TIDMLLAI
RNS Number : 5650I
LungLife AI, INC
08 August 2023
LungLife AI, Inc.
(the "Company" or "LungLife")
Half-year Report
LungLife AI (AIM: LLAI), a developer of clinical diagnostic
solutions for the early detection of lung cancer announces its
unaudited half-year report for the six months ended 30 June
2023.
Operational Highlights:
-- Completed enrolment of the Company's 425-participant pivotal
clinical validation study in May, in line with expectations.
-- Health economics study highlighting the cost-effectiveness of
LungLB(R) when added to the clinical care pathway for indeterminate
lung nodule management peer-reviewed and published in the Journal
of Medical Economics.
-- Peer-reviewed publication of LungLB(R) study in the
Nature-Springer journal BMC Pulmonary Medicine demonstrating high
test performance, successfully detecting lung cancer in its
earliest stages when it is most curable.
Financial Highlights:
-- Cash as of 30 June 2023 of $5.36m (30 June 2022: $10.63m, 31 December 2022: $8.01m)
-- Cash outflow from operating activities $2.70m (six months to 30 June 2022: $3.26m)
-- Loss before tax of $2.81m (six months to 30 June 2022:
$4.47m) and EBITDA loss of $2.78m (six months to 30 June 2022:
$4.31m)
Commenting Paul Pagano, Chief Executive Officer of LungLife,
said : "This has been an important six months for the Company as we
continue to meet our milestones. We have concluded participation in
our clinical validation study and published two important reports
that will assist with the commercialisation of LungLB(R) . Our
present focus is the analysis of the results of our clinical
validation study which we continue to expect to report on by the
end of September."
For further information please contact:
LungLife AI, Inc. www.lunglifeai.com
Paul Pagano, CEO Via Walbrook PR
David Anderson, CFO
Investec Bank plc (Nominated Adviser Tel: +44 (0)20 7597 5970
& Joint Broker)
Virginia Bull / Cameron MacRitchie
/ Lydia Zychowska
Goodbody (Joint Broker) Tel: +44 (0) 20 3841 6202 / +353 (1)
Tom Nicholson / Stephen Kane 667 0420
Walbrook PR Limited Tel: +44 (0)20 7933 8780 or LungLifeAI@walbrookpr.com
Paul McManus / Alice Woodings / Phillip Mob: 07980 541 893 / 07407 804 654 /
Marriage 07867 984 082
About LungLife
LungLife AI is a developer of clinical diagnostic solutions
designed to make a significant impact in the early detection of
lung cancer, the deadliest cancer globally. Using a minimally
invasive blood draw, the Company's LungLB(R) test is designed to
deliver additional information to clinicians who are evaluating
indeterminate lung nodules. For more information visit
www.lunglifeai.com
CHAIRMAN'S STATEMENT
I am delighted to report on the Company's results for the six
months ended 30 June 2023. We have continued to deliver on the
Company's objectives and remain committed to creating shareholder
value as we proceed with the aim of being a driving force in the
early detection of lung cancer.
Our LungLB(R) test
According to the World Health Organization, over 2.2 million new
cases of lung cancer were diagnosed in 2020 and approximately 1.8
million deaths from lung cancer were recorded in 2020 globally.
Nearly 80% of all lung cancers in the United States are diagnosed
in later stages when survival rates are low because the options for
curative treatment are then limited. This is in part due to the
lack of effective early detection solutions and the fact that lung
cancer largely develops asymptomatically.
LungLB(R) is a blood-based test that uses circulating tumour
cells ("CTC") to stratify indeterminant lung nodules as either
cancerous or benign following their identification by CT scan.
Biopsy is currently part of the standard care pathway for lung
nodules and the LungLB(R) test is designed to support the
physician's decision to biopsy only when necessary, or to monitor
non-invasively using additional imaging. There are estimated to be
over 1.5 million indeterminant lung nodules identified each year in
the United States and LungLife's estimated one week turnaround from
receipt of the blood sample to results can save a significant
amount of stressful waiting time for the participant as well as
unnecessary costly and often dangerous procedures.
Three important milestones achieved in the period
Our focus in this period was to conclude enrolment into our
clinical validation study and take further steps towards the
commercialisation of our test.
Clinical validation study
We completed enrolment of the 425 participants in our clinical
validation study in May. The Company is now focused on preparing
the data for detailed analysis, including working with each
clinical site to finalise monitoring of study data before it is
unblinded. Monitoring ensures complete, accurate, and high-quality
information will be received for all participants in the study
prior to final analyses and results interpretation. We continue to
expect this to be concluded by end of September 2023.
Health economics study
We published two important documents in the period, both of
which are important components in establishing the ability of the
Company to be paid for its tests, known as "coverage".
The first publication was a cost-effectiveness analysis ("CEA")
model on LungLB(R) which provides evidence that the test can be
utilised as a cost-effective tool within the current diagnostic
pathway.
The principal aim of the research was to explore the incremental
cost-effectiveness of LungLB(R) when added to the current clinical
diagnostic pathway for patients with lung nodules, as described in
guidelines(1) . The greater cost savings in the model were
demonstrated by a reduction in unnecessary procedures and better
patient outcomes from reduced delays in treatment.
Incremental Cost-Effectiveness Ratio (ICER) is a key metric used
in the publication to demonstrate cost effectiveness. Integration
of LungLB(R) leads to improvement in outcomes and results in an
ICER that was 25% below the willingness to pay (WTP) threshold
commonly considered by US commercial payors, suggesting overall
savings when LungLB(R) is priced at $2,300 per test. ICERs remain
below WTP thresholds at prices up to $3,647 per test .
(1) Evaluation of individuals with pulmonary nodules: when is it
lung cancer? Diagnosis and Management of lung cancer, 3(rd) ed:
American College of Chest Physicians evidence-based clinical
practice guidelines .
Peer reviewed publication of our test
We also announced the peer-reviewed publication of the
successful performance results for the Company's LungLB(R) test
from a multi-site prospective study in patients with indeterminate
pulmonary nodules. The pilot study was performed in collaboration
with MD Anderson Cancer Center (Houston, TX) and Icahn School of
Medicine at Mount Sinai (New York, NY) and appears in the journal
BMC Pulmonary Medicine. The primary objective of the study was to
compare the LungLB(R) test result with a lung biopsy diagnosis and
assess performance in a patient cohort where commonly used nodule
evaluation tools were not informative.
Key points from the study include:
-- 151 study participants scheduled for CT-guided lung biopsy,
70% of whom were found to have "intermediate risk" nodules that
represent the most challenging diagnostic subtype
-- The LungLB(R) test outperformed commonly used evaluation
tools, including the Mayo Clinic risk model and PET scan
-- The test demonstrated robust performance in smaller nodules
(<2 cm in diameter) and in early-stage cancer
-- The LungLB(R) biomarker was found to be the strongest
independent predictor of cancer in this study, exceeding commonly
known strong predictors such as nodule size and smoking status
-- The LungLB(R) test performed equally well in current, former, and never smokers
-- The data support potential clinical utility of LungLB(R) in
reducing delays in treatment, in which positive LungLB(R) test
results were available months ahead of lung cancer diagnosis in
three highlighted cases
We are delighted to have been able to achieve these important
milestones in this six-month period.
Outlook
Our immediate focus is determining the results of our test in
the clinical validation study. Alongside this we continue to
prepare the necessary documentation and applications to support the
commercialisation of our test.
This is a pivotal moment for the Company. On behalf of the
Board, I would like to thank our employees, clinical partners,
study participants, professional advisors, suppliers and
shareholders for their continuing support, and we look forward to
providing further updates on progress throughout the current
year.
Roy Davis
Chairman
FINANCIAL REVIEW
In the six months to 30 June 2023 our cash outflow from
operating activities was $2.70m (six months to 30 June 2022:
$3.26m), resulting in a period end total cash balance of $5.36m,
compared to the total cash balance at the start of the period of
$8.01m. We continue to hold monies on notice deposit, with the
longest notice period being 95 days, which is shown as our
short-term deposit balance on the balance sheet. At 30 June 2023
this represented $2.77m of our total cash balance, and $4.92m at 31
December 2022.
Minimal capital expenditure in the period, and a total of $0.13m
spent on the repayment of lease liabilities (six months to 30 June
2022: $0.11m), being a combination of the payments on our financing
of two microscopes and the rent on our premises in Thousand Oaks
California, being the right of use asset.
Revenues of $23k (six months to 30 June 2022: $10k) related to
royalties earned under our arrangement with our partner in China.
The EBITDA loss for the period was $2.78m (six months to 30 June
2022: $4.31m), which includes the share-based payment charge of
$0.12m (six months to 30 June 2022: $0.39m). The biggest
contributors to the EBITDA loss were employment costs of $1.34m
(six months to 30 June 2022: $1.29m) and research and development
of $0.81m (six months to 30 June 2022: $1.31m). The lower research
and development costs reflect mainly the completion of work on our
AI algorithm in the prior period. In the current period we moved
one of our part time employees to full time, and as such we now
have 15 full time employees in the business.
David Anderson
Chief Financial Officer
STATEMENT OF COMPREHENSIVE INCOME
For the period ended 30 June 2023
Note 6 months 6 months Year ended
ended 30 ended 30 31 December
June 2023 June 2022 2022
US$'000 US$'000 US$'000
Unaudited Unaudited Audited
Revenue (3) 23 10 24
Cost of sales - - -
----------- ----------- -------------
Gross profit 23 10 24
Administrative expenses (2,687) (3,924) (6,865)
Share-based payments (120) (398) (614)
Depreciation (125) (155) (285)
----------- ----------- -------------
Operating loss (2,909) (4,467) (7,740)
Other operating income - - 102
Finance income 127 26 88
Finance charges (22) (27) (52)
----------- ----------- -------------
Loss before taxation (2,804) (4,468) (7,602)
Taxation (3) (1) (4)
----------- ----------- -------------
Loss for the period / year (2,807) (4,469) (7,606)
Other comprehensive income - - -
----------- ----------- -------------
Total comprehensive loss
for the period / year (2,807) (4,469) (7,606)
----------- ----------- -------------
Loss per share from continuing
activities attributable
to the ordinary equity holders
of the Company
Basic and diluted (US Dollars
per share) (4) (0.11) (0.175) (0.298)
----------- ----------- -------------
STATEMENT OF FINANCIAL POSITION
As at 30 June 2023
Note 30 June 30 June 31 December
2023 2022 2022
US$'000 US$'000 US$'000
Unaudited Unaudited Audited
Assets
Current assets
Trade and other receivables (5) 484 526 613
Short term deposits 2,772 4,884 4,922
Cash and cash equivalents 2,589 5,749 3,088
----------- ----------- ------------
Total non-current
assets 5,845 11,159 8,623
----------- ----------- ------------
Non-current assets
Property, plant and
equipment 445 693 566
Intangible assets 5,818 5,818 5,818
Other receivables (5) 13 13 13
----------- ----------- ------------
Total current assets 6,276 6,524 6,397
----------- ----------- ------------
Total assets 12,121 17,683 15,020
Current liabilities
Trade and other payables (7) (970) (706) (1,055)
Lease liabilities (8) (290) (217) (255)
Discontinued operations (174) (174) (174)
-----------
Total current liabilities
Non-current liabilities (1,434) (1,097) (1,484)
Lease liabilities (8) (184) (477) (346)
Provisions (50) (50) (50)
----------- ----------- ------------
Total liabilities (1,668) (1,624) (1,880)
----------- ----------- ------------
Net assets 10,453 16,059 13,140
----------- ----------- ------------
Issued share capital
and reserves attributable
to owners to the parent
Called up share capital 3 3 3
Share premium 91,266 91,264 91,266
Share based payment
reserve 1,694 1,358 1,574
Accumulated losses (82,510) (76,566) (79,703)
----------- ----------- ------------
Total equity 10,453 16,059 13,140
STATEMENT OF CHANGES IN EQUITY
As at 30 June 2023
Share
based
Share Share payment Accumulated Total
capital premium reserve losses equity
US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 1
January 2022 3 91,264 960 (72,097) 20,130
Comprehensive
income:
Loss for the
period - - - (4,469) (4,469)
Transactions
with owners:
Share based payments - - 398 - 398
---------- ---------- --------- -------------- ----------
Balance at 30
June 2022 3 91.264 1,358 (76,566) 16,059
---------- ---------- --------- -------------- ----------
Balance at 1
January 2023 3 91,264 1,358 (76,566) 16,059
Comprehensive
income:
Loss for the
period - - - (3,137) (3,137)
Transactions
with owners:
Exercise of share
options - 2 - - 2
Share based payments - - 216 - 246
---------- ---------- --------- -------------- ----------
Balance at 31
December 2022 3 91,266 1,574 (79,703) 13,140
---------- ---------- --------- -------------- ----------
Balance at 1
January 2023 3 91,266 1,574 (79,703) 13,140
Comprehensive
income:
Loss for the
period - - - (2,807) (2,807)
Transactions
with owners:
Share based payments - - 120 - 120
---------- ---------- --------- -------------- ----------
Balance at 30
June 2023 3 91,266 1,694 (82,510) 10,453
---------- ---------- --------- -------------- ----------
STATEMENT OF CASH FLOWS
For the period ended 30 June 2023
6 months 6 months Year ended
ended 30 ended 30 31 December
June June 2022
2023 2022 US$'000
US$'000 US$'000 Audited
Unaudited Unaudited
Cash flows from operating
activities
Loss for the period / year (2,807) (4,469) (7,606)
Adjustments for non-cash/non-operating
items:
Depreciation 125 155 285
Gain on sale of tangible assets - - (43)
Foreign exchange (gain) /
loss on short term deposits (100) 527 562
Finance income (127) (26) (88)
Finance expense 22 27 52
Taxation 3 1 4
Share based compensation 120 398 614
------------------- ----------- -------------
(2,764) (3,387) (6,220)
Changes in working capital
(Increase)/ decrease in trade
and other receivables 150 221 128
(Decrease)/increase in trade
and other payables (83) (98) 251
------------------- ----------- -------------
Cash outflow from operations (2,697) (3,264) (5,841)
Taxation paid (3) (1) (4)
------------------- ----------- -------------
Net cash outflow from operating
activities (2,700) (3,265) (5,845)
------------------- ----------- -------------
Cash inflow / (outflows)
from investing activities
Proceeds from sale of tangible
assets - - 43
Purchase of tangible assets (5) (82) (85)
Short term deposits 2,250 - (73)
Net cash flows from investing
activities 2,245 (82) (115)
Cash flows from financing
activities
Issue of common stock - - 2
Interest received 105 20 88
Interest paid (22) (27) (52)
Repayment of lease liabilities (127) (114) (207)
------------------- ----------- -------------
Net cash (outflow) / inflow
from financing activities (44) (121) (169)
------------------- ----------- -------------
Net decrease in cash and cash
equivalents (499) (3,468) (6,129)
Cash and cash equivalents
brought forward 3,088 9,217 9,217
------------------- ----------- -------------
Cash and cash equivalents
carried forward 2,589 5,749 3,088
1. GENERAL INFORMATION
LungLife AI, Inc, (the "Company") is a company based in Thousand
Oaks, California which is developing a diagnostic test for the
early detection of lung cancer. The Company was incorporated under
the laws of the state of Delaware on 30 December 2009.
Basis of preparation
The accounting policies adopted in the preparation of the
interim consolidated financial information are consistent with
those of the preparation of the Group's annual consolidated
financial statements for the period ended 31 December 2022. No new
IFRS standards, amendments or interpretations became effective in
the six months to 30 June 2023.
Statement of compliance
This interim consolidated financial information for the six
months ended 30 June 2023 has been prepared in accordance with UK
adopted International Accounting Standards (UK IFRS) IAS 34,
'Interim financial reporting' as adopted by the European Union and
the AIM Rules for UK Companies. This interim consolidated financial
information is not the Group's statutory financial statements and
should be read in conjunction with the annual financial statements
for the period ended 31 December 2022, which have been prepared in
accordance with UK IFRS and have been delivered to the Registrar of
Companies. The auditors have reported on those accounts; their
report was unqualified, did not include references to any matters
to which the auditors drew attention by way of emphasis of matter
without qualifying their report and did not contain any statements
of emphasis or other matters.
The interim consolidated financial information for the six
months ended 30 June 2023 is 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. Comparative numbers for the six months ended
30 June 2022 are unaudited.
Measurement convention
The financial information has been prepared under the historical
cost convention. Historical cost is generally based on the fair
value of the consideration given in exchange for assets.
The preparation of the financial information in compliance with
UK IFRS requires the use of certain critical accounting estimates
and management judgements in applying the accounting policies. The
significant estimates and judgements that have been made and their
effect is disclosed in note 2.
2. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES
The preparation of the Company's historical financial
information under UK IFRS requires the directors to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and
liabilities. Estimates and judgements are continually evaluated and
are based on historical experience and other factors including
expectations of future events that are believed to be reasonable
under the circumstances. Actual results may differ from these
estimates.
The directors consider that the following estimates and
judgements are likely to have the most significant effect on the
amounts recognised in the financial information.
Carrying value of intangible assets, property, plant and
equipment
In determining whether there are indicators of impairment of the
Company's intangible assets, the directors take into consideration
various factors including the economic viability and expected
future financial performance of the asset and when it relates to
the intangible assets arising on a business combination, the
expected future performance of the business acquired.
Classification of the Mount Sinai License as an intangible
asset
On 18 June 2021, the Company entered into the Mount Sinai
License Agreement, pursuant to which Mount Sinai granted an option
to the Company to obtain a licence, on a non-exclusive basis, to
use certain information held by Mount Sinai. After considering the
criteria in IAS38 the directors have judged that the recognition
criteria therein have been met and classified the Mount Sinai
license as an intangible asset.
3. SEGMENT ANALYSIS
IFRS 8 requires operating segments to be identified on the basis
of internal reports about components of the Company that are
regularly reviewed by the chief operating decision maker (which
takes the form of the Board of Directors) as defined in IFRS 8, in
order to allocate resources to the segment and to assess its
performance.
The chief operating decision maker has determined that LungLife
AI, Inc has one operating segment, the development and
commercialisation of its lung cancer early detection test. Revenues
are reviewed based on the products and services provided.
The Company operates in the United States of America. Revenue by
origin of geographical segment is as follows:
Revenue 6 months 6 months Year ended
ended 30 ended 30 31 December
June June 2022 2022
2023 US$'000 US$'000
US$'000 Unaudited Audited
Unaudited
People's Republic of China 23 10 24
23 10 24
----------- ----------- -------------
Non-current assets 30 June 30 June 31 December
2023 2022 2022
US$'000 US$'000 US$'000
Unaudited Unaudited Audited
United States of America 6,276 6,524 6,397
6,276 6,524 6,397
----------- ----------- ------------
Product and service revenue 6 months 6 months Year ended
ended 30 ended 30 31 December
June 2023 June 2022 2022
US$'000 US$'000 US$'000
Unaudited Unaudited Audited
Royalty income 23 10 24
23 10 24
----------- ----------- -------------
4. LOSS PER SHARE
The basic loss per share from continuing activities is based on
a loss for the year attributable to equity holders of the Parent
Company of $2,807,760 for the 6 months ended 30 June 2023 (6 months
ended 30 June 2022 loss $4,469,915; year ended 31 December 2022:
loss $7,605,585) and the weighted average number of shares in issue
for the 6 months to 30 June 2023 of 25,485,982 (6 months to 30 June
2022: 25,480,790 and year to 31 December 2022: 25,481,800).
The Company has one category of dilutive potential ordinary
share, being share options. The potential shares were not dilutive
in the period as the Company made a loss per share in line with IAS
33. Prior to the listing of its shares, between 2 July 2021 and 7
July 2021 the Company implemented a pre-Admission reorganisation of
its capital which included the conversion of Series A and B
Preferred Shares into Common Shares and a reverse share split by
way of the issue of one new Common Share and Preferred Share for
every 18 old Common Shares and Preferred Shares held.
5. TRADE AND OTHER RECEIVABLES
Amounts falling due within 30 June 30 June 31 December
one year 2023 2022 2022
US$'000 US$'000 US$'000
Unaudited Unaudited Audited
Trade receivables 20 69 -
Other receivables 194 99 150
Prepayments 270 358 463
484 526 613
----------- ----------- ------------
Amounts falling due after
one year
Rent deposit 13 13 13
13 13 13
--- --- ---
All receivables are denominated in US dollars.
6. SHARE BASED PAYMENTS
The following is an analysis of movement in options issued and
outstanding to purchase shares in the Company:
Total options Weighted
Number average
exercise
price US$
Outstanding at 1 January 2022 -
audited 2,065,527 1.74
Granted 75,000 2.37
Exercised (5,192) 0.45
Expired (18,356) 1.80
Outstanding at 31 December 2022
- audited 2,116,979 1.76
No movements in the period
Outstanding at 30 June 2023 - unaudited 2,116,979 1.69
--------------- ----------------------
7. TRADE AND OTHER PAYABLES
30 June 30 June 31 December
2023 2022 2022
US$'000 US$'000 US$'000
Unaudited Unaudited Audited
Trade payables 369 368 358
Other payables - tax and
social security 15 2 13
Accruals and other payables 586 336 684
970 706 1,055
----------- ----------- ------------
Trade and other payables comprise amounts outstanding for trade
purchases and on-going costs. All trade and other payables are due
in less than a year.
LEASE LIABILITIES
8
Land and Plant and
buildings machinery Total
US$'000 US$'000 US$'000
At 1 January 2022 504 304 808
Interest expense 19 8 27
Repayments (79) (62) (153)
________ ________ ________
At 30 June 2022 - unaudited 444 250 694
Repayments (55) (63) (118)
Interest expense 18 7 25
________ ________ ________
At 31 December 2022 - audited 407 194 601
Repayments (82) (65) (147)
Interest expense 15 5 20
At 30 June 2023 - unaudited 340 134 474
9. SUBSEQUENT EVENTS
There have been no events which require disclosure in these
unaudited interim financial statements.
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IR NKOBKOBKDFFK
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