TIDMDDDD
RNS Number : 8663G
4d Pharma PLC
01 April 2022
4D pharma Reports Full Year 2021 Financial Results, Operational
Highlights, and Guidance for Key Milestones in 2022
Leeds, UK, April 1, 2022 - 4D pharma plc (AIM: DDDD, NASDAQ:
LBPS), a pharmaceutical company leading the development of Live
Biotherapeutic products (LBPs), a novel class of drug derived from
the microbiome, today reported financial results for the full year
ending December 31, 2021 and highlighted its key corporate
objectives for 2022.
"2021 was a productive year for 4D pharma. We reported promising
signals in the clinic from our lead candidates in immuno-oncology
and inflammatory disease, and entered into our second clinical
collaboration in oncology, further validating the potential for
single strain Live Biotherapeutics to treat systemic disease and
the MicroRx platform. Additionally, we completed the merger with
Longevity Acquisition Corporation which led to 4D pharma being
listed on the NASDAQ exchange, providing us access and visibility
across the US capital markets," said Duncan Peyton, Chief Executive
Officer of 4D pharma. "Already in 2022 we have continued this
progress, and look forward to updating shareholders as we execute
on our corporate objectives throughout the year."
Full Year 2021 Financial Highlights
-- Cash and cash equivalents of GBP15.5 million as of 31 December 2021 (2020: GBP8.8 million)
-- Net assets of GBP23.2 million as of 31 December 2021 (2020: GBP28.0 million)
-- Loss and total comprehensive income for the full year 2021
was GBP54.7 million (2020: GBP25.9 Million)
-- Research and Development Expenses was GBP19.8 million (2020:
22.0 million); General and Administrative Expense was GBP7.3
million (2020: GBP6.0 million)
-- Listed on the NASDAQ Global Market under ticker symbol 'LBPS'
after completing the merger with Longevity Acquisition Corporation,
a special purpose acquisition company (SPAC) on 22 March 2021
-- Along with the Longevity Acquisition Corporation merger we
completed a concurrent private placement, raising total gross
proceeds of approximately $39.8 million.
-- Entered into a senior secured credit facility for up to $30
million with Oxford Finance LLC, including the initial drawdown of
the first tranche for $12.5 million, with the remaining $7.5
million and $10 million tranches dependent on the achievement of
certain milestones.
Full Year 2021 Operational Highlights
-- Provided an update on the ongoing clinical trial portfolio
for lead oncology candidate MRx0518. This included the first
announcement of signals of anti-tumor activity for the combination
of MRx0518 with Keytruda(R) in bladder cancer, adding to the
previously reported activity in renal cell carcinoma and non-small
cell lung cancer.
-- Announced a clinical trial collaboration and supply agreement
with Merck KGaA, Darmstadt, Germany, and Pfizer Inc., under which
4D pharma will conduct a clinical trial to evaluate MRx0518 in
combination with Bavencio(R) (avelumab), an anti-PD-L1 immune
checkpoint inhibitor, 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 study is expected to commence in 2022.
-- Presented additional clinical mechanistic data for MRx0518 at
the European Society for Medical Oncology (ESMO) Congress, as both
a monotherapy and in combination with Keytruda(R) (pembrolizumab).
The results identified baseline biomarkers associated with clinical
benefit in patients with solid tumors resistant to immune
checkpoint inhibitors (ICIs) treated with MRx0518 in combination
with pembrolizumab; and gene and metagene signature changes in
solid tumors following treatment with MRx0518 monotherapy.
-- Presented further analyses of the completed Phase II clinical
trial of Blautix(R) in patients with irritable bowel syndrome with
constipation (IBS-C) or with diarrhea (IBS-D) at Digestive Disease
Week (DDW) 2021. The post-hoc analyses revealed strong and
statistically significant activity on the key symptom of bowel
habit, a potential FDA-approvable primary endpoint. In addition,
analysis of the data by geographical region shows that earlier
topline results were impacted by an unusually high placebo response
in patients in the UK and Ireland, and enhanced positive signals
were seen in the larger US population.
-- Subsequently, the company presented additional mechanistic
clinical data for Blautix(R) at Gastro 2021. The results show
treatment with Blautix(R) led to structural changes in the gut
microbiota and greater increases in interconnectivity between taxa
than placebo, in patients with both IBS-C and/or IBS-D.
-- Reported topline results from Part A of our Phase I/II
randomized, double-blind, placebo-controlled clinical trial of
MRx-4DP0004 as a treatment for asthma. Part A met the primary
endpoint showing MRx-4DP0004 was safe and well tolerated. In
addition, MRx-4DP0004 generated promising signals of clinical
activity which support progression into Part B of the study.
-- Published preclinical research relating to second-generation
immuno-oncology LBP MRx1299 improving the activity of CAR-T in
animal models of cancer, in collaboration with Philipps-University
Marburg, Germany, and Universitätsklinikum Würzburg, Germany.
-- Announced the appointments of Paul Maier as Non-Executive
Director and John Beck as Chief Financial Officer (CFO). Later in
the year the Company was saddened to announce the passing of John
Beck.
Subsequent Events Since the 2021 Period End
-- On 3 January 2022 announced the appointment of John Doyle as Chief Financial Officer (CFO)
-- On 22 February 2022 the Company announced that the U.S. Food
and Drug Administration (FDA) has cleared investigational new drug
(IND) applications for MRx0005 and MRx0029 for the treatment of
Parkinson's disease. The Company expects to initiate a
first-in-human Phase I clinical trial in people with Parkinson's
disease in mid-2022.
-- On 23 March 2022 the company announced that in Part B of the
ongoing Phase I/II study of MRx0518 and Keytruda(R) in patients
with solid tumors that have progressed on a prior immune checkpoint
inhibitor (ICI), the renal cell carcinoma (RCC) group met its
primary efficacy endpoint ahead of enrolment completion.
Anticipated Development Milestones and Key Objectives for
2022
-- First patient dosing in our Phase II study of MRx0518 &
Bavencio(R) as a first-line maintenance therapy for urothelial
carcinoma expected in Q2 2022
-- Complete enrollment of Phase I study of MRx0518 in pancreatic cancer expected to be Q2 2022
-- Presentation of data from the Phase I/II Part A Study in
Asthma at The American Thoracic Society conference in May 2022
-- Part B of ongoing Phase I/II trial of MRx-4DP0004 in asthma, expected to commence in 2H 2022
-- Phase I trial of MRx0005 and MRx0029 in people with
Parkinson's disease expected to commence in 2H 2022
-- Provide update and guidance on Phase II study of Blautix(R)
in patients with irritable bowel syndrome (IBS)
-- Provide update on next steps in Phase I/II study of MRx0518
and Keytruda(R) in the Renal Cell Carcinoma (RCC) group
About 4D pharma
4D pharma is a world leader in the development of Live
Biotherapeutics, a novel and emerging class of drugs, defined by
the FDA as biological products that contain a live organism, such
as a bacterium, that is applicable to the prevention, treatment or
cure of a disease. 4D pharma has developed a proprietary platform,
MicroRx(R), that rationally identifies Live Biotherapeutics based
on a deep understanding of function and mechanism.
4D pharma's Live Biotherapeutic products (LBPs) are orally
delivered single strains of bacteria that are naturally found in
the healthy human gut. The Company has five clinical programs,
namely a Phase I/II study of MRx0518 in combination with
KEYTRUDA(R) (pembrolizumab) in solid tumors, a Phase I study of
MRx0518 in a neoadjuvant setting for patients with solid tumors, a
Phase I study of MRx0518 in patients with pancreatic cancer, a
Phase I/II study of MRx-4DP0004 in asthma, and Blautix(R) in
irritable bowel syndrome (IBS) which has completed a successful
Phase II trial. A Phase I study of MRx0005 and MRx0029 in patients
with Parkinson's disease is expected to commence in 2022.
Additional preclinical-stage programs include candidates for CNS
disease, immune-inflammatory conditions and cancer. The Company has
a research collaboration with MSD (Merck & Co., Inc.,
Kenilworth, NJ, USA), to discover and develop Live Biotherapeutics
for vaccines.
For more information, refer to https://www.4dpharmaplc.com .
Contact Information:
4D pharma
Investor Relations ir@4dpharmaplc.com
Singer Capital Markets - Nominated Adviser and Joint Broker
Philip Davies / James Fischer (Corporate Finance) +44 (0)20 7496
3000
Tom Salvesen (Corporate Broking)
Bryan Garnier & Co. Limited - Joint Broker
Dominic Wilson +44 (0)20 7332 2500
Stern Investor Relations
Julie Seidel +1-212-362-1200
julie.seidel@sternir.com Julie.seidel@sternir.com
Image Box Communications
Neil Hunter / Michelle Boxall +44 (0)20 8943 4685
neil@ibcomms.agency / michelle@ibcomms.agency
6 Degrees
Lynne Dardanell +1-336-202-9689
ldardanell@6degreespr.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 the Company's anticipated development milestones and key
objectives for 2022, the anticipated timing of a first-in-human
Phase I clinical trial in people with Parkinson's disease and the
anticipated timing of a clinical trial to evaluate, 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 present
expectations or projections. The foregoing factors and the other
risks that could cause actual results to differ materially include
the risk that the Company changes its expected strategy and plans,
risk related to safety of investigational therapeutics, clinical
development risk, and those additional risks and uncertainties
described in 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.
Chairperson and CEO's statement
4D pharma is committed to unlocking the power of the microbiome
to develop safe and innovative therapies for serious diseases. With
our MicroRx(R) platform we have been able to do just that,
discovering and developing Live Biotherapeutic Products (LBPs)
demonstrating systemic functionality, for example by influencing
the immune system and modulating the gut-brain axis.
It is well known that a significant proportion of drug
candidates fail in the clinic due to safety concerns. One of the
core attractions of LBPs as a novel class of drug was the
expectation that they would have attractive safety profiles,
significantly reducing this major development risk. We have now
dosed over 300 patients representing diverse disease areas, and to
date all our clinical-stage LBPs have shown placebo-like safety and
tolerability. This is a paradigm shift for drug development.
In 2021 we expanded this evidence base, announcing the first
safety data for MRx-4DP0004 in asthma patients. Importantly, we
continued to demonstrate LBPs can work alongside existing
cornerstone medications without creating additional safety and
toxicity issues, which resonates with clinicians and patients
alike. Moreover, such a profile may position our therapeutics to be
prescribed earlier in the treatment pathway and provides
opportunities to potentially treat disease earlier.
Drugs not only need to be safe, but also effective. In the past
year we generated more clinical data supporting our function-based
approach to developing single strains of bacteria as pharmaceutical
therapeutics. Building on our ground-breaking data in oncology,
demonstrating that a single strain LBP can modulate the immune
system to treat cancer, we provided the first clinical data in
asthma for MRx-4DP0004. Not only was this an important milestone
for 4D pharma, but also represents the first clinical data
indicating the efficacy of a Live Biotherapeutic in this
setting.
Outside the clinic, March 2021 featured another significant
milestone for 4D pharma as we obtained our US listing on Nasdaq
under the ticker 'LBPS'. This was a major achievement of a
long-term goal for the Company. However, no one predicted that the
capital market was on the precipice of an unprecedented rout of
life sciences stocks. During 2020 and the early part of 2021,
capital was flowing into biotech at an unprecedented rate, driven
in part by the pandemic. However, from February 2021 the biotech
capital markets entered a period of dramatic decline. By the end of
the 2021, whilst the main market had gained (for example the
S&P 500 Index was up by around 23%), the biotech market, as
measured by reference to the S&P Biotechnology Select Industry
Index (XBI), was down over 30%. In the early months of 2022, this
trend in life sciences stocks has continued.
Within this general decline across the biotech sector, small cap
and emerging areas were hit particularly hard. Microbiome companies
encountered challenges, and as a maturing field, readthrough was
applied to other public companies under the microbiome
umbrella.
However, as 4D pharma and others in the field have continued to
educate stakeholders, there is a growing appreciation of the
differences of approach and an understanding that not all companies
working on microbiome therapeutics are the same, as has been common
for other new modalities or therapeutic approaches. Our rapidly
evolving field is pursuing a multitude of approaches, from faecal
material transplant (FMT) and bacterial consortia of varying
complexities, to single strain LBPs, engineered strains, microbial
metabolites and compounds targeting bacteria or their products. As
the field matures and generates more clinical data, we may see that
some approaches are particularly suited to different applications.
For example, using FMT and complex consortia as an ecological agent
to outcompete an infectious pathogen in the gut has proven to be
effective in preventing recurrence of C. difficile infection. This
is, though, a very different approach to identifying bacteria that
exert systemic therapeutic impacts on human biology, for use in the
treatment of systemic diseases such as cancer and asthma.
The latter is the approach taken by 4D pharma. Our hypothesis is
that by understanding how bacteria impact host cells, we can use a
single strain to modulate specific, disease-relevant pathways to
develop safe and innovative therapies for serious systemic
diseases. Irrespective of external factors and prevailing market
conditions, throughout 2021 we generated more evidence supporting
this hypothesis.
Oncology
Throughout 2021 and early 2022 we have continued our progress as
a leader in the field of oncology microbiome therapeutics. New
clinical biomarker data from multiple studies in different
treatment settings has continued to develop our understanding of
the mechanism of action of lead immuno-oncology Live Biotherapeutic
MRx0518. This complements our preclinical data, an important
validation not only of the translational value of the MRx0518
preclinical work, but of the MicroRx(R) platform more broadly, with
positive implications across our pipeline. In conjunction with
promising clinical outcomes in our combination study with
Keytruda(R) , this data provides clinical proof of concept of our
single strain LBP approach and the ability of gut-targeted single
strains of bacteria to exert clinically meaningful effects on
systemic diseases away from the gut.
Early in 2021 we reported on the continued progress of our
two-part Phase I/II study of MRx0518 in combination with immune
checkpoint inhibitor Keytruda(R) (pembrolizumab) in patients who
had developed resistance to a prior checkpoint inhibitor, in
collaboration with MSD (tradename of Merck & Co., Inc.,
Kenilworth, N.J., USA). Part A of the study was focused on
demonstrating the safety and tolerability of MRx0518 in combination
with a checkpoint inhibitor, but also gave us the first insight
into the potential impact of Live Biotherapeutics in the fight
against cancer.
Following the successful completion of Part A and progression
into Part B in 2020, in early 2021 we reported target tumor
reductions in Part B patients at the first scheduled restaging
timepoint. Importantly, these included the first signals of
anti-tumor activity for the combination in patients with bladder
cancer, adding to the activity previously reported in patients in
Part A with renal cell carcinoma (RCC) and non-small cell lung
cancer (NSCLC). Additionally, three Part A patients that were
previously reported to have experienced clinical benefit were
continuing on study, with two of these patients continuing on
treatment for over 18 months (as of February 2021) and exhibiting
further target tumor reductions or durable disease control.
The results in the clinic also further strengthened the
translational value of the preclinical data and the MicroRx(R)
platform. At the European Society for Medical Oncology (ESMO)
Congress, we presented biomarker data from two clinical studies,
the combination study with Keytruda(R) and a study of MRx0518 as a
neoadjuvant monotherapy in treatment of naïve patients with a
variety of solid tumors.
Fundamentally, these results further demonstrate the ability of
MicroRx(R) to identify single strains of bacteria that can impact
systemic disease. For MRx0518, the data indicated its ability to
safely engage the immune system, with a mechanism of action
potentially able to overcome important mechanisms of resistance to
checkpoint inhibitors, a major unmet need in cancer treatment. The
biomarker data also raises the potential to identify patients most
likely to respond to MRx0518 combination therapy. This data will
inform the subsequent clinical development strategy for MRx0518,
including taking this LBP into earlier lines of treatment.
Oncology (continued)
As part of this strategy, in February 2021, 4D pharma announced
a new clinical collaboration with Merck KGaA, Darmstadt, Germany,
and Pfizer Inc. to evaluate MRx0518 as a first-line maintenance
treatment for patients with locally advanced or metastatic
urothelial carcinoma in combination with Bavencio(R) (avelumab),
the first and only checkpoint immunotherapy approved in this
setting. Based on our clinical and biomarker data generated to
date, supported by emerging evidence in the scientific literature,
we believe MRx0518 has the potential to enhance the positive
clinical outcomes achieved by Bavencio(R) for patients in this
treatment setting. We have now commenced clinical trial initiation
activities and at the time of writing are screening patients.
In addition to our progress in the clinic and our collaborations
with MRx0518, we also believe our approach using MicroRx(R) to
select single strains could have impacts in other oncology
treatment settings. Expanding our oncology portfolio, in July 2021
we announced the publication of preclinical research in Nature
Communications (Luu, et al., 2021) relating to the ability of
MRx1299 to enhance the anti-tumor efficacy of cancer cell therapies
such as CAR-T in animal models.
Asthma
Having previously presented clinical data supporting the use of
MicroRx(R) to identify LBPs to stimulate the immune system via the
gut for the treatment of cancers, in 2021 we generated the first
clinical data validating the use of MicroRx(R) to identify and
select single strain LBPs which have an anti-inflammatory effect,
with lead clinical program MRx-4DP0004 for the treatment of asthma.
Preclinically, of particular interest was the ability of
MRx-4DP0004 to reduce levels of both neutrophils and eosinophils in
the lung. These cells represent the two major inflammatory pathways
associated with asthma.
Asthma represents a serious global health burden affecting over
260 million people worldwide (WHO, 2021). It is a heterogeneous
disease consisting of numerous clinical phenotypes, driven by
different underlying biology and inflammatory processes. Current
therapeutic options are not effective in all patients, and
biologics approved for more severe patients mainly address
inflammation associated with eosinophils. Thus, there remains a
significant unmet need for new treatment options. The goal for
asthma patients and the clinicians who treat them is better control
and reduced reliance on rescue medications such as short acting
beta agonists (SABA), and ultimately a better quality of life for
patients.
In December 2021, we reported topline clinical results from Part
A of our Phase I/II placebo-controlled trial of MRx-4DP0004 in
patients with partly controlled asthma. MRx-4DP0004 was dosed
alongside patients' regular medication of inhaled corticosteroid
(ICS) with or without long-acting beta agonist (LABA).
As a first-in-human study, the primary goal of Part A was to
demonstrate the safety and tolerability of MRx-4DP0004 as an add-on
therapy, but we were also able to investigate a number of secondary
endpoints evaluating its clinical activity in patients. The trial
achieved the primary endpoint, showing MRx-4DP0004 to be safe and
well tolerated, as has been the case for all 4D pharma's
clinical-stage LBPs to date.
Further, the results also showed that, compared to placebo,
those receiving MRx-4DP0004 had improved quality of life and
greater control of their asthma, demonstrated by a reduction of
SABA rescue inhaler use and a greater proportion of patients
showing a reduction in ACQ-6 score (a clinically validated tool
widely used to measure asthma control in trials and clinical
practice) from baseline. The improvements in ACQ-6 are particularly
encouraging, as although Part A was not intended to be powered for
significance, the proportion of patients with improvements in ACQ-6
scores was statistically significant across all timepoints. This
gives us confidence as we move into Part B, in which the primary
endpoint will be the proportion of patients showing a reduction in
the ACQ-6 score.
Following these topline results, in early 2022 we hosted a
virtual event with Key Opinion Leader (KOL) and Chief Investigator
of the MRx-4DP0004 Phase I/II study, Professor Chris Brightling,
which highlighted the potentially broad utility of MRx-4DP0004
across the spectrum of asthma severity and different inflammatory
phenotypes.
These highly encouraging clinical results for MRx-4DP0004 are
not only a world first and important milestone for the microbiome
therapeutics field in respiratory disease, but also provide
clinical validation of the potential of the MicroRx(R) platform to
identify and develop single strain LBPs with potent systemic
activity on the human immune system.
Irritable Bowel Syndrome (IBS)
In late 2020, we announced topline results from our Phase II
placebo-controlled signal finding study in IBS patients to evaluate
the efficacy of Blautix(R), uniquely in both IBS-C (constipation
predominant) and IBS-D (diarrhea predominant).
In 2021, at Digestive Disease Week (DDW), we presented further
analyses of the clinical data which revealed particularly strong
activity on the key symptom of abnormal bowel habit (stool
frequency in IBS-C or stool consistency in IBS-D). This is
particularly pertinent because published FDA guidelines state that
bowel habit can serve as an approvable primary endpoint in pivotal
studies.
The additional analyses also revealed that the topline results
were impacted by a high placebo response rate in patients in the UK
and Ireland, with enhanced positive signals seen in the larger US
patient population representing approximately two-thirds of the
patients enrolled in the Phase II trial. The activity of Blautix(R)
relative to placebo in this study was competitive with approved
therapeutics for IBS-C and IBS-D, though Blautix(R) is the only
potential therapeutic with activity in both subtypes, while
demonstrating a highly favorable placebo-like safety profile.
Following the successful Phase II trial 4D pharma has engaged
with regulators and potential partners regarding next steps for
Blautix(R) towards a potential pivotal program in IBS, seeking to
address a significant unmet need for a safe and innovative therapy
across IBS subtypes.
Parkinson's
Over 10 million people are currently living with Parkinson's,
and this figure is only expected to grow as the global population
ages. The cornerstone of Parkinson's treatment for over half a
century has been focused on replacing deficient dopamine in the
brain caused by the loss of the nerves which normally produce it.
This has some success in treating the symptoms but does not address
the underlying causes of neurodegeneration. Its effects also tend
to wear off over time and their long-term use results in
significant side effects. There is therefore a great need for new
and more effective treatments which address the underlying causes
of the condition, not simply the symptoms.
4D pharma is seeking to impact key disease processes via the
gut-brain axis. Key targets in the drive to develop a novel
therapeutic include addressing mitochondrial dysfunction and
oxidative stress, neuroinflammation, production of neurotrophic
factors, and ultimately neuroprotection. Using MicroRx(R) , 4D
pharma has identified two unique strains, MRx0029 and MRx0005,
which have shown activity in preclinical animal models of
Parkinson's disease, with positive impacts on these key aspects of
Parkinson's pathology.
Throughout 2021 and into 2022, we have continued to make great
progress towards the clinic, and in February 2022 the FDA cleared
the investigational new drug (IND) applications for both MRx0005
and MRx0029 for the treatment of Parkinson's. We now expect to
start our first-in-human clinical trial of both candidates in
people with Parkinson's in 2022.
At 4D pharma we recognize the need to involve people affected by
Parkinson's at every stage of research in order to bring novel and
transformational treatment to people with Parkinson's. We are proud
to have entered into collaborations with leading partners, with The
Michael J. Fox Foundation as an Industry Partner of the Parkinson's
Progression Markers Initiative, and with Parkinson's UK to
establish a Patient Advisory Board to better understand Parkinson's
disease and provide vital insight to help guide the development of
our LBP candidates.
Other research and development activity
In addition to our progress in the clinic on multiple fronts
generating in-patient data to support our thesis of using single
strains to drive therapeutic activity, we continue to use our
MicroRx(R) platform to both support our internal pipeline and to
collaborate with the pharmaceutical industry.
We continue to advance our ground-breaking collaboration with
MSD in the field of vaccines. This collaboration, which is
associated with potential milestone payments totaling over $1
billion across up to three undisclosed indications, utilizes
MicroRx(R) to discover and develop Live Biotherapeutics for
vaccines. In 2021 we continued to make good progress in this
collaboration.
As with any new pharmaceutical modality, reliable, consistent,
scalable, clinical-grade manufacturing can be a hurdle to progress.
At 4D pharma, we invested early in understanding and resolving this
issue, investing in our in-house cGMP-certified production
facility. We have successfully conducted the manufacturing
optimization and scale-up of multiple unique LBPs, allowing us to
progress four candidates into clinical trials to date. Our LBPs are
produced by a reliable, repeatable process, delivering a consistent
and stable product.
As Live Biotherapeutics advance into later stages of clinical
trials and towards commercialization, the knowledge, skills and
facilities needed to produce cGMP clinical product is increasingly
being seen as a true advantage for developers. This also provides
further evidence to support the thesis of single strain LBPs in
particular, as we continue to show a leading position in our
strategy and capabilities for the manufacturing of LBPs.
Impact of COVID-19
As with many industries, our Company felt the impact of the
ongoing COVID-19 pandemic during 2021. Recruitment and retention of
patients into clinical trials, dosing, and collection of data were
negatively impacted by lockdowns and other government enforced
restrictions, precautions and staff shortages at clinical sites and
external providers such as CROs, and general reluctance among the
patient population during the pandemic.
These factors have led to delays in readouts from some of our
clinical trials and regulatory interactions. For example, enrolment
for our Phase I/II clinical trial of MRx-4DP0004 in asthma was
impacted due to factors associated with the COVID-19 pandemic,
which delayed expected preliminary data for this clinical trial.
Similarly, regulatory interactions regarding next steps for
Blautix(R) in IBS were delayed as a result of the pandemic.
As we have seen with the arrival and spread of new variants over
the last two years, the trajectory of the pandemic remains
uncertain. We continue to assess the impact that COVID-19 will have
going forward on our ability to effectively conduct business
operations as planned. We continue to take steps to mitigate
disruption where possible, for example enabling a significant
proportion of our employees to telecommute and implementing other
technology solutions to minimize disruption.
Corporate development activities
In March we completed our merger with special purpose
acquisition company (SPAC) Longevity Acquisition Corp. and Nasdaq
listing (Nasdaq: LBPS), accessing $14.8 million in the process. In
conjunction, we completed a private placement raising gross
proceeds of approximately $25 million, with an additional
subscription by Duncan Peyton (Chief Executive Officer) and Dr.
Alex Stevenson (Chief Scientific Officer) for an additional $2.0
million of new ordinary shares.
In addition to capital raised during the Nasdaq listing, 4D
pharma further strengthened its financial position closing a senior
secured credit facility for up to $30 million. The initial $12.5
million tranche was drawn down at closing, with an additional $17.5
million available on achievement of certain milestones.
Alongside the Company's progression onto Nasdaq, we looked to
strengthen our management team and Board of Directors with
additional expertise and experience of the US market. In March 2021
we appointed John Beck as Chief Financial Officer (CFO) and it was
with great sadness that John suddenly passed away in July. John
truly believed that 4D was pioneering and brought his invaluable
financial and pharmaceutical experience in bringing 4D to Nasdaq.
He left an indelible mark on the 4D community and is missed by the
entire team.
Since the period end, in January 2022 we announced the
appointment of John Doyle as our new CFO. John brings over 15 years
of experience leading and developing the financial operations,
strategy and investor relations functions at public healthcare
companies and has already made valuable contributions to the
Company's strategic outlook.
Further strengthening our Board, we appointed Paul Maier as
Non-Executive Director, with Mr. Maier also serving as a member of
our Audit and Risk Committee and the Company's 'audit committee
financial expert' under AIM, SEC and Nasdaq rules.
Future outlook
We look ahead to building on our understanding of how 4D pharma
can unlock the power of the microbiome to develop safe and
innovative novel therapeutics for serious disease.
Building on a strong foundation of clinical data in multiple
diverse indications validating our single strain LBP approach, in
2022 and beyond we will continue to generate yet more data
demonstrating the potential of this new class of drug to treat
serious systemic diseases.
Meanwhile we will continue our innovative research, driven by
the MicroRx(R) platform and our in-house development and
manufacturing capabilities, to explore additional opportunities for
Live Biotherapeutics such as our pioneering work in new areas of
cancer therapy, and working with world-leading partners in
innovative collaborations.
With net proceeds from the Longevity Merger completed in March
2021, the fundraise completed in March 2021, the overdraft facility
in Spain, and first tranche of the credit facility with Oxford
Finance announced in July 2021, 4D pharma is funded to the fourth
quarter of 2022, providing the Company sufficient balance sheet
strength and runway to deliver on a number of our short to medium
term clinical and strategic goals.
The work we do both clinically and preclinically is delivering
on the promise of using the microbiome to treat systemic disease
and building long-term value in the MicroRx(R) platform. We look
forward to the continued positive evolution we have observed in the
wider field in recent months, such as an increased appreciation of
the need for mechanistic understanding for the future of LBP
development, and awareness of the critical importance of reliable
manufacturing in delivering this as a viable new class of drug.
Prof. Axel Glasmacher Duncan Peyton
Non-Executive Chairperson Chief Executive Officer
31 March 2022 31 March 2022
Financial outlook
We have financed our operations to date primarily through
proceeds from issuing 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 and access to our
library of well characterized bacterial isolates with the
disease-specific expertise of partners. The amounts that we
actually spend for any specific purpose may vary significantly and
will depend on a number of factors, including, but not limited to,
our research and development activities and programs, clinical
testing, regulatory approval, market conditions, and changes in or
revisions to our business strategy and technology development
plans. Investors will be relying on the judgement of our management
regarding the application of the proceeds from the sale of our
ordinary shares.
As of 31 December 2021, our cash and cash equivalents were
GBP15.5 million . After the year end, but before the signing of
these financial statements, the Group received research and
development tax credits of GBP3.2 million on its UK entities.
Excluding possible income from warrants, we believe that this
additional cash the Spanish loan facility, along with existing cash
and cash equivalents but before restrictive covenants on the Oxford
loan are sufficient to fund our projected operating requirements
until the fourth quarter of 2022. The Directors are continuing to
explore sources of finance that are available to the Group and have
a reasonable expectation that they will be able to secure
sufficient cash inflows into the Group to continue its activities
for not less than twelve months from the date of approval of these
accounts. However, because the additional finance is not committed
at the date of approval of these financial statements, these
circumstances represent a material uncertainty as to the Group's
ability to continue as a going concern. Should the Group be unable
to obtain further finance such that the going concern basis of
preparation were no longer appropriate, adjustments would be
required including to reduce the balance sheet values of assets to
their recoverable amounts, and to provide for future liabilities
that may arise.
We currently anticipate that we will require approximately
GBP20.4 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 approximately GBP13.7 million for general and
administrative costs over such 18-month period, which consists
primarily of expenditures for staff costs, legal and other
professional fees and other administrative expenses. We also
anticipate receiving approximately GBP7.2 million in cash for
research and development tax credit refunds over this 18-month
period and to make around GBP1.7 million on payments towards loans
and interest during this period.
Group statement of total comprehensive income
For the year ended 31 December 2021
31 December 31 December
2021 2020
Notes GBP000 GBP000
----------------------------------------------- ----- ----------- -----------
Revenue 522 534
Research and development costs (19,818) (22,041)
Administrative expenses (7,283) (5,969)
Foreign currency gains 441 363
Other income 36 45
----------------------------------------------- ----- ----------- -----------
Operating loss before non-recurring items (26,102) (27,068)
Non-recurring items 3 (44,381) (3,110)
----------------------------------------------- ----- ----------- -----------
Operating loss after non-recurring items (70,483) (30,178)
Finance income 1 5
Finance expense (610) (173)
Fair value adjustment on warrants and units 13,627 -
----------------------------------------------- ----- ----------- -----------
Loss before taxation (57,465) (30,346)
Taxation 4 3,505 4,383
----------------------------------------------- ----- ----------- -----------
Loss for the year (53,960) (25,963)
Other comprehensive income:
Exchange differences on translating foreign
operations (714) 110
----------------------------------------------- ----- ----------- -----------
Loss for the year and total comprehensive loss
for the year (54,674) (25,853)
----------------------------------------------- ----- ----------- -----------
Loss per share
Basic and diluted for the year 5 (31.83)p (22.80)p
----------------------------------------------- ----- ----------- -----------
The basic and diluted loss per share are the same as the effect
of share options and warrants is anti-dilutive.
Group statement of financial position
At 31 December 2021
At At
31 December 31 December
2021 2020
Notes GBP000 GBP000
------------------------------- ----- ----------- -----------
Assets
Non-current assets
Property, plant and equipment:
- Owned assets 2,885 3,659
- Right-of-use assets 677 835
Intangible assets 13,686 14,025
Taxation receivables 199 177
------------------------------- ----- ----------- -----------
17,447 18,696
------------------------------- ----- ----------- -----------
Current assets
Inventories 272 291
Trade and other receivables 2,167 3,223
Taxation receivables 7,557 4,436
Cash and cash equivalents 15,497 8,775
------------------------------- ----- ----------- -----------
25,493 16,725
------------------------------- ----- ----------- -----------
Total assets 42,940 35,421
------------------------------- ----- ----------- -----------
Liabilities
Current liabilities
Trade and other payables 4,810 6,379
Lease liabilities 80 73
------------------------------- ----- ----------- -----------
4,890 6,452
------------------------------- ----- ----------- -----------
Non-current liabilities
Lease liabilities 889 986
Loans 6 8,961 -
Warrants and units 7 4,992 -
Deferred tax 10 13
------------------------------- ----- ----------- -----------
14,852 999
------------------------------- ----- ----------- -----------
Total liabilities 19,742 7,451
------------------------------- ----- ----------- -----------
Net assets 23,198 27,970
------------------------------- ----- ----------- -----------
Capital and reserves
Share capital 8 451 329
Share premium account 8 185,703 136,278
Merger reserve 958 958
Translation reserve (159) 555
Other reserve (864) (864)
Share-based payments reserve 9 3,717 3,497
Retained earnings (166,608) (112,783)
------------------------------- ----- ----------- -----------
Total equity 23,198 27,970
------------------------------- ----- ----------- -----------
Group cash flow statement
For the year ended 31 December 2021
Year to Year to
31 December 31 December
2021 2020
Notes GBP000 GBP000
---------------------------------------------------- ------ ----------- -----------
Loss after taxation (53,960) (25,963)
Adjustments for:
Depreciation of property, plant and equipment 889 1,003
Amortization of intangible assets 87 203
Loss on disposal of property, plant and equipment 14 -
Short-term rentals included in the Income Statement 104 135
Finance income (1) (5)
Finance expense 610 173
Fair value adjustments on equity, warrants
and units 32,323 3,110
Share-based compensation 583 224
------------------------------------------------------------ ----------- -----------
Cash outflows from operations before movements
in working capital (19,351) (21,120)
Changes in working capital:
Decrease/(increase) in inventories 19 (93)
Increase in trade and other receivables (415) (2,105)
(Increase)/decrease in taxation receivables (3,143) 1,697
Decrease in trade and other payables (2,192) (1,052)
------------------------------------------------------------ ----------- -----------
Cash outflow from operating activities (25,082) (22,673)
------------------------------------------------------------ ----------- -----------
Cash flows from investing activities
Purchases of property, plant and equipment (203) (163)
Purchase of software and other intangibles - (15)
------------------------------------------------------------ ----------- -----------
Net cash outflow from investing activities (203) (178)
------------------------------------------------------------ ----------- -----------
Cash flows from financing activities
Proceeds from issues of ordinary share capital 27,904 29,740
Expenses on issue of shares (4,217) (1,594)
Loan income received 8,990 -
Lease and short-term rentals payments (176) (188)
Interest received 1 5
Interest paid (495) (173)
------------------------------------------------------------ ----------- -----------
Net cash inflow from financing activities 32,007 27,790
------------------------------------------------------------ ----------- -----------
Increase in cash and cash equivalents 6,722 4,939
Cash and cash equivalents at the start of the
year 8,775 3,836
------------------------------------------------------------ ----------- -----------
Cash and cash equivalents at the end of the
year 15,497 8,775
------------------------------------------------------------ ----------- -----------
Group statement of changes in equity
For the year ended 31 December 2021
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 2020 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 recognized in equity
for the year 165 27,982 - - - 3,099 - 31,246
Loss and total comprehensive
loss 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
--------------------------------- ------- ------- ------- ----------- ------- ----------- --------- --------
Issue of shares as part
of merger on 22 March 2021
(net of expenses) 78 31,270 - - - - - 31,348
Issued and assumed warrants
on merger on 22 March 2021 - - - - - 18,517 - 18,517
Reclassification of warrants
as liabilities - - - - - (18,517) - (18,517)
Share issue and placing
on 22 March 2021 (net of
expenses) 41 16,551 - - - - - 16,592
Directors' subscription
for shares on 16 April
2021 3 1,446 - - - - - 1,449
Exercise of share options - 94 - - - (224) - (130)
Exercise of warrants - 64 - - - (4) - 60
--------------------------------- ------- ------- ------- ----------- ------- ----------- --------- --------
Total transactions with
owners recognized in equity
for the year 122 49,425 - - - (228) - 49,319
Loss and total comprehensive
loss for the year - - - (714) - - (53,960) (54,674)
Lapsed options - - - - - (135) 135 -
Issue of share-based compensation - - - - - 583 - 583
--------------------------------- ------- ------- ------- ----------- ------- ----------- --------- --------
At 31 December 2021 451 185,703 958 (159) (864) 3,717 (166,608) 23,198
--------------------------------- ------- ------- ------- ----------- ------- ----------- --------- --------
Notes to the financial statements
For the year ended 31 December 2021
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 2021
has been extracted from the Company's audited financial statements
which were approved by the Board of Directors on 31 March 2022 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 report of the auditor on the financial statements for the
year ended 31 December 2020 was unqualified, did not contain a
statement under Section 498(2) or Section 498(3) of the Companies
Act 2006, and did not include a matter to which the auditors drew
attention by way of emphasis without qualifying their report.
The report of the auditor on the 31 December 2021 financial
statements was unqualified, did not contain a statement under
Section 498(2) or Section 498(3) of the Companies Act 2006 but did
include a matter to which the auditors drew attention by way of
emphasis without qualifying their report relating to the basis of
preparation which is reproduced below:
Material uncertainty related to going concern
We draw attention to the accounting policy on going concern
[reproduced in note 2 below] from page 69 in the financial
statements, which indicates that the group currently does not have
sufficient funds to enable it to meet all of its planned operating
expenditure as set out in the detailed forecasts prepared by
management for a period of at least twelve months from the date of
approval of these financial statements and will therefore have to
raise additional funds over and above the level of those already
announced and included in those forecasts. As stated in the
accounting policy on going concern, these events or conditions,
along with the other matters as set forth in note 2c of the
financial statements [reproduced in note 2 below], indicate that a
material uncertainty exists that may cast significant doubt on the
group's and parent company's ability to continue as a going
concern. Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the
director's use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our
evaluation of the directors' assessment of the entity's ability to
continue to adopt the going concern basis of accounting
included:
-- challenging the directors on the key assumptions in their
forecasts including the timing of cash inflows and outflows;
-- considering the directors assessment of the sensitivity of
the conclusions drawn in the forecasts to changes in the
assumptions; and
-- reviewing evidence of the significant transactions occurring
following the year end date and how they impact on the directors'
forecasts.
No matters came to our attention to indicate that the directors'
assumptions with regard to contractual cashflows were unreasonable,
nor that the expected cash inflows arising from fundraising and
business combination activities were inconsistent with the
information available to support these transactions.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this 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 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 and believe that the current cash position
of the Group will be sufficient to support the Group into quarter
four of 2022.The Directors are continuing to explore sources of
finance available to the Group and have a reasonable expectation
that they will be able to secure sufficient cash inflows into the
Group to continue its activities for not less than 12 months from
the date of approval of these accounts. They have therefore
prepared the financial statements on a going concern basis.
Because the additional finance is not committed at the date of
approval of these financial statements, these circumstances
represent a material uncertainty as to the Group's ability to
continue as a going concern. Should the Group be unable to obtain
further finance such that the going concern basis of preparation
were no longer appropriate, adjustments would be required including
to reduce the balance sheet values of assets to their recoverable
amounts, and to provide for future liabilities that may arise.
3. Non-recurring costs
Year to Year to
31 December 31 December
2021 2020
GBP000 GBP000
------------------------------------------------------- ----------- -----------
Fair value adjustments on warrants issued February
2020 in connection with the issue of equity - 3,110
Fair value adjustments on completion of the merger
with Longevity Acquisition Corporation are made up
as follows:
- Shares 34,153 -
- Public warrants 5,589 -
- Private warrants 1,236 -
- Representative units 2,339 -
- Backstop warrants 9,353 -
Less: cash received (after deduction of liabilities) (8,419) -
Fair value adjustment on warrants issued with loans 130 -
------------------------------------------------------- ----------- -----------
Total non-recurring costs 44,381 3,110
------------------------------------------------------- ----------- -----------
4. Taxation
The tax credit is made up as follows:
Year to Year to
31 December 31 December
2021 2020
GBP000 GBP000
-------------------------------------------------------- ----------- -----------
Current income tax
Corporation tax income for the year (3,496) (3,475)
Corporation tax expense for the year 14 2
Adjustment in respect of prior years (21) 42
-------------------------------------------------------- ----------- -----------
Total income tax credit recognized in the year (3,503) (3,431)
-------------------------------------------------------- ----------- -----------
Current deferred tax
Previously recognized deferred tax gains offset against
losses - (940)
Current year charge (2) (12)
-------------------------------------------------------- ----------- -----------
Total deferred tax (2) (952)
-------------------------------------------------------- ----------- -----------
Total income tax credit recognized in the year (3,505) (4,383)
-------------------------------------------------------- ----------- -----------
The enacted UK corporation tax rate 25.00% forms the basis for
the UK element of the deferred tax calculation noted below, the
equivalent rates used for Ireland and Spain were 12.50% and 25.00%
respectively and for the USA the federal tax rate used was 21.00%
and average state tax rate used was 8.84%.
At 31 December 2021, the Group had tax losses available for
carry forward of approximately GBP85.0 million (31 December 2020:
GBP66.6 million). The Group has not recognized deferred tax assets
relating to such earned forward losses of approximately GBP21.0
million (31 December 2020: GBP12.6 million).
Group management considers that there is insufficient evidence
of future taxable income, taxable temporary differences and
feasible tax-planning strategies to utilize all of the cumulative
losses and therefore it is not considered certain that the deferred
tax assets will be realized in full. If future income differs from
current projections, this could significantly impact the tax charge
or benefit in future years.
5. Loss per share
(a) Basic and diluted
Year to Year to
31 December 31 December
2021 2020
GBP000 GBP000
------------------------------------------------------ ----------- ------------
Loss for the year attributable to equity shareholders (53,960) (25,963)
------------------------------------------------------ ----------- ------------
Weighted average number of shares
Ordinary shares in issue 169,520,003 113,851,960
------------------------------------------------------ ----------- ------------
Basic loss per share (pence) (31.83)p (22.80)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 arising from fair value
adjustments on the issue of warrants and merger with Longevity
Acquisition Corporation.
Reconciliation of adjusted loss after tax:
Year to Year to
31 December 31 December
2021 2020
GBP000 GBP000
-------------------------------------- ----------- -----------
Reported loss after tax (53,960) (25,963)
Non-recurring costs 44,381 3,110
-------------------------------------- ----------- -----------
Adjusted loss after tax (9,579) (22,853)
-------------------------------------- ----------- -----------
Adjusted basic loss per share (pence) (5.65)p (20.07)p
-------------------------------------- ----------- -----------
6. Loans
31 December 31 December
2021 2020
GBP000 GBP000
------------------------ ----------- -----------
Current liabilities - -
Non-current liabilities 8,961 -
-------------------------- ----------- -----------
Net loan balance 8,961 -
-------------------------- ----------- -----------
The loans are made up as follows:
31 December 31 December
2021 2020
GBP000 GBP000
----------------------------- ----------- -----------
Term loan 9,241 -
Capitalized debt issue costs (280) -
------------------------------- ----------- -----------
Net loan balance 8,961 -
------------------------------- ----------- -----------
On 29 July 2021 the Group entered a loan agreement with Oxford
Finance S.A.R.L. for up to $30 million maturing on 1 July 2026 and
secured against substantially all of the assets of the Group and
drawing down the first tranche for $12.5 million or GBP8.990
million at that date.
Interest-only monthly payments will be made until either 1
September 2023 or 1 September 2024 dependent on certain milestones.
In addition, a 6.0% or 6.5% final payment fee will be charged, the
latter being dependent on the extension of the interest only
period, though this fee may be discounted to between 3% and 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 a restrictive covenant that requires the Group
to maintain a cash balance of at least $7.5 million if the Group
does not meet the conditions of the equity event. The equity event
requires the issue of equity securities and other receipt of income
from other partnering transactions, in certain combinations, of at
least $45 million before 1 April 2022.
The loan includes various customary covenants limiting the
Group's ability to perform certain functions that may affect
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 F-1
filings with the SEC, a link to which is provided on our
website.
7. Financial instruments
31 December 31 December
2021 2020
Warrants and units included in liabilities GBP000 GBP000
------------------------------------------- ----------- -----------
Current liabilities - -
Non-current liabilities 4,992 -
--------------------------------------------- ----------- -----------
4,992 -
------------------------------------------- ----------- -----------
The warrants and units included in liabilities are made up as
follows:
31 December 31 December
2021 2020
GBP000 GBP000
----------------------------------------------- ----------- -----------
Opening balance - -
Additions:
- Arising on merger with Longevity Acquisition
Corporation 18,517 -
- Arising on drawdown of loans 130 -
Change in fair value during the period (1 3,655) -
------------------------------------------------- ----------- -----------
Closing balance 4,992 -
------------------------------------------------- ----------- -----------
Warrants and units
The Group has the following warrant and unit option schemes:
a) Recognized on acquisition of Longevity Acquisition Corporation
On 22 March 2021 the Group completed their merger with Longevity
Acquisition Corporation and assumed the existing warrants and
recognized the backstop warrants issued in the funding of the
transaction. The transaction was subject to an exchange ratio of
7.5315 4D pharma plc shares for each Longevity Acquisition
Corporation share with the warrants and units detailed as
follows:
i. Public warrants
Public warrants are traded on Nasdaq as LBPSW. At acquisition
there were 4,000,000 public warrants which convert to half of a
Longevity share (pre-acquisition) or 15,063,000 4D pharma plc
ordinary shares at the exchange ratio. The public warrants are
exercisable until the fifth anniversary of the transaction and have
an exercise price of $11.50 per public warrant; they also include a
redemption price of $18.00 and a cashless redemption feature. As
the exercise price is expressed in USD but the Company's functional
currency is GBP they have been treated as financial liabilities in
the financial statements under IAS 32 with periodic gains and
losses on fair value adjustment included in the Income Statement.
As publicly traded financial instruments the fair value has been
assessed using a Type 1 valuation method which uses their publicly
traded value.
ii. Private warrants
At acquisition there were 320,000 private warrants which
converted to half of a Longevity share (pre-acquisition) or
1,205,040 4D pharma plc ordinary shares at the exchange ratio. The
private warrants are exercisable until the fifth anniversary of the
transaction and have an exercise price of $11.50 per private
warrant; in addition there is no redemption clause, provided
certain conditions are maintained or convert to public warrants
with the same characteristics as private warrants if the conditions
are not met, and cashless redemption features are also present. As
the exercise price is expressed in USD but the Company's functional
currency is GBP they have been treated as financial liabilities in
the financial statements under IAS 32 with periodic gains and
losses on fair value adjustment included in the Income Statement.
As publicly traded prices are not available the fair value has been
assessed using a Type 2, Black Scholes valuation model linked to
the terms, conditions and observable market data at issue.
iii. Representative units
At acquisition there were 240,000 representative units.
Pre-acquisition each unit converted 1.1 Longevity shares and one
public warrant or 1,988,316 4D pharma plc ordinary shares and
903,780 4D pharma shares in public warrants at the exchange ratio.
The representative units are exercisable until 28 August 2023 and
have an exercise price of $11.50 per unit and underlying redemption
clauses associated with the public warrants if exercised. As the
exercise price is expressed in USD but the Company's functional
currency is GBP they have been treated as financial liabilities in
the financial statements under IAS 32 with periodic gains and
losses on fair value adjustment included in the Income Statement.
As publicly traded prices are not available the fair value has been
assessed using a Type 2, Black Scholes valuation model linked to
the terms, conditions and observable market data at issue.
iv. Backstop warrants
Backstop warrants were issued to guarantors who provided
financial support for the merger with Longevity Acquisition
Corporation and came into effect on completion of the transaction.
At acquisition 7,530,000 backstop warrants were issued for one 4D
pharma plc ordinary share per warrant. The backstop warrants are
exercisable for 60 days following the exercise period of the
assumed warrants detailed in (i) and (ii) above. They have an
exercise at par value but are indexed to the exercise of the
assumed warrants, such that they only vest in proportion to the
percentage of these assumed warrants. They include a cashless
redemption feature and as the exercise price is indexed to these
factors they have been treated as financial liabilities in the
financial statements under IAS 32 with periodic gains and losses on
fair value adjustment included in the Income Statement. As publicly
traded prices are not available and multiple elements factor into
the fair value it has been assessed using a Type 3, Monte Carlo
valuation model linked to the terms, conditions and observable
market data at issue.
b) Loan warrants
On 29 July 2021 the Group issued 212,568 warrants to Oxford
Finance S.A.R.L. on the drawdown of the first $12.5 million of a
loan facility for up to $30 million. 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. Each warrant entitles the holder to subscribe for one
ordinary share at a price of $1.18 at any time up to the fifth
anniversary of the issue. As the exercise price is expressed in USD
but the Groups functional currency is GBP they have been treated as
financial liabilities in the financial statements under IAS 32 with
periodic gains and losses on fair value adjustment included in the
Income Statement. Since they are not publicly traded the fair value
was assessed using a Type 2, Black Scholes valuation model linked
to the terms, conditions and observable market data at issue.
Year ended 31 December 2021
Number
-----------------------------------------------------------------------
Exercise
price per At 31 At 31
Exercise share December Non-vesting December
Warrants and
units period Pence 2020 Granted Exercised or lapsed 2021 Exercisable
----------------- ---------- ------------- ---------- ---------- --------- ----------- ---------- -----------
Included in
liabilities
Public warrants 2021-2026 110.27-152.69 - 15,063,000 - - 15,063,000 15,063,000
Private
warrants 2021-2026 110.27-152.69 - 1,205,040 - - 1,205,040 1,205,040
Representative
units 2021-2023 103.38-105.97 - 2,892,096 - - 2,892,096 2,892,096
Backstop
warrants 2021-2026 0.25 - 7,530,000 - - 7,530,000 -
Loan warrants 2021-2026 84.80-87.36 - 212,568 - - 212,568 212,568
Included in
equity
18 February
2020 2020-2025 100.00 21,924,307 - (31,859) - 21,892,448 21,892,448
----------------- ---------- ------------- ---------- ---------- --------- ----------- ---------- -----------
21,924,307 26,902,704 (31,859) - 48,795,152 41,265,152
---------------------------- ------------- ---------- ---------- --------- ----------- ---------- -----------
Weighted average
exercise price of
options (pence) 100.00 91.51 100.00 - 95.32 112.67
----------------------------- ------------- ---------- ---------- --------- ----------- ---------- -----------
Year ended 31 December 2020
Number
----------------------------------------------------------------------
Exercise
price per At 31 At 31
Exercise share December Non-vesting December
Warrants and units period Pence 2019 Granted Exercised or lapsed 2020 Exercisable
------------------- ---------- ---------- --------- ---------- --------- ----------- ---------- -----------
Included in equity
18 February 2020 2020-2025 100.00 - 22,000,000 (75,693) - 21,924,307 21,924,307
------------------- ---------- ---------- --------- ---------- --------- ----------- ---------- -----------
- 22,000,000 (75,693) - 21,924,307 21,924,307
------------------------------ ---------- --------- ---------- --------- ----------- ---------- -----------
Weighted average
exercise price of
options (pence) - 100.00 100.00 - 100.00 100.00
------------------------------- ---------- --------- ---------- --------- ----------- ---------- -----------
31,859 warrants were exercised during the year (31 December
2020: 75,693) and 41,265,152 warrants were exercisable at the year
end (31 December 2020: 21,924,307).
The following table lists the assumptions used in calculating
the fair value of warrants and units:
Weighted
Expected Risk-free Expected Weighted average Number
interest share
volatility rate Dividend life of average price of options
Date of percentage percentage yield options exercise at date originally
issue range range % years price of grant granted
------------------------ ------------ ---------- ---------- -------- -------- -------- -------- ----------
Included in liabilities
22 March 5.00 to
Public warrants 2021 n/a n/a 0.0 4.22 131.48p 137.00p 15,063,000
22 March 5.00 to
Private warrants 2021 90.2-94.8 0.86-1.15 0.0 4.22 131.48p 137.00p 1,205,040
Representative 22 March 2.44 to
units 2021 96.0-106.1 0.43-0.78 0.0 1.66 104.68p 137.00p 2,892,096
22 March 5.00 to
Backstop warrants 2021 70.0-85.0 0.87-1.14 0.0 4.22 0.25p 137.00p 7,530,000
29 July 5.00 to
Loan warrants 2021 90.3-94.8 0.74-1.15 0.0 4.58 86.08p 88.00p 212,568
Included in equity
18 February
18 February 2020 2020 59.3 0.46 0.0 5.00 100.00p 46.00p 22,000,000
------------------------ ------------ ---------- ---------- -------- -------- -------- -------- ----------
The expected life of the warrants and units is based on
historical data and is not necessarily indicative of exercise
patterns that may occur. The expected volatility reflects the
assumption that the historical volatility is indicative of future
trends, which may also not necessarily be the actual outcome.
No dividends were assumed to be paid in the foreseeable
future.
The models assume, within the calculation of the charge,
delivery of options that are dependent on a judgemental comparison
to the total shareholder return against a specified comparator
group of companies upon passing of the vesting period.
No other features of warrants and units granted were
incorporated into the measurement of fair value.
Share option schemes
The Group operates the following unapproved share option
schemes:
a) 2015 Long Term Incentive Plan (LTIP)
Share options were granted to staff members under the '2015 Long
Term Incentive Plan' on 10 November 2015, 11 May 2016, 24 May 2017,
26 October 2018 and 5 July 2019. Share options are awarded to
management and key staff as a mechanism for attracting and
retaining key employees. These options vest over a period of up to
three years from the date of grant and are exercisable until the
10th anniversary of the award. Exercise of the award is subject to
the employee remaining a full-time member of staff at the point of
exercise and the vesting conditions being met. Vesting conditions
are based on a mixture of the Company's TSR performance, relative
to an appropriate comparator group, and certain individual
performance criteria. The fair value is assessed using a Type 2,
Black Scholes valuation model, linked to the terms, conditions and
observable market data at issue and included in equity in the
share-based payment reserve, and vesting conditions are based on a
mixture of the Company's TSR performance, relative to an
appropriate comparator group, and certain individual performance
criteria.
b) 2021 Long Term Incentive Plan (LTIP)
Share options were granted to staff members under the '2021 Long
Term Incentive Plan' on 17 December 2021. Share options are awarded
to management and staff as a mechanism for attracting and retaining
key employees. These options vest subject to members of staff
remaining employees on each vesting date and on exercise, with
one-quarter of the options awarded vesting on the anniversary of
the vesting start date with the remaining vesting dates and number
of remaining options occurring evenly over the remainder of a
four-year period from vesting start date. The fair value is
assessed using a Type 2, Black Scholes valuation model, linked to
the terms, conditions and observable market data at issue and
included in equity in the share-based payment reserve.
Year ended 31 December 2021
Number
-------------------------- --------------------------------------------------------------------
Exercise
price
per At 31 At 31
Exercise share December Non-vesting December
Date of grant period Pence 2020 Granted Exercised or lapsed 2021 Exercisable
-------------------------- ---------- -------- --------- --------- --------- ----------- --------- -----------
Issued under the 2015
LTIP
11 May 2016 2019-2026 0.25 9,686 - (9,686) - - -
24 May 2017 2020-2027 0.25 36,930 - (36,930) - - -
26 October 2018 2021-2028 0.25 57,962 - (21,353) - 36,610 36,610
5 July 2019 2022-2029 0.25 446,004 - - (176,706) 269,298 -
Issued under the 2021
LTIP
17 December 2021 2021-2031 52.35 - 7,520,152 - - 7,520,152 530,289
-------------------------- ---------- -------- --------- --------- --------- ----------- --------- -----------
550,582 7,520,152 (67,969) (176,706) 7,826,060 566,899
------------------------------------- -------- --------- --------- --------- ----------- --------- -----------
Weighted average exercise
price of options (pence) 0.25 52.35 0.25 0.25 50.31 48.99
-------------------------------------- -------- --------- --------- --------- ----------- --------- -----------
Year ended 31 December 2020
Number
------------------------------------------------------------------
Exercise
price
per At 31 At 31
Exercise share December Non-vesting December
Date of grant period Pence 2019 Granted Exercised or lapsed 2020 Exercisable
-------------------------- ---------- -------- --------- ------- --------- ----------- --------- -----------
Issued under the 2015
LTIP
11 May 2016 2019-2026 0.25 9,686 - - - 9,686 9,686
24 May 2017 2020-2027 0.25 110,817 - - (73,887) 36,930 36,930
26 October 2018 2021-2028 0.25 400,391 30,961 - (373,390) 57,962
5 July 2019 2022-2029 0.25 538,596 - - (92,592) 446,004 21,353
-------------------------- ---------- -------- --------- ------- --------- ----------- --------- -----------
1,059,490 30,961 - (539,869) 550,582 67,969
------------------------------------- -------- --------- ------- --------- ----------- --------- -----------
Weighted average exercise
price of options (pence) 0.25 0.25 - 0.25 0.25 0.25
-------------------------------------- -------- --------- ------- --------- ----------- --------- -----------
67,969 share options had been exercised at the year end (31
December 2020: nil) and 566,289 (31 December 2020: 67,969) share
options were exercisable at the year end.
The following table lists the assumptions used in calculating
the fair value of options:
Weighted
Expected Weighted average Number
share
Expected Risk-free Dividend life of average price of options
interest
volatility rate yield options exercise at date originally
Date of grant % % % years price of grant granted
--------------------------- ---------- --------- -------- -------- -------- -------- ----------
Issued under the 2015 LTIP
11 May 2016 52.50 1.40 0.00 3.00 0.25p 771p 60,147
24 May 2017 52.50 0.41 0.00 3.00 0.25p 321p 240,406
26 October 2018 50.96 0.72 0.00 3.00 0.25p 141p 746,779
5 July 2019 69.62 0.57 0.00 3.00 0.25p 93p 538,596
Issued under the 2021 LTIP
17 December 2021 86.64 1.22 0.00 5.84 86.64p 52.3p 7,520,152
--------------------------- ---------- --------- -------- -------- -------- -------- ----------
The expected life of the options is based on historical data and
is not necessarily indicative of exercise patterns that may occur.
The expected volatility reflects the assumption that the historical
volatility is indicative of future trends, which may also not
necessarily be the actual outcome.
No dividends were assumed to be paid in the foreseeable
future.
The models assume, within the calculation of the charge,
delivery of options that are dependent on a judgemental comparison
to the total shareholder return against a specified comparator
group of companies upon passing of the vesting period.
No other features of options granted were incorporated into the
measurement of fair value.
8. Share capital
Ordinary Share Share
shares capital premium Total
Group Number GBP000 GBP000 GBP000
-------------------------------------------- ----------- ------- ------- -------
Allotted, called up and fully paid ordinary
shares of 0.25p
Ordinary shares at 1 January 2020 65,493,842 164 108,296 108,460
-------------------------------------------- ----------- ------- ------- -------
Placing and subscription on 18 February
2020 44,000,000 110 21,890 22,000
Expenses of placing and subscription
on 18 February 2020 - - (1,065) (1,065)
Placing and subscription on 13 July
2020 21,898,400 55 7,610 7,665
Expenses of placing and subscription
on 13 July 2020 - - (529) (529)
Warrants exercised (issued 18 February
2020) 75,693 - 76 76
-------------------------------------------- ----------- ------- ------- -------
Ordinary shares at 31 December 2020 131,467,935 329 136,278 136,607
-------------------------------------------- ----------- ------- ------- -------
Issued in connection with Longevity
merger on 22 March 2021 31,048,192 78 34,075 34,153
Expenses of merger - - (2,805) (2,805)
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
Warrants exercised 31,859 - 64 64
Share options exercised 67,969 - 94 94
-------------------------------------------- ----------- ------- ------- -------
Ordinary shares at 31 December 2021 180,300,967 451 185,703 186,154
-------------------------------------------- ----------- ------- ------- -------
The balances classified as share capital and share premium
include the total net proceeds (nominal value and share premium
respectively) on issue of the Groups 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.
Significant transactions
On 18 February 2020 the Group raised GBP22.0 million in gross
proceeds (GBP20.9 million net) 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, one
warrant was allotted 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 100 pence at any time up to
the fifth anniversary of admission.
On 13 July 2020 the Group raised GBP7.7 million in gross
proceeds (GBP7.1 million net) 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.
On 22 March 2021 the Group completed the merger with Longevity
Acquisition Corporation, listed on Nasdaq and gained access to its
cash balance of $14.9 million which equated to $11.6 million or
GBP8.4 million after the settling liabilities. 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 31,048,192 shares at a price of GBP1.10 per
share,
On 22 March 2021 the Group raised GBP18.0 million in gross
proceeds (GBP16.6 million net) from a placing of 16,367,332 new
ordinary shares at an issue price of GBP1.10 per share.
On 16 April 2021 the Group raised GBP1.4 million in proceeds
through the sale of 1,317,680 new ordinary shares to Directors, who
were unable to invest in the placing, at a price of GBP1.10 per
share.
9. Share-based payment reserve
Share-based
compensation Warrants Total
GBP000 GBP000 GBP000
------------------------------------------------------ ------------ -------- --------
At 31 December 2019 367 - 367
Lapsed options (204) - (204)
Lapsed options relating to investment in subsidiaries - - -
Issued 235 3,110 3,345
Issued to investment in subsidiaries - - -
Exercised - (11) (11)
------------------------------------------------------ ------------ -------- --------
At 31 December 2020 398 3,099 3,497
Warrants issued or assumed in connection with
the merger with Longevity Acquisition Corporation 18,517 - 18,517
------------
Warrants re-classified as liabilities (18,517) - (18,517)
Lapsed options (135) - (135)
Issued 583 - 583
Exercised (224) (4) (228)
------------------------------------------------------ ------------ -------- --------
At 31 December 2021 622 3,095 3,717
------------------------------------------------------ ------------ -------- --------
10. Related party transactions
During the year the Group 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 Number
Shares and warrants of shares warrants GBP of 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
-------------------------- ---------- --------- --------- ---------- ------------ ---------
Subscription on 13
July 2020 at GBP0.35
per share 571,428 - 200,000 571,428 - 200,000
-------------------------- ---------- --------- --------- ---------- ------------ ---------
Total at 31 December
2020 8,359,835 666,666 866,666 8,317,896 666,666 866,666
-------------------------- ---------- --------- --------- ---------- ------------ ---------
Backstop shares issued
in connection with
the acquisition of
Longevity on 22 March
2021* 496,096 - 381,728 -
-------------------------- ---------- --------- --------- ---------- ------------ ---------
Subscription on 6 April
2021 at $1.10 per share 658,840 - 724,724 658,840 - 724,724
-------------------------- ---------- --------- --------- ---------- ------------ ---------
Total at 31 December
2021 9,514,771 666,666 1,591,390 9,358,464 666,666 1,591,390
-------------------------- ---------- --------- --------- ---------- ------------ ---------
Percentage of enlarged
share capital at 31
December 2021 6.36% 6.33%
-------------------------- ---------- --------- --------- ---------- ------------ ---------
Prof. Axel Glasmacher
Non-Executive Directors NED
--------------------------------------------
Shares and warrants Number of shares Number of warrants GBP
--------------------------------------------------------- ---------------- ------------------ ------
At 1 January 2020 - -
Subscription on 13 July 2020 at GBP0.35 per share 30,000 - 10,500
---------------------------------------------------------------- ---------------- ------------------ ------
Total at 31 December 2020 and 31 December 2021 30,000 - 10,500
---------------------------------------------------------------- ---------------- ------------------ ------
Percentage of enlarged share capital at 31 December 2021 0.02%
---------------------------------------------------------------- ---------------- ------------------ ------
* Excludes backstop warrants.
No warrants had been exercised by the existing Directors at 31
December 2021 or at 31 December 2020.
Merger with Longevity Acquisition Corporation
On 22 March 2021 the Group completed its merger with Longevity
Acquisition Corporation ('Longevity'), a Special Purpose
Acquisition Company, and listed on Nasdaq.
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 were as
follows:
Backstop arrangements and related party transactions
The Longevity shareholders had the right to redeem their
shareholding in Longevity, even if the requisite majority of
Longevity shareholders approved the merge with $14.6 million held
in a trust account by Longevity to fund redemptions. Any
redemptions by Longevity shareholders would have reduce the capital
available to the enlarged group so Backstop agreements were
executed by Longevity, the Company and Whale Management Corporation
(the 'SPAC Sponsor') with certain investors, including Duncan
Peyton and Dr. Alex Stevenson (together, the 'Backstop
Investors').
The Backstop Investors committed to subscribing for Longevity
shares prior to completion to ensure that Longevity held at least
$14.6 million in cash in the event of redemptions by Longevity
shareholders. To secure the backstop arrangements, Longevity agreed
to allot 700,000 Longevity shares to the Backstop Investors, Whale
agreed to transfer 200,000 Longevity shares to the Backstop
Investors, and the Group 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 were exercised.
The Backstop Investors also agreed to loan Longevity $1.86
million, the proceeds of which were used to repay Whale for loans
previously made by Whale to Longevity to fund its launch costs. At
completion, the enlarged group repaid this sum to the Backstop
Investors.
Related party transactions
The participation by Duncan Peyton (in the amount of $1,075,862)
and Dr. 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), participated 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 Groups
nominated advisor, 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 has taken into account the
commercial assessments of the 4D independent Directors .
Lock-up agreements
Duncan Peyton and Dr. Alex Stevenson, being the Chief Executive
Officer and Chief Scientific Officer respectively, entered into
lock-up agreements at completion. Under the terms of the lock-up
agreement, each of Mr. Peyton and Dr. Stevenson agreed 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 12 months.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR GZGFFMMGGZZZ
(END) Dow Jones Newswires
April 01, 2022 02:01 ET (06:01 GMT)
4d Pharma (LSE:DDDD)
Historical Stock Chart
From Mar 2024 to Apr 2024
4d Pharma (LSE:DDDD)
Historical Stock Chart
From Apr 2023 to Apr 2024
