Oxford Biodyn Regulatory News (OBD)

10 December 2019

Oxford Biodynamics Plc

("OBD" or the "Company" and, together with its subsidiaries, the "Group")

FINAL RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2019

AND

NOTICE OF ANNUAL GENERAL MEETING

Oxford BioDynamics Plc (AIM: OBD), a biotechnology company focused on the discovery and development of epigenetic biomarkers based on regulatory genome architecture, for use within the pharmaceutical and biotechnology industry, today announces its final results for the year ended 30 September 2019.

Corporate and operational highlights

§ Continued development of EpiSwitch™ biomarkers for use in immuno-oncology (IO), including signing of fifth commercial collaboration.

§ Participation in amyotrophic lateral sclerosis (ALS) biomarker study sponsored by Mitsubishi Tanabe Pharma America; first patient enrolled post period end.

§ Joined trial with Imperial College London evaluating novel methods of screening for prostate cancer.

§ Collaborated with Casa Sollievo della Sofferenza to develop a panel of epigenetic biomarkers for the diagnosis of Autistic Spectrum Disorder.

§ Study identifying epigenetic changes for monitoring disease progression in Huntington's disease published in Faculty of 1000 Research.

§ Strengthened the OBD Board and team:

o Appointed Dr David Holbrook and Dr Peter Pack as Non-Executive Directors.

o Expanded into the US by forming subsidiary and appointing Glen Ferguson to lead OBD's business development activities in the region.

o Appointed Dr Bartu Ahiska as Senior Vice President (Commercial).

§ Awarded the prestigious Queen's Award for Enterprise: Innovation in April 2019.

§ Expanded leading IP portfolio covering the EpiSwitch™ platform.

§ Completed expansion of UK and Malaysian R&D facilities.

Financial highlights

§ Revenue of £0.9m (FY18: £1.2m).

§ Operating loss of £3.7m (FY18: £2.6m).

§ Cash and term deposits of £15.5m as at 30 September 2019 (FY18: £18.3m).

§ Investment of US$540,000 into Holos Life Sciences.

Post-period end

§ Presentation of poster on use of EpiSwitch™ in IO, co-authored with EMD Serono, Pfizer and the Mayo Clinic.

§ Appointment of Professor Iain McInnes to OBD's Scientific Advisory Board.

Commenting on the results, Christian Hoyer Millar, Chief Executive Officer of Oxford BioDynamics, said: 

"2019 has seen OBD deliver on several important achievements. Not only have we signed additional collaboration agreements, but we have also seen EpiSwitch™ being used in high profile UK and US clinical trials. We believe there is significant potential for EpiSwitch™ biomarkers to benefit a range of diseases, but we have been particularly pleased with the progress we have announced in IO. We have continued to gain traction in this important, growing market demonstrating the value we add to the healthcare system.

We have invested significantly in strengthening our management team and Board, enhancing our presence in the US. Furthermore, the expansion of our ISO-certified R&D facilities in the UK and Malaysia has been completed, allowing us to further scale the use of our EpiSwitch™ technology.

We are well placed to take advantage of the opportunities that this growing sector is offering into 2020 and beyond, and we look forward to updating the market on our progress." 

Notice of Annual General Meeting

The Company's Annual General Meeting will be held at The Kloppenberg Room, Cohen Quad, Exeter College, Walton Street, Oxford, OX1 2HE on 20 March 2020 at 11.00 am.

The information included in this announcement is extracted from the Annual Report, which was approved by the Directors on 9 December 2019. Defined terms used in the announcement refer to terms as defined in the Annual Report unless the context otherwise requires. This announcement should be read in conjunction with, and is not a substitute for, the full Annual Report.

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

For further details please contact:

Notes for Editors

About Oxford BioDynamics Plc

Oxford BioDynamics Plc (AIM: OBD) ("Oxford BioDynamics") is a revenue‐generating biotechnology company focused on the discovery and development of epigenetic biomarkers for use within the pharmaceutical and biotechnology industry.

The Company's award-winning, proprietary technology platform, EpiSwitch™, aims to accelerate the drug discovery and development process, improve the success rate of therapeutic product development and take advantage of the increasing importance of personalised medicine.

In particular, EpiSwitch™ can reduce time to market, failure rates and the costs at every stage of drug discovery. Additionally, the technology provides significant insights into disease mechanisms for drug discovery and product re‐positioning programmes, and enables the personalisation of therapeutics for patients in the context of challenging pricing environments where improved clinical outcomes are critical.

In April 2019, Oxford BioDynamics received the Queen's Award for Enterprise: Innovation. The Queen's Awards for Enterprise are the most prestigious awards for UK businesses.

Oxford BioDynamics is headquartered in the UK, and listed on the London Stock Exchange's AIM under the ticker "OBD". For more information please visit www.oxfordbiodynamics.com.

This announcement includes "forward-looking statements" which include all statements other than statements of historical facts, including, without limitation, those regarding the Group's financial position, business strategy, plans and objectives of management for future operations, and any statements preceded by, followed by or that include forward-looking terminology such as the words "targets", "believes", "estimates", "expects", "aims", "intends", "will", "can", "may", "anticipates", "would", "should", "could" or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Group's control that could cause the actual results, performance or achievements of the Group to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Group's present and future business strategies and the environment in which the Group will operate in the future. These forward-looking statements speak only as at the date of this announcement. The Group expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in this announcement to reflect any change in the Group's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. As a result of these factors, readers are cautioned not to rely on any forward-looking statement.

CHIEF EXECUTIVE OFFICER'S REVIEW

Introduction

OBD made important progress during the year ended 30 September 2019, strengthening our commercial team and Board, receiving external validation of our EpiSwitch™ platform from commercial partners and other collaborators, including first-time inclusion in prospective clinical trials in the US and UK. We also completed the expansion of our ISO-certified R&D facilities in the UK and Malaysia and the integration of all aspects of EpiSwitch™ sample processing and analysis in-house.

In addition to our work with commercial partners, we have continued to focus on proprietary research in increasingly diverse high-value areas, further expanding our intellectual property (IP) portfolio.

In April 2019, we were privileged to receive the Queen's Award for Enterprise: Innovation.

Commercial and scientific developments

Validated EpiSwitch™ biomarkers have now been developed for a wide range of diagnostic and prognostic applications, demonstrating high efficacy in stratifications in a wide range of indications. These notably performed extremely strongly against other conventional, invasive, biopsy-based methodologies. OBD's technology offers commercial partners efficient patient profiling and disease evaluation and can help clinicians make informed decisions on preferred treatment, all based on non-invasive liquid biopsy (a small volume blood test). The potential benefits of such actionable patient stratifications are significant, as they help to implement precision medicine approaches in health care (avoiding therapies likely to fail) and to de-risk drug development for therapeutic companies (identifying the right patients for enrolment to clinical trials).

This year OBD has provided pharmaceutical and biotechnology companies with compelling evidence of the potential for EpiSwitch™ biomarkers to benefit IO drug development programmes and cancer patients, by enabling clinicians to identify patients who are unlikely to respond to IO treatment, across a wide spectrum of indications and treatment combinations, and helping to match potential responders to the right specific IO drugs.

IO represents an important, growing, competitive market, with regulatory pressure and an acknowledged need for actionable patient stratifications: some patients show highly efficacious response to IO treatment, but many current IO therapies have limited utility because of low response rates and significant subsets of patients who do not show clinically meaningful responses to treatment. OBD's developing contribution to the field was highlighted at the beginning of this financial year in November 2018, when the Company announced its fifth commercial collaboration in IO, with a major US-based biopharmaceutical company.

In May 2019, the Company presented on "EpiSwitch™ Biomarkers: Practical Applications for Predictive, Prognostic and Diagnostic Patient Stratifications" at the China BIO Partnering Forum in Shanghai. The presentation focused on validated EpiSwitch™ biomarker applications which have demonstrated high efficacy in predictive, prognostic and diagnostic patient stratifications for lung, haematological, prostate, thyroid and skin cancers. Specifically, the results demonstrated that the baseline predictive stratifications by EpiSwitch™ for response to immuno-checkpoint inhibitors (a common type of IO therapeutic) act as excellent surrogates for standard primary endpoints used in clinical trials, such as progression free survival.

Post period end, in November 2019, OBD presented two posters co-authored with biomarker, translational and clinical teams from EMD Serono and Pfizer, and clinical experts from the Mayo Clinic at the Society for Immunotherapy of Cancer (SITC) annual meeting in National Harbor, Maryland, USA. These posters provided important external validation of the efficacy of EpiSwitch™ biomarkers in the field of IO. The OBD programme presented at SITC focused on the development and validation of predictive biomarkers and showed results from patients with non-small cell lung cancer (NSCLC) or melanoma who had been treated under common IO therapeutic regimes, using avelumab (an anti-PD-L1 antibody), pembrolizumab (an anti-PD-1 antibody), or pembrolizumab in combination with chemotherapy, and generated models to differentiate responders from non-responders.

The results showed that IO biomarkers developed with EpiSwitch™ allowed robust exclusion of non-responders across indications and combinations (identifying patients likely not to respond to any IO therapy), and provided asset-specific classifiers with high positive predictive value (identifying likely responders to a particular drug for a particular indication). The ability to enrich clinical trials by including the right patients based on their genomic architecture could reduce the risk, cost and time to market for therapeutic development programmes and could be a 'game-changer' in IO, enabling drug development programmes to advance with smaller patient cohorts. There is now a compelling rationale for conducting a blinded, comparator arm test to differentiate between the prognostic (likely overall outcome) and predictive (likely response to a particular drug) values of the EpiSwitch™ biomarkers identified in this work.

This year we announced OBD's participation in the REFINE-ALS and PROSTAGRAM studies. This is the first time the Group's EpiSwitch™ biomarkers have been included in prospective clinical trials, marking recognition by industry experts of the potential clinical utility of EpiSwitch™.

·; The REFINE-ALS study is led by Massachusetts General Hospital (MGH) Neurological Clinical Research Institute (NCRI) and sponsored by Mitsubishi Tanabe Pharma America (MTPA). It is designed to identify and measure specific biomarkers to act as a complementary diagnostic for people being treated with RADICAVA® (edaravone) for ALS. OBD's EpiSwitch™ biomarkers will be assessed alongside other biomarker modalities, as well as clinical assessments. The recruitment of the first patient (of a total of up to 300) to the trial was announced by MTPA in October 2019.

·; The aim of the PROSTAGRAM trial is to assess the role of a number of diagnostic approaches, including magnetic resonance imaging (MRI), multiparametric ultrasound and OBD's EpiSwitch™ assay to screen for prostate cancer. The EpiSwitch™ assay for prostate cancer is based on six epigenetic systemic blood-based markers and was developed in collaboration with Mr Mathias Winkler, Consultant Urological Surgeon at Charing Cross Hospital, Imperial College Healthcare NHS Trust and Professor Dmitry Pshezhetskiy, Norwich Medical School, University of East Anglia. We completed our analysis of samples from this trial in our laboratory in the second half of the financial year and await overall findings, which are expected to be reported in early 2021.

OBD has continued to focus on carrying out proprietary research in several disease areas. During the period the Group published results for the first prognostic biomarkers for progression of Huntington's disease (F1000Research, 2018, 7:175), and biomarker stratifications with high sensitivity and predictive values for diagnosis of thyroid cancer (Surgery, Vol 165, Issue 1, in collaboration with NorthShore University HealthSystem). OBD was also invited to contribute a chapter to the "Handbook of Biomarkers and Personalized Medicine", published in May 2019.

Since 30 September 2018, OBD has presented at a number of conferences, including the Cantor Fitzgerald Global Healthcare Conference (New York NY), 4th Annual Biomarker and Companion Diagnostics Conference (San Diego, CA), China BIO 2019 (Shanghai, China), the Nordic Life Science Days 2019 Health Tech event (Malmö, Sweden), the Society for Immunotherapy of Cancer (SITC) 34th Annual Meeting (National Harbor, MD) and 10th Malaysian Endocrine and Metabolic Society (MEMS) Annual Congress (Kuala Lumpur, Malaysia), where scientists from OBD's reference laboratory in Malaysia presented on the successful development and validation of powerful progressive biomarkers in type 2 diabetes mellitus (T2DM), demonstrating how OBD's EpiSwitch™ technology could assist experts in endocrinology in the management of T2DM and pre-diabetes.

As announced in December 2018, the Group exercised a pre-existing option to acquire, for a nominal amount, a 30% shareholding in Holos Life Sciences Pte Ltd ("Holos"), a company developing biomarkers to enable non-pharmaceutical enhancement of health, wellness and performance in humans and animals. OBD also participated in Holos' interim fundraising, investing US$540,000 (£422,000) in that entity. OBD and Holos have entered into exclusive licensing agreements in both human and equine fitness, offering the Group a combination of upfront and milestone fees and sales-based royalties. In January 2018 the Company also announced a collaboration with Holos to develop non-invasive epigenetic biomarkers associated with sports-related concussions suffered by professional sportspersons, and research on this project will begin as samples become available during the coming year.

Strengthened team and Board

We significantly expanded and strengthened our commercial team with the announcement of two key appointments: Glen Ferguson, who joined in March 2019 as Senior Vice President (USA), to lead our business development activity in the world's largest healthcare market and, in June 2019, Dr Bartu Ahiska, who joined the Company as Senior Vice President (Commercial), to spearhead the commercialisation of the Group's EpiSwitch™ technology platform. Glen Ferguson's background is in licensing and contract negotiation, developing strategic alliances, and expertise in the field of companion diagnostics, gained in a life sciences industry career spanning over 25 years. Dr Bartu Ahiska is a technology entrepreneur with experience in several fields including medical engineering, biologics, computing and graphics. Led by Glen, our business development team has been making excellent progress with several US-based customers and collaborators.

The OBD plc Board was joined by two new Non-Executive Directors during the year, as Dr David Holbrook and Dr Peter Pack joined us in April 2019. Both David and Peter have extensive life sciences sector experience and each of them has rapidly developed a strong understanding of the Group and its business.

Also in April 2019, Stephen Diggle (founder and Chief Executive Officer of Vulpes Investment Management, a significant investor in OBD since 2008) took on the role of Non-Executive Chairman, on the retirement from the Board of former Non-Executive Chairman, David Williams. Alison Kibble left her position as Non-Executive Director in May 2019, having served the Company since 2007. We thank both David and Alison for their commitment to OBD and wish them both every success in the future.

After the period end, in November 2019, we were pleased to announce the appointment of Professor Iain McInnes, Professor of Experimental Medicine at Glasgow University, to our Scientific Advisory Panel. Professor McInnes has a major interest in the pathogenesis of rheumatoid arthritis, psoriatic arthritis and their related co-morbidities. He leads a translational science programme in which state-of-the-art cellular and molecular biology techniques are applied to elucidate the mechanisms underlying the perpetuation of a range of chronic diseases, seeking to build precision medicine approaches and new therapeutics thereafter.

OBD has previously collaborated with Professor McInnes and members of his group in the development and assessment of EpiSwitch™ biomarkers to predict the response of patients with rheumatoid arthritis to the drug methotrexate, work which was published in the Journal of Translational Medicine in March 2018.

IP portfolio development

We have continued to develop our broad IP portfolio and now have patents filed or granted in 13 separate families, with others likely to be filed in the next few months. OBD's extensive IP portfolio covers both our own platform technology and a wide range of indication- or application-specific cases. Over the last year, we have developed valuable IP and know-how in internal, proprietary research and development projects as well as through work with commercial partners.

Summary and outlook

It has been a year of strong progress for the Company. We have entered into multiple new research collaborations and our EpiSwitch™ platform has been used in high profile UK and US clinical trials with world leading organisations in prostate cancer and ALS.

We continue to gain recognition in the IO space and believe our EpiSwitch™ platform could have a transformational impact, by reducing the clinical development risk, cost and time to market for these important new therapeutics by enabling drug development programmes to advance with smaller more defined patient cohorts.

We have strengthened our Board and team during the period and have continued to drive the development of new and significant commercial relationships in the US market. The expanded commercial team has already begun to see positive results in our interactions with existing and new potential customers.

We expect to continue to expand our commercial and senior management team over the coming months as we seek to capitalise on opportunities to commercialise the EpiSwitch™ platform, particularly in the US. 

Finally, on behalf of the Board, I would like to thank our shareholders for their support over the last year and I look forward to reporting considerable further progress in 2020.

Christian Hoyer Millar

Chief Executive Officer

FINANCIAL REVIEW

Overview

During the year ended 30 September 2019, the Group focused on developing contracts with global pharmaceutical and biotechnology companies and other commercial partners, collaborating with research institutions, investing in internal proprietary R&D projects, strengthening its Board and commercial team and further developing its IP portfolio.

Financial performance

Revenue in the year ended 30 September 2019 was £0.91m (2018: £1.19m), comprising services fees received for commercial biomarker projects with pharmaceutical, biotechnology and other commercial companies, services fees generated from collaborations with research institutions and licence fees from agreements for the use of biomarkers.

Operating expenses (excluding share option charges) were £4.4m in the year ended 30 September 2019 (2018: £3.80m). Broadly, the £0.6m increase in operating expenses resulted from £0.43m in additional staff costs (reflecting the impact of newly recruited senior staff, a full year's cost for staff who joined us toward the end of the prior year and other pay increases), £0.34m in additional general and other administrative costs, and a £0.05m increase in depreciation and amortisation, offset by a reduction of £0.22m in non-staff R&D costs (resulting from a combination of more efficient laboratory processes and the timing of project work for customers). This measure of operating expenses is quoted because it provides a better indicator of the costs of the Group's continuing operations. Share option charges are non-cash expenses that do not necessarily correlate with the Group's underlying cost base. Share option charges are shown in the consolidated income statement.

Other operating income in the year was £0.04m (2018: £0.20m), arising from OBD staff time and premises-related costs charged to other entities. In the prior year this figure mainly comprised grant income from Innovate UK, supporting the Group's ALS biomarker research and development programme.

Operating loss for the Group was £3.72m (2018: £2.60m).

Financial income of £0.34m (2018: £0.18m) related to interest receivable and foreign exchange gains.

The taxation credit of £0.59m in the year (2018: £0.47m) represents tax relief on research and development expenditure during the period of £0.61m (2018: £0.47m), offset by a small foreign tax charge. The Group has not recognised any deferred tax assets in respect of trading losses arising in the current or prior financial periods.

Net loss for the year was £2.80m (2018: £1.95m). Loss per share was 3.0 pence (2018: 2.2 pence).

Financial position

Cash and term deposits at 30 September 2019 totalled £15.5m (2018: £18.3m), reflecting modest outflow during the year, offset by positive exchange movements on non-sterling deposits. The Group rebalanced its holdings of non-sterling cash shortly before the year end, converting some of its excess US dollar balances to sterling.

Total assets at 30 September 2019 were £18.79m (2018: £20.94m), reflecting investment in tangible and intangible fixed assets, the Group's investment in Holos Life Sciences and a modest increase in inventory as well as reductions in cash and debtors over the year.

Total liabilities increased to £1.20m at 30 September 2019 (2018: £0.89m) driven mainly by higher contract liability (deferred income) balances arising from cash received in advance from customers than was the case in the prior year.

Cash flow

The Group has continued to exercise close control over cash expenditure during the year. Net cash used in operating activities for the year ended 30 September 2019 was £2.27m (2018: £1.94m). Net cash used in investing activities was £11.19m (2018: £0.68m): this included an increase in term deposits with an initial maturity of between three and twelve months of £10.3m as well as the Group's investment in Holos Life Sciences and investment in intangible and tangible fixed assets, offset by interest receipts. Net cash generated by financing activities was £0.2m, received on the exercise of share options (2018: £10.0m, principally arising from the 5% investment in the Company by GL Capital in August 2018). Overall, there was a net decrease in cash and term deposits for the year ended 30 September 2019 of £2.79m (2018: increase of £7.48m) including exchange gains on opening non-sterling denominated deposits of £0.14m (2018: £0.07m).

Paul Stockdale

Chief Financial Officer

CONSOLIDATED INCOME STATEMENT

YEAR ENDED 30 SEPTEMBER 2019

STATEMENT OF COMPREHENSIVE INCOME

YEAR ENDED 30 SEPTEMBER 2019

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 SEPTEMBER 2019

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

CONSOLIDATED STATEMENT OF CASH FLOWS

YEAR ENDED 30 SEPTEMBER 2019

NOTES TO THE FINANCIAL INFORMATION

1. Corporate information

Oxford Biodynamics plc is a public limited company incorporated United Kingdom, whose shares were admitted to trading on the AIM market of the London Stock Exchange on 6 December 2016. The Company is domiciled in the United Kingdom and its registered office is 26 Beaumont Street, Oxford OX1 2NP. The registered company number is 06227084 (England & Wales).

The Group is primarily engaged in biomarker research and development.

2. Basis of the announcement

Basis of preparation

The final results for the year ended 30 September 2019 were approved by the Board of Directors on 9 December 2019. The final results do not constitute full accounts within the meaning of section 434 of the Companies Act 2006 but are derived from audited accounts for the year ended 30 September 2019 and the year ended 30 September 2018.

This announcement is prepared on the same basis as set out in the audited statutory accounts for the year ended 30 September 2019. The accounts for the years ended 30 September 2019 and 30 September 2018, upon which the auditors issued unqualified opinions, also had no statement under section 498(2) or (3) of the Companies Act 2006.

While the financial information included in this results announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards, as adopted by the European Union (EU) (IFRS), this announcement does not in itself contain sufficient information to comply with IFRS.

Reporting currency

The consolidated financial information of Oxford Biodynamics plc ("the Group") is presented in pounds Sterling (£), which is also the Company's functional currency.

Going concern

After making appropriate enquiries, the directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual report and consolidated financial statements. More details are provided in the annual report.

New accounting standards adopted for the first time in the financial statements for the year ended 30 September 2019

IFRS 15 'Revenue from Contracts with Customers'

IFRS 15 'Revenue from Contracts with Customers' and the related 'Clarifications to IFRS 15 Revenue from Contracts with Customers' (hereinafter referred to as 'IFRS 15') replace IAS 18 'Revenue', IAS 11 'Construction Contracts', and several revenue-related Interpretations. The new Standard has been applied retrospectively without restatement, with the cumulative effect of any initial application recognised as an adjustment to the opening balance of retained earnings at 1 October 2018. In accordance with the transition guidance, IFRS 15 has only been applied to contracts that were incomplete as at 1 October 2018.

The adoption of IFRS 15 has an effect on the method by which the Group determines the amount and timing of revenue to be recognised in respect of its contracts with its customers, which is set out in more detail in the accounting policies note in the audited statutory accounts.

Contracts with multiple performance obligations

Some of the Group's contracts include a variety of performance obligations, including licensing of technology, scientific research and supply of primers and reagents. Also, some of the Group's contracts are drafted so as to permit customers to exercise 'go / no-go' decisions which determine whether and how further research proceeds. Under IFRS 15, the Group must evaluate the separability of the promised services or goods based on whether they are 'distinct', meaning both that the customer benefits from the item either on its own or together with other readily available resources and the item is 'separately identifiable' (i.e. the Group does not provide a significant service integrating, modifying or customising it). The Group's existing contracts set out clearly the consideration attributable to each distinct element and therefore the process of determining separate performance obligations and the revenue that should be allocated to them is relatively straightforward.

Whilst IFRS 15 represents significant new guidance, no adjustment to timing or amount of revenue recognised by the Group in any year and therefore no adjustment to the opening balance of retained earnings at 1 October 2018 was necessary on the initial application of the Standard.

IFRS 9 'Financial Instruments'

IFRS 9 replaces IAS 39 'Financial Instruments: Recognition and Measurement'. It makes major changes to the previous guidance on the classification and measurement of financial assets and introduces an 'expected credit loss' model for the impairment of financial assets.

When adopting IFRS 9, the Group has applied transitional relief and opted not to restate prior periods. Any differences arising from the adoption of IFRS 9 in relation to classification, measurement and impairment are recognised in retained earnings.

At the date of initial application of IFRS 9, no reclassification of the Group's financial instruments was necessary.

More detail on the Group's accounting policies is provided in the audited statutory accounts.

Critical judgements in applying the Group's accounting policies

The following are the critical judgements that the Directors have made in the process of applying the Group's accounting policies and that have the most significant effect on the amounts recognised in the consolidated financial statements.

Revenue recognition

For revenue arising from the provision of research services, Management is satisfied that revenue has been recognised appropriately for the stage of the contracts at the reporting date based on reliable estimates. This requires management to estimate for each project the stage of completion at the reporting date based on an analysis of information from the laboratory-based team and analysis of progress towards performance obligations specified under the terms of customer contracts.

Valuation of investment in Holos Life Sciences Pte Ltd

During the period, the Group exercised its option to acquire a 30% shareholding in Holos Life Sciences (Singapore) Pte Ltd ("Holos"), a Singapore-based company which is not listed on any public exchange, for a nominal amount. The Group subsequently invested $540,000 in that entity as part of an interim fundraising. As at 30 September 2019, the Group owned 28.84% of Holos' issued share capital and the Group is determined to have acquired significant influence over its activities. Accordingly, Holos is accounted for as an associate undertaking, using the equity method (see note 9). To the extent that any goodwill is recognised in the carrying value of the investment, the Directors must assess this balance for indicators of impairment on at least an annual basis. The determination of the appropriate carrying value of the Group's holding in Holos requires the Directors to assess the fair value of its investment in Holos' business as at the balance sheet date. In making their judgement on the appropriate carrying value for the Group's investment in Holos, the Directors consider it likely that Holos will be able both i) to generate future sales revenue and profits through its planned business activity, which includes the commercialisation of non-clinical applications of the Group's technology and ii) to raise sufficient funds in the short-to-medium term to continue as a going concern until it becomes self-financing. This judgement may be subject to change in future in the light of Holos' performance and/or fundraising: if the Directors were to change their judgement, it is possible that the value of the Group's investment in Holos would be reduced, potentially to zero, through the recognition of an impairment charge in the income statement. The Directors will continue regularly to review the Group's investment in Holos for indicators of impairment and will update their judgement as necessary.

Operating lease commitments

The Group has entered into commercial property leases as a lessee of property, plant and equipment. The classification of such leases as operating or finance lease requires the Group to determine, based on an evaluation of the terms and conditions of the arrangements, whether it retains or acquires the significant risks and rewards of ownership of these assets and accordingly whether the lease requires an asset and liability to be recognised in the statement of financial position. The Group will adopt IFRS 16 'Leases', with effect from 1 October 2019.

3. Revenue

All revenue is derived from the Group's principal activity, biomarker research and development. Analysis of the Group's revenue by geography and pattern of revenue recognition is as follows:

4. Business segments

Products and services from which reportable segments derive their revenues

Information reported to the Group's Chief Executive (who has been determined to be the Group's Chief Operating Decision Maker) for the purposes of resource allocation and assessment of segment performance is focused on the sole service which Oxford BioDynamics sells. The Group's sole reportable segment under IFRS 8 is therefore that of biomarker research and development.

The Group's non-current assets, analysed by Geographical location were as follows:

Information about major customers

The Group's revenues for the periods covered by this report are derived from a small number of customers, several of which represent more than 10% of the revenue for the period. These are summarised below:

5. Loss for the year

Loss for the year has been arrived at after charging/(crediting):

6. Earnings per share

The calculation of the basic and diluted earnings per share is based on the following data:

*Potential ordinary shares are not treated as dilutive as the entity is loss making. 

7. Intangible fixed assets

Intangible assets not amortised during the period are patents not yet granted and assets that had not been brought into use by the year end. The Group and Company hold no intangible assets that are determined to have indefinite useful life.

8. Tangible fixed assets

9. Investment in associate undertaking

The Group has a 28.84% holding in Holos Life Sciences (Singapore) Pte Ltd ("Holos"), a Singapore-based company which is not listed on any public exchange. The Group's interest in Holos is accounted for using the equity method.

On 5 October 2018, the Company exercised a pre-existing option to acquire, for a nominal amount, a 30% shareholding in Holos. Subsequently, on 30 November 2018 the Company also participated in an interim fundraising by Holos, investing US$540,000 in that entity. Summarised financial information for Holos and a reconciliation with the carrying amount of the Group's investment are set out below:

Summarised statement of financial position of Holos Life Sciences (Singapore) Pte Ltd

Summarised income statement for Holos Life Sciences (Singapore) Pte Ltd

Goodwill is subject to review for impairment on at least an annual basis, as set out in the accounting policies note in the audited statutory accounts. Holos had no contingent liabilities as at 30 September 2019. The Group is not liable for any of Holos' liabilities.

10. Share capital

1 Shares unpaid at the prior year-end were allotted on the exercise of options. These shares were subject to a 'sale to cover' the required exercise price, contracted pre-year end but settled after the year end.

The Company has one class of ordinary shares which carry no right to fixed income.

During the year, the Company issued 53,633 shares on the exercise of options by current and former employees and advisors (2018: 1,030,469 shares). On 22 August 2018, the Company issued 4,688,000 ordinary shares of £0.01 to GL Capital Group for a price of 208p per share. On 4 December 2017, the Company issued 689,441 ordinary shares of £0.01 at nominal value on the exchange of warrants.

11. Share-based payments

Equity-settled share option scheme

In November 2016, the Company established an Enterprise Management Incentive ("EMI") share option scheme, under which options have been granted to certain employees, and a non-employee option scheme with similar terms, except that options granted under it do not have EMI status. EMI and non-EMI share options were also previously granted under a share option scheme established in October 2008 ("the 2008 Scheme"). The Company does not intend to grant any further options under the 2008 Scheme. All of the schemes are equity-settled share-based payment arrangements, whereby the individuals are granted share options of the Company's equity instruments, namely ordinary shares of 1 pence each.

The schemes include non-market-based vesting conditions only, whereby the share options may be exercised from the date of vesting until the 10th anniversary of the date of the grant. In most cases options vest under the following pattern: one-third of options granted vest on the first anniversary of the grant date; one-third on the second anniversary and one-third on the third anniversary.

The options outstanding as at 30 September 2019 have exercise prices in the range of £0.34 to £2.10.