Last checked at 8 Jun 2017 13:04
C4X Discovery Holdings plc
("C4XD", "C4X Discovery" or the "Company")
Issue of equity
8 June 2017 - C4X Discovery Holdings plc (AIM: C4XD), a pioneering drug discovery company, has today issued and allotted 921,075 new ordinary shares of 1p each ("Ordinary Shares"), in two tranches.
The first issue of 34,200 Ordinary Shares relates to the satisfaction of loans made to Adorial Limited ("Adorial") by the directors of Adorial, now employees of C4XD, prior to its acquisition by C4XD in March 2016. The second issue of 886,875 Ordinary Shares is to certain former employees exercising options which were granted on 13 October 2014.
Accordingly, an application has been made for 921,075 new Ordinary Shares to be admitted to trading on AIM and it is expected that admission will take place at 8.00 a.m. on 14 June 2017. The new Ordinary Shares will rank pari passu with the existing Ordinary Shares.
Following Admission, the Company's enlarged issued share capital will comprise 46,555,087 Ordinary Shares with one voting right per share. There are no Ordinary Shares held in treasury. Therefore, in accordance with the FCA's Disclosure and Transparency Rule 5.6.1, the Company confirms that following Admission, the total number of voting rights in the Company will be 46,555,087.
--ENDS-
For further information, please contact:
C4X Discovery Holdings plc
Clive Dix, Chief Executive Officer 07801 865 803
Panmure Gordon (UK) Limited (NOMAD) 020 7886 2500
Freddy Crossley, Duncan Monteith (Corporate Finance)
Tom Salvesen (Corporate Broking)
Consilium Strategic Communications
Mary-Jane Elliott, Matthew Neal, Melissa Gardiner 0203 709 5700
About C4X Discovery
C4X Discovery aims to become the world's most productive drug discovery engine by exploiting cutting edge technologies to design and create best-in-class small-molecule candidates targeting a range of high value therapeutic areas. The company's goal is to drive returns through early-stage revenue-generating deals with the pharmaceutical industry.
C4X Discovery has a state-of-the-art suite of proprietary technologies across the drug discovery process. The company's innovative DNA-based target identification platform (Taxonomy3®) utilises human genetic datasets to identify novel patient-specific targets leading to greater discovery productivity and increased probability of clinical success. This is complemented by C4XD's novel drug design platform which comprises two innovative chemistry technologies, Conformetrix and Molplex, that combine 4D molecular shape analyses (based on experimental data) with best-in-class computational chemistry. This provides new and unprecedented insight into the behaviour of drug molecules, enabling the production of potent selective compounds faster and more cost effectively than the industry standard.
C4X Discovery is advancing its in-house pipeline in addiction, diabetes and inflammation with a number of new drug candidates identified and further progress made towards the clinic. In selecting new targets C4X Discovery will focus on the high-value disease areas of inflammation and neurodegeneration, and will continue to maximise value from opportunistic areas, for example, immuno-oncology, addiction, and diabetes.
The Company was founded as a spin-out from the University of Manchester. It has a highly experienced management team and Board who have delivered significant value creation within the healthcare sector historically and have enabled C4XD to reach multiple value inflexion points since IPO. For additional information please go to: www.c4xdiscovery.com
INTERIM CHAIRMAN AND CEO'S STATEMENT:
Global licensing of pre-clinical stage assets continues to increase in both number of deals and deal value, with the number of pre-clinical deals worth greater than $10 million increasing from 50 in 2012 to 78 in 2015 and the value of up-front payments for these pre-clinical deals increasing by 289 per cent. to approximately $2.4 billion (BIO Industry Analysis, Emerging Therapeutic Company Investment and Deal Trends, 25 May 2016). We remain confident in our ability to capture the increasing value associated with pre-clinical licensing deals by generating a high-value asset portfolio focussed in disease areas with high partnering interest. Our goal, once at 'steady state', is to produce four or more assets suitable for partnering each year, and we expect to complete at least one revenue-generating deal on our portfolio in the next 12 months. We will drive long-term shareholder value by strategically re-investing deal revenue into the Company's Drug Discovery Engine to achieve sustainable productivity in the medium- to long-term.
In the past period, we have focussed on continuing to build our unique Drug Discovery Engine capabilities to achieve our aim of becoming the world's most productive, self-sustaining drug discovery company. Our ongoing disease areas of focus are inflammation, neurodegeneration and opportunistic disease areas: for example, immuno-oncology, addiction and diabetes.
Discovery Engine and portfolio progress
We have made significant progress growing our discovery portfolio to eight projects across a number of commercially-attractive therapeutic areas, and made making key findings using our proprietary Taxonomy3® target discovery platform. We aim to partner all of C4X Discovery's drug assets pre-clinically, enabling partners (who are better placed to do so) take on the technical and financial risk associated with clinical development.
Key highlights
Addiction
Our most advanced drug discovery programme aims to provide a novel oral medicine for addiction, which represents a substantial area of unmet medical need and is forecast to be worth an estimated $13 billion per annum by 2018 (GBI Research 2012). Our novel pre-clinical candidate molecule, an Orexin-1 antagonist candidate, is scheduled to be ready for clinical development by the end of 2017. Earlier this year, C4X completed its first GMP batch synthesis of drug substance. This has provided the material to complete the remaining toxicology studies and enabled drug product supply in preparation for the first clinical study. In parallel, our candidate has also been tested in pre-clinical models of nicotine addiction where it showed significant activity in reducing nicotine-seeking behaviour which has demonstrated its potential use for the treatment of smoking cessation in patients who relapse.
Inflammation
In addition, significant progress has been made in the Company's drug discovery programmes for the treatment of inflammatory diseases. C4X Discovery has identified potent novel activators of the NRF-2 pathway, which is important in mediating lung diseases such as chronic obstructive pulmonary disease ("COPD"), and Pulmonary Arterial Hypertension ("PAH"). Recently, we have demonstrated significant upregulation of the NRF-2 pathway in lung cell assays with lead compounds that are also bioavailable in vivo via the oral route.
Our small molecule programme against Interleukin-17 ("IL-17"), a high value clinically validated target for inflammation and autoimmune diseases such as psoriasis, has also produced promising pre-clinical data recently. Current marketed drugs that target IL-17 are based on injectable monoclonal antibodies, with the identification of orally available small molecules proving extremely challenging for this target. C4XD's Conformetrix technology has enabled the identification of small molecules that can selectively block IL-17 activity whilst keeping the molecular size of the molecule in the traditional 'drug-like' range, offering the potential for more convenient oral or topical treatment which could also increase the number of patients who can access drugs targeting this mechanism. Studies are now underway to optimise these for oral delivery in vivo.
Taxonomy3® target discovery
Our proprietary DNA-based target discovery technology Taxonomy3® continues to produce novel target data in commercially valuable disease areas. Analysis of a clinical rheumatoid arthritis dataset has identified multiple novel targets that have not previously been genetically linked with this major disease and a drug discovery programme against the first of these targets continues to make progress.
In neurodegeneration, Taxonomy3® has identified multiple novel targets in discrete patient sub-groups for the treatment of Parkinson's Disease that could potentially provide an opportunity in stratified medicine. The Company has recently reproduced the analysis from a second patient dataset confirming this discovery. The selection process to choose the first target to be prosecuted in a drug discovery programme is underway. Analysis of an Alzheimer's disease dataset has also been initiated with an additional five further clinical disease datasets planned for analysis in 2017 to provide the Company with multiple novel targets in high-value and therapeutic areas with significant partnering interest.
Portfolio outlook
Overall, C4X Discovery's discovery asset portfolio continues to grow in-line with the Company's strategy and we are progressing well to achieving our ambitions of producing four partnerable assets per annum at 'steady state'. We will continue to invest in both existing and new programmes to ensure we remain on-track to achieve our vision of being the world's most productive, self-sustaining Drug Discovery Engine.
Technology
Our suite of combined proprietary technologies forms the core of our state-of-the-art Drug Discovery Engine that combines novel drug design, using sophisticated analysis of NMR data (Conformetrix), with novel target discovery through multivariate analysis of genetic datasets (Taxonomy3®). MolPlex, our pioneering in-house computational chemistry software complements these platforms by bringing a virtual compound library that enables rapid identification of starting points for new discovery programmes, self-learning virtual docking simulations, and prediction of drug-like molecular properties. Together with our highly experienced team of scientists, these three technologies form our Discovery Engine. Used in conjunction with industry-standard chemical and biology techniques, accessed via our network of contract research organisations, this represents the full complement of capabilities required to deliver viable pre-clinical candidates suitable for advancement into clinical development in collaboration with pharma partners.
Strategic alliances
In September 2016, we announced a new multi-target risk-sharing alliance with Evotec AG ("Evotec"), a leading drug discovery and development alliance company (the "Agreement"). The new Agreement builds on our previous strategic collaboration between the two companies announced in January 2015 and will enable us to increase the output of our Discovery Engine with reduced risk and, potentially, lower cost.
C4XD and Evotec are now working together to develop new small molecule drugs across a range of targets and therapeutic areas. As part of the Agreement, Evotec is applying its extensive assay and screening technologies, laboratory scientists and medicinal chemistry know-how to selected C4XD programmes, in return for funding to partially cover operational costs, milestones dependent on developmental success and a share of potential future royalties. Programmes under the Agreement will run until the point of Potential Development Candidate (PDC) nomination, after which C4XD, which retains all IP, will have the right to out-license successful projects to the pharma industry.
Strengthening management
Delivering on our vision requires strong leadership, in November, we strengthened our Board with the appointment of Dr Craig Fox, Chief Scientific Officer, and Brad Hoy, Chief Financial Officer. Both Craig and Brad bring a wealth of knowledge and experience to the Company and will make a significant contribution to the execution of our new strategy.
Fundraising
In September 2016, C4XD completed a £5.0 million fundraise through the conditional placing of 4,901,961 new ordinary shares at a price of 102 pence per Ordinary Share. The fundraising saw Calculus Capital Limited and Polar Capital LLP join C4XD's share register.
This fundraising was followed in March 2017 (post-period end) by the successful closing of a £7.0 million fundraise at 85 pence per share. The new cash will be used to support the execution and acceleration of our strategy by strengthening our balance sheet as partnering discussions and strategic collaborations progress, expanding our commercial capability and supporting working capital during the expansion of our pipeline portfolio.
Financial review
Revenue for the six months ended 31 January 2017 at £0.1 million was lower than the equivalent prior period (six month period ended 31 January 2016: £0.2 million) reflecting the previously disclosed discontinuation of fee-for-service agreements. C4XD expects future revenues to be derived from licensing and other income from commercial agreements with industry partners relating to C4XD's pre-clinical drug assets.
Research and development expenses at £3.0 million for the six months ended 31 January 2017 showed a slight increase compared to the equivalent prior period (six month period ended 31 January 2016: £2.7 million), reflecting progress being made across our in-house pipeline.
At £1.0 million, administrative expenses for the six months ended 31 January 2017 are in line with those reported in the equivalent prior period (six month period ended 31 January 2016: £0.9 million).
The net loss for the six months ended 31 January 2017 amounted to £3.0 million or a loss of 8.34 pence per Ordinary Share (six month period ended 31 January 2016: £2.7 million or loss of 8.76 pence per Ordinary Share).
C4XD had net assets at 31 January 2017 of £6.0 million (31 July 2016: £4.3 million and 31 January 2016: £5.3 million) and cash, cash equivalents, short-term investments and deposits of £2.2 million (31 July 2016: £1.3 million and 31 January 2016: £5.0 million). Since the period end, C4XD has completed a £7.0 million fundraise in March 2017 through the placing of 8,235,294 new Ordinary Shares at a price of 85 pence per Ordinary Share.
Outlook
C4X Discovery's combination of state-of-the-art proprietary technologies, highly experienced scientific team and industry experience uniquely positions the Company to fulfil the pharmaceutical industry's demand for high quality early-stage drug candidates. As the Company accelerates towards its goal of becoming the world's most productive, self-sustaining drug discovery engine, it aims to expand its commercial capabilities and continue building a portfolio of commercially attractive pre-clinical assets, in addition to progressing partnering discussions to complete at least one revenue-generating deal on the C4XD portfolio in the next 12 months. The Board is excited about the Company's opportunities and its future within the wider evolution of the UK drug discovery market.
Interim consolidated statement of comprehensive income
For the six months ended 31 January 2017
|
|
Six months to 31 January 2017 |
Six months to 31 January 2016 |
Year to 31 July 2016 |
|
| (Unaudited) | (Unaudited) | (Audited) |
|
| £000 | £000 | £000 |
| Notes |
|
|
|
|
|
|
|
|
Revenue | 2 | 78 | 165 | 279 |
|
|
|
|
|
Cost of sales |
| (2) | (8) | (12) |
|
|
|
|
|
Gross profit |
| 76 | 157 | 267 |
|
|
|
|
|
Research and development expenses |
| (3,013) | (2,738) | (5,239) |
Administrative expenses |
| (951) | (896) | (1,817) |
|
|
|
|
|
|
|
|
|
|
Operating loss |
| (3,888) | (3,477) | (6,789) |
|
|
|
| |
Finance income |
| 1 | 26 | 32 |
|
|
|
|
|
Loss on ordinary activities before taxation |
| (3,887) | (3,451) | (6,757) |
|
|
|
|
|
Taxation | 3 | 850 | 736 | 1,436 |
|
|
|
|
|
Loss for the period and total comprehensive loss for the period |
| (3,037) | (2,715) | (5,321) |
|
|
|
|
|
|
|
|
|
|
Loss per share : |
|
|
|
|
Basic and diluted loss for the period | 4 | (8.34)p | (8.76)p | (16.83)p |
Interim consolidated statement of changes in equity
For the six months ended 31 January 2017
| Issued equity | Share | Share based payment | Merger | Capital contribution | Revenue |
| |
| capital | premium | reserve | reserve | reserve | reserve | Total | |
| £000 | £000 | £000 | £000 | £000 | £000 | £000 | |
|
|
|
|
|
|
|
| |
At 1 August 2015 |
|
|
|
|
|
|
| |
2,335 | 10,013 | 51 | 920 | 195 | (5,546) | 7,968 | ||
|
|
|
|
|
|
|
| |
Loss for the six months to 31 January 2016 |
|
|
|
|
|
|
| |
- | - | - | - | - | (2,715) | (2,715) | ||
Share-based payments | - | - | 17 | - | - | - | 17 | |
|
|
|
|
|
|
|
| |
At 31 January 2016 |
|
|
|
|
|
|
| |
2,335 | 10,013 | 68 | 920 | 195 | (8,261) | 5,270 | ||
Loss for the six months to 31 July 2016 |
|
|
|
|
|
|
| |
- | - | - | - | - | (2,606) | (2,606) | ||
Issue of share capital | 15 | 1,584 | - | - | - | - | 1,599 | |
Share-based payments | - | - | 42 | - | - | - | 42 | |
|
|
|
|
|
|
|
| |
At 31 July 2016 |
|
|
|
|
|
|
| |
2,350 | 11,597 | 110 | 920 | 195 | (10,867) | 4,305 | ||
|
|
|
|
|
|
|
| |
Loss for the six months to 31 January 2017 |
|
|
|
|
|
|
| |
- | - | - | - | - | (3,037) | (3,037) | ||
Issue of share capital | 49 | 4,951 | - | - | - | - | 5,000 | |
Expenses of placing | - | (285) | - | - | - | - | (285) | |
Share-based payments | - | - | 67 | - | - | - | 67 | |
|
|
|
|
|
|
|
| |
At 31 January 2017 |
|
|
|
|
|
|
| |
2,399 | 16,263 | 177 | 920 | 195 | (13,904) | 6,050 |
Interim consolidated statement of financial position
As at 31 January 2017
|
31 January 2017 | 31 January 2016 | 31 July 2016 |
| (Unaudited) | (Unaudited) | (Audited) |
Notes | £000 | £000 | £000 |
|
|
|
|
Assets |
|
|
|
Non-current assets |
|
|
|
Property, plant and equipment | 100 | 84 | 94 |
Intangible assets | 587 | 57 | 654 |
Goodwill | 1,192 | - | 1,192 |
|
|
|
|
| 1,879 | 141 | 1,940 |
Current assets |
|
|
|
Trade and other receivables | 547 | 377 | 429 |
Income tax asset | 2,250 | 700 | 1,400 |
Short-term investments and cash on deposit | - | 3,006 | - |
Cash and cash equivalents | 2,194 | 2,011 | 1,328 |
|
|
|
|
| 4,991 | 6,094 | 3,157 |
Total assets | 6,870 | 6,235 | 5,097 |
Liabilities |
|
|
|
Current liabilities |
|
|
|
Trade and other payables | (820) | (965) | (792) |
|
|
|
|
| (820) | (965) | (792) |
|
|
|
|
Total liabilities | (820) | (965) | (792) |
Net assets | 6,050 | 5,270 | 4,305 |
|
|
|
|
|
|
|
|
Capital and reserves |
|
|
|
Issued equity capital 5 | 2,399 | 2,335 | 2,350 |
Share premium 5 | 16,263 | 10,013 | 11,597 |
Share-based payment reserve | 177 | 68 | 110 |
Merger reserve | 920 | 920 | 920 |
Capital contribution reserve | 195 | 195 | 195 |
Revenue reserve | (13,904) | (8,261) | (10,867) |
|
|
|
|
Total equity | 6,050 | 5,270 | 4,305 |
Approved by the Board and authorised for issue on 27 April 2017
Brad Hoy
Chief Financial Officer
27 April 2017
Interim consolidated cash flow statement
For the six months ended 31 January 2017
|
Six months to |
Six months to |
Year to |
31 January 2017 | 31 January 2016 | 31 July 2016 | |
(Unaudited) | (Unaudited) | (Audited) | |
Notes | £000 | £000 | £000 |
|
|
|
|
Loss after tax and interest | (3,037) | (2,715) | (5,321) |
Adjustments for: |
|
|
|
Depreciation of property, plant and equipment | 21 | 17 | 33 |
Amortisation of intangible assets | 67 | 2 | 55 |
Share-based payments | 67 | 17 | 59 |
Taxation | (850) | (736) | (1,436) |
Changes in working capital |
|
|
|
(Increase)/decrease in trade and other receivables | (118) | 11 | (40) |
Increase/(decrease) in trade and other payables | 68 | 253 | (28) |
Decrease in deferred revenue | (40) | (37) | (56) |
Cash outflow from operating activities | (3,822) | (3,188) | (6,734) |
Research and development tax credit received | - | 736 | 736 |
Net cash outflow from operating activities | (3,822) | (2,452) | (5,998) |
|
|
|
|
Cash flows from investing activities: |
|
|
|
Purchases of property, plant and equipment | (27) | (16) | (42) |
Purchases of intangible fixed assets | - | - | (50) |
Acquisition of subsidiary (net of cash acquired) | - | - | (67) |
Decrease in cash placed on deposit | - | 994 | 4,000 |
|
|
|
|
Net cash (outflow)/inflow from investing activities | (27) | 978 | 3,841 |
|
|
|
|
Cash flows from financing activities: |
|
|
|
Proceeds from the issue of ordinary share capital 5 | 5,000 | - | - |
Expenses of placing | (285) | - | - |
Net cash inflow from financing activities | 4,715 | - | - |
|
|
|
|
Increase/(decrease) in cash and cash equivalents | 866 | (1,474) | (2,157) |
Cash and cash equivalents at the start of period | 1,328 | 3,485 | 3,485 |
Cash and cash equivalents at the end of the period | 2,194 | 2,011 | 1,328 |
Monies placed on deposit | - | 3,006 | - |
Cash, cash equivalents and deposits at the end of the period | 2,194 | 5,017 | 1,328 |
Notes to the interim financial report
For the six months ended 31 January 2017
1. Corporate information
The principal activity of the C4X Discovery Holdings plc is research and development, a review of which is included in the Interim Chairman's and CEO's Joint Review.
C4XD is incorporated and domiciled in the United Kingdom and its registered number is 09134041. The address of the registered office is Manchester One, 53 Portland Street, Manchester, M1 3LD.
The interim financial information was approved for issue on 27 April 2017.
2. Accounting policies
Basis of preparation
The accounting policies adopted in this interim financial report are consistent with those followed in the preparation of the Group's annual report and accounts for the year to 31 July 2016.
The interim financial information for the six months ended 31 January 2017 and 31 January 2016 is unaudited and does not constitute statutory accounts as defined in the Companies Act 2006. This interim financial report includes audited comparatives for the year to 31 July 2016. The 2016 annual report and accounts received an unqualified audit opinion and has been filed with the Registrar of Companies.
These interim financial statements have been prepared in accordance with IAS34 Interim Financial Reporting. They do not include all the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual consolidated financial statements as at and for the year ended 31 July 2016.
Basis of consolidation
This interim financial report consolidates the financial statements of C4X Discovery Holdings plc and the entities it controls (its subsidiaries).
Segmental information
Operating segments
At 31 January 2017, 31 July 2016 and 31 January 2016 the Group operated as one segment, focussed on becoming the world's most productive Drug Discovery Engine.
This is the level at which operating results are reviewed by the chief operating decision maker (i.e. the Chief Executive Officer) to make decisions about resources, and for which financial information is available.
All revenues have been generated from continuing operations and are from external customers.
| Six months to | Six months to | Year to |
31 January 2017 | 31 January 2016 | 31 July 2016 | |
| £'000 | £'000 | £'000 |
Analysis of revenue |
|
|
|
Amounts earned under fee-for-service collaborations | 78 | 165 | 279 |
| 78 | 165 | 279 |
Geographical information
The Group operates in two main geographic area, although both are managed in the UK. The Group's revenue per geographical segment based on customer's location, is as follows:
| Six months to | Six months to | Year to |
31 January 2017 | 31 January 2016 | 31 July 2016 | |
| £'000 | £'000 | £'000 |
Analysis of revenue |
|
|
|
UK | 78 | 107 | 151 |
Europe (excluding UK) | - | 58 | 128 |
| 78 | 165 | 279 |
All of the Group's assets are held in the UK and all of its capital expenditure arises in the UK.
3. Tax
The tax credit is made up as follows:
| Six months to | Six months to | Year to |
31 January 2017 | 31 January 2016 | 31 July 2016 | |
| £'000 | £'000 | £'000 |
|
|
|
|
UK corporation tax losses in the period | - | - | - |
Research and development income tax credit receivable | (850) | (700) | (1,400) |
Adjustment in respect of prior periods | - | (36) | (36) |
| (850) | (736) | (1,436) |
4. Loss per share
|
31 January 2017 |
31 January 2016 | 31 July 2016 |
| £'000 | £'000 | £'000 |
Loss for the financial period attributable to equity shareholders | (3,037) | (2,715) | (5,321) |
Weighted average number of shares: | No. | No. | No. |
Ordinary shares in issue | 36,412,279 | 30,988,550 | 31,616,625 |
Basic loss per share (pence) | (8.34)p | (8.76)p | (16.83)p |
Diluted loss per share has not been presented above as the effect of share options issued is anti-dilutive.
5. Issued share capital and share premium
| Deferred shares | Ordinary shares | Share capital | Deferred shares | Share premium | Total |
| Number | Number | £000 | £000 | £000 | £000 |
Ordinary and deferred shares at 31 July 2015 and 31 January 2016 |
|
|
|
|
|
|
|
|
|
|
|
| |
2,025,000 | 30,988,550 | 310 | 2,025 |
10,013 | 12,348 | |
Issue of share capital | - | 1,508,207 | 15 | - |
1,584 | 1,599 |
Ordinary and deferred shares as at 31 July 2016 | 2,025,000 | 32,496,757 | 325 | 2,025 | 11,597 | 13,947 |
Issue of share capital | - | 4,901,961 | 49 | - | 4,951 | 5,000 |
Expenses of placing | - | - | - | - | (285) | (285) |
Ordinary and deferred shares at 31 January 2017 | 2,025,000 | 37,398,718 | 374 | 2,025 | 16,263 | 18,662 |
6. Post Balance Sheet Event
Completion of a £7.0 million fundraise in March 2017 through the placing of 8,235,294 new Ordinary Shares with existing and new investors at a price of 85 pence per Ordinary Share.
7. Interim financial report
A copy of this interim condensed financial report is available on C4XD's website at www.c4xdiscovery.com.