TIDMHEMO
RNS Number : 6279M
Hemogenyx Pharmaceuticals PLC
30 April 2018
Hemogenyx Pharmaceuticals Plc
("Hemogenyx" or the "Company")
Final Results for the year ended 31 December 2017
Hemogenyx Pharmaceuticals plc (LSE: HEMO), formerly named Silver
Falcon plc ("Silver Falcon"), a business formed for the purpose of
acquiring another business or asset, reports its Final Results for
the year ended 31 December 2017. The business of the Company is now
the development of therapies for the treatment of blood
diseases.
All financial amounts are stated in GBP British pounds unless
otherwise indicated.
Key highlights
-- Successful acquisition of Hemogenyx Pharmaceuticals for GBP8m in shares in October 2017
-- Change of name to Hemogenyx Pharmaceuticals Plc
-- GBP2m raised in a Placing and Subscription
-- LakePharma, Inc. appointed as service provider for
development of, CDX bi-specific antibodies
-- University of Oxford collaboration aims to accelerate development of blood cancer treatments
-- Overall work is progressing successfully towards the goal of
submitting an IND application to the FDA
Post-period end highlights
-- First data results show CDX antibodies can attack and
eliminate Acute Myelogenous Leukemia in vitro
-- Patent application filed relating to new type of humanised
mouse (with chimeric mouse-human blood system)
-- Appointment of Sir Marc Feldmann, pioneer of anti-TNF therapy, as Executive Chairman
-- Appointment of cancer research expert Dr Michael Shepard to Scientific Advisory Board
-- Collaboration with major US biotechnology firm worth up to US$250,000
Dr. Vladislav Sandler, CEO of Hemogenyx, said:
"2017 was a significant year for Hemogenyx as we successfully
listed the business on the London Stock Exchange and raised the
financing necessary to further develop novel therapies with the
potential to transform the lives of bone marrow transplant
patients. We remain on track in the development of both of our
products according the timescale we outlined to investors in
October. We continue to successfully develop our Hu-PHEC cell
therapy product and we are on course to have our CDX antibodies
product in readiness for the start of Phase 1 trials as
planned."
Hemogenyx Pharmaceuticals Limited www.hemogenyx.com
Dr Vladislav Sandler, Chief Executive Via Walbrook PR
Officer & Co-Founder
Sir Marc Feldmann, Chairman
Optiva Securities Ltd Tel: +44 (0)20 3137 1902
Christian Dennis
Shard Capital Partners LLP Tel: +44 (0)20 7186 9950
Damon Heath, Erik Woolgar
Peterhouse Corporate Finance Limited Tel: +44 (0)20 7469 0930
Lucy Williams/Duncan Vasey
Walbrook PR Tel: +44 (0)20 7933 8780 or hemogenyx@walbrookpr.com
Paul McManus Mob: +44 (0)7980 541 893
About Hemogenyx Pharmaceuticals Plc
Hemogenyx Pharmaceuticals Plc is a publicly traded company (LSE:
HEMO) headquartered in London, with its wholly owned U.S. operating
subsidiary, HemoGenyx LLC, located in its state-of-the-art research
facility in Brooklyn, New York. HemoGenyx is a preclinical-stage
biopharmaceutical company focused on the discovery, development and
commercialization of novel therapies and treatments for blood
diseases such as leukemia and lymphoma. The company's leading
technologies aim to change the way in which bone
marrow/hematopoietic stem cell (BM/HSC) transplants are performed
and improve their efficacy. HemoGenyx's two distinct and
complementary products include an immunotherapy product for patient
conditioning-the CDX bi-specific antibody-and a cell therapy
product for BM/HSC transplantation-the HuPHEC. Each of these
products holds the potential to revolutionize the way BM/HSC
transplants are being performed, offering solutions that mitigate
the dangers and limitations associated with the current standard of
care. For more information, visit www.hemogenyx.com.
Chairman's Statement
I am very pleased to present an update on the Company for the
year ended 31 December 2017. I took over as Chairman on April 9,
2018, succeeding Dr Robin Campbell.
Silver Falcon listed on the London Stock Exchange on 9 November
2015. Following the evaluation of a number of acquisition
opportunities, it announced on 11 September 2017 an agreement to
acquire the entire share capital of Hemogenyx Pharmaceuticals
Limited for GBP8m (the "Acquisition"), to be satisfied by the issue
of 228,571,428 Consideration Shares at a price of 3.5p per share.
The acquisition constituted a reverse takeover under IFRS2.
Concurrent with the acquisition the Company raised GBP2m (before
expenses) through the issue of 57,142,857 New Ordinary Shares in a
Placing and Subscription at a price of 3.5p per share, as well as
offering 1 new share for 2 warrants to qualifying shareholders over
62,021,429 New Ordinary Shares at 4.0p per share. Silver Falcon
formally changed its name to Hemogenyx Pharmaceuticals Plc.
Hemogenyx Pharmaceuticals Limited is the holding company for
Hemogenyx LLC ("Hemogenyx"), a US based biotechnology company
developing therapies to transform bone marrow and blood stem cell
transplant procedures. These therapies aim to replace the need for
the imperfect existing methods of preparation of patients for
transplantation, such as chemotherapy and radiation treatments, and
at the same time address the problem of finding matching stem cell
donors whilst reducing the risk of blood stem cell rejection after
transplantation.
Consequently, shareholders now have exposure to an important and
growing area of treatment for serious blood diseases, such as
leukaemia and myeloma, whose treatment is currently restricted in
use by risk of toxicity. The two products being developed by
Hemogenyx have the potential to transform, and potentially
revolutionise, the bone marrow or blood stem cell transplant
procedure used to treat the most severe cases of these
diseases.
Hemogenyx is developing two products based on a key finding made
by Dr Vladislav Sandler, the Co-Founder and Chief Executive, for
the $8-9 billion bone marrow / haematopoietic stem cell transplant
market which could replace chemotherapy and radiation as a means of
pre-transplant conditioning, as well as addressing the problem of
stem cell donor availability and issues around relapse or cell
rejection after transplantation. These two products are:
Conditioning product - CDX bi-specific antibodies which redirect
a patient's own immune cells to eliminate unwanted blood stem cells
preparing a patient for bone marrow transplantation;
Cell therapy product - Cell replacement product using Human
Postnatal Hemogenic Endothelial Cells (Hu-PHEC) to generate
cancer-free, patient-matched blood stem cells after transplant into
the patient.
The products address a large and growing need and will be sold
into a market that is already substantial. If successful,
Hemogenyx's products will enable a much wider range of patients to
be treated than is presently the case as the products should be
applicable to the very many patients who are unfit for or, through
the lack of suitable cell donors, unable to receive blood stem cell
transplants at present.
Hemogenyx has, to date, made impressive progress on the
Company's two products efficiently using its limited financial
resources. With the GBP1.6million net of expenses raised during the
listing, we expect to take the initial conditioning product to
readiness for clinical trials and to make significant progress with
our cell therapy product.
Update on Hemogenyx progress
I should take this opportunity to remind shareholders of the
progress made since the reverse takeover and relisting. Overall the
work is progressing successfully toward our goal of submitting an
Investigational New Drug ("IND") application to the US Food and
Drug Administration for our CDX antibodies product.
LakePharma, Inc. appointment
In October last year we announced the appointment of LakePharma,
Inc. as our service provider for the development and manufacturing
of our CDX bi-specific antibodies lead product. LakePharma will
work with us through the product development process, from
discovery to biomanufacturing, as we move toward readiness for
clinical trials. LakePharma, the largest US-based biologics
contract research organisation, is a significant partner bringing
the relevant integrated antibody engineering and bioproduction
expertise we need to advance our CDX product through the necessary
preclinical stages to be ready to enter the clinic within our
planned timetable.
University of Oxford Collaboration
In November last year we confirmed a collaboration with the
University of Oxford to test new means of accelerating and
improving the process by which transplanted blood stem cells grow
and make healthy blood cells, and which promises to hasten the
development of our Hu-PHEC technology.
Researchers at Hemogenyx will administer certain biologics from
Oxford to stem cells in an attempt to accelerate and improve the
engraftment of hematopoietic stem and progenitor cells in animal
models. Engraftment is the process by which blood stem cells
integrate into the bone marrow and make healthy blood. If
successful, this approach has the potential to dramatically improve
the efficiency and outcome of bone marrow transplants.
We will then be in a position to test whether this approach
facilitates the conversion of Hu-PHEC into fully functional,
transplantable blood stem cells. Our Hu-PHEC when developed and
successfully tested will generate cancer-free, patient-matched
blood stem cells and are the basis of our cell therapy product and
have the potential, if all goes according to plan to improve the
efficacy of the bone marrow transplantation therapy.
In addition, we expanded our material transfer agreement with a
major US research university, ensuring the reliable supply of
high-quality human tissues for the development of our Hu-PHEC cell
therapy product.
Post-period end updates
Following the end of the period under review, we have been able
to announce two additional items of significance, describing
research progress. The first major item was the receipt of our
first set of data results showing that developed by Hemogenyx CDX
bi-specific antibodies are capable of attacking and eliminating
cultured cells of the blood cancer, Acute Myelogenous Leukemia
(AML), tested in vitro.
This is a significant development in the process needed to
develop CDX antibodies to become a universally available
conditioning product for patients undergoing bone marrow
transplants as a treatment for serious blood diseases.
At the same time, we confirmed the filing of a provisional
patent application relating to our development of a new type of
humanised mice with a chimeric mouse-human blood system. This can
be used to advance product development, as well as to model several
other diseases and drug discovery applications. Using these new
humanised mice should allow us to demonstrate that CDX bi-specific
antibodies are effective in the treatment of AML, this time in
vivo.
Of particular significance is that this new type of humanised
mice allows us to extend our work to other disease models and the
evaluation of specific drug candidates. Furthermore, this is of
interest to large biopharmaceutical companies. Thus, in mid-March
2018 we announced a collaboration with a major US biotechnology
company (with whom we were already working and from whom we had
already received revenue) to use our humanised mice for this very
purpose. The deal is revenue generating for the Company and is
worth up to approximately $250,000 and we believe this has the
potential to generate further income as the collaboration
develops.
Financial Results
During the year the Group made a loss of GBP2,319,734 (2016:
GBP470,839 loss). As at present, we remain within budget for the
developments of our products.
Scientific Advisory Board & Board update
I have been Chairman of the Scientific Advisory Board since
September 2017 and have been working with the Company to widen its
expertise and to bring in advisers that can specifically help given
the stage which the Company's product development has reached.
In March 2018, we were very pleased to welcome Dr Michael
Shepard to our Scientific Advisory Board. Dr Shepard is a renowned
cancer research specialist and his work led to the discovery and
development of many successful cancer treatments including
Herceptin/trastuzumab, an antibody used to treat breast cancer
patients when he was at Genentech. Sales of Herceptin last year
exceed $6.5 billion worldwide.
Our Scientific Advisory Board, under my Chairmanship brings
together a number of experienced experts with extensive biotech and
large pharma drug development experience and their calibre is a
reflection of potential opportunity that our therapies present.
Further additions are under consideration.
Earlier this month I extended my commitment to the Company and
became Executive Chairman, replacing Robin Campbell, who has become
a Non-Executive Director.
In November, we announced that Timothy Le Druillenec, Finance
Director, stood down as a Director and at the same time as my
appointment to the Board, Adrian Beeston stood down as a
Non-Executive Director. I again extend my thanks to both Timothy
and Adrian for their contribution to the successful completion of
the Company's readmission and trading on the main market of the
London Stock Exchange.
The Board have continued to demonstrate their confidence in the
ongoing success of the business throughout the period under review
and post-period end. I have elected to receive most of my
remuneration in shares and collectively we remain confident that
they should deliver significant shareholder return over the long
term.
As a further sign of confidence, we were pleased to note that
Cornell University, with whom we have an exclusive licence
agreement relating to the patents covering the method of isolation
of post-natal hemogenic endothelial cells, invented by Dr Sandler,
elected to receive part payment for a sum due in a mixture of new
shares and cash, rather than cash as previously expected.
Outlook
Our two main planned products are on track and should if fully
developed and brought into use greatly reduce the dangers of
patient conditioning procedures and create a new form of blood stem
cell transplantation that has the potential to significantly
improve the long-term success of bone marrow transplants and to
transform the lives of patients diagnosed with serious blood
diseases.
My fellow Directors and I believe that the Company is
well-advanced on the planned development steps that were announced
at Admission and we look forward to the next 12 months with
confidence.
Prof Sir Marc Feldmann AC, FRS
MB BS, PhD, FRCP, FRCPath, FAA, F Med Sci
Chairman
Statement of Comprehensive Income
Consolidated Statement of Comprehensive
Loss
Unaudited
Year Ended
Year Ended 31 31 December
Continuing Operations Note December 2017 2016
Revenue - -
Administrative Expenses 6 787,362 447,151
Depreciation Expense 11 33,614 11,870
Operating Loss (820,976) (459,022)
Other income 101,138
Finance Costs (10,741) (11,817)
Reverse acquisition expense 4 (1,631,007) -
Loss before Taxation (2,361,599) (470,839)
------------------ ------------------
Taxation - -
Loss for the year attributable to
equity owners (2,361,599) (470,839)
------------------ ------------------
Items that will be reclassified subsequently
to profit or loss:
Translation of foreign operations (36,652) 26,526
------------------ ------------------
Other Comprehensive income for the
year (36,652) 26,526
Total comprehensive income/(loss)
to the year attributable to the equity
owners (2,398,251) (417,787)
Basic and diluted (per share) 10 (0.01) (0.00)
The notes to the financial statements form an integral part of
these financial statements.
Statement of Financial Position
Statement of Financial Position Group
Unaudited Unaudited
Year Ended Year Ended Year Ended
31 December 31 December 31 December
Note 2017 2016 2015
------ ----------------- ----------------- -----------------
Assets
Non-current assets
Property, plant and equipment 11 191,578 175,797 -
Intangible asset 12 257,525 281,577 234,771
Investment - - -
Total non-current assets 449,103 457,374 234,771
Current assets
Trade and other receivables 15 69,784 162,059 41,295
Cash and cash equivalents 1,876,655 87,223 47,390
Total current assets 1,946,439 249,282 88,685
Total assets 2,395,542 706,656 323,456
================= ================= =================
Equity and Liabilities
Equity attributable to shareholders
Paid-in Capital
Called up share capital 16 3,600,514 1,010,849 255,935
Share premium 17 7,341,056 - -
Other reserves 18 369,147 - -
Reverse asset acquisition reserve 4 (6,157,894) - -
Foreign currency translation
reserve (13,984) 22,668 (3,858)
Retained Earnings (3,006,982) (645,383) (174,544)
Total Equity 2,131,857 388,134 77,533
Liabilities
Non-current liabilities
Borrowings 20 - 275,500 229,704
Total non-current liabilities - 275,500 229,704
Current liabilities
Trade and other payables 20 263,685 16,688 5,241
Current borrowings 20 - 26,335 10,979
Total Current Liabilities 263,685 43,023 16,220
Total Liabilities 263,685 318,522 245,924
----------------- ----------------- -----------------
Total equity and liabilities 2,395,542 706,656 323,456
================= ================= =================
Statement of Financial Position Company
Year Ended Year Ended
31 December 31 December
Note 2017 2016
-------- ---------------- -----------------
Assets
Non-current assets
Loan to subsidiaries 13 594,435 -
Investment in subsidiary 14 8,000,000 -
Total non-current assets 8,594,435 -
Current assets
Trade and other receivables 16 66,013 1,680
Cash and cash equivalents 1,748,337 1,045,723
Total current assets 1,814,350 1,047,403
Total assets 10,408,785 1,047,403
================ =================
Equity and Liabilities
Equity attributable to shareholders
Paid-in Capital
Called up share capital 17 3,600,514 669,000
Share premium 18 7,341,056 841,243
Other reserves 19 369,147 -
Retained Earnings (1,165,532) (606,535)
Total Equity 10,145,185 903,708
Liabilities
Current liabilities
Trade and other payables 20 263,600 143,695
Total Current Liabilities 263,600 143,695
Total Liabilities 263,600 143,695
---------------- -----------------
Total equity and liabilities 10,408,785 1,047,403
================ =================
Hemogenyx Pharmaceuticals Plc has used the exemption grated
under s408 of the Companies Act 2006 that allows for the
non-disclosure of the Income Statement of the parent company. The
after tax loss attributable to Hemogenyx Pharmaceuticals Plc for
the year ended 31 December 2017 was GBP558,997 (2016:
GBP519,898).
Statement of Changes in Equity
Statement of Changes in Equity
Group
Foreign
Called Other Reverse currency
up Share Share reserves acquisition translation Retained Total
Capital Premium reserve reserve losses Equity
---------------- -------------------------- -------------------------- ---------- -------------- ------------ -------------------------- -------------------------------
As at 1
January
2016 255,935 - - - (3,858) (174,544) 77,533
Loss in year - - - - (470,839) (470,839)
Other
Comprehensive
Income - - - - 26,526 - 26,526
---------------- -------------------------- -------------------------- ---------- -------------- ------------ -------------------------- -------------------------------
Total
comprehensive
income for
the period - - - - 26,526 (470,839) (444,313)
Issue of share
capital 754,914 - - 754,914
---------------- -------------------------- -------------------------- ---------- -------------- ------------ -------------------------- -------------------------------
As at 31
December
2016 1,010,849 - - - 22,668 (645,383) 388,134
---------------- -------------------------- -------------------------- ---------- -------------- ------------ -------------------------- -------------------------------
Loss in year - - - - - (2,361,599) (2,361,599)
Other
Comprehensive
Income - - - - (36,652) - (36,652)
Total
comprehensive
income for
the year - - - - (36,652) (2,361,599) (2,398,251)
Transfer to
reverse
acquisition
reserve (1,010,849) - - 1,010,849 - - -
Recognition
of Hemogenyx
PLC equity
at reverse
acquisition 669,000 841,243 - 831,257 - - 2,341,500
Issue of shares
for
acquisition
of subsidiary 2,285,714 5,714,286 (8,000,000) - - -
Issue of shares
to directors
for services 30,000 75,000 - - - - 105,000
Issue of shares
- share
subscription 571,429 1,428,571 - - - - 2,000,000
Share issue
costs (495,316) - - - - (495,316)
Issue of shares
for debt
settlement 44,371 110,927 - - - - 155,298
Issue of
options - - 35,492 - - - 35,492
Issue of
warrants - (333,655) 333,655 - - - -
---------------- -------------------------- -------------------------- ---------- -------------- ------------ -------------------------- -------------------------------
As at 31
December
2017 3,600,514 7,341,056 369,147 (6,157,894) (13,984) (3,006,982) 2,131,857
---------------- -------------------------- -------------------------- ---------- -------------- ------------ -------------------------- -------------------------------
Statement of Changes in Equity Company
Called up Other Retained
Share Capital Share Premium reserves earnings/(loss) Total Equity
---------------- -------------------------- -------------------------- ---------- -------------------------- --------------------------
As at 1
January
2016 649,000 781,243 - (86,637) 1,343,606
Loss in period - - - (519,898) (519,898)
Other
Comprehensive
Income - - - - -
---------------- -------------------------- -------------------------- ---------- -------------------------- --------------------------
Total
comprehensive
income for
the
period - - - (519,898) (519,898)
Issue of share
capital net
of share
issue
costs 20,000 60,000 - - 80,000
---------------- -------------------------- -------------------------- ---------- -------------------------- --------------------------
As at 31
December
2016 669,000 841,243 - (606,535) 903,708
---------------- -------------------------- -------------------------- ---------- -------------------------- --------------------------
Loss in year - - - (517,133) (517,133)
Other
Comprehensive
Income - - - - -
Total
comprehensive
income for
the
year - - - (558,997) (558,997)
Issue of shares
for
acquisition
of subsidiary 2,285,714 5,714,286 - - 8,000,000
Issue of shares
to directors
for services 30,000 75,000 - - 105,000
Issue of shares
- share
subscription 571,429 1,428,571 - - 2,000,000
Share issue
costs - (495,316) - - (495,316)
Issue of shares
for debt
settlement 44,371 110,927 - - 155,298
Issue of
options - - 35,492 - 35,492
Issue of
warrants - (333,655) 333,655 - -
---------------- -------------------------- -------------------------- ---------- -------------------------- --------------------------
As at 31
December
2017 3,600,514 7,341,056 369,147 (1,165,532) 10,145,185
---------------- -------------------------- -------------------------- ---------- -------------------------- --------------------------
Statement of Cash Flows
Unaudited
Year Ended
Year Ended 31 31 December
Statement of Cash Flows Group Note December 2017 2016
Cash flows generated from operating
activities
Loss before income tax (2,361,599) (470,839)
Depreciation 11 33,614 11,870
Other Non-cash items interest/professional
fees (shares issued) 105,000 60,358
Interest income (732) (217)
Interest expense 11,473 12,035
Reverse Acquisition Expense 4 1,631,020 -
Share based payments 18 35,492 -
Working capital changes applicable to pre-acquisition
retained earnings (1,145) -
Change in trade and other payables 7,637 9,507
Change in trade and other receivables (86,260) (163,209)
net cash outflow used in operating activities (452,979) (540,495)
------------------ ------------------
Cash flows generated from financing
activities
Proceeds from issuance of equity securities 2,000,000 754,914
Share issue costs (383,871) -
Repayment of loans and borrowings 20 (154,422) -
Other current liabilities acquired at
acquisition (245,000) -
Net cash flow generated from financing
activities 1,216,707 754,914
------------------ ------------------
Cash flows generated from investing
activities
Interest income 732 217
Interest paid (1,011) -
Cash acquired on acquisition 1,098,640 -
Purchase of property, plant & equipment (64,257) (188,785)
------------------ ------------------
Net cash flow generated from investing
activities 1,034,104 (188,567)
------------------ ------------------
Net increase in cash and cash equivalent 1,797,832 25,852
Effect of exchange rates on cash (8,400) 13,981
Cash and cash equivalents at the beginning
of the period 87,223 47,390
------------------ ------------------
Cash and cash equivalents at the end
of the period 1,876,655 87,223
------------------ ------------------
Year Ended
31 December Year Ended 31
Statement of Cash Flows Company Note 2017 December 2016
Cash flows generated from operating
activities
Loss before income tax (558,997) (519,898)
Other Non-cash items interest/professional
fees (shares issued) 105,000 80,000
Foreign exchange (gain) loss 19,176 -
Interest income (1,166) -
Share based payments 18 35,492 -
Change in trade and other payables 23,459 132,278
Change in trade and other receivables (64,332) 29,487
net cash outflow used in operating
activities (441,368) (278,133)
----------------- ------------------
Cash flows generated from financing
activities
Proceeds from issuance of equity
securities 2,000,000 -
Share issue costs (383,871) -
Net cash flow generated from
financing activities 1,616,129 -
----------------- ------------------
Cash flows generated from investing
activities
Interest income 1,166 -
Loan to subsidiary (473,313) -
----------------- ------------------
Net cash flow generated from
investing activities (472,146) -
----------------- ------------------
Net increase in cash and cash
equivalent 702,614 (278,133)
Cash and cash equivalents at
the beginning of the period 1,045,723 1,323,869
----------------- ------------------
Cash and cash equivalents at
the end of the period 1,748,337 1,045,736
----------------- ------------------
Notes to the Financial Statements
1. General Information
The Company is preclinical-stage biotechnology company focused
on the discovery, development and commercialization of innovative
treatments relating to bone marrow/hematopoietic (blood-forming)
stem cell (BM/HSC) transplants for blood diseases, including
leukaemia, lymphoma and bone marrow failure. The products under
development are designed to address a range of problems that occur
with current standard of care treatments.
The Company's registered office is located at 5 Fleet Place,
London EC4M 7RD, and is listed on the London Stock Exchange.
2. Summary of Significant Accounting Policies
The principal accounting policies applied in the preparation of
these financial statements are set out below. These policies have
been consistently applied to all the years presented, unless
otherwise stated.
Basis of Preparation
The financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") and IFRS
Interpretations Committee (IFRS IC) interpretations as adopted for
use by the European Union, and the Companies Act 2006. The
financial statements have been prepared under the historical cost
convention.
Basis of Consolidation
The consolidated financial statements comprise the financial
statements of Hemogenyx Plc and its subsidiaries as at 31 December
2017. The financial statements of the subsidiaries are prepared for
the same reporting period as the parent company, using consistent
accounting policies.
All intra-group balances, transactions, income and expenses and
profits and losses resulting from intra-group transactions that are
recognised in assets, are eliminated in full.
Subsidiaries are fully consolidated from the date of
acquisition, being the date on which the Group obtains control, and
continue to be consolidated until the date that such control
ceases. Please refer to note 4 for information on the consolidation
of Hemogenyx LLC.
Hemogenyx Pharmaceuticals Plc has used the exemption grated
under s408 of the Companies Act 2006 that allows for the
non-disclosure of the Income Statement of the parent company. The
after tax loss attributable to Hemogenyx Pharmaceuticals Plc for
the year ended 31 December 2017 was GBP558,997 (2016:
GBP519,898).
Research and development expenditure
(i) Research and development
Expenditure on research activities, undertaken with the prospect
of gaining new scientific or technical knowledge and understanding,
is recognised in profit or loss as incurred.
Development activities involve a plan or design for the
production of new or substantially improved products and processes.
Development expenditures are capitalised only if development costs
can be measured reliably, the product or process is technically and
commercially feasible, future economic benefits are probable, and
the Company intends to, and has sufficient resources to, complete
development and to use or sell the asset. No development costs have
been capitalized to date.
(ii) Clinical trial expenses
Clinical trial expenses are a component of the Company's
research and development costs. These expenses include fees paid to
contract research organizations, clinical sites, and other
organizations who conduct development activities on the Company's
behalf. The amount of clinical trial expenses recognized in a
period related to clinical agreements are based on estimates of the
work performed using an accrual basis of accounting. These
estimates incorporate factors such as patient enrolment, services
provided, contractual terms, and prior experience with similar
contracts.
(iv) Government grants
Government grants relate to financial grants from governments,
public authorities, and similar local, national or international
bodies. These are recognised when there is a reasonable assurance
that the Company will comply with the conditions attaching to them,
and that the grant will be received. Government grants relating to
research and development are off-set against the relevant
costs.
Intangibles
Research and development
Research expenditure is written off as incurred. Development
expenditure is written off as incurred, except where the Directors
are satisfied that a new or significantly improved product or
process results and other relevant IAS 38 criteria are met as to
the technical, commercial and financial viability of individual
projects that would require such costs to be capitalised. In such
cases, the identifiable directly attributable expenditure is
capitalised and amortised. The Group's view is that capitalised
assets have a finite useful life and to that extent they should be
amortised over their respective unexpired periods with provision
made for impairment when required. Assets capitalised are not
amortised until the associated product is available for use or
sale. Amortisation is calculated using the straight-line method to
allocate the costs of development over the estimated useful
economic lives. Estimated useful economic life is assessed by
reference to the remaining patent life and may be adjusted after
taking into consideration product and market characteristics such
as fundamental building blocks and product life cycle specific to
the category of expenditure.
Intellectual property (IP)
IP assets (comprising patents, know-how, copyright and licenses)
acquired by the Group as a result of a business combination are
initially recognised at fair value or as a purchase at cost, and
are capitalised.
Internally generated IP costs are written off as incurred except
where IAS 38 criteria, as described in research and development
above, would require such costs to be capitalised.
The Group's view is that capitalised IP assets have a finite
useful life and to that extent they should be amortised over their
respective unexpired periods with provision made for impairment
when required. Capitalised IP assets are not amortised until the
Group is generating an economic return from the underlying asset
and as such no amortisation has been incurred to date as the
products to which they relate are not ready to be sold on the open
market. When the trials are completed and the products attain the
necessary accreditation and clearance from the regulators, the
Group will assess the estimated useful economic like and the IP
will be amortised using the straight line method over their
estimated useful economic lives.
Fixed assets
All property, plant and equipment is stated at historical cost
less accumulated depreciation or impairment value. Cost includes
the original purchase price and expenditure that is directly
attributable to the acquisition of the items to bring the asset to
its working condition. Depreciation is provided at rates calculated
to write off the cost less estimated residual value of each asset
over its expected useful economic life. Assets held under finance
leases, if any, are depreciated over their expected useful economic
life on the same basis as owned assets, or where shorter, the lease
term. Assets are reviewed for impairment when events or changes in
circumstances indicate that the carrying amount may not be
recoverable.
The following rates are used:
Computer equipment 33% Straight line
Laboratory equipment 20% - 50% Straight line
--------------------- ---------- --------------
Impairment of non-financial assets
The Group is required to review, at least annually, whether
there are indications (events or changes in circumstances) that
non-financial assets have suffered impairment and that the carrying
amount may exceed the recoverable amount. If there are indications
of impairment then an impairment review is undertaken. An
impairment charge is recognised within operating costs for the
amount by which the carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of the asset's fair value less
costs to sell and the value-in-use. In the event that an intangible
asset will no longer be used, for example, when a patent is
abandoned, the balance of unamortised expenditure is written
off.
Impairment reviews require the estimation of the recoverable
amount based on value-in-use calculations. Non-financial assets
relate typically to investments in related parties and in-process
development and patents, and require broader assumptions than for
developed technology. Key assumptions taken into consideration
relate to technological, market and financial risks and include the
chance of product launch taking into account the stage of
development of the asset, the scale of milestone and royalty
payments, overall market opportunities, market size and competitor
activity, revenue projections, estimated useful lives of assets
(such as patents), contractual relationships and discount rates to
determine present values of cash flows.
Investments
Equity investments in entities that are associates or
subsidiaries are held at cost, less any provision for impairment.
As there is no quoted price in an active market, fair value cannot
be reliably measured.
Going Concern
The preparation of financial statements requires an assessment
on the validity of the going concern assumption.
The Directors have reviewed projections for a period of at least
12 months from the date of approval of the financial statements.
The financial statements have been prepared on the going concern
basis. The Group's forecasts and projections, taking account of
reasonably possible changes in trading performance, show that the
Group should be able to operate within the level of its current
available working capital and working capital facilities for the
next 12 months. Therefore the Directors consider the going concern
basis appropriate.
Financial Instruments
Financial assets and liabilities are recognised in the Company's
statement of financial position when the Company becomes a party to
the contractual provisions of the instrument. The Company currently
does not use derivative financial instruments to manage or hedge
financial exposures or liabilities.
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. They are included in current assets, except for maturities
greater than 12 months after the end of the reporting period. These
are classified as non-current assets. The Company's loans and
receivables comprise Trade and Other Receivables and Cash and Cash
Equivalents in the Statement of Financial Position.
Trade and Other Receivables and Payables
Trade and other receivables are amounts due from customers for
merchandise sold or services performed in the ordinary course of
business. If collection is expected in one year or less (or in the
normal operating cycle of the business if longer), they are
classified as current assets. If not they are presented as
non-current assets.
Trade and other receivables are recognised initially at fair
value, and subsequently measured at amortised cost using the
effective interest method, less provision for impairment.
Other liabilities measured at amortised cost are obligations to
pay for goods or services that have been acquired in the ordinary
course of business from suppliers. The liabilities are classified
as current liabilities if payment is due within one year or less
(or in the normal operating cycle of the business if longer. If
not, they are presented as non-current liabilities.
The liabilities are recognised initially at fair value, and
subsequently measured at amortised cost using the effective
interest method.
Impairment of Financial assets
The Company and Group assesses at each reporting date whether a
financial asset is impaired and will recognise the impairment loss
immediately through the consolidated statement of comprehensive
loss.
Foreign currencies
Functional and presentation currency
The Company's presentation currency is the British Pound
Sterling ("GBP"). The functional currency for the Company, being
the currency of the primary economic environment in which the
Company operates, is the British Pound Sterling. The individual
financial statements of each of the Company's wholly owned
subsidiaries are prepared in the currency of the primary economic
environment in which it operates (its functional currency)
The Hemogenyx LLC financial statements have been translated into
Pound Sterling in accordance with IAS 21 The Effects of Changes in
Foreign Exchange Rates. This standard requires that assets and
liabilities be translated using the exchange rate at period end,
and income, expenses and cash flow items are translated using the
rate that approximates the exchange rates at the dates of the
transactions (i.e. the average rate for the period). The foreign
exchange differences on translation of Hemogenyx LLC are recognized
in other comprehensive income (loss).
Foreign currency transactions
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing on the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at
period-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognized in profit and
loss.
Share based payments
The Group has applied the requirements of IFRS 2 Share-based
Payment for all grants of equity instruments.
The Group operates an equity-settled share option plan to
certain shareholders. The fair value of the service received in
exchange for the grant of options and warrants is recognised as an
expense. Equity-settled share-based payments are measured at fair
value (excluding the effect of non-market based vesting conditions)
at the date of grant. The fair value determined at the grant date
of equity-settled share-based payment is expensed on a graded
vesting basis over the vesting period, based on the Group's
estimate of shares that will eventually vest and adjusted for the
effect of non-market based vesting conditions.
Fair value is measured by use of the Black-Scholes model. The
expected life used in the models has been adjusted, based on
management's best estimate, for the effects of non-transferability,
exercise restrictions, and behavioural considerations.
On addition the Group issues equity-settled share-based payments
to the directors and senior management ("Employee Share Options")
and to its corporate finance advisers for assistance in raising
private equity ("Non-employee Share Options"). Equity-settled
share-based payments are measured at fair value at the date of
grant for Employee Share Options and the date of service for
Non-employee Share Options. The fair value determined at the grant
date or service date, as applicable, of the equity-settled
share-based payments is expensed, with a corresponding credit to
equity, on a straight-line basis over the vesting period, based on
the Group's estimate of shares that will eventually vest. At each
subsequent reporting date the Group calculates the estimated
cumulative charge for each award having regard to any change in the
number of options that are expected to vest and the expired portion
of the vesting period. The change in this cumulative charge since
the last reporting date is expensed with a corresponding credit
being made to equity. Once an option vests, no further adjustment
is made to the aggregate amount expensed.
The fair value is calculated using the Black Scholes method for
both Employee and Non-employee Share Options as management views
the Black Scholes method as providing the most reliable measure of
valuation. The expected life used in the model has been adjusted,
based on management's best estimate, for the effects of
non-transferability exercise restrictions and behavioural
considerations. The market price used in the model is the issue
price of Company shares at the last placement of shares immediately
preceding the calculation date. The fair values calculated are
inherently subjective and uncertain due to the assumptions made and
the limitation of the calculations used.
Share Capital
Ordinary Shares are classified as equity. Equity instruments
issued by the Hemogenyx Group are recorded at the proceeds
received, net of direct issue costs.
Cash
Cash consist of cash bank deposit balances.
Taxation
Deferred Tax
Deferred income tax is recognised on all temporary differences
arising between the tax bases of assets and liabilities and their
carrying amounts in the financial statements, with the following
exceptions:
-- where the temporary difference arises from the initial
recognition of goodwill or of an asset or liability in a
transaction that is not a business combination and, at the time of
the transaction, affects neither accounting nor taxable profit or
loss;
-- in respect of taxable temporary differences associated with
investment in subsidiaries, associates and joint ventures, where
the timing of the reversal of the temporary differences can be
controlled and it is probable that the temporary differences will
not reverse in the foreseeable future; and
-- deferred income tax assets are recognised only to the extent
that it is probable that taxable profit will be available against
which the deductible temporary differences, carried forward tax
credits or tax losses can be utilised.
Deferred income tax assets and liabilities are measured on an
undiscounted basis at the tax rates that are expected to apply when
the related asset is realised or liability is settled, based on tax
rates and laws enacted or substantively enacted at the statement of
financial position date.
The carrying amount of deferred income tax assets is reviewed at
each statement of financial position date. Deferred income tax
assets and liabilities are offset, only if a legally enforcement
right exists to set off current tax assets against current tax
liabilities, the deferred income taxes related to the same taxation
authority and that authority permits the Company to make a single
net payment.
Income tax is charged or credited directly to equity if it
relates to items that are credited or charged to equity. Otherwise
income tax is recognised in the statement of comprehensive
income.
Segmental Reporting
The Group's operations are located throughout in New York, USA
with the head office located in the United Kingdom. The main assets
of the Group, cash and cash equivalents, are held in United Kingdom
and adequate amounts are transferred to the USA operating business
on a quarterly basis on approval from the board.
The Group currently has one reportable segment - biotechnology
company focused on the discovery, development and commercialization
of innovative treatments relating to bone marrow/hematopoietic
(blood-forming) stem cell (BM/HSC) transplants for blood
disease.
New Accounting Standards and Interpretations in issue but not
applied in the Financial Statements
i) New standards, amendments and Interpretations in issue but
not yet effective or not (and in some cases have not yet been
adopted by the EU):
The standards and interpretations that are issued, but not yet
effective, up to the date of issuance of the financial statements
are listed below. The Group intend to adopt these standards, if
applicable, when they become effective. These are summarised
below:
-- IFRS 15 - 'Revenue from contracts with customers' This
standard deals with revenue recognition and establishes principles
for reporting useful information to users of financial statements
about the nature, timing and uncertainty of revenue and cash flows
arising from an entity's contracts with customers. Revenue is
recognised when a customer obtains control of a good or service and
thus has the ability to direct the use and obtain the benefits from
the good or service.
The standard replaces IAS 18 'Revenue' and IAS 11 'Construction
contracts' and related interpretations. The standard is effective
for annual periods beginning on or after 1 January 2018 and earlier
application is permitted subject to EU endorsement. The Group does
not expect that the adoption of IFRS 15 will result in a change to
the accounting policy as the performance obligation and timing of
recognition are consistent with those identified under IAS 18.
-- IFRS 16 - 'Leases' This standard replaces the current
guidance in IAS 17 - 'Leases' and is a far-reaching change in
accounting by lessees in particular. Under IAS 17, lessees were
required to make a distinction between a finance lease (on balance
sheet) and an operating lease (off balance sheet). IFRS 16 requires
lessees to recognise a lease liability reflecting future lease
payments and a 'right-of-use asset' for virtually all lease
contracts.
-- IFRS 16 includes an optional exemption for certain short-term
leases and leases of low-value assets; however, this exemption can
only be applied by lessees. For lessors, the accounting remains
substantially unchanged. IFRS 16 provides updated guidance on the
definition of a lease (as well as the guidance on the combination
and separation of contracts); under IFRS 16, a contract is, or
contains, a lease if the contract conveys the right to control the
use of an identified asset for a period of time in exchange for
consideration.
The standard is effective for annual periods beginning on or
after 1 January 2019 and earlier application is permitted subject
to EU endorsement. The Group is currently assessing the impact of
IFRS 16.
-- IFRS 9 - 'Financial Instruments' This standard replaces IAS
39. It includes requirements on the classification and measurement
of financial assets and liabilities; it also includes an expected
credit losses model that replaces the current incurred loss
impairment model. The standard is effective for annual periods
beginning on or after 1 January 2018 and earlier application is
permitted subject to EU endorsement.
The Group does not expect that the adoption of IFRS 9 will
result in a material changes to the carrying values and
classification of financial assets and liabilities.
3. Significant accounting judgements, estimates and assumptions
The preparation of the financial statements in conformity with
International Financial Reporting Standards requires the use of
certain critical accounting estimates. It also requires management
to exercise its judgement in the process of applying the Company's
accounting policies.
Estimates and judgements are continually evaluated, and are
based on historical experience and other factors, including
expectations of future events that are believed to be reasonable
under the circumstances. The estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year
are discussed below.
The principal areas in which judgement is applied are as
follows:
Warrants to be issued pursuant to IPO
Under terms of the share placement completed pursuant to the IPO
there were a maximum of 62,021,429 warrants eligible to be issued
eligible participants. As at 31 December 2017 43,627,283 warrants
had been issued to eligible IPO participants who had been
identified. A total of 18,394,146 warrants potentially are still to
be issued however it is not known if or when these warrants will be
issued as the identity of the holders is not known. The Group has
not brought the value of the unissued warrants to account as at 31
December, 2017 as it cannot be reasonably ascertained if these
outstanding warrants will ever be issued. The 18,394,146 warrants
have a value of GBP112,274. Management has determined that a
discount of 40% reasonable to allow for the probability of the
identity of the warrant holders remaining unknown. After applying
this discount a value GBP67,364 has not been brought to account in
the Statement of Financial Position due to uncertainty.
Valuation of stock options
Management uses the Black Scholes model to value the share
options. The model requires use of assumptions regarding
volatility, risk free interest rate and a calculation of the value
of the option at the time of the grant. Please see note 18 for
details.
4. Reverse acquisition and LSE listing
On 4 October 2017, the Company acquired the entire issued share
capital of Hemogenyx LLC, a private company incorporated in the
United States, by way of a share for share exchange.
Although the transaction resulted in Hemogenyx LLC becoming a
wholly owned subsidiary of the Company, the transaction constitutes
a reverse acquisition in as much as the shareholders of Hemogenyx
LLC own a substantial majority of the outstanding ordinary shares
of the Company and 2 out of 6 members of the Board of Directors of
the Company are Hemogenyx LLC shareholders and management.
In substance, the shareholders of Hemogenyx LLC acquired a
controlling interest in the Company and the transaction has
therefore been accounted for as a reverse acquisition. As the
Company previously discontinued its investment activities and was
engaged in acquiring Hemogenyx LLC and raising equity financing to
provide the required funding for the operations of the acquisition
and re-listing on the main market of the LSE, it did not meet the
definition of a business according to the definition in IFRS 3.
Accordingly, this reverse acquisition does not constitute a
business combination and was accounted for in accordance with IFRS
2 Share-based payment and IFRIC guidance, with the difference
between the equity value given up by the Hemogenyx LLC shareholders
and the share of the fair value of net assets gained by the
Hemogenyx LLC shareholders charged to the statement of
comprehensive income as the cost of acquiring a main market LSE
quoted listing.
Following the completion of the transaction the Company changed
its name to Hemogenyx Pharmaceuticals Plc.
In accordance with reverse acquisition accounting principles,
these consolidated financial statements represent a continuation of
the consolidated financial statements of Hemogenyx LLC and
include:
a. The assets and liabilities of Hemogenyx LLC at their
pre-acquisition carrying amounts and the results for both periods;
and
b. The assets and liabilities of the Company as at 31 December
2017 and it's results from 5 October 2017 to 31 December 2017,
On 4 October 2017, the Company issued 228,571,428 shares for all
21,923,076 shares of Hemogenyx LLC.
On 4 October 2017, the quoted share price of Hemogenyx plc was
GBP0.035 and therefore this valued the investment in Hemogenyx LLC
at GBP8,000,000.
Because the legal subsidiary, Hemogenyx LLC, was treated as the
accounting acquirer and the legal Parent Company, Silver Falcon
plc, was treated as the accounting subsidiary, the fair value of
the shares deemed to have been issued by Hemogenyx LLC was
calculated at GBP2,341,500 based on an assessment of the purchase
consideration for an 100% holding in Hemogenyx Plc.
The fair value of net assets of Silver Falcon plc was as follows:
GBP
Cash and cash equivalents 1,098,640
Other assets 60,641
Liabilities (448,800)
----------
Net assets 710,480
----------
The difference between the deemed cost and the fair value of the
net assets acquired of GBP1,631,007 has been expensed in accordance
with IFRS 2, Share based payments, reflecting the economic cost to
the Hemogenyx LLC shareholders of acquiring a quoted entity.
The reverse acquisition reserve that arose from the reverse
takeover is made up as follows:
Year Ended 31
December 2017
GBP
As at start of year -
Pre-acquisition losses of Hemogenyx PLC 1 (799,763)
Hemogenyx LLC issued capital at acquisition2 1,010,849
Investment in Hemogenyx LLC3 (8,000,000)
Reverse acquisition expense4 1,631,020
As at end of year (6,157,894)
---------------
The movements on the Reverse acquisition reserve are as
follows:
1. These consolidated financial statements present the legal
capital structure of the Company. However, under reverse
acquisition accounting rules, the Company was not acquired until 4
October 2017 and therefore the entry above is required to eliminate
the initial retained losses of the Company.
2. Hemogenyx LLC had issued share capital of equivalent to
GBP1,010,849 as at 4 October 2017. As these financial statements
present the capital structure of the parent entity, the issue of
equity by Hemogenyx LLC has been recorded in this reserve.
3. The Company issued 228,571,428 shares at GBP0.35 each,
totaling GBP8,000,000 for the entire issued capital of Hemogenyx
LLC. The above entry is required to eliminate the balance sheet
impact of this transaction.
4. The reverse acquisition accounting is described in detail in
note 4. The entry above represents the difference between the value
of the equity issued by the Company, and the deemed consideration
given by Hemogenyx LLC to acquire the Company.
5. Segment Information
The Group has one reportable segment, the development of
breakthrough therapies for the treatment of blood diseases, and
administrative functions in the United Kingdom.
The following tables present expenditure and certain asset
information regarding the Group's geographical segments for the
year ended 31 December 2017:
Year Ended Year Ended
31 December 31 December
2017 2016
GBP GBP
Revenue
Segment assets
United Kingdom
- -
* Non-current
------------------------- ------------- -------------
* Current 1,814,350 1,047,416
United States
* Non-current 449,103 457,374
----------------------------- ------------- -------------
* Current 132,089 249,282
Total
* Non-current 449,103 457,374
----------------------------- ------------- -------------
* Current 1,946,439 249,282
Capital expenditure
United Kingdom - -
United States 64,257 188,785
------------- -------------
64,257 188,785
------------- -------------
Capital expenditure consists of the purchase of property, plant
and equipment.
All revenue is derived from single customer.
6. Expenses by nature
Group Group
Year Ended Year Ended
31 December 31 December
2017 2016
GBP GBP
------------------------- --------------------------
Laboratory expenses 36,194 22,533
Consumable equipment and supplies 64,287 65,236
Contractors & consultants 164,534 166,177
Travel 19,494 5,871
Staff Costs 246,919 129,400
Insurance 13,820 10,975
Other 22,521 22,000
Legal and professional fees 189,786 24,939
Foreign exchange loss / (gain) 29,807 -
Total Administrative Expenses 787,362 447,151
------------------------- --------------------------
7. Employees
Group Group Company Company
Year Ended Year Ended Year Ended Year Ended
31 December 31 December 31 December 31 December
2017 2016 2017 2016
GBP GBP GBP GBP
----------------------- ------------------------ ----------------------- ------------- -------------
Wages and salaries 197,065 129,400 41,325 -
Social security 12,811 - 2,634 -
Share options 35,492 - 35,492 -
Pension contributions 1,551 - - -
----------------------- ------------------------ ----------------------- ------------- -------------
246,919 129,400 79,451 -
----------------------- ------------------------ ----------------------- ------------- -------------
Average number of people (including executive Directors)
employed:
Group Group
Year Ended Year Ended
31 December 31 December
2017 2016
------------- -------------
Research & development (?) 3 2
Administration 2 1
5 3
------------- -------------
8. Auditors' remuneration
Group Group
Year Ended Year Ended
31 December 31 December
2017 2016
GBP GBP
-------------------- ---------------------
Audit services 40,000 11,575
Non audit services 36,000 24,000
-------------------- ---------------------
76,000 35,575
-------------------- ---------------------
9. Income Tax
Group Group
Year Ended
Year Ended 31 31 December
December 2017 2016
GBP GBP
----------------- --------------- -------------
Current Tax:
Corporation tax on loss for
the year - -
Deferred Tax - -
Tax on loss on ordinary activities - -
Loss on ordinary activities before
tax (2,361,599) (519,898)
Analysis of charge in the year:
Loss on ordinary activities
multiplied by weighted average
tax rate for the group of 25.54%
(2016: 20%) (596,451) (103,980)
Disallowed items 391,839 54,145
Timing differences (7,338) -
Tax losses carried forward (211,950) (49,835)
--------------- -------------
Current Tax charge - -
--------------- -------------
The Group has accumulated tax losses arising in the UK of
approximately GBP698,207 (Dec 2016: GBP295,198) that should be
available, under current legislation, to be carried forward against
future profits. No deferred tax asset has been recognised against
these losses. The Group has tax losses carried forward in the US of
GBP396,416 available under current rules until 2037. No deferred
tax asset has been recognised against these losses.
10. Earnings per share
The calculation of the Basic and fully diluted earnings per
share is calculated by dividing the loss for the year from
continuing operations of GBP2,361,599 (2016: GBP470,839) for the
Group by the weighted average number of ordinary shares in issue
during the year of 260,270,699 (2016: 145,166,853).
The weighted average number of shares is adjusted for the impact
of the reverse acquisition as follows:
- Prior to the reverse takeover, the number of shares is based
on Hemogenyx LLC, adjusted using the share exchange ratio arising
on the reverse takeover; and
- From the date of the reverse takeover, the number of share is
based on the Company.
Dilutive loss per Ordinary Share equals basic loss per Ordinary
Share as, due to the losses incurred in 2017 and 2016, there is no
dilutive effect from the subsisting share options.
11. Property, Plant & Equipment
Property,
Group plant & equipment
GBP
------------------------------------------------ -----------------------
Costs
Balance, December 31, 2015 -
Additions 188,785
Disposals -
Foreign exchange movement -
------------------------------------------------
Balance, December 31, 2016 188,785
Additions 64,257
Disposals -
Foreign exchange movement (17,344)
Balance, December 31, 2017 235,698
------------------------------------------------ -----------------------
Accumulated depreciation and impairment losses
Balance, December 31 2015 -
Depreciation 11,870
Disposals
Foreign exchange movement 1,117
------------------------------------------------
Balance, December 31, 2016 12,987
Depreciation 33,614
Disposals
Foreign exchange movement (2,482)
Balance, December 31, 2017 44,120
------------------------------------------------ -----------------------
Carrying amounts
Carrying value at December 31, 2015 -
------------------------------------------------ -----------------------
Carrying value December 31, 2016 175,797
------------------------------------------------ -----------------------
Carrying value December 31, 2017 191,578
------------------------------------------------ -----------------------
12. Intangible Assets
On 15 January 2015, the Company entered into an Exclusive
License Agreement with Cornell University to grant to the Company
patent rights to patent PCT/US14/65469 entitled "Post-Natal
Hematopoietic Endothelial Cells and Their Isolation and Use" and
rights to any product or method deriving therefrom.
The Company paid Cornell University $347,500, consisting of cash
payments of $22,500 and a convertible promissory note in the amount
of $325,000.
Cost Intellectual
Property
GBP
----------------------- -------------
As at 15 January 2015 -
Additions 228,829
Exchange movements 5,942
31 December 2015 234,771
----------------------- -------------
Exchange movements 46,806
31 December 2016 281,577
----------------------- -------------
Exchange movements (24,052)
31 December 2017 257,525
----------------------- -------------
The carrying value of intangible assets is reviewed for
indications of impairment whenever events or changes in
circumstances indicate that the carrying value may exceed the
recoverable amount. The products to which they relate are not ready
to be sold on the open market. When the trials are completed and
the products attain the necessary accreditation and clearance from
the regulators, the Group will assess the estimated useful economic
like and the IP will be amortised using the straight line method
over their estimated useful economic lives. The directors are of
the view that no impairment is required as the test results to date
have been very positive and these products are now being moved on
the clinical trial phase. Accordingly, the directors continue to
believe that the products will eventually attain the necessary
accreditation and clearance from the regulators and so no
impairment has been considered necessary.
Amortisation will be charged to operating costs in the Statement
of Comprehensive Income when the Group achieves product sales.
13. Loan to subsidiaries
Company Company
Year Ended Year Ended
31 December 31 December
2017 2016
GBP GBP
------------- -------------
Loan to Hemogenyx LLC 594,435 -
594,435 -
------------- -------------
Hemogenyx Pharmaceuticals PLC has made cumulative loan to
Hemogenyx LLC of US$802,121 (GBP594,435) as at 31 December 2017.
The loan is interest free and will be repaid when Hemogenyx LLC's
operational cash flow allows. Management has undertaken an
impairment assessment of the loan as at 31 December 2017 and has
determined that that there was no impairment required. The interest
rate and impairment assessment are reviewed on an annual basis.
14. Investments in subsidiary
Proportion
of ordinary
shares held
Address of the directly by
Name registered office Nature of business parent (%)
----------------------------- -------------------------- ----------------------- -------------
9 East Lookerman
Street, Suite 3A,
Hemogenyx Pharmaceuticals Dover, Kent, Delaware,
LLC USA, 19901 Biomedical sciences 100
----------------------------- -------------------------- ----------------------- -------------
15. Trade and other receivables
Group Group Company Company
Year Ended Year Ended Year Ended Year Ended
31 December 31 December 31 December 31 December
2017 2016 2017 2016
---------------------------------- ----------------------------- ---------------------------------- -----------------------------
VAT
receivable 64,784 - 61,013 -
Other
receivables - 162,059 - 180
Prepayments 5,000 - 5,000 1,500
Total trade
and other
receivables 69,784 162,059 66,013 1,680
---------------------------------- ----------------------------- ---------------------------------- -----------------------------
There are no material differences between the fair value of
trade and other receivables and their carrying value at the year
end.
No receivables were past due or impaired at the year end.
16. Called up share capital
Group Class A Class B
shares shares Ordinary shares GBP
Number Number Number
-------------------------------------- --------------- -------------- ------------------ --------------
As at 31 December 2015 12,657,692 - - 255,935
Issue of shares to retain
contractual ownership percentage 496,154 - - -
19 Feb 2016 2016
Issue of shares for cash various
dates 2016 - 8,769,230 - 754,914
-------------------------------------- --------------- -------------- ------------------ --------------
As at 31 December 2016 13,153,846 8,769,230 - 1,010,849
Transfer of LLC paid up capital
to Reverse Acquisition Reserve
4 Oct 2017 (13,153,846) (8,769,230) - (1,010,849)
Issued capital of PLC at acquisition
4 Oct 2017 - - 66,900,000 669,000
Issue of shares for acquisition
of subsidiary 4 Oct 2017 - - 228,571,428 2,285,714
Issue of shares to directors
4 Oct 2017 - - 3,000,000 30,000
Issue of shares for cash 4
Oct 2017 - - 57,142,857 571,429
Issue of shares for debt settlement
20 Oct 2017 - - 4,437,075 44,371
-------------------------------------- --------------- -------------- ------------------ --------------
As at 31 December 2017 - - 360,051,360 3,600,514
-------------------------------------- --------------- -------------- ------------------ --------------
Called up Share Capital (continued)
The issued capital of the Group for the period 1 January 2015 to
4 October 2017 is that of Hemogenyx LLC. Upon completion of the
acquisition the share capital of Hemogenyx LLC was transferred to
the Reverse acquisition reserve (see note4) and the share capital
of Hemogenyx PLC was brought to account.
Company Number of
shares GBP
------------------------------------------------- -------------- ------------
As at 1 January 2016 64,900,000 649,000
Issue of shares 11 Nov 2016 2,000,000 20,000
------------------------------------------------- -------------- ------------
As at 31 December 2016 66,900,000 649,000
Issue of shares for acquisition of subsidiary
4 Oct 2017 228,571,428 2,285,714
Issue of shares to directors 4 Oct 2017 3,000,000 30,000
Issue of shares for cash 4 Oct 2017 57,142,857 571,429
Issue of shares for debt settlement 20 Oct 2017 4,437,075 44,371
------------------------------------------------- -------------- ------------
As at 31 December 2017 360,051,360 3,600,514
------------------------------------------------- -------------- ------------
17. Share Premium
Group & Company
GBP
---------------------------------------------------------- ----------
As at 31 December 2016 -
---------------------------------------------------------- ----------
Issued capital of PLC at acquisition 4 Oct 2017 841,243
Issue of shares for acquisition of subsidiary 4 Oct 2017 5,714,286
Issue of shares to directors 4 Oct 2017 75,000
Issue of shares for cash 4 Oct 2017 1,428,571
Issue of shares for debt settlement 20 Oct 2017 110,927
Value of warrants issued (333,655)
Share issue costs (495,316)
---------------------------------------------------------- ----------
As at 31 December 2017 7,341,056
---------------------------------------------------------- ----------
The issued share capital of Hemogenyx LLC did not have a share
premium component.
18. Other Reserve
Share options
Year Ended Year Ended
Group & Company: 31 December 31 December
2017 2016
GBP GBP
As at start of year - -
Charge for the year - employees 35,492 -
Fair value of warrants issued
in connection with share placement 333,655
------------- -------------
As at end of year 369,147 -
------------- -------------
The expense recognised for employee and non-employee services
during the year is shown in the following table:
Year Ended Year Ended
Group and Company: 31 December 31 December
2017 2016
GBP GBP
Expense arising from equity-settled share-based
payment transactions 35,492 -
Total expense arising from share-based payment 1,666,512 -
transactions
------------- -------------
Employee Plan
Under the Employee Plan ("EMP") share options are granted to
directors and employees at the complete discretion of the Company.
The fair value of the options is determined by the Company at the
date of the grant to subscribe for Ordinary Shares on each of the
following events/dates:
(i) Admission to the LSE ("Admission");
(ii) On the date falling six (6) months after Admission;
(iii) On the date falling twelve (12) months after Admission; and
(iv) On the date falling twenty four (24) months after Admission
On the provision that the option holder remains a director of
the Company.
Options granted to all other option holders vest in equal
tranches of 12.5% every three months from 4 January, 2018, until
fully vested.
The fair value of the options is determined using the Black
Scholes method as stated in Note 2. The contractual life of each
option granted is two years. There are no cash settlement
alternatives.
Options are settled when the Company receives a notice of
exercise and cash proceeds from the option holder equal to the
aggregate exercise price of the options being exercised.
Non-Employee Plan
Under the Non-Employee Plan ("NEMP") share options are granted
to non-employees at the complete discretion of the Company. The
exercise price of the options is determined by the Company at the
date of the grant. The options vest at the date of the grant.
The fair value of the options is determined using the Black
Scholes method as stated in Note 2 and not the value of services
provided as this is deemed the most appropriate method of
valuation. In all cases non-employee option holders received cash
remuneration in consideration for services rendered in accordance
with agreed letters of engagement. The contractual life of each
option granted ranges from two to five years. There are no cash
settlement alternatives. Volatility was determined by calculating
the volatility for three similar listed companies and applying the
average of the four volatilities calculated.
Options are settled when the Company receives a notice of
exercise and cash proceeds from the option holder equal to the
aggregate exercise price of the options being exercised.
Group & Company: 2017 2017 2016 2016
Number WAEP(1) Number WAEP
pence pence
Outstanding at the - - - -
beginning
of the year
Granted during the
year 24,566,957 3.5 - -
Outstanding at end
of year 24,566,957 3.5 - -
-------------------- --------------------- -------------------- ---------------------
Exercisable at end
of year 1,780,214 3.5 - -
-------------------- --------------------- -------------------- ---------------------
The weighted average remaining contractual life for the share
options outstanding as at 31 December 2017 is 3.89 years (2016:
n/a). The weighted average fair value of options granted during the
year was 0.01 pence (2016: n/a). The exercise price for options
outstanding at the end of the year was 3.5 pence (2016: n/a).
A schedule of options granted is below:
Number options
--------------------------------- ---------------
Dr. Robin Campbell 3,560,429
Lawrence Pemble 3,560,429
Professor Sir Marc Feldmann 5,340,643
Professor Alexander Tarakhovsky 2,670,321
Professor Koen Van Besien 2,670,321
Dr. Mark Pkkett 2,670,321
Dr. Boris Shor 2,670,321
Dr. Rita Simone 712,086
Carina Sirochinsky 712,086
--------------------------------- ---------------
Total 24,566,957
--------------------------------- ---------------
The following table lists the inputs to the model used:
2017
(EMP)
-------------------- --------
Expected volatility
% 39.56
Risk-free interest
rate % 0.472
Expected life of
options (years) 2
WAEP(1) - pence 3.5
Expected dividend -
yield
Model used Black
Scholes
-------------------- --------
(1) weighted average exercise price
Warrants
The share placement that completed on 4 October 2017 with the
issue of 57,142,857 shares at GBP0.035 carried 1 for 2 wrrants for
qualifying shareholders over 62,021,429 new ordinary shares at
GBP0.04 per share. In order to qualify for these warrants the
shareholder must have retained the shares for a period of 60 days
after admission.
As at 31 December 2017 43,627,283 warrants had been issued to
eligible IPO participants who had been identified. A total of
18,394,146 warrants potentially are still to be issued however it
is not known if or when these warrants will be issued ` as the
identity of the holders is not known. The 18,394,146 warrants have
a value of GBP112,274 and applying a reasonable discount of 40% to
allow for the probability of the identity of the warrant holders
remaining unknown, an adjusted value GBP67,364 has not been brought
to account in the Statement of Financial Position due to
uncertainty. The following table lists the inputs to the models
used for the two plans for the years ended 31 December 2017:
2017
(NEMP)
-------------------- --- -------------
Expected volatility
% 39.56
Risk-free interest
rate % 0.472
Expected life of
warrant (years) 1
WAEP(1) - pence 4.0
Expected dividend -
yield
Model used Black Scholes
------------------------- -------------
19. Capital and Reserves
The nature and purpose of equity and reserves are as
follows:
Share capital comprises the nominal value of the ordinary issued
share capital of the Company.
Share Premium represents consideration less nominal value of
issued shares and costs directly attributable to the issue of new
shares.
Other reserves represent the value of options in connection with
share based payments, and warrants connected with share placements,
issued by the Company.
Reverse asset acquisition reserve is the reserve created in
accordance with the acquisition of Hemogenyx Pharmaceuticals LLC on
5 October, 2017 in accordance with IFRS 2.
Foreign currency translation reserve is used to recognize the
exchange differences arising on translation of the assets and
liabilities of foreign branches and subsidiaries with functional
currencies other than Pounds Sterling, as well as the revaluation
of intercompany loans.
Retained earnings represent the cumulative retained losses of
the Company at the reporting date.
20. Non-current and current liabilities
Group Group Company Company
Year Ended Year Ended Year Ended Year Ended
31 December 31 December 31 December 31 December
2017 2016 2017 2016
----------------------------- ----------------------------- ----------------------------- -----------------------------
Trade and
other
payables 7,332 16,688 7,247 143,695
Accruals and
deferred
income 256,353 - 256,353 -
Loan note
interest - 26,334 - -
Loan notes - 275,500 - -
Total
liabilities 263,685 318,522 263,600 143,695
Current
liabilities 263,685 43,022 263,600 143,695
Non-current
liabilities - 275,500 - -
Loan Notes
On 15 January 2015 Hemogenyx LLC issued a USD$325,000 unsecured
convertible promissory note to Cornell University in partial
payment of the license fee with that University. The promissory
note bore interest at 5% per annum with the interest payable
annually in arrears. The maturity date is the earlier of (1) after
the Company receives a bona fide equity investment of not less than
$5 million, (2) 14 January 2020, or (3) a change in control of the
Company. The note was convertible into membership units at a price
equal to the price obtained in the above-mentioned bona fide equity
investment.
Post completion of the acquisition of Hemogenyx Pharmaceuticals
LLC the loan note and accrued interest were repaid in full via a
cash payment of GBP154,422 (USD$199,866.68) and the issue of
4,008,504 ordinary shares at 3.5 pence each in Hemogenyx
Pharmaceuticals PLC with a value totalling GBP140,297
(USD$186,175).
The loan note and interest were fully repaid by 31 December
2017.
A schedule of movements in the loan note is set out in the table
below:
GBP
--------------------------- ----------
Balance 1 January 2016 240,683
Interest expense 12,035
Foreign exchange movement 49,117
--------------------------- ----------
Balance 31 December 2016 301,835
Interest expense 11,473
Repayment in cash (154,422)
Repayment in equity issue (140,298)
(18,588)
--------------------------- ----------
Balance 31 December 2017 -
--------------------------- ----------
21. Related party disclosures
With effect from 11 November 2015, M6 Limited ("M6") entered
into an agreement to provide web development, online marketing,
mobile application development and marketing, content production,
advertising, public relations, and lead generation services to the
Company for a fee of GBP80,000. The Company has agreed with M6 to
issue 2,000,000 Ordinary Shares at the Placing Price at Admission
in settlement of monies owed to M6. As at 11 November 2016,
2,000,000 Ordinary Shares were issued to M6 as payment for their
services; there were no transactions with M6 in 2017. Adrian
Beeston, a director of the Company, is also a director of M6 and
holds c.17 per cent. of the issued ordinary share capital of M6
Limited.
During the year, the Company paid GBP7,150 (2015: GBP20,239) to
Dukemount Capital Plc in respect of rent. Peter Redmond, a Director
of the Company, is also Director of Dukemount Capital Plc. As at
the 31 December, 2017 there were no amounts owed to Dukemount in
respect of rent (2016: GBP1,500). Peter Redmond resigned as a
director of Dukemont Capital on 26 April 2017.
22. Financial instruments
The Group's financial instruments consist of cash, amounts
receivable, investment, and accounts payable and accrued
liabilities and deferred payment.
Fair value of financial assets and liabilities
Fair values have been determined for measurement and/or
disclosure purposes based on the following methods. When
applicable, further information about the assumptions made in
determining fair values is disclosed in the notes specific to that
asset or liability.
The carrying amount for cash, accounts receivable, and accounts
payable and accrued liabilities on the statement of financial
position approximate their fair value because of the limited term
of these instruments. The fair value of deferred payment
approximates its fair value. The investment is carried at cost as
it is not traded on an active market.
Fair value hierarchy
Financial instruments that are measured subsequent to initial
recognition at fair value are grouped in Levels 1 to 3 based on the
degree to which the fair value is observable:
-- Level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets or
liabilities; and
-- Level 2 fair value measurements are those derived from inputs
other than quoted prices included within level 1 that are
observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); and
-- Level 3 fair value measurements are those derived from
valuation techniques that include inputs for the asset or liability
that are not based on observable market data (unobservable
inputs).
The Group did not have any financial instruments in Level 1, 2
and 3.
Financial risk management objectives and policies
The Company has exposure to the following risks from its use of
financial instruments
-- Credit risk
-- Liquidity and funding risk
-- Market risk
The following table sets out the categories of financial
instruments held by the Company as at the year ended 31 December
2017 and period ended 31 December 2016:
Group Group Company Company
Year Ended Year Ended Year Ended Year Ened
31 December 31 December 31 December 31 December
2017 2016 2017 2016
---------------------------------- ----------------------------------- ---------------------------------- ---------------------------
Assets
Trade and
other
receivables,
except
prepayments 64,784 162,059 61,013 180
Cash and cash
equivalents 1,876,655 87,223 1,748,337 1,045,736
1,941,439 249,282 1,809,350 1,045,916
---------------------------------- ----------------------------------- ---------------------------------- ---------------------------
Liabilities
Trade and
other
payables (263,685) (16,688) (263,600) (143,695)
Loan Notes &
interest - (301,835) - -
---------------------------------- ----------------------------------- ---------------------------------- ---------------------------
(263,685) (318523) (263,600) (143,695)
---------------------------------- ----------------------------------- ---------------------------------- ---------------------------
Group 1 January Cash flows Non-cash changes 31 December
2017 2017
----------------------------------------
Share repayment Foreign Interest
exchange charge
movements
------------------------ ---------- ----------- ---------------- ----------- --------- ------------
Long-term borrowings
Short-term borrowings 275,500 (154,422) (140,297) 7,746 11,473 -
------------------------ ---------- ----------- ---------------- ----------- --------- ------------
Total 275,500 (154,422) (140,297) 7,746 11,473 -
------------------------ ---------- ----------- ---------------- ----------- --------- ------------
a) Credit risk
The Group had receivables of GBPnil owing from customers (31
December 2016: GBP1,680).
All bank deposits are held with Financial Institutions with a
minimum credit rating of AAA.
b) Liquidity and funding risk
The Group regularly reviews its major funding positions to
ensure that it has adequate financial resources in meeting its
financial obligations. The Group takes liquidity risk into
consideration when deciding its sources of funds. The principle
liquidity risk facing the business is the risk of going concern
which has been discussed in Note 2 (b).
c) Market risk
Interest rate risk
The Company has floating rate financial assets in the form of
deposit accounts with major banking institutions; however, it is
not currently subjected to any other interest rate risk.
Based on cash balances as above as at the statement of financial
position date, a rise in interest rates of 1% would not have a
material impact on the profit and loss of the Company and such is
not disclosed.
In relation to sensitivity analysis, there was no material
difference to disclosures made on financial assets and
liabilities.
Foreign currency risk
The Group operates internationally and has monetary assets and
liabilities in currencies other than the functional currency of the
operating company involved.
The Group seeks to manage its exposure to this risk by ensuring
that where possible, the majority of expenditure and cash of
individual subsidiaries within the Group are denominated in the
same currency as the functional currency of that subsidiary.
The Group has not entered into any derivative instruments to
manage foreign exchange fluctuations.
The following table shows a currency of net monetary assets and
liabilities by functional currency of the underlying companies:
Functional Currency
--------------------------------
Currency of net Pound Sterling US Dollars Total
monetary assets/(liabilities)
GBP GBP GBP
-------------------------------- ------------------ ------------ ----------
Pound Sterling 1,489,737 - 1,489,737
US Dollars - 132,003 132,003
-------------------------------- ------------------ ------------ ----------
Total 1,489,737 132,003 1,621,740
-------------------------------- ------------------ ------------ ----------
Capital risk management
The Group defines capital as the total equity of the Company.
The Group's objectives when managing capital are to safeguard the
Group's ability to continue as a going concern in order to provide
returns for shareholders and benefits for other stakeholders and to
maintain an optimal capital structure to reduce the cost of
capital.
In order to maintain or adjust the capital structure, the Group
may adjust the amount of dividends paid to shareholders, return
capital to shareholders, issue new shares or sell assets to reduce
debt.
Fair value of financial assets and liabilities
There are no material differences between the fair value of the
Group's financial assets and liabilities and their carrying values
in the financial statements.
23. Operating lease commitments
The Group has office leasing commitments.
The total of future minimum lease payments under non-cancellable
operating leases for each of the following periods:
Group & Company
2017 2016
GBP GBP
---------- ---------
not later than 1 year 8,671 4,286
later than 1 year and not later than 5 years - -
not later than 5 years - -
---------------------------------------------------- ---------- ---------
Total Operating lease commitments 8,671 4,286
---------------------------------------------------- ---------- ---------
24. Ultimate Controlling Party
The Directors have determined that there is no controlling party
as no individual shareholder holds a controlling interest in the
Company.
25. Copies of the Annual Report
Copies of the annual report will be soon be available on the
Company's website at www.hemogenyx.com and from the Company's
registered office, 5 Fleet Place London EC4M 7RD.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SDUFISFASEFL
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April 30, 2018 11:23 ET (15:23 GMT)
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