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:
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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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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 |
By: |
/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)
|
· |
In March, an exploratory study was initiated with MTX110 by
Columbia University in five patients with DIPG using an alternative
convection enhanced delivery system. |
|
· |
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. |
|
· |
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. |
|
· |
In April, an exploratory study was initiated with MTX110 by the
University of Texas, Houston in five patients with recurrent
medulloblastoma. |
|
· |
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. |
|
· |
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. |
FINANCIAL HIGHLIGHTS (including post period end)
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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. |
|
· |
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. |
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
For more information, please contact:
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Midatech Pharma PLC
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| Stephen Stamp, CEO, CFO |
| Tel: +44 (0)29 20480 180 |
| www.midatechpharma.com |
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| Panmure Gordon (UK) Limited (Nominated
Adviser and Joint Broker) |
| Freddy Crossley, Emma Earl (Corporate
Finance) |
| Rupert Dearden (Corporate Broking) |
| Tel: +44 (0)20 7886 2500 |
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| Turner Pope Investments (TPI) Limited
(Joint Broker) |
|
Andrew Thacker (Corporate Broking)
Tel: +44 (0)20 3657 0050
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| IFC Advisory Limited (Financial PR and UK
Investor Relations) |
| Tim Metcalfe / Graham Herring |
| Tel: +44 (0)20 3934 6630 |
| Email: midatech@investor-focus.co.uk |
| |
|
Edison Group (US Investor Relations)
Megan Paul
Tel: +1 (646) 653 7034
Email: mpaul@edisongroup.com
|
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. |
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 |
API |
Therapeutic Area |
Administration |
Formulation |
Pre-
clinical |
Phase
I |
Phase
II |
Partnering
Status
|
|
Q-Sphera |
|
MTD211 |
Small
molecule
|
CNS |
Long acting
Injectable
|
X |
|
|
|
|
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MTD214 |
Small
molecule
|
Anti-rejection |
Long acting
Injectable
|
X |
|
|
|
|
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MTD215 |
Monoclonal
Antibody
|
Undisclosed |
Long acting
Injectable
|
Investigational |
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External:
MTX212
|
Undisclosed |
Undisclosed |
Long acting
Injectable
|
X |
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Partnered |
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External:
MTX213
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Undisclosed
|
Undisclosed
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Undisclosed
|
X |
|
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Partnered
|
|
MTX214 |
Undisclosed |
Undisclosed |
Undisclosed |
X |
|
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MTD201 |
Octreotide |
Carcinoid cancer and
acromegaly
|
Long acting injectable |
In-house development terminated |
|
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MidaSolve |
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MTX110 |
Panobinostat |
Brain cancer in
children (DIPG)
|
Direct to tumour
via CED
|
X |
X |
X |
|
|
|
MTX110 |
Panobinostat |
Medulloblastoma |
Direct to tumour |
X |
X |
|
|
|
|
MTX110 |
Panobinostat |
Glioblastoma |
Direct to tumour
via CED
|
X |
|
|
|
|
|
MidaCore |
|
MTX114 |
Methotrexate |
Psoriasis Immuno-rx |
Topical |
X |
X |
|
|
|
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:
|
|
H1 2020 |
H1 2019 |
| |
|
|
| Total revenue(1) |
£0.17m |
£0.45m |
| R&D costs |
£3.99m |
£3.46m |
| R&D as % of operating costs |
58% |
61% |
| Impairment of intangible assets |
£11.59m |
- |
| Loss from operations |
£18.35m |
£5.24m |
| Net cash (outflow)/inflow for the
period |
£(6.79)m |
£6.70m |
| |
|
|
| Total revenue represents income from R&D
collaborations plus grant revenue |
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
23,495
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
|
| 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.
