Dr. Jim Phillips, Chief Executive Officer and Nick
Robbins-Cherry, Finance Director, will host a conference call for
analysts at 14.00 BST today. Dial-in details are: UK: +44 1452 555
566, US: +1 866 966 9439, ID: 63728744.
Midatech Pharma (AIM: MTPH; Nasdaq: MTP), the international
specialty pharmaceutical company focused on commercialising and
developing products in oncology, immunology and other therapeutic
areas, today announces its interim results for the six months ended
30 June 2016.
Operational Highlights
- Successful integration and good sales performance from newly
acquired US commercial business, Midatech Pharma US Inc. (formerly
DARA BioSciences, Inc.)
- US launch of anti-nausea product Zuplenz® in April 2016, with
encouraging early uptake helping drive the increasing revenues
- Gelclair® continues to consolidate its brand and market
leadership in the US for oral mucositis
- Positive progress has continued for lead Q-Octreotide product
for the treatment of Acromegaly and Carcinoid Syndrome. Plans for
human bio-equivalence studies in H1 2017 are on track, which, in
the case of positive results, could lead to the potential filing
for first marketing authorisations by end 2017/beginning of
2018
- Investment for scale up of manufacturing for the launch of
Q-Octreotide and collaboration with Ophthotech has commenced and is
on time and budget
- Product candidate testing and selection in vivo for
glioblastoma and hepatocellular carcinoma on track for completion
by the end of 2016
- Dosing due to commence in Q3 2016 in first immunotherapy
(MTX102) Phase I study using Midatech's gold nanoparticle ("GNP")
technology in type 1 diabetes
- Further positive progress seen in the period in the Company's
OpsiSporin and MTX110/111 (DIPG) programmes
Financial Highlights
- Total revenue grew from £0.32 million in H1 2015 to £3.80
million (up 1,088%)
- Research and development costs of £2.05 million, a 13% increase
from £1.82 million in H1 2015
- Administrative expenses increased from £3.77 million in H1 2015
to £6.82 million (up 81%), primarily due to the Company's enlarged
commercial infrastructure from the acquisition of Midatech Pharma
US
- Net cash outflow used in operations (after changes in working
capital) was £8.25 million, up 55% from £5.31 million in H1 2015.
The cash balance at 30 June 2016 was £7.23 million
- Loss per share increased by 39% to 25p (H1 2015: 18p)
Commenting on the interim results Dr. Jim Philips, CEO
of Midatech Pharma, said: "Midatech has made good
performance in the first half of 2016 and our commercial business
is well placed to deliver continued revenue growth in the second
half of 2016. We continue to carefully invest in our platform
technologies and candidate pipeline and the remainder of 2016 with
2017 are set to deliver results from a variety of our exciting
R&D programmes. Notwithstanding the challenging recent market
conditions globally, we continue to look at opportunities to build
value for shareholders and look to the future with optimism."
Conference call Dr. Jim Phillips, Chief
Executive Officer and Nick Robbins-Cherry, Finance Director, will
host a conference call for analysts at 14.00 BST today.
UK: +44 1452 555 566
USA: +1 866 966 9439 Conference ID:
63728744
A replay of the call will be available for 30 days after the
event, and can be accessed through the numbers below.
UK: +44 1452 550 000
USA: +1 866 247 4222 Conference ID:
63728744
The results presentation will be made available on the Investors
section of the Midatech website shortly before the call.
- ENDS -
Notes for Editors
About Midatech Pharma PLC Midatech is an
international specialty pharmaceutical company focused on oncology
and other therapeutic areas with a commercial platform and four
marketed products in the US. Midatech's strategy is to develop
products in-house in oncology and with partners in other
indications, and to accelerate growth organically and through
strategic acquisitions. The Company's R&D activities are
supported by two breakthrough drug delivery technologies. The
Group, listed on AIM: MTPH and Nasdaq: MTP, employs c.100 staff in
four countries. For further company information see:
www.midatechpharma.com
Forward-Looking Statement Certain statements in
this press release may constitute "forward-looking statements"
within the meaning of legislation in the United Kingdom and/or
United States. Such forward-looking statements include, but are not
limited to, statements regarding the ability of Midatech to
successfully test, manufacture, produce or commercialize products
for conditions using the nanoparticle and sustained release drug
delivery platforms, and the ability for products in development to
achieve positive clinical results, and the ability to meet or
achieve timelines associated with pre-clinical studies, clinical
trials or regulatory submissions. Any forward-looking statements
are based on currently available competitive, financial and
economic data together with management's views and assumptions
regarding future events and business performance as of the time the
statements are made and are subject to risks and uncertainties. We
wish to caution you that there are some known and unknown factors
that could cause actual results to differ materially from any
future results, performance or achievements expressed or implied by
such forward-looking statements.
Reference should be made to those documents that Midatech shall
file from time to time or announcements that may be made by
Midatech in accordance with the London Stock Exchange AIM Rules for
Companies ("AIM Rules"), the Disclosure and Transparency Rules
("DTRs") and the rules and regulations promulgated by the US
Securities and Exchange Commission, which contains and identifies
other important factors that could cause actual results to differ
materially from those contained in any projections or
forward-looking statements. These forward-looking statements speak
only as of the date of this announcement. All subsequent written
and oral forward-looking statements by or concerning Midatech are
expressly qualified in their entirety by the cautionary statements
above. Except as may be required under the AIM Rules or the DTRs or
by relevant law in the United Kingdom or the United States,
Midatech does not undertake any obligation to publicly update or
revise any forward-looking statements because of new information,
future events or otherwise arising.
CHAIRMAN AND CHIEF EXECUTIVE'S REVIEW
We are pleased to report that during the first half of 2016
Midatech has continued to make good progress on a number of
fronts.
Commercial
In December 2015, we completed the acquisition of the US-based
oncology supportive care business, DARA BioSciences, Inc., which
has since been renamed Midatech Pharma US, Inc. ("MTPUS"). This was
rapidly followed with the acquisition of the anti-nausea product
Zuplenz®. MTPUS brought with it three cancer supportive care
products, Gelclair®, Oravig® and Soltamox® as well as an
established oncology focussed, sales and marketing capability in
the United States.
Midatech's commitment to build on its product portfolio within
the chosen therapeutic areas was demonstrated with the MTPUS
acquisition which has provided an excellent opportunity for the
Group by providing a knowledgeable and established commercial
infrastructure in its primary target area of oncology. Following
the Zuplenz addition to the MTPUS portfolio our US salesforce has a
comprehensive range of cancer supporting care products with which
to target the US market. The market share for these products
currently remains modest so we believe there is significant
opportunity for expansion.
Performance from our MTPUS commercial business for the first six
months of 2016 has been good: overall, total Group revenue was
£3.80 million (H1 2015: £0.32 million) with £3.19 million coming
from product sales in the US (H1 2015: nil). Prior to its
acquisition, DARA Biosciences, Inc. had revenue from product sales
of $2.24m in the comparable six months to 30 June 2015. This
represents an encouraging growth rate on the equivalent period last
year. Gelclair continues to grow, Oravig is in its early growth
phase having been added in October 2015 and Zuplenz was launched in
the US in April where performance has, so far, been
encouraging.
We are pleased to report that the integration of the US business
was completed quickly, successfully and according to plan.
We continue to invest in the Group's infrastructure, and are in
the process of expanding our manufacturing capability in Bilbao to
include the Group's lead development product, Q-Octreotide, and the
products coming from our collaboration with Ophthotech. By
investing in the scale up of our sustained release technology this
will enable us to manufacture most of our own products to
commercial scale in-house in the future. This work is on-going and
is expected to be completed in late 2016.
R&D
In May, we received data from the joint venture insulin legacy
programme (MTD101, MidaformTM) following its Phase IIa study. The
study failed to demonstrate the release profile seen in prior
studies and we are moving to close this programme down. Importantly
for the Company, the oral delivery system used for this trial was a
novel and unique application of Midatech's GNP technology and it is
not used in any of the Group's other GNP programmes; all other GNP
programmes are delivered via injection or infusion, which we
believe is the optimal delivery system for our GNP programmes.
All of our other programmes continue to move forward with
encouraging data coming in, in particular from our lead
Q-Octreotide programme (MTD201) for the treatment of acromegaly and
carcinoid syndrome. Midatech plans to submit an IND application to
the FDA for Q-Octreotide and begin bio-equivalence or therapeutic
equivalence studies by late 2016/early 2017, with a potential US
launch in 2018 or 2019 (depending on clinical trial outcomes). The
market each year for chronic treatment of acromegaly and metastatic
carcinoid syndrome is estimated by the Directors to amount to
approximately $2 billion p.a.
Furthermore, we are obtaining encouraging early results on
cancer targeting using our nanotechnology and the Group's oncology
development portfolio is progressing positively. Our DIPG programme
(MTX110) has been used to treat patients on a compassionate basis
and the clinical development of this and other DIPG product
candidates is on-going.
Additionally, in product research and development, the Group
has: in oncology, further GNP cancer therapies (as outlined above)
in pre-clinical phases for Liver Hepatocellular Carcinoma (MTR104),
which is currently in candidate selection, and for Squamous Cell
Carcinoma (MTR105), which is currently in feasibility testing ahead
of in vivo studies; a sustained release treatment named OpsiSporin
(MTD202) for the treatment of non-infective uveitis, and two
early-stage research programmes in cancer immunotherapy.
The Group's platform technologies have continued to deliver
interest in new product partnerships and collaborations. Midatech
has various current and historic collaborations with a number of
specialty and major pharmaceutical companies and universities to
develop the Group's platform technologies into a broad number of
products in order to achieve a range of potential revenue
opportunities within priority therapeutic areas. This includes
products currently in development with Ophthotech Corporation
(Nasdaq: OPHT), an ocular speciality biopharmaceutical company. The
objective of this collaboration is to explore the feasibility of
using Midatech's sustained release formulations with certain
Ophthotech products. The Group is also working on the development
of an innovative vaccine against type 1 diabetes using the Group's
GNP technology, which has shown in vivo to substantially enhance
tolerogenic response. This is being undertaken with funding support
from an EU Consortium grant, for which dosing in Phase I
first-in-human trials study is commencing in H2 2016, with results
expected in 2017.
Outlook
We believe that our commercial business is well placed to build
on the good performance in the first half of 2016 with continued
revenue growth in the second half of 2016. Furthermore, a number of
our R&D programmes have reached exciting stages of development
and we anticipate positive progress over the remainder of 2016 and
beyond as we continue to carefully invest in our platform
technologies and candidate pipeline.
We continue to look at opportunities to build value for
shareholders going forward despite the difficult market
conditions.
Rolf
Stahel
Dr Jim Phillips
Chairman
Chief Executive Officer
FINANCIAL REVIEW
We are pleased to report a positive set of results for the six
months to 30 June 2016 as Midatech Pharma plc reports its first
interim financial information following the acquisition in December
2015 of DARA BioSciences, Inc., since renamed Midatech Pharma US,
Inc. ("MTPUS").
Key performance indicators
|
H1 2016 |
H1 2015 |
Change |
|
|
|
|
Total revenue |
£3.80m |
£0.32m |
|
1,088 |
% |
R&D costs |
£2.05m |
£1.82m |
|
12 |
% |
R&D as % of operating
costs (before, amortisation of intangible assets and exceptional
items) |
|
20 |
% |
|
37 |
% |
n/a |
Loss from operations |
£10.34m |
£5.27m |
|
96 |
% |
Net cash outflow for the
period |
£8.80m |
£5.98m |
|
47 |
% |
Average headcount |
|
79 |
|
|
55 |
|
|
44 |
% |
Loss from operations before amortisation of intangibles and
exceptional items is also regarded as a significant KPI. In the six
months to 30 June 2016 the Group incurred significant costs arising
from the requirement to commence amortisation of the intangible
assets acquired with MTPUS and Zuplenz® product marketing rights
and the settlement of the contracts of certain of its employees,
the impact of which was as follows:
|
H1 2016 £'000 |
H1 2015 £'000 |
|
|
|
Loss from
operations |
|
|
(10,335 |
) |
|
|
(5,266 |
) |
|
|
|
Contract settlement
costs |
|
|
(1,138 |
) |
|
|
- |
|
Amortisation of intangible
assets |
|
|
(1,709 |
) |
|
|
- |
|
Listing and acquisition
expenses |
|
|
- |
|
|
|
(674 |
) |
|
|
|
|
|
|
|
|
|
Loss from
operations before amortisation of intangible
assets and exceptional items |
|
|
(7,488 |
) |
|
|
(4,592 |
) |
Midatech's KPIs continue to be focused on the key areas of cash
management and available cash, R&D spend and operating results
and, with the addition of the US commercial operation, revenue is
now a very significant KPI. Additional, non-financial KPIs,
including further KPIs in respect of the research and development
programmes, will be added as the business continues to develop.
Revenue
Total revenue for the six months to 30 June 2016 was £3.80m
compared to £0.32m in the first six months of 2015, an increase of
1,088%. US product sales made up the largest part of this with
£3.19m (H1 2015: nil) however a further £0.26m (H1 2015: £0.12m)
came from collaboration revenue and sales made by the UK business.
The balance of revenue of £0.35m (H1 2015: £0.20m) came from grant
income received under the Group's two substantial European grant
funded programmes.
Research and development costs
Expenditure on research and development increased 12% from
£1.82m in the six months to 30 June 2015 to £2.05m in the first six
months of 2016. The increase reflects developments on a number of
fronts including external clinical research focussed on product
development and a number of internal programmes dealing with the
characterisation of Midatech's gold nanoparticle constructs.
Significant progress has been made with both of Midatech's
technology platforms, including:
- Positive pharmacokinetic data with our sustained release
Q-Octreotide programme (MTD201) for the treatment of acromegaly and
carcinoid syndrome.
- Positive data from our OpsiSporin programme (MTD202), a
sustained release treatment with Q-Cyclosporin for the treatment of
non-infective uveitis.
- Progress towards dosing in a first-in-human clinical trial for
its collaborative innovative immunotherapy vaccine against type 1
diabetes, MTX102 utilising Midatech's gold nanoparticle technology.
This trial is expected to commence in the second half of 2016.
- Progress towards therapeutic candidate selection for the
treatment of glioblastoma (brain) and liver cancers and
investigational new drug application (IND) enabling programmes are
scheduled to commence at the end of 2016.
Distribution costs, sales and marketing
Distribution, sales and marketing costs for the six-month period
to 30 June 2016 were £4.24m (H1 2015: nil) and relate exclusively
to the US commercial business. This includes £1.71m of amortisation
charges relating to the acquired intangibles in the books of
Midatech Pharma plc.
Administrative costs
Administrative expenses in the six-month period to 30 June 2016
were £6.82m compared to £3.77m for H1 2015. The most significant
element of the increase relates to the administrative costs of the
newly acquired MTPUS, with £2.89m incurred directly by the US
business. These US costs included £1.14m of non-recurring cost in
relation to settlements with certain former employees of DARA
BioSciences, Inc.
Cash flows
Cash outflows used in operations (after changes in working
capital) in H1 2016 were £8.25m compared to £5.31m in H1 2015,
reflecting the addition of the MTPUS business to the Group as well
as the incremental ongoing costs associated with the NASDAQ
listing. These cash movements resulted in a cash balance of £7.23m
as at 30 June 2016 compared to £16.18m at 31 December 2015 and
£24.34m at 30 June 2015. In addition to these cash reserves, the
Board of Directors of Midatech Pharma plc is evaluating various
near-term funding options available to the Group. The Company
continues to maintain its usual stringent controls over costs.
Whilst the first half of 2016 included £1.14m of employee
contract settlement costs that we do not anticipate will recur, the
likely cash burn in the second half of the year implies a limited
headroom afforded by existing funding. The Board is evaluating
various near-term funding options available to the Group, and,
based on on-going discussions, the Directors are confident that
additional working capital will become available before the end of
the year. We are therefore satisfied that it is appropriate to
prepare these accounts on a going concern basis.
Capital expenditure
Capital expenditure for H1 2016 was £0.75m, which was in line
with H1 2015. Expenditure was broadly split between adding further
analytical capability to the Head Office GNP and Cardiff sustained
release research facilities as well as significant enhancements to
the Group's manufacturing facility in Bilbao, Spain where we are in
the process of adding a sustained release manufacturing line. Only
limited further investment in the UK is planned and the Spanish
construction work is expected to be completed in Q4 2016.
So far in 2016, we have continued to build on the solid
foundations laid down since our AIM IPO and to deliver on our
stated strategy of:
- Expansion of our commercial operations;
- In-house development of our own product portfolio in rare
cancers and with partners in other indications; and
- Acceleration of growth through strategic acquisition of
complementary products and technologies.
Whilst it is too early to assess the long-term impact of the
UK's decision to leave the European Union, there has been no
immediate impact on the Company's day-to-day operations. We have
considered the potential implications on the EU funded grants
received by the Group and at this time do not anticipate any
problems.
The fall in the value of Sterling against both the Euro and US
Dollar immediately following the "Brexit" decision has meant that
costs incurred in those currencies have resulted in higher Sterling
charges to the consolidated financial statements however this is
partly offset by US Dollar denominated revenues.
Nick Robbins-Cherry Chief Financial Officer
Condensed consolidated unaudited statement of comprehensive
income for the six month period ended 30 June 2016 |
|
|
|
Note |
|
Six months ended 30
June 2016 unaudited |
Six months ended 30
June 2015 unaudited |
|
|
|
|
£'000 |
£'000 |
|
|
|
|
|
|
Revenue |
|
4 |
|
|
3,456 |
|
|
121 |
|
Grant revenue |
|
|
|
|
347 |
|
|
203 |
|
|
|
|
|
_______ |
_______ |
Total revenue |
|
|
|
|
3,803 |
|
|
324 |
|
|
|
|
|
|
|
Cost of sales |
|
|
|
|
(1,032 |
) |
|
- |
|
|
|
|
|
_______ |
_______ |
Gross profit |
|
|
|
|
2,771 |
|
|
324 |
|
Research and development
costs |
|
4 |
|
|
(2,048 |
) |
|
(1,822 |
) |
Distribution costs, sales
and marketing |
|
4 |
|
|
(4,237 |
) |
|
- |
|
Administrative costs |
|
4 |
|
|
(6,821 |
) |
|
(3,768 |
) |
|
|
|
|
_______ |
_______ |
Loss from
operations |
|
|
|
|
(10,335 |
) |
|
(5,266 |
) |
|
|
|
|
|
|
Finance income |
|
|
|
|
765 |
|
|
28 |
|
Finance expense |
|
|
|
|
- |
|
|
(12 |
) |
|
|
|
|
_______ |
________ |
|
|
|
|
|
|
Loss before
tax |
|
|
|
|
(9,570 |
) |
|
(5,250 |
) |
|
|
|
|
|
|
Taxation |
|
3 |
|
|
1,365 |
|
|
356 |
|
|
|
|
|
_______ |
________ |
|
|
|
|
|
|
Loss after tax
attributable to the owners of the parent |
|
|
|
|
(8,205 |
) |
|
(4,894 |
) |
|
|
|
|
________ |
________ |
|
|
|
|
|
|
Other
comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
Items that will or may be
reclassified subsequently to profit or loss when specific
conditions are met: |
|
|
|
|
|
Exchange gains/(losses)
arising on translation of foreign operations |
|
|
|
|
1,974 |
|
|
(60 |
) |
|
|
|
|
_______ |
________ |
|
|
|
|
|
|
Total other
comprehensive income, net of tax |
|
|
|
|
1,974 |
|
|
(60 |
) |
|
|
|
|
_______ |
________ |
|
|
|
|
|
|
Total
comprehensive loss attributable to the owners of the
parent |
|
|
|
|
(6,231 |
) |
|
(4,954 |
) |
|
|
|
|
___ ____ |
___ ____ |
|
|
|
|
|
|
Loss per
share |
|
|
|
|
|
Basic and diluted loss per
ordinary share - pence |
|
5 |
|
(25p) |
(18p) |
|
|
|
|
________ |
________ |
Condensed consolidated unaudited statement of financial
position at 30 June 2016 |
|
|
|
Note |
|
As at
30 June 2016
unaudited |
As at
31 December 2015 |
Assets |
|
|
|
£'000 |
£'000 |
Non-current
assets |
|
|
|
|
|
Property, plant and
equipment |
|
6 |
|
|
2,469 |
|
|
1,984 |
|
Intangible assets |
|
7 |
|
|
42,510 |
|
|
41,339 |
|
Other receivables due in
greater than one year |
|
|
|
|
387 |
|
|
387 |
|
|
|
|
|
_______ |
_______ |
|
|
|
|
|
45,366 |
|
|
43,710 |
|
|
|
|
|
_______ |
_______ |
Current
assets |
|
|
|
|
|
Inventories |
|
|
|
|
787 |
|
|
459 |
|
Trade and other
receivables |
|
|
|
|
1,503 |
|
|
2,496 |
|
Income tax receivable |
|
|
|
|
1,723 |
|
|
1,201 |
|
Cash and cash
equivalents |
|
|
|
|
7,226 |
|
|
16,175 |
|
|
|
|
|
_______ |
_______ |
|
|
|
|
|
11,239 |
|
|
20,331 |
|
|
|
|
|
_______ |
_______ |
|
|
|
|
|
|
Total
assets |
|
|
|
|
56,605 |
|
|
64,041 |
|
Liabilities |
|
|
|
_______ |
_______ |
Non-current
liabilities |
|
|
|
|
|
Borrowings |
|
|
|
|
1,440 |
|
|
1,508 |
|
Deferred tax
liability |
|
8 |
|
|
6,520 |
|
|
6,547 |
|
|
|
|
|
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
7,960 |
|
|
8,055 |
|
|
|
|
|
_______ |
_______ |
Current
liabilities |
|
|
|
|
|
Trade and other
payables |
|
|
|
|
5,790 |
|
|
7,084 |
|
Borrowings |
|
|
|
|
360 |
|
|
442 |
|
Derivative financial
liability-equity settled |
|
9 |
|
|
965 |
|
|
1,573 |
|
Provisions |
|
10 |
|
|
799 |
|
|
- |
|
|
|
|
|
_______ |
_______ |
|
|
|
|
|
7,914 |
|
|
9,099 |
|
|
|
|
|
_______ |
_______ |
|
|
|
|
|
|
Total
liabilities |
|
|
|
|
15,874 |
|
|
17,154 |
|
|
|
|
|
_______ |
_______ |
|
|
|
|
|
|
Issued capital and
reserves attributable to owners of the parent |
|
|
|
|
|
Share capital |
|
11 |
|
|
1,002 |
|
|
1,002 |
|
Share premium |
|
|
|
|
31,643 |
|
|
31,643 |
|
Merger reserve |
|
|
|
|
53,003 |
|
|
52,803 |
|
Shares to be issued |
|
|
|
|
- |
|
|
200 |
|
Foreign exchange
reserve |
|
|
|
|
2,364 |
|
|
390 |
|
Accumulated deficit |
|
|
|
|
(47,281 |
) |
|
(39,151 |
) |
|
|
|
|
|
|
|
|
|
|
_______ |
_______ |
Total
equity |
|
|
|
|
40,731 |
|
|
46,887 |
|
|
|
|
|
_______ |
_______ |
|
|
|
|
|
|
Total equity and
liabilities |
|
|
|
|
56,605 |
|
|
64,041 |
|
|
|
|
|
_______ |
_______ |
Condensed consolidated unaudited statement of cash flows
for the six month period ended 30 June 2016 |
|
|
|
|
|
|
|
|
Six months ended 30
June 2016 unaudited |
Six months ended 30
June 2015 unaudited |
|
|
|
£'000 |
£'000 |
Cash flows from
operating activities |
|
|
|
|
Loss after tax |
|
|
|
(8,205 |
) |
|
(4,894 |
) |
Adjustments for: |
|
|
|
|
Depreciation of property,
plant and equipment |
|
|
|
442 |
|
|
191 |
|
Amortisation of intangible
fixed assets |
|
|
|
1,709 |
|
|
- |
|
Share based payment
expense |
|
|
|
75 |
|
|
92 |
|
Net finance income |
|
|
|
(765 |
) |
|
(16 |
) |
Taxation |
|
|
|
(1,365 |
) |
|
(356 |
) |
|
|
|
_______ |
_______ |
Cash flows from
operating activities before changes in working
capital |
|
|
|
(8,109 |
) |
|
(4,983 |
) |
|
|
|
|
|
Increase in
inventories |
|
|
|
(328 |
) |
|
- |
|
Decrease/ (increase) in
trade and other receivables |
|
|
|
891 |
|
|
(777 |
) |
(Decrease)/ increase in
trade and other payables |
|
|
|
(702 |
) |
|
453 |
|
|
|
|
_______ |
_______ |
Cash used in
operations |
|
|
|
(8,248 |
) |
|
(5,307 |
) |
|
|
|
|
|
Taxes received |
|
|
|
204 |
|
|
- |
|
|
|
|
_______ |
_______ |
Net cash used in
operating activities |
|
|
|
(8,044 |
) |
|
(5,307 |
) |
|
|
|
_______ |
_______ |
Investing
activities |
|
|
|
|
Purchases of property,
plant and equipment |
|
|
|
(752 |
) |
|
(733 |
) |
Interest received |
|
|
|
157 |
|
|
- |
|
|
|
|
_______ |
_______ |
Net cash used in
investing activities |
|
|
|
(595 |
) |
|
(733 |
) |
Financing activities |
|
|
|
|
Payments to finance lease
creditors |
|
|
|
(15 |
) |
|
(11 |
) |
Repayment of
borrowings |
|
|
|
(149 |
) |
|
(34 |
) |
Issue of borrowings |
|
|
|
- |
|
|
102 |
|
Share issues net of
costs |
|
|
|
- |
|
|
1 |
|
|
|
|
_______ |
_______ |
Net cash
(used)/generated from financing activities |
|
|
|
(164 |
) |
|
58 |
|
|
|
|
|
|
Net decrease in
cash and cash equivalents |
|
|
|
(8,803 |
) |
|
(5,982 |
) |
Cash and cash
equivalents at beginning of period |
|
|
|
16,175 |
|
|
30,325 |
|
Exchange gains on cash and
cash equivalents |
|
|
|
(146 |
) |
|
- |
|
|
|
|
_______ |
_______ |
Cash and cash
equivalents at end of period |
|
|
|
7,226 |
|
|
24,343 |
|
|
|
|
_______ |
_______ |
Condensed consolidated unaudited statement of changes in
equity for the six month period ended 30 June 2016 |
|
|
|
|
|
|
|
|
|
|
|
Share capital |
Share premium |
Merger reserve |
Shares to be issued |
Foreign exchange
reserve |
Accumulated deficit |
Total equity |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
At 1 January
2016 |
|
1,002 |
31,643 |
52,803 |
|
200 |
|
|
390 |
|
|
(39,151 |
) |
|
46,887 |
|
|
|
|
|
|
|
|
|
|
Loss for the period |
|
- |
- |
- |
|
- |
|
|
- |
|
|
(8,205 |
) |
|
(8,205 |
) |
Foreign exchange
translation |
|
- |
- |
- |
|
- |
|
|
1,974 |
|
|
- |
|
|
1,974 |
|
|
|
______ |
______ |
______ |
______ |
______ |
______ |
______ |
Total
comprehensive loss |
|
- |
- |
- |
|
- |
|
|
1,974 |
|
|
(8,205 |
) |
|
(6,231 |
) |
|
|
______ |
______ |
______ |
______ |
______ |
______ |
______ |
Transactions with
owners |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issue of shares |
|
- |
- |
200 |
|
(200 |
) |
|
- |
|
|
- |
|
|
- |
|
Share based payment |
|
- |
- |
- |
|
- |
|
|
- |
|
|
75 |
|
|
75 |
|
|
|
______ |
______ |
______ |
______ |
______ |
______ |
______ |
At 30 June
2016 |
|
1,002 |
31,643 |
53,003 |
|
- |
|
|
2,364 |
|
|
(47,281 |
) |
|
40,731 |
|
|
|
______ |
______ |
______ |
______ |
______ |
______ |
______ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January
2015 |
|
1,001 |
31,643 |
37,776 |
|
800 |
|
|
(9 |
) |
|
(29,222 |
) |
|
41,989 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss for the year |
|
- |
- |
- |
|
- |
|
|
- |
|
|
(4,894 |
) |
|
(4,894 |
) |
Foreign exchange
translation |
|
- |
- |
- |
|
- |
|
|
(60 |
) |
|
- |
|
|
(60 |
) |
|
|
______ |
______ |
______ |
______ |
______ |
______ |
______ |
Total
comprehensive loss |
|
- |
- |
- |
|
- |
|
|
(60 |
) |
|
(4,894 |
) |
|
(4,954 |
) |
|
|
______ |
______ |
______ |
______ |
______ |
______ |
______ |
Transactions with
owners |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issue of shares |
|
1 |
- |
- |
|
- |
|
|
- |
|
|
- |
|
|
1 |
|
Share based payment |
|
- |
- |
- |
|
- |
|
|
- |
|
|
92 |
|
|
92 |
|
|
|
______ |
______ |
______ |
______ |
______ |
______ |
______ |
At 30 June
2015 |
|
1,002 |
31,643 |
37,776 |
|
800 |
|
|
(69 |
) |
|
(34,024 |
) |
|
(37,128 |
) |
|
|
______ |
______ |
______ |
______ |
______ |
______ |
______ |
Notes
forming part of the condensed consolidated unaudited interim
financial information for the six month period ended 30 June
2016 |
|
1 |
Basis of
preparation |
The unaudited interim consolidated financial information for the
six months ended 30 June 2016 has been prepared following the
recognition and measurement principles of the International
Financial Reporting Standards, International Accounting Standards
and Interpretations (collectively IFRS) issued by the International
Accounting Standards Board (IASB), and as adopted by the EU and in
accordance with International Accounting Standard 34 Interim
Financial Reporting ('IAS34'). The interim consolidated financial
information does not include all the information and disclosures
required in the annual financial information, and should be read in
conjunction with the audited financial statements for the year
ended 31 December 2015.
The condensed interim financial information contained in this
interim statement does not constitute statutory financial
statements as defined by section 434(3) of the Companies Act 2006.
The condensed interim financial information has not been audited.
The financial information for the year ended 31 December 2015 is
derived from the audited statutory financial statements for the
year ended 31 December 2015. The independent auditor's report was
unqualified and did not contain any statement under section 498(2)
or 498(3) of the Companies Act 2006.
There are no new standards or interpretations applicable to the
Group for the accounting period commencing 1 January 2016 for
adoption.
Going concern
The Group is subject to a number of risks similar to those of
other development and early-commercial stage pharmaceutical
companies. These risks include, amongst others, generation of
revenues from the existing product portfolio and in due course the
development portfolio and risks associated with research,
development, testing and obtaining related regulatory approvals of
its pipeline products. Ultimately, the attainment of profitable
operations is dependent on future uncertain events which include
obtaining adequate financing to fulfil the Group's commercial and
development activities and generating a level of revenue adequate
to support the Group's cost structure.
The Group has experienced net losses and significant cash
outflows from cash used in operating activities over the past years
as it develops its portfolio. As at 30 June 2016 the Group had
total equity of £40.73m, it incurred a net loss after tax for the
six months to 30 June 2016 of £8.21m and used cash in operating
activities of £8.25m for the same period. As at 30 June 2016, the
Group had cash and cash equivalents of £7.23m.
The future viability of the Group is dependent on its ability to
generate cash from operating activities, to raise additional
capital to finance its operations or to successfully obtain
regulatory approval to allow marketing of the Group's development
products. The Group's failure to raise capital as and when needed
could have a negative impact on its financial condition and ability
to pursue its business strategies.
The Directors have prepared cash flow forecasts and considered
the cash flow requirement for the Group for a period including
twelve months from the date of approval of this interim financial
information. These forecasts show that further financing will be
required during the course of the next 12 months. This requirement
for additional financing in the short term represents a material
uncertainty that may cast significant doubt upon the Group's
ability to continue as a going concern.
In addition to utilising the existing cash reserves, the
Directors are evaluating a number of near-term funding options
available to the Group and are confident that additional working
capital will become available in the timeframe required and on
terms acceptable to the Board and shareholders. Therefore, after
considering the uncertainties the Directors consider it is
appropriate to continue to adopt the going concern basis in
preparing the interim financial information.
The condensed financial information for the six-month period
were approved by the board on 1 September 2016.
The accounting policies adopted are consistent with those
followed in the preparation of the audited statutory financial
statements for the year ended 31 December 2015.
None of the newly applicable IFRS standards and amendments had
an impact on the Group's interim consolidated financial
information.
Some of the significant accounting policies require management
to make difficult, subjective or complex judgments or estimates.
The policies which management consider critical because of the
level of complexity, judgment or estimation involved in their
application and their impact on the financial Information are:
- Business combinations
- Impairment of goodwill and intangible assets not yet ready for
use
- Share-based payments
- Income Taxes
- Intangible asset recognition
- Fair value through profit and loss derivative liabilities
Income tax is recognised or provided at amounts expected to be
recovered or to be paid using the tax rates and tax laws that have
been enacted or substantively enacted at the Group Statement of
Financial Position date. Research and development tax credits are
recognised on an accruals basis and are included as an income tax
credit under current assets. The research and development tax
credit recognised is based on management's best estimate of the
expected tax claim for the period and is recorded within taxation
as under the Small and Medium-sized Enterprise Scheme.
|
|
Six months ended 30 June 2016 unaudited |
Six months ended 30 June 2015 unaudited |
|
|
£'000 |
£'000 |
Income tax
credit |
|
|
|
Income tax credited to the
income statement |
|
725 |
356 |
|
|
_______ |
_______ |
|
|
|
|
|
|
725 |
356 |
Deferred tax
credit |
|
|
|
Reversal of temporary
differences (note 8) |
|
640 |
- |
|
|
_______ |
_______ |
|
|
|
|
Total tax
credit |
|
1,365 |
356 |
|
|
_______ |
_______ |
Revenue
Geographical analysis of revenue by destination of customer
|
|
Six months ended 30 June 2016 unaudited |
Six months ended 30 June 2015 unaudited |
|
|
£'000 |
£'000 |
|
|
|
|
United Kingdom |
|
42 |
- |
Austria |
|
34 |
25 |
United States |
|
3,380 |
96 |
|
|
_______ |
_______ |
|
|
|
|
|
|
3,456 |
121 |
|
|
_______ |
_______ |
One customer in respect of pipeline R&D accounts for 5% of
revenue in 2016. In the six months ending 30 June 2015, i.e. prior
to acquisition of Midatech Pharma US, there was only one reportable
segment, being pipeline R&D. Modest sales in the six months
ended 30 June 2015 meant that no meaningful analysis could be drawn
from the customer profile of the revenues achieved during that
period.
Following the acquisition of Midatech Pharma US, Inc., in
December 2015, the Group now contains two reportable operating
segments as follows:
- Pipeline Research and Development: The Pipeline Research and
Development ("Pipeline R&D") segment seeks to develop products
using the Group's nanomedicine and sustained release technology
platforms.
- Commercial: The Commercial segment distributes and sells the
Group's commercial products. Midatech Pharma US promotes the
Group's commercial, cancer supportive care products in the US
market, in which the Group has exclusive licenses to Soltamox,
Oravig and Zuplenz, an exclusive license to distribute, promote and
market Gelclair, and a marketing agreement to co-promote two other
products: Ferralet 90 and Aquoral. As and when new products are
introduced the Commercial segment will include revenues from the
marketing of these commercial products.
The accounting policies of the reportable segments are
consistent with the Group's accounting policies described in note
2. Segment result represents the result of each segment without the
allocation of interest expense, interest income and tax.
No measures of segment assets and segment liabilities are
reported to the Group's Board of Directors in order to assess
performance and allocate resources. There is no intersegment
activity and all revenue is generated from external customers.
The UK and Spanish entities meet the aggregation criteria and
have therefore been presented as a single reportable segment under
Pipeline R&D. The research and development activities involve
the discovery and development of pharmaceutical products in the
field of nanomedicine and sustained release technology. The US
operating company is engaged in the sale and marketing of cancer
supportive care products and is reported under the Commercial
segment.
Segmented results for the 6 month ended 30 June
2016
|
Pipeline R&D |
Commercial |
Consolidated |
|
unaudited £'000 |
unaudited £'000 |
unaudited £'000 |
|
|
|
|
Revenue |
|
266 |
|
|
3,190 |
|
|
3,456 |
|
Grant revenue |
|
347 |
|
|
- |
|
|
347 |
|
|
_______ |
_______ |
_______ |
|
|
|
|
Total revenue |
|
613 |
|
|
3,190 |
|
|
3,803 |
|
|
|
|
|
Cost of sales |
|
- |
|
|
(1,032 |
) |
|
(1,032 |
) |
Depreciation |
|
(437 |
) |
|
(5 |
) |
|
(442 |
) |
Amortisation |
|
(3 |
) |
|
(1,706 |
) |
|
(1,709 |
) |
Contract settlement
costs |
|
- |
|
|
(1,138 |
) |
|
(1,138 |
) |
Other research and
development costs |
|
(2,048 |
) |
|
- |
|
|
(2,048 |
) |
Other distribution costs,
sales and marketing |
|
(21 |
) |
|
(2,507 |
) |
|
(2,528 |
) |
Other administrative
costs |
|
(3,493 |
) |
|
(1,748 |
) |
|
(5,241 |
) |
|
_______ |
_______ |
_______ |
|
|
|
|
Segmental result/operating
loss |
|
(5,389 |
) |
|
(4,946 |
) |
|
(10,335 |
) |
|
_______ |
_______ |
|
|
|
|
|
Finance income |
|
|
|
765 |
|
|
|
|
_______ |
|
|
|
|
Loss before tax |
|
|
|
(9,570 |
) |
|
|
|
|
|
|
|
|
Taxation |
|
|
|
1,365 |
|
|
|
|
_______ |
|
|
|
|
Loss after tax |
|
|
|
(8,205 |
) |
|
|
|
_______ |
|
|
|
|
For the 6 months ending 30 June 2015 there was only one
reportable segment being Pipeline R&D. The segment result is
the operating loss for the period which is before interest expense,
interest income and tax.
Non-current assets by location of assets
|
|
30
June 2016 |
31
December 2015 |
|
|
unaudited
£'000 |
£'000 |
|
|
|
|
Spain |
|
1,720 |
1,433 |
United Kingdom |
|
14,209 |
14,019 |
United States |
|
29,437 |
28,258 |
|
|
_______ |
_______ |
|
|
|
|
|
|
45,366 |
43,710 |
|
|
_______ |
_______ |
Basic loss per share amounts are calculated by dividing the net
loss for the period attributable to ordinary equity holders of the
parent company by the weighted average number of ordinary shares
outstanding during the period. As the Group made a loss for the
period the diluted earnings per share is equal to the basic
earnings per share.
|
|
|
Six months ended 30
June 2016 unaudited |
Six months ended 30
June 2015 unaudited |
|
Numerator |
|
£'000 |
£'000 |
|
|
|
_______ |
_______ |
|
|
|
|
|
|
Loss used in basic EPS and
diluted EPS |
|
|
(8,205 |
) |
|
(4,894 |
) |
|
|
|
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
Denominator |
|
|
|
|
|
|
|
|
|
Weighted average number of
ordinary shares used in basic EPS |
|
|
33,469,150 |
|
|
27,800,459 |
|
|
|
|
|
|
|
|
|
_______ |
_______ |
|
|
|
|
|
|
Basic and diluted loss per
share - pence |
|
(25p) |
(18p) |
|
|
|
_______ |
_______ |
6 |
Property,
plant and equipment |
|
|
Fixtures and
fittings |
Leasehold improve-ments |
Computer equipment |
Laboratory
equipment |
Total |
|
|
unaudited |
unaudited |
unaudited |
unaudited |
unaudited |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
Cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2016 |
1,319 |
|
1,112 |
|
|
354 |
|
983 |
|
3,768 |
|
|
Additions |
105 |
|
284 |
|
|
18 |
|
345 |
|
752 |
|
|
Exchange differences |
163 |
|
111 |
|
|
21 |
|
5 |
|
300 |
|
|
Disposals |
- |
|
- |
|
|
(54 |
) |
- |
|
(54 |
) |
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
At 30 June
2016 |
1,587 |
|
1,507 |
|
|
339 |
|
1,333 |
|
4,766 |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
|
Accumulated
depreciation |
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2016 |
458 |
|
733 |
|
|
180 |
|
413 |
|
1,784 |
|
|
Charge for the period |
271 |
|
27 |
|
|
23 |
|
121 |
|
442 |
|
|
Exchange differences |
56 |
|
89 |
|
|
19 |
|
5 |
|
169 |
|
|
Disposals |
- |
|
(40 |
) |
|
(58 |
) |
- |
|
(98 |
) |
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
At 30 June
2016 |
785 |
|
809 |
|
|
164 |
|
539 |
|
2,297 |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
|
Net book
value |
|
|
|
|
|
|
|
|
|
|
|
|
|
At 30 June
2016 |
802 |
|
698 |
|
|
175 |
|
794 |
|
2,469 |
|
|
At 1 January 2016 |
861 |
|
379 |
|
|
174 |
|
570 |
|
1,984 |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
At 1 January
2015 |
|
1,202 |
|
|
880 |
|
|
195 |
|
|
583 |
|
|
2,860 |
|
|
Additions |
|
183 |
|
|
283 |
|
|
173 |
|
|
385 |
|
|
1,024 |
|
|
Acquired through
acquisition of subsidiary |
|
- |
|
|
- |
|
|
- |
|
|
16 |
|
|
16 |
|
|
Exchange differences |
|
(66 |
) |
|
(51 |
) |
|
(14 |
) |
|
(1 |
) |
|
(132 |
) |
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
At 31 December
2015 |
|
1,319 |
|
|
1,112 |
|
|
354 |
|
|
983 |
|
|
3,768 |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
At 1 January
2015 |
|
479 |
|
|
479 |
|
|
140 |
|
|
246 |
|
|
1,344 |
|
|
Charge for the year |
|
3 |
|
|
282 |
|
|
48 |
|
|
168 |
|
|
501 |
|
|
Exchange differences |
|
(24 |
) |
|
(28 |
) |
|
(8 |
) |
|
(1 |
) |
|
(61 |
) |
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
At 31 December
2015 |
|
458 |
|
|
733 |
|
|
180 |
|
|
413 |
|
|
1,784 |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
|
Net book
value |
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December
2015 |
|
861 |
|
|
379 |
|
|
174 |
|
|
570 |
|
|
1,984 |
|
|
At 31 December 2014 |
|
723 |
|
|
401 |
|
|
55 |
|
|
337 |
|
|
1,516 |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
7 |
Intangible
assets |
|
|
|
|
|
|
|
|
In-process research and development |
Product and marketing |
Goodwill |
IT/Website costs |
Total |
|
|
|
unaudited |
unaudited |
unaudited |
unaudited |
unaudited |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
|
Cost |
|
|
|
|
|
|
|
At 1 January
2016 |
12,600 |
18,321 |
12,456 |
|
15 |
|
43,392 |
|
|
Additions |
- |
- |
- |
|
12 |
|
12 |
|
|
Exchange differences |
- |
1,932 |
1,072 |
|
(3 |
) |
3,001 |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
At 30 June
2016 |
12,600 |
20,253 |
13,528 |
|
24 |
|
46,405 |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
Accumulated
amortisation and impairment |
|
|
|
|
|
|
|
At 1 January
2016 |
1,800 |
243 |
- |
|
10 |
|
2,053 |
|
|
Amortisation charge for
the period |
- |
1,706 |
- |
|
3 |
|
1,709 |
|
|
Exchange differences |
- |
133 |
- |
- |
133 |
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
At 30 June
2016 |
1,800 |
2,082 |
- |
|
13 |
|
3,895 |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
Net book
value |
|
|
|
|
|
|
|
At 30 June
2016 |
10,800 |
18,171 |
13,528 |
|
11 |
|
42,510 |
|
|
At 1 January 2016 |
10,800 |
18,078 |
12,456 |
|
5 |
|
41,339 |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
Cost |
|
|
|
|
|
|
|
At 1 January
2015 |
12,600 |
- |
2,291 |
|
12 |
|
14,903 |
|
|
Acquired in business
combinations |
- |
17,989 |
9,952 |
|
- |
|
27,941 |
|
|
Additions |
- |
- |
- |
|
3 |
|
3 |
|
|
Exchange differences |
- |
332 |
213 |
|
- |
|
545 |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
At 31 December
2015 |
12,600 |
18,321 |
12,456 |
|
15 |
|
43,392 |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
Accumulated
amortisation and impairment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January
2015 |
1,800 |
- |
- |
|
9 |
|
1,809 |
|
|
Amortisation charge for
the year |
- |
235 |
- |
|
1 |
|
236 |
|
|
Exchange differences |
- |
8 |
- |
|
- |
|
8 |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
At 31 December
2015 |
1,800 |
243 |
- |
|
10 |
|
2,053 |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
|
|
|
|
|
|
|
|
|
|
Net book
value |
|
|
|
|
|
|
|
At 31 December
2015 |
10,800 |
18,078 |
12,456 |
|
5 |
|
41,339 |
|
|
At 31 December 2014 |
10,800 |
- |
2,291 |
|
3 |
|
13,094 |
|
|
|
_______ |
_______ |
_______ |
_______ |
_______ |
|
Deferred tax is calculated in full on temporary differences
under the liability method using tax rates applicable in the tax
jurisdictions where the tax asset or liability would arise.
The movement on the deferred tax account is as shown below:
|
|
30 June 2016 |
31 December 2015 |
|
|
unaudited £'000 |
£'000 |
|
|
_______ |
_______ |
|
|
|
|
Liability |
|
|
(6,520 |
) |
|
(6,547 |
) |
|
|
_______ |
_______ |
|
|
six months ending 30 June 2016 |
Year ended 31 December 2015 |
|
|
unaudited £'000 |
£'000 |
|
|
|
|
Liability at 1
January |
|
6,547 |
|
|
354 |
|
Arising on
business combination |
|
- |
|
|
6,191 |
|
Credited to
income statement |
|
(640 |
) |
|
(131 |
) |
Foreign
exchange gain/(loss) |
|
613 |
|
|
133 |
|
|
|
_______ |
_______ |
Liability at period
end |
|
|
6,520 |
|
|
6,547 |
|
|
|
_______ |
_______ |
A £6.2m
deferred tax liability arose during 2015 following the acquisition
of DARA BioSciences, Inc.
9 |
Derivative
financial liability |
|
|
Six months ending 30 June 2016 |
Year ended 31 December 2015 |
|
|
unaudited £'000 |
£'000 |
|
|
|
|
|
|
|
|
Equity settled derivative
financial liability - fair value through profit and loss |
|
|
965 |
|
|
1,573 |
|
|
|
_______ |
_______ |
|
|
|
|
Liability at 1
January |
|
|
1,573 |
|
|
- |
|
On acquisition - 5
December 2015 |
|
|
- |
|
|
3,211 |
|
Gain recognised in finance
income within the consolidated statement of comprehensive
income |
|
|
(608 |
) |
|
(1,638 |
) |
|
|
______ |
______ |
Liability at period
end |
|
|
965 |
|
|
1,573 |
|
|
|
_______ |
_______ |
Equity settled derivative financial liability is not a liability
that is to be settled for cash. The Group assumed fully vested
warrants and share options on the acquisition of DARA Biosciences,
Inc. which are to be settled in shares of Midatech Pharma plc. The
number of ordinary shares to be issued when exercised is fixed,
however the exercise prices are denominated in US Dollars being
different to the functional currency of the parent company.
Therefore, the warrants and share options are classified as equity
settled derivative financial liabilities through the profit and
loss account. The financial liabilities were valued using the
Black-Scholes option pricing model based on assumptions described
below. Financial liabilities at FVTPL are stated at fair value,
with any gains or losses arising on re-measurement recognised in
profit or loss. The net gain or loss recognised in profit or loss
incorporated any interest paid on the financial liability and is
included in the 'other gains and losses' line item in the income
statement. A key input in the valuation of the instrument is the
company share price. The share price of the company reduced from
£2.65 at the date of acquisition of DARA Biosciences, Inc. to £1.74
at 31 December 2015, resulting in a gain of £1.638m on
re-measurement which was credited to finance income. The share
price further reduced to £1.35 on the 30 June 2016 resulting in a
gain of £608k on re-measurement, also credited to finance
income.
As at 30 June 2016 there were DARA options outstanding over
721,000 Midatech ordinary shares with a weighted average exercise
price of $7.62 per share, within a range of $2.54 to $770.59, and a
weighted average remaining contractual life of 8.0 years. The risk
free rate ranged from 0.63% to 1.81%, volatility from 59% to 79%
and the expected life from 1.4 - 8.1 years. The exercise of all
options would raise additional cash of $5.50m.
Also at the
period-end there were DARA warrants outstanding over 3,034,437
Midatech ordinary shares with a weighted average exercise price of
$9.67 per share, within a range of $3.06 to $164.71, and a weighted
average remaining contractual life of 2.6 years. The risk free rate
ranged from 0.44% to 1.63%, volatility from 59% to 79% and the
expected life from 0.6 - 6.5 years. The exercise of all warrants
would raise additional cash of $29.33m.
Fair value hierarchy
The Group uses the following hierarchy for determining and
disclosing the fair value of financial instruments by valuation
technique:
· Level 1: quoted (unadjusted) prices in
active markets for identical assets and liabilities;
· Level 2: other techniques for which
all inputs which have a significant effect on the recorded fair
value are observable, either directly or indirectly; and
· Level 3: techniques which use inputs
that have a significant effect on the recorded fair value that are
not based on observable market data.
The fair value of the Group's financial liability is measured at
fair value on a recurring basis.
The following table gives information about how the fair value
of this financial liability is determined:
Financial
liabilities |
Fair value as at 30/06/2016
£'000 |
Fair value as at
31/12/2015 £'000 |
Valuation
technique(s) and key input(s) |
Significant
unobservable input(s) level 3 |
Relationship of
unobservable inputs to fair value |
|
|
|
|
|
|
Equity settled
financial derivative liability |
965 |
1,573 |
Black Scholes
option pricing model |
Volatility rates between a
range of 59% and 76% determined using historical volatility of
comparable companies. |
The higher the volatility
the higher the fair value. |
Expected life between a
range of 0.1 and 8.6 years determined using the remaining life of
the share options. |
The shorter the expected
life the lower the fair value. |
Risk-free rate between a
range of 0.44% and 1.81% determined using the expected life
assumptions. |
The higher the risk-free
rate the higher the fair value. |
If the above unobservable volatility input to the valuation
model were 10% higher while all other variables were held constant,
the carrying amount of shares would increase by £194k (2015:
£273k).
If the above unobservable expected life input to the valuation
model were 1 year shorter while all other variables were held
constant, the carrying amount of shares would decrease by £74k
(2015: £70k).
If the above unobservable risk free rate input to the valuation
model were 10% higher while all other variables were held constant,
the carrying amount of shares would increase by £11k (2015:
£5k).
The financial liability measured at fair value on Level 3 fair
value measurement represents consideration relating to a business
combination.
|
|
30
June 2016 |
|
|
unaudited
£'000 |
|
|
|
Provisions at 1
January |
|
- |
Contract settlements |
|
799 |
|
|
_______ |
|
|
|
Provisions at period
end |
|
799 |
|
|
_______ |
Contract settlements relate to provisions for settlements with
former employees of Midatech Pharma US, Inc.
|
As
at 30 June 2016 |
As
at 30 June 2016 |
As
at 31 December 2015 |
As
at 31 December 2015 |
Allotted and fully paid -
classified as equity |
Number |
£ |
Number |
£ |
|
|
|
|
|
At 1 January |
|
|
|
|
Ordinary shares of 0.005p
each |
33,542,412 |
1,677 |
33,467,504 |
1,673 |
Deferred shares of £1
each |
1,000,001 |
1,000,001 |
1,000,001 |
1,000,001 |
C preference shares of
0.01p each |
- |
- |
- |
- |
|
|
__________ |
|
__________ |
Total |
|
1,001,677 |
|
1,001,674 |
|
|
__________ |
|
__________ |
|
|
|
|
|
In accordance with the Articles of Association for the Company
adopted on 13 November 2014, the share capital of the Company
consists of an unlimited number of ordinary shares of nominal value
0.005 pence each.
Date of
Issue |
Type of Share
Issue |
Ordinary Shares |
Deferred Shares |
Share Price |
Total consideration |
|
|
Number |
Number |
£ |
£'000 |
2016 |
|
|
|
|
|
As at 1 January 2016 |
|
33,467,507 |
1,000,001 |
|
46,840 |
|
|
|
|
|
|
27 June 2016 |
Deferred consideration re:
acquisition of Q Chip Limited |
74,905 |
- |
2.67 |
200 |
|
|
_________ |
_________ |
|
_________ |
|
|
|
|
|
|
As at 30 June
2016 |
|
33,542,412 |
1,000,001 |
|
47,040 |
|
|
_________ |
_________ |
|
_________ |
Date of
Issue |
Type of Share
Issue |
Ordinary Shares |
Deferred Shares |
Share Price |
Total consideration |
|
|
Number |
Number |
£ |
£'000 |
2015 |
|
|
|
|
|
As at 1 January 2015 |
|
27,794,261 |
1,000,001 |
|
32,000 |
|
|
|
|
|
|
24 April 2015 |
Exercise of employee share
options |
16,500 |
- |
0.00005 |
- |
25 September 2015 |
Exercise of employee share
options |
10,000 |
- |
0.00005 |
- |
4 December 2015 |
Share issue on acquisition
of DARA BioSciences, Inc. |
5,422,028 |
- |
2.63 |
14,240 |
23 December 2015 |
Deferred consideration re:
acquisition of Q Chip Limited |
224,718 |
- |
2.67 |
600 |
|
|
_________ |
_________ |
|
_________ |
|
|
|
|
|
|
As at 31 December
2015 |
|
33,467,507 |
1,000,001 |
|
46,840 |
|
|
_________ |
_________ |
|
_________ |
12 |
Related
party transactions and ultimate controlling party |
Transactions with Monosol RX, LLC
The Directors consider Monosol RX, LLC to be a related party by
virtue of the fact that Monosol RX, LLC is a shareholder of the
company and a collaborative partner in the MidaSol Therapeutics
joint operation. During the six months ended 30 June 2016 Midatech
Limited recharged to Monosol RX, LLC £105k (six months ended June
2015 £111k) for research services. There was no period end
receivable due from Monosol RX LLC (at 30 June 2015: £92k).
The Directors do not consider that there is an ultimate
controlling party.
13 |
Contingent
liabilities |
The Group had no material contingent liabilities at 30 June 2016
or 31 December 2015.
14 |
Events after
the reporting date |
There are no events to disclose after the reporting date.
For more information, please contact:
Midatech Pharma PLC
Jim Phillips, CEO
Tel: +44 (0)1235 888300
www.midatechpharma.com
Panmure Gordon (UK) Limited (Nominated Adviser and Broker)
Corporate Finance
Freddy Crossley / Atholl Tweedie / Duncan Monteith
Corporate Broking
Tom Salvesen
Tel: +44 (0)20 7886 2500
RBC Europe Limited (Joint Broker)
Paul Tomasic / Rupert Walford / Thomas Stockman / Laura White
Tel: +44 (0)207 653 4000
Consilium Strategic Communications (Financial PR)
Mary-Jane Elliott / Ivar Milligan / Matthew Neal / Hendrik Thys
Tel: +44 (0)20 3709 5700
Email: midatech@consilium-comms.com
Westwicke Partners (US Investor Relations)
Chris Brinzey
Tel: +1 339 970 2843
Email: chris.brinzey@westwicke.com
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