Annual Financial Report

RNS Number : 2620H

OKYO Pharma Limited

02 August 2021

 

Final audited results for the year ended 31 March 2021

OKYO Pharma Limited (the "Company") is pleased to announce its final audited results for the year ended 31 March 2021.

Summary of OKYO-101 studies during the last year

· OK-101 is designed to target a chemokine-like receptor 1, or CMKLR1, which is a G protein-coupled receptor, or GPCR, expressed on macrophages, monocytes, plasmacytoid/myeloid dendritic cells, natural killer cells and nonhemopoietic cell types, such as endothelial and epithelial cells. Activation of CMKLR1 by its endogenous peptide ligand chemerin is known to modulate inflammation, but natural ligands for CMKLR1 have short half-lives due to rapid inactivation.

· To characterize the potential efficacy of OK-101 to treat DED, OK-101 was tested in a mouse model of acute dry eye disease induced with scopolamine that showed an increase in corneal permeability relative to naïve animals. OK-101 demonstrated a reduction of DED-induced corneal permeability (p ≤ 0.001).

· OK-101's effect in reducing DED-induced corneal permeability was virtually identical to that of the cyclosporine positive control and close to the baseline corneal permeability observed in control animals.

· A separate series of experiments was also performed to evaluate ocular tolerance of OK-101 in rabbits via repeated ocular instillation followed by clinical ophthalmic observations. Rabbit ocular tolerance tests on OK-101 showed no adverse signs such as inflammation, chemosis or hyperemia and no signs of local irritation.

· We completed manufacturing a 25-gram batch of OK-101 drug substance needed for initiating the IND-enabling studies.

· We submitted a patent application to the United States Patent and Trademark Office covering the use of chemerin and chemerin analogues to treat the cytokine release syndrome associated with COVID-19 infections and other conditions such as acute respiratory distress syndrome (ARDS).

Summary of OKYO-201 studies during the last year

· OK-201 is designed to activate a human MAS-Related GProtein-coupled Receptor (MRGPR), which is a promising analgesic target. This receptor is expressed mainly in sensory neurons and is involved in the perception of pain. Activation of MRGPR by BAM peptide inhibits pain by modulating Ca2+ influx.

· On August 6, 2019 we signed a collaborative agreement with TMC and Pedram Hamrah, MD, Professor of Ophthalmology at Tufts University School of Medicine, Boston, MA as Principal Investigator to evaluate our proprietary lead compounds as non-opioid analgesics to suppress corneal neuropathic pain using a mouse ocular pain model developed in Dr. Hamrah's laboratory.

· We have synthesized a small library of lipidated BAM analogues. The potencies of these analogues were determined using a cell-based assay, and a small number of these analogues were evaluated for their analgesic properties in the neuropathic pain model developed by Dr. Hamrah's laboratory at TMC.

Future strategy of OKYO-101

Based on the results from the DED animal model and ocular tolerance studies, we are presently moving forward with plans to file an IND in the third quarter of 2022 on OK-101 to treat DED. To support this work a

 CRO specializing in ophthalmic drug development who will be providing the following services:

· Preparation of the OK-101 Pre-IND briefing document

· Support in requesting and preparing for the OK-101 Pre-IND meeting with FDA

· Support for regulatory publishing and submission of IND in eCTD format

· Providing quality oversight for development of topical formulation for OK-101

· Providing quality oversight for development and qualification of a drug stability analysis method for OK-101 along with conducting stability studies to establish formulated drug product is stable for at least 90 days

· Support for completing animal toxicology studies in two animal species

Future strategy of OKYO-201

During the next year, we will be continuing to conduct preclinical studies and additional animal studies to further evaluate the OK-201 preclinical candidate to treat corneal neuropathic pain.

Financial Highlights

· Total comprehensive loss of £2,994k ( 2020 : £1,211k )

· Cash balance at 31 March 2020 of £4,991k (31 March 2020: £190k)

Enquiries:

OKYO Pharma Limited	Willy Simon	[phone]
Optiva Securities Limited (Broker)	Robert Emmet	[phone]

For further information, please visit the Company's website at http://okyopharma.com/ .

Extracts from the annual accounts for the year ended 31 March 2021 are set out below

OKYO Pharma Limited

Strategic report

The Directors present their report and the financial statements for the Company, OKYO Pharma Limited ("OKYO" or the "Company") and its subsidiary, (together the "Group") for the year ended 31 March 2021.

Introduction

OKYO Pharma Limited (LSE: OKYO) is a preclinical biopharmaceutical company developing next-generation therapeutics to improve the lives of patients suffering from inflammatory eye diseases and ocular pain. Our research program is focused on a novel G protein coupled receptor (GPCR) which we believe plays a key role in the pathology of the inflammatory eye diseases that are the target of this technology. Previously we had focused on OK-113, an agonist for chemokine-like receptor 1, or CMKLR1 receptor, as a potential lead compound for the treatment of dry eye. However, following further analyses of additional analogues tested in a highly regarded animal model of dry eye disease (DED), we have determined that OK-101 gave the highest potency and best results in a number of biomarkers evaluated in the DED animal model studies. Consequently, we have nominated OK-101 as our Investigational New Drug ("IND") candidate and have initiated the IND-enabling studies necessary for filing an IND. In addition to developing OK-101 for the treatment of dry-eye, we also plan during the course of its clinical development to evaluate OK-101 to treat two additional related ophthalmic diseases: 1) uveitis and 2) allergic conjunctivitis.

In a separate series of studies focused on developing a drug from our technology to treat neuropathic ocular pain, we have also been evaluating OK-201, a lipidated bovine adrenal medulla (BAM) peptide analogue preclinical candidate for the treatment of this condition. We are continuing these studies using a unique corneal neuropathic pain animal model developed by our consultants at Tufts Medical Center (TMC). Our therapeutic approach in all of these studies has been focused on targeting inflammatory and pain modulation pathways that drive these conditions.

We have not yet submitted an application to the Food and Drug Administration ("FDA") for any of our product candidates. We have however begun work on accomplishing all the studies necessary for an IND submission for OK-101 to treat dry eye and are planning to file an IND on OK-101 to treat dry eye in the third quarter of 2022.

OKYO R&D PROGRAMMES

1)  OK-101 for Dry Eye Disease (DED)

OK-101, our lead preclinical product candidate, is focused on keratoconjunctivitis sicca, commonly referred to as DED which is a multifactorial disease caused by an underlying inflammation resulting in the lack of lubrication and moisture in the surface of the eye. DED is one of the most common ophthalmic conditions encountered in clinical practice. Symptoms of DED include constant discomfort and irritation accompanied by inflammation of the ocular surface, visual impairment and potential damage to the ocular surface. The disease affects over 35% of the population aged 50+, with women representing approximately two-thirds of those affected. Prevalence of DED is anticipated to increase substantially in the next 10-20 years due to aging populations in the U.S., Europe, Japan and China and use of contact lenses and increased digital screen time in the younger population. We believe this increase in prevalence of dry eye syndrome represents a major expanding economic burden to public healthcare.

At present, there are three different categories of approved drugs to treat DED: 1) Immunosuppressants (Restasis & Sequa), 2) Integrin antagonists (Xiidra) and 3) corticosteroids (e.g., Eysuvis for short term use only). However, DED continues to be a major unmet medical need due to the large number of patients not well served by the treatments available to them through the medical community. A key driver in the development of OK-101 to treat DED was an analysis of the inherent advantages and difficulties associated with the treatment of ocular conditions. One of the major issues with topical administration of any drug designed for treating DED is the requirement that the drug have adequate 'residence' time at the ocular site to afford a pharmacologic benefit before being washed out through natural processes of tear enhancement and lacrimal tear drainage. The drug candidates we have developed are designed to combat washout by including a lipid 'anchor' within the candidate drug molecule to enhance the residence time of the drug in the eye. We refer to our candidates for DED as "lipidated-chemerin" analogues to highlight this pharmacologic characteristic.

OK-101 is designed to target a chemokine-like receptor 1, or CMKLR1, which is a G protein-coupled receptor, or GPCR, expressed on macrophages, monocytes, plasmacytoid/myeloid dendritic cells, natural killer cells and nonhemopoietic cell types, such as endothelial and epithelial cells. Activation of CMKLR1 by its endogenous peptide ligand chemerin is known to modulate inflammation, but natural ligands for CMKLR1 have short half-lives due to rapid inactivation. Discovery of OK-101, a stable, high potency CMKLR1 agonist by On Target Therapeutics (Note: technology licensed to OKYO Pharma) provided an important step toward the development of a new class of anti-inflammatory therapeutics that can be applied to the treatment of ophthalmic diseases including DED, uveitis and allergic conjunctivitis. (see Figure 2)

To further characterize the potential efficacy of OK-101 to treat DED, OK-101 was tested in a mouse model of acute dry eye disease induced with scopolamine that showed an increase in corneal permeability relative to naïve animals. OK-101 demonstrated a reduction of DED-induced corneal permeability (p ≤ 0.001). OK-101's effect in reducing DED-induced corneal permeability was virtually identical to that of the cyclosporine positive control and close to the baseline corneal permeability observed in control animals.

A separate series of experiments was also performed to evaluate ocular tolerance of OK-101 in rabbits via repeated ocular instillation followed by clinical ophthalmic observations. Rabbit ocular tolerance tests on OK-101 showed no adverse signs such as inflammation, chemosis or hyperemia and no signs of local irritation.

We recently completed manufacturing a 25-gram batch of OK-101 drug substance needed for initiating the IND-enabling studies.

Future OK-101 DED Strategy

Based on the results from the DED animal model and ocular tolerance studies, we are presently moving forward with plans to file an IND in the third quarter of 2022 on OK-101 to treat DED. This should enable us to begin clinical trials with OK-101 as early as one month after submission of the IND to FDA. To support this work, we recently signed an agreement with a major clinical CRO specializing in ophthalmic drug development who will be providing the following services:

· Preparation of the OK-101 Pre-IND briefing document

· Support in requesting and preparing for the OK-101 Pre-IND meeting with FDA

· Support for regulatory publishing and submission of IND in eCTD format

· Providing quality oversight for development of topical formulation for OK-101

· Providing quality oversight for development and qualification of a drug stability analysis method for OK-101 along with conducting stability studies to establish formulated drug product is stable for at least 90 days

· Support for completing animal toxicology studies in two animal species

2)  OK-101 for Non-ophthalmic Indications

On January 19, 2021, we announced that we submitted a patent application to the United States Patent and Trademark Office covering the use of chemerin and chemerin analogues to treat the cytokine release syndrome associated with COVID-19 infections and other conditions such as acute respiratory distress syndrome (ARDS). On January 15, 2021 we signed a research and material transfer agreement with the University of Alabama at Birmingham to evaluate the potential of chemerin analogs to minimize the inflammation triggered by SARS-CoV-2 in a model of lung inflammation. Ex vivo lung tissue will be experimentally induced to produce inflammation, and during the course of inflammation in the absence and presence of a chemerin analogue, respectively, a panel of cytokines including TNFα, IL-6, IL-1β will be measured. Currently, experiments are underway at the University of Alabama, but there is nothing to report yet on the results of this study. Assuming the results are encouraging, our plan is to advance this program as a potential prophylaxis to treat COVID-19 infections, and other conditions such as acute respiratory distress syndrome (ARDS). We plan this work to be under the direction of Dr. Napoleone Ferrara, a member of our Scientific Advisory Board.

3)  OK-201 to treat corneal neuropathic pain

Our current focus is to develop first-in-class drug candidates as non-opioid analgesics for ocular pain management without side effects and the potential abuse associated with opioid medications. Ocular pain occurs in several ophthalmic conditions including DED, uveitis, diabetic retinopathy (DR), accidental trauma, surgery, and is typically treated with oral steroids, neurotransmitters and opioids in severe cases. There is no FDA approved drug yet for ocular pain in the form of eye drops. Damage to the ocular surface (nociceptive pain in response to inflammation) or to the somatosensory nervous system (chronic neuropathic pain) due to the underlying pathogenesis of eye disease is the main cause of pain.

A lipidated BAM analogue (OK-201), a promising candidate for the treatment of neuropathic and inflammatory pain, was licensed from Tufts Medical Center (TMC), Boston, MA on February 21, 2018. OK-201 is designed to activate a human MAS-Related GProtein-coupled Receptor (MRGPR), which is a promising analgesic target. This receptor is expressed mainly in sensory neurons and is involved in the perception of pain. Activation of MRGPR by BAM peptide inhibits pain by modulating Ca2+ influx. On August 6, 2019 we signed a collaborative agreement with TMC and Pedram Hamrah, MD, Professor of Ophthalmology at Tufts University School of Medicine, Boston, MA as Principal Investigator to evaluate our proprietary lead compounds as non-opioid analgesics to suppress corneal neuropathic pain using a mouse ocular pain model developed in Dr. Hamrah's laboratory. Since acquiring the rights to OK-201, we have synthesized a small library of lipidated BAM analogues. The potencies of these analogues were determined using a cell-based assay, and a small number of these analogues were evaluated for their analgesic properties in the neuropathic pain model developed by Dr. Hamrah's laboratory at TMC. These collaborative studies have provided additional 'proof-of-concept' results for BAM analogues as potential non-opioid analgesics. Our goal is to develop OK-201, as well as explore additional analogues for their potential use in treating ocular pain.

Future OK-201 Strategy

During the next year, we will be continuing to conduct preclinical studies and additional animal studies to further evaluate the OK-201 preclinical candidate to treat corneal neuropathic pain.

Financial summary

Consolidated Statement of Comprehensive Income

The Group has made a loss for the year of £2,994k ( 2020 : £1,211k). The loss is detailed in the consolidated statement of comprehensive income on page 37.

The Group's expenditure on research and development was £133k for the year ended March 31, 2021, as compared to £407k for the year ended March 31, 2020.  The reduction in expenditure was due an elimination of R&D costs planned for OK-113 once the decision was made to switch to OK-101 as the preclinical candidate for filing an IND with FDA. The activities relating to OK-101 commenced in the last few months of the period, post the recruitment of the CEO.

Other operating expenses were £2,867k for the year ended March 31, 2021 as compared to £800k for the year ended March 31, 2020, an increase of £2,067k. The increase in cost is a result of a bonus that was awarded in the current year to the Non-Executive Chairman for £887k, (on the basis of the co-invention of the use of Chemerin in the COVID-19 indication when he was not a director or employee of the Company (now the subject of a patent application); work carried out in procuring, backing and completing the refinancing the Company in 2020 and actions taken to make new executive appointments and scientific advisory appointments to the Board with the result that the Company now has a clear and accelerated path), additional fair value charges of £375k relating to the issuance of additional options, fundraising expenses of £453k plus additional compliance, professional fees, legal and foreign exchange costs of £352k due to increased activity in the Company in the last 3 months of the period.

Consolidated Statement of Financial Position

At the end of the year, the Group cash balance stood at £4,991k (31 March 2020: £190k). The Group successfully raised £6,070k during the year via the issuance of Convertible loan notes, private placements, and the exercise of options.

Fund raising

In the period, the Group successfully raised funds to further progress its pre-clinical pipeline.

On 23 May 2020, the Group announced that further to the announcement made on 23 March 2020, the Group raised £181,346 through a placing of a further 36,269,253 new ordinary shares.

On 29 May 2020, the Group announced that it had raised £440,000 through the issue of convertible loan notes ("CLNs"). £50,000 of the CLN's were issued to Panetta Partners Ltd, the ultimate parent company. The CLNs carry an interest rate of 20% compounding and have maximum term of 4 years. The CLNs convert into ordinary shares at a price of 0.4p per share and, when converted, the shares will be issued with a warrant attached at an exercise price of 0.4p (with a maximum life of 5 years from the date of issue of the CLN, regardless of the conversion date).

On 28 July 2020, the Group announced that it had raised £3.5m through the issuance of CLN's. The CLNs carry an interest rate of 2.15% compounding and have maximum term of 4 years. The CLNs convert into ordinary shares at a price of 8.5p per share.

On 17 August 2020, the Group announced that it had raised a further £1.437m through the issuance of CLN's. The CLNs carry an interest rate of 2.15% compounding and have maximum term of 4 years. The CLNs convert into ordinary shares at a price of 8.5p per share.

On 8 September 2020, the Group announced that it had raised a further £0.5m through the issuance of CLN's. The CLNs carry an interest rate of 2.15% compounding and have maximum term of 4 years. The CLNs convert into ordinary shares at a price of 8.5p per share.

In March 2021, additional funds of £11,250 were raised through the exercise of options.

Going Concern

The Group has experienced net losses and significant cash outflows from cash used in operating activities over the past years, and as of March 31, 2021, had an accumulated loss of £72.5m, a net loss for the year ended March 31, 2021 of £3m and net cash used in operating activities of £1.2m.

Based upon the current forecasts prepared by Management, the potential use of cash flows from operations from the date of approval of these accounts until 31 December 2022 is £4.4 million, of which £2.5m is to be spent on progressing the R&D pipeline.  When compared to the current cash balance at June 10, 2021 of £4.7 million, management projects a surplus of £0.3 million, thereby supporting Management's assertion that the Company does have the ability to meet its obligations as they become due until December 2022.

However, further funds will need to be raised within the foreseeable future in order to progress it's pipeline and fund ongoing business operations. The Directors are confident, based on the previous fund-raising history that sufficient funds will be forthcoming and accordingly they have prepared these financial statements on a going concern basis. However, until and unless the Group and Company secures sufficient investment to fund its pipeline, there is a material uncertainty about the Group and Company's ability to continue as a going concern, and therefore about the applicability of the going concern basis of preparation.

COVID-19

We remain cognisant of the potential impact of coronavirus (COVID-19) on our operations and have taken the steps necessary to maintain the integrity of the Company's assets and the health and wellbeing of our employees. The Company is well financed, resilient and well positioned to weather any financial downturn occurring as a result of the outbreak. Indeed, the Company has raised additional funds through the issuance of Convertible Loan Notes.

Remote working and outsourcing of research and development activities has meant that progression of the project pipeline is not impacted by the pandemic.

Outlook and Strategy

The development of new drugs to treat DED has been particularly challenging due to the heterogeneous nature of the patient population suffering from DED, and due to the difficulties in demonstrating an improvement in both signs and symptoms of the disease in well-controlled clinical trials. The evidence from over 40 years of scientific literature, however, suggests inflammation as the most common underlying cause of DED. Consequently, development of new therapeutic agents that target inflammatory pathways is looking to be an attractive approach in improving symptoms in DED patients.

During the next 12 months, OKYO is committed to a major effort to accomplish the IND enabling activities necessary for filing an IND on OK-101 to treat DED. These include:

· Topical formulation of the OK-101 drug product and initial stability studies

· Bioanalytical method development to support the OK-101 clinical program

· Engineering batch manufacture of cGMP OK-101 for clinical trials

· Toxicokinetic method development

· Toxicology studies in rabbits and dogs

· Clinical batch manufacturing and stability studies of OK-101

Once an IND on OK-101 to treat DED is in place, the virtue of OK-101 being formulated as a topical drug that can be administered to patients in the form of eye drops, means that our first clinical trial after IND submission is expected to be a Phase 1/2a trial in DED patients, potentially providing an early indication of drug efficacy in DED patients. Should drug efficacy be borne out in this first human trial with OK-101, we will have validated proof-of-concept in this very first study.  With this success in hand, we believe that rapid further clinical development of OK-101 to treat DED will be in order. We anticipate that OK-101, in addition to its potential to treat DED, can then also be evaluated to treat uveitis and allergic conjunctivitis. Hence, once we are clinically evaluating OK-101 to treat dry eye, we will also undertake the plan to explore the drug candidate's potential to suppress the inflammation associated with uveitis and allergic conjunctivitis. In support of this plan, we will be exploring preclinical development of OK-101 for the uveitis indication by first establishing 'proof-of-concept' for this indication utilizing animal model studies of anterior uveitis to evaluate the potential of OK-101 to suppress the inflammation associated with uveitis. We also plan on conducting 'proof-of-concept' studies using OK-101 for the treatment of chronic and seasonal allergic conjunctivitis using a conjunctival allergen challenge animal model to investigate the potential of OK-101 to suppress the inflammation associated with allergic conjunctivitis.

We will also continue to explore the potential use of chemerin and chemerin analogues for prophylaxis against and treatment of symptoms associated with, or resulting from, infection with SARS-CoV-2 virus, including inflammation due to the cytokine storm caused by COVID-19 disease and acute respiratory distress syndrome.  

Business review

A review of the business, its results and strategic outlook is included in the Executive Chairman's Statement on page 2.

Key performance indicators

The Board monitors the Key Performance Indicators (KPIs) that it considers appropriate for the industry and stage of development of the Group. The Group is a research and development ("R&D") based biotechnology Group concerned with a number of pre-clinical projects. These projects require sufficient investment to reach defined milestones by which the Group and its investors can judge the chances of ultimate success and thereby the value of the Group.  At this stage of Group development significant sources of revenue generation are unlikely, and due to the needs of an R&D based biotechnology-based program, the Group is cash consuming.  The Group KPIs are therefore chosen to monitor the progress of the individual scientific programmes, the external market environment for the potential drugs being developed and the cash requirements of the Group.

Financial KPIs

Cash consumption

The cash position of the business is measured on a continual basis with reference both to the general and administrative expenses required to run the Group, and more particularly to the cash required for ongoing research, development and acquisition of the Group's scientific assets.  During 2020, the main use of the Group's funds was progressing the animal model trials for OK-101 and OK-201, which was within the budget. The cash consumption, which refers to cash used in operating activities of the Group, during the year was £1.3m. Management monitors its cash consumption on a monthly basis and a cash projection will be presented at every board meeting.

The Group monitors current and projected cash consumption to ensure that there are sufficient funds available to develop the Group's scientific assets. The Group maintains a virtual operating model resulting in low cash consumption for general and administrative expenses during the period. 

Non-financial KPIs for 2021.

Develop appropriate formulation of OK-101 for animal studies, and conduct stability studies to ensure that the formulation is stable for at least 28 days.

The Group is working towards this KPI. Additional preclinical IND-enabling studies have been performed and peptide manufacturing process has been scaled up to produce larger quantities of OK-101 for stability studies.  A dose ranging study in rabbit was performed to evaluate the effect of OK-101 on corneal permeability and to assess local corneal irritation. OK-101 was found to be effective in reducing corneal permeability and to show no sign of local irritation. Rabbit ocular tolerance tests using OK-101 showed no adverse signs such as inflammation, chemosis or hyperemia and no signs of local irritation.

Other Considerations

External (life sciences) market environment

The Group monitors the life sciences market for a number of factors:

· New developments in drug research and development

· New medical treatment paradigms

· Patent filings by third parties pertinent to the Group's programmes

· Existing and novel drugs in development by third parties

· Healthcare regulation and policy in the major territories

· Private and public financings of life science companies to indicate investor appetite for life science risk

The Group is developing its scientific assets within the European and US territories, but for potential global application.  The environment for life science companies was positive throughout the year.

Principal risks and uncertainties

The Group assesses and monitors the inherent risks in the life sciences industry, as well as other micro and macro-economic factors that may present risk to the Group's progression. The Group also considers Group-specific risks such as research progress, personnel and operational facilities and collaborations.

There are significant risks associated with any life science business. The Board believes that the following risks are the most significant, however, the risks listed do not necessarily comprise all those associated with an investment in the Group. In particular, the Group's performance may be affected by changes in market or economic conditions and in legal, regulatory and / or tax requirements. The risks listed are not set out in any particular order of priority and this is not an exhaustive list of risks.

If any of the following risks were to materialise, the Group's business, financial condition, results or future operations could be materially and adversely affected. In such cases, the Group's share price may decline and an investor may lose part or all of their investment.

The Board considers that the principal risks and uncertainties facing the Group may be summarised as follows:

· Clinical studies fail to generate encouraging data

The Group's product candidates have not been evaluated in clinical trials and results in the clinic may not be reproduced in human trials. There is a high degree of failure for product candidates as they progress through clinical trials and clinical trial data may be interpreted in varying ways which may delay, limit or prevent future regulatory approvals.

· Ability to scale up the Group

Growth may place significant demands on the Group's management and resources. The Group expects to experience growth in the number of its employees and the scope of its operations in connection with the continued development and, in due course, the potential commercialisation of its products. This potential growth could place a significant strain on its management and operations, and the Group may have difficulty managing this future potential growth.

· Intellectual property risk

The commercial success of the Group depends on its ability to obtain patent protection for its pharmaceutical discoveries and to preserve the confidentiality of its know-how. There is no guarantee that patent applications will succeed or be broad enough to provide protection for the Group's intellectual property rights and exclude competitors with similar pharmaceutical products. The success of the Group is also dependent on non-infringement of patents, or other intellectual property rights, held by third parties. Competitors and third parties may hold intellectual property rights which the Group may not be able to license upon favourable terms, potentially inhibiting the Group's ability to develop and exploit its own business. Litigation may be necessary to protect the Group's intellectual property, which may result in substantial costs. The Group seeks to reduce this risk by seeking patent attorney advice that patent protection will be available prior to investing in a project, by seeking patent protection where appropriate, and by minimising disclosure to third parties.

· Competition risk

The Group faces significant competition from pharmaceutical companies. The Group has competitors internationally, including major multinational pharmaceutical companies, universities and research institutions. In respect of Chemerin as an indication for the treatment of DED, there are a number of established companies engaged in the development and marketing of preparations addressing the DED market. In addition, there is a wide range of products addressing the DED market currently approved and marketed by a number of large and small pharmaceutical companies.

· Funding risk

The Group continues to consume cash resources. The Group only recently committed to its new business and its chosen product candidates are in the early stages of development and it may be some years until the Group generates revenue, if at all. The Group remains dependent upon securing funding through the injection of capital from share issues. The Group may not be able to generate positive net cash flows in the future or attract such additional funding required at all, or on suitable terms. In such circumstances, the Group's pre-clinical programmes may be delayed or cancelled and the business operations curtailed. The Group seeks to reduce this risk through tight financial control, prioritising programmes which will generate the best returns, and keeping shareholders informed on progress. Post period-end, the Group raised £3.9 million (before expenses) to fund its pre-clinical activities and strengthen its balance sheet.

· Dependence on key personnel

The loss of one or more of its key personnel could have an adverse impact on the business of the Group. Furthermore, it may be particularly difficult for the Group to attract and retain suitably qualified and experienced people, given the competition from other industry participants and the relative size of the Group. The Group has deliberately pursued a lean headcount policy to conserve financial resources. Failure to continue to attract and retain such individuals could adversely affect the Group's ability to conduct and grow its operations effectively. The Group seeks to reduce this risk by recruiting additional personnel and additionally appropriate incentivisation of personnel through participation in long term equity incentive schemes.

Gender of Directors and employees

We recruit individuals who have the skills, experience and integrity needed to perform the roles to make OKYO Pharma Ltd a successful company. We note that there are no women on the board but that we recruit without regard to sex or ethnic origin, appointing and thereafter promoting staff based upon merit.

The profile of the Group's directors, officers and employees at March 31, 2020, was as follows:

	March 31, 2021
	Male	Female	Total
Number or persons who were Directors or officers of the Group	5	1	6
Number of persons who were other employees of the Group	-	-	-
Total Directors and employees at March 31, 2021	5	1	6

The lean staffing structure is supported by the outsourcing of some administrative functions and the use of contract research organisations (CROs).

Directors' duties in relation to s172 Companies Act 2006

The Board of Directors have considered the matters set out in section 172 of the United Kingdom's Companies Act 2006 insofar as Guernsey law requires consideration of the same.

The directors consider, that they have acted in the way they believe, in good faith, to promote the success of the Company for the benefit of its members as a whole and, in doing so, have regard (amongst other matters) to:

• the li kely consequences of any decisions in the long-term,

• the interests of the Company's employees,

• the need to foster the Company's business relationships with suppliers, customers and others,

• the impact of the Company's operations on the community and environment,

• the desirability of the Company maintaining a reputation for high standards of business conduct, and

• the need to act fairly between the shareholders of the Company.

Principal decisions in 2020

We have considered the decisions taken by the Board which will have an impact on the longer-term performance and prospects for the Group. The Board believes that the following decisions taken during the year and since the year end fall into this category and were made with full consideration of both internal and external stakeholders. The Group's aim is to meet the needs of the key stakeholders who ultimately wish for us to progress our pipeline of drugs to treat rare cancers and autoimmune and inflammatory diseases to commercial deployment.

Significant events/decisions	Key s172 matter(s) affected	Actions and impact
Raised £6m of investment from existing and new investors, to enable Group to progress its pre -clinical trials	Shareholders	Decisions were made by the Board to raise additional funds enabling the company to pursue its R&D objectives thereby meeting core stakeholder requirements. The cash funding requirement offsets any dilution experienced by the existing shareholders.
Filing of patent application covering the use of Chemerin and associated analogues to treat cytokine storm associated with COVID-19 and ARDS	Staff and Shareholders	Decisions were made by the executive team in consultation with the Board after carefully considering impact upon existing staff resources and available funding. The application has resulted in an expanded project focus.

Environmental matters

We currently outsource our research, development, testing and manufacturing activities. These activities are subject to various environmental, health and safety laws and regulations, which govern, among other things, the controlled use, handling, release and disposal of and the maintenance of a registry for hazardous materials and biological materials. If we or our partners fail to comply with such laws and regulations, we could be subject to fines or other sanctions.

As with other companies engaged in activities similar to ours, we face a risk of environmental liability inherent in our current and historical activities, including liability relating to releases of or exposure to hazardous or biological materials. Environmental, health and safety laws and regulations are becoming more stringent. We may be required to incur substantial expenses in connection with future environmental compliance or remediation activities, in which case, our production and development efforts may be interrupted or delayed.

Gabriele Cerrone

Non-Executive Chairman

31 July 2021

Martello Court, Admiral Park, St Peter Port, Guernsey, GY1 3HB

 

END

 

 

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