Evgen Pharma PLC Final Results (8527B)

TIDMEVG

RNS Number : 8527B

Evgen Pharma PLC

15 June 2021

Evgen Pharma plc

(the "Company")

Final Results to 31 March 2021

Evgen Pharma plc (AIM: EVG), the clinical stage drug development company developing sulforaphane based medicines for the treatment of multiple diseases, announces its audited results for the year ended 31 March 2021.

Research and Development

-- Phase IIb/III trial using SFX-01 for acute respiratory distress syndrome ("ARDS"), including COVID-19 patients, sponsored by the University of Dundee and NHS Tayside, with grant funding from LifeArc; the "STAR" trial (SFX-01 treatment for acute respiratory infections). 133 patients recruited to date

-- Safety data review by independent Data Monitoring Committee ("DMC") of 60 randomised patients concluded there were no concerns regarding patient safety. Further assessment by the DMC of unblinded data from 100 randomised patients for safety and futility will be performed imminently

-- Exciting pre-clinical data generated in glioma/glioblastoma - preparations under way for randomised, blinded Phase I/II clinical trial to start in H1/2022

-- In vitro data suggests that SFX-01 may suppress tumour growth in patients with oestrogen receptor positive breast cancer who have become resistant to CDK4/6 inhibitors such as palbociclib (sold as Ibrance by Pfizer)

-- Encouraging in vitro data that SFX-01 may also be effective in treating blood cancers such as the severe form of childhood leukaemia, juvenile myelomonocytic leukaemia (JMML), linked to new evidence that SFX-01 inhibits a further pathway of relevance in many cancers

Corporate

-- Completion of first out-licensing deal with Juvenescence for use of Sulforadex(R) technology in non-pharmaceutical markets. Up to $10.5m receivable in milestones with royalties on sales, expected from mid-2023

   --       Funding round of GBP11m (before costs) will accelerate Evgen's development programmes 

Strengthened Management Team

-- Senior management team strengthened and expanded with appointments of Dr Huw Jones (CEO) and, post year end, Dr Glen Clack as Chief Medical Officer and Dr Helen Kuhlman as Chief Business Officer

Financial Highlights

   --       Financial performance in-line with expectations: 

o Post tax loss of GBP2.7m (2020: loss of GBP2.7m)

o Cash outflow from operations of GBP2.9m (2020: outflow of GBP2.6m)

o Cash and short-term deposits at 31 March 2021 of GBP11.6m (31 March 2020: GBP4.1m)

Barry Clare, Chairman of Evgen Pharma, said: " Over the last 12 months Evgen has substantially strengthened its senior team, made considerable progress across all areas of its business, raised significant funding to accelerate the development of its therapeutic programmes and concluded its first commercial partnership. I look forward to continuing our success in the current year and would like to thank our shareholders for their continued support."

Enquiries:

 
 Evgen Pharma plc www.evgen.com           via Walbrook 
 Dr Huw Jones, CEO 
 Richard Moulson, CFO 
 
 finnCap www.finncap.com                  [phone] 
 Geoff Nash / Teddy Whiley (Corporate 
  Finance) 
 Alice Lane (ECM) 
 
 Walbrook PR                             [phone] or [e-mail] 
                                          [phone] / +44 (0)7876 
 Paul McManus / Anna Dunphy                741 001 
 
 

About Evgen Pharma plc

Evgen Pharma is a clinical stage drug development company developing sulforaphane based medicines for the treatment of multiple diseases. The Company's core technology is Sulforadex(R), a method for synthesising and stabilising the naturally occurring compound sulforaphane and novel proprietary analogues based on sulforaphane. The lead product, SFX-01, is a patented composition of synthetic sulforaphane and alpha-cyclodextrin.

Clinical data from the Company's open-label Phase II STEM trial has shown that SFX-01 can halt the growth of progressing tumours in patients with oestrogen-positive (ER+) metastatic breast cancer, and in some cases significantly shrink the tumour, whilst causing very few side effects.

The Company has its headquarters at Alderley Park, Cheshire and its registered office is at the Liverpool Science Park, Liverpool. It joined the AIM market of the London Stock Exchange in October 2015 and trades under the ticker symbol EVG.

For further information, please visit: www.evgen.com

CHAIRMAN'S STATEMENT

The last year has seen considerable progress in Evgen's development programmes, our first out-licensing deal, and a substantial fundraising that will accelerate these programmes. In addition, we initiated an externally funded Phase IIb/III clinical trial of SFX-01 in Acute Respiratory Distress Syndrome ('ARDS') in partnership with The University of Dundee and NHS Tayside, the sponsors of the trial, which recruited its first patient in November 2020.

With Dr Huw Jones, who joined us in October 2020 as CEO, and the more recent appointments of Dr Helen Kuhlman as Chief Business Officer and Dr Glen Clack as Chief Medical Officer, we have a broader and stronger senior management to execute our ambitions.

Following its unblinded safety data review from the first 60 randomised patients in the STAR trial, the independent DMC concluded that there were no concerns regarding patient safety or data quality that would prevent continuation of the trial. We expect to receive its assessment of futility and safety from the first 100 patients shortly, which will consider whether there is sufficient evidence of clinical improvement in the treatment arm compared with placebo to justify continuation of the trial.

Since we successfully completed our Phase IIa trial of SFX-01 in metastatic breast cancer ('mBC') the treatment pathway has changed substantially with the launch and rapid uptake of CDK4/6 inhibitors. These are becoming standard of care as first or second line treatments and hence we have re-assessed how to position SFX-01 as a STAT3 inhibitor in this landscape. In partnership with Manchester University and the Institut Curie in Paris we are assessing whether SFX-01 has anti-cancer activity in CDK4/6 resistant preclinical models. Early data generated so far does show such activity. Accordingly, we are refreshing the design of our next mBC clinical trial and starting a dialogue with potential partners and/or funders of this trial.

Whilst we hypothesise that STAT3 inhibition is the predominant mechanism of action for SFX-01 in mBC, recent preclinical data has demonstrated that it also inhibits Src homology region 2 domain-containing phosphatase-2 (SHP2), a mediator of cell proliferation in blood cancers and a number of solid tumours. Early preclinical in vitro data from the University of Oxford in which cell lines from juvenile myelomonocytic leukaemia (JMML) patients were exposed to SFX-01 showed reduced cell proliferation. JMML is a rare but very serious blood cancer in children. We have commissioned further work to assess whether and in what blood cancers a clinical programme might be initiated.

Also during the year we announced compelling preclinical data showing that SFX-01 significantly extended survival times in animal models of glioma, especially when combined with radiotherapy. This work was conducted at the University of Aquila, Italy and is being repeated at Auckland University in New Zealand and with a contract research organisation. To date the results have been consistent with those obtained at Aquila, strengthening our conviction that we should proceed to a glioma clinical programme, which we aim to commence in H1 2022.

In September 2020, we announced our first out-licensing deal with the JuvLife division of Juvenescence Ltd. JuvLife was established to provide high quality, science-based consumer products that will extend a healthy lifespan. The license covers non-pharmaceutical applications of our Sulforadex technology with limitations on dosing so that there is no conflict or cross-over with our core clinical candidates. We have established a good and supportive working relationship with the JuvLife team, who are conducting a thorough and professional product development and marketing programme. We anticipate market launch by the middle of 2023. The deal will generate attractive cashflows from milestones and royalties and is an opportunity to generate income from an element of our technology which we would otherwise be unlikely to exploit commercially.

We were very pleased with the heavily oversubscribed fundraising completed in March 2021 which raised GBP11m before expenses. This was characterised by some high-quality institutional names joining the register for the first time, and strong support from key existing institutions and retail investors through the Open Offer. The funding allows us to accelerate our various preclinical and clinical programmes and to conclude the scale up and formulation work on SFX-01 so we are able to supply larger, late-stage trials and early in-market demand.

The biological activity of sulforaphane is undoubted and our Sulforadex technology provides us with an exceptional opportunity to build a valuable business. Our pipeline has been broadened with data showing SFX-01 could be efficacious in several cancers as well as respiratory diseases such as ARDS. With greater resources and a strengthened management team we look forward enthusiastically to further achievements in the current year.

Barry Clare

Chairman

14 June 2021

STRATEGIC REPORT

The Directors present their Strategic Report for the year ended 31 March 2021.

Chief Executive's Report

Introduction

Evgen is a clinical stage drug development company focussed on the development of sulforaphane-based compounds, a new class of pharmaceuticals which are synthesised in a proprietary, well-tolerated, stable formulation. We have a comprehensive intellectual property package over this technology. Our pipeline exploits sulforaphane's activity in three separate biochemical pathways; inhibition of pSTAT3 and SHP2, both of importance in cancer, and up-regulation of Nrf2, a therapeutic target associated with a broad range of diseases which are characterised by excessive oxidative stress and inflammation. Sulforaphane has attracted huge scientific interest and has been shown to have anti-cancer and anti-inflammatory qualities in a wide range of preclinical and clinical studies.

Our lead product, SFX-01, has demonstrated efficacy in a Phase II trial for advanced metastatic breast cancer. It has been used to treat over 200 patients in clinical trials and is well-tolerated with predominantly mild side-effects.

Evgen has exclusive rights to the only technology (Sulforadex(R)) proven to synthesise this very unstable molecule in a stabilised composition that will satisfy regulatory and medicinal needs for a pharmaceutical and that can be used as a therapeutic.

Our strategy is now sharper and more focused

Following my appointment as CEO our strategy has been refined as follows:

-- To ensure our selected development programmes meet stringent scientific and commercial criteria

   --         Our core R&D efforts to be focused on our oncology and ARDS pipeline 

-- SFX-01 to continue to be provided to academic groups for preclinical evaluation in selected disease models

-- Consideration will be given to supporting clinical evaluation of SFX-01 in non-core indications, where there is compelling preclinical data and an attractive commercial opportunity

-- To leverage the Sulforadex(R) platform by supporting Juvenescence in bringing products to market outside the pharmaceutical sector

   --         The business model is to establish proof of concept and then conclude partnerships 

Evgen will have the right to access the pre-clinical and clinical data generated by academic partners on fair commercial terms to advance its clinical and commercial development. Since the principal funding for these trials will be obtained by the investigator/ institution they have limited impact on our cash reserves.

We believe this strategy offers the best route to enhance shareholder value and the opportunity for all stakeholders to benefit from the undoubted potential of SFX-01 and our broader technology platform.

Operational overview

Clinical pipeline

To date, SFX-01 has been administered to some 200 patients and demonstrated a good safety and tolerability profile. Evgen has two clinical development programmes ongoing; one in metastatic breast cancer (Phase II), and one in Acute Respiratory Distress Syndrome (Phase IIb/III).

In addition, it is expected that a Phase II trial in glioma/glioblastoma will be started in 2022.

The Company has started the preparatory work to file an IND around the end of 2021 to enable clinical studies to be conducted in the United States.

ARDS in patients with respiratory distress due to COVID-19 and other infective agents

In June, we won a highly competitive grant process to secure funding from LifeArc to evaluate SFX-01 in patients with suspected COVID-19, in conjunction with the University of Dundee ("Dundee") and NHS Tayside. The trial, sponsored by Dundee, will investigate whether SFX-01 can reduce the severity, or prevent the onset of ARDS associated with COVID-19 and pneumonia resulting from other infectious agents, thus reducing the need for invasive patient ventilation and potentially improving recovery times.

Nrf2 (nuclear factor erythroid 2 p45-related factor 2) is a transcription factor that regulates many target genes including those used in encoding proteins involved in the cellular antioxidant response, damage repair, protein homeostasis and maintenance of metabolic balance. It has been discovered that NRF2 is suppressed in lung biopsy samples from patients infected with the COVID-19 virus. SFX-01 inactivates a protein associated with regulating NRF2, known as KEAP1 (Kelch-like ECH-associated protein 1) thus allowing accumulation of NRF2 and an increase in expression of target genes potentially improving the cellular response to the COVID-19 virus and reducing the risk of the "cytokine storm". SFX-01 upregulates the Nrf2 pathway, which is part of the natural human defence against inflammatory and oxidative stress, such as the inflammation that occurs during a severe viral infection. Preclinical studies have shown that up-regulating the Nrf2 pathway reduces the severity of ARDS, the progressive lung damage observed in COVID-19 and other pneumonia patients which can result in the need for invasive ventilation in an intensive care unit. Recent pre-clinical data from Johns Hopkins University in the USA suggests that sulforaphane has direct anti-viral activity against the virus that causes COVID-19, adding a second potential mechanism to support the evaluation of SFX-01 in ARDS. This hypothesis is being tested in the STAR COVID-19 study.

The Phase IIb/III study will recruit up to 300 patients with confirmed or suspected COVID-19. Patients will be drawn from both hospital and community settings and may present with COVID-19 or other respiratory diseases such as viral pneumonia. Half the group will receive SFX-01 in addition to standard hospital care while the other half will receive a placebo and standard hospital care.

Evgen will supply clinical centres with SFX-01 and a placebo as its contribution to the trial. The financial contribution to the trial is minimal as the costs of providing SFX-01 for the trial are not material.

As at 12 June 2020, 133 patients had been recruited and depending on availability of COVID-19 and other patients with ARDS, data could be available in the first half of 2022.

In March this year unblinded safety data from the first 60 randomised patients was reviewed by an independent Data Monitoring Committee ("DMC"). It was concluded that there were no concerns regarding patient safety or data quality that would prevent continuation of the trial.

A further assessment, by the DMC, of unblinded data from the first 100 randomised patients, for safety and futility, will be performed imminently and will be announced in the coming weeks. The trial sponsor (University of Dundee/NHS Tayside) are cleaning the trial data and finalising the statistical basis for performing the analysis, and the output will be provided to the DMC for review shortly. The DMC assessment of futility will consider whether there is sufficient evidence of clinical improvement in the treatment arm compared with placebo to justify continuation of the trial.

We expect to be able to announce the DMC conclusions later this month in line with previous guidance as to timing thereof.

Metastatic breast cancer ("mBC")

Since 2012, Evgen has worked with University of Manchester scientists at the Cancer Research UK Manchester Institute ("Manchester") and together we have generated promising data showing SFX-01 reduces the number of cancer stem cells in patient-derived breast cancer tissue in xenograft models. The xenograft studies used a combination of hormone therapy and SFX-01, with the role of SFX-01 being to target the cancer stem cell population. Crucially, the data also showed that SFX-01 is unique, compared with existing marketed therapies, in deactivating phosphorylated STAT3, a key agent in driving cancer metastases and resistance to current standards of care. This data was recently published in the prestigious journal, Oncogene.

In the open-label Phase II trial of SFX-01 in 46 mBC patients we demonstrated:

   --    Conclusive evidence of anti-cancer activity via objective responses (tumour shrinkage) 

-- 24% of patients showed a durable clinical benefit for at least six months, despite the late stage of disease and patients' established resistance to hormone therapy. Of these, five patients were still receiving SFX-01 at 12 months and one patient remained on treatment for over 18 months

   --    A mild and favourable side effect profile for an anti-cancer drug. 

Since we commenced the trial CDK4/6 inhibitors have grown in acceptance and are becoming standard of care in first line mBC treatment. These drugs provide an extended period of progression free survival, but invariably patients become resistant to them. Accordingly, we are conducting further preclinical work with Manchester to assess the impact of SFX-01 in CDK4/6 resistance models. Early in vitro data suggests that SFX-01 may suppress tumour growth in patients who have become resistant to CDK4/6 inhibitors. Should this data be reinforced with further in vitro and in vivo work we will pursue a Phase II placebo-controlled study in second line mBC treatment of patients who have failed on CDK4/6 inhibitors. Such a trial could commence in 2022.

Broadening of pre-clinical programmes

We continue to support academic research to broaden the potential range of applications for SFX-01 and increase our mechanistic understanding in these different disease areas. This has led to two additional cancer programmes becoming part of our core strategy.

Compelling data in glioma/glioblastoma

Glioma is the most common form of brain tumour affecting around 5 per 100,000 people. The more severe, grade IV classification, glioblastoma, is a very serious form of brain tumour representing 45% of all cases and has a poor prognosis with median survival of around 14 months. The five-year survival of the severe grades is 5%. The therapeutic options for glioma are limited to surgery, radiotherapy and the one drug widely available, temozolomide. There is a clear unmet need for more treatments for use in conjunction with the current standard of care.

A collaboration with Dr Claudio Festuccia at the University d'Aquila, Italy has generated highly positive data for SFX-01 in pre-clinical models of glioma and glioblastoma. Using standard in vitro and in vivo pre-clinical models as well as orthotopic models (where glioma cells are implanted in brain tissue representing a more disease-relevant model) both tumour shrinkage and significantly extended survival times were demonstrated. Furthermore, SFX-01 was also found to potentiate (i.e. substantially increase) the therapeutic effect of radiotherapy in these models. Dr Festuccia's work has recently been submitted for publication.

Further preclinical work has commenced in multiple laboratories to complete the data set required for a clinical trial application and/or partnering discussions. To date such work has built on Dr Festuccia's results from in vitro experiments and has confirmed the in vitro efficacy of SFX-01 in multiple, highly disease relevant, patient-derived cells. The preclinical work should be completed in 2021 and a phase Ib/II clinical study could commence in H2 of 2022.

Early data in JMML points to potential use of SFX-01 in blood cancers

Professor Philip Eaton at Queen Mary University of London has shown that SFX-01 inhibits activity of the non-receptor phosphotyrosine phosphatase, SHP2 (coded by the PTPN11 gene). SHP2 is thought to be a significant factor in some cancers. Professor Eaton's work has recently been submitted for publication.

Following on from this work an in vitro project was conducted by another world-renowned academic institution to study the effect of SFX-01 on cells from patients with Juvenile Myelomonocytic Leukaemia ('JMML'). SHP2 is a mediator of the cell proliferation seen in JMML patients. Whilst this is preliminary data from a small sample size, we were encouraged to see a statistically significant effect in reducing cell proliferation and increasing apoptosis (cell death).

JMML is an invasive and rare childhood cancer with very high clinical lethality and limited treatment options, usually stem cell transplantation. It occurs with an estimated incidence of 1.2 cases per million annually. We are evaluating whether to pursue a development programme in this very rare disease and/or investigate whether SFX-01 should be evaluated in other cancers that are also mediated by SHP2.

Out-licensing

First commercial out-licensing deal signed, with Juvenescence

In September 2020 we announced the licensing of our Sulforadex(R) sulforaphane stabilisation technology in a number of non-pharmaceutical applications to Juvenescence Ltd ("Juvenescence"). In particular, Juvenescence intends to market and sell a high-end nutritional health product containing a defined dose of sulforaphane extracted from natural sources. Under the terms of the license agreement (the "Agreement"), we will receive milestone and option payments of up to $10.5m together with royalties on future product sales which are anticipated from mid-2023.

This agreement monetises one element of Evgen's sulforaphane technology platform within a timescale considerably shorter than that typical of pharmaceutical development. Our focus will remain on progressing the therapeutic programmes, and the Agreement contains provisions which ensure a clear differentiation between potential nutritional health products and pharmaceutical products, including limitations on daily dose.

The natural source of sulforaphane to be used by Juvenescence contrasts with the synthetic sulforaphane which is used in SFX-01, the Company's lead therapeutic product. Juvenescence is making good progress and it is envisaged that product launch will occur in around two years' time.

Non-clinical programmes

Our long-term toxicology work has now concluded and we are pleased to note that the final data demonstrates an acceptable toxicology profile for conducting clinical trials in chronic diseases where longer term dosing is required. These data are consistent with our observations of patients who received SFX-01 for extended periods in the mBC trial.

Scale-up of our formulation and manufacturing processes has progressed. In particular, a commercial scale process for producing a key intermediate in drug substance manufacture has been developed by a well-regarded contract manufacturing organisation. Following the February fundraise we are now working on the scale up of API and finished product formulation with a major contract manufacturer, with the aim of having a scaled-up product with further enhanced IP protection available for clinical trials in early 2022.

Intellectual property update

Our IP portfolio continues to be strengthened with a number of key patents being granted. The current status of the intellectual property portfolio is as follows:

-- From the "parent" patent family entitled "Stabilised Sulforaphane" patents are granted in Australia, Canada, EU, US, Japan and Hong Kong

-- The principal manufacturing patent application, entitled "Methods of Synthesising Sulforaphane" is granted in Australia, China, Europe, Japan, US and Canada and further applications are pending in Brazil, Canada, US and India

-- A second manufacturing patent which is directed to methods of isolating and purifying sulforaphane or analogues from natural sources has been granted in Europe, US, Japan and China

-- The patent application providing protection around novel analogues based on sulforaphane, and entitled "Sulforaphane-Derived Compounds" is granted in Australia, China, Europe, Japan and the US and pending in Canada

Furthermore, a new composition of matter filing has been made which, if successful, would add a further 20 years of patent life to the key patent family.

People

Key hires in senior team

After 10 years at Evgen, our founding CEO, Dr Steve Franklin, resigned from the Company at the end of April last year. Dr Huw Jones joined us in October 2020 as CEO with over 30 years' experience of leadership roles in public and private R&D-based companies.

Following our February fundraise we have been able to strengthen our senior management team in two key roles. Since the year-end Dr Glen Clack has joined as Chief Medical Officer and Dr Helen Kuhnman as Chief Business Officer. Both are highly experienced in their fields and we now have the senior level expertise we need to accelerate our development and build on the successes in the recent past.

Key Performance Indicators

Key Performance Indicators include a range of financial and non-financial measures (such as clinical trial progress). Details about the progress of our development programs (non-financial measures) are included elsewhere in this Strategic Report, and below are the other indicators (financial measures) considered pertinent to the business.

 
                                                                       2021 (GBPm) 
 Year-end cash and short-term investments and cash on deposit held: 
  (2020: GBP4.1m)                                                      11.6 
                                                                      ------------ 
 

The increase in year-end cash reflects the fundraising in February 2021 which raised GBP11m before expenses (GBP0.7m) together with receipt of the R&D tax credit (GBP0.47m), offset in part by working capital, pre-clinical and clinical expenditures.

 
                                                                     2021 (GBPm) 
 Net cash inflow (including monies placed on fixed term deposits) 
  (2020 inflow: GBP2.1m)                                             7.5 
                                                                    ------------ 
 

The net cash inflow reflects the fundraising completed during the year less working capital, pre-clinical and clinical expenditures.

 
                                    2021 (GBPm) 
 Operating loss: (2020: GBP3.2m)    3.2 
                                   ------------ 
 

The operating loss reflects pre-clinical and clinical activity in the year and related product manufacture.

Financial review

The financial performance for the year ended 31 March 2021 was in line with expectations.

Losses

The total loss for the year was GBP2.7m (31 March 2020: GBP2.7m) including a credit for share-based compensation of GBP0.1m (2020 debit: GBP0.2m). Operating expenses excluding share-based compensation were higher at GBP3.5m (2020: GBP3.0m) reflecting some reduction in payroll costs offset by increased professional fees and business development costs.

Share-based compensation

Accounting standards require a charge to be made against the grant of share options and recognised in the Consolidated Statement of Comprehensive Income. Where such options lapse ahead of their vesting date the relevant charges are written back. As a consequence of certain option lapses there was an overall credit for the year in relation to share-based payments of GBP0.1m (2020 debit: GBP0.2m), which has no impact on cash flows.

Headcount

Average headcount of the Group for the year was 8 (2020: 8).

Taxation

The Group has elected to claim research and development tax credits under the small or medium enterprise research and development scheme of GBP0.54m (2020: GBP0.45m).

Share capital

A total of 4,751,178 ordinary shares of 0.25p each were issued pursuant to exercises of share options granted under individual share option grants. These options had exercise prices ranging from 0.9p to 5.0p per share.

A share placing and open offer was completed in March 2021 which raised GBP11m before expenses, through the issue of 137,490,676 shares at 8p per share. This provides us with a strengthened balance sheet and the resources to; pursue our preclinical oncology projects including a phase IIa efficacy trial in glioma; complete our production and formulation work up to and including manufacture of final product batches which are suitable for Phase III and in-market use; prepare and apply for an IND in the US to enable clinical trials in this critical territory; and strengthen our senior management team with key hires.

Cash flows and financial position

The cash (including short term deposits) position at 31 March 2021 increased to GBP11.6m (31 March 2020: GBP4.1m) as a consequence of the fundraise. The amount received net of expenses was GBP10.3m and a further GBP0.47m was received from R&D tax credits. These receipts were offset by ongoing work in preclinical projects, toxicology, product development and manufacture and general running costs.

Employee and engagement

As a very small company in terms of staff, Board members have multiple points of contact with staff; through Board meeting feedback, participation in weekly management meetings involving all staff, and ad hoc interactions in relation to specific matters.

These forums provide staff with an opportunity to give their views which can then be taken into account in making decisions likely to affect their interests.

Specific matters of concern to them as employees are dealt with in management meetings and by email. Corporate developments and Company performance are discussed weekly in management meetings.

All staff are eligible for the Group's share option scheme and this encourages involvement in the Company's performance.

Stakeholder Engagement

The Group has a small number of major suppliers and consultants that support its delivery of strategy and corporate goals. The selection of, relationships with, and execution of, contracted work by these parties is considered at least weekly by the Executive Directors and at each Board meeting by all Directors. Where appropriate, the Chairman and/ or non-executive directors participate in engagement with these parties, and where appropriate, Board members are involved in meetings with such parties.

Principal risks and uncertainties

Evgen is a biopharmaceutical company and, in common with other companies operating in the sector, is subject to a number of risks. The principal risks and uncertainties identified by the Group for the year ending 31 March 2021 are set out below.

COVID-19 pandemic

The Board is monitoring the impact of COVID-19 on the Group and its staff closely. To date, the impact on our staff and programmes has been limited to some delays in preclinical programmes because our scientific partners have had access to their laboratories restricted. Continuation of the pandemic for further sustained periods may affect:

   --   Our ability to conduct and conclude partnering discussions 

-- Our ability to initiate and execute new clinical trials, whether sponsored by Evgen or Clinical Investigators

   --   Completion of the current preclinical, clinical and production programmes to agreed timelines. 

Development

The Group is at a relatively early stage of development and may not be successful in its efforts to develop approved or marketable products. Technical risk is present at each stage of the development process which is a highly regulated environment which presents technical and operational risk. There can be no guarantee that the Group will be able to, or that it will be commercially advantageous for the Group to, develop its Intellectual Property through entering into licensing deals with pharmaceutical companies.

Commercial

The biotechnology and pharmaceutical industries are very competitive. The Group's competitors include major multinational pharmaceutical companies, biotechnology companies and research institutions. Many of its competitors have substantially greater financial, technical and other resources. The Group's competitors may succeed in developing, acquiring or licensing drug product candidates that are more effective or less costly than those the Group is developing, or may develop, and this may have a material adverse impact on the Group.

Regulatory

The Group's operations are subject to laws, regulatory approvals, and certain government directives, recommendations and guidelines. There can be no assurance that future legislation will not impose further government regulation which may adversely affect the business or financial condition of the Group.

Intellectual property (IP)

The Group's success depends in part on its ability to obtain and maintain patent protection for its technology and potential products in the United States, Europe and other countries. If the Group is unable to obtain and maintain patent protection for its technology and potential products, or if the scope of patent protection is not sufficiently broad, competitors could develop and commercialise similar technology and products, which could materially affect the Group's ability to successfully commercialise its technology and potential products. The Group is exposed to additional IP risks, including infringement of IP rights, involvement in lawsuits and the inability to protect the confidentiality of its trade secrets which could have an adverse effect on the success of the Group.

Financial

The Group has a limited operating history, has incurred significant losses since its inception and does not have any approved or revenue generating products. The Group expects to incur losses for the foreseeable future, and there is no certainty that the business will generate a profit. The Group may not be able to raise additional funds that will be required to support its product development programs or commercialisation efforts, and any additional funds that are raise may cause dilution to existing shareholders.

Operational

The Group's future development and prospects depend to a material extent on the experience, performance and continued service of its senior management team including the Directors. The Directors believe the senior management team is appropriately structured for the Group's size and stage of development and is not overly dependent on any one individual. The Group has entered into contractual arrangements with these individuals with the aim of securing the services of each of them. Retention of these services or the identification of suitable replacements cannot be guaranteed. The loss of the service of any of the Directors or senior management and the cost of recruiting replacements may have a material adverse effect on the Group and its commercial and financial performance.

Outlook

As expected, the March review on 60 patients by the DMC found no reason to discontinue the trial on safety grounds. We look forward to its assessment of futility which we expect later this month.

We are excited at the prospect of initiating an efficacy trial in glioma, and potentially JMML given the preclinical data generated in both indications. Initial data showing SFX-01 may be of benefit to mBC patients who have developed resistance to CDK4/6 inhibitors is also very encouraging. With a strengthened senior team and our partner Juvenescence progressing well towards market launch within two years we are building an exciting and valuable business.

Dr Huw Jones

Chief Executive

14 June 2021

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 March 2021

 
                                                                Year        Year 
                                                               ended       ended 
                                                            31 March    31 March 
                                                                2021        2020 
                                                   Notes     GBP'000     GBP'000 
------------------------------------------------  ------  ----------  ---------- 
 Revenue                                                         194           - 
------------------------------------------------  ------  ----------  ---------- 
 Operating expenses 
 Operating expenses                                          (3,519)     (2,998) 
 Share based compensation                              4         112       (168) 
------------------------------------------------  ------  ----------  ---------- 
 Total operating expenses                                    (3,407)     (3,166) 
------------------------------------------------  ------  ----------  ---------- 
 Operating loss                                              (3,213)     (3,166) 
------------------------------------------------  ------  ----------  ---------- 
 Loss on ordinary activities before taxation                 (3,213)     (3,166) 
 
 Taxation                                                        539         451 
------------------------------------------------  ------  ----------  ---------- 
 Loss and total comprehensive expense attributable to 
  equity holders of the parent for the year                  (2,674)     (2,715) 
--------------------------------------------------------  ----------  ---------- 
 Loss per share attributable to equity holders 
  of the parent (pence)                                5 
 
 Basic loss per share                                         (1.82)      (2.10) 
 Diluted loss per share                                       (1.82)      (2.10) 
------------------------------------------------  ------  ----------  ---------- 
 

CONSOLIDATED AND COMPANY STATEMENTS OF FINANCIAL POSITION

as on 31 March 2021

 
                                                            Group                Company 
                                                        As at      As at      As at      As at 
                                                     31 March   31 March   31 March   31 March 
                                                         2021       2020       2021       2020 
                                             Notes    GBP'000    GBP'000    GBP'000    GBP'000 
---------------------------------------  ---------  ---------  ---------  ---------  --------- 
 ASSETS 
 Non-current assets 
 Property, plant and equipment                              5          2          2          - 
 Intangible assets                                         66         82          -          - 
 Investments in subsidiary undertaking                      -          -         73         73 
---------------------------------------  ---------  ---------  ---------  ---------  --------- 
 Total non-current assets                                  71         84         75         73 
 Current assets 
 Trade and other receivables                              235        196     10,513      8,362 
 Current tax receivable                                   519        446         21         59 
 Short-term investments and cash 
  on deposit                                            6,000          -      6,000          - 
 Cash and cash equivalents                              5,593      4,131      5,122      4,001 
---------------------------------------  ---------  ---------  ---------  ---------  --------- 
 Total current assets                                  12,347      4,773     21,656     12,422 
---------------------------------------  ---------  ---------  ---------  ---------  --------- 
 Total assets                                          12,418      4,857     21,731     12,495 
---------------------------------------  ---------  ---------  ---------  ---------  --------- 
 LIABILITIES AND EQUITY 
 Current liabilities 
 Trade and other payables                                 607        653        562        395 
---------------------------------------  ---------  ---------  ---------  ---------  --------- 
 Total current liabilities                                607        653        562        395 
---------------------------------------  ---------  ---------  ---------  ---------  --------- 
 Equity                                          6 
 Ordinary shares                                          687        331        687        331 
 Share premium                                         27,870     17,831     27,870     17,831 
 Merger reserve                                         2,067      2,067          -          - 
 Share based compensation                                 359      1,890        359      1,274 
 Retained deficit                                    (19,172)   (17,915)    (7,747)    (7,336) 
---------------------------------------  ---------  ---------  ---------  ---------  --------- 
 Total equity attributable to equity 
  holders of the parent                                11,811      4,204     21,169     12,100 
---------------------------------------  ---------  ---------  ---------  ---------  --------- 
 Total liabilities and equity                          12,418      4,857     21,731     12,495 
---------------------------------------  ---------  ---------  ---------  ---------  --------- 
 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 March 2021

 
                                 Ordinary     Share    Merger    Share based   Retained 
                                   shares   premium   reserve   compensation    deficit     Total 
                                  GBP'000   GBP'000   GBP'000        GBP'000    GBP'000   GBP'000 
------------------------------  ---------  --------  --------  -------------  ---------  -------- 
 Balance on 31 March 2019             247    13,240     2,067          1,722   (15,200)     2,076 
 Total comprehensive expense 
  for the period                        -         -         -              -    (2,715)   (2,715) 
 Transactions with owners 
 Share issue - cash                    83     4,589         -              -          -     4,672 
 Share issue - options 
  exercised                             1         2         -              -          -         3 
 Share based compensation 
  - share options                       -         -         -            168          -       168 
------------------------------ 
 Total transactions with 
  owners                               84     4,591         -            168          -     4,843 
------------------------------  ---------  --------  --------  -------------  ---------  -------- 
 Balance on 31 March 2020             331    17,831     2,067          1,890   (17,915)     4,204 
------------------------------  ---------  --------  --------  -------------  ---------  -------- 
 Total comprehensive expense 
  for the period                        -         -         -              -    (2,674)   (2,674) 
 Transactions with owners 
 Share issue - cash                   344     9,938         -              -          -    10,282 
 Share issue - options 
  exercised                            12       101         -            (2)          -       111 
 Share issue - lapsed options           -         -         -        (1,417)      1,417         - 
 Share based compensation 
  - share options                       -         -         -          (112)          -     (112) 
------------------------------                                                           -------- 
 Total transactions with 
  owners                              356    10,039         -        (1,531)      1,417    10,281 
------------------------------  ---------  --------  --------  -------------  ---------  -------- 
 Balance on 31 March 2021             687    27,870     2,067            359   (19,172)    11,811 
------------------------------  ---------  --------  --------  -------------  ---------  -------- 
 

CONSOLIDATED AND COMPANY STATEMENT OF CASH FLOWS

for the year ended 31 March 2021

 
                                                    Group                    Company 
                                           Year ended   Year ended   Year ended   Year ended 
                                             31 March     31 March     31 March     31 March 
                                                 2021         2020         2021         2020 
                                              GBP'000      GBP'000      GBP'000      GBP'000 
----------------------------------------  -----------  -----------  -----------  ----------- 
 Cash flows from operating activities 
 Loss before taxation                         (3,213)      (3,166)      (1,251)      (2,291) 
 Depreciation and amortisation                     18           21            -            - 
 Share based compensation                       (112)          168        (112)          168 
----------------------------------------  -----------  -----------  -----------  ----------- 
                                              (3,307)      (2,977)      (1,363)      (2,123) 
 Changes in working capital 
 (Increase)/decrease in trade 
  and other receivables                          (39)         (61)      (2,150)        (800) 
 (Decrease)/increase in trade 
  and other payables                             (46)         (35)          167          177 
----------------------------------------  -----------  -----------  -----------  ----------- 
 Cash used in operations                         (85)         (96)      (1,983)        (623) 
 Taxation received                                466          497           76          169 
----------------------------------------  -----------  -----------  -----------  ----------- 
 Net cash (outflow) / inflow from 
  operating activities                        (2,926)      (2,576)      (3,270)      (2,577) 
 Cash flows from investing activities 
 Monies placed on fixed-term deposit          (6,000)            -      (6,000)            - 
 Acquisition of tangible fixed 
  assets                                          (5)          (1)          (2)            - 
----------------------------------------  -----------  -----------  -----------  ----------- 
 Net cash (outflow)/inflow from 
  investing activities                        (6,005)          (1)      (6,002)            - 
 Cash flows from financing activities 
 Proceeds from issue of shares                 11,110        5,003       11,110        5,003 
 Issue costs                                    (717)        (328)        (717)        (328) 
----------------------------------------               -----------               ----------- 
 Net cash inflow from financing 
  activities                                   10,393        4,675       10,393        4,675 
----------------------------------------  -----------  -----------  -----------  ----------- 
 Movements in cash and cash equivalents 
  in the period                                 1,462        2,098        1,121        2,098 
----------------------------------------  -----------  -----------  -----------  ----------- 
 Cash and cash equivalents at 
  start of period                               4,131        2,033        4,001        1,903 
----------------------------------------  -----------  -----------  -----------  ----------- 
 Cash and cash equivalents at 
  end of period                                 5,593        4,131        5,122        4,001 
----------------------------------------  -----------  -----------  -----------  ----------- 
 
   1.    General information 

Evgen Pharma plc ('the Company') is a public limited company incorporated in England & Wales and was admitted to trading on the AIM market of the London Stock Exchange under the symbol EVG on 21 October 2015. The address of its registered office is Liverpool Science Park Innovation Centre 2, 146 Brownlow Hill, Liverpool, Merseyside L3 5RF. The principal activity of the Company is clinical stage drug development.

   2.    Basis of preparation 

The financial information for the year ended 31 March 2020 has been extracted from the Group's audited financial statements which were approved by the Board of Directors on 12 June 2020, and which have been delivered to the Registrar of Companies for England and Wales. The report of the auditor on these financial statements was unqualified and did not contain a statement under Section 498(2) or Section 498(3) of the Companies Act 2006, but did include a matter to which the auditors drew attention by way of emphasis without qualifying their report relating to the basis of preparation in connection with a material uncertainty relating to going concern.

The report of the auditor on the 31 March 2021 financial statements was unqualified, did not contain a statement under Section 498(2) or Section 498(3) of the Companies Act 2006 and did not include a matter to which the auditors drew attention by way of emphasis without qualifying their report.

The information included in this preliminary announcement has been prepared on a going concern basis under the historical cost convention, and in accordance with in International Accounting Standards in conformity with the requirements of the Companies Act 2006, IFRIC interpretations and the Companies Act 2006 applicable to companies operating under IFRS.

   3.    Going concern 

On 31 March 2021, the Group had cash and cash equivalents, including short-term investments and cash on deposit, of GBP11.59 million.

The Directors have prepared detailed financial forecasts and cash flows looking beyond 12 months from the date of the approval of these financial statements. In developing these forecasts, the Directors have made assumptions based upon their view of the current and future economic conditions that will prevail over the forecast period.

The Directors estimate that the cash held by the Group together with known receivables will be sufficient to support the current level of activities to the middle of 2023. They have therefore prepared the financial statements on a going concern basis.

   4.    Share based payment charge 

During the years ended 31 March 2021 and 31 March 2020, the Group issued a number of share options to certain employees. A Black-Scholes model was used to calculate the appropriate charge for these periods. The use of this model to calculate a charge involves using a number of estimates and judgements to establish the appropriate inputs to be entered into the model, covering areas such as the use of an appropriate interest rate and dividend rate, exercise restrictions and behavioural considerations. A significant element of judgement is therefore involved in the calculation of the charge.

Where such options lapse ahead of their vesting date the relevant charges are written back. As a consequence of certain option lapses there was an overall credit for the year in relation to share-based payments of GBP0.1m (2020 debit: GBP0.2m)

   5.    Loss per share 

Basic loss per share is calculated by dividing the loss for the period attributable to equity holders by the weighted average number of ordinary shares outstanding during the year.

As on 31 March 2021 the Group had 6,402,754 (2020: 9,531,367) share options outstanding which are potentially dilutive. The calculation of the Group's basic and diluted loss per share is based on the following data:

 
                                                   Year ended    Year ended 
                                                     31 March      31 March 
                                                         2021          2020 
                                                      GBP'000       GBP'000 
 Loss for the year attributable to equity 
  holders for basic loss                              (2,674)       (2,715) 
-----------------------------------------------  ------------  ------------ 
 
                                                   Year ended    Year ended 
                                                     31 March      31 March 
                                                         2021          2020 
                                                       Number        Number 
 Weighted average number of ordinary 
  shares for basic loss per share                 147,019,536   129,315,418 
-----------------------------------------------  ------------  ------------ 
 Effects of dilution: 
  Share options                                             -             - 
 Weighted average number of ordinary 
  shares adjusted for the effects of dilution     147,019,536   129,315,418 
-----------------------------------------------  ------------  ------------ 
 
                                                   Year ended    Year ended 
                                                     31 March      31 March 
                                                         2021          2020 
                                                        Pence         Pence 
 Loss per share - basic and diluted                    (1.82)        (2.10) 
-----------------------------------------------  ------------  ------------ 
 

The loss and the weighted average number of ordinary shares for the years ended 31 March 2021 and 2020 used for calculating the diluted loss per share are identical to those for the basic loss per share. This is because the outstanding share options would have the effect of reducing the loss per ordinary share and would therefore not be dilutive under the terms of International Accounting Standard ("IAS") No 33.

   6.    Issued capital and reserves 

Ordinary shares

 
                                          Company 
 Ordinary shares of 0.25p each         Share Capital 
                                        Number   GBP'000 
 As on 31 Mar 2020                 132,646,263       331 
--------------------------------  ------------  -------- 
 Issued on exercise of options       4,751,178        12 
 Issued under placing agreement    137,490,676       344 
 As on 31 Mar 2021                 274,888,117       687 
--------------------------------  ------------  -------- 
 

On 6 July 2020 1,940,800 ordinary shares were issued in connection with the exercise of share options at an exercise price of 2.65375 pence per share payable in cash, 884,000 ordinary shares were issued in connection with the exercise of share options at an exercise price of 0.8875 pence per share payable in cash and 132,800 ordinary shares were issued in connection with the exercise of share options at an exercise price of 0.875 pence per share payable in cash.

On 7 July 2020 778,378 ordinary shares were issued in connection with the exercise of share options with nil exercise price.

On 24 July 2020 1,015,200 ordinary shares were issued in connection with the exercise of share options at an exercise price of 5.0 pence per share payable in cash.

On 3 March 2021 137,490,676 ordinary shares were issued at a price of GBP0.08 raising GBP11.0 million which after share issue expenses of GBP0.7 million gave net consideration of GBP10.3 million.

The ordinary shares rank pari passu in all respects in relation to dividends and repayment of capital and have equal voting rights with one vote per share. There are no restrictions on the transferability of the shares.

The Group and Company do not have an authorised share capital as provided by the Companies Act 2006.

Other reserves:

The share premium reserve represents the difference between the net proceeds of equity issues and the nominal share capital of the shares issued.

The merger reserves on 31 March 2021 and 2020 arose from the acquisition of Evgen's sole subsidiary, Evgen Ltd, in 2014 which is accounted for using the merger method of accounting.

The share-based compensation reserve reflects the aggregate fair value of equity-settled share-based payment transactions.

Reserves classified as retained deficit represent accumulated losses. None of the reserves are distributable.

   7.    Related party transactions 

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.

During the year ended 31 March 2021, the Group purchased consultancy services totalling GBP19,225 (year ended 31 March 2020: GBP15,069) from FD Consult Ltd, a company controlled by Richard Moulson. The amount owed to FD Consult Ltd on 31 March 2021 was GBPnil (31 March 2020: GBPnil).

   8.    Report and accounts 

A copy of the Annual Report and Accounts will shortly be sent to all shareholders shortly with notice of the Annual General Meeting and will also be available to download from the Group's website at www.evgen.com .

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END

FR EASKLFSEFEFA

(END) Dow Jones Newswires

June 15, 2021 02:00 ET (06:00 GMT)