TIDMALM
RNS Number : 0756I
Allied Minds PLC
25 August 2016
25 August 2016
Allied Minds plc(1)
Half-Yearly Report for the six months ended 30 June 2016
Introduction
At Allied Minds we transform academic discoveries and U.S.
government research into commercial product breakthroughs.
Disruption of the status quo is what drives us. Our focus is to
sift through the thousands of opportunities we see each year to
single out just a few that we believe will disrupt existing large
and growing markets and business models. Whether it is at the
forefront of the shift to shared mobile spectrum, or building a
chemistry-based platform to modify existing chemical structures
serving multi-billion dollar markets, we find ourselves working in
the laboratories with our research partners to identify the best
opportunities capable of changing the world and making people's
lives better.
This focus on disruption has led to the formation of several key
subsidiaries which include Allied-Bristol Life Sciences, Federated
Wireless, Precision Biopsy, SciFluor Life Sciences and Spin
Transfer Technologies. Each is aimed at solving major problems in
multi-billion dollar markets and has taken significant strides
towards commercialisation. These particular subsidiaries have made
very recent progress including the raising of significant
third-party funding, expanding partnerships with industry leading
corporations or making significant steps in their research
programmes or clinical trials.
An integral part of our process to advance each of our
subsidiaries into product development and go-to-market activities
is to partner with some of the world's most prominent players in
their industries. We are proud that companies like Bristol-Myers
Squibb, Google, Intel and Lockheed Martin actively work with us to
help develop ecosystems in which the products and services of our
subsidiaries will serve. We are gratified that these partners see
the same opportunities we do.
What distinguishes us from other IP Commercialisation companies
is our unparalleled reach into U.S.-based research universities and
federal government laboratories, and the nature of our access and
relationships with these organisations. Our reach extends to over
160 research partners including Harvard University, Columbia
University, NYU and Virginia Tech, to name a few. In addition, we
enjoy favourable access to the Department of Defense and other U.S.
government agencies through a historic public-private partnership
which grants us special privileges and rights for technology
transfer. This partnership allows us access to disruptive
technologies that tend to be in a relatively advanced stage of
development which facilitates adaption for commercial purposes. It
has led to the formation of important subsidiaries like Federated
Wireless, HawkEye 360 and Percipient Networks, and licenses for
technology from Los Alamos National Laboratory, The Aerospace
Corporation and MITRE as a few examples.
Chris Silva, Allied Minds' CEO said, "We continue to deliver on
our strategy and our commitments to shareholders. Significant
capital was invested into new and existing subsidiary businesses
during the reporting period, with an increasing proportion of this
funding now being derived from third party investors. This is
testimony that the commercial value of our most promising
subsidiary companies is now being recognised within the sectors
they operate, a trend which is also helping us build yet further
partnerships with world class corporations. We continue to add to
our portfolio and several of our most promising companies are
making strong strides towards commercialisation. This progress
gives the Board every confidence for the future of the Group."
(1) Allied Minds plc is referred to as "Allied Minds" or "the
Company". "The Group" refers to Allied Minds plc and its
consolidated subsidiaries.
Period Highlights
Investment Highlights
-- The Group invested $31.8 million into new and existing
subsidiary businesses in the six months ended 30 June 2016. Three
subsidiaries raised an additional $99.2 million in funding from
third-party investors (in cash and binding commitments).
-- Federated Wireless closed a $22 million Series A preferred funding round.
-- Allied-Bristol Life Sciences (ABLS) entered into an agreement
with New York University (NYU) for ABLS III, LLC, d/b/a
i<BETA>eCa Therapeutics (ABLS III), to exclusively license
proprietary compounds from NYU School of Medicine that target the
Wnt signalling pathway.
-- The Group formed a new subsidiary, ABLS Capital, and secured
investment commitments of $80 million, to fund up to ten potential
lead optimisation programmes of promising drug development
opportunities. The remaining 20% of lead optimisation phase
investment, or up to an additional $20 million, will be funded by
Bristol-Myers Squibb Company (BMS).
Corporate Highlights
-- The Group (through Allied Minds Federal Innovations (AMFI))
entered into an agreement with The MITRE Corporation that gives
AMFI a first look and exclusive access to certain technologies in
MITRE's intellectual property (IP) portfolio that are of interest
to Allied Minds.
-- Allied Minds entered into a collaboration with Pacific
Northwest National Laboratory (PNNL, operated by Battelle) to
identify promising early-stage technologies for startup formation
and investment.
HY16 Financial Highlights
-- Net cash and investments* at 30 June 2016: $162.6 million (FY15: $194.8m).
-- Revenue: $1.3 million (HY15: $1.5m).
-- Net loss: $52.2 million (HY15: $39.9m), of which $41.2
million attributable to Allied Minds (HY15: $30.7m).
-- The Directors believe that there has been no significant
change in the Group Subsidiary Ownership Adjusted Value since 31
December 2015, and through 30 June 2016, which was $535.8 million
as at 31 December 2015.
* includes excess cash in form of fixed income securities.
Key Subsidiary Highlights
-- ABLS successfully completed the drug candidate feasibility
programme at ABLS II, LLC (ABLS II), and approved an investment of
$15 million to fund further development of the lead optimisation
programme.
-- Federated Wireless continued its rapid progress to make
mobile spectrum sharing a reality, with several notable
announcements in the period:
o It officially began the certification process with the Federal
Communications Commission (FCC) for its Spectrum Access System.
o It entered into an alliance with five other wireless industry
leaders to develop, promote, and market solutions in the 3.5 GHz
band. The other companies in the alliance are: Google, Intel,
Qualcomm Incorporated, Nokia, and Ruckus Wireless.
o It announced a partnership with Telrad Networks, a global
provider of TD-LTE broadband solutions to undertake a trial for a
comprehensive solution in compliance with the FCC Citizen's
Broadband Radio Service (CBRS) 3550-3700 MHz band rules.
o It also announced a partnership with Siemens to provide
spectrum access and management to current and future Siemens
customers in the 3.55 - 3.7 GHz CBRS frequency band.
-- Spin Transfer Technologies (STT) announced that it had
successfully demonstrated its Spin Transfer Magneto-Resistive
Random Access Memory (ST-MRAM) technology through the production of
a working prototype device, also proving that its advanced
prototyping magnetics processing line at its facility in Fremont,
California, is now fully operational. In addition, as STT
progresses towards completing its first major development phase, it
has expanded its team by adding two key executives, a Sr. Vice
President, Business Development and a Sr. Vice President, IC
Product Development.
-- Precision Biopsy announced that it submitted an application
to the U.S. Food and Drug Administration (FDA) for permission to
enroll patients in the Transrectal Ultrasound (TRUS) and MR/Fusion
arm of the company's study, expanding the scope of a clinical trial
for its ClariCore(TM) Biopsy System in prostate cancer
patients.
Board and Management Highlights
-- Jill Smith was appointed to the Board as an Independent Non-Executive Director. See below.
Post-period-end Highlights
-- SciFluor Life Science (SciFluor) announced that its
Investigational New Drug (IND) application to the Food and Drug
Administration (FDA) went into effect for SF0166 Topical Ophthalmic
Solution (SF0166), which enables the company to initiate two Phase
I/II clinical studies of SF0166 in age-related macular degeneration
(wet-AMD) and diabetic macular edema (DME) patients.
-- HawkEye 360 announced that it is collaborating with Lockheed
Martin to apply HawkEye 360's radio frequency (RF) detection and
mapping technology in new markets.
-- RF Biocidics announced that its APEX 85 chemical-free food
safety system received the Almond Board of California's Technical
Expert Review Panel (TERP) certification for pasteurisation. This
certification validates the company's chemical-free pasteurisation
processes for raw almonds at Sran Family Orchards at Kerman,
CA.
-- ABLS II completed its $15 million preferred share fundraising
for the lead optimisation programme to develop novel small molecule
therapeutics for the treatment of fibrotic and autoimmune
diseases.
-- The Group secured a $20 million debt facility from Silicon
Valley Bank (SVB) to provide an additional source of capital, which
represents an evolution in the Group's capital structure to support
its future growth and development.
For more information, please contact:
Allied Minds plc
Christopher Silva, Chief Executive Officer +1 617 419 1800
Joseph Pignato, Chief Financial Officer www.alliedminds.com
Citigate Dewe Rogerson
Patrick Donovan/Rob Newman +44 20 7638 9571
alliedminds@citigatedr.co.uk
Further information on Allied Minds is available on our website:
www.alliedminds.com
This 2016 half-yearly report release may contain statements that
are or may be forward-looking statements, including statements that
relate to the Company's future prospects, developments and
strategies. The forward-looking statements are based on current
expectations and are subject to known and unknown risks and
uncertainties that could cause actual results, performance and
achievements to differ materially from current expectations,
including, but not limited to, those risks and uncertainties
described in the principal risks and uncertainties of the 2016
half-yearly report. These forward-looking statements are based on
assumptions regarding the present and future business strategies of
the Company and the environment in which it will operate in the
future. Each forward-looking statement speaks only as at the date
of this half-yearly report Release. Except as required by law,
regulatory requirement, the Listing Rules and the Disclosure
Guidance and Transparency Rules, neither the Company nor any other
party intends to update or revise these forward-looking statements,
whether as a result of new information, future events or
otherwise.
This announcement contains inside information as defined in
Article 7 of the Market Abuse Regulation No. 596/2014.
Interim Management Report
Summary
Allied Minds is a diversified holding company at the forefront
of technology transfer and venture creation. Since 2006, we have
formed, funded, and operated life sciences and technology companies
based on breakthrough academic and federally-funded research and
development.
The Group currently has 25 subsidiary businesses at varying
stages of maturity across the life sciences and technology sectors.
These businesses are founded on technological innovations in
medical devices, biopharmaceuticals, cyber security, wireless
communications, semiconductors, low Earth orbit space, and food
safety markets.
The Board is encouraged by the performance of the Allied Minds'
business in the first half of 2016. As detailed in this half-yearly
report, Allied Minds has continued to make strong progress
executing against its strategy to identify early-stage technologies
and innovations from leading U.S. research facilities, form and
invest in companies with differentiated intellectual property
rights and key scientific, engineering and management talent, and
develop the resulting subsidiaries into potentially disruptive
businesses which address large and growing markets.
The Directors continue to be very encouraged by advancements
across the Group as we attract further investments into the
existing portfolio, welcome further partnerships with industry
leaders, and continue to achieve other financial, operational and
technical milestones.
Portfolio Review
Overview
During the first half of 2016, the Group invested $31.8 million
into the Company's new and existing subsidiary businesses. An
additional $99.2 million was raised from third party investors,
including BMS (in cash and binding commitments), in three
subsidiary fundraisings. Allied Minds currently has majority
ownership in, or operating control of, all of its 25 subsidiary
businesses. Below we provide an overview of our current existing
subsidiary businesses, including year formed, and Allied Minds'
ownership interest.
Subsidiary Businesses of Allied Minds
Ownership
Year Interest
Subsidiary Formed (1)(2) Overview
------------------------------- -------- ---------- -------------------------------------
Life Sciences
Allied-Bristol Life 2014 80.00% Created with Bristol-Myers
Sciences, LLC Squibb (BMS) to identify
and conduct preclinical
development of therapeutic
candidates which are intended
to be sold to BMS prior
to clinical development
ABLS I, LLC 2014 74.00% Proprietary platform and
associated small molecule
lead compounds known as
Antibody-Recruiting Molecules
(ARMs) provide a novel
approach for the treatment
of prostate cancer by
recruiting the body's
own immune system, developed
in the Yale University
laboratory of Dr. David
Spiegel
ABLS II, LLC 2014 35.95% Novel small molecule therapeutics
for the treatment of fibrotic
and autoimmune diseases,
developed in the Harvard
University laboratory
of Professor Malcolm Whitman
ABLS III, LLC, 2016 80.00% Proprietary compounds
d/b/a i<BETA>eCa Therapeutics developed by Dr. Ramanuj
Dasgupta at the NYU School
of Medicine that target
the Wnt signalling pathway
and nuclear beta catenin,
which plays a key role
in the development and
progression of a number
of cancers affecting large
numbers of patients
ABLS Capital, LLC 2016 30.25% Formed to fund 80% of
the lead optimisation
phase, with the remaining
20% funded by BMS, of
up to ten new drug candidates
that pass initial feasibility
studies funded by ABLS
Biotectix, LLC 2007 64.35% Aiming to enable the next
generation of implantable
electrostimulation and
sensing products through
the development of proprietary,
high-performance, conducting
polymer coatings
Cephalogics, LLC 2006 95.00% Developing a non-invasive,
bedside neuroimaging system,
which seeks to provide
real-time continuous ischemia
detection and perfusion
status in a variety of
stroke and Central Nervous
System (CNS) injury settings
CryoXtract Instruments, 2008 93.24% A suite of automated product
LLC solutions that seeks to
allow the global scientific
community to access valuable
frozen biosamples without
exposing them to damaging
freeze/thaw cycles
LuxCath, LLC 2012 98.00% A catheter-based real-time
tissue and lesion visualisation
technology for use during
cardiac ablation procedures
initially focused on atrial
fibrillation ablation
Precision Biopsy, Inc. 2008 68.32% A medical device platform,
Claricore(TM), utilising
tissue spectroscopy, which
seeks to distinguish tissue
characteristics in real-time
and to guide clinicians
toward areas of disease
for optimum therapy initially
focused on prostate cancer.
Developing focal therapy
system using Claricore
for abnormal tissue targeting
in the prostate
ProGDerm, Inc., 2008 90.38% A biologic that aims to
d/b/a Novare Pharmaceuticals represent a natural approach
to generate subcutaneous
fat to enhance the appearance
of skin using the body's
own processes; developing
novel peptides based on
the Rhamm protein for
inflammatory, fibrotic,
aesthetic and other market
opportunities
SciFluor Life Sciences, 2010 69.89% Developing a best-in-class
Inc. portfolio of compounds
based on the strategic
use of fluorine initially
focused on retinal, CNS,
fibrotic and pain related
diseases
SoundCure, Inc. 2009 84.62% Developed an FDA-cleared
consumer medical device
for tinnitus therapy offering
customised acoustic technology
Tinnitus Treatment 2013 100.00% Developing an online audiology-based
Solutions, Inc. telehealth business including
an expanding broad network
of corporate and provider
partners
Technology
Allied Minds Federal 2012 100.00% Through a series of public-private
Innovations, Inc. partnerships (PPPs) with
the U.S. federal government,
aims to develop and commercialise
the next generation of
transformative technologies
from U.S. federal research
institutions
BridgeSat, Inc. 2015 100.00% Developing an optical
connectivity system that
aims to increase the speed,
security and efficiency
of data transmissions
from low Earth orbit (LEO)
satellites, unmanned aerial
systems, and remote terrestrial
infrastructure compared
to traditional radio frequency
solutions
Federated Wireless, 2012 73.02% A leader in the emerging
Inc. market for shared spectrum,
their CINQ cloud-based
platform provides coordinated
shared spectrum resources
to enterprise customers,
network operators, and
service providers
Foreland Technologies, 2013 100.00% A cyber security platform
Inc. company which aims to
discover, incubate and
commercialise emerging
technologies with greater
speed and agility than
the rest of the market
HawkEye 360, Inc. 2015 75.00% Building a constellation
of small satellites in
low Earth orbit to generate
reports on wireless signals
that can be used to track
and monitor global transportation
networks and assist with
emergencies
Optio Labs, Inc. 2012 81.23% Developer of mobile security
technologies for the evolving
cyber operating environment
Percipient Networks, 2014 100.00% Developing threat-intelligence
LLC driven cloud-based cyber
security technologies
for proactive enterprise
network defence
RF Biocidics, Inc. 2008 67.14% Developer of equipment
that seeks to disinfect
food from insects and
pathogens through a process
that does not use chemicals
Seamless Devices, Inc. 2014 79.12% Developer of semiconductor
devices using a novel
approach to analog-to-digital
signal processing based
on switched-mode signal
processing technology
and algorithms
Spin Transfer Technologies, 2007 48.40% MRAM computer memory that
Inc. is being developed with
the aspiration of becoming
a leading universal memory
technology to address
a segment of the $60 billion
per annum worldwide computer
memory market
Whitewood Encryption 2014 100.00% Developer of the next-generation
Systems, Inc. systems of data encryption
that leverage advanced
quantum cryptography technologies
Notes:
(1) Ownership interests are as at 24 August 2016 (being the
latest practicable date prior to the publication of this document),
and are based upon percentage interest of issued and outstanding
common shares and preferred shares (on an as-converted into voting
common share basis); provided, that for ABLS I, ABLS II, ABLS III
and ABLS Capital, the disclosed percentage represents the Company's
direct or indirect economic interest.
(2) In 2016, Allied Minds ceased operations at its subsidiary
SiEnergy Systems, LLC (SiEnergy). The company was formed to develop
thin film Solid Oxide Fuel Cell (SOFC) technology. Allied Minds
determined that the technology would not meet key milestones which
were designed to measure technological and commercial progress
within a reasonable timeframe and within a reasonable budget, and
that the market for clean energy alternatives continued to be
potentially adversely impacted by the low cost of traditional
energy sources.
Current Period Notable Developments
The following is a list of notable developments at the Company
and certain key subsidiaries during the period:
Allied Minds plc
During the first six months of 2016, there were several
important developments at the Company, which included:
-- The MITRE Corporation, a not-for-profit organisation that
operates multiple federally-funded research and development centres
(FFRDCs), entered into an agreement with AMFI that gives AMFI a
first look and exclusive access to certain technologies in MITRE's
intellectual property (IP) portfolio that are of interest to AMFI.
The Group's relationship with MITRE is one of several arrangements
that the Group has with federal research labs, each of which is
structured to help create a platform for technology transfer, as
well as new company creation.
-- Pacific Northwest National Laboratory (PNNL, operated by
Battelle) entered into a collaboration with Allied Minds to
identify promising early-stage technologies for startup formation
and investment. These efforts will help build processes for smooth,
efficient transfer of emerging research to the commercial
marketplace. PNNL has long been a key leader in software, energy,
environmental, and national security innovation, and its
researchers have been consistent winners of R&D 100 Awards. It
is also a key site for LabCorps, the Department of Energy's
specialised training curriculum aimed at accelerating technology
transfer from national labs into the commercial sector.
-- Jill Smith was appointed to the Board as an Independent
Non-Executive Director. Jill has more than 25 years of experience
as an international business leader, including 16 years as Chief
Executive Officer of private and public companies in the technology
and information services markets. Most recently, Jill served as
Chairman, Chief Executive Officer and President of DigitalGlobe
Inc. (NYSE:DGI), a global provider of satellite imagery products
and services. Currently, Jill serves as an independent director on
the Boards of Directors of Endo International plc, Hexagon and JM
Huber.
-- Credit Suisse International was appointed to act as the
Group's joint corporate broker alongside Numis Securities
Limited.
Allied-Bristol Life Sciences, LLC
Allied-Bristol Life Sciences, LLC (ABLS) is a drug discovery and
development company created in August 2014 through a partnership
between Allied Minds and Bristol-Myers Squibb (BMS). The company's
mission is to create novel drug candidates against serious diseases
with large market potential. These include fibrosis,
cardiovascular, immunosciences, immuno-oncology, oncology, and
genetically-defined diseases.
The first six months of 2016 were very busy for ABLS. During
this period it formed one new subsidiary, ABLS III (d/b/a
i<BETA>eCa Therapeutics), and in May, it announced that ABLS
II, which is focused on the treatment of fibrotic diseases as an
inhibitor of Prolyl sRNA Synthetase, had successfully completed its
initial drug candidate feasibility programme. Also during the
period, Allied Minds formed ABLS Capital, LLC (ABLS Capital) to
secure funding for further drug development of ABLS-sourced drug
candidates.
i<BETA>eCa Therapeutics exclusively licensed IP from New
York University School of Medicine (NYU). NYU researchers have
identified novel inhibitors of nuclear beta catenin, a key player
in the Wnt signalling pathway and a major driver of various
cancers. These molecules are targeted specifically against nuclear
(versus cytoplasmic) beta catenin with potentially better safety
and efficacy profiles. The company's objective is to develop
molecules with improved potency, efficacy and better pharmaceutical
properties.
ABLS Capital was formed to provide the significant funding
required to move up to ten (10) ABLS subsidiaries through the
optimisation phase where pre-clinical development work is
completed. The $80 million fund of committed capital is to be
invested in concert with the $20 million committed by BMS. ABLS
owned subsidiaries that successfully complete their initial
feasibility programme are eligible to benefit from new investments
made by ABLS Capital and BMS, to fund further pre-clinical drug
development at such subsidiary through the optimisation phase.
Successful completion of such lead optimisation programme at each
ABLS subsidiary is the crucial next step prior to BMS exercising
its right to acquire such subsidiary.
Finally, the completion of the feasibility programme for ABLS
II, the ABLS subsidiary focused on the treatment of fibrotic
diseases as an inhibitor of Prolyl sRNA Synthetase, is a
significant step forward. The development of these novel small
molecule therapeutics is based upon intellectual property developed
in the Harvard University laboratory of Professor Malcolm Whitman.
The next phase for this company, which could lead to its
acquisition by BMS, is completing an optimisation programme. An
additional $15 million to fund this further development has been
contributed by ABLS Capital and BMS combined.
Federated Wireless, Inc.
Federated Wireless, Inc. (Federated Wireless) provides
innovative cloud-based wireless infrastructure solutions to extend
the access and capacity of carrier networks through sharing of
surplus wireless spectrum amongst multiple tiers of users. The
allocation of spectrum employing a shared-economy model is hugely
disruptive to the status quo of large spectrum block auctions.
Federated Wireless is well positioned to take advantage of this
movement given its proprietary sensor technology (Environmental
Sensor Capability or ESC), which unlocks access to surplus 3.5 GHz
spectrum owned by the U.S. military, and cloud based spectrum
access system (SAS). During the first six months of 2016, there
were several important milestones reached by the company.
In February 2016, Federated Wireless announced that it had
raised $22.0 million of new equity in a Series A Preferred round.
The raise will enable it to complete its SAS and ESC certification
process, conclude the development and accelerate the
commercialisation of its cloud-hosted CINQ platform, and conduct
field trials throughout 2016 and 2017 with technology partners to
include Ruckus Wireless, Google, Intel, Qualcomm, and Nokia. Allied
Minds invested $5.0 million in this fundraising, and third-party
investment totalled $17.0 million.
Also in February 2016, Federated Wireless and five other
companies announced an alliance to build an ecosystem for the 3.5
GHz band (or the CBRS band). The alliance includes industry
leaders: Google, Intel, Nokia, Qualcomm and Ruckus Wireless. The
six companies aim to build a robust ecosystem of industry
participants and make CBRS solutions as widely available as
possible.
In May 2016, Federated Wireless announced that it officially
began the certification process with the Federal Communications
Commission (FCC) for its SAS. Certification is the final phase of
the regulatory process as the company prepares its solution for
commercial use. Federated Wireless continues to work closely with
the FCC and leads the WInnForum in helping to establish standards
for the 3.5 GHz band and shared spectrum.
Finally in June, the first two commercial agreements for
Federated Wireless were announced with both Siemens and Telrad.
Both companies currently operate in the 3.65 GHz band and will be
early adopters of the FCC's CBRS (Citizens Broadband Radio Service)
rules in order to evolve and expand their networks using the
Federated Wireless CINQ XP product. These collaborations re-affirm
that the CBRS model is a commercially viable way to allocate and
manage limited spectrum resources.
HawkEye 360, Inc.
HawkEye 360, Inc. (HE360) is building a constellation of small
low Earth orbit (LEO) satellites capable of detecting wireless
signals that can be used to track and monitor global transportation
networks, assist with emergencies and provide other data analytics
and reporting services to a broad range of customers. What is
unique about the system is that it is capable of identifying radio
frequency (RF) signals, locating them and then visualising the
information in a way that no one has done before. Being able to
provide this information globally and on a timely basis is
distinctive and offers a solution that current terrestrial based
systems or simple photos cannot provide.
Since 1 January 2016, HE360 reported four major events. The
first was the formation of its advisory board in January which is
comprised of several individuals including a former Director of the
National Reconnaissance Office and a former Secretary of Homeland
Security. The guidance that HE360 receives from this group is
invaluable as it rapidly works to build its system and achieve
commercialisation.
In April 2016, HE360 made two key additions to the team by
hiring a vice president of sales and vice president of engineering.
The addition of these two critical hires to the leadership team has
helped the company to accelerate the development of its space-based
RF mapping and analytics system to serve both commercial
enterprises and governments.
In May 2016, HE360 took a critical step toward the launch and
operation of its constellation system by announcing a partnership
with Deep Space Industries to manufacture its Pathfinder small
satellite cluster. Securing this partnership, only a few months
after the formation of HE360 in September 2015, is key for the
scheduled launch and testing of the system in late 2017. Once the
constellation is launched and operational, HE360 will be operating
the world's first privately-funded constellation of LEO small
satellites capable of collecting data and generating reports on
geolocated wireless signals.
Finally, in July 2016 (post-period), HE360 announced that it is
collaborating with Lockheed Martin to apply HE360's RF detection
and mapping technology in new markets. The two companies agreed to
work together to apply HE360's space-based RF data and analytics
capabilities in new mission solutions, potentially extending the
adoption of the technology across multiple customer segments and
new markets.
Precision Biopsy, Inc.
Precision Biopsy, Inc. (Precision Biopsy) is focused on a new
approach to an important medical procedure that has been largely
unchanged in nearly thirty years - even though it is linked to one
of the most frequently diagnosed cancers in American men, with
about a million such procedures conducted each year in the U.S.
Prostate biopsies are still generally performed as random, 12-point
searches with an ultrasound probe and a simple, spring-loaded
needle gun. The samples are then sent to pathology for analysis,
where it can take several days or longer to get the results.
That is why Precision Biopsy invented the ClariCore(TM) Biopsy
System. Its real-time classification of prostate tissue is being
designed to offer immediate results for the 45% to 50% of men being
biopsied who do not have prostate cancer. For everyone else,
ClariCore is being designed to reduce the number of samples
requiring analysis to only those it classifies as suspicious.
During the first six months of 2016, Precision Biopsy expanded
enrollment of patients in Cohort A of its clinical trial for the
ClariCore system.
In March, Precision Biopsy submitted an Investigational Device
Exemption to the FDA to expand the clinical trial by adding a
second arm to the study enrolling patients for the Transrectal
Ultrasound (TRUS) and MR/Fusion study. Precision Biopsy is now
moving forward to enroll patients in this arm of the study.
Also during the first six months of 2016, Precision Biopsy
developed its Focal Therapy strategy and assembled a team of
experts to advise in areas such as prostate cancer, MR/Fusion,
product development and marketing.
Finally, Precision Biopsy continued to prosecute its IP
portfolio for its ClariCore system and its Focal Therapy
programme.
RF Biocidics, Inc.
RF Biocidics, Inc. (RFB) manufactures equipment and processes
that use specialised radio frequency (RF) technology to safely
eliminate harmful contaminates from foods. The resulting process is
an effective, chemical-free and environmentally friendly
alternative to conventional steam heat or chemical pasteurisation
methods. Through the first six months of 2016, RFB recorded sales
of $0.2 million as compared to $0.5 million during the same period
one year earlier. These results were primarily driven by (i) delays
in obtaining regulatory approvals for a new generation, higher
capacity machine and (ii) delays in product modifications to enable
the processing of certain freshly harvested raw materials.
Subsequent to the period end, in July 2016, RFB announced that
the Almond Board of California's Technical Expert Review Panel
approved the non-roasting bulk pasteurisation processes from its
APEX 85 Food Safety System. This certification validates RFB's
chemical-free pasteurisation processes for raw almonds at Sran
Family Orchards in Kerman, CA and is important as RFB can now help
farmers, growers and food producers navigate a new era of food
safety and federal regulation. Consumer demand and the U.S. Food
Safety Modernization Act of 2010 are guiding the food industry
towards organic, chemical-free processes, so we believe that the
APEX 85 TERP certification at Sran Family Orchards allows for a
compelling alternative for California's 6,800 almond growers
because of minimal change to the taste and texture of the nut.
SciFluor Life Sciences, Inc.
SciFluor Life Sciences, Inc. (SciFluor) engages in drug
discovery and development by the strategic incorporation of
fluorine and is building a portfolio of proprietary fluorinated
compounds seeking to serve billion dollar markets. What makes
fluorine modification of an underlying chemical structure of a drug
special has to do with the very nature of fluorine. Adding fluorine
to an existing compound has been demonstrated to improve potency,
selectivity, rates of absorption and metabolic stability in many
cases. The carbon-fluorine bond is the strongest bond in organic
chemistry and is widely used to block sites of metabolism to
improve drug half-life. The electron-withdrawing effect of a
fluorine substituent impacts the basicity of neighboring donor
atoms which allows for stronger binding to receptors. Finally, the
lipid-loving feature of the fluorine atom can also improve oral and
topical absorption, as well as brain penetration.
SciFluor's principal products are comprised of two lead
compounds SF0166 and SF0034.
Currently serious eye conditions including neovascular
age-related macular degeneration (wet-AMD), diabetic macular edema
(DME) and retinal vein occlusion (RVO) are treated using drugs
requiring injection into the eye. These combined disease states
represent an estimated 50 million patients worldwide and an
estimated $8 billion current market value. SF0166 is a patented
small molecule integrin antagonist wholly owned by SciFluor
intended to treat these serious diseases. However, what makes
SF0166 disruptive is that it is a topical drug (administered using
eye drops) intended to replace drugs requiring injection into the
eye.
SF0034, a KCNQ2/3 modulator and a fluorinated derivative of
retigabine, is also patented and is wholly owned by SciFluor.
SF0034 could eliminate key safety issues associated with retigabine
and serve markets totaling $5.0 billion in aggregate including:
epilepsy/seizures; tinnitus; amyotrophic lateral sclerosis (ALS or
Lou Gehrig's disease); and channelopathies (genetically-defined
rare diseases).
In February 2016, SciFluor was granted U.S. Patent No. 9,266,884
covering methods of using SF0166 in the treatment of a range of
diseases including AMD, DME and RVO. SciFluor had been previously
granted U.S. Patent 8,901,144 covering compositions of matter that
include SF0166.
In July 2016 (post-period), the Investigational New Drug (IND)
Application to the Food and Drug Administration (FDA) went into
effect for SF0166 Topical Ophthalmic Solution (SF0166). This
enables the company to initiate clinical testing of SF0166 in AMD
and DME patients.
Spin Transfer Technologies, Inc.
Electronic memory devices used in today's computers are
specialised to handle different computing and data storage tasks.
Non-volatile memories, such as Flash, retain information after
power has been turned off, but Flash memory suffers from slow write
speed and poor endurance. High-speed memories, such as DRAM, offer
greater read and write performance, but DRAM is volatile and
requires significantly higher power to operate. In addition, both
Flash and DRAM have questionable scalability to finer process
geometrics.
Magnetoresistive random access memory (MRAM) is a promising
technology for the next generation of memory applications providing
the non-volatility of Flash and high read and write performance of
DRAM. Spin Transfer Technologies, Inc. (STT) was formed to develop
and commercialise OST-MRAM(TM), its spin transfer MRAM technology
first discovered in the labs at our partner, New York
University.
During the first six months of 2016, STT announced that it had
successfully demonstrated its Spin Transfer Magneto-Resistive
Random Access Memory (ST-MRAM) technology through the production of
a working prototype device. Supported by completion of its
'magnetic back end' wafer fabrication clean room at the end of
2015, the company's engineering development cycles have strongly
accelerated, reliably achieving 2-3 week engineering cycle time for
wafers, reduced by greater than 75% in comparison to the typical
two month or longer cycle time that was the operating norm prior to
the clean room completion. This has permitted the company to make
rapid strides in its planned migration to perpendicular magnetic
tunnel junction (pMTJ) technology. Specifically, the company has
produced its first wafers, based on its internally developed
'Diagnostic Memory 1' (DM1) design and using pMTJ technology,
demonstrating complete memory operations. These first functional
pMTJ DM1 wafers have completed an initial parametric evaluation
indicating performance approaching readiness for external sampling
by potential customers and partners, the company's key technology
objective for 2016. The company's focus on further wafer process
improvements and prototyping, as well as exhaustive evaluation of
the pMTJ technology and DM1 chip performance, are the key
activities planned for the second half of 2016, intended to enable
fruitful chip sampling of the DM1 technology demonstrator to target
third parties before year end.
In addition, STT has completed development of a chip design and
related prototyping collateral that will enable assessment and
demonstration of the emerging pMTJ technology at megabit-level
densities with accompanying performance and yield statistics. This
'megabit density' technology demonstration, along with the pMTJ DM1
samples, are essential enablers to the company's initial market
outreach. The company currently plans to complete prototypes and
associated performance assessments at 'megabit density' in the
second half of 2016.
The above progress signals the anticipated impending completion
of STT's first major phase of development, resulting in a 'baseline
pMTJ technology' that the company believes will be both viable
against competitors (with typical incremental improvements) and
highly credible in securing an advanced CMOS manufacturing partner,
strategic joint development partner(s), and early stage license
agreements. In order to prepare for this transition, the company
recently announced that it has added two new key executives hiring
a Sr. Vice President, IC Product Development, and also a Sr. Vice
President, Business Development.
The company's early stage cooperative development arrangements
with its Asian CMOS foundry partner and a large storage systems
manufacturer have progressed as anticipated. STT plans to expand
one or both of those relationships, as well as add additional
relationships, as enabled by the impending readiness of the
'baseline pMTJ technology'.
Post-period-end Notable Developments
In addition to the post-period developments discussed above
regarding HE360, RFB and SciFluor, the following important
developments have occurred since the period-end:
-- ABLS II completed its $15 million preferred share fundraising
for the lead optimisation programme to develop novel small molecule
therapeutics for the treatment of fibrotic and autoimmune
diseases.
-- The Group secured a $20 million debt facility from Silicon
Valley Bank (SVB) to provide an additional source of capital, and
represents an evolution in the Group's capital structure to support
its future growth and development.
Outlook
While the risks inherent in early-stage businesses are always
present, the Board remains confident that there are significant
opportunities to form, fund, manage and build companies to
undertake research and product development and commercialise
scientific research and innovations emerging from U.S. universities
and U.S. federal research institutions and laboratories. The
favourable long-term macro environment, coupled with the Group's
access to capital and diversified intellectual property assets,
continued success against commercial milestones and development
partnerships, and portfolio of maturing subsidiary companies, gives
the Directors confidence that the Group remains well placed to
achieve its objectives.
Financial Review
Condensed Consolidated Statement of Comprehensive Loss
For the six months ended: 30 June 2016 30 June 2015
$'000 $'000
---------------------------------------------- ------------- -------------
Revenue 1,286 1,475
Cost of revenue (1,255) (746)
Selling, general and administrative expenses (25,831) (20,684)
Research and development expenses (25,542) (19,663)
Finance cost, net (872) (239)
Loss for the year (52,214) (39,857)
Other comprehensive loss, net of tax (169) (12)
------------- -------------
Total comprehensive loss (52,383) (39,869)
============= =============
Revenue was lower by $0.2 million, at $1.3 million for the six
months ended 30 June 2016 (HY15: $1.5m), when compared to the same
period in the prior year. This decrease is primarily attributable
to the lower product revenue at RF Biocidics by $0.3 million,
offset by increase in revenue at CryoXtract by $0.2 million, and
Federated Wireless by $0.1 million. Cost of revenue at $1.3 million
for the six months ended 30 June 2016 (HY15: $0.7m) was higher as a
percentage of revenue, when compared to the same period in the
prior year, as a result of fair value inventory adjustments at RF
Biocidics and CryoXtract.
Selling, general and administrative (SG&A) expenses
increased by $5.1 million, to $25.8 million for the six months
ended 30 June 2016 (HY15: $20.7m), of which $2.6 million relates to
personnel expenses increasing to $12.7 million (HY15: $10.1m) due
to overall higher headcount, $0.5 million relates to an increase in
sales and marketing costs to $1.6 million (HY15: $1.1m), $0.4
million relating to professional services increasing to $3.8
million (HY15: $3.4m) and $1.4 million increase in non-cash charges
for depreciation and amortisation to $3.1 million (HY15: $1.7m).
The increase is attributed to the continued overall growth of the
Group compared to the same period in the prior year, namely by
increase in headcount, selling, advertising and go-to market
initiatives, and associated travel costs.
Research and development (R&D) expenses increased by $5.8
million, to $25.5 million for the six months ended 30 June 2016
(HY15: $19.7m). The increase is attributed to the overall growth of
the Group's research and development activities, attributed to
higher development activities at Federated Wireless (+$1.8m), Optio
Labs (+$1.2m) SciFluor (+$1.0m) and Spin Transfer Technologies
(+$1.9m). This increase was reflected by higher R&D headcount,
related employee costs and increased external R&D professional
services costs. Ramp up in research and development activities at
some of the younger portfolio companies in the ABLS family
(+$1.2m), HawkEye 360 (+$0.6m), and BridgeSat (+$0.3m) has also
contributed to this increase.
As a result of the above discussed factors, total comprehensive
loss for the year increased by $12.4 million to $52.4 million for
the six months ended 30 June 2016 (HY15: $39.9m).
Condensed Consolidated Statement of Financial Position
As of the period ended: 30 June 2016 31 December 2015
$'000 $'000
------------------------------------ ------------- -----------------
Non-current assets 65,664 92,784
Current assets 153,133 158,427
------------- -----------------
Total assets 218,797 251,211
============= =================
Non-current liabilities 630 863
Current liabilities 124,347 108,974
Equity 93,820 141,374
Total liabilities and equity 218,797 251,211
============= =================
Significant performance-impacting events and business
developments reflected in the Group's financial position at the
half year end include:
-- Non-current assets decreased by $27.1 million, to $65.7
million at 30 June 2016 (FY15: $92.8m), mainly due to the decrease
of $26.4 million in the balance of excess cash invested in fixed
income securities in the form of government agencies and corporate
bonds. Property and equipment decreased by $0.5 million to $33.7
million as of 30 June 2016 (FY15: $34.2m), mainly reflecting
capital purchases for the period of approximately $2.2 million, net
of depreciation of $2.7 million. Intangible assets, net as of 30
June 2016, remained relatively consistent at $4.2 million compared
to $4.4 million as of 31 December 2015, decreasing as a result of
their amortisation over the six months period.
-- Current assets decreased by $5.3 million, to $153.1 million
as of 30 June 2016 (FY15: $158.4m), mainly due to the decrease in
cash and cash equivalents of $7.2 million, offset by the increase
of $1.4 million in the short-term investments of excess cash in the
form of fixed income securities with maturities less than one year
and an increase in inventories of $1.5 million mainly from
completion of systems at RF Biocidics. Cash and cash equivalents
decreased by $7.2 million to $98.4 million at 30 June 2016 from
$105.6 million at 31 December 2015 due to operating cash outflows
of $48.6 million, acquisition of property and equipment and
intangibles of $2.4 million, and $0.1 million from repayment of the
loan at CryoXtract, offset by maturity into cash of $25.0 million
of the investments in fixed income securities, $17.0 million
proceeds from the financing round at Federated Wireless in January
2016 and $1.9 million from issuance of share capital in Allied
Minds, ABLS Capital and HawkEye 360.
-- Non-current liabilities remained relatively consistent at
$0.6 million as of 30 June 2016, compared to $0.9 million at 31
December 2015.
-- Current liabilities increased by $15.3 million, to $124.3
million at 30 June 2016 (FY15: $109.0m) mainly reflecting the
increase of $17.0 million from the recognition of subsidiaries
preferred shares liability from the financing round at Federated
Wireless and $1.8 million of fair value adjustment in subsidiary
preferred shares liabilities at Spin Transfer, SciFluor, Precision
Biopsy and Federated Wireless over the period, offset by the
decrease in trade and other payables largely from the release of
$4.1 million in bonus accruals at 31 December 2015 that were paid
out in January of the current period.
-- Net equity decreased by $47.6 million, to $93.8 million at 30
June 2016 (FY15: $141.4m) reflecting the net comprehensive loss for
the period of $52.4 million, offset by $1.7 million of cash
proceeds from issuance of share capital in ABLS Capital and HawkEye
360, proceeds from the exercise of options in Allied Minds of $0.2
million and a $2.9 million charge from equity-settled share based
payments.
Condensed Consolidated Statement of Cash Flows
For the six months ended: 30 June 2016 30 June 2015
$'000 $'000
----------------------------------------------------- ------------- -------------
Net cash outflow from operating activities (48,601) (39,312)
Net cash inflow/(outflow) from investing activities 22,622 (94,401)
Net cash inflow from financing activities 18,836 25,115
Net decrease in cash and cash equivalents (7,143) (108,598)
Cash and cash equivalents at beginning of period 105,555 224,075
------------- -------------
Cash and cash equivalents at end of the period 98,412 115,477
============= =============
The Group's net cash outflow from operating activities of $48.6
million in the six months ended 30 June 2016 (HY15: $39.3m) was
primarily due to the net operating losses for the period of $51.3
million (HY15: $39.6m), plus increase in working capital and other
finance costs of $3.2 million (HY15: $4.6m), offset by adjustment
for non-cash accounting entries such as depreciation, amortisation,
and share-based expenses of $6.0 million (HY15: $4.9m).
The Group had a net cash inflow from investing activities of
$22.6 million in the six months ended 30 June 2016 (HY15: $94.4m
outflow) predominately reflecting the maturity of fixed income
securities into cash inflows of $25.0 million, as compared to the
$84.1 million outflows from investment of excess cash in fixed
income securities during the same period last year of funds raised
in the initial public offering (IPO). The increase was offset by
purchases of property and equipment of $2.1 million (HY15: $9.5m),
which were lower in the first half of 2016 compared to the same
period last year due to capital purchases at Spin Transfer
Technologies in the prior year to support the operations in the
newly built 'clean room' facility.
The Group's net cash inflow from financing activities of $18.8
million in the six months ended 30 June 2016 (HY15: $25.1m) largely
reflects the net proceeds of $17.0 million from the financing round
at Federated Wireless received in January and issuance of share
capital at ABLS Capital and HawkEye 360 of $1.7 million, as
compared to $25.2 million net inflows from the SciFluor financing
in April 2015.
Total cash and deposits, including the investments in fixed
income security, in total reflecting the available funds to the
Group for future investments decreased to $162.6 million at 30 June
2016 from $194.8 million at 31 December 2015.
See Note 8 of Notes to the Condensed Consolidated Interim
Financial Statements for information regarding related party
transactions.
The Group's strategy is to maintain healthy, highly liquid cash
balances that are readily available to support the activities of
its subsidiaries in terms of working capital, maintaining the level
of research and development activities required to achieve the set
milestone goals, and acquiring capital equipment where necessary to
support those research and development activities. To further
minimise its exposure to risks, the Group does not maintain any
material borrowings or cash balances in currencies other than U.S.
dollars.
Portfolio Overview and Valuation
The Group has established relationships with many of the most
prestigious academic research institutions across the United
States. Allied Minds aims to gain direct access to technologies at
the forefront of research by working to develop its existing
university network and selectively adding highly regarded research
centres across the U.S.
In addition, the Group has established relationships with U.S.
Department of Defense laboratories and other federal agency
laboratories, such as the Department of Energy, with the objective
of systematically commercialising the technological inventions
developed in the corresponding U.S. federal government laboratory.
The Group has reviewed technologies and innovations from 160
research institutions in recent periods.
The Group currently has 25 subsidiary businesses at varying
stages of maturity across the life sciences (14 companies) and
technology (11 companies) sectors. These businesses are founded on
technological innovations in medical devices, biopharmaceuticals,
cyber security, wireless communications, semiconductors, low Earth
orbit space, and food safety markets. During the period, the Group
formed two new subsidiaries, i<BETA>eCa Therapeutics and ABLS
Capital.
Approximately $391.3 million of capital has been allocated to
the Group's active subsidiary businesses, of which $239.4 million
was raised and deployed by Allied Minds, $146.7 million has been
contributed by third party investors directly into the subsidiary
companies and $5.2 million has been raised by subsidiaries in the
form of loans from banks and federal grants.
All of the Company's subsidiary companies are currently
controlled and therefore fully consolidated in the Company's
consolidated financial statements prepared in accordance with
International Financial Reporting Standards (IFRS). As a result,
the Consolidated Statements of Financial Position incorporated
within the Company's consolidated financial statements do not
include current valuations of the Company's subsidiary
companies.
At the close of each annual financial period, the Directors
approve the total value of all subsidiary businesses in the Group
which is used to derive the "Group Subsidiary Ownership Adjusted
Value". The Group Subsidiary Ownership Adjusted Value was $535.8
million as at 31 December 2015 (which reflects the increase in
valuation as a result of the $22.0 million Series A preferred stock
financing completed by Federated Wireless in January 2016). The
Directors believe that there has been no significant change in the
Group Subsidiary Ownership Adjusted Value since 31 December 2015,
and through 30 June 2016.
There can be no guarantee that the aforementioned valuation of
the Group will be considered to be correct in light of the future
performance of the various Group businesses, or that the Group
would be able to realise proceeds in the amount of such valuations,
or at all, in the event of a sale by it of any of its
subsidiaries.
The Group has historically reported as supplementary
information, including in the 2015 Annual Report and Accounts,
ownership adjusted valuations of each of the Group's top ten
subsidiary businesses by value, as well as an aggregated
sum-of-the-parts valuation of all the Group's subsidiary
businesses. The Group is considering revising its disclosure in
future reports to limit the disclosure to a single sum-of-the-parts
number for its life sciences companies, and a second
sum-of-the-parts number for its technology companies. The Board is
evaluating whether the disclosure of the top ten individual
valuations may cause competitive harm to the Group, and whether the
individual valuations and the short-term fluctuations of such
valuations are reliable and relevant information that is useful to
shareholders.
Principal Risks and Uncertainties
The principal risks and uncertainties surrounding the Group
businesses are set out in detail in the Risk Management section of
the Strategic Report included in the 2015 Annual Report and
Accounts. There have not been any significant changes in the nature
of the risks set forth therein that will affect the next six months
of the financial year, therefore, such risks are applicable to the
remaining six months of the financial year. Those risks can be
summarised as follows:
-- The science and technology being developed or commercialised
by the Group's businesses may fail and/or the Group's business may
not be able to develop their intellectual property into
commercially viable products or technologies. There is also a risk
that some of the subsidiary businesses may fail or not succeed as
anticipated, resulting in an impairment of the Group's value.
-- The Group expects to continue to incur substantial
expenditure in further research and development activities of its
businesses. There is no guarantee that the Group will become
profitable and, even if it does, it may be unable to sustain
profitability.
-- If any of the Group's relationships with U.S. universities
and federal government institutions were to break down or be
terminated or expire, then the Group would lose any rights that it
has to act as a private sector partner in the commercialisation of
intellectual property being generated by such universities, other
research-intensive institutions or U.S. federal research
institutions.
-- A majority of the Group's intellectual property relates to
technologies originated in the course of research conducted in, and
initially funded by, U.S. universities or other federally-funded
research institutions. Although the Group has been granted
exclusive licenses to use this intellectual property, there are
certain limitations inherent in these licenses, for example as
required by the Bayh-Dole Act of 1980.
-- The Group currently has in place cooperative research and
development agreements with certain U.S. Department of Defense
laboratories and federal funded government institutions. Certain
regulatory measures apply to these agreements which restrict the
export of information and material that may be used for military or
intelligence applications by a non- U.S. person.
-- The Group operates in complex and specialised business
domains and requires highly qualified and experienced management to
implement its strategy successfully. All of the operations of the
Group and its subsidiary businesses are located in the United
States, which is a highly competitive employment market. There is a
risk that the Group may lose key personnel, or fail to attract or
retain new personnel. Furthermore, given the relatively small size
of the senior management at the corporate level, the Group is
reliant on a small number of key individuals.
-- A large proportion of the overall value of the Group's
businesses may be concentrated in a small proportion of the Group's
businesses. If one or more of the intellectual property rights
relevant to a valuable business were terminated, this would have a
material adverse impact on the overall value of the Group's
businesses.
-- Clinical studies and other tests to assess the commercial
viability of a product are typically expensive, complex and
time-consuming, and have uncertain outcomes. If the Group fails to
complete or experiences delays in completing tests for any of its
product candidates, it may not be able to obtain regulatory
approval or commercialise its product candidates on a timely basis,
or at all.
-- The Group expects to remain viable through December 2017
given its current cash and financial position. However, if the
Group is unable to raise capital, generate sufficient revenue,
appropriately manage expenses, or exit any of its existing Group
businesses prior to the end of such period, then the Group's
business, financial condition, results of operations, prospects and
future viability could be adversely affected.
A copy of the 2015 Annual Report and Accounts is available on
the Company's website at www.alliedminds.com under "Investors -
Reports & Presentations".
Condensed Consolidated Statement of Comprehensive Loss
For the six months ended: Note 30 June 2016 30 June 2015
(restated,
see note 1)
$'000 $'000
---------------------------------------------------------------- ----- ------------- -------------
Revenue 1,286 1,475
Operating expenses:
Cost of revenue (1,255) (746)
Selling, general and administrative expenses (25,831) (20,684)
Research and development expenses (25,542) (19,663)
Operating loss (51,342) (39,618)
Finance income 1,460 553
Finance cost (520) (24)
Finance cost from IAS 39 fair value accounting (1,812) (768)
Finance cost, net (872) (239)
Loss before tax (52,214) (39,857)
Taxation _ _
Loss for the period 2 (52,214) (39,857)
Other comprehensive loss:
Items that may be reclassified subsequently to profit or loss:
Foreign currency translation differences (169) (12)
Other comprehensive loss, net of taxation (169) (12)
------------- -------------
Total comprehensive loss (52,383) (39,869)
------------- -------------
Loss attributable to:
Equity holders of the parent (41,154) (30,659)
Non-controlling interests 6 (11,060) (9,198)
(52,214) (39,857)
------------- -------------
Total comprehensive loss attributable to:
Equity holders of the parent (41,323) (30,671)
Non-controlling interests (11,060) (9,198)
(52,383) (39,869)
============= =============
Loss per share $ $
Basic 3 (0.19) (0.14)
------------- -------------
Diluted 3 (0.19) (0.14)
------------- -------------
Condensed Consolidated Statement of Financial Position
As of the period ended: Note 30 June 2016 31 December 2015
$'000 $'000
---------------------------------------------- ----- ------------- -----------------
Non-current assets
Property and equipment 33,655 34,173
Intangible assets 4,153 4,384
Investment in equity accounted investees 1,612 1,612
Other investments 25,189 51,545
Other financial assets 942 842
Other non-current assets 113 228
------------- -----------------
Total non-current assets 65,664 92,784
------------- -----------------
Current assets
Cash and cash equivalents 98,412 105,555
Other investments 39,010 37,648
Inventories 2,947 1,511
Trade and other receivables 6,498 7,342
Subscription receivable 6,000 6,000
Other financial assets 266 371
------------- -----------------
Total current assets 153,133 158,427
------------- -----------------
Total assets 218,797 251,211
============= =================
Equity
Share capital 3,431 3,429
Share premium 156,114 155,867
Merger reserve 185,544 185,544
Translation reserve (185) (16)
Accumulated deficit (221,028) (182,660)
------------- -----------------
Equity attributable to owners of the Company 5 123,876 162,164
Non-controlling interests 6 (30,056) (20,790)
------------- -----------------
Total equity 93,820 141,374
------------- -----------------
Non-current liabilities
Loans _ 112
Other non-current liabilities 630 751
Total non-current liabilities 630 863
------------- -----------------
Current liabilities
Trade and other payables 10,796 14,268
Deferred revenue 455 395
Loans 231 228
Subsidiary preferred shares 7 112,865 94,083
------------- -----------------
Total current liabilities 124,347 108,974
------------- -----------------
Total liabilities 124,977 109,837
Total equity and liabilities 218,797 251,211
============= =================
Condensed Consolidated Statement of Changes in Equity
Share Capital
Note Total Non-
Share Merger Translation Accumulated parent controlling Total
Shares Amount premium reserve reserve deficit equity interests equity
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Balance at 31 December
2014
(restated, see note 1) 214,445,579 3,411 153,442 185,544 (61) (107,557) 234,779 (4,946) 229,833
Total comprehensive loss
for the period
Loss from continuing
operations _ _ _ _ _ (30,659) (30,659) (9,198) (39,857)
Foreign currency
translation _ _ _ _ (12) _ (12) _ (12)
----------- ----------- -------- ----------- --------
Total comprehensive loss
for the period (12) (30,659) (30,671) (9,198) (39,869)
Gain/(loss) arising from
change in
non-controlling
interest _ _ _ _ _ (4,040) (4,040) 4,040 _
Exercise of stock
options 4,5 758,150 12 1,320 _ _ _ 1,332 _ 1,332
Equity-settled share
based payments 4 _ _ _ _ _ 2,666 2,666 537 3,203
Balance at 30 June 2015
(restated, see note 1) 215,203,729 3,423 154,762 185,544 (73) (139,590) 204,066 (9,567) 194,499
=========== ====== ======= ======= =========== =========== ======== =========== ========
Balance at 31 December
2014
(restated, see note 1) 214,445,579 3,411 153,442 185,544 (61) (107,557) 234,779 (4,946) 229,833
Total comprehensive loss
for the period
Loss from continuing
operations _ _ _ _ _ (77,797) (77,797) (20,192) (97,989)
Foreign currency
translation _ _ _ _ 45 _ 45 1 46
Total comprehensive loss
for the period 45 (77,797) (77,752) (20,191) (97,943)
Gain/(loss) arising from
change in
non-controlling
interest _ _ _ _ _ (3,228) (3,228) 3,228 _
Exercise of stock
options 1,191,784 18 2,425 _ _ _ 2,443 _ 2,443
Equity-settled share
based payments _ _ _ _ _ 5,922 5,922 1,119 7,041
Balance at 31 December
2015 215,637,363 3,429 155,867 185,544 (16) (182,660) 162,164 (20,790) 141,374
=========== ====== ======= ======= =========== =========== ======== =========== ========
Total comprehensive loss
for the period
Loss from continuing
operations _ _ _ _ _ (41,154) (41,154) (11,060) (52,214)
Foreign currency
translation _ _ _ _ (169) _ (169) _ (169)
Total comprehensive loss
for the period (169) (41,154) (41,323) (11,060) (52,383)
New funds into
non-controlling
interest 6 _ _ _ _ _ _ _ 1,725 1,725
Gain/(loss) arising from
change in
non-controlling
interest 6 _ _ _ _ _ 218 218 (218) _
Exercise of stock
options 4,5 100,000 2 247 _ _ _ 249 _ 249
Equity-settled share
based payments 4 _ _ _ _ _ 2,568 2,568 287 2,855
Balance at 30 June 2016 215,737,363 3,431 156,114 185,544 (185) (221,028) 123,876 (30,056) 93,820
=========== ====== ======= ======= =========== =========== ======== =========== ========
Condensed Consolidated Statement of Cash Flows
For the six months ended: Note 30 June 2016 30 June 2015
$'000 $'000
------------------------------------------------------------------------------ ----- ------------- -------------
Cash flows from operating activities:
Net operating loss (51,342) (39,618)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 2,662 1,386
Amortisation 459 296
Share-based compensation expense 4 2,855 3,203
Changes in working capital:
(Increase)/decrease in inventory (1,436) 427
Decrease/(increase) in trade and other receivables 963 (3,167)
Decrease in trade and other payables (3,472) (2,427)
(Decrease)/increase in other non-current liabilities (121) 285
Increase/(decrease) in deferred revenue 60 (216)
Interest received 1,453 553
Interest paid (516) (22)
Other finance cost (166) (12)
Net cash used in operating activities (48,601) (39,312)
------------- -------------
Cash flows from investing activities:
Purchases of property and equipment, net of disposals (2,144) (9,461)
Purchases of intangible assets, net of disposals (228) (810)
Redemptions/(purchases) of other investments 24,994 (84,130)
Net cash provided by/(used in) investing activities 22,622 (94,401)
------------- -------------
Cash flows from financing activities:
Proceeds from exercise of stock options _ 37
Repayment of notes payable (109) (104)
Proceeds from issuance of share capital 5 249 _
Proceeds from issuance of share capital in subsidiaries 6 1,725 _
Proceeds from issuance of preferred shares in subsidiaries 7 16,971 25,182
Net cash provided by financing activities 18,836 25,115
------------- -------------
Net decrease in cash and cash equivalents (7,143) (108,598)
Cash and cash equivalents at beginning of period 105,555 224,075
Cash and cash equivalents at end of period 98,412 115,477
============= =============
Notes to the Condensed Consolidated Interim Financial
Statements
1. General information
a) Reporting entity
Allied Minds Group comprises of Allied Minds plc and its
subsidiaries ("Allied Minds", the "Group" or the "Company"). The
Company is publicly listed on the Main Market of the London Stock
Exchange ("LSE"). Allied Minds plc is engaged in the development of
various technologies for commercial applications. As of 30 June
2016, Allied Minds had 30 active subsidiaries to which the Company
provided funding, comprising 25 operating businesses. The
subsidiaries have entered into agreements with universities,
scientists, and U.S. federal research institutions to develop and
commercialise products. In exchange for licenses, time, and
expertise already provided, certain universities and/or scientists
received an equity ownership in the subsidiaries. The cash
contributed by Allied Minds is used to fund additional research and
to create a management structure and operations. Allied Minds
dissolved two subsidiaries in the first half of 2015 to which
funding had previously been provided, and no subsidiaries were
dissolved in the year ended 31 December 2014.
b) Basis of preparation
These interim financial statements have been prepared in
accordance with International Accounting Standard ("IAS") 34
Interim Financial Reporting. They do not include all the
information required for a complete set of IFRS financial
statements. However, selected explanatory notes are included to
explain events and transactions that are significant to an
understanding of the changes in the Group's financial position and
performance since the last annual consolidated financial
information included in the annual report and accounts as at and
for the year ended 31 December 2015.
As reported in the annual report and accounts as at and for the
year ended 31 December 2015, at the end of 2014 one of the Group's
subsidiaries issued preferred shares to existing shareholders of
the Group. These subsidiary preferred shares were accounted for as
equity (Non-controlling interests ("NCI") and Accumulated deficit)
in 2014. During 2015, management further analysed the subsidiary
preferred shares and determined that, due to the nature of their
conversion features, they should have been accounted for as
subsidiary preferred shares in current liabilities. As a result,
management increased current liabilities as at 31 December 2014 by
$50.0 million, reduced NCI by $36.9 million and increased
accumulated deficit by $13.1 million in the consolidated statement
of financial position. This adjustment had no material effect on
the Group's consolidated comprehensive loss for 2014. As of 30 June
2015, the preferred shares, which are classified as fair value
through profit and loss, were remeasured to fair value of $50.8
million resulting in a $0.8 million increase in finance cost. The
Group's consolidated statement of comprehensive loss for the six
months ended 30 June 2015 increased by the same amount to $39.9
million.
Subsidiaries are fully consolidated from the date of
acquisition, being the date on which the Group obtains control and
continue to be consolidated until the date when such control
ceases. The financial information of the subsidiaries is prepared
for the same reporting period as the parent Company, using
consistent accounting policies. All intra-group balances,
transactions, unrealised gains and losses resulting from
intra-group transactions and dividends are eliminated in full.
Investments in associates are carried at cost less impairment
unless it is demonstrated that the group exercises significant
influence over the entity and then it is equity accounted.
Non-controlling interests ("NCI") are measured at their
proportionate share of the acquiree's identifiable net assets at
the acquisition date. Changes in the Group's interest in a
subsidiary that do not result in a loss of control are accounted
for as equity transactions.
The financial information presented in these half-yearly results
has been prepared under the historical cost convention. The
reporting currency adopted by Allied Minds is U.S. dollar ('$') as
this is the functional currency of the entities in the Group. In
preparing these interim financial statements, management has made
judgements, estimates and assumptions that affect the application
of accounting policies and the reported amounts of assets and
liabilities, income and expense. Actual results may differ from
these estimates.
The significant judgements made by management in applying the
Group's accounting policies and the key sources of estimation
uncertainty were the same as those that applied to the consolidated
financial information included in the Group annual report and
accounts as at and for the year ended 31 December 2015.
The Company has prepared trading and cash flow forecasts for the
Group covering the period to 31 December 2017. After making
enquiries and considering the impact of risks and opportunities on
expected cash flows, the Directors have a reasonable expectation
that the Group has adequate cash to continue in operational
existence for the foreseeable future. For this reason, they have
adopted the going concern basis in preparing these half-yearly
results.
The financial information contained in this half-yearly report
does not constitute full statutory accounts as defined in section
434 of the Companies Act 2006. The condensed consolidated financial
statements are neither audited nor reviewed and the results for the
six months ended 30 June 2016 are not necessarily indicative of
results for future operating periods.
Certain financial information has been extracted from the annual
report and accounts as at and for the period ended 31 December 2015
and has been included for comparative purposes in this half-yearly
report.
These interim financial statements are unaudited and were
approved by the Board of Directors and authorised for issue on 25
August 2016 and are available on the Company's website at
www.alliedminds.com under "Investors - Reports and
Presentations".
c) Accounting policies
The accounting policies applied by the Group in these
half-yearly results are the same as those which formed the basis of
the 2015 Annual Report and Accounts. No new standards that have
become effective in the period have had a material effect on the
Group's financial statements.
2. Operating segments
a) Information about reportable segments
For management purposes, the Group's principal operations are
currently organised in two reportable segments:
i. Early stage companies - subsidiary businesses that are in the
early stage of their lifecycle characterised by incubation,
research and development activities; and
ii. Commercial stage companies - subsidiary businesses that have
substantially completed their research and development activities
and that have developed one or more products that are actively
marketed.
Due to their size and nature, Spin Transfer Technologies, Inc.
(or "STT", an early stage company) and RF Biocidics, Inc. (or
"RFB", a commercial stage company) are not aggregated and presented
as two additional separate reportable segments. The Group's
principal operations are therefore presented as four reportable
segments being early stage company - STT, early stage companies -
other, commercial stage company - RFB, and commercial stage
companies - other. Other operations include the management function
of the head office at the parent level of Allied Minds.
The Group's chief operating decision maker ("CODM") reviews
internal management reports on these operating segments at least
quarterly in order to make decisions about resources to be
allocated to the segment and to assess its performance.
The following provides detailed information of the Group's
reportable segments:
For the six months ended: 30 June 2016
------------------------------- --------------------------------------------------------------------
Early stage Commercial Other Consolidated
STT Other RFB Other operations
$'000 $'000 $'000 $'000 $'000 $'000
--------- --------- -------- -------- ----------- -------------
Statement of Comprehensive
Loss
Revenue _ 303 169 814 _ 1,286
Cost of revenue _ (101) (540) (614) _ (1,255)
Selling, general and
administrative expenses (3,863) (8,473) (2,957) (2,718) (7,820) (25,831)
Research and development
expenses (6,917) (17,854) (112) (659) _ (25,542)
Finance income/(cost),
net (797) (935) _ (15) 875 (872)
Loss for the year (11,577) (27,060) (3,440) (3,192) (6,945) (52,214)
Other comprehensive
income _ _ (47) _ (122) (169)
Total comprehensive
loss (11,577) (27,060) (3,487) (3,192) (7,067) (52,383)
--------- --------- -------- -------- ----------- -------------
Total comprehensive loss attributable
to:
Equity holders of the
parent (6,302) (23,363) (1,990) (2,601) (7,067) (41,323)
Non-controlling interests (5,275) (3,697) (1,497) (591) _ (11,060)
Total comprehensive
loss (11,577) (27,060) (3,487) (3,192) (7,067) (52,383)
========= ========= ======== ======== =========== =============
For the six months ended: 30 June 2015 (restated, see note 1)
Early stage Commercial Other Consolidated
STT Other RFB Other operations
$'000 $'000 $'000 $'000 $'000 $'000
-------- --------- -------- -------- ----------- -------------
Statement of Comprehensive
Loss
Revenue _ 488 464 523 _ 1,475
Cost of revenue _ _ (583) (163) _ (746)
Selling, general and
administrative expenses (3,172) (5,407) (2,276) (2,440) (7,389) (20,684)
Research and development
expenses (4,973) (13,591) (141) (958) _ (19,663)
Finance income/(cost),
net (756) _ _ (22) 539 (239)
Loss for the year (8,901) (18,510) (2,536) (3,060) (6,850) (39,857)
Other comprehensive income _ _ (27) _ 15 (12)
Total comprehensive loss (8,901) (18,510) (2,563) (3,060) (6,835) (39,869)
-------- --------- -------- -------- ----------- -------------
Total comprehensive loss attributable
to:
Equity holders of the
parent (4,090) (15,887) (1,431) (2,428) (6,835) (30,671)
Non-controlling interests (4,811) (2,623) (1,132) (632) _ (9,198)
Total comprehensive loss (8,901) (18,510) (2,563) (3,060) (6,835) (39,869)
======== ========= ======== ======== =========== =============
As of the period
ended: 30 June 2016
------------------------ ------------------------------------------------------------------
Early stage Commercial Other Consolidated
STT Other RFB Other operations
$'000 $'000 $'000 $'000 $'000 $'000
--------- --------- -------- ------ ----------- -------------
Statement of Financial
Position
Total assets 53,345 68,359 8,051 3,429 85,613 218,797
Total liabilities (53,543) (66,164) (2,024) (602) (2,644) (124,977)
Net assets (198) 2,195 6,027 2,827 82,969 93,820
========= ========= ======== ====== =========== =============
As of the period ended: 31 December 2015
------------------------ --------------------------------------------------------------------------------------
Early stage Commercial Other Consolidated
STT Other RFB Other operations
$'000 $'000 $'000 $'000 $'000 $'000
------------ --------- ----------- -------- ----------- -------------
Statement of Financial
Position
Total assets 66,223 57,158 7,878 3,461 116,491 251,211
Total liabilities (55,378) (49,096) (1,411) (1,264) (2,688) (109,837)
Net assets 10,845 8,062 6,467 2,197 113,803 141,374
============ ========= =========== ======== =========== =============
At the end of 2015, the Group's CODM has determined that
Biotectix reached commercial stage and as such its financial
information has been presented in the respective reportable segment
as of and for the six months and year ended 30 June 2016 and 31
December 2015, respectively.
Allied Minds, as the Manager of ABLS Capital, effectively
controls the policies and management of ABLS Capital and is the
largest single member of the voting rights of ABLS Capital
(99.98%), which gives the Company a substantial influence over the
outcome of all actions which require a shareholder vote. Allied
Minds also has a 30.25% share in the economic interest of ABLS
Capital. Allied Minds therefore continues to exercise effective
control over ABLS Capital and as such, the company will continue to
be fully consolidated within the group's financial statements. The
financial information of ABLS Capital is presented in the Early
stage - Other reportable segment as of and for the six months and
year ended 30 June 2016 and 31 December 2015, respectively.
b) Portfolio valuation
At the close of each annual financial period, the Directors
approve the total value of all subsidiary businesses in the Group,
which is used to derive the "Group Subsidiary Ownership Adjusted
Value". This Group Subsidiary Ownership Adjusted Value is a
sum-of-the-parts ("SOTP") valuation of all the subsidiaries that
make up the Group.
Ownership adjusted value represents Allied Minds' interest in
the equity value of each subsidiary: = (Business Enterprise Value -
Long Term Debt + Cash) x Allied Minds' percentage ownership plus
the value of debt provided by Allied Minds plc to each subsidiary
business. Allied Minds commits post-seed funding to its
subsidiaries in the form of loans. Further details about the Group
valuation methodology are disclosed in 2015 Annual Report and
Accounts.
The Group Subsidiary Ownership Adjusted Value ("GSOAV") was
$535.8 million as at 31 December 2015. The Directors believe there
has been no significant change in the Group Subsidiary Ownership
Adjusted Value since 31 December 2015 and through 30 June 2016.
There can be no guarantee that the aforementioned valuation of
the Group will be considered to be correct in light of the future
performance of the various Group businesses, or that the Group
would be able to realise proceeds in the amount of such valuations,
or at all, in the event of a sale by it of any of its subsidiaries.
Whilst the Board considers the methodologies and assumptions
adopted in the valuation are supportable, reasonable and robust,
because of the inherent uncertainty of valuations, those estimated
values may differ significantly from the values that would have
been used had a ready market for the investment existed and the
differences could be significant.
In addition to the Group Subsidiary Ownership Adjusted Value,
the Directors believe that Allied Minds' established partner
network and significant pipeline of future opportunities to form
and develop new subsidiary companies will enable it to create and
realise further value for Shareholders. The Directors believe that
Allied Minds has created significant brand value and name
recognition providing access to new deal opportunities and
potential partners for its subsidiaries, together with a suite of
operational standards, processes and know-how that enable the Group
to apply its business model and create shareholder value in a
capital efficient manner.
3. Earnings per share
The calculation of basic and diluted earnings per share has been
calculated by dividing the loss for the period attributable to
ordinary shareholders of $41.2 million (HY15: $30.7m), by the
weighted average number of ordinary shares outstanding of
215,646,704 (HY15: 214,495,830) during the six-month period ended
30 June 2016:
Loss attributable to ordinary shareholders:
For the six months ended: 30 June 2016 30 June 2015
(restated,
see note 1)
--------------------------------- -------------------- --------------------
Basic Diluted Basic Diluted
$'000 $'000 $'000 $'000
--------- --------- --------- ---------
Loss for the year attributed to
the owners of the Company (41,154) (41,154) (30,659) (30,659)
Loss for the year attributed to
the ordinary shareholders (41,154) (41,154) (30,659) (30,659)
--------- --------- --------- ---------
Weighted average number of ordinary shares:
For the six months ended: 30 June 2016 30 June 2015
Basic Diluted Basic Diluted
Issued ordinary shares
on 1 January 215,637,363 215,637,363 214,445,579 214,445,579
Effect of share options
exercised 9,341 9,341 50,251 50,251
------------ ------------ ------------ ------------
Weighted average ordinary
shares 215,646,704 215,646,704 214,495,830 214,495,830
============ ============ ============ ============
Loss per share:
For the six months ended: 30 June 2016 30 June 2015
Basic Diluted Basic Diluted
$ $ $ $
------- -------- ------- --------
Loss per share (0.19) (0.19) (0.14) (0.14)
------- -------- ------- --------
The Group has only one class of potentially dilutive ordinary
shares. These are contingently issuable shares arising under the UK
Long Term Incentive Plan ("LTIP"). Based upon information available
at the end of the reporting period, no portion of the awards under
the LTIP has vested. Consequently, there are no potentially
dilutive shares outstanding at the period end.
4. Share-based payments
The share-based payments expense for the period was $2.9 million
(HY15: $3.2m) comprising charges related to the LTIP and the other
subsidiary plans. The primary changes affecting the half year
period were related to the following:
a) UK Long Term Incentive Plan
On 19 June 2014, Allied Minds plc established the UK Long Term
Incentive Plan (LTIP). Under the LTIP, awards over ordinary shares
may be made to employees, officers and Directors of, and other
individuals providing services to the Company and its subsidiaries.
Awards may be granted in the form of share options, share
appreciation rights, restricted or unrestricted share awards,
performance share awards, restricted share units, phantom-share
awards and other share-based awards, with the intent that awards
will normally vest only after a minimum period of three years from
the date of grant. Awards were made under the LTIP upon the
Company's admission to the LSE at the IPO. Vesting is subject to
the achievement of performance conditions and continued services of
the participant. In respect of these initial awards made to
employees at the IPO, vesting is dependent upon performance metrics
as follows:
-- 60 per cent of each award is subject to performance
conditions based on the Company's total shareholder return ("TSR")
performance over a three year period; and
-- 40 per cent of each award is subject to performance
conditions based on a basket of shareholder value metrics
("SVM").
In respect of these initial awards, at the end of the three year
period, performance against the relevant measures will be
calculated to determine the number of ordinary shares which have
satisfied the vesting criteria and 50 per cent of the award will
then vest at that time. The remaining 50 per cent will vest in two
equal tranches in years 4 and 5 subject to the relevant participant
still being employed within (or being a director of a company
within) the Group at the relevant vesting date (or being an earlier
good leaver as described further in the LTIP).
Subsequently, in the first half of 2015, annual awards were made
to employees under the LTIP that vest 100 per cent after the three
year measurements period subject to both the TSR and SVM
performance conditions. In the first half of 2016, annual awards
were made to employees under the LTIP that vest 100 per cent after
the three year measurements period subject to the TSR performance
conditions only.
A summary of stock option activity under the UK LTIP for the six
months ended 30 June 2016 and 2015, respectively, is shown
below:
For the six months ended: 30 June 2016 30 June 2015
TSR SVM TSR SVM
------- ------- ------- -------
Number of shares granted at
maximum ('000) 1,443 56 170 280
Weighted average fair value
per share (GBP) 2.19 3.37 7.01 5.99
Monte Market Monte Market
Fair value measurement basis Carlo Value Carlo Value
The share grants that vest upon the occurrence of a market
condition (i.e. the TSR performance) and service condition were
adjusted to current market price at the date of the grant to
reflect the effect of the market condition on the non-vested
shares' value. The Company used a Monte Carlo simulation analysis
utilising a Geometric Brownian Motion process with 50,000
simulations to value those shares. The model takes into account
share price volatilities, risk-free rate and other covariance of
comparable UK public companies and other market data to predict
distribution of relative share performance. This is applied to the
reward criteria to arrive at expected value of the TSR awards.
The share grants that vest only upon the occurrence of a
performance condition (i.e. the SVM grants) and service condition
were valued at the fair value of the shares on the date of the
grants. The SVM grants in the six months ended 30 June 2016
included 56,595 restricted units (HY15: 24,508) issued to the
non-executive Directors of the Company that vest annually over
three years conditional on their continued participation on the
Board of Allied Minds.
The accounting charge does not necessarily represent the
intended value of share-based payments made to recipients, which
are determined by the Remuneration Committee according to
established criteria. The share-based payment charge for the period
related to the UK LTIP was $1.6 million (HY15: $1.4m).
b) U.S. Stock Option/Stock Issuance Plan
The U.S. Stock Option/Stock Issuance Plan ("U.S. Stock Plan")
was originally adopted by Allied Minds, Inc. in 2008. The U.S.
Stock Plan provides for the grant of share option awards,
restricted share awards, and other awards to acquire common stock
of Allied Minds, Inc. (now Allied Minds, LLC). All stock options
granted to employees under this plan are equity settled, for a
ten-year term. In 2014, Allied Minds plc adopted and assumed the
rights and obligations of Allied Minds, Inc. (now Allied Minds LLC)
under this plan except that the obligation to issue Common Stock is
replaced with an obligation to issue ordinary shares to satisfy
awards granted under the U.S. Stock Plan.
A summary of stock option activity in the U.S. Stock Plan for
the six months ended 30 June 2016 and 2015, respectively, is
presented in the following table:
For the six months ended: 30 June 2016 30 June 2015
-------------------------------- --------------------------------- ---------------------------------
Number of Weighted average Number of Weighted average
options exercise price options exercise price
-------------- ----------------- -------------- -----------------
Outstanding as of 1 January 9,204,712 $2.10 10,396,496 $2.09
Granted during the period _ _ _ _
Exercised during the period (100,000) $2.49 (758,150) $1.75
Forfeited during the period _ _ _ _
Outstanding as of period end 9,104,712 $2.10 9,638,346 $2.12
-------------- ----------------- -------------- -----------------
Exercisable at period end 9,104,712 $2.10 9,638,346 $2.12
Intrinsic value of exercisable $25.6 million $61.8 million
As of 19 June 2014, the maximum number of options reserved under
the plan were issued and outstanding and fully vested. The Company
does not intend to make any further grants under the U.S. Stock
Plan. Accordingly, there were no new grants under the U.S. Stock
Plan for the six months ended 30 June 2016 and 2015.
For the six months ended 30 June 2016, employees exercised
options to purchase and sold 100,000 shares (HY15: 758,150) of the
Company stock, resulting in $0.2 million (HY15: $1.3m) additional
share premium for the period.
Restricted share awards for 118,800 ordinary shares are
outstanding, which were granted under the U.S. Stock Plan to the
non-executive Directors. These ordinary shares vest in three equal
tranches on each of the first three anniversaries of the Company's
admission to the Main Market of the LSE ("Admission") provided that
the non-executive Director in question is still providing services
to the Group on the relevant vesting date.
5. Share capital, share premium and reserves
As noted in note 4(b), various option holders in the U.S. Stock
Plan exercised their options, resulting in additional share premium
of $0.2 million (HY15: $1.3m). Movements below explain the
movements in share capital:
As of the period ended: 30 June 2016 31 December 2015
$'000 $'000
--------------------------------------------------------- ------------- -----------------
Equity
Share capital, GBP0.01 par value, issued and fully paid
215,737,363 and 215,637,363, respectively 3,431 3,429
Share premium 156,114 155,867
Merger reserve 185,544 185,544
Translation reserve (185) (16)
Accumulated deficit (221,028) (182,660)
Equity attributable to owners of the Company 123,876 162,164
Non-controlling interests (30,056) (20,790)
------------- -----------------
Total equity 93,820 141,374
============= =================
6. Non-controlling interests
The following summarises the changes in the non-controlling
ownership interest in subsidiaries by reportable segment,
calculated on the basis of percentage ownership of non-controlling
interest in voting stock on an as converted basis, excluding
liability classified preferred shares:
Early stage Commercial Consolidated
STT Other RFB Other
$'000 $'000 $'000 $'000 $'000
Non-controlling interest
as of
31 December 2015 (4,281) (3,550) (7,031) (5,928) (20,790)
New funds into non-controlling
interest _ 1,725 _ _ 1,725
Share of comprehensive
loss (5,275) (3,697) (1,497) (591) (11,060)
Effect of change in Company's
ownership interest 62 (295) 15 _ (218)
Equity-settled share
based payments 217 69 _ 1 287
Non-controlling interest
as of
30 June 2016 (9,277) (5,748) (8,513) (6,518) (30,056)
======= ======= ======= ======= ============
7. Subsidiary preferred shares
Certain of the Group's subsidiaries have outstanding preferred
shares which have been classified as a subsidiary preferred shares
in current liabilities in accordance with IAS 39 as the
subsidiaries have a contractual obligation to deliver cash or other
assets to the holders under certain future liquidity event and/or a
requirement to deliver an uncertain number of common shares upon
conversion.
The following summarises the subsidiary preferred shares
balance:
As of the period ended: 30 June 2016 31 December 2015
$'000 $'000
----------------------------- ------------- -----------------
Spin Transfer Technologies 52,361 51,518
SciFluor Life Science 26,136 25,583
Precision Biopsy 17,304 16,982
Federated Wireless 17,064 _
------------- -----------------
Subsidiary preferred shares 112,865 94,083
============= =================
In January 2016, Federated Wireless successfully raised $22.0
million in Series A preferred stock financing, of which Allied
Minds participated with $5.0 million for 2,727,580 shares of the
preferred stock and the remainder was provided by existing
shareholders of the Group.
The following presents the quantitative information about the
significant unobservable inputs used in the fair value measurement
of the Group's subsidiary preferred shares liability:
Option Pricing Model Inputs
Measurement Date Time to Liquidity Volatility Risk-Free Rate
----------------- ------------------ -------------- ---------------
31-Dec-2015 3.78 - 4.76 years 60.0% - 70.0% 1.48% - 1.71%
30-Jun-2016 2.56 - 4.26 years 31.7% - 70.0% 0.86% - 1.12%
The change in fair value of the subsidiary preferred shares is
recorded in Finance cost from IAS 39 fair value accounting in the
consolidated statement of comprehensive loss.
The minimum liquidation preference that would be payable to the
subsidiary preferred holders upon a liquidation event of the
subsidiaries, is as follows:
As of the period ended: 30 June 2016 31 December 2015
$'000 $'000
----------------------------- ------------- -----------------
Spin Transfer Technologies 50,000 50,000
SciFluor Life Science 25,200 25,200
Precision Biopsy 17,000 17,000
Federated Wireless 17,000 _
------------- -----------------
Subsidiary preferred shares 109,200 92,200
============= =================
8. Related party transactions
a) Key management personnel compensation
For the six months ended: 30 June 2016 30 June 2015
$'000 $'000
------------- -------------
Short-term employee benefits 915 2,394
Share-based payments 2,073 1,708
Total 2,988 4,102
============= =============
Compensation of the Group's key management personnel includes
salaries, health care and other non-cash benefits. Share-based
payments are subject to vesting terms over future periods.
b) Key management personnel transactions
For the six months ended: 30 June 2016 30 June 2015
$'000 $'000
---------------- -------------
Non-executive Directors' fees 245 147
Non-executive Directors' share-based payments 275 225
Total 520 372
================ =============
Executive management and Directors of the Company control 2.1%
(FY15: 2.2%) of the voting shares of the Company as of 30 June
2016.
The Group has not engaged in any other transactions with key
management personnel.
c) Other related party transactions
Condensed Consolidated Statement of Comprehensive Loss
For the six months ended: 30 June 2016 30 June 2015
$'000 $'000
------------- -------------
Purchase of goods
Equity-accounted investee 684 1,200
Condensed Consolidated Statement of Financial Position
As of the period ended: 30 June 2016 31 Dec 2015
$'000 $'000
------------- ------------
Purchase of goods outstanding balance
Equity-accounted investee 600 171
9. Subsequent events
The Company has evaluated subsequent events through 25 August
2016, which is the date the Condensed Consolidated Interim
Financial Statements are available to be issued.
ABLS II, LLC
In August 2016, ABLS II secured an investment of $15.0 million,
in exchange for 6,410,256 preferred shares of the company, of which
ABLS Capital provided $12.0 million and the balance was provided by
BMS. The funds will provide the required resources for the lead
optimisation programme to develop novel small molecule therapeutics
for the treatment of fibrotic and autoimmune diseases.
As a result of the transaction, the economic interest of Allied
Minds in ABLS II changed to 35.95% through its indirect holdings of
ABLS and ABLS Capital interest. The Company continues to exercise
effective control over ABLS II and as such will continue to be
fully consolidated in the group's financial statements.
Concurrently, in August 2016, ABLS Capital issued 12,000,000
Class B Units to its members for $12 million in order to secure its
share of the funding in ABLS II. Allied Minds provided its pro rata
share of 22.5% of this issue and the balance was provided by the
remaining subscribed members of ABLS Capital.
SVB line of credit
In August 2016, the Group secured a $20 million debt facility
from Silicon Valley Bank ("SVB") to provide an additional source of
capital, which represents an evolution in the Group's capital
structure to support its future growth and development. No moneys
have been drawn from this facility as of the date of the
half-yearly report.
Statement of Directors' Responsibilities
The Directors confirm to the best of their knowledge that:
a) the Condensed Consolidated Interim Financial Statements have
been prepared in accordance with IAS 34 as adopted by the European
Union and give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Group as required by
the FCA's Disclosure Guidance and Transparency Rules (4.2.4R);
and
b) the Interim Management Report includes a fair review of the
information required by the FCA's Disclosure Guidance and
Transparency Rules (4.2.7R and 4.2.8R).
The Directors of Allied Minds plc and their functions are listed
below.
By order of the Board
Peter Dolan, Christopher Silva,
Non-Executive Chairman Chief Executive Officer
25 August 2016
Further information for shareholders:
Company Registration Number
08998697
Registered Office
40 Dukes Place
London EC3A 7NH
Website
www.alliedminds.com
Board of Directors
Peter Dolan (Non-Executive Chairman)
Chris Silva (Chief Executive Officer)
Rick Davis (Senior Independent Director)
Jeffrey Rohr (Independent Non-Executive Director)
Kevin Sharer (Independent Non-Executive Director)
Jill Smith (Independent Non-Executive Director)
Company Secretary
Michael Turner
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR PGUWURUPQGMC
(END) Dow Jones Newswires
August 25, 2016 02:01 ET (06:01 GMT)
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