TIDMLLAI
RNS Number : 3593Q
LungLife AI, INC
20 February 2023
LungLife AI, Inc.
(the "Company" or "LungLife")
Preliminary audited results for year ended 31 December 2022
LungLife to report financial results for full-year 2022
LungLife AI (AIM: LLAI), a developer of clinical diagnostic
solutions for lung cancer, announces its audited preliminary
results for the year ended 31 December 2022.
Summary and Highlights for the year:
-- Cash as of 31 December 2022 of $8.01m (2021: $14.62m)
-- Loss before tax of $7.60m (2021: $7.43m)
-- Adjusted EBITDA(1) loss of $6.84m (2021: $5.40m)
-- Enrolled first participant into multi-centre clinical
validation study in February 2022, and on track to complete study
enrolment in the next 2-3 months. Total of 14 sites enrolled in the
study, including seven from Veterans Affairs Hospitals(2)
-- Centers for Medicare & Medicaid Services ("CMS") granted
a national price of $2,030 per test for the LungLB(R),
November 2022
-- LungLB(R) test approved and Clinical Laboratory Evaluation
Programme ("CLEP") permit awarded by the New York State Department
of Health, allowing the Company to perform clinical utility studies
and offer LungLB(R) commercially in New York state, September
2022
-- Selected to participate in the US National Cancer Institute's
Early Detection Research Network ("EDRN") as part of Boston
University-University of California Los Angeles Lung Cancer
Biomarker Development Laboratory
-- 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, March 2022
(1) Earnings before interest, tax, depreciation and
amortisation, adjusted to exclude exceptional items, share based
payments and other operating income
(2) Federal government charged with providing life-long
healthcare services to eligible veterans
Commenting, Paul Pagano, Chief Executive Officer of LungLife,
said : "2022 was a significant year for LungLife and I'm proud of
the team for the accomplishments made in fulfilment of our
milestones. We initiated our multi-centre validation study in
February, expanded the number of participating sites throughout the
year and is on track to complete participant enrolment in the next
2-3 months. We ended the year with CMS confirming a price of $2,030
for LungLB(R) under crosswalk - avoiding a year long process of
gapfill price determination and accelerating progress on
reimbursement.
"We also received two independent reviews of LungLB(R) with the
New York CLEP permit and selection to participate in the US
National Cancer Institute's Early Detection Research Network. These
have provided external evaluation of our technology's analytical
and clinical data and are important steps in increasing awareness
of LungLB(R) and moving towards the Company's commercialisation
plan.
"We remain focused on completing our clinical validation study,
commencing our clinical utility study later this year and expanding
patient access to LungLB(R) through implementation of our
commercial reimbursement plan. We are very excited by the
opportunities ahead and the potential for LungLB(R) to transform
the early detection of lung cancer".
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)
Virginia Bull / Cameron MacRitchie
/ Lydia Zychowska
Walbrook PR Limited Tel: +44 (0)20 7933 8780 or LungLifeAI@walbrookpr.com
Stephanie Cuthbert / Alice Woodings Mob: 07980 541 893 / 07407 804 654 /
/ Phillip 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
Our Purpose is to be a driving force in the early detection to
lung cancer. And our Vision is to invert the 20:80 ratio such that
in years to come at least 80% of lung cancer is detected early.
Chairman's Statement
I am delighted to report on the Company's results for the year
ended 31 December 2022. We have continued to deliver on the
Company's objectives and remain committed to creating shareholder
value as we proceed with the aim of being a driving force in the
early detection of lung cancer through the completion of our
LungLB(R) test multi-centre clinical validation study.
LungLB(R) test
According to the World Health Organization, over 2.2 million new
cases of lung cancer were diagnosed in 2020 and approximately 1.8
million deaths from lung cancer were recorded in 2020 globally.
Nearly 80% of all lung cancers in the United States are diagnosed
in later stages when survival rates are low because the options for
curative treatment are then limited. This is in part due to the
lack of effective early detection solutions and the fact that lung
cancer largely develops asymptomatically.
LungLB(R) is a blood-based test that uses circulating tumour
cells ("CTC") to stratify indeterminant lung nodules as either
cancerous or benign following their identification by CT scan.
Biopsy is currently part of the standard care pathway for lung
nodules and 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. There are estimated to be
over 1.5 million indeterminant lung nodules identified each year in
the United States(1) 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 participant as well as
unnecessary costly and often dangerous procedures.
(1) Gould MK et al. Am J Respir Crit Care Med. 2015 PMID:
26214244 .
Progress
Our focus this year has been on our clinical validation study
and charting a course to subsequent commercialisation.
We enrolled our first participant in February 2022 in our
multi-centre clinical validation study. Currently we have activated
14 sites in our clinical validation study, which include seven from
the Veterans Affairs hospitals. Our study currently requires us to
enrol 425 participants.
As we collect more data on enrolment trends from various sites,
we become more able to precisely estimate timing of completion,
which we forecast to be completed in the next 2-3 months.
Hand-in-hand with enrolment, the Clinical Research Organization
(CRO) monitors the usable sample rate (unusable samples may result
from a failed biopsy, or insufficient blood draw, for example) and
distribution of the study arms (cancer vs benign nodules) to ensure
we are still in-line with our initial projections; so that we can
make adjustments to final enrolment numbers, should it be
necessary, which is standard practise for clinical studies.
While COVID, nursing and research strikes impacted sites at
times from reaching their full enrolment rates, our actions,
including activating additional sites across the country, have
helped keep us broadly on track with our initial estimates. Within
approximately three months following the enrolment of the last
participant we anticipate the data will be available for analysis
and subsequent study readout. These timelines are well-accounted
for within our current cash runway, which we continue to expect
will take us through to mid-2024.
We received two important, independent evaluations of our test
this year.
In September the New York State Department of Health ("NYSDOH")
awarded LungLife a Clinical Laboratory Evaluation Program ("CLEP")
permit following their on-site audit, during which there were no
deficiencies found.
The CLEP permit allows LungLife to perform clinical utility
studies and offer the LungLB(R) test commercially in New York
state, in addition to 46 other states permitted by the Company's
existing Clinical Laboratory Improvement Amendments ("CLIA")
certification.
This is an important step in LungLife's commercialisation plan,
given its 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. Securing a CLEP permit is a
requirement to consider participants from New York state in the
utility studies planned for 2023, from which the Company expects
first nominal revenues.
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.
In October we announced we will be one of two industry partners
to participate in the Boston University ("BU") -University of
California Los Angeles ("UCLA") Lung Cancer Biomarker Development
Laboratory of the US National Cancer Institute's Early Detection
Research Network ("EDRN").
The EDRN is a division of the US National Cancer Institute, the
federal government's principal agency for cancer research and
training. The EDRN's mission is to discover, develop, and validate
new biomarkers and medical imaging technologies to detect
early-stage cancers, and to translate them into clinical tests. It
is comprised of over 300 investigators from academic institutions
and industry partners working collaboratively to bring new
diagnostic biomarkers to clinical use.
LungLife's clinical laboratory will operate as a Biomarker
Reference Laboratory, processing blood samples from the
participating academic centres at UCLA and BU where the LungLB(R)
test will be combined with imaging to assist their early detection
research, as well as validate combined test performance in patients
with indeterminate lung nodules. It is expected the blood samples
will be collected over a number of years with progress and results
presented to EDRN members at annual meetings, representing the
first independent study of LungLB(R) . These activities are
independent of LungLife's ongoing pivotal validation study and do
not impact on the progress of this study.
The work of the EDRN closely aligns with LungLife's mission to
increase the early detection of lung cancer and will provide
further clinical evidence for the LungLB(R) technology as well as
widen awareness of our technology with leading US investigators. It
also affords LungLife the potential to offer novel cell-based
diagnostic biomarkers discovered at UCLA and BU to physicians from
its clinical laboratory, thereby potentially expanding its lung
cancer testing capabilities.
We were pleased to conclude the year with the announcement in
November that the Centers for Medicare & Medicaid Services
("CMS") has granted a price at $2,030 per test for the LungLB(R)
early lung cancer detection diagnostic. This final CMS payment
determination is listed in the Calendar Year 2023 Clinical
Laboratory Fee Schedule (CLFS) and will apply to all eligible
Medicare patients tested by LungLB(R) .
Medicare, a national health insurance program in the US, covers
63.9 million people and indeterminate lung nodules are often found
in patients of an age typically covered by Medicare. Securing a
favourable crosswalk* decision means Medicare beneficiaries now
have a national price for the LungLB(R) test effective since 1
January 2023. This represents completion of a key Company milestone
as it supports the plan to seek comprehensive reimbursement for the
test.
* 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.
People
The team currently comprises of 14 full time and 2 part time
employees, having hired our Director of Quality Assurance in the
year.
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.
On behalf of the Board, I would like to thank our employees,
clinical partners, study participants, professional advisors,
suppliers and shareholders for their support, and we look forward
to providing further updates on progress throughout the current
year.
Outlook
Our focus is the conclusion of our clinical validation study
and, while optional, subsequent submission to FDA, and planning for
the clinical utility study as part of our commercialisation
pathway. We were delighted to have received confirmation of our
price; our focus is now on securing coverage.
The next two years are incredibly exciting for LungLife and we
look forward to updating shareholders on our progress during that
time.
Roy Davis
Chairman
20 February 2023
Financial Review
The financial performance of the Company in the year to 31
December 2022 reflects the first full year of activity post our IPO
in July 2021.
Statement of Comprehensive Income
The Company generated revenues of US$24,000 in the year (2021 -
US$195,000) comprising wholly of royalty income from its sub
licensee in China. In 2021 royalty income accounted for US$88,000
with the balance of US$107,000 being consumable sales of
fluorescent in situ hybridisation (FISH) probes. The royalty income
is calculated at 6% of underlying net sales, and the Company pays a
3% royalty on this income to MD Anderson Cancer Center.
The largest cost incurred in the year was employee expenses of
US$3,264,000 (2021 - $1,760,000) followed by research and
development costs US$1,981,000 (2021 - US$1,343,00), being those
external costs incurred on our clinical validation trial and in the
continued development of our LungLB(R) test and AI algorithm. In
the year we increased headcount by one additional full-time member
of the team, one intern and hired a new member of the team as
replacement for a leaver. At the end of December 2022, and at the
date of this report, we have 14 full time and 2 part time
employees.
Other operating income of US$102,000 (2021 - US$206,000) relates
to claims made under the US Government Employee Retention Credits
scheme, designed as COVID related support for businesses, whilst in
2021 other operating income related to payment received under the
US Government Paycheck Protection Program, akin to the UK furlough
scheme. Finance income of US$88,000 (2021 - US$12,000) was
generated from funds held on deposit, and we incurred finance
expense of US$52,000 (2021 - US$417,000). Finance expense in the
year related to that arising on lease liabilities for certain
tangible assets and the leasehold premises occupied by the Company,
whereas last year $309,000 related to interest charged on the
Convertible Loan Notes, which formed part of the balance on the
Notes subsequently converted into new common shares at the time of
the IPO.
Total loss for the year was US$7,606,000, the loss of 2021 was
US$7,444,000 but included exceptional costs of the IPO of
US$1,101,000, so a true comparable loss of US$6,343,000. EBITDA
loss for 2022 excluding share-based payments was $6,841,000 and a
comparable EBITDA for 2021, excluding the exceptional costs, of
US$5,396,000.
Statement of Financial Position
Cash and cash equivalents at the end of the year was
US$3,088,000 (2021 - US$9,217,000). In addition, the Company holds
money on short term deposit, on which notice is 95 days with the
balance at year end US$4,922,000 (2021 - US$5,411,000). We continue
to hold the cost of acquiring the option under the License
Agreement with the Icahn School of Medicine of Mount Sinai ("Mount
Sinai") at its original purchase cost, without amortisation. The
option fee gives the Company access in the future to the
de-identified participant records held by Mount Sinai to assist in
the development of future products. As this asset is therefore not
currently being utilised no amortisation has been charged to
date.
Statement of Cash Flows
The net outflow from operating activities was US$5,845,000 (2021
- US$7,540,000), with minimal outflows for investing and financing
activities such that net cash outflow for the year was US$6,129,000
(2021 - inflow of $9,089,000). The prior year benefited from the
gross proceeds from the AIM admission of $23,444,000.
David Anderson
Chief Financial Officer
20 February 2023
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2022
Year to Year to
31 December 31 December
Note 2022 2021
US$'000 US$'000
Revenue 4 24 195
Cost of sales (-) (96)
_________ _________
Gross margin 24 99
Administrative expenses 6 (6,865) (5,495)
Share-based payments 6 (614) (409)
Depreciation 6 (285) (323)
Exceptional expense - costs of listing - (1,101)
_________ _________
Loss from operations (7,740) (7,229)
Other operating income 6 102 206
Finance income 9 88 12
Finance expense 9 (52) (417)
_________ _________
Loss before tax (7,602) (7,428)
Tax expense 10 (4) (16)
_________ _________
Loss from continuing operations (7,606) (7,444)
Other comprehensive income - -
_________ _________
Loss and total comprehensive income attributable
to the owners of the Company (7,606) (7,444)
_________ _________
Earnings per share attributable to the
ordinary equity holders of the parent 11
Loss per share
Basic and diluted (US$ cents) ($0.298) ($0.469)
_________ _________
The results reflected above relate to continuing operations
STATEMENT OF FINANCIAL POSITION
As at 31 December 2022
Note 2022 2021
US$'000 US$'000
Assets
Current assets
Trade and other receivables 14 613 741
Short term deposits 5 4,922 5,411
Cash and cash equivalents 5 3,088 9,217
_________ _________
8,623 15,369
_________ _________
Non-current assets
Property, plant and equipment 12 566 766
Intangible assets 13 5,818 5,818
Other receivables 14 13 13
_________ _________
6,397 6,597
_________ _________
Total assets 15,020 21,966
_________ _________
Liabilities
Current liabilities
Trade and other payables 15 1,055 804
Lease liabilities 16 255 207
Discontinued operations 174 174
_________ _________
1,484 1,185
Non-current liabilities
Lease liabilities 16 346 601
Provisions 17 50 50
_________ _________
Total liabilities 1,880 1,836
_________ _________
NET ASSETS 13,140 20,130
_________ _________
Issued capital and reserves attributable
to
owners of the parent
Share capital 19 3 3
Share premium reserve 20 91,266 91,264
Share based payment reserve 1,574 960
Accumulated losses (79,703) (72,097)
_________ _________
TOTAL EQUITY 13,140 20,130
_________ _________
STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2022
Total
attributable
to equity
Share-based holders
Share Share payment Accumulated of Total
capital premium reserve Other equity losses parent equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
1 January 2021 9 52,194 551 843 (64,903) (11,306) (11,306)
Comprehensive
income
for the year
Loss - - - - (7,444) (7,444) (7,444)
Other comprehensive
Income - - - - - - -
_________ _________ _________ _________ _________ _________ _________
Total comprehensive
Income
for the year - - - - (7,444) (7,444) (7,444)
_________ _________ _________ _________ _________ _________ _________
Contributions by
and
distributions to
owners
Issue of Convertible
Loan
Notes - - - 99 - 99 99
Reverse split (8) 8 - - - - -
Issue of common
shares
on conversion of
preference
shares and
Convertible
Loan Notes 1 12,601 - - - 12,602 12,602
Issue of share
capital 1 27,461 - - - 27,462 27,462
Transfer of balance
following
conversion of
Convertible
Loan Notes - - - (942) 250 (692) (692)
Share issue costs - (1,000) - - - (1,000) (1,000)
Share-based payment - - 409 - - 409 409
_________ _________ _________ _________ _________ _________ _________
Total contributions
by
and
distributions to
owners (6) 39,070 409 (843) 250 38,880 38,880
_________ _________ _________ _________ _________ _________ _________
31 December 2021 3 91,264 960 - (72,097) 20,130 20,130
_________ _________ _________ _________ _________ _________ _________
STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2022 (continued)
Total
attributable
to equity
Share-based holders
Share Share payment Accumulated of Total
capital premium reserve Other equity losses parent equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
1 January 2022 3 91,264 960 - (72,097) 20,130 20,130
Comprehensive
income
for the year
Loss - - - - (7,606) (7,606) (7,606)
Other comprehensive
Income - - - -
_________ _________ _________ _________ _________ _________ _________
Total comprehensive
Income
for the year - - - - (7,606) (7,606) (7,606)
_________ _________ _________ _________ _________ _________ _________
Contributions by
and
distributions to
owners
Exercise of share
options - 2 - - - 2 2
Share-based payments - - 614 - - 614 614
_________ _________ _________ _________ _________ _________ _________
Total contributions
by
and
distributions to
owners - 2 614 - 616 616
_________ _________ _________ _________ _________ _________ _________
31 December 2022 3 91,266 1,574 - (79,703) 13,140 13,140
_________ _________ _________ _________ _________ _________ _________
STATEMENT OF CASH FLOWS
For the year ended 31 December 2022
Year to Year to
31 December 31 December
Note 2022 2021
US$'000 US$'000
Cash flows from operating activities
Loss for the year (7,606) (7,444)
Adjustments for:
Depreciation of property, plant and equipment 285 323
Forgiveness of Paycheck Protection Program
Loan (206)
Gain on sale of tangible assets (43) (36)
Foreign exchange loss on short term deposit 562 -
Finance income (88) (12)
Finance expense 52 417
Taxation 4 16
Share-based payments expense 614 409
_________ _________
(6,220) (6,533)
(Increase) / decrease in trade and other
receivables 128 (569)
(Decrease) / increase in trade and other
payables 251 (422)
Income taxes paid (4) (16)
_________ _________
Net cash outflow from operating activities (5,845) (7,540)
_________ _________
Cash flows from investing activities
Purchases of tangible assets (85) (47)
Proceeds from sale of tangible assets 43 36
Short term deposits (73) (5,411)
Landlord improvement contribution - 15
Purchase of intangibles - (1,800)
_________ _________
Net cash used in investing activities (115) (7,207)
_________ _________
Cash flows from financing activities
Issue of Convertible Notes - 1,612
Issue of Common Stock 2 23,444
Expenses of issue of Common Stock - (1,000)
Interest received 88 10
Interest paid (52) (107)
Repayment of lease liabilities (207) (123)
_________ _________
Net cash (used in) / from financing activities (169) 23,836
Net (decrease) / increase in cash and cash
equivalents (6,129) 9,089
Cash and cash equivalents at beginning
of year 9,217 128
_________ _________
Cash and cash equivalents at end of year 5 3,088 9,217
_________ _________
Notes forming part of the financial statements
For the year ended 31 December 2022
General Information
1
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, USA, on 30 December 2009.
The Company's costs associated with developing and
commercialising its test include costs associated with the
development of intellectual property optimising the technology, and
obtaining regulatory approval. To complete clinical trials the
Company will continue to require additional operating funds. The
Company has raised funds through offerings of debt, common stock
and Series A Preferred Shares.
There are no restrictions on the Company's ability to access or
use its assets and settle its liabilities.
Basis of preparation
2
Information in this preliminary announcement does not constitute
statutory accounts of the company. The financial information
presented in this preliminary announcement is based on, and is
consistent with, that in the company's audited financial statements
for the year ended 31 December 2022, which will be delivered to
shareholders for approval at the Company's Annual General Meeting.
The independent auditors have reported on those financial
statements and their report is unqualified and unmodified.
The financial statements have been prepared in accordance with
UK adopted International Accounting Standards ("UK IFRS").
These financial statements are prepared in accordance with UK
IFRS under the historical cost convention, as modified by the use
of fair value for financial instruments measured at fair value. The
historical financial information is presented in United States
Dollars ("US$") except where otherwise indicated.
The principal accounting policies adopted in the preparation of
the financial statements are set out below. The policies have been
consistently applied to all the years presented, unless otherwise
stated.
(a) Going concern
These financial statements have been prepared on the going
concern basis.
The directors of the Company have a reasonable expectation that
the Company has adequate resources to continue in operational
existence for the foreseeable future and for at least one year from
the date of approval of the financial statements. As of 31 December
2022 the Company had total available cash resources of
US$8,010,000, split between cash and cash equivalents of
US$3,088,000 and monies of short term deposit (with notice of 95
days) of US$4,922,000. The Company will be concluding its clinical
trial in early 2023 and together with other operational impacts our
expenditure levels are expected to be reduced. For that reason,
they continue to adopt the going concern basis in preparing the
Company's financial statements.
(b) New standards, amendments and interpretations
New standards are not expected to impact the Company as they are
either not relevant to the Company's activities or require
accounting which is consistent with the Company's current
accounting policies.
The Directors have considered those standards and
interpretations which have not been applied in these financial
statements but which are relevant to the Company's operations that
are in issue but not yet effective and do not consider that they
will have a material effect on the future results of the
Company.
(c) Revenue recognition
Sale of goods
Revenue comprises the fair value of the sale of FISH probes used
to identify the properties of blood samples under the terms of a
sub license agreement with a third party, net of applicable sales
taxes. Revenue is recognised on the sale of goods when the
significant risks and rewards of ownership of the goods have passed
to the buyer and the amount of revenue can be measured reliably.
Revenue on goods delivered is recognised when the customer accepts
delivery and on services when those services have been
rendered.
Royalty income
Under the terms of a patent and technology sub license agreement
the company is entitled to receive royalty income at 6% of the
quarterly net sales invoiced by the sub licensee in the relevant
quarter. Income is recognised in the period in which the underlying
net sales are generated.
Cash is received from revenues recognised according to terms of
trade within the relevant contractual relationship, usually in
accordance with agreed events such as placing of order, fulfilment
of order and delivery.
(d) Intangible assets
Research expenditure is recognised as an expense when incurred.
Development expenditure is recognised as an expense except those
costs incurred on development projects are capitalised as long term
assets to the extent that such expenditure is expected to generate
future economic benefits. Development expenditure is capitalised
only if it meets the criteria for capitalisation under IAS 38.
Capitalised development expenditure is measured at cost less
accumulated amortisation and impairment losses, if any. Development
expenditure initially recognised as an expense is not recognised as
an asset in future years. Capitalised development expenditure is
amortised on a straight-line basis over the estimated useful life
of the asset when the asset is available for use.
(e) Property, plant and equipment
Owned assets
Items of property, plant and equipment are stated at cost less
accumulated depreciation and impairment losses. Cost includes the
original purchase price of the asset and the costs attributable to
bringing the asset to its working condition for its intended use.
When parts of an item of property, plant and equipment have
different useful lives, those components are accounted for as
separate items of property, plant and equipment.
Subsequent costs are included in the asset's carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Company and the cost of the item can be measured
reliably.
(e) Property, plant and equipment (continued)
Depreciation
Depreciation is charged to profit or loss on a straight-line
basis over the estimated useful lives of each part of an item of
property, plant and equipment. The estimated useful lives are as
follows:
-- computer and IT equipment - 33 per cent. straight line
-- leasehold improvements - shorter of lease term and useful life
-- plant and machinery - 20 per cent. straight line
-- laboratory equipment - 20 per cent. straight line
The residual values, useful lives and depreciation methods are
reviewed, and adjusted if appropriate, or if there is an indication
of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the
proceeds with the carrying amount and are recognised within "other
operating income" in the statement of income.
(f) Impairment of non-financial assets
Non-financial assets are reviewed for impairment annually in the
case of not being available for use, and whenever events or changes
in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised for the amount by
which the asset's 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. For the purposes of assessing
impairment, assets are considered at the lowest levels for which
there are separately identifiable cash flows (cash- generating
units).
Non-financial assets other than goodwill that suffered
impairment are reviewed for possible reversal of the impairment at
each reporting date.
Basis of preparation (continued)
2
(g) Financial assets
Classification
The Company classifies its financial assets as loans and
receivables. The classification depends on the purpose for which
the investments were acquired. Management determines the
classification of its investments at initial recognition.
Loans and receivables
Loans and receivables are non-derivative financial assets with
fixed or determinable payments. They are initially recognised at
fair value and are subsequently stated at amortised cost using the
effective interest method.
Impairment of financial assets
Impairment provisions are recognised when there is objective
evidence (such as significant financial difficulties on the part of
the counterparty or default or significant delay in payment) that
the Company will be unable to collect all of the amounts due under
the term's receivable, the amount of such a provision being the
difference between the net carrying amount and the present value of
the future expected cash flows associated with the impaired
asset.
(h) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call
deposits with an original maturity of three months or less.
Basis of preparation (continued)
2
(i) Financial liabilities
Trade and other payables
Trade and other payables are initially recognised at fair value
and subsequently measured at amortised cost. Accounts payable are
classified as current liabilities if payment is due within one year
or less. If not, they are presented as non-current liabilities.
Convertible debt
The proceeds received on issue of the Company's convertible debt
are allocated into their liability and equity components. The
amount initially attributed to the debt component equals the
discounted cash flows using a market rate of interest that would be
payable on a similar debt instrument that does not include an
option to convert. Subsequently, the debt component is accounted
for as a financial liability measured at amortised cost until
extinguished on conversion or maturity of the bond. The remainder
of the proceeds is allocated to the conversion option and is
recognised in the "Other equity" within shareholders' equity, net
of income tax effects.
(j) Borrowings
Borrowings are recognised initially at fair value, net of
transaction costs incurred. Borrowings are subsequently carried at
amortised cost; any difference between the proceeds (net of
transaction costs) and the redemption value is recognised in the
income statement over the period of the borrowings using the
effective interest method.
Borrowings are de-recognised from the statement of financial
position when the obligation specified in the contract is
discharged, is cancelled or expires. The difference between the
carrying amount of a financial liability that has been extinguished
or transferred to another party and the consideration paid,
including any non-cash assets transferred or liabilities assumed,
is recognised in the income statement as other operating income or
finance costs.
Borrowings are classified as current liabilities unless the
Company has an unconditional right to defer settlement of the
liability for at least 12 months after the reporting period.
(k) Provisions
A provision is recognised in the statement of financial position
when the Company has a present legal or constructive obligation as
a result of a past event, and it is probable that an outflow of
economic benefits will be required to settle the obligation. If the
effect is material, provisions are determined by discounting the
expected future cash flows at a pre- tax rate that reflects current
market assessments of the time value of money and, when
appropriate, the risks specific to the liability. The increase in
the provision due to the passage of time is recognised in finance
costs.
(l) Share capital
Ordinary shares are classified as equity. There are various
classes of ordinary shares in issue, as detailed in note 19.
Incremental costs directly attributable to the issue of new shares
are shown in share premium as a deduction from the proceeds.
Basis of preparation (continued)
2
(m) Net finance costs
Finance costs
Finance costs comprise interest payable on borrowings, direct
issue costs and dividends on preference shares, and are expensed in
the period in which they are incurred.
Finance income
Finance income comprises interest receivable on funds invested,
and foreign exchange gains.
Interest income is recognised in the income statement as it
accrues using the effective interest method.
(n) Leases
All leases are accounted for by recognising a right-of-use asset
and a lease liability except for:
-- Leases of low value assets; and
-- Leases with a duration of 12 months or less.
Lease liabilities are measured at the present value of the
contractual payments due to the lessor over the lease term, with
the discount rate determined by reference to the rate inherent in
the lease unless (as is typically the case) this is not readily
determinable, in which case the Company's incremental borrowing
rate on commencement of the lease is used. Variable lease payments
are only included in the measurement of the lease liability if they
depend on an index or rate. In such cases, the initial measurement
of the lease liability assumes the variable element will remain
unchanged throughout the lease term. Other variable lease payments
are expensed in the period to which they relate.
On initial recognition, the carrying value of the lease
liability also includes:
-- amounts expected to be payable under any residual value guarantee
-- the exercise price of any purchase option granted in favour
of the Company if it is reasonably certain to assess that
option
-- any penalties payable for terminating the lease, if the term
of the lease has been estimated on the basis of termination option
being exercised.
Right of use assets are initially measured at the amount of the
lease liability, reduced for any lease incentives received, and
increased for:
-- lease payments made at or before commencement of the lease
-- initial direct costs incurred; and
-- the amount of any provision recognised where the Company is
contractually required to dismantle, remove or restore the leased
asset (typically leasehold dilapidations - see note 19).
Subsequent to initial measurement lease liabilities increase as
a result of interest charged at a constant rate on the balance
outstanding and are reduced for lease payments made. Right-of-use
assets are amortised on a straight-line basis over the remaining
term of the lease or over the remaining economic life of the asset
if, rarely, this is judged to be shorter than the lease term.
Basis of preparation (continued)
2
(n) Leases (continued)
When the company revises its estimate of the term of any lease
(because, for example, it re-assesses the probability of a lessee
extension or termination option being exercised) it adjusts the
carrying amount of the lease liability to reflect the payments to
make over the revised term, which are discounted using a revised
discount rate. The carrying value of lease liabilities is similarly
revised when the variable element of future lease payments
dependent on a rate or index is revised, except the discount rate
remains unchanged. In both cases an equivalent adjustment is made
to the carrying value of the right-of-use asset, with the revised
carrying amount being amortised over the remaining (revised) lease
term. If the carrying amount of the right-of-use asset is adjusted
to zero, any further reduction is recognised in profit or loss.
(o) Income tax
Income tax for the years presented comprises current and
deferred tax. Income tax is recognised in the income statement
except to the extent that it relates to items recognised directly
in equity, in which case it is recognised in equity. Current tax is
the expected tax payable on the taxable income for the year, using
tax rates enacted or substantively enacted at the statement of
financial position date, and any adjustment to tax payable in
respect of previous years.
Deferred tax is recognised on temporary differences arising
between the tax bases of assets and liabilities and their carrying
amounts.
The following temporary differences are not recognised if they
arise from (a) the initial recognition of goodwill; and (b) for the
initial recognition of other assets or liabilities in a transaction
other than a business combination that at the time of the
transaction affects neither accounting nor taxable profit or loss.
The amount of deferred tax provided is based on the expected manner
of realisation or settlement of the carrying amount of assets and
liabilities, using tax rates enacted or substantively enacted at
the statement of financial position date.
A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against
which the asset can be utilised. Deferred tax assets are reduced to
the extent that it is no longer probable that the related tax
benefit will be realised.
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 taxes 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.
(p) Foreign currency translation
i) Function and presentational currency
Items included in the financial statements of the Company are
measured using USD, the currency of the primary economic
environment in which the entity operates ('the functional
currency'), which is also the Company's presentation currency.
ii) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. 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 to USD, are recognised in the
income statement.
Critical accounting judgements and estimates
3
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 assets, the directors make a number of estimates in
relation to assets 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.
Classification of the Mount Sinai License as an intangible
asset
As set out in note 13, o n 18 June 2021, the Company entered
into the Mount Sinai License Agreement, pursuant to which Mount
Sinai granted an option to the Company to obtain a licence, on a
non-exclusive basis, to use certain information held by Mount
Sinai. After considering the criteria in IAS38 the directors have
judged that the recognition criteria therein have been met and
classified the Mount Sinai license as an intangible asset.
Segment analysis
4
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 the
Company 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:
Year to Year to
31 December 31 December
2022 2021
US$'000 US$'000
Revenue
People's Republic of China 24 195
________ ________
24 195
________ ________
Segment analysis (continued)
4
2022 2021
US$'000 US$'000
Non-current assets
United States of America 6,397 6,597
________ ________
6,397 6,597
________ ________
Year to Year to
31 December 31 December
2022 2021
US$'000 US$'000
Product and service revenue
Royalty income 24 88
Consumable items - 107
________ ________
24 195
________ ________
Financial instruments - Risk management
5
The Company is exposed through its operations to the following
financial risks:
- Credit risk
- Foreign exchange risk and
- Liquidity risk
The Company is exposed to risks that arise from its use of
financial instruments. This note describes the Company's
objectives, policies and processes for managing those risks and the
methods used to measure them. Further quantitative information in
respect of these risks is presented throughout these financial
statements.
(i) Principal financial instruments
The principal financial instruments used by the Company, from
which financial instrument risk arises, are as follows:
- Cash and cash equivalents
- Short term cash deposits
- Trade and other payables
Financial instruments - Risk management (continued)
5
(ii) Financial instruments by category
Financial asset
Amortised Amortised
cost cost
2022 2021
US$'000 US$'000
Cash and cash equivalents* 3,088 9,217
Short term cash deposits* 4,922 5,411
Trade and other receivables 607 741
_________ _________
Total financial assets 8,617 15,369
_________ _________
* Comparative amounts at 31 December 2021 have been re-presented
to reflect the reclassification of fixed term deposits of
$5,411,000 with a maturity date of greater than three months at
inception. There were no fixed term deposits at 31 December
2020.
Financial liabilities
Amortised Amortised
cost cost
2022 2021
US$'000 US$'000
Trade and other payables 1,055 804
_________ _________
Total financial liabilities 1,055 804
_________ _________
(iii) Financial instruments not measured at fair value
Financial instruments not measured at fair value includes cash
and cash equivalents, trade and other receivables, and trade and
other payables.
Due to their short-term nature, the carrying value of cash and
cash equivalents, trade and other receivables, and trade and other
payables approximates their fair value.
See note 16 for information on lease liabilities.
Financial instruments - Risk management (continued)
5
(iv) Financial instruments
General objectives, policies and processes
The Board has overall responsibility for the determination of
the Company's risk management objectives and policies and, whilst
retaining ultimate responsibility for them, it has delegated the
authority for designing and operating processes that ensure the
effective implementation of the objectives and policies to the
Company's finance function.
The overall objective of the Board is to set policies that seek
to reduce risk as far as possible without unduly affecting the
Company's competitiveness and flexibility. Further details
regarding these policies are set out below:
Credit risk
Credit risk is the risk of financial loss to the Company if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations. Due to the current low level of
revenue, the Company's exposure to credit risk is on cash at bank.
The Company only deposits cash with major banks with high quality
credit standing.
Cash in bank and short-term deposits
The credit quality of cash has been assessed by reference to
external credit rating, based on Standard and Poor's long-term /
senior issuer rating:
2022 2022 2021 2021
Cash in bank Cash Cash
Rating at bank Rating at bank
US$'000 US$'000
Bank A A+ 981 A+ 8,140
Bank B BBB+ 2,002 BBB+ 1,015
Bank C A+ 105 A+ 62
_________ _________
3,088 9,217
_________ _________
2022 2022 2021 2021
Short term deposits
Rating Rating
US$'000 US$'000
Bank B BBB+ 4,922 BBB+ 5,411
_________ _________
4,922 5,411
_________ _________
Financial instruments - Risk management (continued)
5
Foreign exchange risk
Foreign exchange risk arises when the Company enters into
transactions denominated in a currency other than its functional
currency. The Company's policy is, where possible, to settle
liabilities denominated in its functional currency. Currently the
Company's liabilities are either US dollar or UK sterling. No
forward contracts or other financial instruments are entered into
to hedge foreign exchange movements, with funds raised in the UK
being transferred to fund US operations using spot rates.
As at 31 December 2022 assets held in Sterling amounted to
US$5,275,000 (2021 - US$6,488,000) and liabilities held in Sterling
amounted to US$65,000 (2021 - US$66,000).
The effect of a 5% strengthening of the Sterling against US
dollar at the reporting date on the Sterling denominated net assets
carried at that date would, all other variables held constant, have
resulted in a decrease in post-tax loss for the year and increase
of net assets of US$260,000 (2021 - US$321,000). A 5% weakening in
the exchange rate would, on the same basis, have increased post-tax
loss and decreased net assets by US$260,000 (2021 -
US$321,000).
Liquidity risk
Liquidity risk is the risk that the Company will encounter
difficulty in meeting its financial obligations as they fall due.
This risk is managed by the production of annual cash flow
projections. The Company's continued future operations depend on
its ability to raise sufficient working capital through the issue
of share capital and generating revenue.
The following table sets out the contractual maturities
(representing undiscounted contractual cash-flows) of financial
liabilities which can all be met from the cash resources currently
available:
Between
Up to 3 3 and 12
months months
At 31 December 2022 US$'000 US$'000
Trade and other payables 371 -
_________ _________
Total 371 -
_________ _________
Between
Up to 3 3 and 12
months months
At 31 December 2021 US$'000 US$'000
Trade and other payables 275 -
_________ _________
Total 275 -
_________ _________
Financial instruments - Risk management (continued)
5
Capital Disclosures
The Company monitors its capital which comprises all components
of equity (i.e., share capital, share premium, and accumulated
losses).
The Company's objectives when maintaining capital are to
safeguard the entity's ability to continue as a going concern.
Expenses by nature
6
Year to Year to
31 December 31 December
2022 2021
US$'000 US$'000
Employee benefit expenses (see note 8) 3,264 1,760
Share-based payments charge - non-employee and
directors 37 87
Depreciation of property, plant and equipment 285 323
Gain on disposal of equipment (43) (36)
Research and development expenditure 1,981 1,343
Professional costs 643 720
Legal settlement - 687
Foreign exchange losses 659 97
Other costs 938 1,210
Other operating income is claims made for Employee Retention
Credits. Other operating income for the prior year represented
forgiveness of the Paycheck Protection Program Loan.
Auditors' remuneration
7
During the year the Company obtained the following services from
the Company's auditor:
Year to Year to
31 December 31 December
2022 2021
US$'000 US$'000
Fees payable to the Company's auditor for the
audit of the Company 48 48
Fees payable to the Company's auditor for other
services:
Services in connection with listing - 108
_________ _________
Total 48 156
_________ _________
Employee benefit expenses
8
Year to Year to
31 December 31 December
2022 2021
US$'000 US$'000
Employee benefit expenses (including Directors)
comprise:
Wages and salaries 2,262 1,304
Benefits 164 75
Share-based payments expense 577 323
Social security contributions and similar taxes 177 53
Pension 84 5
_________ _________
3,264 1,760
_________ _________
Key management personnel compensation
Key management personnel are those persons having authority and
responsibility for planning, directing and controlling the
activities of the Company, including the Directors of the
Company.
Year to Year to
31 December 31 December
2022 2021
US$ US$
Salary 696 599
Share based payment expense 495 313
_________ _________
1,191 912
_________ _________
The average number of employees (including Directors) in the
Company in the year was 18 (2021 - 14).
Net finance costs
9
Year to Year to
31 December 31 December
2022 2021
US$'000 US$'000
Finance expense
Interest expense on lease liabilities 52 108
Interest expense on liabilities measured at amortised
cost - 309
_________ _________
Total finance expense 52 417
_________ _________
Net finance costs (continued)
9
Year to Year to
31 December 31 December
2022 2021
US$'000 US$'000
Finance income
Bank interest 88 12
_________ _________
Total finance income 88 12
_________ _________
Tax expense
10
Year to Year to
31 December 31 December
2022 2021
US$'000 US$'000
Current tax expense
Current tax on loss for the year - -
Withholding tax on royalties 4 16
_________ _________
Total current tax 4 16
Deferred tax asset
On losses generated in the year - -
_________ _________
4 16
_________ _________
Tax expense (continued)
10
There were no charges to current corporation taxation due to the
losses incurred by the Company in the year. The reasons for the
difference between the actual tax charge for the year and the US
federal income tax rate of 21% and state of California income tax
rate of 8.84% are as follows:
Year to Year to
31 December 31 December
2022 2021
US$'000 US$'000
Loss for the year (7,606) (7,428)
_________ _________
Tax using 29.84% (2,270) (2,217)
Expenses not deductible for tax purposes 34 689
Unrecognised deferred tax assets for losses
carried forward 2,236 1,528
_________ _________
Total tax expense - -
_________ _________
The unrecognised deferred tax is based on Federal taxable losses
carried forward of US$53,485,000 (2021 - US$49,393,000) and a
Federal capital loss of US$4,583,333 (2021 - US$4,583,333). No
deferred tax asset is recognised for these losses due to early
stage in the development of the Company's activities. Of the total
Federal losses carried forward US$35,281,000 (2021 - US$35,281,000)
expire in 2030 and can only be used against trading profits from
the same trade. Losses of US$18,204,000 (2021 - US$14,112,000) do
not expire but can only offset against 80% of taxable profits from
the same trade.
Loss per share
11
Year to Year to
31 December 31 December
2022 2021
Total Total
Numerator US$ US$
Loss for the year used in basic EPS (7,605,585) (7,444,188)
Denominator
Weighted average number of ordinary shares used
in basic EPS 25,481,800 15,870,143
Resulting loss per share (US$0.298) (US$0.469)
The Company has one category of dilutive potential ordinary
share, being share options (see note 21). The potential shares were
not dilutive in the year as the Company made a loss per share in
line with IAS 33. As described in note 19, between 2 July 2021 and
7 July 2021 the Company implemented a pre-Admission reorganisation
of its capital which included the conversion of Series A and B
Preferred Shares into Common Shares and a reverse share split by
way of the issue of one new Common Share and Preferred Share for
every 18 old Common Shares and Preferred Shares held.
As required by IAS33, the number of shares presented as the
denominator in calculating loss per share has been adjusted from 1
January 2020, the beginning of the earliest period for which loss
per share information is presented in order to maintain
comparability.
Tangible assets
12
Furniture Computers
Leasehold and and IT Plant &
improvements equipment equipment machinery Total
US$'000 US$'000 US$'000 US$'000 US$
Cost or valuation
At 1 January 2021 982 56 50 1,051 2,139
Landlord contribution (15) - - - (15)
Additions 349 - 35 258 642
________ ________ ________ _________ _________
At 31 December 2021 1,316 56 85 1,309 2,766
Additions - - 31 54 85
________ ________ ________ ________ ________
At 31 December 2022 1,316 56 116 1,363 2,851
________ ________ ________ ________ ________
Accumulated depreciation
and impairment
At 1 January 2021 712 56 50 859 1,677
Depreciation 233 - 3 87 323
________ ________ ________ ________ ________
At 31 December 2021 945 56 53 946 2,000
Depreciation 140 - 19 126 285
________ ________ ________ ________ ________
At 31 December 2022 1,085 56 72 1,072 2,285
________ ________ ________ ________ ________
Net book value
At 31 December 2022 231 - 44 291 566
________ ________ ________ ________ ________
At 31 December 2021 371 - 32 363 766
________ ________ ________ ________ ________
Included in leasehold improvements at 31 December 2022 are right
of use assets with a cost of $1,282,052 (2021 - $1,282,052) and
accumulated depreciation of $1,042,261 (2021 - $911,119).
Intangible assets
13
License Total
US$'000 US$'000
Cost
_________ _________
At 31 December 2021 and 2022 5,818 5,818
_________ _________
Accumulated amortisation and impairment
At 1 January 2021 - -
Amortisation charge - -
_________ _________
At 31 December 2021 - -
Amortisation charge
_________ _________
At 31 December 2022 - -
_________ _________
Net book value
At 31 December 2022 5,818 5,818
_________ _________
At 31 December 2021 5,818 5,818
_________ _________
On 18 June 2021, the Company entered into the Mount Sinai
Licence Agreement, pursuant to which the Icahn School of Medicine
at Mount Sinai ("Mount Sinai") granted an option to the Company to
obtain a licence, on a non-exclusive basis, to use certain
information held by Mount Sinai. The Mount Sinai Licence Agreement
automatically became effective on Admission. Exercise of the option
contained in the Mount Sinai Licence Agreement is conditional on:
(i) Admission; (ii) clearance by Mount Sinai's information security
team; and (iii) IRB, data security and data use approvals. Mount
Sinai is under an obligation to use commercially reasonable efforts
to obtain such clearances and approvals (other than Admission).
Pursuant to the Mount Sinai Licence Agreement, Mount Sinai has
granted the Company an option to obtain a licence, on a
non-exclusive basis, to use certain information held by Mount Sinai
to be able to develop future products.
Trade and other receivables
14
2022 2021
US$'000 US$'000
Amounts falling due within one year
Prepayments and accrued income 463 692
Other debtors 150 49
_________ _________
613 741
_________ _________
2022 2021
US$'000 US$'000
Amounts falling due after one year
Rent deposit 13 13
_________ _________
13 13
_________ _________
Trade and other payables
15
2022 2021
US$'000 US$'000
Trade payables 358 212
Accruals and other payables 684 571
_________ _________
Total financial liabilities classified as financial
liabilities measured at amortised cost 1,042 783
Other payables - tax and social security payments 13 21
_________ _________
Total trade and other payables 1,055 804
_________ _________
The carrying value of trade and other payables classified as
financial liabilities measured at amortised cost approximates fair
value.
Lease Liabilities
16
Land and Plant and
buildings machinery Total
US$'000 US$'000 US$'000
At 1 January 2021 571 360 931
Interest expense 89 18 107
Repayments (156) (74) (230)
________ ________ ________
At 31 December 2021 504 304 808
________ ________ ________
Additions - - -
Repayments (134) (125) (259)
Interest expense 37 15 52
________ ________ ________
At 31 December 2022 407 194 601
________ ________ ________
2022 2021
US$'000 US$'000
Maturity of lease liabilities
Within 3 months 62 57
Between 3 - 12 months 193 150
Between 1 - 2 years 233 255
Between 2 - 5 years 113 346
________ ________
601 808
________ ________
Provisions
17
Dilapidations Total
US$'000 US$'000
At 1 January 2021 50 50
Movement - -
_________ _________
At 31 December 2021 50 50
_________ _________
Movement - -
_________ _________
At 31 December 2022 50 50
_________ _________
Provision is made for the anticipated cost of returning the
Company's premises to their prior state on termination of the
lease.
Net cash /(debt) reconciliation
18
2022 2021
US$'000 US$'000
Cash and cash equivalents 3,088 9,217
Lease liabilities (601) (808)
_________ _________
Net cash / (debt) 2,487 8,409
_________ _________
Cash and Borrowings
cash equivalents and loans Net Debt
US$'000 US$'000 US$'000
Net debt at 1 January 2021 128 (10,630) (10,502)
Cash flows 9,089 - 9,089
Other non-cash movements:
Conversion of Convertible Loan Notes - 10,396 10,396
Forgiveness of Payroll Protection
Program loan - 206 206
Lease liabilities - (471) (471)
Accretion of interest on convertible
notes - (309) (309)
_________ _________ _________
Net debt at 31 December 2021 9,217 (808) 8,409
_________ _________ _________
Cash flows (6,129) - (6,129)
Other non-cash movements:
Lease liabilities 207 207
_________ _________ _________
Net debt at 31 December 2022 3,088 (601) 2,487
_________ _________ _________
Share capital
19
Issued and fully paid
Number US$
Shares of US$0.0001 par value each
At 1 January 2020
Common shares 5,092,839 510
Preference shares, Series A and B 79,738,560 7,973
Issue of common shares in the year 1,820,407 182
_________ _________
Total at 31 December 2020 86,651,806 8,665
Reverse stock split, at ratio of 1 new common
share (81,837,883) (8,184)
Issue of common shares on conversion of the
Convertible Loan Notes and Warrants 9,350,888 935
Issue of common shares for cash 9,659,091 966
Issue of common shares for non-cash consideration 1,656,888 166
_________ _________
Total issued share capital at 31 December
2021 25,480,790 2,548
Exercise of 5,192 options in the year 5,192 5
_________ _________
Total issued share capital at 31 December
2022 25,485,982 2,553
_________ _________
Between 2 July 2021 and 7 July 2021 the Company implemented a
pre-Admission reorganisation of its capital which included, inter
alia, the following:
-- A reverse share split by way of the issue of one new Common
or Preferred Share for every 18 old Common or Preferred Shares
held
-- Conversion of Series A-1 and Series A-2 Convertible Notes and
related Warrants into Common Shares
-- Conversion of Series A Preferred Shares and Series B Preferred Shares into Common Shares
Reserves
20
The following describes the nature and purpose of each reserve
within equity:
Reserve Description and purpose
Share premium Amount subscribed for share capital in
excess of nominal value.
Share based payment reserve Amount charged to date in respect of share
based payment expense
Retained earnings All other net gains and losses and transactions
with owners (e.g., dividends) not recognised
elsewhere.
Share-based payment
21
Prior to Admission to AIM the Company operated two share option
plans: the 2010 Stock Incentive Plan and approved by the Board on 1
January 2010 and the 2020 Stock Incentive Plan was approved on 14
May 2020:
(a) options granted under the 2010 Stock Incentive Plan fall into two groups:
(i) options granted in or before 2016 over a total of 2,183,634
shares, with exercise prices ranging from $0.10 to $0.16 per share,
these options are now fully vested; and
(ii) options granted in 2019 over a total of 6,951,463 shares,
with an exercise price of $0.025 per share: these options generally
vest on a monthly basis over three or four years from the date of
grant. However, those granted to current employees of the Company
were amended so that they became exercisable in full on
Admission.
(b) Options were granted in 2020 and 2021 under the 2020 Stock
Incentive Plan over a total of 5,364,385 shares with an exercise
price of $0.0044 per share. These options vest over four years from
the date of grant on a monthly basis, but certain of these options
accelerated immediately before Admission, and became fully
exercisable at Admission.
On 14 May 2021 the Board approved the Company's 2021 Omnibus
Long-Term Incentive Plan ("LTIP") and it was approved by
shareholders on 27 May 2021 to become effective approximately three
days prior to Admission. The LTIP provides for the grant of both
EMI Options and non-tax favoured options. Options granted under the
LTIP are subject to exercise conditions as summarised below.
The LTIP has a non-employee sub-plan for the grant of Options to
the Company's advisors, consultants, non-executive directors, and
entities providing, through an individual, such advisory,
consultancy, or office holder services and a US sub-plan for the
grant of Options to eligible participants in the LTIP and the
Non-Employee Sub-Plan who are US residents and US taxpayers.
With the exception of options over 384,924 shares, which vested
immediately on Admission, the options issued under the LTIP vest
25% on the first anniversary of the vesting commencement date and
an additional one forty-eighth of the total number of options after
each subsequent calendar month for employees. For consultants
options issued under the LTIP vest 25% on the first anniversary of
the vesting commencement date and an additional one sixteenth of
the total number of options after each subsequent quarter. If
options remain unexercised after the date one day before the tenth
anniversary of grant such options expire. Vesting shall accelerate
in full in the event of a change of control of the Company.
As described in note 19, between 2 July 2021 and 7 July 2021 the
Company implemented a pre-Admission reorganisation of its capital
which included a reverse share split by way of the issue of one new
Common or Preferred Share for every 18 old Common or Preferred
Shares held.
At the date of the reorganisation there were 14,499,482
pre-Admission options outstanding to 32 option holders comprising
Directors, former Directors and employees with exercise prices
between $0.0044 and $0.16 per share. Those options were varied to
reflect the reverse share split so that they were replaced with
805,492 options with exercise prices of between $0.0792 and $2.88
per share. The directors consider that this was a mechanical
variation modification of the awards and not a modification for the
purposes of IFRS2. Comparative figures have been adjusted to
restate numbers and values of share options issued as if the
reverse share split had been in effect from 1 January 2020.
On Admission on 8 July 2021 the Board approved grants of 769,707
to Paul Pagano and 386,703 options to David Anderson and on 23
November 2021 and 27 December 2021 the Board approved further
grants, of 112,500 and 5,000 options respectively, to employees and
consultants.
Share-based payment (continued)
21
Weighted
average
exercise
price US$ Number
Outstanding at 1 January 2020 - 12,230,198
Granted during the year - 2,345,845
Cancelled - (25,000)
Exercised during the year - (51,561)
_________ _________
Outstanding at 31 December 2020 and 1 January
2021 - 14,499,482
Reverse share split - (13,693,990)
_________ _________
Revised balance outstanding at 31 December 2020 0.74 805,492
Granted during the year 2.19 1,260,035
Exercised or expired during the year 0.74 (13,913)
_________ _________
Outstanding at 31 December 2021 1.74 2,065,527
_________
Granted during the year 2.37 75,000
Exercised during the period 0.45 (5,192)
Expired during the year 1.80 (18,356)
_________ _________
Outstanding at 31 December 2022 1.76 2,116,979
_________ _________
Exerciseable at 31 December 2022 1.62 1,506,180
_ _
The exercise price of options outstanding at 31 December 2022
ranged between US$0.08 and US$2.70 and their weighted average
contractual life was 5.03 years and weighted average expected life
was 3.55 years. The fair value of each share option granted has
been estimated using a Black-Scholes model. The weighted average
inputs into the model for the 2022 grants are a share price of
$2.37, exercise price of $2.37, expected volatility of 55.21%,
expected dividend yield of 0%, expected life of 5.03 years and a
risk-free interest rate of 1.26%. In the absence of historic
volatility data available at the grant date the expected volatility
of 55.21% was estimated based on comparable companies.
The Company recognised total expenses of US$614,000 (2021:
US$409,000) within administrative expenses relating to
equity-settled share-based payment transactions during the
year.
Related party transactions
22
During the year an amount of US$130,000 (2021 - US$2,190,000)
was invoiced by The Icahn School of Medicine at Mount Sinai for
services rendered in the year. As of 31 December 2022 no amounts
were owed to The Icahn School of Medicine at Mount Sinai (2021 -
Nil).
During the year Paul Pagano and David Anderson, both directors
of the Company, each purchased 5,000 shares in the Company using
their own funds.
Events after the reporting date
23
There have been no events subsequent to the year-end that
require disclosure in these financial statements.
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END
FR NKCBQBBKDFBD
(END) Dow Jones Newswires
February 20, 2023 02:00 ET (07:00 GMT)
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