Company Announcements

Interim Results

Source: RNS
RNS Number : 3534I
ReNeuron Group plc
02 December 2022
 

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018.

 

ReNeuron Group plc

("ReNeuron" or "the Company")

 

Interim Results for the six months ended 30 September 2022

 

ReNeuron Group plc (AIM: RENE), a UK based leader in Stem Cell derived Exosome Technologies, announces its unaudited interim results for the six months ended 30 September 2022 and a funding update.

 

Catherine Isted, Chief Executive Officer, said: "The last six months have been a time of transition as the executive team has focused on accelerating the development of CustomExTM our exosome drug delivery platform. The data produced to validate the platform, following Dr. Corteling's return in March of this year, has enabled us to highlight the potential of CustomExTM in comparison to the conventional approach of our competitors. Following my appointment as CEO in September, I have further strengthened the executive team with the recent appointment of Simon Dew as Chief Business Officer. In light of current unfavourable equity capital markets, it has not been possible to complete an equity raise at the present time. However, through a review of the cost base and planned initiatives, savings have been identified in order to extend our cash runway to ensure the continued development of our technology platform and maximise partnering opportunities and thereby deliver the value that I believe our customisable and targeted delivery platform should command."

 

 

FINANCIAL HIGHLIGHTS

·    Revenue for the period of £438,000 (H1 2021: £58,000) related to income from partner funded development activities and royalty income

·    Reduced operating costs incurred in the period of £4.7 million (H1 2021: £6.1 million) primarily as a result of a reduction in clinical trial related costs following the strategic review in January 2022, partly offset by additional investment made in the exosome technology platform

·    Loss for the period of £3.2 million (H1 2021: loss of £5.2 million) driven by lower costs, increased revenue as noted above and foreign exchange gains

·    Net cash used in operating activities of £4.3 million (H1 2021: £4.6 million). Cash used was higher than the loss for the period explained by changes in working capital and capital investment made to support exosome platform development

·    Cash, cash equivalents and bank deposits at 30 September 2022 of £10.5 million (31 March 2022: £14.5 million)

 

FUNDING UPDATE

 

The Company has been investigating an equity raise with institutional and other investors. Having regard to the unfavourable conditions in small-cap equity markets, the Board has concluded that it will not be possible to complete an equity raise at the current time. As at 30 November 2022, having recently received the R&D tax credit for FY 2022, the Company has cash of £10.0 million, and through deferring certain expenditure on proprietary programmes and other longer term development plans, the cash runway will be extended until at least the start of the fourth calendar quarter of 2023.  This is not expected to compromise the Company's ability to sign commercial exosome collaborations which upon completion should extend the runway until at least 2024.

 

OPERATIONAL HIGHLIGHTS

 

Corporate and Organisational Development

In September 2022 the Company announced a number of organisation changes:

·    Catherine Isted was appointed Chief Executive Officer with Iain Ross resuming his role as Non-Executive Chairman

·    John Hawkins was promoted to Chief Financial Officer and joined the ReNeuron board;

·    Dr. Randolph Corteling assumed the role of Chief Scientific Officer

·    Suzanne Hancock was appointed Chief Operations officer

·    It was announced that Simon Dew, an experienced business development professional and exosomes expert would join ReNeuron as Chief Business Officer

 

Exosomes platform

·    Data presented in May highlighted the breadth of the Group's CustomExTM exosome platform with four neural and three non-neural stem cell lines each producing distinct exosome populations

Post period end in October, the Group presented exciting data on the significant advantages of its CustomExTM platform, including a 600% increase in delivery of siRNA compared to a conventional human embryonic kidney-derived ("HEK") exosome approach

 

 

Fosun Pharma

·    In July 2022, a Supplemental Terms Agreement was signed with Fosun Pharma for the Technology Transfer of CTX into China, highlighting continued progress with the collaboration

·    The Group expects to receive approximately £1 million over the 24 month period from signing the agreement, of which £320,000 has been received. In addition there is potential under the Technology Transfer agreement for the Group to receive up to £5 million over the medium to long term, with further potential milestone payments of up to £74 million linked to the main agreement signed in 2019



 

 

Enquiries:

 

ReNeuron

www.reneuron.com/investors

Catherine Isted, Chief Executive Officer

Via Walbrook PR

John Hawkins, Chief Financial Officer

 

 

 

Liberum Capital Limited (NOMAD and Joint Broker)

Phil Walker (Investment Banking)

Richard Lindley (Investment Banking)

Ben Cryer (Investment Banking)

+44 (0)20 3110 2000

 

 


Allenby Capital Limited (Joint Broker)

+44 (0)20 3328 5656

James Reeve/George Payne (Corporate Finance)


Stefano Aquilino (Sales & Corporate Broking)


 


Walbrook PR (Media & Investor Relations)

+44 (0)20 7933 8780 or reneuron@walbrookpr.com

Alice Woodings

+44 (0)7407 804 654

 

About ReNeuron

ReNeuron is a UK based leader in proprietary stem cell derived exosome technologies, harnessing its unique stem cell technologies to develop 'off the shelf' treatments for diseases with significant unmet needs. 

 

ReNeuron's stem cell derived proprietary exosome technology platform offers a delivery mechanism for a variety of payloads such as siRNA, mRNA, proteins, small molecules and genes. The Group has a growing number of partner collaborations with Global Pharma, Biotech and academic partners in this fast-expanding area of scientific and commercial interest. ReNeuron also has the ability, through its conditionally immortalised induced pluripotent stem cell (iPSC) platform, to make allogeneic tissue cells of choice and has the potential to produce exosomes with tissue specific targeting ability. 

 

The Group has out-licenced its CTX Programme for stroke disability and hRPC programme in retinitis pigmentosa to Fosun in China and is looking to out-license both of these programmes in other territories.

 

ReNeuron's shares are traded on the London AIM market under the symbol RENE.L. For further information visit www.reneuron.com

 

This announcement contains forward-looking statements with respect to the financial condition, results of operations and business achievements/performance of ReNeuron and certain of the plans and objectives of management of ReNeuron with respect thereto. These statements may generally, but not always, be identified by the use of words such as "should", "expects", "estimates", "believes" or similar expressions. This announcement also contains forward-looking statements attributed to certain third parties relating to their estimates regarding the growth of markets and demand for products. By their nature, forward-looking also statements involve risk and uncertainty because they reflect ReNeuron's current expectations and assumptions as to future events and circumstances that may not prove accurate.  A number of factors could cause ReNeuron's actual financial condition, results of operations and business achievements/performance to differ materially from the estimates made or implied in such forward-looking statements and, accordingly, reliance should not be placed on such statements.



 

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2022

 

CHAIRMAN'S STATEMENT

 

Following the departure of our CEO in February 2022, I started this financial year as Executive Chairman and had the opportunity to spend a lot of time with the team at our site in Pencoed in Wales. I have been impressed by the quality of the management team, the science and the data produced by our scientists on our exosome delivery platform CustomExTM.  In August, at my recommendation, we announced that the board had taken the decision to appoint Catherine Isted, our then CFO, as the new CEO having shown herself, against external competition, to be an excellent candidate for the role and that I would revert to being non-executive Chairman after a period supporting the transition.

 

During September, under Catherine's leadership, we announced that John Hawkins, our Financial Controller, would step up to the role of CFO and join the board. Along with other executive changes and the recruitment of Simon Dew as Chief Business Officer this now completes what I believe to be a very strong executive team with the skill sets needed to continue and accelerate the turnaround following the change of strategic direction we as a board made under my direction at the start of the year.

 

In summary the first six months of the financial year have been a time of change with the transition to becoming a company with a fully focused Exosomes drug delivery platform - CustomExTM. The Company has produced significant data highlighting the advantages of the CustomExTM platform over the competition's conventional HEK based exosome delivery approach.

 

Progress has also been made with Fosun Pharma as we continue to maximise the value of the legacy stem cell assets. Whilst continuing to support Fosun in Greater China, we are also committed to continuing to add value from the legacy assets and realising the potential of the iPSC platform, not only in its role in future proofing the CustomExTM platform and its ability to generate new exosome lines, but also in its own right. We will continue to assess all opportunities to create value through organic growth but also, as appropriate, explore technology licensing and acquisition opportunities to accelerate and enhance the overall value proposition of our Company.

 

The Group ended the period with cash, cash equivalents and bank deposits of £10.5 million and with our cash runway being extended until at least the start of the fourth calendar quarter 2023 and the right team now in place, the Company will look to build on these foundations and sign new longer-term commercial partnerships to further extend the cash runway and therefore deliver value commensurate with what our CustomExTM platform can offer in the field of targeted drug delivery.

 

I look forward to the coming year continuing to work with the ReNeuron team and all our stakeholders to build the value this Company truly merits.

 

Iain Ross

Chairman 

 

 

 

 

 



 

CHIEF EXECUTIVE'S REPORT

 

Corporate and Organisational Development

 

There have been significant changes during the period at the Executive level in addition to the changes at Directorate as described in the Chairman's statement.

 

In September it was announced that Simon Dew would be joining the Executive Team as Chief Business Officer. Mr. Dew is a senior healthcare executive with extensive experience in Business Development and Corporate Strategy. His career spans working at SmithKline Beecham, IQVIA, Astellas Pharma, Gyroscope, and more recently exosomes company Evox Therapeutics, where he was responsible for leading two transformational partnership deals with global pharmaceutical companies. He commenced his new role at ReNeuron in early November.

 

Additionally, in September Dr. Randolph Corteling assumed the role of Chief Scientific Officer with Prof. Stefano Pluchino moving to the role of Chair of the Scientific Advisory Board (continuing to combine working with ReNeuron with his academic work in Exosomes and Regenerative Neuroimmunology at the University of Cambridge) and Suzanne Hancock, formerly Head of Operations, moved to the position of Chief Operations Officer.

 

CustomExTM Exosome Platform

 

In the last six months there has been significant data presented on ReNeuron's CustomExTM  platform, highlighting not only the breadth of the platform but also improvements in uptake and payload delivery when compared to the standard HEK based exosome approach.

 

In May, Dr. Corteling was invited as a guest speaker to the International Society of Cell and Gene Therapy conference. This presentation was the first time that the Company had highlighted the breadth of the Group's exosome platform, showing that it had four district neural cell lines (in the cortex, hippocampus, striatum and mesencephalon) in addition to three non-neural cell lines (in the retina, liver and pancreas), with, very importantly, each cell line producing a distinct exosomes type allowing for improved target selection. In addition, ReNeuron highlighted its induced pluripotent stem cell (iPSC) platform, derived from ReNeuron's CTX cell line, which could be used to produce other stem cell lines which in turn could be used to produce other distinct exosomes depending on the target required.

 

In October, further exciting data were presented at an international exosomes conference in Boston showing the significant advantages of the Group's stem cell derived platform CustomExTM compared to a conventional HEK exosome approach. Key highlights from the presentation included:

 

·    When comparing the uptake of a panel of exosomes into three different target cell types (Epithelial cells, Endothelial cells and Neural cells), ReNeuron identified one or more CustomExTM exosome types that outperformed the conventional approach of using HEK-derived exosomes at least 10-fold in each of the three different cell types. This was most pronounced with endothelial cells where one of ReNeuron's CustomExTM exosome types showed an 18-fold improvement in uptake over HEK-derived exosomes.

·    When ReNeuron's exosomes were loaded with an siRNA payload, this improvement in uptake was reflected in the siRNA delivery to the target cell, with the best performing CustomExTM exosome type showing a 600% improvement in siRNA delivery to the target cell when compared to delivery from HEK-derived exosomes.

 

The siRNA data was of particular interest to ReNeuron's siRNA collaborators, and the Group plans to further bolster its siRNA data package over the coming period, highlighting the advantages of using CustomExTM.

 

During the period, ReNeuron continued to progress its existing partner programmes focusing on the CNS, although following the recent data announcements, interest has now started to grow outside of the CNS. Additionally, the Group has received interest from potential partners following presentation of these platform data. The management team is working to progress both existing and potential new partnerships towards meaningful collaborations over the course of the next 12 months. The Group believes that the addition of Simon Dew will help accelerate interest from the industry which will ultimately lead to an acceleration of partnering announcements.

 

Induced Pluripotent Stem Cell (iPSC) Platform

 

While the iPSC platform is highly important to expanding the breadth of the CustomExTM platform due to its ability to create new stem cell lines and therefore associated exosomes from those lines, there is also a growing interest in the iPSC platform in its own right due to iPSC's ability to differentiate into any other form of cell. ReNeuron's iPSCs were developed from the Group's conditionally immortalised CTX stem cell line and they retain the immortalisation characteristics of the original CTX line. This results in any new stem cell line derived from these iPSCs having the benefit of being highly stable which is of increased interest to third parties.

 

Work continues with two groups at University College London ("UCL"), firstly investigating the potential use of CTX derived iPSC lines to generate CAR-T / CAR-NK cells and secondly with a separate group at UCL investigating the ability to differentiate into Schwann cells for potential use in peripheral nerve damage repair. The Group plans to generate further data in the iPSC field over the coming six months and additionally expand its numbers of collaborators in the area.

 

Legacy assets

 

Fosun Pharma continues to develop CTX in stroke disability in China following the out-licensing agreement signed with ReNeuron in April 2019. In July 2022, ReNeuron announced that it had negotiated and signed a supplemental terms agreement with Fosun. As a result, the Group expects to receive approximately £1 million over the 24 month period from signing the agreement (including the £320,000 upfront payment received in January 2022) in relation to the initial supply of CTX cell bank vials and services provided to undertake the technology transfer, with up to a further £5 million receivable by the Group over the medium to longer term for the continued provision of CTX cell bank vials to enable manufacture by Fosun Pharma and with further potential milestone payments of up to £74m linked to the main agreement signed in 2019.

 

Fosun Pharma is expanding its cell therapy portfolio to stem cell platforms and ReNeuron CTX is one of the starting programmes. A dedicated Fosun Pharma team has been established for the technology transfer into China and the construction of a 20,000 square foot GMP facility to manufacture CTX is underway. The signing of this Supplemental Terms Agreement underscores Fosun Pharma's continued commitment to the CTX stroke disability programme.

 

The collaboration with Fosun Pharma continues on track and the Group continues to progress out-licensing opportunities for the CTX programme in other geographies.

 

Following the cessation of the hRPC programme earlier in the year, work has been ongoing to complete the data package that can be made available to potential interested parties. This data package is expected to be completed in Q4 2022. There has been some early interest in this programme and the Group will accelerate efforts to progress this once the data package is available.

 

Outlook

 

With the executive team now in place, the key focus over the coming period for myself and the rest for the team will be data generation and collaboration deals to further extend the cash runway. 

 

We are targeting to announce several larger scale exosome collaborations from existing / new partners and to develop further collaboration agreements with our iPSC platform. We also plan to accelerate the number of partnering opportunities in the 'hopper' through a greater focus on marketing of the advantages of the CustomExTM platform. This, I believe, will lead to further success for the Company over the longer term.

 

Presenting further data highlighting the customisability and targeted approach of the CustomExTM platform and superiority over HEK based approaches will be a key priority for the team over the period as will a renewed focus on looking to further monetise the legacy assets outside of the agreement with Fosun Pharma.

 

I look forward to leading the new exosome focused team, as ReNeuron extends its presence and exosome collaborations, maximising the opportunities ahead, as we deliver returns to shareholders from the fast-growing field of exosome mediated drug delivery.

 

Catherine Isted

Chief Executive Officer

FINANCIAL REVIEW

 

During the first half of the financial year, costs continued to be closely controlled with spend primarily directed towards progressing the Group's proprietary exosome platform. The Group is investing in the exosome platform in order to capitalise on the potential it sees in the exosomes field by adding value through its existing and future new commercial collaborations. The total comprehensive loss for the period reduced to £3.2 million (H1 2021: £5.2 million).

 

At 30 September 2022, the Group had cash, cash equivalents and bank deposits of £10.5 million.

 

FINANCIAL HIGHLIGHTS

(£'000)

Six months ended 30 September 2022

Six months ended 30 September 2021

Year ended 31 March2022

Revenue

438

58

403

Total comprehensive loss

3,176

5,234

9,689

Operating expenses

4,712

6,128

11,631

Net cash used in operating activities

 

4,323

 

4,599

 

7,411

Cash, cash equivalents & bank deposits

 

10,464

 

17,418

 

14,548

 

Revenue and Other Operating Income

 

In the six months to 30 September 2022, revenues, which related to partner funded development activities were £393,000 (H1 2021: £Nil). Income related to royalty income, was £45,000 (H1 2021: £58,000).

 

Operating expenses

 

Total operating expenses reduced in the period to £4.7 million (H1 2021: £6.1 million).

 

This reduction in costs followed a review of programme priorities and resource requirements, with the Group having made the decision to primarily focus its resources on its proprietary exosome platform.

 

Research and development (R&D) expenditure reduced to £2.9 million (H1 2021: £4.3million), primarily reflecting the refocussing of activities as described above, together with consequent cost reductions related to clinical development activities.

 

General and administrative expenses declined in the period to £1.7million (H1 2021: £1.8 million).

 

 

Finance income/expense

 

Finance income represented income received from the Group's cash and investments and gains from foreign exchange, with losses from foreign exchange shown in finance expense.

 

Finance income was £466,000 in the period (H1 2021: £124,000). The current period included foreign exchange gains of £429,000 (H1 2021: £112,000). In the current period, finance expense solely comprised lease interest of £10,000 (2021: £18,000).

 

The Group holds cash and investments in foreign currencies in order to hedge against operational spend in those currencies. The weakening of sterling during the period resulted in a relative increase in valuation of the Group's foreign currency deposits.

 

Taxation

 

The taxation credit for the period of £0.6 million primarily comprised an R&D tax credit (H1 2021: £0.7 million). The amount of the R&D tax credit reduced in line with the reduction in research and development spend.

 

Cash flow

 

Net cash used in operating activities in the period reduced to £4.3 million (H1 2020: £4.6 million). This reduction in cash used reflected the reduction in costs offset by an adverse working capital movement (H1 2022 saw a £0.5 million reduction in working capital, whereas H1 2021 had a £0.9 million increase).

 

The Group had cash, cash equivalents and bank deposits totalling £10.5 million as of 30 September 2022 (31 March 2022: £14.5 million).

 

Statement of financial position

 

Non-current assets increased as the Company invested in property, plant and equipment to aid further development of the exosome analytics and manufacturing process.

 

Current assets include a Corporation tax receivable of £2.0 million comprising the amount due from R&D tax credits for the full year ended 31 March 2022 plus the credit due for the current period (30 September 2021: £2.6 million). This debtor was lower than 2021 due to the reduction in research and development expenditure.

 

Current liabilities primarily comprise trade and other payables at £6.2 million which were £0.4 million lower than the same period last year (30 September 2021: £6.6 million) and £0.7 million lower than at the last year end (31 March 2022: £6.9 million).

 

Non-current liabilities represented the lease liability relating to the Company's premises. The lease liability reduced by £0.1 million during the period.

 

John Hawkins

Chief Financial Officer

 



 

INTERIM FINANCIAL STATEMENTS

 

Unaudited Consolidated Statement  of Comprehensive Income

for the six months ended 30 September 2022

 



Six months ended

Six months ended

Year ended



30 September

30 September

 31 March



2022

2021

2022


Note

£'000

£'000

£'000

Revenue

4

438

58

403

Research and development costs


(2,986)

(4,340)

(8,068)

General and administrative costs


(1,726)

(1,788)

(3,563)

Operating loss

 

(4,274)

(6,070)

(11,228)

Finance income

6

466

124

195

Finance expense

7

(10)

(18)

(25)

Loss before income taxes

 

(3,818)

(5,964)

(11,058)

Taxation

8

642

730

1,369

Loss and total comprehensive loss for the period

 

(3,176)

(5,234)

(9,689)

Loss and total comprehensive loss attributable to equity owners of the company

 

(3,176)

(5,234)

(9,689)






Basic and diluted loss per ordinary share

9

(5.6p)

(9.2p)

(17.0p)

 



 

Unaudited Consolidated Statement of Financial Position

as at 30 September 2022

 



30 September

30 September

31 March



2022

2021

2022


Note

£'000

£'000

£'000

Assets

 




Non-current assets

 




Property, plant and equipment


354

325

288

Right-of-use asset

10

331

423

373

Intangible assets


186

186

186



871

934

847

Current assets

 




Trade and other receivables


456

517

536

Corporation tax receivable


2,036

2,565

1,392

Investments - bank deposits


1,000

6,000

5,000

Cash and cash equivalents


9,464

11,418

9,548



12,956

20,500

16,476

Total assets


13.827

21,434

17,323






Equity

 




Equity attributable to owners of the company

 




Share capital

11

571

569

571

Share premium account

11

113,925

113,925

113,925

Capital redemption reserve


40,294

40,294

40,294

Merger reserve


2,223

2,223

2,223

Accumulated losses


(149,931)

(142,858)

(147,125)

Total equity


7,082

14,153

9,888

Liabilities

 




Current Liabilities

 




Trade and other payables


6,249

6,646

6,873

Lease liabilities


151

145

146



6,400

6,791

7,019

Non-current liabilities

 

 



Lease liabilities


345

490

416



345

490

416

Total liabilities

 

6,745

7,281

7,435

Total equity and liabilities


13,827

21,434

17,323

 



 

Unaudited Consolidated Statement of Changes in Equity

for the six months ended 30 September 2022

 



Share

Capital

 




Share

premium

redemption

Merger

Accumulated

Total

 

capital

account

reserve

reserve

losses

Equity

 

£'000

£'000

£'000

£'000

£'000

£'000

As at 1 April 2021

569

113,904

40,294

2,223

(138,085)

18,905

Exercise of employee share options

-

21

-

-

-

21

Credit on share-based payment

-

-

-

-

461

461

Loss and total comprehensive loss for the period

-

-

-

-

(5,234)

(5,234)

As at 30 September 2021

569

113,925

40,294

2,223

(142,858)

14,153

Exercise of employee share options

2

-

-

-

-

2

Credit on share-based payment

-

-

-

-

188

188

Loss and total comprehensive loss for the period

-

-

-

-

(4,455)

(4,455)

As at 31 March 2022

571

113,925

40,294

2,223

(147,125)

9,888

Credit on share-based payment

-

-

-

-

370

370

Loss and total comprehensive loss for the period

-

-

-

-

(3,176)

(3,176)

As at 30 September 2022

571

113,925

40,294

2,223

(149,931)

7,082

 



 

Unaudited Consolidated Statement of Cash Flows

for the six months ended 30 September 2022

 



Six months ended

Six months ended

Year ended



30 September

30 September

 31 March



2022

2021

2022


Note

£'000

£'000

£'000

Cash flows from operating activities

 




Cash used in operations

12

(4,310)

(4,578)

(9,196)

Overseas taxes paid


(3)

(3)

(52)

Income tax credit received


-

-

1,862

Interest paid


(10)

(18)

(25)

Net cash used in operating activities


(4,323)

(4,599)

(7,411)






Cash flows from investing activities

 




Capital expenditure


(156)

(238)

(302)

Interest received


32

3

26

Net cash (used in)/generated by investing activities


(124)

(235)

(276)






Cash flows from financing activities

 




Proceeds from the issue of ordinary shares


-

21

23

Bank deposits matured/(placed)


4,000

1,500

2,500

Lease payments


(73)

(84)

(157)

Lease finance


7

-

-

Net cash generated by/(used in) financing activities


3,934

1,437

2,366






Net (decrease)/increase in cash and cash equivalents

13

(513)

(3,397)

(5,321)

Effect of foreign exchange rates


429

112

166

Cash and cash equivalents at the start of period


9,548

14,703

14,703

Cash and cash equivalents at the end of period

14

9,464

11,418

9,548

 



 

Notes to the Interim Financial Statements

for the six months ended 30 September 2022

 

1. General information and basis of preparation

ReNeuron Group plc is an AIM listed company incorporated and domiciled in the United Kingdom under the Companies Act 2006. The Company's registered office and its principal place of business is Pencoed Business Park, Pencoed, Bridgend CF35 5HY. Its shares are listed on the Alternative Investment Market ("AIM") of the London Stock Exchange.

 

These Interim Financial Statements were prepared by the Directors and approved for issue on xx xxx 2022. They have not been audited.

 

These Interim Financial Statements do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 March 2022 were approved by the Board of Directors on 11 August 2022 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified and did not contain statements under 498 (2) or (3) of the Companies Act 2006. The auditor's report did however contain an emphasis of matter regarding a material uncertainty related to going concern.

 

As permitted, these Interim Financial Statements have been prepared in accordance with UK AIM rules and with International Accounting Standard 34 "Interim financial reporting". They should be read in conjunction with the Annual Financial Statements for the year ended 31 March 2022, which have been prepared in accordance with International Accounting Standards in conformity with the Companies Act 2006 (IFRS) and the applicable legal requirements of the Companies Act 2006.

 

2. Accounting policies

The accounting policies applied are consistent with those of the Annual Financial Statements for the year ended 31 March 2022, as described in those Annual Financial Statements. Where new standards or amendments to existing standards have become effective during the year, there has been no material impact on the net assets or results of the Group.

 

3. Going concern

The Group is expected to incur further costs as it continues to develop its technologies through the research and pre-clinical development pathway. The operations of the Group are currently being financed from funds that have been raised from share placings, commercial partnerships and grants.

 

The Group actively seeks further business development and commercial opportunities in order to support its ongoing development programmes. The Board places considerable emphasis on communication with shareholders, potential investors and other commercial organisations in order to maximise the chances of success in exploiting these opportunities.

 

As noted previously, it has not been possible to complete an equity raise at this current time. The Board will continue to explore alternative funding mechanisms and note that in the absence of any further financing, the Group's current financial resources will be sufficient to support operations until at least the start of the fourth calendar quarter 2023.The Board therefore considers it appropriate to continue to adopt the going concern basis in the preparation of these interim financial statements. However, there is no guarantee that future attempts to secure adequate additional revenues/funding on a timely basis will be successful and, therefore, this represents a material uncertainty, which may cast significant doubt about the Group's ability to continue as a going concern. These interim financial statements do not include the adjustments that would result if the Group were unable to continue as a going concern.

 

 

 

 

4. Revenue


Six months

Six months



Ended

Ended

 Year ended


30 September

30 September

31 March


2022

2021

 2022


£'000

£'000

£'000

Royalty income

45

58

119

Income associated with development activities

393

 

-

284


438

58

403

 

Royalty income is derived from the licensed sale of the Group's products to customers in the USA.

Income associated with development activities relates to fees received under research agreements and is generated in the United Kingdom, the USA, the People's Republic of China and South East Asia.

 

5. Segment information

The Group has identified the Chief Executive Officer as the Chief Operating Decision Maker (CODM). The CODM manages the business as one segment, the development of stem cell derived exosome technologies. Since this is the only reporting segment, no further information is included. The information used internally by the CODM is the same as that disclosed in the Interim Financial Statements. Revenue is analysed in note 4 above.

 

 

6. Finance income


Six months

Six months



Ended

Ended

 Year ended


30 September

30 September

31 March


2022

2021

 2022


£'000

£'000

£'000

Interest received

37

12

29

Foreign exchange gains

429

112

166


466

124

195

 

7. Finance expense


Six months

Six months



Ended

Ended

 Year ended


30 September

30 September

31 March


2022

2021

 2022


£'000

£'000

£'000

Lease interest

10

18

25


10

18

25

 

 

 

 

 

8. Taxation


Six months

Six months



Ended

Ended

 Year ended


30 September

30 September

31 March


2022

2021

 2022


£'000

£'000

£'000

R & D tax credit

644

733

1,392

Overseas taxation

(2)

(3)

(53)

Adjustments in respect of prior years

-

-

30


642

730

1,369

 

9. Basic and diluted loss per share

The basic and diluted loss per share is calculated by dividing the loss for the financial period of £3,176,000 (September 2021: £5,234,000, March 2022: £9,689,000) by 57,090,147 shares (September 2021: 56,907,676 and March 2022: 56,975,677 shares), being the weighted average number of ordinary 1p shares in issue during the period. Potential ordinary shares are not treated as dilutive as the entity is loss-making.

 

10. Right-of-use-asset


30 September

30 September

 31 March


2022

2021

 2022


£'000

£'000

 £'000

At beginning of the period

373

473

473

Additions

7

-

-

Depreciation charge

(49)

(50)

(100)

At end of the period

331

423

373

 

The net book value of the underlying assets is as follows:


30 September

30 September

 31 March


2022

2021

 2022

(124)461

£'000

£'000

 £'000

Land and buildings

325

421

373

Computer and office equipment

6

2

-

At end of the period

331

423

373

 

11. Share capital and share premium


Number of shares

Share capital

Share premium

Total


 

£'000

£'000

£'000

As at 30 September 2021

56,936,402

569

113,925

114,494

Issue of new shares - share options exercised

127,221

2

-

2

As at 31 March 2022

57,063,623

571

113,925

114,496

Issue of new shares - share options exercised

82,270

-

-

-

As at 30 September 2022

57,145,893

571

113,925

114,496

 

12. Cash used in operations


Six months

Six months



Ended

Ended

 Year ended


30 September

30 September

31 March


2022

2021

 2022


£'000

£'000

£'000

Loss before income tax

(3,818)

(5,964)

(11,058)

Adjustment for:

 



Finance income

(466)

(124)

(195)

Finance expense

10

18

25

Depreciation of property, plant and equipment

83

126

224

Depreciation of right-of-use asset

49

50

100

Loss on disposal of fixed assets

-

-

3

Share-based payment charges

370

461

649

Changes in working capital:

 



Receivables

87

(64)

(90)

Payables

(625)

919

1,146

Cash used in operations

(4,310)

(4,578)

(9,196)

 

13. Reconciliation of net cash flow to movement in net debt


Six months

Six months



Ended

Ended

 Year ended


30 September

30 September

31 March


2022

2021

 2022


£'000

£'000

£'000

Decrease in cash and cash equivalents

(513)

(3,397)

(5,321)

Effect of foreign exchange rates

429

112

166

Cash inflow from increase in lease liabilities

(7)

-

-

Lease repayments

83

102

182

Lease interest

(10)

(18)

(25)

Net funds at start of period

8,986

13,984

13,984

Net funds at end of period

8,968

10,783

8,986

 

14. Analysis of net funds


Six months

Six months



Ended

Ended

 Year ended


30 September

30 September

31 March


2022

2021

 2022


£'000

£'000

£'000

Cash and cash equivalents

9,464

11,418

9,548

Lease liabilities

(496)

(635)

(562)

Net funds

8,968

10,783

8,986

 

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