Cizzle Biotechnology Holdings PLC
Annual Report for the year ended 31 December 2023
Company registered number: 06133765
Cizzle Biotechnology Holdings PLC
Annual Report for the year ended 31 December 2023
Contents
Page
Company Information ................................................................................................................. 1
Chair’s Statement........................................................................................................................ 2
Board of Directors ....................................................................................................................... 4
Strategic Report .......................................................................................................................... 5
Directors' Report ...................................................................................................................... 14
Statement of Directors’ responsibilities ..................................................................................... 18
Corporate Governance Statement ............................................................................................ 19
Directors’ Remuneration Report ................................................................................................ 25
Independent Auditor’s report to the members of Cizzle Biotechnology Holdings PLC ............ 31
Consolidated Statement of Comprehensive Income ................................................................. 38
Consolidated Statement of Financial Position ........................................................................... 39
Company Statement of Financial Position ................................................................................ 40
Consolidated Statement of Cash Flows .................................................................................... 41
Company Statement of Cash Flows.......................................................................................... 42
Consolidated Statement of Changes in Equity .......................................................................... 43
Company Statement of Changes in Equity ............................................................................... 44
Notes to the Financial Statements ............................................................................................ 45
Cizzle Biotechnology Holdings PLC
1
Company Information
Directors
Allan Syms
Nigel Lee
Prof. Dawn Coverley
John Treacy
Company Secretary
SGH Company Secretaries Limited
Executive Chair
Finance Director
Non-Executive
Non- Executive
Registered Number
06133765
London,EC3V 0HR
Registered Office
6th floor, 60 Gracechurch Street
Financial Public Relations
IFC Advisory Limited
Birchin Court, 20 Birchin Lane
London
EC3V 9DU
Joint Broker and Financial Adviser
Allenby Capital Limited
5 St. Helen’s Place
London,
EC3A 6AB
Shakespeare Martineau
No 1 Colmore Square
Birmingham
B4 6AA
Joint 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 continued throughout 2023 to develop a blood test to measure the CIZ1B cancer biomarker.
CIZ1B is a variant of CIZ1,a naturally occurring cell nuclear protein involved in ensuring normal DNA
replication, and the targeted CIZ1B variant has been shown to be highly correlated with early-stage lung
cancer.
Based on the original published research by Professor Coverley and her team at the University of York,
it has been shown that CIZ1B can be measured with high sensitivity that should allow for testing in a
high-throughput, hospital-friendly format. The Directors believe that this development addresses an
important unmet clinical need for a simple test that can help with the early detection of lung cancer,
which is essential to improve a patient’s chance of survival.
The Board intends that the Group’s initial commercial product will be based on a platform that can be
readily performed by hospitals and reference laboratories. To address the wider high volume global
market, it is also envisaged that potential follow-on products could be immunoassay kits and a point of
care test provided by primary health care providers.
Research and Development
Throughout 2023, the Group 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.
This strategic approach is intended to enable the Group to produce different assay formats with optimised
reagents using a range of specific antibodies and to ensure resilience in critical supply chains.
On 24 April 2023 the Group announced a new 12 month agreement with the University of York, running
until 25 September 2024, that builds on successful outcomes from the current research programme and
meeting key milestones for monoclonal antibody characterisation and assay platform optimisation. This
agreement extended access to state of the art facilities and world leading scientists to support new
solutions for early cancer diagnostics and therapeutic tools.
On 10 August 2023 the Group announced an expansion of its research programme with the University of
York to further develop its CIZ1B biomarker technology for early stage cancer diagnosis, and other
potential applications in cancer therapy. This followed significant further progress in isolating additional
new and specific monoclonal antibodies to the CIZ1B biomarker and incorporating these into a new high-
throughput clinical diagnostic immunoassay platform. The recent developments meet key milestones for
required for commercial clinical trials.
On 19 September 2023 the Group and Bio-Techne Corporation, a NASDAQ Tech listed company,
announced progress evaluating specific monoclonal antibodies for Cizzle’s CIZ1B cancer biomarker.
Cizzle has successfully completed an evaluation programme aimed at assessing the feasibility of using
the Simple Western platform from ProteinSimple (a Bio-Techne brand) for high throughput detection of
the CIZ1B cancer biomarker which may be useful in the detection of early-stage lung cancer.
It was announced on 26 March 2024 that the Group has successfully completed a further monoclonal
antibody development programme with ProteoGenix, a France-based antibody development and
production contract research organisation (CRO), with a track record in generating antibodies from
development to production for therapeutic, diagnostic and research use.
The Directors believe that it now has a developed a range of monoclonal antibodies to optimise its current
and future product formats which in additional extend important proprietary rights that the Group has for
detecting the CIZ1B Biomarker.
The Group is now well placed to meet key milestones planned for the launch of its first commercial
product. This includes the manufacturing and scale up of key antibodies and reagents, that following
performance testing in clinical trials are intended to become the core components of the Group's
commercial test for the CIZ1B biomarker.
Reaching Global Markets
The Group has continued its discussions with existing partners in the USA and China to develop its future
opportunities in Global Markets.
Cizzle Biotechnology Holdings PLC
3
The Group announced on 2 April 2024 a non-binding Memorandum of Understanding (“MoU”) for a
strategic and exclusive licensing agreement to develop and offer its proprietary test for the CIZ1B
biomarker which is highly associated with early-stage lung cancer, throughout the USA and Canada
(“North America”). The new partnership is intended to incorporate the Group’s existing relationship with
Corepath Laboratories, a full-service cancer reference laboratory, as announced on 6 May 2022, through
a dedicated, recently incorporated, US based company Cizzle Bio Inc (“BIO”).
Subject to binding documentation, the proposed royalty arrangements with CorePath will be restructured
to enable the Group to gain significant cash flows from new royalty payments and significant cost savings.
All planned expenditure related to clinical trials and the commercialization of diagnostic tests for the CIZ1B
biomarker in the USA are expected to be funded directly by BIO.
The Group will receive minimum advance royalty payments of US$2.3 million over a period of 30
months, payable as to US$0.3 million on signing the binding agreement and a further US$1.0 million on
each of the fifteenth and thirtieth month anniversaries of signing as part of annual royalty fees of 10% of
net sales.
In addition, the Group will benefit from the free issue of shares in BIO.
BIO is paying a non-refundable upfront fee of US$100,000 within 30 days of signing the MoU for a 120-
day exclusivity period to complete the formal legally binding agreement.
Funding
In June 2023 the Group raised net proceeds, before expenses, of £305,000 (gross proceeds: £350,000).
On 26 September 2023 the Company exercised the option to acquire £3,250,000 payable in shares in
Conduit Pharmaceuticals Inc, a company that was subsequently listed on NASDAQ during December
2023. The Company were not able to have these shares registered with its custodian until January 2024.
On 26 March 2024 the Group announced that it had undertaken a conditional placing of 31,050,000 new
ordinary shares of 0.01p each (“Ordinary Shares”) in the Company (the “Placing”) at a price of 2 pence
per share (the “Issue Price”) raising approximately £0.62 million before expenses for the Group. The net
proceeds of the Placing will be utilised towards completing the Group’s first proposed commercial test to
detect CIZ1B, further protect the Group’s Intellectual Property (IP), progress the Group’s research with
the University of York and for general corporate purposes.
Upon completion of the Placing, the Group terminated the £500,000 loan facility agreement with E3 Fund
SP entered into on 20 September 2022. This facility has not been drawn down.
The Group also agreed to issue 1,500,000 new Ordinary Shares at 2p per new Ordinary Share in
satisfaction of a payment of £30,000 for professional advisory services to Novum Securities Limited.
Financial overview
The financial results for the year ended 31 December 2023 are summarized below:
- Corporate expenses, before share option charge and exceptional items: £669,000 (2022:
£823,000);
- Share option charge: £307,000 (2022: £140,000);
- Exceptional corporate expenses relating to net measurement losses on the current asset
investment and the transfer of intangible asset: £787,000 (2022: £Nil);
- Total comprehensive loss: £1,717,000 (2022 Loss £912,000); and
-
Loss per share 0.5 p (2022: Loss 0.3 p).
Allan Syms
Executive Chair
29 April 2024
Cizzle Biotechnology Holdings PLC
4
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. Nigel qualified as a Chartered Accountant in 1988.
Cizzle Biotechnology Holdings PLC
5
Strategic Report for the year ended 31 December 2023
The directors present their strategic report for the year ended 31 December 2023.
Business review
The review of the Group is detailed in the Chair’s Statement on pages 2 to 3.
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 cycle, 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 regulatory 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. The Board intends to launch
its first commercial product in the USA with clinical trials and operating protocols for the CIZ1B biomarker
test to be delivered through its partnership with Cizzle Bio Inc as a Laboratory Developed Test (LDT).
Verifying Accurate Leading-edge IVCT Development (VALID) Act
On September 29, 2023, the Food and Drug Administration (FDA) announced the publication of
a proposed rule to “clarify” that LDTs are medical devices subject to FDA regulation. LDTs are diagnostic
tests that are developed and offered by high-complexity laboratories certified under the Clinical Laboratory
Improvement Amendments of 1988 (CLIA). While FDA has asserted that it has authority to regulate LDTs
as medical devices, it has never broadly exercised that authority. In the proposed rule, FDA seeks to
amend its regulation defining “in vitro diagnostic products” (IVDs) to add the words “including when the
manufacturer of these products is a laboratory” which would mean LDT’s would be treated as medical
devices and require FDA approval. Currently the VALID Act bill has not been enacted to enable Congress
to work with key stakeholders on legislative proposals for regulating diagnostics, including LDTs especially
those within the laboratory community and others have long taken the position that FDA does not have
authority under the FDCA to regulate LDTs.
The Group’s future products are likely to require UKCA, CE Marking, or FDA 510(k) clearance , There
can be no guarantee that the Group’s products will 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.
Cizzle Biotechnology Holdings PLC
6
Strategic Report for the year ended 31 December 2023 (continued)
Principal risks and uncertainties (continued)
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). On 9 January 2024, the MHRA released a Roadmap towards the future regulatory framework
for medical devices. This provides an update on the intended timelines to implement the future core
regulations.
• 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
-
products must be registered from 1 May 2021;
-
other Class IIb and all Class IIa devices and IVD List B products and Self-Test IVDs must be
registered from 1 September 2021;
-
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 may 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, the Middle East 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.
Cizzle Biotechnology Holdings PLC
7
Strategic Report for the year ended 31 December 2023 (continued)
Principal risks and uncertainties (continued)
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 Group’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.
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 or LDT accreditation 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 X-Ray 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 technology to find a biomarker in early
-stage tumours..
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.
Cizzle Biotechnology Holdings PLC
8
Strategic Report for the year ended 31 December 2023 (continued)
Principal risks and uncertainties (continued)
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.
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
The Company has raised approximately £0.62m of funds through the issue of new shares in April 2024
and announced the signing of a MOU with Cizzle Bio Inc which would guarantee reduced research and
developed costs in the UK as well as guaranteeing a minimum royalty payment of $2.3m over a period of
30 months from the signing of a binding agreement. If these royalty payments did not arise then alternative
sources of funding would need to be sought which could delay the activities planned under the Group’s
business plan. 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 Group 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 Group from generating potential revenue from licensing and current
royalty deals.
Cizzle Biotechnology Holdings PLC
9
Strategic Report for the year ended 31 December 2023 (continued)
Principal risks and uncertainties (continued)
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, post
COVID-19 pandemic economic correction , 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 Group 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 Group
in the past.
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 2023 the Group had cash balances amounting to £144,000 (2022:
£478,000) 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
- Methods and Compounds for diagnosis and treatment of cancer; and
- Use of a Fibrinogen Capture Agent to detect a CIZ1B variant.
Diversity
The Group is aware of the importance of 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.
Under the FCA’s Listing Rule 14, as a Standard Listed entity, the Group is subject to certain Diversity and
Inclusion targets. These include: i) at least 40% of the individuals on its board of directors are women; (ii)
at least one senior position (chair, chief executive, senior independent director or chief financial officer)
on its board of directors is held by a woman; and (iii) at least one individual on its board of directors is
from a minority ethnic background. Unfortunately the Group has been unable to meet these targets during
the period, largely due to the small, early stage nature of the business and the short time since its
formation. The Group recognises the benefits of diversity across all areas and believes that a diverse
Board is a positive factor in business success, brings a broader, more rounded perspective to decision
making, and makes the Board more effective. When recruiting, the Board will endeavour to consider a
wide and diverse talent pool whilst also taking into account the optimum make-up of the Board, including
the benefits of differences in skills, industry experience, business model experience, gender, race,
disability, age, nationality, background and other attributes that individuals may bring.
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.
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.
Cizzle Biotechnology Holdings PLC
10
Strategic Report for the year ended 31 December 2023 (continued)
Climate-Related matters
There is limited scope for the Group to have a major impact on environmental manners at the current
phase of the Group but we do undertake and take actions to undertake recycling and energy conservation
in our daily activities.
We have considered the Financial Stability Board’s Task Force on Climate-related Financial Disclosures
(TCFD) recommendations and have reported below our status against the following pillars:
-
-
-
-
Governance – the governance around climate- related risks and opportunities;
Strategy – the actual and potential impacts of climate-related risks and opportunities for the
business, strategy, and financial planning;
Risk Management – the processes for identifying, assessing and managing climate-related risks;
and
Metrics and Targets – the metrics and targets used to assess and manage relevant climate-related
risks and opportunities.
a.
Governance
The Boards oversight of climate-related risks and opportunities – due to the research and
development stage of the business the Group’s operations are at a relatively small scale and so therefore
its environmental impact. The Group consists of four directors with most of its research and development
activity outsourced to third party organisations. The Group recognises its responsibility to protect the
environment now and as the business scales up into its next phase.
Managements role in assessing and managing climate-related risks and opportunities – The Board
is responsible for the oversight of climate-related matters and for keeping under review the adequacy and
effectiveness of the Group’s internal control and risk management systems, which include climate-related
risks. It is also supported by the work undertaken by our Audit Committee.
b.
Strategy
Climate-related risks and opportunities identification – The Group is committed to a net-zero planet
and undertaking sustainable research.
Climate-related risks and opportunities impacts – the Board is committed to conserving its natural
resources and engaging with those partners and suppliers that have similar objectives. The main part of
our research and development activity is undertaken at the University of York and overseen by Professor
Dawn Coverley. This work is governed by strict policies on climate-related matters, outlined in
its Sustainability Plan (https://www.york.ac.uk/about/sustainability/strategy/). In particular, excessive use
of single-use plastics is an issue that concerns the Coverley laboratory. They have adopted a rigorous
recycling regime for polypropylene and polystyrene items, which involves decontamination and
partitioning of almost all cell culture consumables. This feeds into a department-wide drive and is part of
a wider sustainability strategy for a range of items from batteries to equipment. Some of the Group’s at
the University of York involves mammalian cell culture which uses single-use plastic items, all now
recycled.
During 2024 we anticipate that clinical trials will be undertaken by one of our partners. We will seek to
ensure that Environmental, Social and Governance (“ESG”) will be an important consideration as part of
this work.
Resilience of the organisations strategy – the information collected during its work will allow the Board
to challenge the Group’s strategy to ensure that it is as resilient as possible.
c.
Risk Management
Identifying and assessing climate-related risks – the main current risk on environmental matters is to
ensure that we undertake our research in a sustainable way. This can be done through our partners to
whom this work is outsourced.
Cizzle Biotechnology Holdings PLC
11
Strategic Report for the year ended 31 December 2023 (continued)
Climate-Related matters (continued)
In the future, we recognise that when we develop a ‘Point of Care test’, perhaps similar to the Covid-19
tests, that such products are likely to be regarded as ‘Bio Waste’ and therefore difficult to recycle. It will
also be important one day to ensure that such products are packaged and distributed in an
environmentally sustainable manner.
Managing climate-related risks – these risks will continue to be managed by the Board as part of its
Risk Management Procedures.
Integration into overall risk management – as operations scale up in the future the identification,
assessment and effective management of climate-related risks and opportunities will be discussed at
board meetings.
d.
Metrics and targets
Climate-related metrics - as the Group’s operations scale up we will seek to collect, structure and
effectively disclose related performance data for material climate-related risks and opportunities identified
where relevant.
Scope 1, Scope 2 and Scope 3 emissions -the board will consider adopting Sustainability Accounting
Standards Board (SASB) recommended disclosures but this may be dependent upon the business model
that the Group adopts in order to seek to maximise shareholder value. E.g. it may be that the Group
pursues a licensing model.
Climate-related targets – we have already mentioned that all directors mainly work from home apart
from one that is based at the University of York, so business travel is already minimised. This means that
energy use and emissions, through remote working, are already minimised. Consequently, no separate
disclosures relating to energy consumption and efficiency have been made as the entity consumed less
than 40,000 kWh of energy during the period.
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 2023 and since the year
end have been summarised in the Chair’s Statement on pages 2 to 4 and are summarised as follows:
Cizzle Biotechnology Holdings PLC
12
Strategic Report for the year ended 31 December 2023 (continued)
Decision-making (continued)
Decision: to raise new monies for the Company to ensure a sound financial base.
Context
In June 2023 the Company completed a fund raising providing gross proceeds of £350,000 by way of
a subscription for its shares. 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 taking the
Company’s proprietary CIZ1B biomarker blood test for use in the early detection of lung cancer and
through to UKCA, CE marking and/or FDA 510(k) clearance.
On 21 Sept 2023 the Group announced an update on its Option with Conduit and noted shareholder
approval for Conduit-Murphy merger and NASDAQ listing. The Company has a put option to sell its
5% economic interest and royalty sharing agreement in the AZD 1656 asset to treat inflammatory
pulmonary and cardiovascular disease to Conduit for a total consideration of £3.25 million, to be
satisfied through the issuance of new shares in Conduit (the "Option"). The merger completed and
Conduit became a publicly traded company on NASDAQ in the USA on 25 September 2023. Cizzle
exercised its Option on 26 September 2023 and the Company as at 31 December 2023 held 395,460
shares in the NASDAQ listed business with no restrictions.
On 26 March 2024 the Company announced that it has undertaken a conditional placing of
31,050,000 new ordinary shares of 0.01p each (“Ordinary Shares”) in the Company (the “Placing”) at
a price of 2 pence per share (the “Issue Price”) raising approximately £0.62 million before expenses
for the Company. The net proceeds of the Placing will be utilised towards completing the Company’s
first proposed commercial test to detect CIZ1B, further protect the Company’s Intellectual Property
(IP), progress the Company’s research with the University of York and for general corporate
purposes. Upon completion of the Placing, the Company intends to terminate the £500,000 loan
facility agreement with E3 Fund SP entered into on 20 September 2022. This facility has not been
drawn down. The Company also agreed to issue 1,500,000 new Ordinary Shares at 2p per new
ordinary share in satisfaction of a payment of £30,000 for professional advisory services to Novum
Securities Limited.
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
13
Strategic Report for the year ended 31 December 2023 (continued)
Decision-making (continued)
Decision: to continue the enhancement of its research and development capabilities
Context
The Group has continued throughout 2023 in developing a blood test to measure the CIZ1B cancer
biomarker. CIZ1B is a variant of CIZ1,a naturally occurring cell nuclear protein involved in ensuring
normal DNA replication, and the targeted CIZ1B variant has been shown to be highly correlated with
early-stage lung cancer.
Based on the original published research by Professor Coverley and her team at the University of York,
it has been shown that CIZ1B can be measured with high sensitivity that should allow for testing in a
high-throughput, hospital-friendly format. The Directors believe that this development addresses an
important unmet clinical need for a simple test that can help with the early detection of lung cancer,
which is essential to improve a patient’s chance of survival.
The Board intends that the Group’s initial commercial product will be based on a platform that can be
readily performed by hospitals and reference laboratories. To address the wider high volume global
market, it is also envisaged that potential follow-on products could be immunoassay kits and a point
of care test provided by primary health care providers.
On 24 April 2023 the Group announced a new 12 month agreement with the University of York,
running until 25 September 2024, that builds on successful outcomes from the current research
programme and meeting key milestones for monoclonal antibody characterisation and assay platform
optimization. This agreement extended access to state of the art facilities and world leading scientists
to support new solutions for early cancer diagnostics and therapeutic tools.
On 10 August 2023 the Group announced an expansion of its research programme with the University
of York to. This followed significant further progress in isolating additional new and specific
monoclonal antibodies to the CIZ1B biomarker and incorporating these into a new high-throughput
clinical diagnostic immunoassay platform. The recent developments meet key milestones to begin
commercial clinical trials. The Group is now engaged in clinical trials design to support the validation
and accreditation of the CIZ1B test prior to commercial launch.
On 19 September 2023 the Group and Bio-Techne Corporation, a NASDAQ Tech listed company,
announced progress evaluating specific monoclonal antibodies for Cizzle’s CIZ1B cancer biomarker.
Cizzle has successfully completed an evaluation programme aimed at assessing the feasibility of
using the Simple Western platform from ProteinSimple (a Bio-Techne brand) for high throughput
detection of the CIZ1B cancer biomarker which may be useful in the detection of early-stage lung
cancer.
Stakeholder considerations (Shareholders)
The decisions taken have enhanced the Group’s research and development capabilities.
This report was approved by the board on 29 April 2024 and was signed on its behalf by:
Allan Syms
Director
Cizzle Biotechnology Holdings PLC
14
Directors’ Report for the year ended 31 December 2023
The directors present the annual report and audited financial statements for the year ended 31 December
2023.
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 38. 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 (2022: £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 Group 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 2023 the total number of employees in the Company comprised of 4 employees (2022:
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.
Climate-related matters
We believe that the Company has made climate-related financial disclosures consistent with the TCFD
recommendations and recommended disclosures within its Strategic Report on pages 10 and 11.
Cizzle Biotechnology Holdings PLC
15
Directors’ Report for the year ended 31 December 2023 (continued)
Capital structure
Details of the issued share capital are set out in Note 15. 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 15. No share options were exercised
during the year (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 (2022: £Nil).
Share issues
Details of shares issued during the year are set out in Note 15.
Going concern
The Directors have adopted the going concern basis in preparing the financial statements for the year to
31 December 2023 (see Note 2.2). In reaching this conclusion, the Directors have considered for the
Group, current trading and the current and projected funding position for the period of approximately 20
months from the date of approval of the financial statements through to 31 December 2025. The forecasts
have been prepared using a number of scenarios – a base case assumes receipt of minimum royalty
payments as explained in Note 24 and an extended research scenario into other cancers that is financed
by the part sale of a current asset investment. These scenarios show that the Group continues to be a
going concern. The directors have concluded that the Group has sufficient funds in order to meet its
committed liabilities as they fall due for the foreseeable future. Should funding from these scenarios not
arise, then the Group would manage its working capital according to its needs through the orderly
divestment of its current asset investment in a NASDAQ-listed company. This would ensure that the
Group has sufficient cash resources for at least 12 months from the date of signing these accounts, as
well as meeting the goals within its business plan.
Cizzle Biotechnology Holdings PLC
16
Directors’ Report for the year ended 31 December 2023 (continued)
Post balance sheet events
On 26 March 2024 the Company announced that it has undertaken a conditional placing of 31,050,000
new ordinary shares of 0.01p each (“Ordinary Shares”) in the Company (the “Placing”) at a price of 2
pence per share (the “Issue Price”) raising approximately £0.62 million before expenses for the Company.
The net proceeds of the Placing will be utilised towards completing the Group’s first proposed commercial
test to detect CIZ1B, further protect the Group’s Intellectual Property (IP), progress the Group’s research
with the University of York and for general corporate purposes.
Upon completion of the Placing, the Company intends to terminate the £500,000 loan facility agreement
with E3 Fund SP entered into on 20 September 2022. This facility has not been drawn down.
The Company also agreed to issue 1,500,000 new Ordinary Shares at 2p per new ordinary share in
satisfaction of a payment of £30,000 for professional advisory services to Novum Securities Limited.
The total issue of 32,550,000 new Ordinary Shares were admitted to the Main Market of the London
Stock Exchange on 11 April 2024.
The Group announced on 2 April 2024 a non-binding Memorandum of Understanding (“MoU”) for a
strategic and exclusive licensing agreement to develop and offer its proprietary test for the CIZ1B
biomarker which is highly associated with early-stage lung cancer, throughout the USA and Canada
(“North America”). The new partnership is intended to incorporate the Group’s existing relationship with
Corepath Laboratories, a full-service cancer reference laboratory, as announced on 6 May 2022, through
a dedicated, recently incorporated, US based company Cizzle Bio Inc (“BIO”).
Subject to binding documentation, the proposed royalty arrangements with CorePath will be restructured
to enable the Group to gain significant cash flows from new royalty payments and significant cost savings.
All planned expenditure related to clinical trials and the commercialization of diagnostic tests for the CIZ1B
biomarker in the USA are expected to be funded directly by BIO.
The Group will receive minimum advance royalty payments of US$2.3 million over a period of 30
months, payable as to US$0.3 million on signing the binding agreement and a further US$1.0 million on
each of the fifteenth and thirtieth month anniversaries of signing as part of annual royalty fees of 10% of
net sales.
In addition, the Group will benefit from the free issue of shares in BIO.
BIO is paying a non-refundable upfront fee of US$100,000 within 30 days of signing the MoU for a 120-
day exclusivity period to complete the formal legally binding agreement.
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.
Cizzle Biotechnology Holdings PLC
17
Directors’ Report for the year ended 31 December 2023 (continued)
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 Group’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 Group’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, 29 April 2024
Cizzle Biotechnology Holdings PLC
18
Statement of Directors’ Responsibilities
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
19
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 2023
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
20
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 2023 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 2023:
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
21
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 2023 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 4.
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 15.
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
22
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 2023 there were fourteen Board meetings, one Remuneration Committee meeting and
one Audit Committee meeting.
Principle Six–- Appropriate Skills and Experience of the Directors
Directors who served during 2023:
Throughout 2023 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).
As a small business, the Group does not have a formal diversity policy. The Group recognises the benefits
of diversity across all areas and believes that a diverse Board is a positive factor in business success,
brings a broader, more rounded perspective to decision making, and makes the Board more effective.
When recruiting, the Board will endeavour to consider a wide and diverse talent pool whilst also taking
into account the optimum make-up of the Board, including the benefits of differences in skills, industry
experience, business model experience, gender, race, disability, age, nationality, background and other
attributes that individuals may bring.
The current directors of the Company are as follows are detailed on page 4.
Principle Seven–- Evaluation of Board Performance
Internal evaluation of the Board, the Committee and individual directors is seen as an important step in
the development of the Board. During December 2023 separate meetings were held with the Chair and
each director to review the effectiveness of the board. Evaluation criteria take into account business
planning and financial reporting together with performance against key milestones, board composition,
constitution, diversity and succession planning. As we further progress the commercialisation of the
Group’s technology, the Company recognises the need to draw further expertise into the board when
appropriate. 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 2023, 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
23
Corporate Governance Statement (continued)
Audit Committee
During 2023 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 2023. 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 tender 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 2023 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 2023. 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 2023 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. The directors agreed to
freeze their remuneration for two years until March 2025 as noted in the Directors Remuneration Report
on page 29.
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
24
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
25
Directors’ Remuneration Report for the year ended 31 December 2023
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
26
Directors’ Remuneration Report for the year ended 31 December 2023 (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
Position
Date of
Committee
appointment
to
John Treacy
Chair
Prof. Dawn Coverley
Member
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
27
Directors’ Remuneration Report for the year ended 31 December 2023 (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 2023 was as follows:
Year ended 31 December 2023
Year ended 31 December 2022
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
90
36
126
3
1
4
Total
£’000
93
37
130
Cizzle Biotechnology Holdings PLC
28
Directors’ Remuneration Report for the year ended 31 December 2023 (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
2022
Granted
during the
year
Share options at 31
Dec 2023
Date from which
exercisable
Expiry date
Allan
Syms
Nigel Lee
*
CSOP 23
-
8,868,096
8,868,096
****
28 Jun 2033
CSOP 21
5,068,956
-
5,068,956
**
2 Nov 2031
CSOP 23
-
6,224,233
6,224,233
****
28 Jun 2033
CSOP 21
2,000,000
CSOP 17
CSOP 16
CSOP 15
500
800
300
-
-
-
-
2,000,000
**
2 Nov 2031
500
9 Nov 2018 ***
8 Nov 2027
800
27 Oct 2017 ***
26 Oct 2026
300
25 May 2016 ****
25 Aug 2025
TOTAL
7,070,556 15,092,329
22,162,885
* 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.
**** Granted in respect of salary freeze for 2 years to 3 March 2025 – 50% exercisable on both 3 March
2024 and 3 March 2025.
Remuneration of Non-Executive Directors (audited)
The remuneration of the Non-Executive Directors for the year ended 31 December 2023 was as follows:
Non-
Executive
Director
Basic
salary
£’000
John
Treacy
Dawn
Coverley *
TOTAL
30
40
70
Year ended 31 December 2023
Year ended 31 December 2022
Bonus
Fees
Pension
Total
£’000
£’000
£’000
£’000
Basic
salary
£’000
Bonus
Fees
Pension
Total
£’000
£’000
£’000
£’000
-
-
-
-
-
-
-
1
1
30
30
-
41
40
104
71
70
104
-
-
-
-
30
1
145
1
175
* 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.
Cizzle Biotechnology Holdings PLC
29
Directors’ Remuneration Report for the year ended 31 December 2023 (cont’d)
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 in 2021 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.
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
2022
Granted
during the
year
Exercised
in year
Share options
at 31 Dec
2023
Date from
which
exercisable
Expiry date
Dawn
Coverley
John
Treacy
TOTAL
CSOP 23
-
7,614,540
CSOP 21
12,672,389
-
CSOP 23
-
6,235,629
12,672,389
13,850,169
-
-
-
-
7,614,540
**
28 Jun 2033
12,672,389
*
2 Nov 2031
6,235,629
**
28 Jun 2033
26,522,558
* subject to achievement of certain Group objectives.
** Granted in respect of salary freeze for 2 years to 3 March 2025 – 50% exercisable on both 3 March
2024 and 3 March 2025.
Review of remuneration for all directors
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 Group 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.
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 2023
Distributions to
shareholders
Total employee pay
(£’000)
Group Operational
cash outflow (£’000)
-
201
639
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.
Cizzle Biotechnology Holdings PLC
30
Directors’ Remuneration Report for the year ended 31 December 2023 (cont’d)
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 2023 to 31 December 2023. 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:
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
29 April 2024
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 ‘company’) and its
subsidiaries (the ‘group’) for the year ended 31 December 2023 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 company financial statements, as applied in
accordance with the provisions of the Companies Act 2006.
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the group’s and of the company’s
affairs as at 31 December 2023 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 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 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 company’s ability to continue to adopt the going concern basis of
accounting included:
• Testing the mathematical accuracy of the base case and downside scenarios forecasts;
• Evaluating and challenging the appropriateness of the forecasting method by using our
understanding of the group and company and by considering past historical accuracy of the
management’s forecasting and comparing the actual post year end results with the forecasts;
• Understanding the forecasts including the key assumptions and inputs used and sources of the key
inputs through inquiries with the directors and management and, where possible, obtaining
supporting documentation for such key inputs;
• Testing the main assumptions used as well as validating the drawdown of the facility and receipt of
research and development income;
• Reviewing the reasonableness of downside scenarios; and
• Assessing the appropriateness and adequacy of the group’s and company’s going concern
disclosures included in the financial statements.
Based on the work we have performed, we have not identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast significant doubt on the group’s or company's ability
to continue as a going concern for a period of at least twelve months from when the financial statements
are authorised for issue.
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
£73,300 (2022: £132,000)
£69,600 (2022: £127,000)
£51,300 (2022: £92,400)
£48,700 (2021: £88,900)
5% (2022:5%) of the group’s net assets
5% (2022:5%) of the company’s
net assets (capped at 95% of
group materiality).
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 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% (2022: 70%) of materiality for the
financial statements as a whole, for both the group and company. The
percentage applied was determined based on our risk assessment of the
control environment and our cumulative knowledge of the group and company.
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 £3,600 (2022: £4,000). We agreed with the audit committee
that we would report to them misstatements identified during our audit above £3,600 (2022: £6,600) for
the group audit and £3,400 (2022: £6,350) for the 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 significant risk areas being the
classification of the investment held in Conduit Pharmaceuticals Inc (Conduit) – (group) as well as the
valuation of the investment in subsidiary undertakings (company only) and areas involving significant
accounting estimates and judgement by the directors, being the valuation of the share-based options
issued in the year. 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 benefits expected to be derived
from the partnership agreement entered into with third party.
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 company and two subsidiary undertakings, one of
which is dormant. Of the trading components, both were considered 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 company
financial statements.
Key audit matters
Key audit matters are those matters that, in our professional judgment, 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
Classification of the investment held in Conduit
(group) (Note 12)
In the current year the company exercised their option
to sell its investment in Intangible assets relating to
the:
•
5% economic interest in the commercialisation of
the AZD 1656 asset; and
royalty sharing agreement with SGCS.
•
The consideration was in the form of shares in
Conduit Pharmaceuticals Inc for which the fair value
of the shares was £2,124,207 at date of transfer. At
year end the investment is held as a current asset.
There is a risk that the investment has been incorrectly
classified and presented in terms of the requirements
of IAS 32 Presentation of the financial instruments and
IFRS 9 Financial Instruments, specifically:
•
•
the designation of the fair value movement on the
investment as either through profit or loss or
other comprehensive income; and
the classification of the gain or loss on transfer of
the intangible asset to the investment held.
There is also a risk that the company may not be able
to sell the investment within 12 months after year end
and as such the investment is incorrectly classified as
current. As a result of these significant risks we have
determined that the classification of the investment in
Conduit is a key audit matter.
Our work in this area included:
- Obtaining and reviewing the exercise
notice and share certificate of
the
investment held to assess whether the
investment was correctly classified at
initial recognition and at year end in
accordance with IAS 32 and IFRS 9;
- Ensuring that at initial recognition the
transfer of the intangible asset to the
investment held in Conduit is appropriate
and in line with the requirement of IFRS 9;
- Reviewing minutes of meetings, regulatory
news announcements (RNS) and holding
discussions with management to ascertain
the classification of the investment at initial
recognition and at year end between
current and non-current; and
- Ensuring that adequate disclosures and
accounting policies have been included in
line with IFRS 9 and IAS 32.
Based on the procedures performed the
classification of the investment as current
assets was appropriate and in line with the
requirements of IAS 32 and IFRS 9.
Cizzle Biotechnology Holdings PLC
34
Independent Auditor’s Report to the Members of Cizzle Biotechnology Holdings PLC (continued)
Key Audit Matter
How our scope addressed this matter
the
Valuation of
undertakings (company) (Note 11)
investment
in subsidiary
Our work in this area included:
-
The company carries a material ’Investment in
subsidiary undertakings‘ balance in its Statement of
Financial Position. There is a risk that the carrying
value of
the
investments
recoverable amount and is therefore impaired.
is greater
than
the
Considering
impairment
the existence of
indicators per IAS 36 Impairment of Assets,
which
to
considering the external and internal sources
of information. This included:
included but were not
limited
As the estimated recoverable amount of investments
is subjective due to the inherent uncertainty involved
in ascertaining whether any impairment indicators are
met and if so, forecasting and discounting future cash
flows, there is a significant risk and a key audit matter
that the carrying value of investments are overstated.
- Reviewing the key assumptions and
inputs made by management’s expert in
the valuation of
in
previous years and ascertaining whether
there have been any changes to the
basis of these key assumptions and
inputs that would indicate an impairment;
the subsidiary
- Reviewing
and
discussing
the
development timelines of the Biomarker
that were
and
estimated
the
acquisition of the subsidiary;
to be reached since
the key milestones
- Assessing
the
changes
the
biotechnology market
the
technological and legal environment and
the implications to the expected prices
and costs included in the valuation; and
to
and
- Reviewing the progress of the underlying
research and development of
the
Biomarker since the acquisition and
assessing the future plans of the group
and company as part of our work on
going concern.
Based on the procedures performed, we
found the investments to be reasonable and in
line with IAS 36.
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 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.
Cizzle Biotechnology Holdings PLC
35
Independent Auditor’s Report to the Members of Cizzle Biotechnology Holdings PLC (continued)
Opinions on other matters prescribed by the Companies Act 2006
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:
•
•
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 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:
•
•
adequate accounting records have not been kept by the company, or returns adequate for our audit
have not been received from branches not visited by us; or
the 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 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 company financial statements, the directors are responsible for assessing the
group’s and the 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 company or to cease operations, or have no realistic alternative but to
do so.
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:
Cizzle Biotechnology Holdings PLC
36
Independent Auditor’s Report to the Members of Cizzle Biotechnology Holdings PLC (continued)
• We obtained an understanding of the group and 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.
• We determined the principal laws and regulations relevant to the group and company in this regard to
be those arising from:
o Listing Rules and Disclosure Guidance and Transparency Rules;
o UK-adopted international accounting standards;
o Companies Act 2006;
o Anti-bribery and anti-money laundering regulations; and
o UK taxation law.
• We designed our audit procedures to ensure the audit team considered whether there were any
indications of non-compliance by the group and company with those laws and regulations. These
procedures included, but were not limited to:
o 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;
o Reviewing board meeting minutes;
o Reviewing Regulatory News Service (RNS) announcements; and
o Reviewing legal and regulatory correspondence and legal expenses.
•
•
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 investments in conduit (group) and valuation of investment in subsidiary undertakings (company)
(detailed in the key audit matters section of this report) and 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.
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.
• Compliance with laws and regulations at the subsidiary level was ensured through conducting
enquiries of management and reviewing correspondence for any instances of non-compliance.
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/auditorsresponsibilities. This description forms
part of our auditor’s report.
Cizzle Biotechnology Holdings PLC
37
Independent Auditor’s Report to the Members of Cizzle Biotechnology Holdings PLC (continued)
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 6 years, covering the periods ending 31 December 2018 to 31 December 2023.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the group or the
company and we remain independent of the group and the 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.
Hannes Verwey (Senior Statutory Auditor) 15 Westferry Circus
For and on behalf of PKF Littlejohn LLP Canary Wharf
Statutory Auditor London E14 4HD
29 April 2024
Cizzle Biotechnology Holdings PLC
38
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2023
Notes
Group
Year ended 31
December
2023
£’000
Group
Year ended 31
December
2022
£’000
Administrative expenses
- on-going administrative costs
- cost associated with put option
- share option charge
- gain on transfer of intangible asset
- net fair value loss on financial asset measured at
fair value through profit or loss
Total administrative 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
6
6
6
6
6
9
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
10
10
(669)
(120)
(307)
44
(711)
(1,763)
(1,763)
46
(1,717)
(0.5p)
(0.5p)
(823)
-
(140)
-
-
(963)
(963)
51
(912)
(0.3p)
(0.3p)
The above results relate entirely to continuing activities. 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 45 to 60 are an integral part of these financial statements.
Cizzle Biotechnology Holdings PLC 39
Registered number: 06133765 (England and Wales)
Consolidated Statement of Financial Position
As at 31 December 2023
Non-current assets
Intangible asset
Current assets
Investment held at fair value through profit or loss
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
2023
£’000
11
12
13
14
15
-
-
1,413
136
144
1,693
1,693
3,504
35,335
-
(40,021)
10,081
478
(7,870)
1,507
16
186
186
1,693
Group
2022
£’000
2,080
2,080
-
227
478
705
2,785
3,502
34,917
115
(40,021)
10,081
199
(6,153)
2,640
145
145
2,785
The notes on pages 45 to 60 are an integral part of these financial statements.
The financial statements were approved and authorised for issue by the board on 29 April 2024
and were signed on its behalf by:
Nigel Lee
Director
Cizzle Biotechnology Holdings PLC
40
Registered number: 06133765 (England and Wales)
Company Statement of Financial Position
As at 31 December 2023
Non-current assets
Intangible asset
Investments
Current assets
Investment held at fair value through profit or loss
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
2023
£’000
11
11
12
13
14
15
-
21,803
21,803
1,413
830
70
2,313
24,116
3,504
35,335
-
10,081
478
(25,407)
23,991
16
125
125
24,116
2022
£’000
2,080
21,803
23,883
-
726
464
1,190
25,073
3,502
34,917
115
10,081
199
(23,867)
24,947
126
126
25,073
The notes on pages 45 to 60 are an integral part of these financial statements. The loss for the year of
the Company was £1,540,000 (2022: loss of £627,000).
The financial statements were approved and authorised for issue by the board on 29 April 2024 and
were signed on its behalf by:
Nigel Lee
Director
Cizzle Biotechnology Holdings PLC
41
Consolidated Statement of Cash Flows for the year ended 31 December 2023
Cash flows from operating activities
Operating (loss) before tax
Movement on put option
Gain on transfer of intangible asset
Net fair value loss on financial assets measured at fair
value through profit or loss
Share option charge
Share based adjustment to former director
Operating cash flow before working capital movements
(Increase) / Decrease in trade and other receivables
Increase / (Decrease) in trade and other payables
Cash used in operations
Tax received
Net cash used in operating activities
Cash flows from investing activities
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
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
2023
£'000
Group
2022
£'000
(1,763)
(963)
120
(44)
711
307
-
(669)
(24)
13
(680)
41
(639)
-
-
305
-
305
(334)
478
144
-
-
-
140
8
(815)
16
(73)
(872)
-
(872)
(120)
(120)
480
115
595
(397)
875
478
13
16
13
15
14
14
The notes on pages 45 to 60 are an integral part of these financial statements.
* Included in the movements in investing activities is a non-cash movements of £2,080,000 explained
further in note 11 and 12 related to the transfer of the intangible assets to the investment in Conduit
Pharmaceuticals Limited.
Cizzle Biotechnology Holdings PLC
42
Company Statement of Cash Flows for the year ended 31 December 2023
Cash flows from operating activities
Loss before tax
Share option charge
Movement on put option
Gain on transfer of intangible asset
Net fair value loss on financial assets measured at fair
value through profit or loss
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 Put Option*
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
Notes
13
16
13
15
14
14
2023
£'000
(1,540)
307
120
(44)
711
(446)
(14)
(27)
(487)
-
(212)
(212)
305
-
305
(394)
464
70
2022
£'000
(627)
140
-
-
-
(487)
10
(8)
(485)
(120)
(374)
(494)
480
115
595
(384)
848
464
The notes on pages 45 to 60 are an integral part of these financial statements.
* Included in the movements in investing activities is a non-cash movements of £2,080,000 explained
further in note 11 and 12 related to the transfer of the intangible assets to the investment in Conduit
Pharmaceuticals Limited.
Cizzle Biotechnology Holdings PLC
43
Consolidated statement of Changes in Equity
for the year ended 31 December 2023
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 2022
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
335
(40,021)
(5,517)
937
-
-
-
-
-
-
-
-
-
(276)
-
140
-
-
-
-
-
-
-
-
-
276
-
-
1,880
504
(80)
56
115
140
3,502
34,917
115
10,081
199
(40,021)
(5,241)
3,552
Comprehensive Loss for the year
-
-
-
-
-
-
(912)
(912)
At 31 December 2022
3,502
34,917
115
10,081
199
(40,021)
(6,153)
2,640
Registration of shares to be issued
Issue of shares for cash
Costs of share issue
Share option charge
-
2
-
-
348
(45)
-
115
(115)
3,504
35,335
Comprehensive Loss for the year
-
-
At 31 December 2023
3,504
35,335
-
-
-
-
-
-
-
279
-
-
-
-
-
-
-
-
-
350
(45)
279
10,081
478
(40,021)
(6,153)
3,224
-
-
-
(1,717)
(1,717)
10,081
478
(40,021)
(7,870)
1,507
-
-
-
-
-
-
The notes on pages 45 to 60 are an integral part of these financial statements.
Cizzle Biotechnology Holdings PLC
44
Company statement of Changes in Equity
for the year ended 31 December 2023
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 2022
3,493
32,566
10,081
335
(23,516)
22,959
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
-
-
-
-
-
-
115
-
-
-
-
-
-
-
-
-
-
-
-
-
(276)
276
-
140
-
-
1,880
504
(80)
56
115
140
3,502
34,917
115
10,081
199
(23,240)
25,574
Comprehensive Loss for the year
-
-
-
-
-
(627)
(627)
At 31 December 2022
3,502
34,917
115
10,081
199
(23,867)
24,947
115
(115)
Registration of shares to be issued
Issue of shares cash
Costs of share issue
Share option charge for year
-
2
-
-
348
(45)
-
3,504
35,335
Comprehensive Loss for the year
-
-
At 31 December 2023
3,504
35,335
-
-
-
-
-
-
-
279
-
-
-
-
-
350
(45)
279
10,081
478
(23,867)
25,531
-
-
(1,540)
(1,540)
10,081
478
(25,407)
23,991
-
-
-
-
-
-
The notes on pages 45 to 60 are an integral part of these financial statements.
Cizzle Biotechnology Holdings PLC
45
Notes to the financial statements for the year ended 31 December 2023
1 General information
Cizzle Biotechnology Holdings PLC (“the Company” of “the Group”) 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 2023 are the Group results.
(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 2023.
i)
New standards and amendments – applicable 1 January 2023
The following standard and interpretations apply for the first time to financial reporting periods commencing
on or after 1 January 2022:
Amendments to IAS 1: Presentation of Financial Statements
and IFRS 2: Disclosure of Accounting Policies
Amendments to IAS 8: Accounting policies. Changes in
Accounting Estimates and Errors – Definition of Accounting
Estimates
Amendments to IAS 12: Income Taxes – Deferred Tax
related to Assets and Liabilities arising from a Single
Transaction
Amendments to IAS 12 International Tax Reform: Pillar Two
Model Rules
Effective for accounting
periods beginning on or after
1 January 2023
Impact
None
1 January 2023
None
1 January 2023
None
1 January 2023
None
Cizzle Biotechnology Holdings PLC
46
Notes to the financial statements for the year ended 31 December 2023
2
Accounting policies (continued)
Forthcoming requirements
ii)
As at 31 December 2023, the following standards and interpretations had been issued but were not
mandatory for annual reporting periods ending on 31 December 2023 and not early adopted.
Amendments to IAS 1: Presentation of Financial
Statements: Classification of Liabilities as Current or
Non-current
Amendments to IFRS 16 Leases: Lease Liability in a
Sale and Leaseback
Amendments to IAS1 Presentation of Financial
Statements: Non-current Liabilities with Covenants
Amendments to IAS 7 Statement of Cash Flows and
IFRS 7 Financial Instruments: Disclosures: Supplier
Finance Arrangements
Amendments to IAS 21 The Effects of Changes in
Foreign Exchange: Lack of Exchangeability
2.2 Going concern
Effective for accounting periods
beginning on or after
1 January 2024
Impact
None
1 January 2024
None
1 January 2024
None
1 January 2024
None
TBC
None
The Directors have adopted the going concern basis in preparing the financial statements for the year ended 31
December 2023. In reaching this conclusion, the Directors have considered current trading and the current and
projected funding position for approximately 20 months from the date of approval of the financial statements
through to 31 December 2025. The forecasts have been prepared using a number of scenarios – a base case
assumes receipt of minimum royalty payments as explained in Note 24 and an extended research scenario into
other cancers that is financed by the part sale of a current asset investment. These scenarios show that the Group
continues to be a going concern. The directors have concluded that the Group has sufficient funds in order to
meet its committed liabilities as they fall due for the foreseeable future. Should funding from these scenarios not
arise, then the Group would manage its working capital according to its needs through the orderly divestment of
its current asset investment in a NASDAQ-listed company. This would ensure that the Group has sufficient cash
resources for at least 12 months from the date of signing these accounts, as well as meeting the goals within its
business plan.
Current funding
The Group’s cash balance as at 31 December 2023 was £144,000 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.
On 26 March 2024 the Group announced that it has undertaken a conditional placing of 31,050,000 new ordinary
shares of 0.01p each (“Ordinary Shares”) in the Company (the “Placing”) at a price of 2 pence per share (the
“Issue Price”) raising approximately £0.62 million before expenses for the Company. The net proceeds of the
Placing will be utilised towards completing the Company’s first proposed commercial test to detect CIZ1B, further
protect the Company’s Intellectual Property (IP), progress the Company’s research with the University of York
and for general corporate purposes.
Upon completion of the Placing, the Company intends to terminate the £500,000 loan facility agreement with E3
Fund SP entered into on 20 September 2022. This facility has not been drawn down.
The Company also agreed to issue 1,500,000 new Ordinary Shares at 2p per new ordinary share in satisfaction
of a payment of £30,000 for professional advisory services to Novum Securities Limited.
Cizzle Biotechnology Holdings PLC
47
Notes to the financial statements for the year ended 31 December 2023
2
Accounting policies (continued)
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 Group and Company
have 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.
2.4 Foreign currency translation
The functional currency of the Company and its subsidiaries 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.
2.5 Non-Current assets
Investments in intangible assets and subsidiaries are stated at cost less accumulated impairment.
Investments classified as current assets
2.6
Assets that do not meet the criteria for amortised cost or fair value through other comprehensive income (“FVOCI”)
are measured at fair value through profit or loss (“FVPL”). A gain or loss on a debt investment that is subsequently
measured at FVPL is recognised in profit or loss and presented net within other gains / (losses) in the period in
which it arises.
2.7 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.
2.8 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. Note 23 describes all equity categories
in further detail.
2.9 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.
Cizzle Biotechnology Holdings PLC
48
Notes to the financial statements for the year ended 31 December 2023
2
Accounting policies (continued)
2.10 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.
2.11
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.
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.
Cizzle Biotechnology Holdings PLC
49
Notes to the financial statements for the year ended 31 December 2023
2.11
Financial instruments (continued)
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.
2.12 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.
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)
Cizzle Biotechnology Holdings PLC
50
Notes to the financial statements for the year ended 31 December 2023
3
Reverse acquisition (continued)
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.
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 22 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 Level One
investment risk, 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) 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. The credit risk on the
current asset investment arises from the investment in a Nasdaq quoted company. The Group reviews the
market price of this investment on a daily basis.
(b)
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 16. The
Group manages this risk through the preparation of cash flow forecasts which are regularly reviewed by
the directors.
Cizzle Biotechnology Holdings PLC
51
Notes to the financial statements for the year ended 31 December 2023
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.
Accounting judgement
a)
The Company’s principal judgement in 2023 relate to its impairment review of its investment in its subsidiary
company, CBL. In 2022 relate to its impairment review of its’s intangible assets (AZD 1656). Following the
review of these assets at 31 December 2023 the directors considered that no impairment loss is required to
be made.
b)
Accounting estimate
Share based payments
See Note 15 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
Cost associated with put option
Gain on transfer of intangible asset
Net fair value loss on financial asset measured at fair
value through profit or loss
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
8
Directors’ emoluments
Group
2023
£’000
214
173
146
22
13
-
36
65
669
307
120
(44)
711
1,763
Group
2023
£’000
36
36
Group
2022
£’000
280
180
154
38
68
8
31
64
823
140
-
-
-
963
Group
2022
£’000
31
31
Wages and salaries
Social Security Costs
Pension Contributions
Share based payments*
Group
2023
£’000
196
22
5
307
530
Group
2022
£’000
300
39
5
140
484
Company
2023
£’000
133
Company
2022
£’000
143
15
3
307
458
17
3
140
303
Cizzle Biotechnology Holdings PLC
52
Notes to the financial statements for the year ended 31 December 2023
Directors’ emoluments (continued)
*Included in the share based payment charge is £28,000 related to the employee contribution of the national
insurance which has been accrued for as the Company has taken on the obligation on the employee’s behalf.
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
2023
£’000
(47)
1
(46)
Group
2022
£’000
(47)
(4)
(51)
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%* (2022: 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
19% has been used as the Company generates profits of less than £50k
10 Earnings per share
Basic loss per share
Loss for the year
Weighted average number of ordinary shares
Basic loss per share
Group
2023
£’000
(1,763)
(335)
209
126
(46)
(46)
Group
2022
£’000
(963)
(183)
27
156
(51)
(51)
Group
2023
(1,717,000)
355,861,445
(0.5p)
Group
2022
(912,000)
291,322,970
(0.3p)
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.
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 2023 and 31 December 2022 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 2023, there were share options outstanding over 48,685,443 shares (2022: 19,742,945
shares), which could potentially have a dilutive impact in the future.
Cizzle Biotechnology Holdings PLC
53
Notes to the financial statements for the year ended 31 December 2023
11 Non- Current assets
Investment in subsidiary undertakings
Intangible assets
Total investments
Group
2023
£’000
-
-
-
Group
2022
£’000
-
2,080
2,080
Company
2023
£’000
21,803
-
21,803
Company
2022
£’000
21,803
2,080
23,883
a.
Investments in subsidiary undertakings - Company
Opening balance
Acquisition during the year
Closing balance
2023
£’000
21,803
-
21,803
2022
£’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
Disposal (traded for investment measured at
fair value through profit or loss)*
Closing balance
2023
£’000
2,080
-
(2,080)
-
2022
£’000
200
1,880
-
2,080
* During the current year the Company exercised a put option which meant that the intangible asset was
traded for an investment in Conduit Pharmaceuticals Limited (“Conduit”) as set out in Note 12 resulting in
a gain of £44,000.
On 14 February 2022, the Company entered into a definitive agreement (the "Agreement") with 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”).
Cizzle Biotechnology Holdings PLC
54
Notes to the financial statements for the year ended 31 December 2023
11 Non- Current assets (continued)
b.
Intangible assets – Group and Company (continued)
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 expected value of £3.25 million to be satisfied through the issuance of new shares in Conduit (the
“Option”). On transfer of the shares to the Company, the shares were worth £2.12 million (refer to note 12).
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 in 2022 was accounted for under prepayments ( see Note 13).
On 26 September 2023 the Company exercised the option to acquire £3,250,000 payable in shares in Conduit
Pharmaceuticals Inc, a company that was subsequently listed on NASDAQ during December 2023. The
Company were not able to have these shares registered with its custodian until January 2024.
b.
Intangible assets – Group (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.
Cizzle Biotechnology Holdings PLC
55
Notes to the financial statements for the year ended 31 December 2023
12. Current asset investment
Investment
Total investments
Investment – Group and Company
Transfer from intangible asset*
Measurement loss of level1 investment at
year end
Market value of
December 2023
Investment at 31
Group
2023
£’000
1,413
1,413
Group
2022
£’000
-
Company
2023
£’000
1,413
Company
2022
£’000
-
-
1,413
-
2023
£’000
2,124
(711)
1,413
2022
£’000
-
-
-
* During the current year the Company exercised a put option which meant that the intangible asset was
traded for an investment in Conduit Pharmaceuticals Limited (“Conduit”) as set out in Note 11 resulting in a
gain of £44,000.
The investment noted above represents shares held in Conduit Pharmaceuticals Inc, a NASDAQ-listed
company as mentioned in Note 11. The investment is a level 1 investment and has been valued at its market
value on 31 December 2023.
13
Trade and other receivables
Amounts due from subsidiaries
Social security and other taxes
Corporation tax recoverable
Prepayments and other receivables
Group
2023
£’000
-
14
95
27
136
Group
2022
£’000
-
7
88
132
227
Company
2023
£’000
801
6
-
23
830
Company
2022
£’000
590
8
-
128
726
Prepayments include £Nil (2022: £120,000) for a Put Option that was acquired during the year and paid in
cash. During 2023 the Put Option was exercised in order to obtain the current asset investment (Note 12).
Amounts due from subsidiary undertakings at 31 December 2023 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 2023, trade and other receivables of £Nil (2022: £Nil) were impaired.
Cizzle Biotechnology Holdings PLC
56
Notes to the financial statements for the year ended 31 December 2023
14
Cash and cash equivalents
Cash on hand and balances with banks
Group
2023
£’000
144
144
Group
2022
£’000
478
478
Company
2023
£’000
70
Company
2022
£’000
464
70
464
15 Share capital
Numbers in 000s
Nominal value per share
At 1 January 2023
Issued
At 31 December 2023
New
Ordinary
Shares
0.01p
339,804
24,038
363,842
Deferred ‘A’
shares
Deferred ‘A'
shares
0.01p
12,383,626
-
12,383,626
0.99p
225,158
-
225,158
The above table reflects the full authorised and fully paid shares of the Company at 31 December 2023. There
are no shares issued that are partly paid. The following table reconciles the total nominal value of the shares
in issue:
Nominal value per share
At 1 January 2023
Issued during the year
At 31 December 2023
New
Ordinary
shares
0.01p
£000
35
Deferred
£0.01p
‘A’ shares
0.01p
£’000
1,238
Deferred ‘A'
shares
0.99p
£000
2,229
2
37
-
1,238
-
2,229
Total
£000
3,502
2
3,504
During the year ended 31 December 2023, the following shares were issued:
5 Jan 2023 – Subscription (cash)
23 June 2023 – Subscription (cash)
Total issued
No of shares
issued
000s
Issue price
per share
Pence
7,371
16,667
24,038
1.6p
2.1p
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 in 2021
was accounted for as a cost to the Company and a reduction of the share premium account. In June 2023 the
Group raised net proceeds, before expenses, of £305,000 (gross proceeds: £350,000).
On 11 April 2024 32,550,000 new Ordinary Shares were admitted to the Main Market of the London Stock
Exchange due to a share placing that raised gross proceeds of approximately £0.62m (before expenses) and
the settlement of £30,000 of professional fees. This is further explained in Note 24.
Cizzle Biotechnology Holdings PLC
57
Notes to the financial statements for the year ended 31 December 2023
15 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 2023 are summarised below:
Date of grant
2015
2016
2017
2021
2023
Number of
options
300
800
500
19,741,345
28,942,498
Exercise price
(pence per
share)
5.02
1.85
1.00
10.00
2.19376p
Exercise
dates from
2017
2017
2018
2021 (based on performance)
2024
The number and weighted average exercise price of the options that were exercisable at 31 December 2023 were
19,742,945 and 10.0p respectively. The share based payment charge for the year was £307,000 (2021:
£140,000). Included in the share based payment charge is £28,000 related to the employee contribution of the
national insurance which has been accrued for as the Company has taken on the obligation on the employee’s
behalf. Movements in the number of share options outstanding and their related weighted average exercise prices
are as follows:
At 31 December 2022
Granted during year
At 31 December 2023
Average
exercise price
(pence per
share)
10.00
2.19
5.35
Options
number
19,742,945
28,942,498
48,685,443
Share options outstanding at the end of the year have the following expiry dates and exercise prices:
Expiry date
2025
2026
2027
2031
2033
Exercise price
(pence per
share)
5.02
1.85
1.00
10.00
2.19
Options
2023
300
800
500
19,741,345
28,942,498
48,685,443
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
2023
Share
Price
Pence
9.38p
4.40p
1.95p
Exercise
Price
Pence
1.53p
10.00p
2.19p
Expected
Option
Life
Years
10 years
10 years
10 years
Expected
Volatility
%
68%
32%
58.4%
Expected
Dividend
Yield
%
0%
0%
0%
Risk free
Interest
Rate
%
0.83%
0.83%
4.93%
Fair Value
At date of
Grant
Pence
1.60p
3.00p
1.32p
Cizzle Biotechnology Holdings PLC
58
Notes to the financial statements for the year ended 31 December 2023
16
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
17
Financial assets and liabilities
Group
2023
£’000
92
7
87
186
Group
2023
£’000
68
17
7
92
Group
2022
£’000
41
8
96
145
Group
2022
£’000
16
25
-
41
Company
2023
£’000
41
Company
2022
£’000
40
7
77
125
8
78
126
Company
2023
£’000
17
Company
2022
£’000
15
17
7
41
25
-
40
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.
Amounts due from subsidiaries (Note 13)
Other receivables (Note 13)
Cash and cash equivalents (Note 14)
Group
2023
£’000
-
5
144
Group
2022
£’000
-
132
478
Company
2023
£’000
801
-
70
Company
2022
£’000
590
128
464
Financial assets at amortised cost
149
610
871
1,182
Financial assets at fair value through profit
or loss (Note12)
Trade payables (Note 16)
Accruals and other payables (Note 16)
Financial liabilities at amortised cost
18 Deferred income tax
1,413
Group
2023
£’000
92
87
179
-
Group
2022
£’000
41
96
137
1,413
Company
2023
£’000
-
Company
2022
£’000
41
77
118
40
78
118
There is an un-provided deferred tax asset arising on taxable losses of £0.72m (2022: £0.64m). 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 2023 there was no deferred tax liability (2022: £Nil).
19 Commitments
The Group has no commitments as at 31 December 2023 (2022: £Nil).
Cizzle Biotechnology Holdings PLC
59
Notes to the financial statements for the year ended 31 December 2023
20 Related party transactions
Transactions with directors
At 31 December 2023 there were no balances owed to directors other that recent expense claims totalling £6,120
which were paid during January 2024. 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. During 2023 the group paid £10,000 to Dr Justin Ainscough for research and development
consultancy work. Dr Ainscough is a shareholder and husband to Professor Dawn Coverley, a director of the
Company.
21 Controlling party
The directors consider there to be no ultimate controlling party.
22
Capital management
In managing its capital structure, the Group and Company’s objective is to safeguard the Group and 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:
Group
2022
£’000
-
Company
2023
£’000
-
Company
2022
£’000
-
Group
2023
£’000
-
Total debt
Total equity
Debt-to-equity ratio
1,507
0.0%
2,640
0.0%
23,991
0.0%
24,947
0.0%
23
The following reserves describe the nature and purpose of each reserve within equity:
Reserves
Capital reduction reserve
a.
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.
Share premium
b.
The amount subscribed for each share in excess of nominal value.
Reverse acquisition reserve
c.
The reverse acquisition reserve is explained in Note 3.
Share option
d.
The accumulated expense arising during their vesting period of share options granted to directors and
employees and warrants granted to third parties.
Accumulated losses
e.
All other net losses and gains not recognised elsewhere.
Cizzle Biotechnology Holdings PLC
60
Notes to the financial statements for the year ended 31 December 2023
24
Post balance sheet events
Funding
On 26 March 2024 the Company announced that it has undertaken a conditional placing of 31,050,000 new
ordinary shares of 0.01p each (“Ordinary Shares”) in the Company (the “Placing”) at a price of 2 pence per
share (the “Issue Price”) raising approximately £0.62 million before expenses for the Company. The net
proceeds of the Placing will be utilised towards completing the Company’s first proposed commercial test to
detect CIZ1B, further protect the Company’s Intellectual Property (IP), progress the Company’s research with
the University of York and for general corporate purposes.
Upon completion of the Placing, the Company intends to terminate the £500,000 loan facility agreement with
E3 Fund SP entered into on 20 September 2022. This facility has not been drawn down.
The Company also agreed to issue 1,500,000 new Ordinary Shares at 2p per new ordinary share in satisfaction
of a payment of £30,000 for professional advisory services to Novum Securities Limited.
The total issue of 32,550,000 new Ordinary Shares were admitted to the Main Market of the London Stock
Exchange on 11 April 2024.
Research & development
Since the release of the Group’s interim results to 30 June 2023 on 28 September 2023, Cizzle has continued
to make progress in the development of the Company’s proprietary assay for the CIZ1B biomarker, which is
highly associated with early-stage lung cancer. In particular, the Company has successfully completed an
antibody development programme with ProteoGenix, a France-based antibody development and production
contract research organisation (CRO), with a track record in generating antibodies from development to
production for therapeutic, diagnostic and research use. The Directors believe that the new antibodies from
this development programme should extend the range and proprietary rights that the Company has for
detecting the CIZ1B Biomarker.
Strategic Licensing and Partnership Memorandum of Understanding for North America
The Company announced on 2 April 2024 a non-binding Memorandum of Understanding (“MoU”) for a
strategic and exclusive licensing agreement to develop and offer its proprietary test for the CIZ1B biomarker
which is highly associated with early-stage lung cancer, throughout the USA and Canada (“North America”).
The new partnership is intended to incorporate the Company’s existing relationship with Corepath
Laboratories, a full-service cancer reference laboratory, as announced on 6 May 2022, through a dedicated,
recently incorporated, US based company Cizzle Bio Inc (“BIO”).
The Key highlights of the MoU are as follows:
• The MoU envisages Cizzle providing an exclusive licence to BIO to develop and market clinical
diagnostic assays based on the CIZ1B biomarker to facilitate the early detection of lung cancer in
North America ;
• Cizzle will receive an up-front payment of US$100,000 within 30 days as a non-refundable fee to grant
BIO an exclusive negotiating period of 120 days;
• Subject to entering binding documentation, Cizzle will receive minimum advance royalty payments of
US$2.3 million over a period of 30 months, payable as to US$0.3 million on signing the binding
agreement and a further US$1.0 million on each of the fifteenth and thirtieth month anniversaries of
signing as part of annual royalty fees of 10% of net sales
• BIO intends to fully fund all expenditure on development, clinical trials, accreditation and marketing of
diagnostic tests for the CIZ1B Biomarker in North America which would represent a significant saving
on current planned expenditure by the Company;
• Cizzle will participate in the ownership of BIO through a grant of a 10% equity stake in BIO for no cash
consideration; and
• Cizzle will benefit from inventions and improvements to CIZ1B technology for sale in the rest of the
world.