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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Arix Bioscience Plc | LSE:ARIX | London | Ordinary Share | GB00BD045071 | ORD 0.001P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 142.00 | 0.00 | 00:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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Arix Bioscience PLC (ARIX)
Interim Results for the Six Months Ended 30 June 2023
27-Sep-2023 / 07:01 GMT/BST
=----------------------------------------------------------------------------------------------------------------------
Arix Bioscience plc
Interim Results for the Six Months Ended 30 June 2023
LONDON, 27 September 2023: Arix Bioscience plc ("Arix" or the "Company") (LSE: ARIX), a transatlantic venture capital
company focused on investing in breakthrough biotechnology companies, announces its interim results for the six months
ended 30 June 2023.
Financial Highlights
-- Net Asset Value increased by GBP13 million to GBP239 million (31 December 2022: GBP226 million); 185p per share
(31 December 2022: 175p per share)
-- Value of listed portfolio: GBP68 million (31 December 2022: GBP45 million)
-- Value of unlisted portfolio: GBP66.2 million (31 December 2022: GBP54.8 million)
-- Gross Portfolio Value: GBP134.4 million (31 December 2022: GBP99.7 million)
-- Cash position at period end: GBP101.0 million (31 December 2022: GBP122.8 million)
Operational and Strategic Highlights
-- Continued momentum in the Public Opportunities Portfolio ("POP"), investing GBP16.4 million and increasing
in value to GBP22.1 million (31 Dec 2022: 13.5m), reflecting an unrealised gain of GBP3.5 million
-- Agile capital deployment: conserving cash in volatile market conditions whilst supporting existing
portfolio companies and investing in new companies
Portfolio Highlights
-- Arix added Ensoma to its core portfolio with a USD9 million investment in an USD85 million financing co-led
by the Company
? The financing saw Ensoma acquire Arix portfolio company TwelveBio in an all-share transaction
? Ensoma subsequently closed a USD50 million Series B extension, bringing the total round to USD135 million
-- Disc Medicine announced a USD62.5 million financing led by Bain Capital in February 2023
-- Disc Medicine raised a further USD157.8 million in a public offering following the positive Phase 2 data
release of its BEACON trial
-- Harpoon completed a USD25 million private placement of redeemable preferred stock and warrants to purchase
common stock to certain institutional investors, which included Arix
-- Enliven entered the public markets via a reverse merger with Imara Inc, creating the combined Enliven
Therapeutics
-- As of mid-September 2023, the Public Opportunities Portfolio has outperformed Arix's benchmark XBI index
since its inception by 26%, returning 8.8%, including realised gains and losses, against a drop in the XBI of 17.3%
in the same period
Post Period-end
-- In light of the unfavourable prevailing market conditions and following engagement with shareholders, a
strategic review was commenced in July.
Robert Lyne, CEO of Arix, commented:
"Following the announcement of the strategic review in July 2023, the Board has been exploring a range of strategic
options for the Company. Currently, a number of options remain under active consideration and the Board is focused on
evaluating these in conjunction with its advisers. The Board expects to have concluded this process soon and will
provide a further update to shareholders as soon as possible."
Analyst Briefing: 9:00am BST Today, Wednesday 27 September 2023
Management will host a virtual briefing for Analysts at 9:00am BST today. Analysts wishing to join should register
their interest by contacting Powerscourt on arix@powerscourt-group.com or on +44 (0) 20 7290 1050.
Investor Presentation: 1:00pm BST Today, Wednesday 27 September 2023
Management will be hosting a live presentation and Q&A session via the online platform, Investor Meet Company, at
1:00pm BST today.
The presentation is open to analysts and all existing and potential shareholders. Questions can be submitted pre-event
via the Investor Meet Company dashboard or at any time during the live presentation via the "Ask a Question" function.
Investors can sign up to Investor Meet Company for free via: https://www.investormeetcompany.com/arix-bioscience-plc/
register-investor
Investors who already follow Arix on the Investor Meet Company platform will automatically receive an invitation to the
event.
[S]
Enquiries
For more information on Arix, please contact:
Arix Bioscience plc
+44 (0)20 7290 1050
ir@arixbioscience.com
Powerscourt Group
Sarah MacLeod, Ibrahim Khalil, Nick Johnson
+44 (0)20 7250 1446
arix@powerscourt-group.com
About Arix Bioscience plc
Arix Bioscience plc is a transatlantic venture capital company focused on investing in breakthrough biotechnology
companies around cutting-edge advances in life sciences.
We collaborate with exceptional entrepreneurs and provide the capital, expertise, and global networks to help
accelerate their ideas into important new treatments for patients. As a listed company, we are able to bring this
exciting growth phase of our industry to a broader range of investors. www.arixbioscience.com
Arix Bioscience plc
Half-Yearly Report and Condensed Consolidated Interim Financial Statements
Six months ended 30 June 2023
Chief Executive Statement
Overview
The first half of the 2023 financial year saw an improvement in the NAV of GBP13 million, from GBP226 million at 31
December 2022 to GBP239 million at 30 June 2023. This translated to a NAV per share movement from 175p per share to 185p
per share, driven by an increase in the underlying value of our listed portfolio. Over the period 1 January 2023 to 30
June 2023, there were mark to market gains in Aura Biosciences (GBP2.2 million), Disc Medicine (GBP12.7 million) and
Enliven (GBP1.9 million) as well as a GBP3.5 million gain in the Public Opportunities Portfolio. To put these strong gains
into context, during the same period, our benchmark index, the XBI, rose by only 2%. These positive evaluations were
only marginally offset by a cumulative negative FX movement of GBP2.3 million. GBP16.8 million was deployed into new listed
investments during the period, GBP16.4 million of which was into the Public Opportunities Portfolio and GBP0.4 million into
Disc Medicine after its IPO. The investment into Disc Medicine was realised later in the period at more than 2x,
realising GBP1.1 million. The cumulative effect of these gains, investments and realisations saw the total value of our
listed portfolio increase by 41% to GBP68 million at period-end (31 Dec 2022: GBP45 million).
The unlisted portfolio saw only two minor changes in fair value, with the remaining holding value of STipe written-off
at the half-year, resulting in a GBP1.2 million impairment. The decision to write-off this investment through the sale of
shares back to the company at nominal value reflects the challenge facing STipe in executing its preclinical work. This
loss was offset by a GBP1.2 million increase in the value received from Ensoma's acquisition of Twelve Bio, which
completed during the period. The GBP6.2 million value of Ensoma equity received by Arix in exchange for the holding in
Twelve Bio is priced at the December 2022 Series B round, in which Arix also participated, and reflects all shares
received as part of the acquisition. There was a significant new addition to the unlisted portfolio during the period,
with GBP6.6 million invested in Evommune. Together with a GBP2.9 million investment in Harpoon's redeemable preference
share issue and the GBP4.0 million draw down of the second tranche of Sorriso's Series A, investment into the unlisted
portfolio totalled GBP13.5 million in the period, excluding the impact of the Twelve Bio acquisition. With a cumulative
negative FX impact of GBP1.7 million, the total value of our unlisted portfolio, legacy assets and other interests
increased to GBP69 million at period-end (31 Dec 2022: GBP58 million).
Net investments of GBP6.0 million into the Public Opportunities Portfolio, and GBP13.5 million into the unlisted portfolio,
together with a GBP0.7 million net gain on our Disc Medicine purchase and sale, contributed to a net cash reduction of
GBP21.8 million to GBP101.0 million at period-end (31 Dec 2022: GBP122.8 million).
Strategic Review
In light of the unfavorable prevailing market conditions and in response to engagement with shareholders following
release of the Annual Report to 31 December 2022, a strategic review was announced in July 2023 which would include a
consideration of:
-- The Company's investment and realisation strategies;
-- Its capital allocation and shareholder returns policies; and
-- A tax-efficient wind-down of the Company.
The Board has been exploring a range of alternatives as part of this review. Currently, a number of options remain
under active consideration and the Board is focused on evaluating these in conjunction with its advisers. The Board
expects to have concluded this process soon and will provide a further update to shareholders as soon as possible.
Leadership Change
As announced separately today, I will be stepping down from my position as CEO and leaving the company by the end of
the year. The Board will determine the appropriate Board and management arrangements following the outcome of the
strategic review and update shareholders accordingly.
Portfolio Update for the six months to 30 June 2023: a robust performance
Prolonged uncertainty, volatile market conditions and depressed biotech valuations have resulted in fewer new
investments during the period with a continued focus on cash conservation. Weak public markets have limited the funding
opportunities for many biotech companies and in turn reduced the competitive tension which drives the M&A market.
Despite these pressures, we are delighted to see our portfolio companies trading well relative to peers in their
respective stages in the clinical process and therapeutic areas.
Overall, the portfolio made good operational progress in the period, with several companies reaching important clinical
milestones. Three portfolio companies raised funds totalling USD327.5 million. We co-led a USD50 million Series B
financing for new portfolio company Evommune, a clinical-stage biotechnology company inventing new ways to treat
inflammatory diseases. Subsequently, Evommune announced the closing of an additional USD7.5 million extension to its
Series B financing from new investor Verition Fund Management, bringing the total raised in the Series B round to
USD57.5m. Meanwhile, Disc Medicine enjoyed two further rounds of funding, raising a total of USD220 million in 2023, and
Ensoma completed a Series B extension, raising an additional USD50 million.
Clinical Companies
Artios Pharma - GBP24.9m (31 Dec 2022: GBP24.9m), 10.4% of NAV, 8.8% ownership stake
Artios Pharma is pioneering the development of novel small molecule therapeutics that target the DNA damage response
(DDR) process to treat patients suffering from a broad range of cancers.
During the period, Artios initiated a Phase 2 randomised trial for its ATR inhibitor ART0380 plus Gemcitabine in
Patients with Platinum Resistant Ovarian Cancer. The initiation of the Phase 2 trial follows the successful Phase 1
dose escalation demonstrating a favourable safety and tolerability profile, clinical activity, and preferred
pharmacokinetics in advanced solid tumours.
The company also launched a national project with IUCT-Oncopole, a cancer care, research and training centre in
Toulouse, France, to overcome resistance to therapies for familial breast cancer.
Aura Biosciences - GBP14.7m (31 Dec 2022: GBP13.1m), 6.2% of NAV, 4.0% ownership stake
Aura Biosciences is a Nasdaq listed, clinical-stage company developing a novel class of virus-like drug conjugate (VDC)
therapies for multiple oncology indications, including ocular and urologic cancers.
During the period, Aura announced positive interim Phase 2 safety and efficacy data of Belzupacap Sarotalocan (bel-sar)
that showed an excellent response to therapy with 89-100% tumour control in patients with early-stage Choroidal
Melanoma with suprachoroidal (SC) administration. The interim data provides strong confidence to support the launch of
the global Phase 3 trial which is on track to dose the first patient this year.
Bel-sar was granted Fast Track Designation by the FDA for the treatment of Choroidal Metastasis, its second ocular
oncology indication to receive this designation, highlighting the need for vision preserving treatment options.
The Phase 1 trial of bel-sar for the treatment of non-muscle invasive bladder cancer is currently ongoing, and Aura
expects to report Phase 1 data in 2024.
Disc Medicine - GBP20.7m (31 Dec 2022: GBP9.0m), 8.7% of NAV, 2.6% ownership stake
Disc Medicine is a clinical stage company dedicated to the discovery and development of novel therapeutic candidates
for serious and debilitating haematological diseases based on fundamental pathways of red blood cell biology.
Following the completion of its merger with Gemini Therapeutics in December 2022, Disc became a Nasdaq-listed company
trading as Disc Medicine and focused on advancing Disc's pipeline of haematology programmes. During the first half of
2023, the company raised total gross proceeds of USD220 million from a USD62.5 million registered direct offering and
USD157.9 million upsized public offering, providing the company with cash runway well into 2026.
The company also announced:
-- Positive initial data from ongoing Phase 2 trial of Bitopertin in patients with Erythropoietic
Protoporphyria, in which bitopertin demonstrated a favourable efficacy and safety profile alongside improvements in
sunlight tolerance and measures of quality-of-life in patients;
-- Initiation of a phase 1/2 study of bitopertin in patients with Diamond-Blackfan Anemia who have failed
corticosteroid treatment; and
-- Enrolment of patients in two separate Phase 1b/2 studies for DISC-0974, one in patients with anaemia of
chronic kidney disease who are not receiving dialysis (NDD-CKD) and one in patients with myelofibrosis and anaemia;
initial data from both trials expected by year-end 2023.
-- Received FDA Fast Track Designation for MWTX-003 for the Treatment of Polycythemia Vera, which highlights
the unmet need for treatment for patients and the initiation of the Ph1 trial expected in the coming months
Evommune - GBP6.4m, 2.7% of NAV, 3.4% ownership stake
Evommune is a private clinical-stage company inventing new ways to treat inflammatory diseases. The company is evolving
immunology through its unique and dynamic human tissue-based approach to discovering, developing, and delivering
therapies that address symptoms and halt progressive disease.
In April, Arix co-led the USD50 million Series-B for Evommune alongside existing investors EQT Life Sciences and
SymBiosis and invested GBP6.6 million in the round.
In June 2023, Evommune announced the closing of an additional USD7.5 million to its Series B financing from new investor
Verition Fund Management, bringing the total raised in the Series B round to USD57.5 million.
The capital raised will support Evommune's pipeline of programs, including EVO101, a novel small molecule inhibitor of
interleukin 1 receptor-associated kinase 4 (IRAK4), currently in Phase 2a trials, with data expected in Q4 2023. The
financing will also advance EVO756, a small molecule inhibitor of the mast cell receptor MRGPRX2, through clinical data
readouts.
Harpoon Therapeutics - GBP4.0m (31 Dec 2022: GBP1.3m), 1.7% of NAV, 5.8% ownership stake
Harpoon Therapeutics is a clinical-stage immunotherapy company developing a novel class of T cell engagers that harness
the power of the body's immune system to treat patients suffering from cancer and other diseases.
During the period, Harpoon completed a USD25 million private placement of redeemable preferred stock and warrants to
purchase common stock to certain institutional and other accredited investors.
Harpoon also completed enrolment of patients in their Phase 1 study of HPN217 in Relapsed/Refractory Multiple Myeloma,
with data presentation and selection of Phase 2 dose expected by year end.
Post-period in September 2023, Harpoon announced that Abbvie will not exercise the exclusive license option in
connection with Harpoon's HPN217 program, which targets B cell maturation antigen, or BCMA. The program will remain
exclusively owned by Harpoon, and the company plans to complete the ongoing Phase I clinical trial with data to support
the next phase of development.
Also in September, the company began dosing the first patients with small cell lung cancer (SCLC) in an ongoing Phase 1
/2 trial of HPN328, a DLL3 targeting TriTAC®, in combination with atezolizumab (Tecentriq®) as supplied by F.
Hoffmann-La Roche as part of a Master Clinical Supply Agreement.
Imara now Enliven - GBP9.4m (31 Dec 2022: GBP7.8m), 3.9% of NAV, 1.4% ownership stake
In February 2023, Enliven entered the public market via reverse merger with Imara Inc. (previously Nasdaq: IMRA).
Concurrent with the merger, Enliven completed a USD165 million private placement with participation from new and existing
investors. Following the transaction, Enliven is expected to have a cash runway into early 2026 with multiple clinical
milestones along the way.
Enliven continues to progress its parallel lead programs, ELVN-001 and ELVN-002, through dose escalation in Phase 1
trials, with initial proof of concept data for both programs expected in 2024.
Preclinical Companies
Sorriso Pharmaceuticals - GBP10.2m (31 Dec 2022: GBP6.6m), 4.3% of NAV, 26.1% ownership stake
Sorriso Pharmaceuticals is a biotechnology company advancing a pipeline of disease-modifying antibodies for the
treatment of inflammatory diseases, including Crohn's disease and ulcerative colitis.
During the period the company has made good progress preparing for initiation of Phase 1 clinical development in 2023.
The company remains on track to enter clinical trials in H2 2023.
Drug Discovery and research-stage companies (8.8% of NAV)
These companies are start-ups in the initial stages of research and development.
Depixus - GBP8.0m (31 Dec 2022: GBP8.2m), 3.3% of NAV, 14.2% ownership stake
Depixus is developing technology for the fast, accurate and inexpensive extraction of genetic and epigenetic
information from single molecules of DNA and RNA.
Having closed the Series A financing in December 2021, during the period, the company continued to make good progress
and plans to provide further updates in H1 2024.
Twelve Bio now Ensoma - GBP13.0m (31 Dec 2022: GBP12.5m), 5.4% of NAV, 6.0% ownership stake
Twelve Bio was acquired by Ensoma as of 8 February 2023.
Ensoma is a genomic medicines company developing one-time in vivo treatments that precisely engineer any cell of the
hematopoietic system. The company's EngeniousT platform combines innovative delivery technology with the full DNA
editing toolkit to tackle diseases that affect millions around the world, such as cancer and autoimmune disease, as
well as inherited conditions.
Following Ensoma's USD85 million financing led by Arix in January, Ensoma closed a Series B extension financing in May,
raising a further USD50 million, bringing the total round to USD135 million. The USD50 million was contributed by new
investors Kite, a Gilead company (Nasdaq: GILD), Bioluminescence Ventures and Delos Capital and by existing investor
SymBiosis.
Stipe Therapeutics
As part of our ongoing process to align our investments with our strategy, and following adjustments to its carrying
value in prior years, a decision was made in the period to fully exit our position in Stipe for a nominal amount.
Public Company Investments
Public Opportunities Portfolio - GBP22.1m (31 Dec 2022: GBP13.4m), 9.2% of NAV
During the period we have invested GBP16.4 million into the Public Opportunities Portfolio ("POP"), investing across
seven companies that we believe have the potential to deliver positive clinical data over the next 6 to 18 months.
Given the challenging state of the public markets for biotech funding, a key criterion has been that all of these
businesses are well funded through to these milestones, to reduce the risk of dilutive new fundraising. Through the
half year we have had multiple positive data read-outs from this portfolio. In a period of continued volatility, this
has helped the POP to increase to its current value of GBP22.1 million at the half year, reflecting an unrealised gain of
GBP3.5 million against the cost to date. The POP has subsequently recorded an overall gain and we see significant upside
potential as further milestones and data read-outs are reached.
Outlook
The last two years have seen one of the biotech sector's longest and most sustained reductions in both valuations and M
&A activity. This has inevitably impacted Arix's financial and stock market performance since 2021 and informed the
Board's decision to maintain significant cash balances to provide downside protection for investors during this time.
Despite this wider macro environment, improvements in the Group's NAV, in listed and unlisted assets, demonstrates both
the value of this strategy as well as positive signs of recovery in the broader biotech sector. Underpinned by a robust
balance sheet and improving NAV, Arix remains well positioned to further fund the portfolio, where necessary, while it
strives to reach a resolution to its strategic review.
Robert Lyne
Chief Executive Officer
Condensed Consolidated Interim Statement of Comprehensive Income
Half Year to 30 June 2023 Half Year to 30 June 2022
(unaudited) (unaudited)
GBP'000 GBP'000
Note
Change in fair value of investments 8 16,993 (26,635)
Impairment of investments 8 (1,238) (2,459)
Revenue 7 27 62
Administrative expenses (2,982) (2,284)
Operational gain/(loss) 12,800 (31,316)
Finance income 10 2,016 154
Foreign exchange (loss)/gain 11 (2,334) 1,339
Share-based payment 13 (4) (138)
Gain/(loss) before taxation 12,478 (29,961)
Taxation 9 - (93)
Gain/(loss) for the period 12,478 (30,054)
Other Comprehensive Income
Exchange differences on translating foreign
operations
725 2,225
Total comprehensive gain/(loss) for the period 13,203 (27,829)
Attributable to
Owners of Arix Bioscience plc 13,203 (27,829)
Gain/(loss) per share
Basic gain/(loss) per share (GBP) 6 0.11 (0.22)
Diluted gain/(loss) per share (GBP) 6 0.10 (0.22) The above condensed consolidated interim statement of comprehensive income should be read in conjunction with the accompanying notes, on pages 11 to 19
.
Condensed Consolidated Interim Statement of Financial Position
31 December
30 June 2023
2022
Note (unaudited)
(audited)
GBP'000
GBP'000
ASSETS
Non-Current Assets
Investments held at fair value 8 137,079 102,694
Intangible assets - 24
Property, plant and equipment 44 57
Right of use asset 46 72
137,169 102,847
Current Assets
Cash and cash equivalents 100,988 122,782
Other assets 2,377 2,218
103,365 125,000
TOTAL ASSETS 240,534 227,847
LIABILITIES
Current liabilities
Trade and other payables (1,377) (1,864)
(59)
Lease liability (37)
(1,414) (1,923)
Non-Current liabilities
Lease liability - (11)
TOTAL LIABILITIES (1,414) (1,934)
NET ASSETS 239,120 225,913
EQUITY
Share capital and share premium 12 188,585 188,585
Retained earnings 64,457 51,250
Other reserves (13,922) (13,922)
239,120 225,913
TOTAL EQUITY 239,120 225,913
The above Condensed Consolidated Interim Statement of Financial Position should be read in conjunction with the accompanying notes, on pages 11 to 19.
Condensed Consolidated Interim Statement of Changes in Equity
For the six months ended 30 June 2023
Share Treasury
Capital and Share
Other Equity Other Reserves Retained Earnings
Premium Reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 January 2023 188,585 (1,216) (1,113) (11,593) 51,250 225,913
Gain for the period - - - - 12,478 12,478
Other comprehensive income - - 725 - - 725
Share-based payment - - - - 4 4
As at 30 June 2023 (unaudited) 188,585 (1,216) (388) (11,593) 63,732 239,120
Share Treasury
Capital and Premium Other Equity Other Reserves Share Reserve Retained Earnings
Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
As at 1 January 2022 188,585 (1,216) (1,113) (11,593) 80,694 255,357
Loss for the period - - - - (30,054) (30,054)
Other comprehensive income - - 2,225 - - 2,225
Share-based payment - - - 138 138
As at 30 June 2022 (unaudited) 188,585 (1,216) 1,112 (11,593) 50,778 227,666 The above Condensed Consolidated Interim Statement of Changes in Equity should be read in conjunction with the accompanying notes, on pages 11 to 19.
Condensed Consolidated Interim Statement of Cash Flows
For the six months ended 30 June 2023
Half Year to Half Year to
30 June 2023 30 June 2022
(unaudited) (unaudited)
GBP'000 GBP'000
Net Cash used in operating activities 14 (3,538) (4,830)
Finance income received 1,696 154
Net cash used in operating activities (1,842) (4,676)
Cash flows (used in)/from investing activities
Purchase of equity and loan investments (36,497) (16,322)
Disposal of equity and loan investments 17,867 12,262
Purchase of property, plant and equipment - (3)
Net cash (used in)/from investing activities (18,630) (4,063)
Net decrease in cash and cash equivalents (20,472) (8,739)
Cash and cash equivalents at start of period 122,782 134,230
Effect of exchange rate changes (1,322) 5,598
Cash and cash equivalents at end of period 100,988 131,089
The above Condensed Consolidated Interim Statement of Cash Flows should be read in conjunction with the accompanying notes, on pages 11 to 19. Notes to the Financial Statements 1. General information
The principal activity of Arix Bioscience plc (the "Company") and together with its subsidiaries (the "Arix Group" or "the Group") is to invest in breakthrough biotechnology companies around cutting edge advances in life sciences.
The Company is incorporated and domiciled in the United Kingdom. The Company was incorporated on 15 September 2015 as Perceptive Bioscience Investments Limited and changed its name to Arix Bioscience Limited. It subsequently re- registered as a public limited company and changed its name to Arix Bioscience plc. The registered office address is Duke Street House, 50 Duke Street, London W1K 6JL. The registered number is 09777975.
These condensed consolidated interim financial statements were approved for issue on 26 September 2023.
These condensed consolidated interim financial statements do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2022 were approved by the Board of Directors on 24 April 2023 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006.
These condensed consolidated interim financial statements have been independently reviewed, not audited. 2. Basis of Preparation
These condensed interim financial statements for the six months ended 30 June 2023 have been prepared on a going concern basis, in accordance with the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority and in accordance with UK adopted international accounting standards. The going concern assessment covers a period of at least 12 months from the approval of these interim financial statements and includes the Group's current performance, financial position and the principal and emerging risks facing the Group, not withstanding the results and conclusions of the recent strategic review.
The condensed consolidated interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2022, which have been prepared in accordance with UK-adopted international accounting standards. The accounting policies adopted in the interim financial statements are consistent with those followed in the annual financial statements for the year ended 31 December 2022.
Taxes on income in the interim periods are accrued using the tax rate that would be applicable to the expected total annual profit or loss. 3. Estimates
The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.
In preparing these condensed consolidated interim financial statements, the significant judgements and estimates made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that are set on page 84 of the consolidated financial statements for the year ended 31 December 2022 and no retrospective adjustments were made. 4. Segmental Information
Information for the purposes of resource allocation and assessment of performance is reported to the Arix Group's Chief Executive, who is considered to be the chief operating decision maker, based wholly on the overall activities of the Arix Group. It has therefore been determined that the Arix Group has only one reportable segment under IFRS 8 ('Operating Segments'), which is that of sourcing, financing and developing healthcare and life science businesses globally. The Arix Group's revenue, results and assets for this one reportable segment can be determined by reference to the Condensed Consolidated Interim Statement of Comprehensive Income and Condensed Consolidated Interim Statement of Financial Position.
Notes to the Financial Statements (continued) 5. Financial Risk Management and Financial Instruments
The Arix Group's activities expose it to a variety of financial risks: market risk (including currency risk, fair value, interest rate risk, and cash flow interest rate risk), credit risk and liquidity risk.
The condensed consolidated interim financial statements do not include all financial risk management information and disclosures required in the annual financial statements; they should be read in conjunction with the Group's annual financial statements as at 31 December 2022. There have been no changes in the risk management department or in any risk management policies since the year end. 6. Gain/(loss) per Share
Basic gain or loss per share is calculated by dividing the gain or loss attributable to equity holders of Arix Bioscience plc by the weighted average number of unrestricted shares.
Potentially dilutive ordinary shares include options and conditional share awards issued under the Company's long
-term incentive plans. As in the prior period the Arix Group incurred a loss, the diluted loss per share is the same as the basic loss per share as the loss has an anti-dilutive effect and the inclusion of shares would be to decrease the loss per share.
2023 2022
GBP'000 GBP'000
Gain/(loss) attributable to equity holders of Arix Bioscience plc 13,203 (27,829)
Weighted average number of shares in issue 124,175,167 124,100,217
Fully diluted weighted average number of shares 131,876,919 132,415,872
Basic gain/(loss) per share GBP0.11 (GBP0.22)
Diluted gain/(loss) per share GBP0.10 (GBP0.22) 7. Revenue
The total revenue for Arix Group has been derived from its principal activity of investing in breakthrough biotechnology companies around cutting edge advances in life sciences. All of this revenue relates to trading undertaken in the United Kingdom.
2023 2022
GBP'000 GBP'000
Fund management fee income 14 54
Other income 13 8
27 62
Notes to the Financial Statements (continued) 8. Investments
Level 3 -
Unquoted
Level 1- Quoted Investments
Investments Total
GBP'000 GBP'000 GBP'000
At 31 December 2022 44,771 57,923 102,694
Additions 16,869 19,628 36,497
Disposals (11,485) (6,382) (17,867)
Impairment - (1,238) (1,238)
Realised and unrealised gain on investments 20,343 772 21,115
Foreign exchange losses (2,337) (1,785) (4,122)
At 30 June 2023 68,161 68,918 137,079
Level 3 investments are valued with reference to either the most recent funding round (GBP65.3m), net asset value (GBP2.7m) or deferred consideration (GBP0.9m).
Level 3 -
Unquoted
Level 1- Quoted Investments
Investments Total
GBP'000 GBP'000 GBP'000
At 31 December 2021 63,698 56,937 120,635
Additions 14,424 1,898 16,322
Disposals (12,262) - (12,262)
Impairment - (2,459) (2,459)
Realised and unrealised loss on investments (33.947) (799) (34,746)
Foreign exchange losses 5,801 2,310 8,111
At 30 June 2022 37,714 57,887 95,601
The Group's valuation policy can be found in page 87 of Group's annual report for the year ended 31 December 2022. The Group's milestone valuation approach cannot be readily sensitised and therefore the Group have not disclosed sensitivity analysis for Level 3 inputs. A 10% movement in the share price of Level 1 inputs would result in a GBP6.8 million movement in investment portfolio value (December 2022: GBP3.8 million).
As permitted by IAS 28 'Investment in Associates' and in accordance with the Arix Group accounting policy, investments are held at fair value even though the Arix Group may have significant influence over the companies. Significant influence is determined to exist when the Group holds more than 20% of the holding or when less than 20% is held but in combination with a certain level of board representation is deemed to be able to exert significant influence. As at 30 June 2023, the Arix Group is deemed to have significant influence over the following entity:
Notes to the Financial Statements (continued)
8. Investments (continued)
% of Issued Share
Company Country Registered Address Capital Net Assets of Profit/(loss) of Date of Financial
Company Company Information
Held
Sorriso Not
6 Northridge Way Sandy,
Pharmaceuticals, UT 84092 US publicly
USA 26.1% N/A N/A
Inc. available
Notes to the Financial Statements (continued)
8. Investments (continued)
Value Fully Committed,
Value 1 Jan 2023 Investment Realisations Impairment Change in FX 30 diluted* not Fully
in period in period in period valuation movement Jun equity invested funded
2023 interest
GBPm GBPm GBPm GBPm GBPm GBPm GBPm % GBPm %
Core
Portfolio
Unlisted
Artios 24.9 - - - - - 24.9 8.8% - 8.8%
Depixus 8.2 - - - - (0.2) 8.0 14.2% - 14.2%
Ensoma 7.5 6.2 - - - (0.7) 13.0 6.0% - 6.0%
Evommune - 6.6 - - - (0.2) 6.4 3.4% - 3.5%
Harpoon
Redeemable - 2.9 - - - (0.1) 2.8 - - -
Preference
Shares**
Sorriso 6.6 4.0 - - - (0.4) 10.2 26.1% - 26.1%
Twelve Bio 5.0 - (6.2) - 1.2 - - - - -
STipe 1.3 - - (1.2) (0.1) - - - - -
Amplyx 1.3 - - - (0.3) (0.1) 0.9 - - -
Unlisted 54.8 19.7 (6.2) (1.2) 0.8 (1.7) 66.2 - - -
Total
Listed
Aura 13.1 - - - 2.2 (0.6) 14.7 4.0% - 4.0%
Disc 9.0 0.4 (1.1) - 12.7 (0.3) 20.7 2.6% - 2.6%
Harpoon 1.3 - - - - (0.1) 1.2 5.8% - 5.8%
Imara/ 7.9 - - - 1.9 (0.4) 9.4 1.4% - 1.4%
Enliven***
Public
Opportunities 13.5 16.4 (10.4) - 3.5 (0.9) 22.1 - - -
Portfolio
Listed Total 44.8 16.8 (11.5) - 20.3 (2.3) 68.1 - - -
Legacy Assets 0.1 - - - - - 0.1 - - -
Gross 99.7 36.5 (17.7) (1.2) 21.1 (4.0) 134.4 - - -
Portfolio
Other 3.0 - (0.2) - - (0.1) 2.7 - - -
Interests
Total 102.7 36.5 (17.9) (1.2) 21.1 (4.1) 137.1 - - -
Investments
*Fully diluted reflects the shareholding inclusive of unexercised and unvested options. **These are 8% redeemable preference shares being held at Fair Value, which is deemed to be the acquisition cost. ***Name change
Notes to the Financial Statements (continued) 9. Taxation
Half Year to Half Year to
30 June 2023 (unaudited) 30 June 2022 (unaudited)
GBP'000 GBP'000
Current period tax charge
Current Tax
- 93
Total tax charge
- 93
Reconciliation of tax charge
Gain/ (loss) before tax 12,478 (29,961)
Expected tax based on 22.00% (2022: 19.00%) 2,748 (5,693)
Effects of:
Expenses not deductible for tax purposes 43 501
Income not taxable (16) (29)
Investment revaluation (3,523) 5,119
Employee share options 4 11
Deferred tax not recognised 744 184
Total tax charge
- 93
Unrecognised deferred tax assets
Unutilised tax losses (9,471) (14,747)
Priority profit share outstanding 441 395
Other timing differences (12,324) (7,208)
Carried forward (21,354) (21,560)
Notes to the Financial Statements (continued) 10. Finance Income
Finance Income has increased substantially since 30 June 2022 reflecting the impact of the increase in interest rates in the UK (from 1.25% to 5%) on the Company's cash balances. 11. Foreign Exchange
The Company holds US dollar denominated cash in order to match cash calls from our portfolio investments. In H1 2022 sterling weakened against the US dollar creating an FX gain whereas in H1 2023 sterling gained against the US dollar creating an FX loss. 12. Share Capital
As at As at
30 June 2023 31 Dec 2022
Allotted and called up
Ordinary shares of GBP0.00001 each (#)
135,609,653 135,609,653
Ordinary shares of GBP0.00001 each (GBP'000) 1 1
49,671 Series C shares of GBP1 each (GBP'000) 50 50
Included within Ordinary shares are 6,220,145 shares that were held in Treasury at 30 June 2023 (31 Dec 2022: 6,428,853).
At the Company's Annual General Meeting on 23 May 2023, shareholders granted a renewal of the authority to allow the Company to buy back up to 10% of its shares. No shares have been purchased in the six months to 30 June 2023 (six months to 30 June 2022: 0). 13. Share Options
Executive Incentive Plan
The Arix Group operates an Executive Incentive Plan for Executive Directors and certain employees of the Company.
Executive Incentive Plan - 2021
In August 2021, the Executive Directors and certain employees were awarded options or conditional awards which, in case of options, will become exercisable at nil cost and, in the case of the conditional share awards, will vest at nil cost at the end of the three-year performance period, subject to performance criteria. This requires the net asset value and the share price to have grown by a minimum of 7% pa compound over the performance period to 31 December 2023, and up to 15% pa compound to achieve 100% of the award. 368,369 are unvested at 30 June 2023 (31 Dec 2022: 368,369). A credit of GBP40k (six months to 2022 a charge of GBP41k) has been recognised in the period in relation to the 2021 Executive Incentive Plan.
Executive Incentive Plan - 2022
In November 2022, the Executive Director and certain employees were awarded options which will become exercisable at nil cost at the end of the three-year performance period, subject to performance criteria. The scheme in three part relates to growth of net asset value, invested net asset value and share price growth.
Net asset value and separately the invested net asset value must grow by a minimum of 5% pa (for NAV) and 7% pa (for invested NAV) compound over the performance period to 31 December 2024, and up to 12% pa (NAV), 15% pa (invested NAV) compound to achieve 100% of the award. Additionally, a third element relating to share price growth from start point of GBP1.27 must grow by minimum of 5% pa compound over the performance period and up to 15% pa compound to achieve 100% of the award.
648,584 options were issued in 2022, all of which are unvested at year-end. In addition, a further 127,358 were issued in May 2023 on the same terms as those issued in November 2022. A charge of GBP30k (six months to 2022: GBPnil) has been recognised in the period in relation to the 2022 Executive Incentive Plan.
The charge in the period relating to net asset value growth was calculated based upon the share price at grant of GBP1.27, with an assessed likelihood of vesting of 25%, down from 50% at 31 December 2022. The charge relating to share price growth was calculated using a Monte Carlo simulation model, using assumptions relating to share price at grant (GBP1.27); risk-free interest rate (-2.4%); time to vesting (2 years and 4 months); and expected volatility of 23.5%.
Executive Incentive Plan - 2023
In May 2023, the Executive Director and certain employees were awarded options which will become exercisable at nil cost at the end of the three-year performance period, subject to performance criteria. The scheme in three part relates to growth of net asset value, invested net asset value and share price growth.
Net asset value and separately the invested net asset value must grow by a minimum of 5% pa (for NAV) and 7% pa (for invested NAV) compound over the performance period to 31 December 2025, and up to 12% pa (NAV), 15% pa (invested NAV) compound to achieve 100% of the award. Additionally, a third element relating to share price growth from the start of the performance period of GBP1.07 must grow by minimum of 5% pa compound over the performance period and up to 15% pa compound to achieve 100% of the award.
880,932 options were issued in 2023, all of which are unvested at 30 June. In the period, a share-based payment charge of GBP14k was recognised in relation to the 2023 Executive Incentive Plan. The charge relating to net asset value growth and invested net asset value growth was calculated based upon the share price at grant of GBP1.06, with an assessed likelihood of vesting of 50%. The charge relating to share price growth was calculated using a Monte Carlo simulation model, using assumptions relating to share price at the start of the performance period (GBP1.07); risk-free interest rate (3.58%); length of the performance period (3 years); and expected volatility based on the three years prior to the start of the performance period (42.9%).
Executive Share Option Plan and Founder Incentive Shares
At the Arix Group's inception, an Executive Share Option Plan was in operation, in which two Directors participated. Options were granted on 8 February 2016 with an original exercise price of GBP1.80 per ordinary share. This was subsequently amended for one Director, with the exercise price reducing by GBP0.18. The number of ordinary shares subject to the options totals 5,520,559. The options vested in four equal proportions on 8 February of 2017, 2018, 2019 and 2020. The options may not be exercised after the tenth anniversary of the grant date, and it will lapse on that date if it has not lapsed or been exercised in full before then. All options vest at the end of the vesting period relating to that option or on the occurrence of a contingent event; these include a change of control or cessation of employment in accordance with 'good leaver' provisions.
No options have been exercised to date. In the six months to 30 June 2023, a share-based payment charge of GBPnil (2022: nil) was recognised in relation to the Executive Share Option Plan, calculated using the Black-Scholes model. Assumptions used in the model relating to the risk-free interest rate and expected volatility were unchanged from those used in the prior period.
Restricted shares with identical terms, including a GBP1.80 price for the lifting of restrictions, were offered to the founders of the Company, totaling 5,080,582 shares. In the six months to 30 June 2023, a share-based payment charge of GBPnil (2022: nil) was recognised. The charge was calculated using the Black-Scholes model. Assumptions used in the model relating to the risk-free interest rate and expected volatility were unchanged from those used in the prior period.
Notes to the Financial Statements (continued) 14. Net Cash from Operating Activities
Half Year to Half Year
to
30 June 2023 30 June
2022
GBP'000
GBP'000
Gain/(loss) before income tax 12,478 (29,961)
Adjustments for:
Change in fair value of investments (gain)/ 26,635
loss (16,993)
Impairment of investments 1,238 2,459
Foreign exchange loss/(gain) 2,334 (3,372)
Share-based payment 4 138
Depreciation and amortisation 63 90
Finance income (2,016) (154)
Changes in Working Capital
(Increase) in trade and other receivables (159) (86)
(Decrease) in trade and other payables (487) (579)
Cash (used) in Operations (3,538) (4,830) 15. Related Party Transactions
During the period, Arix Capital Management Limited, a subsidiary of the Company, received fee income totaling GBP14k (six months to 30 June 2022: GBP54k) relating to its management of The Wales Life Sciences Investment Fund LP ("WLSIF"), an entity in which ALS SPV Limited, also a subsidiary of the Company, has an interest. At 30 June 2023, Arix Capital Management Limited was owed
GBP1.1 million (30 June 2022: GBP994k) in respect of these fees. 16. Events After the Reporting Period
No significant portfolio company events. The conclusions of the Strategic Review as conducted after the period end are discussed on pages 2 and 3 of this document.
Statement of Directors' Responsibilities
The Directors confirm that to the best of their knowledge these consolidated condensed interim financial statements have been prepared in accordance with UK Adopted International Accounting Standard 34, 'Interim Financial Reporting', and that the interim management report includes a fair review of the information required by Disclosures Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority, namely:
-- an indication of important events that have occurred during the first six months and their impact on theconsolidated condensed interim set of financial statements, and a description of the principal risks anduncertainties for the remaining six months of the financial year; and
-- material related-party transactions in the first six months and any material changes in the related-partytransactions described in the last annual report.
The Directors are responsible for the maintenance and integrity of the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
The Directors of Arix Bioscience plc are listed in the Company's Annual Report for 31 December 2022. By order of the Board
R Lyne
Robert Lyne
Chief Executive Officer 26 September 2023
INDEPENT REVIEW REPORT TO ARIX BIOSCIENCE PLC Conclusion Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2023 is not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority. We have been engaged by Arix Bioscience plc (the 'company') to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2023 which comprises the condensed Consolidated Interim Statement of Financial Position, the Condensed Consolidated Interim Statement of Comprehensive Income, the Condensed Consolidated Interim Statement of Cash Flows, the Condensed Consolidated Interim Statement of Changes in Equity and the explanatory notes to the Condensed Interim Financial Statements. Basis for conclusion We conducted our review in accordance with International Standard on Review Engagements (UK) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" ("ISRE (UK) 2410"). A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. As disclosed in note 2, the annual financial statements of the Company and its subsidiaries (the 'Group') are prepared in accordance with UK adopted international accounting standards. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with UK adopted International Accounting Standard 34, "Interim Financial Reporting. Conclusions relating to going concern Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed. This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410, however future events or conditions may cause the Group to cease to continue as a going concern. Responsibilities of directors The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority. In preparing the half-yearly financial report, the directors are responsible for
assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so. Auditor's responsibilities for the review of the financial information In reviewing the half-yearly report, we are responsible for expressing to the Company a conclusion on the condensed set of financial statement in the half-yearly financial report. Our conclusion, including our Conclusions Relating to Going Concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report. Use of our report Our report has been prepared in accordance with the terms of our engagement to assist the Company in meeting the requirements of the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability. BDO LLP Chartered Accountants London, UK 26 September 2023 BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127)
----------------------------------------------------------------------------------------------------------------------- Dissemination of a Regulatory Announcement, transmitted by EQS Group. The issuer is solely responsible for the content of this announcement.
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ISIN: GB00BD045071 Category Code: IR TIDM: ARIX LEI Code: 213800OVT3AHQCXNIX43 OAM Categories: 1.2. Half yearly financial reports and audit reports/limited reviews Sequence No.: 274075 EQS News ID: 1735081 End of Announcement EQS News Service =------------------------------------------------------------------------------------
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