Half-year Report

Oxford BioDynamics PLC
30 May 2023
 

30 May 2023

 

Oxford BioDynamics Plc

 

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

INTERIM RESULTS FOR THE SIX-MONTH PERIOD ENDED 31 MARCH 2023

 

Positive momentum on EpiSwitch CiRT, progressing at pace on Prostate Screening EpiSwitch

 

Oxford BioDynamics Plc (AIM: OBD), a biotechnology company developing precision medicine tests based on the EpiSwitch® 3D genomics platform, today announces its interim results for the six-month period to 31 March 2023.

 

CORPORATE AND OPERATIONAL HIGHLIGHTS

Sustained growth in orders of the EpiSwitch® CiRT test

Accelerated development of Prostate Screening EpiSwitch (PSE) blood test

Initial results of EpiSwitch prognostic stratification in ALS

 

FINANCIAL HIGHLIGHTS

Revenue of £220k (H1 2022: £85k)

Successful equity placing, open offer and subscription raising gross proceeds of
£9.3m (£8.5m net) (October 2022)

Cash and term deposits at 31 March 2023 of £3.6m (31 March 2022: £4.6m)

 

POST-PERIOD END HIGHLIGHTS

Grant of Company's second FNIH PACT Award, worth $963,000 (May 2023)

Lease to establish US clinical laboratory in Frederick, MD (April 2023)

Milestone of 300 EpiSwitch CiRT test orders reached (May 2023)

 

Commenting on the results, Dr Jon Burrows, Chief Executive Officer of Oxford BioDynamics, said:

"The first half of our financial year saw excellent progress across the business. There was sustained growth in orders of EpiSwitch CiRT tests, which has continued post-period end. Overwhelming demand for the PSE blood test after announcement of its high accuracy performance led the Group to accelerate its development.

 

As OBD continues to lead the way and demonstrate to the market the power of applying 3D genomics to precision medicine and clinical testing, it is good to see and hear that there is a growing understanding and appreciation of the innovative solutions developed using our proprietary EpiSwitch® platform.

 

We continue to focus commercially on growing CiRT sales and establishing the revenue engine while working diligently to launch the PSE clinical test before the end of 2023."

 

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 which is part of domestic UK law pursuant to the Market Abuse (Amendment) (EU Exit) Regulations (SI 2019/310) ("UK MAR"). Upon the publication of this announcement, this inside information (as defined in UK MAR) is now considered to be in the public domain.

 

 

Investor presentation

The Company's management will conduct a presentation to investors via the Yellowstone Advisory webinar platform at 2pm BST on 30 May 2023. The presentation is open to existing and potential shareholders. Questions may be submitted by emailing info@yellowstoneadvisory.com.

To register, please visit: https://us02web.zoom.us/webinar/register/3216841534960/WN_XzaMPjm_TE6YFtNcxVxC1g

 

For further information please contact:

 

Oxford BioDynamics Plc

Jon Burrows, CEO

Paul Stockdale, CFO

 

+44 (0)1865 518910

Shore Capital

Nominated Adviser and Broker

Stephane Auton / John More / Iain Sexton

 

+44 (0)20 7408 4090

Instinctif Partners

Tel: +44 (0)20 7457 2020

Melanie Toyne-Sewell / Rozi Morris / Adam Loudon

 

OxfordBioDynamics@instinctif.com

 

Notes for Editors

 

About Oxford BioDynamics Plc

Oxford BioDynamics Plc (AIM: OBD) is a global biotechnology company, advancing personalized healthcare by developing and commercializing precision medicine tests for life-changing diseases.

Its flagship product is EpiSwitch® CiRT (Checkpoint Inhibitor Response Test) for cancer, a predictive immune response profile for immuno-oncology (IO) checkpoint inhibitor treatments, launched in February 2022.

OBD's next commercial product will be the Prostate Screening EpiSwitch® (PSE) blood test, due to be launched in Q4 2023.

In March 2021, the Company launched its first commercial prognostic test, EpiSwitch® CST (Covid Severity Test) and the first commercially available microarray kit for high-resolution 3D genome profiling and biomarker discovery, EpiSwitch® Explorer Array Kit, which is available for purchase by the life science research community.

The Company has developed a proprietary 3D genomic biomarker platform, EpiSwitch®, which can build molecular diagnostic classifiers for prediction of response to therapy, patient prognosis, disease diagnosis and subtyping, and residual disease monitoring in a wide range of indications.

Oxford BioDynamics has participated in more than 40 partnerships with big pharma and leading institutions including Pfizer, EMD Serono, Genentech, Roche, Biogen, Mayo Clinic, Massachusetts General Hospital and Mitsubishi Tanabe Pharma.

The Company has created a valuable technology portfolio, including biomarker arrays, molecular diagnostic tests, bioinformatic tools for 3D genomics and an expertly curated 3D genome knowledgebase comprising hundreds of millions of data points from over 10,000 samples in more than 30 human diseases.

OBD is headquartered in Oxford, UK and is listed on AIM of the London Stock Exchange. It also has a commercial office in Gaithersburg, MD, USA and a reference laboratory in Penang, Malaysia.

For more information, please visit the Company's website, www.oxfordbiodynamics.com, or follow on Twitter or LinkedIn.

 

About EpiSwitch®

The 3D configuration of the genome plays a crucial role in gene regulation. By mapping this architecture and identifying abnormal configurations, EpiSwitch® can be used to diagnose patients or determine how individuals might respond to a disease or treatment.

Built on over 10 years of research, EpiSwitch® is Oxford Biodynamics' award-winning, proprietary platform that enables screening, evaluation, validation and monitoring of 3D genomic biomarkers. The technology is fully developed, based on testing of over 10,000 samples in 30 disease areas, and reduced to practice.

In addition to stratifying patients with respect to anticipated clinical outcome, EpiSwitch® data offer insights into systems biology and the physiological manifestation of disease that are beyond the scope of other molecular modalities. The technology has performed well in academic medical research settings and has been validated through its integration in biomarker discovery and clinical development with big pharma.

 

A copy of this announcement is available on the Company's website at 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

The first half of the year saw continued growth in orders of OBD's EpiSwitch® CiRT test by early-adopter physicians and a high level of interest in our forthcoming Prostate Screen EpiSwitch (PSE) test. During the period, we took steps to expedite the final development and launch of this next commercial product, while continuing to build commercial sales of CiRT alongside work for pharma customers and grant-funded and internal R&D activity.

EpiSwitch CiRT

The mechanism of action of immune checkpoint inhibitor (ICI) therapies is to release the brakes holding the immune system back and stimulate it so that it can attack a patient's cancer cells. EpiSwitch CiRT, the Group's flagship product, is a first-of-its kind blood test which predicts an individual patient's response to treatment with immune checkpoint inhibitors (ICIs) [1].

The test was initially launched in the US in February 2022. During the period, in November 2022, we hit the key milestone of 100 CiRT tests ordered, around nine months after launch. The next 100 tests were ordered in about half that time and we recently processed the 300th order less than three months later, in mid-May 2023. The period ended with a total of 24 US oncologists 'on the books', 20 of whom had placed orders for CiRT tests since the beginning of 2023 and we have continued to grow our physician base post-period end.

As planned, we have added to our sales and market access team during and after the period, recruiting experienced professionals who are familiar with US oncology practices and the specific challenges they face when deciding treatment pathways for patients. In our FY22 results, we highlighted the importance of learning from the oncologists who are using CiRT for refining our staff training and collateral. Building on our interactions with oncologists, OBD's team have become expert at introducing and explaining the CiRT test and its benefits to patients, physicians and payors alike. More recently, we have begun to facilitate several local advisory boards at which physicians hear not only from the OBD team, but also fellow doctors about their experiences of using the test.

A unique CPT-PLA code for EpiSwitch CiRT has been available for use in the US since the beginning of the period, allowing for reimbursement from US insurers. Reimbursements from US payors under the unique code have typically been in the range anticipated by the Group: the average amount paid for reimbursed tests to date is between $2,000 and $2,500, against a list price of $5,500. Some payors are now routinely providing reimbursement within as little as 2-3 weeks of claims being submitted. Average turn-around time for CiRT (measured from sample receipt to provision of a final test report) remained between three and four days throughout the period.

Post-period end, in May 2023, the Group announced the publication in the high-impact peer-reviewed journal Cancers of a paper describing the development and validation of the CiRT test and, crucially, its expanded validation to the top five (by annual sales) of the most widely used ICI drugs [2]. The study's extended validation results came from a total of 280 patient samples in more than 14 cancer indications.

Second PACT Award, to investigate Hyper-Progressive Disease

Post-period end, in May 2023, the Company was granted a second Partnership for Accelerating Cancer Therapies (PACT) Award [3]. The prestigious PACT Awards are executed by the Foundation for the National Institutes of Health (FNIH), a US not-for-profit organization managing the pre-competitive collaboration between the National Institutes of Health (NIH), National Cancer Institute (NCI), the US Food and Drug Administration (US-FDA) and 12 leading pharma companies.

The Award, worth $963,000 over one year, will help fund the reduction to practice of an EpiSwitch prognostic blood test for immune oncology (IO)-triggered Hyper-Progressive Disease (HPD). HPD is a serious condition observed in a subset of cancer patients with a specific immune profile, who react to treatment with ICIs with accelerated tumour growth, resulting in significantly reduced overall survival. The work enabled by this award will build on the results of a prototype Hyper-ICI Response Test (HiRT) to develop a blood test to identify patients at risk of HPD well before ICI therapy is started. Early accurate prognosis of HPD has long been an unmet clinical need.

The Company's first PACT award, announced in August 2021, funded extended application of the EpiSwitch platform used in the development of CiRT to the analysis of primary and acquired resistance to ICI therapy, drawing on over 186 patient samples from several trials [4]. Recognition by the PACT consortium for a second time is a source of significant pride for the Group. On the announcement of the latest award, Dr Stacey Adam, Associate Vice President, Science Partnerships at FNIH commented on OBD's previous performance: "Oxford BioDynamics has demonstrated its expertise in end-to-end biomarker development with its first PACT award. Today, the PACT partners are pleased to show their support once again, this time to enable a non-invasive and more accurate risk assessment of patients having a hyper-progressive disease profile when being considered for immunotherapy."

Prostate Screening EpiSwitch (PSE)

We plan to launch the PSE test during the final quarter of 2023 [5]. PSE is a simple blood test that combines the widely used prostate specific antigen (PSA) test with an EpiSwitch prostate cancer classifier developed by OBD. In peer-reviewed work, published in the journal Cancers in February 2023, PSE demonstrated compelling results of 93% positive predictive value, 95% negative predictive value and overall accuracy of 94% [6].

 

Positive results from PSA tests are known to be unreliable, with a positive predictive value of 25% (meaning 3 in 4 men with a raised PSA level will not have cancer) and can lead to many men being referred for expensive follow-on screening, including invasive biopsies that often lead to complications. OBD's PSE test will offer a rapid, accurate, minimally invasive test with significant potential as a screening diagnostic and large addressable markets. In the UK there are approximately 11 million men between the ages of 50 and 80, while in the US the number is closer to 50 million.

 

OBD will offer the PSE test from its own clinical laboratories in the US and UK. To that end, post-period end, the Group's US subsidiary leased and moved into 7,800 sq ft of laboratory space in Frederick, MD, USA. In due course, this lab will be accredited under the Clinical Laboratory Improvements Act (CLIA) by the Maryland Department of Health. A UK clinical lab meeting the requirements of ISO 15189 (the international quality standard for medical laboratories) is also under development, in the Group's existing UK HQ.

 

We are delivering on these plans at pace, with an anticipation that is clearly shared by the many physicians who have already requested the PSE test for their patients. With several US-based laboratory staff already recruited, we remain on track to complete equipment installation, technology transfer and test validation in time for the planned launch in Q4 2023.

 

EpiSwitch in ALS

Amyotrophic lateral sclerosis (ALS), also known as Lou Gehrig's disease in the US or motor neurone disease (MND) in the UK, is a fatal disorder that attacks nerve cells that control voluntary muscle movements, like chewing, walking, and breathing, usually leading to death from respiratory failure in 3-5 years.

In December 2022 we announced that Dr James Berry, Director, NCRI, Massachusetts General Hospital (MGH) had shared interim analysis from the Mitsubishi Tanabe Pharma America (MTPA)-sponsored REFINE-ALS biomarker trial in which an assay developed using OBD's EpiSwitch platform is being assessed alongside other biomarker modalities [7].

The EpiSwitch assay used in the trial provides both diagnostic information (whether the patient has ALS) and prognostic stratification (whether the patient will have fast or slow progressing disease). The initial assessment shared by Dr Berry showed that the EpiSwitch assay used in the trial was better than other biomarker modalities at stratifying patients, at baseline, into those with fast or slow progressing ALS.

OBD's EpiSwitch assay has the potential to enable doctors to confirm diagnosis of ALS (and discount other conditions that are often misdiagnosed as ALS) more quickly than is typically possible using the currently used battery of diagnostic tests. Baseline prognostic stratification of ALS patients with fast-progressing disease, combined with early, accurate diagnosis could have significant benefits to patients with this devastating illness.

The potential for OBD's EpiSwitch assay to play a pivotal role in the diagnosis and treatment pathway decisions of ALS patients was highlighted at the recent 2nd Annual ALS Drug Development Summit in Boston, MA, USA at which OBD was Lead Partner (May 2023). OBD's Chief Scientific Officer Dr Alexandre Akoulitchev gave a plenary talk entitled "Liquid Biopsy with 3D Genomic Biomarkers as a Clinical Tool for Diagnosis, Prognosis & Disease Understanding in ALS" that generated significant interest from conference attendees representing pharma, academia and ALS patient advocacy groups.

EpiSwitch Explorer Array Kit

Launched in 2021, OBD's EpiSwitch Explorer Array Kit allows the academic and life science research community to apply the Group's 3D genomics technology to their own areas of research. The kits include EpiSwitch whole genome microarray slides custom-made by Agilent Technologies (NYSE:A) as well as OBD's proprietary reagents for sample preparation and access to first tier analysis software developed in-house by the OBD team.

 

The Explorer Array Kit allows interrogation of just under 1 million of the most critical interactions between 3D anchor sites (OBD's proprietary "EpiSwitch loci") on the human genome. Results obtained using the kit offer powerful new information to researchers, including confirmation or clarification of their hypotheses. For example, interactions between 3D anchor sites whose presence or absence discriminate between groups with different phenotypes are often found to be at sites located close to genes that are known to play a role in the condition being investigated, but whose contribution is poorly understood.

 

Feedback from prestigious academic purchasers of the Explorer Array Kit, including scientists from The Francis Crick Institute and the University of Oxford Department of Biochemistry, has been positive, with a number of repeat orders after the period. Results from academic life-science research based on EpiSwitch Explorer Arrays have already been presented at national and international scientific peer group meetings.

 

Team growth

During and after the period, we have recruited to key positions to support the Group's commercial strategy, including US-based sales and clinical operation roles, and operations, data science and support roles in the UK. The period also saw a managed evolution of the Group's staffing structure, with a rebalancing of roles and lines of responsibility so that it continues to facilitate the achievement of the Group's objectives as efficiently as possible.

 

Development pipeline

OBD has an extensive pipeline of deployable molecular diagnostic and prognostic tests, across diverse indications. Alongside work on prostate cancer, patient response to immuno-oncology and ALS, the Group's scientists were engaged in successful internal research in several other indications, including neurodegenerative and metabolic diseases and canine oncology, throughout the period. We have previously identified canine oncology and colorectal cancer as offering likely opportunities for future commercialization, after the planned launch of PSE.

Funding to support growth

During the period, in October 2022, we successfully raised gross equity proceeds of approximately £9.3m from new and existing shareholders, at a 33% premium to the then share price. The funds raised were allocated to the provision of working capital to accelerate the commercialization of the EpiSwitch product line, initially focusing on EpiSwitch CiRT, including spend on expanded teams and activity to support sales and marketing of the test. This funding has also enabled us to accelerate our work to bring PSE to the market.

 

Summary

I am extremely pleased with the progress our Anglo-American OBD team has made during and after the first half of the year. As pioneers of the 3D genomics marketplace, it is encouraging to see an increase in appreciation and understanding of our technology and capabilities as we continue to build the Company as a commercial-stage business. I am particularly appreciative of the continued support from our core investors that enabled us to raise capital at a premium during the period despite difficult market conditions.

 

The EpiSwitch platform and the extensive EpiSwitch KnowledgeBase™ generated and continually augmented by it, underpin OBD's ability to bring powerful clinical testing solutions that provide acknowledged patient benefit to market for precision medicine. Our pipeline of deployable tests includes significant opportunities for commercialization and partnering. The market is only just beginning to appreciate the enormous long-term potential of the EpiSwitch platform and EpiSwitch KnowledgeBase™ to generate benefits for all healthcare stakeholders.

 

We are focused on two main objectives through the remainder of our financial year and through to the end of calendar 2023. On CiRT, we continue to concentrate our efforts on sustaining growth in orders and reimbursements for the test and establishing a sustainable revenue engine from the product. For PSE, we are on track to stand up our clinical labs and launch this important and highly sought after test by the end of the calendar year.

 

In last year's interims statement, I referred to moving forward with excitement and determination and our conviction in the long-term potential of OBD to benefit healthcare has been strengthened as we review a successful period for the Group's products and technology and plan for hard work and further success over the rest of the year.

 

Dr Jon Burrows

Chief Executive Officer

 

 

 

FINANCIAL REVIEW

 

Overview

Key activities during the period have included supporting EpiSwitch CiRT, product development work for the forthcoming PSE test and internal and commercial research. Revenue and other operating income were both increased relative to the prior period. Income arising from reimbursement by US healthcare payors for the Group's EpiSwitch CiRT test was recognized for the first time during the period. As expected, the Group's operating cost base also increased compared to the prior period, partly because of activity to support growing adoption of CiRT. The October 2022 fundraising provided the Group with additional cash resources to support its near-term activities.

Financial Performance

Revenue for the period (£220k, H1 2022: £85k) includes amounts in respect of sales of EpiSwitch CiRT tests and EpiSwitch Explorer Array Kits and from contracts with pharma and other commercial customers. As indicated in the Group's latest annual report, revenue arising from reimbursement for the Group's proprietary tests by US insurers is recognised on receipt. Revenue for reimbursed tests is therefore delayed relative to test processing and there is no accounts receivable balance recognized in respect of reimbursed tests prior to receipt.

The reimbursement claims process is a complex one that is carefully managed by the Group's clinical operations team, alongside staff from our partner laboratory. This includes, for example, delaying submission of claims for certain groups of patients until appropriate coverage policies are in place, in order to avoid rejection of claims by payors wherever possible.

As noted above, to date, reimbursements for EpiSwitch CiRT have been received at an average of between $2,000 and $2,500 per reimbursed test, which is within the range originally expected by the Group.

Cost of sales of EpiSwitch CiRT tests, represents a minimum sum payable to the Group's partner lab on the processing of each test, and additional amounts that become due and are recognized only when reimbursement is received from payors.

Other operating income of £200k (H1 2022: £170k) arose from the Group's first PACT Award, referred to in the Chief Executive Officer's review above. The two-year $910,000 PACT Award has funded extended application of the technology used in the development of EpiSwitch CiRT to the analysis of primary and acquired resistance to ICI in several trials. The Group's second PACT Award, supporting the development of prognostic biomarkers for hyper-progressive disease, was announced post-period end in May 2023, and will provide $963,000 in funding over a 12-month period. OBD is also one of 26 participants in the EU-funded HIPPOCRATES (Health initiatives in psoriasis and psoriatic arthritis consortium European states) consortium that was awarded a total of €21 million over 5 years in 2021.

Operating costs have increased overall compared to previous periods (£5.1m, H1 2022: £4.4m), reflecting increased activity across the business, and increases in salaries and most external costs.

R&D costs excluding staff costs were £284k (H1 2022: £191k, H2 2022: £335k). The majority of these costs are incurred in the Group's UK laboratories and include lab consumables, equipment maintenance and other laboratory services. These costs vary depending on the nature and volume of work that is undertaken.

Staff costs increased to £2.6m (H1 2022: £2.1m, H2 2022: £2.4m) driven by inflationary salary increases awarded in January 2023, to help retain skilled, trained staff in a competitive market. Also, although overall average staffing numbers have remained relatively constant since October 2021, the proportion of Group staff employed in more senior roles and based in the US have both increased, which has increased the average per-employee cost.

General and administrative costs also increased in the period to £1.47m (H1 2022: £1.23m). Employee-related expenses increased by £130k, reflecting the increased number of staff engaged in sales support activity that requires travel to meet with customers and some increased travel post-COVID by UK- and US-based staff engaged in business development. Facilities-related costs increased by £60k, predominantly because of increased utilities costs, whilst marketing costs increased by £60k, reflecting costs associated with newly designed and improved Group websites as well as inflationary increases in other costs. IT and communications costs increased by £45k, driven by higher levels of spend on IT security and the Group's clinical order management system being operational for the whole period. The cost of other supplies and services, including professional fees, were £60k lower, mainly reflecting lower legal costs, offset by higher costs of audit and accounting advisory services.

Financial position

Cash and fixed term deposits at 31 March 2023 were £3.62m (31 March 2022: £4.59m, 30 September 2022: £1.0m), reflecting the funds raised in October 2022 offset by increased operating cash outflows.

There was lower expenditure on intangible assets and property plant and equipment than in the equivalent period in the prior year and no new property leases were entered into during the period. Together with depreciation and amortization, this led to a slight decrease in total non-current assets, to £8.19m (31 March 2022: £8.84m, 30 September 2022: £8.58m).

Current assets excluding cash and fixed term deposits increased to £2.47m (31 March 2022: £1.21m, 30 September 2022: £1.77m), mainly because approximately £0.90m in UK R&D Tax Credits remained outstanding at the end of the period (received in April 2023).

Current liabilities were similar to one year ago at £2.10m (31 March 2022: £2.07m, 30 September 2022: £2.91m). The balance outstanding at the 30 September 2022 year end was increased because of higher accruals for staff bonus payments, which are typically paid early in the calendar year, as well as the timing of payment of a number of relatively high value invoices.

Non-current liabilities decreased to £5.47m (31 March 2022: £6.19m, 30 September 2022: £5.85m), driven mainly by payments of rent on the Group's existing property leases during the period.

Cash flow

Net cash used in operating activities increased during the period to £5.22m (H1 2022: £2.30m). In addition to the increased operating loss for the period, operating cash outflow was affected by movements in working capital which had a negative impact on cash of £1.25m relative to the prior period. The Group also received £0.9m in UK R&D Tax Credits post-period end in April 2023, rather than during the period as was the case in the prior period.

Investing cash outflows were reduced, with lower cash payments in respect of asset additions than in the prior period (£0.26m, H1 2022: £0.60m).

Payments in respect of leases (including both capital and interest elements) were unchanged from the prior period (£0.45m, H1 2022: £0.45m). Net cash receipts from the issue of equity were £8.54m as a result of the successful placing, open offer and subscription during the period.

Outlook

The first half of the year included encouraging growth in product orders and the receipt of the first US reimbursements in respect of EpiSwitch CiRT tests, as well as enthusiastic reaction to the Group's PSE test and plans for its launch by the end of 2023. The milestone of 300 EpiSwitch CiRT tests processed, reached post-period in May 2023, demonstrated continued positive momentum.

The Group's financial performance and cashflow for the period reflected the increased cost base necessary to secure these positive commercial developments against modest revenue. Whilst the Group entered the second half of the year with £3.62m in cash and term deposits and received £0.9m of tax refunds shortly after the period end, total cash and fixed-term deposits remain relatively low compared to the Group's monthly cost base.

As was the case at the previous period end and year end, the Group will need to generate increased revenue and/or additional funding during the remainder of the calendar year. At the date of this report, a number of factors make it difficult to predict anticipated product and other commercial revenue and associated cash receipts. Accordingly, as explained in more detail in Note 2 to the interim financial statements, the Board has concluded (as it did in the annual reports for the years ended 30 September 2021 and 30 September 2022) that there continues to be a material uncertainty which may cast significant doubt on the Group's ability to continue as a going concern.

As the financial year progresses, the OBD team remains focused and driven to achieve further commercial success, growing sales of CiRT and preparing for the launch of PSE.

 

Paul Stockdale

Chief Financial Officer

 

References

[1] Oxford BioDynamics Plc. (2022). EpiSwitch CiRT. https://www.mycirt.com

[2] Hunter, E., et al. (2023). Development and validation of blood‐based predictive biomarkers for response to PD‐1/PD-L1 checkpoint inhibitors: evidence of a universal systemic core of 3D immunogenetic profiling across multiple oncological indications, Cancers 15(10), 2696. https://www.mdpi.com/2072-6694/15/10/2696

[3] Oxford BioDynamics Plc. (2023). Oxford Biodynamics granted US Foundation of NIH PACT Award for prognosis of cancer patients with IO-triggered Hyper-Progressive Disease. https://otp.tools.investis.com/clients/uk/oxford_biodynamics_plc/rns/regulatory-story.aspx?cid=2040&newsid=1684666

[4] Oxford BioDynamics Plc. (2021). Oxford BioDynamics awarded US FNIH Grant to apply EpiSwitch® Immune Health test for improved prediction of patient response to Immune Checkpoint Inhibitor (ICI) cancer therapies. https://otp.tools.investis.com/clients/uk/oxford_biodynamics_plc/rns/regulatory-story.aspx?cid=2040&newsid=1503717

[5] Oxford BioDynamics Plc. (2023). Business update - plan to launch Prostate Screening EpiSwitch® test by end of 2023; sales progress for flagship EpiSwitch® CiRT. https://otp.tools.investis.com/clients/uk/oxford_biodynamics_plc/rns/regulatory-story.aspx?cid=2040&newsid=1679474

[6]  Pchejetski, D., et al. (2023). Circulating Chromosome Conformation Signatures Significantly Enhance PSA Positive Predicting Value and Overall Accuracy for Prostate Cancer Detection. Cancers, 15(3), 821. http://dx.doi.org/10.3390/cancers15030821

[7] Oxford BioDynamics Plc. (2022). Initial assessment of EpiSwitch® assay in ALS trial. https://otp.tools.investis.com/clients/uk/oxford_biodynamics_plc/rns/regulatory-story.aspx?cid=2040&newsid=1652438

 

 



 

Consolidated income statement



Six-month period

ended 31 March

 

Year ended 30 September



2023

 

2022

 

2022


 

(unaudited)

 

(unaudited, restated)

 

(audited)


Note

£000

 

£000

 

£000

Continuing operations







Revenue

3

220


85


154

Cost of sales


(76)


-


(38)

Gross profit


144


85


116








Research & development costs (excluding staff costs)

4

(284)


(191)


(526)

Staff costs

4,5

(2,565)


(2,103)


(4,483)

General & other admin costs

4

(1,467)


(1,232)


(2,452)

Share option charges

12

(176)


(223)


(394)

Depreciation and amortization

7-9

(610)


(622)


(1,213)

Other operating income


200


170


351

Operating loss


(4,758)


(4,116)


(8,601)








Fair value (loss)/gain on financial liabilities designated as FVTPL


(73)


936


1,095

Gain reclassified to profit or loss on disposal of foreign operation


114


-


-

Finance income


55


29


134

Finance costs


(90)


(100)


(195)

Loss before tax


(4,752)


(3,251)


(7,567)








Income tax


309


363


857

Loss for the period from continuing operations


(4,443)


(2,888)


(6,710)

 







Loss attributable to:







  Owners of the Company


(4,443)


(2,888)


(6,710)

  Non-controlling interest


-


-


-



(4,443)


(2,888)


(6,710)

Earnings per share


 

 

 

 

 

  From continuing operations







  Basic and diluted (pence per share)

6

(3.2)


(2.9)


(6.7)








 

 

Consolidated statement of comprehensive income



Six-month period

ended 31 March

 

Year ended 30 September



2023

 

2022

 

2022


 

(unaudited)

 

(unaudited, restated)

 

(audited)


Note

£000

 

£000

 

£000


 






Loss for the period


(4,443)


(2,888)


(6,710)

Exchange differences on translation of foreign operations that may be reclassified to the income statement


(37)


(6)


(40)

Less: Gain reclassified to profit or loss on disposal of foreign operation


(114)


-


-

Total comprehensive income for the period


(4,594)


(2,894)


(6,750)

Total comprehensive income attributable to:







  Owners of the Company


(4,594)


(2,895)


(6,750)

  Non-controlling interest


-


1


-

 


(4,594)


(2,894)


(6,750)

 

Consolidated statement of financial position



31 March 2023

 

31 March 2022

30 September 2022


(unaudited)

(unaudited, restated)

 

(audited)


Note

£000

 

£000

 

£000

Assets

 






Non-current assets







Intangible fixed assets

7

1,703


1,452


1,601

Property, plant and equipment

8

2,397


2,738


2,582

Right-of-use assets

9

4,086


4,653


4,396

Total non-current assets


8,186


8,843


8,579

Current assets







Inventories


373


358


337

Trade and other receivables


2,100


854


1,429

Fixed term deposits


2,425


1,639


25

Cash and cash equivalents


1,198


2,947


974

Total current assets


6,096


5,798


2,765

Total assets


14,282


14,641


11,344

Equity and liabilities







Capital and reserves







Share capital

11

1,467


1,004


1,004

Share premium


27,095


19,020


19,020

Translation reserve


(32)


152


119

Share option reserve


2,834


3,245


3,154

Retained earnings


(24,656)


(17,059)


(20,709)

Equity attributable to owners of the Company

 

6,708


6,362


2,588

Non-controlling interest


-


18


-

Total equity


6,708


6,380


2,588

Current liabilities







Trade and other payables


1,143


1,077


2,000

Warrant liability

13

187


273


114

Lease liabilities

10

737


711


736

Current tax liabilities


35


6


61

Total current liabilities


2,102


2,067


2,911

Non-current liabilities







Lease liabilities

10

5,019


5,748


5,400

Provisions


432


416


424

Deferred tax


21


30


21

Total non-current liabilities


5,472


6,194


5,845

Total liabilities


7,574


8,261


8,756

Total equity and liabilities


14,282


14,641


11,344








 

Consolidated statement of changes in equity

 

 

Share capital

Share premium (restated)

Translation reserve

Share option reserve

Retained earnings (restated)

Attributable to share-holders

Non-controlling interest

Total   

 

£000

£000

£000

£000

£000

£000

£000

£000

At 1 October 2021

926

16,740

159

3,022

(14,171)

6,676

17

6,693

Loss for the period as previously stated

-

-

-

-

(3,029)

(3,029)

-

(3,029)

Correction of fair value of warrants (Note 2)

-

-

-

-

141

141

-

141

Loss for the period, restated

-

-

-

-

(2,888)

(2,888)

-

(2,888)

Other comprehensive income for the period

-

-

(7)

-

-

(7)

1

(6)

Total comprehensive income for the period, restated

-

-

(7)

-

(2,888)

(2,895)

1

(2,894)


Subscription for new shares

78

3,545

-

-

-

3,623

-

3,623

Issue of warrants to subscribe for new shares as previously stated

-

(946)

-

-

-

(946)

-

(946)

Correction of fair value of warrants (Note 2)

-

(263)

-

-

-

(263)

-

(263)

Issue of warrants to subscribe for new shares, restated

-

(1,209)

-

-

-

(1,209)

-

(1,209)

Transaction costs for new shares

-

(56)

-

-

-

(56)

-

(56)

Share option credit

-

-

-

223

-

223

-

223

At 31 March 2022, restated

1,004

19,020

152

3,245

(17,059)

6,362

18

6,380

 

 

 

 

 

 

 

 

 

At 1 April 2022

1,004

19,020

152

3,245

(17,059)

6,362

18

6,380

Loss for the period

-

-

-

-

(3,822)

(3,822)

-

(3,822)

Other comprehensive income for the period

-

-

(33)

-

-

(33)

(1)

(34)

Total comprehensive income for the period

-

-

(33)

-

(3,822)

(3,855)

(1)

(3,856)


Buy-back and cancellation of minority interest shares

-

-

-

-

(90)

(90)

(17)

(107)

Share option credit

-

-

-

171

-

171

-

171

Lapse of vested share options

-

-

-

(262)

262

-

-

-

At 30 September 2022

1,004

19,020

119

3,154

(20,709)

2,588

-

2,588

 

 

 

 

 

 

 

 

 

At 1 October 2022

1,004

19,020

119

3,154

(20,709)

2,588

-

2,588

Loss for the period

-

-

-

-

(4,443)

(4,443)

-

(4,443)

Other comprehensive income for the period

-

-

(151)

-

-

(151)

-

(151)

Total comprehensive income for the period

-

-

(151)

-

(4,443)

(4,594)

-

(4,594)


Subscription for new shares

463

8,809

-

-

-

9,272

-

9,272

Transaction costs for new shares

-

(734)

-

-

-

(734)

-

(734)

Share option credit

-

-

-

176

-

176

-

176

Lapse of vested share options

-

-

-

(496)

496

-

-

-

At 31 March 2023

1,467

27,095

(32)

2,834

(24,656)

6,708

-

6,708

 

 

Consolidated statement of cash flows



Six-month period ended
31 March

 

Year ended 30 September

 



2023

 

2022

 

2022

 


(unaudited)

(unaudited)

 

(audited)

 


Note

£000

 

£000

 

£000

 

Loss before tax for the financial period


(4,752)


(3,251)


(7,567)


Adjustments to reconcile loss for the period to net cash flows:








Net interest


34


92


184


Loss on disposal of property, plant and equipment


3


-


1


Depreciation of property, plant and equipment

8

261


290


539


Depreciation of right-of-use assets

9

290


285


574


Amortization of intangible fixed assets

7

59


48


100


Net foreign exchange movements


25


(40)


(278)


Movement in provisions


8


8


16


Share based payments charge

12

176


223


394


Fair value gain on financial liabilities designated as FVTPL

13

73


(936)


(1,095)


Gain reclassified to profit or loss on disposal of foreign operation


(114)


-


-


Working capital adjustments:

 







(Increase) / decrease in trade and other receivables


(296)


527


469


(Increase) / decrease in inventories


(36)


34


55


(Decrease) / increase in trade and other payables


(878)


(521)


475


Operating cash flows before interest and tax paid


(5,147)


(3,241)


(6,133)










R&D tax credits received


-


942


969


Tax paid


(75)


(1)


(13)


Net cash used in operating activities

 

(5,222)


(2,300)


(5,177)










Investing activities








Interest received


37


8


14


Purchases of property, plant and equipment


(92)


(303)


(363)


Purchases of intangible fixed assets


(169)


(301)


(538)


(Increase) / decrease in fixed-term deposits


(2,400)


523


2,138


Net cash (used in) / generated by investing activities


(2,624)


(73)


1,251


Financing activities








Interest paid


(90)


(100)


(195)


Repayment of lease liabilities


(361)


(349)


(703)


Issue of equity shares and warrants


9,272


3,623


3,623


Acquisition of minority interest shares in subsidiary entity


-


-


(107)


Transaction costs relating to equity issues


(734)


(56)


(56)


Net cash generated by financing activities


8,087


3,118


2,562


Net increase / (decrease) in cash and cash equivalents


241


745


(1,364)


Foreign exchange movement on cash and cash equivalents

(17)


27


163


Cash and cash equivalents at beginning of year


974


2,175


2,175


Cash and cash equivalents at end of period


1,198


2,947


974










 

 

 

Notes

1.      General information

The interim financial information was authorized for issue by the Board of Directors on 29 May 2023. The information for the period ended 31 March 2023 has not been audited and does not constitute statutory accounts as defined in section 434 of the Companies Act 2006 and should therefore be read in conjunction with the audited financial statements of the Company and its subsidiaries as at and for the year ended 30 September 2022, which were prepared in accordance with UK-adopted international accounting standards and have been delivered to the Registrar of Companies. The Report of the Auditor on the financial statements was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006. This interim information does not comply with IAS 34 Interim Financial Reporting, as is permissible under the rules of AIM.

2.      Basis of accounting

Basis of preparation

These interim consolidated financial statements have been prepared under the historical cost convention, except for, where applicable, the revaluation of financial liabilities at fair value through profit or loss, and in accordance with the recognition and measurement principles of UK-adopted international accounting standards.

Reporting currency

The consolidated financial statements are presented in pounds sterling (GBP), which is also the Company's functional currency.

Going concern

In assessing the appropriateness of adopting the going concern assumption, as noted in the annual report and accounts for the year ended 30 September 2022, the Group has prepared a detailed budget for the year ending 30 September 2023 ("the budget") and a further forecast ("the forecast") for the period to 30 September 2024. The budget and forecast include:

 

·     

estimates of likely revenue arising from EpiSwitch® CiRT and the Group's other proprietary products (based on the Group's own assessments of market opportunities and planned launch of the PSE test in late 2023);

·     

anticipated revenues from contracts with pharmaceutical partners;

·     

operating costs reflecting the current cost base, with increased spend to accelerate the commercialization of the EpiSwitch® product line, focusing in the period under review on EpiSwitch® CiRT and PSE; and

·     

capital expenditure, primarily to equip the Group's planned clinical laboratories and to maintain and extend its patent estate.

 

Combined revenue and other operating income during the period ended 31 March 2023 was increased compared to the equivalent period in the previous year, but was significantly exceeded by the Group's operating costs. The Group was able to maintain its cash reserves during the period, including through the raising of £9.3m (before fees) by way of a placing, subscription and open offer for new ordinary shares in October 2022. The Group also sought to continue to control costs and cash outflow as much as possible, whilst still supporting product and sales development and business development activity with pharma.

 

In preparing the budget and forecast, the Directors also note the existence of several factors that increase the difficulty inherent in predicting the Group's performance, including its cash generation. These include:

 

·     

notwithstanding a reduction over the period in the level of uncertainty regarding adoption of EpiSwitch CiRT by physicians, a continued lack of sufficient historical information from which to reliably predict future sales volume growth, long-term average reimbursement rates and timing of receipts from US healthcare payors as a whole (again, notwithstanding the positive experience to date of receiving reimbursements from certain payors) in respect of the Group's proprietary products (EpiSwitch® CiRT, PSE (once launched) and to a lesser extent the EpiSwitch® Explorer Array Kit). Successive growth in orders of EpiSwitch® CiRT by early adopter oncologists remains encouraging and broadly in line with the Group's original budget. However, in order to achieve the sales volumes included in the remainder of the budget and forecast, continued growth in adoption by additional physicians as new sales staff are employed to support EpiSwitch CiRT in successive geographic areas will be necessary, and there is no guarantee that this will be achieved.

·     

the Group remains engaged in a number of business development interactions with pharma partners up to the time of publication of this report, but there is no guarantee that the Group will be able to agree sufficient cash-generating projects to cover its costs. No new agreements with pharma partners have been entered into during the period. Also, the timing of projects for such customers can be impacted by delays in contracting and thereafter in receipt of blood or other patient samples on which to work, which in turn can lead to delays in receipt of cash.

·     

cash and fixed term deposits are anticipated to be at low balances compared to the Group's ongoing operating cost base throughout the period covered by the forecast. Given the uncertainties above, it is probable that the Group may hold only low levels of cash in excess of its immediate requirements, depending on the timing of receipts from product sales and revenue-generating projects.

·     

at the levels of revenue and costs - including those arising from expansion of the Group's staff team to support EpiSwitch CiRT and PSE - and working capital assumptions that are reflected in the forecast, as noted above, the Group would need to delay some planned discretionary spending (for example on staff bonuses) in early 2024 in order to preserve cash resources.


To date, cash balances have remained broadly in line with budgeted amounts. However, in the event that sufficient product and new project revenue and/or operating income is not generated, the Group would need to obtain additional funding during the remainder of 2023 in order to continue as a going concern.

The Group successfully raised £9.3m, at a premium of 33% to the Company's then share price during the period in October 2022. However, as at the date of publication of this report, there is no guarantee that it will be able to access further cash resources from investors. This issue may be compounded if the Company's share price were to fall from its current level.

The Directors do not believe that any of the factors above is unusual or unexpected for the Group at this point in the execution of its strategy. However, shareholders should be aware that there is uncertainty around its ability to generate sufficient revenues and the timing of receipts from customers, as well as the ability of the Group to raise sufficient finance to meet its expected costs.  These conditions present a material uncertainty which may cast significant doubt on the Group and Parent Company's ability to continue as a going concern and, therefore, it may be unable to realize its assets and discharge its liabilities in the normal course of business.

Accounting policies

The interim financial statements have been prepared in accordance with the accounting policies set out in the Annual Report and Accounts for the year ended 30 September 2022, which is available on the Company's website.

Accounting judgements and estimates

There have been no significant changes to critical accounting judgements or accounting estimates of amounts reported in prior financial periods.

 

Prior period adjustment in respect of warrant liability

On 11 November 2021, the Company issued 7,791,803 warrants to subscribe for new ordinary shares (the "Warrants"). The Warrants are classified as liabilities in the balance sheet. The fair value of the Warrants is estimated at least on every reporting date. The estimates of the fair value of the Warrants as at the date of their issue on 11 November 2021 and as at 31 March 2022 have been corrected in comparative figures for the six months ended and as at 31 March 2022 in this report. These corrections impact the allocation of the amounts raised in October 2021 between equity and the liability associated with the Warrants, the fair value of the Warrants as at 31 March 2022 and the non-cash fair value gain on financial liabilities designated as FVTPL in the consolidated income statement for the six months ended 31 March 2022. No correction is required to the amounts included in the Annual Report and Accounts for the year ended 30 September 2022.

 

Impact of restatement on prior period:

Consolidated income statement

 

Restated

Six-month period

ended

31 March 2022

 

As previously stated

Six-month period

ended

31 March 2022


£000

 

£000





Fair value gain on financial liabilities designated as FVTPL

936


795

Loss before tax

(3,251)

 

(3,392)

Loss for the period from continuing operations

(2,888)

 

(3,029)

Loss attributable to:




  Owners of the Company

(2,888)


(3,029)

  Non-controlling interest

-


-


(2,888)


(3,029)

Earnings per share

 

 

 

  From continuing operations




  Basic and diluted (pence per share)

(2.9)


(3.1)

 

 

Consolidated statement of financial position

 

Restated

31 March 2022

 

As previously stated

31 March 2022


£000

 

£000

Capital and reserves




  Share premium

19,020


19,283

  Retained earnings

(17,059)


(17,200)

Equity attributable to owners of the Company

6,362


6,484

Total equity

6,380


6,502

Current liabilities




  Warrant liability

273


151

Total current liabilities

2,067

 

1,945

Total liabilities

8,261

 

8,139

Total equity and liabilities

14,641

 

14,641

 

 

Consolidated statement of cash flows

 

Restated

Six-month period

ended

31 March 2022

 

As previously stated

Six-month period

ended

31 March 2022


£000

 

£000

Loss before tax for the period

(3,251)


(3,392)

 Adjustments to reconcile loss for the period to net operating cash flows:




Fair value gain on financial liabilities

(936)


(795)

Net cash used in operating activities

(2,300)

 

(2,300)

 

The impact of the restatement on the consolidated statement of changes in equity is shown on the statement itself.

 

3.      Revenue

All revenue is derived from the Group's principal activities, namely sales of proprietary products and biomarker research and development. An analysis of the Group's revenue by segment, geography and pattern of revenue recognition is as follows:

 


 

Six-month period

ended 31 March

 

Year ended 30 September


 

2023

 

2022

 

2022


 

£000

 

£000

 

£000

Continuing operations:

 

 

 

 

 

 

Sales of proprietary products

 

 

 

 

 

 

USA


79


-


-

Rest of World


2


-


-

 


81


-


-

 

 

 

 

 

 

 

Biomarker research and development







USA


129


55


107

Rest of World


10


30


47



139


85


154

Consolidated revenue


220


85


154

 


 

Six-month period

ended 31 March

 

Year ended 30 September


 

2023

 

2022

 

2022


 

£000

 

£000

 

£000

Continuing operations

 

 

 

 

 

 

Revenue recognized at a point in time


81


-


-

Revenue recognized over time


139


85


154



220


85


154

 

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 costs incurred to support the Group's main activities. The Group is currently determined to have one reportable segment under IFRS 8, that of sales and proprietary products and biomarker research and development. This assessment will be kept under review as the Group's activity expands.

 

The Group's costs and non-current assets (other than investments accounted for using the equity method), analysed by geographical location were as follows:



Six-month period

ended 31 March

 

Year ended

30 September



2023

 

2022

 

2022



£000

 

£000

 

£000

Staff costs

 






UK


1,269


1,203


2,572

USA


1,243


849


1,815

Rest of World


53


51


96

Total staff costs


2,565


2,103


4,483








Research & development costs

 






UK


284


189


523

USA


-


-


-

Rest of World


-


2


4

Total research & development costs


284


191


527








General & other admin costs

 






UK


1,111


926


1,898

USA


335


284


479

Rest of World


21


22


75

Total general & other admin costs


1,467


1,232


2,452










31 March 2023


31 March 2022


30 September 2022

Non-current assets

 

£000


£000


£000

UK


7,708


8,257


7,954

USA


430


519


564

Malaysia


48


67


61

Total non-current assets


8,186


8,843


8,579

 

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 summarized below:



Six-month period

ended 31 March


Year ended 30 September



2023

 

2022


2022



£000

 

£000


£000

Revenue from individual customers each representing more than 10% of revenue for the period:

194


83


152

 

Number

 

Number

 

Number

Number of individual customers each representing more than 10% of revenue for the period

2


2


2

 

5.      Staff costs



Six-month period

ended 31 March

 

Year ended

30 September



2023

 

2022

 

2022



£000

 

£000

 

£000

 

 






Wages and salaries


2,213


1,828


3,921

Social security costs


210


177


332

Other pension costs


142


98


230



2,565


2,103


4,483

The average number of persons, including executive directors, employed by the Group during the period was as follows:



Six-month period

ended 31 March

 

Year ended

30 September



2023

 

2022

 

2022



Number

 

Number

 

Number

Management and administration


10


12


11

Clinical operations and customer support


9


6


7

Laboratory-based


24


26


26



43


44


44

 

6.      Loss per share

From continuing operations

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


Six-month period

ended 31 March

Year ended

30 September


2023

2022

(restated)

2022


£000

£000

£000

Loss for the purposes of basic earnings per share being net loss attributable to owners of the Company

(4,443)

 

(2,888)

 

(6,710)

Loss for the purposes of diluted earnings per share

(4,443)

(2,888)

(6,710)


 

 

 


No.

No.

No.

Number of shares

 

 

 

Weighted average number of ordinary shares for the purposes of basic and diluted earnings per share*

 

139,099,667

 

99,052,940

 

99,702,257


 

 

 

Weighted average number of potential ordinary shares*

17,761,631

14,968,046

16,126,034


 

 

 


Pence

Pence

Pence

Loss per share

 

 

 

Basic and diluted loss per share

(3.2)

(2.9)

(6.7)

*Potential ordinary shares are not treated as dilutive as the Group is loss-making and the potential ordinary shares do not increase the loss per share from continuing operations.

 

7.      Intangible fixed assets

Group


Website development costs


Software development costs


Patents


Total

 


£000


£000


£000


£000

Cost

 

 

 

 

 

 

 

 

At 1 October 2022


62


144


1,674


1,880

Additions


-


-


169


169

Exchange differences

 

 

 

(11)

 

 

 

(11)

At 31 March 2023

 

62

 

133

 

1843

 

2,038

Amortization

 

 

 

 

 

 

 

 

At 1 October 2022


62


65


152


279

Charge for the period


-


17


43


60

Exchange differences

 

-


(4)


-


(4)

At 31 March 2023

 

62

 

78

 

195

 

335

Carrying amount

 








At 31 March 2023

 

-

 

55

 

1,648

 

1,703

At 31 March 2022


-


64


1,388


1,452

At 30 September 2022


-


79


1,522


1,601

 

8.      Property, plant and equipment

Group


Leasehold improvements


Office equipment


Fixtures & fittings


Laboratory equipment


Total

 


£000


£000


£000


£000


£000

Cost

 

 

 

 

 

 

 

 

 

 

At 1 October 2022


2,041


182


172


2,318


4,713

Additions


40


33


-


40


113

Disposals


-


-


-


(19)


(19)

Exchange differences


(1)


(3)


(1)


(52)


(57)

At 31 March 2023

 

2,080

 

212

 

171

 

2,287

 

4,750

Accumulated depreciation

 

 

 

 

 

 

 

 

 

 

At 1 October 2022


231


139


44


1,717


2,131

Charge for the period


103


18


16


122


259

Eliminated on disposals


-


-


-


(16)


(16)

Exchange differences


(1)


(1)


(1)


(18)


(21)

At 31 March 2023

 

333

 

156

 

59

 

1,805

 

2,353

Carrying amount

 










At 31 March 2023

 

1,747

 

56

 

112

 

482

 

2,397

At 31 March 2022


1,885


55


143


655


2,738

At 30 September 2022


1,810


43


128


601


2,582

 

 

9.      Right-of-Use Assets

Group

 

Buildings


Other


Total

 

 

£000


£000


£000

Cost

 

 

 

 

 

 

At 1 October 2022


5,224


18


5,242

Additions


-


-


-

Derecognition

 

-


-


-

Exchange differences

 

(29)


-


(29)

At 31 March 2023

 

5,195

 

18

 

5,213

Accumulated depreciation

 


 

 

 

 

At 1 October 2022


835


11


846

Charge for the period


288


3


291

Derecognition


-


-


-

Exchange differences


(10)


-


(10)

At 31 March 2023

 

1,113

 

14

 

1,127

Carrying amount

 






At 31 March 2023

 

4,082

 

 

4,086

At 31 March 2022


4,643


10


4,653

At 30 September 2022


4,389


7


4,396

 

10.   Leasing

Group


31 March

 

31 March

 

30 September



2023

 

2022

 

2022

Maturity analysis:


£000

 

£000

 

£000

Year 1


900


895


910

Year 2


861


895


908

Year 3


813


859


820

Year 4


812


812


813

Year 5+


3064


3,876


3470



6450


7,337


6,921

Less: future interest charges


(694)


(878)


(785)



5,756

 

6,459

 

6,136

Analyzed as:







Lease liabilities (current)

 

737


711


736

Lease liabilities (non-current)


5,019


5,748


5,400

 


5,756

 

6,459

 

6,136

The group has elected not to recognise a lease liability for short term leases (leases with an expected term of 12 months or less) or for leases of low value assets. Payments made under such leases are expensed on a straight-line basis.

 

11.   Share capital of the Company

 

31 March 2023

 

31 March 2022

 

30 September 2022

 


Number

 

£

 

Number

 

£

 

Number

 

£

 

Authorized shares













Ordinary shares of £0.01 each

146,712,380


1,467,124


100,351,574


1,003,516


100,351,574


1,003,516


On 28 October 2022 and 31 October 2022, the Company issued a total of 46,360,806 new ordinary shares of 1 pence each, pursuant to a placing, subscription and open offer, at a price of 20p per share.

The Company has a number of shares reserved for issue under an equity-settled share option scheme: further details are disclosed in
Note 12.

The company has a number of shares reserved for issue in respect of warrants; further details are disclosed in Note 13.

 

12.   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 may 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 grant date. 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 31 March 2023 had exercise prices in the range of £0.17 to £2.10.

Options outstanding

Six-month period

ended 31 March

 

Year ended 30 September


2023

 

2022

 

2022


Unaudited

 

Unaudited

 

Audited


Number

 

Number

 

Number

Outstanding at start of period

9,447,658


8,526,484

 

8,526,484

Granted during the period

1,857,500


725,000


1,556,757

Forfeited during the period

(1,767,409)


(96,667)


(635,583)

Exercised during the period

-


-

 

-

Outstanding at end of period

9,537,749


9,154,817


9,447,658

Weighted average remaining contractual life (in years) of options outstanding at the period end

6.01


4.81


5.36

 

 

Options exercisable

 

 

Number of Options

 

Weighted average exercise price

£

 

Latest exercise price

 

£

At 31 March 2023


5,056,976


0.77

 

0.19

 

At 31 March 2022


6,857,019


0.69

 

0.40

 

At 30 September 2022


6,622,162


0.68

 

0.17

 








 

Share option expense


Six-month period

ended 31 March

Year ended
30 September

 



2023

 

2022

 

2022

 



£000

 

£000

 

£000

 

Expense arising from share-based payment transactions


176


223


394

 

 

13.   Warrants

The number of shares reserved for issue under warrant options as at 31 March 2023 amounted to 7,791,803 (30 September 2022 and 31 March 2022: 7,791,803).

The Warrants have an exercise price of 58.125p and may be exercised for a period beginning one year and ending five years following the date of issuance.

In certain circumstances, the Warrants may be exercised by way of a 'cashless exercise' whereby holders are entitled to receive a number of warrant shares equal to [(A-B) x 7,7941,803]/(A), where A is the value of the Company's ordinary shares at the time, and B is the warrant exercise price of 58.125p. Also, anti-dilution provisions are in place such that if there is an adjustment for any dividends paid or changes to ordinary share capital at any time whilst the warrant is outstanding, the number of shares issued on exercise of the warrant is adjusted to take into account the proportionate change with a limitation on fractional shares.

On award and at each subsequent reporting date, the fair value of the Warrants has been estimated using the Black-Scholes option pricing model. Volatility has been estimated by reference to historical share price data over a period commensurate with the expected term of the options awarded. The assumptions used in arriving at the fair value for the Warrants during the period were as follows:         



 

Restated

 



31 March
2023

31 March
2022

30 September
2022

Share price at value date (p)


14.25

20.0

11.5

Exercise price (p)


58.125

58.125

58.125

Expected volatility


66.01%

52.75%

59.86%

Dividend yield


0%

0%

0%

Expected life of option


3.61 years

4.61 years

4.11 years

Risk free interest rate


3.46%

1.401%

4.40%

Fair value per Warrant (p)


2p

2p

1p

 



31 March
2023

 

31 March 2022

 

30 September 2022



£000

 

£000

 

£000

Warrant liability


187


273


114

 

14.   Financial instruments

Financial risk management objectives and policies

The Group is exposed to various risks in relation to financial instruments, the main types of risk being market risk, credit risk and liquidity risk, which are described in more detail below.

The Group's financial assets and liabilities are summarized by category in the table below.

The Group's financial risk management is co-ordinated at its head office by its finance function, in close co-operation with the Board. It co-ordinates access to financial markets, monitors and manages the financial risks relating to the operations of the Group through internal reports which analyse exposures.

The Group does not trade in financial assets for speculative purposes, nor has it entered into derivatives.

 

Categories of financial instruments

The carrying amounts of financial assets and financial liabilities in each category are as follows:

 

Group


31 March
2023

 

31 March
2022
(restated)

 

30 September
2022


Note

£000

 

£000

 

£000

Financial assets







Amortized cost







Cash and cash equivalents


1,198


2,947


974

Term deposits


2,425


1,639


25

Trade and other receivables


1,752


613


1,083

Total financial assets


5,375


5,199


2,082








Financial liabilities







Amortized cost







Trade and other payables


820


808


1,783

Lease liabilities

10

5,756


6,459


6,136



6,576


7,267


7,919

FVTPL







Warrant liability

13

187


273


114

Total financial liabilities


6,763


7,540


8,033

 

 

Fair value measurement of financial instruments

Financial assets and financial liabilities measured at fair value in the consolidated statement of financial position are grouped into three levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows:

 

·     

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities

·     

Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

·     

Level 3: unobservable inputs for the asset or liability.

 

The following table shows the levels within the hierarchy of financial liabilities measured at fair value on a recurring basis (there were no financial assets measured at fair value on a recurring basis in any of the periods):

 

Group



 

 

 

 

 

 



Level 1

 

Level 2

 

Level 3

 

Total

At 31 March 2023

Note

£000

 

£000

 

£000

 

£000

Financial liabilities









Warrant liability

13

-


187


-


187



-


187


-


187

At 31 March 2022









Financial liabilities









Warrant liability


-


273


-


273

 


-


273


-


273

At 30 September 2022









Financial liabilities









Warrant liability


-


114


-


114



-


114


-


114

 

Management has assessed that the fair values of cash and term deposits, trade receivables, trade payables and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. Further, the Directors consider that the carrying amounts of other financial assets and financial liabilities recorded at amortized cost in the financial statements approximate to their fair values.  Accordingly, none of the bases for valuation under the fair value hierarchy set out in IFRS 13 'Fair Value Measurement' have been deployed in arriving at the values for these items.

 

 

Market risk

The Group's activities expose it primarily to the financial risks of changes in foreign currency exchange rates (see below). To mitigate its exposure to foreign currency risk, the Group monitors amounts to be paid and received in specific currencies, and where these are expected largely to offset one another, no further currency hedging activity or forward exchange contracts are entered into.

 

Foreign currency sensitivity

The Group undertakes transactions denominated in foreign currencies, therefore exposures to exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters, utilising natural hedging as outlined above where possible. The carrying amounts of the Group's and Company's foreign currency-denominated monetary assets and liabilities at the relevant period end dates are as follows:

 


Assets

Group


31 March 2023

 

31 March 2022

 

30 September 2022



£000

 

£000

 

£000

US dollar


249


378


175

Singapore dollar


11


231


20

Australian dollar


-


131


-

Malaysian ringgit


7


5


15

Outstanding at end of period


267


745


210








 


Liabilities



31 March 2023

 

31 March 2022

 

30 September 2022



£000

 

£000

 

£000

US dollar


(274)


(202)


(407)

Singapore dollar


(4)


(4)


(4)

Euro


-


(4)


(13)

Malaysian ringgit


(2)


(1)


(2)

Outstanding at end of period


(280)


(211)


(426)

 

The Group is mainly exposed to variations in the exchange rate between sterling and the US dollar and, to a lesser extent, the Singapore dollar.

 

The following table details the Group's sensitivity to a 10% weakening in the pound sterling against the relevant foreign currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management's assessment of a reasonably possible movement in foreign exchange rates over the medium term (3-12 months). The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. For a 10% strengthening of the pound sterling against the relevant currency, there would be a comparable impact on the profit and other equity, and the balances below would be negative.

 


US dollar impact


Singapore dollar impact


Six-month period ended


Year ended


Six-month period ended


Year ended


31 March 2023


31 March 2022


30 September 2022


31 March 2023


31 March 2022


30 September 2022


£000


£000


£000


£000


£000


£000

Profit

2


38


23


1


23


2

 

In Management's opinion, the sensitivity analysis is representative of the inherent foreign exchange risk through the year.

 

Interest rate sensitivity

The Group is not significantly exposed to interest rate risk because it does not have any external borrowings. It does hold funds on deposit in accounts paying variable interest rates. The Group's finance income is therefore affected by variations in deposit interest rates.

 

 

Credit risk

Credit risk is the risk that a counterparty fails to discharge its contractual obligations, resulting in financial loss to the Group. The Group is primarily exposed to credit risk in respect of its cash, cash equivalents and term deposits and trade and other receivables.

 

Credit risk management

The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group makes appropriate enquiries of the counter party and independent third parties to determine credit worthiness. Use of other publicly available financial information and the Group's own trading records is made to rate its banking counterparties and major customers. The Group's exposure and the credit worthiness of its counterparties are continuously monitored and the aggregate value of transactions is spread amongst approved counterparties. Credit exposure is also controlled by counterparty limits that are reviewed and approved by Group management continuously.

 

The vast majority of the Group's cash and cash equivalents are invested either with systemic UK and global banks or UK banks with a Tier 1 capital ratio significantly in excess of the current regulatory recommendation. Cash in excess of the Group's immediate requirements is predominantly invested in short-term deposits, breakable term deposits or notice accounts which allow for instant access to funds if necessary. The Group holds some deposits in accounts requiring notice of 95 days to access funds.

 

Trade receivables consist of a small number of customers, spread across various geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable. Expected credit loss rates are based on the Group's historical credit losses during the 48 months prior to 1 April 2023. There were no credit losses during that period, but where appropriate, the historical rates are adjusted to reflect specific current and forward-looking factors that may affect a customer's ability to settle the amount outstanding.

 

Trade receivables are written off when there is no reasonable expectation of recovery. Failure to make payments within 180 days of an invoice's due date and failure to engage with the Group on alternative payment arrangements would be considered indicative of no reasonable expectation of recovery.

 

Because the commercial research and grant-funded contracts in which the Group is involved tend to be invoiced by means of milestone payments covering a substantial portion of each project, this may distort the credit exposure profile at certain points during a given financial period.  For the six-month period ended 31 March 2023 the proportion of revenue attributable to one customer was 59% (year ended 30 September 2022: 88%), but the Directors are of the view that this does not signify that there is more than a low to moderate risk in this respect, and this is borne out by the Group's history of having incurred no credit losses throughout the period covered by this report.

 

The carrying amount recorded for financial assets in the consolidated financial statements is stated net of any impairment losses and represents the Group's maximum exposure to credit risk. No guarantees have been given in respect of third parties.

 

 

Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities.  To counter this risk, the Group seeks to operate from cash reserves and with no bank debt. The Group monitors forecast cash inflows and outflows and adjusts its term deposits accordingly to ensure that sufficient funds are available to meet cash requirements.  For its contracts with pharma and biotech customers, the Group benefits from a substantial proportion of revenue being paid in advance.

 

The following table details the Group's expected maturity for its non-derivative financial assets. It has been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets. The inclusion of information on non-derivative financial assets is necessary to understand the Group's liquidity risk management as the liquidity is managed on a net asset and liability basis.

 

Group

Weighted average effective interest rate

Less

than 1 month

 

1-3 months

 

3 months to 1 year

 

1-5 years

 

5+ years

 

Total

 

%

£000

 

£000

 

£000

 

£000

 

£000

 

£000














31 March 2023













Non-interest bearing


2,945


-


-


-


-


2,945

Variable interest rate instruments

2.75%

5


2,408


25


-


-


2,438



2,950


2,408


25


-


-


5,383














31 March 2022













Non-interest bearing


3,409


-


-


-


-


3,409

Variable interest rate instruments

0.7%

151


-


1,639


-


-


1,790



3,560


-


1,639


-


-


5,199














30 September 2022













Non-interest bearing


1,997


-


-


-


-


1,997

Variable interest rate instruments

0.6%

60


-


25


-


-


85



2,057


-


25


-


-


2,082

 

Variable rate instruments above are balances on interest-bearing notice accounts. The amounts included above for variable interest rate instruments for both non-derivative financial assets and liabilities are subject to change if variable interest rates differ to those estimates of interest rates determined at the relevant year-ends presented above.

 

The following table details the expected maturity of the Group's non-derivative financial liabilities. Figures disclosed in the table are contractual undiscounted cashflows including, for lease liabilities, future interest charges.

 

Group

Weighted average effective interest rate

Less

than 1 month

 

1-3 months

 

3 months to 1 year

 

1-5 years

 

5+ years

 

Total

 

%

£000

 

£000

 

£000

 

£000

 

£000

 

£000






 








31 March 2023





 








Non-interest bearing


820


-

 

-


-


-


820

Fixed interest rate instruments

3%

9


221

 

689


3,311


2,251


6,481



829


221

 

689


3,311


2,251


7,301






 








31 March 2022





 








Non-interest bearing


808


-

 

-


-


-


808

Fixed interest rate instruments

3%

7


224

 

664


3,379


3,063


7,337



815


224

 

664


3,379


3,063


8,145






 








30 September 2022





 








Non-interest bearing


1,783


-

 

-


-


-


1,783

Fixed interest rate instruments

3%

9


219

 

682


3,354


2,657


6,921



1,792


219

 

682


3,354


2,657


8,704

 

No amount is included in the table above in respect of the warrant liability (Note 13) because it is not possible to determine either whether a contractual cash outflow will arise or the timing of such a contractual cash outflow. An obligation will potentially arise only on completion of a "Fundamental Transaction" (see Critical accounting judgement in respect of Warrants in the Company's Annual Report and Accounts for the year ended 30 September 2022), at which time it would be possible to determine the value and timing of any contractual cash outflow in respect of the Warrants.

 

15.    Events after the balance sheet date

On 1 April 2023, the Group's US subsidiary entered into a 75-month lease of 7,800 sq ft of laboratory and office space in Frederick, MD, USA.

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