TIDMONC
RNS Number : 7892F
Oncimmune Holdings PLC
31 October 2018
The information contained within this announcement is deemed by
the Company to constitute inside information stipulated under the
Market Abuse Regulation (EU) No. 596/2014. Upon the publication of
this announcement via the Regulatory Information Service, this
inside information is now considered to be in the public
domain.
Oncimmune Holdings plc
("Oncimmune" or the "Company")
Results for the year ended 31 May 2018, Strategy Update and
Trading Update
Nottingham, UK - 31 October 2018: Oncimmune Holdings plc (AIM:
ONC.L), a leader in the development, manufacture and
commercialisation of personalised immunodiagnostics for the
screening, detection and care of cancer, today announces its full
year results for the year ended 31 May 2018.
Corporate & Operational Highlights (including post-period
end)
-- Exclusive licence agreement signed with Genostics Company
Limited ("Genostics") for the distribution, manufacturing and
future development of all products related to the EarlyCDT(R)
platform in China
-- New distribution agreements signed for EarlyCDT(R) -Lung test
making a total of 15 agreements with total minimum sales
commitments of GBP29.5m over their initial periods
-- Continued progress on long term plan of supporting its
distributors deliver high quality sales for EarlyCDT(R) -Lung in
the US
-- EarlyCDT(R) -Liver test for hepatocellular cancer launched in May 2018 in the US
-- NHS ECLS trial continued to monitor its cohort of over 12,000
patients for occurrence of lung cancer. Final results expected in
early 2019
-- Data published in the Journal of Cancer Therapy and in PloS
One in support of the role of EarlyCDT(R) -Lung in the management
of indeterminate pulmonary nodules
-- Dr Adam Hill, MB PhD, was appointed as new Chief Executive
Officer having joined as Chief Medical Officer and Chief Strategy
Officer in April 2018
-- Geoffrey Hamilton-Fairley appointed to a new role as Vice Chairman of the Board
-- Appointment of Dr. Cheung To and Dr. Annalisa Jenkins to the
Board as Non-Executive Directors
Financial Highlights
-- GBP10m equity investment from Genostics Company Ltd completed in March 2018
-- GBP5m raised from new and existing investors in October 2017
-- Revenue for the year was GBP240k (2017: GBP215k)
-- Operating expenses before share based charges and exceptional
items were GBP5.56m (2017: GBP4.88m)
-- Loss before tax of GBP6.34m (2017: GBP5.32m)
-- Net loss for the year was GBP6.34m (2017: GBP5.02m)
-- R&D costs for the year were GBP1.08m of which GBP281k has
been capitalised (2017: GBP1,025k of which GBP415k has been
capitalised)
-- Strong cash balance at the period end of GBP12.95m (2017: GBP5.1m)
Strategic Update
Following the appointment of Dr Adam Hill in March as Chief
Medical Officer and Chief Strategy Officer in March 2018, the
management and Board have undertaken a review to identify and
capitalise on the wide range of opportunities presented by
Oncimmune's proprietary autoantibody-based platform that are
additional to continuing to build scale and momentum in the core
business.
This review has confirmed the utility of Oncimmune's immunogenic
protein library, the ability to rapidly develop in-vitro diagnostic
panels to detect cancer early, and the potential of this technology
to have an impact across the cancer care pathway, which presents
multiple paths to increasing shareholder value.
In addition to maintaining focus on the core business of
developing and commercialising clinical tests for the early
detection of single cancer types, the Board believes latent value
can be unlocked from Oncimmune's platform through strategic
partnerships across a breadth of applications, and with a range of
partner companies. These opportunities are designed to be capital
light in nature, leveraging the investment in Oncimmune's platform
to date, whilst maximising optionality, and include:
-- Integrating Oncimmune's tests into third-party established
ecosystems (established installed base of testing equipment, for
example, to gain access to a new and proprietary distribution
channel);
-- Combining EarlyCDT(R) products with another provider's
diagnostic tools to improve clinical decision making, and enhance
market share (with another in-vitro diagnostic, or diagnostic
imaging modality, for example);
-- Stratifying risk for underwriters of life and critical
illness risk by incorporating EarlyCDT(R) -Lung, and other
products, to reduce claims cost; and
-- Partnering with pharmaceutical companies to develop
complementary diagnostics against immuno-oncology biomarkers such
as PDL1 to improve therapy selection, or enhance therapy
targeting.
In the coming three years, Oncimmune intends to continue
delivering its core strategy, which focusses on early detection,
including exploiting the potential in screening following the
upcoming results from the NHS ECLS study. In addition to this, the
Company will seek to enhance projected revenues from clinical
tests, leveraging the investment made in the platform, by
accelerating value creation through partnering across a range of
applications to generate scale and reach wider end markets.
Pulmonology Distribution and Trading Update
As set out in our interim results announcement issued on 13
February 2018, our pilot distribution project with a major US
pulmonology sales force was successfully completed in February
2018, and the Company has been in negotiation regarding the terms
of a full distribution contract since this time. These discussions
have not reached a satisfactory conclusion and, as of 30 October,
the Board has agreed that discussions will cease as a firm
timetable for agreement and implementation cannot be committed to
by both parties. Whilst this is disappointing given the positive
data points the pilot has produced, this arrangement now unlocks
Oncimmune to focus more time on developing discussions with other
US pulmonary salesforces with the goal of reaching an agreement
that fully realises the value of EarlyCDT(R) -Lung in this
indication.
The inability to reach agreement with the original distribution
partner and the subsequent decision to engage with additional
potential partners will affect the timing of revenue related to
such partnerships. As a result, the Company's revenue expectations
for the current financial year are materially reduced by these
events. In the meantime, Oncimmune will continue to sell to the
physician practices already active from the pilot and to build the
case for using EarlyCDT(R) -Lung to aid in assessing risk of
indeterminant pulmonary nodules. In these practices, the number of
tests sold has doubled despite no active sales activity since
February, with newly contracted, and significantly enhanced,
reimbursement rates per test being honoured
Dr Adam Hill, CEO of Oncimmune commented: "With the fundraise in
early 2018 with Genostics Company Ltd, providing access to the
China market, the foundations are laid for our forward
strategy.
"The year ahead presents significant opportunity with the final
read-out of the ECLS study, which we anticipate will open up volume
opportunities for EarlyCDT(R) -Lung, as well as topping off the
clinical evidence base for the product in triaging asymptomatic
patients to an appropriate diagnostic pathway. This, in turn,
provides further confidence in our platform capability.
"Unlocking latent value in Oncimmune's immunogenic protein
library over the next three years, designed to layer on revenue to
our existing clinical testing business, will open up applications
to generate scale and reach wider end markets across the cancer
care continuum."
For further information:
Oncimmune Holdings plc
Adam Hill, Chief Executive Officer
contact@oncimmune.co.uk
Zeus Capital Limited (Nominated Adviser and Joint Broker)
Andrew Jones, John Goold
+44 (0)20 3829 5000
Bryan, Garnier & Co Limited (Joint Broker)
Phil Walker, Dominic Wilson
+44 (0)20 7332 2500
Berenberg (Joint Broker)
Toby Flaux, Alix Mecklenburg-Solodkoff
+44 (0)20 3207 7800
Media enquiries:
Consilium Strategic Communications
Chris Gardner, Matthew Neal, Lindsey Neville
Oncimmune@consilium-comms.com
+44 (0)20 3709 5708
About Oncimmune
Beating cancer, one test at a time
Oncimmune is a leader in the development, manufacture and
commercialisation of personalised immunodiagnostics for the
screening, detection and care of cancer. Oncimmune is changing how
clinicians, researchers and patients view, diagnose and treat
cancer. Our technology detects evidence of the body's natural
response to cancer, enabling detection 4 years or more before
standard clinical diagnosis. Our tests facilitate clinical
decision-making and are complementary to diagnostic technologies,
making them valuable additions to established and new care
pathways. We partner with leading developers and distributors to
make our technology available globally.
Oncimmune was founded in 2002 and launched its platform
technology in 2009, followed by its first commercial tests,
EarlyCDT(R) -Lung and EarlyCDT(R) -Liver. To date, over 155,000
tests have been performed for patients worldwide and EarlyCDT(R)
-Lung is being used in the largest-ever randomised trial for the
early detection of lung cancer using biomarkers, the National
Health Service (NHS) ECLS study of 12,210 high-risk smokers in
Scotland. Oncimmune, headquartered in Nottingham, UK with a CLIA
lab in Kansas, US and offices in London, UK and Shanghai, China.
Oncimmune joined the Alternative Investment Market (AIM) of the
London Stock Exchange in May 2016 under the ticker ONC.L.
For more information, visit http://oncimmune.com/
CHAIRMAN AND CHIEF EXECUTIVE'S REVIEW
Oncimmune has pursued the goal to be a leader in early cancer
detection since inception and, in so doing, enhancing the clinical
outcomes of cancer patients. The benefits of early detection of
cancer are both clear and well understood: early stage cancer
diagnosis leads to significantly improved five-year survival over
late stage cancer diagnosis.
In May 2016, the Company completed an IPO on AIM. At that time,
the Company laid out its strategy to deliver both its mission and
value to shareholders. On behalf of the Board, we are pleased to
present the third Annual Report & Accounts since IPO for the
year ended 31 May 2018, and to provide a progress update on the
plan detailed at the time of admission to AIM.
We continue to be well positioned to deliver on that plan and on
the wider potential of our autoantibody-based platform.
Strategy and Business Model
At IPO, the directors believed the Group had reached a point of
inflexion having proven and protected the EarlyCDT(R) platform
technology for the early detection of cancer and demonstrated
clinical utility and commercial sales of its lead product. The next
phase of growth for the Group was the execution of its commercial
plans through a three-year growth strategy.
The Group has focused on exploiting the commercial opportunity
for the EarlyCDT(R) platform technology for multiple cancers across
the continuum of care; from early detection, to risk assessment for
intervention, to stratification of patients for therapy. The
business model is two-fold; to deliver EarlyCDT(R) testing as a
service through the Group's CLIA-approved laboratory in De Soto,
Kansas, and to sell EarlyCDT(R) units for other laboratories to
provide their own testing service. The different marketing channels
attracted distinctly different unit economics.
The initial phase of growth for the Group was focused on
completing the development of the EarlyCDT(R) -Lung Kit to increase
sales and open up additional markets, as well as broaden
Oncimmune's product offering with EarlyCDT(R) -Liver. The Group has
also focused on developing stratification panels to identify
patients who might benefit from a specific therapy, and those that
might not.
Underpinning this growth is a phased approach to product
development and launch with Board oversight which ensures the
delivery of long term growth is underpinned by a clear set of
economic values aimed at protecting the Company from unnecessary
risk and securing its long-term future.
Business Update
The Company has continued to deliver on its commercialisation
plans during the year. After completing recruitment of senior staff
to support the delivery of commercialisation plans in the US,
Europe and Asia last year, the Company has seen the increase in
revenue anticipated as a result of its phased roll-out across 15
geographies, securing in excess of GBP 29.5m in minimum commitments
over the next five years.
The Company has made good progress in R&D with the launch of
the EarlyCDT(R) -Liver panel as a Laboratory Delivered Test (LDT)
in the US, proving the viability of the EarlyCDT(R) platform
technology to discover, validate and launch a number of solid
cancer biomarker panels, and further demonstrating the potential of
the Company to execute on its portfolio revenue proposition with
multiple products, generating revenues in different regions and
with different partners. Furthermore, the Company has invested in
early research to provide evidence that the EarlyCDT(R) platform
technology can be used to stratify patients into those likely to
respond to specific therapy regimens.
In Q3, the Company completed a GBP10m fund-raise with a
strategic investor, Genostics Company Ltd, which provides access to
the China market.
EarlyCDT(R) Platform Technology and Distribution
In the US, the Company has continued with the previously
outlined plan of supporting its distributors in order to deliver
high quality, and long-term, sales. The Company has continued
relationships with distributors for EarlyCDT(R) -Lung in the US
throughout the 2017/2018 financial year, supplementing this with
the addition of Valentech in Brazil and Columbia, providing reach
into South America. The company has secured agreements for
EarlyCDT(R) -Lung with several Private Payer Organizations (PPO's)
covering 140m US insured members. The company has also recently
signed a non-exclusive distribution agreement for the sale of tests
covering Argentina, Uruguay and the Dominican Republic.
As set out in our interim results announcement issued on 13
February 2018, our pilot distribution project with a major US
pulmonology sales force was successfully completed in February
2018, and the Company has been in negotiation regarding the terms
of a full distribution contract since this time. These discussions
have failed to reach a satisfactory conclusion and it has been
agreed that discussions will cease until a firm timetable for
agreement and implementation can be committed to by both parties.
Whilst this is disappointing, this arrangement now unlocks
Oncimmune to focus more time on developing discussions with other
US pulmonary salesforces with the goal of reaching an agreement
that fully realises the value of EarlyCDT(R) --Lung in this
indication. The Company remains cautious with regards to its near
term revenue growth in the US; positioning of the test is critical
to long-term success, as is distribution through partnership to
achieve scale.
Outside of the US, the Company continues to make good progress.
The Company's Asia Pacific business has eight distribution
agreements in place for EarlyCDT(R) -Lung kits throughout the
region, supplementing those in Israel, South Korea, Taiwan and
Singapore with agreements in Brazil, Columbia, Iran, India and
China which provide over GBP26.7m in minimum payment guarantees
over the next five years.
In Europe, the Company has also announced further distribution
agreements for its EarlyCDT(R) -Lung kit with agreements for Spain,
Moldova and Turkey adding to the agreements in Denmark, Norway,
Sweden and Poland completed in 2017/2018 with the aggregate minimum
sales commitments of approximately GBP2.8m.
A number of our partnered territories have required additional
regulatory clearances, beyond the product's CE Mark and ISO
certification, which can take 12 months to obtain. Progress is
being made towards obtaining the necessary product registrations to
allow wider commercialisation in these new markets. The first of
which are now being secured so that sales can begin to build.
The Company anticipates signing further distribution contracts
in Asia and Europe during 2018/2019, with a number of these
arrangements also likely to include guaranteed minimum payments
that add to confidence in our chosen distributors and enhance
revenue forecasting.
In addition to the commercialisation of the Company's lead
asset, EarlyCDT(R) -Lung, the Company launched EarlyCDT(R) -Liver
in May 2018 as an LDT in the US. EarlyCDT(R) -Liver will initially
be available through Oncimmune's existing distribution network in
the US, whilst the Company looks for further specialist
distribution partners in the US and other global markets who target
hepatologists. It is intended that the test builds traction whilst
building evidence on clinical utility.
The primary commercial focus for the liver test will be China
and the Asia Pacific region where hepatocellular cancer incidence
is four times that found in the US. It is anticipated that in these
regions the test will be used as a front-line screening test for
high-risk patients who have Hepatitis B or C. Work has commenced
with our Chinese partner to validate its use as a screening test on
a Chinese population, and to gain CFDA clearance.
Research, development and trials
Based upon the early discovery work published at the
International Liver Cancer Association meeting in 2017, showing
that a panel of 10 autoantibodies could detect hepatocellular
carcinoma (HCC) with high sensitivity and specificity, our research
and development effort throughout the financial year has been
dominated by validation of EarlyCDT(R) -Liver for HCC. Liver cancer
is the second most common cause of death from cancer worldwide and
is particularly prevalent in Eastern and South-Eastern Asia with
China accounting for approximately 50% of cases globally. The
prognosis for liver cancer is very poor and there is a clear
clinical need for improved diagnostic testing; globally 700,000 new
cases are diagnosed each year and the annual death rate is in
excess of 600,000. The Company's test has high specificity at 97%,
complementing current imaging detection methods as well as the
stand-alone biomarker alpha fetoprotein (AFP) used in Asia.
Beyond EarlyCDT(R) -Liver, the research and development
programme has delivered early progress on the development of a
higher sensitivity version of EarlyCDT(R) -Lung (EarlyCDT(R) -Lung
Plus) that utilises some new and proprietary biomarkers.
EarlyCDT(R) -Lung Plus aims to improve sensitivity in the lung
nodule setting, where differentiating benign and malignant tumours
is key. The addition of later stage markers should add value
ensuring we detect as many cancers as possible without affecting
the false positive rate. This test enhancement should help drive
adoption. This improved version of Oncimmune's lead product has
undergone beta site testing and validation in the pathology labs at
Leeds Teaching Hospitals NHS Trust. In addition, blood collected by
fingerstick has been proven to be acceptable for testing on all
existing EarlyCDT(R) platform products. This removes barriers to
adoption of the tests that the Company experienced due to
unavailability of phlebotomy services or the reluctance of the
patient to have venous blood draw. Finally, feasibility has been
demonstrated for the development of EarlyCDT(R) products on a new
multiplex platform. This platform provides increased analytical
sensitivity while allowing all biomarkers to be measured in a
single reaction thereby saving on reagent cos Data derived from the
collaboration with Scancell and supporting Oncimmune's claims
as
a companion diagnostics platform were presented at the
Immuno-Oncology Summit in Boston.
From a clinical trial perspective, the NHS ECLS trial continued
to monitor its cohort of over 12,000 patients for occurrence of
lung cancer. The follow-up period ended in June 2018 and it is
expected that the major findings of the trial will be published
early in 2019. Meanwhile, results on effects of EarlyCDT(R) -Lung
testing on patient emotional outcomes and smoking behaviour were
presented at the World conference on Lung Cancer in Yokohama,
Japan. At the same meeting, results of a collaboration between
Oncimmune, Abcodia and UCLS utilising samples from the UKCTOCS
study were presented that demonstrated, unequivocally, for the
first time that autoantibodies can be used to detect lung cancer
earlier than current diagnostic methods. This study clearly
demonstrated a median cancer detection lead time of four years. A
paper describing modelling of the health economic impact of
EarlyCDT(R) -Lung testing of patients with pulmonary nodules was
published in PLoS One and concluded that using the test for this
application was likely to be cost effective in the US healthcare
system. Finally, following on from the paper published by Massion
and colleagues in 2016, further data was published in the Journal
of Cancer Therapy in support of the role of EarlyCDT(R) -Lung in
the management of indeterminate pulmonary nodules.
Fundraising
In January, the Company announced it had signed a framework
agreement for an exclusive licence with Genostics Company Limited
for the distribution, manufacturing and future development of all
products related to Oncimmune's EarlyCDT(R) platform for the
People's Republic of China. As part of the framework agreement,
Genostics Company Limited agreed to invest GBP10m in Oncimmune by
way of subscription for 6,410,256 new ordinary shares at a price of
GBP1.56 per ordinary share, a 49% premium to the share price. The
agreement strengthened the Company's balance sheet to pursue its
three year plan for commercial growth.
The Company also raised GBP5m (GBP4.78m net of expenses) via a
placement in September and November 2017, with the bulk of shares
admitted in October 2017.
Management and Board Changes
In September 2018 the Company announced the appointment of Adam
Hill as new Chief Executive Officer, having joined the Company as
Chief Medical Officer and Chief Strategy Officer in April 2018.
With this appointment, Geoffrey Hamilton-Fairley moved into a new
role as Vice Chairman of the Board of Directors. In January 2018,
the Company further strengthened its Board with the addition of Dr
Anna Lisa Jenkins as Non-Executive Director and again with the
addition of Dr Cheung To in September 2018.
Stakeholder and Social Responsibility
The Company recognises the value of strong relationships with a
range of different external and internal stakeholders to maximise
shareholder value. These stakeholders have been mapped and the
Company understands their needs, interests and expectations.
Immunodiagnostics has significant potential to impact health
outcomes from a cancer diagnosis and, as such, the Company
recognises the societal impact of its products in the geographies
that it operates. The Company is working on defining this impact
and measuring this societal impact; however, like many in this
industry, both the intended, and unintended consequences of
products in the market are challenging to capture.
To date, the Company has obtained informal feedback from its
staff, suppliers, distributors, shareholders, regulators and other
stakeholders. Going forward this feedback will be formalised and
the Company intends that this feedback will form an essential part
of the control mechanism to direct the future strategy and business
model.
Strategy
Following the appointment of Dr Adam Hill in March as Chief
Medical Officer and Chief Strategy Officer in March 2018, the
management and Board have undertaken a review to identify and
capitalise on the wide range of opportunities presented by
Oncimmune's proprietary autoantibody-based platform that are
additional to continuing to build scale and momentum in the core
business.
This review has confirmed the utility of Oncimmune's immunogenic
protein library, the ability to rapidly develop in-vitro diagnostic
panels to detect cancer early, and the potential of this technology
to have an impact across the cancer care pathway - presenting
multiple paths to value.
In addition to maintaining focus on the core business of
developing and commercialising clinical tests for the early
detection of single cancer types, the Board believes latent value
can be unlocked from Oncimmune's platform through strategic
partnerships across a breadth of applications, and with a range of
partner companies. These opportunities are designed to be capital
light in nature, leveraging the investment in Oncimmune's platform
to date, whilst maximising optionality, and include:
-- Integrating Oncimmune's tests into third-party established
ecosystems (established installed base of testing equipment, for
example, to gain access to a new and proprietary distribution
channel),
-- Combining EarlyCDT(R) products with another provider's
diagnostic tools to improve clinical decision making, and enhance
market share (with another in-vitro diagnostic, or diagnostic
imaging modality, for example),
-- Stratifying risk for underwriters of life and critical
illness risk by incorporating EarlyCDT(R) -Lung, and other
products, to reduce claims cost,
-- Partnering with pharmaceutical companies to develop
complementary diagnostics against immuno-oncology biomarkers such
as PDL1 to improve therapy selection, or enhance therapy
targeting.
In the coming three years, Oncimmune intends to continue
delivering its core strategy, which is focused on early detection,
including exploiting the potential in screening following the
upcoming results from the NHS ECLS study. In addition to this, the
Company will seek to enhance revenues from clinical tests by
accelerating value creation through partnering across a range of
applications to generate scale and reach wider end markets.
In the core EarlyCDT(R) business we expect to begin to see
additional registrations in partner territories during 2019.
Achieving an appropriate value for the US market opportunity for
EarlyCDT(R) -Lung is key to the generating value for shareholders.
As described earlier, the inability to reach agreement with the
original distribution partner and the subsequent decision to engage
with additional potential partners will affect the timing of
revenue related to such partnerships. As a result, the Company's
revenue expectations for the current financial year are materially
reduced by these events. The ECLS study results are also expected
in the first half of 2019 following encouraging interim results. In
2019 we will also take the first steps in developing the
aforementioned strategic partnerships.
Progress across these opportunities will, of course, depend on
the degree of adjacency to the core business but we aim to initiate
revenue generation with at least one partner and be either
study-design ready or laying the groundwork for more substantial
studies with other partners towards the end of 2019.
Adam Hill Meinhard Schmidt
Chief Executive Officer Chairman
30 October 2018
CHIEF FINANCIAL OFFICER'S REVIEW
Revenue in the year ended 31 May 2018 was GBP240k (2017:
GBP215k). In the current year, this revenue represented the sale of
commercial tests that were performed from our own CLIA laboratory
in Kansas, US. The Group now has numerous revenue channels that it
is focusing on, albeit these revenue streams are at a very early
stage:
-- EarlyCDT(R) -Lung central lung tests performed in the US
-- EarlyCDT(R) -Lung kits sold to our distributors
-- EarlyCDT(R) -Liver central lung tests performed in the US
-- Partnership diagnostic revenues
Operating expenses before share based charges and exceptional
items in the year ended 31 May 2018 were GBP5.56m (2017: GBP4.88m).
The increase of costs largely reflects the additional employment
costs incurred as the company has expanded its research and
development capabilities, commercial efforts and starts to put in
place additional management to cope with this scaling up.
The loss before tax for the year was GBP6.34m (2017: GBP5.32m)
and the net loss for the year was GBP6.34m (2017: GBP5.0m).
GBP281k (2017: GBP415k) of research and development costs have
been capitalised in the year. The decision to capitalise these
costs was made on the basis that these were the direct costs
relating to the work that went in to the development of the
EarlyCDT(R) -Liver test, which went live during 2018.
The Company raised a further GBP5m (GBP4.78m net of expenses)
via a placement in September and November 2017 issuing 4.167
million shares. In February and March 2018, the Company raised
GBP10m equity investment as part of a license, distribution,
manufacturing and future development agreement for the Peoples'
Republic of China with Genostics Company Limited.
The cash balance at the end of the year was GBP12.953m (2017:
GBP5.075m).
Financial Outlook
The Company's cash position continues to be strong.
At present the company has contracted minimum revenues from
distributors totalling over GBP29.5m from 15 separate distributors
across the world. The expectation is to enter into new distribution
agreements in new geographies in the future.
The cash burn continues to be managed very carefully. Focus
continues to be on:
-- Creating value through research and development
-- Increasing the distribution channel and sales of EarlyCDT(R) -Lung tests
-- Increasing the distribution channel and sales of EarlyCDT(R) -Liver tests
-- Partnership diagnostic revenues
As such, the management are confident that its cash resources
are sufficient for the foreseeable future.
Andrew Millet
Chief Financial Officer
30 October 2018
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year to Year to
31 May 31 May
2018 2017
GBP'000 GBP'000
Notes Total Total
Revenue 4 240 215
Cost of sales (917) (532)
--------- --------
Gross loss (677) (317)
Administrative expenses 5 (4,759) (3,857)
Research and development expenses (800) (1,025)
Share based payment charges (138) (74)
(5,697) (4,956)
Operating loss (6,374) (5,273)
Finance income 8 48 26
Finance expense 8 (16) (69)
Loss before income tax (6,342) (5,316)
Income tax 9 - 293
--------- --------
Loss for the financial year (6,342) (5,023)
Other comprehensive income
Items that may be subsequently
reclassified to profit or loss,
net of tax
Currency translation differences (23) 222
Loss after tax and total comprehensive
income for the year attributable
to equity holders (6,365) (4,801)
Basic and diluted loss per share 22 (11.41p) (9.84p)
========= ========
The accompanying notes form an integral part of these
consolidated financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 May 31 May
2018 2017
GBP'000 GBP'000
Notes
ASSETS
Non-current assets
Intangible assets 11 671 518
Property, plant and equipment 10 201 230
872 748
--------- ---------
Current assets
Inventories 13 295 323
Trade and other receivables 12 291 261
Cash and cash equivalents 14 12,953 5,075
--------- ---------
13,539 5,659
--------- ---------
Total assets 14,411 6,407
========= =========
EQUITY AND LIABILITIES
Equity
Capital and reserves attributable
to the equity holders
Share capital 18 616 510
Share premium 30,952 16,273
Other reserves 2,325 2,187
Merger reserve 30,787 30,787
Foreign currency translation
reserve 146 169
Own shares (1,926) (1,926)
Retained earnings (49,338) (42,996)
--------- ---------
Total equity 13,562 5,004
Non-current liabilities
Other Loans 16 - -
- -
--------- ---------
Current liabilities
Trade and other payables 15 808 847
Other statutory liabilities 41 54
Other loans 16 - 502
--------- ---------
849 1,403
--------- ---------
Total liabilities 849 1,403
========= =========
Total equity and liabilities 14,411 6,407
========= =========
The accompanying notes form an integral part of the consolidated
financial statements.
The financial statements were approved by the board on 12
October 2018.
Andrew Millet
Director
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Other Merger Foreign Own Shares Retained Total
capital premium reserves reserve currency earnings
translation
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 June 2016 510 16,273 2,113 30,787 (53) (1,926) (37,973) 9,731
Loss for the year - - - - - - (5,023) (5,023)
Other comprehensive
income:
Currency
translation
differences - - - - 222 - - 222
--------- --------- ---------- --------- ------------- ----------- ---------- --------
Total comprehensive
income - - - - 222 - (5,023) (4,801)
Transactions with
owners:
Share option charge - - 74 - - - - 74
As at 31 May 2017 510 16,273 2,187 30,787 169 (1,926) (42,996) 5,004
========= ========= ========== ========= ============= =========== ========== ========
Loss for the year - - - - - - (6,342) (6,342)
Other comprehensive
income:
Currency
translation
differences - - - - (23) - - (23)
--------- --------- ---------- --------- ------------- ----------- ---------- --------
Total comprehensive
income - - - - (23) - (6,342) (6,365)
Transactions with
owners:
Shares issued
during the year 106 14,679 - - - - - 14,785
Share option charge - - 138 - - - - 138
As at 31 May 2018 616 30,952 2,325 30,787 146 (1,926) (49,338) 13,562
========= ========= ========== ========= ============= =========== ========== ========
The accompanying notes form an integral part of the consolidated
financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
Year to Year to
31 May 31 May
2018 2017
GBP'000 GBP'000
Notes
Cash flows from operating activities
Loss after income tax (6,342) (5,023)
Adjusted by:
Depreciation and amortisation 180 91
Share based payment charge 138 74
Interest received (48) 26
Interest expense 16 (69)
Inventory 28 (135)
Trade and other receivables (30) 177
Trade and other payables (52) 315
Taxes credit - (293)
Exchange movement (23) 222
-------- --------
Cash used by operations (6,133) (4,615)
Interest paid (16) 69
Interest received 48 (26)
Income tax received - 293
-------- --------
Net cash used by operating activities (6,101) (4,279)
-------- --------
Cash flows from investing activities
Purchase of property, plant and
equipment (31) (7)
Development expenditure capitalised (281) (415)
Net cash used in investing activities (312) (422)
-------- --------
Cash flows from financing activities
Proceeds from share issue 14,785 -
Repayment of long term borrowings (502) (388)
Net cash (used in)/generated
from financing activities 14,283 (388)
-------- --------
Movement in cash attributable
to foreign exchange 8 (33)
Net (decrease) / increase in
cash and cash equivalents 7,878 (5,089)
Cash and cash equivalents at
the beginning of the year 5,075 10,197
Cash and cash equivalents at
the end of the year 14 12,953 5,075
======== ========
The accompanying notes form an integral part of the consolidated
financial statements.
1. General information
Oncimmune Holdings Plc (the 'Company') is a limited company
incorporated and domiciled in England and Wales. The registered
office of the company is Clinical Sciences Building, City Hospital,
Hucknall Road, Nottingham, NG5 1PB. The registered company number
is 09818395.
The Group's principal activity is that of cancer diagnosis.
The Directors of Oncimmune Holdings Plc are responsible for the
financial information and contents of the financial
information.
2. Accounting policies
The principal accounting policies applied in the preparation of
the consolidated financial information are set out below. These
policies have been consistently applied to all years presented,
unless otherwise stated.
Basis of preparation
The Group has prepared its consolidated financial statements in
accordance with International Financial Reporting Standards
("IFRSs") as adopted in the European Union, IFRIC Interpretations
and the Companies Act 2006 applicable to companies reporting under
IFRS.
The Company was incorporated on 9 October 2015 and was
re-registered as a public limited company on 14 December 2015. On
23 November 2015, a group re-organisation was completed, by means
of a share for share exchange, as result of which the newly
incorporated company, Oncimmune Holdings Plc, became the parent
company of the Group.
The companies involved in the above share for share exchange
have not previously been presented in the consolidated financial
statements of a single legal entity. However, the underlying
business was ultimately controlled and managed by the same parties
before and after the share for share exchange and that control was
not transitory. The transactions outlined above, therefore, meet
the definition of a common control transaction in accordance with
IFRS 3 Business Combinations.
IFRS does not provide any specific guidance on accounting for
common control transactions and IFRS 3 excludes common control
transactions from its scope; therefore the Directors have selected
an accounting policy in accordance with paragraphs 10-12 of IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors.
The consolidated entity meets the definition of a group
reconstruction under FRS 102 19,27 and has therefore been accounted
for under the principals of merger accounting as outlined in FRS
102, paragraphs 19.29 - 19.33, merger accounting. The consolidated
financial statements have therefore been prepared as if Oncimmune
Limited and its subsidiaries had been held by Oncimmune Holdings
Plc from inception and therefore the results and position of
Oncimmune Limited have been reflected in the comparatives.
The preparation of financial statements in accordance with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the Group's accounting policies. The areas involving a
high degree of judgement or complexity, or areas where assumptions
and estimates are significant to the consolidated financial
statements, are disclosed in note 3.
Going concern
The consolidated financial statements have been prepared on a
going concern basis and under the historical cost convention. After
considering the year end cash position, making appropriate
enquiries and reviewing budgets and profit and cash flow forecasts
for the foreseeable future (and in any event for a period of at
least 12 months from the approval date of these financial
statements), the Directors have formed a judgement at the time of
approving the financial statements that there is a reasonable
expectation that the Group has sufficient resources to continue in
operational existence for the foreseeable future. For this reason,
the Directors consider the adoption of the going concern basis in
preparing the Consolidated financial statements is appropriate. The
future prospects of the business have been further detailed in the
Strategic Report.
The consolidated financial statements presented in sterling and
has been rounded to the nearest thousand (GBP'000).
Standards, amendments and interpretations to existing
standards
Standards, amendments and interpretations to existing standards
that are not yet effective and have not been early adopted by the
Group in these financial statements.
At the date of authorisation of the financial statements,
certain new standards, amendments and interpretations to existing
standards have been published but are not yet effective. The Group
has not early adopted any of these pronouncements. The new
standards, amendments and interpretations that are expected to be
relevant to the Group's financial statements in the future are as
follows:
Standard/interpretation Content Applicable for
financial years
beginning on/after
IFRS 9 Financial Instruments 1 January 2018*
IFRS 15 Revenue from Contracts with Customers 1 January 2018*
IFRS 16 Leases 1 January 2019*
IFRS 1 First time adoption (amendments) 1 January 2018*
IFRS 2 Share based payments (amendments) 1 January 2018*
IFRS 4 Insurance contracts (amendments) 1 January 2018*
IAS 28 Investments in Associates and 1 January 2018*
IAS 39 Joint Ventures (amendments) 1 January 2018*
Financial Instruments: Recognition
IAS 40 and measurement (amendments) 1 January 2018*
IFRIC 22 Investment Property (amendments) 1 January 2019*
Foreign Currency transactions
and advance consideration (amendments)
IFRS 9 Prepayment Features with Negative 1 January 2019
Compensation (amendments)
IFRIC 23 Uncertainty over Income Tax Treatments 1 January 2019
Amendments to Long-term Interest in Associates 1 January 2019
IAS 28 and Joint Ventures
Amendments to Plan Amendment, Curtailment or 1 January 2019
IAS 19 Settlement
Amendment to References to Conceptual Framework 1 January 2020
in IFRS Standards
IFRS 17 Insurance Contracts 1 January 2021
Amendment to IFRS Sale or Contribution of Assets Deferred until
10 and IAS 28 between an Investor and its Associate further notice
or joint Venture
Annual Improvements to IFRS Standards 2014 -
2016 Cycle
1 January 2018
* Amendments to IFRS 1 First-time Adoption of IFRS
1 January 2018
* Amendments to IAS 28 Investment in Associate and
Joint Venture
Annual Improvements to IFRS Standards 2015 - 1 January 2019
2017 Cycle - Various standards
1 January 2019
* Amendment to IFRS 3
1 January 2019
* Amendment to IFRS 11
1 January 2019
* Amendment to IAS 12
1 January 2019
* Amendment to IAS 23
*Not yet adopted by the EU.
The effective dates stated above are those given in the original
IASB/IFRIC standards and interpretations. As the Group prepares its
financial statements in accordance with IFRS as adopted by the
European Union (EU), the application of new standards and
interpretations will be subject to their having been endorsed for
use in the EU via the EU endorsement mechanism.
IFRS 15
IFRS 15 Revenue from contracts with customers deals with revenue
recognition and establishes principles for reporting useful
information to users of financial statements. 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 impact that IFRS 15 will have on the financial statements is
yet to be quantified. The group are in the process of completing
this assessment and at this stage are unable to conclude on the
impact on the accounts. The Group has different contractual
arrangements with each of its clients which requires a detailed
review in order to assess the changes the Group will need to make
to its revenue recognition policies once the standard is
implemented.
Revenue
The amount shown as revenue in the statement of comprehensive
income comprises royalties received and receivable and, in
addition, amounts received and receivable in respect of the
provision of medical testing services, in the US and other markets,
including the UK.
Revenue is recognised at the fair value of the consideration
received or receivable and excludes intra-group sales, value added
tax and trade discounts.
Revenue is recognised when the amount can be reliably measured
and it is probable that future economic benefits associated with
the transaction will flow to the entity.
Royalty income is recognised when the tests to which the royalty
licences relate are completed by third parties. Amounts receivable
in respect of the provision of medical testing services are
recognised when these services are delivered.
Research and development
Expenditure on research activities is recognised as an expense
in the period in which it is incurred.
Development expenditure, where it meets certain criteria (given
below), is capitalised and amortised on a straight-line basis over
its useful life which is currently five years. Asset lives are
subject to regular review and an impairment exercise carried out at
least once a year. Where no internally-generated intangible asset
can be recognised, development expenditure is written-off in the
period in which it is incurred.
An intangible asset arising from development is recognised if,
and only if, the group can demonstrate the following:
- the technical feasibility of completing the intangible asset
so that it will be available for use or sale;
- the intention to complete the intangible asset and use or sell it;
- the ability to sell or use the intangible asset
- how the intangible asset will generate probable future
economic benefits. Among other things, the group can demonstrate
the existence of a market for the output of the intangible asset or
the intangible asset itself or, if it is to be used internally, the
usefulness of the intangible asset.
- the availability of adequate technical, financial and other
resources to complete the development and to use of sell the
intangible asset.
- the ability to measure reliabily the expenditure attributable
to the intangible asset during its development.
The Group has reviewed research and development expenditure, to
determine whether any of that spend could qualify as development
expenditure which satisfies the requirements for capitalisation set
out above. As a result, GBP281,240 (2017: GBP415,000) of
development expenditure has been capitalised.
Property, plant and equipment
Property, plant and equipment is stated at historic cost,
including expenditure that is directly attributable to the acquired
item, less accumulated depreciation and impairment losses.
Depreciation is calculated on a straight line basis over the
deemed useful life of an asset and is applied to the cost less any
residual value. The asset classes are depreciated on a straight
line basis over the following periods:
Laboratory equipment - 3 - 7 years
Office equipment - 3 - 7 years
Computer equipment - 3 - 4 years
The carrying value of the property, plant and equipment is
compared to the higher of value in use and the fair value less
costs to sell. If the carrying value exceeds the higher of the
value in use and fair value less the costs to sell the asset then
the asset is impaired and its value reduced by recognising an
impairment in profit or loss.
Impairment testing of non-current assets
For the purposes of assessing impairment, assets are grouped at
the lowest levels for which there are separately identifiable cash
flows (cash-generating units). As a result, some assets are tested
individually for impairment and some are tested at cash-generating
unit level. Those intangible assets not yet available for use and
goodwill are tested for impairment at least annually. All other
individual assets or cash-generating units are tested for
impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the
asset's or cash-generating unit's carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of fair
value, reflecting market conditions less costs to sell, and value
in use based on an internal discounted cash flow evaluation. All
assets are subsequently reassessed for indications that an
impairment loss previously recognised may no longer exist.
Inventories
Inventory is carried at the lower of cost or net realisable
value after making due allowance for obsolete and slow moving
stock. Net realisable value is calculated based on the revenue from
sale in the normal course of business less any costs to sell.
Leased assets
In accordance with IAS 17 Leases, the economic ownership of a
leased asset is transferred to the lessee if the lessee bears
substantially all the risks and rewards related to the ownership of
the leased asset. The related asset is then recognised at the
inception of the lease at the fair value of the leased asset or, if
lower, the present value of the minimum lease payments plus
incidental payments, if any.
All other leases are treated as operating leases. Payments on
operating lease agreements are recognised as an expense on a
straight-line basis. Associated costs, such as maintenance and
insurance, are expensed as incurred. Lease incentives received are
recognised in the consolidated statement of comprehensive income on
a straight-line basis over the lease term.
Taxation
Income tax on the profit or loss for the year comprises current
and deferred tax.
Current tax is the expected tax payable on the taxable income
for the year, using current rates, and any adjustments to the tax
payable in respect of previous years. In so far as group companies
are entitled to UK tax credits on qualifying research and
development expenditure, such amounts are recognised when
received.
Deferred taxation is provided on all temporary differences
between the carrying amount of the assets and liabilities in the
financial statements and the tax base. Deferred tax assets are
recognised only to the extent that it is probable that future
taxable profits will be available against which the temporary
difference can be utilised. Deferred tax assets and liabilities are
not discounted. Deferred tax is determined using the tax rates that
have been enacted or substantially enacted by the balance sheet
date, and are expected to apply when the deferred tax liability is
settled or the deferred tax asset is realised.
Deferred tax is provided on temporary differences arising on
investments in subsidiaries except where the timing of the reversal
of the temporary difference is controlled by the Group and it is
probable that the temporary difference will not reverse in the
foreseeable future.
Tax is recognised in profit or loss, except where it relates to
items recognised directly in equity, in which case it is recognised
in equity.
Share based compensation
Equity-settled share-based payments are recognised as an expense
in profit or loss, based on the fair value of the option at the
date of grant. Such costs are spread over the vesting period,
adjusted for the best available estimate of the number of share
options expected to vest, with a corresponding credit to equity,
net of deferred tax where applicable. Such adjustments are only
made in respect of non-market performance vesting conditions. No
adjustment is made to the expense recognised in prior periods if
fewer share options ultimately are exercised than originally
estimated. Vesting conditions relate to continuing employment.
On the re-organisation in November 2015 the existing Oncimmune
Limited schemes were rolled over into the 2015 Oncimmune Holdings
Plc scheme with Oncimmune Holdings Plc taking on the obligation for
the exercise of the options. Modification accounting was performed
resulting in the incremental fair value at the date of the
modification being calculated. The incremental fair value is the
excess of the fair value of the award immediately after the
modification over the fair value immediately before the
modificiation. Where the was an incremental fair value this was
charged over the remainder of the vesting period, together with the
original charge relating to the grant date of the original reward.
Recognition of a cost of investment in Oncimmune Holdings Plc and a
corresponding reserve in respect of the fair value of the options
rolled over was considered, however no investment was recognised as
the amount was not considered material.
Where the granting of share options has coincided with the issue
of shares, for cash, to third party investors, the fair value of
such options is based on the issue price for those shares which is
considered to be an arm's length value.
Employee benefit trust
Assets, other than shares, held by the Oncimmune Limited's
Employee Benefit Trust (EBT) are included in the group's balance
sheet under the appropriate heading. Shares in the company held by
the EBT are disclosed as a deduction from shareholder's funds and
dividend income is excluded in arriving at profit before tax and
deducted from aggregate dividends paid and proposed. Reflecting the
substance of these arrangements any amounts which the trustees of
the EBT may resolve, pursuant to their discretionary powers, to pay
to any beneficiaries of the EBT are charged to the profit or loss
account only when paid, subject to statutory deductions.
Segmental reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the main decision-making body of the
Group, which collectively comprises the Executive Directors. The
Executive Directors are responsible for allocating the resources
and assessing the performance of the operating segments.
Exceptional items
Exceptional items are treated as such if the matters are
non-recurring, material and fall outside of the operating
activities of the Group.
Government grants
Government grants receivable are recognised on receipts of cash.
Related expenditure is recognised as it occurs
Financial instruments
Financial instruments are assigned to their different categories
by management on initial recognition, depending on the contractual
arrangements.
Financial assets
The Group's financial assets fall within the heading of 'Loans
and receivables'. Loans and receivables comprise trade and certain
other receivables as well as cash and cash equivalents.
Loan and receivables are recognised when the Group becomes a
party to the contractual provisions of the instrument and are
recognised at fair value and subsequently measured at amortised
cost using the effective interest method less any provision for
impairment, based on the receivable ageing, previous experience
with the debtor and known market intelligence. Any change in their
value is recognised in the statement of comprehensive income.
Derecognition of financial assets occurs when the rights to
receive cash flows from the investments expire or are transferred
and substantially all of the risks and rewards of ownership have
been transferred. An assessment for impairment is undertaken at
least at each balance sheet date whether or not there is objective
evidence that a financial asset or a group of financial assets is
impaired.
Financial liabilities
The Group's financial liabilities comprise borrowings and trade
and other payables.
Financial liabilities are initially recognised at the fair value
of the consideration received net of issue costs. After initial
recognition borrowings are measured at amortised cost using the
effective interest method. All interest-related charges are
included in the statement of comprehensive income line item
"finance expense". Financial liabilities are derecognised when the
obligation to settle the amount is removed.
Warrants to purchase shares
Warrants to purchase shares that do not meet the definition of
equity instruments are accounted for as derivative liabilities. The
valuation is performed at inception and at each subsequent
reporting with movements recognised in the profit or loss.
Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held
on call, together with other short term highly liquid investments
which are not subject to significant changes in value and have
original maturities of less than three months.
Equity
Equity comprises the following:
-- Share capital: the nominal value of equity shares.
-- Share premium: includes any premium received on the sale of
shares. Any transaction costs associated with the issuing of shares
are deducted from share premium, net of any income tax
benefits.
-- Own shares and other reserves
-- Profit and loss account: retained profits
-- Foreign currency translation reserve: differences arising
from translation of investments in overseas subsidiaries
-- Merger reserve: The merger reserve represents the difference
between the parent company's cost of investment and a subsidiary's
share capital and share premium. The merger reserve in these
accounts has arisen from a group reconstruction upon the
incorporation and listing of the parent company that was accounted
for as a common control transaction. Common control transactions
are accounted for using merger accounting rather than the
acquisition method.
Foreign currencies
Monetary assets and liabilities in foreign currencies are
translated into sterling at the rates of exchange ruling at the
statement of financial position date. Transactions in foreign
currencies are translated into sterling at the rate of exchange
ruling at the date of the transaction. Exchange differences are
taken into account in arriving at the operating profit. The
functional currency of the group and parent company is GBP'000.
The financial statements of foreign subsidiaries are translated
at the rate of exchange ruling at the statement of financial
position date. The exchange differences arising from the
retranslation of the opening net investment in subsidiaries are
taken directly to reserves. Where exchange differences result from
the translation of foreign currency borrowings raised to acquire
foreign assets (including equity investments) they are taken to
reserves and offset against differences arising from the
translation of those assets. All other exchange differences are
dealt with through the statement of comprehensive income.
3. Accounting estimates and judgements
The preparation of financial statements under IFRS requires the
Group to make estimates and judgements that affect the application
of policies and reported amounts. Estimates and judgements are
based on historical experience and other factors including
expectations of future events that are believed to be reasonable
under the circumstances. Actual results may differ from these
estimates.
The estimates and judgements which have a significant risk of
causing a material adjustment to the carrying amount of assets and
liabilities are discussed below:
-- Useful lives of depreciable assets
Management reviews the useful lives of depreciable assets at
each reporting date. At the reporting date management assesses that
the useful lives represent the expected utility of the assets to
the Group. Actual results, however, may vary due to unforeseen
events.
-- Inventory provision
Inventory provisions are based on an estimate of the realisable
value of the inventory items.
-- Impairment
An impairment loss is recognised for the amount by which the
asset's or cash generating unit's carrying amount exceeds its
recoverable amount. To determine the recoverable amount, management
estimates expected future cash flows from each cash-generating unit
and determines a suitable discount rate in order to calculate the
present value of those cash flows. In the process of measuring
expected future cash flows management makes assumptions about
future operating results. These assumptions relate to future events
and circumstances. In most cases, determining the applicable
discount rate involves estimating the appropriate adjustment to
market risk and the appropriate adjustment to asset-specific risk
factors.
-- Capitalisation of development costs
Development expenditure, where it meets certain criteria per IAS
38 Intangible Assets, is capitalised and amortised on a
straight-line basis over its useful life. Asset lives are subject
to regular review and an impairment exercise carried out at least
once a year. Where no internally-generated intangible asset can be
recognised, development expenditure is written-off in the period in
which it is incurred. Development expenditure is only recognised
when all of the criteria set out in IAS 38 are met. Management
applies judgement in making this assessment and in determining
attributable costs for each project.
-- Deferred tax
Judgement has been applied in respect of the non recognition of
deferred tax on losses as detailed in note 9 on the basis of
uncertainty over the timing of future reversal.
4. Segmental information
Management has determined the operating segments based on the
reports reviewed by the strategic decision maker comprising the
Board of Executive Directors. The segmental information is split on
the basis of geographical analysis however, management report only
the contents of the statement of comprehensive income and therefore
no statement of financial position information is provided on a
segmental basis in the following tables:
Revenue 31 May 2018 31 May 2017
GBP'000 GBP'000
Class of business
Distribution of testing products 240 215
Royalties - -
Total revenues 240 215
------------ ------------
Geographical analysis by destination
United Kingdom 104 80
North America 136 135
Rest of the world - -
Total revenues 240 215
------------ ------------
Geographical analysis by origin
United Kingdom - -
North America 240 215
Rest of the world - -
Total revenues 240 215
------------ ------------
Operating segments
As at 31 May 2018
UK USA Holdings Consolidated
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 104 136 - 240
Cost of sales (258) (659) - (917)
Gross margin (154) (523) - (677)
-------- -------- --------- -------------
Operating loss (3,167) (1,744) (1,463) (6,374)
Net finance
and other costs 32
Loss before
tax (6,342)
-------------
Taxation -
(6,342)
-------------
As at 31 May 2017
UK USA Holdings Consolidated
GBP'000 GBP'000 GBP'000 GBP'000
Revenue 80 135 - 215
Cost of sales (247) (284) - (531)
Gross margin (167) (149) - (316)
-------- -------- --------- -------------
Operating loss (3,279) (1,171) (823) (5,273)
Net finance
and other costs (43)
Loss before
tax (5,316)
-------------
Taxation 293
(5,023)
-------------
Assets are not reported by business segment to the Chief
Operating Decision Maker.
Information about major customers
In the year to 31 May 2018, the group had two customers who
contributed more than 10% of group revenue individually. These two
customers contributed approximately 60% of group revenue.
5. Loss before income tax
May 2018 May 2017
GBP'000 GBP'000
Loss before taxation has been arrived
at after charging:
Depreciation of owned property, plant
and equipment 52 63
Amortisation of intangible assets 128 28
Research and development 800 1,025
Share based payment expense 138 74
Employee costs (Note 7) 3,094 2,202
Operating lease rentals
* Other operating leases 225 116
Audit and non-audit services:
Fee payable to the company's auditor:
Fee for the audit of the parent company 20 15
Fees payable to the Company's auditor
for other services:
The audit of the Company's subsidiaries
pursuant to legislation 25 24
Tax compliance services 6 6
Tax advisory services 4 6
Audit related assurance services - 4
All other assurance services - 1
6. Remuneration of key personnel
The Group consider that the Directors are the key personnel;
May 2018 May 2017
GBP'000 GBP'000
Share based payments expense 138 74
Salary, fees, bonuses and other short
term emoluments 731 409
Social security costs 82 44
--------- ---------
951 527
========= =========
Details of Director's remuneration are disclosed in the
Directors' report
7. Employees
The average number of employees (including Directors) during the
period was as follows:
May 2018 May 2017
Directors 11 10
Lab staff 31 33
Sales and administration 10 4
--------- ---------
52 47
========= =========
The cost of employees (including directors) during the period
was made up as follows:
May 2018 May 2017
GBP'000 GBP'000
Wages and salaries 2,659 2,021
Social security costs 257 106
Pension cost 40 1
Share based payments 138 74
--------- ---------
3,094 2,202
========= =========
8. Net finance costs
May 2018 May 2017
GBP'000 GBP'000
Finance revenue 48 26
Finance costs (16) (69)
--------- ---------
32 (43)
========= =========
9. Income tax credit
May 2018 May 2017
GBP'000 GBP'000
Current tax:
UK corporation tax credit at rates: 2018
- 19 % 2017 -19.83% - (293)
Prior period adjustment - -
---------- ---------
- (293)
Tax recoverable for the period - (293)
========== =========
Factors affecting current tax charge:
The tax assessed on the profit for the period is different to
the standard rate of corporation tax in the UK. The differences are
explained below:
May 2018 May 2017
GBP'000 GBP'000
Loss before income tax (6,342) (5,316)
Loss for the year multiplied by the
standard rate of corporation tax (1,205) (1,054)
Expenses not deductible for tax purposes 54 6
Adjustment in respect of prior periods - -
Income not assessable for tax - -
Tax uplift in R&D expenditure (220) (295)
Losses surrendered for R&D claims 194 228
Losses carried forward 1,177 822
- (293)
========== ==========
The group has unrelieved UK tax losses of GBP15,212,000 (2017:
GBP12,247,000) and unrelieved overseas tax losses of GBP19,789,000
(2017: GBP17,917,000). Deferred tax of GBP5,950,000 has not been
provided given the uncertainty over the timing of a future
reversal. At year end management have not recognised research and
deferred tax credit as there is uncertainty over the timing and
amount that will be received from the taxation authorities.
10. Property, plant and equipment
Laboratory Computer Office Total
Equipment Equipment Equipment
GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 31 May 2017 1,018 25 30 1,073
Additions 31 - - 31
Foreign exchange movement (11) - - (11)
----------- ----------- ----------- --------
At 31 May 2018 1,038 25 30 1,093
----------- ----------- ----------- --------
Depreciation
At 31 May 2017 795 18 30 843
Charge for the year 50 2 - 52
Foreign exchange movement (3) - - (3)
----------- ----------- ----------- --------
At 31 May 2018 842 20 30 892
----------- ----------- ----------- --------
Net book values
At 31 May 2018 196 5 - 201
=========== =========== =========== ========
At 31 May 2017 223 7 - 230
=========== =========== =========== ========
There were no assets held under finance leases during 2018 or
2017. The amount of depreciation expense charged to the statement
of comprehensive income in respect of such assets was GBPnil in
2018 and 2017.
11. Intangible Assets
Intangible Assets
GBP'000
Cost
At 31 May 2017 558
Additions 281
Disposals -
------------------
At 31 May 2018 839
------------------
Depreciation
At 31 May 2017 40
Charge for the year 128
------------------
At 31 May 2018 168
------------------
Net book values
At 31 May 2018 671
==================
At 31 May 2017 518
==================
All intangible assets are from internal development.
12. Trade and other receivables
May 2018 May 2018
GBP'000 GBP'000
Trade receivables 162 50
Other debtors 89 191
Prepayments and accrued income 40 20
--------- ---------
291 261
========= =========
At 31 May 2018 trade receivables were stated net of provisions
of GBPnil (2017 - GBPnil). The remaining balances were considered
recoverable on normal trade terms. There is no material difference
between the fair value and the varying value of these assets. The
maximum credit risk exposure at the reporting date equated to the
fair value of trade receivables as stated net of provisions.
Standard payment terms are 30 days net.
13. Inventories
May 2018 May 2017
GBP'000 GBP'000
Diagnostic testing materials 295 323
--------- ---------
295 323
========= =========
Inventory is stated net of a GBP193,000 provision (2017:
GBP501,000). During the year inventory with a gross value and
impairment provision of GBP308,000 was written off in full due to
obsolescence.
14. Cash and cash equivalents
Cash balances at the end of each year are as follows:
May 2018 May 2017
GBP'000 GBP'000
Cash and cash equivalents per statement
of financial position 12,953 5,075
--------- ---------
Cash per statement of cash flows 12,953 5,075
========= =========
15. Trade and other payables
May 2018 May 2017
GBP'000 GBP'000
Trade payables 402 590
Other creditors 181 122
Accruals and deferred income 225 135
808 847
========= =========
16. Borrowing
The Group uses bank overdrafts, bank and other loans to finance
acquisitions; the following balances remain outstanding as
shown:
May 2018 May 2017
GBP'000 GBP'000
Current
Other loans - 502
- 502
======================== =========
The Company had taken out a venture loan facility originally of
EUR1,862,649 (approximately GBP1.5m), from Harbert European
Speciality Lending Company Limited ('Harbert'), repayable in equal
instalment over the period to 31 January 2018 at an interest rate
of 10%, plus a further 3% to be paid with the final instalment. The
facility was secured by a fixed and floating charge over the
company's assets and undertaking. As at the year end GBPnil was
falling due within one year and GBPnil was falling due after one
year (2017: GBP502,281 and GBPnil respectively). The loan was
repaid in full during the financial year.
17. Lease commitments
At the end of each period the Group had total minimum annual
payment commitments under non-cancellable operating lease
agreements as set out below:
May 2018 May 2017
GBP'000 GBP'000
Land and buildings
Operating leases which expire:
Within one year 257 21
In two to five years 234 -
In over five years - -
--------- ---------
491 21
========= =========
18. Share capital
May 2018 May 2017
Shares GBP Shares GBP
Authorised:
Ordinary shares of GBP0.01
each 64,102,560 641,025 57,115,594 571,155
- 641,025 571,155
=========== ======== =========== ========
Allotted, called up
and fully paid:
Ordinary shares of GBP0.01
each 61,626,327 616,263 51,024,404 510,244
61,626,327 616,263 51,024,404 510,244
=========== ======== =========== ========
19. Share based payments
The Group has granted options to certain directors and employees
in respect of Ordinary shares
The Group has the following share options schemes in place:
The 2005 Share Option Scheme
The 2005 Share Option Scheme has the following principal
terms:
-- the scheme is limited to eligible persons, being employees,
officers, SAB members and consultants of the Group;
-- the scheme provides for options to be granted to eligible
persons to subscribe for ordinary shares of 0.01p each in the
capital of Oncimmune Holdings Plc;
-- the scheme was limited to options over 14,500 ordinary shares
in Oncimmune Limited (now 725,000 options over Ordinary shares of
Oncimmune Holdings Plc), all of which have been granted and options
may be issued under the Enterprise Management Incentive (EMI) rules
or as unapproved options;
-- no option may be exercised later than the tenth anniversary
of the date of grant, extended to 20 years for certain option
holders;
-- each option issued under the scheme had a vesting period
commencing for employees, officers and consultants on the first
anniversary of the date of the grant and expiring on the fourth
anniversary of the date of grant and for SAB members commencing on
the second anniversary and expiring on the fourth anniversary of
the date of grant;
-- options issued under the scheme are non-transferable;
-- vested options must be exercised (i) within 24 months of an
option holder's death; (ii) within 3 months of an option holder
ceasing to hold office for reasons of disability, redundancy or
retirement (unless otherwise agreed by the Directors); and (iii)
within 6 months of an option holder's resignation (if an employee,
officer or consultant of the Operating Group) and within 24 months
of an option holder's resignation (if an SAB member), or in each
case the options shall lapse
-- If an option holder shall leave the Operating Group for any
reason, options granted to that option holder shall only be
exercisable in the Directors' discretion;
-- on 'takeover' of Oncimmune Holdings Plc where a general offer
is made to acquire the whole of the issued share capital of
Oncimmune Holdings Plc (or any class of share capital of Oncimmune
Holdings Plc), the acquiring company may make a 'rollover' offer to
the option holders, which the option holders shall be deemed to
accept, such that their options shall rollover into options in the
acquiring company upon the same terms; and
-- Oncimmune Holdings Plc may at any time add to or vary the
scheme rules provided that this does not affect the liabilities of
any option holder.
The 2007 Share Option Scheme
The 2007 Share Option Scheme is on the same principal terms as
the 2005 Share Option Scheme save that:
-- the scheme was limited to an additional 25,029 (increased to
68,056 options over ordinary shares in Oncimmune Limited and which
rolled over 3,402,800 options over Ordinary Shares), of which
23,511 options over ordinary shares in Oncimmune Limited (rolled
over into 1,175,550 options over Ordinary Shares of Oncimmune
Holdings Plc) have been granted;
-- the vesting period for all options issued under the scheme
commenced on the first anniversary of the date of grant and expired
on the third anniversary of the date of grant, and;
-- vested options must be exercised (i) within 12 months of an
option holders death; (ii) within 3 months of an option holder
ceasing to hold office for reasons of disability, redundancy or
retirement (unless otherwise agreed by the Directors) and (iii) on
or before an option holders resignation, or in each case the
options shall lapse.
In November 2015, the two existing option schemes were rolled
over into the 2015 Oncimmune Holdings Scheme on the terms set out
above.
May 2018 May 2017
Number of Number
options of options*
Options in grant 4,391,765 3,650,550
========== =============
Weighted average exercise GBP0.86 GBP0.77
price
Weighted average life remaining
in years 6 5
*Share options issued by Oncimmune Limited
The fair value of options granted by the Company has been
arrived at using the Black-Scholes model. The assumptions inherent
in the use of this model are as follows:
May 2018 May 2017
Volatility 20% 20%
Dividend yield 0% 0%
Risk free rate 3% 3%
Discount factors 10% 10%
-- The option life is assumed to be at the end of the allowed period
-- Historical staff turnover is taken into account when
determining the proportion of granted options that are likely to
vest by the end of the period
-- Following the application of the vesting probability
assumptions, there are no further vesting conditions other than
remaining in employment with the Company during the vesting
period
-- No variables change during the life of the option (e.g. dividend yield)
-- Volatility has been estimated as there is no history of the Company's share price.
At the period end each year the Group had the following options
at the weighted average exercise prices (WAEP) shown:
WAEP May 2018 WAEP May 2017
Expiry date Number Number
Outstanding at 1 June
(2017, 2016) 0.77 3,650,550 0.83 1,825,550
Granted - 913,531 - 1,825,000
Lapsed (147,315)
Modified
Exercised (25,000)
Outstanding at 31
May (2018, 2017) 0.86 4,391,765 0.77 3,650,550
===== ========== ===== ==========
Weighted average remaining
contractual life in
years 6 5
===== ========== ===== ==========
The options are subject to the rules of 2016 Share Option plan
(an amalgamation of the Company's 2005 and 2007 Share option
Plans).
The Group recognised total expenses in respect of the option
schemes above of GBP138,065 (2017: GBP74,435) related to
equity-settled share based payment transactions during the
year.
Warrants
The group has warrants outstanding as follows, over the GBP0.01
Ordinary Shares:
Grant date Number Subscription
price
Expiry date
Outstanding at 1 June
2016:
Directors November 988,750 GBP0.01
2015
Harberts European May 2016 282,515 GBP0.66368
Growth Fund
Zeus Capital May 2016 1,041,314 GBP1.30
Granted in the year Nil
Outstanding at 31
May 2017: 2,322,579
========== =============
20. Related party transactions
During the year ended 31 May 2018, the University of Nottingham
- a shareholder, and Wisteria - where the CFO is a director,
provided services to the group as shown below. University of
Nottingham provided facilities and services to enable the Company
to undertake research whilst Wisteria provided bookkeeping
services.
Wisteria University of Nottingham
May 2018 May 2017 May 2018 May 2017
GBP'000 GBP'000 GBP'000 GBP'000
Costs incurred 39 44 163 174
Outstanding at year end 4 8 64 39
Also, at year end GBP806 (2017: GBP243), GBP4,805 (2017:
GBP6,703) and GBP1,241 (2017: GBP9,035) was outstanding to Andrea
Murray, Andrew Millet and Geoffrey Hamilton-Fairley
respectively.
21. Categories of financial instruments
May 2018 May 2017
GBP'000 GBP'000
Current financial assets
Loans and receivables 291 261
Cash and cash equivalents 12,953 5,075
--------- ---------
Total financial assets 13,244 5,336
Non-financial assets - -
--------- ---------
Total 13,244 5,336
========= =========
Non-current financial liabilities
At amortised cost - borrowings - -
========= =========
Current financial liabilities
At amortised cost - borrowings - 502
At amortised cost - payables 849 901
--------- ---------
Total current financial liabilities 849 1,403
Non financial liabilities - -
--------- ---------
Total current liabilities 849 1,403
========= =========
22. Loss per share
The basic per share is calculated by dividing the loss
attributable to the owners of Oncimmune Holdings Plc by the
weighted average number of ordinary shares in issue during the
year. Diluted earnings per share has not been calculated as the
entity is loss making.
May 2018 May 2017
Earnings
Loss on ordinary activities for the purposes
of basic and fully diluted loss per share
(GBP'000) (6,342) (5,023)
Loss on ordinary activities for the purposes - -
of basic and fully diluted loss per share
(GBP'000) (before highlighted items)
----------- -----------
Number of shares
Weighted average number of shares for
calculating basic and fully diluted earnings
per share 55,558,178 51,024,404
----------- -----------
Loss per share
Basic and fully diluted loss per share 11.41p 9.84p
----------- -----------
Basic and fully diluted loss per share
(before exceptional items) 11.41p 9.84p
----------- -----------
23. Financial risk management
The Group's activities expose it to a variety of financial
risks: market risk (interest rate risk), credit risk and liquidity
risk.
Market risk - Foreign exchange risk
As disclosed in note 4 in the years to 31 May 2018 and 31 May
2017 over 43% of the Group's income by destination was into the
North American market and denominated in US dollars. The Group's
income stream is exposed to fluctuations in the US dollar exchange
rate against Sterling.
Market risk - Interest rate risk
The Group carries borrowings in the form of other loans as all
borrowings are on fixed interest terms, the directors consider that
no risk arises in respect of future cash flows.
Market risk - Price risk
The Group is not exposed to either commodity or equity
securities price risk.
Credit risk
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in financial loss to the
Group. In order to minimise this risk the Group endeavours only to
deal with companies which are demonstrably creditworthy. In
addition, a significant proportion of revenue results from cash
transactions. The aggregate financial exposure is continuously
monitored. The maximum exposure to credit risk is the value of the
outstanding amount of trade receivables. The management do not
consider that there is any concentration of risk within either
trade or other receivables.
Liquidity risk
The Group currently holds cash balances to provide funding for
normal trading activity. The Group also has access to both short
term and long term borrowings. Trade and other payables are
monitored as part of normal management routine.
Borrowings and other liabilities mature according to the
following schedule:
2018 Within One to
1 year five years
GBP'000 GBP'000
Trade payables 402 -
Other taxation and social 41 -
security
Other creditors 181 -
Accruals and deferred income 225 -
2017 Within One to
1 year five years
GBP'000 GBP'000
Trade payables 590 -
Other taxation and social 57 -
security
Other creditors 122 -
Accruals and deferred income 135 -
Other loans 502 -
========
Capital risk management
The Group' s capital management objectives are:
-- to ensure the Group's ability to continue as a going concern; and
-- to provide an adequate return to shareholders
by pricing products and services commensurate with the level of
risk.
The Group monitors capital on the basis of the carrying amount
of equity less cash and cash equivalents as presented on the face
of the statement of financial position.
May 2018 May 2017
GBP'000 GBP'000
Total equity 13,562 5,064
Cash and cash equivalents 12,953 5,075
--------- ---------
Capital 26,515 10,139
========= =========
Total financing
Borrowings - 502
--------- ---------
Overall financing - 502
========= =========
Capital to overall financing ratio N/A 2,019.7%
========= =========
24. Events after the balance sheet date
There were no events after the balance sheet date.
25. Subsidiaries consolidated
The subsidiaries included in the consolidated financial
statements of the Group are detailed below. No subsidiary
undertakings have been excluded from the consolidation.
Company Holding
Country of incorporation Class of share Direct Indirect
capital held % %
Oncimmune Limited United Kingdom Ordinary 100
United States
Oncimmune (USA) LLC of America Ordinary 100
26. Ultimate controlling party
There is no ultimate controlling
party of the Company.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR WGGMAUUPRPPU
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