TIDMAREC
RNS Number : 8872W
Arecor Therapeutics PLC
20 April 2023
Arecor Therapeutics plc
("Arecor", the "Company" or the "Group")
UNAUDITED PRELIMINARY RESULTS FOR THE YEARED 31 DECEMBER
2022
Significant clinical progress with positive Phase I clinical
results for both lead products, AT278 and AT247, in diabetes
franchise
Expansion of Partnership Portfolio
Extensive IP portfolio underpinning proprietary Arestat(TM)
platform
Cambridge, UK, 20 April 2023: Arecor Therapeutics plc (AIM:
AREC), a globally focused biopharmaceutical company advancing
today's therapies to enable healthier lives, today announces its
unaudited preliminary results for the year ended 31 December 2022.
The Annual Report and Accounts for the year ended 31 December 2022,
will be posted to shareholders in due course together with the
notice of the 2023 Annual General Meeting.
Sarah Howell, Chief Executive Officer of Arecor, said: " 2022
was a year of delivery and execution of our strategy. As clinical
development of the two lead insulin candidates in our Diabetes
franchise rapidly advances, 2023 should provide further evidence of
their potential to enable a new frontier in diabetes management. We
continue to build a strong pipeline of potential collaborations and
future revenue opportunities to grow our portfolio of partnerships.
In 2023 we anticipate the first product incorporating the
Arestat(TM) technology, AT220, to be marketed by our partner under
a royalty generating license agreement in a multi-billion market.
The commercial roll-out of Ogluo(R), Tetris Pharma's key diabetes
product, will accelerate across key European territories meeting a
key patient need for people living with diabetes at risk of severe
hypoglycaemia."
Operational Highlights (including post-period events):
-- AT247 - Positive results from US Phase I clinical trial of ultra-rapid acting insulin, AT247
- Delivered by continuous subcutaneous infusion over 3 days via
an insulin pump
- Reinforces AT247 potential to enable a fully closed loop
artificial pancreas system
-- AT278 - Initiation of second Phase I trial of ultra-rapid
acting, ultra-concentrated AT278 in people with Type 2 diabetes,
with first patient dosed in Q1 2023
-- Specialty Hospital - Ready-to-use (RTU) injectable medicine AT307 transferred to Hikma
- Arestat(TM) enabled product to deliver safe, fast and
effective treatment options for patients
- Transferred to Hikma for further development, triggering
license milestone for Arecor
-- Partnership portfolio further strengthened
- Two new collaborations with a top five global pharmaceutical
company and pharmaceutical division of one of world's largest
chemicals marketing and pharmaceuticals companies
-- Acceleration of commercially driven strategy with acquisition of Tetris Pharma Ltd
- GBP6 million Placing to add key commercial diabetes product,
Ogluo(R), and build out Arecor's Specialty Hospital Products
franchise with scalable sales, marketing and distribution
platform
-- Appointment of Dr. Manjit Rahelu as Chief Business Officer
Financial Highlights:
-- Total Income of GBP3.5 million (2021: GBP1.8 million)
-- Investment in R&D of GBP8.6 million (2021: GBP5.4 million)
-- Loss after tax for the year of GBP9.3 million (2021: GBP6.2 million)
-- Cash and short-term investments of GBP12.8 million at 31
December 2022 (2021: GBP18.3 million)
-- Successful placing of GBP6.0 million (before expenses)
-- Acquisition of Tetris Pharma Ltd
Analyst meeting and webcast today
Dr Sarah Howell, Chief Executive Officer, and Susan Lowther,
Chief Financial Officer, will host a meeting and webcast for
analysts and investors at 11.00 am UK time today. Join the webcast
here . A copy of the final results presentation will be released
later this morning on the Company website at www.arecor.com. Please
contact Consilium Strategic Communications for details on
arecor@consilium-comms.com / +44 203709 5700.
For more information, please contact:
Arecor Therapeutics plc www.arecor.com
Dr Sarah Howell, Chief Executive Officer Tel: +44 (0) 1223 426060
Email: info@arecor.com
Susan Lowther, Chief Financial Officer Tel: +44 (0) 1223 426060
Email: info@arecor.com
Mo Noonan, Communications Tel: +44 (0) 7876 444977
Email: mo.noonan@arecor.com
Panmure Gordon (UK) Limited (NOMAD Tel: +44 (0) 20 7886 2500
and Broker)
Freddy Crossley, Emma Earl (Corporate
Finance)
Rupert Dearden (Corporate Broking)
Consilium Strategic Communications
Chris Gardner, David Daley, Lindsey Tel: +44 (0) 20 3709 5700
Neville Email: arecor@consilium-comms.com
Notes to Editors
About Arecor
Arecor Therapeutics plc is a globally focused biopharmaceutical
company transforming patient care by bringing innovative medicines
to market through the enhancement of existing therapeutic products.
By applying our innovative proprietary formulation technology
platform, Arestat(TM) , we are developing an internal portfolio of
proprietary products in diabetes and other indications, as well as
working with leading pharmaceutical and biotechnology companies to
deliver enhanced formulations of their therapeutic products. The
Arestat (TM) platform is supported by an extensive patent portfolio
.
For further details please see our website, www.arecor.com
This announcement contains inside information for the purposes
of the retained UK version of the EU Market Abuse Regulation (EU)
596/2014 ("UK MAR").
--
Chair's statement
Growing Arecor's reputation and reach
"As Arecor's reputation for innovative drug development
continues to build, we have demonstrated our strengths both in
partnership with leading pharmaceutical companies and through
progress with our own insulin portfolio. We will continue to build
on that work in the coming year to cement our status and expand our
reach within the industry."
Celebrating its first full year as a quoted company, Arecor
continued to make strong progress in 2022. Against a background of
major global challenges impacting the financial markets, we focused
on our strategy; delivering clinical data for one of our lead
diabetes programmes, bolstering our portfolio of blue-chip partners
and successfully completing a GBP6 million Placing to acquire
Tetris Pharma, a complementary commercial acquisition in the
specialty hospital products field.
2022 was a year characterised by macroeconomic turmoil and
geopolitical events that impacted financial markets and affected
all segments of industry including the pharmaceutical sector.
Whilst this has had only a limited impact on the day-to-day
business through rising costs for companies such as Arecor, the
resultant ripples has impacted the way that the industry connects
and works together.
Against this backdrop we are very encouraged by how much
progress Arecor has made. Our new partnerships with leading
pharmaceutical companies only strengthen our reputation as an
innovator that pharma and biopharma can work with and clearly
demonstrates the strength and relevance of our platform and
intellectual property. The progress of our partnered pipeline
products and the achievement of licence milestones further
exemplifies this success.
Within our own portfolio of insulin-based products notably,
AT278 and AT247, we have continued to build out excellent clinical
data sets, which is key to demonstrating where they best fit within
the clinical landscape and with potential commercial partners. We
successfully completed a further Phase I clinical trial in diabetes
for AT247, an insulin candidate, which clearly showed that it
possesses characteristics that facilitate a fully closed loop
artificial pancreas, with optimal automated delivery of insulin.
This will enable far more effective disease management, making
living with the disease easier and less burdensome for people with
Type I diabetes.
Furthermore, we closed the year with initiation of a second
Phase I clinical trial for AT278, an ultra-rapid acting,
ultra-concentrated (500 U/mL) insulin candidate, in Type 2 diabetic
patients. This head-to-head study is important to demonstrate
AT278's potential as a single injection treatment for patients who
need higher doses of insulin. Its highly concentrated formulation
also has the potential to advance the miniaturisation of delivery
devices. With 537 million people living with diabetes worldwide and
64 million requiring insulin daily, finding solutions to improve
the lives of people living with diabetes is more critical than
ever.
Diabetes and metabolic disorders are principally treated by
endocrinologists, a group of clinical specialists that Arecor
already interacts closely with in the development of its diabetes
franchise. In August, we successfully raised GBP6 million to
acquire Tetris Pharma, providing Arecor with a marketing, sales and
distribution capability focused on injectable specialty products
across the UK and Europe. The lead product Ogluo(R), a treatment
for severe hypoglycaemia is prescribed to diabetics by
endocrinologists and so is complementary to our therapeutic focus.
This acquisition provides Arecor with greater optionality in the
future both for our specialty products franchise and potential
partner products.
Looking forward, 2023 will build on the solid platform we have
produced in 2022 and will be a year of accelerated delivery across
the key areas of our business. One critical aspect of this will be
the way we work with both commercial and technology partners.
Building successful partnerships is of great importance to Arecor.
It requires two-way commitment and engagement, and I would like to
thank our partners for their contribution in making our current and
future potential partnerships succeed. The success of our partners
with products incorporating our technology is our success.
I would also like to thank our shareholders for their continued
belief in our vision, strategy and team. Their support has enabled
us to grow Arecor into a successful UK biopharmaceutical company on
the international stage and it is pleasing to shine a light on
examples of British science and expertise that maintain the UK's
strong reputation within the industry.
Finally, the Company would not be where it is today without the
hard work and commitment of our employees. 2023 shows no sign of
slowing for Arecor. Our focus is ensuring both scientific and
commercial delivery across our business pillars; a focus that will
drive value for our shareholders.
Andrew Richards
Non-Executive Chair
Chief Executive Officer's review
Significant momentum across internal and partnered portfolio
"Arecor's ambition is to build a significant self-sustaining
biopharmaceutical company and in 2022 we made excellent progress
across all aspects of our business, advancing our lead diabetes
clinical development programmes, delivering on our partnerships
portfolio and accelerating our commercially driven strategy."
Our vision is to transform patient care through the enhancement
of existing therapeutic products. By applying our innovative
proprietary formulation technology platform, Arestat(TM) we are
developing novel formulations of medicines with enhanced properties
that genuinely transform patient care, improving outcomes and
bringing safer, more effective and affordable treatments for the
benefit of patients and healthcare systems.
Combining our extensive know-how and expertise alongside the
power of Arestat(TM) , allows us to deliver differentiated,
patent-protected products, bringing benefits to patients and
achieving a commercial advantage in valuable and often competitive
fields of medicine. The progress in 2022 across our internal
portfolio of proprietary products and within our partnered
programmes, reflects the strength and broad applicability of our
formulation technology and expertise.
Within our Diabetes franchise, we made excellent progress in the
continued clinical development of our two lead insulin candidates,
AT247 and AT278. The latest data from our clinical trials continue
to reinforce our belief in the value of these products and that
they offer the potential to simplify and improve blood glucose
control for people living with diabetes and could enable the
development of next generation miniaturised insulin delivery
systems and a fully closed loop/artificial pancreas system - the
Holy Grail of diabetes management.
The steady growth in demand for ready-to-use (RTU) and
ready-to-administer (RTA) hospital care medicines that are
administered by healthcare professionals, underlines the
significant opportunity for Arecor within our Specialty Hospital
Products franchise. The transfer of our novel RTU therapeutic to
Hikma, which triggered the payment of a license milestone to
Arecor, was a significant advancement for the programme and for our
Company - important validation from a major pharmaceutical company
of the potential of our Arestat(TM) technology to deliver difficult
to achieve, but important RTU medicines, which are becoming
increasingly desirable for fast, safe and effective treatment of
patients at the point of care.
The acquisition of Tetris Pharma, and lead product Ogluo(R),
brought an opportunity to accelerate our commercially driven
strategy. Now a subsidiary of Arecor, this business provides us
with a revenue-generating sales, marketing and distribution
platform which complements our Specialty Hospital Products
franchise and adds the optionality of taking selected products to
market in the UK and Europe, in addition to our already proven
partnering strategy. Its targeting of endocrinologists with
Ogluo(R) provides a valuable link for Arecor to the clinical
community most closely engaged with diabetes patients.
In April 2023, we were delighted to welcome Dr. Manjit Rahelu as
Chief Business Officer. Manjit brings extensive experience
nurturing the growth of companies and driving deals to commercial
success, which will be invaluable to Arecor as we deliver on our
key strategic goals, leveraging the potential of our Arestat(TM)
platform technology, advancing our pipeline of proprietary products
and further expanding our partnered portfolio.
Operational review
Diabetes: Clinical progress with faster acting and more
concentrated faster acting insulins, AT247 and AT278. During the
year we made further significant progress advancing our proprietary
diabetes focused portfolio through clinical development. Our
Arestat(TM) enabled novel formulations of insulin are designed to
accelerate insulin absorption post injection, enabling more precise
and effective management of blood glucose levels for people living
with diabetes, particularly around difficult to manage
mealtimes.
In 2022, under an IND we undertook a US Phase I clinical trial
of our ultra-rapid acting insulin candidate, AT247, delivered by
continuous subcutaneous infusion and designed to further
demonstrate the superiority of AT247 compared to current
best-in-class insulins available to patients today. Results from
that trial clearly demonstrate faster insulin absorption than the
currently available, gold standard, rapid acting insulins,
NovoRapid(R) and Fiasp(R), and reinforce the potential of AT247 to
enable a fully closed loop artificial pancreas system, a
potentially life changing treatment option for people living with
diabetes. The successful completion of this first trial to
investigate the potential of AT247 when delivered by subcutaneous
infusion via an insulin pump over a period of 3 days, was an
important milestone for Arecor. With a superior PK profile and
promising PD results, the data support the potential that AT247 can
enable even more effective disease management for people with Type
I diabetes using fully automated delivery of insulin via a pump in
closed loop mode.
Both clinical trial and real-world evidence show that closed
loop systems are more effective in keeping blood glucose in a
healthy range than standard care, which entails regular measurement
of blood glucose level by the patient. This fact, in addition to
patient testimony describing the reduced mental load in the
management of their diabetes afforded by such systems, has led to a
recommendation by NICE that there should be wider access to closed
loop technology for people with Type 1 Diabetes.
The availability of AT247 with its ultra-rapid acting PK/PD
profile will be a key component in the move from the currently
available systems to those that are fully automatic and require
limited input from patients, allowing them to 'fully switch off'
from worrying about dipping into hypoglycaemia.
We have also initiated a second Phase I clinical trial of AT278,
our ultra-rapid acting, ultra-concentrated insulin candidate, in
Type 2 diabetic patients, illustrating the rapid progress we are
making in our clinical development programmes. This candidate has a
very promising profile, already demonstrated in our previous study,
which delivered results at the high end of expectations. In 2022 we
took these results to key scientific conferences, showcasing our
research to the diabetes research community. At both the
International Advanced Technologies and Treatments for Diabetes
(ATTD) meeting and the Annual Meeting of the European Association
for the Study of Diabetes (EASD), the data were well received. A
key opinion leader webinar, entitled "The Need for Concentrated and
Rapid Acting Insulin Treatments in Diabetes Care", which we hosted
following the ATTD meeting, brought together four world-class
experts in the field of diabetes care to discuss the AT278 clinical
data and highlighted the clear clinical and patient need.
When speaking about the unmet need for concentrated, rapid
acting insulin in the Arecor KOL webinar, Wendy Lane, MD,
highlighted the potential benefits to patients with the use of
AT278 when delivered by either pen or pump. Patient comfort and
convenience are likely to be improved with the smaller injection
volume needed and the ultimate development of smaller, longer
wear-time devices that concentrated insulin will allow.
Importantly, these benefits would come with no compromise to the
known clinical benefits of better blood glucose control and
outcomes for patients when using fast acting insulin around
mealtimes. Currently there are no highly concentrated rapid acting
insulins available for these patients.
AT278 has the potential to disrupt the market for insulin
treatment as the first concentrated, yet very rapid acting insulin,
and thereby become the gold standard insulin for the growing
population of people with diabetes with high daily insulin needs.
It has the potential to be a critical enabler in the development of
next generation miniaturised insulin delivery systems that are
beginning to dominate segments of the market. We look forward to
generating further data to support this candidate's profile, with
results from our second phase I clinical trial anticipated in Q4
2023. We believe that further investment in the diabetes programme
will take the products to a significantly higher value inflexion
prior to partnering.
Advancing specialty hospital proprietary portfolio
Our Specialty Hospital Products franchise is developing
medicines that are administered within the hospital setting by
health care professionals, particularly during the treatment of
serious infections, cancer and emergency care. Leveraging our
Arestat(TM) technology, we are developing RTU and RTA medicines
within this franchise, which provide significant benefits through
point of care use including safety benefits through reduced risk of
inappropriate dosing and efficiency benefits through avoiding the
need for pharmacy reconstitution.
Under a co-development agreement announced in January 2020 with
Hikma, and subsequently expanded in October 2020, we have been
responsible for optimising novel formulations of two products using
our Arestat(TM) technology platform. In 2022 we successfully
completed the application of this technology platform for both
products, and in January 2023, Hikma made the very positive
decision to take on full responsibility for the further development
and commercialisation activities for one of those products, AT307,
a RTU injectable hospital medicine. Hikma will now further develop
this product and seek approval under the U.S. Food and Drug
Administration's 505(b)(2) regulatory pathway. Hikma will generate
all data required for regulatory submission and approval in its
territories, including the United States. Under the terms of our
royalty-based agreement with Hikma, this transfer also triggered a
milestone payment to Arecor, following the upfront payment to
Arecor in October 2020 when the co-development and license
agreement was signed.
The transfer of AT307 was a significant milestone for Arecor and
a clear demonstration of the value that our expertise and
technology can bring to leading pharmaceutical companies developing
innovative products to improve patient care. It is also an
important further step in bringing this important medicine to
patients, through Hikma's commitment to the product's further
development and future commercialisation.
Following a product portfolio review, Hikma also made the
decision to deprioritise AT282, the second RTU medicine within our
co-development and licensing agreement. All rights to this product
have been returned to Arecor and with the strong data package
generated and Arecor owned patents, we are now assessing options
for gaining a new commercial partner for this potentially important
product.
Expansion of revenue generating partnership deals
The year brought further validation of the scientific strength
of our Arestat(TM) technology platform and the value of our
offering to leading healthcare companies, with the addition of two
new technology partnerships to our roster of collaborations.
Working with our partners we are applying our Arestat(TM) platform
technology to develop enhanced formulations of our partners'
proprietary products, with superior target product profiles.
In June 2022, we entered into an exclusive formulation study
collaboration with a top 5 global pharmaceutical company to develop
improved, stable, high concentration liquid formulations of its
proprietary products.
In November 2022, we entered an exclusive formulation
collaboration with the pharmaceutical division of one of the
world's largest chemicals marketing and pharmaceutical companies,
to develop a differentiated, stable, liquid drug product for
intravenous RTU administration. The new product formulation
supports safe medication practices and operational efficiency by
eliminating the need for reconstitution.
In February 2023, we entered into an additional formulation
study agreement with an existing top five global pharmaceutical
partner, building on a collaboration formed in 2022, to develop
improved, stable, high concentration, liquid formulations of its
proprietary product
These partners who gain access to our technology, fund the
development work and have the option to acquire the rights to the
new proprietary formulation and associated Intellectual Property
(IP) under a technology licensing model to further develop and
commercialise the product.
Partnerships provide near-term revenues as they typically
involve upfront and milestone payments and, if successful, they
provide significant future recurring revenue upside potential from
a royalty stream or equivalent. These also provide continued
learnings on where our technology can be applied.
Among our three licensed programmes, we continue to expect the
first partnered product incorporating the Arestat(TM) technology,
AT220, to be on the market within 2023. This is our most advanced
partnered programme and is a novel and differentiated formulation
of a product licensed to a global pharmaceutical company, targeting
a multi-billion market opportunity. Arecor will receive development
milestones and royalties on sales from continued development and
commercialisation.
These partnerships with leading biotech and biopharma companies
validate the need and demonstrate the opportunity for the
Arestat(TM) platform and are testament to our world-leading
expertise and innovation in formulation science.
Building a robust intellectual property portfolio
Throughout the year we have continued to invest in building a
strong patent portfolio to protect our Arestat(TM) technology
platform and proprietary pipeline products. The Group's IP
portfolio currently comprises 36 patent families, including >75
granted patents in Europe, the US and in other key territories. The
strength of our patents are a key valuable asset in licensing
negotiations.
In 2022 we further strengthened the portfolio with six
significant patents granted and a further three post-period,
protecting our proprietary Arestat(TM) technology and novel
formulations of existing therapeutic medicines with enhanced
features. The European Patent Office granted a patent (EP3496734B)
protecting novel compositions of insulin glargine with improved
thermostability and two patents (EP3592383B1 and EP3592385B1)
protecting our novel formulations of high-concentration adalimumab;
the United States Patent and Trademark Office granted a patent
(US11278624) protecting novel formulations of AT247 and AT278, as
did the Japan Patent Office (JP7145849). The same patent was also
granted in South Korea.
In February 2023, the Indian Patent Office granted a patent
(IN412485) protecting novel formulations of the Group's proprietary
insulin products, AT247 and AT278, until 2038. In addition, the
United States Patent and Trademark Office has granted two patents
(US11534402 and US11534403) protecting the Group's novel
formulations of high-concentration adalimumab until 2038.
These are important additions to our comprehensive IP strategy
and provide further proof of the potential of our Arestat(TM)
technology in the development of enhanced products.
Acquisition of Tetris Pharma and initiation of European roll-out
of Ogluo (R)
2022 provided an opportunity to further build on our ambition to
become a significant self-sustaining biopharmaceutical company
through the successful GBP6 million Placing to acquire Tetris
Pharma. Tetris Pharma is a strong, strategic fit for the Group,
giving Arecor a commercial stage speciality pharmaceutical business
with a marketing and distribution platform across the UK and
European markets with a core focus on niche injectable and
hospital-based prescription products. That platform has the
potential to add future optionality to our Specialty Hospital
Products franchise by providing the capability to take select
products to market in the UK and Europe, where appropriate. While
there is no change to the Group's overall strategy, we believe
Arecor is stronger as a result of this complementary acquisition.
We have gained a key commercial diabetes product for our portfolio,
with Ogluo(R), a ready-to-use glucagon auto-injector pen to treat
severe hypoglycaemia, a key patient need. The acquisition also
complements Arecor's existing Specialty Hospital Products
franchise, offering the potential to accelerate significant revenue
growth for the Company.
Following an earlier UK launch, the Tetris Pharma team has
continued the European commercial roll out of Ogluo(R), which is
now also available to patients in Germany and Austria. Syneos
Health, along with selected potential partners, is supporting
Ogluo's(R) continued roll-out across Europe, with additional
launches planned across key territories to further support
anticipated revenue growth.
Outlook
2022 was a year of delivery and execution of our strategy. As
clinical development of the two lead insulin candidates in our
Diabetes franchise rapidly advances, 2023 should provide further
evidence of their potential to enable a new frontier in diabetes
management. We continue to build a strong pipeline of potential
collaborations and future revenue opportunities to grow our
portfolio of partnerships. In 2023 we anticipate the first product
incorporating the Arestat(TM) technology, AT220, to be marketed by
our partner under a royalty generating license agreement in a
multi-billion market. The commercial roll-out of Ogluo(R), Tetris
Pharma's key diabetes product, will accelerate across key European
territories meeting a key patient need for people living with
diabetes at risk of severe hypoglycaemia.
Arecor enters 2023 in its strongest position yet to transform
patient care with enhanced, differentiated, life-changing
treatments. I would like to thank our Board, partners, stakeholders
and shareholders for their belief in Arecor. And above all, my
colleagues for their exceptional efforts and scientific
achievements.
Sarah Howell
Chief Executive Officer
Financial Review
The acquisition of Tetris Pharma Ltd and the associated placing
of GBP6 million in the year, accelerates our commercial strategy
and complements our proprietary diabetes portfolio and partnered
products
" We are grateful to our shareholders for their support of the
acquisition of Tetris Pharma, the associated raise and our vision
of building a commercially focused business with the potential to
derive significant revenue from existing and future partnering
opportunities."
On 4 August 2022, the Group acquired the entire issued share
capital of Tetris Pharma Ltd. On 4 August 2022, the Group raised
GBP6 million (before expenses), through the issue of an aggregate
of 2,000,000 placing shares to existing institutional and other
shareholders at a price of 300 pence per ordinary share. Certain of
the Company's directors participated in the placing and subscribed
an aggregate of GBP113,271 for 37,755 shares.
At the end of the financial year, the Group had cash resources
of GBP12.8 million (2021: GBP18.3 million) and remained debt free.
Cash and operating expenditure continue to be carefully
managed.
Cashflow forecasts and going concern
The directors regularly review rolling 12 monthly cash flow
forecasts. These forecasts indicate that the Group expects to
remain cash positive to continue to deliver on its business
strategy. This includes a period of at least 12 months from the
date of approval of the financial statements. The review of
forecasts for this period includes levers and controls which could
be applied if it was necessary to do so.
Taking such factors into account, the Group's unaudited
financial statements have been prepared on a going concern
basis.
Key financial performance indicators
A summary of the financial KPIs is set out below:
2022 2021
GBP'000s GBP'000s
--------- ---------
Total Income 3,537 1,798
--------- ---------
Formulation development projects 1,352 1,158
--------- ---------
Product sales 1,051 -
--------- ---------
Other operating income 1,132 640
--------- ---------
Loss after tax (9,260) (6,169)
--------- ---------
Cash and short-term investments 12,806 18,316
--------- ---------
Net Assets 17,455 18,549
--------- ---------
Total Income increased to GBP3.5 million in the year (2021:
GBP1.8 million), including revenue of GBP2.4 million (2021: GBP1.2
million) and other operating income of GBP1.1 million (2021: GBP0.6
million).
Revenue recognised in the year increased to GBP2.4m million
(2021: GBP1.2 million). On a like-for-like basis, revenue from
formulation development projects increased to GBP1.4 million (2021:
GBP1.2 million) including two new agreements signed in the year.
Net Product sales of GBP1.0 million (2021: Nil) from Tetris Pharma
Ltd were generated in the five-month period from August to December
2022.
Other operating income of GBP1.1 million (2021: GBP0.6 million)
was derived from a full project year of the Innovate UK grant
awarded in March 2021.
The loss after tax of GBP9.3 million (2021: GBP6.2 million)
included R&D expenditure which increased to GBP8.6 million
(2021: GBP5.4 million). This was focused investment in our
proprietary products including the US Phase I clinical trial of
AT247, with headline results announced in October, and the EU Phase
I clinical trial of AT278 which was initiated in December 2022.
Sales, General and Administrative expenses increased to GBP5.6
million (2021: GBP2.9 million) and included expenditure by Tetris
Pharma Ltd from August onwards. Including non-recurring costs of
GBP0.2 million in respect of the acquisition and placing. The prior
year non-recurring expenditure of GBP0.5 million was placing and
AIM admission costs.
Net assets of GBP17.2 million (2021: GBP18.5 million) included
cash and short-term investments of GBP12.8 million (2021: GBP18.3
million). Trade and other receivables increased to GBP2.2 million
(2021: GBP1.4 million) and included trade receivables and grant
project debtors. Current liabilities increased to GBP4.0 million
(2021: GBP2.3 million) and included final amounts due for the US
Phase I clinical trial of AT247.
Susan Lowther
Chief Financial Officer
Consolidated income statement
for the year ended 31 December 2022
31 December 31 December
2022 2021
Unaudited Audited
GBP000 GBP000
Revenue 2,403 1,158
Other operating income 1,132 640
Research and Development (8,613) (5,386)
Sales, General & Administrative (5,552) (2,851)
Operating loss (10,630) (6,439)
Finance income 109 1
Finance expense (21) (507)
------------ ------------
Loss before tax (10,542) (6,945)
Taxation 1,282 776
------------ ------------
Loss for the financial year (9,260) (6,169)
============ ============
Basic and diluted loss per share
(GBP) (0.32) (0.27)
In the year ended 31 December 2022, Sales, General &
Administrative costs included GBP0.2 million of non-recurring
expenses incurred in the acquisition of Tetris Pharma Ltd. The
prior year included GBP0.5 million of non-recurring IPO and placing
costs.
All results presented above are derived from continuing
operations and are attributable to owners of the company.
Consolidated statement of financial position
At 31 December 2022
31 December 31 December
2022 2021
Unaudited Audited
GBP000 GBP000
Non-Current assets
Intangible assets 1,918 30
Goodwill 1,484 -
Property, plant and equipment 838 328
Other receivables 48 48
------------ ------------
Total non-current assets 4,288 406
Current assets
Trade and other receivables 2,215 1,423
Current tax receivable 1,325 776
Cash and cash equivalents 4,765 18,316
Short term investments 8,041 -
Inventory 1,131 -
------------ ------------
Total current assets 17,477 20,515
Current liabilities
Trade and other payables (3,526) (2,141)
Lease liabilities (202) (126)
------------ ------------
Total current liabilities (3,728) (2,267)
Non-current liabilities
Lease liabilities (86) (105)
Deferred tax (496) -
------------ ------------
Total non-current liabilities (582) (105)
Net Assets 17,455 18,549
============ ============
Equity attributable to equity holders
of the company
Share capital 306 278
Share premium account 28,976 23,348
Share-based payments reserve 893 519
Other reserves 11,455 11,455
Merger relief reserve 2,014 -
Foreign exchange reserve (8) -
Retained losses (26,181) (17,051)
Total equity attributable to equity
holders of the company 17,455 18,549
============ ============
Consolidated statement of changes in equity
for the year ended 31 December 2022
Merger Share-based Foreign
Share Share Other relief payments exchange Retained Total
capital premium reserves reserve reserve reserve losses equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 January
2021 27 11,594 - - 1,045 - (11,892) 774
Comprehensive
income for
the year
Loss for the
year - - - - - - (6,169) (6,169)
Transactions
with owners
Shares issued
by Arecor Limited 1 - - - - - - 1
Reserve transfer - - - - (1,010) - 1,010 -
Share bonus
issue 139 (139) - - - - - -
Incorporation
of Arecor Therapeutics
Limited - (11,455) 11,455 - - - - -
Shares issued
by Arecor Therapeutics
plc 110 24,785 - - - - - 24,895
Share issue
expense - (1,437) - - - - - (1,437)
Share based
compensation - - - - 484 - - 484
Issue of shares
on exercise
of share options 1 - - - - - - 1
--------- --------- ---------- --------- ------------ ---------- --------- --------
Total transactions
with owners 251 11,754 11,455 - (526) - 1,010 23,944
--------- --------- ---------- --------- ------------ ---------- --------- --------
Equity as at
31 December
2021 (Audited) 278 23,348 11,455 519 - (17,051) 18,549
========= ========= ========== ========= ============ ========== ========= ========
Loss for the
year - - - - - - (9,260) (9,260)
Transactions
with owners
Issue of shares
on acquisition
of Tetris Pharma
Ltd 7 - - 2,014 - - - 2,021
Issue of shares
for working
capital purposes 20 5,980 - - - - - 6,000
Share issue
expense (352) - - - - - (352)
Issue of shares
on exercise
of share options 1 - - - - - - 1
Reserve transfer - - - - (130) - 130 -
Share based
compensation - - - - 503 - - 503
Foreign exchange
movements - - - - - (8) - (8)
--------- --------- ---------- --------- ------------ ---------- --------- --------
Total transactions
with owners 28 5,628 - 2,014 374 (8) 130 8,165
--------- --------- ---------- --------- ------------ ---------- --------- --------
Equity as at
31 December
2022 (Unaudited) 306 28,976 11,455 2,014 893 (8) (26,181) 17,455
========= ========= ========== ========= ============ ========== ========= ========
Consolidated statement of cash flows
for the year ended 31 December 2022
31 December 31 December
2022 2021
Unaudited Audited
GBP000 GBP000
Cash flow from operating activities
Loss for the financial year before tax (10,542) (6,945)
Finance income (109) (1)
Finance costs 21 507
Share-based payment expense 503 484
Depreciation 248 163
Amortisation 93 8
Foreign exchange movements (69) (5)
------------
(9,855) (5,789)
Changes in working capital
Decrease / (increase) in Inventories 587 -
Decrease / (increase) in trade and other
receivables (48) (1,257)
Increase / (decrease) in trade and other
payables (2,198) 838
Tax received 734 758
------------ ------------
Net cash from operating activities (10,780) (5,450)
------------ ------------
Cash flow from investing activities
Acquisition of subsidiary net of cash 284 -
acquired
Purchase of property, plant and equipment (299) (69)
Purchase of intangible assets (46) -
Short term investments (8,041)
Interest received 109 1
------------ ------------
Net cash used in investing activities (7,993) (68)
------------ ------------
Cash flow from financing activities
Issue of ordinary shares 6,000 20,002
Share issue costs (352) (1,437)
New loans received - 2,500
Capital payments on lease liabilities (165) (112)
Repayment of working capital facility (295) -
Interest paid on lease liabilities (21) (22)
Other interest paid (7) -
------------ ------------
Net cash generated from financing activities 5,160 20,931
------------ ------------
Net (decrease) / increase in cash and
cash equivalents (13,613) 15,413
Exchange losses on cash and cash equivalents 62 5
Cash and cash equivalents at beginning
of financial year 18,316 2,898
Cash and cash equivalents at end of
financial year 4,765 18,316
============ ============
Notes to the consolidated financial statements
1. General information
Arecor Therapeutics plc ("Arecor" or the "Company") is a public
limited company registered in England and Wales at Chesterford
Research Park, Little Chesterford, Saffron Walden, CB10 1XL with
registered number 13331147.
The principal activity of the Company is to act as a holding
company. The Group has two wholly owned trading subsidiaries;
Arecor Limited and Tetris Pharma Ltd.
Tetris Pharma Ltd and its wholly owned subsidiary Tetris Pharma
B.V were acquired on 4 August 2022.
Basis of preparation
Whilst the financial information included in this preliminary
announcement has been prepared in accordance with international
accounting standards, this announcement does not itself contain
sufficient information to comply with all IFRS disclosure
requirements. The Company's 2022 Annual Report and Accounts will be
prepared in compliance with UK-adopted International Accounting
Standards (IFRS).
The unaudited preliminary announcement does not constitute a
dissemination of the annual financial report and does not therefore
need to meet the dissemination requirements for annual financial
reports. A separate dissemination announcement in accordance with
Disclosure and Transparency Rules (DTR) 6.3 will be made when the
annual report and audited financial statements are available on the
Company's website.
Statutory Information
The financial information included in this preliminary
announcement does not constitute statutory accounts. The statutory
accounts for the year ended 31 December 2021 have been delivered to
the Registrar of Companies and received an unqualified auditors'
report, did not draw attention to any matters by way of emphasis
and did not contain statements under s498 (2) or (3) of the
Companies Act 2006.
The statutory accounts for the year ended 31 December 2022 will
be finalised on the basis of the financial information presented by
the directors in this unaudited preliminary announcement and will
be delivered to the Registrar of Companies following the Company's
General Meeting. The announcement of the preliminary results was
approved on behalf of the Board of directors on 19 April 2023.
Operating segments
The Directors have considered the reporting of operating
segments in line with IFRS 8 and believe that there is only one
reporting unit within the Group. The chief operating decision maker
reviews the operating results at a group consolidated level.
Business Combinations
Business combinations are accounted for using the acquisition
method as at the acquisition date. This is considered to be the
date at which control is transferred to the Group. The
consideration transferred for the acquisition is the fair value of
any equity interests issued by the Group. Identifiable assets and
liabilities assumed in the business combination are measured at
their fair value at the date of acquisition. This includes the
value of any intangible assets generated that could not previously
be recognised by the entity pre-acquisition.
The Group measures goodwill at the date of acquisition as the
fair value of the consideration less the recognised net amount of
the identifiable assets and liabilities acquired. Costs related to
the acquisition other than those associated with the issue of
equity in the Group are expensed as they are incurred.
On 4 August 2022, the Group acquired the entire share capital of
Tetris Pharma Ltd. The company has been consolidated in its
entirety with the income and expenditure post-acquisition included
in the consolidated income statement.
Investments in subsidiaries
Investments in subsidiaries owned by the company are included at
cost less any accumulated impairment charges.
Going Concern
The Directors have considered the Company's cashflow forecasts
to the period ending 12 months from the date of authorisation of
the financial statements. They have no grounds for concern
regarding the Company's ability to meet its obligations as they
fall due and continue to operate within the existing cash balance
and working capital facilities, thus requiring no additional
funding to maintain liquidity.
Cash flow forecasts model sensitivities, controls and levers in
the management of working capital. The potential impact of the
COVID-19 pandemic on the Group's ability to execute its strategy
has reduced however the business risk from macroeconomic factors
has increased. The potential impact on the Group has been
considered in the review of cashflow forecasts.
In reaching their decision to prepare financial statements on a
going concern basis, the Directors have a reasonable expectation
that the Company and the Group have adequate resources to continue
in operational existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis in
preparing the annual report and accounts
Revenue
Revenue is measured based on the consideration that the Group
expects to be entitled to in exchange for transferring promised
goods and services. Revenue is recognised to the extent that the
Group obtains the right to consideration in exchange for its
performance. In accordance with IFRS 15 Revenue from contracts with
customers, the following five-steps are applied:
-- identify contracts with customers;
-- determine performance obligations arising under those contracts;
-- set an expected transaction price;
-- allocate that price to the performance obligations; and then
-- recognise revenues as and when those obligations are satisfied.
2. Revenue and operating segments
The geographic analysis of the Group's revenue is as
follows:
31 December 31 December
2022 2021
Unaudited Audited
GBP000 GBP000
UK 1,136 71
Switzerland 240 -
Rest of Europe 108 76
USA 784 940
India 135 40
Rest of world - 31
------------ ------------
2,403 1,158
============ ============
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision makers.
Information reported includes revenue, expenditure by type and
department, cashflows and EBITDA for the Group.
The Board of Directors has been identified as the chief
operating decision makers and is responsible for allocating
resources, assessing the performance of the operating segment and
making strategic decisions. Accordingly, the Directors consider
there to be a single operating segment.
31 December 31 December
2022 2021
Unaudited Audited
GBP000 GBP000
Formulation development projects 1,352 1,014
Sales of pharmaceuticals 1,051 -
Non-Government grants - 144
------------ ------------
2,403 1,158
============ ============
3. Other operating income
Other operating income in the year was grant income received in
respect of a GBP2.8m grant awarded by Innovate UK in March
2021.
4. Operating loss
31 December 31 December
2022 2021
Unaudited Audited
GBP000 GBP000
Operating loss is stated after charging:
Audit fees 148 60
Other audit services 10 8
Audit of grant claims - Other professional
services 4 40
Depreciation of property, plant and
equipment:
- Owned assets 122 68
- Right of use assets under leases 126 95
Amortisation of intangible assets 93 8
Research and Development costs not disclosed
elsewhere in this note 5,958 3,570
Sales, General and Admin costs not disclosed
elsewhere in this note 2,934 395
Non-recurring expenses 171 462
Foreign exchange gains (69) (5)
Directors and employee costs 4,668 3,536
Non-recurring expenses in the year were costs incurred in the
acquisition of Tetris Pharma Ltd. Prior year costs were expenses
incurred in the admission to AIM on 3(rd) June 2021.
5. Finance income
31 December 31 December
2022 2021
Unaudited Audited
GBP000 GBP000
Bank interest received 102 1
Other interest received 7 -
------------ ------------
109 1
============ ============
6. Finance expense
31 December 31 December
2022 2021
Unaudited Audited
GBP000 GBP000
Loan note conversion - 485
Lease interest 18 22
Other interest expenses 8 -
26 507
============ ==============
The prior year comparatives include a charge of GBP485,000
arising from the conversion of loan notes into ordinary shares at
Admission.
7. Taxation
31 December 31 December
2022 2021
Unaudited Audited
GBP000 GBP000
Research & development tax credit
receivable (1,325) (776)
------------ ------------
Total tax (1,325) (776)
============ ============
31 December 31 December
2022 2021
Unaudited Audited
GBP000 GBP000
Loss before tax (10,542) (6,945)
Loss on ordinary activities multiplied
by standard rate of corporation tax
in the UK of 19% (2021: 19%) (2,003) (1,320)
============ ============
Tax effects of:
Expenses not deductible for tax purposes 248 180
Enhanced R&D relief (560) (523)
Unrecognised deferred tax 1,073 887
Additional relief on capital expenditure (20) -
Origination and reversal of timing (63) -
differences
------------ ------------
Total tax (credit) (1,325) (776)
============ ============
At 31 December 2022, the Group has accumulated tax losses of
GBP20,164,670 (2021: GBP11,361,635). No deferred tax asset was
recognised in respect of these accumulated tax losses due to
uncertainty regarding the timing of recoverability in future years.
Under UK tax law currently enacted, the accumulated tax losses are
not limited by an expiry date.
As confirmed in the UK Government budget in March 2023, the
level of UK Corporation tax will increase from 19% to 25% on 6
April 2023
8. Basic and diluted loss per share
Basic loss per share is calculated by dividing the loss
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year.
The diluted loss per share is considered to be the same as the
basic loss per share. Potential dilutive shares are not treated as
dilutive where they would result in a loss per share.
31 December 31 December
2022 2021
Unaudited Audited
GBP GBP
Loss per share from continuing operations (0.32) (0.27)
------------ ------------
The loss and weighted average number of ordinary shares used in
the calculation of basic loss per share are as follows:
31 December 31 December
2022 2021
Unaudited Audited
GBP000 GBP000
Loss used in the calculation of total basic
and diluted loss per share (9,260) (6,169)
------------ ------------
31 December 31 December
2022 2021
Number of shares Number Number
Weighted average number of ordinary shares
for the purposes of basic and diluted loss
per share 28,936,088 23,033,420
------------ ------------
9. Intangible assets
GROUP Patents Licenses Software Total
GBP000 GBP000 GBP000 GBP000
Cost
At 1 January 2021 150 - - 150
Additions - - - -
-------- --------- --------- -------
At 31 December 2021 150 - - 150
-------- --------- --------- -------
Additions - 1,933 48 1,981
At 31 December 2022 150 1,933 48 2,131
-------- --------- --------- -------
Amortisation
At 1 January 2021 112 - - 112
Charge for the year 8 - - 8
-------- --------- --------- -------
At 31 December 2021 120 - - 120
-------- --------- --------- -------
Charge for the year 8 83 2 93
-------- --------- --------- -------
At 31 December 2022 128 83 2 213
-------- --------- --------- -------
Net book value
At 31 December 2021 30 - - 30
======== ========= ========= =======
At 31 December 2022 22 1,850 46 1,918
======== ========= ========= =======
Amortisation is recognised within administrative expenses.
10. Acquisition of Tetris Pharma Ltd
On 4 August 2022, the Group acquired 100% of the share capital
of Tetris Pharma Ltd and gained control of the company and its
wholly owned subsidiary, Tetris Pharma BV. The fair value of the
assets acquired and the resulting goodwill arising on acquisition
is shown below. The fair value of the consideration paid for the
acquisition was GBP2,020,351.
Book value Fair value Fair value
adjustment
GBP000 GBP000 GBP000
Ogluo license and distribution
agreement, UK and Europe (Intangible
asset) - 1,781 1,781
UK Distribution agreements -
Other products (intangible asset) 152 152
Property, plant and equipment 232 - 232
Inventory 1,719 - 1,719
Trade and other receivables 738 - 738
Cash at bank 284 - 284
Trade and other payables (3,579) 505 (3,074)
Trade facility (295) - (295)
Historic liabilities - (505) (505)
Deferred tax on intangibles - (496) (496)
----------- ------------ -----------
Total (901) 1,437 536
----------- ------------ -----------
Goodwill 1,484
Total Consideration 2,020
The acquisition of Tetris Pharma Ltd was settled by the issue of
651,726 ordinary shares in Arecor Therapeutics plc. On the date of
the transaction, the market value was 310p per share. Further
consideration may fall due if specific sales and EBITDA targets are
met in each of the three years following the date of
acquisition.
Historic liabilities were costs incurred prior to the
acquisition which were non-recurring therefore were considered
separately to trade and other payables in the fair value
analysis.
Goodwill reflects expectations of future sales growth
attributable to Tetris Pharma Ltd.
From the date of acquisition to the financial year end, Tetris
Pharma Ltd contributed GBP1.0 million to Group revenue and incurred
a loss for the period of GBP1.2 million.
11. Share capital
31 December 31 December
2022 2022
Nominal
Number value
GBP000
Ordinary shares - par value GBP0.01
Allotted, called up and fully paid
Ordinary shares of GBP0.01 30,618,183 306
------------ ------------
At 31 December 2022 30,618,183 306
============ ============
31 December 31 December
2021 2021
Nominal
Number value
GBP000
Ordinary shares - par value GBP0.01
Allotted, called up and fully paid
Ordinary shares of GBP0.01 27,835,024 278
------------ ------------
At 31 December 2021 27,835,024 278
============ ============
The Company has a single class of Ordinary share that bear no
rights to fixed income
The following shares were issued in the periods presented:
Share Share
Number Capital Premium
GBP000 GBP000
At 1 January 2022 27,835,024 278 23,348
Issue of Ordinary shares of GBP0.01 2,000,000 20 5,980
Share issue expense - - (352)
Issue of ordinary shares of GBP0.01
as consideration for the acquisition
of Tetris Pharma Ltd 651,726 7 -
Issue of Ordinary shares of GBP0.01
on exercise of share options 131,433 1 -
----------- -------- --------
At 31 December 2022 (Unaudited) 30,618,183 306 28,976
=========== ======== ========
Share Share
Number Capital Premium
GBP000 GBP000
At 1 January 2021 - Arecor Limited 2,715,518 27 11,594
Issue of Ordinary shares of GBP0.01 62,493 1 -
Five to one bonus issue on all shares 13,890,055 139 (139)
----------- -------- --------
Total Ordinary shares allotted, called
up and fully paid in Arecor Limited
at 24 May 2021 16,668,066 167 11,455
----------- -------- --------
One to one share swap with Arecor
Therapeutics ordinary shares at par 16,668,066 167 -
Conversion of loan notes 2,165,908 21 4,873
Issue of ordinary shares of GBP0.01
during listing 8,849,558 88 19,912
Costs associated with issue of ordinary
shares of GBP0.01 (1,437)
Issue of Ordinary shares of GBP0.01 151,492 2 -
At 31 December 2021 (Audited) 27,835,024 278 23,348
=========== ======== ========
Share Premium
Proceeds received in addition to the nominal value of the shares
issued during the period have been included in share premium less
registration and other regulatory fees and net of related tax
benefits.
Share premium increases in the year arose from a placing of GBP6
million to provide working capital and an issue of shares as
consideration for the acquisition of Tetris Pharma Ltd.
12. Financial commitments
In August 2022, the Group signed agreements with The Medical
University of Graz and Joanneum Research Forschungsgesellschaft
GmbH, both based in Graz, Austria to provide specialised clinical
research services relating to a European based clinical study of
AT278, due to start in early 2023. Total payments agreed to be paid
to these parties for undertaking the study are EUR1.6m.
13. Post balance sheet events
There were no adjusting or significant non-adjusting events post
the balance sheet date of 31 December 2022.
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END
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