Half-year Report

RNS Number : 8641B

Oxford BioDynamics PLC

15 June 2021

 

15 June 2021

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

OXFORD BIODYNAMICS PLC

("OBD" or the "Company" and, together with its subsidiaries, the "Group")

INTERIM RESULTS FOR THE SIX-MONTH PERIOD ENDED 31 MARCH 2021

Progress in commercialization of OBD's EpiSwitch® platform

Oxford BioDynamics Plc (AIM: OBD, the Company), a biotechnology company developing precision medicine tests for personalized healthcare based on the EpiSwitch ® 3D genomics platform   today announces its interim results for the six-month period to 31 March 2021.

CORPORATE AND OPERATIONAL HIGHLIGHTS

• Launch of EpiSwitch® CST (COVID-19 Severity Test) (March 2021)
• Launch of EpiSwitch® Explorer Array Kit allowing researchers to access OBD's EpiSwitch® technology platform (March 2021)
• Expansion of strategic focus to include development and commercialization of laboratory tests (announced December 2020)
• Strengthening of the Senior Management Team and Board, including the appointment of Matthew Wakefield as Non-Executive Chairman (December 2020)

FINANCIAL HIGHLIGHTS

• Revenue of £0.25m (H1 2020: £0.19m)
• Operating loss of £3.5m (H1 2020: £2.4m)
• Cash and term deposits of £8.1m as at 31 March 2021 (31 March 2020: £13.9m, 30 September 2020: £11.5m)

POST-PERIOD END

• Signing of new lease agreement to expand core UK infrastructure and receipt of £2.5m in lease incentives

Commenting on the results, Dr Jon Burrows, Chief Executive Officer of Oxford BioDynamics, said:

"The OBD team achieved a tremendous amount over the first half of the year: we developed and executed our expanded strategy, culminating in the successful launch of the EpiSwitch® CST COVID-19 Severity Test and the EpiSwitch® Explorer Array Kit. The Group continues to make excellent progress in commercializing our pipeline: we look forward to growing sales and entering the Immuno-Oncology (IO) market with the launch of our Universal Immuno-Oncology (IO) Response Test by the end of the financial year. Additionally, we continue to invest considerable time and effort in market research to determine the most promising and lucrative market opportunities for 2022 onwards from our available product development pipeline. Our current attention converges on the fields of prostate cancer, colorectal cancer and veterinary medicine."

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

For more information:

Oxford BioDynamics Plc	Tel: [phone]
Jon Burrows, CEO Paul Stockdale, CFO
Shore Capital - Nominated Adviser and Broker	Tel: [phone]
Advisory: Edward Mansfield / John More Broking: Fiona Conroy
Instinctif Partners - Financial PR	Tel: [phone]
Melanie Toyne-Sewell / Agnes Stephens / Katie Duffell / Nathan Billis	[e-mail]
PCG Advisory Group - US Investor Relations	Tel: [phone]
Jeff Ramson / Kirin Smith

Notes to Editors

About Oxford BioDynamics Plc

Oxford BioDynamics Plc (AIM: OBD) is a global biotechnology company, advancing personalized healthcare by developing and commercializing precision medicine tests for life-changing diseases.

In March 2021, the Company launched its first commercial prognostic test,  EpiSwitch ®   CST  (Covid Severity Test) and the first commercially available microarray kit for high-resolution 3D genome profiling and biomarker discovery,  EpiSwitch® Explorer Array Kit . Its next product will be a predictive immune response profile for immuno-oncology (IO) checkpoint inhibitor treatments, to be launched later in 2021.  

The Company has developed a proprietary 3D genomic biomarker platform, EpiSwitch®, which can build molecular diagnostic classifiers for prediction of response to therapy, patient prognosis, disease diagnosis and subtyping, and residual disease monitoring in a wide range of indications.

Oxford BioDynamics has participated in   more than 40 partnerships with big pharma and leading institutions including Pfizer, EMD Serono, Genentech, Roche, Biogen, Mayo Clinic, Massachusetts General Hospital and Mitsubishi Tanabe Pharma.

The Company has created a valuable technology portfolio, including biomarker arrays, molecular diagnostic tests, bioinformatic tools for 3D genomics and an expertly curated 3D genome knowledgebase comprising hundreds of millions of data points from over 10,000 samples in more than 30 human diseases.  

OBD is headquartered in Oxford, UK and is listed on AIM of the London Stock Exchange. It also has a commercial team in the US and a reference laboratory in Penang, Malaysia.

For more information, please visit the Company's website, www.oxfordbiodynamics.com , or follow on Twitter or LinkedIn .
 

About EpiSwitch®

The 3D configuration of the genome plays a crucial role in gene regulation. By mapping this architecture and identifying abnormal configurations, EpiSwitch® can be used to diagnose patients or determine how individuals might respond to a disease or treatment.

Built on over 10 years of research, EpiSwitch® is Oxford Biodynamics' award-winning, proprietary platform that enables screening, evaluation, validation and monitoring of 3D genomic biomarkers. The technology is fully developed, based on testing of over 10,000 samples in 30 disease areas, and reduced to practice.

In addition to stratifying patients with respect to anticipated clinical outcome, EpiSwitch® data offer insights into systems biology and the physiological manifestation of disease that are beyond the scope of other molecular modalities. The technology has performed well in academic medical research settings and has been validated through its integration in biomarker discovery and clinical development with big pharma.

Oxford BioDynamics is leveraging its leading technology to develop a pipeline of tests in a wide range of indications, such as immuno-oncology, oncology, and veterinary medicine, to follow the release of its EpiSwitch ® CST (Covid Severity Test).

A copy of this announcement is available on the Company's website at www.oxfordbiodynamics.com .

This announcement includes "forward-looking statements" which include all statements other than statements of historical facts, including, without limitation, those regarding the Group's financial position, business strategy, plans and objectives of management for future operations, and any statements preceded by, followed by or that include forward-looking terminology such as the words "targets", "believes", "estimates", "expects", "aims", "intends", "will", "can", "may", "anticipates", "would", "should", "could" or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Group's control that could cause the actual results, performance or achievements of the Group to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Group's present and future business strategies and the environment in which the Group will operate in the future. These forward-looking statements speak only as at the date of this announcement. The Group expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in this announcement to reflect any change in the Group's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. As a result of these factors, readers are cautioned not to rely on any forward-looking statement.  

CHIEF EXECUTIVE OFFICER'S REVIEW

Introduction  

The first half of this financial year was transformational for OBD, executing on the delivery of the Group's expanded strategy with the successful launch of its first proprietary lab developed test (LDT), the EpiSwitch® CST, on time in March 2021. This was closely followed by a supply and resale agreement with Agilent Technologies (NYSE: A) and the launch of the EpiSwitch® Explorer Array Kit to the academic and pharma R&D market. These achievements were supported by the addition of experienced staff members to key positions in the Group's US and UK teams and the appointment of Matthew Wakefield to the Board as Non-Executive Chairman.

Expanded strategic focus

In December 2020, the Group announced an expansion of its strategic focus to include developing and commercializing proprietary LDTs and making its EpiSwitch® 3D genomic biomarker arrays and bioinformatics tools available to academic and commercial researchers. Opening these new commercial channels alongside the Group's ongoing biomarker discovery work with commercial partners provides an opportunity for the Group to accelerate the adoption of EpiSwitch® and 3D genomics in the growing field of precision medicine. The first two products developed under the strategic expansion were launched during the period and are discussed in more detail below.

As part of the expanded strategic plan, to better support each of the Group's commercial channels, the Board approved a significant expansion of core UK infrastructure to include the development of purpose-built laboratory and office space in Oxford. The Group also successfully recruited new team members in Operations, Marketing, Finance and HR during the period.

EpiSwitch® CST

The EpiSwitch® CST is a prognostic test of COVID-19 severity, initially launched to the US concierge medicine market at the end of the period in March 2021. The launch of EpiSwitch® CST marked a significant milestone for the Group. The test was developed by the Group's scientists using blood samples from multiple worldwide cohorts of COVID-19 patients. The test predicts a personalized risk of severe illness due to SARS-CoV-2 with high accuracy (92%), sensitivity (96%), specificity (86%), positive predictive value (92%), and negative predictive value (93%)¹. EpiSwitch® CST is an important tool to manage the uncertainty of daily life during the ongoing pandemic by identifying high-risk individuals and for those individuals who cannot be vaccinated (estimated to be c10m people in the USA alone).

The Group is partnering with US testing facilities regulated under CAP-CLIA² standards, to offer the test as a laboratory developed test (LDT). Physicians order the test, sending a routine blood sample to the partner lab where it is assayed using industry standard PCR technology and OBD's proprietary reagents and processes. Data analysis is then performed on OBD's secure proprietary server, producing a confidential patient report, which is signed off by the medical director of the partner lab and issued to the ordering physician.

The Group's product development and operations teams have been working remotely throughout the calendar year on technology transfer and operational logistics with our partner lab. In the second quarter we have had to address several post-launch logistical issues - including a requirement to source and commission additional robotic machinery for the dedicated EpiSwitch® CST line at the partner lab - that have led to delays in the first sales of the CST. The CST is now expected to be fully available to our "early adopter" market of US-based concierge medicine physicians by the end of June. Work with the Group's partner lab over recent months has provided invaluable on-the-ground experience that will be applied to the forthcoming launches of the other tests in OBD's pipeline, beginning with the Universal Immuno-Oncology (IO) Response Test later in the current financial year.

The course of the ongoing COVID-19 pandemic remains uncertain, but the widely reported emergence of new variants and the potential for an ongoing vaccination program to be required beyond 2021 increase the likelihood that the EpiSwitch® CST remains an important tool to assess personalized risk during and beyond the relaxation of COVID restrictions in the Group's initial markets. In addition to the risks of acute illness associated with COVID infection, 20-50% of COVID survivors continue to have complications resulting from infection for many months after recovery, so-called "long COVID" disease. The Group's product development team is currently working on longitudinal COVID samples, in collaboration with NHS Hertfordshire, to leverage previous physiological insights that will help physicians with decision-making for both the acute and chronic manifestation of COVID disease.

EpiSwitch® Explorer Array Kit

OBD launched the EpiSwitch® Explorer Array Kit in March 2021, with initial orders received post-period end. The EpiSwitch® Explorer Array Kit is the first commercially available microarray kit for high-resolution 3D genome profiling and biomarker discovery and is for use by academic and clinical researchers. The kit contains custom microarrays based on OBD's proprietary probe designs, manufactured by Agilent Technologies (NYSE:A), as well as OBD's proprietary biochemical reagents for sample preparation. Researchers also benefit from access to the Group's EpiSwitch® Data Portal enabling powerful, proprietary analytics of research data and interrogation of the world's largest 3D genome knowledgebase. The kit opens up the Group's EpiSwitch®platform, which is already well validated in pharma biomarker discovery, to a much wider community of worldwide R&D experts. Since the launch of the kit, the Group's commercial team has been engaged in multiple discussions with potential partners with respect to co-marketing and distribution rights.

Pipeline commercialization update

The Group has further refined its plans for the commercialization of its pipeline of developed EpiSwitch tests. As already announced, the next test to be launched by the Group will be in the field of immuno-oncology (IO). The EpiSwitch® Universal IO Response Test is a predictive test for the determination of likely response in cancer patients considered for monotherapy treatment with immune checkpoint inhibitors (ICIs).

As an established cancer treatment of potentially high efficacy in responders, the number of cancer patients eligible for treatment with ICIs has increased in recent years³. A significant proportion of patients do not respond to these therapeutics, and some suffer significant immune related adverse events⁴. Physicians need a way to determine whether patients will benefit from ICI therapeutics in order to select the best treatment option for each individual. Existing molecular tests using next generation sequencing or immunohistochemistry cannot successfully stratify responders and non-responders.

The EpiSwitch® test, developed following the analysis of more than 800 patient samples from multiple cohorts, identifies likely responders and enables robust exclusion of non-responders across cancer indications and therapeutic combinations. The test will be made available to oncologists by the end of the current financial year. Earlier, a successful application of the Group's EpiSwitch® platform technology to the development and validation of IO biomarkers for response to a specific ICI in patients with non-small cell lung cancer was jointly presented with EMD Serono, Pfizer and Mayo Clinic at the Society for Immunotherapy of Cancer's (SITC) 34^th Annual Meeting in December 2019⁵.

The comprehensive applications in OBD's product pipeline include several diagnostic, prognostic, predictive or monitoring tests across multiple indications. The Group has reviewed the likely market opportunities for each of these and expects the most promising and lucrative to be diagnostic/prognostic tests for early-stage detection and staging of prostate cancer (PCa) and colorectal cancer (CRC) and, in veterinary medicine, a diagnostic/prognostic test for canine lymphoma.

Prostate cancer

Population-wide screening for PCa offers a significant potential market (there are approximately 45m men aged 50-75 in the US alone⁶), with an unmet need for a reliable non-invasive test. OBD recently took part in the PROSTAGRAM study led by Professor Hashim Ahmed, Professor and Chair of Urology at Imperial College London and funded by the Wellcome Trust, The Urology Foundation and the British Medical Association. Patient blood samples were screened using the Group's proprietary EpiSwitch® diagnostic assay for blood-based diagnosis of PCa, alongside other diagnostic methodologies, including PSA tests, MRI and ultrasound. Release of the final data from this study is awaited.

During the period, the results of the Group's work in PCa with the University of East Anglia, the Department of Urology, Norfolk and Norwich NHS Trust, the University of Essex and Imperial College London were published in the Journal of Translational Medicine⁷. This study identified specific chromosome conformations in the blood of PCa patients that allow both PCa diagnosis and risk stratification with high sensitivity and specificity, offering significant potential for the development of quick diagnostic and prognostic blood tests for PCa, significantly exceeding the specificity of the currently used (but widely disregarded) PSA test.

Colorectal cancer

Following positive results from initial product development, OBD expects to be able to launch a blood-based molecular test for diagnosis (including early-stage screening) and prognosis of CRC. This is an exciting addition to the pipeline and has been identified as a substantial commercial opportunity going forward. Approximately 148k people are diagnosed with colorectal cancer in the US each year and the American Cancer Society recommends that anyone aged 45 or older (110m people in the US⁶) should have regular screening⁸.

Veterinary medicine

OBD first announced the applicability of its EpiSwitch® technology to the diagnosis of canine lymphoma in January 2020, in a study focused on the diagnosis of B-cell lymphoma in dogs, presented at the American Association for Cancer Research (AACR) Conference on Advances in Liquid Biopsies. This study, conducted in collaboration with Prof. Jaime Modiano at the University of Minnesota Department of Veterinary Clinical Sciences, Animal Cancer Care and Research Program, College of Veterinary Medicine and Masonic Cancer Center, generated a new biomarker signature that was able to correctly identify dogs with and without lymphoma with high sensitivity and specificity. Since then, OBD has extended its purview into blood cancers and soft tissue tumors in dogs (lymphomas, leukaemias and sarcomas). Post-period end, the Group has entered into discussions with veterinary medicine industry experts with a view to determining the best approach to commercializing the IP already developed in this area. The market opportunity is significant, with approximately 30,000 vets and 90m dogs in the US.

Other commercial and scientific progress

During the period, the Group made continued progress on several commercial and internal biomarker discovery projects, including its contribution to the REFINE-ALS clinical trial for Mitsubishi Tanabe Pharma America, Inc. Following the successful development and validation of IO biomarkers in partnership with EMD Serono, Pfizer and Mayo Clinic as presented at SITC 2019⁵, the Group expanded its IO work under the master service agreement with a top pharma company, first announced in December 2019. The OBD team has now processed, analyzed and reported on a total of 496 patient samples from an IO trial.

OBD has been represented on three Steering Committees of the FNIH Biomarkers Consortium by its Chief Scientific Officer Dr Alexandre (Sasha) Akoulitchev since April 2020. Following its recent achievements in the field of IO, OBD has also become a member of the specialised immuno-oncology working group, supported by both the Immunity and Inflammation, and Cancer Biomarker Steering Committees. This provides further evidence of the importance of IO biomarkers, and the role that the EpiSwitch® platform could play, in improving clinical decision-making and patients' outcomes.

Board and team changes

The Group made several key appointments during and after the period, particularly to its Operations and Marketing teams. Thomas Guiel joined the Group as Chief Operating Officer in December 2020. Thomas has over 30 years' experience in biotechnology and clinical diagnostic laboratory management, having provided leadership in logistics, manufacturing and operations for both large and early-stage companies. Since joining OBD, Thomas has played a vital role in the development and launch of the Group's first products and is providing leadership to the project developing its expanded UK infrastructure. Dave Blum joined OBD in January 2021 as Senior Vice President and Head of Marketing. Dave is a designer, illustrator, animator, and experienced senior executive with an expert-level science and medical background including a PhD in Biological Chemistry and MA in Medical and Biological Illustration from Johns Hopkins University. He specializes in the visualization of complex subject matter for commercial and educational purposes.

At Board level, the Company welcomed Matthew Wakefield as Non-Executive Chairman in December 2020. Matthew is a long-time supporter of OBD and brings a wealth of experience from a 27-year career in the City, working in senior positions in both the fund management and investment banking industries. Also in December, Non-Executive Chairman Dr Peter Pack and co-founder and former Chief Executive Officer Christian Hoyer Millar stepped down from the Board. The Board thanks each of them for their contributions and wishes them every future success.

IP

The Group's global intellectual property portfolio anchors its position as leader in the 3D genomics space. The Group continued to maintain and develop its IP during the period, through its broad and multi-layered patent strategy, trade secrets and know-how, trademarks and branding. OBD now has patents filed or granted in 18 separate families and was granted a second US patent: 'Methods of Detecting Long Range Chromosomal Interactions' during the period. In November 2020, EpiSwitch® was granted as an OBD-owned trademark by the US Patent and Trademark Office.

Looking forward

In the second half of the year, the Group will continue to focus on the execution of its commercial plan: growing sales of the EpiSwitch® CST and EpiSwitch® Explorer Array Kit launched in H1, and developing and launching the EpiSwitch® Universal IO Response Test. The Group will also expand and strengthen both its infrastructure and team: the development of new UK laboratory and office facilities is expected to be completed before the year end and there will be recruitment to key positions in the US and UK to support the further commercialization of the Group's pipeline.

The Board has been pleased to note that, following the launch of the EpiSwitch® CST and EpiSwitch® Explorer Array Kit, several US-based investors and institutions have expressed interest in the Group and its commercial plans. To that end, post-period end the Group has appointed the PCG Advisory Group as the Group's US investor relations advisors to promote OBD's strategic communications and maximise awareness of the Group's commercial plans and trajectory in the US capital markets.  I look forward to updating shareholders on further progress in due course.

Dr Jon Burrows

Chief Executive Officer

¹ The EpiSwitch®CST is based on the results of OBD's genome-wide prognostic study of clinical outcomes in Covid patients (Hunter et al., 2021) , bioRxiv :  https://www.biorxiv.org/content/10.1101/2021.03.14.435295v1

² CAP-CLIA regulated laboratories are accredited by the College of American Pathologists as being compliant with the Clinical Laboratory Improvement Amendments, 1988 (42 CFR, Part 493).

³   https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6503493/  

⁴ https://www.nature.com/articles/s41571-019-0218-0 .

⁵ https://www.oxfordbiodynamics.com/wp-content/uploads/2020/06/SITC2019_P143_multitherapy.pdf , https://www.oxfordbiodynamics.com/wp-content/uploads/2020/06/SITC2019_P142_avelumab.pdf  

⁶ https://www.statista.com/statistics/241488/population-of-the-us-by-sex-and-age/  

⁷ https://translational-medicine.biomedcentral.com/articles/10.1186/s12967-021-02710-y#Abs1

⁸ https://www.cancer.org/cancer/colon-rectal-cancer/detection-diagnosis-staging/acs-recommendations.html  

FINANCIAL REVIEW

Overview

During the six months ended 31 March 2021 alongside ongoing commercial and research work, the Group was engaged in the development and launch of its first lab developed test, EpiSwitch® CST, as well as the EpiSwitch® Explorer Array Kit. Revenues for the period of £250k (six months ended 31 March 2020: £188k) were generated by work for pharmaceutical partners, the Group's products having been launched just before the end of the period. As expected, the Group's expanded strategic focus led to increased costs across the organisation, generating a reduction in cash and term deposits of £3.4m (H1 2020: £1.0m, H2 2020: £2.4m). Cash and term deposits at 31 March 2021 were £8.1m (30 September 2020: £11.5m). Post-period end, in April 2021, the Group benefited from the receipt of £2.5m cash in lease incentives on entering into a new lease agreement for its expanded UK infrastructure.

Financial performance

Revenue for the period was driven by work on existing projects for pharma partners and at £250k was lower than the typical level in recent years, though slightly increased compared to the equivalent period in the prior year (H1 2020: £188k). Project-related revenue was negatively impacted by two main drivers: receipt of blood samples from some commercial partners was delayed, in part because of the COVID-19 pandemic. Also, travel restrictions and an internal focus on proprietary product development meant that business development activity with pharma/biotech companies was constrained. These factors, largely outside of the Group's control, provide further justification for the Board's decision to pivot to an expanded strategy including developing and marketing the Group's own products, which they consider more likely to generate revenue and improved shareholder value in the short-to-medium term.

Research and development activity was increased compared to the equivalent period in the prior year (£601k, H1 2020: £279k) with higher consumables usage and costs associated with the procurement of blood samples necessary to develop the EpiSwitch® CST. Staffing costs were also increased (£1.87m, H1 2020: £1.24m), mainly because of the impact of senior appointments since the beginning of the prior year, as well as inflationary increases for existing staff. General and administrative costs were increased (£959k, H1 2020: £691k), reflecting increased professional and marketing costs (including in the US) offset by lower travel and associated expenses as a result of COVID-19-related restrictions. Share options charges were lower (£65k, H1 2020: £94k) because of lower fair value charges per option for recent grants and a number of options that lapsed prior to vesting for which there were credits to the income statement. Depreciation expenses for property plant and equipment were lower (£215k, H1 2020: £241k) because several items of lab and office equipment are now fully written down but still in use.

Finance income for the period included only interest income (£22k, H1 2020: £80k including interest income and exchange gains) and was generated from lower balances held in term deposit and notice accounts, at lower interest rates. Finance costs include lease interest charges calculated under IFRS 16 'Leases' and realised and unrealised exchange losses (£72k, H1 2020: £10k included only lease interest charges). In both periods, exchange gains and losses were driven almost entirely by the effect on US dollar-denominated cash and debtor balances of movements in the sterling-to-US dollar exchange rate.

Financial position

Overall, non-current assets increased by £256k compared to 31 March 2020 (£2.63m, H1 2020: £2.38m), mainly as a result of additions to patents, leasehold improvements and lab equipment. Additions to leasehold improvements in the period were capitalised design and strip-out costs associated with the lease entered into by the Company post-period end to expand its UK infrastructure. The lease will lead to an increased right-of-use asset balance at the 30 September 2021 year end.

Inventories were slightly increased at £379k (H1 2020: £247k) because higher stock levels of microarray slides and biochemical reagents were maintained in order to support the Group's products and to mitigate widely reported post-Brexit supply chain risks. Overall, lease liabilities were reduced as the Group did not enter into any new leasing arrangements during the period. Lease liabilities will be increased at the 30 September 2021 year end because of the new lease signed post-period end. Other assets and liabilities remained at similar levels to previous reporting dates.

Cash flow

The Group held cash and fixed-term deposits of £8.14m at 31 March 2021 (30 September 2020: £11.51m), after a net outflow for the period of £3.36m (H2 2020: £2.37m, H1 2020: £1.62m). The increased cash outflow vs H1 2020 was primarily driven by a £1.46m increase in operating cash outflows, and a £0.25m increase in payments for intangible and tangible fixed asset additions. Post-period end, the Group received approximately £2.5m pursuant to the terms of the lease for its expanded UK infrastructure, entered into post-period end.

Summary and outlook

The interim financial statements for the six-month period ended 31 March 2021 reflect the Group's investment in the development and, at the end of the period, launch of the first of its proprietary products. Staff costs, general and administrative expenses and lease-related depreciation and interest charges are expected to increase in the second half of the financial year as the Group focuses on growing sales of the EpiSwitch® CST, launching its Universal IO Response Test and continuing to make key appointments to its team. Investment in the Group's expanded UK infrastructure will mainly be funded by the lease incentives received post period-end.

Paul Stockdale

Chief Financial Officer

Consolidated income statement

		Six-month period ended 31 March			Year ended 30 September
		2021		2020		2020
	(unaudited)		(unaudited)			(audited)
	Note	£000		£000		£000
Continuing operations
Revenue	3,4	250		188		456
Research & development costs (excluding staff costs)		(601)		(279)		(622)
Staff costs		(1,866)		(1,242)		(2,747)
General & other admin costs		(959)		(691)		(1,321)
Share option charges	12	(65)		(94)		(253)
Depreciation and amortization	6-8	(215)		(241)		(467)
Other operating income		1		1		3
Operating loss		(3,455)		(2,358)		(4,951)
Finance income		22		80		121
Finance costs		(72)		(10)		(80)
Loss before tax		(3,505)		(2,288)		(4,910)
Income tax		426		262		597
Loss for the period from continuing operations		(3,079)		(2,026)		(4,313)
Loss attributable to:
Owners of the Company		(3,079)		(2,026)		(4,313)
Non-controlling interest				-		-
		(3,079)		(2,026)		(4,313)
Earnings per share
From continuing operations
Basic and diluted (pence per share)	5	(3.3)		(2.2)		(4.7)

Consolidated statement of comprehensive income

		Six-month period ended 31 March			Year ended 30 September
		2021		2020		2020
	(unaudited)		(unaudited)			(audited)
		£000		£000		£000
Loss for the period		(3,079)		(2,026)		(4,313)
Exchange differences on translation of foreign operations   that may be reclassified to the income statement		(11)		(42)		(11)
Total comprehensive income for the period		(3,090)		(2,068)		(4,324)
Total comprehensive income attributable to:
Owners of the Company		(3,090)		(2,065)		(4,323)
Non-controlling interest		-		(3)		(1)
		(3,090)		(2,068)		(4,324)

Consolidated statement of financial position

		31 March		31 March	30 September
		2021		2020		2020
	(unaudited)		(unaudited)			(audited)
		£000		£000		£000
Assets	Note
Non-current assets
Intangible fixed assets	6	1,005		634		869
Property, plant and equipment	7	782		784		700
Right-of-use assets	8	424		537		480
Deferred tax asset		-		-		-
Investments accounted for using the equity method		422		422		422
Total non-current assets		2,633		2,377		2,471
Current assets
Inventories		379		247		323
Trade and other receivables		1,067		1,101		1,053
Fixed term deposits		3,162		7,331		5,387
Cash and cash equivalents		4,982		6,544		6,119
Total current assets		9,590		15,223		12,882
Total assets		12,223		17,600		15,353
Equity and liabilities
Capital and reserves
Share capital	11	926		926		926
Share premium		16,740		16,740		16,740
Translation reserve		182		164		193
Share option reserve		2,837		2,859		3,018
Retained earnings		(10,147)		(5,027)		(7,314)
Equity attributable to owners of the Company		10,538		15,662		13,563
Non-controlling interest		18		16		18
Total equity		10,556		15,678		13,581
Current liabilities
Trade and other payables		1,021		1,289		1,102
Lease Liabilities	10	130		-		130
Provisions		74		-		42
Current tax liabilities		10		8		13
Total current liabilities		1,235		1,297		1,287
Non-current liabilities
Lease liabilities	10	348		514		411
Provisions		76		102		65
Deferred tax		8		9		9
Total non-current liabilities		432		625		485
Total liabilities		1,667		1,922		1,772
Total equity and liabilities		12,223		17,600		15,353

Consolidated statement of changes in equity

	Share capital	Share premium	Translation reserve	Share option reserve	Retained earnings	Attributable to share- holders	Non-controlling interest	Total
	£000	£000	£000	£000	£000	£000	£000	£000
At 1 October 2019	926	16,740	203	2,788	(3,082)	17,575	19	17,594
Adjustment arising on adoption of IFRS 16	-	-	-	-	58	58	-	58
At 1 October 2019 (adjusted)	926	16,740	203	2,788	(3,024)	17,633	19	17,652
Loss for the period	-	-	-	-	(2,026)	(2,026)	-	(2,026)
Other comprehensive income for the period	-	-	(39)	-	-	(39)	(3)	(42)
Total comprehensive income for the period	-	-	(39)	-	(2,026)	(2,065)	(3)	(2,068)
Transactions with owners recorded in equity
Share option credit	-	-	-	94	-	94	-	94
Lapse of vested share options	-	-	-	(23)	23	-	-	-
At 31 March 2020	926	16,740	164	2,859	(5,027)	15,662	16	15,678
At 1 April 2020	926	16,740	164	2,859	(5,027)	15,662	16	15,678
Loss for the period	-	-	-	-	(2,287)	(2,287)	-	(2,287)
Other comprehensive income for the period	-	-	29	-	-	29	2	31
Total comprehensive income for the period	-	-	29	-	(2,287)	(2,258)	2	(2,256)
Transactions with owners recorded in equity
Share option credit	-	-	-	159	-	159	-	159
Lapse of vested share options	-	-	-	-	-	-	-	-
At 30 September 2020	926	16,740	193	3,018	(7,314)	13,563	18	13,581
At 1 October 2020	926	16,740	193	3,018	(7,314)	13,563	18	13,581
Loss for the period	-	-	-		(3,079)	(3,079)	-	(3,079)
Other comprehensive income for the period	-	-	(11)	-	-	(11)	-	(11)
Total comprehensive income for the period	-	-	(11)	-	(3,079)	(3,090)	-	(3,090)
Share option credit	-	-	-	65	-	65	-	65
Lapse of vested share options				(246)	246	-	-	-
At 31 March 2021	926	16,740	182	2,837	(10,147)	10,538	18	10,556

Consolidated statement of cash flows

		Six-month period ended 31 March			Year ended 30 September
		2021		2020		2020
	(unaudited)		(unaudited)			(audited)
	Note	£000		£000		£000
Loss before tax for the financial period		(3,505)		(2,288)		(4,910)
Adjustments to reconcile loss for the period to net cash flows:
Net interest		(14)		(65)		(102)
(Profit) on disposal of property, plant and equipment		-		-		(1)
Amortization of intangible fixed assets	6	19		17		36
Depreciation of property, plant and equipment	7	140		168		318
Depreciation of right-of-use assets	8	56		56		113
Movement in provisions		43		10		15
Share based payments charge	12	65		94		253
Working capital adjustments:
(Increase) / decrease in trade and other receivables		(219)		(269)		136
Increase in inventories		(56)		(4)		(80)
(Decrease) /increase in trade and other payables		(47)		292		165
Operating cash flows before interest and tax paid		(3,518)		(1,989)		(4,057)
R&D tax credits received		608		598		598
Tax paid		(2)				(13)
Cash used in operations		(2,912)		(1,391)		(3,472)
Net foreign exchange movements		59		6		71
Net cash used in operating activities		(2,853)		(1,385)		(3,401)
Investing activities
Interest received		45		71		123
Purchases of property, plant and equipment		(261)		(72)		(107)
Purchases of intangible fixed assets		(155)		(96)		(350)
Proceeds from disposal of tangible assets		-		-		1
Decrease in fixed-term deposits		2,225		2,969		4,913
Net cash generated by investing activities		1,854		2,872		4,580
Financing activities
Lease payments		(72)		(98)		(181)
Net cash used in financing activities		(72)		(98)		(181)
Net (decrease) / increase in cash and cash equivalents		(1,071)		1,389		998
Foreign exchange movement on cash and cash equivalents		(66)		(43)		(77)
Cash and cash equivalents at beginning of year		6,119		5,198		5,198
Cash and cash equivalents at end of period		4,982		6,544		6,119

Notes

1.  General information

The interim financial information was authorised for issue by the Board of Directors on 14 June 2021. The information for the period ended 31 March 2021 has not been audited and does not constitute statutory accounts as defined in section 434 of the Companies Act 2006 and should therefore be read in conjunction with the audited financial statements of the Company and its subsidiaries as at and for the year ended 30 September 2020, which were prepared in accordance with EU Adopted International Financial Reporting Standards and have been delivered to the Registrar of Companies. The Report of the Auditor on the financial statements was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006. This interim information does not comply with IAS 34 Interim Financial Reporting, as is permissible under the rules of AIM.

2.  Basis of accounting

Basis of preparation

These interim consolidated financial statements have been prepared under the historical cost convention and in accordance with the recognition and measurement principles of European Union Adopted International Financial Reporting Standards (IFRSs).

Reporting currency

The consolidated financial statements are presented in pounds sterling (GBP), which is also the Company's functional currency.

Going concern

The Board has prepared the interim financial information on the going concern basis, which is considered to be appropriate. However, as noted in detail in the Annual Report and Accounts for the year ended 30 September 2020, a number of conditions still exist that, taken together, present a material uncertainty which may cast significant doubt on the Company's ability to continue as a going concern. These conditions include: the inherent difficulty, at the time of approving the interim financial information, in forecasting the likely sales that will be generated by the proprietary products that the Group has launched; cash outflows associated with expanding the Group's infrastructure are either up-front in nature (for example capital expenditure on laboratory fit-out and equipment) or generate relatively long-term commitments (for example property leases); in a 'worst case' scenario considered by the Board, in which none of the Group's launched and planned products generates revenue and revenue from contracts with pharmaceutical and biotech partners is also severely curtailed, the Group would need to access additional cash resources in order to continue as a going concern, by the second quarter of 2022; and at the time of approving the interim financial information, the Group has no guarantee that it will be able to access additional cash resources. The Directors do not believe that any of these factors is unusual or unexpected for the Group at this point in its history.

Accounting policies

The interim financial statements have been prepared in accordance with the accounting policies set out in the Annual Report and Accounts for the year ended 30 September 2020.

Accounting judgements and estimates

There have been no significant changes to critical accounting judgements or accounting estimates of amounts reported in prior financial periods.

3.  Revenue

All revenue is derived from the Group's principal activity, biomarker research and development. An analysis of the Group's revenue by geography and pattern of revenue recognition is as follows:

		Six-month period ended 31 March			Year ended 30 September
		2021		2020		2020
		£000		£000		£000
Continuing operations
USA		250		109		378
Rest of World		-		79		78
Consolidated revenue		250		188		456

		Six-month period ended 31 March			Year ended 30 September
		2021		2020		2020
		£000		£000		£000
Continuing operations
Revenue recognised at a point in time		-		-		14
Revenue recognised over time		250		188		442
		250		188		456

4.  Business segments

Products and services from which reportable segments derive their revenues

Information reported to the Group's Chief Executive Officer (who has been determined to be the Group's Chief Operating Decision Maker) for the purposes of resource allocation and assessment of segment performance is focused on the sole service which the Group sold up to the end of the period. The Group's sole reportable segment for the period under IFRS 8 is therefore that of biomarker research and development.

The Group's non-current assets (other than investments accounted for using the equity method), analysed by geographical location were as follows:

		31 March 2021		31 March 2020		30 September 2020
		£000		£000		£000
Non-current assets
UK		2,127		1,849		1,952
Malaysia		83		106		97
USA		1		-		-
Total non-current assets		2,211		1,955		2,049

Information about major customers

The Group's revenues for the periods covered by this report are derived from a small number of customers, many of which represent more than 10% of the revenue for the period. These are summarised below:

		Six-month period ended 31 March			Year ended 30 September
		2021		2020		2020
		£000		£000		£000
Revenue from individual customers each representing more than 10% of revenue for the period:		236		159		378

5.  Earnings per share

From continuing operations

The calculation of the basic and diluted earnings per share is based on the following data:

		Six-month period ended 31 March			Year ended 30 September
		2021		2020		2020
		£000		£000		£000
Earnings for the purposes of basic earnings per share being net loss attributable to owners of the Company		(3,079)		(2,026)		(4,313)
Earnings for the purposes of diluted earnings per share		(3,079)		(2,026)		(4,313)
		No.		No.		No.
Number of shares
Weighted average number of ordinary shares for the purposes of basic and diluted earnings per share*		92,559,771		92,559,771		92,559,771
		Pence		Pence		Pence
Earnings per share
Basic and diluted earnings per share		(3.3)		(2.2)		(4.7)

*Potential ordinary shares are not treated as dilutive as the Group is loss making.

6.  Intangible fixed assets

Group					Patents		Website development costs		Software development costs		Total
					£000		£000		£000		£000
Cost
At 1 October 2020					829		62		40		931
Additions					155		-		-		155
Disposals					-		-		-		-
At 31 March 2021					984		62		40		1,086
Amortization
At 1 October 2020					6		33		23		62
Charge for the period					3		10		6		19
At 31 March 2021					9		43		29		81
Carrying amount
At 31 March 2021					975		19		11		1,005
At 30 September 2020					823		29		17		869

7.  Property, plant and equipment

Group			Leasehold improvements		Office equipment		Fixtures and fittings		Laboratory equipment		Total
			£000		£000		£000		£000		£000
Cost
At 1 October 2020			576		133		62		1,620		2,391
Additions			144		25		-		58		227
Disposals			-		-		-		(19)		(19)
Exchange differences			(1)		-		(1)		(10)		(12)
At 31 March 2021			719		158		61		1,649		2,587
Accumulated depreciation
At 1 October 2020			237		72		37		1,345		1,691
Charge for the period			36		20		4		80		140
Eliminated on disposals			-		-		-		(19)		(19)
Exchange differences			(1)		-		(1)		(5)		(7)
At 31 March 2021			272		92		40		1,401		1,805
Carrying amount
At 31 March 2021			447		66		21		248		782
At 30 September 2020			339		61		25		275		700

8.  Right-of-Use Assets

Group									Buildings		Total
									£000		£000
Cost
At 1 October 2020									734		734
Additions									-		-
Disposals									-		-
At 31 March 2021									734		734
Accumulated depreciation
At 1 October 2020									254		254
Charge for the period									56		56
Eliminated on disposals									-		-
At 31 March 2021									310		310
Carrying amount
At 31 March 2021									424		424
At 30 September 2020									480		480

9.  Interest in associate undertaking

The Group has a 28.84% holding in Holos Life Sciences (Singapore) Pte Ltd ("Holos"), a Singapore-based company which is not listed on any public exchange. The Group's interest in Holos is accounted for using the equity method.

On 5 October 2018, the Company exercised a pre-existing option to acquire, for a nominal amount, a 30% shareholding in Holos. Subsequently, on 30 November 2018 the Company also participated in an interim fundraising by Holos, investing US$540,000 in that entity. Summarised financial information for Holos and a reconciliation with the carrying amount of the Group's investment are set out below:

Summarised consolidated statement of financial position of Holos Life Sciences (Singapore) Pte Ltd

		31 March		31 March		30 September
		2021		2020		2020
		£000		£000		£000
Current assets		127		298		203
Non-current assets		1		1		2
Current liabilities		(96)		(34)		(87)
Non-current liabilities		(906)		(1,006)		(969)
Equity		(874)		(741)		(851)
Group's share in equity - 28.84% (31 March 2020 and 30 September 2020: 28.84%)		-		-		-
Goodwill		422		422		422
Carrying amount of the investment		422		422		422

Summarised consolidated income statement for Holos Life Sciences (Singapore) Pte Ltd

		Six-month period ended 31 March 2021		Six-month period ended 31 March 2020		Year ended 30 September 2020
		£000		£000		£000
Revenue		-		-		-
Cost of sales		-		-		-
R&D expenditure		-		(39)		(89)
Admin expenses		(53)		(183)		(268)
Finance costs		(10)		(9)		(15)
Loss before tax		(63)		(231)		(372)
Tax		11		-		-
Loss and total comprehensive income for the period		(52)		(231)		(372)
Group's share of loss for the period - 28.84% (not recognised)   (31 March 2020 and 30 September 2020: not recognised)		(15)		(67)		(107)

Goodwill is subject to review for impairment on at least an annual basis, as set out in the accounting policies in the annual report and accounts for the year ended 30 September 2020.

Holos had no contingent liabilities as at 31 March 2021 (31 March 2020 and 30 September 2020: Nil). The Group is not liable for any of Holos' liabilities.

10.  Leasing

		31 March		31 March		30 September
		2021		2020		2020
Maturity analysis:		£000		£000		£000
Year 1		145		108		145
Year 2		145		145		145
Year 3		145		145		145
Year 4		73		145		145
Year 5		-		109		-
		508		652		580
Less: future interest charges		(30)		(47)		(39)
		478		605		541
Analyzed as:
Lease liabilities (current)		130		91		130
Lease liabilities (non-current)		348		514		411
		478		605		541

Post-period end, the Group entered into a new lease in respect of office and lab space in the UK. At the same time, the Group entered into a surrender agreement effecting the early termination its existing UK lease. Figures above for 31 March 2021 show the position as at that date, before signature of the surrender agreement.

The group has elected not to recognise a lease liability for short term leases (leases with an expected term of 12 months or less) or for leases of low value assets. Payments made under such leases are expensed on a straight-line basis.

11.  Share capital of the Company

	31 March 2021				31 March 2020				30 September 2020
	Number		£		Number		£		Number		£
Authorised shares
Ordinary shares of £0.01 each	92,559,771		925,598		92,559,771		925,598		92,559,771		925,598

The Company has a number of shares reserved for issue under an equity-settled share option scheme: further details are disclosed in Note 12.
 

12.  Share-based payments

Equity-settled share option scheme

In November 2016, the Company established an Enterprise Management Incentive ("EMI") share option scheme, under which options have been granted to certain employees, and a non-employee option scheme with similar terms, except that options granted under it may not have EMI status. EMI and non-EMI share options were also previously granted under a share option scheme established in October 2008 ("the 2008 Scheme"). The Company does not intend to grant any further options under the 2008 Scheme. All of the schemes are equity-settled share-based payment arrangements, whereby the individuals are granted share options of the Company's equity instruments, namely ordinary shares of 1 pence each.

The schemes include non-market-based vesting conditions only, whereby the share options may be exercised from the date of vesting until the 10^th anniversary of the grant date. In most cases options vest under the following pattern: one-third of options granted vest on the first anniversary of the grant date; one-third on the second anniversary and one-third on the third anniversary.

The options outstanding as at 31 March 2021 had exercise prices in the range of £0.34 to £2.10.

Options outstanding		Six-month period ended 31 March			Year ended 30 September
		2021		2020		2020
		Unaudited		Unaudited		Audited
		Number		Number		Number
Outstanding at start of period		7,846,519		6,640,921		6,640,921
Granted during the period		-		1,065,598		1,275,598
Forfeited during the period		(866,167)		(70,000)		(70,000)
Exercised during the period		-		-		-
Outstanding at end of period		6,980,352		7,636,519		7,846,519
Weighted average remaining contractual life (in years) of options outstanding at the period end		4.35		4.68		4.33

Options exercisable	Number of Options		Weighted average exercise price £		Latest exercise price £
At 31 March 2021		6,702,784		0.64		1.00
At 31 March 2020		6,121,248		0.57		1.00
At 30 September 2020		6,224,253		0.59		1.00
Share option expense		Six-month period ended 31 March			Year ended 30 September
		2021		2020		2020
		£000		£000		£000
Expense arising from share-based payment transactions		65		94		253

13.  Post balance sheet events

After the period end, the Company entered into a lease agreement for new office and laboratory space in Oxford, UK. The lease has a term of ten years at an annual rental of £812,658. The Company received approximately £2.5m in respect of contributions towards fit-out and in lieu of a rent-free period and property dilapidations.

 

END

 

 

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