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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Relief Therapeutics Holdings AG (QB) | USOTC:RLFFD | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 4.2038 | 0.00 | 01:00:00 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13A-16 OR 15D-6
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the Month of September, 2023
Commission File Number: 001-41174
RELIEF THERAPEUTICS Holding SA
(Exact name of Registrant as specified in its charter)
Not Applicable
(Translation of registrants name into English)
Switzerland
(Jurisdiction of incorporation or organization)
Avenue de Sécheron 15
1202 Geneva
Switzerland
Tel: +41 22 545 11 16
(Address of principal executive offices)
Indicate by check mark if the registrant files or will file annual reports under cover of Form 20-F or Form 40-F
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1) ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7) ☐
INFORMATION CONTAINED IN THIS REPORT ON FORM 6-K
On September 15, 2023, RELIEF THERAPEUTICS Holding SA (the Company) presented to its shareholders (i) a corporate update and presentation, (ii) its Condensed Consolidated Financial Statements (unaudited) as of June 30, 2023, and (iii) its Managements Discussion and Analysis of Financial Condition and Results of Operations for the six months ended June 30, 2023, which are attached hereto as Exhibits 99.1, 99.2, and 99.3 respectively.
On September 15, 2023, the Company issued a press release reporting on its results for the six months ended June 30, 2023 and providing a corporate update, which press release is attached hereto as Exhibit 99.4.
INDEX TO EXHIBITS
1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
RELIEF THERAPEUTICS Holding SA | ||
By: | /s/ Jack Weinstein | |
Jack Weinstein | ||
Chief Financial Officer |
Dated: September 15, 2023
2
Exhibit 99.2
RELIEF THERAPEUTICS Holding SA
Condensed Consolidated Interim Financial Statements
for the half-year ended June 30, 2023
(unaudited)
- 1 -
CONSOLIDATED INTERIM BALANCE SHEET
in CHF thousands |
Notes | June 30, 2023 |
December 31, 2022 |
|||||||||
ASSETS |
||||||||||||
Intangible assets |
6 | 105,576 | 162,915 | |||||||||
Right-of-use assets |
7 | 2,829 | 2,642 | |||||||||
Property and equipment |
8 | 390 | 49 | |||||||||
Other non-current assets |
118 | 114 | ||||||||||
Deferred tax assets |
506 | 495 | ||||||||||
|
|
|
|
|||||||||
Non-current assets |
109,419 | 166,215 | ||||||||||
Inventories |
9 | 450 | 227 | |||||||||
Trade receivables |
1,012 | 1,321 | ||||||||||
Other current assets |
10 | 2,106 | 1,798 | |||||||||
Cash and cash equivalents |
12,792 | 19,237 | ||||||||||
|
|
|
|
|||||||||
Current assets |
16,360 | 22,583 | ||||||||||
|
|
|
|
|||||||||
Total assets |
125,779 | 188,798 | ||||||||||
|
|
|
|
|||||||||
EQUITY AND LIABILITIES |
||||||||||||
Share capital |
11 | 56,163 | 56,163 | |||||||||
Reserves |
221,590 | 220,961 | ||||||||||
Treasury shares |
(7,289 | ) | (12,108 | ) | ||||||||
Accumulated losses |
(176,098 | ) | (119,599 | ) | ||||||||
|
|
|
|
|||||||||
Equity |
94,366 | 145,417 | ||||||||||
|
|
|
|
|||||||||
Non-current lease liabilities |
7 | 2,334 | 2,232 | |||||||||
Non-current borrowings |
12 | 13 | 16 | |||||||||
Defined benefit obligations |
1,764 | 1,772 | ||||||||||
Provisions |
13 | 7,032 | 7,909 | |||||||||
Deferred tax liabilities |
24 | 13,145 | 20,736 | |||||||||
|
|
|
|
|||||||||
Non-current liabilities |
24,288 | 32,665 | ||||||||||
Current lease liabilities |
7 | 531 | 444 | |||||||||
Current borrowings |
12 | 361 | 372 | |||||||||
Trade payables |
2,173 | 1,625 | ||||||||||
Financial liabilities due to related parties |
14 | 1,313 | 1,280 | |||||||||
Provisions |
13 | | 3,094 | |||||||||
Other current payables and liabilities |
15 | 2,747 | 3,901 | |||||||||
|
|
|
|
|||||||||
Current liabilities |
7,125 | 10,716 | ||||||||||
|
|
|
|
|||||||||
Total equity and liabilities |
125,779 | 188,798 | ||||||||||
|
|
|
|
The accompanying notes form an integral part of these consolidated interim financial statements.
- 2 -
CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE LOSS
Six-month period ended June 30, |
||||||||||||
in CHF thousands |
Notes | 2023 | 2022 | |||||||||
Revenue |
5 | 3,023 | 3,242 | |||||||||
Other gains |
16 | 66 | 563 | |||||||||
|
|
|
|
|||||||||
Total income |
3,089 | 3,805 | ||||||||||
Raw materials and consumables expenses |
17 | (779 | ) | (669 | ) | |||||||
External selling and distribution expenses |
17 | (1,442 | ) | (465 | ) | |||||||
External research and development expenses |
18 | (933 | ) | (10,637 | ) | |||||||
Personnel expenses |
19 | (6,259 | ) | (5,767 | ) | |||||||
Other administrative expenses |
20 | (3,462 | ) | (3,963 | ) | |||||||
Change in fair value of contingent consideration |
13 | 3,962 | 740 | |||||||||
|
|
|
|
|||||||||
EBITDA |
(5,824 | ) | (16,956 | ) | ||||||||
Impairment expense |
21 | (55,824 | ) | (8,226 | ) | |||||||
Amortization and depreciation expense |
22 | (1,704 | ) | (2,033 | ) | |||||||
|
|
|
|
|||||||||
Operating result |
(63,352 | ) | (27,215 | ) | ||||||||
Financial income |
23 | | 162 | |||||||||
Financial expense |
23 | (790 | ) | (1,056 | ) | |||||||
|
|
|
|
|||||||||
Net loss before taxes |
(64,142 | ) | (28,109 | ) | ||||||||
Income taxes |
24 | 7,643 | 1,609 | |||||||||
|
|
|
|
|||||||||
Net loss for the period |
(56,499 | ) | (26,500 | ) | ||||||||
OTHER COMPREHENSIVE INCOME |
||||||||||||
Remeasurement of defined benefit obligation |
| | ||||||||||
|
|
|
|
|||||||||
Items that will not be reclassified to profit or loss |
| | ||||||||||
Currency translation differences |
415 | 191 | ||||||||||
|
|
|
|
|||||||||
Items that may be reclassified to profit or loss |
415 | 191 | ||||||||||
|
|
|
|
|||||||||
Other comprehensive income for the period, net of tax |
415 | 191 | ||||||||||
|
|
|
|
|||||||||
Total comprehensive loss for the period |
(56,084 | ) | (26,309 | ) | ||||||||
|
|
|
|
|||||||||
EARNINGS PER SHARE |
||||||||||||
Basic and diluted loss per share (in CHF) |
25 | (5.098 | ) | (2.551 | ) | |||||||
|
|
|
|
The accompanying notes form an integral part of these consolidated interim financial statements.
- 3 -
CONSOLIDATED INTERIM STATEMENT OF CASH FLOW
Six-month period ended June 30, |
||||||||||||
in CHF thousands |
Notes | 2023 | 2022 | |||||||||
Net loss for the period |
(56,499 | ) | (26,500 | ) | ||||||||
Adjustments: |
||||||||||||
Income tax gain |
24 | (7,643 | ) | (1,609 | ) | |||||||
Amortization and depreciation expense |
22 | 1,704 | 2,033 | |||||||||
Impairment of intangible assets |
6 | 55,734 | 8,226 | |||||||||
Impairment of receivables and inventories |
98 | 77 | ||||||||||
Reversal of impairment loss on receivables |
| (453 | ) | |||||||||
Gain from fair value adjustments to contingent payments |
13 | (3,962 | ) | (740 | ) | |||||||
Finance expenses |
23 | 790 | 1,056 | |||||||||
Finance income |
23 | | (12 | ) | ||||||||
Interest expenses on borrowings and lease liabilities |
(255 | ) | (166 | ) | ||||||||
Change in defined benefit obligations |
| 23 | ||||||||||
Share-based payment expense |
19 | 511 | 1,288 | |||||||||
Changes in working capital: |
||||||||||||
Decrease/(Increase) in inventories |
(223 | ) | 147 | |||||||||
Decrease/(Increase) in trade receivables |
301 | 166 | ||||||||||
Decrease/(Increase) in other assets |
(312 | ) | 4,498 | |||||||||
(Decrease)/increase in trade payables |
577 | (146 | ) | |||||||||
(Decrease)/increase in provisions |
(136 | ) | (622 | ) | ||||||||
(Decrease)/increase in other payables and liabilities |
(1,151 | ) | (1,997 | ) | ||||||||
|
|
|
|
|||||||||
Cash flow used in operating activities |
(10,466 | ) | (14,731 | ) | ||||||||
|
|
|
|
|||||||||
Payments for property, plant and equipment |
(369 | ) | (25 | ) | ||||||||
Payments for intangible assets |
6 | | (107 | ) | ||||||||
Reimbursement for price adjustment on intangible assets |
6 | 149 | | |||||||||
Proceeds from other financial assets |
| 469 | ||||||||||
Milestone payments related to acquisition of subsidiaries |
| (5,120 | ) | |||||||||
Interest received |
| 19 | ||||||||||
|
|
|
|
|||||||||
Cash flow used in investing activities |
(220 | ) | (4,764 | ) | ||||||||
|
|
|
|
|||||||||
Proceeds from capital increase |
11 | 4,992 | 60 | |||||||||
Sale of treasury shares |
11 | 17 | 4,933 | |||||||||
Equity transaction costs |
11 | (487 | ) | (78 | ) | |||||||
Repayment of lease liabilities |
(344 | ) | (178 | ) | ||||||||
Repayment of borrowings |
(4 | ) | (75 | ) | ||||||||
|
|
|
|
|||||||||
Cash flow from financing activities |
4,174 | 4,662 | ||||||||||
|
|
|
|
|||||||||
Net decrease in cash and cash equivalents |
(6,512 | ) | (14,833 | ) | ||||||||
Cash and cash equivalents at beginning of period |
19,237 | 44,761 | ||||||||||
Exchange difference on cash and cash equivalents |
67 | (57 | ) | |||||||||
Cash and cash equivalents at end of period |
12,792 | 29,871 | ||||||||||
|
|
|
|
The accompanying notes form an integral part of these consolidated interim financial statements.
- 4 -
CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY
in CHF thousands |
Share capital | Treasury shares |
Reserves | Accumulated loss |
Total equity |
|||||||||||||||
Balance at January 1, 2022 |
44,133 | (2,999 | ) | 210,147 | (69,751 | ) | 181,530 | |||||||||||||
Result for the period |
| | | (26,500 | ) | (26,500 | ) | |||||||||||||
Other comprehensive income for the period |
| | 191 | | 191 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total comprehensive result for the period |
| | 191 | (26,500 | ) | (26,309 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Direct Share Placement program |
| 764 | 4,169 | | 4,933 | |||||||||||||||
Transaction cost in relation to capital increases |
| | (78 | ) | | (78 | ) | |||||||||||||
Exercise of stock options |
30 | | 30 | | 60 | |||||||||||||||
Share-based compensation cost |
| | 1,288 | | 1,288 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance at June 30, 2022 |
44,163 | (2,235 | ) | 215,747 | (96,251 | ) | 161,424 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance at January 1, 2023 |
56,163 | (12,108 | ) | 220,961 | (119,599 | ) | 145,417 | |||||||||||||
Result for the period |
| | | (56,499 | ) | (56,499 | ) | |||||||||||||
Other comprehensive income for the period |
| | 415 | | 415 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total comprehensive result for the period |
| | 415 | (56,499 | ) | (56,084 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Direct Share Placement program |
| 12 | 5 | | 17 | |||||||||||||||
Private placement |
| 4,800 | 195 | | 4,995 | |||||||||||||||
Withdrawal of fractional shares |
| (12 | ) | (10 | ) | | (22 | ) | ||||||||||||
Transaction cost in relation to capital increases |
| | (487 | ) | | (487 | ) | |||||||||||||
Exercise of stock options |
| 19 | | | 19 | |||||||||||||||
Share-based compensation cost |
| | 511 | | 511 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance at June 30, 2023 |
56,163 | (7,289 | ) | 221,590 | (176,098 | ) | 94,366 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
The accompanying notes form an integral part of these consolidated interim financial statements.
- 5 -
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. | General information |
RELIEF THERAPEUTICS Holding SA (Relief, the Company or the Group) is a Swiss stock corporation domiciled at 15 Avenue de Sécheron, 1202 Geneva, Switzerland. The Companys shares are listed on the SIX Swiss Exchange (ticker: RLF) and quoted in the U.S. on OTCQB (tickers: RLFTF, RLFTY).
The Group focuses on identification, development and commercialization of novel, patent protected products intended for the treatment of metabolic, dermatological and pulmonary rare diseases with a portfolio of clinical and marketed products that serve unmet patient needs.
In March 2021, Relief signed a collaboration and license agreement with Acer Therapeutics, Inc. (Acer) for the worldwide development and commercialization of ACER-001 (OLPRUVA) for the treatment of urea cycle disorders (UCDs) and maple syrup urine disease (MSUD). In December 2022, the FDA approved ACER-001 for the treatment of UCDs in the U.S. In August 2023, Relief and Acer terminated the March 2021 collaboration and license agreement and entered into a new exclusive license agreement for the development and commercialization of ACER-001 for the treatment of UCDs, MSUD, and other potential indications. Under the terms of the new agreement, Acer retains development and commercialization rights worldwide, excluding Europe where Relief retains these rights.
In June 2021, the Group acquired APR Applied Pharma Research SA (APR), a privately held Swiss pharmaceutical company specialized in formulating, developing, and commercializing known molecules designed with proprietary drug delivery systems for niche and specialty diseases. The acquisition transformed Relief into a fully integrated commercial-stage biopharmaceutical group. The acquisition further diversified Reliefs pipeline and portfolio with both commercial products and clinical-stage programs, provided a commercial infrastructure in Europe and strengthened internal research and development (R&D) capabilities.
In July 2021, the Group acquired AdVita Lifescience GmbH (AdVita). The acquisition strengthened the Groups expertise and intellectual property rights around the inhaled formulation and delivery of aviptadil.
In 2022, Relief established a commercial unit in the U.S. to launch PKU Golike in October 2022 and market potential future products in the U.S. market.
These unaudited condensed consolidated interim financial statements were approved for publication by the Board of Directors on September 14, 2023.
2. | New and revised International Financial Reporting Standards (IFRS) |
There were no new standards or amendments to existing standards that have a significant impact on the Groups accounting policies and interim financial statements.
3. | Summary of significant accounting policies |
3.1 | Basis of preparation |
These condensed consolidated interim financial statements were prepared in accordance with IAS 34 Interim Financial Reporting as issued by the International Accounting Standards Board (IASB). They do not include all disclosures that would otherwise be required in a complete set of financial statements and should therefore be read in conjunction with the Groups annual consolidated financial statements for the year ended December 31, 2022. They have been prepared under the historical cost convention, as modified by the revaluation of financial instruments at fair value, and are presented in Swiss francs (CHF). All values are rounded to the nearest thousand (TCHF), except when otherwise indicated.
3.2 | Reclassifications |
A gain of TCHF 740 on fair value remeasurement of contingent consideration in the comparative period of the consolidated interim statement of comprehensive loss has been reclassified from Other gains to a distinct line Change in fair value of contingent consideration to conform with the current period presentation. This reclassification had no impact on the Groups previously reported financial position or result of operations.
3.3 | Significant accounting policies |
The accounting policies used in the preparation and presentation of the condensed interim consolidated financial statements are consistent with those applied for the Groups last annual consolidated financial statements for the year ended December 31, 2022.
- 6 -
3.4 | Interim measurement note |
The business is not subject to any seasonality. Expenses largely depend on the phase of the respective projects, particularly with regard to external research and development expenditures.
Costs that incur unevenly during the financial year are anticipated or deferred in the interim report only if it would also be appropriate to anticipate or defer such costs at the end of the financial year.
4. | Summary of critical accounting judgments and key sources of estimation uncertainty |
The preparation of the consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income, expenses and related disclosures. The estimates and underlying assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
4.1 | Critical judgments in applying accounting policies |
Critical judgments in applying accounting policies were the same as those applied to the consolidated financial statements for the year ended December 31, 2022.
4.2 | Key sources of estimation uncertainty |
Key sources of estimation uncertainty were the same as those applied to the consolidated financial statements for the year ended December 31, 2022.
Going concern
These consolidated financial statements have been prepared assuming the Group will continue as a going concern which contemplates the continuity of operations, realization of assets and the satisfaction of liabilities in the ordinary course of business.
As of August 31, 2023, the Group had CHF 18.3 million cash in hand, which includes proceeds of USD 10 million from the renegotiation of licensing terms with Acer (refer to note 29). Based on liquidity forecasts and development plans, existing cash was expected to be sufficient to meet the Groups cash needs for at least the next 12 months.
Since its inception, the Group has primarily relied on external financing to fund its cash needs and has experienced recurring losses. The Group may continue to generate operating losses in the foreseeable future. The Groups long-term viability depends on its ability to raise additional capital until it generates positive cash flows to support its operations. The Group may never achieve sustainable profitability and is exposed to all the risks inherent in establishing a business. Management intends to continue to explore options to obtain additional funding, including public or private financing, or license and collaboration agreements. However, there can be no assurance that capital will be available in sufficient amounts or on acceptable terms. If Relief is unable to obtain the required funding, it will be forced to delay, reduce or eliminate some or all of its research and development programs and of its product portfolio expansion or commercialization efforts, which could adversely affect its business prospects or result in the Groups inability to continue operations.
- 7 -
5. | Segment information |
5.1 | Information on revenue |
The disaggregation of the Groups revenue is presented in the following table:
TCHF |
01.01.-30.06.2023 | 01.01.-30.06.2022 | ||||||
Revenue streams |
||||||||
Royalties |
812 | 1,246 | ||||||
Product sales |
2,042 | 1,369 | ||||||
Licensing fees |
| 211 | ||||||
Revenue from research and development services |
169 | 416 | ||||||
|
|
|
|
|||||
Total revenue |
3,023 | 3,242 | ||||||
|
|
|
|
|||||
Geographical area |
||||||||
Switzerland |
237 | 639 | ||||||
Europe (excluding Switzerland) |
1,319 | 1,609 | ||||||
North America |
735 | 630 | ||||||
Rest of the world |
732 | 364 | ||||||
|
|
|
|
|||||
Total revenue |
3,023 | 3,242 | ||||||
|
|
|
|
|||||
Timing of revenue recognition |
||||||||
Point in time |
3,023 | 3,242 | ||||||
Over time |
| | ||||||
|
|
|
|
|||||
Total revenue |
3,023 | 3,242 | ||||||
|
|
|
|
5.2 | Geographical location of non-current assets |
TCHF |
June 30, 2023 | December 31, 2022 | ||||||
Switzerland |
108,565 | 165,484 | ||||||
Rest of the world |
230 | 122 | ||||||
|
|
|
|
|||||
Total non-current assets * |
108,795 | 165,606 | ||||||
|
|
|
|
* | Without financial assets and deferred tax assets |
- 8 -
6. | Intangible assets |
TCHF |
Technologies, patents and trademarks |
Licenses | In-process research and development |
Goodwill | Total | |||||||||||||||
Historical cost |
||||||||||||||||||||
January 1, 2022 |
39,357 | 13,729 | 132,395 | 8,658 | 194,139 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Addition |
174 | | 314 | | 488 | |||||||||||||||
December 31, 2022 |
39,531 | 13,729 | 132,709 | 8,658 | 194,627 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Acquisition price adjustment |
| | (149 | ) | | (149 | ) | |||||||||||||
June 30, 2023 |
39,531 | 13,729 | 132,560 | 8,658 | 194,478 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Accumulated amortization and impairment |
||||||||||||||||||||
January 1, 2022 |
(1,840 | ) | | | | (1,840 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Amortization |
(3,448 | ) | | | | (3,448 | ) | |||||||||||||
Impairment |
(24,255 | ) | | (529 | ) | (1,640 | ) | (26,424 | ) | |||||||||||
December 31, 2022 |
(29,543 | ) | | (529 | ) | (1,640 | ) | (31,712 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Amortization |
(965 | ) | (491 | ) | | | (1,456 | ) | ||||||||||||
Impairment |
| | (49,717 | ) | (6,017 | ) | (55,734 | ) | ||||||||||||
June 30, 2023 |
(30,508 | ) | (491 | ) | (50,246 | ) | (7,657 | ) | (88,902 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Carrying amount per class |
||||||||||||||||||||
December 31, 2022 |
9,988 | 13,729 | 132,180 | 7,018 | 162,915 | |||||||||||||||
June 30, 2023 |
9,023 | 13,238 | 82,314 | 1,001 | 105,576 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Carrying amount per asset |
||||||||||||||||||||
PKU Golike |
4,511 | | | | 4,511 | |||||||||||||||
Diclofenac |
4,512 | | | 360 | 4,872 | |||||||||||||||
ACER-001 |
| 13,238 | | 641 | 13,879 | |||||||||||||||
RLF-100 |
| | 57,290 | | 57,290 | |||||||||||||||
RLF-TD011 |
| | 24,858 | | 24,858 | |||||||||||||||
Sentinox |
| | | | | |||||||||||||||
RLF-OD032 |
| | 166 | | 166 | |||||||||||||||
June 30, 2023 |
9,023 | 13,238 | 82,314 | 1,001 | 105,576 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
PKU Golike |
4,678 | | | | 4,678 | |||||||||||||||
Diclofenac |
5,310 | | | 360 | 5,670 | |||||||||||||||
ACER-001 |
| 13,729 | | 641 | 14,370 | |||||||||||||||
RLF-100 |
| | 81,516 | 3,805 | 85,321 | |||||||||||||||
RLF-TD011 |
| | 47,392 | 2,212 | 49,604 | |||||||||||||||
Sentinox |
| | 2,958 | | 2,958 | |||||||||||||||
RLF-OD032 |
| | 314 | | 314 | |||||||||||||||
December 31, 2022 |
9,988 | 13,729 | 132,180 | 7,018 | 162,915 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
In December 2022, ACER-001 was approved in the U.S. by the Food and Drug Administration (FDA) for the treatment of Urea Cycle Disorders under the trademark OLPRUVA. The intangible asset associated with the ACER-001 license is amortized from January 1, 2023, on a straight-line basis over its estimated useful life of 14 years.
Impairment test
Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. Intangible assets with indefinite useful lives are not amortized but are tested for impairment either individually or at the cash-generating unit level. The Group generally tests its intangible assets for impairment at the end of the year, or more frequently if events or changes in circumstances indicate that intangible assets may be impaired. The Group considers the relationship between its market capitalization and its equity book value, among other factors, when reviewing for indication of impairment. As of June 30, 2023, Reliefs market capitalization was CHF 33.7 million, representing a significant decrease from CHF 132.2 million as of December 31, 2022, and a large discount to the carrying amount of its net assets, indicating a potential impairment of Reliefs intangible assets. Additionally, the Group identified circumstances that negatively affected the recoverable value of its in-development assets. Consequently, the Group carried out impairment tests of its intangible assets and goodwill as of June 30, 2023.
For the purpose of impairment testing, goodwill was allocated to each CGU constituting the sole operating segment of the Group. The recoverable amount of the group of CGUs is based on the cumulated value in use estimated for each CGU or group of CGUs. The Groups material CGUs relate to on-market drugs and drug candidates referred to above. The impairment test was performed by determining the recoverable amount of each CGU as the risk-adjusted net present value of future cashflows.
- 9 -
Key assumptions used in value in use calculations
The estimation of recoverable amounts involves significant management judgment. The values assigned to each assumption on an asset basis are based on historical data from external and internal sources and on managements estimates. The key assumptions used in the valuation models were determined as follows:
| Cash flow projections were based on a financial forecast developed by management, which includes projections for net sales, cost of sales, and development costs. These projections are periodically reviewed and updated by management. |
| Revenue projections were based on a product-specific analysis that considered relevant market sizes, disease prevalence, incidence rates, expected market share, expected patent life, and the expected year of regulatory approval for unapproved product candidates based on the current stage of development and expected development plan. |
| Forecast periods were defined on a product basis and based on product life cycles. For on-market products, cash flows were projected for each CGU over a period of five years and cash flows beyond the forecast period were extrapolated using an attrition rate of 5% until the expected end of the exclusivity period of each product. For in-process projects, cash flows were projected over a period of up to 20 years, reflecting the length of the development and subsequent commercialization period. Reliefs approach to compiling development and commercial forecasts is based on a combination of external sources and internal estimates, which includes the use of patient-based models. This methodology is commonly employed in the pharmaceutical industry and has demonstrated satisfactory results over time. No terminal value was considered. |
| Probabilities of success for in-process projects to reach final development and commercialization ranged from 15% to 35%. These probabilities were based on empirical success rate analysis of multi-stage studies for comparable indications, or if this approach could not be applied, management exercised its judgment. |
| The pre-tax discount rate was 17.61% based on the assumed cost of capital for the Group (December 31, 2022: 16.54%). |
Impairment test conclusion
For the six-month ended June 30, 2023, the Group recognized a non-cash impairment charge of TCHF 55734 to write down the carrying value of intangible assets associated with RLF-100®, RLF-TD011 and Sentinox. The impairment charge was recorded in the comprehensive statement of loss under the heading Impairment expense.
As part of a comprehensive strategic review conducted in the second and third quarters of 2023, the Group prioritized certain development programs to ensure resource efficiency amid constrained funding conditions and revised its development plans. Under the revised strategic plan, resource allocation to development programs related to drug candidates RLF-100, RLF-TD011 and Sentinox was scaled back. The de-prioritization of these programs is expected to postpone potential economic returns while reducing required short-term investments. The Group plans to primarily allocate available resources to the ongoing development of its metabolic disorder programs, including RLF-OD032, PKU Golike and ACER-001. It aims to resume the accelerated development of RLF-100, RLF-TD011 and Sentinox once adequate financing or strategic partnerships are secured for their completion. Clinical programs with RLF-100 and RLF-TD011 remained ongoing as of June 30, 2023.
The postponement of estimated future net cash flows from these assets, as well as an increase of the discount rate compared to December 31, 2022, resulted in impairment charges of TCHF 24225, TCHF 22534 and TCHF 2958 recognized against the intangible assets associated with RLF-100, RLF-TD011 and Sentinox, respectively. In addition, goodwill allocated to these assets was entirely impaired for a total amount of TCHF 6017.
For other intangible assets and remaining goodwill, the Group determined based on the results of the impairment test that their estimated value in use exceeded their respective carrying amounts as of the measurement date. Therefore, the Group did not record an impairment charge on these other assets for the period ended June 30, 2023.
Sensitivity to changes in assumptions
The Group performed a sensitivity analysis taking into account reasonably possible changes in the assumptions the value in use is most sensitive to, as listed in the key assumptions section above, including higher discount rate, lower projected income, increased development budget, and postponed market launch when applicable. The results of the sensitivity analysis as of June 30, 2023, are presented hereafter.
| The intangible assets associated with PKU Golike had an estimated recoverable amount that exceeded by TCHF 307 the carrying amount of TCHF 4511. However, changes in assumptions such as an increase in the pre-tax discount rate by 50 basis points, or a 6% reduction in expected gross margins during the remaining expected commercialization period would trigger an impairment. For instance, a reduction of 30% in expected gross margins throughout the commercialization period would cause an impairment of TCHF 1273, assuming other assumptions remain constant. No other reasonably possible change of key assumptions would cause the carrying amount to exceed the recoverable amount. |
- 10 -
| The intangible assets associated with Diclofenac had an estimated recoverable amount that exceeded by TCHF 1271 the carrying amount of TCHF 4872. However, a reduction of 22% in expected gross margins during the remaining expected commercialization period would trigger an impairment. For instance, a reduction of 30% in expected gross margins throughout the commercialization period would cause an impairment of TCHF 501, assuming other assumptions remain constant. No other reasonably possible change of key assumptions would cause the carrying amount to exceed the recoverable amount. |
| The intangible assets associated with RLF-100 and RLF-TD011 had estimated recoverable amounts that exactly matched their carrying amounts due to the impairment recognized at the end of the current reporting period. They are inherently sensitive to any changes in assumptions which would result in future impairments. |
For intangible assets associated with the ACER-001 license, the Group concluded that no reasonably possible change of key assumptions would cause the carrying amount to exceed the recoverable amount.
While management believes the assumptions used are reasonable, changes in these assumptions could result in a future material impairment. The completion of the development of IPR&D assets and the ongoing commercialization of on-market products are subject to the availability of capital, which is uncertain as discussed in note 4.2 of these interim consolidated financial statements. If the Group is unable to secure sufficient capital, it will be forced to delay or abandon certain development and commercialization activities, which could lead to a material impairment of the affected assets.
7. | Leases |
7.1 | Right-of-use assets |
TCHF |
Building | Equipment | Total | |||||||||
Historical cost |
||||||||||||
January 1, 2022 |
2,538 | 139 | 2,677 | |||||||||
|
|
|
|
|
|
|||||||
Addition |
| 549 | 549 | |||||||||
Foreign exchange difference |
(9 | ) | (2 | ) | (11 | ) | ||||||
December 31, 2022 |
2,529 | 686 | 3,215 | |||||||||
|
|
|
|
|
|
|||||||
Addition |
86 | 454 | 540 | |||||||||
Disposal |
(89 | ) | (44 | ) | (133 | ) | ||||||
Foreign exchange difference |
(1 | ) | 1 | | ||||||||
June 30, 2023 |
2,525 | 1,097 | 3,622 | |||||||||
|
|
|
|
|
|
|||||||
Accumulated depreciation |
||||||||||||
January 1, 2022 |
(147 | ) | (32 | ) | (179 | ) | ||||||
|
|
|
|
|
|
|||||||
Depreciation |
(292 | ) | (105 | ) | (397 | ) | ||||||
Foreign exchange difference |
3 | | 3 | |||||||||
December 31, 2022 |
(436 | ) | (137 | ) | (573 | ) | ||||||
|
|
|
|
|
|
|||||||
Depreciation |
(104 | ) | (116 | ) | (220 | ) | ||||||
Foreign exchange difference |
| | | |||||||||
June 30, 2023 |
(540 | ) | (253 | ) | (793 | ) | ||||||
|
|
|
|
|
|
|||||||
Carrying amount |
||||||||||||
at December 31, 2022 |
2,093 | 549 | 2,642 | |||||||||
at June 30, 2023 |
1,985 | 844 | 2,829 | |||||||||
|
|
|
|
|
|
7.2 | Maturity of lease liabilities |
TCHF |
June 30, 2023 | December 31, 2022 | ||||||
< 1 year |
531 | 444 | ||||||
1-5 years |
1,674 | 1,455 | ||||||
> 5 years |
660 | 777 | ||||||
|
|
|
|
|||||
Total |
2,865 | 2,676 | ||||||
|
|
|
|
7.3 | Amounts recognized in profit or loss |
TCHF |
01.01.-30.06.2023 | 01.01.-30.06.2022 | ||||||
Lease expense for short-term and low value leases |
25 | 19 | ||||||
Depreciation expense on right-of-use assets (note 22) |
220 | 183 | ||||||
Interest expense on lease liabilities (note 23) |
13 | 13 | ||||||
|
|
|
|
- 11 -
8. | Property and equipment |
The net carrying amount of property and equipment increased to TCHF 390 as of June 30, 2023, from TCHF 49 as of December 31, 2022, primarily in relation to the acquisition of laboratory equipment and office material.
9. | Inventories |
TCHF |
June 30, 2023 | December 31, 2022 | ||||||
Raw material |
2,753 | 2,758 | ||||||
Finished goods |
457 | 139 | ||||||
Gross inventories |
3,210 | 2,897 | ||||||
Valuation allowance |
(2,760 | ) | (2,670 | ) | ||||
|
|
|
|
|||||
Total |
450 | 227 | ||||||
|
|
|
|
10. | Other current assets |
TCHF |
June 30, 2023 | December 31, 2022 | ||||||
Prepaid expenses |
1,040 | 836 | ||||||
Accrued revenue |
915 | 723 | ||||||
VAT receivable |
120 | 147 | ||||||
Deposits |
10 | 28 | ||||||
Other current receivables |
21 | 64 | ||||||
|
|
|
|
|||||
Total |
2,106 | 1,798 | ||||||
|
|
|
|
11. | Share capital |
Number of shares | ||||||||||||
Common shares | Treasury shares | Total | ||||||||||
Balance at January 1, 2022 |
11,033,337 | (749,668 | ) | 10,283,668 | ||||||||
Issuance of treasury shares |
3,000,000 | (3,000,000 | ) | | ||||||||
Direct Share Placement program |
| 347,145 | 347,145 | |||||||||
Milestone payments |
| 375,500 | 375,500 | |||||||||
Exercises of options |
7,500 | | 7,500 | |||||||||
|
|
|
|
|
|
|||||||
Balance at December 31, 2022 |
14,040,837 | (3,027,024 | ) | 11,013,813 | ||||||||
|
|
|
|
|
|
|||||||
Balance at January 1, 2023 |
14,040,837 | (3,027,024 | ) | 11,013,813 | ||||||||
Direct Share Placement program |
| 2,947 | 2,947 | |||||||||
Private placements |
| 1,200,000 | 1,200,000 | |||||||||
Withdrawal of fractional shares |
| (3,009 | ) | (3,009 | ) | |||||||
Exercises of options |
| 4,688 | 4,688 | |||||||||
|
|
|
|
|
|
|||||||
Balance at June 30, 2023 |
14,040,837 | (1,822,398 | ) | 12,218,439 | ||||||||
|
|
|
|
|
|
11.1 | Issued share capital |
As of June 30, 2023, the share capital consisted of 14040837 issued shares with a par value of CHF 4.00 each. The Company held 1822398 shares in treasury as of June 30, 2023.
Reverse stock split
On May 5, 2023, RELIEF THERAPEUTICS Holding SA effected a 1-for-400 reverse stock split, whereby every 400 shares of the pre-reverse split share capital were combined and reclassified into one share. A total of 5616334800 pre-reverse split ordinary shares were combined and reclassified into 14040837 ordinary shares post-reverse stock split. The par value of each share was multiplied by 400 from CHF 0.01 to CHF 4.00. The Company paid in cash fractional shares, and accordingly, no fractional shares were issued in connection with the reverse stock split.
As a result of the reverse stock split, all references in these financial statements to units of shares or per share amounts are reflective of the reverse split for all periods presented. In addition, the exercise prices and the numbers of shares issuable upon the exercise of any outstanding options, warrants, and other securities entitling their holders to purchase or receive Relief shares were proportionally adjusted.
- 12 -
Equity transactions in 2023
During the first semester of 2023, the following transactions resulted in cash gross proceeds of TCHF 5030 before deducting transaction costs of TCHF 487.
| June 2023 private placement: |
On June 15, 2023, the Company entered into a securities purchase agreement pursuant to which the Company agreed to sell in a private placement 1200000 ordinary shares, pre-funded warrants to purchase up to 300000 ordinary shares (the Pre-Funded Warrants) and warrants to purchase up to 1500000 ordinary shares (the Warrants). The Company received total gross proceeds of TCHF 4995 before deducting placement agent fees and related expenses.
The Warrants are exercisable until June 21, 2028, at an exercise price of CHF 3.40 per share. The Pre-Funded Warrants were prefunded at CHF 3.329 per share and are exercisable with no expiration date at an exercise price of CHF 0.001 per share. Each of the Warrants and Pre-Funded Warrants represents the right to purchase one ordinary share of the Company. Relief committed to reserving from its treasury shares reserve the maximum number of shares to be issued upon exercise of the Warrants and Pre-Funded Warrants. As of June 30, 2023, none of the Warrants and Pre-Funded Warrants had been exercised.
| DSP program: sale of 2947 shares at an average price per share of CHF 5.52 for total gross proceeds of TCHF 17. |
| Exercises of options: issuance upon exercise of 4688 shares at CHF 4.00 per share for gross proceeds of TCHF 19. |
The Company retired fractional shares upon completion of the reverse stock split. Fractional shares representing 3009 shares post-reverse stock split were acquired in May 2023 for a total cost of TCHF 22.
11.2 | Capital band |
Pursuant to changes in the Swiss Code of Obligations effective January 1, 2023, and the decision of the extraordinary general meeting held on April 28, 2023, the Companys authorized capital was replaced by a capital band. The capital range can be used for issuance of shares for strategic acquisitions and financing transactions.
As of June 30, 2023, the Board of Directors was authorized, at any time until 30 May 2024, to increase the share capital by the issuance of up to 2500000 ordinary shares with a nominal value of CHF 4.00, under the terms and conditions set forth in Article 3ater of Reliefs Articles of Association.
11.3 | Conditional share capital |
The conditional share capital of the Company as of June 30, 2023, was TCHF 16688, consisting of 4171924 shares with a par value of CHF 4.00 each, of which 264424 shares to be used for stock options and 3907500 shares for grant of option rights in connection with bonds, notes or similar financial instruments issued by the Company.
11.4 | Outstanding options and warrants |
As of June 30, 2023, there were 182283 outstanding stock options under the Companys stock option plans and 1800000 outstanding warrants as issued in the June 2023 private placement. Each option allows its holder to acquire one share at a predetermined price, subject to certain vesting conditions.
12. | Borrowings |
TCHF |
June 30, 2023 | December 31, 2022 | ||||||||||||||
Non-current | Current | Non-current | Current | |||||||||||||
Bank loans |
13 | 361 | 16 | 372 | ||||||||||||
Other financial liability |
| | | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
13 | 361 | 16 | 372 | ||||||||||||
|
|
|
|
|
|
|
|
As of June 30, 2023, the company had two outstanding bank loans: a TCHF 355 loan from a German bank carrying interest at 2.7% per year until December 30, 2023, and a TCHF 19 loan that is interest-free and repayable in monthly installments until 2026.
- 13 -
13. | Provisions |
TCHF |
Contingent consideration (i) |
Legal and regulatory (ii) |
Total | |||||||||
Balance at December 31, 2022 |
10,867 | 136 | 11,003 | |||||||||
Unwinding of discount on provisions |
171 | | 171 | |||||||||
Variation due to assumption adjustment |
(3,962 | ) | | (3,962 | ) | |||||||
Foreign exchange difference |
(44 | ) | | (44 | ) | |||||||
Utilization |
| (136 | ) | (136 | ) | |||||||
|
|
|
|
|
|
|||||||
Balance at June 30, 2023 |
7,032 | | 7,032 | |||||||||
|
|
|
|
|
|
(i) | Contingent consideration for business acquisitions |
As of June 30, 2023, the Group recognized provisions of TCHF 7032 for contingent payments that may become due to the former shareholders of APR and AdVita upon completion of pre-agreed milestones. As a result of changes in its development strategy (note 6), the Group reevaluated its assessment of contingent payments related to the affected programs. Consistent with assumptions underlying the impairment of the carrying value of the associated intangible assets, the expected settlement dates of the contingent payments were postponed. The resulting gain of TCHF 3962 from fair value remeasurement was recorded in the income statement for the six months ended June 30, 2023.
Contingent consideration for the acquisition of APR
As of June 30, 2023, remaining milestone payments under the acquisition agreement were (i) the execution of a definitive agreement for the commercialization of Sentinox, (ii) the launch of Sentinox in the first of France, Germany, Spain, Italy, and the United Kingdom, and (iii) the launch of RLF-TD011 in the first of France, Germany, Spain, Italy and the United Kingdom. Contingent payments aggregate to a maximum amount of CHF 28 million, in a combination of cash and Relief shares.
Contingent consideration for the acquisition of AdVita
As of June 30, 2023, remaining milestone payments under the acquisition agreement were (i) the approval in the U.S. or Europe of the inhaled form of aviptadil for the treatment of sarcoidosis or berylliosis, and (ii) the conduct of a phase II clinical study for the inhaled form of aviptadil in the treatment of checkpoint inhibitor-induced pneumonitis. Contingent payments aggregate to a maximum amount of EUR 10 million (CHF 9.8 million), in cash.
Provisioned amounts are calculated at the end of each reporting period by determining the probability-weighted present value of potential payments. As of June 30, 2023, probabilities ranged from 15% to 90% based on the estimated likelihood of completion for each underlying milestone. These probabilities are consistent with those estimated for the impairment test conducted for intangible assets and goodwill (note 6). Time to completion of each milestone ranged from approximately one year to eight years. A discount rate of 5% was determined based on the estimated time value of comparable liabilities, excluding risks factored into the probabilities of success.
(ii) | Legal and regulatory proceedings |
A provision of TCHF 136 recorded as of December 31, 2022, was released upon the conclusion of an investigation initiated in June 2021 by SIX Exchange Regulation AG. The actual cost amounted to TCHF 142.
14. | Financial liabilities due to related parties |
In January 2021, the Company signed a financing agreement with its largest shareholder, GEM Global Yield LLC (GEM), for the implementation of a share subscription facility (the SSF) in the amount of up to CHF 50 million until January 20, 2024. As of June 30, 2023, the Company had not drawn on the SSF.
The Company agreed to pay GEM a commitment fee (the Fee) of TCHF 1250 plus accrued interest. As of June 30, 2023, the Fee was payable on demand and bore interest at 1% above the base rate of Barclays Bank plc. As the obligation to pay the Fee arose with the execution of the agreement, the Company recorded it in full as a liability on the signature date. The corresponding expense is recognized as financial expense (note 23) over the SSF commitment period of three years ending January 20, 2024.
- 14 -
15. | Other current payables and liabilities |
TCHF |
June 30, 2023 | December 31, 2022 | ||||||
Accrued expenses |
1,558 | 2,138 | ||||||
Payable to social security institutions |
498 | 497 | ||||||
Stamp duty and capital tax liabilities |
136 | 347 | ||||||
Deferred revenue |
80 | 776 | ||||||
Other current liabilities |
475 | 143 | ||||||
|
|
|
|
|||||
Total |
2,747 | 3,901 | ||||||
|
|
|
|
16. | Other gains |
TCHF |
01.01.-30.06.2023 | 01.01.-30.06.2022 | ||||||
Gain from reversal of impairment on financial assets |
| 453 | ||||||
Income from sublease agreements |
50 | 47 | ||||||
Various others |
16 | 63 | ||||||
|
|
|
|
|||||
Total other gains |
66 | 563 | ||||||
|
|
|
|
17. | Cost of sales |
Expenses incurred with third parties in relation to the purchase and manufacturing of drug products for sale, as well as laboratory supplies in connection with research and development services provided to customers, are classified in raw materials and consumables expenses. Expenses incurred with third parties in relation to advertising, marketing, sales promotion, shipping, distribution and commission on sales, are classified as external selling and distribution expenses.
The increase in raw materials and consumables expenses correlates with the increase in revenue from product sales. A change in the product mix, with a higher proportion of sales stemming from higher-margin products, reduced the ratio of raw materials and consumables expenses over product sales. The increase in external selling and distribution expenses is primarily due to marketing activities subsequent to the launch of PKU Golike in the U.S. in October 2022.
18. | External research and development expenses |
External research and development expenses include costs associated with outsourced clinical research organization activities, sponsored research studies, clinical trial costs, process development, and product manufacturing expenses in relation to research and development programs.
In the first six months of 2023, external research and development expenses mainly comprised the clinical and drug product development costs associated with RLF-OD032, RLF-100 and RLF-TD011, complemented by the continued development of the PKU Golike products franchise. In the comparative period, these expenses mainly related to costs incurred by Acer under the license and collaboration agreement for development and premarketing activities for ACER-001.
19. | Personnel expenses |
TCHF |
01.01.-30.06.2023 | 01.01.-30.06.2022 | ||||||
Salaries and social security expense |
5,735 | 4,277 | ||||||
Independent contractors fees |
| 178 | ||||||
Share-based payment expense |
511 | 1,288 | ||||||
Service cost for other benefit obligations |
13 | 24 | ||||||
|
|
|
|
|||||
Total personnel expenses |
6,259 | 5,767 | ||||||
|
|
|
|
20. | Other administrative expenses |
TCHF |
01.01.-30.06.2023 | 01.01.-30.06.2022 | ||||||
Professional services |
1,947 | 3,306 | ||||||
Other administrative expenses |
1,515 | 657 | ||||||
|
|
|
|
|||||
Total other administrative expenses |
3,462 | 3,963 | ||||||
|
|
|
|
- 15 -
21. | Impairment expense |
TCHF |
01.01.-30.06.2023 | 01.01.-30.06.2022 | ||||||
Impairment losses on intangible assets (note 6) |
(55,734 | ) | (8,226 | ) | ||||
Impairment losses on inventories (note 9) |
(90 | ) | | |||||
|
|
|
|
|||||
Total impairment expense |
(55,824 | ) | (8,226 | ) | ||||
|
|
|
|
22. | Amortization and depreciation expense |
TCHF |
01.01.-30.06.2023 | 01.01.-30.06.2022 | ||||||
Amortization of intangible assets (note 6) |
1,456 | 1,840 | ||||||
Depreciation of rights-of-use assets (note 7) |
220 | 183 | ||||||
Depreciation of property and equipment (note 8) |
28 | 10 | ||||||
|
|
|
|
|||||
Total amortization and depreciation expense |
1,704 | 2,033 | ||||||
|
|
|
|
23. | Financial income and expense |
TCHF |
01.01.-30.06.2023 | 01.01.-30.06.2022 | ||||||
Interest income |
| 12 | ||||||
Foreign exchange gain, net |
| 150 | ||||||
|
|
|
|
|||||
Total financial income |
| 162 | ||||||
|
|
|
|
|||||
Unwinding of discount on provisions (note 13) |
(171 | ) | (676 | ) | ||||
SSF commitment fee (note 14) |
(207 | ) | (205 | ) | ||||
Negative interest on cash deposits |
| (92 | ) | |||||
Interest expense related to leases |
(13 | ) | (13 | ) | ||||
Bank charges |
(17 | ) | (16 | ) | ||||
Foreign exchange loss, net |
(323 | ) | | |||||
Other financial expenses |
(59 | ) | (54 | ) | ||||
|
|
|
|
|||||
Total financial expense |
(790 | ) | (1,056 | ) | ||||
|
|
|
|
24. | Income taxes |
The income tax gain of TCHF 7643 is primarily related to a reduction in deferred tax liabilities resulting from the impairment and amortization expenses recognized against intangible assets (note 6).
25. | Earnings per share |
01.01.-30.06.2023 | 01.01.-30.06.2022 | |||||||
Loss attributable to shareholders (in TCHF) |
(56,499 | ) | (26,500 | ) | ||||
Weighted average number of shares |
11,082,004 | 10,388,747 | ||||||
|
|
|
|
|||||
Total basic and diluted loss per share (in CHF) |
(5.098 | ) | (2.551 | ) | ||||
|
|
|
|
Basic and diluted result per share is calculated by dividing the net result attributable to the shareholders of the parent company by the weighted average of shares outstanding during the period. In 2023 and 2022, the number of shares outstanding varied as a result of different transactions on the share capital structure of the Company. References to shares and per share amounts for the comparative period have been restated to reflect the reverse stock split (note 11).
Neither outstanding options and warrants nor effects from the contingent liabilities payable in shares have been considered in the diluted loss calculation as their effect is anti-dilutive.
- 16 -
26. | Related party transactions |
26.1 | Related party transactions |
During the six-month period ending on June 30, 2023, the Company did not engage in any related party transactions, except for compensation provided to its management.
26.2 | Related party balances |
As of June 30, 2023, the liability of TCHF 1313 due to GEM (December 31, 2022: TCHF 1280) was the only material related party balance.
27. | Non-cash transactions |
In the first semester of 2023 and 2022, the Group engaged in non-cash investing or financing activities that are not reflected in the consolidated statement of cash flow. These activities mainly included the execution of new leasing contracts for office material and laboratory equipment (note 7).
28. | Contingent liabilities |
28.1 | Business combinations with APR and AdVita |
The acquisition agreements for APR and AdVita contain remaining contingent milestone payments in the aggregate maximum amounts of CHF 28 million and EUR 10 million (CHF 9.8 million), respectively, payable upon achievement of pre-agreed objectives. As of June 30, 2023, a provision totaling CHF 7.0 million was recognized to account for the probability-weighted present value at balance sheet date of these possible future payments. Refer to note 13 for further details.
28.2 | Acquisition of RLF-OD032 |
Under the agreement and subsequent amendments concluded with Meta Healthcare Ltd. for the acquisition of RLF-OD032, Relief may issue additional payments of approximately TCHF 250 contingent to pre-specified development milestones. Relief also committed to paying Meta Healthcare Ltd. royalties on net commercialization profit of a low double-digit percentage.
28.3 | Settlement agreement with NeuroRx |
In November 2022, Relief agreed to a settlement with NRx Pharmaceuticals, Inc. (NRx), the parent company of NeuroRx, to terminate their collaboration in the development of aviptadil and resolve their legal dispute. As part of the agreement, Relief committed to pay NRx up to USD 13 million (CHF 11.6 million) in aggregate as milestone payments upon marketing approval of an aviptadil product. Relief also agreed to pay single-digit percentage royalties on possible future sales of an aviptadil product, up to a maximum of USD 30 million (CHF 26.8 million) in aggregate. Finally, Relief agreed to use commercially reasonable efforts to maintain the Right to Try Program in the U.S. until December 2024.
29. | Events after the reporting period |
Restructured | license agreement with Acer |
On August 30, 2023, Relief announced the termination of the March 2021 collaboration and license agreement and the execution of a new exclusive license agreement with Acer for the development and commercialization of ACER-001 (OLPRUVA) for the treatment of UCDs, MSUD, and other potential indications. Under the terms of the new agreement, Acer retains development and commercialization rights worldwide, excluding Europe where Relief retains these rights.
Relief received a non-contingent USD 10 million upfront cash payment and will receive an additional non-contingent USD 1.5 million cash payment on the one-year anniversary of the agreement. Relief is also entitled to receive from Acer a 10% continuing royalty on net sales in the Acer territory, and 20% of any value received by Acer from licensing or divestment transactions relating to OLPRUVA, up to a cumulative amount of an additional USD 45 million. Relief committed to paying Acer a variable, continuing royalty up to a maximum of 10% of the net sales of OLPRUVA and 20% of any value received by Relief from sublicensing transactions relating to OLPRUVA in the Relief territory.
There were no other material events after the balance sheet date that would require adjustment to these consolidated financial statements or disclosure under this heading.
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Exhibit 99.3
RELIEF THERAPEUTICS Holding SA
Managements discussion and analysis of
financial condition and results of operations
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The following discussion and analysis should be read in conjunction with the unaudited interim condensed consolidated financial statements as of and for the six months ended June 30, 2023, which were prepared in accordance with International Accounting Standard 34 Interim Financial Reporting. Our consolidated financial statements are prepared in accordance with the International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB) and are presented in Swiss francs (CHF).
Unless otherwise indicated or the context otherwise requires, the terms Company, Relief, Group, we, our, ours, or us refer to RELIEF THERAPEUTICS Holding SA together with its consolidated subsidiaries.
In addition to historical data, this discussion contains forward-looking statements regarding our business and financial performance based on current expectations that involve risks, uncertainties, and assumptions. Actual results may differ materially from those discussed in the forward-looking statements as a result of various factors.
Overview
We are a Swiss, commercial-stage biopharmaceutical company committed to delivering innovative treatment options with the potential for transformative outcomes to benefit those suffering from debilitating conditions that have no or limited treatment options to help them live their best possible lives and achieve their full potential. Our cost-effective, capital-efficient approach to drug development and commercialization is focused on rare metabolic disorders, rare skin diseases, rare respiratory diseases and rare monogenetic diseases.
We mitigate development risk by focusing on programs that can be advanced via the 505(b)(2) regulatory pathway, which relies on established products with a proven history of safety and efficacy and either initial human therapeutic activity, proof-of-concept or a strong scientific rationale. We concentrate our global skills and internal R&D resources toward optimizing the therapeutic potential of these assets through the application of our proprietary platform technologies, drug delivery systems or novel dosage forms.
Our portfolio offers a balanced mix of marketed, revenue-generating products, our proprietary, globally patented drug delivery platform technologies that have utility for development in other specialty or rare disease therapeutic areas and a highly targeted clinical development pipeline consisting of risk-mitigated assets that have been engineered for improvements in efficacy, safety or convenience to benefit the lives of patients. In addition, the Company is commercializing several legacy products via licensing and distribution partners. A description of our portfolio is provided in the Portfolio & Pipeline section of our 2023 half year report.
We are actively pursuing a strategy to diversify our portfolio through the ongoing evaluation of potential in-licensing opportunities. To bring treatments to patients as quickly as possible, we are seeking partnerships with, or acquisitions of, companies that have late-stage clinical molecules with a strong human safety profile, allowing for relatively short, capital-efficient clinical trials with clear endpoints. We are also evaluating prospective opportunities that fit within our genetic medicine initiative for devastating, as-yet-unaddressed, rare monogenetic diseases.
Our mission to provide therapeutic relief to those suffering from rare diseases and disorders is being advanced by an international team of well-established biopharma industry leaders with extensive research, development and rare disease expertise. Our focus on rare diseases with significant unmet medical need allows us to maintain a lean organization, with strong, experienced leadership able to deliver growth by effectively managing partnerships and efficiently allocating capital across our business.
Corporate Strategy Update
After conducting a comprehensive evaluation of Reliefs business, we continue to refine our corporate strategy to enhance operational efficiency and focus on near term, pivotal value drivers.
We intend to concentrate in the near term the Companys resources on advanced, lower-risk R&D programs in the metabolic therapeutic area with substantial value-generating potential. Relief will continue to advance the development of RLF-OD032, which, if successful, may significantly bolster revenues. Concurrently, we will pursue the development of ACER-001 in Europe and of our PKU Golike products franchise.
We shall modulate our activities in dermatology and respiratory until future funding or licensing partners are secured. We will continue to advance the RLF-TD011 proof-of-concept study at Northwestern University and the inhaled formulation of RLF-100® presently being evaluated in the Leuppi Study.
Collaboration and license agreement with Acer Therapeutics, Inc.
In March 2021, we entered into a collaboration and license agreement with Acer Therapeutics, Inc. (Acer) for the worldwide development and commercialization of ACER-001 (sodium phenylbutyrate, OLPRUVA). In December 2022, the U.S. Food and Drug Administration (FDA) approved ACER-001 as a prescription medicine for the treatment of certain Urea Cycle Disorders (UCDs). In August 2023, Relief and Acer terminated the March 2021 collaboration and license agreement and entered into a new exclusive license agreement for the development and commercialization of ACER-001 for the treatment of UCDs, MSUD, and other potential indications. Under the terms of the new agreement, Acer retains development and commercialization rights worldwide, excluding Europe where we retain these rights.
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Acer provided us in August 2023 with a non-contingent USD 10 million upfront cash payment and will provide an additional non-contingent USD 1.5 million cash payment on the one-year anniversary of the agreement. We will also receive a 10% continuing royalty calculated on the net sales of OLPRUVA in the Acer territory, and 20% of any value received by Acer from licensing or divestment transactions relating to OLPRUVA, up to a cumulative amount of an additional USD 45 million. Acer will receive from us a variable, continuing royalty up to a maximum of 10% of the net sales of OLPRUVA and 20% of any value received by us from sublicensing transactions relating to OLPRUVA in geographical Europe. However, there can be no assurance as to whether Relief and Acer will be successful in their respective development and commercialization efforts.
Collaboration agreement with InveniAI LLC
In November 2021, we entered into a collaboration agreement with InveniAI LLC (InveniAI), a U.S. based company that has pioneered the application of artificial intelligence and machine learning across the biopharmaceutical and other industries, in order to identify promising drug candidates to treat rare and specialty diseases. Under the terms of the agreement, we paid InveniAI an initial up-front fee of USD 0.5 million. We will be required to pay success milestones for any products brought to us in connection with the InveniAI Collaboration Agreement ranging from approximately USD 0.2 million per product candidate for which we exercise our option to acquire IP rights to USD 50 million for any required product reaching USD 1 billion per year in net sales. We will also be required to pay royalties in certain countries of approximately 3% on any such commercialized product. We are not currently developing any product brought to us by InveniAI.
Termination of the collaboration agreement with NeuroRx, Inc.
In September 2020, we entered into a collaboration agreement with NeuroRx, Inc. (NeuroRx) to develop and commercialize aviptadil acetate, for the treatment of COVID-19 related conditions and other pulmonary indications. In October 2021, we filed a lawsuit against NeuroRx and its former chief executive officer for multiple breaches of the agreement. In January 2022, NeuroRx filed a complaint against us alleging that we were in breach of the agreement.
In November 2022, Relief and NeuroRx (along with NeuroRxs parent company NRx Pharmaceuticals, Inc.) executed an asset purchase agreement and a settlement agreement to resolve all matters relating to the pending litigation. As part of the settlement, at a closing that was held on December 19, 2022, (i) NeuroRx transferred to Relief all of the assets that it previously used in its aviptadil development program, including its regulatory filings, patent applications, clinical data, and the formulation of the aviptadil product it was previously developing, (ii) Relief has the exclusive right and control vis à vis NeuroRx going forward to develop and commercialize an aviptadil product, (iii) Relief has agreed to use commercially reasonable efforts to continue the existing Right to Try Program for aviptadil in the U.S. for at least two years, (iv) Relief will pay NeuroRx milestone payments if it can successfully obtain commercial approval of an aviptadil product (whether for COVID-19 or any other indication), up to a maximum of USD 13 million in the aggregate, (v) Relief will pay NeuroRx royalties based on a single-digit percentage of future sales of an aviptadil product (whether for COVID-19 or any other indication), up to a maximum of USD 30 million in the aggregate, (vi) NeuroRx has agreed not to compete in the development of an aviptadil product in the future, (vii) the collaboration agreement between the parties has been cancelled, (viii) the parties have exchanged mutual release of all claims between the parties, and (ix) Relief and NeuroRx have each dismissed their pending litigation.
In September 2023, we received a copy of a complaint filed in Israel by Jonathan Javitt, former chief executive officer and current chief scientist of NRx Pharmaceuticals, Inc., against Relief and certain of its current and former directors, officers and consultants. The complaint alleges, among other matters, that statements made by Relief and other defendants regarding Dr. Javitt were defamatory, causing material harm to Dr. Javitt. Dr. Javitt also appears to be seeking financial damages, an injunction against future alleged defamatory statements, and for Relief to turn over global rights to ZYESAMI to Dr. Javitt. While we deny all allegations in the complaint and consider them to be without merit and lacking both factual and legal foundation, we intend to dispute whether Dr. Javitt has properly served the defendants and whether there is jurisdiction in the courts of Israel over these alleged claims. While there can be no assurance, we believe that the possibility of any financial damage to Relief, its directors, officers and associated parties resulting from this claim is remote.
Recent business combinations
In June 2021, we acquired APR Applied Pharma Research SA (APR), a privately held Swiss pharmaceutical company specialized in identifying, developing and commercializing known molecules engineered with drug delivery systems in niche and rare diseases on a global basis. The integration of the two companies established Relief as a fully integrated, international biopharmaceutical enterprise, further diversifying Reliefs pipeline and portfolio with both commercial products and clinical-stage programs, provided a commercial infrastructure in Europe and strengthened our internal R&D capabilities.
In July 2021, we acquired AdVita Lifescience GmbH (AdVita), a Germany-based privately held pharmaceutical company developing products for the treatment and diagnosis of rare lung diseases. The acquisition strengthened our expertise and ability to progress with the development of RLF-100.
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Components of Results of Operations
Revenue
Revenue is primarily derived from our portfolio of marketed products and the provision of R&D services to third parties. We generate revenue from product sales, licensing fees, and royalties since the date of acquisition of APR in June 2021. Prior to the acquisition, Relief did not generate any revenue from commercial activities.
To date, our revenue has been substantially less than our operating expenses. Accordingly, we rely on external funding to continue operations and fund our clinical and commercial development plan. We expect the expansion of our PKU GOLIKE® franchise as a medical food in the U.S. and other territories, as well as the commercialization of Olpruva by Acer (for which we may receive royalty payments in the amount of 10% of net sales) will contribute to increases in future revenues. We do not expect to generate revenue from product candidates unless and until we complete their development and obtain regulatory approvals.
Other gains
Other gains generally consist of income from facility subleasing, gains on disposal of intangible assets, write-offs of liabilities and adjustments in fair value of certain assets and liabilities.
Raw materials and consumables expenses
Raw materials and consumables expenses are comprised of expenditures incurred with third parties in relation to the purchase and manufacturing of medical food and drug products for sale, as well as laboratory supplies in connection with R&D services provided to customers.
External selling and distribution expenses
External selling and distribution expenses are comprised of expenditures incurred with third parties in relation to advertising, marketing, sales promotion, shipping, distribution, and commission on sales, for the sale of products and R&D services.
External research and development expenses
External research and development expenses include costs associated with outsourced clinical research organization activities, sponsored research studies, clinical trial costs, process development, drug candidate manufacturing expenses, license fees, and investigator-sponsored trials, including licensing fees and milestone payments charged by licensors or collaboration partners, as well as expenses related to laboratory supplies and materials.
Costs for certain development activities, such as clinical trials, are recognized based on an evaluation of the progress to completion of specific tasks using information from the clinical sites and our vendors. Costs associated with the development activity under collaboration agreements are recognized based on actual expenses reported by our collaboration partners.
Personnel expenses
Personnel expenses consist of employee-related expenses, including salaries, benefits, share-based compensation, and other personnel-related costs.
Other administrative expenses
Other administrative expenses consist primarily of corporate facility costs, fees for legal and audit services, insurance costs, and consulting fees not otherwise included in research and development expenses.
Change in fair value of contingent consideration
Under the APR and AdVita acquisition agreements, Relief agreed to pay additional consideration upon completion of specific milestones. The fair value of the contingent consideration is recorded as a liability on our balance sheet and adjusted at the end of each reporting period based on the estimated probability of occurrence and the time factor. Any changes in fair value of the contingent liability due to assumption adjustments are recorded in the income statement.
Financial income
Financial income consists mainly of foreign exchange net result, when positive. Foreign exchange net result is allocated to financial expense when negative.
Financial expense
Financial expense consists mainly of interest expense associated with the discounting overtime of provisions for contingent payments measured at fair value. The commitment fee that became due upon execution of our current share subscription facility agreement with GEM in January 2021 is expensed over the period of effectiveness of the instrument. In addition, we incurred negative interest charge on our Swiss franc and Euro cash deposits until year-end 2022.
Income taxes
We are subject to corporate income taxation in Switzerland, the U.S., Italy, and Germany. We are also subject to corporate capital tax for our parent company and subsidiaries located in Switzerland. Unless and until the Group becomes profitable in certain tax jurisdictions, we expect income tax losses and gains will primarily arise from variations of deferred tax assets and liabilities.
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Comparison of the six months ended June 30, 2023 and 2022
The following table summarizes our results of operations for the six months ended June 30, 2023 and 2022:
For the six months ended June 30, |
||||||||||||
in CHF thousands (unaudited) | 2023 | 2022 | Change | |||||||||
Revenue |
3,023 | 3,242 | (219 | ) | ||||||||
Other gains |
66 | 563 | (497 | ) | ||||||||
|
|
|
|
|
|
|||||||
Total income |
3,089 | 3,805 | (716 | ) | ||||||||
Raw materials and consumables expenses |
(779 | ) | (669 | ) | (110 | ) | ||||||
External selling and distribution expenses |
(1,442 | ) | (465 | ) | (977 | ) | ||||||
External research and development expenses |
(933 | ) | (10,637 | ) | 9,704 | |||||||
Personnel expenses |
(6,259 | ) | (5,767 | ) | (492 | ) | ||||||
Other administrative expenses |
(3,462 | ) | (3,963 | ) | 501 | |||||||
Change in fair value of contingent consideration |
3,962 | 740 | 3,222 | |||||||||
|
|
|
|
|
|
|||||||
EBITDA |
(5,824 | ) | (16,956 | ) | 11,132 | |||||||
Impairment expense |
(55,824 | ) | (8,226 | ) | (47,598 | ) | ||||||
Amortization and depreciation expense |
(1,704 | ) | (2,033 | ) | 329 | |||||||
|
|
|
|
|
|
|||||||
Operating loss |
(63,352 | ) | (27,215 | ) | (36,137 | ) | ||||||
Financial income |
| 162 | (162 | ) | ||||||||
Financial expense |
(790 | ) | (1,056 | ) | 266 | |||||||
|
|
|
|
|
|
|||||||
Net loss before taxes |
(64,142 | ) | (28,109 | ) | (36,033 | ) | ||||||
Income taxes |
7,643 | 1,609 | 6,034 | |||||||||
|
|
|
|
|
|
|||||||
Net loss for the period |
(56,499 | ) | (26,500 | ) | (29,999 | ) | ||||||
|
|
|
|
|
|
Revenue
In the first six months of 2023, we generated CHF 3.02 million in revenue from product sales, licensing fees, royalties and contract services, compared to CHF 3.24 million for the six months ended June 30, 2022.
Revenue from product sales increased from CHF 1.37 million to CHF 2.04 million, largely driven by sales of our PKU Golike products. The overall reduction in revenue is partly explained by the absence of one-time license fees we recognized in the prior years six-month period, amounting to CHF 0.21 million. Contract services revenue also contracted from CHF 0.42 million to CHF 0.17 million. Further, our royalty revenue decreased from CHF 1.25 million to CHF 0.81 million, impacted by lower royalties on the U.S. sales of a Diclofenac-based product by a licensing partner, due to the introduction this year of generic competitors in the market.
Other gains
Other gains were CHF 0.07 million for the six months ended June 30, 2023, compared to CHF 0.56 million for the six months ended June 30, 2022. In the current period, these gains were primarily constituted by income from facility sublease agreements. The prior period also included an impairment reversal related to a financial asset, contributing CHF 0.45 million.
Raw materials and consumables expenses
Raw materials and consumables expenses increased 16% for the six months ended June 30, 2023 as compared to the prior year period. The increase in expenses correlates with the increase in revenue from product sales of 49%. A change in the product mix, with a higher proportion of sales stemming from higher-margin products, reduced the ratio of raw materials and consumables expenses over product sales revenue.
External selling and distribution expenses
External selling and distribution expenses increased to CHF 1.44 million for the six-month period ended June 30, 2023, from CHF 0.46 million for the six-month period ended June 30, 2022, an increase of CHF 0.98 million primarily due to marketing activities for the launch and subsequent commercialization of PKU Golike in the U.S. from October 2022.
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External research and development expenses
External research and development expenses decreased to CHF 0.93 million for the six-month period ended June 30, 2023, from CHF 10.64 million for the six months ended June 30, 2022. In the comparative period, these expenses mainly related to costs incurred by Acer under our former license and collaboration agreement for development and premarketing activities for ACER-001. In the first six months of 2023, external development expenses were mainly directed towards the development of RLF-OD032, RLF-TD011 and RLF-100, complemented by the continued development of our PKU Golike products franchise.
Personnel expenses
Personnel expenses increased to CHF 6.26 million in the six-month period ended June 30, 2023, compared to CHF 5.77 million for the six-month period ended June 30, 2022, an increase of CHF 0.49 million mainly due to an increase in employee headcount resulting from the progressive formation of our U.S. sales force in 2022. Non-cash expenses resulting from grants of stock options, which are included in personnel expenses, amounted to CHF 0.51 million and CHF 1.29 million in the six-month periods ended June 30, 2023 and 2022, respectively.
As of June 30, 2023, Relief had 64 full-time equivalents on its payroll (December 31, 2022: 69).
Other administrative expenses
Other administrative expenses decreased to CHF 3.46 million in the six-month period ended June 30, 2023, compared to CHF 3.96 million for the six-month period ended June 30, 2022, a decrease of CHF 0.50 million mainly tied to lower expenses incurred for legal and regulatory affairs, reflecting non-recurring events from 2022 including the closed litigation with NeuroRx.
Change in fair value of contingent consideration
During the six months ended June 30, 2023, we recognized a CHF 3.96 million gain from the fair value adjustment of contingent consideration. The reduction in the estimated present value of potential future milestone payments is attributable to the postponement of expected completion dates due to strategic decisions concerning our RLF-100, RLF-TD011 and Sentinox development programs.
In the consolidated statement of loss for the six months ended June 30, 2022, a gain of CHF 0.74 million on fair value remeasurement of contingent consideration was recorded within the Other gains line item. In the comparative period of the consolidated statement of loss for the six months ended June 30, 2023, this gain was reclassified to a distinct line Change in fair value of contingent consideration to conform with the current period presentation.
Impairment expense
We conducted an impairment test of our intangible assets and goodwill as of June 30, 2023, and concluded that the carrying amount intangible assets and goodwill associated with RLF-100®, RLF-TD011 and Sentinox, were impaired. As a result, we recognized a non-cash impairment charge on intangible assets of CHF 55.73 million in the current period. The impairment charge is attributable to the Companys revised development strategy. Refer to note 6 of our interim consolidated financial statements for further information on intangible assets and related impairment.
Amortization and depreciation expenses
Amortization and depreciation expenses were CHF 1.70 million for the six-month ended June 30, 2023, compared to CHF 2.03 million for the six months ended June 30, 2022. Amortization and depreciation expenses predominantly pertain to the amortization of our intangible assets.
Financial income
There was no financial income in the six-month period ended June 30, 2023, compared to CHF 0.16 million for the six-month period ended June 30, 2022. In the comparative period, financial income was primarily constituted by a net foreign exchange gain.
Financial expense
Financial expense decreased to CHF 0.79 million in the six-month period ended June 30, 2023, compared to CHF 1.06 million for the six-month period ended June 30, 2022. This reduction resulted from two main factors: the decrease of interest costs associated with the unwinding of the time discount on provisions for contingent considerations, from CHF 0.68 million to CHF 0.17 million, resulting from a decreased provisioned amount; and the end of negative interest rates that were previously charged on our cash deposits in Swiss francs and Euros. In contrast, we recognized a net foreign exchange loss of CHF 0.32 million in the six-month period ended June 30, 2023, compared to a net foreign exchange gain of CHF 0.15 million recorded during the same period in 2022.
Income taxes
Income taxes were a gain of CHF 7.64 million in the six months ended June 2023, compared to an income tax gain of CHF 1.61 million for the six-month period ended June 30, 2022. The income tax gains resulted mainly from the amortization and impairment of intangible assets and a corresponding reduction in the temporary difference between the carrying amount of these assets and their tax base.
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Liquidity and Capital Resources
To date, we have funded our operations primarily through private placements, at-the-market sales of treasury shares, equity offerings, and loans from our largest shareholder, GEM. We have never been profitable and have incurred operating losses in each year since inception. We have an accumulated deficit of CHF 176.1 million as of June 30, 2023, and may incur further losses over the foreseeable future as we develop our business. We have spent, and expect to continue to spend, a substantial amount of funds in connection with implementing our business strategy, including our planned product development and commercialization efforts.
As Relief continues to incur significant operating losses, our ability to pursue and finance our operations and our intended development plans depends on our ability to continue to raise additional financing. Our primary uses of capital are R&D expenses, personnel compensation expenses, and administrative expenses. We expect to continue to incur substantial expenses in connection with our product candidates at various stages of development and for working capital requirements. We expect to continue to raise financing through the sale of equity and debt financing. We intend to use future expected proceeds, together with cash on hand, to finance our development and commercial activities and the diversification of our pipeline, as well as to fund our outstanding liabilities and other commitments. We expect our expenses to increase in connection with our ongoing activities, particularly as we continue to advance our portfolio of product candidates, initiate further clinical trials, and seek marketing approval for our product candidates, contingent upon the availability of financing. In addition, if we obtain marketing approval for any of our product candidates, we expect to incur additional commercialization expenses related to program sales, marketing, manufacturing, and distribution to the extent that such sales, marketing and distribution are not the responsibility of potential partners. Accordingly, we may need to obtain substantial additional funding in connection with our continuing operations.
Going concern
As of August 31, 2023, we had cash and cash equivalents of CHF 18.3 million, which includes proceeds of USD 10 million from the renegotiation of licensing terms with Acer Therapeutics in August 2023. Based on current operating plans, we expect that we have sufficient resources to fund operations for at least the next 12 months from the date of issuance of this report.
Our future capital requirements will depend on many factors, including:
| the scope, progress, results and costs of our ongoing and planned preclinical studies and clinical trials; |
| the number and development requirements of other product candidates that we may pursue; |
| the costs, timing and outcome of regulatory review of our product candidates; |
| the timing amount of milestone payments we may have to pay in relation to the acquisitions of APR and AdVita; |
| the extent to which we in-license or acquire other product candidates and technologies; |
| the costs and timing of future commercialization activities, including drug manufacturing, marketing, sales and distribution, for any of our product candidates for which we receive or have received marketing approval; |
| the timing of repayment of the Reliefs borrowings; and |
| the funding necessary to sustain our commercial operations until we attain the breakeven point. |
Our long-term viability depends on our ability to raise additional capital until we generate positive cash flows to support our operations. We may not be successful in our efforts to raise additional funds or achieve profitable operations. We intend to continue to explore potential opportunities to obtain the additional resources that will be necessary to support our operations, including raising additional capital through either private or public equity or debt financing, or additional program collaborations or non-dilutive funding, as well as using our treasury share sales program or our shares subscription facility with GEM.
If we are unable to obtain additional funding to support our current or proposed activities and operations, we may not be able to continue our operations as proposed, which may require us to suspend or terminate any ongoing development activities, modify our business plan, curtail various aspects of our operations, cease operations, or seek relief under applicable bankruptcy laws. In such event, our stockholders may lose a substantial portion or even all of their investment.
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The following table summarizes our cash flows for each of the periods indicated:
For the six months ended June 30, |
||||||||||||
in CHF thousands (unaudited) | 2023 | 2022 | Change | |||||||||
Cash and cash equivalents at beginning of period |
19,237 | 44,761 | (25,524 | ) | ||||||||
Cash flow used in operating activities |
(10,466 | ) | (14,731 | ) | 4,265 | |||||||
Cash flow used in investing activities |
(220 | ) | (4,764 | ) | 4,544 | |||||||
Cash flow from financing activities |
4,174 | 4,662 | (488 | ) | ||||||||
Decrease in cash and cash equivalents |
(6,512 | ) | (14,833 | ) | 8,321 | |||||||
Effect of exchange rates |
67 | (57 | ) | 124 | ||||||||
|
|
|
|
|
|
|||||||
Cash and cash equivalents at end of period |
12,792 | 29,871 | (17,079 | ) | ||||||||
|
|
|
|
|
|
Operating Activities
Net cash used in operating activities was CHF 10.47 million for the six months ended June 30, 2023, compared to CHF 14.73 million for the six months ended June 30, 2022. This decrease is mainly due to reduced external R&D expense payouts, while cash inflows and outflows related to revenues and other expenses, as well as our net working capital, remained relatively constant.
Investing Activities
Net cash used in investing activities was CHF 0.22 million for the six months ended June 30, 2023, compared to CHF 4.76 million for the six months ended June 30, 2022. In the current period, cash used in investing activities was mainly for the acquisition of property and equipment. In the comparative period, cash used in investing activities consisted mainly of a payment to the former shareholders of AdVita for the completion of a contractual milestone.
Financing Activities
Net cash from financing activities was CHF 4.17 million for the six months ended June 30, 2023, compared to CHF 4.66 million for the six months ended June 30, 2022. In the current period, funds were primarily derived from a CHF 5 million private placement, before deduction of transaction costs. In the previous period, net cash from financing activities originated primarily from our Direct Share Placement program.
Main contractual obligations and commitments
Under our license agreements with Acer Therapeutics Inc., NeuroRx Inc., and Meta Healthcare Ltd., we may be required to pay royalties and milestone payments. In addition, under the acquisition agreements with the former shareholders of APR and AdVita, we may be required to make payments upon achievement of pre-agreed objectives. Refer to note 28 of our interim consolidated financial statements for further information on contingent liabilities.
In January 2021, we signed a financing agreement with GEM for the implementation of a share subscription facility. We agreed to pay GEM a commitment fee of CHF 1.25 million plus accrued annual interest at 1% above the base rate of Barclays Bank plc. As of June 30, 2023, the outstanding balance payable to GEM on demand was CHF 1.31 million.
We enter into contracts in the normal course of business with clinical research organizations for clinical trials, nonclinical studies, manufacturing and other services and products for operating purposes. These contracts generally provide for termination upon notice, and we believe that our non-cancelable obligations under these agreements are not material.
Critical Accounting Policies and Significant Judgments and Accounting Estimates
Our managements discussion and analysis of our financial condition and results of operations is based on our interim consolidated financial statements, which we have prepared in accordance with the International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB). The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets, liabilities, and disclosures at the reporting date. We base our estimates and assumptions on historical experience and other factors that we believe to be reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates.
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Recent Accounting Pronouncements
The adoption of IFRS as issued by the IASB and interpretations issued by the IFRS Interpretations Committee that are effective for the first time for our financial year beginning on January 1, 2023, had no material impact on our financial position or disclosures made in our interim consolidated financial statements.
JOBS Act Exemptions
We qualify as an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (JOBS Act) in the U.S. Subject to certain conditions, we are relying on certain of exemptions under the JOBS Act, including without limitation, (1) providing an auditors attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act and (2) complying with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditors report providing additional information about the audit and the financial statements, known as the auditor discussion and analysis. We will remain an emerging growth company until the earlier to occur of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our initial public offering in the U.S., (b) in which we have total annual gross revenues of at least USD 1.07 billion, or (c) in which we are deemed to be a large accelerated filer under the rules of the U.S. Securities and Exchange Commission, which means the market value of our common shares held by non-affiliates exceeds USD 700 million as of the prior June 30, and (2) the date on which we have issued more than USD 1.0 billion in non-convertible debt during the prior three-year period.
Cautionary Statement Regarding Forward Looking Statements
This half-year report, including this discussion and analysis, contains statements that constitute forward-looking statements. All statements other than statements of historical facts contained in this discussion and analysis, including statements regarding our future results of operations and financial position, business strategy, product candidates, product pipeline, ongoing and planned clinical studies, including those of our collaboration partners, regulatory approvals, research and development costs, timing and likelihood of success, as well as plans and objectives of management for future operations are forward-looking statements. Many of the forward-looking statements contained in this report can be identified by the use of forward-looking words such as anticipate, believe, could, expect, should, plan, intend, estimate, will and potential, among others. Forward-looking statements appear in a number of places in this discussion and analysis and include, but are not limited to, statements regarding our intent, belief or current expectations. Forward-looking statements are based on our managements beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors, including, but not limited to, those identified under the section entitled Risk Factors in our Annual Report on Form 20-F. These forward-looking statements speak only as of the date of this discussion and analysis, and are subject to a number of risks, uncertainties and assumptions as described under the sections in our Annual Report on Form 20-F entitled Risk Factors and in this discussion and analysis. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur, and actual results could differ materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time such as the global pandemic originating with Covid-19, and it is not possible for management to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.
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Exhibit 99.4
Ad hoc announcement pursuant to Art. 53 LR
Relief Therapeutics Reports Half-Year 2023 Financial Results and Provides Corporate Update
GENEVA (SEPT. 15, 2023) RELIEF THERAPEUTICS Holding SA (SIX: RLF, OTCQB: RLFTF, RLFTY) (Relief, or the Company), a biopharmaceutical company committed to delivering innovative treatment options for select specialty, unmet and rare diseases, today reported its financial results for the half-year ended June 30, 2023 and provided a corporate update. The Relief 2023 half-year report is available for download on the companys website.
The comprehensive half-year report includes a statement from the Companys chief executive officer, Jack Weinstein, alongside an updated presentation of Reliefs portfolio and pipeline. It also provides an overview of the 2023 to date highlights, the interim consolidated financial statements for the half-year ended June 30, 2023, and the customary managements discussion and analysis of financial condition and results of operations.
ABOUT RELIEF THERAPEUTICS
Relief Therapeutics is a commercial-stage biopharmaceutical company committed to advancing treatment paradigms and delivering improvements in efficacy, safety and convenience to benefit the lives of patients living with select specialty and rare diseases. Relief Therapeutics portfolio offers a balanced mix of marketed, revenue-generating products, our proprietary, globally patented Physiomimic and TEHCLO platform technologies and a targeted clinical development pipeline consisting of risk-mitigated assets focused in three core therapeutic areas, which include rare metabolic, rare dermatology and rare respiratory diseases. In addition, Relief Therapeutics is commercializing several legacy products via licensing to distribution partners. Relief Therapeutics mission is to provide therapeutic relief to those suffering from rare diseases and is being advanced by an international team of well-established, experienced biopharma industry leaders with extensive research, development and rare disease expertise. Relief Therapeutics is headquartered in Geneva, with additional offices in Balerna, Switzerland, Offenbach am Main, Germany and Monza, Italy. Relief Therapeutics is listed on the SIX Swiss Exchange under the symbol RLF and quoted in the U.S. on OTCQB under the symbols RLFTF and RLFTY. For more information, please visit our website www.relieftherapeutics.com or follow Relief Therapeutics on LinkedIn and Twitter.
CONTACT:
RELIEF THERAPEUTICS Holding SA
Jeremy Meinen
Chief Financial Officer
contact@relieftherapeutics.com
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