Cizzle Biotechnology Holdings PLC
Annual Report for the year ended 31 December 2022
Company registered number: 06133765
Cizzle Biotechnology Holdings PLC
Annual Report for the year ended 31 December 2022
Contents
Page
Company Information ................................................................................................................. 1
Chair’s Statement........................................................................................................................ 2
Board of Directors ....................................................................................................................... 5
Strategic Report .......................................................................................................................... 6
Directors' Report ...................................................................................................................... 14
Statement of Directors’ responsibilities ..................................................................................... 17
Corporate Governance Statement ............................................................................................ 18
Directors’ Remuneration Report................................................................................................ 24
Independent Auditor’s report to the members of Cizzle Biotechnology Holdings PLC ............ 31
Consolidated Statement of Comprehensive Income................................................................. 37
Consolidated Statement of Financial Position........................................................................... 38
Company Statement of Financial Position ................................................................................ 39
Consolidated Statement of Cash Flows .................................................................................... 40
Company Statement of Cash Flows.......................................................................................... 41
Consolidated Statement of Changes in Equity.......................................................................... 42
Company Statement of Changes in Equity ............................................................................... 43
Notes to the Financial Statements ............................................................................................ 44
Cizzle Biotechnology Holdings PLC
1
Executive Chair
Finance Director
Non-Executive
Non- Executive
Registered Office
6th floor, 60 Gracechurch Street
London,EC3V 0HR
Shakespeare Martineau
No 1 Colmore Square
Birmingham
B4 6AA
Company Information
Directors
Allan Syms
Nigel Lee
Prof. Dawn Coverley
John Treacy
Company Secretary
SGH Company Secretaries Limited
Registered Number
06133765
Financial Public Relations
IFC Advisory Limited
Birchin Court, 20 Birchin Lane
London
EC3V 9DU
Financial Adviser
Allenby Capital Limited
5 St. Helen’s Place
London,
EC3A 6AB
Broker
Novum Securities Limited
2nd floor, Lansdowne House
57 Berkeley Square
London
W1J 6ER
Solicitors
Cooley (UK) LLP
22 Bishopsgate
London
EC2N 4BQ
Independent Auditor
PKF Littlejohn LLP
Statutory Auditor
15 Westferry Circus
London
E14 4HD
Registrar
Neville Registrars Limited
Neville House
Steelpark Road
Halesowen
B62 8HD
Bankers
National Westminster Bank PLC,
27, Market Place,
Romsey, SO51 8ZH
Cizzle Biotechnology Holdings PLC
Chair’s Statement
2
The Group has continued throughout 2022 in developing a blood test for the early detection of lung
cancer. Its proof-of-concept prototype test is based on the ability to measure a stable blood plasma
biomarker, a variant of CIZ1. CIZ1 is a naturally occurring cell nuclear protein involved in DNA
replication, and the targeted CIZ1B variant is highly correlated with early-stage lung cancer.
Published research led by Professor Coverley previously demonstrated that CIZ1B can be measured
with high sensitivity via an ELISA process, which should allow for testing in a high-throughput, hospital-
friendly format. The Directors believe that this development overcomes an important barrier to further
clinical development and the application of this blood test for the early detection of lung cancer, which
is essential to improve a patient’s chance of survival.
In addition to implementing a strategy to develop a regulatory approved commercial, diagnostic
laboratory immunoassay for early-stage lung cancer, the Group has broadened its interests to include
the detection of a range of other early-stage cancers. It has also expanded its potential customer base
to include the pharmaceutical industry through a contract to develop a diagnostic test that can help in
the development of personalised medicines, so called “companion diagnostics”, and has secured royalty
bearing rights to the sale of such medicines in the longer term.
The Board intends for the Group’s initial product to be a diagnostic immunoassay that can be readily
performed by hospitals and reference laboratories, but a potential follow-on product could be a point of
care test provided by a primary health care provider.
Research and Development
Throughout 2022, the Company continued to work with external expert partners and suppliers to
develop and supply of proprietary key monoclonal antibodies and other detector proteins for its assay
platform, and in July 2022 the Company provided an update on the progress of this work. A key
milestone was the characterisation of a mouse monoclonal antibody that specifically detects CIZ1B.
Assay conditions for its use are being optimised, as well as further work to broaden access to other
antibodies that can be used in its proprietary early lung cancer tests, and potentially for a range of other
early-stage cancers.
On 11 April 2022 a new 12 month research agreement was signed with the University of York, a member
of the Russell Group of research-intensive universities and one of the world’s premier institutions for
inspirational and life-changing research, for the development of potential applications in cancer
diagnosis and therapy. The agreement, commenced on 25 June 2022 for a period of 12 months,
following the successful previous programme announced on 17 September 2021 for the development
and validation of molecular tools with potential application in cancer diagnosis or therapy, and their
configuration into assays for Cizzle’s proprietary cancer biomarker variants. On 24 April 2023, the
Company announced that this research programme had met some critical milestones, especially in
optimising the platform and antibodies required to scale up and bring to market our diagnostic tests for
early-stage cancer detection. As such a further new agreement has been signed with the University
lasting until 25 September 2024. This programme will continue development of its CIZ 1B biomarker
technology for early-stage cancer diagnosis and with potential applications in cancer therapy. This
includes the evaluation of the biomarker for detecting a range of other cancers in addition to the existing
assay for early lung cancer detection.
As in previous agreements, Cizzle Biotechnology will own all intellectual property rights arising from the
work which strengthens the Company’s position in creating new solutions for early cancer diagnostics
and therapeutic tools.
Development of new future revenue stream
On 14 February 2022 the Group announced a royalty acquisition agreement with Conduit and SGSC to
acquire a 5% economic interest in the commercialisation of the AZD1656 asset or such other assets
being developed by Conduit or SGSC to treat inflammatory pulmonary and cardiovascular disease, for
a total consideration of £1.88m. The initial consideration of £1m was settled through the issue of
25,000,000 new ordinary shares at a price of 4.0p per share, with the remaining consideration of £0.88m
settled in September 2022 through the issue of 22,000,000 new ordinary shares at 4.0p per share. Prior
to this, in September 2021, the Group entered into a royalty sharing agreement with SGSC to grant the
Group potential royalty payments from the commercialisation of SGSC’s therapeutic asset AZD1656 of
up to £5m, plus potentially further payments from the use of a companion diagnostic.
Cizzle Biotechnology Holdings PLC
Chair’s Statement (continued)
Development of new future revenue stream (cont’d)
3
In December 2022 the Company announced that it had agreed a put option to sell: (i) its 5% economic
interest in the commercialisation of the AZD 1656 asset to treat inflammatory pulmonary and
cardiovascular disease (the “Economic Interest”); and (ii) its royalty sharing agreement with St George
Street Capital (“SGSC”), the UK-based biomedical charity (the “Royalty Sharing Agreement’) to Conduit
Pharmaceuticals Limited, a pharmaceutical company established to fund the development of successful
deprioritized clinical assets licensed from large pharmaceutical companies (“Conduit”) for a total
consideration of £3.25 million to be satisfied through the issuance of new shares in Conduit (the “Option”).
On 9 November 2022, it was announced that Conduit entered into a definitive business combination
agreement with Murphy Canyon Acquisition Corp. (NASDAQ:MURF) (“Murphy”), a blank-check special
purpose acquisition company. The combined company’s common stock is anticipated to be listed on
NASDAQ under the ticker symbol “CDT”. The combined company is anticipated to have an estimated pro
forma enterprise valuation of approximately $700.49 million with cash proceeds from the transactions
expected to be the balance of $136.04 million of cash held in Murphy’s trust account less any redemptions
by Murphy’s public stockholders and the payment of certain expenses, and approximately $27.00 million
attributable to a private investment anchored by new and existing investors of Conduit (the “PIPE
Investment”).
The Economic Interest and Royalty Sharing agreements are valued at cost, totalling £2,080,000, as at
31 December 2022. No profits or revenues were attributable to the assets subject to the Option. The
Option is exercisable solely at the discretion of Cizzle and Cizzle has agreed to pay Conduit £120,000
in cash as the premium for the Option, which has a nine-month term.
Reaching Global Markets
During 2022 the Company extended its global reach of the Group’s technology to both China and the
USA, where there is much need for the use of the early detection of lung cancer tests:
(cid:127) China: On 1 February 2022 a full commercial agreement with International Co-Innovation Center for
Advanced Medical Technology (iCCAMT) and Shenzen Intelliphecy Life Technologies Co. Ltd was
executed to develop and market early lung cancer diagnostic tests in China. This agreement will generate
future revenues for the Group via a 10% royalty on the sales of all products and services using its
proprietary CIZ1B technology and from payment for monoclonal antibodies and reagents.
(cid:127) USA: On 6 May 2022 the Group announced that it had signed a heads of terms to partner with CorePath
Laboratories (CorePath), a full service cancer reference laboratory, to develop and offer its proprietary
early-stage lung cancer test throughout the USA. The proposal is that the Group would receive a 15%
royalty and royalty sharing arrangements on the direct offering of products and services using CIZ1B via
CorePath in the USA. On 16 June 2022 a marketing agreement was signed with Behnke Group, USA, to
promote, identify and facilitate partnerships for Cizzle with healthcare providers and businesses in the
USA.
Funding
In September 2022 the Company completed a fund raising providing gross proceeds of £500,000 by way
of a subscription for its shares and secured a £500,000 facility to draw down on further funds for a term
of 18 months, if required. The funds will be used to provide working capital for the Company and to
continue development of a laboratory-developed test (“LDT”) accredited service for the early detection of
lung cancer and taking the Company’s proprietary CIZ1B biomarker blood test through to UKCA, CE
marking and/or FDA 510(k) clearance.
In December 2022 the Company raised net proceeds, before expenses, of £115,000 (gross proceeds:
£118,000) to fund the purchase of an option (cost £120,000) to sell its AZD1656 assets as explained
above.
Cizzle Biotechnology Holdings PLC
4
Chair’s Statement (continued)
Financial overview
The financial results for the year ended 31 December 2022 are summarized below:
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Corporate expenses, before share option charge and exceptional items: £823,000 (2021:
£552,000);
Share option charge: £140,000 (2021: £299,000)
Exceptional corporate expenses relating to the acquisition: £Nil (2021: £3,107,000) which
include transaction costs of £Nil (2021: £303,000) and a non-cash share-based expense of
£Nil (2021: £2,804,000) (explained in Notes 3 and 5);
Total comprehensive loss: £912,000 (2021 Loss £3,921,000); and
Loss per share 0.3 p (2021: Loss 2.4 p).
Allan Syms
Executive Chair
26 April 2023
Cizzle Biotechnology Holdings PLC
5
Board of directors
Dr Allan Syms (Executive Chair), appointed 21 May 2019
Allan is an experienced international life sciences and technology senior executive, with over 30 years of
experience at Board level often as founder or chief executive officer in creating, funding and building
emerging technology businesses through to trade sale and IPO. After gaining a PhD in cancer biology at
the Tenovus Institute of Cancer Research and postdoctoral fellowships at Baylor College of Medicine in
Houston and Oxford University, he began his corporate career at GE Healthcare (formerly Amersham
International PLC) to develop novel diagnostic detection systems. He then worked with a number of UK
leading universities to spin out and develop technology businesses. Allan has extensive experience in
M&A, licensing and managing strategic change, becoming corporate marketing director at Integra
Biosciences AG a leading Swiss laboratory and diagnostics supplies company. He was previously a
specialist adviser on China to the Department of International Trade.
Allan was appointed Non-Executive Chair on 21 May 2019 and was appointed Executive Chair with
effect from 14 May 2021.
John Treacy (Non-Executive Director), appointed 29 January 2019
John is a London-based experienced financier who specialises in working with growing companies. He
qualified as a solicitor in the London office of a major international law firm where he specialised in Capital
Markets and Mergers & Acquisitions. From there he moved to practice corporate finance in the advisory
teams of several prominent UK brokerages where he acted as an adviser to a number of AIM companies
and advised on numerous IPOs, acquisitions, debt restructurings and placings.
John is also the Chair of the Audit and Risk Committee and the Chair of the Remuneration Committee.
Professor Dawn Coverley (Non-Executive Director), appointed 14 May 2021
Dawn is a cell biologist with over 20 years’ experience in cancer-related research. After a first degree in
Genetics (Leicester), and a PhD in biochemistry (Cancer Research UK), she completed postdoctoral
training at the University of Cambridge, then moved to the University of York to establish an independent
research group in 2002, supported by the Lister Institute of Preventive Medicine. Her research exploits
experimental systems that reconstitute fundamental processes associated with genome and epigenome
stability, and their contribution to the earliest stages of human cancers. She founded Cizzle Biotechnology
Limited and raised early-stage funding in 2006 to begin development of her research findings into clinically
useful products, focused on CIZ1B and the early detection of lung cancer. She is currently principal
investigator of an academic research laboratory at the University of York and Scientific Director of Cizzle
Biotechnology.
Dawn is also a member of the Audit and Risk Committee and Remuneration Committee.
Nigel Lee (Finance Director), appointed 14 May 2021
Nigel has been a director of CFO Solutions Limited since 2003 which has provided financial advisory
services to the Group since 2010, as well as company secretarial services since 2012. CFO Solutions
Limited ceased providing these services to the Group on 14 May 2021. He is also a part-time Finance
Director of Kent Surrey Sussex AHSN Limited. He was financial director/controller in two IT services and
software companies between 1999 to 2003 and prior to that had 11 years of audit and business advisory
experience at PricewaterhouseCoopers, including six years as a senior manager. Nigel qualified as a
Chartered Accountant in 1988.
Cizzle Biotechnology Holdings PLC
6
Strategic Report for the year ended 31 December 2022
The directors present their strategic report for the year ended 31 December 2022.
Business review
The review of the Company is detailed in the Chair’s Statement on pages 2 to 4.
Principal risks and uncertainties
The principal risks and uncertainties of the Group are as follows:
Pre-revenue business
The Group is still at an early stage of its development, has not generated revenues from its operations to
date and has a history of operating losses. The generation of revenues is difficult to predict and there is
no guarantee that the Group will generate significant or any revenues in the foreseeable future.
There are a number of operational, strategic and financial risks associated with early-stage companies.
The Group will face risks frequently encountered by pre-revenue companies looking to bring new medical
devices to the market. For the foreseeable future, the Group will have significant reliance upon the
success of the CIZ1B biomarker in the detection of lung cancer. There is no guarantee that the Group’s
intellectual property will ultimately result in a commercially viable test for the detection of lung cancer. It
is also possible that technical and/or regulatory hurdles could lengthen the time required for the delivery
of such a testing product.
The Group’s prospects, inter alia, rest initially upon the rate of consumer penetration for its test for the
early detection of lung cancer, once fully developed. The Group’s future growth and prospects will also
depend on its ability to secure commercialisation partnerships on appropriate terms, to manage growth
and to expand and improve operational, financial and management information, quality control systems
and its commercialisation function on a timely basis, whilst at the same time maintaining effective cost
controls. Any failure to expand and improve operational, financial and management information and
quality control systems in line with the Group’s growth could have a material adverse effect on the Group’s
business, financial condition and results of operations.
Regulatory environment and the process for obtaining a CE marking or a 510(k) clearance
The Group’s prospective future products will be subject to various laws, regulations and standards in each
of the jurisdictions in which products are to be manufactured and distributed.
While the Board intends to develop the CIZ1B biomarker test to a point at which UKCA, CE Marking, LDT
or FDA 510(k) clearance will be sought, there can be no guarantee that the Group’s future products will
ultimately obtain UKCA, CE marking, LDT or FDA 510(k) clearance. There can also be no guarantee that
future UKCA, CE marking, LDT or FDA 510(k) clearance can be obtained within the timescales or the
budgets anticipated by the Directors. The Group intends to pursue UKCA, CE marking approval, LDT
accreditation or FDA 510(k) clearance via the use of retrospective testing data. However, if retrospective
testing data is not sufficient to obtain UKCA, CE marking approval, LDT accreditation and/or FDA 510(k)
clearance, then the Group may need to complete a prospective study, which it is anticipated would be
more expensive and would take longer.
Any other potential delays in obtaining the UKCA CE marking approval, LDT accreditation or potentially
FDA 510(k) clearance would adversely affect the timing of the Group’s future product sales into the EU
(or the USA in the case of a LDT or FDA 510(k) clearance). There is no guarantee that there will not be
an extended period of requests for information or supporting data that could add to the timing for receiving
the UKCA/CE mark (or potentially a LDT or FDA 510(k) clearance).
There are significant uncertainties associated with the exit by the UK from its membership of the European
Union. Since 1 January 2021, there have been a number of changes, introduced through secondary
legislation, to how medical devices are placed on the market in Great Britain (England, Wales and
Scotland). These are:
CE marking will continue to be recognised in Great Britain until 30 June 2023;
certificates issued by EU-recognised Notified Bodies will continue to be valid for the Great Britain market
until 30 June 2023;
the EU no longer recognises UK Notified Bodies;
Cizzle Biotechnology Holdings PLC
7
Strategic Report for the year ended 31 December 2022 (continued)
Principal risks and uncertainties (continued)
UK Notified Bodies are not able to issue CE certificates (other than for the purposes of the “CE UKNI”
marking, which is valid in Northern Ireland) – and have become UK Approved Bodies.
a new route to market and product marking is available for manufacturers wishing to place a device on
the Great Britain market;
since 1 January 2021, all medical devices, including in vitro diagnostic medical devices (IVDs), placed
on the Great Britain market need to be registered with the MHRA. There is a grace period for registering:
Class IIIs and Class IIb implantables, and all active implantable medical devices and IVD List A
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products must be registered from 1 May 2021;
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other Class IIb and all Class IIa devices and IVD List B products and Self-Test IVDs must be
registered from 1 September 2021;
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Class I devices, custom-made devices and general IVDs (that do not currently need to be
registered) must be registered from 1 January 2022; and
manufacturers of Class I devices, custom-made devices and general IVDs that, prior to 1 January 2021,
were required to register their devices with the MHRA (i.e. UK-based manufacturers or third country
manufacturers with Northern Ireland-based Authorised Representatives) must continue to register their
devices from 1 January 2021 on the same basis as they do now rather than in line with the above dates.
The Group’s lung cancer blood test will likely be classed as an IVD List B product.
It is anticipated that the MHRA wishes to strengthen regulation to protect patients post-Brexit. Changes
to regulation could lead to potential delays in obtaining the UKCA CE marking approval, LDT accreditation
or potentially FDA 510(k) clearance and there can be no guarantee that the Group’s future products will
ultimately obtain UKCA, CE marking, LDT or FDA 510(k) clearance or that future UKCA, CE marking,
LDT or FDA 510(k) clearance can be obtained within the timescales or the budgets anticipated by the
Directors. The Group will closely monitor changes to regulation brought about by the MHRA and work
with the MHRA to try to ensure that the Group’s products meet any changes in the standards.
On 21 October 2022, the MHRA announced a 12 month extension of the standstill period on the future
Medical Device regime which is a substantial reform of the current framework. This is to ensure that the
future regime is robust and reflects the detail required to avoid disruption to supplies, support innovation
and enable safe access to Medical Devices for UK patients. It is anticipated that the new regulations will
come into force in July 2024. This will provide additional time to develop the legislation and support system
readiness.
There are possible further uncertainties as to the current and future fiscal, monetary and regulatory
landscape in the UK. There is also uncertainty as to how, when and to what extent the continuing impact
of Brexit, the COVID-19 pandemic, the ongoing armed conflict in Ukraine and potential low levels of
economic growth, will have an impact more generally on the economy of the UK and the growth of various
industries, consumer confidence, levels of investor activity and confidence in market performance.
The UK’s exit from the EU may yet lead to a more complicated and uncertain process for obtaining
regulatory clearance to market the Group’s future products in the UK and the EU. In the event of such
complications or delays in obtaining regulatory clearance for marketing in the UK or the EU, the Group
will consider giving higher priority to compliance with the LDT and FDA 510(k) clearance process.
Following Brexit, the Group will need to comply with the Medical Devices (Amendment etc.) (EU Exit)
Regulations 2019 if it is to market its future products in the UK.
Failure to comply with additional requirements as a result of regulatory change and/or failure to receive
regulatory clearance may adversely impact the Company’s ability to develop and market its products
which in turn may have an adverse impact on the business of the Group.
Complex research and development processes
Certain elements of the reagents and other components which are planned to be used in the Group’s test
for lung cancer are complex and bespoke in their nature and may be difficult to reproduce in an optimised
manner. Any unexpected delays or issues with this process may have an impact on the Group’s
anticipated development and commercialisation strategy and its timeline.
Cizzle Biotechnology Holdings PLC
8
Strategic Report for the year ended 31 December 2022 (continued)
Principal risks and uncertainties (continued)
Competition and the pace of development in the healthcare industry
The Directors are aware of a number of competitor companies which are seeking to develop,
commercialise or market alternative types of tests for the detection of cancer, including lung cancer.
Certain competitors already have UKCA, CE of FDA 510K marking for lung cancer detection products.
Existing or new competitors may have larger resources, greater market presence, economies of scale or
a lower cost base than the Group. Diagnosis of lung cancer needs to be made at a much earlier stage
through the availability of an accurate in vitro diagnostic test. This is being addressed by a number of
different technologies to the Group, for example autoantibody technology and tests on circulating DNA
including those based on single nucleotide polymorphisms (SNPs) and gene panels. It is therefore
possible that the market may evolve and other tests and companies may provide alternative solutions.
Few tests are aimed at early detection (cancer stages 1 and 2) or on reducing significantly the number of
false positives achieved via CXT and chest CT scans. While many blood tests to detect tumour markers
are available or under development, many are hampered as markers may also be produced by normal
cells. In contrast, the Group’s test is based on tumour-specific technology.
The Group operates within the biotechnology sector, a complex area of the healthcare industry. Rapid
scientific and technological change within the biotechnology sector could lead to other market participants
creating approaches, products and services equivalent or superior to the diagnostic testing products and
services than those to be offered by the Group, which could adversely affect the Group’s performance
and success. Better resourced competitors may be able to devote more time and capital towards the
research and development process, which, in turn, could lead to scientific and/or technological
breakthroughs that may materially alter the outlook or focus for markets in which the Group will operate.
If the Group is unable to keep pace with the changes in the biotechnology sector and in the wider
healthcare industry, the demand for its prospective future testing platforms and associated products and
services could fall, which may have a material adverse effect on the Group’s business, financial condition,
capital resources, results and/or future operations. In addition, certain of the Group’s competitors may
have significantly greater financial and human resource capacity and, as such, better manufacturing
capability or sales and marketing expertise. New companies with alternative technologies and products
may also emerge. Any of these events may have a material adverse effect on the Group’s business,
financial condition, capital resources, results and/or future operations.
Attraction and retention of key management and employees
The successful operation of the Group will depend partly upon the performance and expertise of its current
and future management and employees. The loss of the services of certain of these members of the
Company’s key management, particularly Professor Dawn Coverley and Dr Allan Syms or the inability to
identify, attract and retain a sufficient number of suitably skilled and qualified employees may have a
material adverse effect on the Group.
Complex research and development processes
Certain elements of the reagents and other components which are planned to be used in the Group’s test
for lung cancer are complex and bespoke in their nature and may be difficult to reproduce in an optimised
manner. Any unexpected delays or issues with this process may have an impact on the Group’s
anticipated development and commercialisation strategy and its timeline.
Ownership and protection of intellectual property rights
The Group’s ability to compete will depend in part upon the successful protection of its intellectual
property, in particular its patents and know-how. The Group seeks to protect its intellectual property
through the filing of patent applications, as well as robust confidentiality obligations on its employees.
Filing, prosecuting and defending patents in all countries throughout the world would be prohibitively
expensive. It is possible that competitors will use the technologies in jurisdictions where the Group has
not yet obtained patent protection in order to develop its own products which will then directly compete
against the Group’s product.
Cizzle Biotechnology Holdings PLC
9
Strategic Report for the year ended 31 December 2022 (continued)
Principal risks and uncertainties (continued)
Future product liability risks
The Group’s future business may expose it to potential product liability and indemnity risks. There can be
no assurance that the necessary insurance cover will be available to the Group at a commercially
acceptable cost or that, in the event of any claim, the level or extent of insurance carried by the Group
now or in the future will be adequate, or that a product liability or other claim would not materially and
adversely affect the business of the Group.
Lack of manufacturing process
The Group currently has no manufacturing process. Future manufacturing process will be outsourced to
a partner specialising in manufacture. These arrangements usually provide for an adequate volume of
manufacturing capability. No assurance can be given that a future manufacturing partner (i) can be found
to provide a product on commercially acceptable terms and (ii) will achieve and sustain the production
yields required to meet the Group’s future customers’ demand for the Group’s products; in either case
this could have a material and adverse effect on the Group’s business.
Future funding requirements
It was noted in the Prospectus announced in September 2022 to raise £0.5m of funds and a £0.5m equity
facility that the Group will have sufficient financial recourses to conduct its planned activities and cover its
general operating costs and overheads for at least 18 months from the date of this Prospectus. Thereafter,
the Company will need to raise additional funding should it wish to undertake development of additional
future products beyond the core offering currently being contemplated and to further fund the corporate
and operational overhead of the business, which is likely to remain pre-revenue at this point. The
Company has budgeted for all near and short-term activities and plans, however in the longer term the
potential for further research, development and production plans and additional initiatives may arise,
which are beyond the scope of the Group’s current planned activity and which may require additional
financing which may not be available to the Group when needed, on acceptable terms, or at all. If the
Company is unable to raise additional capital when needed or on suitable terms, the Group could be
forced to delay, reduce or eliminate future plans or aspirations should the current activity deliver potentially
commercially viable results in the future. Any additional equity fundraising to finance opportunities arising
may be dilutive for Shareholders. Any debt-based funding, should it be achievable, may bind the Group
to restrictive covenants and curb its operating activities and ability to pay potential future dividends even
when profitable. Finally, changes in interest rates could have an adverse impact on the Group’s business
by increasing the cost of capital and may negatively impact the Group’s ability to secure financing on
favourable terms.
Timely completion of project milestones to commercialise the Group’s technology
The Company must meet project milestones in order to commercialise its technology in line with market
expectations and to ensure that its first product reaches the market at the most appropriate time to
maximise the market opportunity. The Directors continually review project milestones and action to be
undertaken at monthly operational and board meetings but no guarantee can be given that such
milestones shall be achieved on time or at all. Material delays to project delivery may, among other things,
damage relationships with key suppliers and other business partners and may risk other market entrants
building market share which may have an adverse effect of the Group’s business. Delays in meeting
project milestones may also delay the Company from generating potential revenue from licensing and
current royalty deals.
Economic uncertainty
There are significant uncertainties as to the current and future fiscal, monetary and regulatory landscape
in the UK. Economic and global political uncertainty, including the continuing impact of Brexit, the COVID-
19 pandemic, the ongoing armed conflict in Ukraine and potential low levels of economic growth, are likely
to put cost pressures on services which the Group requires for both research, development and
professional advisory. The Company will continue to negotiate fixed price contracts with its professional
advisors, however such contracts will need to be renewed and renegotiated periodically. In addition new
adviser contracts may need to be entered into from time to time, most likely on a project to project basis.
In each case, fixed prices may be higher than those prices paid by the Company in the past.
Cizzle Biotechnology Holdings PLC
10
Strategic Report for the year ended 31 December 2022 (continued)
Key performance indicators (KPI’s)
The directors have identified the following KPI’s that they feel are the most vital measurements for the
Group to monitor given its current stage of development. These KPI’s are considered at each board and
monthly operational meeting.
Cash management
The directors consider the cash flows for the previous month and the updated rolling cash flow forecast
for the Group. At 31 December 2022 the Group had cash balances amounting to £478,000 (2021:
£875,000) and no borrowings.
Intellectual Property
Each month the directors review the Group’s Intellectual Property Portfolio and the applications and
renewals required to maintain this portfolio.
The Group’s patent portfolio currently includes:
CIZ1 Replication Protein
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- Methods and Compounds for diagnosis and treatment of cancer; and
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Use of a Fibrinogen Capture Agent to detect a CIZ1B variant.
Diversity
The Group is committed to workplace diversity which includes but is not limited to gender, age, ethnicity
and cultural background. The Group’s only employees are the directors, which consists of three men and
one woman.
Corporate Responsibility
The Group consists of four directors who all work from their homes and one director also works at the
University of York. As we undertake our research and development activities and manage the affairs of
the business and develop our plans for the future our business practices focus on the following areas:
Health and Safety, and ensuring that all of our employees operate in a safe environment;
Environment, managing our environmental impact in areas of waste, energy and water;
Employee support, to ensure that all employees flourish;
Ethical Standards, operating at the highest level in all business dealings.
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Whist our current levels of engagement do not enable much engagement with the local community, we
wish, as our business grows, to have positive interaction with the communities in which we operate.
Climate-Related matters
There is limited scope for the Group to have a major impact on environmental manners but we do attempt
to minimise the amount of travel that we undertake and take actions to undertake recycling and energy
conservation in our daily activities.
Most of the Group’s current activity is that of research and development that is carried out at the University
of York of with subcontractors that are undertaking specific tasks for the Company. Accordingly, the
governance of climate related matters is considered at board meetings if any matters were to arise. No
climate risks have currently been identified other than the minimisation of travel as already noted.
The Company will consider in the future whether a separate committee will be required to consider
environmental matters once the Company has a product that it can sell. When the Company reaches this
stage there will be risks to deal with in terms of :
-
-
-
Sustainable packaging;
Creating an environmentally friendly distribution network; and
Considering whether the product could be recyclable.
The Company is unable to develop any environmental metrics and targets until a product has been
created.
Cizzle Biotechnology Holdings PLC
11
Strategic Report for the year ended 31 December 2022 (continued)
Promotion of the Company for the benefit of the Members as a whole
S172 of the Companies Act 2006 requires the Board to promote the Company for the benefit of the
members as a whole. In particular, the requirements of s172 are for the Directors to:
Consider the likely consequences of any decision in the long term;
Act fairly between the members of the Company;
Maintain a reputation for high standards of business conduct;
Consider the interests of the Company’s employees;
Foster the Company’s relationships with suppliers, customers and others; and
Consider the impact of the Company’s operations on the community and the environment.
The directors have strived to ensure that these considerations are embedded within its decision-making
process.
Decision-making
The day to day operation decisions of the Group have been made by the executive directors. All key
decisions of the Group have been made at board meetings involving all directors.
The Directors believe that during the year they have acted in the way most likely to promote the success
of the Company for the benefit of its members as a whole and have adhered to the requirements set out
above that are applicable to the Company given its scope of operations. For example, the Company, does
not have any employees other than the directors, so considering employee interests is not currently
relevant.
The principal decisions taken by the Group during the year ended 31 December 2022 and since the year
end have been summarised in the Chair’s Statement on pages 2 to 4 and are summarised as follows:
Decision: to raise new monies for the Company to ensure a sound financial base.
Context
In September 2022 the Company completed a fund raising providing gross proceeds of £500,000 by
way of a subscription for its shares and secured a £500,000 facility to draw down on further funds for
a term of 18 months, if required.
In December 2022 the Company raised net proceeds, before expenses, of £115,000 (gross proceeds:
£118,000) to fund the purchase of an option (cost £120,000) to sell its AZD1656 assets as explained
below.
Stakeholder considerations (Shareholders)
The raising of new finance ensures that the Company has a sound financial platform from which to
develop the Group’s activities.
Cizzle Biotechnology Holdings PLC
12
Strategic Report for the year ended 31 December 2022 (continued)
Promotion of the Company for the benefit of the Members as a whole (continued)
Decision: to build a portfolio of early cancer detection tests, companion diagnostics and royalty
bearing stakes in significant drug assets whilst also creating an option to realise these
investments in the short-term.
Context
The Group currently does not have any trading revenues and wishes to a build a portfolio of income
streams from a variety of early cancer detection tests.
-
- On 14 February 2022 the Group announced a royalty acquisition agreement with Conduit
and SGSC to acquire a 5% economic interest in the commercialisation of the AZD1656
asset or such other assets being developed by Conduit or SGSC to treat inflammatory
pulmonary and cardiovascular disease, for total consideration of £1.88m.
In December 2022 the Company announced that it had agreed a put option to sell: (i) its
5% economic interest in the commercialisation of the AZD 1656 asset to treat inflammatory
pulmonary and cardiovascular disease (the “Economic Interest”); and (ii) its royalty sharing
agreement with St George Street Capital (“SGSC”), the UK-based biomedical charity (the
“Royalty Sharing Agreement’) to Conduit Pharmaceuticals Limited (“Conduit”) for a total
consideration of £3.25 million to be satisfied through the issuance of new shares in Conduit
(the “Option”).
Stakeholder considerations (Shareholders)
The investment in SGSC’s therapeutic asset AZD 1656 provides an opportunity for the Group to earn
additional revenues, from an additional source of income, other than its proposed test for the early
detection of lung cancer. The purchase of a put option also creates the possibility of realising this
investment at a profit.
Decision: to enhance its research and development capabilities
Context
The Group is developing a blood test for the early detection of lung cancer. Its proof of concept
prototype test is based on the ability to detect a stable plasma biomarker, a variant of CIZ1 known as
CIZ1B. CIZ1 is a naturally occurring cell nuclear protein involved in DNA replication, and the targeted
CIZ1B variant is highly correlated with early-stage lung cancer. Currently the laboratory test
developed by Professor Dawn Coverley at The University of York, has been used to validate the use
of CIZ1B to detect lung cancer, and a proof of concept prototype test developed, which is compatible
with potential use within a hospital laboratory setting.
- On 11 April 2022 a new 12 month research agreement was signed with the University of
York, a member of the Russell Group of research-intensive universities and one of the
world’s premier institutions for inspirational and life-changing research, for the
development of potential applications in cancer diagnosis and therapy. This new
agreement, commencing for a period of 12 months from 25 June 2022, follows the
successful programme announced on 17 September 2021 for the development and
validation of molecular tools with potential application in cancer diagnosis or therapy, and
their configuration into assays for Cizzle’s proprietary cancer biomarker variants. Cizzle
will own all intellectual property rights arising from the work which strengthens the
Company’s position in creating new solutions for early cancer diagnostics and therapeutic
tools.
Stakeholder considerations (Shareholders)
The decisions taken have enhanced the Group’s research and development capabilities.
Cizzle Biotechnology Holdings PLC
13
Strategic Report for the year ended 31 December 2022 (continued)
Promotion of the Company for the benefit of the Members as a whole (continued)
Decision: to spread the global reach of the Group’s technology to Global markets where there
is much need for the use of the early detection of lung cancer tests.
Context
One of the target markets identified for the Group is in China where we are aware there are serious
challenges in being able to detect cancer early, and there is a great need for screening and diagnosing
cancers among the Chinese population. Targeted testing can improve timely access to cancer care
and save lives.
Lung cancer is the leading cause of cancer death in the USA, making up almost 25% of all cancer
deaths.
-
-
China. On 1 February 2022 a full commercial agreement with International Co-Innovation
Center for Advanced Medical Technology (iCCAMT) and Shenzen Intelliphecy Life
Technologies Co. Ltd was executed to develop and market early lung cancer diagnostic
tests in China. This agreement will generate future revenues for the Group via a 10%
royalty on the sales of all products and services using its proprietary CIZ1B technology
and from payment for monoclonal antibodies and reagents.
USA. On 6 May 2022 the Group announced that it had signed a heads of terms to partner
with CorePath Laboratories (CorePath), a full service cancer reference laboratory, to
develop and offer its proprietary early-stage lung cancer test throughout the USA. The
proposal is that the Group would receive a 15% royalty and royalty sharing arrangements
on the direct offering of products and services using CIZ1B via CorePath in the USA. On
16 June 2022 a marketing agreement was signed with Behnke Group, USA, to promote,
identify and facilitate partnerships for Cizzle with healthcare providers and businesses in
the USA.
Stakeholder considerations (Shareholders)
The decisions taken so far enhance the Group’s Global future revenue streams whilst minimising the
amount of investment required to reach these potential markets.
This report was approved by the board on 26 April 2023 and was signed on its behalf by:
Allan Syms
Director
Cizzle Biotechnology Holdings PLC
14
Directors’ Report for the year ended 31 December 2022
The directors present the annual report and audited financial statements for the year ended 31 December
2022.
Principal activity, business review and future developments
On 14 May 2021, the Company’s ordinary shares were admitted to the Standard-Listing of the London
Stock Exchange. Also on that date, the Company completed the reverse acquisition of CBL.
The Group’s principal activity since 14 May 2021 has been the early detection of lung cancer via the
development of an immunoassay test for the CIZ1B biomarker. For the period to 14 May 2021 the
Company was a holding company that was an AIM Rule 15 cash shell seeking a new investment.
The Statement of Group Comprehensive Income is set out on page 37. A review of the Group’s trading
during the year, its position at the year-end, post balance sheet events, and its prospects for the future
are set out in the Chair’s Statement and the Strategic Report.
Dividends
No dividend is proposed in respect of the year (2021: £Nil).
Financial risk management
Information in respect of financial risk management objectives and policies, exposure to price, credit,
liquidity and cash flow risks, and current trading and trading outlook for the Company are outlined in Note
4.
Directors
The directors of the Company who served during the year are listed below:
Directors
Function
Allan Syms
Nigel Lee
Dawn Coverley
John Treacy
Executive Chair
Finance Director
Non-Executive Director
Non-Executive Director
Board Responsibility and Corporate Governance Statement
The Board is responsible for approving the interim and annual financial statements, formulating and
monitoring the Group’s strategy, approving financial plans and reviewing performance, as well as
complying with legal, regulatory and corporate governance matters. The Board is committed to
maintaining appropriate standards of corporate governance and, as detailed below on page 18, has
concluded that it will adopt the Quoted Companies Alliance’s Corporate Governance Code.
Employees
At 31 December 2022 the total number of employees in the Company comprised of 4 employees (2021:
4), who were all directors.
The Group’s employment policies are designed to attract, retain and motivate the very best staff for each
role in the Group, recognising that this can only be achieved through equal opportunities regardless of
gender, race, religion or disability. Regular meetings were held by the directors to discuss the performance
of the Group as a whole. Financial and economic factors were dealt with in this context. Information
concerning employees and their remuneration is given in Note 8.
Cizzle Biotechnology Holdings PLC
15
Directors’ Report for the year ended 31 December 2022 (continued)
Capital structure
Details of the issued share capital are set out in Note 14. On recognition of the reverse takeover of CBL
on 14 May 2021 the Group had 3 classes of share:
-
-
-
New Ordinary Shares of 0.01p each.
Deferred ‘A’ shares of 0.01p each.
Deferred ‘A’ Shares of 0.99p each.
None of these shares have any rights to fixed income and only new ordinary shares carry the right to
one vote per share at general meetings of the Company.
There are no specific restrictions on the size of a holding or on the transfer of New Ordinary Shares,
which are both governed by the general provisions of the Articles of Association and prevailing
legislation. The directors are not aware of any agreements between holders of the Company’s shares
that may result in restrictions on the transfer of securities or on voting rights.
Details of employee share option schemes are set out in Note 14. During the year ended 31 December
2022, 3,689,096 options were exercised.
No person has any special right of control over the Company’s share capital and all issued shares are
fully paid.
The appointment and replacement of directors of the Company is governed by its Articles of Association,
the Companies Act 2006 and related legislation. The Articles themselves may be amended by special
resolution of the shareholders. The current Articles have been in place for some years and are in the
process of being reviewed and updated. It is anticipated that updated articles will be proposed for
approval at the forthcoming Annual General Meeting.
Donations
No charitable or political donations were made during the year (2021: £Nil).
Share issues
Details of shares issued during the year are set out in Note 14.
Going concern
The Directors have adopted the going concern basis in preparing the financial statements for the year to
31 December 2022 (see Note 2.2). In reaching this conclusion, the Directors have considered for the
Company, current trading and the current and projected funding position for the period of just over 12
months from the date of approval of the financial statements through to 30 April 2024 . The Company, as
anticipated in the Company’s Prospectus announced on 22 September 2022, will need to raise additional
funding should it wish to undertake development of additional future products beyond the core offering
that is mentioned in this Prospectus and to further fund the corporate and operational overhead of the
business. The forecasts have been prepared using two scenarios – a realistic one that assumes expected
levels of income and a pessimistic one that assumes a reduced level of income and delays in accelerated
research and development expenditure. Both forecasting scenarios show that the Group continues to be
a going concern. The directors have concluded that the Group has sufficient funds and undrawn facilities
(£500,000) in order to meet its committed liabilities as they fall due for the foreseeable future.
Cizzle Biotechnology Holdings PLC
16
Directors’ Report for the year ended 31 December 2022 (continued)
Post balance sheet events
On 7 March 2023 the Company announced director salary increase waivers and the award of share
options. In conducting a review of director remuneration, the Company’s remuneration committee was of
the view that the Company’s directors’ salaries are currently below market comparables. However, even
in a period of high inflation, the directors remain fully committed to maintaining low overheads and
maximising the funds available to the Company for the development of its CIZ1B early lung cancer test.
The directors have therefore agreed to waive any increase in basic salary for a period of two years from
3 March 2023. In compensation, and subject to shareholder approval at the next Annual General Meeting
of the Company, the Company has conditionally granted share options over new ordinary shares in the
Company (the “Options”) to the directors, with an exercise price equivalent to the volume weighted
average price of the Company’s ordinary shares for the month of February 2023 at 2.19376p per share.
50% of the Options will vest and become exercisable after the 12-month anniversary of grant; the
remaining 50% shall vest and become exercisable on the 24-month anniversary of grant. The Options will
have a 10 year life from the date of grant and are subject to good and bad leaver provisions. The Options
are unapproved for the purposes of the enterprise management incentive and have been granted outside
of, and in addition to, grants made under the Company’s existing share option schemes.
On 5 January 2023 the Company issued 7,371,557 ordinary shares of 0.01p each for a price of 1.6p per
share to fund the purchase of a Put Option to dispose of AZD1656 assets referred to in Note 11. At 31
December 2022 the Company had received £115,000 ( net of share issue costs) in relation to this share
issue (gross proceeds: £118,000).
On 24 April 2023 the Group announced a further extension of its research and development contract with
the University of York until 25 September 2024.
Disclosure of information to auditor
The directors who held office at the date of approval of this Directors’ report confirm that, so far as they
are aware, there is no relevant audit information of which the Company’s auditor is unaware; and each
Director has taken all steps that he ought to have taken as a Director to make himself aware of any
relevant audit information and to establish that the Company’s auditor is aware of that information.
Auditor
The existing auditors of the Company are PKF Littlejohn LLP and a resolution for their re-appointment will
be put to the Annual General Meeting.
Annual General Meeting
The Annual Report is made available to shareholders at least 21 clear days’ notice before the Annual General
Meeting (“AGM”) along with the notice of the AGM. Shareholders are given the opportunity to vote on each
separate resolution proposed at the AGM. The Company counts all proxy votes and will indicate the level of
proxies lodged for each resolution, after it has first been dealt with by a show of hands.
Website publication
The Directors are responsible for ensuring the annual report and the financial statements are made
available on a website. Financial statements are published on the Company’s website in accordance
with legislation in the United Kingdom governing the preparation and dissemination of financial
statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the
Company’s website is the responsibility of the Directors. The Directors’ responsibility also extends to
the ongoing integrity of the financial statements contained therein.
Approved by the Board of Directors and signed by order of the Board
Allan Syms
Director, 26 April 2023
Cizzle Biotechnology Holdings PLC
Statement of Directors’ Responsibilities
17
The directors are responsible for preparing the strategic report, the directors’ report and the financial
statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that
law the directors have elected to prepare the Group and Company financial statements in accordance
with UK-adopted international accounting standards. Under company law the directors must not approve
the financial statements unless they are satisfied that they give a true and fair view of the state of affairs
of the Group and Company and of the profit or loss of the Group and Company for that period.
In preparing these financial statements, the Directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether they have been prepared in accordance with UK-adopted international accounting
standards, subject to any material departures disclosed and explained in the financial
statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to
presume that the Group and Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and
explain the Group and Company’s transactions and disclose with reasonable accuracy at any time the
financial position of the Group and Company and enable them to ensure that the financial statements
comply with the requirements of the Companies Act 2006. They are also responsible for safeguarding
the assets of the Group and Company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
They are also responsible to make a statement that they consider that the Annual Report and Financial
Statements, taken as a whole is fair, balanced and understandable and provides the information
necessary for the shareholders to assess the Group and Company’s position and performance, business
model and strategy.
Directors’ Responsibility Statement Pursuant to Disclosure and Transparency Rules
Each of the Directors, whose names and functions are listed on page 1, confirm that, to the best of their
knowledge and belief:
the financial statements prepared in accordance with UK-adopted international accounting
standards, give a true and fair view of the assets, liabilities, financial position and loss of the
Group and Company; and
The Annual Report and financial statements, including the Business review, includes a fair
review of the development and performance of the business and the position of the Group and
Parent Company, together with a description of the principal risks and uncertainties that they
face.
Cizzle Biotechnology Holdings PLC
Corporate Governance Statement
18
The Directors recognise the importance of sound corporate governance. The directors continue to adopt
the Quoted Companies Alliance’s Corporate Governance Code (“the QCA Code”). In addition, the
Directors have adopted a code of conduct for dealings in the shares of the Company by directors and
employees and are committed to maintaining the highest standards of corporate governance. During 2022
Allan Syms has continued as Executive Chair of the Company.
The corporate governance arrangements that the Board has adopted are designed to ensure that the
Company delivers long term value to its shareholders and that shareholders have the opportunity to
express their views and expectations for the Company in a manner that encourages open dialogue with
the Board. The Board recognises that their decisions regarding strategy and risk will impact the corporate
culture of the Company as a whole and that this will impact the performance of the Company. The Board
is very aware that the tone and culture set by the Board will greatly impact all aspects of the Company as
a whole and the way that employees behave.
The Company’s activities have been focussed on taking forward the research and development activities
of the Group that have been developed over many years by Professor Dawn Coverley and her team at
The University of York. The Company is committed to respectful dialogue with its suppliers, partners and
potential customers. It is a crucial part of the Company to have sound ethical values and behaviours in its
undertakings to successfully achieve its corporate objectives.
The Board places great importance on this aspect of corporate life and seeks to ensure that this flows
through all that the Company does.
The Board currently consists of two executive and two non-executive directors and does not have a CEO.
The Board continues to consider whether it would be appropriate to seek to appoint additional non-
executive and/or executive directors but at this time believes that appropriate oversight of the Company
is provided by the currently constituted Board. This view will continue to be reviewed by the Board.
John Treacy
Non-Executive Director
Cizzle Biotechnology Holdings PLC
19
Corporate Governance Statement (continued)
The QCA Code sets out 10 principles which should be applied. These are listed below together with a
short explanation of how the Company applies each of the principles. Where the Company does not fully
apply each principle an explanation as to why has also been provided:
Principle One–- Business Model and Strategy
The Board’s strategy during 2022 has been able to continue with its research and development activity
and in particular had adopted a strategy of developing CBL’s prototype test into a commercial, CE marked
and/or FDA 510(k) cleared diagnostic immunoassay that can be readily performed as a sufficiently reliable
test in a hospital setting.
Principle Two–- Understanding Shareholder Needs and Expectations
The Board is committed to maintaining good communication and having constructive dialogue with its
shareholders. Institutional shareholders and analysts have the opportunity to discuss issues and provide
feedback at meetings with the Company. In addition, all shareholders are encouraged to attend the
Company’s Annual General Meeting. Investors also have access to current information on the Company
though its website, https://cizzlebiotechnology.com and via Allan Syms, Non-Executive Chair who is
available to answer investor relations enquiries through IFC Advisory Limited (cizzle@investor-
focus.co.uk).
Principle Three–- Stakeholder Responsibilities
The Board recognises that the long-term success of the Company is reliant upon the efforts of the
employees of the Company and its contractors, suppliers and regulators. The Board has put in place a
range of processes and systems to ensure that there is close Board oversight and contact with its key
resources and relationships. Currently the directors of the Company are the Group’s only employees but
it has systems in place whereby the effectiveness of the board is reviewed and discussed.
Principle Four–- Risk Management
In addition to its other roles and responsibilities the Audit and Compliance Committee is responsible to
the Board for ensuring that procedures are in place, and are being effectively implemented to identify,
evaluate and manage the significant risks faced by the Company. The risk assessment matrix below sets
out those risks, and identifies their ownership and the controls that are in place. This matrix is updated as
changes arise in the nature of risks or the controls that are implemented to mitigate them. The Audit
Committee reviews the risk matrix and the effectiveness of scenario testing on a regular basis. The
following principal risks, and controls to mitigate them, have been identified during 2022:
Activity
Financial
Risk
Pre-revenue
business
Healthcare Industry
Pace of development
the healthcare
in
industry
Management
employees
and
Retention of key
staff
Research
Development
and
Complex processes
.
Patents and other
property
intellectual
rights (IPR)
Infringement of other
patents, IPR
Impact
Revenues are not generated
to support the development
and commercialisation of the
Group’s technology.
The Group’s technology may
be superseded by other
competitor technologies.
The loss of key members of
staff could have an adverse
the pace of
impact on
development.
Additional
development
than anticipated.
costs
takes
if
longer
Additional costs of defending
any IPR claims and/or delays/
additional costs
in current
programme of research and
development.
Control(s)
Regular appraisal of
project milestones.
that
Continual monitoring
of competitor products
and
alternative
solutions.
Ensuring
key
employees
have
to ensure
incentives
that they do not wish to
leave.
Regular appraisal of
project milestones and
consideration of a
variety of strategies.
Regular monitoring of
third party patents/
IPR with patent
advisers.
Cizzle Biotechnology Holdings PLC
20
Corporate Governance Statement (continued)
Principle Four–- Risk Management (continued)
The Company has already established procedures, as represented by this and previous years’
statements, for the purpose of providing a system of internal control. In addition, there were a range of
Company policies that were reviewed at least annually by the Board and a programme of training and
then confirmation of understanding that all employees of the Company were required to undertake each
year. These Company policies covered matters such as share dealing, insider legislation and expenses.
The directors consider that an internal audit function is not considered necessary or practical due to the
size of the Company and the close day to day control exercised by the directors. The directors will continue
to monitor the need for new systems of internal control and an internal audit function.
The annual review of internal control and financial reporting procedures did not highlight any issues
warranting the introduction of an internal audit function.
Principle Five–- A Well-Functioning Board of Directors
During 2022 the composition of the board has been two executive directors and two non-executive
directors. Allan Syms is Executive Chair and Nigel Lee is the Finance Director. The non-executive
directors have continued to be John Treacy and Professor Dawn Coverley. The time commitment formally
required by the Company is an overriding principal that each director will devote as much time as is
required to carry out the roles and responsibilities that the director has agreed to take on. All directors of
the Company are part-time. Biographical details of the current directors are set out on page 5.
Executive and non-executive directors are subject to re-election intervals as prescribed in the Company’s
Articles of Association. At each Annual General Meeting one-third of the Directors, who are subject to
retirement by rotation shall retire from office. They can then offer themselves for re-election. The letters
of appointment of all directors are available for inspection at the Company’s registered office during
normal business hours.
The Executive Chair and Finance Director both receive a salary for their services as a director which is
approved by the Board, being mindful of the time commitment and responsibilities of their roles and of
current market rates for comparable organisations and appointments. They are also reimbursed for
travelling and other incidental expenses incurred on Group business.
The Non-Executive Directors receive payments under appointment letters which are terminable by three
months’ notice by either party.
The Board encourages the ownership of shares in the Company by Executive and Non-Executive
Directors alike and in normal circumstances does not expect Directors to undertake dealings of a short-
term nature. The Board considers ownership of Company shares by Non-Executive Directors as a positive
alignment of their interest with shareholders. The Board will periodically review the shareholdings of the
Non-Executive Directors and will seek guidance from its advisors if, at any time, it is concerned that the
shareholding of any Non-Executive Director may, or could appear to, conflict with their duties as an
independent Non-Executive Director of the Company or their independence itself. Directors’ emoluments,
including Directors’ interest in share options over the Company’s share capital, are set out in Note 14.
The Board has established that it will meet on at least 6 times throughout the year. It has established an
Audit Committee and a Remuneration Committee, particulars of which appear hereafter. The Board
agreed that appointments to the Board are made by the Board as a whole and so has not created a
Nominations Committee.
Cizzle Biotechnology Holdings PLC
21
Corporate Governance Statement (continued)
Principle Five–- A Well-Functioning Board of Directors (continued)
Attendance at Board and Committee Meetings
The Board retains full control of the Company with day-to-day operational control delegated to Executive
Directors. The full Board meets at least every other month and on any other occasions it considers
necessary. During 2022 there were sixteen Board meetings, one Remuneration Committee meeting and
one Audit Committee meeting.
Principle Six–- Appropriate Skills and Experience of the Directors
Directors who served during 2022:
Throughout 2022 the executive directors have been Allan Syms (Executive Chair) and Nigel Lee (Finance
Director). The Non-Executive directors have been John Treacy (specialising in corporate governance,
capital markets, legal matters) and Professor Dawn Coverley (cell biologist and expert in cancer related
research).
The current directors of the Company are as follows are detailed on page 5.
Principle Seven–- Evaluation of Board Performance
Internal evaluation of the Board, the Committee and individual directors is seen as an important next step
in the development of the Board and one that will be addressed during 2023. The aim is that this will be
undertaken on an annual basis in the form of peer appraisal, questionnaires and discussions to determine
the effectiveness and performance in various areas as well as the directors’ continued independence.
Principle Eight–- Corporate Culture
During 2022, the Board recognised that their decisions regarding strategy and risk will impact the
corporate culture of the Company as a whole and that this will impact the performance of the Company.
The Board is very aware that the tone and culture set by the Board will greatly impact all aspects of the
Company as a whole and the way that employees behave. A large part of the Company’s activities was
centred upon addressing customer and market needs. Therefore, the importance of sound ethical values
and behaviours is crucial to the ability of the Company to successfully achieve its corporate objectives.
The Board places great importance on this aspect of corporate life and seeks to ensure that this flows
through all that the Company does. The Board assessment of the culture within the Company at the
present time is one where there is respect for all individuals and there is open dialogue within the
Company.
Principle Nine–- Maintenance of Governance Structures and Processes
Ultimate authority for all aspects of the Company’s activities rests with the Board. The Board has adopted
a Financial Position and Prospects Board Memorandum which summarises financial reporting procedures
and establishes procedures to ensure that it meets all regulatory requirements for accounting, financial
reporting and related obligations. This includes matters which are reserved to the Board and the division
of responsibilities between the executive and non-executive directors. The Chair is responsible for the
effectiveness of the Board.
Cizzle Biotechnology Holdings PLC
22
Corporate Governance Statement (continued)
Audit Committee
During 2022 the Audit Committee has consisted of John Treacy (Chair) and Professor Dawn Coverley. It
meets as required and specifically to review the Interim Report and Annual Report, and to consider the
suitability and monitor the effectiveness of internal control processes. There was one meeting of the Audit
Committee during 2022. The Audit Committee also reviews the findings of the external auditor and reviews
accounting policies, material accounting judgements and risk and control framework.
The independence and effectiveness of the external auditor is reviewed annually. The possibility of
undertaking an audit tender process is considered on a regular basis. The Company’s policy is to ensure
that the Company’s audit is put out to render at least once in every 10 years. The Current auditors were
appointed in respect of the Company’s audit for the year ended 31 December 2018. At each Annual
General Meeting a resolution is proposed for the re-appointment of auditors. There are no contractual
restrictions existing on the choice of auditors. The Audit Committee meets at least once a year with the
auditor to discuss their independence and objectivity, the Annual Report, any audit issues arising, internal
control processes, appointment and fee levels and any other appropriate matters. The fees in respect of
audit services are set out in Note 7.
Remuneration Committee
During 2022 the Remuneration Committee has consisted of John Treacy (Chair) and Professor Dawn
Coverley. The purpose of the Remuneration Committee is to ensure that the Executive Directors and other
employees are fairly rewarded for their individual contribution to the overall performance of the Company.
The Committee considers and recommends to the Board the remuneration of the Executive Directors and
is kept informed of the remuneration packages of senior staff and invited to comment on these. There was
one Remuneration Committee meeting during 2022. The Board retains responsibility for overall
remuneration policy. The Remuneration Committee recommends to the Board the remuneration packages
by reference to individual performance and uses the knowledge and experience of the Committee
members, published surveys relating to similar companies and market changes generally. The
Remuneration Committee has responsibility for recommending any long-term incentive schemes.
The Board determines whether or not Executive Directors are permitted to serve in roles with other
companies. Such permission would only be granted on a strictly limited basis, where there are no conflicts
of interest or competing activities and providing there is not an adverse impact on the commitments
required to the Company. Earnings from such roles would be required to be disclosed to the Chair.
During 2022 there were two main elements of the remuneration package for Executive and Non-Executive
Directors and former employees:
Basic salaries: Basic salaries are recommended to the Board by the Remuneration Committee,
1.
taking into account the performance of the individual and the rates for similar positions in comparable
companies. No benefits in kind are currently available to Executive Directors.
2.
Share options: The Company operates unapproved share option schemes for Executive Directors
and some non-executive directors to motivate those individuals through equity participation. Exercise of
share options under the schemes is subject to specified exercise periods and compliance with the Scheme
Rules and the rules of the London Stock Exchange. The schemes are overseen by the Remuneration
Committee which recommends to the Board all grants of share options based on the Remuneration
Committee’s assessment of personal performance and specifying the terms under which eligible
individuals may be invited to participate. It is intended that the performance related elements of
remuneration form a significant proportion of the total remuneration package of Executive Directors and
be designed to align their interests with those of shareholders. In this development phase of the Company
the Remuneration Committee currently considers that the best alignment of these interests is through the
continued use of incentives for performance through the award of share options.
Cizzle Biotechnology Holdings PLC
23
Corporate Governance Statement (continued)
Non-executive Directors
The Board has adopted guidelines for the appointment of non-executive directors which have been in
place and which have been observed throughout the year. These provide for the orderly and constructive
succession and rotation of the non-executive directors insofar as they will be appointed for an initial term
of three years and may, at the Board’s discretion believing it to be in the best interests of the Company,
be appointed for subsequent terms. In accordance with the Companies Act 2006, the Board complies
with: a duty to act within their powers; a duty to promote the success of the Company; a duty to exercise
independent judgement; a duty to exercise reasonable care, skill and diligence; a duty to avoid conflicts
of interest; a duty not to accept benefits from third parties and a duty to declare any interest in a proposed
transaction or arrangement.
Principle Ten–- Shareholder Communication
The Board is committed to maintaining good communication and having constructive dialogue with its
shareholders. Institutional shareholders and analysts have the opportunity to discuss issues and provide
feedback at meetings with the Company. In addition, all shareholders are encouraged to attend the
Company’s Annual General Meeting. Investors also have access to current information on the Company
though its website, https://cizzlebiotechnology.com and via Allan Syms, non-executive Chair who is
available to answer investor relations enquiries through IFC Advisory Limited (cizzle@investor-
focus.co.uk).
Cizzle Biotechnology Holdings PLC
24
Directors’ Remuneration Report for the year ended 31 December 2022
The Company has established a remuneration committee. The Committee reviews the scale and structure
of the Directors’ fees, taking into account the interests of shareholders and the performance of the Group
and directors.
The items included in this report are unaudited unless otherwise stated.
Statement of Cizzle Biotechnology Holdings PLC Policy on Directors’ Remuneration by the Chair
of the Remuneration Committee
As Chair of the Remuneration Committee, I have pleasure in introducing our Directors’ Remuneration
Report. One of the Remuneration Committee’s aims is to provide clear, transparent remuneration
reporting for our shareholders which adheres to the best practice corporate governance principles that
are required for listed companies.
A key focus of the Directors’ Remuneration Policy is to align the interests of the Directors to the long-term
interests of the shareholders and aims to support a high-performance culture with appropriate rewards
for meeting the Group’s objectives without unnecessary risk-taking. This is underpinned through the
operation of incentive plans.
Key activities of the Remuneration Committee
The key activities of the Remuneration Committee are to:
determine and agree with the board the framework or broad policy for the remuneration of the
Company’s Chair and the executive directors including pension rights and compensation
payments. The remuneration of non-executive directors shall be a matter for the board or the
shareholders (within the limits set in the articles of association). No director or senior manager
shall be involved in any decisions as to their own remuneration;
recommend and monitor the level and structure of remuneration for senior management taking
into account all factors which it deems necessary including relevant legal and regulatory
requirements and the provisions and recommendations of the UK Corporate Governance Code
(insofar as it applies to the Company) and other relevant guidance. These will be subject to annual
review. The objective of such policy shall be to attract, retain and motivate the executive
management of the Company without paying more than necessary. The remuneration policy
bears in mind the Company’s appetite for risk and be aligned to the Company’s long term strategic
goals. A significant proportion of remuneration should be structured so as to link rewards to
corporate and individual performance and be designed to promote the long term success of the
Company;
review and have regard to the pay and employment conditions across the Company or Group,
especially when determining salary increases;
review the ongoing appropriateness and relevance of the remuneration policy;
approve the design of, and determine targets for, any performance related pay schemes operated
by the Company and approve the total annual payments made under such schemes;
review the Company’s arrangements for its employees to raise concerns, in confidence, about
possible wrongdoing in financial reporting or other matters. The Committee shall ensure that
these arrangements allow proportionate and independent investigation of such matters and
appropriate follow up action;
review the design of all share incentive plans for approval by the board and shareholders. For
any such plans, determine each year whether awards will be made, and if so, the overall amount
of such awards, the individual awards to executive directors, Company Secretary and other senior
executives and the performance targets to be used;
determine the policy for, and scope of, pension arrangements for each executive director and
other senior executives;
Cizzle Biotechnology Holdings PLC
25
Directors’ Remuneration Report for the year ended 31 December 2022 (cont’d)
Key activities of the Remuneration Committee (cont’d)
determine the total individual remuneration package of the Chair, each executive director, the
Company Secretary and other senior executives including bonuses, incentive payments and
share options or other share awards;
ensure that contractual terms on termination and any payments made are fair to the individual
and the Company; that failure is not rewarded and the duty to mitigate loss is fully recognised;
oversee any major changes in employee benefits structures throughout the Company or Group;
and agree the policy for authorising claims for expenses from the directors;
be responsible for establishing the selection criteria, selecting, appointing and setting the terms
of reference for any remuneration of consultants who advise the Committee;
obtain reliable, up-to-date information about remuneration in other companies of comparable
scale. The Committee shall have full authority to appoint remuneration consultants and to
commission or purchase any reports, surveys or information which it deems necessary to help it
fulfil its obligations within any budgetary restraints imposed by the board;
consider such other matters as may be requested by the board of directors; and
work and liaise as necessary with all other board committees.
Members
The Remuneration Committee comprises the following independent Non-Executive Directors:
Name
John Treacy
Prof. Dawn Coverley
Position
Chair
Member
appointment
to
Date of
Committee
14 May 2021
14 May 2021
Remuneration Components
The Company remunerates directors in line with best market practice in the industry in which it operates.
As the Group is currently a pre-revenue business the components of Director’s Remuneration consists
of:
Base salaries
Pension benefits
Share incentive arrangements
These remuneration components will be reviewed at least annually by the Committee.
It is anticipated that once the Group becomes a revenue generating business that the following
components of Directors Remuneration are likely to be appropriate:
Other benefits
Annual bonus
Cizzle Biotechnology Holdings PLC
26
Directors’ Remuneration Report for the year ended 31 December 2022 (cont’d)
Recruitment policy
Base salaries take into account market data for the relevant role, internal relativities, their individual
experience and their current base salary. Where an individual is recruited at below market rates of
remuneration, they may be re-aligned over a period of time, subject to their performance in their role.
Service Agreements and Letters of Appointment
The Executive Directors’ service agreements are summarised below:
Executive
Director
Date of service
agreement
Initial term Notice period by
Company (Months)
Notice period by
Director (Months)
Allan Syms
14 May 2021
6 months
Nigel Lee
14 May 2021
N/a
6
6
6
6
The Non-Executive Directors’ service agreements are summarised below:
Non-Executive
Director
Date of service
agreement
Initial term Notice period by
Company (Months)
Notice period by
Director (Months)
John Treacy
14 May 2021
3 years
Dawn Coverley
14 May 2021
3 years
3
3
3
3
Non-Executive directors are typically expected to serve two three-year terms but may be invited by the
Board to serve for an additional period. Any term renewal is subject to Board review and AGM re-election.
Remuneration of Executive Directors (audited)
The remuneration of the Executive Directors for the year ended 31 December 2022 was as follows:
Year ended 31 December 2022
Year ended 31 December 2021
Executive
Director
Allan Syms
Nigel Lee
TOTAL
Basic salary
Pension
Total
Basic salary
Pension
£’000
£’000
£’000
£’000
£’000
90
36
126
3
1
4
93
37
130
70
22
92
1
1
2
Total
£’000
71
23
94
Cizzle Biotechnology Holdings PLC
27
Directors’ Remuneration Report for the year ended 31 December 2022 (cont’d)
Share scheme interests of executive directors (audited)
The interests of the executive directors in share schemes are shown in the table below:
Executive
Director
Type of
scheme
Share
options at
31 Dec
2021
Allan Syms
CSOP 21
5,068,956
Nigel Lee *
CSOP 21
2,000,000
CSOP 17
CSOP 16
CSOP 15
500
800
300
TOTAL
7,070,556
Granted
during the
year
Lapsed
or
cancelled
Share
options at 31
Dec 2022
Date from
which
exercisable
Expiry date
-
-
-
-
-
-
-
-
-
-
-
-
5,068,956
2,000,000
**
**
2 Nov 2031
2 Nov 2031
500
9 Nov 2018 ***
8 Nov 2027
800
27 Oct 2017 ***
26 Oct 2026
300
25 May 2016 ****
25 Aug 2025
7,070,556
* Includes brought forward 1,600 beneficial interests in share options as director of CFO Solutions Limited.
** subject to achievement of certain Group objectives.
*** One-third of the total options vest on first, second and third anniversary from date of grant.
**** One third of the options vest on 25 May 2016, 25 February 2017 and 25 August 2017.
Remuneration of Non-Executive Directors (audited)
The remuneration of the Non-Executive Directors for the year ended 31 December 2022 was as follows:
Year ended 31 December 2022
Year ended 31 December 2021
Non-
Executive
Director
Basic
salary
£’000
Bonus
Fees
Pension
Total
£’000
£’000
£’000
£’000
John
Treacy
Dawn
Coverley *
Martin
Lampshire
30
-
40
104
-
-
TOTAL
70
104
-
-
-
-
-
1
-
1
30
145
-
Basic
salary
£’000
30
25
-
Bonus
Fees
Pension
Total
£’000
£’000
£’000
£’000
-
-
-
-
-
-
7
7
-
1
-
1
30
26
7
63
175
55
* As mentioned in the Company’s prospectus that was published on 23 April 2021, Dawn Coverley was
granted options over 3,689,096 options in lieu of options that existed in Cizzle Biotechnology Limited prior
to the reverse takeover by the Company on 14 May 2021. In addition, in consideration of the waiver of
outstanding salary so as to conserve cash for patent maintenance costs in Cizzle Biotechnology Ltd, it
was agreed that Dawn Coverley would be entitled to a cash bonus from the Company equal to the exercise
price of the share options (£56,588, together with any tax payable thereon). The £104,000 bonus noted
above relates to the grossing up of the exercise price of £56,588 for income tax and national insurance
so that the exercise could be accounted for and taxed through the Company’s payroll.
Cizzle Biotechnology Holdings PLC
28
Directors Remuneration Report for the year ended 31 December 2022 (cont’d)
Share scheme interests of non- executive directors (audited)
The interests of the Non-Executive directors in share schemes are shown in the table below:
Non-
executive
Director
Type of
scheme
Share
options at
31 Dec
2021
Granted
during the
year
Exercised
in year
Share options at
31 Dec 2022
Date from
which
exercisable
Expiry
date
Dawn
Coverley
CSOP 21
12,672,389
CSOP 21
3,689,096
-
-
(3,689,096)
12,672,389
*
-
14 May 2021
**
2 Nov
2031
13 May
2031
TOTAL
16,361,485
-
(3,689,096)
12,672,389
* subject to achievement of certain Group objectives.
** may only be exercised for a period of 30 days from the date on which the Company’s audited annual
accounts are published each year; or at the discretion of the board of directors.
Relative importance of total remuneration
The table below illustrates total employee remuneration compared to distributions to shareholders and
operational cash outflow, excluding proceeds from the issue of ordinary shares (before issue costs):
Year ended 31
December 2022
Distributions to
shareholders
Total employee pay
(£’000)
Operational cash
outflow (£’000)
-
305
872
Operational cash outflow has been shown in the table above as cash flow monitoring and forecasting are
an important consideration for the Remuneration Committee and Board of Directors when determining
cash-based remuneration for directors and employees.
Event since the year end Relative importance of total remuneration
On 7 March 2023 the Company announced director salary waivers and the award of share options. In
conducting a review of director remuneration, the Company’s remuneration committee was of the view
that the Company’s directors’ salaries are currently below market comparables. However, even in a period
of high inflation, the directors remain fully committed to maintaining low overheads and maximising the
funds available to the Company for the development of its CIZ1B early lung cancer test. The directors
have therefore agreed to waive any increase in basic salary for a period of two years from 3 March 2023.
In compensation, and subject to shareholder approval at the next Annual General Meeting of the
Company, the Company has conditionally granted share options over new ordinary shares in the
Company (the “Options”) to the directors, with an exercise price equivalent to the volume weighted
average price of the Company’s ordinary shares for the month of February 2023 at 2.19376p per share.
50% of the Options will vest and become exercisable after the 12-month anniversary of grant; the
remaining 50% shall vest and become exercisable on the 24-month anniversary of grant. The Options will
have a 10 year life from the date of grant and are subject to good and bad leaver provisions. The Options
are unapproved for the purposes of the enterprise management incentive and have been granted outside
of, and in addition to, grants made under the Company’s existing share option schemes.
Cizzle Biotechnology Holdings PLC
29
Directors Remuneration Report for the year ended 31 December 2022 (cont’d)
The table below sets out the options of each director at 31 December 2022 and new options granted:
Director
Number of options
granted in March 2023
Options held at 31
December 2022
Total options held at
date
signing
accounts
of
Allan Syms
Nigel Lee *
Dawn Coverley
John Treacy
8,868,096
6,224,233
7,614,540
6,235,629
5,068,956
2,000,000
13,937,052
8,224,233
12,672,389
20,286,929
-
6,235,629
*In addition, Nigel Lee is interested in 1,600 options over the Company’s ordinary shares issued to CFO
Solutions Ltd, a company in which Nigel Lee is a director.
Historical share price performance comparison
The table below compares the share price performance (based on notional investment of £100) of Cizzle
Biotechnology Holdings PLC against the FTSE SmallCap and FTSE Techmark Mediscience based on
prices/indices at close of business from 1 January 2022 to 31 December 2022. Note that month end prices
are based on the last day of trading of each month. The FTSE SmallCap has been chosen to provide a
wider market comparator and the FTSE Techmark Mediscience chosen due to sector relevance:
Cizzle Biotechnology Holdings PLC
30
Directors Remuneration Report for the year ended 31 December 2022 (cont’d)
Consideration of shareholder views
The Board considers shareholder feedback received and guidance from shareholder bodies. This
feedback is considered as part of the Company’s policy on remuneration.
Approved on behalf of the Board of Directors
John Treacy
Director and Chair of the Remuneration Committee
26 April 2023
Cizzle Biotechnology Holdings PLC
31
Independent Auditor’s Report to the Members of Cizzle Biotechnology Holdings PLC
Opinion
We have audited the financial statements of Cizzle Biotechnology Holdings PLC (the ‘parent company’)
and its subsidiaries (the ‘group’) for the year ended 31 December 2022 which comprise the Consolidated
Statement of Comprehensive Income, the Consolidated and Company Statements of Financial Position,
the Consolidated and Company Statements of Cash Flows, the Consolidated and Company Statements
of Changes in Equity and notes to the financial statements, including significant accounting policies. The
financial reporting framework that has been applied in their preparation is applicable law and UK-adopted
international accounting standards and as regards the parent company financial statements, as applied
in accordance with the provisions of the Companies Act 2006.
In our opinion:
(cid:127)
(cid:127)
(cid:127)
(cid:127)
the financial statements give a true and fair view of the state of the group’s and the parent company’s
affairs as at 31 December 2022 and of the group’s loss for the year then ended;
the group financial statements have been properly prepared in accordance with UK-adopted
international accounting standards;
the parent company financial statements have been properly prepared in accordance with UK-
adopted international accounting standards and as applied in accordance with the provisions of the
Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the Companies
Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our report. We are independent of the
group and parent company in accordance with the ethical requirements that are relevant to our audit of
the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest
entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis
of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’
assessment of the group’s and parent company’s ability to continue to adopt the going concern basis of
accounting included obtaining the directors’ going concern assessment, including the cash forecast for
the going concern period which covers a period up to 30 April 2024. We noted that the group modelled a
base case and a plausible downside scenario in their cash forecast in order to incorporate unexpected
changes to the performance and liquidity of the group. Our evaluation thereof involved:
(cid:127)
(cid:127)
Testing the mathematical accuracy of the base case and a downside scenario forecasts;
Evaluating and challenging the appropriateness of the forecasting method by using our understanding
of the group and parent company and by considering past historical accuracy of the directors’
forecasting and comparing the actual post year end results with the forecasts;
(cid:127) Understanding the forecasts including the key inputs used and sources of these inputs through
the directors and management and, where possible, obtaining supporting
inquiries with
documentation for such key inputs;
Testing the main assumptions and judgements used including the drawdown of the facility and receipt
of research and development income;
(cid:127)
(cid:127) Reviewing the reasonableness of downside scenarios included in the pessimistic forecast; and
(cid:127)
Assessing the appropriateness and adequacy of the group’s and parent company’s going concern
disclosures included in the financial statements.
Our responsibilities and the responsibilities of the directors with respect to going concern are described
in the relevant sections of this report
Cizzle Biotechnology Holdings PLC
32
Independent Auditor’s Report to the Members of Cizzle Biotechnology Holdings PLC (continued)
Our application of materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative
thresholds for materiality. These, together with qualitative considerations, helped us to determine the
scope of our audit and the nature, timing and extent of our audit procedures on the individual financial
statement line items and disclosures and in evaluating the effect of misstatements, both individually and
in aggregate on the financial statements as a whole. Based on our professional judgement, we determined
the materiality thresholds for the financial statements as follows:
for
Material
the
financial statements
as a whole
Performance
materiality
the
Basis for materiality
financial
for
statements
a
whole
as
Rationale
Group Financial Statements
Parent company
statements
financial
£132,000 (2021: £27,000)
£127,000 (2021: £18,000)
£92,400 (2021: £18,900)
£88,900 (2021: £12,600)
5% of the group’s net assets
5% of the parent company’s net
assets excluding the investment
and the intragroup debtor
balance
The group is still at an early stage of development and is not revenue
generating. Its principal activity is driven by the development of an
immunoassay test for the CIZ1B biomarker. As such, the performance and
success of the group is measured by the existence, development and success
of its net assets. The benchmark has changed from loss before tax less
exceptional items the prior year given that the group has capitalised intangible
assets in the year.
The parent company benchmark excluded the investment and intragroup
balances as these are eliminated at consolidation and would have resulted, in
our view, in the inappropriate exclusion of some account balances and
transactions from our scope.
The percentage applied to the benchmark has been selected to bring into
scope all significant classes of transactions, account balances and disclosures
relevant for the members, and also to ensure that matters that would have a
significant impact on the results were appropriately considered.
Performance materiality has been set at 70% of materiality for the financial
statements as a whole, for both the group and parent company. The
percentage applied was determined after considering the number and
quantum of identified misstatements in the prior year audit, management’s
attitude to correcting misstatements identified and our cumulative knowledge
of the group and parent company including the environment they operate in.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate
of uncorrected and undetected misstatements exceeds overall materiality. For each component of the
group, we allocated a materiality that is less than our overall group materiality. The materiality applied to
the audit of the subsidiary undertaking was £4,000. We agreed with the audit committee that we would
report to them misstatements identified during our audit above £6,600 for the group audit and £6,350 for
the parent company audit, as well as misstatements below those amounts that, in our view, warranted
reporting for qualitative reasons.
Cizzle Biotechnology Holdings PLC
33
Independent Auditor’s Report to the Members of Cizzle Biotechnology Holdings PLC (continued)
Our approach to the audit
In designing our audit approach, we determined materiality, as above, and assessed the risk of material
misstatement in the financial statements. In particular, we looked at areas involving significant accounting
estimates and judgement by the directors, being the valuation of intangible assets and share-based
payment transactions. As part of our work on going concern we considered future events that are
inherently uncertain such as future research and development expenditure and the drawdown of the
facility. We also addressed the risk of management override of internal controls, including evaluating
whether there was evidence of bias by management that represented a risk of material misstatement due
to fraud.
There are three components in the group being the parent company and two subsidiary undertakings,
one of which is dormant. Of the trading components, both were considered material and significant and
accordingly, a full scope audit was performed. Our audit was performed from our London office with
regular contact with management and the directors throughout the audit. This, in conjunction with
additional procedures performed, gave us sufficient and appropriate evidence for our opinion on the group
and parent company financial statements.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial statements of the current period and include the most significant assessed risks of
material misstatement (whether or not due to fraud) we identified, including those which had the greatest
effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in the context of our audit of the financial statements
as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters.
Key Audit Matter
How our scope addressed this matter
Valuation of
intangible assets
recognised in the year (Notes 2.5, 5
and 11)
In the current year, the group entered
into:
1. An agreement with St George
Street Capital (‘SGSC’) and Conduit
Pharmaceuticals Limited (‘Conduit’)
to acquire a 5% economic Interest in
the commercialisation of the AZD
1656 asset at a price of £1.88 million.
2. A put option agreement with
Conduit to sell: a) its 5% economic
interest in the AZD 1656 asset; and b)
its royalty sharing agreement with
SGCS which was entered into in the
prior year at a premium price of £3.25
million.
intangible assets
The economic
interest has been
recognised as an intangible asset as
at 31 December 2022. Given that the
is
valuation of
subjective, there is a risk that the
value is materially overstated at year
end. Consequently, we
have
determined the valuation of intangible
assets to be a key audit matter.
Our work in this area included:
(cid:127) Obtaining
and
and
memorandum of understandings (MOUs) to understand
the terms and conditions of the agreements;
agreements
reviewing
the
(cid:127)
Evaluating managements accounting treatment of the 5%
economic interest in accordance with IAS 38 Intangible
Assets;
(cid:127) Obtaining management’s impairment assessment and
reviewing the reasonableness and appropriateness of
their conclusions relating to the indicators of impairment at
year end;
(cid:127) Challenging management’s assessment of the impairment
indicators outlined in IAS 36 Impairment of Assets;
(cid:127) Reviewing board meeting minutes and regulatory news
service (‘RNS’) announcements to assess whether there
have been any subsequent changes to the terms and
conditions stipulated in the agreements; and
(cid:127)
Ensuring
appropriately included in line with IAS 38.
that adequate disclosures have been
the procedures performed, we
found
Based on
management’s assessment of the valuation of intangible
assets to be supported by the underlying assessment and the
judgements and estimates applied to be reasonable.
Cizzle Biotechnology Holdings PLC
34
Independent Auditor’s Report to the Members of Cizzle Biotechnology Holdings PLC (continued)
Other information
The other information comprises the information included in the annual report, other than the financial
statements and our auditor’s report thereon. The directors are responsible for the other information
contained within the annual report. Our opinion on the group and parent company financial statements
does not cover the other information and, except to the extent otherwise explicitly stated in our report, we
do not express any form of assurance conclusion thereon. Our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be
materially misstated. If we identify such material inconsistencies or apparent material misstatements, we
are required to determine whether this gives rise to a material misstatement in the financial statements
themselves. If, based on the work we have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in
accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
(cid:127)
(cid:127)
the information given in the strategic report and the directors’ report for the financial year for which
the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable
legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and their
environment obtained in the course of the audit, we have not identified material misstatements in the
strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
(cid:127)
(cid:127)
(cid:127)
(cid:127)
adequate accounting records have not been kept by the parent company, or returns adequate for
our audit have not been received from branches not visited by us; or
the parent company financial statements and the part of the directors’ remuneration report to be
audited are not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the statement of directors’ responsibilities, the directors are responsible for the
preparation of the group and parent company financial statements and for being satisfied that they give a
true and fair view, and for such internal control as the directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the group and parent company financial statements, the directors are responsible for
assessing the group’s and the parent company’s ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or the parent company or to cease operations, or have no
realistic alternative but to do so.
Cizzle Biotechnology Holdings PLC
35
Independent Auditor’s Report to the Members of Cizzle Biotechnology Holdings PLC (continued)
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an
audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of
these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of
irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities,
including fraud is detailed below:
(cid:127) We obtained an understanding of the group and parent company and the sector in which they operate
to identify laws and regulations that could reasonably be expected to have a direct effect on the
financial statements. We obtained our understanding in this regard through discussions with
management, industry research, application of cumulative audit knowledge and experience of the
biotechnology sector.
(cid:127) We determined the principal laws and regulations relevant to the group and parent company in this
regard to be those arising from the:
-
-
-
-
-
Listing and Disclosure and Transparency Rules;
UK-adopted international accounting standards;
Companies Act 2006;
Anti-bribery and anti-money laundering regulations; and
UK taxation law.
(cid:127) We designed our audit procedures to ensure the audit team considered whether there were any
indications of non-compliance by the group and parent company with those laws and regulations.
These procedures included, but were not limited to:
-
-
-
-
Holding discussions with management and the directors and considering whether there were any
known or suspected instances of non-compliance with laws and regulations or fraud;
Reviewing board meeting minutes;
Reviewing Regulatory News Service (RNS) announcements; and
Reviewing legal and regulatory correspondence and legal expenses.
(cid:127) We also identified the risks of material misstatement of the financial statements due to fraud. We
considered, in addition to the non-rebuttable presumption of a risk of fraud arising from management
override of controls, that the potential for management bias was identified in relation to the valuation
of intangible assets (detailed in the key audit matters section of our report) as well as the valuation of
share-based payment transactions. We addressed this by challenging the assumptions and
judgements made by management when auditing these accounting estimates and ensuring that there
were adequate disclosures included in the respective notes.
(cid:127)
As in all of our audits, we addressed the risk of fraud arising from management override of controls
by performing audit procedures which included, but were not limited to: the testing of journals;
reviewing accounting estimates for evidence of bias; and evaluating the business rationale of any
significant transactions that are unusual or outside the normal course of business.
Cizzle Biotechnology Holdings PLC
36
Independent Auditor’s Report to the Members of Cizzle Biotechnology Holdings PLC (continued)
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities,
including those leading to a material misstatement in the financial statements or non-compliance with
regulation. This risk increases the more that compliance with a law or regulation is removed from the
events and transactions reflected in the financial statements, as we will be less likely to become aware of
instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather
than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: www.frc.org.uk/auditorresponsibilities . This description forms
part of our auditor’s report.
Other matters which we are required to address
We were appointed by the directors on 13 February 2019 to audit the financial statements for the period
ending 31 December 2018 and subsequent financial periods. Our total uninterrupted period of
engagement is 5 years, covering the periods ending 31 December 2018 to 31 December 2022.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the group or the
parent company and we remain independent of the group and the parent company in conducting our
audit.
Our audit opinion is consistent with the additional report to the audit committee.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part
16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the
company’s members those matters we are required to state to them in an auditor’s report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone,
other than the company and the company's members as a body, for our audit work, for this report, or for
the opinions we have formed.
David Thompson (Senior Statutory Auditor)
For and on behalf of PKF Littlejohn LLP
Statutory Auditor
26 April 2023
15 Westferry Circus
Canary Wharf
London E14 4HD
Cizzle Biotechnology Holdings PLC
37
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2022
Notes
Group
Year ended 31
December
2022
£’000
Group
Year ended 31
December
2021
£’000
Revenue
Cost of sales
Gross profit
Administrative expenses
- on-going administrative costs
-
-
-
Total administrative expenses
share option charge
transaction costs
reverse acquisition expenses
Operating loss and loss before income tax
Income tax
Loss and total comprehensive income for the year
attributable to the equity shareholders of the parent
Earnings per ordinary share (pence) attributable to
the equity shareholders:
Continued operations basic and diluted
Earnings per ordinary share (pence) attributable to
the equity shareholders of the parent
6
6
6
6
9
10
10
-
-
-
(823)
(140)
-
-
(963)
(963)
51
(912)
(0.3p)
(0.3p)
-
-
-
(552)
(299)
(303)
(2,804)
(3,958)
(3,958)
37
(3,921)
(2.4p)
(2.4p)
The Company has elected to take the exemption provided under section 408, Companies Act 2006
from presenting the Company statement of comprehensive income.
The notes on pages 44 to 59 are an integral part of these financial statements.
Cizzle Biotechnology Holdings PLC
Registered number: 06133765 (England and Wales)
Consolidated Statement of Financial Position
As at 31 December 2022
Non-current assets
Intangible asset
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Equity
Capital and reserves attributable to equity holders
of the Company
Ordinary shares
Share premium
Shares to be issued
Reverse acquisition reserve
Share capital reduction reserve
Share option reserve
Retained losses
Total equity
Liabilities
Current liabilities
Trade and other payables
Total liabilities
Total equity and liabilities
Notes
Group
2022
£’000
11
12
13
14
2,080
2,080
227
478
705
2,785
3,502
34,917
115
(40,021)
10,081
199
(6,153)
2,640
15
145
145
2,785
38
Group
2021
£’000
200
200
80
875
955
1,155
3,493
32,566
-
(40,021)
10,081
335
(5,517)
937
218
218
1,155
The notes on pages 44 to 59 are an integral part of these financial statements.
The financial statements were approved and authorised for issue by the board on 26 April 2023
and were signed on its behalf by:
Nigel Lee
Director
Cizzle Biotechnology Holdings PLC
39
Registered number: 06133765 (England and Wales)
Company Statement of Financial Position
As at 31 December 2022
Non-current assets
Intangible asset
Investments
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
Equity
Capital and reserves attributable to equity holders
of the company
Ordinary shares
Share premium
Share capital to be issued
Share capital reduction reserve
Share option reserve
Accumulated losses
Total equity
Liabilities
Current liabilities
Trade and other payables
Total liabilities
Total equity and liabilities
Notes
2022
£’000
11
11
12
13
14
2,080
21,803
23,883
726
464
1,190
25,073
3,502
34,917
115
10,081
199
(23,867)
24,947
15
126
126
25,073
2021
£’000
200
21,803
22,003
241
848
1,089
23,092
3,493
32,566
-
10,081
335
(23,516)
22,959
133
133
23,092
The notes on pages 44 to 59 are an integral part of these financial statements. The loss for the year
of the Company was £627,000 (2021: loss of £1,145,000).
The financial statements were approved and authorised for issue by the board on 26 April 2023 and
were signed on its behalf by:
Nigel Lee
Director
Cizzle Biotechnology Holdings PLC
40
Consolidated Statement of Cash Flows for the year ended 31 December 2022
Cash flows from operating activities
Operating (loss) before tax
Adjustment for:
Reverse acquisition expense
Share option charge
Transaction costs settled through share issue
Share based adjustment/payment to former director
Operating cash flow before working capital movements
Decrease in trade and other receivables
Decrease in trade and other payables
Net cash used in operating activities
Cash flows from investing activities
Cash acquired on acquisition of subsidiary
Purchase of investment in intangible assets
Purchase of a Put Option
Net cash used in investing activities
Cash flows from financing activities
Proceeds from the issue of ordinary shares (net of issue
costs)
Proceeds from shares to be issued
Borrowings repaid
Net cash generated from financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at the start of the year
Cash and cash equivalents at the end of the year
Notes
Group
2022
£'000
Group
2021
£'000
(963)
(3,958)
3,6
12
15
11
12
14
13
13
-
140
-
8
(815)
16
(73)
(872)
-
-
(120)
(120)
480
115
-
595
(397)
875
478
2,804
299
32
11
(812)
7
(204)
(1,009)
46
(200)
-
(154)
2,041
-
(10)
2,031
868
7
875
The notes on pages 44 to 59 are an integral part of these financial statements.
Cizzle Biotechnology Holdings PLC
41
Company Statement of Cash Flows for the year ended 31 December 2022
Notes
2022
£'000
2021
£'000
Cash flows from operating activities
Loss before tax
Share option charge
Transaction costs settled through share issue
Operating cash flow before working capital movements
Change in trade and other receivables
Change in trade and other payables
Net cash used in operating activities
Cash flows from investing activities
Purchase of investment in intangible assets
Purchase of Put Option
Investment in subsidiary company
Change in intra group funding
Net cash used in investing activities
Cash flows from financing activities
Proceeds from the issue of ordinary shares (net of issue
costs)
Proceeds from shares to be issued
Net cash generated from financing activities
Net (decrease) /increase in cash and cash equivalents
Cash and cash equivalents at the start of the year
Cash and cash equivalents at the end of the year
12
15
11
12
11
14
13
13
(627)
140
-
(487)
10
(8)
(485)
-
(120)
-
(374)
(494)
480
115
595
(384)
848
464
(1,145)
299
32
(814)
(19)
75
(758)
(200)
-
(103)
(216)
(519)
2,041
-
2,041
764
84
848
The notes on pages 44 to 59 are an integral part of these financial statements.
Cizzle Biotechnology Holdings PLC
42
Group statement of Changes in Equity
for the year ended 31 December 2022
Group
Ordinary
Share
Capital
Share
Premium
Shares
to be
issued
Capital
Redemption
Reserve
Share
Option
Reserve
Reverse
Acquisition
Reserve
Retained
Losses
Total
£'000
£'000
£’000
£’000
£'000
£'000
£'000
£'000
At 1 January 2021
Issue of shares
Transfer to reverse acquisition
reserve
Recognition of plc equity at
acquisition date
Issue of shares for acquisition of
subsidiary
Reverse acquisition expense
Issue of shares for cash
Issue of shares in settlement of
fees
Issue of warrants
Cost of share issue
Share option charge
3
-
1,585
11
(3)
(1,596)
3,470
8,852
21
21,679
-
2
-
-
-
-
-
2,198
32
(36)
(159)
-
3,493
32,566
Comprehensive Loss for the year
-
-
At 31 December 2021
3,493
32,566
Issue of shares for acquisition of
AZD 1656 intangible asset
Issue of shares for cash
Costs of share issue
Share options exercised
Shares to be issued
Share option charge
5
4
-
-
-
-
1,875
500
(80)
56
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
115
-
-
-
-
10,081
-
-
-
-
-
-
-
10,081
-
-
-
-
-
-
-
-
-
36
-
299
335
-
-
-
1,599
(22,621)
(21,803)
2,804
-
-
-
-
-
(1,596)
-
-
-
-
-
-
-
-
-
-
(8)
11
-
(218)
(103)
2,804
2,200
32
-
(159)
299
(40,021)
(1,596)
4,858
-
(3,921)
(3,921)
10,081
335
(40,021)
(5,517)
937
-
-
-
-
-
-
-
-
-
(276)
-
140
199
-
-
-
-
-
-
-
-
-
-
276
-
-
1,880
504
(80)
56
115
140
(40,021)
(5,241)
3,552
-
(912)
(912)
Comprehensive Loss for the year
-
-
-
-
3,502
34,917
115
10,081
At 31 December 2022
3,502
34,917
115
10,081
199
(40,021)
(6,153)
2,640
The notes on pages 44 to 59 are an integral part of these financial statements.
Cizzle Biotechnology Holdings PLC
43
Company statement of Changes in Equity
for the year ended 31 December 2022
Ordinary
Share
Capital
£’000
Share
premium
£’000
Shares
to be
issued
£’000
Share capital
reduction
reserve
£’000
Share
option
reserve
£’000
Retained
Losses
£’000
Total
£’000
At 1 January 2021
3,470
8,852
Issue of shares for acquisition of
subsidiary
Issue of shares for cash
Issue of shares in settlement of fees
Cost of share issue
Issue of warrants
Share option charge
21
2
-
-
-
-
21,679
2,198
32
(159)
(36)
-
3,493
32,566
Comprehensive Loss for the year
-
-
At 31 December 2021
3,493
32,566
Issue of shares for acquisition of
AZD 1656 intangible asset
Issue of shares cash (net of
expenses)
Costs of share issue
Share options exercised
Shares to be issued
Share option charge for year
5
4
-
-
-
-
1,875
500
(80)
56
-
-
3,502
34,917
Comprehensive Loss for the year
-
-
At 31 December 2021
3,502
34,917
-
-
-
-
-
-
-
-
-
-
-
-
115
-
115
-
115
10,081
-
-
-
-
-
-
10,081
-
-
-
-
-
36
299
335
(22,371)
32
-
-
-
-
-
-
21,700
2,200
32
(159)
-
299
(22,371)
24,104
-
-
(1,145)
(1,145)
10,081
335
(23,516)
22,959
1,880
504
(80)
56
115
140
-
-
-
-
-
-
10,081
-
-
-
-
-
-
-
(276)
276
-
-
-
140
199
-
(23,240)
25,574
(627)
(627)
10,081
199
(23,867)
24,947
The notes on pages 44 to 59 are an integral part of these financial statements.
Cizzle Biotechnology Holdings PLC
44
Notes to the financial statements for the year ended 31 December 2022
1
General information
Cizzle Biotechnology Holdings PLC (“the Company” of “the Group”) (formerly Bould Opportunities PLC) is a
public limited company with its shares traded on the Standard Listing of the London Stock Exchange. On 14
May 2021 the Company acquired through a share for share exchange the entire share capital of Cizzle
Biotechnology Limited. The Company is a holding company of a group of companies (“the Group”) whose
principal activity is the early detection of lung cancer via the development of an immunoassay test for the
CIZ1B biomarker.
The directors consider there to be no ultimate controlling shareholder of the Company.
The address of the registered office is 6th Floor, 60 Gracechurch Street, London, EC3V 0HR and the registered
number of the Company is 06133765.
2
Accounting policies
The principal accounting policies applied in the preparation of these financial statements are set out below.
These policies have been consistently applied to all the years presented, unless otherwise stated.
2.1
Basis of preparation
The financial statements of Cizzle Biotechnology Holdings PLC (“the Company”) including subsidiary
undertakings (together referred to as “the Group”) have been prepared in accordance with UK-adopted
international accounting standards and the Companies Act 2006 on a historical cost basis.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the Company’s
accounting policies. The areas involving a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the financial statements are disclosed in Note 5.
The results for the year ended 31 December 2022 are the Group results. The results for the comparative
period to 31 December 2021 are the results of the Group following the acquisition of Cizzle Biotechnology
Limited (“CBL”) on 14 May 2021.
(a)
New standards and interpretations
The IASB and IFRS Interpretations Committee have issued the following standards and interpretations with
an effective date of implementation of 1 January 2022.
i)
New standards and amendments – applicable 1 January 2022
The following standard and interpretations apply for the first time to financial reporting periods
commencing on or after 1 January 2022:
Proceeds before Intended Use – Amendments to IAS 16
“Property, Plant and Equipment”
Reference to the Conceptual Framework – Amendments to
IFRS 3 “Business Combinations”
Onerous contracts and costs of fulfilling a contract –
Amendments to IAS 37 – “Provisions, Contingent Liabilities
and Contingent Assets”
Effective for accounting
periods beginning on or after
1 January 2022
Impact
None
1 January 2022
None
1 January 2022
None
Cizzle Biotechnology Holdings PLC
45
Notes to the financial statements for the year ended 31 December 2022
2
Accounting policies (continued)
Forthcoming requirements
ii)
As at 31 December 2022, the following standards and interpretations had been issued but were not
mandatory for annual reporting periods ending on 31 December 2022 and not early adopted.
Definition of accounting estimates – Amendments to IAS
8 “Changes in Accounting Estimates and Errors”
Disclosure of Accounting Policies – Amendments to IAS
1 “Presentation of Financial Statements” and IFRS
Practice Statement 2
Deferred Tax relates to Assets and Liabilities arising
from a Single Transaction – Amendments to IAS 12
“Income Taxes”
2.2 Going concern
Effective for accounting periods
beginning on or after
1 January 2023
Impact
None
1 January 2023
None
1 January 2023
None
The Directors have adopted the going concern basis in preparing the financial statements for the year ended
31 December 2022. In reaching this conclusion, the Directors have considered current trading and the current
and projected funding position for the period of just over 12 months from the date of approval of the financial
statements through to 30 April 2024. The Company, as anticipated in the Company’s Prospectus announced
on 22 September 2022, will need to raise additional funding should it wish to undertake development of
additional future products beyond the core offering that is mentioned in this Prospectus and to further fund the
corporate and operational overhead of the business. The forecasts have been prepared using two scenarios
– a realistic one that assumes expected levels of income and a pessimistic one that assumes a reduced level
of income and delays in accelerated research and development expenditure. Both forecasting scenarios show
that the Group continues to be a going concern.
Current funding
The Group’s cash balance as at 31 December 2022 was £478,000 and there were no borrowing facilities at
that date. On 26 September 2022 the Company raised £535,000, before share issue costs, through the placing
of new ordinary shares. Also a further facility of £500,000, which is available until 19 March 2024, was
announced that is available to the Company, to provide further funds at a fixed price of 1.8p per ordinary share.
On 19 December 2022 the Company raised £115,000, net of share issue costs, (gross proceeds: £118,000)
and the ordinary shares relating to this subscription were admitted to trading on the London Stock Exchange
in January 2023.
Conclusion
After taking account of the Company’s current funding position, its cash flow projections and the risks and
uncertainties associated with these, the directors have a reasonable expectation that the Company has access
to adequate resources to continue in operational existence for the foreseeable future. For these reasons they
continue to prepare the financial statements on a going concern basis. These financial statements do not
include any adjustments that would result from the going concern basis of preparation being inappropriate.
2.3
Segmental reporting
IFRS 8 requires that segmental information be disclosed on the basis of information reported to the chief
operating decision maker. The Company considers that the role of chief operating decision maker is performed
by the Company’s Board of Directors. The Group’s only business activity and single segment
is the
development of tests for the early detection of lung cancer.
Foreign currency translation
2.4
The functional currency of the Company is Sterling which is also the presentational currency of the financial
statements. Foreign currency assets and liabilities are converted into Sterling at the rates of exchange ruling
at the end of the financial year. Foreign currency transactions are translated into the functional currency using
the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting
from the settlement of such transactions and from the translation at year end exchange rates of monetary
assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive
income.
Cizzle Biotechnology Holdings PLC
46
Notes to the financial statements for the year ended 31 December 2022
2
Accounting policies (continued)
2.5
Non-Current assets
Investments in intangible assets and subsidiaries are stated at cost less accumulated impairment. Plant and
equipment are stated at costs less accumulated depreciation and any accumulated impairment losses.
Depreciation is charged to write off costs less estimated residual values on a straight-line basis over their
estimated useful lives. Estimated useful lives are reviewed each year and amended if necessary. The Group’s
and Company’s investment in intangible assets ( currently AZD 1656) are considered to have indefinite lives
due to the infancy of the assets and the fact that they are not yet revenue generating.
2.6 Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at call with banks and other short-term highly
liquid investments, with original maturities of three months or less.
2.7
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax, from the proceeds.
2.8
Current and deferred income tax
Current income tax is calculated on the basis of the tax laws enacted or substantively enacted at the statement
of financial position date in the countries where the Company’s subsidiaries and associates operate and
generate taxable income. Management periodically evaluates positions taken in tax returns with respect to
situations in which applicable tax regulation is subject to interpretation and establishes provisions where
appropriate on the basis of amounts expected to be paid to the tax authorities. Research and Development
tax credits are accounted for on an accruals basis.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred
income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other
than a business combination that at the time of the transaction affects neither accounting nor taxable profit nor
loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively
enacted by the statement of financial position date and are expected to apply when the related deferred income
tax asset is realised or the deferred income tax liability is settled. Deferred income tax assets are recognised
to the extent that it is probable that future taxable profit will be available against which the temporary differences
can be utilised.
2.9
Share based payments
The Company operates an equity-settled, share-based compensation plan. The fair value of the employee
services received in exchange for the grant of the options is recognised as an expense and credited to the
share option reserve within equity. The total amount to be expensed over the vesting period is determined by
reference to the fair value of the options granted, excluding the impact of any non-market vesting conditions
(for example, profitability and sales growth targets). Options that lapse before vesting are credited back to
income. The proceeds received net of any directly attributable transaction costs are credited to share capital
(nominal value) and, if applicable, share premium when the options are exercised.
2.10
Financial instruments
i) Financial assets
The Company classifies its financial assets in the following measurement categories:
those to be measured subsequently at fair value through profit or loss; and
those to be measured at amortised cost.
Cizzle Biotechnology Holdings PLC
47
Notes to the financial statements for the year ended 31 December 2022
2
Accounting policies (continued)
2.10 Financial instruments (continued)
The classification depends on the business model for managing the financial assets and the contracted terms
of the cash flows. Financial assets are classified as at amortised cost only if both of the following criteria are
met:
the asset is held within a business model whose objective is to collect contracted cash flows; and
the contractual terms give rise to cash flows that are solely payments of principal and interest.
Financial assets, including trade and other receivables and cash and bank balances, are initially recognised
at transaction price, unless the arrangement constitutes a financing transaction, where the transaction is
measured at the present value of the future receipts discounted at a market rate of interest.
Such assets are subsequently carried at amortised cost using the effective interest method.
At the end of each reporting period financial assets measured at amortised cost are assessed for objective
evidence of impairment. If an asset is impaired the impairment loss is the difference between the carrying
amount and the present value of the estimated cash flows discounted at the asset’s original effective interest
rate. The impairment loss is recognised in the consolidated income statement.
The Company applies the simplified approach in calculating the expected credit losses (ECLs) as permitted
by IFRS 9. Changes in credit risk is not tracked but instead a loss allowance is recognised at each reporting
date based on the financial asset’s lifetime ECL.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was
recognised the impairment is reversed. The reversal is such that the current carrying amount does not exceed
what the carrying amount would have been had the impairment not previously been recognised. The
impairment reversal is recognised in the consolidated income statement.
Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset expire or
are settled, or (b) substantially all the risks and rewards of the ownership of the asset are transferred to another
party or (c) despite having retained some significant risks and rewards of ownership, control of the asset has
been transferred to another party who has the practical ability to unilaterally sell the asset to an unrelated third
party without imposing additional restrictions
ii) Financial liabilities
Basic financial liabilities, being trade and other payables, are initially recognised at transaction price, unless
the arrangement constitutes a financing transaction, where the debt instrument is measured at the present
value of the future receipts discounted at a market rate of interest.
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of
business from suppliers. Accounts payable are classified as current liabilities if payment is due within one year
or less. If not, they are presented as non-current liabilities. Trade payables are recognised initially at transaction
price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the liability is extinguished, that is when the contractual obligation
is discharged, cancelled or expires. The Company does not hold or issue derivative financial instruments.
iii) Offsetting
Financial assets and liabilities are offset and the net amounts presented in the financial statements when there
is an enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to
realise the asset and settle to liability simultaneously.
2.11
Pensions
For defined contribution schemes the amount charged to the statement of comprehensive income is the
contribution payable in the year. Differences between the contributions payable in the year and contributions
actually paid are shown either as accruals or prepayments.
Cizzle Biotechnology Holdings PLC
48
Notes to the financial statements for the year ended 31 December 2022
3 Reverse acquisition
On 14 May 2021 the Company acquired through a share for share exchange the entire share capital
of CBL whose principal activity is the early detection of lung cancer through the development of tests
to detect CIZ1B variant protein.
Although the transaction resulted in CBL becoming a wholly owned subsidiary of the Company, the
transaction constitutes a reverse acquisition as the previous shareholders of CBL own a substantial
majority of the shares of the Company.
In substance the shareholders of CBL acquired a controlling interest in the Company and the
transaction has therefore been accounted for as a reverse acquisition. As the Company’s activities
prior to the acquisition were purely the maintenance of the AIM listing, acquiring CBL and raising equity
finance to provide the required funding for the operations of the acquisition means it did not meet the
definition of a business combination in accordance with IFRS 3.
Accordingly, this reverse acquisition does not constitute a business combination and was accounted
for in accordance with IFRS 2 “Share-based Payments” and associated IFRIC guidance. Although the
reverse acquisition is not a business combination, the Company has become a legal parent and is
required to apply IFRS 10 and prepare consolidated financial statements. The directors have prepared
these financial statements using the reverse acquisition methodology, but rather than recognise
goodwill, the difference between the equity value given up by the CBL shareholders is charged to the
statement of comprehensive income as a share-based payment on reverse acquisition, and represents
in substance the cost of acquiring a quoted company.
In accordance with the reverse acquisition principles, these consolidated financial statements
represent a continuation of the consolidated statements of Cizzle Biotechnology Holdings Plc and its
subsidiaries and include:
- The assets and liabilities of CBL at their pre-acquisition carrying value amounts and the results for
all periods reported; and
- The assets and liabilities of the Company as at 14 May 2021 and its results from the date of reverse
acquisition (14 May 2021 to 31 December 2021).
On 14 May 2021 the Company issued 206,310,903 ordinary shares to acquire the 313,932 ordinary
shares of CBL Limited. At 14 May 2021 the valuation of the investment in CBL was £21,700,000.
Because the legal subsidiary, CBL, was treated on consolidation as the accounting acquirer and the
legal parent company, Cizzle Biotechnology Holdings Plc, was treated as an accounting subsidiary,
the fair value of the shares deemed to be issued by CBL was calculated at £2,587,000 based on an
assessment of the purchase consideration for a 100% holding of Cizzle Biotechnology Holdings plc.
The fair value of the net liabilities of Cizzle Biotechnology Holdings Plc at acquisition was as follows:
Cash and cash equivalents
Other assets
Liabilities
Net (Liabilities)
£’000
46
47
(310)
(217)
The difference between the deemed cost of £2,587,000 and the fair value of the net liabilities noted
above of £(217,000) resulted in £2,804,000 being expensed as “reverse acquisition expenses” in
accordance with IFRS2, Share- based Payments, reflecting the economic cost to CBL shareholders
of acquiring a quoted entity.
Cizzle Biotechnology Holdings PLC
49
Notes to the financial statements for the year ended 31 December 2022
3
Reverse acquisition (continued)
The reverse acquisition reserve which arose from the reverse takeover is made up as follows:
Pre-acquisition equity1
CBL share capital at acquisition2
Investment in CBL3
Reverse acquisition expense4
£’000
(22,621)
1,599
(21,803)
2,804
(40,021)
1. Pre-acquisition equity of Cizzle Biotechnology Holdings PLC at 14 May 2021.
2. CBL had issued share capital and share premium of £1,599,000. As these financial statements
represent the capital structure of the legal parent entity, the equity of CBL is eliminated.
3. The value of the shares issued by the Company in exchange for the entire share capital of
CBL plus stamp duty expenses.
4. The reverse acquisition expense represents the difference between the value of the equity
issued by the Company, and the deemed consideration given by CBL to the Group.
4
Financial risk
The Group’s principal risk factors are as follows:
4.1 Capital risk management
The Company monitors capital which comprises all components of equity (i.e. share capital, share premium,
capital reduction reserve, share option reserve, and retained earnings/losses). Note 21 describes how capital
is managed in respect of the debt to equity ratio.
4.2
Financial risk factors
The Group’s operations exposed it to a variety of financial risks that had included the effects of credit risk,
liquidity risk and interest rate risk. The Company had in place a risk management programme that attempted
to limit the adverse effects on the financial performance of the Company by monitoring levels of debt finance
and the related finance costs. The Company did not use derivative financial instruments to manage interest
rate costs and as such, no hedge accounting was applied.
Given the size of the Company, the directors did not delegate the responsibility of monitoring financial risk
management to a sub-committee of the Board. The policies set by the board of directors were implemented
by the Company’s finance department.
(a)
(b)
Credit risk
The Company’s credit risk was primarily attributable to its trade receivables balance. The amounts
presented in the statement of financial position are net of allowances for impairment.
Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with
financial liabilities. The Company’s financial liabilities included its trade and other payables shown in
Note 15. The Group manages this risk through the preparation of cash flow forecasts which are regularly
reviewed by the directors.
Cizzle Biotechnology Holdings PLC
50
Notes to the financial statements for the year ended 31 December 2022
5
Critical accounting estimates and judgements
In the preparation of the financial statements the directors must make estimates and assumptions that
affect the asset and liability items and revenue and expense amounts recorded in the financial statements.
These estimates are based on historical experience and various other assumptions that the Board believes
are reasonable under the circumstances. The results of this form the basis for making judgements about
the carrying value of assets and liabilities that are not readily available from other sources.
a)
Accounting judgement
The Group’s principal judgements relate to its impairment review of its’s intangible assets (AZD 1656), the
Company’s investment in its subsidiary company, CBL. Following the review of these assets at 31
December 2022 the directors considered that no impairments of these assets had arisen. The directors
also consider that the Group’s intangible assets currently have an indefinite life, as mentioned in Note 2.5.
b)
Accounting estimate
Share based payments
See Note 14 which explains the methods used to estimate the fair value of share options granted.
6
Operating expenses
Research and development
Professional advisers
Staff costs
Intellectual property renewal fees
Regulatory fees
Share based payment
Audit fees (Note 7)
Other expenditure
On-going administrative costs
Share option charge
Reverse acquisition expense
Transaction costs – IPO and reverse acquisition
Total administrative expenses
7
Auditor’s remuneration
Fees payable to the Company’s auditor for the audit of the Group,
Company and subsidiary financial statements
Non-audit services – reporting accountant for IPO
Group
2022
£’000
280
180
154
38
68
8
31
64
823
140
-
-
963
Group
2022
£’000
31
-
31
Group
2021
£’000
161
89
88
57
53
37
27
40
552
299
2,804
303
3,958
Group
2021
£’000
27
38
65
Cizzle Biotechnology Holdings PLC
51
Notes to the financial statements for the year ended 31 December 2022
8
Directors’ emoluments
Wages and salaries
Social Security Costs
Pension Contributions
Share based payments
Group
2022
£’000
300
39
5
140
484
Group
2021
£’000
125
10
3
299
437
Company
2022
£’000
143
Company
2021
£’000
105
17
3
140
303
11
2
299
417
The Group does not have any employees other than the directors. The average number of directors during
the year was 4 (2021: 4).
9
Income tax credit
The tax credit for the year was as follows:
Research and development tax credits
-
-
Current year
Prior year
Group
2022
£’000
(47)
(4)
(51)
Group
2021
£’000
(37)
-
(37)
Research and Development tax credits are accounted for on an accruals basis.
The tax on the Group’s loss before tax differs from the theoretical amount that would arise using the tax
rate applicable to the losses of the Group as follows:
Loss before tax on continuing operations
Tax calculated at the domestic rate applicable of 19% (2021: 19%)
Expenses not deductible for tax purposes
Tax losses for which no deferred tax credit was recognised
Research and development tax credit
Total income tax credit
10 Earnings per share
Basic loss per share
Loss for the year
Weighted average number of ordinary shares
Basic loss per share
Group
2022
£’000
(963)
(183)
27
156
(51)
(51)
Group
2021
£’000
(3,958)
(752)
590
162
(37)
(37)
Group
2022
(912,000)
291,322,970
(0.3p)
Group
2021
(£3,921,000)
160,516,450
(2.4p)
The basic loss per share is derived by dividing the loss for the period attributable to ordinary shareholders
by the weighted average number of shares in issue. In 2021 the weighted average number of shares is
adjusted for the impact of the reverse acquisition as follows:
-
Prior to the reverse acquisition, the number of shares is based on CBL, adjusted using the share
exchange ratio arising on the reverse acquisition; and
From the date of the reverse acquisition, the number of share is based on the Company.
-
Cizzle Biotechnology Holdings PLC
52
Notes to the financial statements for the year ended 31 December 2022
10 Earnings per share (continued)
Diluted earnings per share is calculated by dividing the loss attributable to ordinary shareholders by the
weighted average number of ordinary shares outstanding after adjusting these amounts for the effects of
dilutive potential ordinary shares. As the results for the years ended 31 December 2022 and 31 December
2021 are a loss, any exercise of share options would have an anti-dilutive effect on earnings per share.
Consequently, earnings per share and diluted earnings per share are the same and the calculation has not
been included.
As at 31 December 2022, there were share options outstanding over 19,742,945 shares (2021: 23,432,041
shares), which could potentially have a dilutive impact in the future.
11 Non- Current assets
Investment in subsidiary undertakings
Intangible assets
Total investments
Group
2022
£’000
-
2,080
2,080
Group
2021
£’000
-
200
200
Company
2022
£’000
21,803
2,080
23,883
Company
2021
£’000
21,803
200
22,003
a.
Investments in subsidiary undertakings - Company
Opening balance
Acquisition during the year
Closing balance
2022
£’000
21,803
-
21,803
2021
£’000
-
21,803
21,803
The investment in subsidiary undertakings is in the following companies:
Name
Country of
incorporation
Proportion of ownership
interest
Principal
activities/status
Cizzle Biotechnology
Limited
England and
Wales
100% interest in ordinary
share capital
Early detection of lung
cancer
Cizzle Biotech Limited
(formerly Enfis Limited)
England and
Wales
100% interest in ordinary
share capital
Dormant
The registered address for ongoing subsidiaries is 6th floor, 60 Gracechurch Street, London, EC3V 0HR.
Cizzle Biotechnology Limited - as mentioned in Note 3, this investment represents the value of the shares
issued by the Company in exchange for the entire share capital of CBL (£21,700,000 plus stamp duty
expenses of £103,000).
b.
Intangible assets – Group and Company
Opening balance
Acquisition during the year
Closing balance
2022
£’000
200
1,880
2,080
2021
£’000
-
200
200
Cizzle Biotechnology Holdings PLC
53
Notes to the financial statements for the year ended 31 December 2022
b.
Intangible assets – Group and Company (continued)
At 1 January 2022, Intangible assets represents the fair value of an investment in a royalty sharing
arrangement with St George Street Capital (“SGSC”), a UK-based medical charity. This agreement grants
the Company potential future royalty payments from the commercialisation of St George Street’s
therapeutic asset AZD1656 of up to £5m, plus potentially further payments from the use of a companion
diagnostic.
On 14 February 2022, the Company entered into a definitive agreement (the "Agreement") with Conduit
Pharmaceuticals Limited (“Conduit”) and St George Street Capital Limited ("SGSC") to acquire a 5%
economic interest in the commercialisation of the AZD 1656 asset or other such assets being developed
by Conduit or SGSC to treat inflammatory pulmonary and cardiovascular disease (the “Economic Interest”).
Highlights of the Agreement are as follows:
-
-
-
-
Agreement with Conduit and SGSC to acquire a 5% economic interest for a total consideration
of £1.88 million, to be settled in new Cizzle ordinary shares at a price of 4.0p per share, a 56.9%
premium to the closing mid-market price on 11 February 2022;
The Agreement is in addition to the Company’s existing interest in AZD 1656 as announced on
20 September 2021:
SGSC recently reported the successful completion of the AZD 1656 ARCADIA clinical trial in
Covid-19 and SGSC and Conduit are in discussions with multiple pharmaceutical companies
about licensing opportunities for AZD 1656 for Covid-19 and potentially for further indications;
and
The Agreement supports the Company’s ambitions to expand its target customer base into the
pharmaceutical industry and is in line with its strategy of building a portfolio of early cancer
detection tests, companion diagnostics and royalty bearing stakes in significant drug assets.
Consideration for the Agreement (£1.88m) - non cash acquisition
Under the terms of the Agreement, Cizzle will pay consideration of £1.88 million to SGS for the Economic
Interest. Of the consideration payable, £1.0 million (the “Initial Consideration”) was satisfied by the issue of
25,000,000 new ordinary shares in the Company (the “Consideration Shares”), at a price of 4.0 pence per
Consideration Share, being a premium of 56.9 per cent. to the Company’s closing mid-market price of 2.55
pence on 11 February 2022. The remaining consideration of £880,000 was settled in new ordinary shares
in the Company issued at 4.0 pence per share, on 29 September 2022.
Consideration for Put Options (£0.12m)
On 19 December 2022 the Company agreed a put option to sell: (i) its 5% economic interest in the
commercialisation of the AZD 1656 asset to treat inflammatory pulmonary and cardiovascular disease (the
"Economic Interest"); and (ii) its royalty sharing agreement with St George Street Capital ("SGSC"), the UK-
based biomedical charity (the “Royalty Sharing Agreement’) to Conduit Pharmaceuticals Limited ("Conduit")
for a total consideration of £3.25 million to be satisfied through the issuance of new shares in Conduit (the
“Option”). The Economic Interest and Royalty Sharing Agreement are valued at cost, totalling £2,080,000.
No profits or revenues were attributable to the assets subject to the Option. The Option is exercisable solely
at the discretion of Cizzle and Cizzle has agreed to pay Conduit £120,000 in cash as the premium for the
Option, which has a nine-month term. The Company also raised proceeds of £115,586, net of expenses,
by way of a subscription for 7,371,557 new ordinary shares in the Company ("Ordinary Shares") at 1.6p
per share (the “Issue Price”) with existing investors (the “Subscription”), in order to provide funds to be put
towards satisfying the Option premium.
This Put Option was paid for in cash and is accounted for under prepayments ( see Note 12).
Cizzle Biotechnology Holdings PLC
54
Notes to the financial statements for the year ended 31 December 2022
12
Trade and other receivables
Trade receivables
Less: provision for impairment
Trade receivables (net)
Amounts due from subsidiaries
Social security and other taxes
Corporation tax recoverable
Prepayments and other receivables
Group
2022
£’000
-
-
-
-
7
88
132
227
Group
2021
£’000
-
Company
2022
£’000
-
Company
2021
£’000
-
-
-
-
14
37
29
80
-
-
590
7
-
128
725
-
-
216
7
-
18
241
Trade and other receivables are non-derivative financial assets with fixed or determinable payments that
are not quoted in an active market. They are classified as ‘trade and other receivables’ in the statement of
financial position and are included in current assets, except for maturities greater than 12 months after the
statement of financial position date. These are classified as non-current assets. The value of trade
receivables shown above, in addition to the value of cash balances on deposit with counterparties (see
Note 16), represents the Company’s maximum exposure to credit risk. No collateral is held as security.
Prepayments include £120,000 (2021: £nil) for a Put Option that was acquired during the year and paid in
cash. See Note 11 for further details.
Amounts due from subsidiary undertakings at 31 December 2022 represented net amounts provided to the
Company’s wholly owned subsidiary, Cizzle Biotechnology Limited.
The fair value of trade and other receivables approximate to the net book values stated above.
As of 31 December 2022, trade and other receivables of £Nil (2021: £Nil) were impaired.
13
Cash and cash equivalents
Cash on hand and balances with banks
Group
2022
£’000
478
478
Group
2021
£’000
875
875
Company
2022
£’000
464
Company
2021
£’000
848
464
848
Cizzle Biotechnology Holdings PLC
55
Notes to the financial statements for the year ended 31 December 2022
14 Share capital
Numbers in 000s
Nominal value per share
At 1 January 2022
Issued
At 31 December 2022
New
Ordinary
Shares
0.01p
253,448
86,356
339,804
Deferred ‘A’
shares
Deferred ‘A'
shares
0.01p
225,158
-
225,158
0.99p
12,383,626
-
12,383,626
The above table reflects the full authorised shares of the Company at 31 December 2022. In addition to
this the directors had authorised the issue of 7,371,557 new ordinary shares of 0.01p each but these shares
were not issued until 5 January 2023 when they had been approved by the London Stock Exchange for
issue.
The following table reconciles the total nominal value
of the shares in issue:
Nominal value per share
At 1 January 2022
Issued during the year
At 31 December 2022
New
Ordinary
shares
0.01p
£000
Deferred
£0.01p
‘A’ shares
0.01p
£’000
Deferred ‘A'
shares
0.99p
£000
Total
£000
26
9
35
1,238
-
1,238
2,229
3,493
-
2,229
9
3,502
During the year ended 31 December 2022, the following shares were issued:
17 Feb 2022 - Acquisition of AZD1656 Intangible Asset
26 Sept 2022 -Placing (cash)
29 Sept 2022 – balance of acquisition of AZD1656 Intangible asset
29 Sept 2022 – exercise of share options
Total issued
No of shares
issued
000s
Issue price
per share
Pence
25,000
35,667
22,000
3,689
86,356
4.0p
1.5p
4.0p
1.53393p
On 14 May 2021 the Company issued investor warrants to subscribe for 11,000,000 Ordinary Shares at a fixed
price of 15p per share valid for three years until 13 May 2024.
On 14 May 2021 the Company issued broker and adviser warrants to subscribe for 1,350,000 Ordinary Shares
at a fixed price of 10p per share valid for three years until 13 May 2024. 250,000 of these broker warrants are
automatically exercisable upon the Company’s share price equalling 20p per share. The fair value of these
warrants at 31 December 2021 was £36,000 and has been accounted for as a cost to the Company and a
reduction of the share premium account ( see statement of changes in equity on pages 42 to 43).
Cizzle Biotechnology Holdings PLC
56
Notes to the financial statements for the year ended 31 December 2022
14 Share capital (continued)
Employee share scheme
The Company has an Executive Share Option Scheme.
The exercise terms of all granted options as at 31 December 2022 are summarised below:
Date of grant
2015
2016
2017
2021
2021
Number of
options
300
800
500
3,689,096
19,741,345
Exercise price
(pence per
share)
5.02
1.85
1.00
1.53
10.00
Exercise
dates from
2017
2017
2018
2021
2021 (based on performance)
The number and weighted average exercise price of the options that were exercisable at 31 December 2022
were 19,741,345 and 10.0p respectively.
Movements in the number of share options outstanding and their related weighted average exercise prices
are as follows:
At 31 December 2021
Exercised during year
At 31 December 2022
Average
exercise price
(pence per
share)
8.67
1.53
10.00
Options
number
23,432,041
(3,689,096)
19,742,945
Share options outstanding at the end of the year have the following expiry dates and exercise prices:
Expiry date
2025
2026
2027
2031
Exercise price
(pence per
share)
5.02
1.85
1.00
10.00
Options
2022
300
800
500
19,741,345
19,742,945
The Company determines the fair value of its share option contracts on the grant date, adjusts this to reflect
its expectation of the options that will ultimately vest, and then expenses the calculated balance on a straight-
line basis through its statement of comprehensive income over the expected vesting period with a
corresponding credit to its share option reserve. Subsequent changes to the expectation of number of options
that will ultimately vest are dealt with prospectively such that the cumulative amount charged to the statement
of comprehensive income is consistent with latest expectations. Subsequent changes in market conditions do
not impact the amount charged to the statement of comprehensive income.
The Company determines the fair value of its share option contracts using a model based on the Black-
Scholes-Merton methodology. In determining the fair value of its share option contracts, the Company made
the following assumptions (ranges are provided where values differ across tranches). Expected volatility was
determined by reference to historical volatility of the Company’s share price.
Grant date
2021
2021
Share
Price
Pence
9.38p
4.40p
Exercise
Price
Pence
1.53p
10.00p
Expected
Option
Life
Years
10 years
10 years
Expected
Volatility
%
68%
32%
Expected
Dividend
Yield
%
0%
0%
Risk free
Interest
Rate
%
0.83%
0.83%
Fair Value
At date of
Grant
Pence
1.60p
3.00p
Cizzle Biotechnology Holdings PLC
57
Notes to the financial statements for the year ended 31 December 2022
15
Trade and other payables
Trade payables
Social security and other taxes
Accruals and other payables
Due or due in less than one month
Due between one and three months
Due in more than three months
16
Financial assets and liabilities
Group
2022
£’000
41
8
96
145
Group
2022
£’000
16
25
-
41
Group
2021
£’000
111
43
64
218
Group
2021
£’000
75
4
32
111
Company
2022
£’000
40
Company
2021
£’000
73
8
78
126
6
54
133
Company
2022
£’000
15
Company
2021
£’000
37
25
-
40
4
32
73
The tables below analyse the carrying value of financial assets and financial liabilities in the Group’s and
Company’s statements of financial position. Further information on the classes that make up each category is
provided in the notes indicated. The carrying value of each category is considered a reasonable approximation
of its fair value. All amounts are due within one year.
Trade receivables (Note 12)
Amounts due from subsidiaries (Note 12)
Prepayments and other receivables (Note 12)
Cash and cash equivalents (Note 13)
Financial assets at amortised cost
Trade payables (Note 15)
Accruals and other payables (Note 15)
Borrowings (Note 16)
Financial liabilities at amortised cost
17 Deferred income tax
Group
2022
£’000
-
-
132
478
610
Group
2022
£’000
41
96
-
137
Group
2021
£’000
-
-
29
875
904
Group
2021
£’000
111
64
-
175
Company
2022
£’000
-
Company
2021
£’000
-
590
128
464
1,182
216
18
848
1,082
Company
2022
£’000
40
Company
2021
£’000
73
78
-
118
54
-
127
There is an un-provided deferred tax asset arising on taxable losses of £0.64m (2021: £0.47m). In accordance
with accounting standards, the deferred tax asset has not been recognised in the financial statements due to
uncertainty over the availability of sufficient future profits against which it could be recovered.
At 31 December 2022 there was no deferred tax liability (2021: £Nil).
18 Commitments
The Group has no commitments as at 31 December 2022 (2021: £Nil).
Cizzle Biotechnology Holdings PLC
58
Notes to the financial statements for the year ended 31 December 2022
19 Related party transactions
Transactions with directors
At 31 December 2022 there was a balance owed to the Company by Professor Dawn Coverley, a director of
the Company, of £680 in respect of PAYE/NI arising on the exercise of share options. This amount was fully
settled in January 2023. The maximum liability owed to the Company during the year was £2,582.
20 Controlling party
The directors consider there to be no ultimate controlling party.
21
Capital management
In managing its capital structure, the Company’s objective is to safeguard the Company's ability to continue
as a going concern, managing cash flows so that it can continue to provide returns for shareholders.
The Company makes adjustments to its capital structure in the light of changes in economic conditions and
the requirements of the Company’s businesses. The Board has sought to maintain low levels of borrowing to
reflect the development stage of the Company’s businesses. Over time as the Company’s businesses mature
and become profitable the Board is likely to make increased use of borrowing facilities to fund working capital.
In order to maintain or adjust the capital structure, the Company may issue new shares or seek additional
borrowing facilities. The Company monitors capital on several bases including the debt to equity ratio. This
ratio is calculated as debt ÷ equity. Debt is calculated as total borrowings as shown in the consolidated
statement of financial position.
Equity comprises all components of equity as shown in the consolidated statement of financial position. The
debt-to-equity ratio at 31 December 2022 and 31 December 2021 was as follows:
Total debt
Total equity
Debt-to-equity ratio
22
Reserves
Group
2022
£’000
-
2,640
0.0%
Group
2021
£’000
-
937
0.0%
Company
2022
£’000
-
24,947
0.0%
Company
2021
£’000
-
22,959
0.0%
The following reserves describe the nature and purpose of each reserve within equity:
a.
Capital reduction reserve
The capital reduction reserve set out in the Statement of Changes in Equity arose in 2014 when the
nominal value of each share was reduced from 10p to 1p.
b.
Share premium
The amount subscribed for each share in excess of nominal value.
c.
Reverse acquisition reserve
The reverse acquisition reserve is explained in Note 3.
d.
Share option
The accumulated expense arising during their vesting period of share options granted to directors and
employees and warrants granted to third parties.
e.
Accumulated losses
All other net losses and gains not recognised elsewhere.
Cizzle Biotechnology Holdings PLC
59
Notes to the financial statements for the year ended 31 December 2022
23
Subsequent events
a)
Issue of equity
On 5 January 2023 the Company issued 7,371,557 ordinary shares of 0.01p each for a price of 1.6p per
share to fund the purchase of a Put Option to dispose of AZD1656 assets referred to in Note 11. At 31
December 2022 the Company had received £115,000 ( net of share issue costs) in relation to this share
issue (gross proceeds: £118,000).
b)
Issue of options in lieu of salary increases
In conducting a review of director remuneration, the Company’s remuneration committee was of the view
that the Company’s directors’ salaries are currently below market comparables. However, even in a period
of high inflation, the directors remain fully committed to maintaining low overheads and maximising the
funds available to the Company for the development of its CIZ1B early lung cancer test.
The directors have therefore agreed to waive any increase in basic salary for a period of two years from
3 March 2023. In compensation, and subject to shareholder approval at the next Annual General Meeting
of the Company, the Company has conditionally granted share options over new ordinary shares in the
Company (the “Options”) to the directors, with an exercise price equivalent to the volume weighted
average price of the Company’s ordinary shares for the month of February 2023 at 2.19376p per share.
50% of the Options will vest and become exercisable after the 12-month anniversary of grant; the
remaining 50% shall vest and become exercisable on the 24-month anniversary of grant. The Options will
have a 10 year life from the date of grant and are subject to good and bad leaver provisions. The Options
are unapproved for the purposes of the enterprise management incentive and have been granted outside
of, and in addition to, grants made under the Company’s existing share option schemes. Following the
grant of the Options, the total number of ordinary shares under option is 48,685,443 ordinary shares
representing 14.02% of the Company's current issued ordinary share capital.
The Options have been granted to the directors as follows:
Director
Number of
Options
granted
Existing options
held
Total number of
options now held
Allan Syms
Nigel Lee
Dawn Coverley
John Treacy
8,868,096
6,224,233
7,614,540
6,235,629
5,068,956
2,000,000
12,672,389
-
13,937,052
8,224,233
20,286,929
6,235,629
Total number of
options now held
as % of current
issued share
capital
4.01%
2.37%
5.84%
1.80%
c)
Research and development contract
On 24 April 2023 the Group announced a further extension of its research and development contract with
the University of York until 25 September 2024.