Verona Pharma plc (AIM:VRP) (Nasdaq:VRNA) (“Verona Pharma” or the
“Company”), a clinical-stage biopharmaceutical company focused on
developing and commercializing innovative therapies for respiratory
diseases, announces today an operational update and financial
results for the third quarter ended September 30, 2017.
The Company’s product candidate RPL554, is a
first-in-class, inhaled, dual inhibitor of the enzymes
phosphodiesterase 3 and 4, or PDE3 and PDE4, that acts as both a
bronchodilator and an anti-inflammatory agent in a single compound.
Verona Pharma is developing RPL554 for the treatment of chronic
obstructive pulmonary disease (“COPD”) and cystic fibrosis (“CF”),
and potentially asthma.
OPERATIONAL HIGHLIGHTS
During the three months ended September 30, 2017
the Company:
- Reported data from two clinical studies:• Positive
top-line data from a Phase 2a clinical trial in COPD with RPL554
when dosed in addition to tiotropium (Spiriva®):
• Achieved significant and clinically meaningful additional
improvement in peak lung function when added to tiotropium, a
widely used drug to treat COPD; • Achieved faster
onset-of-action when added to tiotropium; and
• Demonstrated statistical significance across all primary and
secondary efficacy outcome measures, as well as a clear dose
response at 6 mg dose compared to 1.5 mg dose;• Earlier than
expected positive top-line data from U.S. pharmacokinetic (“PK”)
trial demonstrated that nebulized RPL554 delivers optimal clinical
dose to patients: • Confirmed inhaled RPL554 is an
appropriate form of administration for patients with chronic COPD
and other respiratory disorders; and • Demonstrated
absorption occurs primarily in the lungs following inhaled
administration, consistent with optimal inhaled delivery of
medications for the treatment of COPD and asthma;
- Commenced a 4-week, Phase 2b dose-ranging clinical trial in
Europe in approximately 400 patients to investigate the efficacy,
safety, and dose-response of nebulized RPL554 for the maintenance
treatment of COPD;• Study has now enrolled ahead of schedule,
more than 200 patients (equivalent to 50% of the study) enrolled,
see separate announcement issued today; and• Top-line data now
expected in mid-2018, and potentially sooner than previous guidance
of second-half of 2018;
- Continued the Phase 2a clinical study to evaluate the PK and
pharmacodynamic (“PD”) profile and tolerability of RPL554 in up to
10 CF patients as well as examine the effect on lung
function;• Top-line data expected in the first half of
2018;
- Continued development of RPL554 as dry powder inhaler (“DPI”)
and metered dose inhaler (“MDI”) formulations for maintenance
treatment of COPD.
FINANCIAL HIGHLIGHTS
- Net cash, cash equivalents and short-term investments at
September 30, 2017 amounted to £85.5 million (December 31, 2016:
£39.8 million);
- For the nine months ended September 30, 2017, reported
operating loss of £19.1 million (first nine months of 2016: £4.1
million) and reported loss after tax of £14.2 million (first nine
months of 2016: loss after tax of £4.2 million), reflecting the
preparation, initiation and completion of clinical trials and
expansion of the team;
- Reported loss per share of 17.4 pence for the nine months ended
September 30, 2017 (first nine months of 2016: loss per share 15.4
pence); and
- Net cash used in operating activities for the nine months ended
September 30, 2017 of £15.8 million (first nine months of 2016:
£3.3 million) reflecting increased clinical activities.
Jan-Anders Karlsson, PhD, CEO of Verona Pharma, commented:
“We are delighted to report another period of
significant progress for Verona Pharma. We reported positive
top-line data from two clinical studies that we completed ahead of
schedule during the third quarter. In a Phase 2a trial RPL554
demonstrated a significant and clinically meaningful improvement in
lung function in COPD patients and faster onset of action when
administered as an add-on treatment to tiotropium, one of the most
widely prescribed LAMA bronchodilators in these patients. In the PK
trial in the United States, we demonstrated that inhalation of
RPL554 is an appropriate route of administration for people with
COPD and other respiratory diseases. We are also pleased that we
were able to update the market today on the solid progress being
made in enrolling patients in our 4-week Phase 2b COPD trial and we
now expect to report top line data in mid-2018.”
Conference Call and Webcast
Information
Verona Pharma will host an investment community
conference call at 8:00 a.m. Eastern Standard Time (1:00 pm
Greenwich Mean Time) on November 7, 2017. Analysts and investors
may participate in the conference call by utilizing the conference
ID: 1550110 and dialing the following numbers:
- (877)-280-1254 or (646)-254-3388 for callers in the United
States
- 0800 279 5736 or 44 (0) 20 3427 1901 for callers in the United
Kingdom
- 0800 589 2673 or 49 (0) 69 2222 10619 for callers in
Germany
Those interested in listening to the conference
call live via the internet may do so by visiting the “Investors”
page of Verona Pharma’s website at www.veronapharma.com and
clicking on the webcast link. A webcast replay of the
conference call [audio] will be available on the “Investors” page
of Verona Pharma’s website at www.veronapharma.com.
An electronic copy of the interim results will
be made available today on the Company’s website
(http://www.veronapharma.com). This press release does not
constitute an offer to sell or the solicitation of an offer to buy
any of the Company’s securities, and shall not constitute an offer,
solicitation or sale in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of that jurisdiction.
This press release contains inside information
for the purposes of Article 7 of Regulation (EU) No. 596/2014.
About Verona Pharma plcVerona Pharma is a
clinical-stage biopharmaceutical company focused on developing and
commercializing innovative therapies for the treatment of
respiratory diseases with significant unmet medical needs. Verona
Pharma’s product candidate, RPL554, is a first-in-class, inhaled,
dual inhibitor of the enzymes phosphodiesterase 3 and 4 that acts
as both a bronchodilator and an anti-inflammatory agent in a single
compound. In clinical trials, treatment with RPL554 has been
observed to result in statistically significant improvements in
lung function as compared to placebo, and has shown clinically
meaningful and statistically significant improvements in lung
function when administered in addition to frequently used short-
and long-acting bronchodilators as compared to such bronchodilators
administered as a single agent. Verona Pharma is developing RPL554
for the treatment of chronic obstructive pulmonary disease (COPD)
and cystic fibrosis (CF), and potentially asthma.
Forward-Looking StatementsThis
press release contains forward-looking statements. All statements
contained in this press release that do not relate to matters of
historical fact should be considered forward-looking statements,
including, but not limited to, statements regarding the expected
timing of top-line data from our clinical trials of RPL554,
development of RPL554 to treat asthma or other respiratory
diseases, RPL554 as an important and promising therapy for COPD
patients, the timing of commencement of clinical trials for RPL554,
the ability of DPI and MDI formulations of RPL554 to address a
larger COPD market segment and significantly extend RPL554’s
commercial opportunity, our ability to deliver a comprehensive
package of Phase 2b data for nebulized RPL554, the broad potential
applicability of RPL554 in COPD and other respiratory indications,
and collaborations to acquire or in-license product candidates.
These forward-looking statements are based on
management's current expectations. These statements are neither
promises nor guarantees, but involve known and unknown risks,
uncertainties and other important factors that may cause our actual
results, performance or achievements to be materially different
from our expectations expressed or implied by the forward-looking
statements, including, but not limited to, the following: our
limited operating history; our need for additional funding to
complete development and commercialization of RPL554, which may not
be available and which may force us to delay, reduce or eliminate
our development or commercialization efforts; the reliance of our
business on the success of RPL554, our only product candidate under
development; economic, political, regulatory and other risks
involved with international operations; the lengthy and expensive
process of clinical drug development, which has an uncertain
outcome; serious adverse, undesirable or unacceptable side effects
associated with RPL554, which could adversely affect our ability to
develop or commercialize RPL554; potential delays in enrolling
patients, which could adversely affect our research and development
efforts; we may not be successful in developing RPL554 for multiple
indications; our ability to obtain approval for and commercialize
RPL554 in multiple major pharmaceutical markets; misconduct or
other improper activities by our employees, consultants, principal
investigators, and third-party service providers; material
differences between our “top-line” data and final data; our
reliance on third parties, including clinical investigators,
manufacturers and suppliers, and the risks related to these
parties’ ability to successfully develop and commercialize RPL554;
and lawsuits related to patents covering RPL554 and the potential
for our patents to be found invalid or unenforceable. These and
other important factors under the caption “Risk Factors” in our
final prospectus filed with the Securities and Exchange Commission
(“SEC”) on April 28, 2017 relating to our Registration Statement on
Form F-1, and our other reports filed with the SEC, could cause
actual results to differ materially from those indicated by the
forward-looking statements made in this press release. Any such
forward-looking statements represent management's estimates as of
the date of this press release. While we may elect to update such
forward-looking statements at some point in the future, we disclaim
any obligation to do so, even if subsequent events cause our views
to change. These forward-looking statements should not be relied
upon as representing our views as of any date subsequent to the
date of this press release.
For further information, please contact:
Verona Pharma plc |
|
Tel: +44 (0)20 3283
4200 |
Jan-Anders Karlsson,
Chief Executive Officer |
|
info@veronapharma.com |
|
|
|
Stifel Nicolaus Europe
Limited (Nominated Adviser and UKBroker) |
|
Tel: +44 (0) 20 7710
7600SNELVeronaPharma@stifel.com |
Stewart Wallace /
Jonathan Senior / Ben Maddison |
|
|
|
|
|
FTI
Consulting (UK Media and Investor enquiries) |
|
Tel:
+44 (0)20 3727 1000 |
Simon Conway / Natalie
Garland-Collins |
|
veronapharma@fticonsulting.com |
|
|
|
ICR, Inc. (US Media and
Investor enquiries) |
|
|
James Heins |
|
Tel: +1
203-682-8251 |
|
|
James.Heins@icrinc.com |
|
|
|
Stephanie
Carrington |
|
Tel. +1
646-277-1282 |
|
|
Stephanie.Carrington@icrinc.com |
OPERATIONAL REVIEW
We are a clinical-stage biopharmaceutical company focused on
developing and commercializing innovative therapies for the
treatment of respiratory diseases with significant unmet medical
needs. Our product candidate, RPL554, is a first-in-class, inhaled,
dual inhibitor of the enzymes phosphodiesterase 3 and 4, or PDE3
and PDE4, that acts as both a bronchodilator and an
anti-inflammatory agent in a single compound, giving it a dual
mechanism of action to improve lung function. If successful, RPL554
would represent the first novel class of bronchodilator developed
in decades, and at the same time have anti-inflammatory effects.
RPL554 has been well tolerated in our clinical trials, and has not
been observed to result in the gastrointestinal or other side
effects commonly associated with PDE4 inhibition.
We are developing RPL554 for the treatment of
COPD and CF. We may also explore, alone or with a collaborator, the
development of RPL554 to treat asthma and other respiratory
diseases.
We have initiated four clinical trials of
nebulized RPL554 in 2017, of which two were successfully completed
this quarter. In September 2017, we announced positive top-line
data from our Phase 2a clinical trial of RPL554 as an add-on
treatment to tiotropium, one of the most important current
therapies for COPD. The data showed a significant improvement in
peak lung function when RPL554 was added on top of tiotropium,
supporting the continued development of RPL554 as a promising
therapy for COPD patients. We have also shown in a pharmacokinetic,
or PK, clinical trial that RPL554 is well-suited to inhaled
administration.
Enrollment in our current study in 400 COPD
patients in Europe, being treated for 4 weeks, is progressing well
and the Company now expects to report top-line data in mid-2018,
sooner than previous guidance of second-half of 2018.
Our ongoing Phase 2a study in CF patients, to
evaluate PK and PD is progressing as planned and we expect to
report top-line data in the first half of 2018.
The Company continues to review its development
strategy for RPL554 in the context of additional data generated,
including from clinical trials and market research, to identify
opportunities to enhance the planned development and
commercialization of RPL554 which may lead to changes in the
planned future clinical development of RPL554.
In addition to our nebulized formulation of
RPL554, we are also developing RPL554 in both DPI and MDI
formulations for the maintenance treatment of COPD. We believe
these formulations may enable the Company to address a larger COPD
market segment than can be addressed through the nebulizer
formulation. We may explore the development of RPL554 in these
formulations for the treatment of CF and other respiratory
diseases.
For the nine months ended September 30, 2017 the
Company recorded a loss after tax of £14.2m (2016: loss of £4.2m)
and a loss per share of 17.4p (2016: loss of 15.4p). Net cash
outflows from operating activities during the nine month period
ended September 30, 2017 were £15.8m (2016: outflow of
£3.3m), and at September 30, 2017 the Company held cash, cash
equivalents and short-term investments of £85.5m (December 31,
2016: £39.8m).
OUTLOOK
Having successfully completed earlier this year
a global offering comprised of an initial public offering of our
American Depositary Shares (“ADSs”) on Nasdaq and an offering in
Europe of our ordinary shares, we believe that we now have the team
and funding in place to progress the development of nebulized
RPL554 as maintenance therapy for both COPD and CF, as well as for
the treatment of acute exacerbations of COPD. We are also
developing DPI and MDI formulations of RPL554 which we believe has
the potential to extend the commercial opportunity in COPD and
other respiratory indications, as we believe RPL554’s properties as
a dual inhibitor of PDE3 and PDE4 give it broad potential
applicability in this therapeutic area. Additionally, we intend to
seek strategic collaborative relationships and opportunities to
acquire or in-license product candidates for the treatment of
additional unmet clinical needs in respiratory diseases.
FINANCIAL REVIEW
Financial review of the three and nine
month periods ended September 30, 2017
Three months ended September 30, 2017
The operating loss for the three months ended
September 30, 2017 was £8.1m (three months ended September 30,
2016: £2.2m) and the loss after tax for the period was £9.1m (three
months ended September 30, 2016: £2.5m).
Research and development costs for the three
months ended September 30, 2017 were £6.1m (three months ended
September 30, 2016: £1.4m), an increase of £4.7m. This increase
related to the expense of preparation for, initiation, progression
and completion of clinical trials as well as the build-out of the
management team, including the expansion of clinical and regulatory
capacity in the United States. Included in the increase was an
amount of £0.5m related to share-based payment charges (2016:
£0.1m).
General and administrative costs for the three
months ended September 30, 2017 were £2.0m (three months ended
September 30, 2016: £0.8m), an increase of £1.2m. This increase was
due to an expansion in the commercial and administrative structure
and activities of the Company. Included in the increase was an
amount of £0.5m related to share-based payment charges (2016:
£0.0m).
Finance income for the three months ended
September 30, 2017 was £0.1m (three months ended September 30,
2016: £0.1m).
Finance expense for the three months ended
September 30, 2017 was £2.4m (three months ended September 30,
2016: £0.7m). The increase in finance expense was due to an
increase in the fair value of the warrant liability of £1.2m,
increased losses following changes in exchange rates as well as an
increase in the calculated value of the assumed contingent
obligation resulting from the Vernalis licence agreement, offset by
transaction costs relating to warrants in 2016. The increase
in the value of the warrants was caused by changes in the
underlying assumptions for measuring the liability of the warrants,
predominantly the increase in the price of the Company’s shares.
The Company manages its exposure to movements in foreign exchange
movements by holding its cash and short-term investments in a range
of currencies. The movement in the sterling US dollar exchange rate
resulted in a foreign exchange loss during the period.
Taxation for the three months ended September
30, 2017 amounted to a credit of £1.3m (three months ended
September 30, 2016: £0.3m), an increase in the credit amount of
£1.0m. The credits are obtained at a rate of 14.5% of 230% of our
qualifying research and development expenditure, and the increase
in the credit amount was primarily attributable to our increased
expenditure on research and development.
Nine months ended September 30, 2017
The operating loss for the nine months ended
September 30, 2017 was £19.1m (nine months ended September 30,
2016: £4.1m) and the loss after tax for the period was £14.2m (nine
months ended September 30, 2016: £4.2m).
Research and development costs for the nine
months ended September 30, 2017 were £14.0m (nine months ended
September 30, 2016: £2.7m), an increase of £11.3m. This increase
related to the expense of preparation for, initiation, progression
and completion of clinical trials as well as the build-out of the
management team, including the expansion of clinical and regulatory
capacity in the United States. Included in the increase was an
amount of £1.2m related to share-based payment charges (2016:
£0.2m).
General and administrative costs for the nine
months ended September 30, 2017 were £5.0m (nine months ended
September 30, 2016: £1.4m), an increase of £3.6m. This increase was
due to an expansion in the commercial and administrative structure
and activities of the Company. Included in the increase was an
amount of £1.0m related to share-based payment charges (2016:
£0.1m).
Finance income for the nine months ended
September 30, 2017 was £4.1m (nine months ended
September 30, 2016: £0.1m). The increase in finance
income was primarily due to a decrease in the fair value of the
warrant liability of £3.9m caused by changes in the underlying
assumptions for measuring the liability of the warrant,
predominantly the price of the Company’s shares.
Finance expense for the nine months ended
September 30, 2017 was £2.2m (nine months ended September 30,
2016:£0.9m). The increase in finance expense was due to
increased losses following changes in exchange rates as well as an
increase in the calculated value of the assumed contingent
obligation resulting from the Vernalis licence agreement, offset by
transaction costs relating to warrants in 2016. As part of
our approach to risk management we hold cash and short-term
investments in a mix of currencies. The movement in the
sterling US dollar exchange rate has resulted in the foreign
exchange loss for the nine months ended September 30, 2017 (nine
months ended September 30, 2016: gain).
Taxation for the nine months ended September 30,
2017 amounted to a credit of £2.9m (nine months ended September 30,
2016: £0.6m), an increase in the credit amount of £2.3m. The
credits are obtained at a rate of 14.5% of 230% of our qualifying
research and development expenditure, and the increase in the
credit amount was primarily attributable to our increased
expenditure on research and development.
Cash Flow - Operating activities: net cash used
in operating activities increased by £12.5m to £15.8m for the nine
months period ended September 30, 2017 compared to £3.3m for the
nine month period ended September 30, 2016. This increase was due
to the increases in both research and development, and general and
administrative expenses described above.
Cash Flow - Investing activities: net cash used
in investing activities for the nine month period ended September
30, 2017 amounted to £54.8m, reflecting the placing of funds on
term deposits with maturity of greater than 3 months together with
certain patent costs, compared to £0.1m for the nine months ended
September 30, 2016.
Cash Flow - Financing activities: net cash
inflow from financing activities for the nine month period ended
September 30, 2017 amounted to £63.2m and relates to the net
proceeds from the global offering of our ADSs and ordinary shares
and a private placement of our ordinary shares, each of which
completed on May 2, 2017. For the period ended September 30, 2016
the net cash inflow of £41.8m related to a financing that took
place in July 2016.
Financial position
At September 30, 2017 Verona Pharma plc and its
subsidiaries had approximately £85.5m in cash, cash equivalents and
short-term investments (December 31, 2016: £39.8m).
VERONA PHARMA PLCCONDENSED CONSOLIDATED
INTERIM STATEMENT OF COMPREHENSIVEINCOME FOR THE
THREE AND NINE MONTHS ENDING SEPTEMBER 30, 2016 AND SEPTEMBER 30,
2017
|
Notes |
|
|
Three months ended September 30,2016
(unaudited) |
|
|
Three months ended September 30,2017
(unaudited) |
|
|
Nine months ended September 30,2016
(unaudited) |
|
|
|
Nine months ended September 30,2017
(unaudited) |
|
|
|
|
|
£ |
|
|
£ |
|
|
£ |
|
|
|
£ |
|
Research and
development costs |
|
|
|
(1,408,726 |
) |
|
(6,084,999 |
) |
|
|
(2,653,441 |
) |
|
|
(14,027,854 |
) |
General and
administrative costs |
|
|
|
(751,912 |
) |
|
(2,040,276 |
) |
|
|
(1,427,026 |
) |
|
|
(5,041,200 |
) |
Operating
loss |
|
|
|
(2,160,638 |
) |
|
(8,125,275 |
) |
|
|
(4,080,467 |
) |
|
|
(19,069,054 |
) |
Finance income |
6 |
|
|
139,803 |
|
|
114,079 |
|
|
|
147,178 |
|
|
|
4,130,934 |
|
Finance expense |
6 |
|
|
(711,285 |
) |
|
(2,360,885 |
) |
|
|
(859,195 |
) |
|
|
(2,151,329 |
) |
Loss before
taxation |
|
|
|
(2,732,120 |
) |
|
(10,372,081 |
) |
|
|
(4,792,484 |
) |
|
|
(17,089,449 |
) |
Taxation —
credit |
7 |
|
|
270,757 |
|
|
1,257,906 |
|
|
|
555,734 |
|
|
|
2,861,359 |
|
Loss for
period |
|
|
|
(2,461,363 |
) |
|
(9,114,175 |
) |
|
|
(4,236,750 |
) |
|
|
(14,228,090 |
) |
Other
comprehensive income/(expense): Items that may be
subsequently reclassified to profit or loss. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange differences on
translating foreign operations |
|
|
|
3,842 |
|
|
(13,654 |
) |
|
|
20,495 |
|
|
|
(27,691 |
) |
Total
comprehensive loss for the period attributable to owners of
the Company |
|
|
|
(2,457,521 |
) |
|
(9,127,829 |
) |
|
|
(4,216,255 |
) |
|
|
(14,255,781 |
) |
Loss per ordinary
share — basic and diluted (pence) |
8 |
|
|
(5.9 |
)p |
|
(8.7 |
)p |
|
|
(15.4 |
)p |
|
|
(17.4 |
)p |
|
|
|
|
|
|
|
The accompanying notes form an integral part of these condensed
consolidated interim financial statements.
VERONA PHARMA PLCCONDENSED CONSOLIDATED
INTERIM STATEMENT OF FINANCIAL POSITIONAS OF
DECEMBER 31, 2016 AND SEPTEMBER 30, 2017
|
Notes |
|
|
As of December 31, 2016 (audited) |
|
|
|
As of September 30, 2017 (unaudited) |
|
|
|
|
|
£ |
|
|
|
£ |
|
ASSETS |
|
|
|
|
|
|
|
|
|
Non‑current
assets: |
|
|
|
|
|
|
|
|
|
Property, plant and
equipment |
|
|
|
13,838 |
|
|
|
12,819 |
|
Intangible assets |
|
|
|
1,876,684 |
|
|
|
2,003,841 |
|
Goodwill |
|
|
|
441,000 |
|
|
|
441,000 |
|
|
|
|
|
2,331,522 |
|
|
|
2,457,660 |
|
Current
assets: |
|
|
|
|
|
|
|
|
|
Prepayments and other
receivables |
|
|
|
2,958,587 |
|
|
|
3,916,024 |
|
Current tax
receivable |
|
|
|
1,067,460 |
|
|
|
3,068,523 |
|
Short-term
investments |
9 |
|
|
— |
|
|
|
54,064,942 |
|
Cash and cash
equivalents |
|
|
|
39,785,098 |
|
|
|
31,393,327 |
|
|
|
|
|
43,811,145 |
|
|
|
92,442,816 |
|
Total
assets |
|
|
|
46,142,667 |
|
|
|
94,900,476 |
|
|
|
|
|
|
|
|
|
|
|
EQUITY AND
LIABILITIES |
|
|
|
|
|
|
|
|
|
Capital and
reserves attributable to equity holders: |
|
|
|
|
|
|
|
|
|
Share capital |
|
|
|
2,568,053 |
|
|
|
5,250,870 |
|
Share
premium |
|
|
|
58,526,502 |
|
|
|
118,861,212 |
|
Share‑based payment
reserve |
|
|
|
2,101,790 |
|
|
|
4,092,921 |
|
Accumulated loss |
|
|
|
(28,728,038 |
) |
|
|
(42,983,819 |
) |
Total
equity |
|
|
|
34,468,307 |
|
|
|
85,221,184 |
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
|
Trade and other
payables |
|
|
|
2,823,489 |
|
|
|
4,751,798 |
|
Tax payable – US
operations |
|
|
|
126,063 |
|
|
|
78,091 |
|
Derivative financial
instrument |
10 |
|
|
7,922,603 |
|
|
|
3,997,333 |
|
Total current
liabilities |
|
|
|
10,872,155 |
|
|
|
8,827,222 |
|
Non‑current
liabilities: |
|
|
|
|
|
|
|
|
|
Assumed contingent
obligation |
11 |
|
|
802,205 |
|
|
|
852,070 |
|
Total
non‑current liabilities |
|
|
|
802,205 |
|
|
|
852,070 |
|
Total equity
and liabilities |
|
|
|
46,142,667 |
|
|
|
94,900,476 |
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes form an integral part of
these condensed consolidated interim financial statements.
VERONA PHARMA PLCCONDENSED
CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
FORTHE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND
SEPTEMBER 30, 2017
|
|
Nine months ended September 30, 2016
(unaudited) |
|
|
Nine months ended September 30, 2017
(unaudited) |
|
|
|
£ |
|
|
£ |
|
Cash used in
operating activities: |
|
|
|
|
|
|
Loss before
taxation |
|
(4,792,484 |
) |
|
(17,089,449 |
) |
Finance income |
|
(147,178 |
) |
|
(4,130,934 |
) |
Finance expense |
|
859,195 |
|
|
2,151,329 |
|
Share‑based payment
charge |
|
307,929 |
|
|
1,991,131 |
|
Increase in prepayments
and other receivables |
|
(537,183 |
) |
|
(2,377,156 |
) |
(Decrease)/increase in
trade and other payables |
|
(551,100 |
) |
|
2,798,146 |
|
Depreciation of plant
and equipment |
|
7,288 |
|
|
4,502 |
|
Amortization of
intangible assets |
|
40,913 |
|
|
50,305 |
|
Cash used in operating
activities |
|
(4,812,620 |
) |
|
(16,602,126 |
) |
Cash inflow from
taxation |
|
1,533,068 |
|
|
816,367 |
|
Net cash used
in operating activities |
|
(3,279,552 |
) |
|
(15,785,759 |
) |
|
|
|
Cash flow from
investing activities: |
|
|
Interest
received |
|
48,166 |
|
|
87,356 |
|
Purchase of plant and
equipment |
|
(3,825 |
) |
|
(3,483 |
) |
Payments for
patents |
|
(99,719 |
) |
|
(177,461 |
) |
Purchase of short-term
investments |
|
— |
|
|
(54,689,344 |
) |
Net cash used
in investing activities |
|
(55,378 |
) |
|
(54,782,932 |
) |
|
|
|
Cash flow from
financing activities: |
|
|
Gross proceeds from
issue of shares and warrants |
|
44,702,197 |
|
|
70,031,506 |
|
Transaction costs on
issue of shares and warrants |
|
(2,910,461 |
) |
|
— |
|
Transaction costs on
Global Offering |
|
— |
|
|
(6,785,749 |
) |
Net cash
generated from financing activities |
|
41,791,736 |
|
|
63,245,757 |
|
|
|
|
Net increase /
(decrease) in cash and cash equivalents |
|
38,456,806 |
|
|
(7,322,934 |
) |
Cash and cash
equivalents at the beginning of the period |
|
3,524,387 |
|
|
39,785,098 |
|
Effect of exchange
rates on cash and cash equivalents |
|
99,012 |
|
|
(1,068,837 |
) |
Cash and cash
equivalents at the end of the period |
|
42,080,205 |
|
|
31,393,327 |
|
|
|
|
|
|
|
|
|
The accompanying notes form an integral part of
these condensed consolidated interim financial statements.
VERONA PHARMA PLCCONDENSED CONSOLIDATED
INTERIM STATEMENT OF CHANGES IN EQUITYFOR THE NINE
MONTHS ENDED SEPTEMBER 30, 2016 AND SEPTEMBER 30, 2017
|
Share capital |
|
|
Share premium |
|
|
Share‑based payment reserve |
|
|
Total Accumulated losses |
|
|
Total Equity |
|
|
£ |
|
|
£ |
|
|
£ |
|
|
£ |
|
|
£ |
|
Balance at
January 1, 2016 |
1,009,923 |
|
|
26,650,098 |
|
|
1,525,897 |
|
|
(23,752,204 |
) |
|
5,433,714 |
|
Loss for the
period |
— |
|
|
— |
|
|
— |
|
|
(4,236,750 |
) |
|
(4,236,750 |
) |
Other comprehensive
income for the period: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange
differences on translating foreign operations |
— |
|
|
— |
|
|
— |
|
|
20,495 |
|
|
20,495 |
|
Total comprehensive
loss for the period |
— |
|
|
— |
|
|
— |
|
|
(4,216,255 |
) |
|
(4,216,255 |
) |
New share capital
issued |
1,555,796 |
|
|
34,151,439 |
|
|
— |
|
|
— |
|
|
35,707,235 |
|
Transaction costs on
share capital issued |
— |
|
|
(2,325,035 |
) |
|
— |
|
|
— |
|
|
(2,325,035 |
) |
Warrants exercised
during the period |
167 |
|
|
4,000 |
|
|
— |
|
|
— |
|
|
4,167 |
|
Share‑based
payments |
— |
|
|
— |
|
|
307,929 |
|
|
— |
|
|
307,929 |
|
Balance at
September 30, 2016 |
2,565,886 |
|
|
58,480,502 |
|
|
1,833,826 |
|
|
(27,968,459 |
) |
|
34,911,755 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
January 1, 2017 |
2,568,053 |
|
|
58,526,502 |
|
|
2,101,790 |
|
|
(28,728,038 |
) |
|
34,468,307 |
|
Loss for the
period |
— |
|
|
— |
|
|
— |
|
|
(14,228,090 |
) |
|
(14,228,090 |
) |
Other comprehensive
expense for the period: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange
differences on translating foreign operations |
— |
|
|
— |
|
|
— |
|
|
(27,691 |
) |
|
(27,691 |
) |
Total comprehensive
loss for the period |
— |
|
|
— |
|
|
— |
|
|
(14,255,781 |
) |
|
(14,255,781 |
) |
New share capital
issued |
2,676,150 |
|
|
67,647,737 |
|
|
— |
|
|
— |
|
|
70,323,887 |
|
Transaction costs on
new share capital issued |
— |
|
|
(7,453,027 |
) |
|
— |
|
|
— |
|
|
(7,453,027 |
) |
Warrants exercised
during the period |
6,667 |
|
|
140,000 |
|
|
— |
|
|
— |
|
|
146,667 |
|
Share-based
payments |
— |
|
|
— |
|
|
1,991,131 |
|
|
— |
|
|
1,991,131 |
|
Balance at
September 30, 2017 |
5,250,870 |
|
|
118,861,212 |
|
|
4,092,921 |
|
|
(42,983,819 |
) |
|
85,221,184 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The currency translation reserve is currently not material and
as such is not presented in a separate reserve but has been
included in the total accumulated losses reserve.
The accompanying notes form an integral part of these condensed
consolidated interim financial statements.
VERONA PHARMA PLC NOTES TO THE CONSOLIDATED INTERIM
FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER
30, 2017
1. General information
On February 10, 2017 the Company effected a
50-for-1, reverse stock split, consolidation of its shares. All
references to ordinary shares, options and warrants, as well as
share, per share and related information in these consolidated
financial statements have been retroactively adjusted to reflect
the consolidation as if it had occurred at the beginning of the
earliest period presented.
On May 2, 2017 the Company announced the closing
of its global offering of an aggregate of 47,399,001 new ordinary
shares, consisting of the initial public offering in the United
States of 5,768,000 American Depositary Shares (“ADSs”) at a price
of $13.50 per ADS and the private placement in Europe of 1,255,001
ordinary shares at a price of £1.32 per ordinary share, for gross
proceeds of $80.0 million (the “Global Offering”). Each ADS offered
represents eight ordinary shares of the Company. The ordinary
shares offered were allotted and issued in a concurrent private
placement in Europe and other countries outside of the United
States and Canada.
In addition, the Chairman of Verona Pharma's
board of directors, Dr. David Ebsworth, and an existing shareholder
agreed to subscribe for 254,099 new ordinary shares at a price of
£1.32 per ordinary share in a shareholder private placement
separate from the Global Offering (the "Shareholder Private
Placement"), contingent on and concurrent with the Global Offering
and generating additional gross proceeds of £335 thousand.
On May 15 and May 23, 2017, pursuant to the
Global Offering, the underwriters purchased an additional 733,738
ADSs, representing 5,869,904 ordinary shares, at a price of $13.50
per ADS, for additional gross proceeds of $9.9 million bringing the
total gross proceeds in the Global Offering to $89.9 million (£70.0
million). Including the Shareholder Private Placement, the total
gross proceeds of the capital raising amounted to $90.3 million
(£70.3 million).
The ADSs began trading on the NASDAQ Global
Market under the ticker symbol “VRNA” on April 27, 2017. Verona
Pharma’s ordinary shares continue to trade on the AIM market of the
London Stock Exchange (“AIM”) under the symbol “VRP”.
On September 22, 2017, 133,333 share options
over 133,333 new shares were exercised at a price of 110p per
share, resulting in proceeds of £147 thousand to the Company.
Following the Global Offering, the Shareholder
Private Placement and the exercise of warrants, the number of
ordinary shares in issue at September 30, 2017 was 105,017,401.
2. Basis of accounting
The unaudited condensed consolidated interim
financial statements of Verona Pharma Plc (the “Company”) and
its subsidiaries, Verona Pharma, Inc., and Rhinopharma Limited
(together “the Group”), for the nine months ended September 30,
2017, do not include all the statements required for full annual
financial statements and should be read in conjunction with the
consolidated financial statements of the Group as of
December 31, 2016.
These unaudited condensed interim financial
statements were authorized for issue by the Company’s board of
directors (the “Directors”) on November 7, 2017. There have been no
changes, except as otherwise stated, to the accounting policies as
contained in the annual consolidated financial statements as of and
for the year ended December 31, 2016, which have been prepared
in accordance with international financial reporting standards
(“IFRS”) as issued by the International Accounting Standards Board
(“IASB”).
The interim condensed consolidated financial
statements have been prepared on a going‑concern basis. Management,
having reviewed the future operating costs of the business in
conjunction with the cash held as of September 30, 2017, believes
the Group has sufficient funds to continue as a going concern for
at least 12 months from the end of the reporting period.
The Group’s activities and results are not
exposed to any seasonality. The Company operates as a single
operating and reportable segment.
Dividend
The Directors do not recommend the payment of a
dividend for the nine months ended September 30, 2017 (Nine months
ended September 30, 2016: £Nil; year ended December 31,
2016: £Nil).
Update to accounting policies:
Short-Term Investments
Short-term investments include fixed term
deposits held at banks and other investments with original
maturities of three months or more but less than a year. They are
classified as loans and receivables and are measured at amortised
cost using the effective interest method.
3. Segmental reporting
The Group’s activities are covered by one
operating and reporting segment: Drug Development, as detailed more
fully in the annual consolidated financial statements as of and for
the year ended December 31, 2016. There have been no changes to
management’s assessment of the operating and reporting segment of
the Group during the period.
4. Financial Instruments
The Group’s activities expose it to a variety of
financial risks: market risk (including foreign currency risk);
cash flow and fair value interest rate risk; and credit risk and
liquidity risk. The condensed consolidated interim financial
statements do not include all financial risk management information
and disclosures required in the annual financial statements, and
they should be read in conjunction with the Group’s annual
financial statements for the year ended December 31, 2016.
5. Estimates
The preparation of condensed consolidated
interim financial statements require management to make judgments,
estimates and assumptions that affect the application of accounting
policies and the reported amounts of assets and liabilities, income
and expenses. Actual results may differ from those estimates.
In preparing these condensed consolidated
interim financial statements, the significant judgments made by
management in applying the Group’s accounting policies and the key
sources of estimation uncertainty were the same as those applied to
the consolidated financial statements for the year ended
December 31, 2016.
6. Finance income and expense
|
Three monthsended September30, 2016 |
|
|
Three monthsended September30, 2017 |
|
|
Nine monthsended September30, 2016 |
|
|
Nine monthsended September30, 2017 |
|
|
£ |
|
|
£ |
|
|
£ |
|
|
£ |
|
Finance
income: |
|
|
|
|
|
|
|
|
|
|
|
Interest received on
cash balances |
40,791 |
|
|
102,882 |
|
|
48,166 |
|
|
194,467 |
|
Foreign exchange gain
on translating foreign currency denominated bank balances |
99,012 |
|
|
— |
|
|
99,012 |
|
|
— |
|
Fair value adjustment
on derivative financial instrument (note 10) |
— |
|
|
— |
|
|
— |
|
|
3,925,270 |
|
Other income |
— |
|
|
11,197 |
|
|
— |
|
|
11,197 |
|
Total finance
income |
139,083 |
|
|
114,079 |
|
|
147,178 |
|
|
4,130,934 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three monthsended September30, 2016 |
|
|
Three monthsended September30, 2017 |
|
|
Nine monthsended September30, 2016 |
|
|
Nine monthsended September30, 2017 |
|
|
£ |
|
|
£ |
|
|
£ |
|
|
£ |
|
Finance
expense: |
|
|
|
|
|
|
|
|
|
|
|
Transaction costs
allocated to the issue of warrants |
585,425 |
|
|
— |
|
|
585,425 |
|
|
— |
|
Re-measurement of
contingent arrangement (note 11) |
— |
|
|
— |
|
|
86,128 |
|
|
— |
|
Impact of changes in
foreign exchange rates on the contingent arrangement (note 11) |
3,991 |
|
|
(7,418 |
) |
|
24,906 |
|
|
(20,221 |
) |
Unwinding of discount
factor related to the contingent arrangement (note 11) |
21,434 |
|
|
23,803 |
|
|
62,301 |
|
|
70,086 |
|
Foreign exchange loss
on receivables relating to financing activities (note 12) |
— |
|
|
— |
|
|
— |
|
|
408,277 |
|
Foreign exchange loss
on translating other foreign currency denominated balances |
— |
|
|
1,156,837 |
|
|
— |
|
|
1,693,187 |
|
Fair value adjustment
on derivative financial instrument (note 10) |
100,435 |
|
|
1,187,663 |
|
|
100,435 |
|
|
— |
|
Total finance
expense |
711,285 |
|
|
2,360,885 |
|
|
859,195 |
|
|
2,151,329 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three month period ended September 30, 2017, the value
of the liability arising from the derivative financial instrument
increased by £1,188 thousand, from £2,810 thousand on June 30, 2017
to £3,997 thousand on September 30, 2017; the increase in the value
of this liability is recorded as finance expense.
For the nine month period ended September 30,
2017, the value of the liability arising from the derivative
financial instrument decreased by £3,926 thousand, from £7,923
thousand on January 1, 2017 to £3,997 thousand on September 30,
2017; the decrease in the value of this liability is recorded as
Finance income. (The change in value of this liability during the
period comprised a reduction of £5,113 thousand during the six
months ended June 30, 2017, partially offset by an increase of
£1,188 thousand during the three months ended September 30, 2017,
as set out above.)
As a result, the movement in the value of the
liability arising from the derivative financial instrument is
recorded as finance expense in the three month period to September
30, 2017, and as finance income in the nine month period to
September 30, 2017.
7. Taxation
The tax credit for the nine month period ended
September 30, 2017, amounts to £2,861 thousand, and consists of the
estimated research and development tax credit receivable on
qualifying expenditure incurred during the nine month period ended
September 30, 2017 for an amount of £3,079 thousand plus a tax
expense of £218 thousand related to the US operations (nine month
period ended September 30, 2016: £556 thousand tax credit,
comprising £572 thousand for research and development tax credit,
less £16 thousand expense for tax on US operations).
The tax credit for the three month period ended
September 30, 2017, amounts to £1,258 thousand, and consists of the
estimated research and development tax credit receivable on
qualifying expenditure incurred during the three month period ended
September 30, 2017 for an amount of £1,336 thousand plus a tax
expense of £78 thousand related to the US operations (three month
period ended September 30, 2016: £270 thousand tax credit,
comprising £282 thousand for research and development tax credit,
less £11 thousand expense for tax on US operations).
8. Loss per share calculation
The basic loss per share of 17.4p (September 30,
2016: loss of 15.4p) for the nine months ended September 30, 2017
is calculated by dividing the loss for the nine months ended
September 30, 2017 by the weighted average number of ordinary
shares in issue of 81,923,920 during the nine months ended
September 30, 2017 (September 30, 2016: 27,574,331).
The basic loss per share of 8.7p (September 30,
2016: loss of 5.9p) for the three months ended September 30, 2017
is calculated by dividing the loss for the three months ended
September 30, 2017 by the weighted average number of ordinary
shares in issue of 104,896,971 during the three months ended
September 30, 2017 (September 30, 2016: 41,612,262). Since the
Group has reported a net loss, diluted loss per ordinary share is
equal to basic loss per ordinary share.
Each ADS represents 8 shares of the Company, so
the loss per ADS is any period is equal to 8 times the loss per
share.
9. Short-term investments
The short-term investments as at September 30,
2017 amounted to a total of £54,065 thousand (December 31, 2016: £
nil) and consisted of fixed term deposits, in both US Dollars and
UK Pounds.
10. Warrants
Pursuant to the July 2016 placement the Company
issued 31,115,926 units to new and existing investors at the
placing price of £1.4365 per unit. Each unit comprises one ordinary
share and one warrant. The warrant holders can subscribe for 0.4 of
an ordinary share at a per share exercise price of 120% of the
placing price or £1.7238. The warrant holders can opt for a
cashless exercise of their warrants. The warrant holders can choose
to exchange the warrants held for a reduced number of warrants
exercisable at nil consideration. The reduced number of warrants is
calculated based on a formula considering the share price and the
exercise price of the shares. The warrants were therefore
classified as a derivative financial liability, since their
exercise might result in a variable number of shares to be
issued.
At December 31, 2016 warrants over 12,446,370
shares were in effect. During the 9 months ended September 30, 2017
warrants over 45,108 shares were forfeited.
|
|
|
At December 31, 2016 |
|
|
At September 30, 2017 |
|
Warrants |
12,446,370 |
|
|
12,401,262 |
|
Stock price |
£1.5650 |
|
|
£1.4000 |
|
Exercise price |
£1.7238 |
|
|
£1.7238 |
|
Risk-free interest
rate |
0.088% |
|
|
0.42% |
|
Expected life of
options |
2.43 years |
|
|
1.92
years |
|
Annualized
volatility |
73.53% |
|
|
55.17% |
|
Dividend rate |
0.00% |
|
|
0.00% |
|
|
|
|
|
|
|
|
|
|
|
|
|
As at September 30, 2017, the Company updated the underlying
assumptions and calculated a fair value of these warrants, using
Black-Scholes (level 3), amounting to £3,997 thousand.
The variance for the nine month period ended
September 30, 2017 was income of £3,925 thousand (nine month period
ended September 30, 2016: expense of £100 thousand) and is recorded
as finance income (nine month period ended September 2016: finance
expense) in the Consolidated Statement of Comprehensive
Income. Of this amount a total of £12 thousand related to the
warrants that were forfeited (2016: £nil). The variance for the
three month period ended September 30, 2017 was an expense of
£1,188 thousand (three month period ending September 30, 2016: £100
thousand) and is recorded as finance expense (2016: finance
expense) in the Consolidated Statement of Comprehensive Income.
|
Derivativefinancialinstrument |
|
|
|
£ |
At December 31,
2016 |
|
|
7,922,603 |
|
Fair value adjustments
recognized in profit or loss |
|
|
(3,925,270 |
) |
At September
30, 2017 |
|
|
3,997,333 |
|
|
|
|
|
|
|
|
|
|
|
For the amount recognized at September 30, 2017, the effect,
when some of these underlying parameters would deviate up or down,
is presented in the below table.
|
|
|
Volatility(up / down10 % pts) |
|
|
Time tomaturity(up / down6 months) |
|
£
thousands |
|
|
£
thousands |
|
|
|
|
|
Variable up . |
4,941 |
|
|
4,651 |
Base case,
reported fair value |
3,997 |
|
|
3,997 |
Variable down |
3,041 |
|
|
3,245 |
|
|
|
|
|
|
|
|
|
|
11. Assumed contingent obligation related to the
business combination
The value of the assumed contingent obligation
as of September 30, 2017 amounted to £852,070 (December 31,
2016: £802,205).
The increase in value of the assumed contingent
obligation during the nine months ended September 30, 2017 amounted
to £49,865 (nine months ended September 30, 2016: £173,335) and was
recognized as a finance expense. The increase in value of the
assumed contingent obligation during the three months ended
September 30, 2017 amounted to £23,803 (three months ended
September 30, 2016: £21,434) and was recognized as a finance
expense.
|
September 30, 2016 |
|
|
September 30, 2017 |
|
|
£ |
|
|
£ |
|
January 1, |
593,941 |
|
|
802,205 |
|
Re‑measurement of
contingent arrangement |
86,128 |
|
|
- |
|
Impact of changes in
foreign exchange rates |
24,905 |
|
|
(20,221 |
) |
Unwinding of discount
factor |
62,301 |
|
|
70,086 |
|
Period end |
767,275 |
|
|
852,070 |
|
|
|
|
|
|
|
|
|
|
|
|
|
There is no material difference between the fair value and
carrying value of the financial liability.
12. Issuance of Share
Capital
On May 2, 2017 the Company announced the closing
of its Global Offering of an aggregate of 47,399,001 new ordinary
shares, comprising 5,768,000 American Depositary Shares (“ADSs”) at
a price of $13.50 per ADS and 1,255,001 ordinary shares at a price
of £1.32 per ordinary share. During May 2017 the underwriters
purchased an additional 733,738 ADSs, representing 5,869,904
ordinary shares, at a price of $13.50 per ADS. The total gross
proceeds in the Global Offering amounted to $89.9 million (£70.0
million).
In addition, the Chairman of Verona Pharma's
board of directors, Dr. David Ebsworth, and an existing shareholder
agreed to subscribe for 254,099 new ordinary shares at a price of
£1.32 per ordinary share in the Shareholder Private Placement,
contingent on and concurrent with the Global Offering and
generating gross proceeds of £0.3m.
Where there is a time and foreign exchange
difference between proceeds from a share issue becoming due and
being received, the movement is taken to Finance income or Finance
expense as appropriate. In respect of the Global Offering and
Shareholder Private Placement, the Company recorded a finance
expense of £439,049 arising from movements in exchange rates on
funds receivable, offset by a saving on commission payable of
£30,822, for a net finance expense of £408,277.
On September 22, 2017, 133,333 existing warrants
over 133,333 new shares were exercised at a price of 110p per
share, resulting in proceeds of £146 thousand to the Company.
Following the Global Offering, the Shareholder
Private Placement and the exercise of warrants, the number of
ordinary shares in issue at September 30, 2017 was
105,017,401. All new ordinary shares rank pari passu with
existing ordinary shares.
13. Share option scheme
During the nine months ended September 30, 2017
and following the Global Offering the Company granted a total of
4,656,828 share options and 1,052,236 Restricted Stock Units
(“RSUs”) (nine months ended September 30, 2016 the Company granted
a total of 1,701,990 share options, and nil RSUs). The numbers
presented reflect ordinary shares although some grants made in 2017
are in ADSs. Each ADS represents eight ordinary shares.
The movement in the number of the Company’s
share options is set out below:
|
Weighted average exercise price |
|
|
Nine months ended September 30, 2016 |
|
|
Weighted average exercise price |
|
|
Nine months ended September 30, 2017 |
|
|
£ |
|
|
|
|
|
£ |
|
|
|
|
Outstanding at
January 1 |
1.78 |
|
|
1,792,000 |
|
|
1.87 |
|
|
3,037,333 |
|
Granted during the
period |
1.97 |
|
|
1,701,990 |
|
|
1.32 |
|
|
4,656,828 |
|
Exercised during the
period |
1.25 |
|
|
(3,330 |
) |
|
1.10 |
|
|
(133,333 |
) |
Forfeited during the
period |
1.24 |
|
|
(150,000 |
) |
|
|
|
|
— |
|
Expired during the
period |
2.46 |
|
|
(260,000 |
) |
|
1.90 |
|
|
(33,333 |
) |
Number of outstanding
options |
1.84 |
|
|
3,080,660 |
|
|
1.53 |
|
|
7,527,495 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The movement in the number of the Company’s RSUs is set out
below:
|
|
|
Weighted average exercise price |
|
|
Nine months ended September 30, 2016 |
|
|
Weighted average exercise price |
|
|
Nine months ended September 30, 2017 |
|
£ |
|
|
|
|
|
£ |
|
|
|
Outstanding at
January 1 |
n/a |
|
|
— |
|
|
— |
|
|
— |
Granted during the
period |
— |
|
|
— |
|
|
1.32 |
|
|
1,052,236 |
Expired during the
period |
— |
|
|
— |
|
|
— |
|
|
— |
Number of outstanding
RSUs |
n/a |
|
|
— |
|
|
1.32 |
|
|
1,052,236 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The share‑based payment expense for the nine months ended
September 30, 2017 was £1,991,131 (nine months ended September 30,
2016: £307,929). The share‑based payment expense for the
three months ended September 30, 2017 was £1,022,832 (three months
ended September 30, 2016: £129,967).
The options and RSUs granted during the nine
months ended September 30, 2017, were awarded under the
Company’s 2017 Long Term Incentive Plan with total fair values
estimated using the Black‑Scholes option‑pricing model of £5.3m.
The cost is amortized over the vesting period of the options and
the RSUs on a straight‑line basis. The following assumptions were
used for the Black‑Scholes valuation of share options and RSUs
granted in the nine months ended September 30, 2017. The only
performance condition of the options and RSUs is the vesting
period.
|
Share options |
|
|
RSU |
|
|
Issued in the nine months
endedSeptember 30, 2017 |
|
|
Issued in the nine months endedSeptember 30,
2017 |
|
Options / RSUs
granted |
4,656,828 |
|
|
1,052,236 |
|
Risk‑free interest
rate |
0.29 % - 0.62 % |
|
|
0.42 %
- 0.62 % |
|
Expected life of
options / RSUs |
5.5 – 7.0 years |
|
|
5.5 –
7.0 years |
|
Annualized
volatility |
71.3 % - 73.3 % |
|
|
71.3 %
- 73.1% |
|
Dividend rate |
0.00% |
|
|
0.00% |
|
Vesting period |
3 and 4 years |
|
|
3 and 4
years |
|
|
|
|
|
|
|
|
|
|
|
|
|
14. Related party transactions
In the nine months ended September 30,
2016, and 2017, executive directors received regular salaries,
post-employment benefits and share-based payments. Additionally,
non-executive directors received compensation for their services in
the form of cash compensation and equity grants. The compensation
costs for the Directors and senior staff for the three and nine
months ended September 30, 2016 and 2017 were as follows:
|
|
|
Short-termemployee |
|
Share-based |
|
Post-employment |
|
|
|
|
|
benefits |
|
payments |
|
benefits |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
(in £ thousands) |
Three months
ended September 30, 2016 |
|
Directors |
325 |
|
88 |
|
5 |
|
418 |
|
|
Other key
managementpersonnel |
141 |
|
45 |
|
3 |
|
189 |
|
|
|
466 |
|
133 |
|
8 |
|
607 |
Three months
ended September 30, 2017 |
|
Directors |
244 |
|
355 |
|
5 |
|
604 |
|
|
Other key
managementpersonnel |
428 |
|
628 |
|
7 |
|
1,063 |
|
|
|
672 |
|
983 |
|
12 |
|
1,667 |
|
|
|
Short-termemployee |
|
Share-based |
|
Post-employment |
|
|
|
|
|
benefits |
|
payments |
|
benefits |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
(in £ thousands) |
Nine months ended
September 30, 2016 |
|
Directors |
522 |
|
183 |
|
10 |
|
715 |
|
|
Other key
managementpersonnel |
594 |
|
118 |
|
6 |
|
718 |
|
|
|
1,116 |
|
301 |
|
16 |
|
1,433 |
Nine months ended
September 30, 2017 |
|
Directors |
738 |
|
697 |
|
13 |
|
1,448 |
|
|
Other key
managementpersonnel |
1,159 |
|
1,203 |
|
18 |
|
2,380 |
|
|
|
1,897 |
|
1,900 |
|
31 |
|
3,828 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David Ebsworth, a Non-Executive Director, purchased £18 thousand
of our ordinary shares as part of the Shareholder Private Placement
and £10 thousand of our ordinary shares from the market in the
period. Vikas Sinha, a Non-Executive Director, purchased of
£234 thousand of our ordinary shares, in the form of ADSs, as part
of the Global Offering.
The Company recognizes Vivo Capital and Novo A/S
as related parties. Both these funds participated in the Global
Offering, as per the table below presenting their equity
contributions:
|
|
|
Equity Contributions at Global Offering |
|
|
|
£
thousands |
|
|
|
|
Novo
A/S |
|
|
7,791 |
Vivo
Capital |
|
|
7,407 |
|
|
|
|
|
|
|
|
15. Convenience translation
We maintain our books and records in pounds
sterling and we prepare our financial statements in accordance with
IFRS, as issued by the IASB. We report our results in pounds
sterling. For the convenience of the reader we have translated
pound sterling amounts in the tables below as of September 30, 2017
and for the three and nine month periods ended September 30, 2016
and 2017 into US dollars at the noon buying rate of the Federal
Reserve Bank of New York on September 29, 2017, which was £1.00 to
$1.3402. These translations should not be considered
representations that any such amounts have been, could have been or
could be converted into US dollars at that or any other exchange
rate as of that or any other date.
The loss per ADS is calculated on the basis of 8
ordinary shares per ADS.
CONDENSED CONSOLIDATED INTERIM STATEMENT
OF COMPREHENSIVE INCOME FOR THE THREE AND NINE MONTHS ENDING
SEPTEMBER 30, 2016 AND SEPTEMBER 30, 2017
|
Three months ended September 30,2017
(unaudited) |
|
|
|
Three months ended September 30,2017
(unaudited) |
|
|
|
|
Three months ended September 30,2016
(unaudited) |
|
|
|
$ |
|
|
|
|
£ |
|
|
|
|
£ |
|
Research and
development costs |
|
(8,155,116 |
) |
|
|
|
(6,084,999 |
) |
|
|
|
(1,408,726 |
) |
General and
administrative costs |
|
(2,734,378 |
) |
|
|
|
(2,040,276 |
) |
|
|
|
(751,912 |
) |
Operating
loss |
|
(10,889,494 |
) |
|
|
|
(8,125,275 |
) |
|
|
|
(2,160,638 |
) |
Finance income |
|
152,889 |
|
|
|
|
114,079 |
|
|
|
|
139,803 |
|
Finance
expense |
|
(3,164,058 |
) |
|
|
|
(2,360,885 |
) |
|
|
|
(711,285 |
) |
Loss before
taxation |
|
(13,900,663 |
) |
|
|
|
(10,372,081 |
) |
|
|
|
(2,732,120 |
) |
Taxation —
credit |
|
1,685,846 |
|
|
|
|
1,257,906 |
|
|
|
|
270,757 |
|
Loss for
period |
|
(12,214,817 |
) |
|
|
|
(9,114,175 |
) |
|
|
|
(2,461,363 |
) |
Other
comprehensive (expense) / income: |
|
|
|
|
|
|
|
|
|
|
|
Exchange differences on
translating foreign operations |
|
(18,299 |
) |
|
|
|
(13,654 |
) |
|
|
|
3,842 |
|
Total
comprehensive loss for the period attributable to owners of the
Company |
|
(12,223,116 |
) |
|
|
|
(9,127,829 |
) |
|
|
|
(2,457,521 |
) |
Loss per ADS —
basic and diluted |
$ |
(0.93 |
) |
|
|
£ |
(0.70 |
) |
|
|
£ |
(0.48 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30,2017
(unaudited) |
|
|
Nine months ended September 30,2017
(unaudited) |
|
|
|
Nine months ended September 30,2016
(unaudited) |
|
|
$ |
|
|
£ |
|
|
|
£ |
|
Research and
development costs |
(18,800,130 |
) |
|
|
(14,027,854 |
) |
|
|
(2,653,441 |
) |
General and
administrative costs |
(6,756,216 |
) |
|
|
(5,041,200 |
) |
|
|
(1,427,026 |
) |
Operating
loss |
(25,556,346 |
) |
|
|
(19,069,054 |
) |
|
|
(4,080,467 |
) |
Finance income |
5,536,278 |
|
|
|
4,130,934 |
|
|
|
147,178 |
|
Finance
expense |
(2,883,211 |
) |
|
|
(2,151,329 |
) |
|
|
(859,195 |
) |
Loss before
taxation |
(22,903,279 |
|
|
|
(17,089,449 |
) |
|
|
(4,792,484 |
) |
Taxation —
credit |
3,834,793 |
|
|
|
2,861,359 |
|
|
|
555,734 |
|
Loss for
period |
(19,068,486 |
) |
|
|
(14,228,090 |
) |
|
|
(4,236,750 |
) |
Other
comprehensive (expense) / income: |
|
|
|
|
|
|
|
|
|
|
Exchange differences on
translating foreign operations |
(37,111 |
) |
|
|
(27,691 |
) |
|
|
20,495 |
|
Total
comprehensive loss for the period attributable to owners of the
Company |
(19,105,597 |
) |
|
|
(14,255,781 |
) |
|
|
(4,216,255 |
) |
Loss per ADS —
basic and diluted |
(1.86 |
) |
|
|
(1.39 |
) |
|
|
(1.23 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL
POSITION
|
As of September 30,2017 (unaudited) |
|
|
As of September 30,2017 (unaudited) |
|
|
As of December 31,2016 (audited) |
|
|
$ |
|
|
£ |
|
|
£ |
|
ASSETS |
|
|
|
|
|
|
|
|
Non‑current
assets: |
|
|
|
|
|
|
|
|
Property, plant and
equipment |
17,180 |
|
|
12,819 |
|
|
13,838 |
|
Intangible assets |
2,685,548 |
|
|
2,003,841 |
|
|
1,876,684 |
|
Goodwill |
591,028 |
|
|
441,000 |
|
|
441,000 |
|
|
3,293,756 |
|
|
2,457,660 |
|
|
2,331,522 |
|
Current
assets: |
|
|
|
Prepayments and other
receivables |
5,248,255 |
|
|
3,916,024 |
|
|
2,958,587 |
|
Current tax
receivable |
4,112,435 |
|
|
3,068,523 |
|
|
1,067,460 |
|
Short-term
investments |
72,457,835 |
|
|
54,064,942 |
|
|
— |
|
Cash and cash
equivalents |
42,073,337 |
|
|
31,393,327 |
|
|
39,785,098 |
|
|
123,891,862 |
|
|
92,442,816 |
|
|
43,811,145 |
|
Total
assets |
127,185,618 |
|
|
94,900,476 |
|
|
46,142,667 |
|
|
|
|
|
|
|
|
|
|
EQUITY AND
LIABILITIES |
|
|
|
|
|
|
|
|
Capital and
reserves attributable to equity holders: |
|
|
|
|
|
|
|
|
Share capital |
7,037,216 |
|
|
5,250,870 |
|
|
2,568,053 |
|
Share
premium |
159,297,796 |
|
|
118,861,212 |
|
|
58,526,502 |
|
Share‑based payment
reserve |
5,485,333 |
|
|
4,092,921 |
|
|
2,101,790 |
|
Accumulated loss |
(57,606,914 |
) |
|
(42,983,819 |
) |
|
(28,728,038 |
) |
Total
equity |
114,213,431 |
|
|
85,221,184 |
|
|
34,468,307 |
|
|
|
|
|
Current
liabilities: |
|
|
|
Trade and other
payables |
6,368,359 |
|
|
4,751,798 |
|
|
2,823,489 |
|
Tax payable – US
operations |
104,658 |
|
|
78,091 |
|
|
126,063 |
|
Derivative financial
instrument |
5,357,226 |
|
|
3,997,333 |
|
|
7,922,603 |
|
Total current
liabilities |
11,830,243 |
|
|
8,827,222 |
|
|
10,872,155 |
|
Non‑current
liabilities: |
|
|
|
Assumed contingent
obligation |
1,141,944 |
|
|
852,070 |
|
|
802,205 |
|
Total
non‑current liabilities |
1,141,944 |
|
|
852,070 |
|
|
802,205 |
|
Total equity
and liabilities |
127,185,618 |
|
|
94,900,476 |
|
|
46,142,667 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16. Subsequent Events
No events occurred after the reporting date that
would have a material impact on the financial position of the
Company.
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