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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Realm Thera. | LSE:RLM | London | Ordinary Share | GB00B3XBCR18 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 11.50 | 10.00 | 13.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2019 to May 2024
TIDMRLM
RNS Number : 2670A
Realm Therapeutics PLC
23 March 2017
Realm Therapeutics plc
("Realm Therapeutics", "Realm" or the "Company")
Final Results for the Year Ended 31 December 2016 and Business Update
Drug Development Strategy on track with IND filing and sale of Supermarket Retail Business
23 March 2017 - Realm Therapeutics plc (AIM: RLM), a clinical stage biopharmaceutical company focused on leveraging its proprietary immunomodulatory technology, today announces its final results for the year ended 31 December 2016 and provides an update on its two drug candidates.
Alex Martin, Chief Executive Officer of Realm Therapeutics, commenting on the results, said:
"We are pleased to report significant progress in advancing our strategy to become a biopharmaceutical company. In 2016, we sold the Supermarket Retail business, added proven sector specialist talent to the leadership team and the Board, and completed significant R&D work in support of our Investigational New Drug (IND) applications to the U.S. Food & Drug Administration (FDA). To reflect this new focus on drug development, we also changed our name to Realm Therapeutics.
"We recently announced that our IND application for PR022 for the treatment of Atopic Dermatitis was submitted and allowed to proceed into the clinic, and we intend to submit our IND application for PR013 for the treatment of Allergic Conjunctivitis in Q3 of this year. We anticipate starting our Phase II clinical studies with both drug candidates this year, with top-line data readouts expected in 2018."
2016 OPERATIONAL HIGHLIGHTS
-- Unveiled new strategic focus as a specialty biopharmaceutical company focused on leveraging its proprietary immunomodulatory technology to develop novel, prescription treatments for inflammatory diseases including indications in Dermatology and Ophthalmology
-- Added key new team members:
Ø Dr. Christian Peters joined as Chief Medical Officer
Ø Dr. Simba Gill and Dr. Ivan Gergel appointed to the Board as Non-Executive Directors
-- Grew intellectual property portfolio through new issue patents for hypochlorous acid, at therapeutic concentrations, for the treatment of a broad range of inflammatory skin diseases
-- Changed Company name to Realm Therapeutics (formerly PuriCore) to reflect the new strategy
2016 FINANCIAL HIGHLIGHTS
-- Cash and cash equivalents of $21.4 million as at 31 December 2016 (2015: $15.5m) -- Sold Supermarket Retail business to Chemstar Corp for gross proceeds of $13.5 million
-- R&D costs from continuing operations* were $5.0 million (2015: $1.8m) reflecting the change in strategy to focus on drug development
-- Loss from continuing operations* of $7.3 million (2015: $5.2m loss) reflecting higher R&D investment
-- Net loss of $0.5 million, including gain on sale of Supermarket Retail Business (2015: $9.4m loss)
* Continuing operations comprise the Group's drug development activities, Wound Care business, and costs of operating Realm Therapeutics plc, following the sale of the Supermarket Retail (SR) business. Results of SR for all periods presented in the Statement of Comprehensive Income are reflected as discontinued operations.
DRUG DEVELOPMENT PIPELINE UPDATE
In February 2016, Realm Therapeutics initiated drug development programmes, based on its proprietary hypochlorous acid technology at high concentrations, with an initial focus in Dermatology and Ophthalmology. The Company currently has two candidates: PR022, for the treatment of Atopic Dermatitis, and PR013, for the treatment of Allergic Conjunctivitis. Key milestones for these therapies are as follows:
PR022 for Atopic Dermatitis (AD):
-- Submitted IND application to the FDA as a novel treatment for AD in early 2017
-- FDA has allowed IND to proceed into Phase IIa clinical trial which is expected to begin in H2 2017
-- Top-line data readout from Phase IIa trial is expected in H1 2018
-- Estimate peak year sales could potentially meet or exceed $1 billion in the US alone, based on market analysis
-- Demonstrated that PR022 is associated with a statistically significant therapeutic effect in established pre-clinical models of AD, including significant reduction of key cytokines associated with AD such as IL4, IL13, IL-31 and TARC, and serum IgE
-- Presented two posters at the Dermatology Innovation Forum in February 2017, demonstrating pre-clinical anti-itch properties and in vitro data elucidating the mechanism of action and supporting the linkage between the active ingredient in PR022 and reduced expression of protein markers associated with AD and related inflammation
PR013 for Allergic Conjunctivitis (AC):
-- On target to submit IND application in Q3 2017 -- Plan to initiate Phase IIb clinical trial in Q4 2017 -- Top-line data readout from Phase IIb trial is expected in H1 2018
-- Demonstrated that PR013 is associated with a statistically significant therapeutic effect in established pre-clinical models of AC
-- Estimate peak year sales potential of approximately $400 million in the US, based on market analysis and indications of superiority to standard of care demonstrated in pre-clinical models
-- Successfully completed a pre-IND meeting with the FDA which validated plans to enter directly into a Phase II trial following acceptance of the IND
2016 Results and Development Update Conference Call
The Company will hold a conference call today, 23 March 2017, at 2 pm GMT (10 am ET; 7 am PT) to review the 2016 results and discuss progress and plans related to the drug development strategy. To participate in the call, please contact Ciara Martin, FTI Consulting, on +44 (0) 20 3727 1838 to obtain dial-in details.
2016 Annual Report Availability
Realm Therapeutics' 2016 Annual Report and Accounts will be available in due course on the Company's website at www.realmtx.com and will be subsequently be posted to those shareholders who have not elected to receive the document electronically.
2017 Notice of Annual General Meeting and Form of Proxy Availability
Realm Therapeutics' 2017 Annual General Meeting will be held at the offices of CMS Cameron McKenna LLP, Cannon Place, 78 Cannon Street, London EC4N 6AF on 6 June 2017 at 10 am. The 2017 Notice of Annual General Meeting and Form of Proxy is expected to be made available in May 2017 on the Company's website at www.realmtx.com and will subsequently be posted to shareholders.
Enquiries:
Hot Features
Premium
+44 (0) 20 3727
Realm Therapeutics plc 1000
Alex Martin, Chief Executive Officer
Marella Thorell, Chief Financial
Officer and Chief Operating Officer
+44 (0) 20 3727
FTI Consulting 1000
Simon Conway / Mo Noonan
N+1 Singer (Nominated Adviser +44 (0) 20 7496
& Broker) 3000
Aubrey Powell / Lauren Kettle
About Realm Therapeutics
Realm Therapeutics is a clinical stage biopharmaceutical company focused on developing novel immunomodulatory therapies to protect and improve the lives of adults and children. The Company has initiated drug development programmes, based on its proprietary hypochlorous acid technology at high concentrations. The Company believes its formulations have novel immunomodulatory activity with potential application for the treatment of diseases in a number of therapeutic areas, including Dermatology and Ophthalmology.
About Atopic Dermatitis (AD)
AD a serious form of eczema, is a chronic, relapsing, inflammatory disease characterised by itchy, inflamed skin, which poses a significant burden on patients' quality of life and on the overall health care system. Patients with AD have impaired function of their skin barrier, and this, combined with skin damage as a result of the intense itching and scratching associated with the disease, makes them at risk for secondary infections due to colonisation with pathogenic bacteria (particularly Staphylococcus aureus) and changes in the skin microbiome. AD affects up to 20% of children and up to 3% of adults and prevalence numbers continue to increase.
About Allergic Conjunctivitis (AC)
AC is an inflammatory disease of the conjunctiva, the membrane covering the white part of the eye, caused primarily from a reaction to an allergen such as pollen, or pet dander, or other environmental antigens, and affects up to 40% of the United States population and up to 20% of the population of Europe and Japan, including children. This inflammation results in redness, acute itching, tearing and associated nasal symptoms.
Certain statements made in this announcement are forward-looking statements. These forward-looking statements are not historical facts but rather are based on the Company's current expectations, estimates, and projections about its industry; its beliefs; and assumptions. Words such as 'anticipates,' 'expects,' 'intends,' 'plans,' 'believes,' 'seeks,' 'estimates,' and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and other factors, some of which are beyond the Company's control, are difficult to predict, and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. The Company cautions shareholders and prospective shareholders not to place undue reliance on these forward-looking statements, which reflect the view of the Company only as of the date of this announcement. The forward-looking statements made in this announcement relate only to events as of the date on which the statements are made. The Company will not undertake any obligation to release publicly any revisions or updates to these forward-looking statements to reflect events, circumstances, or unanticipated events occurring after the date of this
announcement except as required by law or by any appropriate regulatory authority.
Chief Executive Officer's Report
2016 has been a transformative and important year in the history of the Company, as we executed on our strategy to become a specialty biopharmaceutical company. We have made excellent progress and now, as Realm Therapeutics, we are well positioned to leverage our platform technology.
A Year of ... Transformation
Our ambition throughout 2016 was to build a business focused on the development of novel immunomodulatory therapies, as announced in our Strategic Review update in February 2016, and we took many steps to affect this change.
After thoughtful consideration, we decided that in order to facilitate the change in strategy and to focus exclusively on drug development, we should sell the Supermarket Retail business. In October 2016, we completed the sale for $13.5 million (gross proceeds) to Chemstar Corp.
In December 2016, we announced that we changed our name to Realm Therapeutics to reflect the new direction of the Company.
A Year of ... Progress
Our initial focus is on the development of novel, prescription, topical treatments for inflammatory diseases and in 2016 we progressed in the development of our two candidates - PR022 for Atopic Dermatitis and PR013 for Allergic Conjunctivitis.
Our first product, PR022, is a proprietary non-alcohol based, topical gel, which has shown statistically significant therapeutic effect in pre-clinical models of Atopic Dermatitis, but without the typical negative effects of commonly used drugs.
We were delighted to announce our first major milestone in January 2017 when we submitted an IND (Investigational New Drug) application to the US Food & Drug Administration (FDA) for PR022. In February 2017, we announced that the FDA has permitted Realm's IND application to proceed into Phase II clinical trials. We plan to begin a Phase IIa clinical trial in the second half of 2017.
We also had a successful pre-IND meeting with the FDA to discuss our second product, PR013, a proprietary topical ophthalmic solution for the treatment of Allergic Conjunctivitis. We are preparing for the submission of an IND application to the FDA for PR013, targeted for Q3 2017.
To ensure that we have the right skills in place, we have increased our team's expertise in clinical development through the additions of Dr. Simba Gill and Dr. Ivan Gergel to the Board as Non-Executive Directors, and the hiring of Dr. Christian Peters in the key role of Chief Medical Officer. Together, they bring a wealth of industry experience and successful track records in the industry, adding scientific depth to the leadership team at this critical stage of the Company's development.
A Year of ... Appreciation
The pivoting of the business could not have happened without shareholder support for the new strategic direction and the sale of the Supermarket Retail business. We appreciate our shareholders' confidence. I also want to thank all our employees for their flexibility and unwavering dedication during an exciting time, but one filled with change and uncertainty. I am grateful to the Board for their vision and guidance. We are excited to continue to build a bright future for Realm Therapeutics in the biotech sector.
Alex Martin
Chief Executive Officer
23 March 2017
Chief Financial Officer's Report
Realm Therapeutics plc is the Company and the Group represents the Company and its subsidiaries. Continuing operations comprise the Group's drug development activities, Wound Care business, and costs of operating Realm Therapeutics plc, following the sale of the Supermarket Retail (SR) business. For the SR business, results for all periods presented in the Statement of Comprehensive Income are reflected as discontinued operations. The Cash Flow Statement for the period ended 31 December 2016 reflects SR results and disposal accounting within operating and investing activities. Group results described in this report reflect continuing operations, unless otherwise noted.
Financial Focus
Realm Therapeutics is a clinical development company following the change in strategic focus and the sale of the Supermarket Retail business. The Group's financial results reflect the increased spend on clinical development activities and research & development, together with investment in business infrastructure to support drug development.
Sale of Supermarket Retail Business
In October 2016, the Group completed the sale of the Supermarket Retail business to Chemstar Corp for gross proceeds of $13.5 million (net proceeds of $10.7 million, after payment of all costs including accruals remaining at the end of 2016).
Revenue
Group revenue from continuing operations in the period, comprising primarily Wound Care royalties, was $0.9 million (2015: $1.2m), reflecting an increase in royalties offset by the absence of Biocidal Products Regulation (BPR) related revenue in 2016 (2015 BPR revenue: $0.6m).
Operating Expenses
Operating expenses from continuing operations increased to $8.1 million (2015: $6.2m) reflecting our new drug development strategy, regulatory investments and other costs. Investment in R&D increased to $5.0 million (2015: $1.8m) primarily due to resources and activities in drug development, formulation development, and pre-clinical and toxicology studies to support submission of Investigational New Drug (IND) applications for PR022 and PR013. Continuing operations absorbed a greater portion of overhead costs in 2016 than in 2015 due to the sale of the Supermarket Retail business in October 2016.
Loss
Loss from continuing operations was $7.3 million (2015: $5.2m), reflecting greater investments in R&D. Including the impact of the sale of the Supermarket Retail business, net loss was $0.5 million (2015: $9.4m), reflecting improved operating results in Supermarket Retail along with the gain on sale.
Cash Flow
Cash and cash equivalents held as at 31 December 2016 were $21.4 million (as at 31 December 2015: $15.5m). Net cash used in operating activities of continuing and discontinued operations was $4.9 million (2015: $3.4m) and spending to fund the purchase of fixed assets was $0.8 million (2015: $1.7m). In 2016, net cash proceeds of $11.8 million were realised from the sale of the Supermarket Retail business (prior to payment of sale related accruals of $1.1 million in 2017). The Group had no outstanding debt as at 31 December 2016.
Future Financing
The Group has announced that its current cash resources are sufficient to fund a Phase IIa trial for Atopic Dermatitis and a Phase IIb trial for Allergic Conjunctivitis, based on current clinical development plans and timelines and other planned investments. The Board is considering a variety of options to finance development beyond these milestones and to evaluate other potential therapeutic areas.
Marella Thorell
Chief Financial Officer and Chief Operating Officer
23 March 2017
Consolidated Statement of Comprehensive Income
For the Years Ended 31 December
2016 2015
$ $
CONTINUING OPERATIONS *
Revenue 866,937 1,232,593
Cost of sales (120,906) (240,729)
------------ ------------
Gross Profit 746,031 991,864
------------ ------------
Research and development
expenses (5,049,043) (1,792,971)
General and administrative
expenses (3,003,910) (3,074,650)
Sales and marketing expenses - (1,316,759)
------------ ------------
Total operating expenses (8,052,953) (6,184,380)
------------ ------------
Loss from Continuing Operations
before Interest and Tax (7,306,922) (5,192,516)
Finance income / (expense) 2,875 (12,089)
------------ ------------
Total Finance income /
(expense) 2,875 (12,089)
------------ ------------
Loss from Continuing Operations
before Taxation (7,304,047) (5,204,605)
Taxation expense on Continuing
Operations (26,612) (34,004)
------------ ------------
Loss from Continuing Operations (7,330,659) (5,238,609)
DISCONTINUED OPERATIONS
Profit / (Loss) from Discontinued
Operations including Gain
on Sale 6,823,418 (4,134,839)
------------ ------------
Loss for the Year Attributable
to Equity Holders of the
Parent (507,241) (9,373,448)
------------ ------------
Other Comprehensive Loss:
Items that Are or May Be
Reclassified to Profit
and Loss:
Foreign currency translation
differences for foreign
operations (11,155) (26,895)
------------ ------------
Total Comprehensive Loss
for the Period Attributable
to Equity Holders of the
Parent (518,396) (9,400,343)
============ ============
Loss per Share, Basic and
Diluted (0.01) (0.19)
============ ============
Loss per Share, Continuing
Operations, Basic and Diluted (0.15) (0.10)
============ ============
* Continuing Operations comprise the Group's drug
development activities, Wound Care business and
costs associated with operating Realm Therapeutics
plc
Consolidated Statement of Changes in Equity
For the Years Ended 31 December
Cumulative
Share Share Other Retained translation
capital premium reserves earnings adjustment Total
$ $ $ $ $ $
At 31 December
2014 (as restated) 8,515,641 81,414,651 107,764,975 (169,368,806) 34,937 28,361,398
Loss for the
year - - - (9,373,448) - (9,373,448)
Other comprehensive
loss - - - - (26,895) (26,895)
---------- ----------- ------------ -------------- ------------- ------------
Total comprehensive
loss - - - (9,373,448) (26,895) (9,400,343)
Reclassification
following
lapse of share
options and (4,446,
warrants - - 250) 4,446,250 - -
Share-based
payment movement - - 374,166 - - 374,166
---------- ----------- ------------ -------------- ------------- ------------
Transactions
with owners - - (4,072,084) 4,446,250 - 374,166
At 31 December
2015 8,515,641 81,414,651 103,692,891 (174,296,004) 8,042 19,335,221
Loss for the
year - - - (507,241) - (507,241)
Other comprehensive
loss - - - - (11,155) (11,155)
---------- ----------- ------------ -------------- ------------- ------------
Total comprehensive
loss - - - (507,241) (11,155) (518,396)
Issuance of
shares upon
option exercise 3,750 2,906 - - - 6,656
Reclassification
following
lapse of share
options - - (710,249) 710,249 - -
Share-based
payment movement - - 224,633 - - 224,633
---------- ----------- ------------ -------------- ------------- ------------
Transactions
with owners 3,750 2,906 (485,616) 710,249 - 231,289
At 31 December
2016 8,519,391 81,417,557 103,207,275 (174,092,996) (3,113) 19,048,114
========== =========== ============ ============== ============= ============
Other reserves includes share-based payments and warrant expense. Reclassification of Other Reserves to Retained Earnings in 2016 related to costs associated with share-based payment expense for share options and the Value Creation Plan which lapsed in the year. The 2015 Reclassification related to costs associated with prior share-based payment and warrant expense for share options and warrants which lapsed.
Consolidated Statement of Financial Position
As at 31 December
2016 2015
$ $
ASSETS
Non-Current Assets
Intangible assets - 589,468
Property, plant, and
equipment 138,888 2,631,507
Non-current other assets 323,013 1,308,640
-------------- --------------
Total Non-Current Assets 461,901 4,529,615
-------------- --------------
Current Assets
Inventories 2,902 1,643,465
Trade, other receivables
and current assets 352,315 3,149,147
Cash and cash equivalents 21,429,871 15,456,624
-------------- --------------
Total Current Assets 21,785,088 20,249,236
-------------- --------------
Total Assets 22,246,989 24,778,851
============== ==============
LIABILITIES
Current Liabilities
Trade payables and other
accruals (3,198,875) (5,443,630)
Total Liabilities (3,198,875) (5,443,630)
-------------- --------------
Net Assets 19,048,114 19,335,221
-------------- --------------
EQUITY
Share capital 8,519,391 8,515,641
Share premium 81,417,557 81,414,651
Other reserves 103,207,275 103,692,891
Retained earnings (174,092,996) (174,296,004)
Cumulative translation
adjustment (3,113) 8,042
-------------- --------------
Issued Capital and Reserves
Attributable to Equity
Holders of the Parent 19,048,114 19,335,221
-------------- --------------
Total Equity 19,048,114 19,335,221
============== ==============
Consolidated Statement of Cash Flows
For the Years Ended 31 December
2016 * 2015 *
$ $
Cash Flows from Operating Activities
Loss for the year (507,241) (9,373,448)
Adjustments for non-cash:
Supermarket Retail net assets (5,278,528) -
disposed
Write off of property, plant
and equipment 171,739 1,020,240
Depreciation and amortisation 772,205 1,744,229
Share-based payment expense 224,633 374,166
Finance income (176,572) (315,718)
Finance costs - 12,089
Taxation 26,612 -
------------ ------------
Operating Loss before Movement
in Working Capital (4,767,152) (6,538,442)
------------ ------------
Decrease in trade and other
receivables 488,506 866,193
Decrease / (Increase) in inventories 575,694 (534,317)
(Decrease) / Increase in trade
payables and other accruals (319,882) 2,534,018
Increase in Supermarket Retail (1,093,154) -
disposal costs payable
Decrease in taxes payable - (75,000)
------------ ------------
Cash Used in Operations (5,115,988) (3,747,548)
------------ ------------
Finance income (includes Continuing
and Discontinued Operations) 176,572 315,718
------------ ------------
Net Cash Flows used in Operating
Activities (4,939,416) (3,431,830)
------------ ------------
Cash Flows from Investing Activities
Proceeds from sale of Supermarket 11,790,217 -
Retail, net of costs paid
Purchases of property, plant
and equipment (844,885) (1,704,676)
Purchases of intangible assets - (24,418)
------------ ------------
Net Cash Flows from Investing
Activities 10,945,332 (1,729,094)
------------ ------------
Cash Flows from Financing Activities
Proceeds from exercise of stock 6,656 -
options
Repayment of line of credit
/ borrowings - (223,323)
Interest paid on borrowings - (12,089)
------------ ------------
Net Cash Flows from Financing
Activities 6,656 (235,412)
------------ ------------
Net Increase / (Decrease) in
Cash and Cash Equivalents 6,012,572 (5,396,336)
Cash and Cash Equivalents at
Beginning of Year 15,456,624 20,887,379
Effect of Foreign Exchange
Rate Changes on Cash Held (39,325) (34,419)
------------ ------------
Total Cash and Cash Equivalents
Held at End of Year 21,429,871 15,456,624
============ ============
* Includes Continuing and Discontinued Operations
RISKS AND UNCERTAINTIES
The Group operates in the inherently uncertain environment of drug development and with minimal revenue streams. The risks included here are not exhaustive. Additionally, new risks emerge periodically, and it is not possible to predict all such risk factors for the Group's business or the extent to which any factor or combination of factors might cause actual financial or operational results to differ materially from those contained in any forward-looking statements.
Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.
RISKS RELATING TO THE GROUP'S BUSINESS AND DRUG DEVELOPMENT STRATEGY
The new strategic focus is subject to the vagaries of drug development, including cost and timeline uncertainties.
Realm Therapeutics has transitioned to a company focused on developing its platform technology at high concentrations for drug applications. Such a strategy involves inherent risks associated with demonstrating safety and efficacy of compounds, ensuring stable formulations, demonstrating clinical efficacy, achieving regulatory approval and then delivering commercial success.
Failure to execute a successful research and development strategy could result in an inability to deliver products and indications, which would have a material detrimental effect on the sustainability of the business. Failure of programmes could result from lack of resources, inadequate planning or anticipation of obstacles, poorly designed testing protocols, changes in the regulatory landscape, failure to achieve clinical results or regulatory approvals, adverse events in clinical trials or from the formulations simply not having the clinical benefits or safety profiles that were anticipated in clinical trials.
Even if regulatory approvals are obtained, market adoption of the Group's products could prove slow or impossible, depending upon other products or available therapies for the indications. Other drug companies could develop safer or more effective products for the same indications and secure a significant portion of the available market. Macro-economic factors and the political climate could impact the pricing or payers' willingness to reimburse patients for the Group's products. There are many uncertainties and variables which could impact the timing and likelihood of the Group successfully delivering a new drug and/or in the projected timelines and at the anticipated costs.
Significant investment will be required to support the drug development strategy and the Group has limited on-going revenue which will likely result in additional funding requirements. Existing shareholders' interests in the Company may be diluted as a result of a funding event. If no additional funding can be raised, the impact to the business could be significant.
The Group has a cash position of $21.4 million as at 31 December 2016. Following the sale of the Supermarket Retail business, the Group's primary source of revenue is limited to the royalties received related to the sale of its Wound Care products by a partner. The costs associated with developing, testing and obtaining regulatory approval for drugs are significant. In addition, the timeline for obtaining regulatory approvals for drugs are lengthy and uncertain. As the Group does not currently have sufficient cash to cover the costs of developing new drug products to commercialisation, additional funding will likely be necessary.
The Group may seek to obtain additional funds through equity or debt financings, or strategic alliances with third parties either alone or in combination with equity or debt financing investments. If the Group is unable to raise additional funding in the future, product development could be limited and long-term viability may be at risk.
Without limitation, the factors that may cause the Group's future funding requirements to be greater than anticipated or to accelerate the need for funds include:
-- unforeseen developments during pre-clinical and/or clinical trials; -- delays in the timing of receipt of required regulatory approval or clearances;
-- unanticipated expenses in research and development and manufacture of clinical trial material;
-- unanticipated expenses in defense of intellectual property rights; -- lack of financial resources to adequately support operations; -- the need to respond to technological changes and competition; -- unforeseen problems in attracting and retaining qualified personnel; -- claims that might be brought in excess of the Group's insurance coverage; -- warranty claims related to the sale of the Supermarket Retail business; or, -- imposition of penalties for failure to comply with regulatory guidelines.
All or any of these factors may utilise the Group's cash resources and increase the amount, and accelerate the timing of, any funding event. An equity raise or even a debt raise (which could include a convertible feature or warrants) may dilute existing shareholders' ownership stakes.
The Group is dependent on a limited number of contract manufacturers and other vendors to support its drug development efforts.
The Group, like many development-stage drug companies with small internal teams, has partnered with several third parties in relation to development efforts, clinical trial material production, pre-clinical/safety studies, analytical studies and regulatory support. As such, the Group is dependent on a limited number of key partners to deliver services and products to expected timelines and costs in order to meet the Group's plans. The Group seeks to partner with vendors with a good track-record of results, but there is no certainty as to future performance of these vendors.
The Group relies on a small team of key management to execute the strategy.
The Group has in place a motivated management team focused on its strategy and a supportive R&D team of scientists focused on development. Loss of key team members could result in a delay of the Group's plans and operations or additional costs to recruit and train replacements. The Group seeks to motivate and retain key employees by providing incentivising remuneration packages and a positive, developmental working environment.
The Group's drug development strategy exposes it to a higher level of risk associated with clinical studies.
As the Group's business strategy is to develop drug formulations, there is an increased risk associated with the clinical studies which will need to be conducted for approval. The clinical testing could results in harm to patients for which the Group could be held responsible. If patients were harmed as a consequence of the Group's actions, it could have a material negative effect on the Group's financial results and cash flow as well as its reputation and consequently its access to potential financing.
The Group's products are subject to various legislative and regulatory requirements.
The Group's products are subject to various legislative and regulatory requirements. If the Group or its vendors fail to satisfy legislative and regulatory requirements or violate any such requirements, this could result in the imposition of sanctions on the Group or its vendors, including fines, injunctions (such as stoppages of clinical development activities), penalties, import bans, delays, suspension or withdrawal of approvals, seizures or recall of products, operating restrictions, and criminal prosecutions, any of which could materially harm the Group's product and clinical development efforts.
There are a broad range of regulations relating to the development, approval and manufacturing of drugs which the Group must successfully navigate and achieve in order to commercialise new drugs. Even if regulatory clearance is granted, it is subject to continual review and this approval maybe withdrawn or restricted.
Additionally, the Group and its distribution, manufacturing and other partners must comply with many regulations relating to the marketing of its medical device products.
Any one or a combination of these factors could have a material adverse effect on the Group's business, financial condition and development timelines. While the Group endeavors to manage these risks through contractual arrangements and monitoring, there is inherent risk in arrangements that are not completely under the Group's control.
Legislative changes or regulatory reform of the healthcare systems may also affect the Group's ability to develop or ultimately commercialise its products.
The Group is reliant on core platform technology for its products which limits diversification.
The Group is reliant on its core technology platform and is subject to competition from other companies that might have products in development or commercially available which are more advanced and/or less expensive. In relation to future products, competitors, particularly in key therapeutic areas, may precede the Group in commercialising, developing and receiving regulatory approval for their products and competitors may also succeed in developing products that are safer, more effective or more economically viable than products developed by the Group. As a result, the Group's products may not be competitive or available in the market in a timely manner therefore eroding the Group's market share and/or potential for growth or creating pricing pressure in the market.
Relying on a platform technology as the basis for its drug products makes the business less diverse.
RISKS RELATING TO INTELLECTUAL PROPERTY
The Group may be unable to adequately protect its intellectual property.
The Group is the owner of intellectual property rights, comprising patents, trademarks, designs, copyright, trade secrets and confidential information. While it may apply from time to time to register additional patents, trademarks, designs and copyright and take reasonable steps to protect its trade secrets and confidential information, there can be no assurance that any of its registered intellectual property rights will not be successfully challenged or that third parties will not misappropriate such secrets and information. The Group relies to a great extent on its patents and whilst no validity challenges have previously been made there is no guarantee that they will not be made in the future. Other companies may obtain intellectual property rights based on developments in technology used by the Group. Without obtaining a license to utilise such intellectual property rights, the Group would be restricted from utilising such new developments.
Any misappropriation, or challenge to its intellectual property rights, or failure to obtain protection for a license in relation to such intellectual property could have a material adverse effect on the Group's business, financial condition and results of operations and may require it to engage in costly litigation.
Intellectual property litigation and/or infringement actions may be brought against the Group or may need to be brought by the Group.
There can be no assurance that the Group will not receive a notification that any products infringe any third-party intellectual property rights in the future. Any litigation to determine the validity of third-party infringement claims, whether or not determined in the Group's favour or settled by the Group, would be costly and would divert the efforts and attention of the management and R&D personnel from important strategic tasks, which could have a material adverse effect on the Group's business and timelines and/or financial condition.
The Directors cannot guarantee that infringement claims by third parties or claims by customers or end users of the Group's products resulting from infringement claims will not be asserted in the future or that such assertions, if proven to be true, will not materially adversely affect the Group's business and timelines and/or financial condition. In the event of an adverse ruling in any such matter, the Group could be required to pay substantial damages; cease the manufacture, use and sale of infringing products; discontinue the use of certain processes; or obtain a license under the intellectual property rights of the third-party claiming infringement. A license may not be available on reasonable terms or at all. Any limitations on the Group's ability to market its products, or delays and costs associated with redesigning its products or payments of license fees to third parties, or any failure by the Group to develop or license a substitute technology on commercially reasonable terms could have a material adverse effect on the Group's business and timelines and/or financial condition. There can be no assurance that the Group will not need to bring (or otherwise participate in) claims against third parties for infringement of intellectual property owned by the Group.
RISKS RELATING TO THE ORDINARY SHARES
The share price of the Company may fluctuate significantly.
The share price may, in addition to being affected by the Group's actual or forecasted results and milestones as well as market reception to the drug development business strategy, fluctuate significantly as a result of factors beyond the Group's control and may not always reflect the underlying asset value or the prospects of the Group. The factors that may affect the Group's share price include:
-- liquidity of the ordinary shares and willingness of shareholders to sell where there are demand or supply imbalances;
-- fluctuations in stock market prices and volumes, and general market volatility;
-- changes in laws, rules and regulations applicable to the Group, its operations and involvement in actual or threatened litigation;
-- general economic and political conditions.
There can be no assurance that an active or liquid trading market for the Company's ordinary shares will be developed or, if developed, that it will be maintained.
The Company's shares were admitted to trading on AIM following delisting from the Main Market on 23 December 2014. There can be no assurance that an active or liquid trading market for the ordinary shares will develop or, if developed, that it will be maintained. AIM is a market designed primarily for emerging or smaller companies to which a higher investment risk tends to be attached than to larger or more established companies and may not provide the liquidity normally associated with the premium segment of the Official List. The ordinary shares may, therefore, be difficult to sell compared to the shares of companies listed on the premium segment of the Official List and their market prices may be subject to greater fluctuations than might otherwise be the case.
Further, a quotation on AIM affords shareholders a lower level of regulatory protection than that afforded to shareholders in a company with its shares listed on the premium segment of the Official List. The future success of AIM and liquidity in the market for the Company's Shares cannot be guaranteed. Potential investors and shareholders should be aware that the value and any income from the ordinary shares can go down as well as up and that investment in securities which are traded on AIM might be less realisable and might carry a higher risk than a security listed on the Official List. Liquidity on AIM is currently provided by market makers who are member firms of the London Stock Exchange and are obliged to quote a share price for each company for which they make a market between 8:00 am and 4:30 pm on a business day.
Select Notes to the Financial Statements
For the Years Ended 31 December 2016 and 2015
BASIS OF PREPARATION
Realm Therapeutics plc (the Company) is incorporated in the United Kingdom (UK). In December 2016, the Company changed its name from PuriCore plc to Realm Therapeutics plc to more accurately reflect the Company's strategic focus and direction. Realm Therapeutics, Inc. (a United States (US) subsidiary), is incorporated under the laws of Delaware in the US. The Group represents the Company and all its subsidiaries including Realm Therapeutics, Inc., PuriCore Europe Limited and PuriCore Scientific Limited. The Group consolidated financial statements were authorised for issue by the Board of Directors on 23 March 2017. European Union law (EULAW) (IAS Regulation EC 1606/2002) requires the financial statements of the Group be prepared in accordance with International Financial Reporting Standards as adopted by the EU (Adopted IFRSs). The financial statements have been prepared on the basis of the recognition and measurement requirements of Adopted IFRSs that are endorsed by the EU and effective as at 31 December 2016.
The information in this news release does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006 ("the Act"). The statutory financial statements for the year ended 31 December 2016 will be delivered to the Registrar of Companies in England and Wales in accordance with Section 441 of the Act. The auditor has reported on those accounts. Its report was unqualified and did not contain a statement under Section 498(2) or (3) of the Act.
On 7 October 2016, Realm Therapeutics, Inc. sold its Supermarket Retail business for gross proceeds of $13.5 million. Accordingly, the Supermarket Retail business operational results for the period through 7 October 2016 and for the year ended 31 December 2015 presented in the Consolidated Statement of Comprehensive Income are reflected as discontinued operations. The Consolidated Statement of Cash Flows for the period ended 31 December 2016 reflects the Supermarket Retail business results and the sale within operating and investing activities. A discontinued operation is a component of the Group's business that represents a separate major line of business that has been disposed. Classification as a discontinued operation occurred upon disposal.
Continuing operations include drug development activities, the Wound Care business which is out-licensed, and costs of operating the Company.
The financial statements are presented in US dollars (USD), rounded to the nearest dollar. The USD has been chosen as the presentational currency as most of the Group's revenue and expenses are denominated in USD. The accounting policies set out below have, unless otherwise stated, been applied consistently throughout the year.
Some asset and liability amounts reported in the accounts are based on management estimates and assumptions that affect the reported amounts. There is therefore a risk of significant changes to the carrying amounts for these assets and liabilities within the next financial year. Management regularly reviews the estimates and assumptions that drive key financial calculations and disclosures. Key risks are considered in these calculations, where necessary.
NOTE 1 - Segmental Analysis
Segmental information is provided having regard to the markets served. Realm Therapeutics is a clinical biopharmaceutical company focused on leveraging its proprietary core technology to develop pharmaceuticals. The Group also has royalty revenue from its Wound Care product (as a medical device). During the years ended 31 December 2015 and 2016, the Health Sciences segment represented revenue and costs related to these programmes. Discontinued operations represent the Group's Supermarket Retail business which was sold on 7 October 2016.
An analysis of the Group's business segments for the years ended 31 December is as follows.
2016
Discontinued
Company Operations:
Health & Other Supermarket
Sciences (1) Total Retail
$ $ $ $
Revenue 866,937 - 866,937 14,759,521
------------ ------------ ------------ -------------
Gross Profit 746,031 - 746,031 6,028,975
------------ ------------ ------------ -------------
(Loss) / Profit before
Interest, Tax, Depreciation
& Amortisation, Fixed
Asset write-offs and
Share-Based Payment
Expense (5,955,383) (1,000,778) (6,956,161) 2,018,005
Interest income - 2,875 2,875 173,697
Depreciation and amortisation (59,345) (66,783) (126,128) (646,077)
Write-off of capital
assets (3) - - - (140,741)
Share-based payment
expense - (224,633) (224,633) -
------------ ------------ ------------ -------------
(Loss) / Profit before (6,014,
Tax 728) (1,289,319) (7,304,047) 1,404,884
Taxation Expense - (26,612) (26,612) -
------------ ------------ ------------ -------------
(Loss) / Profit after
Tax (6,014,728) (1,315,931) (7,330,659) 1,404,884
============ ============ ============ =============
Segment Assets
Non-current assets 100,859 361,042 461,901 -
Current assets 312,249 42,968 355,217 -
------------ ------------ ------------ -------------
Total assets excluding
cash and cash equivalents 413,108 404,010 817,118 -
============ ============ ============ =============
Segment Liabilities
Current liabilities (1,121,102) (2,077,773) (3,198,875) -
------------ ------------ ------------ -------------
Total liabilities (1,121,102) (2,077,773) (3,198,875) -
============ ============ ============ =============
Other Segment Items
Capital expenditure:
property, plant, and
equipment 67,197 6,652 73,849 771,036
2015
Discontinued
Company Operations:
Health & Other Supermarket
Sciences (1) (2) Total Retail
$ $ $ $
Revenue 611,076 621,517 1,232,593 22,173,276
------------ ------------ ------------ -------------
Gross Profit 370,347 621,517 991,864 5,656,947
------------ ------------ ------------ -------------
Loss before Interest,
Tax, Depreciation &
Amortisation, and Share-Based
Payment Expense (3,345,216) (914,933) (4,260,149) (2,524,642)
Interest income / (expense) - (12,089) (12,089) 315,718
Depreciation and amortisation (461,225) (96,976) (558,201) (1,186,028)
Write-off of capital
assets (3) - - - (739,887)
Share-based payment
expense - (374,166) (374,166) -
------------ ------------ ------------ -------------
Loss before Tax (3,806,441) (1,398,164) (5,204,605) (4,134,839)
============ ============ ============ =============
Segment Assets
Non-current assets 46,563 128,861 175,424 4,354,191
Current assets 12,771 - 12,771 4,779,841
------------ ------------ ------------ -------------
Total assets excluding
cash and cash equivalents 59,334 128,861 188,195 9,134,032
============ ============ ============ =============
Segment Liabilities
Current liabilities (387,889) (900,177) (1,288,066) (4,155,564)
------------ ------------ ------------ -------------
Total liabilities (387,889) (900,177) (1,288,066) (4,155.564)
============ ============ ============ =============
Other Segment Items
Capital expenditure:
property, plant, and
equipment 114,077 58,461 172,538 1,457,140
Capital expenditure:
intangible assets - - - 24,418
1) In 2016 and 2015, Company and Other include costs associated with operating Realm Therapeutics plc.
2) In 2015, Company and Other include BPR revenue and costs.
3) Represents the write off of certain concentrate delivery system assets, as customers purchased alternate capital equipment (generators), no longer in use.
Information about Geographical Areas
An analysis of the Group's revenue by geographic location of its customers, segment assets (excluding cash and cash equivalents) and capital and intangible expenditures are as follows.
Revenue Segment Assets Capital Expenditures
For the Years For the Years
Ended 31 December At 31 December Ended 31 December
2016 2015 2016 2015 2016 2015
$ $ $ $ $ $
North America 817,479 1,156,378 786,953 143,870 73,849 172,538
United Kingdom 49,458 42,545 30,165 44,325 - -
Other - 33,670 - - - -
----------- ----------- -------- ---------- ---------- -----------
Continuing Operations 866,937 1,232,593 817,118 188,195 73,849 172,538
=========== =========== ======== ========== ========== ===========
Discontinued
Operations,
North America 14,759,521 22,173,276 - 9,134,032 771,036 1,481,558
=========== =========== ======== ========== ========== ===========
Note 2 - Discontinued Operations
Discontinued operations represent the Supermarket Retail business. The Supermarket Retail segment was sold in October 2016; therefore, the 2016 results are for the period ended 7 October 2016. The Statement of Comprehensive Income, Summary Statement of Cash Flows, and Statement of Financial Position for the Supermarket Retail segment are as follows:
For the period from 1 January through 7 October
2016 2015
$ $
Results of Discontinued Operations
Revenue 14,759,521 22,173,276
Cost of Sales (8,730,546) (16,516,329)
------------------------------------------------ -------------
Gross Profit 6,028,975 5,656,947
Sales and marketing expenses (1,873,965) (3,071,954)
General and administrative expenses (1,756,715) (4,614,811)
Research and development expenses (1,167,108) (2,420,739)
------------------------------------------------ -------------
Operating Expenses (4,797,788) (10,107,504)
------------------------------------------------ -------------
Profit / (Loss) from Operating Activities 1,231,187 (4,450,557)
Finance Income 173,697 315,718
------------------------------------------------ -------------
Profit / (Loss) from Operating Activities, net of
tax 1,404,884 (4,134,839)
Gain on Sale of Discontinued Operations 5,418,534 -
------------------------------------------------ -------------
Profit / (Loss) from Discontinued Operations 6,823,418 (4,134,839)
================================================ =============
Basic and diluted Earnings / (Loss) per Share from
Discontinued Operations 0.14 (0.09)
================================================ =============
For the period from 1 January through 7 October
2016 2015
$ $
Net Cash Flow from Operating Activities 1,903,703 (692,961)
Net Cash Flow from Investing Activities (771,036) (1,598,001)
------------------------------------------------ ------------
Net Cash Generated by / (Used in) Discontinued
Operations 1,132,667 (2,290,962)
================================================ ============
7 October 2016 (Date of Disposal)
Effect of Disposal on the Financial Position of the Group $
ASSETS
Non-Current Assets
Intangible assets 445,309
Property, plant and equipment 2,396,978
Other assets 282,255
----------------------------------
Total Non-Current Assets 3,124,542
----------------------------------
Current Assets
Inventories 1,064,869
Trade and other receivables 3,028,411
----------------------------------
Total Current Assets 4,093,280
----------------------------------
Total Assets 7,217,822
----------------------------------
LIABILITIES
Current Liabilities
Trade and other payables (1,939,294)
----------------------------------
Total Current Liabilities (1,939,294)
----------------------------------
Net Assets 5,278,528
==================================
Gross proceeds 13,500,000
Less: disposal costs paid 1,709,783
Less: disposal costs included in trade payables and other accruals 1,093,155
----------------------------------
Consideration received, net of expenses, satisfied in cash 10,697,062
Net assets disposed 5,278,528
----------------------------------
Gain on Sale of Discontinued Operations 5,418,534
==================================
NOTE 3 - Profit / (Loss) for the Year
An analysis of the Group's profit / (loss) for the years ended 31 December has been arrived at after charging:
2016 2015
$ $
Continuing Operations:
Research and development expense 5,049,043 1,792,971
Depreciation of property, plant, and equipment 126,128 129,312
Cost of inventories recognized as expense 58,799 95,299
Loss on disposal of property, plant, and equipment 38,891 1,208
Amortisation and impairment of intangible assets - 428,888
Inventories written down or provisioned - 125,581
Discontinued Operations
Cost of inventories recognized as expense 5,973,968 10,064,146
Research and development expense 1,167,108 2,420,739
Depreciation of property, plant, and equipment, 501,918 996,259
Loss on disposal of property, plant, and equipment 132,848 1,019,032
Amortisation and impairment of intangible assets 144,159 189,770
Inventories written down or provisioned - 188,188
An analysis of Group auditor's remuneration for the years ended 31 December is as follows.
2016 2015
$ $
Audit of the Company's financial
statements 35,000 35,000
Amounts receivable by the Company's
auditors and its associates in
respect of:
Audit of financial statements
of subsidiaries of the Company 55,000 55,000
Taxation compliance services 71,500 66,900
All other services (interim review) 3,313 -
-------- --------
Auditor's remuneration for all
services 164,813 156,900
======== ========
NOTE 4 - Earnings / (Loss) per Share
The Company's issued share capital at 31 December 2016 consisted of 50,165,432, 10 pence ordinary shares.
The calculation of the Group's basic and diluted earnings or loss per share for the years ended 31 December is based on the following data.
2016 2015
$ $
Loss for the Year Attributable to Equity Holders of the Parent (507,241) (9,373,448)
Profit / (Loss) from Discontinued Operations including 2016 Gain on Sale 6,823,418 (4,134,839)
------------ ------------
Loss from Continuing Operations for the purpose of Adjusted basic and diluted loss per
share (7,330,659) (5,238,609)
============ ============
As at 31 December
Number of Shares 2016 2015
Weighted average number of ordinary shares for the purpose of basic and diluted loss per
share 50,139,141 50,135,432
Weighted average number of ordinary shares for the purpose of diluted profit per share 50,139,141 50,135,432
2016 2015
Earnings Per Share $ $
Basic and diluted from Continuing Operations (1) (0.15) (0.10)
Basic and diluted from Discontinued Operations 0.14 (0.09)
------------ ------------
Total basic and diluted (0.01) (0.19)
============ ============
(1) The calculation for diluted loss per share is identical to that used for basic loss per share. The exercise of share options would have the effect of reducing the loss per share and are therefore excluded since not dilutive under the terms of IAS 33 'Earnings per share'.
NOTE 5 - Cash and Cash Equivalents
An analysis of the Group's cash and cash equivalents as at 31 December is as follows.
Group
2016 2015
$ $
Cash at bank 1,107,950 896,338
Cash equivalents (1) 20,321,921 14,560,286
----------- -----------
Total Cash and Cash Equivalents 21,429,871 15,456,624
=========== ===========
(1) Cash equivalents represent funds held in a money market fund backed by U.S. Treasury securities.
NOTE 6 - Trade Payables and Other Accruals
The Directors believe the carrying amount of trade payables and other accruals approximates their fair value. An analysis of the Group's trade payables and other accruals as at 31 December is as follows.
Group
2016 2015
$ $
Trade payables 642,915 1,336,277
Other taxes and social
security 2,364 18,523
Accruals 1,460,440 3,907,545
Supermarket Retail disposal
costs payable 1,093,156 -
Deferred income - 181,285
Total current trade
payables and other accruals 3,198,875 5,443,630
---------- ----------
Amounts owed to group
undertakings - -
---------- ----------
Total trade payables
and other accruals 3,198,875 5,443,630
========== ==========
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UORNRBUAOURR
(END) Dow Jones Newswires
March 23, 2017 03:01 ET (07:01 GMT)
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