TIDMN4P
RNS Number : 2313Z
N4 Pharma PLC
17 September 2020
N4 Pharma Plc
("N4 Pharma" or the "Company")
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 2020.
Highlights:
-- Refined strategy to focus on three, clearly defined, work streams:
o the optimisation of production and loading of Nuvec(R) as a
delivery technology platform for nucleic acid vaccines;
o the Covid-19 proof of concept research programme; and
o feasibility studies into Nuvec(R) for use in oral vaccines and
other applications.
-- Successful transfection in vitro of HEK 293T cells with
Nuvec(R) loaded with the Coronavirus DNA Plasmid
-- Move to full in vivo study with the Coronavirus and other DNA
plasmids with measurement of production of antibodies
-- Research Collaboration Agreement with Nanomerics Limited out of UCL's School of Pharmacy
-- Appointment of Ardena as technology transfer and manufacturing partner
-- Operating loss for the period was GBP585,066 (30 June 2019: GBP552,160)
-- Placing of 50,731,250 new Ordinary Shares to raise c.GBP2 million
-- Issue of a further 3,886,562 new Ordinary Shares following
warrant and option exercises raising GBP139,262.48
-- Cash balance at period end of approximately GBP2.44 million
Nigel Theobald, Chief Executive Officer of N4 Pharma Plc,
commented:
"The arrival of the Covid-19 pandemic during the period has
thrown up considerable challenges globally but also opportunities.
Whilst continuing with our optimisation work of Nuvec(R) as a
delivery platform technology, the immediate need to address the
threat of Covid-19 encouraged us to look at more specific, product
driven, applications resulting in our proof of concept work with
Nuvec(R) loaded with the Coronavirus DNA Plasmid. Our subsequent in
vitro success was extremely pleasing but to maximise our chances of
success in any full in vivo study we now need to incorporate the
findings of our optimisation work. This is key as we look to
further our work with the Coronavirus plasmid in parallel to
working with more generic DNA plasmids which may be more applicable
in collaborations on multiple other vaccines. To that end, we are
excited to be moving towards our most comprehensive in vivo study
to date and are in the process of scoping the different aspects of
the study.
"At the same time, we aim to maximise the potential uses of
Nuvec(R) as we continue to look at other applications including
assessing its ability for use in the delivery of vaccines orally.
We remain fully funded for the current work programmes and I look
forward to providing further updates in due course."
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014.
Enquiries:
N4 Pharma Plc Via IFC Advisory
Nigel Theobald, CEO
Luke Cairns, Executive Director
SP Angel Corporate Finance LLP Tel: + 44 (0)20 3470 0470
Nominated Adviser and Joint Broker
Matthew Johnson/Caroline Rowe (Corporate
Finance)
Vadim Alexandre/Abigail Wayne/Rob
Rees (Corporate Broking)
Turner Pope Investments (TPI) Limited Tel: +44 (0)20 3657 0050
Joint Broker
Andy Thacker
IFC Advisory Limited Tel: +44 (0)20 3934 6630
Financial PR
Graham Herring
Zach Cohen
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 preclinical and clinical programs, N4
Pharma will seek to receive upfront 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 2020, the Company raised an
additional GBP1.9m, net of expenses, through the issue of
50,731,250 new ordinary shares.
The operating loss for the period was GBP585,066 (30 June 2019:
GBP552,160).
Cash balance at 30 June 2020 was GBP 2,443,518 (30 June 2019:
GBP1,167,547).
Nuvec(R) development work
The first part of 2020 saw the Company focus on the optimisation
of Nuvec(R) starting with the improved manufacture and dispersion
of the particle. In parallel, we entered into a research
collaboration agreement with Nanomerics Limited ("Nanomerics") to
focus on the stability of a number of different formulations of
Nuvec(R) using both a well characterised plasmid DNA and a novel
small interfering RNA (siRNA). Whilst these work streams remained
ongoing, the advent of the Covid-19 pandemic presented significant
local and global challenges but also created an opportunity as to
how Nuvec(R) may be applied as a potential delivery technology to
any of the multiple Covid-19 vaccines currently in development
across the world.
Whilst we did not initially envisage a material disruption to
our studies, the scale of lockdown created minor but inevitable
delays to our optimisation work and the work with Nanomerics. As
working practices have evolved against the backdrop of the pandemic
these work streams are now very much on track and continue to
expand our data set for Nuvec(R). With such attention on Covid-19
and potential vaccines, we took the decision to undertake a proof
of concept study prior to a full in vivo study to assess the
efficacy of Nuvec(R) loaded with the Coronavirus plasmid DNA. This
work was undertaken by an experienced contract research
organisation, Evotec, and began in the period under review and has
recently concluded resulting in the decision to move to a full in
vivo study as set out further below.
In the period, we have also undertaken an appraisal of Nuvec(R)
in the use of manufacturing viral vectors and how they might be
used in ex vivo gene therapy. Whilst there is a viable market to be
potentially addressed in the future the Board has concluded that
the return on investment at this stage would not be suitably
attractive. As a result, the Board has concluded that the best use
of its resources would be better served focusing on its strategy
for the next six to twelve months being:
-- Completion of the optimisation work including the
establishment of optimal dispersion, loading ratios and the tech
transfer for consistent manufacture;
-- The scoping and implementation of our most comprehensive in vivo study to date; and
-- Feasibility studies on other applications for Nuvec(R) such
as for oral vaccines and in oncology.
The strengthening of our balance sheet through the funds raised
in May of this year means that we are well funded to complete all
our currently planned work streams.
Going Forward
Over the last few months we have sought to refine our work
streams in such a way that they align towards a definitive study
which comprises the multiple learnings from the studies to date.
These continue to be refined through the optimisation work which is
expected to be concluded with our CRO partners over the coming
months to then feed into our in vivo work. In parallel, we have
begun our tech transfer work with Ardena to enable consistent
manufacture of Nuvec(R) with the potential to GMP standards as and
when required in the future.
Through our Covid-19 proof of concept work we have seen Nuvec(R)
loaded with the Coronavirus plasmid DNA transfect human HEK cells
in vitro. Following the recently announced results for the pilot in
vivo work, we have decided to proceed to a full in vivo study to
demonstrate the capability of Nuvec(R) loaded with the Coronavirus
plasmid DNA to generate Covid-19 antibodies. This in vivo study
will be our most comprehensive yet. Whilst we are still finalising
the scope of the study, we will be looking to compare, amongst
other variables, reactions of Nuvec(R) loaded with different DNA
plasmids (including Coronavirus), as well as optimised Nuvec(R) and
unoptimised Nuvec(R).
Whilst our core work on Nuvec(R) continues positively as
detailed above, the Board is mindful that it needs to expand its
risk profile and there remains great potential in exploring other
applications for Nuvec(R). As announced in July, we feel Nuvec(R)
could offer significant advantages in addressing issues in the oral
delivery of vaccines and we are in the process of conducting
preliminary feasibility studies as to its viability as a tool for
oral vaccines. Likewise, in the area of oncology we are exploring
the viability of Nuvec(R) as a tool in this substantial market.
Intellectual Property
In parallel to the work outlined above, the Company continues to
see progress on its licensed patent application from The University
of Queensland ("UQ") and its own patent application. The UQ patent
application has had responses from all the key patent examiners and
dialogue is ongoing to clarify the list of claims being discussed.
Our own patent application for improvements to how Nuvec(R) is made
has now entered the national phases for Europe, USA, China, Japan,
India and Australia.
Board changes
Post the period end, Luke Cairns, previously a Non-Executive
Director, became an Executive Director, overseeing the Company's
finance, corporate and investor relations activities allowing Nigel
Theobald, Chief Executive Officer, more time to focus on driving
the Company's development programmes and potential commercial
collaborations.
Outlook
Fundamentally, our strategy remains the same and therefore the
prospects and value potential for Nuvec(R) remain as previously
stated. With every study result, we learn more about Nuvec(R) and
so can better define the next study. This we are doing as we plan
our next in vivo study taking what we are learning in the
optimisation process, previous in vivo studies and the recent
Covid-19 proof of concept work.
The combination of work with Nuvec(R) to address solutions for
multiple injectable vaccines supplemented by our preliminary work
on oral and oncology applications means we are looking to balance
the inherent risk of development with the considerable reward of
any one of these applications advancing to commercial
collaborations.
The Board also remains open to adding other assets to its
portfolio in the event any such opportunities arise.
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
N4 Pharma Plc and its controlled entities
Condensed Consolidated Interim Statement of Comprehensive Income
(unaudited) for the six months ended 30 June 2020
Six months Six months Twelve months
to 30 June to 30 June to 31 December
2020 2019 2019
(Unaudited) (Unaudited) (Audited)
GBP GBP GBP
------------ ------------ -----------------------------
Expenses
Research and development
costs (213,869) (117,694) (216,948)
General and administration
costs (371,197) (432,879) (730,392)
Operating loss for the
period (585,066) (550,573) (947,340)
Finance income/(expenditure) 21 (1,587) (1,385)
Loss for the period before
tax (585,045) (552,160) (948,725)
Taxation 46,657 - 72,352
Loss for the period after
tax (538,388) (552,160) (876,373)
Other comprehensive income -
net of tax - -
Total comprehensive loss
for the period attributable
to equity owners of N4
Pharma Plc (538,388) (552,160) (876,373)
================================ ============ ============ =============================
Loss per share attributable
to owners of the parent
Weighted average number
of shares:
Basic 113,169,749 98,852,040 100,168,016
Diluted 114,298,028 104,379,981 100,168,016
Basic loss per share (0.48p) (0.56p) (0.87p)
Diluted loss per share (0.47p) (0.53p) (0.87p)
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 Interim Statement of Financial Position
(unaudited) for the six months ended 30 June 2020
Notes 30 June 2020 30 June 2019 31 December
2019
(Unaudited) (Unaudited) (Audited)
GBP GBP GBP
------------- ------------- ---------------------------
Assets
Current assets
Trade and other receivables 60,059 265,481 99,269
Cash and cash equivalents 2,443,518 1,167,547 965,752
2,503,577 1,433,028 1,065,021
Total Assets 2,503,577 1,433,028 1,065,021
------------------------------ ------ ------------- ------------- ---------------------------
Liabilities
Current liabilities
Trade and other payables (127,837) (81,863) (51,547)
Accruals and deferred income (20,833) (22,200) (26,136)
------------------------------ ------ ------------- ------------- ---------------------------
Total assets less current
liabilities 2,354,907 1,328,965 987,338
------------------------------ ------ ------------- ------------- ---------------------------
Net Assets 2,354,907 1,328,965 987,338
------------------------------ ------ ------------- ------------- ---------------------------
Equity
Share capital 4 10,705,925 8,676,675 8,676,675
Share premium 5 10,181,317 10,328,797 10,327,258
6a
Share option reserve 6b 47,914 41,141 25,266
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 (4,721,352) (3,858,751) (4,182,964)
------------------------------ ------ ------------- ------------- ---------------------------
Total Equity 2,354,907 1,328,965 987,338
------------------------------ ------ ------------- ------------- ---------------------------
N4 Pharma Plc and its controlled entities
Condensed Consolidated Interim Statement of Changes in Equity
(unaudited) for the six months ended 30 June 2020
(i) Six months
ended 30 June
2020 -
Unaudited
----------- -------------- ------------------------ --------------- ------------------ ------------- ------------------
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 2020 8,676,675 10,327,258 25,266 (14,138,244) 279,347 (4,182,964) 987,338
Total
comprehensive
loss for
the period - - - - - (538,388) (538,388)
Share issue 2,029,250 (121,755) - - - - 1,907,495
Share option
reserve - (24,186) 22,648 - - - (1,538)
At 30 June
2020 10,705,925 10,181,317 47,914 (14,138,244) 279,347 (4,721,352) 2,354,907
(ii) Six
months ended
30 June
2019 -
Unaudited
----------- -------------- ------------------------ --------------- ------------------ ------------- ------------------
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 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 (40,768) - - - 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
N4 Pharma Plc and its controlled entities
Condensed Consolidated Interim Statement of Changes in Equity
(unaudited) for the six months ended 30 June 2020 (Continued)
(iii) Twelve
months ended
31 December
2019 - 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 2019 8,634,675 9,328,848 81,909 (14,138,244) 279,347 (3,306,591) 879,944
Total
comprehensive
loss for
the year - - - - - (876,373) (876,373)
Share issue 42,000 998,410 - - - - 1,040,410
Share option
reserve - - (56,643) - - - (56,643)
At 31 December
2019 8,676,675 10,327,258 25,266 (14,138,244) 279,347 (4,182,964) 987,338
The notes below form an integral part of these financial
statements.
N4 Pharma Plc and its controlled entities
Condensed Consolidated Interim Statement of Cash Flows
(unaudited) for the six months ended 30 June 2020
Six months Six months Twelve months
to 30 June to to 31 December
2020 30 June 2019 2019
(Unaudited) (Unaudited) (Audited)
GBP GBP GBP
------------------------------------ ------------ ----------------------- ----------------
Operating activities
Loss before tax (585,045) (552,160) (948,725)
Finance (income)/expenditure (21) 1,587 1,385
Share based payments to
employees (1,538) 1,181 3,767
Operating loss before changes
in working capital (586,604) (549,392) (943,573)
Movements in working capital:
Decrease in trade and other
receivables 39,210 11,445 29,441
Increase/(decrease) in trade
and other payables
payables 70,987 (86,060) (112,440)
Taxation 46,657 - 220,568
Cash used in operations (429,750) (624,007) (806,004)
-------------------------------------- ------------ ----------------------- ----------------
Net cash flows used in operating
activities (429,750) (624,007) (806,004)
-------------------------------------- ------------ ----------------------- ----------------
Financing activities
Finance income/(expenditure) 21 (1,587) (1,385)
Net proceeds of ordinary
share issue 1,907,495 1,000,000 980,000
Net cash flows from financing
activities 1,907,516 998,413 978,615
-------------------------------------- ------------ ----------------------- ----------------
Net increase in cash and
cash eqivaequivalents
equivalents 1,477,766 374,406 172,611
Cash and cash equivalents
at beginning of the period
the period 965,752 793,141 793,141
Cash and cash equivalents
at 30 June /
31 December 2,443,518 1,167,547 965,752
The notes below form an integral part of these
financial statements.
N4 Pharma Plc and its controlled entities
Notes to the condensed interim financial statements for the six
months ended 30 June 2020
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 Biotech was dissolved
on 14 January 2020. 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 2020 but have not had
a material effect on this condensed consolidated interim financial
information:
Title As Issued by the IASB, mandatory
for accounting periods starting
Amendments to IFRS3: Business Accounting periods beginning
Combinations on or after 1 January 2020
---------------------------------
Amendments to IAS1 and IAS8: Accounting periods beginning
Definition of Material on or after 1 January 2020
---------------------------------
Interest Rate Benchmark Reform: Accounting periods beginning
amendments to IFRS9, IAS39 and on or after 1 January 2020
IFRS7
---------------------------------
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
2019 were prepared in accordance with International Financial
Reporting Standards ("IFRS") as adopted by the European Union.
The condensed consolidated interim financial information for the
six months ended 30 June 2020 are unaudited. In the opinion of the
Directors, the condensed consolidated interim 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.
N4 Pharma Plc and its controlled entities
Notes to the condensed consolidated interim financial statements
for the six months ended 30 June 2020
2. Accounting policies (continued)
Basis of consolidation:
These condensed consolidated interim financial statements have
been prepared in accordance with IFRS 2 for the comparative six
month period ended 30 June 2019 and the comparative 12 month period
to 31 December 2019 and the current six period ended 30 June 2020.
These condensed consolidated interim 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, as modified for
the fair value of options and warrants, 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 condensed
consolidated interim 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.
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
statement of financial position date as to whether future profits
will be available against which the unused tax losses can be
utilised.
Share-based payment arrangements
Share-based payment arrangements in which the Group receives
goods or services as consideration for its own equity instruments
are accounted for as equity-settled share-based payment
transactions, regardless of how the equity instruments are obtained
by the Group.
N4 Pharma Plc and its controlled entities
Notes to the condensed consolidated interim financial statements
for the six months ended 30 June 2020
2. Accounting policies (continued)
Significant Accounting Policies (continued):
Share-based payment arrangements (continued)
Share-based transactions, other than those with employees, are
measured at the value of goods or services received where this can
be reliably measured. Where the services received are not
identifiable, their fair value is determined by reference to the
grant date fair value of the equity instruments provided. Should it
not be possible to measure reliably the fair value of identifiable
goods and services received, their fair value shall be determined
by reference to
the fair value of the equity instruments provided measured over
the period of time that the goods and services are received.
The expense is recognised in the condensed consolidated interim
statement of comprehensive income or capitalised as part of an
asset when the goods are received or as services are provided, with
a corresponding increase in equity.
The grant date fair value of share-based payment awards granted
to employees is recognised as an employee expense, with a
corresponding increase in equity, over the period that the
employees become unconditionally entitled to the awards. The fair
value of the options granted is measured using an option valuation
model, taking into account the terms and conditions upon which the
options were granted. The amount recognised as an expense is
adjusted to reflect the actual number of awards for which the
related service and non-market vesting conditions are expected to
be met, such that the amount ultimately recognised as an expense is
based on the number of awards that do meet the related service and
non-market performance conditions at the vesting date. For
share-based payment awards with non-vesting conditions, the grant
date fair value of the share-based payment is measured to reflect
such conditions and there is no "true-up" for differences between
expected and actual outcomes.
Share-based payment transactions in which the Group receives
goods or services by incurring a liability to transfer cash or
other assets that is based on the price of the Group's equity
instruments are accounted for as cash-settled share-based payments.
The fair value of the amount payable to recipients is recognised as
an expense, with a corresponding increase in liabilities, over the
period in which the recipients become unconditionally entitled to
payment. The liability is re-measured at each condensed
consolidated interim statement of financial position date and at
settlement date. Any changes in the fair value of the liability are
recognised in the condensed consolidated interim statement of
comprehensive income.
3. Critical accounting judgements and estimates
The preparation of the condensed consolidated interim 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 interim financial statements.
N4 Pharma Plc and its controlled entities
Notes to the condensed consolidated interim financial statements
for the six months ended 30 June 2020
4. Share capital
Allotted, called up and 30 June 2020 30 June 2019 31 Dec 2019
fully paid (Unaudited) (Unaudited) (Audited)
GBP GBP GBP
152,193,787 Ordinary Shares
of 0.4p each (30 June 2019
and 31 December 2019: 101,462,537
Ordinary shares of 0.4p
each) 2,435,100 405,850 405,850
137,674,431 Deferred Shares
of 4p each (30 June 2019
and 31 December 2019: 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
2019 and 31 December 2019:
279,176,540 Deferred shares
of 0.099p each) 2,763,848 2,763,848 2,763,848
10,705,925 8,676,675 8,676,675
====================== ===================== =====================
The transactions that took place during the period were as
follows:
-- 50,731,250 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 issue costs 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 GBP279,347. 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.
N4 Pharma Plc and its controlled entities
Notes to the condensed consolidated interim financial statements
for the six months ended 30 June 2020
6. Share-based payments and Share Option Reserve (continued)
a) Options (continued)
The fair value determined is unwound on a straight-line basis
over the vesting period based on the Group's estimate of the number
of shares that will vest and recognised as share premium. The value
of the change is adjusted to reflect the expected and actual levels
of vesting.
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 behavioral considerations. The inputs
into model were as follows:
2017 Options 2018 Options 2019 Options 2020 Options
Share price 6.375p 6.6p 3.55p 4.8p
Exercise price 7p 6.6p 3.55p 4.8p
Expected volatility 27.2% 45.2% 37.4% 29.9%
Expected option 3 years 6.5 years 6.5 years 3 years
life
Risk free rate 4.75% 5.00% 5.00% 4.75%
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
In the case share options granted to Paul Titley, of the total
of 1,434,286 that were granted, the exercise of options over
717,143 ordinary shares were subject to certain performance
conditions. These share options lapsed 2019 due to his departure
from the Company and those targets not being met. This leaves Paul
Titley with 717,143 options.
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 lapsed on 1 January
2019 due to his departure from the Company.
The share options granted to Alan Hey lapsed on 28 February 2020
due to his departure from the Company.
N4 Pharma Plc and its controlled entities
Notes to the condensed consolidated interim financial statements
for the six months ended 30 June 2020
6. Share-based payments and Share Option Reserve (continued)
a) Options (continued)
As at 30 June 2020, there were 8,396,513 (30 June 2019:
7,679,370, 31 December 2019: 7,679,370) options in existence over
ordinary shares of the Company.
Name Date of Grant Ordinary Shares Expriy Date Exercise Price
Under Otion
2015 Options
Gavin Burnell 14.10.15 2,701,210 14.10.15 0.028
Luke Cairns 14.10.15 675,302 14.10.15 0.028
2015 Options
Luke Cairns 03.05.17 717,143 03.05.17 0.07
David Templeton 03.05.17 717,143 03.05.17 0.07
Paul Titley 03.05.17 717,143 03.05.17 0.07
2019 Options
John Chiplin 21.05.19 717,143 21.05.19 0.0355
Christopher Britten 21.05.19 717,143 21.05.19 0.0355
2020 Options
David Templeton 18.05.20 717,143 18.05.20 0.048
Luke Cairns 18.05.20 717,143 18.05.20 0.048
----------------
8,396,513
----------------
The aggregate fair value of the share options issued is as
follows:
30 June 2020 30 June 2019 31 December
2020
(unaudited) (unaudited) (unaudited)
GBP GBP GBP
2015 Options 16,296 19,385 17,831
2017 Options - 7,550 3,037
2018 Options - 21,887 2,998
2019 Options 2,538 22,793 1,399
2020 Options 321 - -
------------- ------------- -------------
19,155 71,615 25,265
------------- ------------- -------------
b) Warrants
As at 30 June 2020, the total number of warrants in issue were
2,536,562 (30 June 2019: nil, 31 December 2019: nil).
The warrants are exercisable at 4p and entitled holders to
subscribe for new ordinary shares at any time in the period of two
years following the grant of the warrants. The expiry date of the
placing warrants is 20 May 2022.
N4 Pharma Plc and its controlled entities
Notes to the condensed consolidated interim financial statements
for the six months ended 30 June 2020
6. Share-based payments and Share Option Reserve (continued)
b) Warrants (continued)
During the period, an amount of GBP28,759, representing the fair
value of the warrants 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 2020 was GBP28,759 (30
June 2019: GBPnil, 31 December 2019: GBPnil).
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 2020, the non-executive directors'
fees amounted to GBP36,993 (6 months to 30 June 2019: GBP27,894, 12
months to 31 December 2019: GBP53,590).
During the period to 30 June 2020, the Company charged N4 UK
GBP18,000 in respect of 50 per cent. of the fees paid to
non-executive directors for the services rendered to N4 UK (6
months to 30 June 2019: GBP12,000, 12 months to 31 December 2019:
GBP24,000)
10. Subsequent events
On 15 July 2020 the Company appointed SP Angel Corporate Finance
LLP as the Company's Nominated Adviser and Joint Broker. On the
same date the company appointed Luke Cairns to an executive
director position, previously Luke was a non-executive
director.
On 14 August 2020 the Company received a notification to
exercise warrants representing ordinary shares of 0.4 pence each
for a total consideration of GBP4,500. The 112,500 new Ordinary
Shares issued following the exercise of warrants admitted to
trading on AIM on 20 August 2020.
On 26 August 2020 the Company received a notification to
exercise warrants representing 2,424,062 ordinary shares of 0.4
pence each for a total consideration of GBP96,962. The 2,424,062
new Ordinary Shares issued following the exercise of warrants
admitted to trading on AIM on 2 September 2020.
On 8 September 2020 the Company received a notification to
exercise options representing 1,350,000 ordinary shares of 0.4
pence each for a total consideration of GBP37,800. The 1,350,000
new Ordinary Shares issued following the exercise of options
admitted to trading on AIM on 14 September 2020.
Following the issue of new ordinary shares pursuant to the
warrant and option exercises detailed above, as at today's date,
the Company's total issued share capital consists of 156,080,349
Ordinary Shares.
Aside from the above disclosures there are no other significant
subsequent events that require adjustment or disclosure in these
condensed consolidated interim financial statements.
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END
IR EAXNKFSEEEFA
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