Final Results for the Year Ended 31 January 2021

RNS Number : 4573Y

e-Therapeutics plc

13 May 2021

 

e-therapeutics plc

("e-therapeutics" or "the Company" or "the Group")

Final Results for the Year Ended 31 January 2021

Oxford, UK, 13 May 2021 - e-therapeutics plc (AIM: ETX), the drug discovery company, announces its final audited results for the year ended 31 January 2021.

Operational Highlights

Management and Board restructure

· On 11 February 2020, Ali Mortazavi was appointed Executive Chairman in a management restructure that saw Ray Barlow stepping down as Chief Executive Officer and Steve Medlicott stepping down as Chief Financial Officer

· From 12 October 2020, Ali Mortazavi was appointed as Chief Executive Officer

· Post year end, Trevor Jones, who has been an independent Non-Executive Director since 2015, was appointed Non-Executive Chairman and post period, Karl Keegan was appointed Chief Financial Officer in March 2021

Expansion into RNA interference (RNAi)

· In May 2020, the Company announced expansion into RNAi as a therapeutic modality having designed a novel GalNAc small interfering RNA (siRNA) that will leverage expertise in network biology and, post period, filed a patent application and commenced experiments to characterise the platform. The Company expects to offer this proprietary platform to potential partners in 2021-22

Collaboration with Galapagos NV ("Galapagos")

· In June 2020, the Company announced a collaboration with Galapagos to identify new therapeutic approaches to modulate a specific mechanism involved in idiopathic pulmonary fibrosis ("IPF"). Significant progression has been made on this collaboration during the year and post period, this collaboration has achieved two success-based milestones. The Company remains in business development discussions for both network-driven and functional
genomics technologies with multiple potential partners

Scientific Advisory Board ("SAB") launched

· During the year, a SAB was created. Headed by Dr Paul Burke, with members Dr Bill Harte and Professor John Mattick, who all have considerable industry experience and will provide strategic advice and insight on transforming the drug discovery process

COVID-19 project

· In response to the COVID-19 pandemic, the Company initiated a project to identify approved and known drugs, both alone and as synergistic combinations, that could rapidly be repositioned for the treatment of COVID-19

· Compounds identified through the Company's network-driven discovery platform have been tested by Wuxi App Tec in cell-based assays and show potent anti-inflammatory and antiviral activity. This activity is expected to be generically applicable, raising the prospect of utility against both existing and new emergent strains of coronavirus

Financial highlights

During the year the Company strengthened its financial position raising t otal gross funds of £13.2m .

· Completed equity fundraises of £1.6m and £11.6m in February and July 2020 respectively to scale the Group's business model with focus on further developing the Group's informatics platform capabilities, building and populating an internal pipeline of high conviction early assets and expanding the team to support the scale-up

· Revenues of £0.3m (FY20: £0.5m)

· Cash at 31 January 2021 of £13.0m (FY20: £3.8m)

· Cash increase in the year of £9.2m (FY20: £(2.1)m)

· R&D spend £2.7m (FY20: £2.1m)

· Operating loss of £4.5m (FY20: loss of £2.9m)

· R&D tax credit of £0.8m (FY20: £0.6m)

Ali Mortazavi, Chief Executive Officer of e-therapeutics, commented: " Our ambition is to transform the drug discovery process. The successful fundraises during the year enable the next stage of growth and value creation for the Company. We have begun to build momentum as we move forward with our strategy delivering scientific progress as well as current and prospective partnerships. "

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ('MAR'). Upon the publication of this announcement via Regulatory Information Service ('RIS'), this inside information is now considered to be in the public domain.

-Ends-

Enquiries:

e-therapeutics plc	Tel: [phone]
Ali Mortazavi, CEO	www.etherapeutics.co.uk
Karl Keegan, CFO
SP Angel Corporate Finance LLP	Tel: [phone]
Nominated Adviser and Broker
Matthew Johnson/Caroline Rowe (Corporate Finance)
Vadim Alexandre/Rob Rees (Corporate Broking)

About e-therapeutics plc

e-therapeutics plc is an Oxford, UK-based company with a powerful computer-based approach to drug discovery, founded on its industry-leading expertise in network biology to fully capture disease complexity. The Company combines network science, machine learning, artificial intelligence, statistics and big data with expertise in drug discovery and development to transform the search for new medicines and intervention strategies.

e-therapeutics has developed an in silico laboratory that enables the rapid screening of millions of compounds and the identification of small subsets that are enriched for highly active hits. Its proprietary platform also has novel applications in functional genomics, being able to analyse complex genetic datasets, provide a deep understanding of pathological mechanisms and distil actionable insights for the discovery of novel drugs, biomarkers and diagnostics.

e-therapeutics has deployed and validated its disease-agnostic drug discovery platform both in house and with partners, including Novo Nordisk, Galapagos NV and a US-based, top 5 pharmaceutical company.

Chairman's statement

During the financial year ended 31 January 2021, we have seen good momentum in growing shareholder value, leveraging the funds raised to deliver scientific progress and building upon current and prospective partnerships and collaborations. The Company has ended the period in a secure financial position which will enable it to make significant progress in the year ahead and beyond.

In my first statement as Chairman, I am pleased to report that the Company is now well positioned for future success. Over the last 12 months e-therapeutics has made significant progress across the business and raised significant funding to support its strategy for value creation. The proceeds have facilitated a number of initiatives, with a particular focus on expanding the Company's computational platform capabilities, internal asset pipeline prospects and success in securing partnerships and collaborations. In light of the recent uncertainty arising from the COVID-19 pandemic, we have been quick to adapt to the changing circumstances and there has been minimal impact on our business. Indeed, for our Company, the situation has opened up new opportunities. The speed at which the Company has reacted to changing circumstances and the support it has offered its employees is a credit to the leadership of CEO, Ali Mortazavi and the Executive Team.

e-therapeutics' ambition is to transform the drug discovery process. We are leveraging our computational platform and network biology expertise to accelerate the identification and development of effective therapies, in particular through the synergy between our computational approaches and our recently added proprietary RNAi technology platform.

Our goal is to establish e-therapeutics as the leading platform in computational biology:

1.  To win commercial deals and achieve industrial validation of our informatics Platform

2.  Establish a validated RNAi platform

3.  Develop high-conviction internal assets

4.  Develop the Company to a sufficient scale through platform development and recruitment

5.  Provide guidance, development and feedback to people to enable them to fulfil their role

The period has seen significant delivery against this strategy with the following notable achievements:

· The Company announced a collaboration with Galapagos to identify new therapeutic approaches to modulate a specific mechanism involved in Idiopathic Pulmonary Fibrosis (IPF) and potentially other fibrotic indications. In addition, the Company has existing partnerships with Novo Nordisk and this partnership on Type- 2 diabetes has been extended with the potential to progress to a larger discovery project. The Company expansion into RNA interference (RNAi) and the establishment of a proprietary siRNA platform with siRNA as the drug modality of choice for our internal pipeline was a key achievement during 2020.

· Significant progress has been made on our GaINAc siRNA platform and we have recently filed a patent application relating to specific hepatocyte targeting for liver gene silencing which will provide a competitive advantage in developing our RNAi therapeutic pipeline.

· In addition to its partnerships/collaborations, the Company intends to extract and retain further value from its platform by building an in-house pipeline of assets to provide out-licensing opportunities, through a data-driven and flexible partnering strategy at the right value inflection points. The Company has developed a proprietary disease-agnostic platform to produce valuable disease biology insights and potential drug targets and candidates.

· In December 2020, the Company announced it had deployed its network biology platform to identify clinical stage compounds that either singly or in combination could be repurposed rapidly to treat COVID-19 and it has generated very encouraging results.

· Innovations continue to be made to our core platform technologies including increased automation and in the area of target identification. Significant headway has been made in recruiting further skilled people to the team.

· In order to support and develop our people, the appointment of our Chief People Officer has resulted in new initiatives, regular interactive learning and cross-team collaboration sessions as well as the implementation of a new HR framework.

Strengthened financial position

During the period under review, the Board and management have continued to implement robust financial control. A particular achievement during the period was the Board's commitment to strengthen the financial position of the Company by securing new investors and raising funds to enable the Company's next stage of growth and value creation.

I am delighted that in the most recent fund raise we welcomed new institutional shareholders and retail shareholders, through a specific Retail Offer via PrimaryBid. As a result, the overall size and shape of our shareholder base has significantly changed. I should like to thank all our new and existing shareholders for their continued support.

The funds raised in the period gives the Company sufficient working capital for at least 12 months and with an element of discretionary spend.

Board and Executive Team

In February 2020, we announced a restructuring of the Board and Executive Team resulting in the appointment of Ali Mortazavi as Executive Chairman. In addition, Michael Bretherton was appointed Non-Executive Director. Subsequently in October 2020, Ali Mortazavi was also appointed Chief Executive of the Company in addition to his role as Chairman. Post period in March 2021, a further reorganisation of the Board resulted in my appointment to the role of Independent Non-Executive Chairman with Ali Mortazavi continuing in his role as Chief Executive Officer.

The Company continued to build its Executive competencies with the appointments of Laura Roca-Alonso as Chief Business officer, Stephanie Maley as Chief People Officer and, post period, the appointment of Karl Keegan as Chief Financial Officer.

I should like to thank our dedicated staff for their very significant contribution to the Company and for their continued diligence, agility and commitment throughout this difficult time. In my opinion, the Board restructuring has denoted a turning point in the leadership and direction of e-therapeutics and we are now in a strong position under the leadership of Ali Mortazavi to execute on our strategy. I warmly welcome all the new appointments to our company. I am delighted to have been appointed as Chairman and I now look forward to completing the search for an additional Non- Executive Director to strengthen the Board further and to support the Company's future success.

Professor Trevor Jones CBE

Independent Non-Executive Chairman

12 May 2021

Chief Executive Officer's statement

Prior to investing and becoming the CEO, I conducted detailed due diligence into the full range of computational approaches in drug discovery. I was struck by the Company's "biology first" approach and the interest its network biology capabilities were receiving from large biopharmaceutical companies.

I am pleased to report my first set of full year results for e-therapeutics as CEO. We have begun to build momentum as we move forward with our strategy, accelerated by our substantial new investment completed last year. Despite some of the most challenging conditions that we have all seen in our lifetimes, this year has been a pivotal and successful year for e-therapeutics. The COVID-19 pandemic has affected every individual in very different and sometimes tragic ways but, out of necessity, it has also opened up opportunities for businesses such as ours.

e-therapeutics' expertise in network biology and drug development, coupled with our nascent RNAi platform, gives us a synergistic competitive advantage through effective drug discovery target identification and a rapid and validated development path. This expertise underpins many of the operational highlights for the Company this year. Our collaboration agreement with Galapagos in IPF, with potential in other fibrotic conditions and our type-2 diabetes agreement with Novo Nordisk are validation of our platform, highlighting the ability of our network approach and expertise to go beyond pure in silico predictions and identify potentially clinically viable interventions with supporting laboratory data.

The significant progress made on our GaINAc siRNA platform will enable us to benchmark it against those of competitor RNAi companies. In parallel, we have also established a dedicated group to leverage our computational network biology discovery platform specifically at target genes in hepatocytes, which are amenable to GaINAc delivery. We believe that the combination of these elements will enable us to offer an attractive business development proposition to potential collaborators.

e-therapeutics' computational platform is capable of discovering novel drug targets and active small molecules and of uncovering new biological mechanisms and genetic insights. In our COVID-19 project launched this year, we have deployed that capability to investigate known compounds in a novel context and have uncovered new mechanisms that mitigate infection-induced hyperinflammation as well as discovering a potent anti-viral strategy.

The most significant challenge for the Company was having sufficient capital to allow us to realise opportunities and I am very pleased that we were able to secure the financing to execute on our strategy and business model.

Strategy

e-therapeutics' ambition is to transform the drug discovery process, leveraging its computational network biology platform (drug discovery) to find novel targets to address mechanisms underpinning complex disease. The business model incorporates out- licensing of targets and compounds in addition to the development of an in-house pipeline of RNAi therapeutics.

Drug discovery - computational network driven biology platform

The Company was, and is, one of the few purely "biology first" computational companies that I have come across, in contrast to competitors who are primarily focused on computational approaches to small molecule chemistry. This approach starts with a biological question such as "which processes in COVID-19 disease might it make most sense to address?" One answer could be "hyperinflammation". From a knowledge of just some of the proteins involved we are able to use our proprietary platform and data resources to construct bespoke network models that capture the full complexity of this process and predict missing information. These models are analysed using our cutting- edge network analytics which leverage network science, network statistics and ML/AI approaches to derive new drug targets, biological mechanisms and active small molecules, as well as providing genetic support for target choices.

Establishing world leading hepatocyte expertise, generating novel hepatocyte expressed targets and a focus on expanding our collaborations

The platform is disease agnostic and the Company has completed multiple in-house and partnered projects in diverse disease areas such as fibrosis, type-2 diabetes, CNS and oncology indications, to name but a few. I believe that e-therapeutics is addressing the most critical unmet need in drug discovery/development - the modelling and interpretation of complex human biology. Biological functions are controlled by networks of genes and proteins and we construct in silico models of these

functions to interpret human biology/disease states. We believe that the Company has the most complete datasets, predictive AI/ ML algorithms and the most experienced computational biologists, informaticians and data scientists in the field of network biology and these assets provide an important barrier to entry for competitors.

Informatics and drug development

Historically, the Company has operated a hybrid partnership/collaboration model and the use of small molecules as a drug modality for its internal pipeline. However, the time, costs and time to value inflection in small molecule drug development makes this difficult for a small company to prosecute.

By way of example, even after our in-house computational methods have generated a biological hypothesis, target, active chemical matter and an indication to pursue, it typically takes 3-4 years and c.US$3-5m to create a lead compound to take into IND enabling studies. In addition, a further 2 years would most likely be needed to generate human phase 1 data where potential partnership discussions

could begin. Clearly, these timelines and costs in addition to the additional centralised overheads are hugely capital intensive and at most, we would only be able to prosecute one high conviction candidate.

As such, small molecule drug development now forms part of the Company's partnership/ collaboration strategy and we will endeavour to structure transactions where we have some upside economics/ opt-ins with biopharmaceutical collaborators who use e-therapeutics' network driven computational biology platform but who wish to develop small molecules in the clinic independently and at their own cost.

RNAi platform the new drug modality of choice for our internal pipeline

One of the key achievements of the year has been to establish RNAi as the drug modality of choice for our internal pipeline. Importantly, this is not a choice that many companies can easily make and we have deep in-house expertise in this field which we believe gives us a competitive advantage. It is fair to say that without this expertise, it would have taken a significantly longer time to file IP and develop the multiple RNA chemistries which we have developed this year.

Liver presents large commercial opportunities for RNA therapies

Focused delivery of siRNAs to the liver has striking advantages over small molecules in terms of timelines, costs and value inflection points: in contrast to the 3-4 years and c. US$3-5m to create a lead small molecule compound an siRNA attached to a GaINAc delivery system can be synthesised in 4-5 months and for a cost of c. US$200-300K. In addition, as one of the most sought-after drug modalities, there have been multiple collaboration transactions pre-IND filing as opposed to at a later stage (Phase 1-2) with small molecules.

We have recently filed a patent application related to the chemistry of novel GaINAc conjugated siRNAs. In addition, a number of siRNA constructs have been designed with potentially beneficial safety and potency profiles and additional patent applications are expected to be filed shortly. We believe that the new patent applications, combined with our extensive know-how, will provide a significant competitive advantage in further developing our RNAi therapeutic pipeline. The new constructs will include features to minimise potential microRNA off-target effects, thermally destabilising regions of the siRNA for reduced toxicity and important position-specific stabilisation chemistries to improve potency. Multiple in vitro and in vivo experiments are underway to test these constructs with contract research organisations in Germany and China. We expect to offer our proprietary platform to potential business development partners in 2021-2022 and anticipate that these constructs will demonstrate at least equivalence to competitors' platforms.

Liver focused informatics team

The advantages of RNAi as a drug modality extend beyond the delivery platform. In Q3 2020, we established a liver-focused scientific group which is actively engaged in curating, generating and mining hepatocyte specific data and knowledge resources specifically designed to complement our computational platform. This focus on one cell type is an important driver for novel targets and mechanisms and we believe will improve the performance of our network models and algorithms.

Efforts in this area include proprietary data resources in hepatocyte biology such as our hepatocyte- specific interactome, which is an important and recently completed map of hepatocyte network biology, a complete genome-wide siRNA signature database for human hepatocytes and a comprehensive hepatocyte-centric knowledge resource leveraging natural language processing (NLP), our in-house proprietary data, knowledge graphs and AI-driven inference approaches.

By deploying our cutting-edge informatics platform alongside our novel RNAi technology platform, we believe that we can harness the many therapeutic opportunities in the liver which have yet to be identified.

The hepatocyte team comprises highly skilled scientists and physicians whose objective is to identify novel hepatocyte-expressed targets for complex indications such as cardiovascular and metabolic diseases. This team will conduct validation of those targets in appropriate phenotypic assay systems and animal models and assess genetic support for the therapeutic targets using our functional genomics capability. We are in a unique position of using our "Hepatocyte Atlas" and computational modelling of biology to feed a drug platform which can have multiple shots on goal due to the costs and timelines outlined.

Partnerships and collaborations

In Q2 2020, we announced a collaboration agreement with Galapagos to identify new therapeutic approaches to modulate a specific mechanism involved in IPF and potentially in other fibrotic indications with high unmet need. The project has successful achieved two pre-defined milestones to date. In this period we also extended our collaboration with Novo Nordisk in type 2 diabetes until March 2021, after which there is a 6-month option period to progress the collaboration to a larger discovery project.

COVID-19 project

Our project to find compounds for the treatment of COVID-19 using our platform generated very encouraging results. In Q2 2020, small molecule compounds predicted by our platform were tested in validated SARS-CoV-2 in vitro assays at WuXi AppTech. These compounds showed potent anti-inflammatory and anti-viral activity and confirmed our in silico predictions. We identified a clear mechanism, target and clinical stage compounds. This activity also extended to other alpha and beta coronaviruses and we expect this to be generically applicable, raising the prospect of utility against both existing coronaviruses that cause serious disease such as SARS and MERS and against new emergent strains of coronavirus. This data set is a strong validation of our platform and the network biology approach to drug discovery.

The success of the two fundraises in the year have enabled us to make significant hires in all aspects of our business and headcount since I joined in February 2020 has risen from 16 to 25. I would like to thank the dedicated team, the Board and our shareholders for their hard work and support during the year.

I believe that we have a unique blend of individual skillsets in the Company and look forward with great confidence to the coming year and beyond.

Outlook

The last twelve months have been very encouraging as we have continued to develop our strategy and consistently demonstrated our scientific capabilities and further validation of our platforms. Importantly, with further investment to continue to develop our capabilities we now enter the next year ready to deliver on our exciting plans and with multiple opportunities.

The Company will look to maximise the value of its computational network driven biology platform through creating deal structures and positioning e-therapeutics as a global leader in network biology. Our ambition is to secure multiple research collaborations each year.

The Company will also look to commence RNAi platform partnerships/deals - an area currently commanding significant and attractive deals - and we anticipate business development opportunities in the second half of 2021.

Our priorities for the coming year are to:

· Expand computational platform collaborations

· Establish world-leading hepatocyte expertise

· Identify novel hepatocyte-expressed targets

· Commence RNAi in vivo studies and platform partnerships

The Company aims to maximise the value of its internal platform capabilities through two core channels - entering into platform collaborations with strategic partners and through the generation of in-house datasets to support development candidates. In addition to its partnerships, the Company intends to extract and retain further value from its platform by building an in-house pipeline of assets to provide out-licensing opportunities, through a data-driven and flexible partnering strategy at the right value inflection points.

Ali Mortazavi

Chief Executive Officer

12 May 2021

Financial review

Our people and processes have responded well to a financial year that has brought a lot of change to e-therapeutics - with a new management team and gross fundraises totalling £13.2m in the year enabling us to focus on streamlining and scaling our business model and pushing forward with our strategic aims.

Revenue

In June 2020, we signed a collaboration agreement with Galapagos to identify new therapeutic approaches to modulate a specific mechanism involved in IPF and potentially in other fibrotic indications. Revenue during the year, of £0.3m, relates to the partial recognition of upfront payments and achieved milestones during the year, in accordance with IFRS 15. Additional revenue is expected to be recognised in the coming financial year as this collaboration further advances. The business development functions of the Group have been strengthened during the year, including the hire of a Chief Business Officer in April 2020, and it is expected that further collaborations will be signed in the coming financial year. Revenue in the prior year, of £0.5m, related to deals with Novo Nordisk in the area of type-2 diabetes, which successfully completed in the prior year.

Fundraises

The fundraises during the year (gross £1.6m in February 2020 and gross £11.6m in July 2020) have enabled the Group to refocus its strategy on enhancing and validating our platform technologies and developing our internal asset pipeline. It was also announced during the year that e-therapeutics would be expanding into RNA as a therapeutic modality, with computational drug discovery outcomes to be harnessed both internally and in partnership with collaborators.

R&D expenditure

An increase in R&D expenditure began to materialise after the half-year fundraise and the full year expenditure totalled £2.7m (2020: £2.1m). R&D spend is expected to increase significantly in the coming year, with the advancements of internal discovery programmes, both small molecule and RNAi, along with the release of a competitive and functional RNAi platform.

Administrative expenditure

Administrative expenditure for the year totalled £2.1m (2020: £1.2m), with the management restructure in February 2020 resulting in one-off redundancy costs of £0.4m. In the coming year we will continue to invest in our people, both in terms of recruitment and ongoing motivation and development. We will also continue to improve our underlying system infrastructure and processes to ensure that they grow with the business, enabling our employees to work efficiently and ensuring the safety of our information assets. Although we are not expecting the same level of one-off expenditure, we are expecting the underlying cost base to increase as the business continues to grow.

Operating loss

The operating loss for the year, of £4.5m (2020: £2.9m), is £1.6m greater than the operating loss in the prior year, due to the one-off administrative expenses during the current year referred to above and as plans for expanding the business are put into motion.

R&D tax credits

We are anticipating an R&D tax credit of £0.8m (2020: £0.6m) to be received in relation to the current year, bringing the loss for the year to £3.7m (2020: £2.3m). The R&D tax credit claim has not yet been submitted to HM Revenue and Customs, yet historically the amounts received have been materially in line with the receivable booked at the year end.

Cash flow

The year-end cash position is £13.0m (2020:£3.8m), with the most significant inflow during the year being the gross fundraises of £13.2m, with associated costs of £0.6m. After adjusting for the net fundraises, the R&D tax credit received during the year, of £0.6m (2020:£1.1m), the non-cash charges of share options under IFRS 2, of £0.4m, and depreciation, amortisation and impairment of £0.1m, the underlying cash burn of £4.0m (2020: £3.2m) is broadly in line with the operating loss.

Financial outlook

In the coming financial year, we will drive forward with the strategic plans formulated during the large mid-year fundraise, validating our platform technologies, developing our RNAi platform and progressing our high-conviction in-house RNAi and small molecule assets.

Our budget, which has been prepared taking risk factors such as COVID-19 and Brexit into consideration, shows that we have sufficient funds to continue in operational existence for at least 12 months from the signing of these financial statements. We anticipate a significant increase in our rate of spend, but our budget remains prudent and incorporates discretionary spend which would only be incurred if data supported that it remained the best strategic direction for the Group.

Ali Mortazavi

Chief Executive Officer

12 May 2021
 

Consolidated Income Statement

For the year ended 31 January 2021

		2021 (audited)	2020 (audited)
	Notes	£000	£000
Revenue		317	456
Cost of sales		-	-
Gross profit		317	456
Research and Development expenditure		(2,705)	(2,104)
Administrative expenses		(2,097)	(1,240)
Operating loss		(4,485)	(2,888)
Investment income		17	15
Loss before tax		(4,468)	(2,873)
Taxation	5	784	526
Loss for the year attributable to equity holders of the Company		(3,684)	(2,347)
Loss per share - basic and diluted	6	(0.99)p	(0.87)p

Consolidated Statement of Comprehensive Income

For the year ended 31 January 2021

	2021 (audited)	2020 (audited)
	£000	£000
Loss for the financial year	(3,684)	(2,347)
Other comprehensive income	-	-
Total comprehensive loss for the financial year	(3,684)	(2,347)

 

Consolidated Statement of Changes in Equity

For the year ended 31 January 2021

	Share	Share	Retained
	capital	premium	earnings	Total
	£000	£000	£000	£000
As at 31 January 2019 (audited)	269	65,165	(58,632)	6,802
Total comprehensive income for year
Loss for the financial year	-	-	(2,347)	(2,347)
Total comprehensive loss for year	-	-	(2,347)	(2,347)
Transactions with owners, recorded directly in equity
Issue of ordinary shares	-	11	-	11
Equity-settled share-based payment transactions	-	-	36	36
Total contributions by and distribution to owners	-	11	36	47
As at 31 January 2020 (audited)	269	65,176	(60,943)	4,502
Total comprehensive income for year
Loss for the financial year	-	-	(3,684)	(3,684)
Total comprehensive loss for year	-	-	(3,684)	(3,684)
Transactions with owners, recorded directly in equity
Issue of ordinary shares	152	12,492	-	12,644
Equity-settled share-based payment transactions	-	-	422	422
Total contributions by and distribution to owners	152	12,492	422	13,066
As at 31 January 2021 (unaudited)	421	77,668	(64,205)	13,884

Company Statement of Changes in Equity

For the year ended 31 January 2021

	Share	Share	Retained
	capital	premium	earnings	Total
	£000	£000	£000	£000
As at 31 January 2019 (audited)	269	65,165	(56,060)	9,374
Total comprehensive income for year
Loss for the financial year	-	-	(5,171)	(5,171)
Total comprehensive loss for year	-	-	(5,171)	(5,171)
Transactions with owners, recorded directly in equity
Issue of ordinary shares	-	11	-	11
Equity-settled share-based payment transactions	-	-	36	36
Total contributions by and distribution to owners	-	11	36	47
As at 31 January 2020 (audited)	269	65,176	(61,195)	4,250
Total comprehensive income for year
Loss for the financial year	-	-	(3,682)	(3,682)
Total comprehensive loss for year	-	-	(3,682)	(3,682)
Transactions with owners, recorded directly in equity
Issue of ordinary shares	152	12,492	-	12,644
Equity-settled share-based payment transactions	-	-	422	422
Total contributions by and distribution to owners	152	12,492	422	13,066
As at 31 January 2021 (unaudited)	421	77,668	(64,455)	13,634

 

Balance Sheets

As at 31 January 2021

		Group			Company
		2021 (audited)	2020 (audited)		2021 (audited)	2020 (audited)
	Notes	£000	£000		£000	£000
Non-current assets
Intangible assets	7	82	110		82	110
Property, plant and equipment	8	80	93		80	93
		162	203		162	203
Current assets
Tax receivable	5	769	557		769	557
Trade and other receivables		57	36		57	36
Prepayments		296	149		296	149
Cash and cash equivalents		13,027	3,841		12,776	3,840
		14,149	4,583		13,898	4,582
Total assets		14,311	4,786		14,060	4,785
Current liabilities
Trade and other payables		327	215		326	466
Lease liability		23	46		23	46
Contract liability		77	-		77	-
		427	261		426	512
Non-current liabilities
Lease liability		-	23		-	23
Total liabilities		427	284		426	535
Net assets		13,884	4,502		13,634	4,250
Equity
Share capital	9	421	269		421	269
Share premium		77,668	65,176		77,668	65,176
Retained earnings		(64,205)	(60,943)		(64,455)	(61,195)
Total equity attributable to equity holders of the Company		13,884	4,502		13,634	4,250

 

Consolidated Statement of Cash Flow

For the year ended 31 January 2021

		Group
		2021 (audited)	2020 (audited)
	Notes	£000	£000
Loss for the year		(3,684)	(2,347)
Adjustments for:
Depreciation, amortisation and impairment	7,8	112	97
Investment income		(17)	(15)
Equity-settled share-based payment expense		422	36
Taxation	5	(802)	(547)
Operating cash flows before movements in working capital		(3,969)	(2,776)
Decrease in trade and other receivables		(168)	161
Decrease in trade and other payables		189	(500)
Tax received		590	1,088
Net cash used in operating activities		(3,358)	(2,027)
Interest received		17	15
Acquisition of property, plant and equipment	8	(53)	(5)
Acquisition of other intangible assets	7	(18)	(11)
Net cash (used in)/from investing activities		(54)	(1)
Net proceeds from issue of share capital		12,644	11
Payments under lease liability		(46)	(46)
Net cash (used in)/from financing activities		12,598	(35)
Net increase/(decrease) in cash and cash equivalents		9,186	(2,063)
Cash and cash equivalents at 1 February		3,841	5,904
Cash and cash equivalents at 31 January		13,027	3,841

 

Notes

1.  Status of Audit

The financial information set out herein does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The financial information for the year ended 31 January 2021 has been extracted from the Company's audited financial statements which were approved by the Board of Directors on 12 May 2021 and which, if adopted by the members at the Annual General Meeting, will be delivered to the Registrar of Companies for England and Wales.

The financial information for the year ended 31 January 2020 has been extracted from the Group's audited financial statements which were approved by the Board of Directors on 25 March 2020 and which have been delivered to the Registrar of Companies for England and Wales. The report of the auditor on these financial statements was unqualified, did not contain a statement under Section 498(2) or Section 498(3) of the Companies Act 2006.

The report of the auditor on the 31 January 2020 financial statements was unqualified, did not contain a statement under Section 498(2) or Section 498(3) of the Companies Act 2006, and did not include a matter to which the auditors drew attention by way of emphasis without qualifying their report.

The information in this preliminary statement has been extracted from the audited financial statements for the year ended 31 January 2021 and as such, does not contain all the information required to be disclosed in the financial statements prepared in accordance with International Accounting Standards in Conformity with the provisions of the Companies Act 2006.

The Company is a public limited company incorporated and domiciled in England & Wales and whose shares are quoted on AIM, a market operated by The London Stock Exchange.

2.  Basis of preparation

While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International accounting standards in conformity with the requirements of the Companies Act 2006 this announcement does not in itself contain sufficient information to comply with IFRS. This preliminary announcement has been prepared using the accounting policies that are expected to be published in the Group's accounts for the year ended 31 January 2021, which are consistent with the accounting policies published in the Group's accounts for the year ended 31 January 2020 and that are available on the Company's website at www.etherapeutics.co.uk, with the exception of those new standards, interpretations and amendments which became effective during the year and were adopted by the Group, albeit with no impact on the Group's loss for the year or equity on initial recognition.

This announcement contains forward-looking statements that are based on current expectations or beliefs, as well as assumptions about future events. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as anticipate, target, expect, estimate, intend, plan, goal, believe, will, may, should, would, could, is confident, or other words of similar meaning. Undue reliance should not be placed on any such statements because they speak only as at the date of this document and, by their very nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, plans and objectives, to differ materially from those expressed or implied in the forward-looking statements. There are a number of factors which could cause actual results to differ materially from those expressed or implied in forward-looking statements. The Company undertakes no obligation to revise or update any forward-looking statement contained within this announcement, regardless of whether those statements are affected as a result of new information, future events or otherwise, save as required by law and regulations.

Going concern

Although the Group has recognised revenue from commercial deals during the current and prior year, it is still largely reliant on its cash balance to fund ongoing operations.

At 31 January 2021 we reported cash and liquid resources of £13,027,000 and an underlying cash burn during the year, excluding R&D tax credits received and the net proceeds from fundraises, of £4,030,000.

We prepared detailed strategic plans as part of the fundraise process in July 2020, which raised total gross proceeds, along with the smaller fundraise in February 2020, of £13,203,000. We have also prepared a detailed budget for 16 months, which supports the view that the Group has sufficient cash to meet its operational requirements for at least 12 months from the signing of these financial statements. The budget includes a significant increase in R&D expenditure, in line with progressing our strategic aims. This expenditure is largely uncommitted and discretionary and would be reduced or postponed if required to manage the Group's cash resources.

The financial performance and position of the Group are discussed in more detail in the Financial Review above.

The preliminary announcement has been prepared on the going concern basis since, given the points discussed above, the Directors have a reasonable expectation that the parent Company and the Group have adequate resources to continue in operational existence for the foreseeable future.

3.  Accounting judgements and sources of estimation uncertainty

The preparation of financial statements requires management to make judgements, estimates and assumptions that may affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The estimates and underlying assumptions are reviewed on an ongoing basis.

The following are the key judgements that management have made in the process of applying the Group's accounting policies and that have the most significant effect on the amounts recognised in these financial statements:

· Management considers the continued adoption of the going concern basis appropriate, as discussed further in Note 2 of this preliminary announcement.

·There are various revenue streams from collaborative partnerships and management review these revenue streams against the IFRS 15 criteria to establish whether revenue should be recognised over time or at a point in time. Revenue recognised over time results in a difference between up-front cash receipts and revenue recognised, the balance of which is recorded on the Balance Sheet. At the year end, contract liabilities were £77,000 (2020: £nil).  Revenue of £317,000 (2020: £456,000) is made up of £163,000 (2020: £nil) recognised at a point in time and £154,000 (2020: £456,000) over time. Variable consideration consists of future potential pre-clinical and clinical development and commercial milestone payments and it is deemed by the directors to be fully constrained at this time given the uncertainty around drug development.

· The Directors have not recognised a deferred tax asset based on an assessment of the probability that future taxable income will be available against which the deductible temporary differences and tax loss carry-forwards can be utilised. The potential deferred tax asset is disclosed in note 5.

The following are the key assumptions concerning estimation uncertainty that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year:

·Revenue recognised from collaborative partnerships, and corresponding contract liabilities, reflect management's best estimate of each contract's stage of completion. Management estimates project progress at each reporting date, with consideration to project plans outlined in customer contracts, and remeasures revenue accordingly. There were commercial contracts in progress at the year end and management has recognised revenue in accordance with IFRS 15 using the 5-step process. As a result, at the year end contract liabilities of £77,000 (2020: £nil) were recognised on the Balance Sheet.

·The current tax receivable, of £769,000 (2020: £557,000), represents an R&D tax credit based on an advance claim with HMRC. The final receivable is subject to judgement and the correct application of complex R&D tax rules. The minimum receipt approved by HMRC could be £nil. Historically, final claims have been successful and materially in line with the receivable recognised in the financial statements. The Group expects the current year to be successful too.

4.  Staff numbers

The average number of persons employed by the Group and the Company (including Executive Directors and excluding Non-Executive Directors) during the year, analysed by category, was as follows:

	Number of employees Group and Company
	2021 (audited)	2020 (audited)
R&D Staff	12	12
Finance and administration staff	5	2
Executive Directors	1	2
	18	16

5.  Taxation

Recognised in the Income Statement:		2021 (audited)	2020 (audited)
		£000	£000
Current tax income
R&D tax credit receivable for the current year		(751)	(536)
Adjustments for prior year in respect of R&D tax credit		(33)	10
Current tax credit		(784)	(526)
Deferred tax		-	-
Total on loss on ordinary activities		(784)	(526)

The standard rate of corporation tax applied to reported profit is 19% (2020: 19%). The credit for the year can be reconciled to the consolidated Income Statement as follows:

		2021 (audited)	2020 (audited)
		£000	£000
Loss before tax		(4,468)	(2,873)
Tax at UK corporation tax rate of 19% (2020: 19%)		(849)	(546)
Expenses not deductible for tax purposes		-	4
Enhanced relief for R&D		(323)	(231)
Unrelieved tax losses		396	230
Other		25	7
Adjustments in respect of prior period		(33)	10
Total tax credit for the year		(784)	(526)

The total tax credit recognised with the Consolidated Income Statement is £802,000 (2020: £547,000), which is made up the small or medium sized enterprise ("SME") R&D tax relief of £784,000 (2020: £526,000) and Research and Development Expenditure Credit ("RDEC") of £18,000 (2020: £21,000). The SME tax credit is shown within taxation, as reconciled above. The RDEC is included within administrative expenses in the Consolidated Income Statement on the basis that the RDEC is treated as taxable income, being an 'above the line' relief.

The tax receivable on the Balance Sheet, of £769,000 (2020: £557,000), is made up of SME tax relief of £751,000 (2020: £536,000) and RDEC of £18,000 (2020: £21,000). Historically, R&D credits relating to both the SME scheme and the RDEC scheme have been received from HMRC as a single payment.

The Group has accumulated losses available to carry forward against future trading profits of £28,835,000 (2020: £26,855,000). No deferred tax has been recognised in respect of tax losses since it is uncertain at the Balance Sheet date as to whether future profits will be available against which the unused tax losses can be utilised. At the Budget 2020, the UK Government announced that the corporation tax main rate for the years starting 1 April 2020 and 2021 would remain at 19%. At the Budget 2021, the UK Government announced that the corporation tax main rate for the year starting 1 April 2022 will remain at 19% and that legislation will be introduced to set the main rate at 25% for the year starting 1 April 2023. The estimated value of the deferred tax asset not recognised, measured at the main rate of 19% (2020: 17%), is £5,499,000 (2020: £4,589,000).

The increase in the current year tax credit is due to an increased R&D credit, as a result of higher qualifying expenditure during the year, enabled by the fundraise during the year. The current year R&D credit has not yet been approved by HMRC and, therefore, there is a risk that this claim may not be successful.

6.  Loss per share

The analysis of loss per share is as follows:

	2021 (audited)	2020 (audited)
Earnings for the purposes of basic earnings per share and diluted earnings per share, being loss attributable to owners of the Company (£000)	(3,684)	(2,347)
Weighted average number of ordinary shares for the purposes of basic earnings per share and diluted earnings per share (number)	373,215,456	268,855,366
Loss per share - basic and diluted (p)	(0.99)	(0.87)

Diluted EPS is calculated in the same way as basic EPS but also with reference to reflect the dilutive effect of share options in existence at the year end over 22,622,836 (2020: 19,220,500) ordinary shares. The diluted loss per share is identical to the basic loss per share, as potential dilutive shares are not treated as dilutive since they would reduce the loss per share.

7.  Goodwill and intangible assets

	Group				Company
		Patents and				Patents and
	Goodwill	trademarks	Total		Goodwill	trademarks	Total
	£000	£000	£000		£000	£000	£000
Cost
As at 31 January 2019 (audited)	2,101	1,320	3,421		2,824	1,320	4,144
Additions	-	11	11		-	11	11
As at 31 January 2020 (audited)	2,101	1,331	3,432		2,824	1,331	4,155
Additions	-	18	18		-	18	18
As at 31 January 2021 (unaudited)	2,101	1,349	3,450		2,824	1,349	4,173
Amortisation and impairment
As at 31 January 2019 (audited)	2,101	1,201	3,302		-	1,201	1,201
Impairment losses	-	3	3		2,824	3	2,827
Amortisation charge for the year	-	17	17		-	17	17
As at 31 January 2020 (audited)	2,101	1,221	3,322		2,824	1,221	4,045
Impairment losses	-	30	30		-	30	30
Amortisation charge for the year	-	16	16		-	16	16
As at 31 January 2021 (unaudited)	2,101	1,267	3,368		2,824	1,268	4,092
Net book value
As at 31 January 2019 (audited)	-	119	119		2,824	119	2,943
As at 31 January 2020 (audited)	-	110	110		-	110	110
As at 31 January 2021 (unaudited)	-	82	82		-	82	82

Amortisation

Amortisation has been charged on patents for which the registration process is complete, over the term granted.

The goodwill in the Company Balance sheet arose following the hive up of the trade and assets of InRotis Technologies Limited in 2007 and was fully impaired during the prior year, reflecting the significant advancements in technology, such as the launch of GAINs in the prior year, to the extent that management deem that the business model is now founded upon a different technological capability than it was at the date of the hive up in 2007 and to which the goodwill is allocated.

8.  Property, plant and equipment - Group and Company

	Right-to-use	Plant and	Fixtures
	Property	equipment	and fittings	Total
Group and Company	£000	£000	£000	£000
Cost
As at 31 January 2019 (audited)	-	198	107	305
On transition to IFRS 16	123	-	-	123
Additions	-	5	-	5
Disposals	-	(41)	(4)	(45)
As at 31 January 2020 (audited)	123	162	103	388
Additions	-	53	-	53
Disposals	-	(1)	-	(1)
As at 31 January 2021 (unaudited)	123	214	103	440
Depreciation
As at 31 January 2019 (audited)	-	161	102	263
Depreciation charge for the year	46	29	2	77
Eliminated on disposals	-	(41)	(4)	(45)
As at 31 January 2020 (audited)	46	149	100	295
Depreciation charge for the year	46	18	1	66
Eliminated on disposals	-	(1)	-	(1)
As at 31 January 2021 (unaudited)	92	167	101	360
Net book value
As at 1 February 2019 (audited)	-	37	5	42
As at 31 January 2020 (audited)	77	13	3	93
As at 31 January 2021 (unaudited)	31	47	2	80

9. Capital and reserves

				No. of ordinary shares
				2021 (audited)	2020 (audited)
Share capital				'000	'000
In issue at 1 February				269,125	268,690
Issued for cash				151,649	435
In issue at 31 January - fully paid				420,774	269,125

				2021	2020
				£000	£000
Allotted, called up and fully paid
420,773,546 (2020: 269,125,498) ordinary shares of £0.001 each				421	269
				421	269

The Company has one class of ordinary shares, which carry no right to fixed income.

 

END

 

 

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