Company completed its Chinese direct sales platform. At the
same time, revenues were significantly higher compared with H2 2018
and consequently the Company substantially reduced its underlying
EBITDA loss for the period. Net cash outflow was higher in H1 2019
than the second half of the prior year due to the additional
working capital required to sell NIOX(R) directly in China and the
timing of R&D tax credits. However, net cash outflow is
anticipated to reduce dramatically in H2 2019 reflecting expected
sales growth, continued cost control and favourable working capital
movements on Tudorza(R) sales.
Circassia has already made good progress during the first two
months of the second half, reducing total net cash outflow to
GBP1.2 million and the Company now has multiple revenue growth
drivers in place, notably NIOX(R) direct sales including in China,
full commercial control of Tudorza(R), the imminent launch of
Duaklir(R) and introduction of LungFit PH, once approved. As a
result, Circassia anticipates achieving revenues of GBP60 million -
GBP65 million for full year 2019, and in addition to its focus on
increasing sales, the Company is stepping up its cost control,
targeting the achievement of positive EBITDA on an annual revenue
level of approximately GBP75 million.
AstraZeneca collaboration
During 2019, Circassia addressed the outstanding consideration
relating to its transaction to acquire the US commercial rights to
Tudorza(R) and Duaklir(R) through a five-year vendor loan provided
by AstraZeneca. Under the terms of the companies' agreement,
Circassia has now drawn down $125 million, and will access the
final $18.3 million R&D payment due to AstraZeneca at the end
of 2019.
Team development
With Circassia's transition to a commercially-focused specialty
pharmaceutical business now complete, the Company recently
strengthened its commercial expertise with the appointment of
Jonathan Emms as Chief Operating Officer. In this newly-created
role, he will oversee the Company's operational and commercial
strategy, drawing on his extensive US, European and global
commercial experience. Prior to joining Circassia, Jonathan was
Chief Commercial Officer for Pfizer's Internal Medicines
organisation and was previously elected President of the
Association of the British Pharmaceutical Industry (ABPI). He also
gained significant respiratory experience at GSK where he
previously held a number of roles.
Outlook
Circassia has made good progress across its business during
2019, and with a number of growth drivers in place is well
positioned to build on this foundation. The Company has continued
to increase NIOX(R) revenues with growth in all of its direct
markets as well as in its partnered territories. With its direct
sales force now established in China, Circassia anticipates ongoing
growth in this major market, while its dedicated sales team
continues to increase revenues in the United States. In Italy, the
Company's newly-launched direct sales team has the potential to
significantly expand the use of NIOX(R), while the imminent
European launch of NIOX VERO(R) PLUS will expand the product
franchise.
In the United States, Circassia now has full commercial control
of Tudorza(R) following the exercise of its option at the end of
2018 and transfer of the product licence at the end of H1 2019.
With the introduction of its focused sales model and market access
strategy, the Company has the opportunity to return the product to
growth, increasing net revenues, and has made encouraging progress
during the start of the second half of the year. In the near future
Circassia plans to further expand its US COPD franchise with the
imminent launch of Duaklir(R). With full commercial control from
launch, the Company intends to leverage the learnings from
Tudorza(R), adopting a 'no hassle' brand promise and focus on high
value channels, while capitalising on Duaklir(R)'s differentiated
label.
In a short period of time, Circassia has transformed its
business, building a strong commercial platform across the world's
major markets with a growing portfolio of exciting respiratory
products. The Company has the foundations for robust growth firmly
in place and looks forward to continuing its financial
transformation over the remainder of the year. By building on its
performance in the first two months of the second half, Circassia
plans to continue its drive towards profitability and its goal of
creating a self-sustaining specialty pharmaceutical business.
FINANCIAL REVIEW
The first half of 2019 has been a period of significant
transformation for Circassia after exercising the option to acquire
full US commercial rights to Tudorza(R) and implementing a direct
sales strategy in China. Additionally, the Group has maintained
control of overall costs and investment in its commercial
platform.
The table below sets out the Group's results for the period
ended 30 June 2019, separated into continuing and discontinued
operations. Continuing operations are further divided into
underlying and non-underlying operations. Continuing underlying
operations include Tudorza(R) revenues and sales of NIOX(R), as
well as the costs of the underlying business. These key performance
indicators are used by management to manage the business and
measure performance.
Non-underlying operations include irregular and non-recurring
expenditure, namely foreign exchange movements and other non-cash
losses relating to deferred consideration payable to AstraZeneca.
Discontinued operations include direct costs and overheads
associated with the in-house respiratory pipeline, which ceased in
April 2018, and residual costs from the historic allergy programmes
for which all development ceased in April 2017.
Underlying Non-underlying Total continuing Discontinued Total
operations operations operations operations(1)
H1 H1 2018 H1 H1 2018 H1 H1 2018 H1 H1 2018 H1 H1
2019 2019 2019 2019 2019 2018
Restated(2) Restated(2) Restated(2)
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
================ ======= =========== ======= ============= ======= ============ ===== ============= ======= =======
Revenue 27.9 28.4 - - 27.9 28.4 - - 27.9 28.4
Cost of sales (7.6) (4.2) - - (7.6) (4.2) - - (7.6) (4.2)
Gross profit 20.3 24.2 - - 20.3 24.2 - - 20.3 24.2
Gross margin 73% 85% - - 73% 85% - - 73% 85%
Research and
development(3) (2.8) (4.5) - - (2.8) (4.5) - (1.2) (2.8) (5.7)
Sales and
marketing(3) (25.1) (26.7) - - (25.1) (26.7) - - (25.1) (26.7)
Administrative
expenses(3) (4.8) (5.1) - - (4.8) (5.1) - (0.3) (4.8) (5.4)
Total
expenditure (32.7) (36.3) - - (32.7) (36.3) - (1.5) (32.7) (37.8)
Depreciation
and
amortisation (6.9) (2.3) - - (6.9) (2.3) - - (6.9) (2.3)
EBITDA (12.4) (12.1) - - (12.4) (12.1) - (1.5) (12.4) (13.6)
Operating loss (19.3) (14.4) - - (19.3) (14.4) - (1.5) (19.3) (15.9)
Other
(losses)/gains (0.1) 0.1 (1.1) (2.3) (1.2) (2.2) - - (1.2) (2.2)
Share of loss
of joint
venture - - - - - - - (0.1) - (0.1)
Net finance
costs - - (8.9) (6.0) (8.9) (6.0) - - (8.9) (6.0)
Loss before tax (19.4) (14.3) (10.0) (8.3) (29.4) (22.6) - (1.6) (29.4) (24.2)
Taxation 0.4 0.3 - - 0.4 0.3 - 0.4 0.4 0.7
Loss for the
financial
period (19.0) (14.0) (10.0) (8.3) (29.0) (22.3) - (1.2) (29.0) (23.5)
Cash(4) 21.0 50.8
================ ======= =========== ======= ============= ======= ============ ===== ============= ======= =======
(1) Disclosed as a single amount in the condensed interim
consolidated statement of comprehensive income.
(2) Restated to show the results of the in-house respiratory
programme as discontinued.
(3) Excludes depreciation and amortisation.
(4) Includes cash, cash equivalents and short-term deposits.
Revenue
Circassia's revenues of GBP27.9 million (H1 2018: GBP28.4
million) include Tudorza(R) revenues of GBP9.3 million (H1 2018:
GBP14.4 million) and NIOX(R) revenues of GBP18.5 million (H1 2018:
GBP14.0 million).
During 2018, Tudorza(R) revenues derived from the Group's profit
share arrangement with AstraZeneca. AstraZeneca recorded in-market
sales, cost of sales and other operational costs while Circassia
recorded the costs of the field force and promotion and the
companies each recorded 50% of the resultant profit. On 31 December
2018, Circassia completed the exercise of its option to take full
commercial control of Tudorza(R) in the United States, and during
2019 received the full benefits of commercialisation and recorded
both the product's sales and costs. Tudorza(R) revenues were higher
in H1 2018 mainly due to higher volume of sales and the release of
accrued rebates. Circassia recorded Tudorza(R) revenues of GBP6.5
million in H2 2018, which increased by over 40% to GBP9.3 million
in H1 2019.
NIOX(R) revenues include clinical sales of GBP16.1 million (H1
2018: GBP11.7 million), research sales of GBP2.2 million (H1 2018:
GBP2.1 million) and other revenues of GBP0.2 million (H1 2018:
GBP0.2 million), which include freight. NIOX(R) clinical revenues
represent sales to physicians, hospitals and distributors for use
in clinical practice, while research sales are those to
pharmaceutical companies for use in clinical studies. The increase
in NIOX(R) clinical sales was mainly due to the implementation of
direct sales operation in China, where revenues increased by over
190%.
Gross profit
Gross margin decreased from 85% to 73% which mainly related to
Tudorza(R). Exercise of the Tudorza(R) option marked the end of the
AstraZeneca collaboration agreement in which revenues were recorded
at 100% gross margin. Following the exercise of the option,
Circassia now records both the product's sales and costs. The gross
margin during the period was 77%. Gross profit on NIOX(R) sales was
GBP13.7 million (H1 2018: GBP9.8 million), with a gross margin of
74% (H1 2018: 70%). The increase was mainly due to the weakening of
sterling against the dollar.
Research and development activities
Research and development costs decreased to GBP2.8 million (H1
2018: GBP5.7 million). This was mainly due to lower headcount
combined with the capitalisation of qualifying device development
spend in relation to NIOX VERO(R) PLUS, and a decrease in
discontinued operations following the halting of expenditure on
allergy and respiratory programmes.
Sales and marketing
Sales and marketing costs decreased to some extent during H1
2019 to GBP25.1 million (H1 2018: GBP26.7 million). This was mainly
due to lower labour costs in the United States following the
realignment of the US field force offset to some extent by higher
costs relating to commercial operations in China.
Administrative expenditure
Administrative expenditure, which includes overheads specific to
corporate functions, centrally managed support functions and
corporate costs, decreased to GBP4.8 million (H1 2018: GBP5.4
million). This was mainly due to a decrease in discontinued
operations, in particular restructuring and patent costs relating
to respiratory programmes halted during H1 2018.
Depreciation and amortisation
Depreciation and amortisation increased to GBP6.9 million (H1
2018: GBP2.3 million). This was mainly due to the commencement of
the amortisation charge relating to the Tudorza(R) CMP asset
(Currently Marketed Product) and Duaklir(R) IPR&D asset
(In-Process Research & Development).
Other gains and losses
Other losses decreased to GBP1.2 million (H1 2018: GBP2.2
million), mainly due to unrealised foreign exchange losses on
consideration payable to AstraZeneca due to the weakening of
sterling against the dollar.
Net finance costs
Net finance costs were GBP8.9 million (H1 2018: GBP6.0 million).
This is a non-cash charge to the income statement for the period
reflecting the difference in the discounted consideration payable
to AstraZeneca recorded on the balance sheet and the consideration
payable. This discounted amount reflects the time value of
money.
Share of loss of joint venture
The historic joint venture between Circassia and McMaster
University was established to collaborate on the development of
allergy immunotherapies. Loss for the period in respect of the
joint venture of GBPnil (H1 2018: GBP0.1 million) reflects the
previous cessation of the programmes, and has been included in
discontinued operations.
R&D tax credits
The tax credit on qualifying expenditure for the period was
GBP0.4 million (H1 2018: GBP0.7 million). The decrease since the
previous year reflects the halting of R&D expenditure on the
Group's internal respiratory programmes.
Loss after tax and loss per share
Basic loss per share for the period was 8p (H1 2018: 7p)
reflecting a loss for the financial period of GBP29.0 million (H1
2018: GBP23.5 million). The loss per share for continuing
operations of 8p (H1 2018: 7p) reflecting a loss for the financial
period of GBP29.0 million (H1 2018: GBP22.3 million). The increase
in loss per share mainly arose due to amortisation of AstraZeneca
collaboration assets, combined with an increase in net finance
costs.
Statement of financial position
The Group's net assets at 30 June 2019 were GBP103.2 million (31
December 2018: GBP125.9 million). The decrease is mainly caused by
the unwinding of discounts on contingent and non-contingent
consideration combined with a decrease in the Company's cash and
cash equivalents balance.
Current liabilities at the end of the period were GBP109.5
million (31 December 2018: GBP124.4 million). The decrease is
mainly due to the settlement of contingent consideration to
AstraZeneca, which has been offset by a loan repayable within five
years and is therefore classified as non-current.
Total tax assets at 30 June 2019 were GBP4.4 million (31
December 2018: GBP4.0 million), representing the R&D tax credit
due from HM Revenue and Customs (HMRC). An R&D tax credit of
GBP10.9 million was received in July 2018.
Cash flow
The Group's cash position (including cash, cash equivalents and
short-term deposits) decreased from GBP40.7 million at 31 December
2018 to GBP21.0 million at 30 June 2019. The main cash flows were
GBP19.2 million ($25 million) settlement of deferred consideration
(H1 2018: GBPnil) to AstraZeneca, which was offset by a five-year
loan, along with GBP8.0 million proceeds from issue of shares (H1
2018: GBPnil) to AIT in exchange for the rights to LungFit PH.
Post-period, Circassia has drawn down a further $100 million from
the AstraZeneca loan to settle the outstanding deferred
consideration, and the Group anticipates drawing the final $18.3
million due at the end of the year.
In terms of cash use, GBP18.0 million was used in operations (H1
2018: GBP7.4 million), with the increase reflecting lower gross
margins due to the Tudorza(R) option exercise and higher use of
working capital following the implementation of direct sales in
China.
Exchange differences on cash and cash equivalents arose as a
result of translation of foreign currency balances at the beginning
and end of the relevant period. The exchange loss for the period
was GBP0.1 million (H1 2018: GBP1.5 million). The decrease compared
with H1 2018 was due to more favourable exchange rates, in
particular against the dollar.
Summary and outlook
Circassia anticipates significant sales growth during the second
half of 2019, with a number of factors expected to contribute to
the increase. In particular, the Company expects increased
Tudorza(R) revenues following the recent transfer of the product
licence and initial Duaklir(R) sales later this year following its
imminent launch. The Company also plans to continue its cost
control, and with favourable working capital movements on
Tudorza(R) sales anticipates a dramatic reduction in net cash
outflow. As a result, Circassia looks forward to continuing its
trajectory towards self-sustainability, with an ongoing focus on
achieving positive EBITDA at approximately GBP75 million annual
sales level.
PRINCIPAL RISKS AND UNCERTAINTIES
Circassia has considered the principal risks and uncertainties
facing the Group for the first six months of 2019 and does not
consider them to have changed from those set out on pages 28 to 33
of the 2018 Annual report and accounts. A summary of these risks is
as follows:
Commercial success
The Group's competitors - many of whom have considerably greater
financial and human resources - may develop safer or more effective
products or be able to compete more effectively in the markets
targeted by the Group. New companies may enter these markets and
novel products and technologies may become available which are more
commercially successful than those being developed by the
Group.
Compliance with healthcare regulations
The Group must comply with complex regulations in relation to
the marketing of its pharmaceutical and medical device products.
These regulations are strictly enforced. Failure by the Group (or
its commercial partners) to comply with the US False Claims Act,
Anti-Kickback Statute and the US Foreign and Corrupt Practices Act
and regulations relating to data privacy (amongst others) and
similar legislation in countries outside the US may result in
criminal and civil proceedings against the Group.
Regulatory approvals
The Group may not receive regulatory approval for those of its
products which are in development or regulatory review. Even where
products are approved, subsequent regulatory difficulties may
arise, or the conditions relating to the approval may be more
onerous or restrictive than the Group expects, or existing
approvals might be withdrawn.
Unforeseen side effects
Unforeseen side effects may result from the use of the Group's
products or product candidates.
Supply Chain
The Group relies on third parties for the supply of key
materials and services, such as AstraZeneca for Tudorza(R) and
Duaklir(R). Problems at these contractors, such as technical
issues, contamination, and regulatory actions may lead to delays or
even loss of supply or inadequate supply of these materials and
services either prior to launch or thereafter.
Research and development risks
The Group may not be successful in its efforts to develop the
next generation of its NIOX(R) device. This could have an impact on
the long-term success of the NIOX(R) business. The Group's
commercialisation plans for LungFit PH rely on our partner, Beyond
Air, for the development and supply of that product.
Intellectual property, know how, and trade secrets
The Group may be affected by challenges relating to the validity
of its or its licensed patents. If these challenges are successful,
then the Group may be exposed to generic competition.
The Group could also be sued for infringement of third party
patent rights or not be able to secure intellectual property
protection, or sufficient protection, in relation to products which
are acquired or in development.
The Group may rely upon know how and trade secrets to protect
its products and maintain a competitive advantage. This may be
especially important where patent protection is limited or
lacking.
The Group licenses certain intellectual property rights from
third parties. The rights that are licensed to the Group as part of
the collaboration with AstraZeneca relating to Tudorza(R) and
Duaklir(R) fall within this category. If the Group fails to comply
with its obligations under these licence agreements it may enable
the other party to terminate the agreement.
Organisational capabilities and capacity
The Group may be unable to successfully implement its plans for
growth if it does not attract and retain employees with the
requisite capabilities and experience, in appropriate numbers.
Financial operations
The Group has incurred significant losses since the inception of
its various businesses and anticipates that it will continue to do
so for some time due to the high level of expenditure required to
develop its NIOX(R) business and to promote Tudorza(R) and launch
Duaklir(R).
Foreign exchange fluctuations may adversely affect the Group's
results and financial condition.
Adverse decisions of regulators, including tax authorities, or
changes in tax treaties, laws, or the interpretation of those laws,
could reduce or eliminate research and development tax credits
which the Group currently receives in the United Kingdom.
Brexit
The Group continues to face a range of risks associated with the
UK's vote to leave the EU. For example, this decision may lead to
changes in the regulatory system by which medical devices and
pharmaceutical products are approved for use.
Brexit may also result in restrictions on the movement of people
which make it harder for the Group to attract the talent it needs
to support the business. The general economic uncertainty created
by the process may also make it harder to enter into strategic
partnerships with European companies.
CONDENSED INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
FOR THE SIX MONTHSED 30 JUNE 2019
30 June 2019 30 June 2018
Underlying Non-underlying Total Underlying Non-underlying Total
operations items operations items
Restated(1)
Restated(1)
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
Notes GBPm GBPm GBPm GBPm GBPm GBPm
Continuing
operations
Revenue 27.9 - 27.9 28.4 - 28.4
Cost of sales (7.6) - (7.6) (4.2) - (4.2)
---------------- ------ --------------- ---------------- ---------- --------------- ---------------- ----------
Gross profit 20.3 - 20.3 24.2 - 24.2
Research and
development (3.7) - (3.7) (5.7) - (5.7)
Sales and
marketing (26.0) - (26.0) (27.7) - (27.7)
Administrative
expenses (9.9) - (9.9) (5.2) - (5.2)
Operating loss 4 (19.3) - (19.3) (14.4) - (14.4)
Other (losses)
and gains 5 (0.1) (1.1) (1.2) 0.1 (2.3) (2.2)
Finance costs 6 (0.1) (8.9) (9.0) (0.1) (6.0) (6.1)
Finance income 6 0.1 - 0.1 0.1 - 0.1
Loss before tax (19.4) (10.0) (29.4) (14.3) (8.3) (22.6)
Taxation 0.4 - 0.4 0.3 - 0.3
---------------- ------ --------------- ---------------- ---------- --------------- ---------------- ----------
Loss for the
financial
period from
continuing
operations (19.0) (10.0) (29.0) (14.0) (8.3) (22.3)
---------------- ------ --------------- ---------------- ---------- --------------- ---------------- ----------
Discontinued
operations
Loss for the
period from
discontinued
operations
attributable
to owners of
the parent 7 - - - - (1.2) (1.2)
Loss for the
period
attributable
to owners of
the parent (19.0) (10.0) (29.0) (14.0) (9.5) (23.5)
---------------- ------ --------------- ---------------- ---------- --------------- ---------------- ----------
Other
comprehensive
expense
Items that may
be subsequently
reclassified to
profit or loss
Currency
translation
differences (2.6) (2.6) (4.6) - (4.6)
Total other
comprehensive
expense for
the period (2.6) - (2.6) (4.6) - (4.6)
---------------- ------ --------------- ---------------- ---------- --------------- ---------------- ----------
Total
comprehensive
expense for
the period (21.6) (10.0) (31.6) (18.6) (9.5) (28.1)
---------------- ------ --------------- ---------------- ---------- --------------- ---------------- ----------
(1) Restated to show the results of the in-house respiratory
programme as discontinued
Loss per share attributable to owners of the parent during the
period (expressed in GBP per share)
30 June 2019 30 June 2018
Restated(1)
Basic and diluted loss per share GBP GBP
------------------------------------------ ------- ------------- -------------
Loss per share from continuing operations 15 (GBP0.08) (GBP0.07)
Total loss per share 15 (GBP0.08) (GBP0.07)
------------------------------------------ ------- ------------- -------------
(1) Restated to show the results of the in-house respiratory
programme as discontinued
The notes on pages 17 to 27 are an integral part of these
condensed interim consolidated financial statements.
CONDENSED INTERIM CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
AS AT 30 JUNE 2019
30 June 31 December
2019 2018
GBPm GBPm
Notes Unaudited Audited
------------------------------ ------- ---------- ------------
Assets
Non-current assets
Property, plant & equipment 0.7 0.5
Right-of-use assets 19 2.3 -
Goodwill 10 9.1 9.3
Intangible assets 11 241.2 221.4
Deferred tax assets 9 19.1 19.1
Investment in joint venture 12 - 0.1
Non-current tax assets 9 - 3.0
272.4 253.4
------------------------------ ------- ---------- ------------
Current assets
Inventories 6.0 4.2
Trade and other receivables 12.6 8.1
Current tax assets 9 4.4 1.0
Short-term bank deposits - -
Cash and cash equivalents 21.0 40.7
------------------------------ ------- ---------- ------------
44.0 54.0
------------------------------ ------- ---------- ------------
Total assets 316.4 307.4
------------------------------ ------- ---------- ------------
Equity and liabilities
Ordinary shares 17 0.3 0.3
Share premium 17 630.4 622.5
Other reserves 18 13.7 15.1
Accumulated losses (541.2) (512.0)
------------------------------ ------- ---------- ------------
Total equity 103.2 125.9
Liabilities
Non-current liabilities
Borrowings 13 19.7 -
Deferred tax liabilities 9 10.9 10.9
Finance lease liability 13 1.8 -
Contingent consideration 13 71.3 46.2
------------------------------ ------- ---------- ------------
103.7 57.1
------------------------------ ------- ---------- ------------
Current liabilities
Finance lease liability 13 0.8 -
Non-contingent consideration 13 78.7 80.3
Contingent consideration 13 1.7 15.4
Trade and other payables 13, 14 28.3 28.7
109.5 124.4
Total liabilities 213.2 181.5
------------------------------ ------- ---------- ------------
Total equity and liabilities 316.4 307.4
------------------------------ ------- ---------- ------------
The notes on pages 17 to 27 are an integral part of these
condensed interim consolidated financial statements.
CONDENSED INTERIM CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
FOR THE SIX MONTHSED 30 JUNE 2019
Share capital Share premium Other(1) reserves Accumulated losses Total equity
Notes GBPm GBPm GBPm GBPm GBPm
---------------------- ------ -------------- -------------- ------------------ ------------------- -------------
At 1 January 2019
(audited) 0.3 622.5 15.1 (512.0) 125.9
Change in accounting
policy 19 - - - (0.2) (0.2)
Restated total equity
at 1 January 2019 0.3 622.5 15.1 (512.2) 125.7
Comprehensive
expense:
Loss for the period - - - (29.0) (29.0)
Other comprehensive
expense:
Currency translation
differences 18 - - (2.6) - (2.6)
---------------------- ------ -------------- -------------- ------------------ ------------------- -------------
Total comprehensive
income /(expense) 0.3 622.5 12.5 (541.2) 94.1
Transactions with
owners:
Issue of ordinary
shares 17 - 7.9 - - 7.9
Employee share option
scheme 18 - - 1.2 - 1.2
At 30 June 2019
(unaudited) 0.3 630.4 13.7 (541.2) 103.2
---------------------- ------ -------------- -------------- ------------------ ------------------- -------------
At 1 January 2018
(audited) 0.3 602.2 17.2 (395.0) 224.8
Comprehensive
expense:
Loss for the period - - - (23.5) (23.5)
Other comprehensive
expense:
Currency translation
differences - - (4.6) - (4.6)
---------------------- ------ -------------- -------------- ------------------ ------------------- -------------
Total comprehensive
income /(expense) 0.3 602.2 12.6 (418.5) 196.6
Transactions with
owners:
Employee share option
scheme - - 1.4 - 1.4
---------------------- ------ -------------- -------------- ------------------ ------------------- -------------
At 30 June 2018
(unaudited) 0.3 602.2 14.0 (418.5) 198.0
---------------------- ------ -------------- -------------- ------------------ ------------------- -------------
(1) Other reserves include the share option reserve, translation
reserve, treasury shares reserve and transactions with NCI
reserve
The notes on pages 17 to 27 are an integral part of these
condensed interim consolidated financial statements.
CONDENSED INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHSED 30 JUNE 2019
30 June 30 June
2019 2018
Unaudited Unaudited
Notes GBPm GBPm
-------------------------------------------------------- ------ ---------- ----------
Cash flows from operating activities
Cash generated from operations 16 (18.0) (7.4)
Interest paid (0.1) (0.1)
Net cash used in operating activities (18.1) (7.5)
-------------------------------------------------------- ------ ---------- ----------
Cash flows from investing activities
Interest received 0.1 0.1
Joint venture distributions to owners 0.1 0.3
Purchase of intangible assets (9.0) (0.1)
Purchase of property, plant and equipment (0.2) -
Settlement of deferred consideration (19.2) -
Decrease in short term bank deposits - 5.0
Net cash (used in)/generated from investing activities (28.2) 5.3
-------------------------------------------------------- ------ ---------- ----------
Cash flows from financing activities
Proceeds from issues of shares 8.0 -
Costs offset against share premium (0.1) -
Proceeds from borrowings 19.2 -
Principal elements of lease payments (0.4) -
Net cash generated from financing activities 26.7 -
-------------------------------------------------------- ------ ---------- ----------
Net decrease in cash and cash equivalents (19.6) (2.2)
Cash and cash equivalents at 1 January 40.7 44.5
Exchange loss on cash and cash equivalents (0.1) (1.5)
-------------------------------------------------------- ------ ---------- ----------
Cash and cash equivalents at 30 June 21.0 40.8
-------------------------------------------------------- ------ ---------- ----------
The notes on pages 17 to 27 are an integral part of these
condensed interim consolidated financial statements.
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS
1. General information
Circassia Pharmaceuticals plc is a public limited company which
is listed on the Alternative Investments Market of the London Stock
Exchange and incorporated and domiciled in England and Wales. The
address of its registered office is The Magdalen Centre, Robert
Robinson Avenue, Oxford Science Park, Oxford, Oxfordshire, England,
OX4 4GA.
The condensed consolidated interim financial statements were
approved for issue on 26 September 2019.
The condensed consolidated interim financial statements do not
comprise statutory accounts within the meaning of section 434 of
the Companies Act 2006. Statutory accounts for the year ended 31
December 2018 were approved by the Board of Directors on 1 May 2019
and delivered to the Registrar of Companies. The report of the
auditors on those accounts was unqualified, did not contain an
emphasis of matter paragraph and did not contain any statement
under section 498 of the Companies Act 2006.
The condensed consolidated interim financial statements have not
been audited or reviewed.
Basis of preparation
This condensed consolidated interim financial report for the
period ended 30 June 2019 has been prepared in accordance with
Accounting Standard IAS 34 Interim Financial Reporting.
The interim report does not include all the notes of the type
normally included in an annual financial report. Accordingly, this
report is to be read in conjunction with the annual report for the
year ended 31 December 2018 and any public announcements made by
Circassia Pharmaceuticals plc during the interim reporting
period.
Going concern
The Group has sufficient cash and cash equivalents to meet its
day-to-day working capital requirements. Though the Group continues
to make losses, the Directors have reviewed the current and
projected financial position of the Group, taking into account
existing cash balances. On the basis of this review, the Directors
have not identified any material uncertainties to the Group's
ability to meet its liabilities as they fall due for the
foreseeable future
Accounting policies
The accounting policies adopted are consistent with those of the
previous financial year and corresponding interim reporting period,
except for those listed and the adoption of new and amended
standards as set out below.
Tudorza(R) revenue
Revenue for the first six months of the year represent net
invoice value less estimated rebates, returns and chargebacks,
which are considered to be key estimates. Sales are recognised when
the control of the goods has been transferred to a third party.
This is usually when title passes to the customer, either on
shipment or on receipt of goods by the customer, depending on local
trading terms. In markets where returns are significant, estimates
of returns are accounted for at the point revenue is
recognised.
Borrowings
Interest-bearing loans are initially measured at fair value
(with direct transaction costs being amortised over the life of the
loan) and are subsequently measured at amortised cost using the
effective interest rate method at each reporting date. Changes in
carrying value are recognised in profit.
New and amended standards adopted by the Group
A number of new or amended standards became applicable for the
current reporting period, and the Group had to change its
accounting policies and make retrospective adjustments as a result
of adopting IFRS 16 Leases.
The impact of the adoption of the leasing standard and the new
accounting policies are disclosed in note 19 below. The other
standards did not have any impact on the Group's accounting
policies and did not require retrospective adjustments.
Use of estimates and assumptions
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results may differ from these estimates.
In preparing these condensed interim financial statements, the
significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty
were the same as those that applied to the annual financial
statements for the year ended 31 December 2018, except for those
listed below.
Tudorza(R) rebate accruals
When invoicing Tudorza(R) sales, Circassia must estimate the
rebates and chargebacks that are expected to be paid. These rebates
typically arise from sales contracts with third-party managed care
organisations, hospitals, long-term care facilities, group
purchasing organisations and various federal or state programmes
(Medicaid contracts, supplemental rebates, etc).
Accrual assumptions are built up on a customer-by-customer
basis, taking into account specific contract provisions coupled
with expected performance, and are then aggregated into a weighted
average rebate accrual rate. Accrual rates are reviewed and
adjusted on an as needed basis. There may be further adjustments
when actual rebates are invoiced based on utilisation information
submitted to us (in the case of contractual rebates) and
claims/invoices are received (in the case of regulatory rebates and
chargebacks).
Total accrued rebates and chargebacks in the six months ended 30
June 2019 amounted to GBP20.7 million (2018: GBPnil).
Financial instruments
The Group's financial instruments comprise cash and cash
equivalents, short-term bank deposits, receivables and payables
arising directly from operations. The Directors consider that the
fair values of the Group's financial instruments do not differ
significantly from their carrying values.
2. Financial and capital risk management
The condensed interim financial statements do not include all
financial and capital risk management information and disclosures
required in the annual financial statements; they should be read in
conjunction with the Group's annual financial statements for the
year ended 31 December 2018. The viability consideration has been
disclosed in the last annual report and the Directors believe that
the year-end position remains unchanged.
The majority of operating costs are denominated in sterling,
United States dollars, euro or Swedish krona. Foreign exchange risk
arises from future commercial transactions and recognised assets
and liabilities. The Directors expect foreign exchange volatility
to continue to affect the Group's results and the resulting impact
will be assessed in the annual report.
3. Operating segments
The chief operating decision-maker (the Chief Executive Officer)
is responsible for making key operating decisions in the Group.
Assessment of performance and decisions regarding the allocation of
resources are made by operating segment. The operating segments are
identified within the Group by product portfolios:
- NIOX(R) relates to the portfolio of products used to improve
asthma diagnosis and management by measuring fractional exhaled
nitric oxide (FeNO); and
- US AZ collaboration relates to the US collaboration agreement with AstraZeneca regarding the commercialisation of Tudorza(R) and Duaklir(R).
The allergy and respiratory operating segments have been
classified as discontinued operations. Information about these
discontinued segments is provided in note 7.
The table below information regarding the Group's operating
segments six months ended 30 June 2019 and 2018. Costs shared
between the segments are not allocated to individual segments for
decision making purposes. These are disclosed under the column
headed 'Unallocated'.
NIOX(R) US AZ collaboration Unallocated Total
GBPm GBPm GBPm GBPm
------------------------------- -------- -------------------- ------------ -------
Six months ended 30 June 2019
Revenue 18.5 9.3 0.1 27.9
Operating loss (1.6) (6.1) (11.6) (19.3)
Six months ended 30 June 2018
Restated(1)
Revenue 14.0 14.4 - 28.4
Operating (loss)/ profit (6.9) 1.5 (9.0) (14.4)
------------------------------- -------- -------------------- ------------ -------
(1) Restated to show the results of the in-house respiratory
programme as discontinued
There were no sales between the segments in either reporting
period.
There have been no material changes in total assets or total
liabilities from the amounts disclosed in the last annual financial
statements.
4. Operating loss
There are no material items which are unusual by their nature,
size or incidence for both six months ended 30 June 2019 and
2018.
5. Other (losses) and gains
Six months ended 30 June
---------------------------
2019 2018
GBPm GBPm
----------------------------------------------- ------------- ------------
Net foreign exchange (loss)/ gain (0.1) 0.1
Foreign exchange loss on non-underlying items (1.1) (2.3)
Total other (losses) and gains (1.2) (2.2)
----------------------------------------------- ------------- ------------
Foreign exchange loss on non-underlying items of GBP1.1 million
(30 June 2018: GBP2.3 million) is made up foreign exchange loss of
GBP0.4 million (30 June 2018: GBP1.6 million) on the non-contingent
consideration and foreign exchange loss of GBP0.7 million (30 June
2018: GBP0.7 million) on the contingent royalty consideration.
6. Finance costs and income
Six months ended 30 June
2019 2018
------------- ------------
GBPm GBPm
--------------------------------------------------------- ------------- ------------
Finance costs:
Interest and bank charges payable (0.1) (0.1)
Non-contingent consideration: unwinding of discount (3.1) (1.8)
Contingent royalty consideration: unwinding of discount (5.4) (3.8)
Non-current trade payables: unwinding of discount (0.4) (0.4)
Total finance costs (9.0) (6.1)
--------------------------------------------------------- ------------- ------------
Finance income:
Bank interest receivable 0.1 0.1
Total finance income 0.1 0.1
--------------------------------------------------------- ------------- ------------
7. Discontinued operations
During 2017 it was announced that the Group would no longer
continue development of the allergy programmes. Subsequently during
2018, it was announced that the Group would cease investment in the
in-house respiratory pipeline. As such, the allergy and in-house
respiratory programme costs and the associated research and
development tax credit are classified as discontinued operations in
the consolidated statement of comprehensive income to comply with
IFRS 5 requirements.
Loss for the period Six months ended 30 June
---------------------------
2019 2018
Notes GBPm GBPm
----------------------------------- -------- ------------- ------------
Expenditure - (1.5)
Share of loss of joint venture 12 - (0.1)
Loss before tax - (1.6)
Taxation - 0.4
----------------------------------- -------- ------------- ------------
Loss from discontinued operations - (1.2)
----------------------------------- -------- ------------- ------------
8. Non-underlying items
Management primarily manage the business and measure performance
based on the results of "underlying operations".
Significant irregularly occurring and exceptional items are
excluded from the underlying measures. The following non-underlying
items have been recognised in the income statement for the
period:
Six months ended 30 June
---------------------------
2019 2018
Restated(1)
Notes GBPm GBPm
--------------------------------------------------------------- ------ --------- ----------------
Credited to other gains and losses
Foreign exchange movement on non-contingent consideration 5 (0.4) (1.6)
Foreign exchange movement on contingent royalty consideration 5 (0.7) (0.7)
(1.1) (2.3)
Charged to finance costs
Non-contingent consideration: unwinding of discount 6 (3.1) (1.8)
Contingent royalty consideration: unwinding of discount 6 (5.4) (3.8)
Non-current trade payables: unwinding of discount 6 (0.4) (0.4)
--------------------------------------------------------------- ------ --------- ----------------
(8.9) (6.0)
--------------------------------------------------------------- ------ --------- ----------------
Loss before tax (10.0) (8.3)
Credited to taxation - -
Loss from continuing operations (10.0) (8.3)
Loss from discontinued operations 7 - (1.2)
Total loss (10.0) (9.5)
--------------------------------------------------------------- ------ --------- ----------------
1 Restated to show the results of the in-house respiratory
programme as discontinued. See note 7 for details.
Non-contingent consideration
The GBP0.4 million loss (30 June 2018: GBP1.6 million) relating
to foreign exchange movement on non-contingent consideration
relates to the impact of the strengthening (2018: strengthening)
dollar on translation of the $100 million, $20 million and $5
million deferred non-contingent consideration payable to
AstraZeneca. The consideration was measured by discounting the
liability with GBP3.1 million (30 June 2018: GBP1.8 million)
increasing in the liability due to the passage of time (unwinding
of discount) recognised as a finance cost for the period.
Contingent royalty consideration
Contingent royalty consideration relates to the amount of
royalties payable to AstraZeneca on the future Tudorza(R) and
Duaklir(R) sales, and to AIT for future LungFit PH sales. The
liability was remeasured to fair value at the period end with no
change in fair value (30 June 2018: GBPnil). The GBP0.7 million (30
June 2018: GBP0.7 million) foreign exchange movement relates to the
impact of the strengthening dollar on translation of the contingent
royalty consideration.
Loss from discontinued operations
The costs relating to the discontinued allergy and in-house
respiratory programmes are deemed to be an exceptional item to be
excluded from the underlying operations. See note 7.
9. Taxation
R&D tax credit
Included within the GBP4.4 million tax debtor is an R&D tax
credit of GBP0.4 million (H1 2018: GBP0.6 million) relating to the
six months ended 30 June 2019, and GBP1.0 million relating to the
year ended 31 December 2018. This represents the credit receivable
by the Group for the period as well as adjustments to prior years.
These have been estimated at a rate of 14.5% for qualifying
expenditure, being the prevailing R&D tax credit rate at the
time. An uplift of 130% has been applied to all qualifying
expenditure in line with R&D tax rules.
Deferred taxation
Intangibles Tax losses Net deferred tax liability
GBPm GBPm GBPm
------------------- ------------ ----------- ---------------------------
At 1 January 2019 10.9 (19.1) (8.2)
At 30 June 2019 10.9 (19.1) (8.2)
------------------- ------------ ----------- ---------------------------
30 June 2019 31 December 2018
GBPm GBPm
----------------------------- ------------- -----------------
Deferred tax liabilities 10.9 10.9
Deferred tax assets (19.1) (19.1)
Total deferred tax position (8.2) (8.2)
----------------------------- ------------- -----------------
The Group has the following unrecognised potential deferred tax
assets as at:
30 June 2019 31 December 2018
GBPm GBPm
--------------------------------------- ------------- -----------------
Losses 63.9 58.0
Total unrecognised deferred tax asset 63.9 58.0
--------------------------------------- ------------- -----------------
10. Goodwill
GBPm
At 31 December 2018
Cost 88.2
Accumulated impairment (78.9)
------------------------------- -------
Closing net book amount 9.3
------------------------------- -------
Six months ended 30 June 2019
Opening net book amount 9.3
Exchange differences (0.2)
Closing net book amount 9.1
------------------------------- -------
At 30 June 2019
Cost 88.0
Accumulated impairment (78.9)
------------------------------- -------
Closing net book amount 9.1
------------------------------- -------
As there were no indicators for impairment, management has not
updated any of the impairment calculations.
The carrying value of goodwill is allocated to the following
CGUs:
30 June 2019 31 December 2018
Cash generating unit GBPm GBPm
NIOX(R) 5.0 5.2
AstraZeneca collaboration 4.1 4.1
--------------------------- ------------- -----------------
9.1 9.3
--------------------------- ------------- -----------------
11. Intangible assets
Total
Customer Intellectual intangible
IPR&D CMP relationships Technology property Other assets
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------ -------- ------ ----------------- ------------- ----------------- -------- -----------------
At 31 December
2018
Cost 161.9 97.4 34.6 50.3 - 1.9 346.1
Accumulated
amortisation and
impairment (88.8) - (7.4) (26.9) - (1.6) (124.7)
------------------ -------- ------ ----------------- ------------- ----------------- -------- -----------------
Net book amount 73.1 97.4 27.2 23.4 - 0.3 221.4
------------------ -------- ------ ----------------- ------------- ----------------- -------- -----------------
Six months ended
30 June 2019
Opening net book
amount 73.1 97.4 27.2 23.4 - 0.3 221.4
Additions - - - - 28.1 0.4 28.5
Amortisation
charge (1.1) (3.8) (0.9) (1.0) - - (6.8)
Exchange
differences - - (1.0) (0.9) - - (1.9)
------------------ -------- ------ ----------------- ------------- ----------------- -------- -----------------
Closing net book
amount 72.0 93.6 25.3 21.5 28.1 0.7 241.2
------------------ -------- ------ ----------------- ------------- ----------------- -------- -----------------
At 30 June 2019
Cost 161.9 97.4 34.6 50.3 28.1 2.3 374.6
Accumulated
amortisation and
impairment (89.9) (3.8) (9.3) (28.8) - (1.6) (133.4)
------------------ -------- ------ ----------------- ------------- ----------------- -------- -----------------
Net book amount 72.0 93.6 25.3 21.5 28.1 0.7 241.2
------------------ -------- ------ ----------------- ------------- ----------------- -------- -----------------
As there were no indicators for impairment, management has not
updated any of the impairment calculations.
12. Investment in joint venture
Six months ended Year ended
30 June 2019 31 Dec 2018
GBPm GBPm
------------------------- ----------------- -------------
At 1 January 0.1 0.5
Share of loss - (0.1)
Distributions to owners (0.1) (0.3)
At period end - 0.1
------------------------- ----------------- -------------
The Adiga Life Sciences joint venture managed clinical research
organisations (CROs) in Canada in respect of allergy programmes on
behalf of Circassia. As the allergy programmes are no longer being
continued, the results of the joint venture six months ended 30
June 2019 and 2018 have been included within discontinued
operations in the condensed interim consolidated statement of
comprehensive income, see note 7.
13. Borrowings
In June 2019, the Group entered into a loan facility with
AstraZeneca to finance consideration payable under the
collaboration agreement. The total amount available under the
facility is $143.3 million, of which $25 million (GBP19.7 million)
was drawn down as at 30 June 2019.
The loan is a fixed rate, United States dollar denominated loan,
which is carried at amortised cost. It does not impact the Group's
exposure to cash flow interest rate risk, however does impact the
Group's foreign exchange risk.
The table below analyses the Group's financial liabilities into
relevant maturity groupings based on the remaining period at the
balance sheet date to the contractual maturity date. As at 30 June
2019, the contractual maturities of the Group's non-derivative
financial liabilities were as follows:
Less than 6 Between 6 and 12 Between 1 and 2 Between 2 and 5
months months years years Over 5 years Total
At 30 June 2019 GBPm GBPm GBPm GBPm GBPm GBPm
------------------ ------------------ ----------------- ----------------- ----------------- ------------- ------
Borrowings - - - 19.7 - 19.7
Finance lease
liabilities 0.4 0.4 0.5 1.3 - 2.6
Non-contingent
consideration 78.7 - - - - 78.7
Contingent
consideration 0.9 0.8 2.4 22.9 46.0 73.0
Trade and other
payables 28.3 - - - - 28.3
Total 108.3 1.2 2.9 43.9 46.0 202.3
------------------ ------------------ ----------------- ----------------- ----------------- ------------- ------
14. Trade and other payables
30 June 2019 31 December 2018
GBPm GBPm
Payable within one year
Trade payables 22.1 19.1
Social security and other taxes 0.4 0.3
Accruals 5.6 7.6
Other payables 0.2 1.7
--------------------------------- ------------- -----------------
Total trade and other payables 28.3 28.7
--------------------------------- ------------- -----------------
15. Loss per share
Basic loss per share is calculated by dividing the loss
attributable to ordinary equity holders of the Company by the
weighted average number of ordinary shares in issue during the
year. As net losses were recorded in both 30 June 2019 and 2018,
the dilutive potential shares are anti-dilutive and therefore
excluded from the earnings per share calculation.
Continuing operations Discontinued operations Total
Six months ended 30 June 2019
---------------------------------------------------- ------------------------ ------------------------ ------------
Loss attributable to ordinary equity owners of the
parent company (GBPm) (29.0) - (29.0)
Weighted average number of ordinary shares in issue
(Number) 372,212,140 372,212,140 372,212,140
---------------------------------------------------- ------------------------ ------------------------ ------------
Loss per share (GBP0.08) (GBP0.00) (GBP0.08)
---------------------------------------------------- ------------------------ ------------------------ ------------
Six months ended 30 June 2018 Continuing operations Discontinued operations Total
---------------------------------------------------- ------------------------ ------------------------ ------------
Loss attributable to ordinary equity owners of the
parent company (GBPm) (22.3) (1.2) (23.5)
Weighted average number of ordinary shares in issue
(Number) 333,466,262 333,466,262 333,466,262
---------------------------------------------------- ------------------------ ------------------------ ------------
Loss per share (GBP0.07) (GBP0.00) (GBP0.07)
---------------------------------------------------- ------------------------ ------------------------ ------------
16. Cash used in operations
Reconciliation of loss before tax to net cash used in
operations
Six months ended 30 June
---------------------------
2019 2018
Restated(1)
GBPm GBPm
----------------------------------------------------- --------- ----------------
Loss from continuing operations before tax (29.4) (22.6)
Loss from discontinued operation before tax - (1.6)
----------------------------------------------------- --------- ----------------
Loss before tax (29.4) (24.2)
Adjustment for:
Finance income (note 6) (0.1) (0.1)
Finance costs (note 6) 9.0 6.1
Depreciation 0.1 0.4
Amortisation (note 11) 6.8 1.9
Share of joint venture loss (note 12) - 0.1
Share based payment charge 1.2 1.4
Foreign exchange on non-operating items 1.1 2.3
Changes in working capital:
(Increase)/ decrease in trade and other receivables (4.5) 7.1
(Increase)/ decrease in inventories (2.2) 0.3
Decrease in trade and other payables - (2.7)
Net cash used in operations (18.0) (7.4)
----------------------------------------------------- --------- ----------------
(1) Restated to show the results of the in-house respiratory
programme as discontinued
17. Share capital and share premium
Number of shares Share capital Share premium
millions GBPm GBPm
At 1 January 2019 357.3 0.3 622.5
Issue of new shares 17.8 - 8.0
Expenses offset against share premium - - (0.1)
At 30 June 2019 375.1 0.3 630.4
--------------------------------------- ----------------- -------------- --------------
Number of shares Share capital Share premium
millions GBPm GBPm
--------------------------------------- ----------------- -------------- --------------
At 1 January 2018 333.5 0.2 602.2
Issue of new shares 23.8 0.1 20.4
Expenses offset against share premium - - (0.1)
At 31 December 2018 357.3 0.3 622.5
--------------------------------------- ----------------- -------------- --------------
18. Other reserves
Share option Translation Treasury reserve Transactions with Total other
reserve reserve non-controlling reserves
interests
GBPm GBPm GBPm GBPm GBPm
------------------- ------------------ ------------------ ----------------- ------------------ ------------------
At 1 January 2019 11.6 10.3 (0.7) (6.1) 15.1
Employee share
option scheme 1.2 - - - 1.2
Currency
translation
differences - (2.6) - - (2.6)
At 30 June 2019 12.8 7.7 (0.7) (6.1) 13.7
------------------- ------------------ ------------------ ----------------- ------------------ ------------------
At 1 January 2018 8.9 15.1 (0.7) (6.1) 17.2
Employee share
option scheme 2.7 - - - 2.7
Currency
translation
differences - (4.8) - - (4.8)
At 31 December
2018 11.6 15.1 (0.7) (6.1) 15.1
------------------- ------------------ ------------------ ----------------- ------------------ ------------------
19. Changes in accounting policies
This note explains the impact of the adoption of IFRS 16 Leases
on the Group's financial statements and discloses the new
accounting policies that have been applied from 1 January 2019 in
note 19(b) below.
The Group has adopted IFRS 16 retrospectively from 1 January
2019 but has not restated comparatives for the 2018 reporting
period, as permitted under the specific transitional provisions in
the standard. The reclassifications and the adjustments arising
from the new leasing rules are therefore recognised in the opening
balance sheet on 1 January 2019.
(a) Adjustments recognised on adoption of IFRS 16
On adoption of IFRS 16, the group recognised lease liabilities
in relation to leases which had previously been classified as
'operating leases' under the principles of IAS 17 Leases. These
liabilities were measured at the present value of the remaining
lease payments, discounted using the lessee's incremental borrowing
rate as of 1 January 2019. The weighted average lessee's
incremental borrowing rate applied to the lease liabilities on 1
January 2019 was 3.5%.
2019
GBPm
------------------------------------------------------------------------------------------------ ------
Operating lease commitments disclosed as at 31 December 2018 3.7
Discounted using the lessee's incremental borrowing rate of at the date of initial application 3.1
Less: low-value leases recognised on a straight-line basis as expense (0.2)
Less: adjustments relating to changes in the index or rate affecting variable payments (0.4)
------------------------------------------------------------------------------------------------ ------
Lease liability recognised as at 1 January 2019 2.5
------------------------------------------------------------------------------------------------ ------
Of which are:
Current lease liabilities 0.6
Non-current lease liabilities 1.9
2.5
------------------------------------------------------------------------------------------------ ------
The associated right-of-use assets for property leases were
measured on a retrospective basis as if the new rules had always
been applied. Other right-of use assets were measured at the amount
equal to the lease liability, adjusted by the amount of any prepaid
or accrued lease payments relating to that lease recognised in the
balance sheet as at 31 December 2018. There were no onerous lease
contracts that would have required an adjustment to the
right-of-use assets at the date of initial application.
The recognised right-of-use assets relate to the following types
of assets:
30 June 2019 1 January 2019
GBPm GBPm
--------------------------- ------------- ---------------
Motor vehicles 0.1 0.1
Leasehold assets 2.2 2.4
Total right-of-use assets 2.3 2.5
--------------------------- ------------- ---------------
The change in accounting policy affected the following items in
the balance sheet on 1 January 2019
-- right-of-use assets - increase by GBP2.3 million
-- prepayments - decrease by GBP0.1 million
-- finance lease liabilities - increase by GBP2.5 million
The net impact on accumulates losses on 1 January 2019 was an
increase of GBP0.2 million.
(i) Impact on earnings per share
Earnings per share for the six months to 30 June 2019 was not
impacted as a result of the adoption of IFRS 16.
(ii) Practical expedients applied
In applying IFRS 16 for the first time, the Group has used the
following practical expedients permitted by the standard:
-- the use of a single discount rate to a portfolio of leases
with reasonably similar characteristics
-- reliance on previous assessments on whether leases are onerous
-- the accounting for operating leases with a remaining lease
term of less than 12 months as at 1 January 2019 as short-term
leases
-- the exclusion of initial direct costs for the measurement of
the right-of-use asset at the date of initial application, and
-- the use of hindsight in determining the lease term where the
contract contains options to extend or terminate the lease.
The Group has also elected not to reassess whether a contract is
or contains a lease at the date of initial application. Instead,
for contracts entered into before the transition date the group
relied on its assessment made applying IAS 17 and IFRIC 4
Determining whether an Arrangement contains a Lease.
(b) The group's leasing activities and how these are accounted
for
The group leases various offices, warehouses, equipment and
cars. Rental contracts are typically made for fixed periods of 3 to
10 years but may have extension options as described in (ii) below.
Lease terms are negotiated on an individual basis and contain a
wide range of different terms and conditions. The lease agreements
do not impose any covenants, but leased assets may not be used as
security for borrowing purposes.
Until the 2018 financial year, leases of property, plant and
equipment were classified as either finance or operating leases.
Payments made under operating leases (net of any incentives
received from the lessor) were charged to profit or loss on a
straight-line basis over the period of the lease.
From 1 January 2019, leases are recognised as a right-of-use
asset and a corresponding liability at the date at which the leased
asset is available for use by the group. Each lease payment is
allocated between the liability and finance cost. The finance cost
is charged to profit or loss over the lease period so as to produce
a constant periodic rate of interest on the remaining balance of
the liability for each period. The right-of-use asset is
depreciated over the shorter of the asset's useful life and the
lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include the
net present value of the following lease payments:
-- fixed payments (including in-substance fixed payments), less
any lease incentives receivable
-- variable lease payment that are based on an index or a rate
-- amounts expected to be payable by the lessee under residual value guarantees
-- the exercise price of a purchase option if the lessee is
reasonably certain to exercise that option, and
-- payments of penalties for terminating the lease, if the lease
term reflects the lessee exercising that option.
The lease payments are discounted using the interest rate
implicit in the lease. If that rate cannot be determined, the
lessee's incremental borrowing rate is used, being the rate that
the lessee would have to pay to borrow the funds necessary to
obtain an asset of similar value in a similar economic environment
with similar terms and conditions.
Right-of-use assets are measured at cost comprising the
following:
-- the amount of the initial measurement of lease liability
-- any lease payments made at or before the commencement date
less any lease incentives received
-- any initial direct costs, and
-- restoration costs.
Payments associated with short-term leases and leases of
low-value assets are recognised on a straight-line basis as an
expense in profit or loss. Short-term leases are leases with a
lease term of 12 months or less. Low-value assets comprise
IT-equipment and small items of office furniture.
20. Related party transactions
There have been no new IAS 24 related-party transactions in the
first six months of the current financial year.
21. Events occurring after the reporting date
On 7 August 2019, Circassia settled the non-contingent
consideration due to AstraZeneca, and subsequently drew down $100
million under the existing loan facility with AstraZeneca.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors confirm that these condensed interim financial
statements have been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the European Union and that the interim management report
includes a fair review of the information required, namely:
- an indication of important events that have occurred during
the first six months and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
- material related-party transactions in the first six months
and any material changes in the related-party transactions
described in the last annual report. The Directors of Circassia
Pharmaceuticals plc are listed on page 29.
The Directors are responsible for the maintenance and integrity
of the Group's website www.circassia.com. Legislation in the UK
governing the preparation and dissemination of interim financial
statements may differ from legislation in other jurisdictions.
On behalf of the Board
Steven Harris Julien Cotta
Chief Executive Officer Chief Financial Officer
26 September 2019
SHAREHOLDER INFORMATION
Indicative financial calendar
Preliminary results for the 12 months ending 31 December 2019:
H1 2020
Annual General Meeting: H1 2020
Registrars
All administrative enquiries relating to shareholdings and
requests to receive corporate documents by email should, in the
first instance, be directed to Equiniti. Shareview is Equiniti's
shareholder portal offering access to services and information to
help manage your shareholdings and inform your important investment
decisions.
Shareview portfolio
Shareview Portfolio is an online portfolio management tool which
enables you to view and manage all the shareholdings you have,
where Equiniti is the Registrar, in one place. It is free to use
and provides access to a wide range of market information and
investment services. Please visit www.shareview.co.uk.
This is not a recommendation to buy or sell shares. The price of
shares can go down as well as up, and you are not guaranteed to get
back the amount that you originally invested.
Addresses for correspondence
Head office Registrars
Circassia Pharmaceuticals plc Equiniti Limited
Northbrook House Aspect House
Robert Robinson Avenue Spencer Road
The Oxford Science Park Lancing
Oxford OX4 4GA West Sussex BN99 6DA
United Kingdom United Kingdom
Tel: +44 (0)1865 405560 Shareholder support: 0871 384 2030
Fax: +44 (0)7092 987560
Calls to this number are charged at 10p per minute plus network extras. Lines are
General enquiries: open 8:30am
info@circassia.com to 5:30pm Monday to Friday.
Investors: IR@circassia.com
Website: www.circassia.com
Directors
Dr Francesco Granata (Chairman)
Steven Harris (Chief Executive Officer and co-founder)
Julien Cotta (Chief Financial Officer)
Jonathan Emms (Chief Operating Officer)
Jo Le Couilliard (Independent Non-Executive Director)
Sharon Curran (Independent Non-Executive Director)
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR EAANSALENEAF
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