TIDMMTPH
RNS Number : 2843J
Midatech Pharma PLC
26 April 2022
26 April 2022
Midatech Pharma PLC
("Midatech" or the "Company" or, together with its subsidiaries,
the "Group")
Preliminary Results for the Year Ended 31 December 2021
Midatech Pharma PLC (AIM: MTPH.L; Nasdaq: MTP), a drug delivery
technology company focused on improving the bio-delivery and
biodistribution of medicines, announces its audited preliminary
results for the year ended 31 December 2021.
2021 HIGHLIGHTS
Operational
-- In June 2021, in an R&D update we announced:
o Breakthrough data on the successful encapsulation of a
biologic using Q-Sphera technology. We believe no other commercial
or academic organisation has been able to successfully deliver
therapeutic proteins over extended periods using methods capable of
commercial scale up.
o Delivery of proof of concept formulations of MTX214 and MTX216
to our collaboration partner Janssen for them to undertake in vivo
studies.
o Successful development of a long-acting formulation of MTD211
(Q-brexpiprazole) which, in in vivo studies, demonstrated that a
single injectable dose could deliver therapeutic blood levels of
brexpiprazole over a period of three months.
-- In July 2021, we closed a Placing of 35.1m new ordinary
shares with investors in the UK to raise gross proceeds of GBP10m
(GBP9m net of expenses).
-- In August 2021, we announced that the Company had moved its
headquarters, including offices and custom built laboratories to
new facilities at Caspian Point in Cardiff. The new premises were
officially opened by Vaughn Gething MS, Welsh Government Minister
for the Economy.
-- In December 2021, we announced the successful completion of
the 30-day FDA review period of our Investigational New Drug
Application for a planned Phase I study of MTX110 in recurrent
Glioblastoma Multiforme.
Post period end
-- In January 2022, we announced an extension of our R&D
collaboration with Janssen. Under the extended collaboration we
will focus on maximizing drug loading and optimizing in vitro
duration of release for Janssen's undisclosed experimental molecule
using our Q-Sphera technology.
-- In February 2022, we announced Janssen had added a second
molecule to the collaboration with the same objectives of
maximizing drug loading and optimizing in vitro duration of
release.
Financial
-- Total gross revenue(1) for the year of GBP0.58m (2020: GBP0.34m).
-- Customer revenue(2) for 2021 of GBP0.58m (2020: GBP0.18m).
-- UK Placing in July 2021 raised GBP9.0m, net of expenses.
-- Cash and deposits at 31 December 2021 of GBP10.06m (2020: GBP7.55m).
-- Net loss from continuing operations of GBP5.46m (2020: GBP22.19m loss).
-- Net cash inflow in the year of GBP2.52m (2020: GBP3.64m outflow).
-- Tax credit receivable of GBP0.67m (2020: GBP1.16m).
1. Total gross revenue represents collaboration income from
continuing operations plus grant revenue.
2. Customer revenue represents total gross revenue, excluding
grant revenue.
For more information, please contact:
Midatech Pharma PLC
Stephen Stamp, CEO, CFO
Tel: +44 (0)29 2048 0180
www.midatechpharma.com
Strand Hanson Limited (Nominated and Financial Adviser)
James Dance / Matthew Chandler / Rob Patrick
Tel: +44 (0)20 7409 3494
Turner Pope Investments (TPI) Limited (Broker)
Andrew Thacker / James Pope (Corporate Broking)
Tel: +44(0)20 3657 0050
IFC Advisory Limited (Financial PR and UK Investor Relations)
Tim Metcalfe / Graham Herring
Tel: +44 (0)20 3934 6630
Email: midatech@investor-focus.co.uk
Edison Group (US Investor Relations)
Alyssa Factor
Tel: +1 (860) 573 9637
Email: afactor @edisongroup.com
About Midatech Pharma PLC
Midatech Pharma PLC (dual listed on LSE AIM: MTPH; and NASDAQ: MTP)
is a drug delivery technology company focused on improving the bio-delivery
and biodistribution of medicines. The Company combines approved and
development medications with its proprietary and innovative drug delivery
technologies to provide compelling products that have the potential
to powerfully impact the lives of patients.
The Company has developed three in-house technology platforms, each
with its own unique mechanism to improve delivery of medications to
sites of disease. All of the Company's technologies have successfully
entered human use in the clinic, providing important validation of the
potential for each platform:
Q-Sphera(TM) platform: a disruptive micro-technology used for sustained
release to prolong and control the release of therapeutics over an extended
period of time (from weeks to months).
MidaSolve(TM) platform: an innovative nanotechnology used to dissolve
insoluble drugs so that they can be administered in liquid form directly
and locally into tumours.
MidaCore(TM) platform: a leading-edge nanotechnology used for targeting
medications to sites of disease.
The platform nature of the technologies offers the potential to develop
multiple drug assets rather than being reliant on a limited number of
programmes. Midatech's technologies are supported by 36 patent families
including 120 granted patents and an additional 70 patent applications.
Midatech's headquarters and R&D facility is in Cardiff, UK. For more
information please visit www.midatechpharma.com
Forward-Looking Statements
Certain statements in this announcement may constitute "forward-looking
statements" within the meaning of legislation in the United Kingdom and/or
United States Private Securities Litigation Reform Act. All statements
contained in this announcement that do not relate to matters of historical
fact should be considered forward-looking statements.
Reference should be made to those documents that Midatech shall file from
time to time or announcements that may be made by Midatech in accordance
with the London Stock Exchange AIM Rules for Companies ("AIM Rules"),
the Disclosure and Transparency Rules ("DTRs") and the rules and regulations
promulgated by the US Securities and Exchange Commission, which contains
and identifies other important factors that could cause actual results
to differ materially from those contained in any projections or forward-looking
statements. These forward-looking statements speak only as of the date
of this announcement. All subsequent written and oral forward-looking
statements by or concerning Midatech are expressly qualified in their
entirety by the cautionary statements above. Except as may be required
under the AIM Rules or the DTRs or by relevant law in the United Kingdom
or the United States, Midatech does not undertake any obligation to publicly
update or revise any forward-looking statements because of new information,
future events or otherwise arising.
INTRODUCTION
Headquartered in Cardiff, UK, and quoted on the AIM market of
the London Stock Exchange and on NASDAQ in the US, Midatech is an
R&D biotechnology company focused on improving the bio-delivery
and biodistribution of medicines using its three proprietary drug
delivery technologies.
STRATEGY
Our strategy is based on two key themes: multiple shots on goal
and time and cost to partnerability.
Since the announcement of a Strategic Review in March 2020, we
have sought to broaden our R&D pipeline by initiating internal
programmes, collaborating with third party pharmaceutical companies
on their proprietary active pharmaceutical ingredients, or APIs,
and adding new indications to MTX110, our novel formulation and
delivery system for panobinostat.
Our realigned strategy is to advance our development programmes
to proof of concept stage before seeking licensee partners to fund
further development, manufacturing scale-up and
commercialisation.
Strategic Progress in 2021 Priorities for 2022
Imperatives
Develop and In June we announced that we Refine processes to extend
broaden applications had successfully encapsulated the capacity of Q-Sphera
for our three a large molecule protein using to accommodate a wider
primary drug Q-Sphera technology and, importantly, range of biopharmaceuticals.
delivery technologies preserved the functional integrity
and antigen binding of the protein Generate in vivo data
in vitro. to demonstrate intratumoral
delivery of drugs using
In December we filed a patent Q-Sphera technology.
covering pharmaceutical compositions
and use thereof in combination Expand further our patent
therapy for brain cancer which portfolio to cover new
is expected to offer opportunities inventions and divisionals
to study MTX110 in combination to strengthen existing
with other, synergistic drugs. patent families.
Additionally, we filed a new
divisional patent around our
microparticle production device
which is intended to protect
a new component in the flow process.
Apply our In June, we delivered proof of Identify one or two suitable
proprietary concept formulations, MTX214 candidates to add to our
technologies and MTX216, to Janssen Pharmaceutica internal Q-Sphera pipeline.
to develop NV, or Janssen, our collaboration
compelling partner. Janssen is a wholly-owned Secure a partnership with
products to subsidiary of Johnson & Johnson. a contract manufacturing
proof of concept Janssen then undertook in vivo organisation, or CMO,
stage pre-clinical studies for both to manufacture Q-Sphera
formulations. products to GMP standards
in their facilities such
Also in June, we reported that that the products may
we had successfully developed be used for clinical studies.
a long-acting formulation of
brexpiprazole using our Q-Sphera Market our technologies,
technology. In an in vivo study, their features and benefits
MTD211 demonstrated that a single at scientific and/or partnering
dose of MTD211 could deliver conferences with a view
therapeutic blood levels of brexpiprazole to identifying suitable
over a period of three months. candidates for our technologies
There are no long-acting formulations within the R&D portfolios
of brexpiprazole currently available. of to third party pharmaceutical
companies. We plan to
Also using Q-Sphera technology, target companies working
we developed a long-acting formulation in the field of peptides
of tacrolimus. In an in vivo and proteins.
study, MTD219 demonstrated a
potential dose interval of three-weeks. Obtain preliminary results,
Currently there are only twice- likely to be progression-free
or once-daily formulations available. survival data in a limited
In December the 30-day FDA review number of patients, from
period expired for our Investigational our Phase I study of MTX110
New Drug application ('IND') in recurrent GBM.
for a planned Phase I study of
MTX110 in recurrent Glioblastoma
Multiforme ('GBM'). The study
has been judged safe to proceed.
Accordingly, we have initiated
preparations for the study to
begin enrolling patients in mid-2022.
Enter into Mid-year, we delivered two proof Enter into R&D collaborations
R&D collaborations of concept Q-Sphera formulations with third parties to
at the feasibility as referenced above, to Janssen. formulate their proprietary
stage followed molecules using Q-Sphera
by technology We continued to work on the formulation technology with an emphasis
and commercialisation of Janssen's proprietary protein on proteins.
licenses post and, in January 2022, we announced
proof of concept that the R&D collaboration with Secure a licensee on appropriate
Janssen had been extended to terms for one of our internal
focus on maximizing drug loading Q-Sphera programmes.
and optimizing in vitro duration
of release of Janssen's experimental Seek a partner to develop,
molecule using our Q-Sphera technology. or co-develop, MTX110
once preliminary data
We have initiated discussions from our Phase I study
with third parties regarding in recurrent GBM become
the potential licensing of MTD211 available.
(Q-brexpiprazole).
Provide a We established a Task Force to Continue to monitor third
healthy and monitor governmental advice and party advice and regulation
stimulating regulation regarding the COVID-19 to maintain a safe environment
environment pandemic. We took appropriate for our staff members.
in which our steps to safeguard the health
staff members of staff members including remote Develop individualised
can continue working where feasible and social learning programmes for
to thrive distancing in the workplace. staff members through
and innovate participation in conferences,
In August we moved into new offices webinars and/or training
and purpose-built laboratories programmes.
in Cardiff. The new laboratories
facilitate improved workflow
and a safer, cleaner work environment
for our staff.
We have been compliant with ISO
9001 since 2014 and again passed
an external audit of our quality
management system, obtaining
the highest level of compliance.
During the year, we introduced
a new COSHH assessment procedure
to better quantify the safety
of chemicals and third parties'
APIs being deployed in our laboratories.
BUSINESS MODEL
Since our Strategic Review in March 2020, we have reverted to a
traditional biotech business model. We aim to deploy our
proprietary technologies to develop proof of concept formulations
and then enter into licensing agreements with third party
pharmaceutical companies.
Development
Our intention is to build a balanced portfolio of Q-Sphera
programmes employing a bi-fold strategy to create an:
-- internal pipeline of long-acting injectable products by
re-formulating existing, approved therapies; and
-- external pipeline by entering into research collaborations
with partners to formulate their proprietary products into
long-acting injectable products.
We have applied our MidaSolve technology to panobinostat to
create our proprietary product, MTX110. Our development strategy
for MTX110 is to demonstrate its utility in a range of intractable
brain cancers with a series of pilot proof of concept studies
before seeking licensee partners.
Once a licensing partner has been secured, we would expect any
future development costs to be reimbursed by that partner and for
Midatech to receive milestone payments and, ultimately, royalties
on sales of the product.
Manufacturing
To establish proof-of-concept in pre-clinical studies for
potential licensees, we are able to manufacture non-GMP Q-Sphera
products at pilot scale at our Cardiff facility. Our intention is
to technology transfer GMP manufacture of clinical trial supplies
and ultimately full GMP commercial manufacture to a third party
CMO. We would expect a licensee to assume the cost of manufacturing
GMP product and commercial scale-up pursuant to a technology
transfer agreement.
MTX110 is currently being manufactured to GMP standards at a
CMO.
Commercialisation
Once proof-of-concept has been established, we intend to seek to
license our products to a partner who would complete the clinical
development and subsequently market and sell them in the licensed
territory. In addition to reimbursement of development costs, the
partner would be expected to make milestone payments based on sales
targets and royalty payments.
In 2020 Midatech pivoted from a largely singular focus on the
clinical development and manufacturing scale up of MTD201 to a
strategy based on a broader, but earlier stage, pipeline. The two
strategic drivers behind Midatech's development pipeline, "multiple
shots on goal" and "time and cost to partnerability", are designed
to provide optimal opportunities for partnering success while
focusing our resources on those projects that will deliver near
term data that could attract a development partner.
Our development pipeline includes eight projects of which two
are partnered with Janssen:
ID Technology API Therapeutic Administration Formulation Pre-clinical Phase Phase Partner
Area I II
MTX110 MidaSolve Panobinostat Recurrent Direct to X X X
Glioblastoma tumour via CED
Multiforme
MTX110 MidaSolve Panobinostat Paediatric Direct to X X X
brain cancer tumour via CED
(DIPG)
MTX110 MidaSolve Panobinostat Medulloblastoma Direct to X X X
tumour via CED
MTD211 Q-Sphera Brexpiprazole Schizophrenia, Long acting X X
MDD Injectable
MTD219 Q-Sphera Tacrolimus Anti- Long acting X X
transplant Injectable
rejection
MTX213 Q-Sphera Undisclosed Undisclosed Undisclosed X Janssen
Pharmaceutica
MTX223 Q-Sphera Undisclosed Undisclosed Undisclosed X Janssen
Pharmaceutica
MTX114 MidaCore Methotrexate Mild to Topical X
moderate
psoriasis
TECHNOLOGIES
Q-Sphera
Technology
Our Q-Sphera technology employs 3-D printing techniques to
encapsulate medicines in polymer-based bioresorbable microspheres.
The microspheres may be injected to form depots in the body which
release drug over predictable, sustained periods from one week up
to several months. The features and benefits of Q-Sphera technology
offer numerous potential advantages to patients and payors compared
with immediate release products and other polymer-based
technologies:
FEATURES
Biocompatible Small Low viscosity, Tuneable, Homogenous, Localised Sub cutaneous
biodegradable footprint, small gauge predictable monodispersed delivery
scalable needles Intra
manufacturing muscular
Intra tumoral
Intra
articular
Intra ocular
Increased Low cost, Improved Targeted Low Targeted
dosage environment injectability to therapeutic inter-patient site of
intervals friendly window variability action,
lower systemic
toxicity
BENEFITS
In addition, Q-Sphera products offer the possibility for
targeted delivery to the site of disease including intra tumoral,
intra articular and intra ocular applications, in each case
offering the potential for reduced dose and reduced systemic
toxicity.
Pipeline
We have an internal Q-Sphera pipeline including MTD211, a
long-acting injectable formulation of brexpiprazole. Brexpiprazole,
marketed as Rexulti(R), is indicated for schizophremia and as an
adjunct in the treatment of Major Depressive Disorder, or MDD.
We are also developing MTD219, a long-acting injectable
formulation of tacrolimus, marketed as ProGraf for the prophylaxis
of transplant rejection.
In addition, we are working to optimise the drug loading and
dissolution profiles of two large molecules, MTX213 and MTX223
under collaboration agreements with our partner Janssen.
MidaSolve
Technology
Our MidaSolve technology increases the aqueous solubility of
certain classes of anti-cancer drugs using complexes that
solubilize these agents in water, thereby enabling them to be
injected in liquid form directly into tumours.
The MidaSolve complexation agents (cyclodextrins) comprise a
hydrophobic inner surface and a hydrophilic outer surface, and as a
result are capable of forming host-guest complexes with normally
water-insoluble molecules. The hydrophobic, poorly water-soluble
drug associates with the inner, more hydrophobic surface of the
MidaSolve host, while the hydrophilic outer surface allows the
complex to dissolve at biological pH.
MTX110
Using our MidaSolve technology in combination with panobinostat,
an otherwise insoluble drug, MTX110 is designed for
direct-to-tumour treatment of intractable brain cancers.
Panobinostat is currently marketed under the brand Farydak(R) which
is used orally in combination therapy for the treatment of multiple
myeloma. We are currently researching the utility of MTX110 to
proof of concept stage in three indications:
Glioblastoma Multiforme (GBM):
GBM is the most common and aggressive form of brain cancer in
adults, usually occurring in the white matter of the cerebrum.
Treatments include radiation, surgical resection and chemotherapy
although, in almost all cases, tumours recur. There are
approximately 2-3/100,000(1) population diagnoses of GBM per annum.
Survival with standard of care treatment ranges from approximately
13 months in unmethylated MGMT patients to approximately 30 months
in highly methylated MGMT patients(2) .
Following IND approval in December 2021, we are in the process
of planning for enrolment of patients in a Phase I exploratory
study to assess the utility of MTX110 in recurrent GBM.
Diffuse Intrinsic Pontine Glioma (DIPG):
DIPG tumours are located in the pons (middle) of the brain stem
and are diffusely infiltrating. Occurring mostly in children,
approximately 1,000 patients(3) worldwide are diagnosed with DIPG
per annum and median survival is approximately 10 months(4) . There
is no effective treatment since surgical resection is not possible.
The standard of care is radiotherapy, which transiently improves
symptoms and survival. Chemotherapy does not improve survival and
one likely reason is that many anti-cancer drugs cannot cross the
blood-brain barrier to access the tumour.
In October 2020, we reported the first-in-human study by the
University of California, San Francisco ("UCSF") of MTX110 in DIPG
using a convection enhanced delivery ("CED") system. The Phase I
study established a recommended dose range for Phase II, a good
safety and tolerability profile but also encouraging survival data
in the seven patients treated.
We are in the process of planning for a Phase II study to
confirm the safety and efficacy of MTX110 in DIPG.
Medulloblastoma:
Medulloblastomas are malignant embryonal tumours that start in
the cerebellum. They are invasive and, unlike most brain tumours,
spread through the cerebrospinal fluid ("CSF") and frequently
metastasize to different locations in the brain and spinal cord.
Treatments include resection, radiation and chemotherapy.
Approximately 350 patients(5) are diagnosed with medulloblastoma
per annum and 3,800 people are living with the disease in the US.
The cumulative survival rate is approximately 60%, 52%, and 47% at
5 years, 10 years, and 20 years, respectively(6) ; however,
recurrence is nearly always fatal with no established standard of
care.
The University of Texas is undertaking a Phase I exploratory
study in recurrent medulloblastoma patients using direct
administration of MTX110 into the fourth ventricle, enabling it to
circulate throughout the CSF.
(1) American Association of Neurosurgeons
(2) Radke et al (2019). Predictive MGMT status in a homogeneous
cohort of IDH wildtype glioblastoma patients. Acta Neuropathologica
Communications 7:89 Online:
https://doi.org/10.1186/s40478-019-0745-z
(3) Louis DN, Ellison DW, et al. The 2016 World Health
Organization Classification of Tumors of the Central Nervous
System: a summary. Acta Neuropathol 2016; 131:803-820
(4) Jansen et al, 2015. Neuro-Oncology 17(1):160-166
(5) Aboian et al (2018). Neuro-Oncology Practice, Volume 5, Issue 4, December 2018
(6) Smoll NR (March 2012). "Relative survival of childhood and
adult medulloblastomas and primitive neuroectodermal tumors
(PNETs)". Cancer. 118 (5): 1313-22
MidaCore
Technology
The MidaCore technology platform is based on ultra-small gold
nanoparticle (GNP) drug conjugates, which at 2-4nm and among the
smallest particles in biomedical use. They are composed of a core
of gold salts decorated with an array of therapeutic and/or
targeting ligands. The small size and multi-functional arrangement
around the gold core underpin the ability to improve
biodistribution and target tumour and/or immune sites.
MidaCore design and synthesis GNP technology enables the
production of nano-medications, which we believe are
five-to-tenfold smaller than any other delivery vehicle in medical
use.
MTX114
Using MidaCore technology, we have developed a re-engineered
version of methotrexate, an immuno-suppressant for topical
application in psoriasis. If successful, MTX114 would be a topical
formulation of methotrexate, thus avoiding the need for potentially
toxic systemic administration. Pre-clinical data have shown that
MTX114 normalises skin thickness in psoriatic skin models. We are
continuing the pre-clinical development programme of MTX114 through
an in vivo programme looking at the immuno-suppressive effect and
local staining.
CHIEF EXECUTIVE'S REVIEW
Introduction
2021 was the first full year since the announcement of our
Strategic Review in March 2020 and realignment of our strategy. We
have consolidated operations in our new facilities in Cardiff,
expanded our R&D pipeline to eight programmes, secured a
world-class collaboration partner for two of those programmes and
significantly expanded the opportunities for our technology with
the successful encapsulation of proteins in Q-Sphera.
Execution on Realigned Strategy
The Strategic Review was a catalyst for a re-evaluation of our
priorities in the context of available resources. We quickly
pivoted away from a largely single focus on MTD201 towards a more
broadly-based collaborative strategy. Our realigned strategy is
focused on exploiting our technologies to develop multiple products
to proof of concept stage before seeking partners to fund pivotal
studies and take those products through to market. Our financial
returns will come from development and sales milestone payments
and, ultimately, royalties.
Our intention is to maintain a balanced portfolio of internal
and external Q-Sphera projects. Internal projects are based on
already marketed APIs. External projects may be proposed by
partners and based on their proprietary APIs. We have secured two
R&D collaborations with Janssen.
Similarly, our re-alignment of the MTX110 clinical programme to
prioritise GBM, an opportunity 30-50 times the size of DIPG,
significantly enhances the potential for that product.
We retain the capability to manufacture Q-Sphera products to
non-GMP pilot scale in our laboratory in Cardiff. Following the
closure of our Bilbao operations, we are working to technical
transfer our process to a CMO for GMP manufacture of clinical trial
supplies and commercial products.
The clarity of our realigned strategy and the simplification of
the investment case enabled us to attract new investment in July
which, in turn, allowed us to continue executing on our
strategy.
Commercial Update
Our commercial strategy is gaining traction. In July 2020 we
announced a collaboration with Janssen to explore the feasibility
of applying our Q-Sphera technology to Janssen's chosen APIs.
Following our success in the encapsulation of an exemplar protein,
we announced in January 2022 that Janssen has extended our
collaboration to optimise the drug loading and in vitro dissolution
of Janssen's proprietary protein.
In March 2022 we announced that Janssen had further extended the
collaboration to include the optimisation of drug loading and in
vitro dissolution of a second protein. It is reassuring to have a
collaboration partner of Janssen's status validate the work we are
doing with Q-Sphera.
R&D Update
With the change in strategic emphasis towards collaborating and
partnering at proof-of-concept stage, our R&D portfolio has
evolved as follows:
Q-Sphera
Each of the APIs we have developed for our internal Q-Sphera
pipeline was identified after a comprehensive evaluation of
potential candidates. Both address large markets and, as first in
class long-acting injectables, have the potential to offer
significant clinical benefits compared with current therapies and,
importantly for reimbursement, savings to the healthcare
system.
MTD211 (Q-brexpiprazole)
We have successfully developed a long-acting formulation of
brexpiprazole. In in vivo studies, MTD211 demonstrated that a
single dose is expected to deliver therapeutic blood levels of
brexpiprazole over a period of three months. Marketed under the
brand name Rexulti(R), brexpiprazole is indicated for the treatment
of schizophrenia and adjunctive treatment of major depressive
disorder (MDD) and is currently only available as an immediate
release oral tablet. The market for anti-psychotic drugs is
shifting towards long-acting formulations for reasons of improved
patient compliance and lowering of payor costs associated with
patient hospitalisation events. Sales of long-acting anti-psychotic
products in 2020 were approximately US$5.7 billion(2) globally.
MTD219 (Q-tacrolimus)
We are refining the development of a long-acting formulation of
tacrolimus. In in vivo studies, MTD219 indicated a single dose of
MTD29 could deliver therapeutic blood levels of tacrolimus over a
period of two to three weeks. Marketed under the brand name
ProGraf(R) among others, tacrolimus is indicated for the
prophylaxis of transplant rejection and is currently only available
as a once- or twice-daily oral tablet. Tacrolimus has a relatively
narrow therapeutic index with potential for negative clinical
outcomes from over- or under-dosing. The steady, predictable
pharmacokinetics characteristics of Q-Sphera could offer
significant advantages to patients and payors.
In June 2020 we announced, as part of an R&D Review,
breakthrough data on the successful encapsulation of a protein
using Q-Sphera technology. There are no approved long-acting
injectable formulations of biologic products such as monoclonal
antibodies (mAbs) or other high molecular weight proteins because
they are delicate and easily de-natured in manufacture. We
demonstrated encapsulation of an exemplar mAb and most importantly,
were able to preserve the functional integrity and antigen binding
in vitro. The Company believes no other commercial or academic
organisation has been able to successfully deliver therapeutic
proteins over extended periods using methods capable of commercial
scaling. We believe these results could potentially open up very
significant opportunities for our Q-Sphera technology. A
significant number of latest generation medicines are protein based
and reformulation as long-acting injectables could provide
significant benefits to patients, physicians and payors. In 2020,
the top 10 mAbs recorded aggregate sales of US$74.9 billion(1) and
all mAbs recorded sales of US$154 billion(1) globally.
We are collaborating with Janssen on two large molecule APIs to
optimize their respective drug loading and in vitro dissolution
profiles.
MidaSolve / MTX110
Employing our MidaSolve technology, MTX110 solubilises
panobinostat, a histone deacetylase (HDAC) inhibitor currently used
in the treatment of multiple myeloma. In a liquid formulation as
MTX110, panobinostat can be delivered directly to a patient's
tumour under constant pressure via a catheter system (Convection
Enhanced Delivery, or "CED") thereby bypassing the blood-brain
barrier and allowing for high drug concentrations and broader drug
distribution in and around the tumour while simultaneously
minimising systemic toxicity and other side effects.
During 2021, following receipt of promising pre-clinical data
from tumour models and in vitro patient-derived cell lines, we
re-prioritised our development of our, MTX110, in favour of GBM,
potentially a very significant opportunity with annual diagnoses of
2-3/100,000 population and global market potential of US$3-5
billion . In December 2021 we announced the successful completion
of the 30-day FDA review period of our IND has been judged safe to
proceed with a Phase I study in recurrent GBM. Accordingly, we have
begun has preparations for patient enrolment to begin mid-2022 with
the possibility of initial progression-free survival data in a
limited number of patients by the end of the year.
We initially began developing MTX110 for DIPG, the ultra-rare,
highly aggressive and inoperable form of childhood brain cancer. We
have an ongoing Phase I study in the US with two more patients
required for completion. Thereafter, we plan to initiate a Phase II
study in DIPG with safety and efficacy endpoints. We are also
evaluating the utility of MTX110 in medulloblastoma in a pilot
study at the University of Texas.
As announced in June 2020, we received a letter from counsel to
Secura Bio Inc. (Secura Bio), the licensor of panobinostat and API
component of MTX110, purporting to terminate the Company's license
to panobinostat. Secura Bio three times declined to withdraw its
termination of the license. We received a further letter sent on
behalf of Secura Bio dated in May 2021 purporting to terminate the
Secura License Agreement a second time for alleged material
breaches of the agreement, and demanding a non-exclusive, fully
paid-up, royalty-free, perpetual license to Midatech's MTX110
intellectual property. This demand was refused based upon, among
other things, Secura Bio's previous termination of the license in
2020. We continue to enjoy freedom to use panobinostat for research
purposes and believe the relevant Secura Bio patents may marginally
delay a launch of MTX110 for DIPG but not MTX110 for GBM.
MidaCore
For MTX114 we have deployed our GNP technology to engineer a
formulation of methotrexate for the topical treatment of psoriasis.
If successful, MTX114 would be a topical formulation of
methotrexate, thus avoiding the need for potentially toxic systemic
administration. Pre-clinical data have shown that MTX114 normalises
skin thickness in mouse psoriatic skin models. There are estimated
to be over 100 million(2) people who suffer from psoriasis
worldwide.
(1) Global Data
(2) Psoriasis.org
Financing
Following the positive news in our R&D Update announcement
in June 2021, we raised GBP10 million gross proceeds through the
issue of 35.1 million new ordinary shares via a UK Placing in July.
The Company currently has funding, assuming zero incoming license
fees, into the first quarter of 2023. The financing was a key
strategic decision of the Board. The Board balanced the impact of
dilution on existing investors with the opportunities for growth in
shareholder value afforded by the fundraise.
COVID-19
In response to the pandemic and government imposed restrictions
on movement, we have established a COVID-19 Task Force with the
dual objectives of safeguarding the health and wellbeing of our
staff members and monitoring the impact of COVID-19 on our vendors
and collaborators. We have organised the layout of our offices and
laboratories in Cardiff to permit, as far as reasonably practical,
social distancing and allow employees to work safely in our offices
and laboratories. Notwithstanding these actions, there has been
disruption to internal workplans and delays in the recruitment of
patients to ongoing clinical trials.
Outlook
The breakthrough data on the encapsulation of a protein using
Q-Sphera and retention of its integrity over a significant period
is, as far as we know, unique and could offer game-changing
opportunities for the Company. We believe we have reasons to view
the future with confidence.
FINANCIAL REVIEW
The Strategic Review process which resulted in the restructuring
of operations including the termination of further in-house
development of MTD201, closure of its Bilbao operations and
redundancy of 48 personnel had a material impact on the 2020
comparative numbers referenced below.
Introduction
Midatech Pharma plc (the "Company") was incorporated as a
company on 12 September 2014 and is domiciled in England and
Wales.
Financial analysis
Key performance indicators
2021 2020 Change
Total gross revenue(1) GBP0.58m GBP0.34m 69%
Customer revenue (2) GBP0.58m GBP0.18m 221%
R&D expenditure GBP4.65m GBP6.07m (23)%
R&D as % of operating costs 61% 56% n/a
Net cash inflow/(outflow) for the n/m
year GBP2.52m GBP(3.64)m
============ ============ ============
(1) Total gross revenue represents collaboration income
plus grant revenue.
(2) Customer revenue represents collaboration income
only.
Revenue
In the year ended 31 December 2021, Midatech generated
consolidated total gross revenue of GBP0.58m (2020: GBP0.34m), an
increase of 69% on the prior year. Customer revenue for the year
was GBP0.58m (2020: GBP0.18m), the difference between gross and
customer revenue in 2020 being grant revenue of GBP0.16m. Customer
revenue was derived entirely from the Company's R&D
collaboration agreements with Dr Reddy's laboratories Ltd and
Janssen. The R&D collaboration agreement with Dr Reddy's was
subsequently terminated by mutual agreement while the R&D
collaboration agreement with Janssen has been expanded to include
two proteins. Although R&D collaboration revenue in 2021
increased by only GBP0.4m compared with 2020, the Company regards
this as progress and validation of its partnering strategy.
Research and development expenditure
Research and development costs decreased by GBP1.41m, or 23% to
GBP4.65m (2020: GBP6.07m) in the year primarily due to GBP1.81m
lower clinical development costs on MTD201 offset by a GBP0.48m
increase in clinical costs on MTX110 and a GBP1.21m increase in
preclinical costs spread across several projects, including those
under R&D collaboration agreements. Personnel costs, share
based payment charge and other items increased by GBP0.32m,
GBP0.21m and GBP0.22m respectively in 2021 compared with 2020. The
prior year included certain items related to the restructuring of
the Company following the Strategic Review including redundancy
costs, accelerated depreciation and foreign exchange of GBP0.89m,
GBP0.85m and GBP0.31m, respectively. Although research and
development expenditure as a whole decreased in 2021, importantly,
it increased as a percentage of total operating costs from 56% in
2020 to 61% in 2021. The Company believes focusing its resources on
research and development as opposed to administrative costs is more
likely to generate shareholder value.
Administrative costs
Administrative costs in the year decreased by GBP2.01m, or 41%
to GBP2.95m (2020: GBP4.96m) and included decreases in legal,
professional fees, insurance and other costs of GBP0.95m and a
decrease in personnel costs of GBP0.51m offset by an increase in
share based payments of GBP0.15m. The prior year included certain
items related to the closure of the Company's operations in Bilbao,
Spain including GBP0.55m interest on repaid Spanish soft loans and
GBP0.17m related to the settlement of a lawsuit.
Impairment of intangible assets
There was no impairment of intangible assets in 2021 although in
the prior year, in connection with our decision to terminate
further in-house development of MTD201, we recognized an impairment
loss for in-process research and development of GBP9.30m. In
addition, because no other Q-Sphera products were advanced beyond
the formulation stage as of 31 December 2020, we recognised an
impairment of goodwill arising from our acquisition of Q Chip
Limited in December 2014 of GBP2.29m. In connection with the
purported termination of our license to panobinostat by Secura Bio
in June 2020, we recognized an impairment of an intangible asset of
GBP0.78m as of 31 December 2020.
Staff costs
During the year, the average number of staff decreased to 20
(2020: 40), reflecting the closure of Bilbao operations and the
redundancy of five UK-based employees following the Strategic
Review. Total staff cost for continued operations fell by 40% to
GBP1.67m (2020: GBP2.79m).
Capital expenditure
The total cash expenditure on property plant and equipment in
2021 was GBP0.32m (2020: GBP0.21m), largely in respect of
investment in our laboratory and pilot-scale manufacturing facility
in Cardiff.
Other comprehensive income
Other comprehensive income in 2020 comprised a foreign exchange
gain of GBP0.51m arising on retranslation of Midatech's non-UK
operations.
Cash flow
Net cash outflow from operating activities in 2021 was GBP6.01m
(2020: outflow GBP9.30m) driven by a net loss of GBP5.46m (2020:
loss GBP22.19m) and after negative movements in working capital of
GBP0.62m (2020: negative GBP1.56m), taxes received of GBP1.16m
(2020: GBP1.95m), non-cash impairment of intangible assets of nil
(2020: GBP12.37m) and other net negative adjustments for non-cash
items totalling GBP1.09m (2020: positive GBP0.12m).
Investing activities outflow in 2021 of GBP0.28m (2020: inflow
of GBP2.57m) included purchases of property, plant and equipment of
GBP0.32m (2020: GBP0.21m) offset by proceeds from the disposal of
assets of GBP0.04m (2020: GBP0.14m). A guarantee deposit of
GBP2.64m in respect of a Spanish government loan repaid during the
year was released in 2020.
Financing activities inflow in 2021 of GBP8.81m (2020: inflow of
GBP3.08m) was driven by receipts from share issues, including
exercise of warrants, of GBP9.04m (2020: GBP9.74m) offset by the
repayment of Spanish government loans of GBP0.10m (2020: GBP6.18m).
In 2020, Spanish government grants of GBP0.23m were repaid. The
other principal outflows related to interest paid of GBP0.02m
(2020: GBP0.03m) and payments on lease liabilities of GBP0.11m
(2020: GBP0.26m).
As a result of the foregoing, net cash inflow for the year was
GBP2.52m (2020: outflow of GBP3.64m).
Capital structure
Following approval by shareholders at a General Meeting of the
Company on 2 March 2020, the Ordinary Shares of 0.005 pence each
were consolidated on a one for 20 basis with effect from 3 March
2020 and the consolidated shares were issued with a new
International Securities Identification Number of GB00BKT14T00.
Midatech's capital structure on a post-consolidation basis as of 31
December 2021 was as follows:
Post-consolidation
Ordinary Shares
of 0.1 pence
Ordinary Shares 98,468,387
Warrants 2022 exercisable at GBP10.00 per
Ordinary Share (1) 15,692,276
Warrants exercisable at $6.25 per American
Depositary Share 3,150,000
Warrants exercisable at GBP0.34 per Ordinary
Share 6,999,999
Warrants exercisable at $2.05 per American
Depositary Share 6,590,910
Warrants exercisable at $2.0625 per American
Depositary Share 147,731
Options over Ordinary Shares with a weighted
average exercise price of GBP0.83 2,633,276
Warrants assumed in connection with the 2015
acquisition of DARA with a weighted average
exercise price of $61.03 4,080
Options assumed in connection with the 2015
acquisition of DARA with a weighted average
exercise price of $95.17 2,835
(1) Warrants 2022 expired in February 2022.
In addition, there were 1,000,001 deferred shares of GBP1 each,
unaffected by the consolidation.
As a consequence of the consolidation, per share amounts for
2019 have been restated based on one twentieth of the weighted
average number of Ordinary Shares outstanding during the year,
being 80,546,881 (2020: 42,839,961).
Restructuring in 2020
In March 2020, the Company announced a wide ranging Strategic
Review of its operations. The Board decided to terminate further
in-house development of MTD201, close the Company's MTD201
dedicated facilities in Bilbao and make redundant all 43 Bilbao
based employees and five UK employees. The cash and non-cash impact
of the restructuring on the financial statements during 2020 may be
summarised as follows:
Profit and loss Balance sheet
Cash Non-cash Cash Non-cash
GBP000 GBP000 GBP000 GBP000
Staff redundancy 959 - - -
Repayment of loans, net of
deposit returned (incl. penalties) 324 - 3,543 -
Settlement of leases (incl.
penalties) 122 - 122 -
Repayment of grant funding
(incl. penalties) 229 - 229 -
Impairment of acquired IPRD - 9,300 - 9,300
Impairment of goodwill - 2,291 - 2,291
Write down of tangible assets - 778 - 778
Write back of right of use
asset - IFRS16 - (110) - 110
Legal, advisory fees 157 - - -
Share based payments - (520) - -
1,791 11,739 3,894 12,479
As of 31 December 2020, all loans, grants and subsidies other
than one Spanish government loan of GBP0.10m had been repaid. The
remaining loan was repaid in February 2021.
Going Concern
The Group and Company has experienced net losses and significant
cash outflows from cash used in operating activities over the past
years as it develops its portfolio. For the year ended 31 December,
2021, the Group incurred a consolidated loss from operations of
GBP5.46m and negative cash flows from operating activities of
GBP6.01m. As of 31 December, 2021, the Group had an accumulated
deficit of GBP127.80m.
The Group's future viability is dependent on its ability to
raise cash from financing activities to finance its development
plans until commercialisation, generate cash from operating
activities and to successfully obtain regulatory approval to allow
marketing of its development products. The Group's failure to raise
capital as and when needed could have a negative impact on its
financial condition and ability to pursue its business
strategies.
The Group's consolidated financial statements have been
presented on a going concern basis, which contemplates the
realization of assets and the satisfaction of liabilities in the
normal course of business.
As at 31 December 2021, the Group had cash and cash equivalents
of GBP10.06m. The Directors forecast that the Group currently has
enough cash to fund its planned operations into the first quarter
of 2023.
The Directors have prepared cash flow forecasts and considered
the cash flow requirement for the Company for the next three years
including the period twelve months from the date of approval of the
consolidated financial statements. These forecasts show that
further financing will be required before the first quarter of 2023
assuming, inter alia, that certain development programs and other
operating activities continue as currently planned. This
requirement for additional financing in the short term represents a
material uncertainty that may cast significant doubt upon the Group
and parent company's ability to continue as a going concern.
In addition, the global pandemic COVID-19 virus places increased
uncertainty over the Directors' forecasts. The restrictions that
have been placed on the movement of people caused delays to some of
the Group's plans. The Directors have established a COVID-19 task
force internally to monitor the impact of COVID-19 on the business
and prioritize activities to minimize its continuing effect.
The Directors are evaluating a number of near-term funding
options potentially available to the Group, including fundraising
and the partnering of assets and technologies of the Company. After
considering the uncertainties, the Directors consider it is
appropriate to continue to adopt the going concern basis in
preparing these financial statements.
Macro-economic environment
The United Kingdom completed its exit from the European Union
("EU") on 31 January 2020 and the transition period concluded on 31
December, 2020. A new trade agreement with the EU, the EU-UK Trade
and Cooperation Agreement, was negotiated and became effective on 1
January 2021. The impact of the new trade agreement on the general
and economic conditions in the United Kingdom remains uncertain.
There may, for example be additional costs in materials and
equipment sourced from the EU and we have experienced some delays
in delivery timelines due to additional administration.
The recent invasion by Russian Federation military in Ukraine
has had a destabilising impact on the global economy, including
energy prices. Although there has been no immediate impact on the
Company, it is not possible to assess the medium and long term
impact of the conflict on the Company and the global economy
generally.
Environmental matters, community, human rights issues and
employees
As at 31 December 2021 the Group had 22 employees, of whom 18
were routinely based at its offices in Cardiff. The Company
believes it has a relatively modest environmental impact. All
materials imported into the Company's laboratories are assessed for
safety purposes and appropriate handling and storage safeguards
imposed as necessary. Any small quantities of hazardous materials
are removed by licensed waste management contractors. A number of
policies and procedures governing expectations of ethical standards
and the treatment of employees and other stakeholders are set out
in the Company's Employee Handbook. The Company has also
established an anti-slavery policy pursuant to the Modern Slavery
Act 2015.
The Company strives to be an equal opportunity employer,
irrespective of race or gender. At 31 December 2021; the number of
male/female employees was 32%/68%, the number of male/female senior
managers was 60%/40% and the number of male/female Directors was
100%/0%.
Annual greenhouse gas emissions
We measure our environmental performance by reporting our carbon
footprint in terms of tonne CO(2) equivalent. We report separately
on our indirect emissions from consumption of electricity (Scope 2)
and emissions consisting of employee travel in cars on company
business (Scope 3) estimated on the basis of miles travelled. The
Group have elected to monitor and report its energy efficiency
using tonnes of CO(2) per employee as an intensity ratio.
Methodology
In calculating the reported energy usage and equivalent
greenhouse gas emissions the Group have referred to the HM
Government Environment Reporting Guidelines and the GHG Reporting
Protocol. A location based allocation methodology was used to
calculate electricity usage.
Tonnes CO(2) 2021 2020
Scope 2 21 27
Scope 3 4 3
Total 25 30
Intensity ratio (tonnes of
CO(2) per employee) 1.2 1.4
Note: In order to present like-for-like comparative data,
consumption by Midatech Pharma (España) SL has been excluded from
2020.
The Company's electricity costs for 2021 were approximately
GBP16,000. The Company has no immediate plans to improve energy
efficiency.
Consolidated StatementS of Comprehensive Income
For the year ended 31 December
2021 2020 2019
Note GBP'000 GBP'000 GBP'000
Revenue 578 180 312
Grant revenue - 163 362
Total revenue 578 343 674
Other income 24 12 15
Research and development costs (4,654) (6,068) (7,843)
Distribution costs, sales and marketing - - (323)
Administrative costs (2,946) (4,958) (3,841)
Impairment of intangible assets - (12,369) -
Loss from operations (6,998) (23,040) (11,318)
Finance income 2 936 1 492
Finance expense 2 (44) (431) (97)
Loss before tax (6,106) (23,470) (10,923)
Taxation 3 646 1,281 1,785
Loss from continuing operations (5,460) (22,189) (9,138)
Loss from discontinued operations net of
tax - - (947)
Loss for the year attributable to the owners
of the parent (5,460) (22,189) (10,085)
Other comprehensive income:
Items that will or may be reclassified
subsequently to profit or loss:
Exchange gains/(losses) arising on translation
of foreign operations - 508 (207)
Total other comprehensive income/(loss
) net of tax - 508 (207)
Total comprehensive loss attributable to
the owners of the parent (5,460) (21,681) (10,292)
Loss per share
Continuing operations
Basic and diluted loss per ordinary share (50)
- pence 4 (7)p (52)p p
Discontinued operations
Basic and diluted loss per ordinary share
- pence 4 - - (5)p
Consolidated statementS of financial position
At 31 December
2021 2020 2019
Company number 09216368 Note GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Property, plant and equipment 5 1,152 542 2,154
Intangible assets - - 12,379
Other receivables due in greater than one
year - - 2,625
1,152 542 17,158
Current assets
Trade and other receivables 1,034 572 992
Taxation 670 1,157 1,817
Cash and cash equivalents 10,057 7,546 10,928
11,761 9,275 13,737
Total assets 12,913 9,817 30,895
Liabilities
Non-current liabilities
Borrowings 6 620 60 5,670
Provisions - 50 -
620 110 5,670
Current liabilities
Trade and other payables 1,092 1,230 4,494
Borrowings 6 146 200 412
Provisions 50 - 97
Derivative financial liability 7 553 1,559 664
1,841 2,989 5,667
Total liabilities 2,461 3,099 11,337
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION(continued)
At 31 December
2021 2020 2019
Note GBP'000 GBP'000 GBP'000
Issued capital and reserves attributable
to owners of the parent
Share capital 8 1,098 1,063 1,023
Share premium 83,434 74,364 65,879
Merger reserve 53,003 53,003 53,003
Warrant reserve 720 720 -
Foreign exchange reserve - - (508)
Accumulated deficit (127,803) (122,432) (99,839)
Total equity 10,452 6,718 19,558
Total equity and liabilities 12,913 9,817 30,895
Consolidated statements of cash flows
For the year ended 31 December
2021 2020 2019
Note GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Loss for the year (5,460) (22,189) (10,085)
Adjustments for:
Depreciation of property, plant and equipment 5 213 1,089 979
Depreciation of right of use asset 5 190 118 303
Amortisation of intangible fixed assets - 10 3
Profit on disposal of fixed assets (39) (226) -
Impairment of intangible assets - 12,369 -
Finance income 2 (936) (1) (492)
Finance expense 2 44 431 97
Share-based payment debit/(credit) 89 (404) (34)
Taxation 3 (646) (1,281) (1,785)
Loss from discontinued operations, net
of tax - - 947
Foreign exchange (gains)/losses (3) 387 (140)
Cash flows from operating activities before
changes in working capital (6,548) (9,697) (10,207)
Decrease in trade and other receivables (487) 493 725
(Decrease)/Increase in trade and other
payables (130) (2,004) 1,141
Decrease in provisions - (47) (68)
Cash used in operations (7,165) (11,255) (8,409)
Taxes received 1,157 1,954 1,920
Net cash used in operating activities (6,008) (9,301) (6,489)
Consolidated statements of cash flows(continued)
For the year ended 31 December
2021 2020 2019
Note GBP'000 GBP'000 GBP'000
Investing activities
Purchases of property, plant and equipment 5 (320) (209) (310)
Proceeds from disposal of fixed assets 42 143 -
Purchase of intangibles - - (9)
Long term deposit for guarantee for Government
loan - 2,639 (2,549)
Deposit paid in connection with disposed
subsidiary - - (947)
Interest received - 1 8
Net cash (used in)/generated from investing
activities (278) 2,574 (3,807)
Financing activities
Interest paid (15) (34) (30)
Receipts from sub-lessee on onerous lease - 45 107
Amounts paid on lease liabilities (112) (258) (450)
Repayment of Government grants on closure
of Spanish operation - (229) -
Repayment of borrowings - - (577)
(Repayment)/Proceeds from Government loan (103) (6,182) 4,436
Proceeds from Government subsidy - - 1,139
Share issues including warrants, net of
costs 8 9,035 9,742 14,108
Net cash generated from financing activities 8,805 3,084 18,733
Net increase/(decrease) in cash and cash
equivalents 2,519 (3,643) 8,437
Cash and cash equivalents at beginning
of year 7,546 10,928 2,343
Exchange (losses)/gains on cash and cash
equivalents (8) 261 148
Cash and cash equivalents at end of year 10,057 7,546 10,928
Consolidated statements of changes in equity
For the year ended 31 December
Foreign
Share Share Merger Warrant exchange Accumulated Total
capital premium reserve reserve reserve deficit equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2021 1,063 74,364 53,003 720 - (122,432) 6,718
Loss for the year - - - - - (5,460) (5,460)
Foreign exchange translation - - - - - - -
Total comprehensive loss - - - - - (5,460) (5,460)
Transactions with owners
Shares issued on 19 February
2021 - 161 - - - - 161
Costs associated with share
issue on 19 February 2021 - (10) - - - - (10)
Shares issued on 6 July 2021 35 9,965 - - - - 10,000
Costs associated with share
issue on 6 July 2021 - (1,046) - - - - (1,046)
Share-based payment charge - - - - - 89 89
Total contribution by and
distributions to owners 35 9,070 - - - 89 9,194
At 31 December 2021 1,098 83,434 53,003 720 - (127,803) 10,452
Consolidated statements of changes in equity(cONTINUED)
Foreign
Share Share Merger Warrant exchange Accumulated Total
capital premium reserve reserve reserve deficit equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2020 1,023 65,879 53,003 - (508) (99,839) 19,558
Loss for the year - - - - - (22,189) (22,189)
Foreign exchange translation - - - - 508 - 508
Total comprehensive loss - - - - (508) (22,189) (21,681)
Transactions with owners
Shares issued with warrants
on 18 May 2020 16 2,527 - 720 - - 3,263
Costs associated with shares
issued with warrants on 18
May 2020 (544) - - - - (544)
Shares issued on 27 July 2020 21 5,729 - - - - 5,750
Costs associated with share
issue on 27 July 2020 (489) - - - - (489)
Shares issued on 19 August
2020 3 1,278 - - - - 1,281
Costs associated with share
issue on 19 August 2020 (16) - - - - (16)
Share-based payment credit - - - - - (404) (404)
Total contribution by and
distributions to owners 40 8,485 - 720 - (404) 8,841
At 31 December 2020 1,063 74,364 53,003 720 - (122,432) 6,718
Consolidated statements of changes in equity(cONTINUED)
Foreign
Share Share Merger exchange Accumulated Total
capital premium reserve reserve deficit equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2019 1,003 52,939 53,003 (301) (89,720) 16,924
Loss for the year - - - - (10,085) (10,085)
Foreign exchange translation - - - (207) - (207)
Total comprehensive loss - - - (207) (10,085) (10,292)
Transactions with owners
Shares issued on 26 February
2019 17 13,388 - - - 13,405
Costs associated with share
issue on 26 February 2019 - (1,120) - - - (1,120)
Shares issued on 29 October
2019 3 1,211 - - - 1,214
Costs associated with share
issue on 29 October 2019 - (539) - - - (539)
Share-based payment credit - - - - (34) (34)
Total contribution by and
distributions to owners 20 12,940 - - (34) 12,926
At 31 December 2019 1,023 65,879 53,003 (508) (99,839) 19,558
Notes forming part of the financial statements
For the year ended 31 December 2021
1. Basis of preparation
The consolidated financial statements have been prepared in
accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006, and they are
prepared in accordance with international financial reporting
standards. The consolidated financial statements have been prepared
on a historical cost basis except that the following assets and
liabilities are stated at their fair value: certain financial
assets and financial liabilities measured at fair value, and
liabilities for cash-settled share-based payments.
The financial information contained in this final announcement
does not constitute statutory financial statements as defined in
Section 435 of the Companies Act 2006. The financial information
has been extracted from the financial statements for the year ended
31 December 2021 which have been approved by the Board of
Directors, and the comparative figures for the year ended 31
December 2020 and 31 December 2019 are based on the financial
statements for that year.
The financial statements for 2020 and 2019 have been delivered
to the Registrar of Companies and the 2021 financial statements
will be delivered after the Annual General Meeting.
The auditor's report for the Company's 2021 Annual Report and
Accounts was unqualified but did draw attention to the material
uncertainty relating to going concern. The auditor's report did not
contain statements under s498(2) or (3) of the Companies Act
2006
Whilst the financial information included in this results
announcement has been prepared in accordance with International
Financial Reporting Standards (IFRSs) this announcement does not
itself contain sufficient information to comply with IFRSs. The
information in this results announcement was approved by the board
on 12 April 2022.
The Directors confirm that, to the best of their knowledge, this
condensed set of consolidated financial statements has been
prepared in accordance with the AIM Rules.
Going concern
The Group and Company has experienced net losses and significant
cash outflows from cash used in operating activities over the past
years as it develops its portfolio. For the year ended 31 December
2021, the Group incurred a consolidated loss from operating
activities of GBP5.5m and negative cash flows from operations of
GBP6.0m. As of 31 December 2021, the Group had an accumulated
deficit of GBP127.8m.
The Group's future viability is dependent on its ability to
raise cash from financing activities to finance its development
plans until commercialisation, generate cash from operating
activities and to successfully obtain regulatory approval to allow
marketing of its development products. The group's failure to raise
capital as and when needed could have a negative impact on its
financial condition and ability to pursue its business
strategies.
The Group's consolidated financial statements have been
presented on a going concern basis, which contemplates the
realization of assets and the satisfaction of liabilities in the
normal course of business.
As at 31 December 2021, the Group had cash and cash equivalents
of GBP10.1m. The Directors forecast that the Group currently has
enough cash to fund its planned operations into the first quarter
of 2023.
The Directors have prepared cash flow forecasts and considered
the cash flow requirement for the Company for the next three years
including the period twelve months from the date of approval of the
consolidated financial statements. These forecasts show that
further financing will be required during the first quarter of 2023
assuming, inter alia, that certain development programs and other
operating activities continue as currently planned. This
requirement for additional financing in the short term represents a
material uncertainty that may cast significant doubt upon the Group
and parent company's ability to continue as a going concern.
In addition, the global pandemic COVID-19 virus places increased
uncertainty over the Directors' forecasts. The restrictions that
have been placed on the movement of people caused delays to some of
the Group's plans. The Directors have established a COVID-19 task
force internally to monitor the impact of COVID-19 on the business
and prioritize activities to minimize its continuing effect.
The Directors are evaluating a number of near-term funding
options potentially available to the Group, including fundraising
and the partnering of assets and technologies of the Company. After
considering the uncertainties, the Directors consider it is
appropriate to continue to adopt the going concern basis in
preparing these financial statements.
2 Finance income and expense
2021 2020 2019
GBP'000 GBP'000 GBP'000
Finance income
Interest received on bank deposits - 1 8
Gain on equity settled derivative financial
liability 936 - 484
Total finance income 936 1 492
2021 2020 2019
GBP'000 GBP'000 GBP'000
Finance expense
Interest expense on lease liabilities 36 20 30
Other loans 8 14 67
Loss on equity settled derivative financial
liability - 397 -
Total finance expense 44 431 97
The gain/(loss) on the equity settled derivative financial
liability in 2021, 2020 and 2019 arose as a result of the movement
in share price (note 7).
3 Taxation
2021 2020 2019
GBP'000 GBP'000 GBP'000
Current tax credit
Current tax credited to the income statement 646 1,144 1,782
Taxation payable in respect of foreign
subsidiary - (21) -
Adjustment in respect of prior year - 158 3
646 1,281 1,785
Deferred tax credit
Reversal of temporary differences - - -
Total tax credit 646 1,281 1,785
There was no tax charge relating to discontinued operations for
2021, 2020 and 2019.
The reasons for the difference between the actual tax charge for
the year and the standard rate of corporation tax in the United
Kingdom applied to losses for the year are as follows:
2021 2020 2019
GBP'000 GBP'000 GBP'000
Loss before tax (6,106) (23,470) (11,870)
Expected tax credit based on the standard
rate of United Kingdom corporation tax
at the domestic rate of 19% (1,160) (4,459) (2,255)
Expenses not deductible for tax purposes 75 596 1,087
Income not taxable (2) (75) -
Unrelieved tax losses and other deductions - - (114)
Adjustment in respect of prior period - (158) (3)
Surrender of tax losses for R&D tax refund (280) (491) (1,810)
Foreign exchange differences - 1
Deferred tax not recognised 721 3,306 1,309
Total tax credited to the income statement (646) (1,281) (1,785)
The taxation credit arises on the enhanced research and
development tax credits accrued for the respective periods.
An adjustment has been recognised in 2020 in respect of the
prior period of GBP158k, this is as a result of a more detailed
review of cost classification prior to the submission of tax
returns to HMRC in 2020.
4 Loss per share
2021 2020 2019
GBP'000 GBP'000 GBP'000
Numerator
Loss used in basic EPS and diluted EPS:
Continuing operations (5,460) (22,189) (9,138)
Discontinued operations - - (947)
Denominator
Weighted average number of ordinary shares
used in basic EPS: 80,546,881 42,839,961 18,330,588
Basic and diluted loss per share:
Continuing operations - pence (7)p (52)p (50)p
Discontinued operations - pence - - (5)p
On 2 March 2020 a resolution was passed at a general meeting of
shareholders of the Company to consolidate its ordinary shares on a
one for 20 basis into new ordinary shares of 0.1p each in the
capital of the Company. The comparative denominator has been
calculated to reflect the share consolidation.
The Group has made a loss in the current and previous years
presented, and therefore the options and warrants are
anti-dilutive. As a result, diluted earnings per share is presented
on the same basis for all periods shown.
5 Property, plant and equipment
Right of
Fixtures Leasehold Computer Laboratory use
and fittings improvements equipment equipment asset Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 January 2019 253 2,013 383 3,651 - 6,300
Adoption of IFRS 16 Leases - - - - 395 395
Additions 4 137 23 223 822 1,209
Effect of modification
to lease terms - - - - (82) (82)
Exchange differences (9) (112) (3) (136) (11) (271)
At 31 December 2019 248 2,038 403 3,738 1,124 7,551
Additions - 58 16 135 - 209
Effect of modification
to lease terms - - - - (678) (678)
Disposal (202) (2,184) (185) (2,323) (316) (5,210)
Exchange differences 7 92 2 112 58 271
At 31 December 2020 53 4 236 1,662 188 2,143
Additions 57 53 16 194 720 1,040
Transfer - - - (155) 155 -
Effect of modification
to lease terms - - - - (24) (24)
Disposal (50) (4) (10) (138) (164) (366)
At 31 December 2021 60 53 242 1,563 875 2,793
Right of
Fixtures Leasehold Computer Laboratory use
and fittings improvements equipment equipment asset Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Accumulated depreciation
At 1 January 2019 241 1,485 265 2,326 - 4,317
Charge for the year 2 400 70 507 303 1,282
Exchange differences (8) (91) (3) (93) (7) (202)
At 31 December 2019 235 1,794 332 2,740 296 5,397
Charge for the year 9 310 50 720 118 1,207
Disposals (202) (2,183) (185) (2,300) (316) (5,186)
Exchange differences 7 81 2 79 14 183
At 31 December 2020 49 2 199 1,239 112 1,601
Transfer - - - (74) 74 -
Charge for the year 8 5 22 178 190 403
Disposals (50) (3) (8) (138) (164) (363)
At 31 December 2021 7 4 213 1,205 212 1,641
Net book value
At 31 December 2021 53 49 29 358 663 1,152
At 31 December 2020 4 2 37 423 76 542
At 31 December 2019 13 244 71 998 828 2,154
In April 2021 the Group signed an agreement to lease new
premises in Cardiff to house its corporate offices and
laboratories. The agreement to lease allowed the Group to carry out
the Cat A works and fit out prior to completion of the lease and
its occupation in August 2021. The principal terms of the lease are
as follows:
-- Five-year term with no break clause; and
-- Nine months' rent free from commencement of lease.
The lease has been recognised as a right of use asset during the
period.
6 Borrowings
2021 2020 2019
GBP'000 GBP'000 GBP'000
Current
Lease liabilities 146 93 233
Government and research loans - 107 179
Total 146 200 412
Non-current
Lease liabilities 620 60 912
Government and research loans - - 4,758
Total 620 60 5,670
During 2021 a euro denominated government and research loan of
GBP103k (2020: GBP6.2m) was repaid. This amount includes GBP nil
(2020: GBP1.2m) of government grants, which is included in the
amounts disclosed in note 17. This amount translated at year end
rate was GBP107k (2020: GBP4.8m).
Book values approximate to fair value at 31 December 2021, 2020
and 2019.
Obligations under finance leases are secured by a fixed charge
over the fixed assets to which they relate.
Government loans in Spain
MPE previously had four Spanish government loans, three were
repaid in 2020 with the final loan repaid in February 2021 prior to
the liquidation of MPE.
Three of the loans were provided for the finance of research,
technical innovation and the construction of their laboratory. The
loans were term loans which carried an interest rate below the
market rate and were repayable over periods through to 2024. As a
result of the Group's decision on 31 March 2020 to terminate
further in-house development of MTD201 and the subsequent closure
of its dedicated manufacturing facilities in Bilbao two of these
loans were repaid in 2020, with the final loan being repaid in
2021.
The fourth loan received by MPE in September 2019 for EUR6.6m
was awarded under the Spanish Government Reindustrialization
programme. The Spanish Government required the company to provide a
EUR2.9 million cash-backed guarantee as security for the loan. The
funds were to be used to support Midatech's manufacturing scale-up
facilities construction. This loan was terminated and repaid early
in 2020 as a result of the Group's decision on 31 March 2020. As a
result of the early termination interest was charged at market
rates up to the date of satisfaction of the loan.
The loans carried default interest rates in the event of
scheduled repayments not being met. On initial recognition, the
loans are discounted at a market rate of interest with the credit
being classified as a grant within deferred revenue. The deferred
grant revenue is released to the consolidated statement of
comprehensive income within research and development costs in the
period to which the expenditure is recognised.
The deferred revenue element of the government loans is
designated within note 17 as deferred revenue and Government
grants, the gross contractual repayment of the loans is disclosed
in note 21. As a result of the repayment of the loans these were
fully amortised during 2020.
7 Derivative financial liability - current
2021 2020 2019
GBP'000 GBP'000 GBP'000
Equity settled derivative financial liability
At 1 January 1,559 664 -
Warrants issued - 997 1,148
Transfer to share premium on exercise of
warrants (70) (499) -
Gain recognised in finance income within
the consolidated statement of comprehensive
income (936) 397 (484)
At 31 December 553 1,559 664
Equity settled derivative financial liability is a liability
that is not to be settled for cash.
May 2020 warrants
In May 2020 the Company issued 9,545,456 warrants in the
ordinary share capital of the Company as part of a registered
direct offering in the US. The number of ordinary shares to be
issued when exercised is fixed, however the exercise price is
denominated in US Dollars being different to the functional
currency of the Company. Therefore, the warrants are classified as
equity settled derivative financial liabilities recognised at fair
value through the profit and loss account ('FVTPL'). The financial
liability is valued using the Monte Carlo model. Financial
liabilities at FVTPL are stated at fair value, with any gains or
losses arising on re-measurement recognised in profit or loss. The
net gain or loss recognised in profit or loss incorporates any
interest paid on the financial liability and is included in the
'finance income' or 'finance expense' lines item in the income
statement. Fair value is determined in the manner described in note
21. A key input in the valuation of the instrument is the Company
share price. Exercise price per ADR is $2.05 and $2.0625.
October 2019 warrants
In October 2019 the Company issued 3,150,000 warrants in the
ordinary share capital of the Company as part of a registered
direct offering in the US. The number of ordinary shares to be
issued when exercised is fixed, however the exercise price is
denominated in US Dollars. The warrants are classified equity
settled derivative financial liabilities and accounted for in the
same way as those issued in May 2020. The financial liability is
valued using the Monte Carlo model. The exercise price per ADR is
$6.25.
DARA warrants and share options
The Group also assumed fully vested warrants and share options
on the acquisition of DARA Biosciences, Inc. (which took place in
2015). The number of ordinary shares to be issued when exercised is
fixed, however the exercise prices are denominated in US Dollars.
The warrants are classified equity settled derivative financial
liabilities and accounted for in the same way as those detailed
above. The financial liability is valued using the Black-Scholes
option pricing model. The exercise price of the warrants and
options is $61.03 and $95.17 respectively.
The following table details the outstanding warrants as at 31
December and also the movement in the year:
At 1 Granted Lapsed At 31 Granted Exercised At 31 Lapsed Exercised At 31
January December December December
2019 2019 2020 2021
May
2020
grant - - - - 7,545,456 (2,500,000) 7,045,456 - (306,815) 6,738,641
October
19 grant - 3,150,000 - 3,150,000 - - 3,150,000 - - 3,150,000
DARA
Warrants 116,206 - (111,582) 4,624 - - 4,624 (544) - 4,080
DARA
Options 6,167 - (3,332) 2,835 - - 2,835 - - 2,835
8 Share capital
Authorised, allotted
and fully
paid - classified 2021 2021 2020 2020 2019 2019
as equity Number GBP Number GBP Number GBP
At 31 December
Ordinary shares of
GBP0.001 each 98,468,387 98,468 63,073,852 63,074 23,494,981 23,495
Deferred shares of
GBP1 each 1,000,001 1,000,001 1,000,001 1,000,001 1,000,001 1,000,001
Total 1,098,469 1,063,075 1,023,496
On 2 March 2020 a resolution was passed at a general meeting of
shareholders of the Company to consolidate its ordinary shares on a
one for 20 basis into new ordinary shares of 0.1p each in the
capital of the Company. The above table reflects the share
consolidation in the comparative figures.
In accordance with the Articles of Association for the Company
adopted on 13 November 2014, the share capital of the Company
consists of an unlimited number of ordinary shares of nominal value
GBP0.001 each. Ordinary and deferred shares were recorded as
equity.
Rights attaching to the shares following the incorporation of
Midatech Pharma plc
Shares classified as equity
The holders of ordinary shares in the capital of the Company
have the following rights:
(a) to receive notice of, to attend and to vote at all general
meetings of the Company, in which case shareholders shall have one
vote for each share of which he is the holder; and
(b) to receive such dividend as is declared by the Board on each
share held.
The holders of deferred shares in the capital of the
Company:
(a) shall not be entitled to receive notice of or to attend or
speak at any general meeting of the Company or to vote on any
resolution to be proposed at any general meeting of the Company;
and
(b) shall not be entitled to receive any dividend or other
distribution of out of the profits of the Company.
In the event of a distribution of assets, the deferred
shareholders shall receive the nominal amount paid up on such share
after the holder of each ordinary share shall have received (in
cash or specie) the amount paid up or credited as paid up on such
ordinary share together with an additional payment of GBP100 per
share. The Company has the authority to purchase the deferred
shares and may require the holder of the deferred shares to sell
them for a price not exceeding 1p for all the deferred shares.
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END
FR BKPBNDBKBDQB
(END) Dow Jones Newswires
April 26, 2022 10:06 ET (14:06 GMT)
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