Filed pursuant to Rule 424(b)(3)
Registration No.: 333-240984
PROSPECTUS SUPPLEMENT
(to the Prospectus dated August 13, 2020)
MIDATECH PHARMA PLC
12,695,456 Ordinary Shares Representing
2,539,091 American Depositary Shares
This prospectus supplement,
or the Prospectus Supplement, amends our prospectus dated August 13, 2020, or the Prospectus, related to the resale by the selling
shareholders identified in the Prospectus of up to an aggregate of 12,695,456 of our ordinary shares, nominal value 0.1p per share,
or Ordinary Shares, represented by 2,539,091 American Depositary Shares, or Depositary Shares.
This Prospectus Supplement
is being filed in order to incorporate into and include in the Prospectus the information set forth in our Form 6-K filed with
the Securities and Exchange Commission on September 10, 2020, which is attached hereto. This Prospectus Supplement should be read
in conjunction with the Prospectus and is qualified by reference to the Prospectus except to the extent that the information in
this Prospectus Supplement supersedes the information contained therein.
Our Depositary Shares
are listed on the NASDAQ Capital Market under the symbol “MTP.” The last reported closing price of Depositary Shares
on the NASDAQ Capital Market on September 9, 2020 was $2.05.
Our Ordinary Shares
are admitted for trading on AIM, a market operated by the London Stock Exchange plc, or AIM, under the listing code “MTPH.”
The last reported closing price of our Ordinary Shares on AIM on September 9, 2020 was £0.33.
Investing in our
securities involves risks. See “Risk Factors” beginning on page 9 of the Prospectus and in the documents incorporated
by reference in the Prospectus for a discussion of the factors you should carefully consider before deciding to purchase these
securities.
Neither the Securities
and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
______________________________
The date of this Prospectus Supplement is
September 10, 2020.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the month of September 2020
Commission File Number 001-37652
Midatech Pharma PLC
(Translation of registrant’s name into English)
Oddfellows House,
19 Newport Road,
Cardiff, CF24 0AA, United Kingdom
(Address of principal executive offices)
Indicate by check mark whether the registrant files or
will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F x Form
40-F o
Indicate by check mark if the registrant is submitting
the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o
Indicate by check mark if the registrant is submitting
the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o
This Report on Form 6-K, including Exhibit
99.1, is hereby incorporated by reference into the Company’s Registration Statements on Form F-3 (File No. 333-233901)
and Form F-1 (File No. 333-240984).
SUBMITTED HEREWITH
Attached to the Registrant’s Form 6-K filing for the month
of September 2020, and incorporated by reference herein, is:
Exhibit No.
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Description
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99.1
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Press release, dated September 10, 2020
entitled
“Interim
results for the six months ended 30 June 2020, R&D collaboration strategy gaining traction”
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SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
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Midatech Pharma PLC
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Date: September 10, 2020
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By:
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/s/ Stephen Stamp
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Stephen Stamp
Chief Executive Officer, Chief Financial
Officer
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Exhibit Index
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Exhibit No.
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Description
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99.1
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Press release, dated September 10, 2020
entitled
“Interim
results for the six months ended 30 June 2020, R&D collaboration strategy gaining traction”
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Exhibit 99.1
10 September 2020
Midatech Pharma Plc
(“Midatech” or the “Company”)
Interim results for the six months ended
30 June 2020
R&D Collaboration Strategy Gaining
Traction
Midatech Pharma PLC (AIM: MTPH.L; Nasdaq:
MTP), a drug delivery technology company focused on improving the bio-delivery and bio-distribution
of medicines, announces its unaudited interim results for the six months ended 30 June 2020.
OPERATIONAL HIGHLIGHTS (including
post period end)
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·
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In March, an exploratory study was initiated with MTX110 by Columbia University in five patients with DIPG using an alternative
convection enhanced delivery system.
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·
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In March, the Company announced a wide-ranging Strategic Review, updated in April to include a Formal Sale Process under the
Takeover Code. The Formal Sale Process was subsequently terminated in July.
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·
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In March, the decision was taken to terminate further in-house development of the MTD201 programme with immediate effect although
the asset remains available for licensing. All activities connected with MTD201 have been wound down expeditiously and the manufacturing
facilities in Bilbao have been closed. Following the termination of in-house development of MTD201, the Company realigned its strategy
towards exploiting its Q-Sphera technology more broadly.
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In April, an exploratory study was initiated with MTX110 by the University of Texas, Houston in five patients with recurrent
medulloblastoma.
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In June, the Company signed a research collaboration with Dr Reddy’s Laboratories Ltd under which Midatech is deploying
its in-house expertise and Q-Sphera drug delivery platform to medicines nominated by Dr Reddy’s.
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·
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In July, the Company signed a collaboration with an unnamed European affiliate of a global pharmaceutical company, to establish
the application of the Q-Sphera platform to new modalities in drug delivery.
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FINANCIAL HIGHLIGHTS (including
post period end)
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·
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Total revenue in H1 2020 was £0.17m (H1 2019: £0.45m). Total revenue represents income from R&D collaborations
plus grant revenue.
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Research and development costs increased by 15% to £3.99m (H1 2019: £3.46m) as a result of lower MTX110 development
costs, redundancy costs of £0.88m and write-down of Spain assets of £0.55m, offset by a negative share-based payment
charge of £0.35m.
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Administrative expenses increased to £2.93m (H1 2019: £2.05m) and included £0.35m one-time costs associated
with Spanish Government loans, £0.07m UK redundancy costs and a £0.51m increase in legal and professional fees.
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Impairment of intangible assets of £11.59m (H1 2019: Nil) related to the termination of further in-house development
of MTD201 and associated IPRD and goodwill.
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Net cash used in operating activities (after changes in working capital) in H1 2020 was £7.09m, compared with £4.56m
in H1 2019.
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In May, in a concurrent Registered Direct Offering in the US and a Placing in the UK, the Company raised £4.26m before
expenses through the sale of 15.76m ordinary shares at £0.27 per share and warrants exercisable for 16.55m ordinary shares
at £0.34 per share.
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In July, the Company raised an additional £5.75m before expenses in an oversubscribed UK Placing, including a Broker
Option, through the sale of 21.3m ordinary shares at £0.27 per share with no warrants.
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The cash balance at 30 June 2020 was £4.33m.
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This
announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.
For more information, please contact:
Midatech Pharma
PLC
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Stephen Stamp, CEO, CFO
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Tel: +44 (0)29 20480 180
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www.midatechpharma.com
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Panmure Gordon (UK) Limited (Nominated Adviser and Joint Broker)
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Freddy Crossley, Emma Earl (Corporate Finance)
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Rupert Dearden (Corporate Broking)
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Tel: +44 (0)20 7886 2500
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Turner Pope Investments (TPI) Limited (Joint Broker)
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Andrew Thacker (Corporate Broking)
Tel: +44 (0)20 3657 0050
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IFC Advisory Limited (Financial PR and UK Investor Relations)
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Tim Metcalfe / Graham Herring
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Tel: +44 (0)20 3934 6630
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Email: midatech@investor-focus.co.uk
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Edison Group (US Investor Relations)
Megan Paul
Tel: +1 (646) 653 7034
Email: mpaul@edisongroup.com
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About Midatech
Pharma PLC
Midatech Pharma PLC (dual listed on LSE
AIM: MTPH; and NASDAQ: MTP) is a drug delivery technology company focused on improving the bio-delivery and bio-distribution of
medicines. The Company combines approved and development medications with its proprietary and innovative drug delivery technologies
to provide compelling products that have the potential to powerfully impact the lives of patients.
The Company has developed three in-house
technology platforms, each with its own unique mechanism to improve delivery of medications to sites of disease. All of the Company’s
technologies have successfully entered human use in the clinic, providing important validation of the potential for each platform:
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Q-Sphera™ platform: a disruptive micro-technology used for sustained release to prolong and
control the release of therapeutics over an extended period of time (from weeks to months).
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MidaSolve™ platform: an innovative nanotechnology used to dissolve insoluble drugs so that
they can be administered in liquid form directly and locally into tumours.
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MidaCore™ platform: a leading-edge nanotechnology used for targeting medications to sites
of disease.
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The platform nature of the technologies
offers the potential to develop multiple drug assets rather than being reliant on a limited number of programmes. Midatech’s
technologies are supported by 36 patent families including 120 granted patents and an additional 70 patent applications. Midatech's
headquarters and R&D facility is in Cardiff, UK. For more information please visit www.midatechpharma.com
Forward-Looking Statements
Certain statements in this press release
may constitute "forward-looking statements" within the meaning of legislation in the United Kingdom and/or United States
Private Securities Litigation Reform Act. All statements contained in this press release that do not relate to matters of historical
fact should be considered 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.
CHIEF EXECUTIVE’S REVIEW
The first half of 2020 proved to be a period
of significant transition for Midatech. We began the half-year with positive results from our Phase I study comparing subcutaneous
and intramuscular administration of MTD201, conferring the potential for an additional patient and cost benefit of the product.
Preparations for Phase III were well advanced when the dislocation in the capital markets which began in mid-February combined
with the limited prospects for partnering of assets at that time, caused the Board to reassess and the Company began a wide-ranging
strategic review of its operations.
Strategic Review and Formal Sale Process
On 31 March 2020 we announced that the
Company was initiating a formal Strategic Review. The Board had concluded that, in the context of its cash runway, the Company
was unlikely to consummate a license transaction or raise sufficient funds to continue the required remaining investment in MTD201
of approximately US$30 million on a timely basis. We therefore decided to terminate further inhouse development of the MTD201 programme
with immediate effect, although the asset remains available for licensing. We also took the difficult decision to close the Company's
MTD201 dedicated manufacturing facilities in Bilbao, Spain and offer redundancy to all 42 employees. In addition, a further five
UK-based employees in clinical research and administrative roles were also offered redundancy.
On 20 April 2020, we announced that we
had appointed Noble Capital Markets Inc. to advise the Board in considering all options for extracting value from its technologies
and optimising outcomes for the Company’s shareholders including partnering clinical stage assets, partnering or selling
one or more technologies, or selling the Company by way of a “Formal Sale Process” under the Takeover Code. We did
not receive any proposals for the acquisition of the Company under the Code and, accordingly, the Formal Sale Process was terminated
in July. We are evaluating expressions of interest from third parties for the potential acquisition of certain assets of the Company
All activities connected with MTD201 have
been wound down expeditiously and the manufacturing facilities in Bilbao have been closed. Following the termination of in-house
development of MTD201, we realigned our strategy for exploiting our Q-Sphera technology as discussed under Commercial Update
below.
Commercial Update
As a result of the Strategic Review, Midatech's
remaining 20 employees and operations are now concentrated in Cardiff. The Company’s strategy was immediately pivoted to
deploy its proprietary Q-Sphera drug delivery technology to (1) formulate a compelling portfolio of novel products with significant
commercial potential for licensing to pharmaceutical company partners; and (2) formulate proprietary compounds of pharmaceutical
partners under collaboration agreements.
The Company’s commercial strategy
is gaining traction. On 8 June 2020, we announced a collaboration with Dr Reddy's Laboratories Ltd and on 21 July 2020 we announced
a second collaboration with a European affiliate of a global pharmaceutical company, in each case to explore the feasibility of
applying Midatech's Q-Sphera technology to the partners' proprietary products. One of our partners has extended the initial collaboration
to two products. We believe the collaborations are encouraging early validation of the technology platform and, if successful,
we would expect to enter into licensing and technology transfer agreements with partners including milestone payments and royalties
with the medium term goal of becoming a self-sustaining, profitable business.
R&D update
With termination of further inhouse development
of MTD201 and change in strategic emphasis towards collaborating and partnering at proof-of-concept stage, the Company’s
R&D portfolio is significantly more diversified as follows:
ID
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API
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Therapeutic Area
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Administration
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Formulation
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Pre-
clinical
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Phase
I
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Phase
II
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Partnering
Status
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Q-Sphera
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MTD211
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Small
molecule
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CNS
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Long acting
Injectable
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X
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MTD214
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Small
molecule
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Anti-rejection
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Long acting
Injectable
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X
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MTD215
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Monoclonal
Antibody
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Undisclosed
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Long acting
Injectable
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Investigational
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External:
MTX212
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Undisclosed
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Undisclosed
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Long acting
Injectable
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X
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Partnered
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External:
MTX213
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Undisclosed
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Undisclosed
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Undisclosed
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X
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Partnered
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MTX214
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Undisclosed
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Undisclosed
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Undisclosed
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X
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MTD201
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Octreotide
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Carcinoid cancer and
acromegaly
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Long acting injectable
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In-house development terminated
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MidaSolve
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MTX110
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Panobinostat
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Brain cancer in
children (DIPG)
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Direct to tumour
via CED
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X
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X
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X
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MTX110
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Panobinostat
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Medulloblastoma
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Direct to tumour
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X
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X
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MTX110
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Panobinostat
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Glioblastoma
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Direct to tumour
via CED
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X
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MidaCore
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MTX114
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Methotrexate
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Psoriasis Immuno-rx
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Topical
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X
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X
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Q-Sphera
Since the start of the Strategic Review
the Company has developed two formulations for its internal Q-Sphera pipeline: one in CNS (MTD211) and one in transplant anti-rejection
(MTD214). Each of the APIs was identified after a comprehensive evaluation of potential candidates. Both MTD211 and MTD214 address
large markets and, as long-acting injectables, have the potential to offer significant clinical benefits compared with current
therapies and, importantly for reimbursement, savings to the healthcare system. Both formulations are currently being optimised
in preparation for IND-enabling in vivo studies later this year. Once completed, we will seek licensing and technology transfer
agreements with partners for further development and, ultimately marketing.
Insofar as the Company is aware, there
are no FDA approved long-acting injectable formulations of biologic products such as monoclonal antibodies or other forms of high
molecular weight proteins. Proteins are delicate and easily de-natured in manufacturing processes which require significant shear
forces, heat and/or certain types of solvent. Midatech’s Q-Sphera encapsulation printing technology is inherently less harmful
than most traditional PLGA manufacturing methods. A significant number of latest generation medicines are protein based and could
benefit from alternative dosing with long-acting injectables and, although there remain significant technical challenges, Midatech’s
MTD215 programme is investigating the feasibility of encapsulating a monoclonal antibody using a model protein, representative
of closely related therapeutics, to demonstrate proof of concept. If successful, the Company plans to apply the know-how to commercial
opportunities.
MTD201, a long-acting Q-Sphera formulation
of octreotide for the treatment of acromegaly and neuroendocrine tumours, reported a second Phase I study (“Study 102”)
in 28 healthy volunteers comparing subcutaneous versus intramuscular routes of administration. The results showed similar pharmacokinetics
and bioavailability for the two routes of administration. Although inhouse development of MTD201 has been terminated, the pre-clinical
and two Phase I studies have demonstrated Q-Sphera proof-of-concept as a long-acting injectable formulation technology with several
potential advantages compared with other PLGA-based technologies including; predictable kinetics, minimal burst release, improved
injectability, simpler reconstitution and now, subcutaneous administration.
MidaSolve
The Company’s MidaSolve project,
MTX110, is being developed initially for the treatment of an ultra-rare, highly aggressive and inoperable form of childhood brain
cancer called Diffuse Intrinsic Pontine Glioma ("DIPG"). This disease is universally fatal with an average life expectancy
of nine months. Midatech is also evaluating MXT110 for the treatment of other forms of childhood brain cancer including medulloblastoma
and glioblastoma multiforme ("GBM"), a fast-growing form of brain cancer in adults.
MTX110 utilises our MidaSolve nanosaccharide
inclusion technology to solubilise an otherwise insoluble chemotherapeutic agent, panobinostat, allowing it to be administered
directly into the tumour via a convection enhanced delivery (“CED”) system of micro-catheters. Panobinostat is already
approved for the treatment of other cancers and is known to be one of the most potent agents against DIPG tumour cells. However,
its lack of solubility in water means that the currently marketed form of panobinostat can only be given orally and is not effective
against brain cancers as it does not readily cross the blood-brain-barrier.
Our initial Phase I study in DIPG patients
is being conducted by the University of California, San Francisco and is expected to report safety, tolerability and a recommended
dose for Phase II within the next few weeks. Preparations for a Phase II trial of safety and efficacy in 19 patients with Kinderspital,
Zurich are well advanced. The study endpoint is expected to be patient survival after 12 months.
The Company has initiated two additional
exploratory trials; a study of five DIPG patients with Columbia University utilising an alternative CED system, and a study of
five patients with University of Texas, Houston in medulloblastoma.
As announced on 9 June 2020, the Company
received a letter from counsel to Secura Bio Inc. purporting to terminate the Company's licence to panobinostat. The Company remains
of the view that the grounds for the purported termination of the panobinostat licence agreement by Secura Bio Inc. are unfounded.
At this time, the Company is considering various avenues for a resolution and/or best options available to the Company.
We are waiting to hear from the EU whether
Midatech meets the EU criteria for an SME and if the GlioKIDS grant will be confirmed.
MidaCore
The Company has deployed its gold nanoparticle
technology in a formulation of methotrexate for the topical treatment of psoriasis which is available for partnering. Certain other
indications using gold nanoparticle technology have been licensed to Emergex Vaccines.
Board Changes and Restructuring
On 31 March 2020, alongside the announcement
of the Strategic Review, Craig Cook resigned as Chief Executive Officer following six years’ service with the Company, initially
as Chief Operating Officer and Chief Medical Officer before being appointed Chief Executive Officer in June 2018. In addition,
recognising the narrowed focus of the Company, Huaizheng Peng and Frédéric Duchesne graciously offered their resignations
which were also accepted by the Board. In the relatively short period we overlapped I very much appreciated the leadership of all
three and wish to place on record the thanks of the Company for their counsel during some challenging times.
The painful decisions we took in March
2020 unfortunately resulted in 48 gifted and dedicated staff members, more than two-thirds of the Company, being made redundant.
I should also like to thank them all for the grace with which they accepted a difficult situation.
Funding
The termination of MTD201, closure of Bilbao
operations and re-alignment of strategy towards collaborations and partnerships all helped reduce the average monthly cash outflow
by around half. These fundamental changes, although painful at the time, allowed us to re-position the Company and execute a concurrent
US / UK fundraise in May 2020 followed by a UK Placing in July 2020, raising a total of £10.0 million before expenses. Significantly,
the July fundraise was oversubscribed and also brought new institutional investors onto the shareholder register. The Company currently
has funding into the fourth quarter of 2021.
COVID-19
In response to the pandemic and government
imposed restrictions on movement, we established a COVID-19 Task Force in mid-March 2020 with the dual objectives of safeguarding
the health and wellbeing of our staff members and monitoring the impact of COVID-19 on our vendors and collaborators. We have reorganised,
as far as possible, the layout of our offices and laboratories in Cardiff to conform to social distancing policies and allow all
our employees to return to the workplace. Notwithstanding these actions, there has been disruption to internal workplans and delays
in the recruitment of ongoing clinical trials.
Outlook
Following the announcement of our Strategic
Review we are seeing signs of our re-aligned strategy of collaborating and earlier partnering of our technologies beginning to
gain traction. Combined with an extended cash runway, we have reasons to view the future with excitement and confidence.
FINANCIAL REVIEW
The results for the six months ended 30
June 2020 were materially impacted by the Strategic Review, the closure of the Company’s operations in Bilbao and cessation
of further inhouse development of MTD201.
Key performance indicators:
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H1 2020
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H1 2019
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Total revenue(1)
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£0.17m
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£0.45m
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R&D costs
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£3.99m
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£3.46m
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R&D as % of operating costs
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58%
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61%
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Impairment of intangible assets
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£11.59m
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-
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Loss from operations
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£18.35m
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£5.24m
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Net cash (outflow)/inflow for the period
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£(6.79)m
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£6.70m
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Total revenue represents income from R&D collaborations plus grant revenue
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Midatech’s KPIs focus on the key
areas of operating results, R&D spend and cash management. These measures provide information on the core R&D operation.
Additional financial and non-financial KPIs may be adopted in due course.
Revenues
Total revenue for the six months to 30
June 2020 was £0.17m compared to £0.45m in the first six months of 2019, a decrease of 63%. Revenue, comprising income
from R&D collaborations, was £8,000 compared to £0.23m in the corresponding period last year. Grant income reduced
from £0.22m in the six months to 30 June 2019 to £0.16m this year. No revenues from the Company’s recently announced
feasibility collaborations were recognised in the first half of 2020.
Research and Development
R&D costs for the first half of 2020
increased £0.53m or 15% to £3.99m in H1 2020 compared with £3.46m in H1 2019. R&D costs in H1 2020 included
£1.88m (H1 2019 £1.90m) and £0.18m (H1 2019 £0.37m) for projects MTD201 and MTX110, respectively. Also
included in R&D costs in H1 2020 were redundancy costs of £0.88m and £0.55m write-down of Spain assets offset by
a negative share based payment charge of £0.35m.
Administrative Costs
Administrative expenses in the six-month
period ended 30 June 2020 increased 43% to £2.93m compared to £2.05m for H1 2019. The increase in administrative costs
includes £0.35m of one-time costs associated with Spanish Government loans,£0.51m of increased
legal and professional fees due in part to the closure of Bilbao operations and in part due to an aborted fundraise in the first
quarter of 2020 and £0.07m in respect of UK redundancy costs.
Impairment of Intangible Assets
Following the termination of further inhouse
development of MTD201, the Company recognised an impairment of intangible assets of £11.59m in H1 2020 (H1 2019 £nil).
The impairment includes the write off of in-process research and development connected to the Midatech Pharma (Wales) Limited (“MPW”)
cash generating unit of £9.30m and goodwill arising on the acquisition of Q-Chip Limited (subsequently re-named MPW) of £2.29m.
Closure of Bilbao Operations
Following the announcement of the Strategic
Review and the termination of further inhouse development of MTD201, the Company immediately began the process of closing its facilities
in Bilbao, Spain which were largely dedicated to the manufacture of MTD201. Following an expediente de regulación de
empleo, or collective bargaining process under Spanish law, all Bilbao employees were made redundant with effect from 3 June
2020. A liquidator has been appointed to administer the repayment of Spanish government loans, unused grants, finance leases and
sundry other liabilities and sale or disposal of the laboratory and manufacturing equipment in Bilbao. The Company’s expectation
is that the Spanish subsidiary will be subject to solvent liquidation in due course.
Cash Flows
Cash outflows used in operations (before
changes in working capital) in H1 2020 were £6.55m compared to £4.57m in H1 2019. This increased cash outflow was principally
due to an increase in operating loss from £4.42m in H1 2019 to £17.42m in H1 2020 although the H1 2020 operating loss
included a non-cash impairment of intangible assets of £11.59m. Outflow from net changes in working capital in H1 2020 of
£0.52m (H1 2019 £18,000 inflow) and de minimis tax inflows in both periods resulted in net cash used in operations
in H1 2020 of £7.09m (H1 2019 £4.56m).
Net cash used in investing activities in
H1 2020 of £88,000 (H1 2019 £0.97m) included purchases of property, plant and equipment of £89,000. The cash
outflow in the prior period principally related to a claim of £0.95m in respect of a warranty provided to the purchaser of
Midatech Pharma US Inc. in November 2018.
Net cash generated from financing activities
was £0.39m in H1 2020 compared with £12.23m in H1 2019. Cash raised from share issues, net of expenses, were £3.73m
and £12.29m in H1 2020 and H1 2019 respectively. In H1 2020, there were also repayments of government loans and grants relating
to the closure of the Company’s operations in Bilbao totalling £3.27m.
Overall, cash decreased by £6.79m
in the six months ended 30 June 2020, compared to an increase of £6.70m in H1 2019. This resulted in a cash balance at 30
June 2020 of £4.33m compared with £10.93m at 31 December 2019. After repayment of certain Government loans, borrowings
at 30 June 2020 were £3.51m compared with £6.08m at 31 December 2019.
Post-period end
On 27 July 2020 the Company announced a
successful UK Placing, including a Broker Option, of 21.3m ordinary shares at £0.27 per share for aggregate gross proceeds
of £5.75m, or £5.28m net of expenses. The UK Placing and Broker Options were oversubscribed and introduced new institutional
shareholders to the register. The UK Placing and Broker Option closed on 3 August 2020. The net proceeds of the UK Placing and
Broker Option extended the Company’s cash runway into the fourth quarter of 2021 assuming all programmes are progressed according
to plan and zero milestones are received from potential licensees of Q-Sphera technology.
On 19 August 2020 the Company announced
that US investors had exercised warrants for 500,000 American Depositary Share (“ADS”) warrants representing 2,500,000
new ordinary shares of 0.1p each at an exercise price of $2.05 per ADS or £0.34 per ordinary share. The aggregate exercise
price paid to the Company was $1.02m.
Going Concern
Midatech has experienced net losses and
significant cash outflows from cash used in operating activities over the past years as it has developed its portfolio. As at 30
June 2020 the Group had total equity of £4.55m (£19.56m at 31 December 2019), it incurred a net loss after tax for
the six months to 30 June 2020 of £17.42m (£4.42m H1 2019) and used cash in operating activities of £7.09m (£4.56m
H1 2019) for the same period. As at 30 June 2020, the Company had cash and cash equivalents of £4.33m.
The future viability of the Company 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 Company’s development products. The Company’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 Company for the next five years including the period 12 months from the date of
approval of this interim financial information. These forecasts show that the Company has sufficient cash resources for the next
12 months from the date of approval of these consolidated interim financial statements. The Directors therefore consider it appropriate
to continue to adopt the going concern basis in preparing the financial information.
Stephen Stamp
Chief Executive Officer and Chief Financial
Officer
Consolidated Statements of Comprehensive
Income
For the year six month period ended
30 June
|
|
Note
|
|
2020
unaudited
£’000
|
|
|
2019
unaudited
£’000
|
|
Revenue
|
|
|
|
|
8
|
|
|
|
230
|
|
Grant revenue
|
|
|
|
|
160
|
|
|
|
222
|
|
Total revenue
|
|
|
|
|
168
|
|
|
|
452
|
|
Research and development costs
|
|
|
|
|
(3,989
|
)
|
|
|
(3,459
|
)
|
Distribution costs, sales and marketing
|
|
|
|
|
(8
|
)
|
|
|
(191
|
)
|
Administrative costs
|
|
|
|
|
(2,925
|
)
|
|
|
(2,046
|
)
|
Impairment of intangible assets
|
|
|
|
|
(11,591
|
)
|
|
|
-
|
|
Loss from operations
|
|
|
|
|
(18,345
|
)
|
|
|
(5,244
|
)
|
Finance income
|
|
2
|
|
|
508
|
|
|
|
1
|
|
Finance expense
|
|
2
|
|
|
(22
|
)
|
|
|
(8
|
)
|
Loss before tax
|
|
|
|
|
(17,859
|
)
|
|
|
(5,251
|
)
|
Taxation
|
|
3
|
|
|
439
|
|
|
|
832
|
|
Loss for the year attributable to the owners of the parent
|
|
|
|
|
(17,420
|
)
|
|
|
(4,419
|
)
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
Items that will or may be reclassified subsequently to profit or loss:
|
|
|
|
|
|
|
|
|
|
|
Exchange (losses)/gains arising on translation of foreign operations
|
|
|
|
|
143
|
|
|
|
(64
|
)
|
Total other comprehensive loss net of tax
|
|
|
|
|
143
|
|
|
|
(64
|
)
|
Total comprehensive loss attributable to the owners of the parent
|
|
|
|
|
(17,277
|
)
|
|
|
(4,483
|
)
|
Loss per share
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per ordinary share - pence
|
|
4
|
|
|
(64
|
)p
|
|
|
(29
|
)p
|
The accompanying notes form part of these financial statements
Consolidated Statements of Financial
Position
For the year six month period ended
30 June
|
|
Note
|
|
As at
30 June 2020
unaudited
£’000
|
|
|
As at
31 December
2019
£’000
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
5
|
|
|
954
|
|
|
|
2,154
|
|
Intangible assets
|
|
6
|
|
|
778
|
|
|
|
12,379
|
|
Other receivables due in greater than one year
|
|
|
|
|
-
|
|
|
|
2,625
|
|
|
|
|
|
|
1,732
|
|
|
|
17,158
|
|
Current assets
|
|
|
|
|
|
|
|
|
|
|
Trade and other receivables
|
|
|
|
|
3,669
|
|
|
|
992
|
|
Taxation
|
|
|
|
|
2,268
|
|
|
|
1,817
|
|
Cash and cash equivalents
|
|
|
|
|
4,328
|
|
|
|
10,928
|
|
|
|
|
|
|
10,265
|
|
|
|
13,737
|
|
Total assets
|
|
|
|
|
11,997
|
|
|
|
30,895
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
|
|
|
|
|
|
Borrowings
|
|
7
|
|
|
107
|
|
|
|
5,670
|
|
|
|
|
|
|
107
|
|
|
|
5,670
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
Trade and other payables
|
|
|
|
|
2,788
|
|
|
|
4,494
|
|
Borrowings
|
|
7
|
|
|
3,401
|
|
|
|
412
|
|
Provisions
|
|
|
|
|
-
|
|
|
|
97
|
|
Derivative financial liability
|
|
8
|
|
|
1,154
|
|
|
|
664
|
|
|
|
|
|
|
7,343
|
|
|
|
5,667
|
|
Total liabilities
|
|
|
|
|
7,450
|
|
|
|
11,337
|
|
Issued capital and reserves attributable to owners of the parent
|
|
|
|
|
|
|
|
|
|
|
Share capital
|
|
9
|
|
|
1,039
|
|
|
|
1,023
|
|
Share premium
|
|
|
|
|
67,882
|
|
|
|
65,879
|
|
Merger reserve
|
|
|
|
|
53,003
|
|
|
|
53,003
|
|
Warrant reserve
|
|
|
|
|
720
|
|
|
|
-
|
|
Foreign exchange reserve
|
|
|
|
|
(365
|
)
|
|
|
(508
|
)
|
Accumulated deficit
|
|
|
|
|
(117,732
|
)
|
|
|
(99,839
|
)
|
Total equity
|
|
|
|
|
4,547
|
|
|
|
19,558
|
|
Total equity and liabilities
|
|
|
|
|
11,997
|
|
|
|
30,895
|
|
The accompanying notes form part of these financial statements
Consolidated Statements of Cash Flows
For the six month period ended 30 June
·
|
|
Note
|
|
2020
unaudited
£’000
|
|
|
2019
unaudited
£’000
|
|
· Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|
· Loss for the period
|
|
|
|
|
(17,420
|
)
|
|
|
(4,419
|
)
|
· Adjustments for:
|
|
|
|
|
|
|
|
|
|
|
· Depreciation of property, plant and equipment
|
|
5
|
|
|
474
|
|
|
|
518
|
|
· Depreciation of right of use asset
|
|
5
|
|
|
89
|
|
|
|
123
|
|
· Amortisation of intangible fixed assets
|
|
6
|
|
|
10
|
|
|
|
3
|
|
· Loss on disposal of fixed assets
|
|
|
|
|
30
|
|
|
|
|
|
· Impairment of intangible assets
|
|
6
|
|
|
11,591
|
|
|
|
|
|
· Finance income
|
|
2
|
|
|
(508
|
)
|
|
|
(1
|
)
|
· Finance expense
|
|
2
|
|
|
22
|
|
|
|
8
|
|
· Share-based payment expense
|
|
|
|
|
(473
|
)
|
|
|
26
|
|
· Taxation
|
|
3
|
|
|
(439
|
)
|
|
|
(832
|
)
|
· Foreign exchange losses/(gains)
|
|
|
|
|
70
|
|
|
|
-
|
|
· Cash flows from operating activities before changes in working capital
|
|
|
|
|
(6,554
|
)
|
|
|
(4,574
|
)
|
· (Increase) /Decrease in trade and other receivables
|
|
|
|
|
(493
|
)
|
|
|
61
|
|
· Increase/(Decrease) in trade and other payables
|
|
|
|
|
69
|
|
|
|
(43
|
)
|
· (Decrease)/Increase in provisions
|
|
|
|
|
(97
|
)
|
|
|
-
|
|
· Cash used in operations
|
|
|
|
|
(7,075
|
)
|
|
|
(4,556
|
)
|
· Taxes payments
|
|
|
|
|
(13
|
)
|
|
|
(5
|
)
|
· Net cash used in operating activities
|
|
|
|
|
(7,088
|
)
|
|
|
(4,561
|
)
|
Consolidated Statements of Cash Flows
(continued)
For the six month period ended 30 June
·
|
|
Note
|
|
2020
unaudited
£’000
|
|
|
2019
unaudited
£’000
|
|
· Investing activities
|
|
|
|
|
|
|
|
|
|
|
· Purchases of property, plant and equipment
|
|
5
|
|
|
(89
|
)
|
|
|
(20
|
)
|
· Purchase of intangibles
|
|
5
|
|
|
-
|
|
|
|
(8
|
)
|
· Warranty claim in connection with disposed subsidiary
|
|
|
|
|
|
|
|
|
(947
|
)
|
· Interest received
|
|
|
|
|
1
|
|
|
|
1
|
|
· Net cash used ininvesting activities
|
|
|
|
|
(88
|
)
|
|
|
(974
|
)
|
· Financing activities
|
|
|
|
|
|
|
|
|
|
|
· Interest paid
|
|
|
|
|
(22
|
)
|
|
|
(6
|
)
|
· Receipts from sub-lessors
|
|
|
|
|
45
|
|
|
|
22
|
|
· Amounts paid on lease liabilities
|
|
|
|
|
(98
|
)
|
|
|
(67
|
)
|
· Repayment of government grant
|
|
|
|
|
(165
|
)
|
|
|
-
|
|
· Repayment of Government loan
|
|
|
|
|
(3,109
|
)
|
|
|
-
|
|
· Share issues including warrants, net of costs
|
|
9
|
|
|
3,734
|
|
|
|
12,285
|
|
· Net cash generated from financing activities
|
|
|
|
|
385
|
|
|
|
12,234
|
|
· Net (decrease)/increase in cash and cash equivalents
|
|
|
|
|
(6,791
|
)
|
|
|
6,699
|
|
· Cash and cash equivalents at beginning of period
|
|
|
|
|
10,928
|
|
|
|
2,343
|
|
· Exchange gains/(losses) on cash and cash equivalents
|
|
|
|
|
191
|
|
|
|
(66
|
)
|
· Cash and cash equivalents at end of period
|
|
|
|
|
4,328
|
|
|
|
8,976
|
|
The accompanying notes form part of these financial statements
Consolidated Statements of Changes in
Equity
|
|
Share
capital
£’000
|
|
|
Share
premium
£’000
|
|
|
Merger
reserve
£’000
|
|
|
Warrant
reserve
£’000
|
|
|
Foreign
exchange
reserve
£’000
|
|
|
Accumulated
deficit
£’000
|
|
|
Total
equity
£’000
|
|
At 1 January 2020
|
|
|
1,023
|
|
|
|
65,879
|
|
|
|
53,003
|
|
|
|
-
|
|
|
|
(508
|
)
|
|
|
(99,839
|
)
|
|
|
19,558
|
|
Loss for the year
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
-
|
|
|
|
–
|
|
|
|
(17,420
|
)
|
|
|
(17,420
|
)
|
Foreign exchange translation
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
-
|
|
|
|
143
|
|
|
|
–
|
|
|
|
143
|
|
Total comprehensive loss
|
|
|
1,023
|
|
|
|
65,879
|
|
|
|
53,003
|
|
|
|
-
|
|
|
|
(365
|
)
|
|
|
(117,259
|
)
|
|
|
2,281
|
|
Transactions with owners
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued on 18 May 2020
|
|
|
16
|
|
|
|
2,527
|
|
|
|
–
|
|
|
|
720
|
|
|
|
–
|
|
|
|
–
|
|
|
|
3,263
|
|
Costs associated with share issue on 18 May
2020
|
|
|
–
|
|
|
|
(524
|
)
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(524
|
)
|
Share-based payment charge
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(473
|
)
|
|
|
(473
|
)
|
Total contribution by and distributions to
owners
|
|
|
16
|
|
|
|
2,003
|
|
|
|
–
|
|
|
|
720
|
|
|
|
–
|
|
|
|
(473
|
)
|
|
|
2,266
|
|
At 30 June 2020 (unaudited)
|
|
|
1,039
|
|
|
|
67,882
|
|
|
|
53,003
|
|
|
|
720
|
|
|
|
(365
|
)
|
|
|
(117,732
|
)
|
|
|
4,547
|
|
|
|
Share
capital
£’000
|
|
|
Share
premium
£’000
|
|
|
Merger
reserve
£’000
|
|
|
Warrant
reserve
£’000
|
|
|
Foreign
exchange
reserve
£’000
|
|
|
Accumulated
deficit
£’000
|
|
|
Total
equity
£’000
|
|
At 1 January 2019
|
|
|
1,003
|
|
|
|
52,939
|
|
|
|
53,003
|
|
|
|
–
|
|
|
|
(301
|
)
|
|
|
(89,720
|
)
|
|
|
16,924
|
|
Loss for the year
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(4,419
|
)
|
|
|
(4,419
|
)
|
Foreign exchange translation
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(64
|
)
|
|
|
–
|
|
|
|
(64
|
)
|
Total comprehensive loss
|
|
|
1,003
|
|
|
|
52,939
|
|
|
|
53,003
|
|
|
|
–
|
|
|
|
(365
|
)
|
|
|
(94,139
|
)
|
|
|
12,441
|
|
Shares issued on 26 February 2019
|
|
|
17
|
|
|
|
13,388
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
13,405
|
|
Costs associated with share issue on 26
February 2019
|
|
|
|
|
|
|
(1,120
|
)
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(1,120
|
)
|
Share-based payment charge
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
26
|
|
|
|
26
|
|
Total contribution by and distributions to
owners
|
|
|
17
|
|
|
|
12,268
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
26
|
|
|
|
12,311
|
|
At 30 June 2019 (unaudited)
|
|
|
1,003
|
|
|
|
65,207
|
|
|
|
53,003
|
|
|
|
–
|
|
|
|
(365
|
)
|
|
|
(94,113
|
)
|
|
|
24,752
|
|
The accompanying notes form part of these financial statements
Notes Forming Part of The Consolidated
Unaudited Interim Financial Information
For the six month period ended 30 June
2020
The unaudited interim consolidated financial
information for the six months ended 30 June 2020 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 (‘IAS 34’). 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 2019.
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 comparative financial information for the year
ended 31 December 2019 in this interim financial information does not constitute statutory accounts for that year. The statutory
accounts for 31 December 2019 have been delivered to the UK Registrar of Companies. The auditor’s report on those accounts
was unqualified and did not contain a statement under section 498(2) or 498(3) of the Companies Act 2006. The auditor’s report
did draw attention to a material uncertainty related to going concern and the requirement, as of the date of the report, for additional
funding to be raised by the Company within the succeeding 12 months.
Midatech Pharma’s annual reports
may be downloaded from the Company’s website at http://www.midatechpharma.com/investors/financial-reports.html
or a copy may be obtained from Oddfellows House, 19 Newport Road, Cardiff CF24 0AA.
Going Concern
The Group and parent company are 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 revenue from 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.
On 11 March 2020, the World Health Organization
declared the novel strain of coronavirus (COVID-19) a global pandemic and recommended containment and mitigation measures worldwide.
As of the date of these unaudited interim financial information, the Group’s operations have been curtailed temporarily due
to restrictions imposed by governments.
The Group cannot reasonably estimate the
length or severity of this pandemic and related restrictions. Some factors from the COVID-19 outbreak that the Company believe
will adversely affect current and planned drug development activities include:
|
·
|
the diversion of healthcare resources away from the conduct of clinical trial matters to focus
on pandemic concerns, including the attention of physicians serving as our clinical trial investigators, hospitals serving as our
clinical trial sites and hospital staff supporting the conduct of our clinical trials;
|
|
·
|
limitations on travel that interrupt key trial activities, such as clinical trial site initiations
and monitoring;
|
|
·
|
interruption in global shipping affecting the transport of clinical trial materials, such as investigational
drug product used in our trials; and
|
|
·
|
employee absences that delay necessary interactions with local regulators, ethics committees and
other important agencies and contractors.
|
The Company has experienced net losses
and significant cash outflows from cash used in operating activities over the past years as it develops its portfolio. For the
six months ended 30 June 2020 the Group incurred a consolidated loss from operations of £17.4 million and negative cash
flows from operations of £7.1 million. As of 30 June 2020 the Group had an accumulated deficit of £117.7 million
and cash and cash equivalents of £4.3 million.
The Group’s future viability is dependent
on its ability to generate cash from operating activities, to raise additional capital to finance its operations and to successfully
obtain regulatory approval to allow marketing of its 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 Company for the next five years including the period 12 months from the date of
approval of the consolidated interim financial information. These forecasts show that financing will not be required during the
next 12 months assuming, inter alia, that certain development programs and other operating activities continue as currently planned.
Accordingly, the Group's consolidated interim statement have been presented on a going concern basis, which contemplates the realisation
of assets and the satisfaction of liabilities in the normal course of business.
The condensed interim financial information
for the six months ended 30 June 2020 was approved by the Board of Directors on 9 September 2020.
|
2.
|
Finance income and expense
|
|
Six months
ended 30
June 2020
unaudited
£’000
|
Six months
ended 30
June 2019
unaudited
£’000
|
Finance income
|
|
|
Interest received on bank deposits
|
1
|
1
|
Gain on equity settled derivative financial liability
|
507
|
–
|
Total finance income
|
508
|
1
|
The gain on the equity settled derivative
financial liability in 2020 arose as a result of the reduction in the Midatech share price.
|
Six months
ended 30
June 2020
unaudited
£’000
|
Six months
ended 30
June 2019
unaudited
£’000
|
Finance expense
|
|
|
Bank loans
|
9
|
2
|
Other loans
|
13
|
6
|
Total finance expense
|
22
|
8
|
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
estimate of the expected tax claim for the period and is recorded within taxation under the Small and Medium-sized Enterprise Scheme.
|
Six months
ended 30
June 2020
unaudited
£’000
|
Six months
ended 30
June 2019
unaudited
£’000
|
Income tax credit
|
439
|
832
|
Basic loss per share amounts are calculated
by dividing the net loss for the period from continuing operations, 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
loss per share is equal to the basic loss per share.
|
|
Six months
ended 30
June 2020
unaudited
£’000
|
|
|
Six months
ended 30
June 2019
unaudited
£’000
|
|
Numerator
|
|
|
|
|
|
|
|
|
Loss used in basic EPS and diluted EPS:
|
|
|
(17,420
|
)
|
|
|
(4,419
|
)
|
Denominator
|
|
|
|
|
|
|
|
|
Weighted average number of ordinary shares used in basic and diluted
EPS:
|
|
|
27,283,688
|
|
|
|
15,083,222
|
|
Basic and diluted loss per share:
|
|
|
(64
|
)p
|
|
|
(29
|
)p
|
On 2 March 2020 a resolution was passed
at a general meeting of shareholders of the Company to consolidate its ordinary shares on a one for 20 basis into new ordinary
shares of 0.1p each in the capital of the Company. The denominator has been calculated to reflect the share consolidation.
The Group has made a loss in the current
and previous years presented, and therefore the options and warrants are anti-dilutive. As a result, diluted earnings per share
is presented on the same basis for all periods shown.
|
5.
|
Property, plant and equipment
|
|
|
Fixtures
and fittings
£’000
|
|
|
Leasehold
improvements
£’000
|
|
|
Computer
equipment
£’000
|
|
|
Laboratory
equipment
£’000
|
|
|
Right of use
asset
£’000
|
|
|
Total
£’000
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2020
|
|
|
248
|
|
|
|
2,038
|
|
|
|
403
|
|
|
|
3,738
|
|
|
|
1,124
|
|
|
|
7,551
|
|
Additions
|
|
|
|
|
|
|
|
|
|
|
15
|
|
|
|
74
|
|
|
|
-
|
|
|
|
89
|
|
Effect of modification to lease
terms
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(686
|
)
|
|
|
(686
|
)
|
Disposal
|
|
|
-
|
|
|
|
(137
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
(137
|
)
|
Exchange differences
|
|
|
11
|
|
|
|
132
|
|
|
|
4
|
|
|
|
169
|
|
|
|
69
|
|
|
|
385
|
|
At 30 June 2020
|
|
|
259
|
|
|
|
2,033
|
|
|
|
422
|
|
|
|
3,981
|
|
|
|
507
|
|
|
|
7,202
|
|
Accumulated depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2020
|
|
|
235
|
|
|
|
1,794
|
|
|
|
332
|
|
|
|
2,740
|
|
|
|
296
|
|
|
|
5,397
|
|
Charge for the period
|
|
|
9
|
|
|
|
113
|
|
|
|
33
|
|
|
|
319
|
|
|
|
89
|
|
|
|
563
|
|
Exchange differences
|
|
|
10
|
|
|
|
126
|
|
|
|
4
|
|
|
|
129
|
|
|
|
19
|
|
|
|
288
|
|
At 30 June 2020
|
|
|
254
|
|
|
|
2,033
|
|
|
|
369
|
|
|
|
3,188
|
|
|
|
404
|
|
|
|
6,248
|
|
Net book value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 30 June 2020
|
|
|
5
|
|
|
|
-
|
|
|
|
53
|
|
|
|
793
|
|
|
|
103
|
|
|
|
954
|
|
At 1 January 2020
|
|
|
13
|
|
|
|
244
|
|
|
|
71
|
|
|
|
998
|
|
|
|
828
|
|
|
|
2,154
|
|
|
|
|
Fixtures
and fittings
£’000
|
|
|
|
Leasehold
improvements
£’000
|
|
|
|
Computer
equipment
£’000
|
|
|
|
Laboratory
equipment
£’000
|
|
|
|
Right of use
asset
£’000
|
|
|
|
Total
£’000
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2019
|
|
|
253
|
|
|
|
2,013
|
|
|
|
383
|
|
|
|
3,651
|
|
|
|
–
|
|
|
|
6,300
|
|
Adoption of IFRS 16 Leases
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
395
|
|
|
|
395
|
|
Additions
|
|
|
4
|
|
|
|
137
|
|
|
|
23
|
|
|
|
223
|
|
|
|
822
|
|
|
|
1,209
|
|
Effect of modification to lease
terms
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
(82
|
)
|
|
|
(82
|
)
|
Exchange differences
|
|
|
(9
|
)
|
|
|
(112
|
)
|
|
|
(3
|
)
|
|
|
(136
|
)
|
|
|
(11
|
)
|
|
|
(271
|
)
|
At 31 December 2019
|
|
|
248
|
|
|
|
2,038
|
|
|
|
403
|
|
|
|
3,738
|
|
|
|
1,124
|
|
|
|
7,551
|
|
Accumulated depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2019
|
|
|
241
|
|
|
|
1,485
|
|
|
|
265
|
|
|
|
2,326
|
|
|
|
–
|
|
|
|
4,317
|
|
Charge for the period
|
|
|
2
|
|
|
|
400
|
|
|
|
70
|
|
|
|
507
|
|
|
|
303
|
|
|
|
1,282
|
|
Exchange differences
|
|
|
(8
|
)
|
|
|
(91
|
)
|
|
|
(3
|
)
|
|
|
(93
|
)
|
|
|
(7
|
)
|
|
|
(202
|
)
|
At 31 December 2019
|
|
|
235
|
|
|
|
1,794
|
|
|
|
332
|
|
|
|
2,740
|
|
|
|
296
|
|
|
|
5,397
|
|
Net book value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2019
|
|
|
13
|
|
|
|
244
|
|
|
|
71
|
|
|
|
998
|
|
|
|
828
|
|
|
|
2,154
|
|
At 1 January 2019
|
|
|
12
|
|
|
|
528
|
|
|
|
118
|
|
|
|
1,325
|
|
|
|
–
|
|
|
|
1,983
|
|
|
|
In-process
research and
development
£’000
|
|
|
Goodwill
£’000
|
|
|
IT/Website
costs
£’000
|
|
|
Total
£’000
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2020
|
|
|
13,378
|
|
|
|
2,291
|
|
|
|
35
|
|
|
|
15,704
|
|
Exchange differences
|
|
|
-
|
|
|
|
-
|
|
|
|
2
|
|
|
|
2
|
|
At 30 June 2020
|
|
|
13,378
|
|
|
|
2,291
|
|
|
|
37
|
|
|
|
15,706
|
|
Accumulated depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2020
|
|
|
3,300
|
|
|
|
-
|
|
|
|
25
|
|
|
|
3,325
|
|
Amortisation charge for the
period
|
|
|
-
|
|
|
|
-
|
|
|
|
10
|
|
|
|
10
|
|
Impairment charge
|
|
|
9,300
|
|
|
|
2,291
|
|
|
|
|
|
|
|
11,591
|
|
Exchange differences
|
|
|
-
|
|
|
|
-
|
|
|
|
2
|
|
|
|
2
|
|
At 30 June 2020
|
|
|
12,600
|
|
|
|
2,291
|
|
|
|
37
|
|
|
|
14,928
|
|
Net book value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 30 June 2020
|
|
|
778
|
|
|
|
-
|
|
|
|
-
|
|
|
|
778
|
|
At 1 January 2020
|
|
|
10,078
|
|
|
|
2,291
|
|
|
|
10
|
|
|
|
12,379
|
|
|
|
|
In-process
research and
development
£’000
|
|
|
|
Goodwill
£’000
|
|
|
|
IT/Website
costs
£’000
|
|
|
|
Total
£’000
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2019
|
|
|
13,378
|
|
|
|
2,291
|
|
|
|
28
|
|
|
|
15,697
|
|
Additions
|
|
|
-
|
|
|
|
-
|
|
|
|
9
|
|
|
|
9
|
|
Exchange differences
|
|
|
-
|
|
|
|
-
|
|
|
|
(2
|
)
|
|
|
(2
|
)
|
At 31 December 2019
|
|
|
13,378
|
|
|
|
2,291
|
|
|
|
35
|
|
|
|
15,704
|
|
Accumulated depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2019
|
|
|
3,300
|
|
|
|
-
|
|
|
|
23
|
|
|
|
3,323
|
|
Amortisation charge for the
period
|
|
|
-
|
|
|
|
-
|
|
|
|
3
|
|
|
|
3
|
|
Exchange differences
|
|
|
-
|
|
|
|
-
|
|
|
|
(1
|
)
|
|
|
(1
|
)
|
At 31 December 2019
|
|
|
3,300
|
|
|
|
-
|
|
|
|
25
|
|
|
|
3,325
|
|
Net book value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2019
|
|
|
10,078
|
|
|
|
2,291
|
|
|
|
10
|
|
|
|
12,379
|
|
At 1 January 2019
|
|
|
10,078
|
|
|
|
2,291
|
|
|
|
5
|
|
|
|
12,374
|
|
The individual intangible assets, excluding goodwill, which
are material to the interim financial information are:
|
Carrying amount
|
Remaining amortisation
period
|
As at 30 June
2020
unaudited
£’000
|
|
As at 31
December
2019
£’000
|
|
As at 30 June
2020 unaudited
£’000
|
|
As at 31
December
2019
£’000
|
|
Midatech Pharma (Wales) Limited acquired IPRD
|
-
|
|
9,300
|
|
n/a in
process
|
|
n/a in
process
|
|
MTX110 acquired IPRD
|
778
|
|
778
|
|
n/a in
process
|
|
n/a in
process
|
|
|
778
|
|
10,078
|
|
|
|
|
|
|
As at 30
June 2020
unaudited
£’000
|
As at 31
December
2019
£’000
|
Current
|
|
|
Lease liabilities
|
208
|
233
|
Government and research loans
|
3,193
|
179
|
Total
|
3,401
|
412
|
Non-current
|
|
|
Lease liabilities
|
107
|
912
|
Government and research loans
|
-
|
4,758
|
Total
|
107
|
5,670
|
Book values approximate to fair value at 30 June 2020 and 31
December 2019.
Obligations under finance leases are secured by a fixed charge
over the fixed assets to which they relate.
Government loans in Spain
In September 2019, Midatech Pharma España
SL received €6.6m of funding awarded under the Spanish Government Reindustrialization programme, following which the Company
provided a €2.9 million cash-backed guarantee. The funds were to be used to support Midatech’s manufacturing scale-up
facilities construction. As a result of the Group’s decision on 31 March 2020 to terminate further in-house development of
MTD201 and the subsequent closure of its dedicated manufacturing facilities in Bilbao the Group are in the process of repaying
this loan to the Spanish Government. As at 30 June 2020 €3.6 million has been repaid, the balance is secured against the
cash-backed guarantee. The balance will be repaid during the remainder of 2020.
There are two other outstanding government
loans which have been received by Midatech Pharma España SL for the finance of research, technical innovation and the construction
of their laboratory. Requests have been made to the Spanish Government to repay the balances outstanding, these will be actioned
during the remainder of 2020.
|
8.
|
Derivative financial liability – current
|
|
|
As at 30
June 2020
unaudited
£’000
|
|
|
As at 31
December
2019
£’000
|
|
At 1 January
|
|
|
664
|
|
|
|
–
|
|
Warrants issued
|
|
|
997
|
|
|
|
1,148
|
|
Gain recognised in finance income within the consolidated statement
of comprehensive income
|
|
|
(507
|
)
|
|
|
(484
|
)
|
|
|
|
1,154
|
|
|
|
664
|
|
Equity settled derivative financial liability
is a liability that is not to be settled for cash.
In May 2020 the Group issued 9,545,456
warrants in the ordinary share capital of the company as part of a Registered Direct Offering. The number of ordinary shares to
be issued when exercised is fixed, however the exercise price is denominated in US Dollars being different to the functional currency
of the parent company. Therefore, the warrants are classified as equity settled derivative financial liabilities recognised at
fair value through the profit and loss account (‘FVTPL’). The financial liability is valued using the Monte Carlo model.
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 incorporates any interest paid on the financial liability and is included
in the ‘finance income’ or ‘finance expense’ lines item in the income statement.
In October 2019 the Group issued 3,150,000
warrants in the ordinary share capital of the company as part of a Registered Direct Offering. The number of ordinary shares to
be issued when exercised is fixed, however the exercise price is denominated in US Dollars being different to the functional currency
of the parent company. Therefore, the warrants are classified as equity settled derivative financial liabilities recognised at
fair value through the profit and loss account (‘FVTPL’). The financial liability is valued using the Monte Carlo model.
The Group also assumed fully vested warrants
and share options on the acquisition of DARA Biosciences, Inc. (which took place in 2015). The number of ordinary shares to be
issued when exercised is fixed, however the exercise prices are denominated in US Dollars. The warrants are classified equity settled
derivative financial liabilities and accounted for in the same way as those issued in October 2019. The financial liability is
valued using the Black-Scholes option pricing model.
At 30 June 2020 a further 22 options had
lapsed and the share price had fallen to £0.215. As the liability had already been reduced to zero there was no movement
on re-measurement.
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 derivative
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 June
2020
|
|
|
Fair value as
at 31
December
2019
|
|
|
Fair value
hierarchy
|
|
|
Valuation
technique(s)
and key input(s)
|
|
Significant unobservable
input(s)
|
|
Relationship of unobservable
inputs to fair value
|
Equity settled
financial derivative
liability – May 2020
Warrants
|
|
£878,000
|
|
|
n/a
|
|
|
|
Level 3
|
|
|
Monte Carlo simulation model
|
|
Volatility rate of 89.7% 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 5.39 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 0.22%determined using the expected life assumptions.
|
|
The higher the risk-free rate
the higher the fair value.
|
Equity settled
financial derivative
liability – October
2019 Warrants
|
|
£276,000
|
|
|
£664,000
|
|
|
|
Level 3
|
|
|
Monte Carlo simulation model
|
|
Volatility rate of 92.7% 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 5.00 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 0.21% determined using the expected life assumptions.
|
|
The higher the risk-free rate
the higher the fair value.
|
Equity settled
financial derivative
liability – DARA
Bioscience warrants
and options
|
|
–
|
|
|
–
|
|
|
|
Level 3
|
|
|
Black-Scholes option pricing model
|
|
Volatility rate of 88.2%% determined using historical volatility of comparable companies.
|
|
The higher the volatility the higher the fair value.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected life between a range of 1.0 and 1.9 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 0.21% determined using the expected life assumptions.
|
|
The higher the risk-free rate
the higher the fair value.
|
Changing the unobservable risk free rate input to the valuation
model by 10% higher while all other variables were held constant, would not impact the carrying amount of shares (2019: nil).
There were no transfers between Level 1 and 2 in the period.
The financial liability measured at fair value on Level 3 fair
value measurement represents consideration relating to warrants issued in May 2020 and October 2019 as part of Registered Direct
offerings and also a business combination.
9. Share capital
Authorised, allotted and
fully
paid – classified as equity
|
As at 30 June
2020
unaudited
Number
|
As at 30 June
2020
unaudited
£
|
As at 31
December
2019
Number
|
As at 31
December
2019
£
|
At 31 December
|
|
|
|
|
Ordinary shares of
£0.001 each
|
39,252,557
|
39,253
|
23,494,981
|
23,495
Deferred shares of £1 each
|
1,000,001
|
1,000,001
|
1,000,001
|
1,000,001
|
Total
|
|
1,039,254
|
|
1,023,496
|
On 2 March 2020 a resolution was passed
at a general meeting of shareholders of the Company to consolidate its ordinary shares on a one for 20 basis into new ordinary
shares of 0.1p each in the capital of the Company. The above table reflects the share consolidation in the comparative figures.
Ordinary and deferred shares were recorded
as equity.
2020
|
|
|
|
Ordinary
Shares
Number
|
|
|
Deferred
Shares
Number
|
|
|
Share
Price
£
|
|
|
Total
consideration
£’000
|
At 1 January 2020
|
|
|
|
|
|
23,494,981
|
|
|
|
1,000,001
|
|
|
|
|
|
|
85,638
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18 May 2020
|
|
UK Placing and
US Registered Direct Offering
|
|
|
|
15,757,576
|
|
|
|
-
|
|
|
|
0.27
|
|
|
4,255
|
At 30 June 2020 (unaudited)
|
|
|
|
|
|
39,252,557
|
|
|
|
1,000,001
|
|
|
|
|
|
|
89,893
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 January 2019
|
|
|
|
|
|
3,059,207
|
|
|
|
1,000,001
|
|
|
|
|
|
|
69,870
|
26 February 2019
|
|
Subscription, Placing and Open Offer
|
|
|
|
17,410,774
|
|
|
|
–
|
|
|
|
0.77
|
|
|
13,406
|
8 October 2019
|
|
Share issue to SIPP trustee
|
|
|
|
25,000
|
|
|
|
–
|
|
|
|
0.001
|
|
|
–
|
29 October 2019
|
|
US Registered Direct Offering
|
|
|
|
3,000,000
|
|
|
|
–
|
|
|
|
0.7874
|
|
|
2,362
|
At 31 December 2019
|
|
|
|
|
|
23,494,981
|
|
|
|
1,000,001
|
|
|
|
|
|
|
85,638
|
|
10.
|
Results of Midatech Pharma (España) SL
|
Included within the Group Consolidated
Statements of Comprehensive Income are the results of the Group’s Spanish operation that was closed on 3 June 2020. The Group
have appointed an Administrator to liquidate the company and anticipate that this will be achieved during the remainder of 2020.
The unaudited results of Midatech Pharma (España) SL for the 6 months to 30 June 2020 are as follows:
|
|
Six months
ended 30 June
2020
unaudited
£’000
|
|
Grant revenue
|
|
|
160
|
|
Total revenue
|
|
|
160
|
|
Research and development costs
|
|
|
(2,579
|
)
|
Administrative costs
|
|
|
(892
|
)
|
Loss from operations
|
|
|
(3,311
|
)
|
Finance expense
|
|
|
(11
|
)
|
Loss before tax
|
|
|
(3,322
|
)
|
Taxation
|
|
|
(13
|
)
|
Loss from operations after tax
|
|
|
(3,335
|
)
|
|
11.
|
Related party transaction
|
Transactions with BioConnection BV
The Directors consider BioConnection BV
(‘BioConnection’) to be a related party because there is a common Director with the Company. The relationship with
BioConnection commenced in 2019.
During the period to 30 June 2020, BioConnection
invoiced the Company €295,638 (2018: Nil). As at 30 June 2020 Nil (30 June 2018: Nil) was due to BioConnection.
|
12.
|
Contingent liabilities
|
As at 31 December 2019 the Group was party
to a claim by the estate of a former employee for unfair dismissal. The claim comprised various elements totalling €258,000.
During the period the case was settled by the Group for €190,000. This has been recognised in the period in Administrative
costs in the Consolidated Statement of Comprehensive Income.
The Group had no contingent labilities as at 30 June 2020.
|
13.
|
Events after the reporting date
|
On 27 July 2020, the Company announced
that it had raised £5.75 million (before expenses) by way of a placing, including a broker option, with investors in the
UK of 21,296,295 new ordinary shares of 0.1p each at an issue price of £0.27 per share.
On 19 August 2020, the Company announced
the exercise of pre-existing warrants over 500,000 ADSs representing 2,500,000 ordinary shares at an exercise price of $2.05 per
ADS. The gross proceeds received by the Company from the exercise of the warrants was $1,025,000.
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