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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 Bioscience plcInterim results for the six months ended30 June 2019

(“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 ., :LONDON28 August, 2019Arix Bioscience plc30 June 2019

Operational highlights

·      £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·   $283 million

§ Harpoon (T cell engagers) raised net proceeds of in a Nasdaq IPO, in which Arix invested (£4.7 million)$70.7 million$6.0 million

§ (CAR-T cell immunotherapy) completed a follow-on financing in which Arix invested a further (£3.8 million)Autolus$108.8 million$5.0 million

§ Aura Biosciences (Choroidal Melanoma) completed a Series D financing, in which Arix committed a further (£3.4 million)$40.0 million$4.5 million

§ Imara (Haematology) completed a Series B financing, in which Arix committed (£11.4 million)$63.0 million$15.0 million

·      Continued clinical progress in the portfolio, with 28 clinical trials live as at30 June 2019

§ 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 FDAAtox Bio

§ 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 endAutolusAUTO1AutolusAUTO1

§ 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 formulationAugust 2019

Financial highlights

§ 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 2018December 2018171 pence200 pence

§ Net downward gross portfolio revaluation of £34.0 million[1] over the period, predominantly due to a 51% decline in share price, despite the company's strong fundamentals Autolus'

§ Gross Portfolio Value of £167.8 million (: £175.5 million)December 2018

§ £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·   Atox Bio

expects to announce results from the REAKT Phase 3 clinical study in acute kidney infections in the second half of 2020·   Atox Bio

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·   AutolusAUTO1The American Society of HematologyDecember 2019

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·   Autolus

expects to present updated Phase 1 results for the CARPALL study of in pALL at ASH 2019·   AutolusAUTO1

expects next generation (NG) programmes for , AUTO2, AUTO3 and AUTO6 to enter the clinic in 2020·   AutolusAUTO1

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·   

[1] 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·   US$10 million

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:Joe AndersonArix Bioscience plc

"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.12:30 pm BST7:30am EST

To listen to the webcast and view the accompanying slide presentation, please go to:https://arixbioscience.com/investor-relations/events-presentations

[ENDS]

Enquiries

For more information on Arix, please contact:

, Head of Investor Relations +44 (0)20 7290 1072Arix Bioscience plc


Charlotte Parry[email protected]

Mary Clark, T: +44 (0) 203 950 9144Optimum Strategic Communications


Supriya Mathur[email protected]

AboutArix Bioscience plc

is a global venture capital company focused on investing in and building breakthrough biotech companies around cutting edge advances in life sciences.Arix Bioscience plc

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.

www.arixbioscience.com

Arix Bioscience plc

Half-Yearly Report and Condensed Consolidated Interim Financial Statements

Six months ended30 June 2019

CEO Statement

Overview

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.Autolus$283 million

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 Performance

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.November 2018February 2019Autolus

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.Autolus

Key Portfolio Company Updates

Imara Therapeutics

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.$63.0 million$15.0 million

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 Therapeutics

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.$70.7 million$6.0 million30 June 2019

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.

Autolus Therapeutics

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).$108.8 million$5.0 millionAutolusAUTO1

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.AutolusAUTO1AUTO1AutolusAUTO1AutolusAUTO1AUTO1

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.AutolusAUTO1

Aura Biosciences

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.$40.0 million$4.5 million

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.U.S. Food & Drug Administration

Atox Bio

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.Atox Bio

VelosBio

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.

Discovery Portfolio

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.

Outlook

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. Atox BioAutolus

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.

, PhDJoe Anderson

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 ended30 June 2019

   

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 ended30 June 2019

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.Arix Bioscience plcCompanyArix Groupthe Group

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.United Kingdom20 Berkeley SquareLondon15 September 2015Perceptive Bioscience Investments LtdArix Bioscience Ltd.Arix Bioscience plc

These condensed consolidated interim financial statements were approved for issue on .28 August 2019

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 2006.31 December 201828 March 2019

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 .30 June 201931 December 2018Financial Conduct AuthorityEuropean UnionEuropean Union

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 .1 January 2019

IFRS16 ‘Leases’

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 .Leases1 January 20191 January 2019

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 AssetsNew Yorkth

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

3.  Estimates

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.31 December 2018

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.Arix GroupArix Group

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.31 December 2018

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.Arix Bioscience plc

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.Arix Group

7.  Investments

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 .31 December 2018

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:Arix GroupArix GroupArix Group30 June 2019

   

8. Taxation

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.8 February 201620 March 201731 December 2018London Stock Exchange

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.22 February 201722 February 201921 February 2027Arix Group

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.26 May 201726 May 2020Arix Group

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.17 May 201817 May 2021Arix Group

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.9 May 20191 January 2022Arix Group

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.31 December 2018

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.22 February 2017

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.26 May 2017

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.17 May 2018

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.9 May 2019

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.30 June 201930 June 2017

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.22 February 201726 May 201717 May 20189 May 2019

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.30 June 201830 June 201930 June 2018Merlin Scientific LLPMerlin Scientific LLPChristopher Evans

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).Arix Capital Management LimitedThe Wales Life Sciences Investment Fund LPArix Capital Management Limited30 June 201830 June 201930 June 2018

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.19 August 2019BioMotiv, LLCBioMotivBioMotivBioMotiv$10,625,000

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

Price: 62.5

Market: LSE
Market Cap: £84.72 m
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