TIDMN4P
RNS Number : 6738M
N4 Pharma PLC
18 September 2019
18 September 2019
N4 Pharma Plc
("N4 Pharma" or the "Company")
Interim Results
N4 Pharma Plc (AIM: N4P), the specialist pharmaceutical company
developing Nuvec(R), a novel delivery system for vaccines and
cancer treatments, announces its unaudited interim results for the
six months ended 30 June 2019.
Key events:
-- Placing of 10,500,000 ordinary shares to raise approximately GBP1.0m net of expenses
-- Commissioned repeat of its successful in vivo study using
Ovalbumin ("OVA) pDNA at University of Queensland ("UQ") to try and
identify causes of inconsistent results seen working with
University of Adelaide and other CROs
-- Commenced search for other asset opportunities to add to the Company portfolio
-- Appointment of Dr John Chiplin as non-executive Chairman
-- Appointment of Dr Chris Britten as non-executive Director
-- Cash balance at period end of approximately GBP1.2 million
Post period end:
-- Received successful results for UQ OVA pDNA study, confirming
the ability of Nuvec(R) to increase antibody responses using
multiple injections at certain doses
-- Commenced work to improve dispersity of Nuvec(R) formulations
loaded with pDNA and initiate further in vivo work to test improved
formulation
Nigel Theobald, Chief Executive Officer of N4 Pharma Plc,
commented:
"In this period, we have confirmed that Nuvec(R) works for both
DNA and mRNA delivery, having produced an antibody response for
both. We have also made progress in understanding how Nuvec(R)
behaves once loaded with DNA and mRNA. We have put in place a clear
plan to investigate how we can improve the dispersion of Nuvec(R)
once loaded with DNA. We will then test this improvement in both in
vitro and in vivo studies and conduct an oncology efficacy
model.
The development and improvement of our Nuvec(R) particle once
loaded with DNA and mRNA is an essential step on its path towards
use in clinical trials and usual for the evolution of any delivery
system. Nuvec(R) still shows great potential as a delivery system
for nucleic acids and we remain excited and confident about its
future."
Enquiries:
N4 Pharma Plc Via Scott PR
Nigel Theobald, CEO
Allenby Capital Limited Tel: +44 (0)203 328 5656
James Reeve/Asha Chotai
Scott PR Tel: +44 (0)1477 539 539
Georgia Smith
About N4 Pharma
N4 Pharma is a specialist pharmaceutical company developing a
novel delivery system for vaccines and cancer treatments using its
unique silica nanoparticle delivery system called Nuvec(R).
N4 Pharma's business model is to partner with companies
developing novel antigens for vaccines and cancer treatments to use
Nuvec(R) as the delivery vehicle to get their antigen into cells to
express the protein needed for the required immunity. As these
products progress through pre clinical and clinical programs, N4
Pharma will seek to receive up front payments, milestone payments
and ultimately royalty payments once products reach the market.
Chairman's Statement
Half year results
During the six months to 30 June 2019, the Company raised an
additional GBP1.0m net of expenses through the issue of 10,500,000
new ordinary shares.
The operating loss for the period was GBP550,573 (2018:
GBP553,379).
Cash balance at 30 June 2019 was GBP1,167,547 (30 June 2018:
GBP1,586,474).
Board changes
During the period, the Company appointed John Chiplin as
non-executive Chairman and Chris Britten as a non-executive
Director. Paul Titley stood down as a director and employee of the
Company. David Templeton became an executive director, taking
responsibility for the technical aspects of Nuvec(R) development.
These changes bring considerable experience and expertise to the
Board in order to take the Company forward.
Nuvec(R) development work
The first part of 2019 has seen the Company make considerable
progress in enhancing the understanding and performance of the
Nuvec(R) system through a series of its own studies and research
collaborations. Following this work, and together with previous
studies, the Company has established that:
-- a range of DNA and mRNA antigens can be loaded onto the
Nuvec(R) particles and successfully transfect cells in vitro;
-- Nuvec(R) mechanism of action to transfect cells is via
endocytosis into the cell and release of payload into the
cytoplasm;
-- Nuvec(R) has a good safety profile, degrades naturally in the
body and, since it is not lipid in composition, is devoid of
potential lipid induced liver damage;
-- importantly, Nuvec(R) works for pDNA and mRNA having shown in
vivo antibody response for both;
-- Nuvec(R) currently delivers a good antibody response from 2-3 injections; and
-- evidence from in vitro studies suggests that Nuvec(R), when
prepared for in vivo dosing, does not produce a monodisperse
suspension after the addition of DNA, which the Directors believe
is the most likely cause of the inconsistent results observed
across certain studies.
The data generated so far is encouraging and shows that, with
proposed enhancements, Nuvec(R) has the potential to be an
effective delivery system for nucleic acids.
Repeat University of Queensland Study
The recent repeat of the University of Queensland (UQ) study
using OVA pDNA was performed because work with other CROs and
collaborators, undertaken subsequently to the initial UQ studies,
showed inconsistent results. The repeat study with UQ added an
additional arm to investigate the response with one injection as
well as three injections, and at different dose levels. The repeat
study confirmed a good response using Nuvec(R) at higher doses
using three injections but no response with just one injection. The
original UQ study had not tested the response using just one
injection.
Together with other data, this work also showed that once the
Nuvec(R) particles were loaded with OVA pDNA, the formulation was
not ideally dispersed. This lack of dispersion is not an issue for
in vitro work but is also a key likely explanation as to the
inconsistency seen when using Nuvec(R) in vivo and may also
contribute to previous study inconsistencies using just one
injection.
Going forward
The work the Company has undertaken itself and with
collaborators shows that the focus now needs to be on improving the
formulations of Nuvec(R) once loaded with DNA and RNA to ensure
delivery of maximum antibody generation in vivo. This is standard
work in the evolution of any delivery system. The focus of this
work is not to alter the basic silica nanoparticle, but rather to
look at the processes of how to load a linker to the silica
particle to enable DNA or RNA to be loaded to the particle and also
how the DNA or RNA is then loaded onto the Nuvec(R) particle. The
objective of the work is to improve these processes so that a more
monodisperse formulation of DNA loaded Nuvec(R) is achieved and any
agglomeration is minimized.
It is anticipated that a more monodisperse formulation would
likely lead to improved transfection efficiency in vivo, greater
consistency of results and may also increase the response from a
single injection.
To that end, the Company has put the following top-level plan in
place. The work is divided into two distinct phases, each of which
has certain stages upon which the Company will provide updates as
they progress.
The first is to generate Nuvec(R) with better potential for
dispersion in aqueous suspensions, improve dispersion techniques,
and optimise the addition of DNA. In doing so the Company will seek
to address the issues it perceives may have been causing
inconsistencies to date. The work to be done will involve four,
sequential, stages:
1. Nuvec(R) manufacturing process alterations (i.e. addition of
PEI onto silica nanoparticles which allows for subsequent loading
of DNA/mRNA)
2. Nuvec(R) dispersion testing
3. Improved Nuvec(R) DNA loading process
4. Analyse the effect of the Nuvec(R) concentration, the
DNA:Nuvec(R) ratio and solution composition on DNA: Nuvec(R)
agglomeration
These four stages of the first phase of work are expected to
take approximately six months and conclude by early Q2 2020.
Following a successful conclusion of phase one, phase two will
be to focus on in vitro testing of the improved product, followed
by in vivo testing seeking an improved transfection and immune
response, before finally conducting an in vivo cancer model study.
Subject to the phase one timetable being achieved, it is expected
that these three stages of phase two would conclude before the end
of 2020.
These two phases will be key milestones to achieve in order for
the Company to start working with partners in any clinical programs
and embark on licencing discussions.
In parallel to the work outlined above, the Company continues to
see progress on its licensed patent application from UQ. The UQ
patent application is now going through dialogue with the European
and US patent examiners and has entered Australia, China, India and
Japan national phases where examiner response is awaited. Should
the grant be received in 2020, it would dovetail well with the
conclusion of the ongoing work on Nuvec(R) and further support any
discussions with potential partners.
The Company is still awaiting feedback from the European
Nanomedicine Characterisation Laboratory ("EUNCL") characterisation
program for Nuvec(R), initially estimated for the end of this
quarter. The characterisation program aims to provide
state-of-the-art pre-clinical characterisation of innovative
nanomaterials such as Nuvec(R) in order to accelerate their
development towards regulatory approval by the European Medicines
Agency ("EMA") and the national agencies. Whilst these results will
further enhance our data package and increase our understanding of
the variables which may affect Nuvec(R) it is not expected that
they would impact on the work plan identified to address the
findings of other studies to date. A further update will be
provided once these results have been received.
Outlook
Fundamentally, our strategy remains the same and therefore the
prospects and value potential for Nuvec(R) remain as previously
stated. To date, we have focused on generating our own in vitro and
in vivo data using Nuvec(R) and undertaking research collaborations
with third parties to gather extra information. The ultimate aim of
doing this work is to get to a point where we could begin widescale
commercial collaboration and licensing in 2020. The recent
learnings and subsequent proposed plan still keep us on track to
start these discussions, albeit towards the end of 2020. In terms
of typical pharmaceutical development time lines, this is a
relatively minor delay.
The use of DNA and RNA as vaccines and treatments, especially in
oncology, is increasingly of interest clinically and, consequently,
the market potential is substantial. A consistent theme in all
discussions about the potential for DNA and RNA antigens to become
products is the need for a safe and effective delivery system and
it is the Boards opinion that Nuvec(R) could have a significant
role in that market.
The Board remains very optimistic about the future of the
Company and its prospects. We are aware that the change in
timelines can be viewed as disappointing, but it is vital to
remember that we are a Lifescience Company and as such need to take
the appropriate time and degree of accuracy to ensure that we will
be able to commercialise Nuvec(R). Regular updates will be provided
on the progress of the workplan.
The Board also recognises the need to investigate other assets
and opportunities that the Company can add to its portfolio and
continue to seek such opportunities.
On behalf of the Board, I would like to thank all of our
shareholders for their continued support and look forward to
providing further updates on our progress.
By order of the Board
John Chiplin
Chairman
N4 Pharma Plc
Glossary of technical terms
Monodisperse: containing particles of uniform size
Agglomeration: particles clumping together
N4 Pharma Plc and its controlled entities
Condensed consolidated Statement of Comprehensive Income
(unaudited) for the six months ended 30 June 2019
Notes Six months Six months Twelve months
to 30 June to 30 June to 31 December
2019 2018 2018
(Unaudited) (Unaudited) (Audited)
GBP GBP GBP
------------ ------------ -------------------------------
Government grant income - 49,308 72,832
Gross Profit - 49,308 72,832
Research and development
costs (117,694) (287,160) (846,176)
General and administration
costs (432,879) (315,527) (643,745)
Operating loss for the
period (550,573) (553,379) (1,417,089)
Finance expenditure (1,587) (535) (981)
Gain on sale of investment - 27,693 27,693
Loss for the period before
tax (552,160) (526,221) (1,390,377)
Taxation - (16,134) 205,534
Loss for the period after
tax (552,160) (542,355) (1,184,843)
Other comprehensive income -
net of tax - -
Total comprehensive loss
for the period attributable
to equity owners of N4
Pharma Plc (552,160) (542,355) (1,184,843)
======================================== ============ ============ ===============================
Loss per share attributable
to owners of the parent
Weighted average number
of shares:
Basic 98,852,040 87,892,979 89,440,373
Diluted 104,379,981 92,128,151 91,305,287
Basic loss per share (0.56p) (0.62p) (1.32p)
Diluted loss per share (0.53p) (0.59p) (1.30p)
All activities derive from continuing operations.
The notes below form an integral part of these financial
statements.
N4 Pharma Plc and its controlled entities
Condensed consolidated Statement of Financial Position
(unaudited) for the six months ended 30 June 2019
Notes 30 June 2019 30 June 2018 31 December
2018
(Unaudited) (Unaudited) (Audited)
GBP GBP GBP
------------- ------------- ---------------------------
Assets
Non-current assets
Investments - - -
------------------------------ ------ ------------- ------------- ---------------------------
- - -
Current assets
Trade and other receivables 265,481 128,275 276,926
Cash and cash equivalents 1,167,547 1,586,474 793,141
1,433,028 1,714,749 1,070,067
Total Assets 1,433,028 1,714,749 1,070,067
------------------------------ ------ ------------- ------------- ---------------------------
Liabilities
Current liabilities
Trade and other payables (81,863) (174,897) (159,666)
Accruals and deferred income (22,200) (18,049) (30,457)
------------------------------ ------ ------------- ------------- ---------------------------
Total assets less current
liabilities 1,328,965 1,521,803 879,944
------------------------------ ------ ------------- ------------- ---------------------------
Net Assets 1,328,965 1,521,803 879,944
------------------------------ ------ ------------- ------------- ---------------------------
Equity
Share capital 4 8,676,675 8,634,675 8,634,675
Share premium 5 10,328,797 9,307,849 9,328,848
Share option reserve 6 41,141 102,279 81,909
Reverse acquisition reserve 5 (14,138,244) (14,138,244) (14,138,244)
Merger relief reserve 5 279,347 279,347 279,347
Retained earnings (3,858,751) (2,664,103) (3,306,591)
------------------------------ ------ ------------- ------------- ---------------------------
Total Equity 1,328,965 1,521,803 879,944
------------------------------ ------ ------------- ------------- ---------------------------
N4 Pharma Plc and its controlled entities
Condensed consolidated Statement of Changes in Equity
(unaudited) for the six months ended 30 June 2019
(i) Six months
ended 30 June
2019 -
Unaudited
----------- ------------- ------------------------ --------------- ------------------- ------------- ---------------------
Share Share Share Option Reverse Merger Relief Retained Total Equity
Capital Premium Reserve Acquisition Reserve Earnings
Reserve
GBP GBP GBP GBP GBP GBP GBP
----------- ------------- ------------------------ --------------- ------------------- ------------- ---------------------
Balance at 1
January 2019 8,634,675 9,328,848 81,909 (14,138,244) 279,347 (3,306,591) 879,944
Total
comprehensive
loss for
the period - - - - - (552,160) (552,160)
Share issue 42,000 958,000 - - - - 1,000,000
Share option
reserve - 41,949 (41,949) - - - -
Share based
payment - - 1,181 - - - 1,181
----------- ------------- ------------------------ --------------- ------------------- ------------- ---------------------
At 30 June
2019 8,676,675 10,328,797 41,141 (14,138,244) 279,347 (3,858,751) 1,328,965
(ii) Six
months ended
30 June
2018 -
Unaudited
----------- ------------- ------------------------ --------------- ------------------- ------------- ---------------------
Share Share Share Option Reverse Merger Relief Retained Total Equity
Capital Premium Reserve Acquisition Reserve Earnings
Reserve
GBP GBP GBP GBP GBP GBP GBP
----------- ------------- ------------------------ --------------- ------------------- ------------- ---------------------
Balance at 1
January 2018 8,579,396 8,513,670 147,635 (14,138,244) 299,045 (2,121,748) 1,279,754
Total
comprehensive
loss for
the period - - - - - (542,355) (542,355)
Share issue 55,279 794,179 - - (19,698) - 829,760
Share option
reserve - - (45,356) - - - (45,356)
At 30 June
2018 8,634,675 9,307,849 102,279 (14,138,244) 279,347 (2,664,103) 1,521,803
N4 Pharma Plc and its controlled entities
Condensed consolidated Statement of Changes in Equity
(unaudited) for the six months ended 30 June 2019 (Continued)
(iii) Twelve
months ended
31 December
2018 - Audited
---------- -------------- ------------- ------------- -------------- ------------ -------------
Share Share Premium Share Option Reverse Merger Relief Retained Total Equity
Capital Reserve Acquisition Reserve Earnings
Reserve
GBP GBP GBP GBP GBP GBP GBP
---------- -------------- ------------- ------------- -------------- ------------ -------------
Balance at 1
January 2018 8,579,396 8,513,670 147,635 (14,138,244) 299,045 (2,121,748) 1,279,754
Total
comprehensive
loss for
the year - - - - - (1,184,843) (1,184,843)
Share issue 55,279 815,178 - - (19,698) - 850,759
Share option
reserve - - (65,726) - - - 147,635
At 31 December
2018 8,634,675 9,328,848 81,909 (14,138,244) 279,347 (3,306,591) 879,944
The notes below form an integral part of these financial
statements.
N4 Pharma Plc and its controlled entities
Condensed consolidated Statement of Cash Flows (unaudited) for
the six months ended 30 June 2019
Six months Six months Twelve months
to 30 June to to 31 December
2019 30 June 2018 2018
(Unaudited) (Unaudited) (Audited)
GBP GBP GBP
------------------------------------ ------------ ----------------------- ----------------
Operating activities
Loss before tax (552,160) (526,221) (1,390,377)
Interest 1,587 535 981
Share based payments to
employees 1,181 - 629
Gain on sale of investment - (27,693) (27,693)
Taxation - (16,134) -
Operating loss before changes
in working capital (549,392) (569,513) (1,416,460)
Movements in working capital:
Decrease/(Increase) in trade
and other receivables 11,445 4,425 (9,266)
(Decrease)/Increase in trade
and other payables (86,060) 13,728 10,905
Taxation - - 70,574
Cash used in operations (624,007) (551,360) (1,344,247)
-------------------------------------- ------------ ----------------------- ----------------
Net cash flows used in operating
activities (624,007) (551,360) (1,344,247)
-------------------------------------- ------------ ----------------------- ----------------
Investing activities
Proceeds from sale of investment - 27,693 27,693
Net cash flows from investing
activities - 27,693 27,693
-------------------------------------- ------------ ----------------------- ----------------
Financing activities
Interest paid (1,587) (535) (981)
Net proceeds of ordinary
share issue 1,000,000 784,404 784,404
Net cash flows from in financing
activities 998,413 783,869 783,423
-------------------------------------- ------------ ----------------------- ----------------
Net increase/ (decrease)
in cash and cash equivalents 374,406 260,202 (533,131)
Cash and cash equivalents
at beginning of the period 793,141 1,326,272 1,326,272
Cash and cash equivalents
at 30 June /
31 December 1,167,547 1,586,474 793,141
The notes below form an integral part of these
financial statements.
N4 Pharma Plc and its controlled entities
Notes to the condensed consolidated interim financial statements
for the six months ended 30 June 2019
1. Corporate information
N4 Pharma Plc (the "Company") is the holding company for N4
Pharma UK Limited ("N4 UK"), and N4 Biotech Limited ("N4 Biotech"),
and together form the group (the "Group"). N4 UK is a specialist
pharmaceutical company engaged in the development of
mesoparticulate silica delivery systems to improve the cellular
delivery and potency of vaccines. The nature of the business is not
deemed to be impacted by seasonal fluctuations and as such
performance is expected to be consistent.
The Company is domiciled in England and Wales and was
incorporated and registered in England and Wales on 6 July 1979 as
a public limited company and its shares are admitted to trading on
AIM (LSE: N4P). The Company's registered office is located at 6th
Floor, 60 Gracechurch Street, London, EC3V 0HR.
2. Accounting policies
Adoption of new and revised International Financial Reporting
Standards
The following IFRS standards, amendments or interpretations
became effective in the six months to 30 June 2019 but have not had
a material effect on this interim consolidated financial
information:
IFRS 16 Leases
IFRIC 23 Uncertainty over Income Tax
Treatments
-----------------------------------
IFRS 9 Prepayments Features with Negative
Compensation
-----------------------------------
IAS 28 Long-term Interests in Associates
and Joint Ventures
-----------------------------------
IAS19 Plan amendment, Curtailment
and Settlement
-----------------------------------
The following relevant new standards, amendments to new
standards and interpretations have been issued, but are not yet
effective, and have not been early adopted:
Title As Issued by the IASB, mandatory
for accounting periods starting
Amendments to Reference to the Accounting periods beginning
Conceptual Framework in IFRS on or after 1 January 2020
Standards
---------------------------------
Basis of Preparation:
The Group's condensed consolidated interim financial statements,
which are unaudited, have been prepared in accordance with
International Accounting Standard ("IAS") 34, "Interim Financial
Reporting".
The annual financial statements for the year ended 31 December
2018 were prepared in accordance with International Financial
Reporting Standards ("IFRS") as adopted by the European Union.
The interim consolidated financial information for the six
months ended 30 June 2019 are unaudited. In the opinion of the
Directors, the interim consolidated financial information presents
fairly the financial position, and results from operations and cash
flows for the period.
The financial statements are presented in sterling, which is the
Group's functional currency as the UK is the primary environment in
which it operates.
Basis of consolidation:
These consolidated financial statements have been prepared in
accordance with IFRS 2 for both the comparative six month period
ended 30 June 2018 and the current period ended 30 June 2019. These
consolidated financial statements have been prepared in accordance
with IFRS 2 as a result of the consolidation of the Company and N4
UK, constituting a reverse takeover transaction.
Significant Accounting Policies:
The condensed, consolidated interim financial statements have
been prepared under the historical cost convention, with the
exception of investments, in accordance with International
Financial Reporting Standards ('IFRS') as adopted by the European
Union.
While the financial information has been prepared in accordance
with IFRS, as adopted by the European Union, the interim condensed,
consolidated financial statements do not contain sufficient
information to comply with IFRSs.
Financial assets at fair value through profit or loss:
Financial assets designated at fair value through profit or loss
at inception are financial instruments that are not classified as
held for trading but are managed, and their performance is
evaluated on a fair value basis in accordance with the Group's
documented investment strategy.
The Group's policy requires the Board of Directors to evaluate
the information about these financial assets on a fair value basis
together with other related financial information.
Segmental reporting:
The Group operated in one business segment, that of the
development and commercialisation of medicines via its delivery
system called Nuvec(R). No revenue has yet been generated by any of
the work undertaken by the Group.
The Directors consider that there are no identifiable business
segments that are subject to risks and returns different to the
core business. The information reported to the Directors, for the
purposes of resource allocation and assessment of performance, is
based wholly on the overall activities of the Group.
Cash and cash equivalents:
The Directors consider any cash on short term deposit and other
short term investments to be cash equivalents.
Government grant income
Government grants are recognised only when there is reasonable
assurance that the Company will comply with the conditions
attaching to them and that the grants will be received.
Government grants are recognised in the income statement on a
systematic basis over the periods in which the Company recognises
and expenses the related costs for which the grants are intended to
compensate.
Government grants that are receivable as compensation for
expenses or losses already incurred or for the purpose of giving
immediate financial support to the Company with no future related
costs are recognised in the income statement in the period in which
they become receivable.
Tax
The Group has accumulated losses available to carry forward
against future trading profits. No deferred tax asset has been
recognised in respect of tax losses since it is uncertain at the
balance sheet date as to whether future profits will be available
against which the unused tax losses can be utilised.
Share-based payment arrangements
Equity-settled share-based payments are measured at fair value
at the date of grant using a Black Scholes pricing model. The key
assumptions used in the model have been adjusted, based on
management's best estimate, for the effects of non-transferability,
exercise restrictions and behavioural considerations.
Cancellations of equity instruments are treated as an
acceleration of the vesting period and any outstanding charge is
recognised in full immediately.
3. Critical accounting judgements and estimates
The preparation of the interim condensed consolidated financial
statements in conformity with IFRS requires management to make
certain estimates, assumptions and judgements that affect the
application of accounting policies and the reported amounts of
assets and liabilities and the reported amounts of income and
expenses during the reporting period.
In the process of applying the Group's accounting policies,
management have decided that there are no estimates and assumptions
significant to causing potentially material adjustments to the
carrying amounts of assets and liabilities recognised in the
condensed consolidated financial statements.
4. Share Capital
Allotted, called up and 30 June 2019 30 June 2018 31 Dec 2018
fully paid (Unaudited) (Unaudited) (Audited)
GBP GBP GBP
101,462,537 Ordinary Shares
of 0.4p each (30 June 2018
and 31 December 2018: 90,962,537
Ordinary shares of 0.4p
each) 405,850 363,850 363,850
137,674,431 Deferred Shares
of 4p each (30 June 2018
and 31 December 2018: 137,674,431
Deferred shares of 4p each) 5,506,977 5,506,977 5,506,977
279,176,540 Deferred Shares
of 0.099p each (30 June
2018 and 31 December 2018:
279,176,540 Deferred shares
of 0.099p each) 2,763,848 2,763,848 2,763,848
8,676,675 8,634,675 8,634,675
===================== ===================== =====================
The transactions that took place during the period were as
follows:
-- 10,500,000 new ordinary shares of 0.4p each were issued.
All ordinary shares rank equally in all respects, including for
dividends, shareholder attendance and voting rights at meetings, on
a return of capital and in a winding-up.
The 137,674,431 deferred shares of 4p, have no right to
dividends nor do the holders thereof have the right to receive
notice of or to attend or vote at any general meeting of the
Company. On a return of capital or on a winding up of the Company,
the holders of the deferred shares shall only be entitled to
receive the amount paid up on such shares after the holders of the
ordinary shares have received the sum of GBP1,000,000 for each
ordinary share held by them.
5. Reserves
The share premium account represents the amount received on the
issue of ordinary shares by the Company in excess
of their nominal value and is non-distributable.
The merger relief reserve arose on the Company's acquisition of
N4 UK and consists of both the consideration shares and deferred
consideration amounting to GBP299,045. There is no legal share
premium on the shares issued as consideration as section 612 of the
Companies Act 2006, which deals with merger relief, applies in
respect of the acquisition.
The reverse acquisition reserve arises due to the elimination of
the Company's investment in N4 UK. Since the shareholder in N4 UK
became a shareholder of the Company, the acquisition is accounted
for as though the legal acquiree (N4 UK) is the accounting
acquirer.
6. Share-based payments and Share Option Reserve
a) Options
The Company has the ability to issue options to Directors to
compensate them for services rendered and incentivise them to add
value to the Group's longer term share value. Equity settled
share-based payments are measured at fair value at the date of
grant.
Cancellations of equity instruments are treated as an
acceleration of the vesting period and any outstanding charge is
recognised in full immediately.
Fair value is measured using a Black Scholes pricing model. The
key assumptions used in the model have been adjusted based on
management's best estimate for the effects of non-transferability,
exercise restrictions and behavioural considerations.
As at 30 June 2019, there were 7,679,370 (30 June 2018:
6,245,084, 31 December 2018: 7,249,084) options in existence over
ordinary shares of the Company.
On 14 October 2015, 10,804,840 and 2,701,210 share options were
granted to Gavin Burnell, (the Company's former chief executive)
and Luke Cairns respectively. Following the post-Share
Re-Organisation, including the consolidation of shares and
subsequent sub-division, these options now equate to a quarter of
the original options issued. The 2,701,210 options held by Gavin
Burnell and the 675,302.50 options held by Luke Cairns, issued on
14 October 2015 are exercisable at a price of 0.7p per share
(pre-Share Re-Organisation) at any time before 14 October 2025.
The aggregate fair value of the share options issued on 14
October 2015 as at 30 June 2019 is GBP19,385 (30 June 2018:
GBP23,636, 31 December 2018: GBP20,910).
Following the RTO and subsequent re-admission to AIM on 3 May
2017 ("Admission"), the following options over new ordinary shares
were granted under the Company's share option scheme and are
exercisable at a price of 7p per share:
Luke Cairns 717,143 options
David Templeton 717,143 options
Paul Titley 1,434,286 options
The above share options are exercisable following the third
anniversary of Admission, being 3 May 2020.
In the case of Paul Titley, the exercise of options over 717,143
ordinary shares were subject to certain performance conditions.
These options were exercisable at a price of 7 pence per share
(post-Share Re-Organisation) at any time before 14 October 2025.
However, these share options lapsed prior to the interim reporting
date of 30 June 2019 due to his departure from the Company and
those targets not being met. This leaves Paul Titley with 717,143
options which are exercisable on the 3(rd) anniversary of
Admission, being 3 May 2020.
The fair value of the share options issued on 3 May 2017 and not
yet exercised as at 30 June 2019 is GBP7,550 (30 June 2018:
GBP6,040, 31 December 2018: GBP26,040).
On 26 September 2018 the following options over ordinary shares
were granted under the Company's share option scheme and are
exercisable at a price of 6.60p per share:
Andrew Leishman 286,857 options
Allan Hey 717,143 options
The share options granted to Andrew Leishman have now lapsed due
to his departure from the Company.
The fair value of the share options issued on 26 September 2018
and not yet exercised as at 30 June 2019 is GBP21,887, (31 December
2018: GBP26,950).
On 21 May 2019 the following options over ordinary shares were
granted under the Company's share option scheme and are exercisable
at a price of 3.55p per share:
John Chiplin 717,143 options
Chris Britten 717,143 options
The fair value of the share options issued on 21 May 2019 and
not yet exercised as at 30 June 2019 is GBP22,793.
b) Warrants
As at 30 June 2019, the total number of warrants in issue was
nil (30 June 2018: 11,054,071, 31 December 2018: 11,054,071).
The remaining warrants were exercisable at 8.5p and entitled
holders to subscribe for new ordinary shares at any time in the
period of two years following the grant of the warrants. These all
relate to the warrants issued as part of the Placing on 3 May 2017.
The expiry date of the placing warrants was 3 May 2019.
Details of the lapsed warrants during the period are as
follows:
During the period, an amount of GBP54,329, representing the fair
value of the remaining 11,054,071 warrants that have lapsed in the
period, has been recognised against the share option reserve and
share premium. The fair value of the warrants in issue and not yet
exercised was determined using the Black Scholes model. The fair
value of the warrants at 30 June 2019 was nil (30 June 2018:
GBP54,329, 31 December 2018: GBP54,329).
8. Earnings per share
Basic earnings per share is calculated by dividing the loss
after tax attributable (excluding the deemed cost of acquisition)
to the equity holders of the Company by the weighted average number
of shares in issue during the period.
Diluted earnings per share is calculated by adjusting the
weighted average number of shares outstanding to assume conversion
of all potential dilutive shares, namely share options and
warrants.
9. Related Party Transactions
During the period to 30 June 2019, the non-executive directors'
fees amounted to GBP27,894 (6 months to 30 June 2018: GBP24,000, 12
months to 31 December 2018: GBP48,000).
During the period to 30 June 2019, the Company charged N4 UK
GBP12,000 in respect of 50 per cent. of the post RTO fees paid to
non-executive directors for the services rendered to N4 UK (6
months to 30 June 2018: GBP12,000, 12 months to 31 December 2018:
GBP24,000)
10. Subsequent events
The Board are in the process of winding up N4 Biotech Limited, a
100% owned subsidiary of N4 Pharma Plc. Subsequent to the interim
financial statements date of 30 June 2019 the bank account has been
closed and it is the Boards intention that N4 Biotech will be wound
up fully prior to the year end.
Aside from the item disclosure there are no other significant
subsequent events that require adjustment or disclosure in these
interim condensed consolidated financial statements.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR GGUPGBUPBGQM
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