TIDMLLAI
RNS Number : 5390A
LungLife AI, INC
26 September 2022
LungLife AI, Inc.
(the "Company" or "LungLife")
Half-year Report
LungLife AI (AIM: LLAI), a developer of clinical diagnostic
solutions for the early detection of lung cancer announces its
unaudited half-year report for the six months ended 30 June
2022.
Summary and Highlights (including post-period end):
-- Cash as of 30 June 2022 of $10.63m
-- Loss before tax of $4.47m and EBITDA loss of $4.31m
-- Six sites participating in the Company's LungLB(R) validation
study, up from three at time of preliminary results in March, with
more in the pipeline
-- New York Clinical Laboratory Evaluation Programme ("CLEP") permit awarded
-- CPT(R) Proprietary Laboratory Analyses (PLA code), a key
component towards reimbursement in the US market, awarded and
became effective on 1 April 2022
-- Appointment of Dr Drew Moghanaki, an internationally
recognised lung cancer specialist, to the Company's Scientific
Advisory Board
-- With the existing sites participating in the validation study
and the additional sites already in the pipeline, there is a
continued expectation that we will complete enrolment of our
validation study by end of March 2023 and initial commercialisation
with nominal revenues of LungLB(R) later in 2023
Commenting on outlook, Paul Pagano, Chief Executive Officer of
LungLife, said : "I am proud of the progress that the team has made
over this six-month period. Our validation study is well underway,
having enrolled our first participant in February, and we are where
we expected to be at this time point to be able to complete
enrolment by the end of Q1 2023.
"Beyond the continued enrolment of participants into the LungLB
(R) validation study, over the remainder of the year we are focused
on progressing towards commercial reimbursement. Following the
grant of a CPT(R) PLA code in January, we now look ahead to the
processes of pricing and coverage for the LungLB(R) test."
For further information please contact:
LungLife AI, Inc. www.lunglifeai.com
Paul Pagano, CEO Via Walbrook PR
David Anderson, CFO
Investec Bank plc (Nominated Adviser Tel: +44 (0)20 7597 5970
& Broker)
Daniel Adams / Virginia Bull / Cameron
MacRitchie
Walbrook PR Limited Tel: +44 (0)20 7933 8780 or LungLifeAI@walbrookpr.com
Paul McManus / Alice Woodings / Phillip Mob: 07980 541 893 / 07407 804 654 /
Marriage 07867 984 082
About LungLife
LungLife AI is a developer of clinical diagnostic solutions
designed to make a significant impact in the early detection of
lung cancer, the deadliest cancer globally. Using a minimally
invasive blood draw, the Company's LungLB(R) test is designed to
deliver additional information to clinicians who are evaluating
indeterminate lung nodules. For more information visit
www.lunglifeai.com
CHAIRMAN'S STATEMENT
The six months ended 30 June 2022 was a period of good progress
for LungLife, as we achieved several milestones to keep us on track
with our mission to make a significant impact in the early
detection of lung cancer through our LungLB(R) test.
Our LungLB(R) test
LungLB(R) is a blood-based test that uses circulating tumour
cells to stratify indeterminant lung nodules as either cancerous or
benign following their identification by CT scan. Biopsy is
currently part of the standard of care pathway for lung nodules,
but it has significant drawbacks. Approximately 40% of biopsies
result in a benign nodule, and an adverse event rate of
approximately 20% means that many patients are unnecessarily put at
risk. The LungLB(R) test is designed to support the physician's
decision to biopsy only when necessary, or to monitor
non-invasively using additional imaging.
In 2021, we completed a 149-participant pilot study in which we
observed a well-balanced performance and a Positive Predictive
Value ("PPV") of 89% by LungLB(R). This PPV value means that in the
case of a positive result from the LungLB(R) test, the subject's
indeterminate nodule was cancerous 89% of the time. We have now
embarked on our clinical validation study and hope those results
will mirror those found in our pilot study.
There are estimated to be over 1.5 million indeterminant lung
nodules identified each year in the United States(1) by CT scan and
LungLife's estimated one week turnaround from receipt of the blood
sample to results can save a significant amount of stressful
waiting time for the patient as well as avoid unnecessary costly,
and often dangerous, procedures.
Progress in the period
In February 2022, we enrolled the first participant into our
multi-centre clinical validation study for LungLB(R). The
validation study will enrol up to 425 participants across multiple
US sites, including MD Anderson Cancer Center, Mount Sinai Hospital
in New York City and multiple medical centres of the Veterans
Affairs, taking participants who present with indeterminate lung
nodules.
Since my last report in March, we have added a further three
sites to our validation study, including a further two medical
centres of the Veterans Affairs ("VA") and most recently,
University of California, Los Angeles ("UCLA"). There are a number
of further sites currently in the pipeline and which are expected
to come onstream in the coming weeks and months.
The VA has the United States' largest integrated health care
system, providing care at nearly 1,300 facilities and serving nine
million veterans each year. Lung cancer is the leading cause of
cancer-related deaths among US veterans, and it is believed that
veterans are at higher risk in part due to environmental exposures
during military service. An estimated 900,000 US veterans are
at-risk for lung cancer, and VA hospitals diagnose around 7,700 new
lung cancer cases each year, making the three VA sites in our study
population an important addition.
Earlier this month we were delighted to be awarded the New York
Clinical Laboratory Evaluation Programme ("CLEP") permit following
their audit. The CLEP permit allows LungLife to perform clinical
utility studies and offer the LungLB(R) test commercially in New
York state, in addition to the 46 other states permitted by the
Company's existing Clinical Laboratory Improvement Amendments
("CLIA") certification. The audit was performed to ensure that the
premises, laboratory practice, equipment, personnel, and
record-keeping methods meet state requirements. Issuance of the
CLEP permit follows a rigorous, independent scientific review of
both analytical and clinical data for LungLB(R), as well as
evaluation of adherence to the Company's quality management
system.
This is an important step in LungLife's commercialisation plan,
given our relationship with the Icahn School of Medicine at Mount
Sinai in New York, a key site in the ongoing pivotal validation
trial, and from which the Company is now able to accept study
participants in future utility studies.
In January 2022, we announced that we had been successfully
granted a Proprietary Laboratory Analyses (PLA) CPT(R) code by the
American Medical Association, marking the first step on the path
for commercial reimbursement. CPT(R) codes offer healthcare
professionals a uniform language for coding medical services and
procedures and allows clinical laboratories to more specifically
identify their tests when billing Medicare and commercial insurers.
The Centers for Medicare & Medicaid Services ("CMS") recently
issued their Calendar Year 2023 Clinical Laboratory Fee Schedule
(CLFS) preliminary payment determination for the LungLB(R) as
crosswalk . There is now a public comment period for 30 days and
the final determination will be announced in November 2022. There
is no guarantee the final payment determination will be
crosswalk.
As a reminder, crosswalk applies if the new test is comparable
to an existing test (that may use a similar technology but for a
different indication, for example), in which case it is assigned
the market-based payment rate of that comparable existing test.
Gapfill applies if there are no comparable existing tests, in which
case the Medicare Administrative Contractor determines the
pricing.
People
In March, we announced the appointment of Dr Drew Moghanaki, MD,
MPH, an internationally recognised lung cancer specialist, to our
Scientific Advisory Board. Dr Moghanaki is Professor and Chief of
Thoracic Oncology at the UCLA Department of Radiation Oncology. He
has brought extensive leadership to our Scientific Advisory Board
as the Director of the VA Partnership to increase Access to Lung
Cancer Screening programme (VA-PALS), and the co-chair of the VA
Lung Cancer Surgery or Stereotactic Radiotherapy (VALOR) Phase III
study, investigating treatment options for stage I lung cancer.
Outlook
Our key focus is meeting our enrolment target by end of March
2023. Once enrolment is complete, we will then start the process of
evaluating the results which we expect to be concluded by June
2023. With our CLIA license and CLEP permit, we expect to be able
to begin commercialisation of LungLB(R) in parallel with our
preparation and submission to the FDA.
We continue to carefully manage our cash resources with an
anticipated cash runway to first half of 2024.
I would like to thank our shareholders, staff and partners for
their support over this period, and look ahead to the remainder of
2022 and beyond, which is set to bring further progress for the
Company.
Roy Davis
Non-Executive Chairman
26 September 2022
(1) Gould MK et al. Am J Respir Crit Care Med. 2015 PMID:
26214244.
FINANCIAL REVIEW
In the period total cash outflow was $4.0m (six months to 30
June 2021 - $0.07m), of which $3.8m was consumed by operating
activities (six month to 30 June 2021 - $1.6m) with the balance
mainly being repayment of lease liabilities, which includes the
rent on our CLIA laboratory. The prior period was before our IPO on
8 July 2021 whereupon the business was funded by the issue of
convertible loan notes, all of which, principal and interest, were
subsequently converted into new common shares.
Revenues of $10k related to royalties earned under our
arrangement with our partner in China. In the six months to 30 June
2021 revenue was $107k which related wholly to the sale of
consumable items to our partner in China. The EBITDA loss for the
period was $4.31m (six months to 30 June 2021 - $2.2m), which
includes the share-based payment charge of $0.4m (six months to 30
June 2021 - $0.16m). The biggest contributors to the EBITDA loss
were employment costs of $1.3m (six months to 30 June 2021 -
$0.43m) and research and development of $1.3m (six months to 30
June 2021 - $0.19m). The research and development costs are those
incurred on our clinical validation study and continued development
of the AI algorithm. In the period we increased our headcount, and
we now have 14 full time employees.
STATEMENT OF COMPREHENSIVE INCOME
For the period ended 30 June 2022
Note 6 months 6 months Year ended
ended 30 ended 30 31 December
June 2022 June 2021 2021
US$'000 US$'000 US$'000
Unaudited Unaudited Audited
Revenue (3) 10 107 195
Cost of sales - (92) (96)
----------- ----------- -------------
Gross profit 10 15 99
Administrative expenses (4,322) (2,247) (5,904)
Exceptional costs - costs
of listing - (2,084) (1,101)
Depreciation (155) (139) (323)
----------- ----------- -------------
Operating loss (4,467) (4,455) (7,229)
Other operating income - 206 206
Finance income 26 - 12
Finance charges (27) (317) (417)
----------- ----------- -------------
Loss before taxation (4,468) (4,566) (7,428)
Taxation (1) - (16)
----------- ----------- -------------
Loss for the period / year (4,469) (4,566) (7,444)
Other comprehensive income - - -
----------- ----------- -------------
Total comprehensive loss
for the period / year (4,469) (4,566) (7,444)
----------- ----------- -------------
Loss per share from continuing
activities attributable
to the ordinary equity holders
of the Company
Basic and diluted (US Dollars
per share) (4) (0.175) (0.960) (0.469)
----------- ----------- -------------
STATEMENT OF FINANCIAL POSITION
As at 30 June 2022
Note 30 June 30 June 31 December
2022 2021 2021
US$'000 US$'000 US$'000
Unaudited Unaudited Audited
Assets
Non-current assets
Property, plant and
equipment 693 309 766
Intangible assets 5,818 - 5,818
Other receivables (5) 13 13 13
----------- ----------- ------------
Total non-current
assets 6,524 322 6,597
----------- ----------- ------------
Current assets
Trade and other receivables (5) 526 137 741
Cash and cash equivalents 10,633 121 14,628
----------- ----------- ------------
Total current assets 11,159 258 15,369
Total assets 17,683 580 21,966
Equity and liabilities
Equity
Called up share capital 3 9 3
Share premium 91,264 52,194 91,264
Other equity - 942 -
Share based payment
reserve 1,358 714 960
Accumulated losses (76,566) (69,469) (72,097)
----------- ----------- ------------
Total equity 16,059 (15,610) 20,130
Non-current liabilities
Lease liabilities 477 75 601
Provisions 50 50 50
----------- ----------- ------------
527 125 651
----------- ----------- ------------
Current liabilities
Trade and other payables (7) 706 3,810 804
Lease liabilities 217 172 207
Discontinued operations 174 174 174
Convertible notes - 11,909 -
Total current liabilities 1,097 16,065 1,185
----------- ----------- ------------
Total liabilities 1,624 16,190 1,836
----------- ----------- ------------
Total equity and liabilities 17,683 580 21,966
----------- ----------- ------------
STATEMENT OF CHANGES IN EQUITY
As at 30 June 2022
Share
based
Share Share Other payment Accumulated Total
capital premium equity reserve losses equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 1
January 2021 9 52,194 843 551 (64,903) (11,306)
Comprehensive
income:
Loss for the
period - - - - (4,566) (4,566)
Transactions
with owners:
Convertible debt - - 99 - - 99
Share based payments - - - 163 - 163
---------- ---------- ---------- --------- -------------- -----------
Balance at 30
June 2021 9 52,194 942 714 (69,469) (15,610)
---------- ---------- ---------- --------- -------------- -----------
Balance at 30
June 2021 9 52,194 942 714 (69,469) (15,610)
Comprehensive
income:
Loss for the
period - - - - (2,878) (2,878)
Transactions
with owners:
Reverse stock
split (8) 8 - - - -
Issue of common
stock 2 40,062 - - - 40,064
Conversion of
Loan Notes - - (942) - 250 (692)
Share issue costs - (1,000) - - - (1,000)
Share based payments - - - 246 - 246
---------- ---------- ---------- --------- -------------- -----------
Balance at 31
December 2021 3 91,264 - 960 (72,097) 20,130
---------- ---------- ---------- --------- -------------- -----------
Balance at 1
January 2022 3 91,264 - 960 (72,097) 20,130
Comprehensive
income:
Loss for the
period - - - - (4,469) (4,469)
Transactions
with owners:
Share based payments - - - 398 - 398
---------- ---------- ---------- --------- -------------- -----------
Balance at 30
June 2022 3 91,264 - 1,358 (76,566) 16,059
---------- ---------- ---------- --------- -------------- -----------
STATEMENT OF CASH FLOWS
For the period ended 30 June 2022
6 months 6 months Year ended
ended 30 ended 30 31 December
June June 2021
2022 2021 US$'000
US$'000 US$'000 Audited
Unaudited Unaudited
Cash flows from operating
activities
Loss for the period / year (4,469) (4,566) (7,444)
Adjustments for non-cash/non-operating
items:
Depreciation 155 139 323
Gain on sale of tangible assets - (36) (36)
Other operating income - (206) (206)
Finance income (26) - (12)
Finance expense 27 317 417
Taxation 1 - 16
Share based compensation 398 163 409
------------------ ----------- -------------
(3,914) (4,189) (6,533)
Changes in working capital
(Increase)/ decrease in trade
and other receivables 221 32 (569)
(Decrease)/increase in trade
and other payables (98) 2,585 (422)
------------------ ----------- -------------
Cash outflow from operations (3,791) (1,572) (7,524)
Taxation paid (1) - (16)
------------------ ----------- -------------
Net cash outflow from operating
activities (3,792) (1,572) (7,540)
------------------ ----------- -------------
Cash inflow / (outflows)
from investing activities
Proceeds from sale of tangible
assets - 36 36
Purchase of tangible assets (82) - (47)
Landlord improvement contribution - 15 15
Purchase of intangible assets - - (1,800)
Net cash flows from investing
activities (82) 51 (1,796)
Cash flows from financing
activities
Issue of Convertible Notes - 1,612 1,612
Issue of common stock - - 23,444
Expenses of issue of common
stock - - (1,000)
Interest received 20 - 10
Interest paid (27) - (107)
Repayment of lease liabilities (114) (98) (123)
------------------ ----------- -------------
Net cash inflow from financing
activities (121) 1,514 23,836
------------------ ----------- -------------
Net increase/(decrease) in
cash and cash equivalents (3,995) (7) 14,500
Cash and cash equivalents
brought forward 14,628 128 128
------------------ ----------- -------------
Cash and cash equivalents
carried forward 10,633 121 14,628
1. GENERAL INFORMATION
LungLife AI, Inc, (the "Company") is a company based in Thousand
Oaks, California which is developing a diagnostic test for the
early detection of lung cancer. The Company was incorporated under
the laws of the state of Delaware on 30 December 2009.
Basis of preparation
The accounting policies adopted in the preparation of the
interim consolidated financial information are consistent with
those of the preparation of the Group's annual consolidated
financial statements for the period ended 31 December 2021. No new
IFRS standards, amendments or interpretations became effective in
the six months to 30 June 2022.
Statement of compliance
This interim consolidated financial information for the six
months ended 30 June 2022 has been prepared in accordance with UK
adopted International Accounting Standards (UK IFRS) IAS 34,
'Interim financial reporting' as adopted by the European Union and
the AIM Rules for UK Companies. This interim consolidated financial
information is not the Group's statutory financial statements and
should be read in conjunction with the annual financial statements
for the period ended 31 December 2021, which have been prepared in
accordance with UK IFRS and have been delivered to the Registrar of
Companies. The auditors have reported on those accounts; their
report was unqualified, did not include references to any matters
to which the auditors drew attention by way of emphasis of matter
without qualifying their report and did not contain any statements
of emphasis or other matters.
The interim consolidated financial information for the six
months ended 30 June 2022 is unaudited. In the opinion of the
Directors, the interim consolidated financial information presents
fairly the financial position, and results from operations and cash
flows for the period. Comparative numbers for the six months ended
30 June 2021 are unaudited.
Measurement convention
The financial information has been prepared under the historical
cost convention. Historical cost is generally based on the fair
value of the consideration given in exchange for assets.
The preparation of the financial information in compliance with
UK IFRS requires the use of certain critical accounting estimates
and management judgements in applying the accounting policies. The
significant estimates and judgements that have been made and their
effect is disclosed in note 2.
2. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES
The preparation of the Company's historical financial
information under UK IFRS requires the directors to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and
liabilities. Estimates and judgements are continually evaluated and
are based on historical experience and other factors including
expectations of future events that are believed to be reasonable
under the circumstances. Actual results may differ from these
estimates.
The directors consider that the following estimates and
judgements are likely to have the most significant effect on the
amounts recognised in the financial information.
Carrying value of intangible assets, property, plant and
equipment
In determining whether there are indicators of impairment of the
Company's intangible assets, the directors take into consideration
various factors including the economic viability and expected
future financial performance of the asset and when it relates to
the intangible assets arising on a business combination, the
expected future performance of the business acquired.
3. SEGMENT ANALYSIS
IFRS 8 requires operating segments to be identified on the basis
of internal reports about components of the Company that are
regularly reviewed by the chief operating decision maker (which
takes the form of the Board of Directors) as defined in IFRS 8, in
order to allocate resources to the segment and to assess its
performance.
The chief operating decision maker has determined that LungLife
AI, Inc has one operating segment, the development and
commercialisation of its lung cancer early detection test. Revenues
are reviewed based on the products and services provided.
The Company operates in the United States of America. Revenue by
origin of geographical segment is as follows:
Revenue 6 months 6 months Year ended
ended 30 ended 30 31 December
June June 2021 2021
2022 US$'000 US$'000
US$'000 Unaudited Audited
Unaudited
People's Republic of China 10 107 195
10 107 195
----------- ----------- -------------
Non-current assets 30 June 30 June 31 December
2022 2021 2021
US$'000 US$'000 US$'000
Unaudited Unaudited Audited
United States of America 6,524 322 6,597
6,524 322 6,597
----------- ----------- ------------
Product and service revenue 6 months 6 months Year ended
ended 30 ended 30 31 December
June 2022 June 2021 2021
US$'000 US$'000 US$'000
Unaudited Unaudited Audited
Consumable items - 107 107
Royalty income 10 - 88
10 107 195
----------- ----------- -------------
4. LOSS PER SHARE
The basic loss per share from continuing activities is based on
a loss for the year attributable to equity holders of the Parent
Company of $4,469,915 for the 6 months ended 30 June 2022 (6 months
ended 30 June 2021 loss $4,566,267; year ended 31 December 2021:
loss $7,444,188) and the weighted average number of shares in issue
for the 6 months to 30 June 2022 of 25,480,790 (6 months to 30 June
2021: 4,758,434 and year to 31 December 2021: 15,870,143).
The Company has one category of dilutive potential ordinary
share, being share options. The potential shares were not dilutive
in the period as the Company made a loss per share in line with IAS
33. Prior to the listing of its shares, between 2 July 2021 and 7
July 2021 the Company implemented a pre-Admission reorganisation of
its capital which included the conversion of Series A and B
Preferred Shares into Common Shares and a reverse share split by
way of the issue of one new Common Share and Preferred Share for
every 18 old Common Shares and Preferred Shares held.
As required by IAS33, the number of shares presented as the
denominator in calculating loss per share has been adjusted from 1
January 2021, the beginning of the earliest period for which loss
per share information is presented in order to maintain
comparability.
5. TRADE AND OTHER RECEIVABLES
Amounts falling due within 30 June 30 June 31 December
one year 2022 2021 2021
US$'000 US$'000 US$'000
Unaudited Unaudited Audited
Trade receivables 69 67 -
Other receivables 99 - 49
Prepayments 358 70 692
526 137 741
----------- ----------- ------------
Amounts falling due after
one year
Rent deposit 13 13 13
13 13 13
--- --- ---
All receivables are denominated in US dollars
6. SHARE BASED PAYMENTS
The following is an analysis of movement in options issued and
outstanding to purchase shares in the Company:
Total Weighted
options average
Number exercise
price US$
At 1 January 2021 14,499,482
Reverse share split (13,693,990)
-------------- ----------------------
Revised balance at 1 January 2021 805,492 0.74
Exercised or expired (13,913) 0.74
Granted 1,260,035 2.19
At 31 December 2021 - Exercisable 2,065,527 1.74
Granted 75,000 2.37
Expired (18,356) 1.80
At 30 June 2022 - Exercisable 2,122,171 1.76
-------------- ----------------------
7. TRADE AND OTHER PAYABLES
30 June 30 June 31 December
2022 2021 2021
US$'000 US$'000 US$'000
Unaudited Unaudited Audited
Trade payables 368 1,225 212
Other payables - tax and
social security 2 - 21
Accruals and other payables 336 2,585 571
706 3,810 804
----------- ----------- ------------
Trade and other payables comprise amounts outstanding for trade
purchases and on-going costs. All trade and other payables are due
in less than a year.
8. SUBSEQUENT EVENTS
There have been no events which require disclosure in these
unaudited interim financial statements.
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