DDDD.L Regulatory News (DDDD)

RNS Number : 2738L

4d Pharma PLC

30 September 2016

 

 

 

This announcement contains inside information

 

 ("4D", "4D Pharma" or "the Company")

 

Interim results for the six months ended 30 June 2016

4D pharma plc (AIM: DDDD), a pharmaceutical company focussing on the development of live biotherapeutics targeting important new therapeutic areas, is pleased to announce the interim results for the Company and its subsidiaries (together "the Group") for the six months ended 30 June 2016.

Financial highlights

· Net assets as at 30 June 2016 of £92.1m (31 December 2015: £92.7m and 30 June 2015: £66.6m)

· Cash and cash equivalents and short term deposits at 30 June 2016 of £75.4m (31 December 2015: £85.4m and 30 June 2015: £61.5m)

· Loss attributable to the owners of the parent undertaking for the six months ending 30 June 2016 of £4.6m (31 December 2015: £7.5m and 30 June 2015: £4.1m)

Corporate highlights

· Acquisition in February 2016 of 4D Pharma Cork Limited (formerly Tucana Health Limited), a company founded to investigate the use of microbiome signatures to aid the diagnosis and treatment of disease, focussing initially on diagnosis and patient stratification in Irritable Bowel Syndrome, and building a diagnostic platform across multiple disease areas mirroring 4D Pharma's programmes

· Acquisition in April 2016 by 4D Pharma León, S.L.U. (a newly incorporated Spanish subsidiary) of the production assets of Instituto Biomar, S.A. ("Biomar"), a Spanish based contract research organisation specialising in microbial fermentation, creating a dedicated commercial-scale production facility with established in-house expertise

Other highlights

· Successful phase 1 clinical trial in respect of Blautix, 4D Pharma's proprietary programme for the treatment of Irritable Bowel Syndrome and the first orally delivered live biotherapeutic to undergo a clinical trial, achieving the primary objective of establishing safety and tolerability

· Continued development of the Group's discovery platform MicroRx, expanding its library to over 3,000 proprietary bacteria, targeting discovery of candidates across multiple disease sectors

Since the period end

· Analysis of samples from the Blautix phase 1 trial, generating meaningful data surrounding mechanism of action, trending towards the overall effectiveness of Blautix

· Commencement of dosing in a phase 1 clinical trial in respect of Thetanix, 4D Pharma's proprietary programme for the treatment of Paediatric Crohn's disease

Chairman's statement

David Norwood, Chairman of 4D Pharma commented: "We are delighted with 4D Pharma's progress through the period. We have seen the Group rapidly grow its research capability, and successfully establish its own development facility in León, Spain. The successful phase 1 clinical trial in respect of Blautix, the first in the field, represents a significant milestone for the Company. This is an extremely exciting time to be involved with 4D Pharma, and I would like to thank the board, our employees and our shareholders for their continued support."

 

For further information please contact:

4D	+ 44 (0) 113 895 0130
Duncan Peyton, Chief Executive Officer
Zeus Capital Limited - Nomad and Broker	+44 (0) 20 3829 5000
Dan Bate
Jonathan Sharp
Dominic Wilson (Institutional Sales)	+44 (0) 20 7533 7727

For further information please visit: www.4dpharmaplc.com.

 

 

Chairman's and Chief Executive Officer's Joint Review

Overview

4D Pharma is the world leader in the new and emerging field of live biotherapeutics.

Live biotherapeutics are a new class of drugs, defined by the FDA as a biological product that contains live organisms (such as bacteria), and that is applicable to the prevention, treatment, or cure of a disease. 

Over the last 12 months, 4D Pharma has continued to develop its scientific understanding of this novel and emerging therapeutic class. 4D Pharma leads this field with research into new areas such as cancer and autism, but importantly with its first-in-patient trials the Company has made significant moves towards delivering safe, effective therapies. 

4D Pharma understands the crucial role played by bacteria found naturally in the gut in the development and maintenance of our immune system, as well as the role they play in combating (not causing) disease. It is through this understanding that 4D Pharma is uniquely placed to develop live biotherapeutics. With a strong scientific focus, the Company strives to develop the 'perfect drug'. This is a concept to discover and develop a therapeutic that provides the gold standard of efficacy, whilst being safe and delivered simply. It must also have a rapid development pathway, and be capable of reliable and cost-effective production.

The therapeutics delivered by 4D Pharma have a favourable safety profile, and are inherently less likely to cause side effects commonly associated with small molecules or other biologics. The safety profile associated with 4D Pharma's therapies derives from the fact that they contain bacteria that are commensal and originally isolated from healthy humans. This aspect of the Company's therapies has been reinforced over the last six months with the successful completion of the Blautix clinical trial.

In the six months ended 30 June 2016, 4D Pharma has continued its rapid progression. The research group continues to grow, investigating new disease areas such as cancer and autism, and developing a new diagnostic platform based on microbiome signatures; and in collaboration with Baylor College of Medicine, 4D Pharma continues its research into germ-free models to give greater confidence as the programmes head to the clinic. Furthermore, the 4D Pharma development team is working to move additional programmes from the bench into the clinic. The Company has recently completed a first-in-patient trial for Irritable Bowel Syndrome ("IBS") and has commenced the trial for Paediatric Crohn's disease ("PC"). 4D Pharma has also acquired a stand-alone production facility, a key step in the Company's development, giving the flexibility to take multiple programmes towards and into the clinic. 

Clinical

In May 4D Pharma completed the first placebo controlled trial in patients dosing with a live biotherapeutic. The trial's primary objective was to evaluate the safety and tolerability of Blautix in both IBS patients and healthy volunteers. As the trial included IBS patients, the secondary objective of the study was to investigate biomarkers associated with the proposed mechanism of action of Blautix, and any changes in IBS patient symptoms were monitored. 

The trial showed Blautix to be safe and well tolerated, meeting its primary objective; it also showed a positive trend supporting the proposed mechanism of action of Blautix, and a corresponding trend towards an improvement in patient symptoms. 

With the positive outcome of this trial, Blautix will move forward into phase II, scheduled to begin in 2017.

In addition to completing the phase I trial of Blautix, 4D Pharma has commenced dosing PC patients with Thetanix. The Thetanix trial is also focused primarily on safety and tolerability, with a secondary objective of monitoring biomarkers and clinical scores associated with PC.

4D Pharma has made progress in advancing its other pipeline programmes towards the clinic. Development and stability work has commenced on two additional programmes, with patient dosing expected to begin in 2017.

Development

The upsurge in interest in the microbiome is relatively recent, and, whilst the science rapidly advances, to make live biotherapeutics a reality it must be understood and demonstrated that science can be translated into a product. 4D Pharma understands how, and has reliably and repeatedly produced live biotherapeutics across a number of its programmes.

Over the past 12 months the development team at 4D Pharma has successfully delivered pharma grade live biotherapeutic clinical batches for two trials. The team is now gearing up to meet the production requirements for the clinical material required to take the existing clinical programmes into phase II, and for those new programmes to be taken into trials planned for 2017.

As part of this development programme, 4D Pharma has invested in a development capability, acquiring the production assets of Biomar with the establishment of 4D Pharma León. This is a stand-alone dedicated development and production site, with the capability to take the research programmes through development and into production.

Research

4D Pharma has a world-leading team of scientists based in Ireland, France and the UK. The research team is focussed entirely on rapidly developing and broadening the understanding of this novel class of therapeutics. This work continues to strengthen the Company's intellectual property position; 4D Pharma now has 44 granted patents covering all the lead programmes. 

The research team continues to mine 4D Pharma's library of bacterial strains to address new disease areas using the Company's proprietary platform, MicroRx. The team is also working to gain greater insight and understanding of the mechanisms of action across the pipeline.

This year the Company established 4D Pharma Cork Limited via the acquisition of Tucana Health Limited. 4D Pharma Cork will build on the expertise of the APC Microbiome Institute at University College Cork ("APC") to develop a diagnostic platform using microbiome signatures allowing stratification of patient populations.

In addition to the internal research conducted by 4D Pharma, where the Company does not have the technical capability in-house, it continues to work closely with world-leading academic institutions, collaborating with Baylor College of Medicine and also with the APC. 

The collaboration with the APC is investigating the role of gut bacteria in the development, evolution and maintenance of the central nervous system. Using bacteria selected via the MicroRx platform, the APC is investigating the efficacy of live biotherapeutics in pre-clinical models associated with disorders of the central nervous system.

During the pre-clinical development of Blautix, and as reported in January 2015, 4D Pharma developed humanised germ-free pre-clinical models. This work showed that transplantation of IBS patient microbiome, in a germ-free environment, led to the development of IBS symptoms in the model, providing a unique environment to study the effect Blautix had on the symptoms caused by the IBS patient microbiome. This allowed 4D Pharma to gain a greater insight into the potential efficacy of Blautix, enabling the Company to refine the trial design of, and develop markers for, the Blautix trial. 

Over the last 12 months 4D Pharma has expanded this work, developing a dedicated germ-free facility with our partners at Baylor College of Medicine. The set-up of this facility is now complete, and the Company looks forward to beginning investigation of pre-clinical models relevant to both our pipeline and also new disease areas. 

Financial results

The consolidated loss on ordinary activities attributable to the owners of the parent undertaking of £4.6m for the six months ended 30 June 2016 is in line with expectations. 

 

 

 

David Norwood	Duncan Peyton
Chairman	Chief Executive Officer
29 September 2016	29 September 2016

 

 

 

 

 

Condensed Consolidated Statement of Comprehensive Income

For the six months ended 30 June 2016

	Note:	Unaudited six months ended 30 June 2016	Audited year to 31 December 2015	Unaudited six months ended 30 June 2015
		£'000s	£'000s	£'000s
Research and development costs		(4,060)	(6,895)	(3,032)
Operating expenses		(1,773)	(3,615)	(1,434)
Operating loss		(5,833)	(10,510)	(4,466)
Finance income		353	451	191
Loss before tax		(5,480)	(10,059)	(4,275)
Taxation	3	897	2,328	-
Loss for the period and total comprehensive income from the period		(4,583)	(7,731)	(4,275)
Loss for the period and total comprehensive income from the period attributable to:
Owners of the parent undertaking		(4,583)	(7,547)	(4,091)
Non-controlling interests		-	(184)	(184)
Loss for the period and total comprehensive income from the period		(4,583)	(7,731)	(4,275)
Loss per share for the period:
Basic & diluted	4	(7.07)p	(12.62)p	(6.93)p

 

 

 

Condensed Consolidated Statement of Financial Position

As at 30 June 2016

		Unaudited six months ended 30 June 2016	Audited year to 31 December 2015	Unaudited six months ended 30 June 2015
		£'000s	£'000s	£'000s
Assets
Non-current assets
Property, plant and equipment		3,958	1,115	584
Intangible assets		13,316	6,171	6,213
		17,274	7,286	6,797
Current assets
Inventories		-	28	98
Trade and other receivables		2,902	2,013	255
Taxation receivables		2,525	2,623	172
Short-term investments and cash on deposit		73,611	83,664	42,128
Cash and cash equivalents		1,836	1,777	19,348
		80,874	90,105	62,001
Total assets		98,148	97,391	68,798
Current liabilities
Trade and other payables		2,226	4,309	1,779
		2,226	4,309	1,779
Non-current liabilities
Financial liabilities		3,203	-	-
Deferred tax		628	385	385
		3,831	385	385
Total liabilities		6,057	4,694	2,164
Net assets		92,091	92,697	66,634
Capital and reserves
Share capital		162	161	151
Share premium		105,909	102,003	72,501
Merger reserve		958	958	958
Other reserve		(864)	(864)	(864)
Share-based premium reserve		77	7	-
Retained earnings		(14,151)	(9,568)	(6,112)
Total equity		92,091	92,697	66,634

 

Approved by the Board and authorised for issue on 29 September 2016.

 

Duncan Peyton

Director

Condensed Consolidated Statement of Changes in Equity

For the six months ended 30 June 2016

			Share based				Non
	Share	Share	payment	Merger	Other	Retained	Controlling	Total
	capital	premium	reserve	reserve	reserve	earnings	interest	equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 January 2015	130	38,259	-	958	-	(2,021)	(278)	37,048
Issue of share capital (net of expenses)	21	34,242	-	-	-	-	-	34,263
Acquisition of minority interest	-	-	-	-	(864)	-	462	(402)
Total transactions with owners recognised in equity	21	34,242	-	-	(864)	-	462	33,861
Loss and comprehensive income for the period	-	-	-	-	-	(4,091)	(184)	(4,275)
At 30 June 2015	151	72,501	-	958	(864)	(6,112)	-	66,634
Issue of share capital (net of expenses)	10	29,502	-	-	-	-	-	29,512
Total transactions with owners recognised in equity	10	29,502	-	-	-	-	-	29,512
Loss and comprehensive income for the period	-	-	-	-	-	(3,456)	-	(3,456)
Issue of share-based compensation	-	-	7	-	-	-	-	7
At 31 December 2015	161	102,003	7	958	(864)	(9,568)	-	92,697
Issue of share capital (net of expenses)	1	3,906	-	-	-	-	-	3,907
Total transactions with owners recognised in equity	1	3,906	-	-	-	-	-	3,907
Loss and comprehensive income for the period	-	-	-	-	-	(4,583)	-	(4,583)
Issue of share-based compensation	-	-	70	-	-	-	-	70
At 30 June 2016	162	105,909	77	958	(864)	(14,151)	-	92,091

 

 

Condensed Consolidated Cash Flow Statement

For the six months ended 30 June 2016

	Unaudited six months ended 30 June 2016	Audited year to 31 December 2015	Unaudited six months ended 30 June 2015
Cash flows from operating activities:	£'000s	£'000s	£'000s
Results after taxation	(4,583)	(7,731)	(4,275)
Adjustments for:
Depreciation of property, plant and equipment	134	143	59
Amortisation of intangible assets	101	110	53
Finance income	(353)	(451)	(191)
Disposal proceeds from property, plant and equipment	-	2	-
Exchange rate movement on financial liabilities	77	-	-
Share-based compensation	70	7	-
Cash flows from operations before movements in working capital	(4,554)	(7,920)	(4,354)
Changes in working capital:
Decrease in inventories	28	87	17
(Increase)/decrease in trade and other receivables	(457)	(1,375)	185
(Increase) in taxation receivables	(197)	(2,389)	(22)
(Decrease)/increase in trade and other payables	(2,081)	2,524	(6)
Cash outflow from operating activities	(7,261)	(9,073)	(4,180)
Cash flows from investing activities:
Purchase of property, plant and equipment	(1,089)	(845)	(226)
Purchase of software and other intangibles	(243)	(14)	-
Acquisition of non-controlling interest	-	(402)	(402)
Cash consideration in relation to acquisition of Biomar assets and business	(1,615)	-	-
Interest received	214	170	191
Monies received back from/(placed on) deposit	10,053	(80,657)	(39,121)
Net cash inflow/(outflow) from investing activities	7,320	(81,748)	(39,558)
Cash flows from financing activities:
Proceeds from the issues of ordinary share capital	-	64,751	34,750
Expenses on issue of shares	-	(976)	(487)
Net cash inflow from financing activities	-	63,775	34,263
Increase/(decrease) in cash and cash equivalents	59	(27,046)	(9,475)
Cash and cash equivalents at the start of period	1,777	28,823	28,823
Cash and cash equivalents at the end of the period	1,836	1,777	19,348

 

 

 

Notes to the Interim Financial Report

For the six months ended 30 June 2016

1. Basis of preparation

 

The Group's half-yearly financial information, which is unaudited, consolidates the results of 4D pharma plc and its subsidiary undertakings up to 30 June 2016. The Group's accounting reference date is 31 December. 4D pharma plc's shares are quoted on the AIM Market of the London Stock Exchange (AIM).

The Company is a public limited liability company incorporated and domiciled in the UK. The consolidated financial information is presented in round thousands of Pounds Sterling (£'000).

The financial information contained in this half-yearly financial report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. It does not therefore include all of the information and disclosures required in the annual financial statements.

The financial information for the six months ended 30 June 2015 and 30 June 2016 is unaudited.

Full audited financial statements of the Group in respect of the period ended 31 December 2015, which received an unqualified audit opinion and did not contain a statement under section 498(2) or (3) of the Companies Act 2006, have been delivered to the Registrar of Companies.

The accounting policies used in the preparation of the financial information for the six months ended 30 June 2016 are in accordance with the recognition and measurement criteria of International Financial Reporting Standards as adopted by the European Union ('IFRS') and are consistent with those which will be adopted in the annual financial statements for the year ending 31 December 2016.

Whilst the financial information included has been prepared in accordance with the recognition and measurement criteria of IFRS, the financial information does not contain sufficient information to comply with IFRS.

4D pharma plc has not applied IAS 34, Interim Financial Reporting, which is not mandatory for UK AIM listed Groups, in the preparation of this interim financial report.

2. Going concern

 

Having prepared management forecasts and made appropriate enquiries, the Directors are satisfied that the Group has adequate resources for the foreseeable future as the Group is in the start-up stage of its business life cycle. Accordingly they have adopted the going concern basis in preparing the financial information.

 

3. Taxation

 

 

	Unaudited six months ended 30 June 2016	Audited year to 31 December 2015	Unaudited six months ended 30 June 2015
	£'000s	£'000s	£'000s
Current income tax
Total current income tax	897	1,398	-
Adjustment in respect of prior years	-	930	-
	897	2,328	-

 

 

4. Loss per ordinary share

 

Basic and diluted

	Unaudited six months ended 30 June 2016	Audited year to 31 December 2015	Unaudited six months ended 30 June 2015
	£'000s	£'000s	£'000s
Loss attributable to equity holders of the parent	(4,583)	(7,547)	(4,091)
Weighted average number of shares:
Ordinary shares in issue	64,791,053	59,823,755	59,031,215
Basic and diluted loss per share (pence)	(7.07)	(12.62)	(6.93)

 

The loss and the weighted average number of shares used for calculating the diluted loss per share are identical to those for the basic loss per share. This is because the outstanding share options would have the effect of reducing the loss per share and would therefore not be dilutive under IAS 33 Earnings per Share.

 

5. Acquisitions

During the six months to 30 June 2016 the following acquisitions were made:

a) On 10th February 2016 4D acquired the entire issued share capital of Tucana Health Limited ("Tucana") for an initial consideration of €4 million which was satisfied by the issue of 410,603 shares in 4D at a price per share of £7.55. Tucana is a start-up company from the University of Cork and was founded by Prof Fergus Shanahan and Prof Paul O'Toole to investigate the use of microbiome signatures to aid the diagnosis and treatment of diseases including those targeted by 4D. Initially, the focus will be on work on the diagnosis and patient stratification for Irritable Bowel Syndrome. Longer term the company will focus on building a diagnostic platform across multiple disease areas mirroring the programmes being developed by 4D's MicroRx platform. On completion of further technical and clinical milestones a further consideration of up to €8m will become due which will be satisfied by the issue of up to 1 million additional shares in 4D. An estimate of the contingent consideration has been provided in relation to this acquisition and is detailed in note 6.

b) On 8th April 2016 4D Pharma plc acquired the production assets of Biomar, S.A ("Biomar") via 4D Pharma Leon S.L.U a newly incorporated Spanish subsidiary ("4D Léon") . As part of the transaction 13 of the Biomar staff moved over to 4D Léon. The consideration for the transaction was an initial €3 million on completion of which €2 million was paid in cash and €1 million satisfied by the issue of 82,349 4D Pharma plc shares at a price per share of £9.805. In addition a further €3 million will become payable in cash upon GMP certification in respect of the production of live biotherapeutics at the Léon premises which is accounted for as a deferred consideration under Financial liabilities in the Statement of Financial Position as at 30 June 2016. See note 7 for more details on this acquisition.

 

6. Acquisition of Tucana Health Limited

Subsidiary acquired
Year	Principal activity	Date of	Proportion	Consideration
		acquisition	of voting
			equity
			interests
			acquired
			(%)	£'000
2016	A start-up company investigating the use of microbiome signatures to aid the diagnosis and treatment of diseases	10th February 2016	100	3,897
Consideration:				£'000
	Initial share consideration (including £93k stamp duty)			3,194
	Estimated contingent consideration to be satisfied in shares			985
	Discounting of estimated future cash flows			(282)
	Estimated total consideration on acquisition			3,897
Provisional fair value of assets acquired and liabilities recognised at the date of acquisition
	Non Current Assets			£'000
	Intellectual property			1,943
	Non Current Liabilities
	Deferred tax on acquisition			(243)
	Provisional fair value of identifiable net assets acquired			1,700
Provisional goodwill arising on acquisition				£'000
	Estimated consideration transferred			3,897
	Less: provisional fair value of identifiable net assets acquired			(1,700)
	Provisional goodwill arising on acquisition			2,197

 

The above provisional fair values are subject to a third party fair valuation of the assets on acquisition which is currently being undertaken. The contingent consideration is based on certain milestone related conditions in respect of the development of the diagnostic tool. The deferred contingent consideration in the table above is based on an estimate of the likelihood of success of the development of the product using generally accepted success rates for pharmaceutical clinical trials.

 

7. Acquisition of Biomar

Subsidiary acquired
Year	Principal activity	Date of	Proportion	Consideration
		acquisition	of voting
			equity
			interests
			acquired
			(%)	£'000
2016	Microbial fermentation	8th April 2016	100	4,845
Consideration:				£'000
	Initial cash consideration			1,615
	Initial share consideration			807
	Deferred consideration to be settled in cash			2,423
	Total consideration on acquisition			4,845
Provisional fair value of assets acquired and liabilities recognised at the date of acquisition
	Non Current Assets			£'000
	Property, plant and equipment			1,887
	Intangible assets			4
	Provisional fair value of identifiable net assets acquired			1,891
Provisional goodwill arising on acquisition				£'000
	Consideration			4,845
	Less: provisional fair value of identifiable net assets acquired			(1,891)
	Provisional goodwill arising on acquisition			2,954

 

The above provisional fair values are subject to a third party fair valuation of the assets on acquisition which is currently being undertaken.

 

8. Share capital

	Ordinary	Share	Share
	shares	capital	premium	Total
	Number	£'000	£'000	£'000
As at 1 January 2015	52,092,119	130	38,259	38,389
Shares issued on 10 February 2015	8,475,610	21	34,729	34,750
Expenses of placing on 10 February 2015	-	-	(487)	(487)
As at 30 June 2015	60,567,729	151	72,501	72,652
Shares issued on 11 December 2015	3,797,469	10	29,991	30,001
Expenses of placing on 11 December 2015	-	-	(489)	(489)
As at 31 December 2015	64,365,198	161	102,003	102,164
Shares issued on 10 February 2016 on acquisition of Tucana Health Limited	410,603	1	3,099	3,100
Shares issued on 8 April 2016 on acquisition of Biomar	82,349	0	807	807
As at 30 June 2016	64,858,150	162	105,909	106,071

 

 

 

9. Interim financial report

 

A copy of this interim financial report will be available on the Company's website at www.4dpharmaplc.com

 

This information is provided by RNS

The company news service from the London Stock Exchange