Renalytix plc (NASDAQ: RNLX) (LSE: RENX), an artificial
intelligence-enabled in vitro diagnostics company, focused on
optimizing clinical management of kidney disease to drive improved
patient outcomes and advance value-based care, reports its
financial results for the fiscal year ended June 30, 2023.
Recent Highlights (including post period
events)
Regulatory &
Reimbursement
- Achieved FDA De Novo marketing
authorization for KidneyIntelX.dkd to assess risk of progressive
kidney function decline in adults with diabetes and early-stage
kidney disease.
- Secured additional key insurance
coverage contracts for KidneyIntelX including:
- EmblemHealth, covering over three
million lives in New York Tri-state region
- CareFirst BlueCross BlueShield, the
largest health care plan in the U.S. Mid-Atlantic
region
- Texas Blue Cross Blue Shield and
Parkland Community Health Plan covering over seven million
lives
- Since announcement of FDA
authorization in June 2023, engagement with various parties
regarding benefits of KidneyIntelX technology has expanded
- Inclusion of KidneyIntelX in draft
Kidney Disease Improving Global Outcomes (KDIGO) 2023 Clinical
Practice Guideline for Evaluation and Management of Chronic Kidney
Disease (KDIGO 2023 Guideline)
- Continuing to maintain contracted
pricing at or over the Medicare Clinical Laboratory Fee Schedule
(CLFS) of $950 per reportable test result
- Medicare payments for KidneyIntelX
received
- Claims submitted through the
individual claims review (ICR) process paid effective July 1,
2022
- Local Coverage Determination (LCD)
evaluation underway with two Medicare Administrative Contractors
supported by new published real-world utility evidence
- Executed over 40 commercial payor
contracts and enrolled as a provider in 35 state Medicaid programs
to date
- Milestone achievement converting
payment to full, long-term commercial insurance billing model at
Mount Sinai Health System
- Insurance payment now available for
over 90% of KidneyIntelX eligible Mount Sinai patients
- Reduction in Mount Sinai test
volumes during commercial insurance billing transition in the
second half of fiscal 2023; order mechanisms now restored and
commercial testing has resumed
Commercial &
Partnerships
- Appointed senior diagnostics
executive Howard Doran to lead global commercial sales beginning
with direct to physician salesforce in New York, Illinois, North
Carolina, Florida and Texas
- Full Epic electronic health record
system integration with Atrium / Wake Forest proceeding with launch
expected before end of calendar 2023
- Selected EVERSANA® to supplement
identification and training of sales personnel in select U.S.
regions
- Accelerates deployment of
KidneyIntelX across key U.S. regions with high rates of diabetic
kidney disease and established insurance coverage
- Agreement with Veterans Affairs
(VA) to integrate KidneyIntelX testing with Veterans Health
Administration electronic health record system
- Core participant in consortium
granted $10 million by Horizon Europe Grant to advance personalized
medicine in treating chronic kidney disease
- Increasing diversity of
commercially billable testing volume, particularly among primary
care physician practices ordering through the MyIntelX portal
Clinical & Validation
- Studies regarding KidneyIntelX
clinical utility and health economics presented in multiple
scientific venues:
- American Society of Nephrology
Kidney Week 2022
- National Kidney Foundation Spring
Clinical Meeting 2023
- American Diabetes Association 83rd
Scientific Session in June 2023
- American Association of Nurse
Practitioners Annual Meeting in June 2023
- Key takeaways:
- A model that estimated the
incremental cost-effectiveness of KidneyIntelX compared to risk
stratification using eGFR and UACR, with a lifetime horizon from
both a public and private payer perspective, predicted that the
average Medicare and commercial patient would experience fewer
dialysis starts and kidney transplants while experiencing an
increased life span and quality-adjusted life span by using
KidneyIntelX compared to the standard of care.
- Deployment and risk stratification
by KidneyIntelX was associated with escalation in clinical actions
taken to optimize cardio-metabolic-kidney health including
medications and referrals.
- KidneyIntelX classified more Black
vs. non-Black patients as high risk for progression of diabetic
kidney disease, and this was associated with increased prescription
of SGLT2-inhibitor drug therapy post-testing, contributing to
elimination of racial disparity in SGLT2i usage.
- Data includes studies from Wake
Forest real world cohort, Mount Sinai real world cohort, Mount
Sinai BioMe Biobank, UPenn Medicine Biobank, the CANVAS clinical
trial cohort, and the Veterans Affairs Database
- Publications:
- Real-world evidence in Journal of
Primary Care and Community Health in which KidneyIntelX resulted in
a 4.5-fold increase in new drug prescriptions (for SGLT2
inhibitors) for high-risk compared to low-risk patients; early
evidence suggested that the introduction of SGLT2i contributed to
an observed reduction in HbA1c levels most notably in high-risk
patients, and a more than a 20% change in dose or type of
antihypertensive therapeutic prescriptions in high vs. low-risk
patients
- Patient case studies in the journal
Diabetic Nephropathy demonstrated how KidneyIntelX can optimize
clinical management in early-stage kidney disease across multiple
physician specialties
- New validation data for
KidneyIntelX.dkd, the FDA approved version of KidneyIntelX, in the
journal Diabetes, Obesity, and Metabolism. Using data from two
independent cohorts and a clinical trial population, it was
demonstrated that the updated KidneyIntelX test significantly
enhanced risk stratification for progressive decline in kidney
function, independent from known risk factors for progression.
Finance & Operations
- Completed $20.3 million equity
financing led by new institutional investors in February 2023
- Reduced annual operating expenses
by over $11 million versus the prior year with additional cost
reduction initiatives underway to extend cash runway while
preserving revenue generating activity
- Over 5,000 KidneyIntelX tests
performed in fiscal year 2023, up 55% from the prior year
- Expanded board of directors with
addition of financial executive Catherine Coste
Investors are advised to read the results for
the 12 months ended 30 June 2023, which have been filed with the
U.S. Securities and Exchange Commission on Form 10-K concurrently
with this results announcement.
Analyst Conference CallThe
Company will host a corresponding conference call and live webcast
today to discuss the financial results and key topics including
business strategy, partnerships and regulatory and reimbursement
processes, at 8:30 a.m. (EDT) / 1:30 p.m. (BST).
Conference Call Details:
To participate in the live conference call via telephone, please
register here. Upon registering, a dial-in number and unique PIN
will be provided in order for interested parties to join the
conference call.
Webcast Registration link:
https://edge.media-server.com/mmc/p/bmrco2si
For further information, please contact:
|
Renalytix plc |
www.renalytix.com |
|
James McCullough, CEO |
Via Walbrook PR |
|
|
|
|
Stifel (Nominated Adviser, Joint Broker) |
Tel: 020 7710 7600 |
|
Alex Price / Nicholas Moore / Nick Harland / Samira Essebiyea |
|
|
|
|
|
Investec Bank plc (Joint Broker) |
Tel: 020 7597 4000 |
|
Gary Clarence / Shalin Bhamra |
|
|
|
|
|
Walbrook PR Limited |
Tel: 020 7933 8780 or
renalytix@walbrookpr.com |
|
Paul McManus / Lianne Applegarth/ Alice Woodings |
Mob: 07980 541 893 / 07584 391 303/ 07407 804 654 |
|
|
|
|
CapComm Partners |
|
| Peter DeNardo |
Tel: 415-389-6400 or investors@renalytix.com |
About RenalytixRenalytix (LSE:
RENX) (NASDAQ: RNLX) is the global founder and leader in the new
field of bioprognosis™ for kidney health. The company has
engineered a new solution that enables early-stage chronic kidney
disease progression risk assessment. The Company’s lead product,
KidneyIntelX™, has been granted Breakthrough Designation by the
U.S. Food and Drug Administration and is designed to help make
significant improvements in kidney disease prognosis, transplant
management, clinical care, patient stratification for drug clinical
trials, and drug target discovery (visit www.kidneyintelx.com). For
more information, visit www.renalytix.com.
Forward-Looking
StatementsStatements contained in this press release
regarding matters that are not historical facts are
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995, as amended. Examples of
these forward-looking statements include statements concerning: the
commercial prospects of KidneyIntelX, including whether
KidneyIntelX will be successfully adopted by physicians and
distributed and marketed, the rate of testing with KidneyIntelX in
health care systems, expectations and timing of announcement of
real-world testing evidence, the potential for KidneyIntelX to be
approved for additional indications, our expectations regarding the
timing and outcome of regulatory and reimbursement decisions, the
ability of KidneyIntelX to curtail costs of chronic and end-stage
kidney disease, optimize care delivery and improve patient
outcomes, and our expectations and guidance related to
partnerships, testing volumes and revenue for future periods. Words
such as “anticipates,” “believes,” “estimates,” “expects,”
“intends,” “plans,” “seeks,” and similar expressions are intended
to identify forward-looking statements. We may not actually achieve
the plans and objectives disclosed in the forward-looking
statements, and you should not place undue reliance on our
forward-looking statements. Any forward-looking statements are
based on management’s current views and assumptions and involve
risks and uncertainties that could cause actual results,
performance or events to differ materially from those expressed or
implied in such statements. These risks and uncertainties include,
among others: that KidneyIntelX is based on novel artificial
intelligence technologies that are rapidly evolving and potential
acceptance, utility and clinical practice remains uncertain; we
have only recently commercially launched KidneyIntelX; and risks
relating to the impact on our business of the COVID-19 pandemic or
similar public health crises. These and other risks are described
more fully in our filings with the Securities and Exchange
Commission (SEC), including our most recent Annual Report on Form
10-K, and other filings we make with the SEC from time to time. All
information in this press release is as of the date of the release,
and we undertake no obligation to publicly update any
forward-looking statement, whether as a result of new information,
future events, or otherwise, except as required by law.
Chairman & CEO’s Joint
Statement
This has been a highly productive year for
Renalytix. We have crossed major thresholds in reimbursement,
outcomes and utility data and received FDA De Novo marketing
authorization for KidneyIntelX.dkd. Our progress was furthered
amplified by inclusion of KidneyIntelX in the draft of the leading
kidney clinical guidelines, KDIGO, for 2023. It is rare to see all
of these milestones pass in a short period of time and we believe
they are significant for broader adoption and clinical acceptance
of KidneyIntelX testing for risk assessment of patients with type 2
diabetes and early-stage kidney disease in the United States and
abroad.
Kidney disease remains one of the costliest and
most widespread unmet medical needs of our time. In the United
States alone, there are approximately 14 million adults with
diabetic kidney disease, which is the intended use population
authorized by FDA for KidneyIntelX.dkd. Our goal is to make the
benefits of early prognosis from KidneyIntelX technology accessible
to as many of these individuals as possible at an early stage when
the benefits of treatment strategies and new drug therapies have
the greatest chance of success, before the disease irreversibly
damages the kidneys.
Importantly, post FDA authorization, we have
reviewed our operating cost basis with a view to meaningfully
reduce our quarterly cash burn rate. This reduction in cash burn
should become apparent in the remainder of our 2024 fiscal year and
is being undertaken without compromising our sales and marketing
efforts focused on growing testing volume and revenue. These
reductions are on top of our recent year over year operating
expense reduction of $11 million. Post FDA authorization, we will
also evaluate potential international licensing opportunities and
strategic partnerships, both of which could provide sources of
non-dilutive capital and expanded revenue opportunities for
Renalytix.
KidneyIntelX.dkd is now the only prognostic in
vitro diagnostic test for assessment of chronic kidney disease
progression with FDA authorization, with claims reimbursed by a
broad array of insurance companies including Blue Cross Blue Shield
groups, Medicare, and Medicaid, and real-world evidence
demonstrating improved outcomes in both diabetes and kidney health
in the short-term.
Repeated publication of both outcomes and
utility data underpin successful diagnostic launches and the
establishment of new standards of care. At Renalytix, we have
invested heavily in and emphasized real-world evidence since we
began full operations in late 2018. We were excited to present
KidneyIntelX outcomes data that has exceeded our expectations by
showing that use of KidneyIntelX was associated with clinical
actions that in less than 12 months led to observed changes in the
core measure for diabetes health, as measured by A1C reductions,
and kidney health, as measured by eGFR slope improvement. We expect
more data from our real-world evidence studies over coming
months.
Raising funds to fuel these clear commercial
opportunities is essential, particularly now that we have reduced
risks associated with a successful service product launch and
adoption. Toward that end, to maximize our flexibility to fund the
business growth, we plan to file an S-3 shelf registration
statement to give us the ability to source capital at the right
time. We will continue to explore less dilutive and non-dilutive
capital funding sources, particularly now that we have a unique
product proposition post-FDA authorization.
On behalf of everyone at Renalytix, we would
like to thank you for your continued support.
About RenalytixAt Renalytix, we
are introducing more accurate prognosis and effective care
management for the estimated 850 million people worldwide with
chronic kidney disease. In the United States alone, chronic kidney
disease affects about 37 million people and is responsible for one
of the largest cost drivers in the national medical system. Early
identification, prognosis and treatment beginning with primary care
is essential if we are to stem the growing social cost and
suffering associated with kidney disease.
With our lead product, KidneyIntelX, the goal is
to drive the focus from kidney disease treatment to kidney health
management through a more accurate understanding of a patient’s
risk for kidney failure before it happens. KidneyIntelX leads
development in the new field of bioprognosis, a biology driven
approach to risk assessment that integrates information from a
simple blood draw and a patient’s health record to produce an
accurate picture of kidney health. A doctor can use KidneyIntelX
results to act on patients at high risk of kidney disease
progression or failure at an early stage where active management
and therapeutics have the best opportunity to impact outcomes and
cost before it is too late.
KidneyIntelX™Our novel
platform, KidneyIntelX, uses a machine-learning enabled algorithm
to process predictive blood biomarkers with key features from a
patient’s health record to generate an early and accurate kidney
health risk score. The score identifies those patients at the most
risk for kidney disease progression and/or failure and further
guides ongoing clinical decisions.
KidneyIntelX is initially indicated for use with
adults who have diagnosed kidney disease and type 2 diabetes –
diabetic kidney disease or DKD. Future KidneyIntelX products in
development intend to expand the indicated uses to include broader
chronic kidney disease, health equity strategies and kidney health
monitoring through treatment. Diabetes is the leading cause of
chronic kidney disease, representing nearly 40% of its cases, and
DKD patients are the highest contributors to emergency room
dialysis starts. Unfortunately, many DKD patients are unaware that
their kidney disease has been progressing, often uncontrolled, for
many years and now find themselves making difficult decisions about
late-stage treatments.
KidneyIntelX was designed as an expandable
platform able to add indicated uses and a monitoring capability,
all within CLIA and FDA regulated insurance reimbursable
framework.
Intellectual PropertyThe U.S.
Patent and Trademark Office allowed claims extending the use of one
of KidneyIntelX’s primary blood biomarkers, sTNFR1, to all patients
with diabetes to determine an increased risk of developing
progressive kidney disease or kidney failure. We have also
completed rights to additional patent applications for use with
KidneyIntelX. We continue to build out our intellectual property
portfolio and are actively evaluating in-licensing opportunities
that will enhance our competitive product positioning.
Current Trading & OutlookWe
believe FDA authorization, positive utility and outcomes data, our
physician and patient education programs, and comprehensive
reimbursement puts us on a path towards KidneyIntelX.dkd becoming
broadly used across the United States among the 14 million
Americans with diabetic kidney disease, and ultimately within the
global market of 850 million people with chronic kidney
disease. We are proud of the rapid pace of these achievements
just five years from our company’s inception.
Our real-world evidence data is comprehensive
and shows clear benefit. With FDA De Novo marketing
authorization in June, KidneyIntelX.dkd will become available
commercially later in this fiscal year and we expect to see growth
in adoption. The social need could not be higher to establish the
innovative preventative medicine strategies that KidneyIntelX
technology enables at the front-end of diabetes and kidney
disease.
During fiscal 2023 over 5,000 KidneyIntelX tests
were performed, which was up 55% from the prior year. We expect a
meaningful increase in total tests during the remainder of fiscal
2024, building on quarterly test volumes of about 1,200 during
fiscal 2023 and through first quarter of 2024. More than half
of these during the first quarter of 2024 thus far are revenue
generating, with a set of the Mount Sinai clinical trial tests no
longer billable following last spring’s transition to full
commercial payment at the hospital system. We are encouraged
by the continued adoption by physicians beyond Mount Sinai, and
expect that with the launch of the FDA-authorized KidneyIntelX.dkd
later this fiscal year, in conjunction our direct to physician
sales force coming on-line, and with new hospital partners such as
Atrium / Wake Forest commencing commercial testing before year-end
as well, we will see accelerating billable volume growth.
Financial Review
The results presented cover FY23. The
presentational currency for Renalytix plc and its subsidiaries
(together, the “Group”) is the United States Dollar.
INCOME STATEMENTRevenueThe
Group recognized a total of $3.4 million in revenue in the
financial year ended 30 June 2023 (“FY23”) which was comprised of
$3.1 million in revenue related to testing services as well as $0.3
million related to pharmaceutical services revenue.
Cost of SalesThe cost of sales associated with
the services performed and commercial testing revenue was $2.7
million for FY23.
Administrative CostsDuring FY23, administrative
expenses totaled $43.1 million (financial year ended 30 June 2022
(“FY22”): $58.3 million). The major items of expenditure were
general and administrative costs of which included $21.0 million in
employee- related costs (FY22: $27.6 million), $5.9 million in
subcontractors, legal, accounting, and other professional fees
(FY22: $12.9 million), $8.0 million in external R&D Services,
lab supplies and lab services(FY22: $6.4 million), $2.7 million in
insurance (FY22: $4.6 million), $2.1 million in depreciation and
amortisation (FY22: $2.1 million), $1.3 million in marketing and
public relations (FY22: $1.9 million), $1.3 in IT related costs
(FY22: $1.7million), $0.4 million in office related expenses
including rent(FY22: $0.5 million), $0.1 million in stock exchange
listing and filing fees (FY22: $0.3 million) and $0.3 million in
other expenses (FY22: $0.3 million).
Gain (loss) on financial assets at fair value
through profit or lossThe Company accounts for the investment in
VericiDx equity securities at fair value, with changes in fair
value recognized in the income statement. During the year ended 30
June 2023, we recorded a loss of $1.3 million to adjust the
VericiDx investment to fair value. During the year ended 30 June
2022, we recorded a loss of $5.9 million to adjust the VericiDx
investment to fair value.
Fair value adjustment of convertible debtWe
elected to account for the convertible notes at fair value with
qualifying changes in fair value recognized through the income
statement until the notes are settled. This excludes fair value
adjustments related to instrument-specific credit risk, which are
recognized in OCI. For the year ended 30 June 2023, we recorded a
loss of $3.1 million to adjust the convertible notes to fair value.
For the year ended 30 June 2022, we recorded a gain of $4.0 million
to adjust the convertible notes to fair value.
Finance Income (Expense)During the year ended 30
June 2023, we recognized a gain of $0.5 million, which was
comprised of $0.2 million of income related to the dissolution of
Kantaro, $0.3 million of income for refunds from Citibank, $0.1
million interest income earned on our cash deposits, and offset by
$0.1 million of foreign exchange losses. During the year ended 30
June 2022, we recognized a foreign currency gain of $9.6 million
due to exchange rate fluctuations on transactions denominated in a
currency other than our functional currency.
BALANCE SHEETInventoryInventory
consists of consumable materials used by the labs to carry out
KidneyIntelX tests. Inventory on hand at 30 June 2023 totaled $0.7
million (FY22: $1.2 million). During FY22, inventory levels
increased due to purchases as the company prepares for increased
KidneyIntelX testing volumes.
Fixed AssetsProperty, plant, and equipment
consists of laboratory equipment being used to support testing and
product development activities. At 30 June 2023, the company held
$1.0 million in net property, plant, and equipment (FY22: $1.4
million).
Intangible AssetsThe Group held $12.5 million
net book value of intangible assets held at 30 June 2023 (FY22:
$14.0 million) includes payments made primarily to Mount Sinai for
license and patent costs for the intellectual property underlying
KidneyIntelX, as well as amounts capitalized as development costs.
Intangible assets also include the value of the biomarker business
purchased (in exchange for ordinary shares in the Company) from
EKF. Intangible assets decreased period over period due to
amortisation and the impact of foreign exchange translation at
period end.
Investment in VericiAt the end of FY23 the group
held 9,831,681 shares in Verici Dx, the fair value of the
investment in Verici Dx was $1.5 million at 30 June 2023 (FY22:
$2.7 million)
Convertible NoteIn April 2022, the Company
issued amortising senior convertible bonds with a principal amount
of $21.2 million in amortising senior convertible bonds due in
April 2027 (the "Bonds"). The Bonds were issued at 85% par value
with total net proceeds of $18.0 million. The Company elected to
account for the Bonds at fair value. At 30 June 2023, the Bonds had
a fair value of $11.9 million. At 30 June 2022, the Bonds had a
fair value of $12.3 million.
CashThe Group had cash on hand of $24.7 million
(FY22: $41.3 million). Cash and equivalents are held in several
deposit accounts in the US ($14.9 million), UK ($8.6 million) and
IRE ($1.2 million). Our expenditure plans remain sufficiently
adaptable to align with available resources.
Consolidated Income StatementFOR THE
YEAR ENDED 30 JUNE 2023
| |
|
Year to 30 June 2023 |
|
|
Year to 30 June 2022 |
|
| |
|
$'000 |
|
|
$'000 |
|
| Continuing
Operations |
|
|
|
|
|
|
|
Revenue |
|
|
3,403 |
|
|
|
2,970 |
|
| Cost of Sales |
|
|
(2,702 |
) |
|
|
(2,052 |
) |
| Gross
profit |
|
|
701 |
|
|
|
918 |
|
| Administrative expenses |
|
|
(43,056 |
) |
|
|
(58,290 |
) |
| Operating
loss |
|
|
(42,355 |
) |
|
|
(57,372 |
) |
| Share of Net loss in Associate
accounted for using the equity method |
|
|
(9 |
) |
|
|
9 |
|
| Gain (loss) on financial assets
at fair value through profit or loss |
|
|
(1,273 |
) |
|
|
(5,900 |
) |
| Fair value adjustment of
convertible debt |
|
|
(3,093 |
) |
|
|
3,998 |
|
| Finance (costs) income - net |
|
|
509 |
|
|
|
9,637 |
|
| Loss before
tax |
|
|
(46,221 |
) |
|
|
(49,628 |
) |
| Taxation |
|
|
(2 |
) |
|
|
(7,104 |
) |
| Loss for the
Period |
|
|
(46,223 |
) |
|
|
(56,732 |
) |
| Earnings per Ordinary
share from continuing operations |
|
|
|
|
|
|
| Basic |
|
$ |
(0.56 |
) |
|
$ |
(0.78 |
) |
| Diluted |
|
$ |
(0.56 |
) |
|
$ |
(0.82 |
) |
Consolidated Statement of Comprehensive
IncomeFOR THE YEAR ENDED 30 JUNE 2023
|
|
|
Year to 30 June 2023 |
|
|
Year to 30 June 2022 |
|
| |
|
$'000 |
|
|
$'000 |
|
| Loss for the period – continuing
operations |
|
(46,223 |
) |
|
(56,732 |
) |
| Other comprehensive
income: |
|
|
|
|
|
|
| Items that may be
subsequently reclassified to profit or loss |
|
|
|
|
|
|
| Changes in the fair value of the
convertible notes |
|
719 |
|
|
536 |
|
| Currency translation
differences |
|
(337 |
) |
|
(11,742 |
) |
| Other comprehensive
(loss)/income for the period |
|
382 |
|
|
(11,206 |
) |
| Total comprehensive loss
for the period |
|
(45,841 |
) |
|
(67,938 |
) |
Items stated above are disclosed net of tax. The income tax
relating to each component of other comprehensive income is
disclosed in the note.
Consolidated and Company’s Statements of Financial
PositionAS AT 30 JUNE 2023
|
|
|
Group As at 30 June 2023 |
|
|
Group As at 30 June 2022 |
|
| |
|
$'000 |
|
|
$'000 |
|
| Assets |
|
|
|
|
|
|
| Non-current
assets: |
|
|
|
|
|
|
| Property, plant and
equipment |
|
1,027 |
|
|
1,368 |
|
| Right of use asset |
|
194 |
|
|
355 |
|
| Intangible assets |
|
12,511 |
|
|
14,020 |
|
| Investment in subsidiaries |
|
|
|
|
- |
|
| Investments accounted for using
the equity method |
|
- |
|
|
9 |
|
| Note receivable |
|
- |
|
|
75 |
|
| Deferred tax assets |
|
- |
|
|
- |
|
| Other long term assets |
|
51 |
|
|
- |
|
| Total non-current
assets |
|
13,783 |
|
|
15,827 |
|
|
|
|
|
|
|
|
|
| Current
Assets |
|
|
|
|
|
|
| Inventory |
|
718 |
|
|
1,160 |
|
| Security Deposits |
|
132 |
|
|
141 |
|
| Financial asset at fair value
through profit or loss |
|
1,460 |
|
|
2,744 |
|
| Trade and other receivables |
|
776 |
|
|
901 |
|
| Due from affiliated company |
|
|
|
|
|
|
| Prepaid and other current
assets |
|
566 |
|
|
1,152 |
|
| Cash and cash equivalents |
|
24,682 |
|
|
41,333 |
|
| Total current
assets |
|
28,334 |
|
|
47,431 |
|
| Total
assets |
|
42,117 |
|
|
63,258 |
|
| |
|
|
|
|
|
|
| Equity attributable to
owners of the parent |
|
|
|
|
|
|
| Share capital |
|
299 |
|
|
241 |
|
| Share premium |
|
104,953 |
|
|
85,444 |
|
| Share-based payment reserve |
|
13,513 |
|
|
11,954 |
|
| Accumulated other comprehensive
income |
|
(1,127 |
) |
|
(1,509 |
) |
| Retained earnings/(deficit) |
|
(99,184 |
) |
|
(52,961 |
) |
| Total
equity |
|
18,454 |
|
|
43,169 |
|
| |
|
|
|
|
|
|
| Liabilities |
|
|
|
|
|
|
| Current
liabilities: |
|
|
|
|
|
|
|
Trade and other payables |
|
11,514 |
|
|
7,281 |
|
|
Deferred revenue |
|
- |
|
|
46 |
|
|
Current lease liabilities |
|
156 |
|
|
163 |
|
|
Note payable current |
|
4,463 |
|
|
4,660 |
|
|
Current due to affiliated company |
|
- |
|
|
55 |
|
| Total current
liabilities |
|
16,133 |
|
|
12,205 |
|
| |
|
|
|
|
|
|
| Non-current
liabilities |
|
|
|
|
|
|
| Note payable non-current |
|
7,485 |
|
|
7,682 |
|
| Non-current lease
liabilities |
|
46 |
|
|
202 |
|
| Total non-current
liabilities |
|
7,531 |
|
|
7,884 |
|
| Total
liabilities |
|
23,664 |
|
|
20,089 |
|
| Total equity and
liabilities |
|
42,117 |
|
|
63,258 |
|
The Company has elected to take the exemption under section 408
of the Companies Act 2006 not to present the Parent Company income
statement. The loss for the Parent Company for the year was
($15,154,820). (Year ended 30 June 2021: loss of $7,718,000).
Consolidated and Company’s Statements of Cash
FlowsFOR THE YEAR ENDED 30 JUNE 2023
|
|
|
Group As at 30 June 2023 |
|
|
Group As at 30 June 2022 |
|
| |
|
$'000 |
|
|
$'000 |
|
| Cash flows from
operating activities: |
|
|
|
|
|
|
| Loss before income tax |
|
(46,221 |
) |
|
(49,628 |
) |
| Adjustments for |
|
|
|
|
|
|
|
Depreciation |
|
341 |
|
|
304 |
|
|
Amortisation and impairment charges |
|
2,151 |
|
|
2,309 |
|
|
Share-based payments |
|
1,560 |
|
|
7,010 |
|
|
Share of net (profit)/loss of associate |
|
9 |
|
|
(9 |
) |
|
Reversal of Kantaro Liability |
|
(55 |
) |
|
(295 |
) |
|
Unrealized loss (Gain) on financial asset at fair value through
profit or loss |
|
1,273 |
|
|
5,900 |
|
|
Realized foreign exchange loss (gain) |
|
(1,008 |
) |
|
|
|
|
Fair value adjustment of convertible debt |
|
3,093 |
|
|
(3,998 |
) |
|
Foreign Exchange Loss (Gain) |
|
- |
|
|
(7,354 |
) |
| Changes in working
capital |
|
|
|
|
|
|
|
Trade and other receivables |
|
125 |
|
|
(307 |
) |
|
Prepaid assets and other current assets |
|
1,298 |
|
|
(698 |
) |
|
Related party receivable |
|
75 |
|
|
- |
|
|
Inventory |
|
442 |
|
|
(807 |
) |
|
Security Deposits |
|
141 |
|
|
- |
|
|
Trade and other payables |
|
4,149 |
|
|
1,904 |
|
|
Deferred Revenue |
|
(46 |
) |
|
(76 |
) |
| Net cash used in
operating activities |
|
(32,674 |
) |
|
(45,745 |
) |
| |
|
|
|
|
|
|
| Cash flows from
investing activities: |
|
|
|
|
|
|
| Purchases of property and
equipment (PPE) |
|
- |
|
|
(591 |
) |
| Purchase of intangibles |
|
- |
|
|
(103 |
) |
| Investment in Renalytix
Inc |
|
- |
|
|
- |
|
| Net cash generated
by/(used in) investing activities |
|
- |
|
|
(694 |
) |
| |
|
|
|
|
|
|
| Cash flows from
financing activities |
|
|
|
|
|
|
| Proceeds from convertible
notes |
|
- |
|
|
18,020 |
|
| Repayment of convertible
notes |
|
(4,288 |
) |
|
- |
|
| Payment of debt issuance
costs |
|
- |
|
|
(1,382 |
) |
| Payments of issuance costs for
the Securities Purchase Agreement |
|
- |
|
|
(218 |
) |
| Issue of shares (net of issue
costs) |
|
19,305 |
|
|
8,804 |
|
| Proceeds from the issuance of
ordinary shares under employee share purchase plan |
|
261 |
|
|
211 |
|
| Proceeds from exercise of
stock options |
|
- |
|
|
198 |
|
| Lease payments |
|
(160 |
) |
|
(118 |
) |
| Net cash generated
from financing activities |
|
15,118 |
|
|
25,516 |
|
| Net
increase/(decrease) in cash and cash equivalents |
|
(17,556 |
) |
|
(20,924 |
) |
| Cash and cash equivalents at
beginning of period |
|
41,333 |
|
|
65,159 |
|
| Effect of exchange rate
changes on cash |
|
905 |
|
|
(2,902 |
) |
| Cash and cash
equivalents at end of period |
|
24,682 |
|
|
41,333 |
|
Consolidated Statement of Changes in
EquityFOR THE YEAR ENDED 30 JUNE 2023
|
|
|
|
|
|
|
Share-based |
|
Accumulated other |
|
|
Retained |
|
|
Total |
|
| |
|
Share Capital |
|
Share Premium |
|
payment reserve |
|
comprehensive income |
|
|
earnings |
|
|
equity |
|
| |
|
$'000 |
|
$'000 |
|
$'000 |
|
$'000 |
|
|
$'000 |
|
|
$'000 |
|
| At 30 June
2022 |
|
241 |
|
85,444 |
|
11,954 |
|
(1,509 |
) |
|
(52,961 |
) |
|
43,169 |
|
| Comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss for the period |
|
- |
|
- |
|
- |
|
- |
|
|
(46,223 |
) |
|
(46,223 |
) |
| Other comprehensive
income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Changes in fair value of
convertible notes |
|
- |
|
- |
|
- |
|
719 |
|
|
- |
|
|
719 |
|
| Currency translation
differences |
|
- |
|
- |
|
- |
|
(337 |
) |
|
- |
|
|
(337 |
) |
| Total comprehensive
income |
|
- |
|
- |
|
- |
|
382 |
|
|
(46,223 |
) |
|
(45,841 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Transactions with
Owners |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Share-based payments |
|
- |
|
- |
|
1,559 |
|
- |
|
|
- |
|
|
1,559 |
|
| Shares issues under ESPP |
|
1 |
|
260 |
|
- |
|
- |
|
|
- |
|
|
261 |
|
| Shares issued under Securities
Purchase Agreement |
|
57 |
|
19,248 |
|
- |
|
- |
|
|
- |
|
|
19,305 |
|
| Total transactions
with owners of the parent, recognized directly in
equity |
|
58 |
|
19,508 |
|
1,559 |
|
- |
|
|
- |
|
|
21,126 |
|
| At 30 June
2023 |
|
299 |
|
104,952 |
|
13,513 |
|
(1,127 |
) |
|
(99,184 |
) |
|
18,454 |
|
Notes to the Financial
Statements
1. GENERAL INFORMATION AND BASIS OF
PRESENTATION
Renalytix Plc (the “Company”) is a company
incorporated in the United Kingdom. The Company is a public limited
company, which is listed on the AIM market of the London Stock
Exchange and Nasdaq global market. The address of the registered
office is Finsgate, 5-7 Cranwood Street, London, United Kingdom,
EC1V 9EE. The Company was incorporated on 15 March 2018 and its
registered number is 11257655.
The principal activity of the Company and its
subsidiaries (together “the Group”) is as a developer of artificial
intelligence- enabled diagnostics for kidney disease.
The financial statements are presented in United
States Dollars (“USD”) because that is the currency of the primary
economic environment in which the Group operates.
2. BASIS OF
PRESENTATION
The Group and Company’s financial statements
have been prepared in accordance with UK-adopted International
Accounting Standards and with the requirements of the Companies Act
2006.
The unaudited financial information included in
this preliminary results announcement for the year ended 30 June
2023 and audited financial information for the year ended 30 June
2022 does not constitute statutory accounts within the meaning of
sections 434(3) and 435(3) of the Companies Act 2006 or contain
sufficient information to comply with the disclosure
requirements in accordance with UK-adopted International
Accounting Standards in conformity with the requirements of the
Companies Act 2006.
The preparation of financial statements in
conformity with IFRS requires the use of certain critical
accounting estimates. It also requires management to exercise its
judgement in the process of applying the Group’s accounting
policies.
New Standards, amendments, and
interpretations not adopted by the group
The group did not adopt any new standards,
amendments or interpretations in year as they did not have a
material impact on the financial statements.
New standards, amendments, and
interpretations issued but not effective for the period ended 30
June 2023, and not early adopted
A number of new standards and amendments to
standards and interpretations are effective for annual periods
beginning on or after 1 January 2023 and have not been applied in
preparing these financial statements. None of these is expected to
have a significant effect on the financial statements of the Group
or Parent Company.
- Amendments to IAS
1: Presentation of Financial Statements, Disclosure of Accounting
Policies
- Amendments to IAS
8: Definition of Accounting Estimates
- Amendments to
IFRS 17: Insurance Contracts
- Amendments to IAS
12: Deferred Tax Related to Assets and Liabilities Arising From a
Single Transaction
- Amendments to
IFRS 16: Leases on Sale and Leaseback
- Amendments to IAS
7 and IFRS 7: Supplier Finance Arrangement
3. SIGNIFICANT ACCOUNTING
POLICIES
The principal accounting policies applied in the
preparation of these financial statements are set out below.
Going concern
The Group and Company meet their day-to-day
working capital requirements through the use of cash reserves.
The Directors have considered the applicability
of the going concern basis in the preparation of these financial
statements.
The Group and Company have incurred recurring
losses and negative cash flows from operations since inception. The
Company anticipates incurring additional losses until such time, if
ever, that it can generate significant sales of KidneyIntelX or any
future products currently in development.
As a result of our losses and our projected cash
needs, the Directors have concluded that substantial doubt exists
about the Group and Company’s ability to continue as a going
concern. Substantial additional capital will be necessary to fund
the Group and Company's operations, expand its commercial
activities and develop other potential diagnostic related products.
The Company plans to seek additional funding through public or
private equity offerings, debt financings, other collaborations,
strategic alliances and licensing arrangements. The Group and
Company may not be able to obtain financing on acceptable terms, or
at all, and the Group and Company may not be able to enter into
strategic alliances or other arrangements on favorable terms, or at
all. The terms of any financing may adversely affect the holdings
or the rights of the Group and Company’s shareholders. If the Group
and Company is unable to obtain funding, the Group and Company
could be required to delay, curtail or discontinue research and
development programs, product portfolio expansion or future
commercialization efforts, which could adversely affect its
business prospect.
The Group and Company’s ability to continue as a
going concern is contingent upon successful execution of
management’s intended plan over the next twelve months to improve
the Group and Company’s liquidity and profitability, which
includes, without limitation:
- Seeking additional
capital through through public or private equity offerings, debt
financings, other collaborations, strategic alliances and licensing
arrangements
- Implementation of
various additional operating cost reduction options that are
available to the Group and Company
- The achievement of
a certain volume of assumed revenue
The consolidated financial statements do not
include any adjustments that may result from the outcome of this
going concern uncertainty.
Basis of consolidation
The consolidated financial statements
incorporate the financial statements of the Company and its
subsidiary undertakings. The Group controls an entity when the
Group is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those
returns through its power over the entity. The existence and effect
of potential voting rights that are currently exercisable or
convertible are considered when assessing whether the Group
controls another entity.
Subsidiaries are fully consolidated from the
date on which control is transferred to the Group. They are
de-consolidated from the date that control ceases.
The Group uses the acquisition method of
accounting to account for business combinations. The consideration
transferred for the acquisition of a subsidiary is the fair values
of the assets transferred, the liabilities incurred and the equity
interests issued by the Group. The consideration transferred
includes the fair value of any asset or liability resulting from a
contingent consideration agreement. Acquisition related costs are
expensed as incurred. Identifiable assets acquired and liabilities
and contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition
date.
Inter-company transactions, balances and
unrealized gains on transactions between Group companies are
eliminated. Unrealized losses are also eliminated. Accounting
policies of subsidiaries have been changed where necessary to
ensure consistency with the policies adopted by the Group.
Associates are entities over which the Group has
significant influence but not control over the financial and
operating policies. Investments in associates are accounted for
using the equity method of accounting and are initially recognized
at cost. The Group’s share of its associates’ post-acquisition
profits or losses is recognized in profit or loss, and its share of
post-acquisition movements in reserves is recognized in other
comprehensive income. The cumulative post-acquisition movements are
adjusted against the carrying amount of the investment.
Foreign currency
translation
(a) Functional and presentational
currency
Items included in the financial statements of
each of the Group’s entities are measured using the currency of the
primary economic environment in which the entity operates (the
functional currency). The consolidated financial statements are
presented in United States Dollars, which is the Group’s
presentational currency. The functional currency of the Parent
Company is GB Pounds.
(b) Transactions and balances
Foreign currency transactions are translated
into the functional currency using the exchange rates prevailing at
the dates of the transactions where items are re-measured. Foreign
exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies
are recognized in the income statement within ‘administrative
expenses’.
(c) Group companies
The results and financial position of all the
Group entities that have a functional currency different from the
presentational currency are translated into the presentational
currency as follows:
- assets and
liabilities for each balance sheet presented are translated at the
closing rate at the date of that balance sheet;
- income and
expenses for each income statement are translated at average
exchange rates; and
- all resulting
exchange differences are recognized in other comprehensive
income.
On consolidation, exchange differences arising
from the translation of the net investment in foreign operations
are taken to other comprehensive income. When a foreign operation
is partially disposed of or sold, exchange differences that were
recorded in equity are recognized in the income statement as part
of the gain or loss on sale.
Segmental reporting
Operating segments are reported in a manner
consistent with the internal reporting provided to the chief
operating decision- maker. The chief operating decision-maker, who
is responsible for allocating resources and assessing performance
of the operating segments, has been identified as the Executive
Directors who make strategic decisions. At present the Directors
consider the business to operate in a single segment.
Property, plant and
equipment
Property, plant and equipment are stated at
historical cost less accumulated depreciation and any provision for
impairment. Historical cost includes expenditure that is directly
attributable to the acquisition of the asset and bringing the asset
to its working condition for its intended use.
Subsequent costs are included in the asset’s
carrying amount or recognized as a separate asset, as appropriate,
only where it is probable that future economic benefits associated
with the asset will flow to the Group and the cost of the asset can
be measured reliably. The carrying amount of the replaced part is
derecognized. All other repairs and maintenance are charged to the
income statement during the financial period in which they are
incurred.
Depreciation on assets is calculated using the
straight-line method to allocate their cost to their residual
values over their estimated useful lives, as follows:
Fixtures and fittings 20%
The assets’ residual values and useful economic
lives are reviewed regularly, and adjusted if appropriate, at the
end of each reporting period.
An asset’s carrying value is written down
immediately to its recoverable amount if the asset’s carrying
amount is greater than its estimated recoverable amount.
Gains and losses on the disposal of assets are
determined by comparing the proceeds with the carrying amount and
are recognized in administration expenses in the income
statement.
Intangible assets
(a) Trademarks, trade
names and licenses
Separately acquired trademarks and licenses are
shown at historical cost. Trademarks and licenses acquired in a
business combination are recognized at fair value at the
acquisition date. Trademarks and licenses have a finite useful life
and are carried at cost less accumulated amortisation. Amortisation
is calculated using the straight-line method to allocate the cost
of trademarks and licenses over the contractual license period of
10 to 15 years and is charged to administrative expenses in the
income statement.
(b) Development costs and
trade secrets
Development costs have a finite useful life and
are carried at cost less accumulated amortisation.
Expenditure incurred on the development of new
or substantially improved products or processes is capitalized,
provided that the related project satisfies the criteria for
capitalisation, including the project’s technical feasibility and
likely commercial benefit. All other research and development costs
are expensed to profit or loss as incurred.
Development costs are amortised over the
estimated useful life of the products with which they are
associated. amortisation commences when a new product is in
commercial production. The amortisation is charged to
administrative expenses in the income statement. The estimated
remaining useful lives of development costs are reviewed at least
on an annual basis.
The carrying value of capitalized development
costs is reviewed for potential impairment at least annually and if
a product becomes unviable and an impairment is identified the
deferred development costs are immediately charged to the income
statement. Amortisation has not yet commenced.
Trade secrets, including technical know-how,
operating procedures, methods and processes, are recognized at fair
value at the acquisition date. Trade secrets have a finite useful
life and are carried at cost less accumulated amortisation.
amortisation has not yet commenced.
Impairment of non-financial
assets
Assets that have an indefinite life or where
amortisation has not yet commenced are tested annually for
impairment. Assets that are subject to amortisation are reviewed
for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An impairment loss
is recognized for the amount by which the carrying amount exceeds
its recoverable amount.
The recoverable amount is the higher of an
asset’s fair value less costs to sell and value in use. In
assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money
and the risks specific to the asset for which the estimates of
future cash flows have not been adjusted.
For the purposes of assessing impairment, assets
are grouped at the lowest levels for which there are separately
identifiable cash flows. Impairment losses recognized for
cash-generating units, to which goodwill has been allocated, are
credited initially to the carrying amount of goodwill. Any
remaining impairment loss is charged pro rata to the other assets
in the cash-generating unit.
Where an impairment loss subsequently reverses,
the carrying amount of the asset (cash-generating unit) is
increased to the revised estimate of its recoverable amount, but so
that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been
recognized for the asset (cash-generating unit) in the prior
period. A reversal of an impairment loss is recognized in the
income statement immediately. If goodwill is impaired however, no
reversal of the impairment is recognized in the financial
statements.
Financial assets
Classification
The Company classifies its financial assets in
the following categories: loans and receivables at amortised cost
and financial assets at fair value through profit or loss. The
classification depends on the purpose for which the financial
assets were acquired and management determines the classification
of its financial assets at initial recognition.
(a) Loans and
receivables
Financial assets are classified as at amortised
cost only if both of the following criteria are met: the asset is
held within a business model whose objective is to collect
contractual cash flows, and the contractual terms give rise to cash
flows that are solely payments of principal and interest. Loans and
receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted on an active market. They
are included in current assets, except for maturities greater than
12 months after the balance sheet date. These are classified as
non-current assets. The Company’s loans and receivables comprise
‘trade and other receivables’ and cash and cash equivalents in the
balance sheet.
(b) Financial assets at
fair value through profit or loss
The Group classifies the following financial
assets at fair value through profit or loss (“FVPL”):
- equity
investments that are held for trading, and
- equity
investments for which the entity has not elected to recognize fair
value gains and losses through Other Comprehensive Income.
(c) Financial assets at
fair value through other comprehensive income
Financial assets at fair value through other
comprehensive income comprise equity securities that are not held
for trading and which the Group has irrevocably elected at initial
recognition to recognize in this category. The Group considers this
category to be more relevant for assets of this type.
(d) Financial liabilities
at fair value through profit or loss
The Group classifies the following financial
assets at fair value through profit or loss (“FVPL”):
- Convertible debt
recorded at fair value through profit or loss.
Cash and cash equivalents
Cash and short-term deposits in the balance
sheet comprise cash at bank and in hand and short- term deposits
with an original maturity of three months or less.
For the purposes of the cash flow statements,
cash and cash equivalents consist of cash and short-term deposits
as defined above.
Share capital and premium
Ordinary Shares are classified as equity.
Proceeds in excess of the nominal value of shares issued are
allocated to the share premium account and are also classified as
equity. Incremental costs directly attributable to the issue of new
Ordinary Shares or options are deducted from the share premium
account.
Other reserves - equity
The share-based payment reserve is used to
recognize the fair value of equity settled share-based payment
transactions.
Foreign currency reserve is used to record the
exchange differences on translation of entities in the Group which
have a functional currency different to the presentation
currency.
Retained earnings includes all current and prior
period results as disclosed in the income statement.
Trade and other payables
Trade payables are obligations to pay for goods
or services that have been acquired in the ordinary course of
business from suppliers. Accounts payable are classified as current
liabilities if payment is due within one year or less (or in the
normal operating cycle of the business if longer). If not, they are
presented as non-current liabilities. Trade payables are recognized
initially at fair value and subsequently measured at amortised cost
using the effective interest method.
Current and deferred income
tax
Income tax comprises current and deferred tax.
Tax is recognized in the income statement, except to the extent
that it relates to items recognized in other comprehensive income
where the associated tax is also recognized in other comprehensive
income.
The current income tax charge is calculated on
the basis of the tax laws enacted or substantively enacted at the
balance sheet date in the countries where the Company and its
subsidiary operate and generate taxable income. Management
evaluates positions taken in tax returns with respect to situations
in which applicable tax regulation is subject to interpretation and
establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.
Deferred tax is recognized, using the liability
method, on all temporary differences at the balance sheet date
between the tax bases of assets and liabilities and their carrying
amounts for financial reporting purposes. Deferred tax liabilities
are recognized in respect of all temporary differences except where
the deferred tax liability arises from the initial recognition of
goodwill in business combinations.
Deferred tax assets are recognized for all
deductible temporary differences, carry-forward of unused tax
assets and tax losses, to the extent that they are regarded as
recoverable. They are regarded as recoverable where, on the basis
of available evidence, there will be sufficient taxable profits
against which the future reversal of the underlying temporary
differences can be deducted.
The carrying value of the amount of deferred tax
assets is reviewed at each balance sheet date and reduced to the
extent that it is no longer probable that sufficient taxable profit
will be available to allow all, or part, of the tax asset to be
utilized.
Deferred tax assets and liabilities are measured
at the tax rates that are expected to apply to the year when the
asset is realized or the liability is settled, based on the tax
rates (and tax laws) that have been substantively enacted at the
balance sheet date.
Deferred income tax assets and liabilities are
offset when there is a legally enforceable right to offset current
tax assets against current tax liabilities and when the deferred
income tax assets and liabilities relate to income taxes levied by
the same taxation authority on either the taxable entity or
different taxable entities where there is an intention to settle
the balances on a net basis.
Leases
Leases are recognized as a right-of-use asset
and a corresponding lease liability at the date on which the leased
asset is available for use by the Group.
Assets and liabilities arising from a lease are
initially measured on a present value basis. Lease liabilities
include the net present value of the following lease payments:
- fixed payments
(including in-substance fixed payments), less any lease incentives
receivable
- variable lease
payment that are based on an index or a rate, initially measured
using the index or rate as at the commencement date
- amounts expected
to be payable by the group under residual value guarantees
- the exercise
price of a purchase option if the group is reasonably certain to
exercise that option, and
- payments of
penalties for terminating the lease, if the lease term reflects the
group exercising that option.
Lease payments to be made under reasonably
certain extension options are also included in the measurement of
the liability.
The lease payments are discounted using the
interest rate implicit within the lease. If that rate cannot be
readily determined, the Group’s incremental borrowing rate is used,
being the rate that the Group would have to pay to borrow the funds
necessary to obtain an asset of similar value to the right-of-use
asset in a similar economic environment with similar terms,
security, and conditions.
Where the Group is exposed to potential future
increases in variable lease payments based on an index or rate,
amounts are not included in the lease liability until they take
effect. When adjustments to lease payments based on an index or
rate take effect, the lease liability is reassessed and adjusted
against the right-of-use asset.
Lease payments are allocated between principal
and finance cost. The finance cost is charged to the income
statement over the lease period so as to produce a constant
periodic rate of interest on the remaining balance of the liability
for each period.
Right-of-use assets are measured at cost
comprising the following:
- the amount of the
initial measurement of lease liability
- any lease
payments made at or before the commencement date less any lease
incentives received
- any initial
direct costs
- restoration
costs
Right-of-use assets are generally depreciated
over the shorter of the asset’s useful life and the lease term on
straight line basis. If the Group is reasonably certain to exercise
a purchase option, the right-of-use asset is depreciated over the
underlying asset’s useful life.
Revenue Recognition
The Group recognizes revenue when a customer
obtains control of contracted goods or services. The Group records
the amount of revenue that reflects the consideration that it
expects to receive in exchange for those goods or services. The
Group applies the following five-step model in order to determine
this amount: (i) identification of the promised goods or services
in the contract; (ii) determination of whether the promised goods
or services are performance obligations, including whether they are
distinct in the context of the contract; (iii) measurement of the
transaction price, including the constraint on variable
consideration; (iv) allocation of the transaction price to the
performance obligations; and (v) recognition of revenue when (or
as) the Group satisfies each performance obligation.
The Group only applies the five-step model to
contracts when it is probable that it will collect the
consideration to which it is entitled in exchange for the goods or
services that it transfers to the customer. The Group reviews the
contract to determine which performance obligations it must deliver
and which of these performance obligations are distinct. Certain
contracts have options for the customer to acquire additional
services. The Group evaluates these options to determine if a
material right exists. If, after that evaluation, it determines a
material right does exist, it assigns value to the material right
based upon the renewal option approach. The Group recognizes as
revenue the amount of the transaction price that is allocated to
each performance obligation when that performance obligation is
satisfied or as it is satisfied. The Group uses present right to
payment and customer acceptance as indicators to determine the
transfer of control to the customer occurs at a point in time.
Sales tax and other similar taxes are excluded from revenues.
Cost of revenue
Cost of revenue consists of costs directly
attributable to the services rendered, including labor costs
directly related to revenue generating activities.
Employee benefits
(a) Pension
obligations
The Group makes contributions to defined
contribution pension plans. A defined contribution plan is a
pension plan under which the Group pays fixed contributions into a
separate entity with the pension cost charged to the income
statement as incurred. The Group has no further obligations once
the contributions have been paid.
(b) Share-based
compensation
The Group operates an equity-settled,
share-based compensation plan, under which the Group receives
services from employees and others as consideration for equity
instruments of the Group. Equity-settled share-based payments are
measured at fair value at the date of grant and are expensed over
the vesting period based on the number of instruments that are
expected to vest. For plans where vesting conditions are based on
share price targets, the fair value at the date of grant reflects
these conditions. Where applicable the Group recognizes the impact
of revisions to original estimates in the income statement, with a
corresponding adjustment to equity for equity-settled schemes. Fair
values are measured using appropriate valuation models, taking into
account the terms and conditions of the awards.
When the share-based payment awards are
exercised, the Company issues new shares. The proceeds received net
of any directly attributable transaction costs are credited to
share capital (nominal value) and share premium.
National insurance on share
options
To the extent that the share price at the
balance sheet date is greater than the exercise price on options
granted to UK citizens under unapproved share-based payment
compensation schemes, provision for any National Insurance
Contributions has been based on the prevailing rate of National
Insurance. The provision is accrued over the performance period
attaching to the award.
Interest income
Interest income is accrued on a time basis, by
reference to the principal outstanding and at the effective
interest rate applicable, which is the rate that exactly discounts
estimated future cash receipts through the expected life of the
financial asset to that asset’s net carrying amount.
Exceptional items
These are items of an unusual or non-recurring
nature incurred by the Group and include transactional costs and
one-off items relating to business combinations, such as
acquisition expenses.
Assets Classified as Held for
Sale
Assets are classified as held for sale if their
carrying amount will be recovered principally through a sale
transaction rather than through continuing use and a sale is
considered highly probable. They are measured at the lower of their
carrying value and fair value less costs to sell. An impairment
loss is recognized for any subsequent write-down of the asset to
fair value less costs to sell.
4. CRITICAL ACCOUNTING ESTIMATES
AND JUDGMENTS
The Company makes estimates and assumptions
regarding the future. Estimates and judgments are continually
evaluated based on historical experience and other factors,
including expectations of future events that are believed to be
reasonable under the circumstances. In the future, actual results
may differ from these estimates and assumptions. The estimates and
assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within
the next financial year relate to:
- Capitalisation
and recoverability of intangible assets
- Share-based
payments
- Convertible debt
recorded at fair value through profit or loss
5. SEGMENTAL REPORTING
The Group operates as a single segment.
6. REVENUE
Testing services revenue
Testing services revenue is generated from the
KidneyIntelX platform, which provides analytical services to
customers. Each individual test is a performance obligation that is
satisfied at a point in time upon completion of the testing process
(when results are reported) which is when control passes to the
customer and revenue is recognized. During the year ended 30 June
2023, the Company recognized $3.1 million of testing services
revenue. Sales tax and other similar taxes are excluded from
revenues. There was $2.7 million of testing services revenue
recognized in the 2022 accounting period.
During the year ended 30 June 2023, the Company
performed testing and provided approved KidneyIntelX risk scores
for approximately 100 samples or $0.1 million of potential revenue
where collectability was determined to not be reasonably assured.
The Company will continue to assess each contract to determine
whether the collectability criterion is met and recognize revenue
when collectability is reasonable assured.
Pharmaceutical services
revenue
Pharmaceutical services revenue is generated
from the provision of analytical services to customers. Contracts
with customers generally include an initial upfront payment and
additional payments upon achieving performance milestones. The
Company uses present right to payment and customer acceptance as
indicators to determine the transfer of control to the customer
which may occur at a point in time or over time depending on the
individual contract terms. Sales tax and other similar taxes are
excluded from revenues. During the year ended 30 June 2023, the
Company recognized $0.3 million of pharmaceutical services revenue.
There was $0.2 million of pharmaceutical services revenue
recognized in the 2022 accounting period.
Deferred revenue
Deferred revenue represents the allocated
transaction price to the material right which will be recognized as
revenue when the renewal options are exercised which is expected to
occur over the next 24 months.
The following table summarizes the changes in
deferred revenue:
|
|
|
Year ended 30 June 2023 |
|
|
Year ended 30 June 2022 |
|
| |
|
$'000 |
|
|
$'000 |
|
| Balance, beginning of
period |
|
45 |
|
|
122 |
|
| Deferral of revenue |
|
|
|
|
150 |
|
| Revenue recognized |
|
(45 |
) |
|
(227 |
) |
| Balance, end of period |
|
- |
|
|
45 |
|
7. INCOME TAX
|
|
|
Year ended 30 June 2023 |
|
|
Year ended 30 June 2022 |
|
|
Group |
|
$'000 |
|
|
$'000 |
|
|
Deferred tax |
|
- |
|
|
(7,104 |
) |
|
Total deferred tax |
|
- |
|
|
(7,104 |
) |
|
Income tax (charge)/credit |
|
- |
|
|
(7,104 |
) |
No deferred asset is calculated on losses in FY23 as the
probability of future utilization is considered too remote.
Factors affecting the future tax charge
The standard rate of corporation tax in the UK is 25%.
Changes to UK Corporation tax rates were enacted as part of The
Finance (No.2) Act 2021 which received Royal Assent on 10 June
2021. The main rate will remain at 19% before increasing to 25%
from 1 April 2023.
|
|
|
Year ended 30 June 2023 |
|
|
Year ended 30 June 2022 |
|
|
|
|
$'000 |
|
|
$'000 |
|
|
Loss before tax |
|
46,221 |
|
|
49,628 |
|
| Tax Calculated at domestic tax
rates applicable to the UK Standard of tax at 25% |
|
11,555 |
|
|
9,429 |
|
| Tax effects of: |
|
|
|
|
|
|
| Expenses not deductible for
tax purposes |
|
(872 |
) |
|
4,490 |
|
| Losses on which no deferred
tax asset is recognized |
|
(85 |
) |
|
(578 |
) |
| Tax credit for the year |
|
10,598 |
|
|
13,341 |
|
|
Current Year Valuation Allowance |
|
(10,598 |
) |
|
(13,341 |
) |
| Prior year deferred tax
asset |
|
- |
|
|
7,097 |
|
| Reversal of tax asset at 30
June |
|
- |
|
|
(7,097 |
) |
|
Tax expense |
|
(2 |
) |
|
(7 |
) |
| Total Income Tax
(Expense)/Credit |
|
(2 |
) |
|
(7,104 |
) |
Net losses can be carried forward indefinitely
to offset future taxable profits however management has concluded
that the realization of deferred tax assets to be less than
probable and recorded a full valuation allowance. No deferred asset
is calculated on losses in the UK totaling $14,389,422 where the
probability of future utilization is considered too remote.
8. NET LOSS PER SHARE
Basic net loss per ordinary share is computed by
dividing net loss by the weighted average number of ordinary shares
outstanding during each period. Diluted net loss per ordinary share
includes the effect, if any, from the potential exercise or
conversion of securities, such as options which would result in the
issuance of incremental ordinary shares. Potentially dilutive
securities outstanding as of June 30, 2023, have been excluded from
the computation of diluted weighted average shares outstanding as
they would be anti-dilutive. Therefore, the weighted average number
of shares used to calculate both basic and diluted net loss per
share are the same.
For the fiscal year ended June 30, 2022, the
diluted net loss per share calculation included the dilutive effect
of convertible debt as well as the impact of the $3.9 million fair
value gain related to the convertible debt, which further increase
net loss used in the diluted loss per share calculation.
The following is a reconciliation of basic net
loss per share to diluted net loss per share for the fiscal years
ended June 30, 2023 and 2022.
| |
|
Year ended 30 June 2023 |
|
|
Year ended 30 June 2022 |
|
| Basic earnings per share |
|
$ |
(0.56 |
) |
|
$ |
(0.78 |
) |
| Average shares outstanding -
basic |
|
|
82,210,050 |
|
|
|
72,861,251 |
|
| Convertible debt shares |
|
|
- |
|
|
|
976,048 |
|
| Adjusted average shares
outstanding - diluted |
|
|
82,210,050 |
|
|
|
73,837,496 |
|
| Diluted earnings per
share |
|
$ |
(0.56 |
) |
|
$ |
(0.82 |
) |
The following potentially dilutive securities
have been excluded from the computation of diluted weighted-average
shares of ordinary shares outstanding as they would be
anti-dilutive:
|
|
|
Year ended 30 June 2023 |
|
|
Year ended 30 June 2022 |
|
|
Stock options to purchase ordinary shares |
|
4,968,576 |
|
|
4,554,901 |
|
| Restricted stock units |
|
40,340 |
|
|
— |
|
|
Conversion of convertible note |
|
5,441,199 |
|
|
— |
|
|
|
|
10,450,115 |
|
|
4,554,901 |
|
The Company was incorporated on 15 March 2018
with 50,000 ordinary shares of £1.00 each, and as a result of
subdivisions (100:1 on 4 May 2018 and then 4:1 on 24 October 2018),
the resulting founding shares became 20,000,000 at £0.0025
each.
9. INVESTMENTS IN
SUBSIDIARIES
| |
|
|
|
|
|
|
| |
|
Year ended 30 June 2023 |
|
|
Year ended 30 June 2022 |
|
| Company |
|
$'000 |
|
|
$'000 |
|
|
At beginning of Period |
|
|
89,112 |
|
|
|
4,588 |
|
| Capital Contribution relating
to share based payment |
|
|
1,511 |
|
|
|
2,824 |
|
| Capital Contribution to
Subsidiary |
|
|
27,864 |
|
|
|
|
| Conversion of intercompany
loan to equity investment |
|
|
- |
|
|
|
81,700 |
|
| At End of Period |
|
|
118,487 |
|
|
|
89,112 |
|
Investments in Group undertakings are recorded at cost, which is
the fair value of the consideration paid, less any impairment. The
Company had the following subsidiaries as of 30 September 2023.
|
Name of Company |
Proportion held |
|
Class of shareholding |
Nature of business |
|
Renalytix AI, Inc.1 |
|
100 |
% |
Ordinary |
Developer of artificial intelligence-enabled clinical diagnostic
solutions for kidney disease |
|
Renalytix AI Limited 2 |
|
100 |
% |
Ordinary |
Developer of artificial
intelligence-enabled clinical diagnostic solutions for kidney
disease |
- Renalytix AI Inc.
is incorporated in the United States of America and has their
principal place of business at 1460 Broadway, New York, New York
10036. Renalytix AI Inc. is included in the consolidation. The
proportions of voting shares held by the parent company do not
differ from the proportion of Ordinary Shares held.
- Renalytix AI
Limited is incorporated in the Republic of Ireland and has their
principal place of business at 29 Lower Patrick Street, Kilkenny,
Ireland. Renalytix AI Ltd. is included in the consolidation. The
proportions of voting shares held by the parent company do not
differ from the proportion of Ordinary Shares held.
10. RELATED PARTY
TRANSACTIONS
In May 2018, the Company secured its cornerstone
license agreement with ISMMS for research and clinical study work
and intended commercialization by the Company. As part of the
collaboration, ISMMS became a shareholder in the Company and has
subsequently made equity investments both in the Company’s IPO in
November 2018 and the subsequent sale of ordinary shares in July
2019. As of 30 June, 2023 and 2022, amounts due to ISMMS totaled
$3.4 million and $2.6 million, respectively. During the years ended
30 June, 2023, 2022, 2021, the Company incurred expenses of $3.3
million, $3.1 million and $1.3 million, respectively.
In connection with the formation of Kantaro, the
Company entered into a five-year Advisory Services Agreement
(“Advisory Agreement”) pursuant to which the Company has agreed to
provide certain advisory services to Kantaro. Pursuant to the
Kantaro Operating Agreement, Kantaro issued 750 Class A Units to
Mount Sinai in exchange for Mount Sinai granting licenses to
Kantaro under certain intellectual property rights of Mount Sinai
and 250 Class A Units to the Company as the sole consideration for
the services to be rendered by the Company under the Advisory
Agreement. A portion of the Company’s units are subject to
forfeiture if, prior to December 31, 2021, Kantaro terminates the
Advisory Agreement as a result of an uncured material breach of the
Advisory Agreement or in the event the Company is acquired by a
hospital or health system that serves all or any portion of the
service areas served by Mount Sinai. The Company determined the
fair value of the services to be provided under the Advisory
Agreement was $2.0 million and the fair value of the Class A units
received from Kantaro was $2.0 million. Fair value was determined
using discounted cash flows which is a Level 3 measurement in the
fair value hierarchy. The method requires several judgments and
assumptions which include discount rates and future cash flows,
among others. As a result of the prior year impairment charge
discussed in Note 3, the carrying value of the Kantaro investment
was written down to zero.
A contributing factor to the impairment
consideration for Kantaro was lower forecasted sales volume and
consequently, a lower time commitment from Renalytix employees.
Based on these circumstances, the Company adjusted the liability to
perform services to Kantaro under the Advisory Agreement during the
year ended June 30, 2021. On December 31, 2022, the members and
managers of Kantaro decided that it was in the best interest of
Kantaro to wind up the business and unanimously signed a
termination agreement. As part of the termination agreement, the
members agreed to wind up Kantaro's business and dissolve it
reasonably promptly after the effective date of the termination
agreement. The termination agreement relieved Renalytix of its
obligation to provide services to Kantaro, and the total liability
associated with the services was written off.
For the twelve months ended June 30, 2023, the
Company recognized $0.02 million, in the statement of operations
related to services performed under the Advisory Agreement. For the
twelve months ended June 30, 2023, $0.01 million of costs incurred
related to the performance of the Advisory Agreement services were
included within research and development and $0.01 million were
included in general and administrative expense, respectively. For
the twelve months ended June 30, 2022, the Company recognized $0.1
million statements of operations related to services performed
under the Advisory Agreement. For the twelve months ended June 30,
2022, $0.05 million of costs incurred related to the performance of
the Advisory Agreement services were included within research and
development and $0.07 million were included within general and
administrative expense.
In addition to the equity granted at formation,
in May 2020 the Company and Mount Sinai each committed to making a
loan to Kantaro. Mount Sinai committed to lend an initial amount of
$0.3 million and an additional $0.5 million thereafter. The Company
committed to lend an initial amount of $0.08 million and an
additional $0.17 million thereafter. Each loan bears interest at a
per year rate equal to 0.25%, compounded monthly, until repaid, and
is repayable from the first amounts that would otherwise constitute
cash available for distribution to the members of Kantaro (provided
that each loan repayment will be made, 75% to Mount Sinai and 25%
to the Company based on each investor’s proportionate ownership).
The Company loaned Kantaro $0.25 million and initially recorded a
note receivable. Upon liquidation of the joint venture, Kantaro
paid Renalytix $0.2 million for repayment of the loan. Renalytix
recognized a gain of $0.1 million in the statement of operations as
prior to repayment, the loan had a carrying value of approximately
$0.075 million.
In June 2020, we and Mount Sinai entered into a
registration rights agreement pursuant to which we have granted
Mount Sinai the following registration rights:
- Demand
Registration on Form F-3 – Mount Sinai is entitled to demand
registrations on Form F-3, if we are then eligible to register
shares on Form F-3, including up to two underwritten offerings in
any 12-month period.
- Demand
Registration on Form F-1 or Form S-1 – At any time following one
year after the completion of the global offering, if we are not
eligible to register shares on Form F-3 or S-3, Mount Sinai is
entitled to a maximum of one demand registration on Form F-1 or
Form S-1 during any 12-month period, subject to specified
exceptions.
- Piggyback
Registration – Mount Sinai is entitled to certain piggyback
registration rights, subject to certain marketing and other
limitations in the context of an underwritten offering.
- Expenses – We
will pay all registration expenses incident to the performance of
our obligations under the registration rights agreement.
Mount Sinai’s registration rights will terminate
at such time as Rule 144, or another similar exception under the
Securities Act, is available for the unlimited public sale of all
of Mount Sinai’s registrable securities without any volume or
manner of sale limitations, subject to specified exceptions.
On February 9, 2023, the Company entered into
security purchase agreements to sell an aggregate of 3,699,910
Ordinary Shares, and 7,511,525 ADS, at a price of $2.17 per ADS and
£0.90 per Ordinary Share. The private placement generated gross
cash proceeds of $20.3 million, the net proceeds of which will be
used for sales and marketing, clinical product development, and
corporate support and financing costs. Certain related parties,
directors of the company and executive officers participated in the
private placement.
Mount Sinai subscribed for a total of 1,382,489
new American Depositary Shares at $2.17 per ADS. Christopher Mills,
Non-Executive Chairman, and his related parties subscribed for a
total of 346,375 Ordinary Shares at £0.90 per Ordinary Share.
In the year ended June 30, 2022, the Company
also entered into a private placement agreement to sell, an
aggregate of 2,428,688 shares of common stock (the “PIPE Shares”),
for a purchase price of $3.625 per share and an aggregate purchase
price of $8.8 million. Certain related parties, directors of the
company and executive officers participated in the private
placement.
Mount Sinai subscribed for a total of 1,103,448
new ordinary shares at $3.625 per ordinary share. EKF Diagnostics
Holdings, subscribed for a total of 137,930 new ordinary shares at
$3.625 per ordinary share. Christopher Mills, Non-Executive
Chairman, and his related parties subscribed for a total of 551,724
new ordinary shares at $3.625 per ordinary share. Timothy Scannell,
Non-Executive Director, subscribed for a total of 68,964 new
ordinary shares at $3.625 per ordinary share. Thomas McLain,
President, subscribed for a total of 55,172 new ordinary shares at
$3.625 per ordinary share.
11. RECONCILIATION OF IFRS TO US
GAAP
Since Renalytix’s initial listing on Nasdaq, the
Company has followed accounting principles generally accepted in
the United States of America (‘US GAAP’), both for internal as well
as external purposes. The information below is unaudited and does
not form part of the statutory accounts.
Renalytix Form 10-K, which is based on US GAAP,
contains differences from its Annual Report, which is based on
IFRS.
The Form 10-K and Annual Report are available on
the Company’s website (www.renalytix.com). In order to help readers
to understand the difference between the Group’s two sets of
financial statements, Renalytix has provided, on a voluntary basis,
a reconciliation from IFRS to U.S. GAAP as follows:
BALANCE SHEET
(in thousands)
|
|
GAAP |
|
|
IFRS |
|
|
GAAP vs IFRS |
|
|
|
|
|
As at 30 June 2023 |
|
|
As at 30 June 2023 |
|
|
Difference |
|
|
|
|
|
$'000 |
|
|
$'000 |
|
|
$'000 |
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
Cash |
24,682 |
|
|
|
24,682 |
|
|
|
- |
|
|
|
|
Accounts receivable |
776 |
|
|
|
776 |
|
|
|
- |
|
|
|
|
Prepaid expenses and other current assets |
1,424 |
|
|
|
1,416 |
|
|
|
8 |
|
|
(a) |
|
Note receivable – Kantaro |
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
Property, plant and equipment, net |
1,027 |
|
|
|
1,027 |
|
|
|
- |
|
|
|
|
Intangibles, net |
- |
|
|
|
12,511 |
|
|
|
(12,511 |
) |
|
(b) |
|
Investment in Verici |
1,460 |
|
|
|
1,460 |
|
|
|
- |
|
|
|
|
Right of use asset |
159 |
|
|
|
194 |
|
|
|
(35 |
) |
|
(c) |
|
Other assets |
1,101 |
|
|
|
51 |
|
|
|
1,050 |
|
|
(d) |
|
Total assets |
30,629 |
|
|
|
42,117 |
|
|
|
(11,488 |
) |
|
|
|
Liabilities and stockholder's equity |
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Note payable – current |
4,463 |
|
|
|
4,463 |
|
|
|
- |
|
|
|
|
Accounts payable |
2,936 |
|
|
|
11,514 |
|
|
|
8,578 |
|
|
(e) |
|
Accrued expenses and other current liabilities |
6,644 |
|
|
|
|
|
|
(6,644 |
) |
|
(e) |
|
Accrued expenses – related party |
1,963 |
|
|
|
|
|
|
(1,963 |
) |
|
(e) |
|
Current lease liability |
130 |
|
|
|
156 |
|
|
|
26 |
|
|
(c) |
|
Deferred Revenue |
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
Note payable – noncurrent |
7,485 |
|
|
|
7,485 |
|
|
|
- |
|
|
|
|
Noncurrent lease liabilities |
41 |
|
|
|
46 |
|
|
|
5 |
|
|
(c) |
|
Total Liabilities |
23,662 |
|
|
|
23,664 |
|
|
|
2 |
|
|
|
|
Stockholders’ (deficit) equity: |
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares, £0.0025 par value per share: 98,750,054 shares
authorized; 93,781,478 and 74,760,432 shares issued and outstanding
at June 30, 2023 and June 30, 2022, respectively |
286 |
|
|
|
299 |
|
|
|
13 |
|
|
(f) |
|
Additional paid in capital |
186,456 |
|
|
|
118,466 |
|
|
|
(67,990 |
) |
|
(g) |
|
Accumulated other comprehensive (loss) income |
(1,450 |
) |
|
|
(1,127 |
) |
|
|
323 |
|
|
(h) |
|
Accumulated deficit |
(178,325 |
) |
|
|
(99,184 |
) |
|
|
79,141 |
|
|
(i) |
|
Total stockholders' (deficit) equity |
6,967 |
|
|
|
18,454 |
|
|
|
11,487 |
|
|
|
|
Total liabilities and stockholders’ (deficit)
equity |
30,629 |
|
|
|
42,117 |
|
|
|
11,488 |
|
|
|
|
a. |
Represents other immaterial presentation differences between US
GAAP & IFRS |
|
b. |
Under IFRS, the acquisition of licenses and subsequent development
efforts are capitalized and presented as intangible assets. Under
U.S. GAAP, such costs are expensed as incurred until technological
feasibility has been achieved or the assets are deemed to have
future alternative use. In addition to capitalized software costs
which are recorded as property and equipment under US GAAP and
Intangibles under IFRS. |
|
c. |
Represents differenced in the timing of the adoption of IFRS 16 in
connection with the Company’s commercial laboratory in Utah. The
Company has deferred the adoption of ASC 842 under U.S. GAAP until
July 1, 2022. |
|
d. |
Differences is attributable to capitalized software costs which are
recorded other assets under U.S. GAAP and Intangibles under
IFRS. |
|
e. |
Accounts payable and other current liabilities are presented in the
aggregate within the Annual report while broken out separately on
the US GAAP 10-K. Difference represents other immaterial
presentation differences and audit adjustments. |
|
f. |
Represents other immaterial audit adjustments. |
|
g. |
Represents cancellation of share premium account and reduction in
accumulated deficit under IFRS in anticipation of a distribution of
FractalDx net assets to the shareholders of Verici in prior year.
In addition, stock-based compensation is recognized on a
straight-line basis under U.S. GAAP and a graded vesting basis
under IFRS which creates timing differences as to when expenses are
recorded. |
|
h. |
Represents the difference in weighted average foreign exchange
rates and spot rates used for translation of financial statements
under IFRS and U.S. GAAP. |
|
i. |
Represents cancellation of share premium and reduction in
accumulated deficit under IFRS in anticipation of a distribution of
FractalDx net assets to the shareholders of Verici and differences
noted within the Company’s consolidated statement of operations and
comprehensive loss. |
RECONCILIATION OF NET LOSS
($ thousands)
|
|
Year ended 30 June 2023 |
|
|
| |
$'000 |
|
|
|
Net loss in accordance with IFRS |
(46,223 |
) |
|
|
Stock compensation expense |
(1,376 |
) |
(j) |
|
Amortisation of intangibles |
1,963 |
|
(k) |
|
Other adjustments |
29 |
|
(l) |
|
Net loss in accordance with US GAAP |
(45,607 |
) |
|
|
j. |
Stock based compensation is recognized on a straight-line basis
under U.S. GAAP and a graded vesting basis under IFRS which creates
timing differences as to when expenses are recorded. |
|
k. |
Amortisation expense is higher on the IFRS books as a result of the
higher intangible asset balance. Under IFRS, the acquisition of
licenses and subsequent development efforts are capitalized and
presented as intangible assets. Under U.S. GAAP, such costs are
expensed as incurred until technological feasibility has been
achieved or the assets are deemed to have future alternative
use. |
|
l. |
The remaining difference represents the aggregation of other
immaterial audit adjustments and small accounting standard
difference. |
Renalytix (NASDAQ:RNLX)
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