Oncimmune Regulatory News (ONC)

This announcement contains inside information

for the purposes of the UK Market Abuse Regulation

28 February 2022

Oncimmune Holdings plc

("Oncimmune" or the "Company")

Interim Results

Increasing ImmunoINSIGHTS pipeline with penetration of top 10 global pharma

Accelerating US-driven momentum, as number ofImmunoINSIGHTS clients more than doubles year-on-year

ImmunoINSIGHTS set to become a market leader in autoantibody profiling segment by 2023, with forecast growth to 12% of market share

Oncimmune Holdings plc (AIM: ONC.L), the leading global immunodiagnostics group, today announces its unaudited interim results for the six months ended 30 November 2021 ("H1 FY2022").

Financial highlights

· Recognised revenue for the period was £1.43M (H1 2020: £1.83M) was affected by the easing of COVID-19 restrictions over the 2021 summer holiday period, as previously announced.

· Gross profit for the period was £0.96M (H1 2020: £1.41M).

· Administrative expenses were £4.05M (H1 2020: £2.88M) which reflect the planned expansion in our ImmunoINSIGHTS Dortmund facility and accelerated investment in our Commercial team, particularly in the US, in light of the increasing demand for ImmunoINSIGHTS services.

· Research & development expenses were stable at £0.67M (H1 2020: £0.62M).

· Loss after tax was £4.86M (H1 2020: £2.60M).

· Gross cash balance at the period end of £2.97M (H1 2021: £3.28M) and net debt at the period end of £5.39M (H1 2021: £7.22M), after investment including capacity growth. The Company drew down an additional €3.0M (c.£2.50M) of debt post period end to fund the acceleration in the expansion of the US-based Commercial team, serviceable by cash generation from ImmunoINSIGHTS.

Commercial and operational highlights (including post period)

ImmunoINSIGHTS

· Since launching in 2020 we have secured contracts with 5 of the top 10 global pharma companies which are expected to constitute c.70% of revenue for the financial year ending 31 May 2022 ("FY2022"). Most of these clients have multiple studies, with five separate programmes underway with the world's leading oncology company.

· The number of contracted clients has more than doubled year-on-year to 13, 3 of which are currently running multiple contracts each, and momentum has continued to accelerate post period end. The value and number of contracted orders and forecast pipeline expected to convert in the near-term continues to grow. In particular, there is increasing visibility from project extensions and additional contracts in other areas for existing clients.

· Existing customer contracts are being extended as planned and relationships with these customers are also expanding to include work in adjacent and separate therapeutic areas. Within this the number of customers engaged in multiple contracts is also increasing, pointing to the quality and impact value on therapeutic programmes we are able to deliver.

· During Q2 and Q3 FY2022 the Company substantially expanded its Commercial team from two with an additional five individuals hired in the US. The rate at which potential studies are moving through the pipeline and converting into contracts has increased markedly from Q2 FY2022 onwards, and we therefore expect near-term revenue growth to reflect this as new members of the team increase their productivity.

· The scaling up of the Company's Dortmund facility continued as planned during the period, with the hiring of bioinformaticians and experienced senior scientists to project manage contracts. We have also streamlined our operations to facilitate the rapid turnaround of proof-of-concept studies, which are often the gateway to larger follow-on contracts.

· New US office established at the Cambridge Innovation Center ("CIC"), Kendall Square in Boston, USA enables the ImmunoINSIGHTS Commercial team to be central to many of the Company's clients.

EarlyCDT® Lung

· iDx Lung1 programme ongoing, with 815 patients recruited to date in Southampton and Leeds.

· Successful real-world screening evaluation pilot with the Norfolk and Waveney Clinical Commissioning Group ("CCG") completed and final report expected in Q4 FY2022. Adoption of the EarlyCDT Lung test within this NHS CCG is expected in the second half of calendar 2022.

· A second pilot with an additional CCG screening over 2,000 patients is anticipated to commence in Q4 FY2022 which is also expected to lead to an ongoing contract.

· Sales revenues from Biodesix in the US are being underpinned by our commercial contract which provides minimum sales volumes.

Recent progress and FY2022 outlook

· The strength of our strategic ImmunoINSIGHTS relationship with our largest customer continued throughout the period and post period, and we are currently undertaking five separate projects across its group companies. Multiple contracts for existing customers is an increasing characteristic of our contracted revenue, particularly from our clients within the top 10 leading global pharma companies.

· The number of contract signings has accelerated from Q2 FY2022 and this momentum has continued throughout Q3 FY2022. Management now guide full year ImmunoINSIGHTS revenues to be not less than £6.0M.

· The contracts signed in FY2022 to date together with those expected to be signed before the end of this financial year underpins the Board's confidence in the prospects of the business beyond the current year, on which we aim to provide an update by the end of August 2022.

· On entering the next financial year (see below regarding year-end change), the Company expects to have materially improved revenue visibility, arising from contracts already signed, from extensions to existing contracts, and from existing clients with already identified studies in other therapeutic areas.

· The considerable growth in the Commercial team, with five members now based in the US, is expected to increase the commercial pipeline substantially throughout FY2023. The expansion in the commercial team headcount is also driving an increase in the pipeline and in the rate of conversion of the pipeline to contract.

· A recent market analysis commissioned from an independent strategy consultancy has sized the potential market for ImmunoINSIGHTS pharma services. It is estimated that the addressable market for pharma services is $2.3bn and growing at c.10% per annum. The autoantibody profiling segment of this market, where we operate, is faster growing at approximately 27% per annum. We believe that, as a pure-play service provider, ImmunoINSIGHTS will become a market leader in this segment by 2023 having grown the Company's market share by more than three times to c.12% over the course of the current financial year.

· Opportunities exist in segments adjacent to the current autoantibody profiling which are accessible through organic and inorganic development and Oncimmune's management is focused on further expanding the total addressable market for the ImmunoINSIGHTS business. We are therefore actively engaged in further in-house R&D to develop these additional product offerings as well as identifying potential complementary M&A opportunities.

· In order to bring the ImmunoINSIGHTS service business in line with the procurement cycles of the Company's clients and also to provide closer alignment between contract awards and revenue recognised during the same financial year, the Board has resolved to move the Company's accounting reference date from 31 May to 31 August. As a result of the change in its accounting reference date, the Company intends to release unaudited interim results for the 12 months ending 31 May 2022 by 31 August 2022 and publish its audited accounts for the 15-month period to 31 August 2022 by 31 January 2023. Thereafter, interim and final results will be published each year for the 6 months to the end of February and 12 months to 31 August, respectively. FY2023 refers to the 12 months to 31 August 2022.

Dr Adam M Hill, CEO of Oncimmune said: "Now that we have far greater visibility on our revised management expectations for this year and beyond, it is anticipated that ImmunoINSIGHTS will become a leading player in the autoantibody profiling segment of pharma services by FY2023, supported by our enviable list of existing blue-chip customers, which includes many of the world's leading pharmaceutical companies.

"Over the last two quarters we have generated significant momentum in ImmunoINSIGHTS, strengthened our client relationships and bolstered our workforce, expanded our capacity and grown our business development capability. Having largely built the ImmunoINSIGHTS business during the COVID-19 pandemic, we have only very recently been able to meet face-to-face with customers, in many cases for the first time. With closer ongoing interaction we anticipate being able to identify further value that our services can bring to our customers' research, discovery and development processes.

"Our science continues to play a key role at the frontiers of academic discovery and is increasingly recognised as a tool set able to deliver high quality, value adding data and insight. With our new presence at CIC in Kendall Square, Boston, in the most active life science hub globally, and the build-out of our Commercial team in North America, ImmunoINSIGHTS will enter our new financial year in September with a proportion of its revenue already visible. This reflects revenue already contracted or identified through existing customer relationships, and a growing pipeline to support improved performance and realisation of value."

1 NHS Lung Health Check Programmes in Wessex and Yorkshire as part of the iDx-LUNG evaluation programme

Investor Presentation and Conference Call

The management team will also host on Investor Meet Company a live presentation of the results at 15.00 GMT this afternoon which will be open to all existing shareholders and potential new investors. Access to Investor Meet Company is free and interested parties can register to attend the presentation via the following link: https://www.investormeetcompany.com/oncimmune-holdings-plc/register-investor

The Directors of the Company and the officer of the Company named belowtake responsibility for this announcement.

For further information:

Oncimmune Holdings plc

Dr Adam M Hill, Chief Executive Officer

Matthew Hall, Chief Financial Officer

contact@oncimmune.co.uk

Singer Capital Markets (Nominated Adviser and Joint Broker)

Aubrey Powell, Harry Gooden, George Tzimas, James Fischer

+44 (0)20 7496 3000

WG Partners (Joint Broker)

David Wilson, Nigel Barnes, Erland Sternby

+44 (0)20 3705 9321

Media enquiries:

FTI Consulting

Ben Atwell, Michael Trace, Alex Davis

Oncimmune@fticonsulting.com

+44 (0)20 3727 1000

About Oncimmune

ImmunoINSIGHTS Service Business

Oncimmune is a leading immunodiagnostics developer, primarily focused on the growing fields of immuno-oncology, autoimmune disease and infectious diseases. The ImmunoINSIGHTS service business leverages Oncimmune's technology platform and methodologies across multiple diseases, to offer life-science organisations actionable insights for therapies across the development and product lifecycle. Our core immune-profiling technology is underpinned by our library of over eight thousand immunogenic proteins, one of the largest of its kind. This helps identify trial participants and patients into clinically relevant subgroups, enabling development of targeted and more effective treatments.

Oncimmune's ImmunoINSIGHTS service business is based at the Company's discovery research centre in Dortmund, Germany. The business platform enables life science organisations to optimise drug development and delivery, leading to more effectively targeted and safer treatments for patients.

The ImmunoINSIGHTS Commercial team is based in the US and Europe and Oncimmune is seeking to replicate the Dortmund facility in the US in the medium term.

EarlyCDT Product Business

Oncimmune's immunodiagnostic technology, EarlyCDT, can detect and help identify cancer on average four years earlier than standard clinical diagnosis. Our lead diagnostic test, EarlyCDT Lung, targets a vast market estimated to grow to £3.8bn by 2024. With over 200,000 tests already performed for patients worldwide and its use being supported by peer reviewed data in over 12,000 patients, we are poised to become an integral component of future lung cancer detection programmes, globally.

Oncimmune's diagnostic products business is located at its laboratory facility in Nottingham, UK.

For more information, visit www.oncimmune.com

Chief Executive's Review

We are pleased to report the Group's unaudited half year results for the six months ended 30 November 2021 and provide an update on the commercial and operational progress since last period end.

Oncimmune remains a leading developer of applied immunodiagnostics for the early detection of disease, drug discovery and development, with over 18 years as a leader in autoantibody-enabled immunodiagnostics. Oncimmune's proprietary platform technology includes a substantial immunogenic protein library, over 200 patents granted and pending in 47 countries, and over 150 academic papers and presentations.

ImmunoINSIGHTS commercial update

The Group launched the ImmunoINSIGHTS service in February 2020 as Oncimmune's contract discovery and development service-based platform and, since then, the number of signed contracts and projects with major pharmaceutical and biotechnology companies has progressively increased.

As at the date of this announcement, the business has secured contracts with 5 of the top 10 global pharmaceutical companies and this is expected to grow again by the end of this financial year. We currently anticipate that by the end of FY2022 approximately 70% of FY2022 revenues will have been earned from these top 10 pharmaceutical companies. More than ever, this is reflected in the increasing number of multiple contracts we have secured with our leading pharmaceutical clients across multiple indications or therapeutic areas. Consistent feedback from our clients highlights the high quality of our service and, most importantly, the impactful value we have been able to contribute to our clients' therapeutic programmes.

The Company is strategically focused on securing contracts from the top global pharma companies. Considerable efforts are required to become an approved and ongoing service provider to these global pharma companies. In most cases, before being awarded an initial contract, we have been required to satisfy technical qualification in order to be accepted as an approved supplier. This is particularly the case for patient data management where, during the course of a study, we are provided with pseudonymised data in order to provide optimised clinical and statistical insight. Being an approved supplier to major pharmaceutical companies is an asset in itself and should facilitate faster contract wins in the future.

The strategy of focusing on large pharma companies does deliver significant benefits. It is estimated that the market for outsourced pharma services to support clinical trials is approximately $2.3bn growing at an estimated 10% per annum, of which, the top 13 pharmaceutical companies will contribute approximately $500M this year. Furthermore, large pharma companies have multiple studies in several disease areas running concurrently, which is enabling the Company to win more than one contract per client. As we deepen and extend our relationships with large pharma, we are improving the quality, as well as the quantity and value, of our commercial pipeline.

Our focus on securing contracts and growing the commercial pipeline has been notably more successful from Q2 FY2022 onwards. Whilst new business activity in Q1 FY2022 was unexpectedly slower than forecast caused by the easing of COVID-19 restrictions over the summer holiday period of 2021, there has been a marked pick-up in commercial momentum in Q2 FY2022 which has continued into Q3 FY2022 and is expected to continue into Q4 FY2022 and beyond.

A measure of our progress is the growth in the commercial pipeline, in particular the growth in the number of individual clients within the pipeline. We are pleased to report that the number of contracted clients has more than doubled year-on-year and this metric continues to grow.

Since the beginning of the current financial year, we have signed 11 contracts, including:

· A Master Services Agreement ("MSA") with a leading global pharmaceutical company with a contract to develop a multiplexed assay to measure Immunoglobulin E (IgE) autoantibodies for planned autoimmune clinical studies. A follow-on IgE project has been indicated by the client for Q1 FY2023. A second and significantly larger contract was announced on 15 February 2022 and work on this project will span the current and next financial years.

· An autoantibody profiling collaboration with MSD, co-funded with the EORTC Melanoma Group and study sponsor, to evaluate the autoantibody profiles of patient samples collected in the ongoing Phase 3 EORTC1325/KEYNOTE-054 trial investigating KEYTRUDA® (pembrolizumab), MSD's anti-PD-1 therapy, as monotherapy for surgically resected, high-risk melanoma. We are scheduling initial results from this project to be made available to EORTC in Q4 2022 and for the project to be completed shortly thereafter.

· A contract in the area of Systemic Lupus Erythematosus ("SLE") for an existing global pharmaceutical company, the second contract we have been awarded for this client. We have scheduled a follow-on to this initial project to commence in Q4 FY2022.

· A contract with a large pharma partner headquartered in Germany, to characterise the Immunoglobulin G (IgG) autoantibody profiles of patients in clinical trials for SLE. A significantly larger follow-on contract is scheduled for Q4 FY2022.

· Two further contracts were signed with our largest client, which brings the total number of contracts signed to date to five. Both of these projects have follow-on studies expected to be signed as further contracts before the end of the current financial year.

In addition to contracts signed and commenced in the period, a number of contracts which were signed in the prior year were progressed through the Dortmund facility. The growth capital from the March 2021 equity fundraise has in part been deployed on equipment and personnel to complete the scaling up of the Dortmund facility to handle approximately 40,000 samples per annum and the expansion of the Commercial team. At the Dortmund facility, we have also streamlined our operations to facilitate the rapid turnaround of pilot studies which are often the gateway to larger follow-on contracts.

During the period, the Commercial team has also been substantially increased, with an additional five heads employed in the US, to complement the existing two heads based in Europe. Complementing this, we have established an office on the Cambridge Innovation Center in Boston, USA, enabling the Commercial team to be proximate to many of our North American pharma clients. In addition, the Company's marketing function has been significantly enhanced with the appointment of a Senior Director of Global Marketing, based in North America. This appointment will be key to building brand awareness across the globe, including through the use of digital projects and marketing automation initiatives.

A recent market analysis by a leading independent strategy consultancy has sized the potential market for pharma services. It is estimated that the addressable market for outsourced pharma services is $2.3bn and growing at c.10% per annum. The autoantibody profiling segment of this market, where we operate, is growing rapidly and expected to increase at a compound rate of c.27% per annum over the next 5 years. We believe that, as a pure-play service provider, ImmunoINSIGHTS will become a market leader in this segment by 2023 having more than tripled the Company's market share over the course of the current financial year. This opportunity for ImmunoINSIGHTS has been achieved through organic growth only since the business was acquired by Oncimmune in March 2019. The Board continues to evaluate available M&A opportunities which could substantially increase the Group's revenue by widening the current service offering and potentially provide a facility in the US to expand laboratory capacity.

EarlyCDT® Lung commercial update

As previously indicated in our annual results to 31 May 2021, announced on 2 November 2021, there has been considerable disruption to healthcare systems globally as countries continue to focus on the COVID-19 pandemic. This disruption affected the sale of EarlyCDT Lung across the globe and has made it difficult for the Group to forecast revenues for EarlyCDT Lung. This downside has been somewhat offset by distributor agreements, particularly with Biodesix, Inc., which require minimum volume commitments.

In the UK, the iDX Lung programme (NHS Lung Health Check Programmes in Wessex and Yorkshire as part of the iDx-LUNG evaluation programme) continues to provide the Group with regular product sales and to date over 815 patients have been recruited in Southampton and Leeds.

Within the NHS, we successfully concluded the real-world screening evaluation pilot with the Norfolk and Waveney Clinical Commissioning Group ("CCG") and the final report is expected in Q4 FY2022. We anticipate the adoption of the EarlyCDT Lung test within this NHS CCG with regular and ongoing product sales to commence from June 2022. Furthermore, a second pilot with another NHS CCG for the screening of over 2,000 patients is expected to commence in Q4 FY2022 and which is also anticipated to lead to ongoing product sales.

Reflecting the above, total Group revenue for FY2022 is expected to be considerably more weighted to ImmunoINSIGHTS this year, as commercial growth for EarlyCDT Lung is anticipated to be more in evidence in the next financial year.

In May 2021, we returned to the Group the intellectual property and distribution rights for the EarlyCDT technology in the People's Republic of China and Hong Kong, allowing us to pursue the optimum route to market in this important territory. We expect to update the market before the end of the current financial year on the ongoing discussions in this area.

Outlook

The ImmunoINSIGHTS business, acquired for an all-share consideration in March 2019 of £3.5M, is an exciting business which is delivering significant high margin revenue growth. It is expected that by the end of this financial year, ImmunoINSIGHTS will have contracted with the majority of the top 10 global pharmaceutical companies and be delivering high quality projects which provide our clients with deep insights into their clinical assets and programmes.

The Company's commercial strategy is focused on securing contracts, particularly from large pharma, and growing the commercial pipeline, which has been particularly successful from Q2 FY2022 onwards. Whilst new business activity in Q1 FY2022 was unexpectedly slow, commercial activity picked up markedly in Q2 FY2022 and this momentum has continued into Q3 and Q4 FY2022. We have already signed five new contracts in Q3 FY2022 and are expecting to sign additional contracts in Q4 FY2022. A significant proportion of contracts signed during the latter part of FY2022 will deliver revenue into FY2023, as a result we expect to commence FY2023 with more than 30% of management's FY2023 revenue expectations already contracted.

The organic growth opportunity for ImmunoINSIGHTS over the next three years is estimated to be substantial. Additional opportunities exist to address adjacent segments of the pharma services market beyond autoantibody profiling which might be reached through organic and inorganic development, further expanding the total addressable market for ImmunoINSIGHTS.

The investment we have made into enlarging Dortmund's laboratory capacity has facilitated an expansion in the volume of samples able to be analysed. This has been complemented by the expansion in the Commercial team, which has grown from two heads at the beginning of the financial year to seven heads currently, five of whom are based in North America. It is anticipated that we will have maximised the current laboratory capacity through organic growth within three years.

In summary, we are successfully delivering against our strategic objectives and have created a business which has a broad commercial offering and is now demonstrating significant revenue growth, with improved growth prospects. Against this backdrop of gathering commercial momentum since the second quarter, the Board is confident of delivering increasing value to all stakeholders.

Chief Financial Officer's review

The Company's recognised revenue for the six months to 30 November 2021 was £1.43M (H1 2020: £1.83M) reflecting a slower start to the financial year with contract signings within the ImmunoINSIGHTS business over the summer being lower than expected. Notwithstanding this, the number of contract signings were higher than the same period last year. Notably there has been a significant uplift in contract signings towards the end of Q2 FY2022 and into Q3 FY2022 and this momentum is expected to continue into Q4 FY2022.

Gross profit for the period was £0.96M (H1 2020: £1.41M).

Administrative expenses through our expansion were £4.05M (H1 2020: £2.88M) which reflect the expansion in our ImmunoINSIGHTS Dortmund facility and Commercial team in the US.

Research & Development costs totalled £0.67M were substantially the same as the same period last year (H1 FY2021: £0.62M). These costs are not expected to materially increase as future R&D expenditure is expected to be funded through commercial contracts.

Loss after tax was £4.86M (H1 2020: £2.60M) as the Company invested in the ImmunoINSIGHTS business with additional equipment purchases and headcount to further increase capacity and remove possible operational bottlenecks.

Gross cash balance at the period end of £2.97M (H1 2021: £3.28M) and net debt at the period end, comprising gross cash less lease liabilities and borrowings, of £5.39M (H1 2021: £7.22M).

In December 2021, the Company drew down the remaining €3.0M of the €6.0M debt facility which was announced in October 2020. The funds are being used to support the acceleration in the build out of the US-based Commercial team and are serviceable by cash generation from ImmunoINSIGHTS. In accordance with the terms of the facility, additional warrants were issued to IPF over 383,994 ordinary shares at an exercise price of 156.6 pence.

Matthew Hall

Chief Financial Officer

28 February 2022

Oncimmune Holdings plc

Consolidated income statement for the six months ended 30 November 2021

Oncimmune Holdings plc

Consolidated statement of financial position as at 30 November 2021

Oncimmune Holdings plc

Consolidated statement of changes in equity for the six months ended 30 November 2021

Oncimmune Holdings plc

Consolidated statement of changes in equity for the six months ended 30 November 2021 (continued)

Oncimmune Holdings plcConsolidated statement of changes in equity for the six months ended 30 November 2021 (continued)

Oncimmune Holdings plcConsolidated statement of cash flows for the six months ended 30 November 2021

NOTES TO THE INTERIM FINANCIAL STATEMENTS

1. General information

The principal activity of Oncimmune Holdings plc (the "Company") and its subsidiaries (together, the "Group") is that of autoantibodies profiling to the pharmaceutical and biotechnology industry, specifically in the areas of immune-oncology, autoimmune disease and infectious diseases, and the research, development and commercialisation of autoantibody tests that can detect cancer up to four years earlier than other methods and can be applied to a very wide range of solid tumour types. The Company is incorporated and domiciled in the United Kingdom. The address of its registered office is MediCity D6 Building, 1 Thane Road Nottingham, UK, NG90 6BH. The registered number is 09818395.

As permitted, this Interim Report has been prepared in accordance with the AIM rules and not in accordance with IAS 34 "Interim Financial Reporting".

This Consolidated Interim Report and the financial information for the six months ended 30 November 2021 does not constitute full statutory accounts within the meaning of section 434 of the Companies Act 2006 and are unaudited. This unaudited Interim Report was approved by the Board of Directors on 25 February 2022.

The consolidated financial statements are prepared under the historical cost convention.

The Group's financial statements for the period ended 31 May 2021 have been filed with the Registrar of Companies. The Group's auditor's report on these financial statements was unqualified and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

Electronic communications

The Company is not proposing to distribute hard copies of this Interim Report for the six months ended 30 November 2021 unless specifically requested by individual shareholders.

The Board believes that by utilising electronic communication it delivers savings to the Company in terms of administration, printing and postage, and environmental benefits through reduced consumption of paper and inks, as well as speeding up the provision of information to shareholders.

News updates, Regulatory News and Financial statements can be viewed and downloaded from the Company's website, www.oncimmune.com. Copies can also be requested from; The Company Secretary, Oncimmune Holdings plc, MediCity D6 Building, 1 Thane Road, Nottingham, NG90 6BH or by email: oncimmune@fticonsulting.com

2. Accounting policies

Basis of preparation

The financial information has been prepared in accordance with international accounting standards.

The accounting policies applied by the Group in this interim report are the same as those applied by the Group in the consolidated financial statements for the year ended 31 May 2021.

Going concern 

In assessing the appropriateness of applying the going concern basis in the preparation of the interim condensed consolidated financial statements the Directors have considered the Group's liquidity and forecast cash flows under a range of potential scenarios taking into account reasonably possible outcomes over a period up to and including March 2023.

In respect of the Group's funding position, the Company entered into a €8.5M credit facility with IPF Management SA in September 2019 which was further extended by €6.0M in October 2020, of which €3.0M was drawn down at that time. The remaining €3.0M was draw down in December 2021. Each drawn down tranche under the credit facility is repayable over a four-year term, interest-only for the first 12 months, with principal repayments commencing thereafter. The facility includes a financial covenant obligation which requires the Group (on a quarterly basis for the term of the facility) to be able to demonstrate that it holds a minimum amount of cash equal to the next nine months of operating cashflow, including the amounts required to service the credit facility. The total loan has been used to support the Group's operational activities, in particular the growth of the ImmunoINSIGHTS service business. In order to monitor compliance with this financial covenant, the Board prepares monthly financial accounts including a calculation of covenant compliance for the following 12 months.

This consolidated interim report has been prepared on a going concern basis and under the historical cost convention. In preparing the interim report the Directors have prepared forecasts and budgets for the period to March 2023. These forecasts and budgets model a range of scenarios, including taking into consideration the impact of Covid-19.

The base case scenario assumes cash from contracts and customers for the forecast period being a mix of contracted amounts, contracts currently under negotiation, repeat business from already contracted work, together with contracts from as yet unidentified opportunities. The base case scenario shows the Group is able to meet its financial obligations as and when they fall due for the forecast period.

The Directors have also considered downside scenarios that reflect the current unprecedented uncertainty in the UK and global economy and which the Directors consider to be severe but plausible. The first downside scenario took the base case scenario and removed a total of 50% of forecast EarlyCDT Lung product revenues, excluding the US with a corresponding reduction in cost of sales, and certain discretionary research and development and overhead costs. The second downside scenario took the base case scenario and removed 50% of forecast EarlyCDT Lung product revenues, excluding the UK and US, as well as 20% reduction in ImmunoINSIGHTS revenues and with a corresponding reduction in cost of sales, and certain discretionary research and development and overhead costs. The results of these scenarios show that the Group has sufficient resources to meet its obligations for the forecast period and will not be in breach of its covenant under the IPF Management SA facility.

In addition to the above, the Directors have performed a more severe downside test. The most severe of these tests reduced EarlyCDT Lung product revenues outside the UK by 50% and reduced ImmunoINSIGHTS revenues by 50% with an appropriate reduction in costs of sales and certain discretionary research and development and overhead costs. Should these reduced revenues be reflected in trading through to March 2023, the Group will not comply with the financial covenant attached to its external borrowings for the duration of the going concern review period. Should the financial covenant not be met the Group's borrowings could be recalled by its lender. Such a scenario gives rise to a material uncertainty which may cast significant doubt about the Group's ability to continue as a going concern. The interim condensed consolidated financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern. However, as detailed in the Chief Executive's review, there has been an uplift in business activity from Q2 FY2022 onwards within the ImmunoINSIGHTS business with the awarding of contracts signed as well as a number of other contracts in the later stages of the contracting process, and which are expected to be signed before the end of the current financial year. Furthermore, in the event that there is a delay or a reduction in forecast revenues or cash receipts, the Group has identified costs within the business which could be reduced within a relatively short time period in order to ensure the Group's ongoing compliance with the covenant.

After considering the above and after making appropriate enquiries, the Directors have formed a judgement at the time of approving the interim report that there is a reasonable expectation that the Group will continue to trade in line with the base case scenario, and as such, the Directors consider the adoption of the going concern basis in preparing the Consolidated interim report is appropriate.

Taxation

Taxes on income in the interim periods are accrued using the rate of tax that would be applicable to expected total annual earnings.

In so far as the Group companies are entitled to UK tax credits on qualifying research and development expenditure, such amounts have been accrued to 31 May 2021 based on the weighted probability of possible outcomes.

3. Loss per share

Basic

Basic loss per share is calculated by dividing the loss after tax attributable to the equity holders of the parent company for the period of £4,863,000 (May 2021: £4,628,000) (November 2020: £2,597,000) by the weighted average number of ordinary shares in issue during the period of 69,123,109 (May 2021: 64,571,180) (November 2020: 63,565,762).

Diluted

Due to losses in the period there is no calculation of a diluted earnings loss per share.

4. Share capital

In June 2021, share options over 164,626 £0.01 ordinary shares of the Company, exercisable at £2.10, were awarded to employees under the Company's 2016 Share Option Plan. These options are subject to the rules of the Company's 2016 Share Option Plan including vesting in five equal annual parts.

As at 30 November 2021 the Group has 9,120,730 share options outstanding.

In December 2021, share options over 135,109 £0.01 ordinary shares of the Company, exercisable at £1.68, were awarded to an employee under the Company's 2016 Share Option Plan. These options are subject to the rules of the Company's 2016 Share Option Plan including vesting in five equal annual parts.

5. Borrowings

The Group uses other loans to finance the ongoing operations of the Group. The following balances remain outstanding:

The loan is a four-year term with Tranche 1 and Tranche 2 repayable on 29 September 2023 and Tranche 3 repayable on 31 October 2024 all tranches being interest-only for the first 12 months, with principal repayments commencing thereafter. The facility includes a financial covenant obligation which requires the Group (on a quarterly basis for the term of the facility) to be able to demonstrate that it holds a minimum amount of cash equal to the next nine months of operating cash flow, including the amounts required to service the credit facility. In order to monitor compliance with this financial covenant, the Board prepares monthly financial accounts including a calculation of covenant compliance for the following 12 months. All covenants were complied with in period. The facility includes a floating charge over the assets of Oncimmune Holdings plc and Oncimmune Ltd.

The fair value of the loan is not materially different to the carrying value, as the interest payable is close to the current market rate.

6. Other liabilities

Other contingent consideration payable as at 31 May 2021 and 30 November 2021 relates to amounts due under the contract with Genostics Company Limited for the IP rights to the EarlyCDT Lung product in People's Republic of China and Hong Kong.

The contingent consideration payable as at 30 November 2020 was due to the former shareholders of Oncimmune Germany GmbH (formerly Protagen AG) and was settled in March 2021 via the issue of Ordinary shares.

The other contingent consideration payable as at 30 November 2020 was in respect of amounts due to two former directors and was settled via the issue of Ordinary shares.

7. Events after the reporting period

In December 2021 €3.0M was drawn down under the credit facility with IPF Management SA. This debt is repayable on 19 December 2025, is interest-only for the first 12 months, with principal repayments commencing thereafter. This debt is subject to the same financial covenant obligations described in Note 5 in this Interim Report.