Arix Bioscience Plc - Interim results for the six months ended 30 June 2019
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION WITHIN THE MEANING OF THE EU MARKET ABUSE REGULATION NO.596/2014
(“Arix”, LSE: ARIX) a global venture capital company focused on investing in and building breakthrough biotech companies, today announces its interim results for the period ended ., :
· £11.4 million commitment to Imara, a new portfolio company focused on sickle cell disease and other hemoglobinopathies, with a novel drug candidate in human trials
of proceeds raised by Arix portfolio companies in the first half of 2019·
§ Harpoon (T cell engagers) raised net proceeds of in a Nasdaq IPO, in which Arix invested (£4.7 million)
§ (CAR-T cell immunotherapy) completed a follow-on financing in which Arix invested a further (£3.8 million)
§ Aura Biosciences (Choroidal Melanoma) completed a Series D financing, in which Arix committed a further (£3.4 million)
§ Imara (Haematology) completed a Series B financing, in which Arix committed (£11.4 million)
· Continued clinical progress in the portfolio, with 28 clinical trials live as at
§ completed enrolment of its Phase 3 ACCUTE study for necrotising soft tissue infections (NSTI). The company has also moved the Phase 2 sepsis associated acute kidney injury (AKI) study into a Phase 3 clinical trial, following feedback from the FDA
§ Aura Biosciences presented further positive safety and efficacy data from the ongoing AU-011 Phase 1b/2 study for choroidal melanoma
§ reported encouraging initial data from its programme in paediatric acute lymphoblastic leukaemia (pALL) and adult acute lymphoblastic leukaemia (aALL), as well as early results from its AUTO3 programme in diffuse large B-cell lymphoma (DLBCL). In August, post period end, announced the prioritisation of and goal of taking this into registration trials for aALL by year end
§ Harpoon initiated the HPN536 Phase 1/2a clinical trial for the treatment of ovarian cancer and other mesothelin-expressing solid tumours
§ Imara reported encouraging initial Phase 2 data from its IMR-687 clinical study for patients with sickle cell disease
§ Pharmaxis initiated a Phase 1 clinical trial of an anti-fibrotic Lysyl Oxidase (LOX) inhibitor focused on treating myelofibrosis and/or pancreatic cancer
§ VelosBio initiated the VLS-101 Phase 1 clinical study for the treatment of haematological cancers
§ Verona initiated a Phase 2b study with nebulized ensifentrine as add-on to long-acting bronchodilator and a first Phase 2 study with metered-dose inhaler formulation. In , post-period end, Verona reported positive Phase 2 data with dry powder inhaler formulation
§ Net Asset Value of £231.8 million (: £270.2 million), per share (FY 2018: per share). Equates to 14.5% decline in NAV per share for the first six months of 2019 versus a 32% increase for in 2018
§ Net downward gross portfolio revaluation of £34.0 million over the period, predominantly due to a 51% decline in share price, despite the company's strong fundamentals
§ Gross Portfolio Value of £167.8 million (: £175.5 million)
§ £26.3 million of capital deployed into the gross portfolio during the period (HY 2018: £12.6 million)
§ Half year loss before tax: £44.8 million (HY 2018: £29.3 million profit before tax)
Key anticipated milestones
The company notes key milestones anticipated by its portfolio companies over the next 18 months:
Artios expects to file an investigational new drug (IND) application for its lead programme Pol? by the end of 2020·
expects to announce results from the ACCUTE Phase 3 clinical study in necrotising soft tissue infections in the fourth quarter of 2019·
expects to announce results from the REAKT Phase 3 clinical study in acute kidney infections in the second half of 2020·
Aura Biosciences expects to initiate the AU-011 Phase 3 clinical study for choroidal melanoma in the first half of 2020·
expects to initiate a Phase 2 registration trial of in aALL in the fourth quarter of 2019 and present updated Phase 1 data at (ASH) in·
expects to present interim Phase 1 data for the Alexander study of AUTO3 in DLBCL at ASH 2019 and initiate a Phase 2 trial in the second quarter of 2020, pending regulatory feedback·
expects to present updated Phase 1 results for the CARPALL study of in pALL at ASH 2019·
expects next generation (NG) programmes for , AUTO2, AUTO3 and AUTO6 to enter the clinic in 2020·
Harpoon expects to present interim results from the HPN424 Phase 1 clinical study in metastatic castration resistant prostate cancer in the first half of 2020·
Harpoon expects to present proof of concept data from its HPN536 Phase1/2a clinical trial for ovarian and other mesothelin-expressing solid tumours in 2020·
Harpoon expects to initiate the HPN217 Phase 1 trial for the treatment of multiple myeloma and the HPN328 Phase 1 clinical study in small cell lung cancer in 2020·
 Including FX
Imara expects to announce updated results from its IMR-687 Phase 2 clinical study in sickle cell disease in the second half of 2019·
Imara expects to initiate a Phase 2 trial for thalassemia in the first quarter of 2020·
Iterum expects to announce results from the SURE 2 Phase 3 clinical study in complicated urinary tract Infections and the SURE 3 Phase 3 clinical study in complicated intra-abdominal infections in the second half of 2019·
Iterum expects to announce results from its SURE 1 Phase 3 clinical study in uncomplicated urinary tract infections in the first half of 2020·
LogicBio expects to initiate the LB-001 Phase 1/2 clinical study for the treatment of methylmalonic acidemia in the first half of 2020·
Pharmaxis expects to announce Phase 1 results from its Systemic LOX inhibitor for myelofibrosis and/or pancreatic cancer in the second half of 2019·
Pharmaxis partner Boehringer for AOC3 inhibitor expected to announce results of Phase 2a trials in NASH in the second half of 2019 and diabetic retinopathy in the first half of 2020·
Pharmaxis expects its Mannitol Business (Aridol and Bronchitol) to turn profitable from 2020. If Bronchitol is approved by the FDA for patients in the US, Pharmaxis will receive a milestone payment on the commercial launch of Bronchitol in the US and mid to high teen percentage royalties on in?market net sales in the first quarter of 2020·
Verona expects to initiate a Phase 3 clinical study for nebulized ensifentrine as maintenance treatment for COPD in 2020·
Verona expects to announce Phase 2 results from a pressurized metered-dose inhaler (pMDI) formulation in the second half of 2019, with final data expected in the first quarter of 2020·
, Chief Executive Officer of , commented:
"Over the period our portfolio has continued to make good progress, with a number of companies reaching important clinical milestones and completing additional financing rounds. The portfolio is well balanced and our companies well capitalised to reach important inflection points.
“In the year ahead, we see key multiple clinical and development milestones scheduled across the portfolio and we look forward to providing regular updates on progress”.
Conference Call and Presentation Information
Arix management will host a presentation and conference call today, 28 August, at / , to discuss the company’s financial results and operational update.
To listen to the webcast and view the accompanying slide presentation, please go to:https://arixbioscience.com/investor-relations/events-presentations
For more information on Arix, please contact:
, Head of Investor Relations
+44 (0)20 7290 1072
T: +44 (0) 203 950 9144
is a global venture capital company focused on investing in and building breakthrough biotech companies around cutting edge advances in life sciences.
We collaborate with exceptional entrepreneurs and provide the capital, expertise and global networks to help accelerate their ideas into important new treatments for patients. As a listed company, we are able to bring this exciting growth phase of our industry to a broader range of investors.
Half-Yearly Report and Condensed Consolidated Interim Financial Statements
Six months ended
In the first half of 2019 the portfolio continued to make good progress, with a number of companies reaching important clinical milestones and completing additional financing rounds, as detailed below.
We invested £26.3 million into the gross portfolio in the period, including co-leading a Series B financing round for new portfolio company Imara and further investments into existing portfolio companies (Aura, and Harpoon). In aggregate, our portfolio companies raised during the six month period, putting them in a strong position to execute on their important clinical development programmes.
Notwithstanding these positive developments, our Net Asset Value (NAV) declined by 14.5% over the first six months of 2019 from 200p per share (£270.2 million NAV) to 171p per share (£231.8 million NAV). This followed a strong FY 2018, when our NAV per share increased by 32% (from 152p to 200p per share). The reduction in NAV for the first half of 2019 was principally due to a reduction in the share price of our largest quoted company, Autolus.
Portfolio companies continued to make good clinical and financial progress. Successful financing rounds with valuation uplifts were completed by Aura (+33%) and Harpoon (+30% from Series C to IPO). In addition, the share prices of portfolio companies that recently floated on the Nasdaq generally performed well during the period, with LogicBio up 25% and Iterum up 37%. However, the valuation increases at these companies and further investments into the portfolio were outweighed by the decline in Autolus’ share price (-51%). Despite this, was still valued at 1.7 times cost at 30 June, given our early investment in this company before it was public (cost £24.6 million, value £42.8 million). This underlines a key aspect of our business model: recognising that biotech is a volatile, high risk sector, we aim to invest in promising technologies early, at relatively low valuations and manage a balanced portfolio. We also take a longer-term view, recognising that real value is driven by clinical data and that along the way individual company valuations can be highly volatile.
Operationally, there was good progress in the portfolio, with notable highlights including positive data readouts from , Aura and Imara, along with new trial initiations from VelosBio, Pharmaxis and Harpoon. The pipeline also continued to expand, with 28 clinical trials now live across the portfolio and multiple pre-clinical studies under way.
Key Portfolio Company Updates
During the period we co-led a Series B for new portfolio company Imara, acquiring a 10% stake on a fully diluted basis and committing to invest (£11.4 million), of which £9.3 million has been drawn to date.
Imara is developing novel therapeutics for the chronic treatment of sickle cell disease (SCD) and other haemoglobinopathies. The lead programme, IMR-687, is designed to be a disease-modifying therapy that acts on both red and white blood cells with the potential to create better treatment outcomes for patients. It has a differentiated clinical profile, including a dual mechanism of action on red and white blood cells, once daily dosing, clean safety, and potential impact on foetal haemoglobin.
Imara adds a new therapeutic area and expands the breadth of our portfolio into non-oncology haematology and also adds another later-stage clinical asset to the portfolio. Imara's lead programme, IMR-687, is at an exciting point in its clinical development and is currently being evaluated in a Phase 2a study in sickle cell patients. The company reported encouraging initial safety and efficacy data in June, which demonstrated that treatment with IMR-687 in adult patients was generally well tolerated. The data also support the dual mechanism of action of IMR-687, with activity seen across both red and white blood cell biomarkers. The company expects to report further Phase 2 data later this year and initiate a Phase 2 trial for thalassemia in the first half of 2020.
Harpoon completed a significant milestone this year, raising net proceeds of through a Nadsaq IPO. Arix invested a further (£4.7 million) in the IPO, resulting in a new ownership stake of 12.1% in Harpoon, which was valued at £29.7 million at . Proceeds from the IPO will be used to advance Harpoon's pre-clinical and clinical trials.
The company continues to make good clinical progress, notably dosing the first patient with HPN536, a mesothelin-targeting T cell engager, in a Phase 1/2a clinical trial for ovarian and other mesothelin-expressing solid tumours. This is the second programme that Harpoon has brought into the clinic, following initiation of a trial in metastatic castration resistant prostate cancer last year. The study is designed to evaluate the safety, tolerability, pharmacokinetics and activity of HPN536.
Harpoon expects to report Phase 1 data from its HPN424 metastatic castration resistant prostate cancer study in the first half of 2020 and advance HPN217 into the clinic for the potential treatment of multiple myeloma in the first quarter of 2020.
During the period, the company raised a further through a follow-on financing. Arix invested (£3.8 million) in this round and retains a stake of 7.6%. also reported encouraging initial data from its programme in paediatric acute lymphoblastic leukaemia (pALL) and adult acute lymphoblastic leukaemia (aALL), as well as positive early results from its AUTO3 programme in diffuse large B-cell lymphoma (DLBCL).
Post period end, provided an update on its pipeline and anticipated milestones, as well as confirming plans to initiate a Phase 2 registration trial of in adult ALL in the fourth quarter of 2019. Data so far have indicated that has the potential to be a best-in-class CAR T therapy in ALL, showing a potentially differentiated safety profile and high level of clinical activity, compared to the current standard of care. In pALL, reported that, while its AUTO3 product has shown good clinical activity, data suggest that may have greater durability in this indication, leading to higher overall Event Free Survival. As a result, is transitioning its focus in pALL to and AUTO1NG, a next generation version of , but is progressing AUTO3 in DLBCL where persistence is thought to be of less importance.
has multiple upcoming milestones and will have data on several of its programmes later this year, but manufacturing delays have impacted clinical readouts on some programmes with data from these now expected in the first half of 2020. Also in 2020 the company expects to progress Next Generation programmes for , AUTO2, AUTO3 and AUTO6 into the clinic.
Aura completed a Series D financing in the period, in which Arix committed a further (£3.4 million), to increase our stake to 7.7%. The financing recognised a 33% uplift in the book value of Arix’s Series C investment in Aura, with Arix’s total interest in Aura increasing to £8.6 million from £3.9 million on a fully committed basis.
Aura plans to use the proceeds from the Series D financing to support the late stage clinical development of its lead asset, light-activated AU-011, for the treatment of primary choroidal melanoma. The currently available treatments for choroidal melanoma come with the risk of vision loss and other long-term sequelae, especially for patients with melanomas located close to the fovea or optic disk. The ongoing Phase 1b/2 study with light-activated AU-011 has shown that the drug is well-tolerated, with clear evidence of tumour control and preservation of visual acuity at long term follow up, even in high risk patients. Aura has been granted Orphan Drug and Fast Track status from the (FDA) and expects to initiate a Phase 3 trial in 2020.
completed enrolment of its Phase 3 ACCUTE study for necrotising soft tissue infections (NSTI). This is a rare, life threatening response to infection that results in significant tissue destruction and systemic disease leading to multiple organ dysfunction, failure and death. Data from this study is expected in the second half of this year, taking the company a step closer to a potential cure for this devastating disease. The company has also moved the Phase 2 REAKT clinical study for sepsis associated acute kidney injury (AKI) into a Phase 3 clinical trial, following feedback from the FDA. Data from this clinical study is expected in the second half of 2020.
VelosBio, a next-generation oncology company, developing novel antibody-drug conjugates (ADCs) to treat haematological cancers and solid tumours, has made rapid progress and dosed the first patient in its lead programme VLS-101 for haematological cancers. ADCs are highly potent drugs designed as a targeted therapy for the treatment of people with cancer. In contrast to traditional chemotherapeutic drugs, ADCs only target cancer cells so that healthy cells are less affected.
Elsewhere in the Core Portfolio, further trial initiations were seen from Pharmaxis and Verona. Pharmaxis initiated a Phase 1 clinical trial of an anti-fibrotic Lysyl Oxidase (LOX) inhibitor focused on treating myelofibrosis and pancreatic cancer and Verona initiated a Phase 2b study with nebulized ensifentrine as add-on to long-acting bronchodilator and a first Phase 2 study with metered-dose inhaler formulation.
Along with these promising developments in our core portfolio companies, we continue to work closely with a handful of very early stage companies in our discovery portfolio. These are smaller investments in start-up technologies and tend to be higher risk situations that we are building towards core companies. Our financial commitments are therefore more modest than with our core portfolio companies, which minimises the downside in the event that these companies do not progress as hoped. In this context we have been working with Mitoconix, which has struggled to reproduce early results in mitochondrial biology. As a consequence, the company is now in liquidation. Arix invested £0.8 million in the company and expects to receive at least £0.3 million following the decision to wind up the company and return surplus cash to shareholders. Elsewhere in the discovery portfolio, we continue to see exciting potential, which we are aiming to translate into future core portfolio companies.
30 months on from our IPO I believe Arix is progressing well on its goal of advancing innovation in medicine for the benefit of patients and investors. We have built a promising portfolio of biotech companies developing highly innovative therapies in important areas of medical need. The portfolio is balanced and our companies well capitalised to reach important inflection points. We are working closely with all our companies to help them develop their clinical programmes, finances and options for value realisation. At the same time our flow of new ideas remains strong and we continue to evaluate new investment opportunities. We have an experienced team and Board, and close relationships with pharmaceutical and academic partners.
Our portfolio companies have made significant progress in a relatively short period of time and are moving towards key clinical and development milestones in the year ahead. We expect data from a number of important clinical studies, notably pivotal Phase 3 studies from Iterum and , Phase 2 data from Imara and Phase 1 data from and Harpoon. Additionally we expect a number of these companies to initiate further clinical studies, including Aura, Harpoon, Imara and LogicBio.
As a listed venture capital company we provide institutional and retail investors access to a balanced portfolio of cutting-edge life science companies, led by some of the most ambitious and brightest minds in biotech. We value the support of all of our shareholders and are working hard to ensure progress across our portfolio companies to build our Net Asset Value per share and, through this, to deliver returns for shareholders.
Condensed Consolidated Interim Statement of Comprehensive Income
The above condensed consolidated interim statement of comprehensive income should be read in conjunction with the accompanying notes.
Condensed Consolidated Interim Statement of Financial Position
The above Condensed Consolidated Interim Statement of Financial Position should be read in conjunction with the accompanying notes.
Condensed Consolidated Interim Statement of Changes in Equity
For the six months ended
The above Condensed Consolidated Interim Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Condensed Consolidated Interim Statement of Cash Flows
For the six months ended
The above Condensed Consolidated Interim Statement of Cash Flows should be read in conjunction with the accompanying notes.
Notes to the Financial Statements
1. General information
The principal activity of (the “”) and together with its subsidiaries (the “” or “”) is to source, finance and develop healthcare and life science businesses globally.
The Company is incorporated and domiciled in the . The Company was incorporated on as and changed its name to It subsequently re-registered as a public limited company and changed its name to . The registered office address is , , W1J 6EQ. The registered number is 09777975.
These condensed consolidated interim financial statements were approved for issue on .
These condensed consolidated interim financial statements do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended were approved by the board of directors on and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006.
These condensed consolidated interim financial statements have been reviewed, not audited.
2. Accounting policies
These condensed interim financial statements for the six months ended have been prepared on a going concern basis, in accordance with the Disclosure Guidance and Transparency Rules of the and with IAS 34, ‘Interim financial reporting’, as adopted by the . The condensed consolidated interim financial statements should be read in conjunction with the annual financial statements for the year ended , which have been prepared in accordance with IFRSs as adopted by the .
Taxes on income in the interim periods are accrued using the tax rate that would be applicable to the expected total annual profit or loss.
The accounting policies adopted are consistent with those of the previous financial year. Certain new or amended IFRSs became effective for the financial year beginning on .
The Group has adopted IFRS 16 retrospectively from , but has not restated comparatives for the 2018 reporting period, as permitted under the specific transitional provisions in the standard. The reclassifications and the adjustments arising from the new leasing rules are therefore recognised in the opening balance sheet on .Leases
On adoption of IFRS 16, the Group recognised lease liabilities in relation to leases which had previously been classified as ‘operating leases’ under the principles of IAS 17 . These liabilities were measured at the present value of the remaining lease payments. Right of use assets were measured at the amount equal to the lease liability. There were no onerous lease contracts that would have required an adjustment to the right of use assets at the date of initial application, although one right-of-use asset has subsequently been impaired, in line with IFRS 16.Leases
Assessment for Impairment and Resulting Investment Property
The Group has assessed its right of use assets for impairment, in line with IAS 36 . During the period, the Group vacated its office at 250 West 55 Street, with the intention of sub-letting that space; all US-based staff have relocated to a more flexible and cost effective office location where it continues to run all US-based operations. Impairment of Assets
The right of use asset at 250 West 55 Street has therefore been impaired to its fair value, being the expected proceeds to the Group from sub-letting. As the property no longer contributes to the Group’s core business and is able to produce its own independent cash flows it is considered its own cash generating unit, and is therefore required to be classified as an investment property in line with IAS 40 . The property is held at its fair value, being the expected proceeds to the Group from sub-letting.thInvestment Property
The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.
In preparing these condensed consolidated interim financial statements, the significant judgements and estimates made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that are set on page 106 of the consolidated financial statements for the year ended and no retrospective adjustments were made.
4. Segmental Information
Information for the purposes of resource allocation and assessment of performance is reported to the Arix Group’s Chief Executive Officer, who is considered to be the chief operating decision maker, based wholly on the overall activities of the . It has therefore been determined that the has only one reportable segment under IFRS 8 (‘Operating Segments’), which is that of sourcing, financing and developing healthcare and life science businesses globally. The Arix Group’s revenue, results and assets for this one reportable segment can be determined by reference to the Condensed Consolidated Interim Statement of Comprehensive Income and Condensed Consolidated Interim Statement of Financial Position.
5. Financial Risk Management and Financial Instruments
The Arix Group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, and cash flow interest rate risk), credit risk and liquidity risk.
The condensed consolidated interim financial statements do not include all financial risk management information and disclosures required in the annual financial statements; they should be read in conjunction with the Group’s annual financial statements as at . There have been no changes in the risk management department or in any risk management policies since the year end.
6. Earnings per Share
Basic earnings per share is calculated by dividing the profit/(loss) attributable to equity holders of by the weighted average number of unrestricted shares.
Potentially dilutive ordinary shares include options and conditional share awards issued under the Company’s long term incentive plans. As the has incurred a loss in the period, the diluted loss per share is the same as the basic earnings per share as the loss has an anti-dilutive effect.
Transfers from Level 3 to Level 1 reflects companies which have listed during the period. Level 3 investments are valued with reference to milestone analysis (£62.2m); net asset value (£1.9m); or by discounted cash flow (£nil); the latter used a discount rate of 33%, a discount for marketability (16%) and other assumptions relating to exit values and exit dates; these assumptions are unchanged from those disclosed at .
As permitted by IAS 28 ‘Investment in Associates’ and in accordance with the accounting policy, investments are held at fair value even though the may have significant influence over the companies. Significant influence is determined to exist when the Group holds more than 20% of the holding or when less than 20% is held but in combination with a certain level of board representation is deemed to be able to exert significant influence. As at , the is deemed to have significant influence over the following entities:
9. Share Capital
10. Share Options
Executive Share Option Plan
On , options were granted pursuant to the Executive Share Option Plan to two directors at an exercise price of £1.80 per ordinary share. The number of ordinary shares subject to the options are the requisite number of ordinary shares as represents 5.43% of the fully diluted ordinary share capital of the Company immediately following the end of the Company’s stabilisation period following admission to the . Restricted shares with similar terms were awarded to the founders of the Company constituting 5.00% of the issued share capital of the Company after admission. As such, the number of options granted for both management and founders was confirmed on . All conditions are unchanged from those disclosed in the financial statements.
Executive Incentive Plan
On , nil cost options were granted pursuant to the Executive Incentive Plan to certain directors and members of staff. The options vested on and may be exercised from this date until . The options are contingent on remaining in employment with a company in the , and are subject to malus and clawback provisions.
On , options were granted pursuant to the Executive Incentive Plan to certain directors and members of staff. The options vest on , subject to the Company’s share value growth over the three-year performance period. The options are contingent on remaining in employment with a company in the , and are subject to malus and clawback provisions.
On , options were granted pursuant to the Executive Incentive Plan to certain directors and members of staff. The options vest on , subject to the Company’s share value growth over the three-year performance period. The options are contingent on remaining in employment with a company in the , and are subject to malus and clawback provisions.
On , options were granted pursuant to the Executive Incentive Plan to certain directors and members of staff. The options vest on , subject to the Company’s share value growth and the Company’s net asset value growth over the three-year performance period. The options are contingent on remaining in employment with a company in the , and are subject to malus and clawback provisions.
Share based payments
The fair value of options granted under the Executive Share Option Plan was calculated using the Black-Scholes model. The assumptions used in this calculation are unchanged from those disclosed in the financial statements.
As the options have no performance conditions, the share based payment charge is calculated by reference to the Company’s share price on the grant date; the charge is recognised over the two-year vesting period.
The charge associated with the options have been calculated using a Monte Carlo simulation, incorporating relevant assumptions for share price (197.5p), expected volatility based on similar quoted companies (44%), risk free interest rate (0.12%) and share option term (three years). The resultant fair value is then spread over the three-year relevant vesting period.
The charge associated with the options have been calculated using a Monte Carlo simulation, incorporating relevant assumptions for share price (209.0p), expected volatility based on similar quoted companies (37%), risk free interest rate (0.93%) and share option term (three years). The resultant fair value is then spread over the three-year relevant vesting period.
The charge associated with the options relating to share price growth have been calculated using a Monte Carlo simulation, incorporating relevant assumptions for share price (157.5p), expected volatility based on similar quoted companies (40%), risk free interest rate (0.72%) and time to vesting (two years, eight months) rather than the performance period (three years). The resultant fair value is then spread over the vesting period. The options relating to net asset value growth have a fair value based upon the share price at grant date (157.5p) and the expected likelihood of vesting (currently considered to be 50%), spread across the vesting period, with a true-up/down as the expected likelihood of vesting changes.
For the six months to , a share based payment charge of £1,411,000 (: £1,564,000) has been recognised for a variety of share based payment schemes offered by the Group.
Charges of £153,000 and £179,000 were recognised in relation to the management options and founder incentive options respectively, granted under the Executive Share Option Plan. A charge of £213,000 was recognised in relation to the Executive Incentive Plan award; £213,000 in relation to the award; £476,000 in relation to the award; £107,000 in relation to the award; and £70,000 in relation to shares issued to non-executive directors in accordance with the Company’s Remuneration Policy and the compensation agreed at their appointments.
11. Related Party Transactions
During the period, consultancy fees amounting to £130,262 (inclusive of VAT) (: £374,400) were payable to , a partnership controlled by Sir , a former director and substantial shareholder of the Company. At , no amount (inclusive of VAT) was owed to by the Company in respect of these fees (: £nil). All consultancy arrangements with Merlin Scientific have been closed.
During the period, , as manager of , recognised management fee income totalling £248,000 (six months to : £454,000). is also a limited partner of the fund. As at , £71,000 was outstanding (: £409,000).
12. Events After the Reporting Period
On , the Group concluded a renegotiation of its terms with . Under the new arrangement, the Group has been released from its ongoing commitment to , the undrawn element of which had stood at . As part of the agreement, the Group’s holding in has been reduced from 2,500 units to 1,078 units. The Group retains visibility over BioMotiv’s pipeline and the right to fund projects which are seeking third party investment.
Note Half Year to 30 June Half Year to 30 June 2018 2019 (unaudited) (unaudited) £'000 £'000 Change in fair value of 7 (39,058) 34,869 investments Revenue 266 472 Administrative expenses (5,343) (5,425) Operating (loss) / (44,135) 29,916 profit Net finance income 480 276 Foreign exchange gains 743 682 Impairment of (485) - right-of-use asset Share-based payment 10 (1,411) (1,564) charge (Loss) / profit before (44,808) 29,310 taxation Taxation 8 5,883 (3,636) (Loss) / profit for the (38,925) 25,674 period Other Comprehensive Income Exchange differences on 91 602 translating foreign operations Taxation 8 - (113) Total comprehensive (38,834) 26,163 (loss) / income for the period Attributable to Owners of Arix (38,834) 26,163 Bioscience plc Earnings per share Basic earnings per share 6 (0.30) 0.24 (£) Diluted earnings per 6 (0.30) 0.22 share (£)
Note 30 June 2019 31 December 2018 (unaudited) (audited) £'000 £'000 ASSETS Non-Current Assets Investments held at fair value 7 171,082 183,981 Intangible assets 1,626 1,770 Property, plant and equipment 221 313 Right of use asset 213 - Investment property 2 338 - 173,480 186,064 Current Assets Cash and cash equivalents 19,647 31,009 Cash on long-term deposit 40,342 60,209 Trade and other receivables 1,037 2,174 Right of use asset 249 - 61,275 93,392 TOTAL ASSETS 234,755 279,456 LIABILITIES Current liabilities Trade and other payables (1,697) (3,399) Lease liability (684) - Deferred tax liability 8 - (5,883) (2,381) (9,282) Non-Current liabilities Lease liability (601) - TOTAL LIABILITIES (2,982) (9,282) NET ASSETS 231,773 270,174 EQUITY Share capital and share premium 9 188,585 188,585 Retained earnings 44,436 82,018 Other reserves (1,248) (429) 231,773 270,174 TOTAL EQUITY 231,773 270,174
Share Capital Other Equity Other Reserves Retained Total and Premium £'000 £'000 Earnings £'000 £'000 £'000 As at 31 188,585 (1,211) 782 82,018 270,174 December 2018 Loss for the - - - (38,925) (38,925) period Other - - 159 (68) 91 comprehensive income Share-based - - - 1,411 1,411 payment charge Acquisition of - (978) - - (978) own shares Issue of own - 14 (14) - - shares to employees As at 30 June 188,585 (2,175) 927 44,436 231,773 2019 (unaudited)
Share Capital Other Equity Other Reserves Retained Total and Premium £'000 £'000 Earnings £'000 £'000 £'000 As at 31 105,125 - (768) 42,088 146,445 December 2017 Profit for the - - - 25,674 25,674 period Other - - 554 (65) 489 comprehensive income Contributions of 83,460 - - - 83,460 equity, net of transaction costs and tax Share-based - - - 1,564 1,564 payment charge As at 30 June 188,585 - (214) 69,261 257,632 2018 (unaudited)
Half Year to 30 June 2019 Half Year to 30 June 2018 (unaudited) (unaudited) £'000 £'000 Cash from operating (5,402) (7,215) activities Tax paid - (28) Net finance income 479 275 received Net cash from operating (4,923) (6,968) activities Cash flows from investing activities Purchase of equity (29,262) (14,320) investments Disposal of equity and 4,254 - loan investments Purchase of property, (5) (4) plant and equipment Net cash received from / 19,867 (40,000) (placed on) long-term deposit Net cash from investing (5,146) (54,324) activities Cash flows from financing activities Net proceeds from issue - 83,460 of shares Purchase of own shares (978) - by Employee Benefit Trust Net cash from financing (978) 83,460 activities Net (decrease) / (11,047) 22,168 increase in cash and cash equivalents Cash and cash 31,009 74,938 equivalents at start of period Effect of exchange rate ( (315) 51 changes Cash and cash 19,647 97,157 equivalents at end of period
2019 2018 £'000 £'000 (Loss)/profit attributable to equity holders of Arix (38,834) 26,163 Bioscience plc Weighted average number of shares in issue 129,418,083 110,060,821 Fully diluted weighted average number of shares 140,864,320 118,805,702 Basic (loss)/earnings per share (£0.30) £0.24 Diluted (loss)/earnings per share (£0.30) £0.22
Level 1- Quoted Level 3 - Unquoted Total Investments Investments £'000 £'000 £'000 At 31 December 2018 113,683 70,298 183,981 Additions 8,485 20,777 29,262 Disposals - (4,254) (4,254) Transfers 23,131 (23,131) - Unrealised loss on (38,967) (91) (39,058) investments Foreign exchange gains 624 527 1,151 At 30 June 2019 106,956 64,126 171,082
Level 1- Quoted Level 3 - Unquoted Total Investments Investments £'000 £'000 £'000 At 31 December 2017 2,846 68,485 71,331 Additions 8,769 5,551 14,320 Transfers 29,620 (29,620) - Unrealised gain on 34,183 686 34,869 investments Foreign exchange gains 659 602 1,261 At 30 June 2018 76,077 45,704 121,781
Company Country Registered Issued Net Assets / Profit / Date of Address Share (Liabilities) (Loss) Financial Capital Information Held Depixus SAS France 3-5 Impasse 20.7% €1,948k (€1,439k) 31 Dec 2017 (EUR) Reille, 75014 Paris OptiKira, USA 20600 15.4% N/A N/A Not publicly LLC Chagrin available Blvd., Suite 210, Cleveland, OH 44122 Quench Bio, USA 400 32.4% N/A N/A Not publicly Inc. Technology available Sq, Cambridge, MA 02139
31 Net Change in FX 30 Fully Funding Fully December Investment Valuation Movement June Diluted Committed, Diluted 2018 in Period £m £m 2019 Equity Not Yet Equity Value £m Value Interest Invested Interest £m £m % £m When Fully Committed % Core Portfolio Amplyx 3.2 - - - 3.2 2.8% 1.8 3.7% Pharmaceuticals Artios Pharma 10.9 - - - 10.9 13.4% 4.3 12.4% Atox Bio 3.2 3.2 - 0.2 6.6 6.4% 0.2 6.5% Aura 3.9 1.7 1.2 0.1 6.9 7.3% 1.7 7.7% Biosciences Autolus 81.5 3.8 (42.7) 0.1 42.7 7.6% - 7.6% Therapeutics Harpoon 23.9 4.7 1.1 - 29.7 12.1% - 12.1% Therapeutics Imara - 9.3 - 0.4 9.7 9.2% 2.1 9.9% Iterum 4.3 - 1.5 0.1 5.9 7.8% - 7.8% Therapeutics LogicBio 24.3 - 6.0 0.2 30.5 12.9% - 12.9% Therapeutics Pharmaxis 6.4 - (0.2) - 6.2 11.1% - 11.1% VelosBio 5.2 - - - 5.2 8.9% 3.4 11.3% Verona Pharma 2.5 - (1.0) - 1.5 2.5% - 2.5% CORE PORTFOLIO 169.3 22.7 (34.1) 1.1 159.0 - 13.5 - Discovery 6.2 3.6 (1.0) - 8.8 N/A - N/A Portfolio GROSS PORTFOLIO 175.5 26.3 (35.1) 1.1 167.8 VALUE Other 8.5 (1.2) (4.0) - 3.3 N/A - N/A Investments TOTAL 184.0 25.1 (39.1) 1.1 171.1 13.5 INVESTMENTS
Half Year to 30 June 2019 Half Year to 30 June 2018 (unaudited) (unaudited) £'000 £'000 Current period tax charge Current Tax - - Deferred tax (6,824) 3,636 Total tax (credit)/charge (6,824) 3,636 Statement of Other Comprehensive Income - tax charge Current Tax - - Deferred tax - 113 Total tax charge - 113 Reconciliation of tax charge (Loss)/profit before tax (44,808) 29,310 Expected tax based on (8,514) 5,568 19.00% Effects of: Adjustments in respect of 55 - prior years Expenses not deductible 1,039 83 for tax purposes Income not taxable (1,094) 69 Tax rate changes 809 (640) Movement in share based 191 payment deferred tax Recognition of deferred - (1,616) tax asset previously unrecognised Rolled over gains 53 - Deferred tax not 1,578 172 recognised Total tax (credit)/charge (5,883) 3,636 Recognised deferred tax (assets)/liabilities Brought forward 5,883 - Adjustment in respect of 55 prior periods Relating to Profit and (5,938) 3,636 Loss Relating to Other - 113 Comprehensive Income Carried forward - 3,749
As at 30 June 2019 As at 31 Dec 2018 Allotted and called up Ordinary shares of £0.00001 each (#) 135,467,601 134,823,243 Ordinary shares of £0.00001 each (£’000) 1 1 49,671 Series C shares of £1 each (£’000) 50 50
Quick facts: Arix Bioscience PLC
Market Cap: £84.72 m
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