TIDMSTX TIDMSTXW
RNS Number : 2570K
Shield Therapeutics PLC
20 September 2016
Shield Therapeutics plc
("Shield" or the "Company" or the "Group")
Interim Results for the six months ended 30 June 2016
Feraccru delivers first revenues and its Intellectual Property
receives a significant boost
London, UK, 20(th) September 2016. Shield Therapeutics plc
(LSE:STX), a specialty pharmaceutical company focused on secondary
care, today announces its preliminary Group results for the six
months ended 30 June 2016.
Highlights (including post period end)
Operational and commercial
-- Achievement of first revenues of GBP240k from sales of
Feraccru, Shield Therapeutics' first prescription medicine which
was approved in February 2016
-- Initial stages of Feraccru's European commercial launch
progressing in line with expectations:
o UK commercial activities accelerating, post- June 2016 launch,
as per plan
o >10 members of Shield Therapeutics' team interacting with
UK customers on a daily basis
o Access to Formularies and approvals by Clinical Commissioning
Groups in the UK being achieved to cover an increasing number of
prescribers
o Feraccru pricing of GBP47.60 per 28-day treatment pack agreed
with the UK NHS
o Higher pricing of EUR64.00 per 28-day treatment pack agreed
and published in Germany, with sales operations to commence in
October 2016
-- Key Composition of Matter patent granted, significantly
increasing the level and duration of exclusive intellectual
property protection afforded to Feraccru from 2023 to at least
2034
-- AEGIS-H2H and AEGIS-CKD Phase 3 studies of Feraccru progressing on track
-- Discussions progressing well with potential licensing
partners in a selection of non-core markets
-- PT20 and PT40 activities continue in-line with plan
Financial(1)
-- Successful completion of an Initial Public Offering (IPO) on
AIM raising GBP32.5m (gross) and further potential gross proceeds
of GBP17.5m, subject to the full exercise of Warrants
-- First reported UK revenues of GBP240k
-- Net loss for period of GBP8.9m on an IFRS basis. Adjusted net loss for period of GBP5.1m(1)
-- Period end cash balance of GBP28.4m
Commenting on the interim results, Carl Sterritt, Chief
Executive Officer of Shield Therapeutics plc, said: "The period
covering the first half of 2016 and particularly since the
Company's IPO in February has been one of foundation building,
implementation of the first stages of Feraccru's commercial launch
and resource growth for Shield Therapeutics; as well as receipt of
our first commercial revenues. During this time the Company has
successfully achieved attractive pricing agreements in the UK and
Germany, and has been accelerating our commercial activities for
Feraccru in the UK, whilst laying the foundations for launch in
Germany in October 2016. Alongside this we have made solid progress
with our two Phase 3 clinical trials that will further enhance the
commercial opportunity available to Feraccru by broadening the
prescribing label and the geographies the product can be prescribed
in; as well as fundamentally improving the intellectual property
rights of Feraccru with a series of significant enhancements.
"Oral ferrous treatments are poorly tolerated meaning patients
frequently don't adhere to treatment, resulting in a real unmet
need for a well-tolerated oral iron replacement like Feraccru for
IBD patients with IDA. The availability of Feraccru is an important
step in helping to fulfil this unmet need and may help reduce the
need to progress to IV iron treatments. With our now-expanded team
of industry-leading professionals we look forward to building on
these activities and further executing our plans through the
remainder of 2016 and beyond so that more patients can benefit from
Feraccru."
Conference call for analysts
A briefing for analysts will be held at 11.00am BST on 20
September 2016 in the Guildhall Room at 85 Gresham Street, London,
EC2V 7NQ. There will be a simultaneous live conference call with
Q&A and the presentation will be available on Shield's website
at www.shieldtx.com.
Dial-in details:
Participant dial-in: 0800 279 5982
International dial-in: +44 (0)1452 557851
Participant code: 71772565
An audio replay file will be made available shortly afterwards
via the Company website: www.shieldtx.com.
- Ends -
For further information please contact:
Shield Therapeutics plc +44 (0)207 186 8500
Carl Sterritt, Chief Executive
Officer
Richard Jones, Chief Financial
Officer
Nominated Adviser and Broker
Liberum Capital Limited
Christopher Britton/Steve
Pearce +44 (0)20 3100 2222
Financial PR Advisor +44 (0)203 709 5700
Consilium Strategic Communications shieldtherapeutics@consilium-comms.com
Mary-Jane Elliott/Matthew
Neal/Lindsey Neville/Hendrik
Thys
References
(1) : Adjusted net loss excludes IFRS financing costs in respect
of pre-IPO structure, one-off costs and share-based payments
(2) : GfK report from 2015 as included in IPO Admission
Document
(3) : IPO Admission Document
Note
This announcement contains inside information for the purposes
of the Market Abuse Regulation.
Chief Executive Officer's statement
The period under review has been a transformational time for
Shield Therapeutics. Following the significant achievement of our
successful IPO onto the AIM market of the London Stock Exchange in
February 2016 to raise GBP32.5 million of growth capital and
receiving the pan-European Marketing Authorisation Approval of our
first product, Feraccru, the period has since been characterised by
the growth of Shield Therapeutics and operational implementation of
our commercial plans, focused on the launch of Feraccru in the key
first two markets of the UK and Germany. The immediate impact of
this has been to deliver our first product-related revenues and by
the end of 2016 approximately 60% of the IDA in IBD EU-5 commercial
opportunity for Feraccru should be available to us.
Feraccru
Feraccru launch
Tellingly, without requiring Health Technology Assessments,
Feraccru has achieved attractive price points in both the UK and
Germany, with a published price of GBP47.60 and EUR64.00 per 28-day
treatment pack, respectively. Such achievements in two
strategically important - and often referenced - markets give a
clear indication of the value that Feraccru can deliver to
integrated healthcare systems and we expect they will support our
pricing and reimbursement activities across a broader basket of
countries throughout the pan-European launch of Feraccru.
Feraccru is estimated to have an achievable peak annual sales
opportunity in excess of GBP500 million in more than 4 million
patients in Europe and the USA that make up its two core markets of
IDA in IBD and IDA in chronic kidney disease (CKD) (2) . The
Company believes the overall market has more than 33 million
patients suffering with IDA who could be effectively treated with
Feraccru(3) .
Following the pricing agreement with the NHS and Department of
Health in the UK, our field-based team of Key Account Managers and
Medical Science Liaisons has been focused on three core activities:
(i) introducing commercially available Feraccru to the initial
target prescriber base of UK gastroenterologists; (ii) educating
Clinical Commissioning Groups (CCGs) on the health economic
benefits of Feraccru; and (iii) critically, with the agreement and
support of prescribers, submitting applications to and achieving
access for Feraccru from hospital formularies. Steady progress is
being made across this triumvirate of key stakeholders in an IDA
patient's journey in the UK, as with their support and approvals we
will deliver commercial success for Feraccru. Widening the audience
of potential patients and prescribers as quickly as possible is an
important target and this has been aided by the fact that, at the
time of Feraccru's UK launch, the British Society of
Gastroenterology (BSG) was holding its main annual scientific and
commercial meeting. We ensured maximum coverage at this key event
for the UK's leading gastroenterologists.
We are pleased to report our first commercial revenues from
Feraccru in this interim results statement. These first revenues
represent stock sold to our two UK wholesalers in preparation for
the commencement of commercial prescribing of Feraccru as our
in-house team of Key Account Managers and Medical Science Liaisons
commenced work. We look forward to updating the market on
Feraccru's in-market demand in early 2017.
Whilst we have employed our own sales team of Key Account
Managers in the UK we have chosen to utilise a slightly different
field-based model via a Contract Commercial Organisation in Germany
to minimise time to commercial launch. As such, in Germany, we are
employing our own central team of commercial and medical
professionals, and have initially contracted the resources of the
highly regarded inVentiv Health to provide our field-based team of
eight Key Account Managers initially and a National Sales Manager.
This has significantly streamlined the otherwise complicated
logistics of identifying and recruiting our own field-based sales
team in this, our first overseas market, whilst giving us the
ability to have a lower risk 'try before we buy' period with each
Key Account Manager. Product training is scheduled for early
October, after which the team will be out in the market actively
implementing our commercial strategy in Germany.
As with the UK launch, we have an early, pan-German opportunity
to raise awareness of Feraccru at Deutsche Gesellschaft für
Gastroenterologie, Verdauungs und Stoffwechselkrankheiten (DGVS),
the annual scientific congress of the German gastroenterology
society, which is taking place just as Feraccru becomes
commercially available in Germany. The commercial launch and
prescriber/payor approval process in Germany is more streamlined
than in the UK and we also have the advantage of starting our
commercial operations with a broader prescriber experience of
Feraccru due to the clinical trials we have run and are running in
multiple key institutions in Germany. As a result of this existing
experience with Feraccru, it is hoped that these key institutions
will transition into important commercial customers.
Over the period, we have also made significant progress in
refining our launch strategies in the other member countries of the
EU-5. In France, we have taken the commercial decision to include
data from the AEGIS H2H clinical study in our Pricing and
Reimbursement submission, as specialist research conducted post
Feraccru's marketing authorisation approval has provided a strong
signal that this will facilitate optimum pricing in this market.
This has become even more relevant following the recently announced
news on Shield receiving the composition of matter patent grant for
Feraccru that will see protection extended through at least 2034,
versus the previously estimated 2023 before approval-related term
extensions. Similar specialist research is ongoing in Spain and
Italy and is currently expected to result in the same decisions on
the timing of Pricing and Reimbursement submissions.
Feraccru Intellectual Property Rights
2016 has seen very significant intellectual property progress on
a number of fronts that protect, facilitate and enhance Feraccru's
exclusive commercial opportunity. In particular, since
Admission:
i. The European approval of Feraccru has provided the product
with 10 years of data and marketing exclusivity in the countries
covered by the approval, giving protection to February 2026.
ii. The approval in Europe has also allowed Shield to apply for
a supplementary protection certificate to be applied to one of the
core patents protecting Feraccru. We have requested this be issued
against the core manufacturing patent that protects Feraccru and
upon issuance this will extend that patent out to August 2028 in a
number of core markets.
iii. In addition to this increased coverage, our patent
protecting Feraccru's use in achlorhydric patients was granted in
the USA in February, having already been granted in other major
territories. This patent covers an important feature of Feraccru's
mode of action by demonstrating a unique ability as an oral iron to
remain in solution and be available for absorption, even if a
patient's gastrointestinal pH has been artificially increased. In
many patients with diseases concomitant to their IDA, the use of pH
raising pharmacotherapies like the proton pump inhibitors
omeprazole or lansoprazole is very common and in such patients
ferrous-based oral iron therapies simply precipitate out of
solution and are unabsorbable. In such patients, prior to the
availability of Feraccru, parenteral iron therapy was the only
realistic option.
iv. However, the most significant progress we have made with
Feraccru's IPR is the granting of UK Patent GB2531742, entitled
'Polymorphs of Ferric Maltol', a composition of matter patent that
significantly expands Feraccru's intellectual property portfolio by
protecting the active substance of Feraccru through to at least
2034, as announced on 7 September 2016. We are delighted that such
a highly regarded body as the UKIPO has granted Shield a
composition of matter patent to the active substance in Feraccru
and in doing so has significantly added to the breadth of the IP
for Feraccru(R) as well as providing a lengthy extension to that
protection. Allowance at the UKIPO is an indicator of the
protection that we are anticipating in other territories when the
national phase is entered in April 2017. We will now seek
protection across a broad range of geographies and such composition
of matter protection should enable Shield to prevent third parties
from manufacturing or selling the product for any use until at
least 2034.
Feraccru clinical development progress
Shield's two ongoing Phase 3 clinical trials are moving forward
as planned, with AEGIS H2H recruiting in Europe and preparing to
commence recruitment in the USA - an important expansion as
positive data from this study will now allow an earlier filing of
the NDA for Feraccru with the US FDA. Meanwhile AEGIS CKD set-up is
approaching finalisation and we remain expectant of first patients
being enrolled during Q4-16. Together with existing data on
Feraccru, these studies are designed to further increase the
product's commercial opportunity by achieving a broader label in
Europe and giving access to the USA.
Other products in development
PT20
As previously advised, an end of Phase 2 meeting with the FDA is
due to take place in Q4-16. The outcome of such a meeting is
expected to allow us to finalise what additional clinical and
non-clinical work is required for us to be able to submit an NDA.
Our search for a commercial/co-development partner for PT20 has
begun with meaningful discussions with potential development
partners not expected to occur until after the FDA meeting. Work on
the development of a suitable formulation of the drug product for
use in a second pivotal study is also ongoing.
PT40
Following receipt of guidance from FDA on how to most
efficiently develop PT40 through to submitting the supplemental New
Drug Application (sNDA) that would be required, activities have
commenced to identify both a suitable scale-up contract
manufacturer and commercial partners who would license this
technology from Shield.
Financial review
We are delighted to report our first Group revenues of GBP240k
for the period, which relate entirely to sales of Feraccru into the
UK distribution channel. Operating loss for the period was GBP5.6
million after R&D costs of GBP0.8 million, which excludes
GBP0.9 million of R&D that was capitalised following a review
of our R&D capitalisation policy in respect of Feraccru
post-marketing approval.
Our accounts for the period were again impacted by various IFRS
adjustments in respect of our pre-IPO corporate structure.
Phosphate Therapeutics Ltd (PTL) has been consolidated into the
results from the IPO. Reported net loss was GBP8.9 million. On an
adjusted basis net loss, after taking account of these non-cash
IFRS adjustments, one-off costs of GBP170k and non-cash share based
payments of GBP143k was GBP5.1 million and adjusted loss per share
was GBP0.05 per share.
Net cash at the period end was GBP28.4 million after taking
account of the non-cash IFRS adjustments, the positive impact of
the net IPO funds raised and funds raised immediately prior to the
IPO from pre-existing share options. Net assets of GBP54.3 million
include the GBP27 million acquisition of PTL capitalised under
intangible assets.
Referendum vote to leave the EU
Shield does not anticipate any direct regulatory or commercial
impact from Brexit and there has been no immediate impact on the
Company's operations following the UK's referendum vote to leave
the European Union. Considering foreign exchange rates, in the
short term we are both naturally hedged to Euro costs due to
investments made into the company prior to the IPO and have had no
significant expenditure in the USA in the period. Going forward, we
actively update our currency plans and keep a conservative outlook
on FX movements and, in addition, where appropriate, we maintain
healthy cash reserves to protect the Company against large
fluctuations in individual currencies.
Corporate development and licensing
Since Feraccru's European approval we have had an encouraging
level of inbound interest from potential partners in a wide range
of non-core territories. We remain confident in our ability to
convert this interest into licensing agreements in the near term
and thereby expand the commercial opportunity for Feraccru.
Thinking more strategically, to supplement the organic growth that
Feraccru's commercialisation will finance, we are actively
considering a narrow selection of both portfolio and infrastructure
enhancing opportunities in the specialty pharmaceuticals arena, as
we recognise that such expansion has the potential to accelerate
our growth and diversify our opportunities.
Summary and outlook
Shield has now transformed itself from wholly
development-focused into a commercially-focused and customer-facing
organisation that is selling its innovative and value-added lead
product, whilst continuing its development to enable the commercial
opportunity to be maximised throughout the lengthy period of
intellectual property protection that is available to and has
recently been extended for Feraccru.
Looking forward we are excited that, over the course of the next
few months, increasing numbers of patients will have the chance to
benefit from Feraccru therapy, as it is launched in Germany and
commercial progress continues to be made in the UK. With detailed
out-licensing discussions ongoing in a number of non-core
territories, we look forward to being in a position to report
positive news in this regard in the near term. Finally, we also
look forward to agreeing development plans for PT20 with FDA and
then identifying suitable co-development and licensing partners for
this attractive product, so it can be moved into the final stage of
development prior to MAA & NDA filings.
Carl Sterritt
Chief Executive Officer
Consolidated statement of profit and loss and other
comprehensive income
for the six months ended 30 June 2016
Note Six months Six months Year ended
ended ended
30 June 30 June 31 December
2016 2015 2015
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
Revenue 240 - -
Cost of sales (54) - -
Gross profit 186 - -
Operating costs (selling,
marketing, general
and administrative
expenses) (5,004) (574) (1,371)
Other operating income 40 120 221
Operating loss before
research and development
expenditure (4,778) (454) (1,150)
Research and development
expenditure 9 (787) (1,215) (5,284)
Operating loss (5,565) (1,669) (6,434)
Financial income 27 - -
Net foreign exchange
gains 151 1,890 1,941
Foreign exchange losses
on financial instruments 2 (1,059) - -
Net loss on financial instruments
designated as
fair value through profit or (2,398)
loss 2 (28,949) (18,123)
Financial expense (7) (1,299) (1,872)
Loss before tax (8,851) (30,027) (24,488)
Taxation - - -
Loss for the period (8,851) (30,027) (24,488)
Attributable to:
Equity holders of the
parent (8,851) (29,611) (23,627)
Non-controlling interests - (416) (861)
Other comprehensive
income
Items that are or may
be reclassified subsequently
to profit or loss:
Foreign currency translation
differences - foreign
operations (30) (295) (257)
Total comprehensive
income for the period (8,881) (30,322) (24,745)
Attributable to:
Equity holders of the
parent (8,881) (29,906) (23,884)
Non-controlling interests - (416) (861)
Earnings per share
Basic and diluted loss 8 GBP(0.09) GBP(0.93) GBP(0.57)
per share
Non-GAAP measure 8 GBP(0.05) GBP(0.03) GBP(0.13)
Adjusted loss per share
Consolidated balance sheet
at 30 June 2016
Note 30 June 30 June 31 December
2016 2015 2015
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
Non-current assets
Intangible assets 9 27,527 494 513
Property, plant and
equipment 10 23 20 17
27,550 514 530
Current assets
Inventories 246 - -
Trade and other receivables 1,182 140 1,605
Cash and cash equivalents 2 28,455 3,663 725
29,883 3,803 2,330
Total assets 57,433 4,317 2,860
Current liabilities
Trade and other payables (2,978) (1,023) (3,502)
Interest bearing loans
and borrowings 2 - (12,107) -
Other liabilities (181) (41) (73)
(3,159) (13,171) (3,575)
Non-current liabilities
Interest bearing loans
and borrowings 2 - (891) -
Other financial liabilities 2 - (38,728) (17,928)
- (39,619) (17,928)
Total liabilities (3,159) (52,790) (21,503)
Net assets/(liabilities) 54,274 (48,473) (18,643)
Equity
Share capital 12 1,622 365 690
Share premium 77,963 2,393 -
Warrants reserve 2,760 - -
Merger reserve 28,358 - 28,358
Currency translation
reserve (69) (77) (39)
Retained earnings (56,360) (52,484) (47,652)
Equity attributable
to owners of the parent 54,274 (49,803) (18,643)
Non-controlling interest - 1,330 -
Total equity 54,274 (48,473) (18,643)
Consolidated statement of changes in equity
for the six months ended 30 June 2016
Issued Share Warrants Merger Currency Retained Non-controlling Total
capital premium reserve reserve translation earnings interest
reserve
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1
January 2015 365 2,393 - - 218 (23,006) 1,746 (18,284)
Loss for the
period - - - - - (23,627) (861) (24,488)
Other comprehensive
income - - - - (257) - - (257)
Total comprehensive
income for the
period - - - - (257) (23,627) (861) (24,745)
Group reorganisation 325 (2,393) - 28,358 - (1,901) (885) 23,504
Equity-settled
share based
payment transactions - - - - - 882 - 882
Balance at 31
December 2015 690 - - 28,358 (39) (47,652) - (18,643)
Loss for the
period - - - - - (8,851) - (8,851)
Other comprehensive
income - - - - (30) - - (30)
Total comprehensive
income for the
period - - - - (30) (8,851) - (8,881)
Share issue
- IPO 325 26,487 2,760 - - - - 29,572
Share options
exercised 309 25,011 - - - - - 25,320
Phosphate
Therapeutics
Ltd acquisition 298 26,465 - - - - - 26,763
Equity-settled
share based
payment
transactions - - - - - 143 - 143
Balance at 30
June 2016 1,622 77,963 2,760 28,358 (69) (56,360) - 54,274
Consolidated statement of cash flows
for the six months ended 30 June 2016
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
Cash flows from operating
activities
Loss for the period (8,851) (30,027) (24,488)
Adjustments for :
Depreciation and
amortisation 1,372 27 50
Loss on derivative
financial instruments 2,398 28,949 18,123
Equity-settled share
based payment expenses 143 133 882
Financial (income)/expense (155) 1,299 1,872
Unrealised foreign
exchange losses/(gains) 1,105 (1,923) (1,927)
(3,988) (1,542) (5,488)
(Increase)/decrease
in inventories (246) - -
Decrease/(increase)
in trade and other
receivables 427 (61) (1,526)
(Decrease)/increase:
Trade and other
payables (988) 329 2,808
Other liabilities 108 (9) 23
Net cash flow from
operating activities (4,687) (1,283) (4,183)
Cash flows from investing
activities
Acquisitions of intangible
assets (378) (84) (123)
Capitalised development
expenditure (879) - -
Acquisition of property,
plant and equipment (10) (10) (9)
Cash acquired with
Phosphate Therapeutics
Ltd 177 - -
Net cash flow from
investing activities (1,090) (94) (132)
Cash flows from financing
activities
Proceeds of IPO (Note
2) 32,500 - -
IPO costs (Note 2) (2,427) - -
Other costs (501) - -
Share options exercised
(Note 3) 3,935 - -
Issuance of convertible
bonds - 1,062 1,062
Issuance of preference
shares - 3,501 3,501
Net cash flow from
financing activities 33,507 4,563 4,563
Net increase in cash 27,730 3,186 248
Cash and cash equivalents
at 1 January 725 477 477
Cash and cash equivalents
at period end 28,455 3,663 725
Notes
for the six months ended 30 June 2016
1 General information
Shield Therapeutics plc (the "Company") was incorporated in
England and Wales as a public limited company on 3 September 2015.
The Company was admitted to the London Stock Exchange's AIM market
on 26 February 2016. The Company's Ordinary Shares and Warrants
commenced trading on 26 February 2016.
The Company is domiciled in England and the registered office of
the Company is at Northern Design Centre, Baltic Business Quarter,
Gateshead Quays NE8 3DF.
This interim report, which has not been audited has been
prepared in accordance with the measurement and recognition
criteria of EU Adopted International Financial Reporting Standards.
It does not include all the information required for full annual
financial statements and should be read in conjunction with the
financial statements of the Company and its subsidiaries (the
"Group") as at and for the year ended 31 December 2015. This
financial information does not constitute statutory financial
statements as defined in Section 435 of the Companies Act 2006. It
does not comply with IAS 34 Interim financial reporting, as is
permissible under the rules of AIM.
The interim report was approved by the board of directors on 19
September 2016.
2 AIM listing
Shield Therapeutics plc was admitted to AIM on 26 February 2016
with a placing price of GBP1.50 per share for the additional 21.7
million new shares to be issued pursuant to the placing. The
Company's Shares and Warrants commenced trading on 26 February
2016. GBP32.5 million gross was raised through the listing process
and GBP2.4 million of issue costs were incurred in the process.
As part of the listing process Warrants with a subscription
price of GBP1.50 were issued to participants in the placing,
providing an opportunity for the Company to raise up to GBP17.5
million by 30 June 2017 when the Warrants expire. The Warrants
trade under the ticker STXW.
On 26 February 2016 debt with a fair value of GBP21.4 million
was converted to equity and this included certain options converted
to equity at an exercise price of GBP3.9 million. As a consequence
of this transaction, reserves have increased by GBP25.3 million and
the Group is now debt free. Fair value costs of GBP2.4 million and
foreign exchange translation costs of GBP1.1 million were charged
to the profit and loss account during the period as a consequence
of the fair value remeasurement of the debt prior to its
conversion.
3 Acquisition of Phosphate Therapeutics Limited
On 26 February 2016 Shield Therapeutics plc acquired 100% of the
share capital of Phosphate Therapeutics Limited in consideration
for 19,887,791 shares in the Company with a fair value of GBP27
million. As this does not meet the definition of a business
combination this has been accounted for as an asset acquisition of
the intellectual property of Phosphate Therapeutics Limited.
4 Selected relevant accounting policies
The accounting policies set out below have, unless otherwise
stated, been applied consistently to all periods presented in this
financial information. The financial information is prepared on the
historical cost basis except for derivative financial instruments
that are stated at their fair value. The functional currency of the
Company is GBP. The consolidated financial information is presented
in GBP and all values are rounded to the nearest thousand (GBP000),
except as otherwise indicated.
Notes (continued)
for the six months ended 30 June 2016
4 Selected relevant accounting policies (continued)
Basis of consolidation
The consolidated interim financial information comprises the
financial information of the Group and its subsidiaries as at 30
June 2016.
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 statements of the subsidiaries are prepared
for the same reporting period as the parent company, using
consistent accounting policies. All intra-group balances and
transactions, unrealised gains and losses resulting from
intra-group transactions and dividends are eliminated in full.
Losses within a subsidiary are attributed to the non-controlling
interest even if that results in a deficit balance. A change in the
ownership interest of a subsidiary, without a loss of control, is
accounted for as an equity transaction.
Group reorganisations in the prior period are accounted for as a
continuation of the existing Shield Group. Accordingly, the
consolidated financial information of Shield Therapeutics plc has
been prepared as a continuation of the existing Group. Shield
Holdings AG in effect remains the accounting parent entity. The
consolidated financial information reflects any difference in share
capital between Shield Therapeutics plc and Shield Holdings AG as
an adjustment to equity.
Foreign currency
Transactions in foreign currencies are translated to the Group's
functional currency at the foreign exchange rate ruling at the date
of the transaction. Monetary assets and liabilities denominated in
foreign currencies at the balance sheet date are retranslated to
the functional currency at the foreign exchange rate ruling at that
date. Foreign exchange differences arising on translation are
recognised in the income statement. Non-monetary assets and
liabilities that are measured in terms of historical cost in a
foreign currency are translated using the exchange rate at the date
of the transaction. Non-monetary assets and liabilities denominated
in foreign currencies that are stated at fair value are
retranslated to the functional currency at foreign exchange rates
ruling at the dates the fair value was determined.
The assets and liabilities of foreign operations, including
goodwill and fair value adjustments arising on consolidation, are
translated to the Group's presentation currency, Sterling, at
foreign exchange rates ruling at the balance sheet date. The
revenues and expenses of foreign operations are translated at an
average rate for the year where this rate approximates to the
foreign exchange rates ruling at the dates of the transactions.
Exchange differences arising from this translation of foreign
operations are reported as an item of other comprehensive income
and accumulated in the translation reserve or non-controlling
interest, as the case may be.
Intangible assets
Research and development
Expenditure on research activities is recognised as an expense
in the statement of profit and loss.
During the period the Group met the criteria to capitalise
development expenditure for the first time due to the progression
of certain projects beyond the research phase. Consequently the
policy on research and development costs has been expanded to
include the capitalisation criteria for and composition of
development costs. No previously reported balances have been
restated as a consequence of this change.
Notes (continued)
for the six months ended 30 June 2016
4 Selected relevant accounting policies (continued)
Intangible assets (continued)
Expenditure on development activities directly attributable to
an intangible asset is capitalised when the following conditions
are met:
-- it is technically feasible to complete the product so that it will be available for use;
-- management intends to complete the product and use or sell it;
-- there is an ability to use or sell the product;
-- it can be demonstrated how the product will generate probable future economic benefits;
-- adequate technical, financial and other resources to complete
the development and to use or sell the product are available;
and
-- the expenditure attributable to the product during its
development can be reliably measured.
The Group considers that Marketing Authorisation Approval "MAA"
regulatory approval in the relevant jurisdiction confirms these
criteria.
Internally developed intangible assets are recorded at cost and
subsequently measured at cost less accumulated amortisation and
accumulated impairment losses.
Capitalised directly attributable development costs include
clinical trial costs, Chemistry Manufacturing and Controls "CMC"
costs and contractor costs. Internal salary costs have not been
capitalised as they are not considered to directly relate to
bringing the asset to its working condition and employee costs are
not allocated by project.
Expenditure in relation to patent registration and renewal of
current patents is capitalised and recorded as an intangible asset.
Registration costs are continually incurred as the Group registers
these patents in different countries. Patent assets are stated at
cost less accumulated amortisation and accumulated impairment
losses.
Amortisation is charged to the statement of profit and loss on
the straight line basis. Amortisation commences when patents are
issued, or in the case of other capitalised development expenditure
when substantive revenue is being generated from products.
Amortisation is charged as follows.
Patents - over the term of the patents
CMC costs - over five years
Intellectual property purchase costs - over the term of the
patents
Impairment of assets
An impairment review is carried out annually for assets not yet
in use. An impairment review is carried out for assets being
amortised or depreciated when a change in market conditions and
other circumstances indicates that the carrying value may not be
recoverable. The recoverable amount is the higher of an asset's
fair value less costs to sell and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels for
which there are separately identifiable cash flows.
Revenue
Revenue is net invoice value after the deduction of value added
tax and other sales taxes. Deductions are made for product returns
based on historical experience.
Revenue is recognised in the consolidated statement of profit
and loss and other comprehensive income when the risks and rewards
associated with the ownership of goods are transferred to the
customer. This is deemed to occur when the customer collects and
loads the product, resulting in the legal transfer of title.
Notes (continued)
for the six months ended 30 June 2016
4 Selected relevant accounting policies (continued)
Operating income
Other operating income is measured at the fair value of
consideration received or receivable for management services
supplied to related parties. Income is recognised when the service
has been delivered.
Expenses
Financing income and expenses
Financing expenses comprise interest payable, finance charges on
shares classified as liabilities and net foreign exchange losses
that are recognised in the income statement (see foreign currency
accounting policy). Financing income comprises interest receivable
on funds invested, dividend income and net foreign exchange
gains.
Interest income and interest payable is recognised in profit or
loss as it accrues, using the effective interest method. Dividend
income is recognised in the income statement on the date the
entity's right to receive payments is established. Foreign currency
gains and losses are reported on a net basis.
Taxation
Tax on the profit or loss for the period comprises current and
deferred tax. Tax is recognised in the income statement except to
the extent that it relates to items recognised directly in equity,
in which case it is recognised in equity.
Current tax is the expected tax payable or receivable on the
taxable income or loss for the year, using tax rates enacted or
substantively enacted at the balance sheet date, and any adjustment
to tax payable in respect of previous periods.
A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against
which the temporary difference can be utilised.
Share-based payments
The Group operates equity-settled, share-based compensation
plans, under which the entity receives services from employees as
consideration for equity instruments (options) of the Group. The
fair value of the employee services received in exchange for the
grant of the options is recognised as an expense. The total amount
to be expensed is determined by reference to the fair value of the
options granted:
-- including any market performance conditions;
-- excluding the impact of any service and non-market performance vesting conditions; and
-- including the impact of any non-vesting conditions.
Non-market performance and service conditions are included in
assumptions about the number of options that are expected to vest.
The total expense is recognised over the vesting period, which is
the period over which all of the specified vesting conditions are
to be satisfied.
In addition, in some circumstances employees may provide
services in advance of the grant date and therefore the grant date
fair value is estimated for the purposes of recognising the expense
during the period between the service commencement period and the
grant date.
The grant by the Company of options over its equity instruments
to the employees of subsidiary undertakings in the Group is treated
as a capital contribution. The fair value of employee services
received, measured by reference to the grant date fair value, is
recognised over the vesting period as an increase to investment in
subsidiary undertakings, with a corresponding credit to equity in
the parent entity accounts.
5 Critical accounting judgments and key sources of estimation uncertainty
In the application of the Group's accounting policies, which are
described in Note 4, management is required to make judgments,
estimates and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources.
Notes (continued)
for the six months ended 30 June 2016
5 Critical accounting judgments and key sources of estimation uncertainty (continued)
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period or in the period of the revision and future
periods if the revision affects both current and future
periods.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with
employees by reference to the fair value of the equity instruments
at the date at which they are granted. Estimating fair value for
share-based payment transactions requires determining the most
appropriate valuation model, which is dependent on the terms and
conditions of the grant. This estimate also requires the
determination of the most appropriate inputs to the valuation model
including the expected life of the share options and volatility and
making assumptions about them.
Fair value of derivative instruments
Where the fair value of derivative instruments recorded in the
statement of financial position cannot be derived from active
markets, their fair value is determined using valuation techniques.
The inputs to these models are taken from observable markets where
possible. Where this is not feasible, a degree of judgment is
required in establishing fair values. The judgments include
considerations of inputs such as entity value and volatility.
Deferred tax assets
Estimates of future profitability are required for the decision
whether or not to create a deferred tax asset. To date no deferred
tax assets have been recognised.
Development expenditure
Development expenditure is capitalised when the conditions
referred to in Note 4 are met.
Valuation of intellectual property acquired with Phosphate
Therapeutics Limited
The valuation of intellectual property acquired with Phosphate
Therapeutics Limited during the period is based on cash flow
forecasts for the underlying business and an assumed appropriate
cost of capital and other inputs in order to arrive at a fair value
for the asset. The realisation of its value is ultimately dependent
on regulatory approval and successful commercialisation of the
asset. In the event that commercial returns are lower than current
expectations this may lead to an impairment.
6 New standards and interpretations
The Group has adopted the following new standards in these
financial statements for the first time. The adoption of these
pronouncements has not had a material impact on the Group's
accounting policies, financial position or performance.
-- Amendment to IFRS 11 Joint arrangements.
-- Amendment to IAS 1 Presentation of financial statements.
-- Amendment to IAS 16 Property, plant and equipment.
-- Amendment to IAS 27 Separate financial statements.
-- Amendment to IAS 38 Intangible assets.
-- Amendment to IAS 41 Agriculture.
-- Annual improvements to IFRSs - 2012-2014 cycle.
7 Segmental reporting
The Board regularly reviews the Group's performance and balance
sheet position for its operations and receives financial
information for the Group as a whole. As a consequence the Group
has one reportable segment whose revenue, expenses, assets,
liabilities and cash flows are measured and reported on a basis
consistent with the financial information. All revenue reported in
the period relates to the UK market and originated in the UK. No
additional numerical disclosures are necessary.
Notes (continued)
for the six months ended 30 June 2016
8 Loss per share
Six months ended Year ended 31
30 June 2016 December 2015
Loss Weighted Loss per Loss Weighted Loss
GBP000 shares share GBP000 shares per share
000 GBP 000 GBP
IFRS - basic and
diluted (8,851) 94,107 (0.09) (23,627) 41,507 (0.57)
Adjusted - basic
and diluted (5,081) 94,107 (0.05) (5,279) 41,507 (0.13)
Proforma adjusted
- basic and diluted (5,081) 108,135 (0.05) n/a n/a n/a
The diluted loss per share is identical to the basic loss per
share in both periods, as potential dilutive shares are not treated
as dilutive since they would reduce the loss per share. Warrants
issued as part of the IPO process would potentially provide an
additional 11,666,658 shares (approximately 10.8% of the current
share capital) if exercised between the period end and 30 June 2017
(8,012,815 on a weighted basis), which are considered to be
non-dilutive as they would increase the loss per share.
The adjusted loss is calculated after adding back non-recurring
items as illustrated in the table below.
The adjusted loss per share is calculated using the weighted
average number of Ordinary Shares in issue during the period.
The adjusted proforma loss per share is calculated using the
number of Ordinary Shares in issue following the IPO.
The table below reflects the loss used in the basic and diluted
adjusted (non-GAAP) EPS computations:
Six months Year ended
ended
30 June 31 December
2016 2015
(unaudited) (audited)
GBP000 GBP000
Loss for the period (8,851) (23,627)
Interest on preference
shares - 1,761
FX movement on preference
shares - (259)
Fair value remeasurement
of preference share embedded
derivative - 15,610
Interest on convertible
bonds - 139
FX movement on convertible
bonds - 10
Fair value remeasurement
of convertible bond embedded
derivative - 1,146
Fair value remeasurement
of share options 2,398 (59)
FX movement on share options 1,059 -
Non-recurring legal and
professional fees 170 -
Share based payments charge 143 -
Adjusted loss (5,081) (5,279)
Notes (continued)
for the six months ended 30 June 2016
9 Intangible
assets
Patents Development Phosphate Total
and costs Therapeutics GBP000
trademarks GBP000 licences
GBP000 GBP000
Cost
Balance at 1 January
2015 566 - - 566
Additions - externally
purchased 104 - - 104
Effect of movements
in foreign exchange 19 - - 19
Balance at 31 December
2015 689 - - 689
Additions - externally
purchased 378 - - 378
Additions - internally
developed - 879 - 879
Acquisition with Phosphate
Therapeutics Limited - - 27,047 27,047
Effect of movements
in foreign exchange 104 - - 104
Balance at 30 June
2016 1,171 879 27,047 29,097
Amortisation
Balance at 1 January
2015 (130) - - (130)
Charge for the period (46) - - (46)
Balance at 31 December
2015 (176) - - (176)
Charge for the period (42) (84) (1,242) (1,368)
Effect of movements
in foreign exchange (26) - - (26)
Balance at 30 June
2016 (244) (84) (1,242) (1,570)
Net book amount
At 30 June 2016 927 795 25,805 27,527
At 31 December 2015 513 - - 513
GBP27 million of additions during the period to 30 June 2016
relate to the acquisition of intellectual property with Phosphate
Therapeutics Limited (see Note 3).
GBP1.7 million was spent on development expenditure during the
period, with GBP0.9 million capitalised above and GBP0.8 million
charged to the profit and loss account.
Notes (continued)
for the six months ended 30 June 2016
10 Tangible assets
Total
GBP000
Cost
At 1 January 2015 12
Additions 9
At 31 December 2015 21
Additions 10
At 30 June 2016 31
Amortisation
At 1 January 2015 -
Charge for the period (4)
At 31December 2015 (4)
Charge for the period (4)
At 30 June 2016 (8)
Net book amount
At 30 June 2016 23
At 31 December 2015 17
11 Related party transactions - Phosphate Therapeutics Limited
During the period the Company acquired the share capital of
Phosphate Therapeutics Limited, as described in Note 3.
Phosphate Therapeutics Limited is considered to be a related
party of the Company by virture of its linked key management
personnel.
12 Called up share capital
Number GBP000
At 31 December
2015 (audited) 69.0m 690
2 for 3 share consolidation (23.0)m -
Issuance of shares
pursuant to listing 21.7m 325
Exercise of share
options 20.5m 309
Acquisition of
Phosphate Therapeutics
Limited intellectual
property 19.9m 298
At 30 June 2016
(unaudited) 108.1m 1,622
Details of the reasons for the movements in share capital are
provided in Notes 2 and 3.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR GGUQCBUPQGRB
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September 20, 2016 02:01 ET (06:01 GMT)
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