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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Verici Dx Plc | LSE:VRCI | London | Ordinary Share | GB00BM8HZD43 | ORD GBP0.001 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 2.375 | 2.25 | 2.50 | 2.375 | 2.375 | 2.375 | 215,225 | 08:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Business Services, Nec | 1.01M | -8.73M | -0.0360 | -0.66 | 5.76M |
From Dec 2019 to Dec 2024
TIDMVRCI
RNS Number : 3688V
Verici Dx PLC
14 April 2021
Verici Dx plc
("Verici Dx" or the "Company")
Final Results for the period ended 31 December 2020
Verici Dx plc (AIM: VRCI), a developer of advanced clinical diagnostics for organ transplant, announces its inaugural audited results for the period ended 31 December 2020.
Strategic and Operational highlights
-- Verici Dx was successfully admitted to AIM in November raising gross proceeds of c.$18.8m (GBP14.5m)
o The fundraising was significantly oversubscribed by institutional and other investors, and the current share price has notably outperformed the market since IPO
o The net proceeds are being used primarily to fund the clinical utility and validation studies for lead products Clarava(TM) and Tuteva(TM), as well as other bioinformatics and health economic studies
-- Appointed Angela Rose as Senior Director of Clinical Trial Operations in December 2020 to oversee the clinical trials to their conclusion
Financial highlights
-- Adjusted EBITDA loss of $1.24m(1) -- Cash balance at 31 December 2020 of $17.8m
Post-period end
-- Expanded scope of licence agreement with Mount Sinai, in January 2021, to include an additional patent filing related to the analysis of gene expression in a blood-based test (liquid biopsy) to predict risk of fibrosis (chronic kidney graft damage) and rejection of the graft
-- Accelerated CLIA(1) approval strategy to enable faster commercial launch of leading products
-- In February 2021, appointed David Schultenover as Vice President of Quality and Regulatory to project manage the accelerated CLIA approval strategy
Commenting on the outlook, Julian Baines, Non-executive Chairman, said: "We have been very pleased with the progress of the Company in such a short time and our primary focus remains on the successful prosecution of our clinical trials, as the first key step in commercialising our innovative transplant products.
"We are already making good progress, initially partnering with three leading US centres ( Northwestern University Feinberg School of Medicine, Henry Ford Health System and University of Maryland, Baltimore ) in our collaborative, multi-centre observational clinical validation study. We expect to bring more US sites on board shortly and are currently also progressing discussions to include a number of EU sites, to ensure that our products are fully tested for validation by the end of 2021, in line with our objectives set out at the time of our IPO.
"On behalf of the Board, I would like to thank our employees, stakeholders and shareholders for their support and we look forward to providing further updates on progress throughout the current year."
Notes:
1. Earnings before income tax, depreciation and amortisation, adjusted to exclude exceptional items and foreign exchange loss
2. The CLIA (Clinical Laboratory Improvement Amendments) regime is used by the Center for Medicare and Medicaid Services (CMS) to regulate laboratory testing in the US, and requires all clinical laboratories to be certified before they can accept human samples for diagnostic testing
Investor briefing
Sara Barrington, Chief Executive Officer, and David Anderson, Chief Financial Officer, will provide a live presentation relating to the Final Results via the Investor Meet Company platform on Wednesday 14 April 2021 at 5.00 p.m. (BST).
The presentation is open to all existing and potential shareholders. Questions can be submitted pre-event via your Investor Meet Company dashboard up until 9.00 a.m. the day before the meeting or at any time during the live presentation.
Investors can sign up to Investor Meet Company for free and add to meet VERICI DX PLC via:
https://www.investormeetcompany.com/verici-dx-plc/register-investor
Investors who already follow Verici Dx plc on the Investor Meet Company platform will automatically be invited.
Enquiries:
Verici Dx www.v ericidx .com Sara Barrington, CEO Via Walbrook PR Julian Baines, Chairman N+1 Singer (Nominated Adviser & Broker) Tel: 020 7496 3000 Aubrey Powell / Justin McKeegan / Tom Salvesen Walbrook PR Limited Tel: 020 7933 8780 or vericidx@walbrookpr.com Paul McManus / Sam Allen Mob: 07980 541 893 / 07748 651 727
About Verici Dx plc www.vericidx.com
Verici Dx is an immuno-diagnostics company developing and commercialising tests to understand how a patient will and is responding to organ transplant, with an initial focus on kidney transplants. The body's own immune system poses a threat to a successful transplant or graft. Patients' immune systems differ in how they respond to the presence of the transplanted organ, characterising this response is called immune phenotyping. Our products and solutions are underpinned by extensive scientific research into the recipient's immune phenotype and how that impacts on acute rejection, chronic injury and ultimately failure of the transplant. These immuno-profile signatures also inform clinicians as to the optimal strategy for immunosuppressive and other therapies for the most successful treatment to ensure graft acceptance with the least amount of side effects.
The foundational research was driven by a deep understanding of cell-mediated immunity and is enabled by access to expertly curated collaborative studies in highly informative cohorts in kidney transplant.
Chairman's statement
I am delighted to report on the first annual results for Verici Dx plc since admission to AIM in November 2020 and this report covers the period from the Company's incorporation on 22 April 2020 to 31 December 2020.
A full description of our strategy and business model is provided in the Strategic Report below, however in summary Verici Dx is an immuno-diagnostics development company, initially focussed on the kidney transplantation market, incorporating the FractalDx technology and associated assets previously owned by Renalytix AI plc and licensed from the Icahn School of Medicine at Mount Sinai, New York.
We have two leading products which aim to understand how a patient will and is responding to kidney transplantation and these have started clinical validation trials:
-- Clarava(TM) , which is a pre-transplant prognosis for the risk of early acute rejection; and
-- Tuteva(TM) , a post-transplant diagnostic focused upon acute cellular rejection, including sub-clinical rejection not being diagnosed through the current standard of care of rising serum creatinine levels.
Our kidney transplant assays use advanced next-generation sequencing that we believe can define a personalised risk profile for each patient over the course of their transplant journey and can detect injury in advance of currently available clinical tests, with a view to minimising risk of transplant rejection.
The initial focus of Verici Dx on the kidney transplantation market reflects the urgent clinical need in this area. According to the World Health Organisation (WHO), there are reports to suggest that between five and ten million people die annually from kidney disease (compared to 1.8m who die from the most prominent cancer, lung cancer) and about 300,000 people around the world are currently on a waiting list waiting for a kidney transplant and is expected to rise due to an increase in kidney disease. We believe we have unique kidney transplant diagnostic technology that enables accurate, data-driven support for clinical decisions, such as the most appropriate immunosuppressive therapy for that patient. This has not only near-term scope to reduce the unnecessary and serious consequences from over- or under-dosing for immunosuppression, but also to improve the longevity of transplanted kidneys and, by reducing the risk and rate of transplant failure, much broader potential to deliver huge health economic benefits by improving transplant outcomes.
In early November last year, Verici Dx was successfully admitted to trading on AIM, raising gross proceeds of c.$18.8m (GBP14.5m). The fundraising was significantly oversubscribed by institutional and other investors, and the share price has appreciably outperformed the market in the period since then. The net proceeds are being used primarily to fund the clinical utility and validation studies for Clarava(TM) and Tuteva(TM), as well as other bioinformatics and health economic studies.
We are already making good progress initially partnering with three leading US centres ( Northwestern University Feinberg School of Medicine, Henry Ford Health System and University of Maryland, Baltimore ) in our collaborative, multi-centre observational clinical validation study. We expect to bring more US sites on board shortly and are currently also progressing discussions to include a number of EU sites, to ensure that our products are fully tested for validation by the end of 2021, in line with our objectives set out at the time of our IPO.
I am also very pleased that we have been able to announce further key milestones in the development of our strategy during the reporting period and post-period end:
-- In December 2020, we announced the appointment of Angela Rose as Senior Director of Clinical Trial Operations. Angela has over 15 years' experience in clinical trial project management and she will be instrumental in overseeing the clinical trials to their conclusion.
-- In January 2021, we announced the expansion of the scope of our licence agreement with Mount Sinai to include an additional patent filing related to the analysis of gene expression in a blood-based test (liquid biopsy) to predict risk of fibrosis (chronic kidney graft damage) and rejection of the graft. Assuming successful development, the addition of a product that can predict the risk of long-term graft failure will establish an end-to-end solution for clinicians seeking to understand how a patient will and is responding to organ transplant.
-- In February 2021, we announced the acceleration of our CLIA laboratory opening and approvals strategy, including the appointment of David Schultenover as Vice President of Quality and Regulatory, who joined from Thermo Fisher Scientific, where, as Senior Director of Regulatory, Quality and Compliance, he was responsible for 154 people covering regulatory affairs, Quality Assurance and Quality Control.
We have been very pleased with the progress of the Company in such a short time and our primary focus remains the successful prosecution of our clinical trials, as the first key-step in commercialising our innovative transplant products.
On behalf of the Board, I would like to thank our employees, stakeholders and shareholders for their support, and we look forward to providing further updates on progress throughout the current year.
Julian Baines
Non-executive Chairman
Strategic Report
Our Strategy and Business Model
Verici Dx plc is an immuno-diagnostics development company, initially focused on the kidney transplantation market. The Company's kidney transplant assays will use advanced next-generation sequencing that may define a personalised risk-profile of each patient over the course of their transplant journey, as well as may detect injury in advance of currently available clinical tests.
The Company successfully admitted to trading on AIM, a market operated by the London Stock Exchange, on 3 November 2020 raising gross proceeds of US$18.8m In the period to 31 December 2020 the Company focussed on putting in place the additional people and resources to enable it to commence its clinical trials in 2021.
Kidney transplantation is the treatment of choice for subjects with end stage renal disease ("ESRD"). An estimated 37 to 50 per cent. of transplant recipients have evidence of rejection, which events can be sub-divided into:
-- Clinical Acute Rejection ("cAR") occurring in approximately 10 to 15 per cent. of kidney transplant recipients in the first year post transplant. This is usually indicated by a rise in serum creatinine over baseline and determined by a for-cause biopsy. It is usually alleviated with a change in immunosuppressive therapy.
-- Subclinical Acute Rejection ("subAR") occurring in 27 to 40 per cent. of patients with stable serum creatine in the first 1 year post transplant. It can be referred to as silent rejection because it often goes undetected. The only way to identify subAR is through a surveillance biopsy. However only 17 per cent. of transplant centres in the U.S. employ a surveillance biopsy program.
It is now well established that the recipient's immune response directed toward the transplanted kidney drives acute rejection, leading to chronic injury and failure of the transplant, thus necessitating lifelong immunosuppression drug therapy. One of the major issues with current immunosuppressive protocols is that they are not tailored to the individual patient's needs. In clinical practice, immunosuppressive therapy is often decided based on broad clinical criteria including anti-HLA antibodies, race, prior transplantations and recipient age. However, these indicators perform poorly in predicting individual risk for development of acute rejection. As a result, most patients receive a standardised immunosuppressive protocol resulting in a significant proportion some individuals being exposed to either insufficient or excessive immunosuppression, leading to acute rejection and/or complications associated with over-immunosuppression. These complications include infections, malignancy, diabetes, hypertension and heart disease. The number of patients receiving higher doses of immunosuppression around the time of a transplant continues to increase in an attempt to minimise rejection and protect the transplanted kidney.
Current standard of care
There is no current pre-transplant mechanism to determine the optimal approach to immunosuppressive therapy for a given patient beyond the presence of recipient antibodies directed toward the donor tissue, which can be found in only approx. 10 per cent. of patients. Early identification of individuals at high risk of acute rejection could allow targeted therapies aimed at improving long-term outcomes. Evidence exists that the phenotype and function of the immune system in patients before kidney transplantation affects the risk for subsequent acute rejection after transplantation, but no biomarker has been identified to quantify or otherwise assess this risk. Following transplant, clinicians use a standardised approach to managing immunosuppression, slowly reducing drug levels to a maintenance level over the first 3 to 6 months. There are currently no biomarkers available to indicate if a patient is under or over immunosuppressed. Manifestation of clinical acute rejection via measurement of serum creatinine is the current indicator used to determine that a patient is under-immunosuppressed, which means measuring the damage to the kidney by observing the effects of the damage after it has happened increasing the risk of rejection. There is no generally accepted mechanism to identify patients with subclinical acute rejection, except to find evidence of rejection on a surveillance biopsy. Furthermore, there is no clinically available mechanism to identify a patient that is at risk of developing graft injury, either through inflammation or fibrosis or both, and therefore at risk of long-term graft failure.
Verici's proposed solution
To address this "one size fits all approach", the Company is developing tests to understand how a patient is likely and may be responding to organ transplant. The recipient's immune system poses a threat to the grafted organ. Patients' immune systems vary in their response to the presence of the transplanted organ; characterising this immune response is called immuno-phenotyping. The Company's products and solutions are underpinned by extensive scientific research into how the recipient's immune phenotype is likely to respond to the transplanted organ and how that response further influences acute rejection, chronic injury and, ultimately, failure of the transplant. These immuno-profile signatures may also assist clinicians as to their assessment of the optimal strategy for immunosuppressive and other therapies to enable successful graft acceptance at the lowest compatible level of treatment-induced side effects.
The research underpinning our technology is driven by a deep understanding of cell-mediated immunity and is facilitated by access to expertly curated, collaborative studies in highly informative cohorts in organ transplant. The Company has an exclusive worldwide patent and a non-exclusive technical information licence with Mount Sinai derived from the work of Professor Barbara Murphy and collaborators in transplant immunology, focusing on the use of high throughput genomic technologies to understand better the immune system mechanisms that lead to graft injury and loss. The Company's current and planned clinical development programmes are not only directed by an extensive Science Advisory Board of key opinion leaders in the fields of clinical transplant and transplant immunology, but also will be conducted at an expanding list of key transplant centres in the US and beyond for the multi-centre validation trials being funded.
We are developing two leading products for clinical validation and commercialisation:
Hot Features
Premium
-- Clarava(TM) , a pre-transplant prognosis for the risk of early acute rejection ("EAR"); and
-- Tuteva(TM) , a post-transplant diagnostic focused upon acute cellular rejection ("ACR") including sub-clinical rejection not being diagnosed through the current standard of care of rising serum creatine levels.
These products are planned to be offered as laboratory developed tests ("LDT") in the US, taking advantage of the lighter regulatory burden of authorisation under the CLIA regime, which is administered by CMS, in partnership with state health departments, rather than seeking clearance from the FDA. In Europe the company will be seeking CE marking. CE marking issued by an EEA Notified Body will remain valid in the UK market until 30 June 2023. To address the UK market post-Brexit, the Company will be seeking the UKCA (UK Conformity Assessed) mark as well. In addition to obtaining CE and UKCA markings, the products (medical devices), will be registered with MHRA (as required by MHRA since 1 January 2021).
The Company is planning on complementing this commercial path with an efficient route through reimbursement coding, pricing and coverage determinations in the US. For inclusion into NICE guidelines in the UK, evidence-based data (such as health economic cost-effectiveness and patient outcome/clinical-effectiveness data, along with diagnostic test accuracy data), shall be applied for review by NICE Diagnostic Assessment Programme.
Market opportunity
Globally there are approximately 95,000 transplants currently performed each year, of which about 24,000 are performed in the US and 25,000 in Europe. In the US, the comparatively low of procedures compared to the numbers of individuals on the waiting list was recognised as an issue for patients waiting for a transplant for on average 3 to 5 years, and even longer in some geographical locations. It also formed part of the policy in the 2019 US Executive Order, Advancing American Kidney Health, whereby transplant organizations were required to improve efficiencies in the transplant network and expand support for living donors, with the further goal of doubling the number of available transplants by 2030. The Company's portfolio is likely to support the confidence for living donors from the increased success of transplantation.
Group and Company History
The Company was incorporated in England and Wales on 22 April 2020, as a wholly owned subsidiary of Renalytix AI plc ("Renalytix").
On 4 May 2020, the Company purchased the assets attached to the Fractal DX portfolio of patents previously licensed to Renalytix by Mount Sinai, for a consideration of $2,000,000. The consideration was satisfied by the issuance of non-interest-bearing Convertible Loan Notes ("CLNs") from the Company to Renalytix. The CLN instrument provided for a total of up to $3,000,000 of borrowings to be made available to the Company.
On 17 January 2020, ResolveDx Inc was incorporated in the state of Delaware, USA as a wholly owned subsidiary of Renalytix. On 14 August 2020, ownership of ResolveDx Inc was transferred to the Company and, on 21 August 2020 ResolveDx Inc changed its name to Verici Dx Inc.
Pursuant to the terms of the CLNs, notice was given by Renalytix on 28 October 2020 to convert all of its existing debt of $2,500,000 by the Company into 9,831,681 ordinary shares of 0.1 pence each ("Ordinary Shares") at the IPO issue price.
In anticipation of a distribution in specie by Renalytix of its entire shareholding in the Company on 7 July 2020, the entire issued share capital of the Company was sub divided to create 1,000 Ordinary Shares of GBP0.001 each. Additionally, 59,415,135 Ordinary Shares of GBP0.001 each were allotted. Those 59,416,135 shares were then immediately reclassified as 59,416,134 A shares and 1 Golden Share and all the A shares and Golden Share were converted into new ordinary shares at the time of the Company's admission to AIM, a market operated by the London Stock Exchange, on 3 November 2020.
Risks and uncertainties
Set out below are the risks which the Directors believe could materially affect the Group's ability to achieve its financial and operating objectives and control or mitigating activities adopted to manage them. The risks are not listed in order of significance.
(a) The Company does not yet have all collaborations in place with institutions that it needs for its validation and for utility studies and there is no guarantee that the Company will be able to demonstrate clinical utility of the Clarava(TM) or Tuteva(TM) products
Following the validation study for its products, the Company intends to run a clinical utility study to support applications for reimbursement, which is necessary for successful commercialisation and to provide further evidence to support marketing claims.
The Company has identified some initial institutions which will carry out the utility studies and has not yet entered into the relevant agreements with these institutions. There is a risk that the Company will not be able to secure these collaborations, which would impact the Company's ability to proceed to the utility study stage. Whilst the utility study is not a source of continuing revenue, it is a short-term revenue stream from sales of the Clarava(TM) and Tueteva(TM) tests following the validation study.
Furthermore, there is a risk that the Company will not be able to demonstrate the clinical utility of the Clarava(TM) and Tuteva(TM) products in a real-world setting, which would impact the Company's ability to secure reimbursement. If such reimbursement is not achieved, it will make commercialisation of the Clarava(TM) and Tuteva(TM) tests significantly more challenging and would impact the Company's ability to generate revenue.
(b) There are risks associated with offering the Clarava(TM) and Tuteva(TM) tests as an LDT that are outside the Company's control
The Clarava(TM) and Tuteva(TM) tests do not as yet have status as an LDT and the Company does not yet have a CLIA-certified laboratory. The Company may be able to generate revenue from offering the Clarava(TM) and Tuteva(TM) tests as an LDT. However, there are inherent risks associated with offering the Clarava(TM) and Tuteva(TM) tests as an LDT that are outside the Company's control, including test uptake, which would have an impact on the amount of revenue the Company could generate
(c) The Company is dependent on other third parties who provide certain resources and services to the Company as the Company has limited resources in the short-term
The Company relies in part on external resources to conduct the research, development, supply of supplies and clinical testing of its Clarava(TM) and Tuteva(TM) products, including in relation to the Company's laboratory systems which rely on software developed by external manufacturers. The future development of the Clarava(TM) and Tuteva(TM) products and other products will partly depend upon the performance of these third parties. The Company cannot guarantee that the relevant third parties will be able to carry out their obligations under the relevant arrangements.
(d) The Company is reliant upon the expertise and continued service of a small number of key individuals of its management, board of directors and scientific advisors
The Company relies on the expertise and experience of a small number of key individuals. The retention of their services cannot be guaranteed. Accordingly, the departure of these key individuals could have a negative impact on the Company's operations, financial conditions, its ability to execute the Company's business strategy and future prospects.
Going forwards, the Company will rely, in part, on the recruitment of appropriately qualified personnel, including personnel with a high level of scientific and technical expertise in the industry. The Company may be unable to find a sufficient number of appropriately highly trained individuals to satisfy its growth rate which could affects its ability to develop products as planned.
In addition, if the Company fails to succeed in pre-clinical or clinical studies, it may make it more challenging to recruit and retain appropriately qualified personnel. The Company's inability to recruit key personnel or the loss of the services of key personnel or consultants may impede the progress of the Company's research and development objectives as well as the commercialisation of its lead and other products.
(e) The Company may need to raise additional funding to take advantage of future opportunities
The Company may need to raise additional funding to take advantage of future opportunities. No assurance can be given that any such additional funding will be available or, if available, that it will be on terms that are favourable to the Company or shareholders. If the Company is unable to obtain additional funding as required, it may be required to reduce the scope of its operations or anticipated expansion.
(f) The Company's strategy involves generating additional commercially valuable IP that can be protected
The Company intends to build further its intellectual property portfolio. No assurance can be given that any future patent applications will result in granted patents, that the scope of any patent protection will exclude competitors or provide competitive advantages to the Company, that any of the Company's patents will be held valid if challenged or that third parties will not claim rights in or ownership of the patents and other proprietary rights held by the Company.
(g) Positive results from pilot trials and early clinical studies of the Company's Clarava(TM) and Tuteva(TM) products are not necessarily predictive of the results of later clinical studies. If the Company cannot replicate the positive results from earlier tests or studies in its later-stage clinical studies, it may be unable to successfully develop, obtain regulatory approval for, and commercialise its products
Positive results from early-stage clinical studies may not necessarily be predictive of the results from later-stage clinical studies. Many companies in the pharmaceutical, biotechnology and medical device industries have suffered significant setbacks in later-stage clinical trials after achieving positive results in early-stage development, and the Company cannot be certain that it will not face similar setbacks. These setbacks have been caused, among other things, by pre-clinical findings made while clinical trials were underway. Moreover, pre-clinical and clinical data is often susceptible to varying interpretations and analyses, and many companies that believed their product candidates performed satisfactorily in pre-clinical studies and clinical trials nonetheless failed to obtain regulatory approval.
(h) The Company is subject to research and product development risk
The Company may not be able to develop new products or to identify specific market needs that can be addressed by tests or solutions developed by the Company. Product development will be a key ongoing activity in the Company. However, there can be no guarantee that further products will be developed, successfully launched, or accepted by the market. All new product development has an inherent level of risk and can be a lengthy process and suffer unforeseen delays, cost overruns and setbacks, such as difficultly recruiting patients into clinical trials. The nature of the diagnostics industry may mean new products may become obsolete as a result of competition or regulatory changes which could have a material adverse effect on the Company's business, results of operations and financial condition.
In addition, research and development may subject to various requirements, such as research subject protection for individuals participating in clinical evaluations of new products, institutional review board oversight, regulatory authorisations, and design control requirements. Failure to comply with requirements could result in penalties, delay, or prevent commercialisation of products.
(i) The Company is subject to risks associated with medical and technological change and obsolescence
Demand for the Company's products could be adversely impacted by the development of alternative technology and alternative medicines with similar applications. There can be no assurance that the technology and products currently being developed by the Company will not be rendered obsolete. As a result, there is the possibility that new technology or products may be superior to, or render obsolete, the technology and products that the Company is currently developing. Any failure of the Company to ensure that its products remain up to date with the latest advances may have a material adverse impact on the Company's competitiveness and financial performance. The Company's success will depend, in part, on its ability to develop and adapt to these technological changes and industry trends.
(j) The Company's failure to maintain compliance of its clinical laboratory operations with applicable laws could result in substantial civil or criminal penalties
The operation of a clinical laboratory by the Company will be in a highly regulated environment which, among other things, will require maintaining compliance with CLIA certification and state clinical laboratory licensing requirements. Failure to maintain compliance with these requirements may result in a range of enforcement actions, including certificate or licence suspension, limitation, or revocation, directed plan of action, onsite monitoring, civil monetary penalties and criminal sanctions. Such failure may also result in significant adverse publicity. Any of these consequences could limit or entirely prevent continued operation of the Company and therefore impact its financial performance.
(k) The Company is subject to various health regulatory laws pertaining to fraud and abuse and related matters, and any failure to comply with such laws could result in substantial civil or criminal penalties
The Company's employees, independent contractors, consultants, and collaborators may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements, which could cause significant liability for the Company and harm the Company's operations and reputation.
The Company is exposed to the risk that the Company's employees, independent contractors, consultants, and collaborators may engage in fraud or other misconduct to comply with manufacturing standards the Company has established, to comply with federal and state healthcare fraud and abuse laws and regulations and similar laws and regulations established and enforced by comparable non-US regulatory authorities, to report financial information or data accurately or to disclose unauthorised activities to the Company. Such misconduct could also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to the Company's reputation. It is not always possible to identify and deter misconduct, and the precautions the Company will take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting the Company from governmental investigations or other actions or lawsuits stemming from a failure to comply with such laws, standards or regulations. If any such actions are instituted against the Company, or the Company's key employees, independent contractors, consultants, or collaborators, and the Company is not successful in defending itself or asserting the Company's rights, those actions could have a significant impact on the Company's business and results of operations, including the imposition of significant criminal, civil and administrative sanctions including monetary penalties, damages, fines, disgorgement, individual imprisonment, additional reporting requirements and oversight if the Company becomes subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, reputational harm, and the Company may be required to curtail or restructure the Company's operations.
(l) The Company's failure to prevent a data breach would result in serious reputational damage to the Company and may result in civil or criminal lawsuits and associated penalties
The Company takes its responsibility to maintain patient confidentiality and protect patient data extremely seriously. By its nature, the de-identified data that is being processed is highly sensitive and includes genetic and demographic information, the processing of which is subject to the most onerous obligations of applicable data protection legislation. If, due to a technical oversight, human error or malicious action by an employee or third party, the privacy, security or integrity of the data were compromised, the Company may be obliged to report such breach once it became aware of under applicable laws and regulations such as Health Insurance Portability and Accountability Act 1996 ("HIPAA"), EU General Data Protection Regulations (EU) 2016/679 ("GDPR"), Data Protection Act 2018 ("DPA") or other US state or EU member state-specific laws, as well as the data privacy laws of other countries such as Japan, Singapore, Hong Kong and China.
Depending on the nature and extent of the breach, the Company may become subject to a regulatory investigation, which would divert time and financial resources from the day-to-day operation of the business and may result in civil or criminal lawsuits and financial fines and penalties as well as adverse publicity. If third parties and/or customers of the Company become aware of such breaches, they may opt to cancel existing contracts or not enter new contracts with the Company, reducing revenue. The Company may also be required to personally inform the patients whose data was released or accessed as a result of a data breach, which may increase the severity of the reputational damage and may lead to patients revoking their consent for the data to be used by the Company. In addition, patients may have the right to bring claims for compensation for such breaches which might be brought by way of class or representative actions and claim significant sums as damages. To mitigate the risk of a data breach or related issue, the Company will employ technical security measures to protect data and work closely with its data providers to ensure that each party understands its obligations to protect personal data.
Financial Performance
The financial performance of the Group in the period from incorporation on 22 April 2020 to 31 December 2020 reflects the initial acquisition of the FractalDX licence and related assets, the costs incurred up to and including the IPO on 3 November and the operating costs of the business since IPO.
Income Statement
As the Company is in development phase, it is not yet generating revenues from its operating activities. The main components of the Administrative expenses of US$1,595,161 were professional costs of US$ 553,454, employee related costs of US$ 258,852 (excluding the share-based payment charge), laboratory and development costs of US$ 355,107 and foreign exchange losses of US$ 159,538. Due to a dollar denominated cash balance in the parent company the appreciation in the value of sterling against the dollar resulted in this foreign exchange loss. Total depreciation and amortisation was US$ 192,235.
Of the total costs of IPO of US$ 1,235,501, US$ 275,508 has been charged to the Income Statement and shown separately on the face on the Income Statement given its size and non-recurring nature. Also disclosed separately is the share-based payments charge of US$ 2,794,625. As many of the options granted vested immediately the full benefit is reflected in these financial statements, as opposed to being spread over the period of vesting, which for the other option holders is a weighted average of 2.78 years.
The finance expense in the period is almost exclusively arising from the imputed interest cost of the Convertible Loan Note issued to Renalytix for both the purchase of the initial license and other related tangible assets, and to fund the initial working capital requirements of the Company prior to IPO. The Convertible Loan Notes were non-interest bearing but a charge is required under International Financial Reporting Standard Number 9 "Financial Instruments".
Statement of Financial Position and Cash Flow Statement
The principal asset of the Group is the licence acquired from Renalytix and relating to the FractalDx patents, together with related tangible assets. The aggregate purchase price paid for the acquired assets was US$ 2,000,000. In the period since acquisition of the assets on 4 May 2020, legal fees incurred in the further prosecution and development of the patents has been incurred and certain additional equipment purchased.
The net proceeds from the IPO were US$17,559,999, after accounting for those IPO costs charged to the Income Statement, from which the total spend on operations and investing activities was US$1,012,427. Due to the appreciation in the value of sterling against the US dollar in the time from IPO to year end, and the substantial funds held in sterling at year end, a foreign exchange gain of US$928,007 increased the year end cash balance to US$17,751,087.
Section 172 Statement
The Directors, in line with their duties under s172 of the Companies Act 2006, act in a way they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole, and in doing so have regard to a range of matters when making decisions for the long term. Key decisions and matters that are of strategic importance to the Company are appropriately informed by s172 factors.
Section 172(1)(a) to (f) requires each Director to act in the way he or she considers would be most likely to promote the success of the company for the benefit of its members as a whole, with regard to the following matters:
(a) the likely consequences of any decision in the long term
(b) the interests of the Company's employees
(c) the need to foster the Company's business relationships with suppliers, customers and others
(d) the impact of the Company's operations on the community and the environment
(e) the desirability of the Company maintaining a reputation for high standards of business conduct; and
(f) the need to act fairly between members of the Company.
The Company's activities and progress regarding these matters since our IPO on 3 November 2020 have been described above in the other sections of the Strategic Report, and in the Directors' Report and Corporate Governance Statements below.
This report was approved by the Board of Directors on 13 April 2021 and signed on its behalf by:
Julian Baines
Non-executive Chairman
Consolidated statement of profit or loss
and other comprehensive income for the period
ended 31 December 2020
Period
22 April
to
Note 31 December
2020
US$
Administrative expenses 3 (1,595,161)
Exceptional expense - share based payments (2,794,625)
Exceptional expense - costs of listing (275,508)
_________
Loss from operations (4,665,294)
Finance expense (69,713)
_________
Loss before tax (4,735,007)
Tax expense -
_________
Loss from continuing operations (4,735,007)
Other comprehensive income:
Exchange gains arising on translation of
foreign operations 1,028,907
_________
Loss and total comprehensive income attributable
to the owners of the Company (3,706,100)
_________
Earnings per share attributable to the
ordinary equity holders of the parent
Loss per share
Basic and diluted (US$ cents) (5.46)
_________
Consolidated statement of financial position
at 31 December 2020
2020
Note US$
Assets
Current assets
Trade and other receivables 7 323,224
Cash and cash equivalents 17,751,087
_________
18,074,311
_________
Non-current assets
Property, plant and equipment 5 464,042
Intangible assets 6 1,767,424
_________
2,231,466
_________
Total assets 20,305,777
_________
Liabilities
Current liabilities
Trade and other payables 8 681,890
_________
NET ASSETS 19,623,887
_________
Issued capital and reserves attributable
to
owners of the parent
Share capital 9 181,614
Share premium reserve 20,353,748
Share-based payments reserve 2,794,625
Convertible debt option -
Foreign exchange reserve 1,028,907
Retained earnings (4,735,007)
_________
TOTAL EQUITY 19,623,887
_________
Consolidated statement of cash flows for
the period ended 31 December 2020
Period
22 April
to
Note 31 December
2020
US$
Cash flows from operating activities
Loss for the period (4,665,294)
Adjustments for:
Depreciation of property, plant and equipment 123,242
Amortisation of intangible fixed assets 68,993
Finance expense (69,713)
Share-based payment expense 2,794,625
_________
(1,748,147)
Increase in trade and other receivables (323,224)
Increase in trade and other payables 681,890
Settled by Convertible Loan Note 11 535,164
Income taxes paid -
_________
Net cash outflow from operating activities (854,317)
_________
Cash flows from investing activities
Purchases of property, plant and equipment (25,851)
Purchase of intangibles (132,259)
_________
Net cash used in investing activities (158,110)
Cash flows from financing activities
Issue of ordinary shares 18,795,500
Expenses of share issue (959,993)
_________
Net cash from financing activities 17,835,507
Net increase in cash and cash equivalents 16,823,080
Cash and cash equivalents at beginning of -
year
Exchange gains on cash and cash equivalents 928,007
_________
Cash and cash equivalents at end of year 17,751,087
_________
Total
attributable
Share-based Foreign to equity
Share Share payment Convertible exchange Retained holders of Total
capital premium reserve debt option reserve earnings parent equity
US$ US$ US$ US$ US$ US$ US$ US$
22 April 2020 1 - - - - - 1 1
Comprehensive
income for
the period
Loss - - - - - (4,735,007) (4,735,007) (4,735,007)
Other
comprehensive
Income - - - - 1,028,907 - 1,028,907 1,028,907
_________ _________ _________ _________ _________ _________ _________ _________
Total
comprehensive
Income
for the
period - - - - 1,028,907 (4,735,007) (3,706,100) (3,706,100)
_________ _________ _________ _________ _________ _________ _________ _________
Contributions
by and
distributions
to owners
Issue of share
capital 181,613 20,283,029 - - - - 20,464,642 20,464,642
Issue of
Convertible
Loan
Note - - - 165,138 - - 165,138 165,138
Conversion of
Convertible
Loan Note
into shares - - - (94,419) - - (94,419) (94,419)
Transfer of
balance
following
conversion of
Convertible
Loan Note - 70,719 - (70,719) - - - -
Share-based
payment - - 2,794,625 - - - 2,794,625 2,794,625
_________ _________ _________ _________ _________ _________ _________ _________
Total
contributions
by
and
distributions
to owners 181,613 20,353,748 2,794,625 - - - 23,329,986 23,329,986
_________ _________ _________ _________ _________ _________ _________ _________
31 December
2020 181,614 20,353,748 2,794,625 - 1,028,907 (4,735,007) 19,623,887 19,623,887
_________ _________ _________ _________ _________ _________ _________ _________
Notes to the financial statements for the period ended 31 December 2020
1 General information
The principal activity of Verici Dx plc (the "Company") is the development of prognostic and diagnostic tests for kidney transplant patients.
The Company is a public limited company incorporated in England and Wales and domiciled in the UK. The address of the registered office is Avon House, 19 Stanwell Road, Penarth, Cardiff CF64 2EZ and the company number is 12567827.
The Company was incorporated as Verici Dx Limited on 22 April 2020 as a private company and on 9 September 2020 the Company was re-registered as a public company and changed its name to Verici Dx plc.
The audited preliminary announcement has been prepared in accordance with the Group's accounting policies as disclosed in the financial statements for the period ended 31 December 2020 and international accounting standards in conformity with the requirements of the Companies Act 2006 ('IFRS'), and the applicable legal requirements of the Companies Act 2006. This preliminary announcement was approved by the Board of Directors on 13 April 2021. The preliminary announcement does not constitute statutory financial statements within the meaning of section 434 of the Companies Act 2006.
Certain statements in this announcement constitute forward-looking statements. Any statement in this announcement that is not a statement of historical fact including, without limitation, those regarding the Company's future expectations, operations, financial performance, financial condition and business is a forward-looking statement. Such forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially. These risks and uncertainties include, amongst other factors, changing economic, financial, business or other market conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described in this announcement and the Company undertakes no obligation to update its view of such risks and uncertainties or to update the forward-looking statements contained herein. Nothing in this announcement should be construed as a profit forecast.
While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of IFRS, this announcement does not itself contain sufficient information to comply with IFRSs. The Company is in process of publishing its full financial statements in the report and accounts for the period ended 31 December 2020 imminently. The report and accounts will also be made available electronically on the Company's website at www.vericidx.com . The Annual General Meeting will be held on Wednesday 19 May 2021 at 12pm. In light of the COVID-19 related Government measures which are presently in place to restrict social gatherings, and overriding health and safety concerns, the Company has decided to hold this year's AGM partly by means of electronic facilities in accordance with Article 43 of the Company's articles of association, with only the minimum quorum of two shareholders physically present. In the interests of safety, anyone seeking to attend in person (other than those forming the quorum) will be refused entry. The Company will provide a facility for remaining shareholders to join the General Meeting either online or telephonically and there will be an opportunity for shareholders to listen and ask questions. In order to facilitate the process, the board of directors would request that Shareholders register for the meeting and submit questions in advance, before 12 p.m. on 17 May 2021. To register for dial-in details and to submit any questions please contact Walbrook PR via email at verici@walbrookpr.com or call +44 (0)20 7933 8780.
2 Summary of significant accounting policies
The principal accounting policies applied in the preparation of this financial information has been applied consistently throughout the year and will be set out in full in the notes to the group's 2020 Annual Report. Certain of those policies are reproduced below.
Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards and interpretations issued by the International Financial Reporting Standards Interpretations Committee ("IFRIC") as adopted by the European Union ("IFRS").
The functional currency and the presentational currency of the Company is United States dollars ("USD" or "US$") as this is the currency of the primary economic environment that the Company operates in.
a) Standards, interpretations and amendments effective from 1 January 2020
New standards impacting the Group that will be adopted in the annual financial statements for the period ended 31 December 2020, and which have given rise to changes in the Group's accounting policies are:
-- IFRS 16 Leases (IFRS 16); and -- IFRIC 23 Uncertainty over Income Tax Treatments (IFRIC 23)
Other new and amended standards and Interpretations issued by the IASB that will apply for the first time in the next annual financial statements are not expected to impact the Group as they are either not relevant to the Group's activities or require accounting which is consistent with the Group's current accounting policies.
b) Standards, interpretations and amendments not yet effective
There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future accounting periods that the group has decided not to adopt early. The most significant of these is are as follows, which are all effective for the period beginning 1 January 2020:
-- IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors (Amendment - Definition of Material)
-- IFRS 3 Business Combinations (Amendment - Definition of Business)
The Company is currently assessing the impact of these new accounting standards and amendments.
Other
The Group does not expect any other standards issued by the IASB, but not yet effective, to have a material impact on the group.
Going concern
The Group is in the development phase of its business and has not generated any revenues. At 31 December 2020 the Group has available cash resources of $17,751,087 following its listing on AIM, a market operated by the London Stock Exchange on 3 November 2020.
The Board has considered the impact of the ongoing COVID-19 pandemic. There has been minimal impact on the Company to date. Given the impact of COVID-19 in the economy generally, the Board has performed a number of stress tests to assess the ability of the Company to continue as a going concern.
The Directors have prepared cash flow forecasts for the Group for a review period of 12 months from the date of approval of this historical financial information. These forecasts reflect an assessment of current and future market conditions and their impact on the Company's future cash flow performance.
The forecasts have been sensitised for additional costs which may be incurred in the review period. In the sensitised scenario, the forecasts indicate the Company would still have sufficient cash to continue as a going concern.
Having considered the points above, the Directors remain confident in the long-term future prospects for the Group, and their ability to continue as a going concern for the foreseeable future. They therefore adopt the going concern basis in preparing the historical financial information of the Group.
Share-based payments
Where equity settled share options are awarded to employees, the fair value of the options at the date of grant is charged to the consolidated statement of comprehensive income over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Non-vesting conditions and market vesting conditions are factored into the fair value of the options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition or where a non-vesting condition is not satisfied.
Where equity instruments are granted to persons other than employees, the consolidated statement of comprehensive income is charged with the fair value of goods and services received.
Foreign currency translation
a) Function and presentational currency
Items included in the financial statements of the Group are measured using USD, the currency of the primary economic environment in which the entity operates ('the functional currency'), which is also the Company's presentation currency.
b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates, of monetary assets and liabilities denominated in foreign currencies to USD, are recognised in the income statement.
Intangible assets
Intangible assets are measured at cost less accumulated amortisation and any accumulated impairment losses.
Patents are recognised at fair value at the acquisition date. Patents have a finite useful life and are subsequently carried at cost less accumulated amortisation and impairment losses.
The Company amortises intangible assets with a limited useful life on a straight-line basis. The following rates are applied:
Licence - the shorter of the remaining life of the licence and 15 years
Tangible assets
Tangible fixed assets are stated at cost net of accumulated depreciation and accumulated impairment losses. Costs comprise purchase costs together with any incidental costs of acquisition.
Depreciation is provided to write down the cost less the estimated residual value of all tangible fixed assets by equal instalments over their estimated useful economic lives on a straight-line basis. The following rates are applied:
Plant and machinery - 3 years
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, if there is an indication of a significant change since the last reporting date. Low value equipment including computers is expensed as incurred.
Impairment of tangible and intangible assets
At each reporting end date, the Company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit and loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Where an impairment subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit and loss.
3 Expenses by nature
Period
22 April
to
31 December
2020
US$
Employee benefit expenses 2,852,641
Depreciation of property, plant and equipment 123,242
Amortisation of intangible assets 68,993
Laboratory and development costs 355,107
Professional costs 553,454
Share-based payment expense for non-employees 200,836
Foreign exchange losses 159,538
Other costs 75,975
4 Employee benefit expenses
Period
22 April
to
31 December
2020
US$
Employee benefit expenses (including directors)
comprise:
Wages and salaries 244,848
Benefits 9,223
Share-based payment expense 2,593,789
Social security contributions and similar taxes 4,781
_________
2,852,641
_________
Key management personnel compensation
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group, including the Directors of the Company.
Period
22 April
to
31 December
2020
US$
Salary 121,421
Share based payment expense 2,577,826
_________
2,699,247
_________
5 Tangible assets
Plant & machinery Total
US$ US$
Cost or valuation
At 22 April 2020
Additions 25,851 25,851
Acquired business assets 531,484 531,484
Foreign exchange movements 36,565 36,565
_________ _________
At 31 December 2020 593,900 593,900
_________ _________
Accumulated depreciation and impairment
At 22 April 2020
Depreciation (123,242) (123,242)
Foreign exchange movements (6,616) (6,616)
_________ _________
At 31 December 2020 (129,858) (129,858)
_________ _________
Net book value
At 31 December 2020 464,042 464,042
_________ _________
6 Intangible assets
License Total
US$ US$
Cost
At 22 April 2020
Additions 234,095 234,095
Acquired business assets 1,468,516 1,468,516
Foreign exchange movements 136,584 136,584
_________ _________
At 31 December 2020 1,839,195 1,839,195
_________ _________
Accumulated amortisation and impairment
At 22 April 2020
Amortisation charge (68,993) (68,993)
Foreign exchange movements (2,778) (2,778)
_________ _________
At 31 December 2020 (71,771) (71,771)
_________ _________
Net book value
At 31 December 2020 1,767,424 1,767,424
_________ _________
7 Trade and other receivables
2020
US$
Prepayments 202,546
Other debtors 120,678
_________
323,224
_________
8 Trade and other payables
2020
US$
Trade payables 394,331
Accruals 210,953
Loan 73,548
_________
Total financial liabilities
classified as financial liabilities measured
at amortised cost 678,832
Other payables - tax and social security payments 3,058
_________
Total trade and other payables 681,890
_________
The carrying value of trade and other payables
classified as financial liabilities measured
at amortised cost approximates fair value.
The loan was interest bearing at 4% and is
repayable by monthly instalment with the last
instalment payable in March 2021.
9 Share capital
Issued and fully paid
2020 2020
Number US$
Ordinary shares of GBP1 each
On incorporation 1 1
__________ __________
Ordinary shares of GBP0.001 each
Sub-division of existing shares into 1,000
ordinary shares 1,000 1
Issue of new shares 59,415,135 74,864
Issue of shares on conversion of Convertible
Loan Notes 9,831,681 12,771
Placing and offer of shares on admission to
AIM 72,500,000 93,978
__________ __________
At 31 December 141,747,816 181,614
__________ __________
On 7 July 2020 the entire issued share capital of the Company was sub divided to create 1,000 ordinary shares of GBP0.001 each and 59,415,135 ordinary shares of GBP0.001 each were allotted pursuant to a dividend in specie by the then parent company, Renalytix AI Plc. Those 59,416,135 shares were then immediately reclassified as 59,416,134 A shares and one Golden Share and all A shares and the Golden Share converted into ordinary shares at the time of the Company's admission to AIM on 3 November 2020.
On 28 October 2020 pursuant to the conversion of the Convertible Loan Notes in issue at that time of $2,500,000, a further 9,831,681 new ordinary shares were issued.
On 3 November 2020 pursuant to the Company's shares being admitted to AIM, a market operated by the London Stock Exchange, 72,500,000 new ordinary shares were issued at an issue price of GBP0.20 per share raising gross proceeds of US$18,795,500 (GBP14,500,000).
10 Share-based payment
On 28 October 2020, the Board adopted the Share Option Plan to incentivise certain of the Group's employees and Directors. The Share Option Plan provides for the grant of both EMI Options and non-tax favoured options. Options granted under the Share Option Plan are subject to exercise conditions as summarised below.
The Share Option Plan has a non-employee sub-plan for the grant of Options to the Company's advisors, consultants, non-executive directors, and entities providing, through an individual, such advisory, consultancy, or office holder services and a US sub-plan for the grant of Options to eligible participants in the Share Option Plan and the Non-Employee Sub-Plan who are US residents and US taxpayers.
With the exception of options over 10,631,086 shares, which vested immediately on grant, the options vest equally over twelve quarters from the grant date. If options remain unexercised after the date one day before the tenth anniversary of grant, such options expire. The Options are subject to exercise conditions such that they shall, subject to certain exceptions, vest in equal quarterly instalments over the three years immediately following the date of grant, which vesting shall accelerate in full in the event of a change of control of the Company.
2020 2020
Weighted
average
exercise
price (p) Number
Outstanding at 22 April - -
Granted during the period 0.32 14,574,782
Vested during the period 0.20 (10,631,086)
_________ _________
Outstanding at 31 December 0.32 3,943,696
_________ _________
Exercisable at 31 December 0.32 3,943,696
_________ _________
The exercise price of options outstanding at 31 December 2020 ranged between 20p and 45.5p and their weighted average contractual life was 2.78 years.
The weighted average fair value of each option granted during the year was 19p.
The fair value of each share option granted has been estimated using a Black-Scholes model and ranges from 10p to 23p. The inputs into the model are a share prices of 20p, 40p and 45.5p, exercise prices of 20p, 40p and 45.5p, expected volatility of 79%, no expected dividend yield, contractual life of between 2.9 and 1.9 years and a risk-free interest rate of 1.1%. As of 31 December 2020, none of the granted stock options have been exercised.
The Group recognised total expenses of $2,794,625 within administrative expenses relating to equity-settled share-based payment transactions during the period.
11 Acquisition of business assets
On 4 May 2020 the Company entered into an Asset Purchase Agreement with Renalytix AI Plc. The fair value of the assets acquired, and the consideration paid were as follows:
US$
Assets acquired
License 1,468,516
Plant & Machinery 531,484
_________
2,000,000
_________
Contractual repayment amount of Convertible Loan Note
Instrument at inception 2,000,000
_________
Consideration - repayment liability 2,000,000
_________
Subsequent to the acquisition of the business, further Convertible Loan Notes were issued by Renalytix AI Plc to provide working capital to the Company prior to its admission to the London Stock Exchange on 3 November 2020. The Convertible Loan Note was non-interest bearing.
On 28 October 2020 the total Convertible Loan Note of $2,500,000 was redeemed and converted into 9,831,681 ordinary shares. [state applicable FX rate? Or equivalent $ value of GBP0.20 issue price?]
Non-cash transaction
This transaction, together with the subsequent funding of working capital of the Company by further issuance of Convertible Loan Notes on the same terms until Admission to AIM on 3 November 2020, represented the major non-cash transaction in the year.
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END
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