TIDMDDDD
RNS Number : 2173U
4d Pharma PLC
01 April 2021
1 April 2021
4D PHARMA PLC
("4D", the "Company" or, together with its subsidiaries, the
"Group")
Final Results for the year ended 31 December 2020
4D pharma plc (AIM: DDDD, NASDAQ: LBPS), a pharmaceutical
company leading the development of Live Biotherapeutics, is pleased
to announce the final results for the Group for the year ended 31
December 2020.
All details stated hereafter relate to the UK IFRS accounts; the
Group also produces US GAAP accounts, the details of which are
included in the Form 20-F to be filed with the U.S. Securities and
Exchange Commission.
Financial highlights for the year:
-- Total equity of GBP28.0 million (2019: GBP22.3 million)
-- Cash and cash equivalents (including cash on deposit) of
GBP8.8 million (2019: GBP3.8 million)
-- Loss for the year and total comprehensive income for the year
of GBP25.9 million (2019: GBP23.7 million)
-- Adjusted loss per share of 22.80 pence (2019: 40.81pence)
-- Basic and diluted loss per share of 22.80 pence (2019: 36.75 pence)
Operational highlights
-- Announced safety and proof-of-concept clinical efficacy data
for lead Live Biotherapeutic MRx0518 in combination with checkpoint
inhibitor (ICI) Keytruda(R) in heavily pre-treated patients with
non-small cell lung cancer and renal cell carcinoma refractory to
prior ICIs
-- Presented the first clinical monotherapy data for a Live
Biotherapeutic in oncology with data from Part A of our clinical
trial of MRx0518 in the neoadjuvant setting
-- Launched a third clinical trial of MRx0518, in pancreatic
cancer in combination with stereotactic radiotherapy
-- Commencement and expansion of Part B of Phase I/II clinical
trial of MRx0518 in combination with Keytruda(R), with inclusion of
additional tumor type cohorts and additional US sites added
-- Phase II data for Blautix(R) showing clinical activity in
irritable bowel syndrome with constipation (IBS-C) or with
diarrhoea (IBS-D)
-- Launch of a Phase II clinical trial of oral immuno-modulatory
Live Biotherapeutic MRx-4DP0004 for the treatment of patients
hospitalised with COVID-19
-- Completed two fundraises by way of a Placing and Subscription
raising gross proceeds of approximately GBP30 million
-- Entered into a proposed merger agreement with Longevity
Acquisition Corporation (Longevity), a NASDAQ-listed Special
Purpose Acquisition Company (SPAC), and announced intention to seek
NASDAQ listing
-- Appointment of Prof. Axel Glasmacher as Non-Executive Chairperson
-- Appointment of Dr. Katrin Rupalla as an independent Non-Executive Director
-- Appointment of Glenn Dourado as Chief Business Officer
Since the period end
-- On 22 March 2021 the Company completed its previously
announced merger with Longevity and the listing of its ADSs on
NASDAQ became effective under the ticker 'LBPS'; the following day
4D's warrants began trading on NASDAQ under the ticker 'LBPSW'
-- On 22 March 2021, the Company completed a GBP18.01 million
($25.03) million gross fundraise by way of a private placement of
ordinary shares, with Directors intending to subscribe for a
further GBP1.44 million ($2.0 million) following release of the
year end results
-- On 1 March 2021 we announced the appointment of Paul Maier as
an independent Non-Executive Director, and appointment of John Beck
as Chief Financial Officer
-- On 8 February 2021 we announced our second oncology clinical
collaboration and drug supply agreement, with Merck KGaA and
Pfizer, Inc. to evaluate MRx0518 in combination with ICI
Bavencio(R) as a first-line maintenance therapy for urothelial
carcinoma
Prof. Axel Glasmacher, Chairman of 4D pharma, commented: "2020
was a transformational year for 4D: We were able to publish first
proof-of-concept data for MRx0518 in last-line cancers and to
initiate our NASDAQ listing. This creates a solid foundation for
the next steps towards bringing live biotherapeutics to patients
suffering from severe diseases. On behalf of the Board I would like
to thank everyone at 4D for an exceptional performance under
difficult circumstances."
Duncan Peyton, Chief Executive Officer, commented: "4D has made
significant progress leading the field in the development of Live
Biotherapeutics, and made great strides from a corporate
perspective. In addition to the data we have generated in the field
of oncology, we completed our merger with Longevity and obtained a
NASDAQ listing which, together with a concurrent fundraise,
provides 4D with approximately $40 million of additional capital
and a solid financial footing moving forward. This puts 4D pharma
in a strong position to capitalise on multiple data readouts from
our ongoing trials in asthma and oncology as well as facilitating
the move into the clinic with our Parkinson's disease
programme."
The Annual Report, together with a notice of the Company's
Annual General Meeting ("AGM"), will be posted to shareholders and
made available on the Company's website, www.4dpharmaplc.com, by 16
April 2021. The Annual General Meeting will be held at 10 a.m (BST)
on Monday 24(th) May 2021 at 9 Bond Court, Leeds, LS1 2JZ. We
continue to follow guidance from the UK Government which limits
public gatherings. To prevent issues and remain compliant with the
rules in force, persons, shareholders, advisers and other guests
will not be allowed to attend the AGM and anyone seeking to attend
the meeting in person will be refused entry. We therefore encourage
shareholders to submit any questions they would like to pose to the
Board to ir@4dpharmaplc.com so as to be received no later than
Wednesday 19(th) May 2021 . All emails should be marked "AGM
Question" in the subject line, and will require a shareholder
number. If the UK Government's guidance changes before the AGM and
allows significant gatherings of people, we will notify you via the
Company's website at www.4dpharmaplc.com
Forward-Looking Statements
This announcement contains "forward-looking statements." All
statements other than statements of historical fact contained in
this announcement, including without limitation statements
regarding future results form our clinical trials including our
move to the clinic with our Parkinsons and Bavencio trial, the
effect of our recent capital raise on the financial footing of the
Company, the timing for our shareholder mailing and meeting and the
intent of certain of our Directors to invest in our ordinary shares
are forward-looking statements within the meaning of Section 27A of
the United States Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the United States Securities
Exchange Act of 1934, as amended (the "Exchange Act").
Forward-looking statements are often identified by the words
"believe," "expect," "anticipate," "plan," "intend, " "foresee,"
"should," "would," "could," "may," "estimate," "outlook" and
similar expressions, including the negative thereof. The absence of
these words, however, does not mean that the statements are not
forward-looking. These forward-looking statements are based on the
Company's current expectations, beliefs and assumptions concerning
future developments and business conditions and their potential
effect on the Company. While management believes that these
forward-looking statements are reasonable as and when made, there
can be no assurance that future developments affecting the Company
will be those that it anticipates.
All of the Company's forward-looking statements involve known
and unknown risks and uncertainties, some of which are significant
or beyond its control, and assumptions that could cause actual
results to differ materially from the Company's historical
experience and its present expectations or projections. The
foregoing factors and the other risks and uncertainties that could
cause actual results to differ materially include delays or changes
to the nature and scope of our clinical trials, patient response
rates, the effect of current and future pandemics, the timing and
nature of future cash needs and those additional risks and
uncertainties described the documents filed by the Company with the
US Securities and Exchange Commission ("SEC"). The Company wishes
to caution you not to place undue reliance on any forward-looking
statements, which speak only as of the date hereof. The Company
undertakes no obligation to publicly update or revise any of its
forward-looking statements after the date they are made, whether as
a result of new information, future events or otherwise, except to
the extent required by law.
For further information please contact:
4D Pharma plc
Duncan Peyton, Chief Executive Officer + 44 (0)113 895 0130
Investor Relations ir@4dpharmaplc.com
N+1 Singer - Nominated Adviser and Joint Broker +44 (0) 20 7496
3000
Phil Davies / Iqra Amin / James Fischer (Corporate Finance) /
Tom Salvesen (Corporate Broking)
Bryan Garnier & Co. Limited - Joint Broker +44 (0)20 7332
2500
Dominic Wilson / Phil Walker
Image Box PR
Neil Hunter / Michelle Boxall
Tel +44 (0)20 8943 4685
neil@ibcomms.agency / michelle@ibcomms.agency
www.4dpharmaplc.com]
Chairman and CEO's statement
Introduction
4D pharma's strategy continues to be to pioneer a novel class of
safe and effective therapeutic derived from the gut microbiome -
Live Biotherapeutic Products - and to selectively partner or
potentially develop these through regulatory approval and
subsequent commercialisation.
During the year, we made significant progress across our LBP
clinical development programs. In April we announced the successful
completion of the Part A safety phase of our Phase I/II clinical
trial of lead immuno-oncology LBP candidate MRx0518 in combination
with immune checkpoint inhibitor (ICI) Keytruda(R) (pembrolizumab)
in patients with solid tumors refractory to prior ICI therapy.
During Part A of this clinical trial, MRx0518 showed no
treatment-related serious adverse effects or drug discontinuations
and, importantly, no increase of immune-related adverse events that
are often associated with ICI therapy. The safety review committee
duly recommended to proceed to Part B of the study, which is
ongoing.
In August, we announced comprehensive clinical benefit data from
the 12 patients enrolled into Part A of the trial. Five patients
(42%) demonstrated clinical benefit (defined as a complete
response, partial response or stable disease for six months or
longer) on treatment with MRx0518 and Keytruda(R), including three
patients achieving partial responses, an objective response rate of
25%. To the best of our knowledge, we have delivered the first ever
proof-of-concept data in the treatment of cancer using LBPs.
At the Society for Immunotherapy of Cancer (SITC) Annual Meeting
2020 in November we announced the expansion of the Part B of this
study, with the inclusion of three additional tumor type cohorts of
triple-negative breast cancer, squamous cell carcinoma of the head
and neck, and microsatellite instability high/mismatch repair
deficient solid tumors, in addition to the previously enrolling
cohorts of renal cell carcinoma, non-small cell lung cancer and
bladder cancer.
In October 2020 we completed a Phase II clinical trial
investigating the efficacy of Blautix(R) in the treatment of
irritable bowel syndrome (IBS) which showed: (i) a statistically
significant increase in overall response in pre-planned analysis of
the combined IBS-C/D group compared to placebo; and (ii) a
positive, though non-significant increase in overall response in
both IBS-C and IBS-D cohorts, individually. The primary efficacy
endpoint of the trial was based on whether or not a subject, from
either the IBS-C or IBS-D cohorts, was considered an overall
responder. For a subject to be classed as an 'overall responder'
they must have reported an improvement in their weekly (cohort
specific) symptoms (abdominal pain intensity and stool frequency or
consistency) for >=50% of the treatment period.
In April 2020 we received MHRA acceptance for a UK Phase II
clinical trial of our immuno-modulatory LBP MRx-4DP0004 in patients
hospitalised with COVID-19. MRx-4DP0004 is in an ongoing Phase I/II
clinical trial in asthma patients as an add-on therapy to existing
long-term maintenance therapy.
In support of our efforts to advance LBP candidates into the
clinic for the treatment of neurodegenerative diseases such as
Parkinson's disease, in December 2020 we became an industry partner
of the Parkinson's Progression Markers Initiative (PPMI), a
longitudinal study sponsored by The Michael J. Fox Foundation for
Parkinson's Research to better understand Parkinson's disease and
accelerate the development of new treatments. 4D pharma
representatives will join the Partner Scientific Advisory Board
closely involved in the design and execution of the study, as well
as a variety of PPMI Working Groups.
In the year we made good progress in our research collaboration
with Merck Sharp & Dohme to discover and develop vaccines in up
to three indications. To date, we have screened and characterised
hundreds of LBPs with immuno-modulatory potential and selected from
this group lead LBPs with desirable immuno-modulatory properties
for further evaluation and development.
In addition to continued progress in advancing multiple
development programs and therapeutic candidates, in October 2020
the Company entered a definitive merger agreement with Longevity
Acquisition Corporation (NASDAQ: LOAC) a publicly-traded special
purpose acquisition company (SPAC) and announced our intention to
seek a NASDAQ listing of 4D pharma American Depositary Shares
(ADSs). After the period end, on 22 March 2021, the merger was
completed and the listing of 4D pharma ADSs on NASDAQ became
effective under the ticker symbol 'LBPS'; the associated warrants
began trading on NASDAQ on 23 March 2021 under the ticker
'LBPSW'.
Update on the impact of COVID-19
In 2020, the global COVID-19 pandemic affected almost all
aspects of the global economy and the pharmaceutical industry, the
Group included. In response to this unexpected and unprecedented
event, the Group took the situation very seriously and heeded the
advice of the UK, Spanish, Irish and US governments and other
authorities, utilising technology effectively to mitigate this
unprecedented disruption where possible. To protect the safety of
patients, the Group's staff and the staff of the Company's
collaborators, the Group limited non-essential activity at clinical
sites which in turn had an impact on patient recruitment for some
studies, resulting in some potential delays to expected clinical
readouts.
The likely duration of the disruption caused by COVID-19 still
remains uncertain, making it difficult to accurately predict the
impact on the Group's operations and clinical timelines. However,
in light of this unprecedented situation the Board of Directors
carefully re-evaluated the Group's strategic priorities and
near-to-mid-term objectives and took measures to streamline the
business and to prioritise allocation of capital and resources to
key programs set to deliver key clinical value drivers for our
shareholders.
The Group remains committed to reviewing the rapidly evolving
global situation and adapting its strategy and operations
accordingly.
Organisational changes, Board and governance
In 2020 4D pharma welcomed decades of biopharma experience to
our Board and leadership team, providing invaluable expertise to
help guide the Company's ongoing growth and development.
In April, Prof. Axel Glasmacher was appointed Chairperson from
his previous role as Non-Executive Director. We expect Prof.
Glasmacher to be able to contribute his experience as an oncology
physician, Senior Vice President Global Clinical R&D at Celgene
and Board member of the Cancer Drug Development Forum, to guide the
clinical strategy of 4D's LBPs including, but not limited to, lead
oncology candidate MRx0518.
In August the Board was pleased to welcome Dr. Katrin Rupalla.
Dr Rupalla's appointment as a Non-Executive Director was ratified
in September. Dr. Rupalla is currently Senior Vice President
Regulatory Affairs, Medical Documentation and R&D Quality at
Lundbeck A/S (CPH: LUN), a CNS specialist biotech, and before this
spent several years in senior roles overseeing the global
development of blockbuster oncology products at Merck & Co.,
Roche, Celgene and Bristol-Myers Squibb (BMS).
In addition to expanding our Board of Directors, we have also
made important additions to our Executive management team. In April
we welcomed Glenn Dourado as our new Chief Business Officer,
bringing a wealth of expertise in biopharma business development
and strategy, with extensive experience particularly with
NASDAQ-listed biotechs and in the field of oncology, expanding both
our Business Development activities and also our US footprint.
After the period end, in March 2021, we further expanded our
Board and management team, appointing John Beck as Chief Financial
Officer and Paul Maier as Non-Executive Director; Mr Maier was also
appointed Chair of 4D's Audit and Risk Committee and will serve as
the Company's 'audit committee financial expert' under QCA, SEC and
NASDAQ rules. Mr. Beck brings over 30 years of experience in
financial and biopharmaceutical industry management experience.
This includes three previous positions as Chief Financial Officer
of publicly traded life sciences companies where he achieved
notable results in areas including finance, business and corporate
development, strategy, and commercialisation.
Mr. Maier has over 25 years of investor and public relations,
operational, regulatory, and finance expertise in the healthcare
industry. Mr. Maier was previously the Chief Financial Officer of
Sequenom Inc., where he was responsible for raising over $360
million in equity and debt financings, expanding institutional
sell-side research analyst coverage, as well as establishing and
overseeing internal financial infrastructure. Previously, he was
Senior Vice President and Chief Financial Officer of Ligand
Pharmaceuticals (NASDAQ: LGND). He has also acted as an independent
financial consultant to life sciences companies. Mr. Maier is
currently a Board member of Eton Pharmaceuticals, Inc, Biological
Dynamics and International Stem Cell Corporation (OTCQB: ISCO).
The Board is committed to maintaining high standards of
governance, both at Board level and operationally throughout the
business.
Group statement of total comprehensive income
For the year ended 31 December 2020
31 December 31 December
2020 2019
Notes GBP000 GBP000
------------------------------------------------- ------- ----------- -------------
Revenue 534 211
Research and development costs (22,041) (26,512)
Administrative expenses (9,079) (4,359)
Foreign currency gains / (losses) 363 (1,006)
Other income 45 34
------------------------------------------------- ------- ----------- -------------
Operating loss before non-recurring items (30,178) (31,632)
Non-recurring items - 2,659
------------------------------------------------- ------- ----------- -------------
Operating loss after non-recurring items (30,178) (28,973)
Finance income 5 61
Finance expense (173) (514)
------------------------------------------------- ------- ----------- -------------
Loss before taxation (30,346) (29,426)
Taxation 3 4,383 5,360
------------------------------------------------- ------- ----------- -------------
Loss for the year (25,963) (24,066)
Other comprehensive income:
Exchange differences on translating foreign
operations 110 379
------------------------------------------------- ------- ----------- -------------
Loss for the year and total comprehensive income
for the year (25,853) (23,687)
------------------------------------------------- ------- ----------- -------------
Loss per share
Basic and diluted for the year 4 (22.80)p (36.75)p
------------------------------------------------- ------- ----------- -------------
The basic and diluted loss per share are the same as the effect
of share options is anti-dilutive.
Group statement of financial position
At 31 December 2020
At At
31 December 31 December
2020 2019
Notes GBP000 GBP000
------------------------------ ----- ----------- -----------
Assets
Non-current assets
Property, plant and equipment
- Owned assets 3,659 4,196
- Right-of-use assets 835 964
Intangible assets 14,025 13,988
Taxation receivables 177 188
------------------------------ ----- ----------- -----------
18,696 19,336
------------------------------ ----- ----------- -----------
Current assets
Inventories 291 198
Trade and other receivables 3,223 1,118
Taxation receivables 4,436 6,122
Cash and cash equivalents 8,775 3,836
------------------------------ ----- ----------- -----------
16,725 11,274
------------------------------ ----- ----------- -----------
Total assets 35,421 30,610
------------------------------ ----- ----------- -----------
Liabilities
Current liabilities
Trade and other payables 6,379 6,192
Lease liabilities 73 68
6,452 6,260
------------------------------ ----- ----------- -----------
Non-current liabilities
Lease liabilities 986 1,043
Deferred tax 3 13 964
------------------------------ ----- ----------- -----------
999 2,007
------------------------------ ----- ----------- -----------
Total liabilities 7,451 8,267
------------------------------ ----- ----------- -----------
Net assets 27,970 22,343
------------------------------ ----- ----------- -----------
Capital and reserves
Share capital 5 329 164
Share premium account 5 136,278 108,296
Merger reserve 958 958
Translation reserve 555 446
Other reserve (864) (864)
Share-based payments reserve 3,497 367
Retained earnings (112,783) (87,024)
------------------------------ ----- ----------- -----------
Total equity 27,970 22,343
------------------------------ ----- ----------- -----------
Group statement of changes in equity
For the year ended 31 December 2020
Share-based
Share Share Merger Translation Other payment Retained Total
capital premium reserve reserve reserve reserve earnings equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------------------------- ------- ------- ------- ----------- ------- ----------- --------- --------
At 1 January 2019 164 108,296 958 67 (864) 708 (63,566) 45,763
---------------------------------- ------- ------- ------- ----------- ------- ----------- --------- --------
Issue of share capital
(net of expenses) - - - - - - - -
---------------------------------- ------- ------- ------- ----------- ------- ----------- --------- --------
Total transactions with
owners recognised in equity
for the year - - - - - - - -
Loss and total comprehensive
income for the year - - - 379 - - (24,066) (23,687)
Lapsed options - - - - - (608) 608 -
Issue of share-based compensation - - - - - 267 - 267
---------------------------------- ------- ------- ------- ----------- ------- ----------- --------- --------
At 31 December 2019 164 108,296 958 446 (864) 367 (87,024) 22,343
---------------------------------- ------- ------- ------- ----------- ------- ----------- --------- --------
Issue of share capital
(net of expenses) 165 27,906 - - - - - 28,071
Issue of Warrants (net
of expenses) - - - - - 3,110 - 3,110
Exercise of Warrants - 76 - - - (11) - 65
---------------------------------- ------- ------- ------- ----------- ------- ----------- --------- --------
Total transactions with
owners recognised in equity
for the year 165 27,982 - - - 3,099 - 31,246
Loss and total comprehensive
income for the year - - - 109 - - (25,963) (25,854)
Lapsed options - - - - - (204) 204 -
Issue of share-based compensation - - - - - 235 - 235
---------------------------------- ------- ------- ------- ----------- ------- ----------- --------- --------
At 31 December 2020 329 136,278 958 555 (864) 3,497 (112,783) 27,970
---------------------------------- ------- ------- ------- ----------- ------- ----------- --------- --------
Group cash flow statement
For the year ended 31 December 2020
Year to Year to
31 December 31 December
2020 2019
Notes GBP000 GBP000
---------------------------------------------------- ----- ----------- -----------
Loss after taxation (25,963) (24,066)
Adjustments for:
Depreciation of property, plant and equipment 1,003 1,065
Amortisation of intangible assets 203 216
Profit on disposal of property, plant and equipment - (17)
Loss on disposal of intangible assets - 29
Lease liabilities included in the Income statement 135 159
Finance income (5) (61)
Finance expense 173 514
Release of contingent consideration - (2,659)
Share-based compensation 3,334 267
---------------------------------------------------- ----- ----------- -----------
Cash flows from operations before movements
in working capital (21,120) (24,553)
Changes in working capital:
(Increase)/decrease in inventories (93) 92
(Increase)/decrease in trade and other receivables (2,105) 130
Decrease/(increase) in taxation receivables 1,697 (780)
(Decrease)/increase in trade and other payables (1,052) 3,555
---------------------------------------------------- ----- ----------- -----------
Cash outflow from operating activities (22,673) (21,556)
---------------------------------------------------- ----- ----------- -----------
Cash flows from investing activities
Purchases of property, plant and equipment (163) (538)
Purchase of software and other intangibles (15) (57)
Cash received on disposal of assets - 43
Monies drawn from deposit - 10,174
---------------------------------------------------- ----- ----------- -----------
Net cash (outflow)/inflow from investing activities (178) 9,622
---------------------------------------------------- ----- ----------- -----------
Cash flows from financing activities
Proceeds from issues of ordinary share capital 5 29,740 -
Expenses on issue of shares 5 (1,594) -
Lease liability payments (188) (197)
Interest received 5 94
Interest paid (173) (180)
---------------------------------------------------- ----- ----------- -----------
Net cash inflow/(outflow) from financing activities 27,790 (283)
---------------------------------------------------- ----- ----------- -----------
Increase/(decrease) in cash and cash equivalents 4,939 (12,217)
Cash and cash equivalents at the start of the
year 3,836 16,053
---------------------------------------------------- ----- ----------- -----------
Cash and cash equivalents at the end of the
year 8,775 3,836
---------------------------------------------------- ----- ----------- -----------
Notes
For the year ended 31 December 2020
1. Basis of preparation
The financial information set out herein does not constitute
statutory accounts as defined in Section 434 of the Companies Act
2006. The financial information for the year ended 31 December 2020
has been extracted from the Company's audited financial statements
which were approved by the Board of Directors on 31 March 2021 and
which, if adopted by the members at the Annual General Meeting,
will be delivered to the Registrar of Companies for England and
Wales.
The financial information for the year ended 31 December 2019
has been extracted from the Company's audited financial statements
which were approved by the Board of Directors on 22 May 2020 and
which drew attention to the material uncertainty over the going
concern basis of preparation but received an unqualified audit
opinion, did not contain a statement under section 498(2) or (3) of
the Companies Act 2006 and have been delivered to the Registrar of
Companies.The information in this preliminary statement has been
extracted from the audited financial statements for the year ended
31 December 2020 and as such, does not contain all the information
required to be disclosed in the financial statements prepared in
accordance with the International Financial Reporting Standards as
adopted by the European Union ('IFRS').
The Company is a public limited company incorporated and
domiciled in England & Wales and whose shares are quoted on
AIM, a market operated by The London Stock Exchange and through
American Depository Shares (ADS's) listed on NASDAQ . The Company
is incorporated in England and Wales. The registered office is 9
Bond Court, Leeds LS1 2JZ.
2. Going concern
The Group and parent company are subject to a number of risks
similar to those of other development stage pharmaceutical
companies. These risks include, amongst others, generation of
revenues in due course from the development portfolio and risks
associated with research, development and obtaining regulatory
approvals of its products. Ultimately, the attainment of profitable
operations is dependent on future uncertain events which include
obtaining adequate financing to fulfil the Group's commercial and
development activities and generating a level of revenue to support
the Group's cost structure.
The Directors have prepared detailed financial forecasts and
cash flows looking beyond twelve months from the date of the
approval of these financial statements. In developing these
forecasts, the Directors have made assumptions based upon their
view of the current and future economic conditions that are
expected to prevail over the forecast period. Shortly after the
year-end the Company completed the Merger with Longevity
Acquisition Corporation (Longevity) through the issue of new
ordinary shares. On completion cash in hand for Longevity was $14.8
million which is expected to add approximately GBP8.3 million
($11.6 million) in cash to the Company after the payment of costs
and settlement of liabilities. A further 4,320,000 warrants
convertible to Ordinary shares were also issued as part of the
transaction which, if exercised in full, would add approximately
$29.0 million in cash to the Company. Concurrently with the
completion of the Longevity transaction the Company issued new
Ordinary shares in a private placement which raised GBP18.0 million
($25.0 million) in gross proceeds, with certain Directors intending
to subscribe for a further GBP1.44 million ($2.0 million) following
release of the Company's results for the year ended 31 December
2020. Also, in March 2021 our Spanish Subsidiary received a EUR1.0
million (GBP0.86 million) overdraft facility as part of the Spanish
COVID-19 relief package. The overdraft is unsecured, incurs annual
interest at a rate of 2.35% and is repayable at the end of the
three-year term. Given the additional funding from the items above,
but excluding both the possible redemption the Company warrants
issued during the February 2020 share issue (currently worth around
GBP21.9 million) and the warrants issued as part of the Longevity
transaction, the Directors estimate that the Group will have
sufficient cash to fund its operations into Q2 of 2022 and have
prepared the financial statements accordingly using a going concern
basis.
3. Taxation
The tax credit is made up as follows:
Year to Year to
31 December 31 December
2020 2019
GBP000 GBP000
-------------------------------------------------------- ----------- -----------
Current income tax
Total current income tax (3,473) (5,351)
Adjustment in respect of prior years 42 (9)
-------------------------------------------------------- ----------- -----------
Total income tax credit recognised in the year (3,431) (5,360)
Current deferred tax
Previously recognised deferred tax gains offset against
losses (940) -
Current year charge (12) -
-------------------------------------------------------- ----------- -----------
Total deferred tax (952) -
-------------------------------------------------------- ----------- -----------
Total income tax credit recognised in the year (4,383) (5,360)
-------------------------------------------------------- ----------- -----------
The enacted UK corporation tax rate of 19% forms the basis for
the UK element of the deferred tax calculation noted below, the
equivalent rates used for Ireland and Spain were 12.5% and 25%
respectively. However, following the UK budget in 2021 the
chancellor announced an increase to the main rate of corporation
tax rate in the UK to 25% from April 2023, if applied this would
significantly increase the value of the unrecognised deferred tax
asset.
At 31 December 2020, the Group had tax losses available for
carry forward of approximately GBP66.6 million (31 December 2019:
GBP48.3 million). The Group has not recognised deferred tax assets
relating to such earned forward losses of approximately GBP12.6
million (31 December 2019: GBP6.8 million).
Group management considers that there is insufficient evidence
of future taxable income, taxable temporary differences and
feasible tax-planning strategies to utilise all of the cumulative
losses and therefore it is not considered certain that the deferred
tax assets will be realised in full. If future income differs from
current projections, this could significantly impact the tax charge
or benefit in future years.
4. Loss per share
(a) Basic and diluted
Year to Year to
31 December 31 December
2020 2019
GBP000 GBP000
------------------------------------------------------ ------------ -----------
Loss for the year attributable to equity shareholders (25,963) (24,066)
------------------------------------------------------ ------------ -----------
Weighted average number of shares
Ordinary shares in issue 113,851,960 65,493,842
------------------------------------------------------ ------------ -----------
Basic loss per share (pence) (22.80)p (36.75)p
------------------------------------------------------ ------------ -----------
The basic and diluted loss per share are the same as the effect
of share options and warrants is anti-dilutive.
(b) Adjusted
Adjusted loss per share is calculated after adjusting for the
effect of non-recurring income and expenses in relation to the
reassessment of the contingent liability.
Reconciliation of adjusted loss after tax:
Year to Year to
31 December 31 December
2020 2019
GBP000 GBP000
-------------------------------------- ----------- -----------
Reported loss after tax (25,963) (24,066)
Non-recurring income - (2,659)
-------------------------------------- ----------- -----------
Adjusted loss after tax (25,963) (26,725)
-------------------------------------- ----------- -----------
Adjusted basic loss per share (pence) (22.80)p (40.81)p
-------------------------------------- ----------- -----------
5. Share capital
Ordinary Share Share
shares capital premium Total
Group and Company Number GBP000 GBP000 GBP000
-------------------------------------------- ----------- ------- ------- -------
Allotted, called up and fully paid ordinary
shares of 0.25p
Ordinary shares as at 1 January 2019
& 31 December 2019 65,493,842 164 108,296 108,460
-------------------------------------------- ----------- ------- ------- -------
Placing and subscription 18 February
2020 44,000,000 110 21,890 22,000
Expenses of placing and subscription
on 18 February 2020 - - (1,065) (1,065)
Warrants exercised (issued 18 February
2020) 75,693 - 76 76
Placing and subscription 13 July 2020 21,898,400 55 7,610 7,665
Expenses of placing and subscription
on 13 July 2020 - - (529) (529)
-------------------------------------------- ----------- ------- ------- -------
Ordinary shares as at 31 December 2020 131,467,935 329 136,334 136,663
-------------------------------------------- ----------- ------- ------- -------
The balances classified as share capital and share premium
include the total net proceeds (nominal value and share premium
respectively) on issue of the Company's equity share capital. The
entire share capital consists of 0.25 pence ordinary shares.
Each ordinary 0.25 pence share is entitled to:
-- one vote in any circumstances;
-- Pari passu to dividend payments or any other distribution; and,
-- Pari passu to participate in a distribution arising from a winding up of the Company.
The Company raised GBP22.0 million in gross proceeds (GBP20.9
million net) on 18 February 2020 from a placing of 16,820,080 new
ordinary shares and a subscription of 27,179,920 new ordinary
shares at an issue price of 50 pence per share. In addition, each
placee and subscriber was allotted one warrant for every two
ordinary shares subscribed in the fundraising. As a result, a total
of 22,000,000 warrants were allotted. Each warrant entitles the
holder to subscribe for one ordinary share at an exercise price of
100p at any time up to the fifth anniversary of admission.
The Company raised GBP7.7 million in gross proceeds (GBP7.1
million net) on 13 July 2020 from a placing of 16,807,616 new
ordinary shares and a subscription of 5,090,784 new ordinary shares
at an issue price of 35 pence per share.
6. Related party transactions
Interest in Shares and Warrants
During the year the Company undertook two capital raises through
the issue of shares and warrants. Details of the Directors'
participation in these raises and other share acquisitions is as
follows:
Duncan Peyton Dr Alex Stevenson
Executive Directors CEO CSO
-------------------------------- --------------------------------
Number Number
of Number of Number
Shares and Warrants shares of warrants GBP shares of warrants GBP
------------------------------------- --------- ------------ ------- --------- ------------ -------
At 1 January 2020 6,455,075 - 6,413,136 -
Subscription on 18 February 2020
at GBP0.50 per share 1,333,332 666,666 666,666 1,333,332 666,666 666,666
------------------------------------- --------- ------------ ------- --------- ------------ -------
Total at 18 February 2020 7,788,407 666,666 666,666 7,746,468 666,666 666,666
Subscription on 13 July 2020 at
GBP0.35 per share 571,428 - 200,000 571,428 - 200,000
------------------------------------- --------- ------------ ------- --------- ------------ -------
Total at 13 July 2020 8,359,835 666,666 866,666 8,317,896 666,666 866,666
------------------------------------- --------- ------------ ------- --------- ------------ -------
Percentage of enlarged share capital
at 13 July 2020 6.36% 6.33%
------------------------------------- --------- ------------ ------- --------- ------------ -------
David Norwood* Prof. Axel Glasmacher
Non-Executive Directors NED NED
--------------------------------- --------------------------------
Number Number Number Number
Shares and Warrants of shares of warrants GBP of shares of warrants GBP
------------------------------------- ---------- ------------ ------- ---------- ------------ ------
At 1 January 2020 7,123,725 - - -
Subscription on 18 February 2020
at GBP0.50 per share 1,333,336 666,668 666,668 - - -
------------------------------------- ---------- ------------ ------- ---------- ------------ ------
Total at 18 February 2020 8,457,061 666,668 666,668 - - -
Market based purchase 17 March
2020 at GBP0.28 per share 100,000 - 28,000 - - -
Subscription on 13 July 2020 at
GBP0.35 per share 285,714 - 100,000 30,000 - 10,500
------------------------------------- ---------- ------------ ------- ---------- ------------ ------
Total at 13 July 2020 8,842,775 666,668 794,668 30,000 - 10,500
------------------------------------- ---------- ------------ ------- ---------- ------------ ------
Percentage of enlarged share capital
at 13 July 2020 6.73% 0.02%
------------------------------------- ---------- ------------ ------- ---------- ------------ ------
* David Norwood resigned as a Director on 30 September 2020. As
his shareholding was not sufficient for him to qualify as a
substantial shareholder, transactions after this date have been
excluded.
No warrants had been exercised by the existing Directors at 31
December 2020.
Further details of shares issued and proceeds from their issue
can be found in note 21 to the full accounts.
Merger with Longevity Acquisition Corporation
On 22 October 2020 the Company announced its intention to merge
with Longevity Acquisition Corporation (Longevity), a Special
Purpose Acquisition Company, and its intention to seek a NASDAQ
listing.
To secure the merger a backstop agreement was put in place
involving certain of the Directors and significant shareholders
(the "Backstop Investors"). The details of the agreement at 31
December 2020 were as follows:
Backstop Arrangements and Related Party Transactions
The current Longevity shareholders have the right to redeem
their shareholding in Longevity, even if the requisite majority of
Longevity shareholders approve the merger. $14.6 million is
currently held in a trust account by Longevity to fund redemptions.
Any redemptions by Longevity shareholders would reduce the capital
available to the enlarged group. Backstop agreements have therefore
been executed by Longevity, the Company and Whale Management
Corporation ("SPAC Sponsor") with certain investors, including
Duncan Peyton and Alex Stevenson, (together the "Backstop
Investors").
The Backstop Investors have committed to subscribe for Longevity
shares prior to completion so as to raise up to $14.6 million in
the event of redemptions by Longevity shareholders. To secure the
Backstop Arrangements, Longevity has agreed to allot 700,000
Longevity shares to the Backstop Investors, Whale has agreed to
transfer 200,000 Longevity Shares to the Backstop Investors, and
the Company has agreed to allot up to 7,530,000 4D ordinary shares
to the Backstop investors if and to the extent outstanding warrants
issued by Longevity are exercised.
The Backstop arrangements also provide that, subject to certain
conditions, 4D may be required to file, within thirty days after
completion, a registration statement under the US Securities Act
registering the resale of the 4D ordinary shares received by the
Backstop Investors pursuant to the merger and the Backstop
arrangements. The Backstop Investors have agreed to loan Longevity
US$1.86 million, the proceeds of which will be used to repay Whale
for loans previously made by Whale to Longevity to fund its launch
costs. On completion, the enlarged group will repay this sum to the
Backstop Investors.
Related Party Transactions
The participation by Duncan Peyton (in the amount of $1,075,862)
and Alex Stevenson (in the amount of $827,856) in the Backstop
arrangements constitutes a related party transaction for the
purposes of the AIM Rules. In addition, Steve Oliveira and
connected parties, a substantial shareholder of the Company (as
defined by the AIM Rules) is participating in the Backstop
arrangements in the amount of $5 million (in aggregate). The
participation by Steve Oliveira and connected parties in the
Backstop Arrangements also constitutes a related party transaction
for the purposes of the AIM Rules.
The 4D Independent Directors, having consulted with the
Company's nominated adviser, N+1 Singer, consider that the terms of
the related party transactions are fair and reasonable insofar as
Shareholders are concerned. In providing their advice to the 4D
Independent Directors, N+1 Singer have taken into account the
commercial assessments of the 4D Independent Directors .
Lock-up Agreements
Duncan Peyton and Alex Stevenson, being the Chief Executive
Officer and Chief Scientific Officer respectively, will enter into
lock-up agreements at completion. Under the terms of the lock-up
agreement, each of Mr Peyton and Dr Stevenson will agree that,
subject to certain limited exceptions, they will not sell any
consideration shares due to them under the terms of the merger for
a period of twelve months.
7. Subsequent events
Merger with Longevity Acquisition Corporation
On 18 March 2021 (the "Closing Date"), the transaction (the
"Closing") contemplated by the previously announced Merger
Agreement and BVI Plan of Merger (the "Merger"), dated as of 21
October 2020 (the "Merger Agreement"), by and among Longevity
Acquisition Company ("Longevity"), 4D Pharma plc ("4D Pharma"), and
Dolphin Merger Sub Limited, a British Virgin Islands company and a
wholly-owned subsidiary of 4D Pharma (the "Merger Sub") was
approved and the transaction was completed on 22 March 2021. The
Merger Sub is the surviving entity (the "Surviving Corporation").
As a result of the Merger, each Longevity share issued and
outstanding immediately prior to the completion of the Merger was
converted into the right to receive 7.5315 ordinary shares of 4D
Pharma payable in 4D Pharma ADSs ("American Depositary Shares") at
a rate equal to one 4D Pharma ADS for every eight 4D Pharma
ordinary shares. 4D Pharma issued no fractional 4D Pharma Shares or
4D Pharma ADSs in the Merger. Each warrant to purchase Longevity
Shares and right to receive Longevity Shares that was outstanding
immediately prior to the Closing was assumed by 4D Pharma and
automatically converted into a warrant to purchase ordinary shares
of 4D Pharma and a right to receive ordinary shares of 4D Pharma,
payable in 4D Pharma ADSs, respectively.
In connection with the Closing, certain holders of Longevity
common shares exercised their right to redeem those shares in
accordance with the Company's organisational documents, as amended,
for cash at a price of approximately $11 per Ordinary Share, for an
aggregate of approximately $3,000. Pursuant to a Backstop Agreement
previously entered into between Longevity, 4D Pharma, Longevity's
sponsor (Whale Capital Management the "Sponsor") and certain
current shareholders of 4D Pharma and new investors (such current
shareholders of 4D Pharma and new investors, collectively, the
"Buyers"), the Buyers provided financial backing of approximately
$14.7 million to Longevity immediately prior to the Closing, to
cover against redemptions by Longevity Shareholders. In view of the
de minimis redemptions, the backstop was not called upon. The
consideration paid to the Buyers pursuant to the Backstop
Agreements consisted of 700,000 newly issued Ordinary Longevity
Shares, the transfer by Longevity's sponsor of 200,000 outstanding
Longevity Shares, the grant of an option to acquire up to an
additional 400,000 outstanding Longevity Shares from the Sponsor,
and the commitment by 4D Pharma to grant to the Buyers following
the closing of the Merger warrants to acquire up to 1,000,000
Longevity shares (equivalent to 7,530,000 shares in 4D Pharma) for
0.25 pence per ordinary share. In connection with the Closing, and
pursuant to the Merger Agreement, (a) an aggregate of 28,298,192
Ordinary shares were issued in 4D Pharma to Longevity shareholders
and the Buyers, (b) 4D Pharma assumed Longevity warrants to acquire
and rights to receive an aggregate of 16,268,040 ordinary shares in
4D Pharma, and (c) 2,750,000 shares of 4D Pharma were issued to a
bank as an advisor fee.
At the Closing, 4D Pharma entered into a Lock-up Agreement with
the Sponsor and certain shareholders of 4D. Pursuant to the Lock-Up
Agreement, each holder agreed that, subject to certain exceptions,
during the period ending twelve months after the Closing, it will
not (i) lend, offer, pledge, hypothecate, encumber, donate, assign,
sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or
warrant to purchase, or otherwise transfer or dispose of, directly
or indirectly, any shares received as consideration in the Merger
(the "Restricted Securities"), (ii) enter into any swap, short
sale, hedge or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of
the Restricted Securities, or (iii) publicly disclose the intention
to effect any transaction specified in clause (i) or (ii), or (iv)
make any demand for or exercise any right with respect to the
registration of any Longevity Shares.
As Longevity has no ongoing trade or business, the Merger does
not constitute a business combination under IFRS 3. As such the
transaction will be treated as a financing through the issue of
ordinary shares in 4D Pharma. At Closing, Longevity had
approximately $14.8 million of cash in hand on completion equating
to $11.6 million net of costs and will form part of the share
capital and share premium accounts in 4D Pharma.
NASDAQ Listing
On 22 March 2021, with the completion of the Longevity
transaction, the Company completed its NASDAQ Global Market listing
using American Depositary Shares (ADSs) under the ticker 'LBPS' and
the following day the warrants began trading under the 'LBPSW'
ticker. Ordinary shares can be converted at any time to ADSs at a
ratio of eight ordinary shares for one ADS. J.P Morgan Chase bank,
N.A. is acting as depositary bank for the ADSs and the Company's
ordinary shares will continue to be admitted to trading on AIM
under the ticker 'DDDD'
Private Placement Financing
On 17 March 2021, the Company announced that it had entered into
securities purchase agreements with certain US and UK institutional
and accredited investors to raise approximately GBP17.29 million
($24.03 million) in gross proceeds through a private placement of
15,713,309 new ordinary shares of GBP0.0025 at a price of GBP1.10
($1.53) per share. A further subscription for 654,023 ordinary
shares was also made by Merck Sharpe & Dohme Corp. before
admission to AIM on 23 March 2021 bringing the total subscription
to 16,367,332 ordinary shares and gross proceeds of the placement
to approximately GBP18.01 million ($25.03 million) gross or
GBP16.87 million ($23.45 million) net of fees. In addition to the
placement Duncan Peyton (Chief Executive Officer) and Alex
Stevenson (Chief ScientificOfficer) intend to subscribe for, in
aggregate, GBP1.44 million ($2.0 million) of new ordinary shares at
the issue price of GBP1.10 following the release of these financial
results.
Overdraft Facility
In March 2021 4D Pharma Leon S.L.U. agreed a EUR1.0 million
(GBP0.86 million) overdraft facility supported by the Spanish
government as part of its COVID-19 relief package. The overdraft is
unsecured, incurs annual interest at a rate of 2.35% and is
repayable in full at the end of three years, further adding to the
Group's available funding.
8. Report and accounts
A copy of the Annual Report and Accounts will be sent to all
shareholders with notice of the Annual General Meeting, and will be
made available on the Company's website, www.4dpharmaplc.com, by 14
April 2021.
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END
FR BCGDXBUXDGBB
(END) Dow Jones Newswires
April 01, 2021 02:00 ET (06:00 GMT)
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