Final audited results for year ended 31 March 2020

RNS Number : 3696W

OKYO Pharma Limited

17 August 2020

 

Final audited results for the year ended 31 March 2020

OKYO Pharma Limited (the "Company") is pleased to announce its final audited results for the year ended 31 March 2020.

Summary of OKYO-0101 studies during the last year

· Preclinical studies have been performed to ensure the binding of Chem-9 and other related peptides to human primary corneal epithelial cell line (ATCC). The binding assays were developed.

· This cell line was used to develop an assay for effect of Chem-9 on cytokine production. Cells were exposed to high osmolarity, conditions similar to that of the dysfunctional tear film found in dry eye disease, and cytokines expression was measured with or without Chem-9. This assay is being fine-tuned now and it will be used further preclinical discovery research.

· This cell line was used to develop a cell line-based receptor binding assay, which would be used for characterization of Chem-9 peptide. Our goal is to determine binding affinity of Chem-9. This assay will also be used to determine sensitivity of Chem-9 to proteolysis with proteases.

· An HPLC assay was developed which will be used for determination of peptide degradation products following storage at different temperatures and relative humidity (4oC, 250C and 40oC at 50 and 60 RH). This assay will be used for IND-enabling stability studies.

· Peptide manufacturing process has been scaled up to produce larger quantities of Chem-9 for stability study.

· A dose ranging study in rabbits was performed to evaluate the effect of Chem-9 on corneal permeability and to assess the local irritation. Chem-9 was found to be effective in reducing corneal permeability and it shown no sign of local irritation. Potency of Chem-9 in reducing corneal permeability was comparable to cyclosporine (Restasis®; Allergan).

· Rabbit Ocular tolerance tests using Chem-9 showed no adverse signs such as inflammation, chemosis or hyperemia and no signs of local irritation.

Future strategy of OKYO-201

· During the coming year, we will explore and identify novel BAM8 (OKYO-201) analogs to strengthen the IP portfolio by synthesising additional peptides. Further, we will explore the use of OKYO-201 analogs for Ocular Pain, Uveitis associated pain and Neuropathic pain associated with dry eye in order to expand our portfolio. To support the future development of this portfolio, the Group established a Scientific Advisory Board in August 2020 which will be led by Dr A. James Khodabakhsh MD.

Financial Highlights

· Total comprehensive loss of £1.2 million (31 March 2019: £3.8 million)

· Cash balance at 31 March 2020 of £0.2 million (31 March 2019: £0.5 million).

· Basic and diluted loss per share decreased to 0.00 pence per share (31 March 2019: 0.01 pence)

Enquiries:

OKYO Pharma Limited	Willy Simon	[phone]
Optiva Securities Limited (Broker)	Robert Emmet	[phone]

For further information, please visit the Company's website at http://okyopharma.com/ .

Extracts from the annual accounts for the year ended 31 March 2019 are set out below

OKYO Pharma Limited

Strategic report

The Directors present their report and the financial statements for the Company,  OKYO Pharma Limited  ("OKYO" or the "Company") and its subsidiary, (together the "Group") for the year ended 31 March 2020.

Introduction

OKYO Pharma Limited (LSE: OKYO) is a biopharmaceutical company developing next-generation therapeutics to improve the lives of patients with inflammatory eye diseases and chronic pain. Our goal is to develop first in class drug candidates that prevent the disease instead of controlling it, and we achieve this through our collaboration with pioneer scientists in the field.

Pre-clinical programmes

The Group focuses on novel GPCR based therapeutics for eye diseases of high unmet need and non-opioid analgesics for chronic pain, where large market potential exists. Specifically, OKYO is developing first-in-class drug candidates for the treatment of dry-eye, uveitis, ocular and chronic pain.

Dry eye is a multifactorial disease caused by an underlying inflammation resulting in the lack of lubrication and moisture in the surface of the eye. Symptoms of dry eye include constant discomfort and irritation accompanied by inflammation of the ocular surface, visual impairment and potential damage to the ocular surface. The disease affects over 35% of the population aged 50+, with women representing approximately two-thirds of those affected. Prevalence of dry eye is expected to increase substantially in the near future due to an aging population and dry eye syndrome represents a major economic burden to public healthcare.

The Group's therapeutic approach is to develop first-in-class drug candidates that target inflammatory pathways. Using membrane-tethered ligand technology, we developed our lead candidate OKYO-101.  Thus far OKYO-101 has decreased dry eye symptoms in mice with no local irritation in rabbits.

Uveitis is the third leading cause of blindness worldwide. The most common type of uveitis is an inflammation of the iris called iritis (anterior uveitis). Uveitis can damage vital eye tissue, leading to permanent vision loss.  Uveitis is currently treated with corticosteroid eyedrops and injections that reduce inflammation, however, the long-term use of corticosteroids causes risk of cataract and glaucoma, requiring close monitoring for their potential side effects.

The Group's focus is to suppress the inflammation associated with the uveitis using our anti-inflammatory lead compound OKYO-101.

Allergic conjunctivitis, often called "pink eye" is an inflammation of conjunctiva, caused by an allergic reaction to pollen, mould, smoke, dust etc. Up to 40% of the global population suffers from allergic conjunctivitis, which is mostly treated with antihistamines and corticosteroids.  However, a significant number of patients do not respond to antihistamines that leads to overuse of corticosteroids in these patients.

The Group's focus is to determine the efficacy of OKYO-101 in diminishing ocular redness, the most common symptoms of allergic conjunctivitis.

Chronic pain is a health crisis due to its high prevalence. More than 20% of adults suffer from chronic pain globally. The use of opioid medications, such as OxyContin®, Percocet®, Vicodin® and Percodan®, is the most common therapy in the management of acute and chronic pain. Misuse and overdose of opioid medication has created a worldwide opioid epidemic.

The Group's current focus is to develop first-in-class drug candidates as non-opioid analgesics for pain management without side effects and abuse potential associated with the opioid medications.

Ocular pain, which is typically treated with topical steroid, is highly prevalent in patients suffering from dry eye, uveitis, glaucoma, intraocular or orbital tumour, trigeminal neuralgias, ocular migraine etc. Damage to the ocular surface (nociceptive pain) or to the somatosensory nervous system (neuropathic pain) due to the underlying pathogenesis of eye disease is the main cause of pain.

The Group's current focus is to further improve the potency of OKYO-201 and develop novel formulations and delivery methods for the treatment of ocular pain

R&D Pipeline

Chemerin Project (OKYO-101)

On February 21, 2018, the Group announced that it had identified an opportunity to obtain (via assignment from Panetta Partners Limited, a related party) a license from On Target Therapeutics LLC and a sub-license from Tufts Medical Center Inc. These licenses gave the Group the right to exploit all of the intellectual property relating to patent WO2017014605, being claims in; composition of matter and methodology for treating, inter alia, ocular inflammation, dry eye disease (DED) and ocular neuropathic pain with Chemerin or a fragment of analog thereof and a lipid entity linked to the Chemerin or fragment or analog thereof (the ''Chemerin Project'').

DED, also referred to as "Keratoconjunctivitis Sicca", is one of the most common ophthalmic conditions encountered in clinical practice. DED is a multifactorial disorder caused by the lack of lubrication and moisture, significantly lowering the quality of life of affected individuals. The evidence from over 40 years of scientific literature suggests inflammation as the most common underlying cause of the disease. DED represents a major economic burden in public healthcare. Symptoms of dry eye include constant discomfort and irritation accompanied by visual impairment and potential damage to ocular surface. Increase in the levels of inflammatory cytokines in both conjunctiva and tears is known to cause the chronic inflammation associated with the DED. Therefore, development of new therapeutic agents that target inflammatory pathways is crucial in improving symptoms in DED patients.

The Chemerin receptor (CMKLR1 or ChemR23) is a chemokine like G Protein-Coupled Receptor (GPCR) expressed on select populations of cells including inflammatory mediators as well as epithelial cells. Activation of CMKLR1 has been shown to resolve the inflammation in animal models of asthma. We investigated the effects of OKYO-101, an agonist of CMKLR1, in improving dry eye symptoms using murine dry eye model.  We also evaluated ocular tolerance of OKYO-101 following repeated ocular instillation in rabbits followed by clinical ophthalmic observations. Below is the summary of OKYO-101 studies during the last year.

· Preclinical studies have been performed to ensure the binding of Chem-9 and other related peptides to human primary corneal epithelial cell line (ATCC). The binding assays were developed.

· This cell line was used to develop an assay for effect of Chem-9 on cytokine production. Cells were exposed to high osmolarity, conditions similar to that of the dysfunctional tear film found in dry eye disease, and cytokines expression was measured with or without Chem-9. This assay is being fine-tuned now and it will be used further preclinical discovery research.

· This cell line was used to develop a cell line-based receptor binding assay, which would be used for characterization of Chem-9 peptide. Our goal is to determine binding affinity of Chem-9. This assay will also be used to determine sensitivity of Chem-9 to proteolysis with proteases.

· An HPLC assay was developed which will be used for determination of peptide degradation products following storage at different temperatures and relative humidity (4^oC, 25⁰C and 40^oC at 50 and 60 RH). This assay will be used for IND-enabling stability studies.

· Peptide manufacturing process has been scaled up to produce larger quantities of Chem-9 for stability study.

· A dose ranging study in rabbits was performed to evaluate the effect of Chem-9 on corneal permeability and to assess the local irritation. Chem-9 was found to be effective in reducing corneal permeability and it shown no sign of local irritation. Potency of Chem-9 in reducing corneal permeability was comparable to cyclosporine (Restasis®; Allergan).

· Rabbit Ocular tolerance tests using Chem-9 showed no adverse signs such as inflammation, chemosis or hyperemia and no signs of local irritation.

Future Strategy

In the coming year, we will explore novel OKYO-101 analogs to strengthen the IP portfolio by synthesising additional peptides. Further, we will explore the use of OKYO-101 analogs for other inflammatory diseases such as Uveitis and Allergic Conjunctivitis in order to expand our portfolio.

BAM8 (OKYO-201)

More than 20% of adults suffer from chronic pain globally. The use of opioid medications, such as OxyContin®, Percocet®, Vicodin® and Percodan®, is the most common therapy in the management of acute and chronic pain. Misuse and overdose of opioid medication has created worldwide epidemic. The economic impact of the opioid crisis costs the US more than $100 billion per year alone.

MAS-Related G Protein-Coupled Receptors (MRGPR) are expressed mainly in sensory neurons and are involved in the perception of pain.   Activation of MRGPR by BAM8 (Bovine adrenal medulla) inhibits pain by modulating Ca²⁺ influx. BAM8 has the potential to be developed as a non-opioid analgesic for pain. OKYO recently acquired lipidated cyclised BAM8, a promising candidate for the treatment of neuropathic and inflammatory pain, from Tuffs University. Our goal is to further develop this peptide for long-term chronic pain that will provide an alternative to opioid or cannabinoid-based therapy without side effects and abuse potential associated with the current therapy.

Future Strategy

During the coming year, we will explore and identify novel BAM8 (OKYO-201) analogs to strengthen the IP portfolio by synthesising additional peptides. Further, we will explore the use of OKYO-201 analogs for Ocular Pain, Uveitis associated pain and Neuropathic pain associated with dry eye in order to expand our portfolio. T o support the future development of this portfolio, the Group established a Scientific Advisory Board in August 2020 which will be led by Dr A. James Khodabakhsh MD.

Business Review

During the financial period under review, the Group reported a total comprehensive loss of £1.2 million (31 March 2019: £3.8 million). The loss is detailed in the consolidated statement of comprehensive income on page 29.

The Group expenditure on research and development was £0.4m (2019: £2.2m). The 2019 expenditure included the acquisition of the Chemrein-101 license for £1.9m.

At the end of the year, the Group cash balance stood at £0.2 million (31 March 2019: £0.5 million). A further £ 0.2m in respect of the £0.4m capital raising on 19^th March 2020, shown in "other receivables" at the year-end, was received shortly post the balance sheet date. The Group successfully raised an additional £3.9m post year end (see below).

Fund raising

In the period, the Group successfully raised funds to further progress its pre-clinical pipeline.

On 26 April 2019, the Group announced that it had raised £400,000 cash by way of a cash Subscription by Panetta for 36,363,636 Subscription Shares.

On 19 March 2020, the Group announced that it had conditionally placed 112,000,000 new ordinary shares of no-par value in the Company at a placing price of 0.5 pence each to raise £560,000. The placing was split into two tranches with 75,825,130 shares placed in March 2020, and the balance in May 2020. The cash raised for the first tranche was  £379,125, of which £179,126 was still receivable at the year end.

On 29 May 2020, the Group announced that it had raised £440,000 through the issue of convertible loan notes ("CLNs"). £50,000 of the CLN's were issued to Panetta Partners Ltd, the ultimate parent company. The CLNs carry an interest rate of 20% compounding and have maximum term of 4 years. The CLNs convert into ordinary shares at a price of 0.4p per share and, if converted, the shares will be issued with a warrant attached at an exercise price of 0.4p (with a maximum life of 5 years from the date of issue of the CLN, regardless of the conversion date).

On 28 July 2020, the Group announced that it had raised £3.5m through the issuance of CLN's. The CLNs carry an interest rate of 2.15% compounding and have maximum term of 4 years. The CLNs convert into ordinary shares at a price of 8.5p per share. Conversion will be subject to shareholder approval and no conversions may take place prior to 28 February 2021.

Key performance indicators

The Board monitors the Key Performance Indicators (KPIs) that it considers appropriate for the industry and stage of development of the Group. The Group is a research and development based biotechnology Group concerned with a number of pre-clinical assets. These assets require sufficient investment to reach defined milestones by which the Group and its investors can judge the chances of ultimate success and thereby the value of the Group.  At this stage of Group development significant sources of revenue generation are unlikely and the Group is cash consuming.  The Group KPIs are therefore chosen to monitor the progress of the individual scientific programmes, the external market environment for the potential drugs being developed and the cash requirements of the Group.

Financial KPIs

Cash consumption

The cash position of the business is measured on a continual basis with reference both to the general and administrative expenses required to run the Group, and more particularly to the cash required for ongoing research, development and acquisition of the Group's scientific assets.  During 2020, the main use of the Group's funds was progressing the animal model trials for Chemerin and BAM8, which was within the budget. The cash consumption, which refers to cash used in  operating activities of the Group, during the year was £1m. Management monitors its cash consumption on a monthly basis and a cash projection will be presented at every board meeting.

The Group monitors current and projected cash consumption to ensure that there are sufficient funds available to develop the Group's scientific assets. The Group maintains a virtual operating model resulting in low cash consumption for general and administrative expenses during the period. 

Non-financial KPIs

Develop appropriate formulation of Chemerin (OKYO-101) for animal studies and conduct stability studies to ensure that the formulation is stable for at least 28- days.

The Group is working towards this KPI. Additional preclinical IND-enabling studies have been performed and Peptide manufacturing process has been scaled up to produce larger quantities of Chemerin for stability study.  A dose ranging study in rabbit was performed to evaluate the effect of Chemerin on corneal permeability and to assess the local irritation. Chemerin was found to be effective in reducing corneal permeability and it shown no sign of local irritation. Rabbit Ocular tolerance tests using Chemerin showed no adverse signs such as inflammation, chemosis or hyperemia and no signs of local irritation.

Other Considerations

External (life sciences) market environment

The Group monitors the life sciences market for a number of factors:

· New developments in drug research and development

· New medical treatment paradigms

· Patent filings by third parties pertinent to the Group's programmes

· Existing and novel drugs in development by third parties

· Healthcare regulation and policy in the major territories

· Private and public financings of life science companies to indicate investor appetite for life science risk

The Group is developing its scientific assets within the European and US territories, but for potential global application.  The environment for life science companies was positive throughout the year.

Principal risks and uncertainties

The Group assesses and monitors the inherent risks in the life sciences industry, as well as other micro and macro-economic factors that may present risk to the Group's progression. The Group also considers Group-specific risks such as research progress, personnel and operational facilities and collaborations.

There are significant risks associated with any life science business. The Board believes that the following risks are the most significant, however, the risks listed do not necessarily comprise all those associated with an investment in the Group. In particular, the Group's performance may be affected by changes in market or economic conditions and in legal, regulatory and / or tax requirements. The risks listed are not set out in any particular order of priority and this is not an exhaustive list of risks.

If any of the following risks were to materialise, the Group's business, financial condition, results or future operations could be materially and adversely affected. In such cases, the Group's share price may decline and an investor may lose part or all of their investment.

The Board considers that the principal risks and uncertainties facing the Group may be summarised as follows:

· Clinical studies fail to generate encouraging data

The Group's product candidates have not been evaluated in clinical trials and results in the clinic may not be reproduced in human trials. There is a high degree of failure for product candidates as they progress through clinical trials and clinical trial data may be interpreted in varying ways which may delay, limit or prevent future regulatory approvals.

· Ability to scale up the Group

Growth may place significant demands on the Group's management and resources. The Group expects to experience growth in the number of its employees and the scope of its operations in connection with the continued development and, in due course, the potential commercialisation of its products. This potential growth could place a significant strain on its management and operations, and the Group may have difficulty managing this future potential growth.

· Intellectual property risk

The commercial success of the Group depends on its ability to obtain patent protection for its pharmaceutical discoveries and to preserve the confidentiality of its know-how. There is no guarantee that patent applications will succeed or be broad enough to provide protection for the Group's intellectual property rights and exclude competitors with similar pharmaceutical products. The success of the Group is also dependent on non-infringement of patents, or other intellectual property rights, held by third parties. Competitors and third parties may hold intellectual property rights which the Group may not be able to license upon favourable terms, potentially inhibiting the Group's ability to develop and exploit its own business. Litigation may be necessary to protect the Group's intellectual property, which may result in substantial costs. The Group seeks to reduce this risk by seeking patent attorney advice that patent protection will be available prior to investing in a project, by seeking patent protection where appropriate, and by minimising disclosure to third parties.

· Competition risk

The Group faces significant competition from pharmaceutical companies. The Group has competitors internationally, including major multinational pharmaceutical companies, universities and research institutions. In respect of Chemerin as an indication for the treatment of DED, there are a number of established companies engaged in the development and marketing of preparations addressing the DED market. In addition, there is a wide range of products addressing the DED market currently approved and marketed by a number of large and small pharmaceutical companies.

· Funding risk The Group continues to consume cash resources. The Group only recently committed to its new business and its chosen product candidates are in the early stages of development and it may be some years until the Group generates revenue, if at all. The Group remains dependent upon securing funding through the injection of capital from share issues. The Group may not be able to generate positive net cash flows in the future or attract such additional funding required at all, or on suitable terms. In such circumstances, the Group's pre-clinical programmes may be delayed or cancelled and the business operations curtailed. The Group seeks to reduce this risk through tight financial control, prioritising programmes which will generate the best returns, and keeping shareholders informed on progress. Post period-end, the Group raised £3.9 million (before expenses) to fund its pre-clinical activities and strengthen its balance sheet.

· Dependence on key personnel

The loss of one or more of its key personnel could have an adverse impact on the business of the Group. Furthermore, it may be particularly difficult for the Group to attract and retain suitably qualified and experienced people, given the competition from other industry participants and the relative size of the Group. The Group has deliberately pursued a lean headcount policy to conserve financial resources. Failure to continue to attract and retain such individuals could adversely affect e Group's ability to conduct and grow its operations effectively. The Group seeks to reduce this risk by recruiting additional personnel and additionally appropriate incentivisation of personnel through participation in long term equity incentive schemes.

Gender of Directors and employees

We recruit individuals who have the skills, experience and integrity needed to perform the roles to make OKYO Pharma Ltd a successful company. We note that there are no women on the board but that we recruit without regard to sex or ethnic origin, appointing and thereafter promoting staff based upon merit.

The profile of the Group's employees at March 31 2020, was as follows:

	March 31, 2020
	Male	Female	Total
Number or persons who were Directors or officers of the Group	3	-	3
Number of persons who were other employees of the Group	1	-	1
Total Directors and employees at March 31, 2020	4	-	4

The lean staffing structure is supported by the outsourcing of some administrative functions and the use of Clinical Research Organisations.

Environmental matters

We currently outsource our research, development, testing and manufacturing activities. These activities are subject to various environmental, health and safety laws and regulations, which govern, among other things, the controlled use, handling, release and disposal of and the maintenance of a registry for hazardous materials and biological materials. If we or our partners fail to comply with such laws and regulations, we could be subject to fines or other sanctions.

As with other companies engaged in activities similar to ours, we face a risk of environmental liability inherent in our current and historical activities, including liability relating to releases of or exposure to hazardous or biological materials. Environmental, health and safety laws and regulations are becoming more stringent. We may be required to incur substantial expenses in connection with future environmental compliance or remediation activities, in which case, our production and development efforts may be interrupted or delayed.

Greenhouse gas emissions

We are a Group with a small number of employees. We have serviced offices and we currently outsource our research, development, testing and manufacturing activities. As a result we do not emit greenhouse gases from our own activities, nor do we purchase electricity, heat or steam for our own use. (Scope 1 and scope 2 disclosures).

However, we are aware that our activities do have an impact on GHG emissions through the work of our partners and our activities such as business travel. (Scope 3 disclosures). We have discussed with our partners the impact of our operations on emissions but they have not been able to provide the information for us to provide a meaningful analysis.

Willy Simon

Chairman

14 August 2020

Martello Court, Admiral Park, St Peter Port, Guernsey, GY1 3HB

 

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