TIDMDDDD
RNS Number : 5153N
4d Pharma PLC
30 September 2021
4D PHARMA PLC
("4D", "4D Pharma" or "the Company")
Interim results for the six months ended 30 June 2021
Leeds, UK, 30 September 2021 - 4D pharma plc (AIM: DDDD), a
pharmaceutical company leading the development of Live
Biotherapeutics, is pleased to announce the interim results for the
Company and its subsidiaries (together "the Group") for the six
months ended 30 June 2021.
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 6-K to be filed with the U.S. Securities and
Exchange Commission.
Financial highlights
-- Net assets at 30 June 2021 of GBP39.7 million (30 June 2020:
GBP31.5 million and 31 December 2020: GBP28.0 million).
-- Cash and cash equivalents and short-term deposits at 30 June
2021 of GBP20.7 million (30 June 2020: GBP10.0 million and
31 December 2020: GBP8.8 million).
-- Loss and total comprehensive income for the six months ended
30 June 2021 of GBP56.1 million (30 June 2020: GBP13.6 million and
31 December 2020: GBP25.9 million).
-- Research and development expenditure for the six months ended
30 June 2021 of GBP9.9 million (30 June 2020: GBP12.4 million and
31 December 2020: GBP22.0 million).
Operational highlights
-- Completed the acquisition of Longevity Acquisition
Corporation (Longevity), a special purpose acquisition company
(SPAC), and the listing on NASDAQ of 4D pharma American Depository
Shares (ADSs) under the ticker symbol 'LBPS'. As a result of the
business combination, cash of $14.8 million held by Longevity
became available to 4D pharma.
-- In conjunction with the merger and NASDAQ listing, 4D pharma
completed a private placement raising gross proceeds of
approximately $25.0 million (GBP18.0 million), including
participation of existing investor Merck Sharp & Dohme
Corp.
-- Presented additional supportive data from the completed Phase
II trial of Blautix(R) in subjects with irritable bowel syndrome
with constipation (IBS-C) or with diarrhea (IBS-D) at Digestive
Disease Week (DDW). The DDW 2021 poster can be accessed via the
Posters & Publications page of our website at
https://www.4dpharmaplc.com/en/newsroom/posters-and-publications.
-- Announced the completion of target enrollment of 30 patients
in Part A of the Phase I/II first-in-human clinical trial of
MRx-4DP0004 for the treatment of asthma.
-- Announced a clinical trial collaboration and drug supply
agreement with Merck KGaA, Darmstadt, Germany, and Pfizer Inc. for
BAVENCIO(R) (avelumab). Under the collaboration, 4D pharma intends
to commence a clinical trial to evaluate BAVENCIO(R) in combination
with MRx0518 as a first-line maintenance therapy for patients with
locally advanced or metastatic urothelial carcinoma that has not
progressed with first-line platinum-containing chemotherapy. This
is the second clinical collaboration combining MRx0518 with an
immune checkpoint inhibitor.
-- Also provided a clinical update on the MRx0518 clinical
program, with updates on patient recruitment and study status
across the three ongoing MRx0518 clinical trials.
-- Entered into a collaboration with Parkinson's UK, a
non-profit organization, to establish a Patient Advisory Board to
present patient-centric perspectives as the Company advances novel
Live Biotherapeutics for the treatment of neurodegenerative
conditions such as Parkinson's disease.
-- Announced the appointment of John Beck as Chief Financial Officer.
-- Announced the appointment of Paul Maier as Non-Executive Director.
Since the period end
-- Announced the passing of John Beck, Chief Financial Officer.
-- Published pre-clinical research relating to its
second-generation immuno-oncology LBP MRx1299 improving the
activity
of CAR-T.
-- Announced the acceptance of two e-Poster presentations of
MRx0518 clinical biomarker data at the European Society for Medical
Oncology (ESMO) Congress, held from 16-21 September 2021. The ESMO
2021 posters can be accessed via the Posters & Publications
page of our website at
https://www.4dpharmaplc.com/en/newsroom/posters-and-publications
.
-- Closed a senior secured credit facility for up to $30 million
with Oxford Finance SARL, in three tranches: an initial tranche of
$12.5 million at closing which extends 4D pharma's cash runway into
Q4 2022, with the remaining $7.5 million and $10 million tranches
dependent on the achievement of certain milestones.
For further information please contact:
4D
Duncan Peyton, Chief Executive Officer + 44 (0)113 895 0130
Investor Relations ir@4dpharmaplc.com
Singer Capital Markets - Nominated Adviser and Joint Broker +44
(0)20 7496 3000
Philip Davies / 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]
Chairperson and Chief Executive Officer's Joint Review
As we move into the second half of 2021, we look forward to
capitalizing on the efforts of the team throughout the first six
months of 2021. We have generated more data expanding our unique
understanding of mechanisms of host-microbe interactions and are
seeing the benefits in our clinical programs while we continue to
drive research through our proprietary MicroRx(R) platform. This
work has allowed us to discover new therapeutic possibilities in
disease such as Parkinson's, and demonstrate potential of our Live
Biotherapeutics alongside new modalities such as CAR-T. Alongside
the continued push to bring our Live Biotherapeutics to an approval
in oncology, 4D pharma achieved a significant milestone at the
beginning of the year following our listing on NASDAQ.
Building the oncology franchise
We continue our commitment to oncology, building a strong
understanding of the utility of our Live Biotherapeutics in this
field. In particular recognizing the value of a therapeutic which
has little or no side effects to combination with existing
therapies in the fight against cancer while many other combination
treatments currently evaluated in immune-oncology increase
toxicity.
With our lead oncology candidate MRx0518, we have built on our
ongoing work with MSD (Merck & Co.) and its anti-PD-1 immune
checkpoint inhibitor (ICI) Keytruda(R) (pembrolizumab), announcing
a new clinical collaboration and drug supply agreement with Merck
KGaA and Pfizer and their anti-PD-L1 ICI Bavencio(R) (avelumab). In
contrast to the ongoing study with Keytruda in ICI-refractory
patients, the new Bavencio collaboration takes MRx0518 into earlier
lines of treatment, and expands our clinical portfolio targeting
the PD-1 axis.
Under the collaboration we will conduct a clinical study to
evaluate MRx0518 in combination with Bavencio as a first-line
maintenance therapy for urothelial carcinoma, a common form of
bladder cancer. Bavencio is the first and only ICI approved in this
setting, and we are excited to commence this fourth clinical study
of MRx0518 before the end of 2021.
In addition, we announced progress updates for the three ongoing
clinical studies of MRx0518 - in combination with Keytruda in
patients with solid tumors refractory to prior ICI therapy; as a
neoadjuvant monotherapy; and in combination with radiation prior to
surgery for pancreatic cancer. These studies continue to progress
well, giving more insights into the biological mechanisms of
MRx0518 and its activity on the patient immune system, potentially
allowing us to understand which patients may benefit most from
MRx0518 in combination with ICIs like Keytruda and Bavencio.
After the period end, in September, 4D pharma presented new data
from the Keytruda combination and neoadjuvant monotherapy studies
at the European Society for Medical Oncology (ESMO) Congress. The
ESMO 2021 posters can be accessed via the Posters &
Publications page of our website at
https://www.4dpharmaplc.com/en/newsroom/posters-and-publications .
The new data includes tumor immune biomarkers associated with
response to the combination with MRx0518 and Keytruda, which is an
exciting proposition we look forward to investigating further as we
continue to progress MRx0518. This is supported by additional data
for MRx0518 as a monotherapy, providing further evidence of immune
activation by our oral Live Biotherapeutic, including positive
changes in prognostic indicators predictive of response to
immunotherapy. These data continue to deepen our understanding of
the activity of MRx0518 on patients, and will help inform
engagement with regulatory authorities and clinicians as we
continue to develop this leading immuno-oncology Live
Biotherapeutic.
The main focus of our work in oncology at this time is the
preparation of a pivotal development program for MRx0518 in an
oncologic indication.
Through our clinical programs and research, our work in oncology
illustrates the potential of the MicroRx(R) platform to expand 4D
pharma's leadership in oncology.
Alongside our work in solid tumors, 4D also continues to push
forward in identifying new LBP candidates in additional oncology
settings, such as CAR-T. 4D pharma recently published pre-clinical
research relating to second-generation oncology LBP MRx1299 in the
respected peer-reviewed journal Nature Communications. The research
demonstrates the ability of the bacterium Megasphaera massiliensis
and its short chain fatty acid (SCFA) metabolite pentanoate to
enhance the anti-tumor activity of cytotoxic T lymphocytes (CTL)
and Chimeric antigen receptor T cell (CAR-T) therapies in animal
models of cancer.
Blautix (R) - a leading late-stage LBP candidate
IBS remains a misunderstood disease and not easily
characterized. In the US, as many as 35 million people report IBS
symptoms, with 60-70% being women. IBS remains a disease with
significant unmet need. Current treatments target sub-type specific
symptoms (diarrhea or constipation) but, due to side effects and
sub-optimal efficacy, patient satisfaction and compliance remains
an issue. Further, there currently is no therapeutics approved for
patients with fluctuating or mixed symptoms, known as IBS-M.
Following publication of topline efficacy and safety results
from our Phase II study of Blautix(R) in irritable bowel syndrome
with constipation (IBS-C) and with diarrhea (IBS-D) in October
2020, important additional data was presented at Digestive Disease
Week (DDW) in May 2021. The DDW 2021 posters can be accessed via
the Posters & Publications page of our website at
https://www.4dpharmaplc.com/en/newsroom/posters-and-publications .
A key finding from sub-group analyses was an unusually high placebo
response rate in patients in the UK and Ireland which negatively
impacted the topline results. Conversely, we saw an enhanced effect
in the US population in both IBS-C and IBS-D.
In agreement with regulatory guidelines and key opinion leader
feedback, the positive Phase II data provides a clear path forward
for the development of Blautix as a novel treatment for IBS with
the potential to be a single, safe, effective therapeutic able to
address multiple subtypes of IBS. We have engaged with the US FDA
regarding plans for pivotal development, and discussions are
ongoing with multiple potential partners for the program.
MRx-4DP0004 - Systemic immune activity via the gut
MRx-4DP0004 is in an ongoing Phase I/II first-in-human clinical
trial in patients with partly controlled asthma, as an add-on
therapy to their long-term maintenance asthma medication.
In June we announced the completion of target enrolment of 30
patients in Part A of our Phase I/II randomized, placebo-controlled
study of asthma candidate MRx-4DP0004. Part A of the trial
primarily assesses the safety and tolerability of MRx-4DP0004, as
well as biomarker signals of activity relevant to asthma. We expect
to announce top line results later in 2021.
Leveraging the gut-brain axis
As accumulating evidence points towards the gut-brain axis and
the role of the microbiome in conditions of the central nervous
system (CNS), we are excited to continue to push forward in this
field. In April, the company announced our collaboration with
Parkinson's UK, to establish a Patient Advisory Board (PAB) of
people living with Parkinson's disease. The PAB provides valuable
patient perspectives as we continue to advance candidates MRx0029
and MRx0005 towards a first-in-man study in patients with
Parkinson's disease expected to begin in 2022.
Corporate activity
The NASDAQ is the premier exchange for biotechnology companies
worldwide, giving companies global reach and visibility within the
healthcare investment ecosystem. Achieving a listing on NASDAQ has
been a strategic objective for 4D pharma's continued growth and
success moving forward.
In March 2021 we met this transformational milestone, as we
listed 4D pharma American Depository Shares (ADSs) on the NASDAQ
exchange in the United States following the completion of our
merger with special purpose acquisition company (SPAC) Longevity
Acquisition Corporation.
In conjunction with the SPAC merger and NASDAQ listing we
conducted a fundraise which together provided the company with
approximately $42 million of additional capital. In doing so we
began to strengthen our international investor base and put 4D
pharma in a strong financial position to execute across our
pipeline.
Further, after the period end in July, we also announced a
credit facility with Oxford Finance LLC, that provides 4D pharma
with up to $30 million of capital across three tranches, of which
the first tranche of $12.5 million was received upon closing. The
facility diversifies and strengthens the company's capital
structure with a well-respected specialty finance firm in the life
sciences field. The additional funds further extend our cash runway
beyond additional potentially transformative development
milestones.
In addition to strengthening our financial position, we also
strengthened our leadership team. In March we welcomed Paul Maier
as a Non-Executive Director who will also serve as a financial
expert under SEC and NASDAQ rules. Paul brings over 25 years of
operational and financial management experience in the life
sciences industry, and his experience has been a valuable addition
to our Board of Directors.
It was with great sadness that we announced the passing of John
Beck in July of this year, who had served as Chief Financial
Officer with the company since March. John was greatly respected
within the life sciences industry and brought 30 years of finance
experience to our team. His significant contributions to the
company during his time with us have been highly valuable, and we
hope to carry his legacy forward by building upon the strong
foundations he helped to lay as 4D pharma entered a new era as a
US-listed entity.
Conclusion
The first half of 2021 has been a significant period for 4D
pharma. Our dual listing on NASDAQ raised our international profile
and, using this as a platform along with new funds at our disposal,
we look ahead to a period rich in clinical catalysts across our
pipeline of Live Biotherapeutic Products taking the microbiome
beyond the gut, including clinical readouts and the commencement of
new studies across multiple programs. Highs and lows in the broader
microbiome space have created mixed feelings towards microbiome
therapeutic approaches - we are confident 4D pharma's
differentiated, mechanism-driven approach is poised to deliver.
Axel Glasmacher
Non-Executive Chairperson
Duncan Peyton
Chief Executive Officer
30 September 2021
Development Pipeline
As of 30 June 2021
Program Indication Development Stage Status
Blautix(R) (MRx1234) IBS Phase II Completed successful
Phase II
---------------------------- ------------------ ------------------------
MRx0518 First-line maintenance Phase II Expect to initiate
therapy for urothelial Q4 2021
carcinoma, combination
with Bavencio (R)
---------------------------- ------------------ ------------------------
MRx0518 Solid tumors refractory Phase I/II Ongoing; Part A
to immune checkpoint safety stage complete,
inhibitors, combination Part B enrolling
with Keytruda (R)
---------------------------- ------------------ ------------------------
MRx0518 Solid tumors, neoadjuvant Phase Ib Ongoing; Part A
monotherapy complete
---------------------------- ------------------ ------------------------
MRx0518 Pancreatic cancer, Phase I Ongoing; initial
combination with data expected 2021
pre-operative radiotherapy
---------------------------- ------------------ ------------------------
MRx-4DP0004 Asthma Phase I/II Ongoing; Part A
topline data expected
2H 2021
---------------------------- ------------------ ------------------------
MRx-4DP0004 COVID-19 Phase II Discontinued
---------------------------- ------------------ ------------------------
MRx0005 Neurodegeneration Pre-clinical First-in-human study
initiation expected
2022
---------------------------- ------------------ ------------------------
MRx0029 Neurodegeneration Pre-clinical First-in-human study
initiation expected
2022
---------------------------- ------------------ ------------------------
MRx1299 Solid tumors Pre-clinical Demonstrated in
vivo efficacy
---------------------------- ------------------ ------------------------
Various Immune-inflammatory Pre-clinical Demonstrated in
disease vivo efficacy
---------------------------- ------------------ ------------------------
Vaccines research Vaccines Pre-clinical Ongoing; research
collaboration collaboration and
option to license
agreement with MSD
---------------------------- ------------------ ------------------------
Group Statement of Total Comprehensive Income
For the six months to 30 June 2021
Unaudited Unaudited
six months six months Audited
ended ended year to
30 June 30 June 31 December
2021 2020 2020
Notes GBP000 GBP000 GBP000
----------------------------------------- ------ ----------- ----------- ------------
Revenue 231 275 534
Research and development costs (9,873) (12,418) (22,041)
Administrative expenses (3,346) (3,839) (5,969)
Foreign currency gains 229 920 363
Other operating income 18 21 45
----------------------------------------- ------ ----------- ----------- ------------
Operating loss before non-recurring
costs (12,741) (15,041) (27,068)
Non-recurring costs (44,160) (565) (3,110)
----------------------------------------- ------ ----------- ----------- ------------
Operating loss after non-recurring costs (56,901) (15,606) (30,178)
Finance income 2 5 5
Finance expense (83) (88) (173)
----------------------------------------- ------ ----------- ----------- ------------
Loss before taxation (56,982) (15,689) (30,346)
Taxation 3 1,532 1,963 4,383
----------------------------------------- ------ ----------- ----------- ------------
Loss for the period (55,450) (13,726) (25,963)
Other comprehensive income:
Exchange differences on translating
foreign operations (665) 165 110
----------------------------------------- ------ ----------- ----------- ------------
Loss and total comprehensive income
for the period (56,115) (13,561) (25,853)
----------------------------------------- ------ ----------- ----------- ------------
Loss per share
Basic and diluted for the period 4 (34.97)p (14.06)p (22.80)p
----------------------------------------- ------ ----------- ----------- ------------
Group Statement of Financial Position
At 30 June 2021
At At At
30 June 30 June 31 December
2021 2020 2020
Notes GBP000 GBP000 GBP000
------------------------------- ------- --------- --------- ------------
Assets
Non-current assets
Property, plant and equipment:
- Owned assets 3,229 4,150 3,659
- Right-of-use assets 752 911 835
Intangible assets 13,780 14,181 14,025
Taxation receivables 180 191 177
------------------------------- ------- --------- --------- ------------
17,941 19,433 18,696
------------------------------- ------- --------- --------- ------------
Current assets
Inventories 305 212 291
Trade and other receivables 2,980 2,046 3,223
Taxation receivables 5,675 8,228 4,436
Cash and cash equivalents 20,746 10,027 8,775
------------------------------- ------- --------- --------- ------------
29,706 20,513 16,725
------------------------------- ------- --------- --------- ------------
Total assets 47,647 39,946 35,421
------------------------------- ------- --------- --------- ------------
Liabilities
Current liabilities
Trade and other payables 6,962 6,423 6,379
Lease liabilities 74 73 73
------------------------------- ------- --------- --------- ------------
7,036 6,496 6,452
------------------------------- ------- --------- --------- ------------
Non-current liabilities
Lease liabilities 936 1,027 986
Deferred tax 12 966 13
------------------------------- ------- --------- --------- ------------
948 1,993 999
------------------------------- ------- --------- --------- ------------
Total liabilities 7,984 8,489 7,451
------------------------------- ------- --------- --------- ------------
Net assets 39,663 31,457 27,970
------------------------------- ------- --------- --------- ------------
Capital and reserves
Share capital 5 451 274 329
Share premium 5 159,937 130,186 136,278
Merger reserve 958 958 958
Translation reserve (110) 611 555
Other reserve (864) (864) (864)
Share-based payment reserve 47,488 1,010 3,497
Retained earnings (168,197) (100,718) (112,783)
------------------------------- ------- --------- --------- ------------
Total equity 39,663 31,457 27,970
------------------------------- ------- --------- --------- ------------
Approved by the Board and authorized for issue on 30 September
2021.
Duncan Peyton
Director
30 September 2021
Group Statement of Changes in Equity
For the six months to 30 June 2021
Share-based
Share Share Merger Translation Other payment Retained
capital premium reserve reserve reserve reserve earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------- -------- -------- -------- ----------- -------- ----------- --------- --------
At 1 January 2020 164 108,296 958 446 (864) 367 (87,024) 22,343
Issue of share capital 110 21,890 - - - - - 22,000
Issue of warrants - - - - - 565 - 565
----------------------------- -------- -------- -------- ----------- -------- ----------- --------- --------
Total transactions
with owners recognized
in equity for the
period 110 21,890 - - - 565 - 22,565
----------------------------- -------- -------- -------- ----------- -------- ----------- --------- --------
Loss and total comprehensive
income for the period - - - 165 - - (13,726) (13,561)
Issue of share-based
compensation - - - - - 110 - 110
Lapsed options - - - - - (32) 32 -
----------------------------- -------- -------- -------- ----------- -------- ----------- --------- --------
At 30 June 2020 274 130,186 958 611 (864) 1,010 (100,718) 31,457
Expenses and warrants
on issue of share
capital - (1,065) - - - 2,545 - 1,480
Issue of share capital
(net of expenses) 55 7,081 - - - - - 7,136
Exercise of warrants - 76 - - - (11) - 65
----------------------------- -------- -------- -------- ----------- -------- ----------- --------- --------
Total transactions
with owners recognized
in equity for the
period 55 6,092 - - 2,534 - 8,681
----------------------------- -------- -------- -------- ----------- -------- ----------- --------- --------
Loss and total comprehensive
income for the period - - - (56) - - (12,237) (12,293)
Issue of share-based
compensation - - - - - 125 - 125
Lapsed options - - - - - (172) 172 -
----------------------------- -------- -------- -------- ----------- -------- ----------- --------- --------
At 31 December 2020 329 136,278 958 555 (864) 3,497 (112,783) 27,970
Issue of share capital
on acquisition of
Longevity Acquisition
Corp. (net of expenses) 78 5,536 - - - - - 5,614
Issue of share capital
in placing (net
of expenses) 41 16,551 - - - - - 16,592
Directors' subscription
(net of expenses) 3 1,446 - - - - - 1,449
Equity adjustment
relating to a share-based
payment charge on
acquisition of Longevity - - - - - 25,734 - 25,734
Issue of warrants
on acquisition of
Longevity Acquisition
Corp. - - - - - 18,430 - 18,430
Exercise of warrants - 32 - - - (5) - 27
Exercise of share
options - 94 - - - (223) - (129)
----------------------------- -------- -------- -------- ----------- -------- ----------- --------- --------
Total transactions
with owners recognized
in equity for the
period 122 23,659 - - - 43,936 - 67,717
----------------------------- -------- -------- -------- ----------- -------- ----------- --------- --------
Loss and total comprehensive
income for the period - - - (665) - - (55,450) (56,115)
Issue of other share-based
compensation included
in equity - - - - - 91 - 91
Non-vesting share-based
compensation - - - - - (36) 36 -
----------------------------- -------- -------- -------- ----------- -------- ----------- --------- --------
At 30 June 2021 451 159,937 958 (110) (864) 47,488 (168,197) 39,663
----------------------------- -------- -------- -------- ----------- -------- ----------- --------- --------
Group Cash Flow Statement
For the six months to 30 June 2021
Unaudited Unaudited
six months six months Audited
ended ended year to
30 June 30 June 31 December
2021 2020 2020
Notes GBP000 GBP000 GBP000
-------------------------------------------- ----- ----------- ----------- ------------
Loss after taxation (55,450) (13,726) (25,963)
Adjustments for:
Depreciation of property, plant and
equipment 446 508 1,003
Amortization of intangible assets 74 110 203
Loss on disposal of property, plant
and equipment 40 - -
Lease liabilities included in the Income
Statement - 68 135
Finance income (2) (5) (5)
Finance expense 83 88 173
Expense on issue of shares - 1,498 -
Share-based compensation 44,121 675 3,334
-------------------------------------------- ----- ----------- ----------- ------------
Cash flows from operations before movements
in working capital (10,688) (10,784) (21,120)
Changes in working capital:
Increase in inventories (14) (14) (93)
Decrease/(increase) in trade and other
receivables 243 (1,037) (2,106)
(Increase)/decrease in taxation receivables (1,238) (2,111) 1,697
Increase/(decrease) in trade and other
payables 216 19 (1,052)
-------------------------------------------- ----- ----------- ----------- ------------
Cash outflow from operating activities (11,481) (13,927) (22,674)
-------------------------------------------- ----- ----------- ----------- ------------
Cash flows from investing activities
Purchases of property, plant and equipment (117) (160) (163)
Purchase of software and other intangibles - (15) (15)
-------------------------------------------- ----- ----------- ----------- ------------
Net cash outflow from investing activities (117) (175) (178)
-------------------------------------------- ----- ----------- ----------- ------------
Cash flows from financing activities
Proceeds from issues of ordinary share
capital 5 27,904 22,000 29,741
Expenses on issue of shares 5 (4,217) (1,498) (1,594)
Lease liability payments (37) (126) (188)
Interest received 2 5 5
Interest paid (83) (88) (173)
-------------------------------------------- ----- ----------- ----------- ------------
Net cash inflow from financing activities 23,569 20,293 27,791
-------------------------------------------- ----- ----------- ----------- ------------
Increase in cash and cash equivalents 11,971 6,191 4,939
Cash and cash equivalents at the start
of the year 8,775 3,836 3,836
-------------------------------------------- ----- ----------- ----------- ------------
Cash and cash equivalents at the end
of the year 20,746 10,027 8,775
-------------------------------------------- ----- ----------- ----------- ------------
Notes to the Interim Financial Report
For the six months to 30 June 2021
1. Basis of preparation
The Group's half-yearly financial information, which is
unaudited, consolidates the results of 4D pharma plc and its
subsidiary undertakings up to 30 June 2021. The Group's accounting
reference date is 31 December. 4D pharma plc's shares are quoted on
the AIM market of the London Stock Exchange (AIM) as DDDD and as
American Depositary Shares (ADSs) on NASDAQ as LBPS with each ADS
representing 8 Ordinary shares.
The Company is a public limited liability company incorporated,
registered and domiciled in the UK. The consolidated financial
information is presented in round thousands of Pounds Sterling
(GBP000).
The financial information for the six months ended 30 June 2021
and 30 June 2020 is unaudited.
Full audited financial statements of the Group in respect of the
period ended 31 December 2020, which received an unqualified audit
opinion and did not contain a statement under sections 498(2) or
(3) of the Companies Act 2006, have been delivered to the Registrar
of Companies.
The accounting policies used in the preparation of the financial
information for the six months ended 30 June 2021 are in accordance
with the recognition and measurement criteria of International
Financial Reporting Standards as adopted by the UK (UK IFRS) and
are consistent with those which will be adopted in the annual
financial statements for the year ending 31 December 2021.Whilst
the financial information included has been prepared in accordance
with the recognition and measurement criteria of IFRS, the
financial information does not contain sufficient information to
comply with IFRS.
4D pharma plc has not applied IAS 34 'Interim Financial
Reporting', which is not mandatory for UK AIM listed groups, in the
preparation of this interim financial report.
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 12 months from the date of the approval
of these results. 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. The Directors estimate that the cash held by the Group
together with known receivables and the income of $12.5 million
from the first tranche of the loan (issued by Oxford Finance SARL)
in July 2021 will be sufficient to support the current level of
activities into Q4 2022; accordingly, the accounts have been
prepared on a going concern basis.
3. Taxation
The tax credit is made up as follows:
Unaudited Unaudited
six months six months Audited
ended ended year to
30 June 30 June 31 December
2021 2020 2020
GBP000 GBP000 GBP000
----------------------------------------------- ----------- ----------- ------------
Current income tax
Total current income tax 1,523 2,010 3,473
Adjustment in respect of prior years 8 (47) (42)
----------------------------------------------- ----------- ----------- ------------
Total income tax credit recognized in the year 1,531 1,963 3,431
----------------------------------------------- ----------- ----------- ------------
Previously recognized deferred tax gain offset
against losses - - 940
Current year charge 1 - 12
----------------------------------------------- ----------- ----------- ------------
Total deferred tax 1 - 952
----------------------------------------------- ----------- ----------- ------------
Total income tax credit recognized in the year 1,532 1,963 4,383
----------------------------------------------- ----------- ----------- ------------
4. Loss per share
(a) Basic and diluted
Unaudited Unaudited Audited year
six months six months to
ended ended 31 December
30 June 2021 30 June 2020 2020
GBP000 GBP000 GBP000
----------------------------------------- ------------- ------------- ------------
Loss for the year attributable to equity
shareholders (55,450) (13,726) (25,963)
----------------------------------------- ------------- ------------- ------------
Weighted average number of shares:
Ordinary shares in issue 158,560,346 97,647,688 113,851,960
----------------------------------------- ------------- ------------- ------------
Basic loss per share (pence) (34.97)p (14.06)p (22.80)p
----------------------------------------- ------------- ------------- ------------
The basic and diluted loss per share are the same as the effect
of share options is anti-dilutive.
(b) Adjusted
Adjusted loss per share is calculated after adjusting for the
effects of non-recurring costs arising on the inclusion of the fair
value adjustment from the issue of warrants, options and shares as
part of fundraising activities.
Reconciliation of adjusted loss after tax:
Unaudited Unaudited Audited year
six months six months to
ended ended 31 December
30 June 2021 30 June 2020 2020
GBP000 GBP000 GBP000
------------------------------------- ------------- ------------- ------------
Reported loss for the year after tax (55,450) (13,726) (25,963)
Non-recurring costs 44,160 565 3,110
------------------------------------- ------------- ------------- ------------
Adjusted loss after tax (11,290) (13,161) (22,583)
------------------------------------- ------------- ------------- ------------
Basic loss per share (pence) (7.12)p (13.48)p (20.07)p
------------------------------------- ------------- ------------- ------------
5. Share capital
Share capital Share premium Total
Number GBP000 GBP000 GBP000
-------------------------------------- ----------- ------------- ------------- -------
Allotted, called up and fully paid
ordinary shares of 0.25p
-------------------------------------- ----------- ------------- ------------- -------
At 1 January 2020 65,493,842 164 108,296 108,460
Placing and issue on 18 February 2020 44,000,000 110 21,890 22,000
-------------------------------------- ----------- ------------- ------------- -------
At 30 June 2020 109,493,842 274 130,186 130,460
-------------------------------------- ----------- ------------- ------------- -------
Expenses of placing on 18 February
2020 - - (1,065) (1,065)
Placing and issue on 8 July 2020 21,898,400 55 7,610 7,665
Expenses of placing - - (529) (529)
Warrants exercised 75,693 - 76 76
-------------------------------------- ----------- ------------- ------------- -------
At 31 December 2020 131,467,935 329 136,278 136,607
-------------------------------------- ----------- ------------- ------------- -------
Warrants exercised 31,859 - 32 32
Share options exercised 67,968 - 94 94
Issued as part of merger on 22 March
2021 31,048,192 78 8,264 8,342
Expenses of merger - - (2,728) (2,728)
Placing and issue on 22 March 2021 16,367,332 41 17,963 18,004
Expenses of placing - - (1,412) (1,412)
Directors' subscription on 16 April
2021 1,317,680 3 1,446 1,449
-------------------------------------- ----------- ------------- ------------- -------
At 30 June 2021 180,300,966 451 159,937 160,388
-------------------------------------- ----------- ------------- ------------- -------
The balances classified as share capital and share premium
include the total gross proceeds (nominal value and share premium
respectively) on issue of the Company's equity share capital,
comprising 0.25 pence ordinary shares.
On 22 March 2021 the Company completed the merger with Longevity
Acquisition Corporation and listed on NASDAQ. Since Longevity is a
cash shell with no future trade or income it did not qualify as a
business and is not subject to the treatment for business
combination under IFRS 3; as such the transaction has been treated
as the issue of shares for cash.
In connection with the merger, and in addition to the shares
issued above, the Company also issued New Warrants convertible into
ordinary shares. These were comprised of: 4,320,000 outstanding
warrants that were previously issued by Longevity to holders of
Longevity shares at the time of the Longevity IPO and which will be
converted into warrants to purchase up to 16,268,040 ordinary
shares, payable in ADSs; warrants to be issued to the backstop
investors to acquire up to 7,530,000 ordinary shares following
completion in connection with the backstop arrangements; and, an
option to acquire up to 2,892,096 ordinary shares for Cantor
Fitzgerald, in its capacity as underwriter to Longevity at the time
of the Longevity IPO. If all the New Warrants are exercised, the
Company would receive approximately $29 million of capital.
6. Subsequent events
Loan finance
On 29 July 2021 the Group entered into a loan agreement with
Oxford Finance SARL for up to $30 million maturing on 1 July 2026,
with the first tranche of the loan extending the Group's cash
runway until Q4 of 2022 if fully utilized.
The loan is payable in three tranches; the first $12.5 million
was received on signature with further tranches of $7.5 million on
achieving certain milestones and a further $10 million available at
the discretion of the lenders.
Interest will be charged on the loan at 8.15% plus the greater
of the 30-day US Dollar LIBOR rate and 0.1% throughout the term of
the loan. Interest only monthly payments will be made until either
1 September 2023 or 1 September 2024 if certain milestones are
met.
A 6.0% or 6.5% final payment fee will be charged, the latter
being dependent on the extension of the interest only period with
discounts to this fee to 3%, 2% or 1% if the loan is repaid before
the maturity date depending on certain criteria.
In addition to the interest and final payment fee, warrants were
issued for 212,568 shares at an exercise price of $1.18. Further
warrants become available on drawdown of loan tranches at a rate of
2% of the loan value with an exercise price based on the lower of
the preceding day's share price and the 10-day average share price
prior to the further loan. All warrants have a five-year exercise
period from the date of issuance.
The loan includes various customary covenants limiting the
Group's ability to perform certain functions that may affect the
recoverability of the loan, as well as providing penalties and
repayment provisions in the event of a default. A copy of the loan
agreement and further details can be found as an exhibit to our
recent F-1 filings with the SEC, a link to which is provided on our
website.
7. Principal risks and uncertainties
The Company operates within a complex regulatory environment,
which is subject to change. The nature of LBP development exposes
the Company to a number of additional risks and uncertainties which
could affect its ability to meet its strategic goals, its business
model and its operating environment.
The Company sets out its Company and market specific risk
factors on a continual basis in its Annual Reports, which
supplement the risk factors set out in its original admission
document (which is available on the Company's website). The
Company's most recently published Annual Report is that for the
year to 31 December 2020, which is also available on the Company's
website:
https://www.4dpharmaplc.com/en/investors/reports-presentations. A
more detailed list of risk factors can be found in the Company's
regulatory filings with the SEC which can be accessed through the
Company website: https://www.4dpharmaplc.com/en
/investors/sec-filings . The risk factors listed in these sources
are not necessarily comprehensive, but represent, in the Board's
view, the principal risks and areas of uncertainty that the Company
currently faces. Shareholders and potential investors should take
independent advice if they wish to consider the suitability of
these risks with regard to their own particular circumstances and
investment criteria.
Management's discussion and analysis of financial conditions and
results of operations
Key performance indicators
We track a series of metrics focussed primarily on science and
product development whilst ensuring that the business maintains
both sufficient resources and effective allocation of those
resources to achieve our strategic goals. The Board and management
of 4D monitor the following metrics as an indicator of how we are
progressing towards the goal of advancing our Live Biotherapeutic
programs:
1. Successful clinical trials - We are a drug development
company and will realize long-term value by successfully
progressing its candidates through the clinic to registration and
approval. For the six months ended 30 June 2021, we had completed
two clinical trials through Phase I and one through Phase II. For
the six months ended 30 June 2020, we had two clinical trials
completed through Phase I.
2. Clinical trials initiated by phase - Clinical trials are
essential in converting the productivity and potential of our
MicroRx platform and early-stage research into long-term value. By
the end of the six months to 30 June 2021, we had initiated seven
clinical trials including three Phase I, two Phase I/II and two
Phase II trails. There were six clinical trials that we had
initiated by the end of the six months ended 30 June 2020 of three
Phase I, two Phase I/II and one Phase II trial.
3. Strategic collaborations - Collaborations enable us to
realize the potential of our platform, leveraging the complementary
expertise of our partners. In December 2020 we became an industry
partner of the 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. Our 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 February
2021, we announced a clinical trial collaboration and supply
agreement with Merck KGaA, Darmstadt, Germany and Pfizer Inc. for
Bavencio (avelumab), under which we intend to commence a clinical
trial in the second half of 2021 to evaluate Bavencio in
combination with MRx0518 as a first-line maintenance therapy for
patients with locally advanced or metastatic urothelial carcinoma
that has not progressed with first-line platinum-containing
chemotherapy. In April 2021 we announced a sixth strategic
collaboration, this time with Parkinson's UK to establish a patient
advisory board to raise understanding of the treatment issues
associated with neurodegenerative disease from a patient-centric
perspective to help inform trial design. These partnerships are in
addition to: an ongoing strategic collaboration with the University
of Texas MD Anderson Cancer Center, to evaluate our Live
Biotherapeutic oncology pipeline across a range of cancer settings;
a clinical collaboration with MSD to evaluate MRx0518 in
combination with Keytruda, an anti-PD-1 ICI marketed by MSD in
patients with in patients with metastatic NSCLC, RCC and UC that
are refractory to prior anti-PD-1/PD-L1 therapy; and a research
collaboration and option to license agreement with MSD to discover
and develop vaccines derived from our proprietary gut
microbiome-derived commensal bacteria selected from our culture
collection for use in up to three indications, combining our
MicroRx platform with MSD's world-leading expertise in vaccine
development.
4. Intellectual property portfolio - Intellectual property is
essential to our strategy and capturing the value of our
world-leading research output. We have continued to invest
significantly in expanding our IP rights, and by 30 June 2021 had
initiated 68 patent families including over 1,000 granted patents
providing coverage for our pipeline and clinical-stage candidates,
manufacturing innovations and novel diagnostic approaches across
major global markets. This is a 6.25% increase over the 64 patent
families initiated as of 30 June 2020.
5. Cash and equivalents - We continue to invest capital from our
shareholders and partners into supporting research and clinical
development programs, to generate the critical data to advance this
novel modality. See the Liquidity and Capital Resources section
below for additional information.
6. Research and development spend - Investment in research and
development (R&D) is central to our progress and returning
long-term value. For the six months ended 30 June 2021 our R&D
spend was GBP9.9 million compared to GBP12.4 million for the six
months ended 30 June 2020. While maintaining our strategy to invest
in our clinical development programs on a long term basis, the
decrease is a reflection of both the action of management to reduce
costs due to the effect of COVID and the change in clinical trial
status due to the completion and relative reduction in associated
costs of the Blautix trial in these comparable periods.
Components of operating results
Operating expenses
We recognize operating expenses as they are incurred in two
general categories, general and administrative expenses and
research and development expenses, and in a third more specific
category for share-based payments. Our operating expenses also
include non-cash components related to depreciation and
amortization of property, plant and equipment and intangibles,
which are allocated, as appropriate, to general and administrative
expenses and research and development expenses.
General and administrative expenses consist of salaries and
related expenses for executive, legal, finance and administrative
personnel, as well as professional fees, insurance costs and other
general corporate expenses. Management expects general and
administrative expenses to increase in future periods as we add
personnel and incur additional expenses related to an expansion of
our research and development activities and our operation as a
public company listed on two markets, including higher legal,
accounting, insurance, compliance, compensation and other
expenses.
Research and development expenses
Our research and development expenses consist primarily of
salaries and related personnel expenses, contractual commitments,
depreciation and amortization, patent costs and other expenses. We
charge research and development expenses to operations as they are
incurred. Costs are not directly tied to a specific product
candidate until such product candidate enters the clinical trial
stage. Product candidates often have more than one associated
clinical trial related to different therapeutic areas or clinical
indications. Once a product candidate enters a clinical trial, we
track costs of such clinical trial but do not track other costs
associated with specific clinical indications which are pooled.
The following table discloses the breakdown of research and
development expenses:
Unaudited Unaudited
six months six months
ended ended
30 June 30 June
2021 2020
GBP000 GBP000
---------------------------------------------- ----------- -----------
Contractual commitments 3,682 6,233
Staff costs 1,883 2,473
Depreciation and amortization 400 467
Patent costs 1,912 1,535
Other MRx research costs 745 708
Other MDx research costs 16 389
Other manufacturing, research and development
costs 1,235 613
----------------------------------------------- ----------- -----------
Total 9,873 12,418
----------------------------------------------- ----------- -----------
We continue the robust progress of our proprietary development
candidates into and through the clinic and to leverage the
MicroRx(R) platform to generate value through partnerships, such as
our research collaboration with MSD in the vaccines space. However,
leading the way in the development of single strain Live
Biotherapeutics does not come without investment, and we have
sustained our commitment in the period to develop our clinical
candidates, manufacturing processes and pipeline products,
generating clinical data in multiple indications while launching
new trials. Evidenced by our announcement to collaborate with
Parkinson's UK to establish a Patient Advisory Board, we continued
to progress promising new LBP candidates in exciting new areas like
Parkinson's disease.
In February 2021, we announced a clinical trial collaboration
and supply agreement with Merck KGaA, Darmstadt, Germany, and
Pfizer Inc., under which 4D pharma intends to commence a clinical
trial in the second half of 2021 to evaluate BAVENCIO(R) (avelumab)
in combination with MRx0518 as a first-line maintenance therapy for
patients with locally advanced or metastatic urothelial carcinoma
that has not progressed with first-line platinum-containing
chemotherapy.
After top-line data in the fourth quarter of 2020, the clinical
phase of the Blautix(R) program completed in the six months to 30
June 2021 with additional positive data being presented during the
period. Steady progress continued to be made during the period to
30 June 2021 with our three existing clinical trials of our
therapeutic candidate, MRx0518, while the Phase I/II clinical trial
of MRx-4DP0004 in partly controlled asthma saw us completing the
enrolment of the 30 patients for Part A. However, our Phase II
clinical trial of MRx-4DP0004 as an oral therapeutic to prevent or
reduce the hyperinflammatory response in patients hospitalized with
COVID-19 was closed due to the increase in vaccination rates and
declining hospitalization rates. With the ongoing trials above, and
as a result of the closure of the COVID-19 trial, but including the
anticipated launch of a fourth trial in MRx0518 in 2021 in
combination with BAVENCIO(R), we anticipate that our research and
development expenses for the second half of 2021 will result in
lower research and development costs for the year than experienced
in 2020.
With the Blautix(R) trial having produced its initial readout
data in the latter stages of 2020, the six months ended 30 June2020
had higher clinical trial activity and costs than the six months
ended 30 June 2021. In addition to this reduction, the expiration
of minimum terms on certain manufacturing supplier contacts meant
that certain expenses incurred were no longer contractual in nature
and are now recorded under the manufacturing, research and
development costs header. These decreases were partly offset by a
modest increase in MRx0518 costs and an increase arising from
recruitment on the Asthma trial, which had been delayed in 2020 due
to recruitment issues resulting from COVID-19. Overall, these
factors combined to see a reduction in contractual commitments from
GBP6.2 million for the six months ended 30 June 2021 compared to
GBP3.7 million for the six months ended 30 June 2020, a decrease of
GBP2.5 million.
COVID-19 provided a point of inflection in 2020, with management
taking swift action to scale back operations, cut costs or redirect
resources, reducing baseline costs in certain areas; ultimately
though, the impact was seen more towards the back end of the year
ended December 31, 2020 and into 2021. Two of the main areas
affected by the restructuring activities were the staff costs which
decreased during the six months ended 30 June 2021 to GBP1.9
million from GBP2.5 million for the six months ended 30 June 2020.
The MDx research costs also decreased GBP0.3 million between the
same period due to limited scope of work on the project.
Other manufacturing, research and development costs increased to
GBP1.2 million compared to GBP0.6 million for the six months ended
30 June 2021 and 2020, respectively. The increase was driven by two
primary factors, the first of which related to the investment in
manufacturing as we undertook exercises to improve commercial
yields and to scale up our Parkinson's candidates for manufacture.
Secondly, as noted earlier, certain minimum term contractual
manufacturing related suppler contracts were still active during
2020 but the minimum term had been fulfilled come 2021, resulting
in an increase of costs of GBP0.3 million for the six months ended
30 June 2021 as a result of their change in classification
Patent costs for the six months to 30 June 2021 have increased
relative to the same period last year; this is in line with
increases to the patent portfolio but also due to costs incurred
defending certain patents.
Depreciation and amortization reduced in the period as certain
assets reached the end of their estimated useful life without
significant or necessary corresponding replacement costs being
incurred.
Results of operations
Details of the Group's results are included in the Group
Statement of Total Comprehensive Income.
Revenues
We have not generated commercial revenues from product sales. To
date, we have generated revenues from the collaboration agreement
with MSD Collaboration Agreement. Our revenues from our MSD
Collaboration Agreement totalled GBP0.2 million for the six months
to 30 June 2021 and GBP0.3 million for the six months to 30 June
2020. There were no other revenues for the six months ended 30 June
2021 and 2020.
Research and development expenses
Our research and development expenses totalled GBP9.9 million
for the six months ended 30 June 2021, representing a decrease of
GBP2.5 million, or 20%, compared to GBP12.4 million for the period
to 30 June 2020. The decrease was primarily attributable to the
relative activity on the Blautix(R) Phase II trial, stemming from
patient recruitment completing and top line data being released in
October 2020, as a result of which the final data released in March
2021 had attracted lower overall costs in the six month period to
30 June 2021 when compared to the six months ended 30 June 2020.
Details of other contributing factors are included above.
Administrative expenses
Our administrative expenses totalled GBP3.3 million for the six
months to 30 June 2021, representing a GBP0.5 million reduction, or
13%, compared to GBP3.8 million for the six months ended 30 June
2020. Of the total, GBP0.8 million of the reduction expenditure
related to legal fees which, at 30 June 2020, included transaction
costs related to the fundraise in February 2020. Excluding these
costs, there was an increase which was primarily attributable to
the increase in insurance costs associated with the Nasdaq listing
and increased patent costs, which were offset, in part, by
reductions on staff costs and travel expenses as a result of COVID.
General and administrative expenses are mainly attributed to staff
costs, contractual commitments, legal and professional expenses and
depreciation and amortization.
Foreign currency losses/(gains)
For foreign currency transactions included in the statement of
operations and comprehensive loss, the exchange rates applicable to
the relevant transaction dates are used. Transaction gains or
losses arising from changes in the exchange rates used in the
translation of such balances are carried to financing income or
expenses. We recognized foreign currency gains of GBP0.2 million
for the six months 30 June 2021, compared to foreign currency gains
of GBP0.9 million for the half year to 30 June 2020. The change is
due to the movement in exchange rates.
Other income
Other income consists of government grant income for a specific
research project.
Operating loss before non-recurring items
As a result of the foregoing, our operating loss before
non-recurring items totalled GBP12.7 million for the period to 30
June 2021 representing a decrease of GBP2.3 million when compared
to GBP15.0 million for the period to 30 June 2020.
Non-recurring costs
Non-recurring costs relate to the costs associated with warrants
and share options. The acquisition of Longevity Acquisition
Corporation in March 2021 included several classes of warrants,
options, and share based payment adjustments to the shares as part
of the transaction, adding GBP44.2 million in fair value
adjustments in the period to 30 June 2021. Comparably the six
months to 30 June 2020 including GBP0.6 million relating to
warrants issued as part of the February 2020 fundraise.
Operating loss after non-recurring items
As a result of the foregoing, our operating loss after
non-recurring costs totalled GBP56.9 million for the period to 30
June 2021 representing an increase of GBP41.3 million when compared
to GBP15.6 million for the period to 30 June 2020.
Finance income and expense
Finance income consists of interest earned on our short-term
investments. Reductions in finance income over time have been
attributable to poor interest rates. The reduction in finance
expense costs relates to the repayment and subsequent reduction in
underlying capital associated with the property financing
arrangements.
Taxation
Taxation consists of UK and Irish research and development tax
credits, deferred tax movements and US tax. Research and
development tax credits are based on a proportion of our research
and development expenditure and have reduced from GBP2.0 million
for the six months ended 30 June 2020 to GBP1.5 million for the six
months ended 30 June 2021. The decrease was due to the decrease in
research and development expenses over the prior year.
Loss for the period
As a result of the foregoing, our net loss for the six months to
30 June 2021 was GBP55.5 million, representing an increase of
GBP41.8 million over the GBP13.7 million for the six months to 30
June 2020.
Exchange differences on translating foreign operations
Exchange differences on translating foreign operations arose on
consolidation with movements in exchange rates creating a loss of
GBP0.7 million for the period to 30 June 2021 which represented a
GBP0.9 million movement from the equivalent period in 2020 where a
GBP0.2 million profit was reported.
Loss for the period and total comprehensive income for the
period
As a result of the foregoing, our net loss totalled GBP56.1
million for the period ended 30 June 2021, representing an increase
of
GBP42.5 million over the GBP13.6 million for the period ended 30
June 2020.
Liquidity and capital resources
Overview
From our inception through to 30 June 2021, we have funded our
operations principally from the sales of our ordinary shares, with
some additional income from the MSD collaboration agreement and
R&D tax credits. As of 30 June 2021, we had GBP20.7 million in
cash and cash equivalents.
The table below presents our cash flows for the periods
indicated:
Unaudited Unaudited
six months six months
ended ended
30 June 30 June
2021 2020
GBP000 GBP000
------------------------------------------ ----------- -----------
Cash used in operating activities (11,481) (13,927)
Cash used in investing activities (117) (175)
Cash provided by financing activities 23,569 20,293
------------------------------------------- ----------- -----------
Net increase in cash and cash equivalents 11,971 6,191
------------------------------------------- ----------- -----------
Operating activities
Net cash used in operating activities of GBP11.5 million during
the six months ended 30 June 2021 was primarily related to GBP3.8
million for clinical trials and research including other
third-party expenses and an aggregate GBP2.5 million in salary and
other staff costs; a further GBP2.2 million is attributable to
patent spend with GBP3.0 million of legal, professional and
insurance costs which are largely linked to the US listing. Foreign
currency gains reduced expenditure in the period to 30 June 2021 by
GBP0.2 million. Net cash used in operating activities of GBP13.9
million during the six months ended 30 June 2020 was primarily
related to GBP7.9 million for clinical trials and research
including other third-party expenses and an aggregate GBP3.3
million in salary expenses and other staff costs; a further GBP1.5
million is attributable to patent spend with GBP2.1 million of
legal, professional and insurance costs which were largely related
to fundraising activities. Foreign currency gains reduced
expenditure in the period to 30 June 2020 by GBP0.9 million.
Investing activities
Net cash used in investing activities of GBP0.1 million and
GBP0.2 million during the six months ended 30 June 2021 and 30 June
2020 respectively arose on the purchases of property, plant,
equipment and software.
Financing activities
Net cash provided by financing activities in the six months
ended 30 June 2021 was GBP23.6 million. This represents the net
proceeds from the issue of shares issued on the back of the
acquisition of the Longevity Acquisition Corporation, the March
2021 placing and the Directors' fundraise which collectively
contributed GBP23.8 million net of costs. Income from financing
activities was reduced by GBP0.1 million on payment of lease and
associated interest costs. Net cash used in financing activities in
the six months ended 30 June 2020 of GBP20.3 million consisted of
net income of GBP20.5 million from the issue of shares being offset
by expenses of GBP0.2 million in lease payments.
In April 2021, following the release of the Annual Report for
2020, the directors who were unable to participate in the March
2021 financing, purchased 1.3 million Ordinary shares, on the same
terms as the March 2021 financing; for a total of approximately
GBP1.4 million ($2.0 million).
In March 2021 we sold 16.4 million ordinary shares at GBP1.10
($1.53) per share in a private placement generating GBP18.0 million
($25.0 million) in gross proceeds or GBP16.6 million ($23.0
million) net of transaction costs.
Also in March 2021 we completed the reverse recapitalization of
Longevity Acquisition Corporation and subsequent listing on NASDAQ
and received GBP10.7 million ($14.8 million) of cash and cash
equivalents as well as payables and debts of Longevity of GBP2.4
million ($3.3 million) became available to the Company. Net
proceeds, after transaction costs were approximately GBP5.6 million
($7.8 million). The purchase included the issue of 31.0 million
ordinary shares and the Company assumed the existing Longevity
public and private warrants, backstop warrants and representative
units.
In July 2020, we completed the sale of 21.9 million ordinary
shares at GBP0.35 per share for a total of approximately GBP7.1
million net of transaction costs.
In February 2020, we completed the sale of 44 million ordinary
shares at GBP0.50 ($0.65) per share for a total of GBP22.0 million
($28.6 million) or GBP20.9 million ($27.0 million) net of
transaction costs. One warrant was issued for share every two
shares acquired for an exercise price of GBP1.00 ($1.30). The
warrants are immediately exercisable and expire five years from
issuance.
Current outlook
We have financed our operations to date primarily through
proceeds from sales of our ordinary shares. We have incurred losses
and generated negative cash flows from operations since inception.
To date we have not generated significant revenue, and we do not
expect to generate significant revenues from the sale of our
product candidates in the near future. In order to capture the
potential of the platform and maximize value creation, we are
actively pursuing additional research collaborations, pairing our
expertise in LBP discovery and development along with access to our
library of well characterized bacterial isolates with the
disease-specific expertise of partners.
In July 2021, we entered into a Loan Agreement with Oxford
Finance providing for a term loan facility maturing on 1 July 2026
in an aggregate principal amount of up to $30.0 million. $12.5
million of such term loan was available and borrowed on the closing
date. $7.5 million of such term loan is available upon the
achievement of certain milestones. The remaining $10 million of
such term loan is uncommitted and available at the discretion of
the Lenders. The proceeds of the term loans may be used for general
corporate purposes.
As of 30 June 2021, our cash and cash equivalent balance was
GBP20.7 million. We expect that our existing cash and cash
equivalents, including the cash received from the loan agreement in
July 2021 will be sufficient to fund our operations through the
fourth quarter of 2022. For further information, see the Subsequent
Events note in the interim condensed consolidated financial
statements included elsewhere in this report.
We currently anticipate that we will require approximately
GBP23.2 million for research and development activities over the
course of the next 18 months based on the execution of existing
programs but also dependent on exchange rates. We also anticipate
that we will require around GBP10.2 million for general and
administrative costs over such 18-month period, which consists
primarily of expenditures for staff costs, and legal, professional
and insurance fees, and other administrative expenses. We also
estimate approximately GBP6.1 million in cash for research and
development tax credit refunds over this 18-month period.
Assuming all costs and income are as noted, and that there are
no restrictions on the availability of cash, the Company
anticipates that if cash and cash equivalent balances are available
it can fund its activities until the fourth quarter of 2022.
In addition, our operating plans may change as a result of many
factors that may currently be unknown to us, and we may need to
seek additional funds sooner than planned. Our future capital
requirements will depend on many factors, including:
-- the length of the COVID-19 pandemic and its impact on our
planned clinical trials, operations and financial condition;
-- the progress and costs of our pre-clinical studies, clinical
trials and other research and development activities;
-- the scope, prioritization and number of our clinical trials
and other research and development programs;
-- any cost that we may incur under in- and out-licensing
arrangements relating to our product candidates that we may enter
into in the future;
-- the costs and timing of obtaining regulatory approval for our product candidates;
-- the costs of filing, prosecuting, enforcing and defending
patent claims and other intellectual property rights;
-- the costs of, and timing for, strengthening our manufacturing
agreements for production of sufficient clinical and commercial
quantities of our product candidates;
-- the potential costs of contracting with third parties to
provide marketing and distribution services for us or for building
such capacities internally;
-- the costs of acquiring or undertaking the development and
commercialization efforts for additional future therapeutic
applications of our product candidates and the magnitude of our
general and administrative expenses; and
-- adverse trial results that would invalidate further investment in a product or products.
Principal commitments
Leased facilities
We have two real estate leases classified as right-of-use
finance leases, one in Spain and one in the UK. No additional
leases were entered into during the period. The UK lease is for our
headquarters in Leeds. The premises comprise office space and
parking and are for a 10-year term which commenced in May 2017. A
tenant lease break clause is available in May 2022 which has not
been included in the lease calculations as there is no indication
that this would be executed. Lease escalation costs have been
included on a fixed rate basis as a practical expedient. The lease
includes a provision to return the premises to their original
condition on exit; as such an asset retirement obligation of GBP0.3
million has been included in the valuation.
The Spanish lease relates to our manufacturing premises in Leon.
The agreement is for a 10-year term which commenced in April 2016
and includes a tenant lease break clause that can be executed after
providing six months' written notice at any point five years from
the commencement date; again this break clause has not been
included in the lease value as there is no evidence that this will
be executed. Lease escalation costs have also been included on a
fixed rate basis as a practical expedient. The lease includes the
requirement to make certain repairs and as such an asset retirement
obligation of GBP0.1 million has been included in the
valuation.
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IR EASNEDLDFEEA
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