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Developing medicines
that prevent serious
infections
Annual Report and
Financial Statements 2020
About us
Destiny Pharma plc
Our aim is to become a world-leading
anti-infective company with a vibrant
clinical pipeline derived from several
novel technologies.
We are a biotechnology company focused on the development
of novel medicines that can prevent life-threatening infections.
The most advanced programmes include NTCD-M3, a Phase 3 ready
treatment for the prevention of C. difficile infection (“CDI”) recurrence,
which is the leading cause of hospital-acquired infection in the US,
and also the XF-73 nasal gel, which announced excellent Phase 2b
results in March 2021 targeting the prevention of post-surgical
Staphylococcal aureus hospital infections including MRSA.
We are also co-developing SPOR-COV, a novel, biotherapeutic product
for the prevention of COVID-19 and influenza through its pre-clinical
work, and have five other grant-funded XF research projects.
In this report
Strategic report
1 – 23
Highlights
At a glance
Chairman’s statement
Investment proposition
Market opportunity
Business model
Our strategy in action
CEO’s operational and
strategic review
Financial review
Risks and uncertainties
Our stakeholders
1
2
4
5
6
10
11
12
19
20
22
Governance
24 – 35
Introduction to
corporate governance
Board of Directors
Directors’ remuneration report
Directors’ report
Financial statements
36 – 54
Statement of Directors’
responsibilities
Independent auditor’s report
Statement of
comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
24
28
30
35
36
37
40
41
42
43
Notes to the financial statements 44
Glossary
Corporate information
55
IBC
Highlights
Destiny Pharma has expanded its pipeline in 2020 and reported
positive Phase 2 data in Q1 2021
We are dedicated to the discovery, development
and commercialisation of new anti-infectives that improve
outcomes for patients and provide cost-effective medical care.
Positive Phase 2 results reported in March 2021 from XF-73 nasal
gel study
Successful fundraise of £10.4 million and acquisition of NTCD-M3,
a Phase 3 ready asset for prevention of C. difficile
infection recurrence
SporeGen collaboration to co-develop a nasal spray
to prevent COVID-19
Appointed new CBO, Dr Stephanie Bewick
Approval of XF-73 patent application in Brazil
Awarded grant to fund a research collaboration with the University
of Sheffield targeting ophthalmic bacterial and fungal infections
Agreed NIAID collaboration to carry out pre-clinical studies for
XF-73 dermal indication
Awarded grant to fund collaboration with Cardiff University
targeting XF activity against fungal infections
1
Strategic reportDestiny Pharma plc Annual Report and Financial Statements 2020 At a glance
Our lead assets are focused on infection prevention.
• Global interest in infectious disease
driven by rise of drug resistant
superbugs/AMR and COVID-19
• Clear focus on infection prevention
• Two late-stage clinical assets under
IND in US with Fast Track status
• Clinical programmes targeting
>$1 billion global markets with
clear differentiation to competition
• XF-73 to prevent post-surgical
infections – excellent efficacy
data in recent Phase 2 results
• NTCD-M3 to prevent C. difficile gut
infections – 95% prevention of
infection recurrence in Phase 2
• Earlier pipeline targeting COVID-19
and additional bacterial infections
funded by grants
• Funded to Q4 2022 after £10.4 million
raised in November 2020
2
Strategic reportDestiny Pharma plc Annual Report and Financial Statements 2020 Our drug product pipeline: Targeting unmet clinical needs.
NTCD-M3
XF-73
Nasal
XF-73
Dermal
SPOR-COV
XF Drugs
Biofilm
XF Drugs
Research
Pre-clinical
Phase 1
Phase 2
Phase 2
Phase 3
Prevention of recurrent Clostridioides difficile infection ("CDI")
Prevention of post-surgical Staphylococcus aureus infection (US QIDP and Fast Track status)
Treatment of skin infections of antibiotic resistant bacteria – diabetic foot ulcers/burn wounds
Innate immune modulation for prophylaxis of COVID-19 and influenza
Treatment of antibiotic resistant biofilm and bacterial aggregate associated infections
Respiratory, oral mucosa and ocular infection projects
Small molecule XF projects
Microbiome/Biotherapeutic projects
Our partners: University collaborations:
3
Strategic reportDestiny Pharma plc Annual Report and Financial Statements 2020 Chairman’s statement
We have made excellent progress in
developing our pipeline in 2020 and
are very well positioned for the future.
Nick Rodgers
Chairman
Acquisition of NTCD-M3
As the significant step on our strategy,
we acquired a Phase 3 ready asset for
prevention of C. difficile infection
recurrence. This is a perfect fit with
our focus on infection prevention and
moves us into the exciting area of
biotherapeutics and the human
microbiome. Work has now started on
preparing for a Phase 3 clinical trial in
late 2022 and significant value has
already been added by the Destiny
Pharma team.
XF-73 nasal Phase 2b trial
Completing the Phase 2b clinical trial
during a year of pandemic was a great
achievement by the clinical team and
I am delighted that we recently
reported positive results from that
trial. There is a clear clinical need
and a billion‑dollar commercial
opportunity for our XF‑73 nasal gel
formulation as a novel treatment for
the prevention of post‑surgical
staphylococcal infections.
SPOR-COV COVID-19
development
We also won a significant Innovate
UK grant to support a COVID‑19
prevention programme in
collaboration with SporeGen Limited.
Whilst initially focused on COVID‑19,
we believe the opportunity is much
wider. This work is also in the human
microbiome space, so complements
our NTCD‑M3 asset.
Employees
In a year of pandemic, the Destiny
Pharma team, led by Neil Clark, have
done an excellent job in transforming
your company and the Board is very
grateful for their hard work and
dedication. At the start of 2021 we
further strengthened the senior team
with the appointment of our new
Chief Business Officer, Dr Stephanie
Bewick. This is a demonstration that
Destiny Pharma has become much
more commercially focused as we
work towards the launch of our
products in the next few years.
Strategy
Our strategy is to become a world
leader in developing life‑saving
medicines designed for the prevention
and treatment of serious infections
where we believe there are significant
opportunities. This means considering
products and developments to
expand our portfolio outside the XF
platform, and we demonstrated this
in action through the acquisition of
NTCD‑M3 and our SPOR‑COV
collaboration. For 2021 our focus is
very definitely on progressing our
two lead clinical assets into Phase 3
studies. But we will continue to
consider opportunities which
enhance shareholder value by
broadening our portfolio.
The Board of Destiny Pharma would
like to thank our investors for their
continuing support, and we welcome
those new investors who supported
our November 2020 fundraising.
Nick Rodgers
Chairman
13 April 2021
Our strategy is to
build Destiny Pharma
into a world leader in
developing life-saving
medicines to prevent
and treat serious
infections.
Overview
2020 was a significant year for
Destiny Pharma in many ways. We
completed the acquisition of a clinical
stage asset, raised further funding,
completed the XF‑73 Phase 2b trial
and survived the disruption caused
by the COVID‑19 pandemic. I am
delighted to say that this success has
been reflected in the share price,
particularly since the start of 2021.
Moreover, the COVID‑19 pandemic
has highlighted the importance of
infection prevention for bacterial
pathogens as well as the coronavirus
itself. The global threat of serious,
uncontrolled viral and bacterial
infections has meant that
governments, healthcare
professionals, commercial interests
and investors have increased their
interest in anti‑infectives. It is clear
that our approach of infection
prevention has the potential to
deliver better clinical outcomes
for patients as well as significant
commercial returns and valuation
gains for investors.
4
Clear strategy to build a
focused, world-leading
company
Destiny Pharma’s goal is to become a world‑leading anti‑infective
development company with late‑stage clinical assets and an earlier
discovery pipeline derived from several technologies.
US market focus
Currently developing two late‑stage clinical assets focused on the US
market with additional global opportunities.
Increased global interest
in anti-infectives and
preventing infections
The COVID‑19 pandemic has highlighted the global need for new
anti‑infective medicines – viral and bacterial. Destiny Pharma has been
working in this sector for over a decade and its novel clinical assets and
earlier platform are well placed to deliver much‑needed new medicines.
Late stage clinical assets
with clear commercial
positioning
Two clinical assets heading towards Phase 3 clinical studies based
on strong Phase 2 clinical trial results.
NTCD-M3 de-risked
Phase 2 asset
NTCD‑M3 programme is de‑risked due to quality of Phase 2 data
and recent FDA review of Phase 3 plans.
XF-73 delivered very
positive Phase 2 data
Phase 2 data.
XF‑73 Phase 3 study preparation can also start following the good
Pipeline diversity
Our assets are based on several technologies with small molecule and
biotherapeutic/microbiome programmes. Destiny Pharma moved
into the exciting microbiome area through its acquisition of NTCD‑M3
and its SPOR‑COV collaboration in 2020.
Well funded
Funded through to Q4 2022.
Strategic reportDestiny Pharma plc Annual Report and Financial Statements 2020 Investment proposition
Targeted approach to develop medicines for significant global markets
The Directors believe Destiny Pharma has the following
key strengths which underpin the company’s strategy:
Clear strategy to build a
focused, world-leading
company
Destiny Pharma’s goal is to become a world‑leading anti‑infective
development company with late‑stage clinical assets and an earlier
discovery pipeline derived from several technologies.
US market focus
Currently developing two late‑stage clinical assets focused on the US
market with additional global opportunities.
Increased global interest
in anti-infectives and
preventing infections
The COVID‑19 pandemic has highlighted the global need for new
anti‑infective medicines – viral and bacterial. Destiny Pharma has been
working in this sector for over a decade and its novel clinical assets and
earlier platform are well placed to deliver much‑needed new medicines.
Late stage clinical assets
with clear commercial
positioning
Two clinical assets heading towards Phase 3 clinical studies based
on strong Phase 2 clinical trial results.
NTCD-M3 de-risked
Phase 2 asset
NTCD‑M3 programme is de‑risked due to quality of Phase 2 data
and recent FDA review of Phase 3 plans.
XF-73 delivered very
positive Phase 2 data
XF‑73 Phase 3 study preparation can also start following the good
Phase 2 data.
Pipeline diversity
Our assets are based on several technologies with small molecule and
biotherapeutic/microbiome programmes. Destiny Pharma moved
into the exciting microbiome area through its acquisition of NTCD‑M3
and its SPOR‑COV collaboration in 2020.
Well funded
Funded through to Q4 2022.
5
Strategic reportDestiny Pharma plc Annual Report and Financial Statements 2020 Market opportunity
The company targets clinically important infections
where there is a clear commercial opportunity.
CLOSTRIDIOIDES DIFFICILE
INFECTIONS (“CDI”)
C. difficile bacteria are found in the
environment, including the human
gut and in faeces. Many strains of
C. difficile produce toxins that
cause infectious disease by attacking
the gut lining, resulting in diarrhoea,
abdominal pain, fever and nausea,
known as C. difficile infections
(“CDI”). Spores from toxic strains of
C. difficile bacteria from those
infected can rapidly spread to other
patients in hospitals and care homes.
CDI causes multiple diarrhoea events
per day, which results in severe health
implications, including a high hospital
mortality rate of up to 25% in frail,
elderly people. The current standard
of care does not control recurrence.
The use of antibiotics, such as
generic vancomycin, as a first
line therapy disrupts the patient’s
microbiome and enables toxic forms
of C. difficile to flourish, leading to
a recurrence of CDI.
CDI is a leading cause of
hospital‑acquired infection in the
US and EU and current antibiotic
treatments lead to recurrence of CDI.
There are approximately 500,000
cases of CDI within the US each year
and approximately 25% of these
initial cases then recur within one to
three weeks of completing an
antibiotic course, resulting in around
29,000 deaths in the US per year
alone.
The cost to the US healthcare
system is a significant burden,
costing approximately $6 billion each
year. CDI is not only a US issue, and it
is estimated that there are a similar
number of CDI cases in Europe.
Retreatment of recurrent CDI is often
done with the same or an alternative
antibiotic which often leads to further
CDI recurrence and a vicious cycle of
re‑infection. Our clinical asset
NTCD‑M3 is targeted at preventing
the recurrence of CDI and is planned
to enter Phase 3 studies in 2022.
DERMAL INFECTIONS
XF‑73 is being developed as a
new treatment for diabetic foot ulcer
infections (“DFUs”) to target a market
which is estimated to be a $0.5 billion
global sales opportunity based on the
incidence of such infections, the costs
of the associated medical care and a
realistic product pricing of XF‑73 in this
new market. Driven by the growing
number of diabetics and associated
complications such as infected DFUs,
this represents a significant market
opportunity for XF‑73. As with all
anti‑infectives, AMR is also a concern
within this market.
There is no dominant treatment for
DFUs and specialist physicians are
therefore working to find better
treatment options, including topical
formulations. The target product
profile of XF‑73 tested favourably
with dermal clinicians looking for
better treatments for the smaller
market for burns/wound infections
and venous leg ulcers.
6
Strategic reportDestiny Pharma plc Annual Report and Financial Statements 2020 POST-SURGICAL INFECTIONS CAUSED BY
STAPHYLOCOCCUS AUREUS
Destiny Pharma’s lead product from
its XF platform is exeporfinium
chloride (XF‑73) that focuses on
addressing the medical and financial
cost of infections due to one of the
major Gram‑positive bacteria,
Staphylococcus aureus (S. aureus),
a leading cause of post‑surgical
infection across the world. S. aureus
is frequently found in the nose,
respiratory tract, and on the skin.
Each year, around 500,000 patients
in hospitals of the United States
contract a staphylococcal infection,
chiefly caused by S. aureus.
A third of the human population
carry the bacteria S. aureus in
the nose. S. aureus carriers are at a
significantly higher risk of acquiring
a post‑surgical infection.
The main approach in S. aureus
infection prevention has been to
treat patients who carry the bacteria
prior to surgery to reduce the risk
of infection. This has been achieved
predominantly by the use of
intra‑nasal antibiotics (eg mupirocin)
and antiseptic (eg chlorhexidine)
body washes.
Bode et al demonstrated that
treatment of all S. aureus, (MRSA
and all other strains of S. aureus) in
higher risk surgeries led to a >60%
reduction in post‑surgical S. aureus
infections. The recognition of the
benefit of treatment of all S. aureus
represents about a six‑fold increase in
the patient population benefiting, a
figure of >20 million per year in the
USA and Europe alone.
Destiny Pharma has undertaken
independent market research that
confirmed that XF‑73’s target product
profile is superior when compared to
mupirocin, with the potential to
replace mupirocin as the preferred
treatment. Destiny Pharma believes
that there is significant demand for
the XF‑73 product and has identified
the following additional drivers
for adoption:
• current practice guidelines have
identified patient populations that
can benefit while highlighting that
antibiotic resistance as an issue
with current products;
• US general, acute care and
short‑term hospitals with the
highest MRSA infections can
have 1% of their Medicare
reimbursements withheld;
• US hospital administrators
incentivised to reduce infection
to ensure high ratings in
rankings tables;
• XF‑73 has QIDP and Fast Track
regulatory status in the US and also
benefits from five years of extra US
market exclusivity; and
• XF‑73 could be the first drug
approved into a new US indication
with first‑to‑market advantages.
As XF‑73 is differentiated from
antibiotics due to its superior bacterial
resistance profile, it is likely that its use
can be widespread, preserving
antibiotic use, and could potentially
be used without the need for bacterial
screening. In this respect, XF‑73 can
be viewed as a preventative drug more
akin to vaccines than antibiotics.
WHO lists antibiotic
resistance as a top
global concern
UK and US
governments started
new initiatives in 2020
to support drug
development
addressing AMR
COVID-19 pandemic
has highlighted need
for new anti-infectives.
Many of the reported
deaths from the virus
also have bacterial
infections
7
Strategic reportDestiny Pharma plc Annual Report and Financial Statements 2020 Market opportunity continued
Infections caused by antibiotic resistant
strains of bacteria continue to rise at an
alarming rate and are of serious concern
to the WHO.
ANTIMICROBIAL RESISTANCE
It will also have a cumulative cost
of $100 trillion, more than one and
a half times annual world GDP today.
New antibiotics will “buy time”,
however perhaps more importantly
we need to adopt strategies that may
reduce the emergence of AMR
strains. At Destiny Pharma, one such
strategy is being developed in the
form of a new group of antibacterial
drugs, “the XF Drug platform”,
whose novel, ultra‑rapid mechanism
endows them with the extraordinary
ability to reduce the chance of
bacteria becoming resistant to
their action.
Infections caused by antimicrobial
resistant (“AMR”) strains of bacteria
continue to rise at an alarming rate.
They pose a threat to humanity.
Antibiotics represent the foundation
for all modern medicine. However,
this has been taken for granted and
now we find that bacteria have
become resistant to almost every
antibiotic developed by man and
the vast majority of bacterial
infections are now caused by
AMR strains. These AMR bacteria,
dubbed as “Superbugs”, are harder
to treat, cause greater mortality,
and additional cost, to
the healthcare system.
Unless action is taken to address this
huge global issue, the Independent
Review on Antimicrobial Resistance
(Lord O’Neill) estimates that it will
cost the world an additional 10 million
lives a year by 2050, more than the
number of people currently dying
from cancer annually.
Our SPOR‑COVTM prophylactic
approach targets the innate immune
system with the potential to develop
COVID‑19 protection within a
few days of treatment.
COVID-19
COVID‑19 is a new respiratory virus
affecting the lungs and airways that
has caused a major global pandemic.
There is an urgent need for new
treatments for COVID‑19 and related
viral infections. Coronaviruses
(“CoV”) are a large family of viruses
that cause illness ranging from the
common cold to more severe
diseases such as Middle
East Respiratory Syndrome
(“MERS‑CoV”) and Severe Acute
Respiratory Syndrome (“SARS‑CoV”).
8
Strategic reportDestiny Pharma plc Annual Report and Financial Statements 2020 Many initiatives to spur the development and approval
of new antibiotics/antibacterial drugs are under consideration.
The US and UK governments are particularly active in this area.
Key initiatives in recent years are set out below:
21st Century Cures Act,
December 2016 (US)
Instructs the FDA to enable approval of QIDPs in limited patient populations
which will allow more efficient clinical trial design and greater ease of drug
approval for a limited label population.
G20 Declaration, May 2017
Recognised the importance of reactivating the R&D pipeline through
incentive mechanisms that avoid the reliance on high price/volume
combinations and the need to promote prudent and responsible use
of antimicrobials.
Davos announcement,
February 2018
$1 billion rewards proposed at Davos 2018 for new antibiotics: the study,
titled “Revitalizing the Antibiotic Pipeline: Stimulating Innovation while
Driving Sustainable Use and Global Access”, was produced by an
international group made up of 23 partners from big pharma,
academic institutions and public health organisations.
Five‑year AMR Plan, January 2019
The UK government announced its 20‑year vision and second five‑year
action plan on AMR which outlines how the government will contribute
to the global effort against AMR through optimising use of antimicrobials
and investing in innovation, supply and access.
NHS England launch antibiotic
subscription model, July 2019
NHS England is collaborating with the National Institute for Health
and Care Excellence (“NICE”) on a pilot project under which NHS England
will buy two antibiotics on a delinked (volume‑ and usage‑independent)
subscription model basis. The new payment model is intended to incentivise
pharmaceutical companies to develop new drugs for resistant infections.
The first two drugs selected were announced in early 2021.
NTAP Reform, August 2019
The US government reformed the existing new technology add‑on payments
(“NTAPs”) to include an alternative pathway for novel antibacterial drug
payments. The changes increase the value of these payments to 75% for
products that obtain Qualified Infectious Disease Product (“QIDP”) status.
Developing an Innovative
Strategy for Antimicrobial Resistant
Microorganisms (“DISARM”) Act,
currently going through US
legislative process
The DISARM Act is currently making its way through the US legislative
process and is intended to improve critical Medicare reimbursement for
antibiotics and promote their appropriate use. The legislation has
the potential to stabilise the antibiotics market, spur the development
of new infection‑fighting drugs, and preserve the effectiveness of
existing medicines.
The Pioneering Antimicrobial
Subscriptions To End Upsurging
Resistance (“PASTEUR”) Act,
introduced October 2020
The Pioneering Antimicrobial Subscriptions To End Upsurging Resistance
(“PASTEUR”) Act will support the development of new antibiotics and
promote appropriate use of existing ones, helping to limit the increase and
spread of resistant infections. PASTEUR would establish an innovative way
to pay for critically needed new antibiotics, delinked from the sales or use
of those antibiotics with a subscription model providing federal payment
to companies that develop antibiotics.
9
Strategic reportDestiny Pharma plc Annual Report and Financial Statements 2020 Business model
Building shareholder value through drug development
Using a flexible, virtual model to create
novel IP and clinical data packages.
Collaborations
Destiny Pharma is committed to reach
out and work with sector specialists
at all stages of the drug research and
clinical development process where
such collaborations will advance
projects and deliver shareholder
value. These currently include
in‑licensing deals such as NTCD‑M3,
business collaborations (SporeGen
and CMS), grant‑funded university
research partnerships, formulation
development and projects examining
our drug candidates’ interaction
with other anti‑infectives or
potentiation mechanisms.
Research
projects
Investors
Drug
pipeline
assets
Funding
Clinical
programmes
Partners/
collaborators
Grants and
non-dilutive
funding
Focus
Commercialisation
Funding
Destiny Pharma is committed to
developing new drugs that will be a
significant improvement on current
anti‑infectives and that will be part
of the global project to address AMR.
Destiny Pharma does not intend
to build a sales and marketing
infrastructure so will keep its focus as
a “drug development engine” in its
chosen therapeutic areas. Destiny
Pharma has already proven it can
develop intellectual property, identify
lead candidates and bring selected
compounds through early testing to
be ready for later stage clinical trials.
Whilst Destiny Pharma takes great
care to assess the needs of the
clinician in the anti‑infectives sector,
it also investigates the commercial
markets, looking at potential market
volumes and pricing implications.
The reports produced guide the
portfolio review and the selection
of target indications. Destiny Pharma
is looking to partner later stage
Phase 3 projects with expert sales
and marketing pharma or specialty
pharma companies who can support
the later stage clinical trials and carry
out product launches and sales to
maximise value creation.
Destiny Pharma has a track record
of raising funds in both private and
public markets. The company also
seeks to leverage equity funding with
non‑dilutive funding. Five grants and
other non‑dilutive funding awards
totalling over £2.5 million have been
won since the IPO in September 2017.
Destiny Pharma is funded through
to Q4 2022 and will continue to
seek non‑dilutive funding and
partnerships that may generate
cash income and/or bring funding
support to collaborative projects.
10
Strategic reportDestiny Pharma plc Annual Report and Financial Statements 2020 Our strategy in action
The company has made significant progress in 2020.
Progress in period
under review
Targets for 2021
and beyond
The company expanded the
pipeline with the addition of
the NTCD‑M3 and SPOR‑COV
programmes. These new assets
also add two new biotherapeutic/
microbiome technologies alongside
the existing XF platform.
The SPOR‑COV collaboration
brings an anti‑viral approach to add
to the anti‑bacterial programmes.
Continue to look at expanding
the pipeline if suitable assets can
be found. However, progressing
the existing pipeline will also
expand the research and
development activity.
Retained focus on infection
prevention and selecting new
assets with a clear clinical need
and clear commercial opportunity.
The new biotherapeutic assets
add to the company’s footprint
but the plan is to remain focused
on infection prevention and
hospital/care home markets.
The XF‑73 nasal Phase 2b study
completed recruitment against the
backdrop of COVID‑19. The earlier
XF pipeline also progressed and
additional grant awards have been
won to help fund these projects.
We announced strong Phase 2b
clinical trial results for XF‑73 nasal
and can now finalise the Phase 3
plan. Progress NTCD‑M3 through
2021 so it is ready to start Phase 3
studies in 2022.
The China Medical Systems
collaboration has progressed
and certain pre‑clinical work is
being carried out in China.
An equal partnership was signed
with SporeGen in 2020 to work
on the SPOR‑COV COVID‑19
grant‑funded collaboration.
Add new commercial and
grant‑funded collaborations
in 2021.
BUILD
FOCUS
DEVELOP
PARTNERSHIPS
VALUE CREATION
The progress made with
the XF platform and the new
biotherapeutic assets has been
reflected in an increase in share
price and company valuation in
the period.
The expanded pipeline offers
increased opportunities for
future value creation. This will
be driven by the two lead clinical
programmes – XF‑73
and NTCD‑M3.
11
Strategic reportDestiny Pharma plc Annual Report and Financial Statements 2020 CEO’s operational and strategic review
Destiny Pharma’s strategic aim
is to become one of the leading
developers of medicines that target
the prevention of life-threatening
infectious disease.
Neil Clark
Chief Executive Officer
Our biotherapeutic programmes
and the human microbiome
The microbiome represents a
paradigm shift that affects every
aspect of biomedicine: our gut
bacteria control health, disease and
drug responses throughout the body,
and can themselves be a novel type of
medicine. The microbiome therefore
has the potential to be a major new
therapeutic modality.
NTCD-M3 Clostridioides
difficile programme
NTCD‑M3 was developed by
GI infection physician Professor
Dale Gerding, who is a world‑leading
specialist in C. difficile, with more
than 400 peer‑reviewed journal
publications, book chapters and
review articles in the area. NTCD‑M3
has successfully completed Phase 1
and Phase 2b trials. The Phase 1
study demonstrated a strong
safety/toxicology profile and the 95%
prevention of CDI recurrence. Phase
2b NTCD‑M3 data was published in
the prestigious Journal of the
American Medical Association
(Gerding DN et al JAMA
2015;313:1719).
NTCD‑M3 has also been
awarded Fast Track status by
the FDA. Destiny Pharma acquired
global rights to the NTCD‑M3
programme in November 2020.
NTCD-M3 mechanism
of action harnesses the
human microbiome
NTCD‑M3 is a naturally occurring
non‑toxigenic strain of C. difficile
bacteria, which lacks the genes that
can express C. difficile toxins. It is an
oral formulation of NTCD‑M3 spores
and patients who have taken
NTCD‑M3 were found to be protected
from C. difficile infections. NTCD‑M3
acts as a safe “ground cover”
preventing toxic strains of C. difficile
proliferating in the colon after
antibiotic treatment. NTCD‑M3
temporarily colonises the human gut
without causing any symptoms and
the gut microbiome returns to normal
a few weeks after treatment.
The Phase 2 data from a completed
study with NTCD‑M3 was very
promising. The study was a
randomised, double‑blind,
placebo‑controlled trial, among
173 patients aged >18 years, who
were diagnosed as having
CDI (either a first episode or first
recurrence). The results were a
strong, statistically significant data set
showing rapid onset of colonisation
which provided protection during the
early post‑treatment period, making it
an ideal complement to a vaccine and
other antibiotic treatments. The rate of
recurrence (“RR”) of CDI after
treatment with the best dose of
NTCD‑M3 was only 5%, (placebo 30%)
p<0.01. The company believes this is
compelling efficacy compared
with clinical trial data from
other approaches.
Destiny Pharma is
clearly differentiated
from traditional
approaches where
commercialisation and
investment returns
from anti-infectives
have been limited.
We believe that XF‑73, the lead
drug candidate from our XF platform,
has a target product profile that is very
attractive to hospital infection experts.
There are many millions of hospital
operations in the US alone where a
new drug is needed to help prevent
infections. There have also been
several independent papers published
in 2020 from experts in the US, Europe
and Asia that support the clinical need
for XF‑73 and the market potential of
such a preventative approach.
The company’s recent acquisition
of NTCD‑M3 for the prevention of
CDI is also focused on infection
prevention and very well positioned
as a targeted, naturally occurring
bacterial therapy for these serious
gut infections.
The NTCD‑M3 programme also
brings the company into the exciting
area of the human microbiome and
biotherapeutics, which is a fast
developing area of medical science
and investigation for new therapies.
12
Strategic reportDestiny Pharma plc Annual Report and Financial Statements 2020 Total annual CDI hospital management required nearly
2.4 million days of inpatient stay. This is a significant
burden on the US healthcare system.
The company has held discussions
with the FDA as part of Type C
meetings and this has clarified certain
manufacturing scale up activities that
are important for such a late‑stage
clinical project and also the Phase 3
design. We are pleased that the FDA
meeting confirmed that a single Phase
3 study is required as a randomised,
double‑blind, placebo‑controlled trial.
The company has undertaken market
research to assess the US market size
for prevention of recurrence
indication. The only approved drug
is Merck’s Zinplava that is expensive
and reimbursed at c.$3,700, which
inhibits its uptake. It is expected that
NTCD‑M3 could be priced at $1,500,
delivering estimated peak US sales
of c.$200 million.
It requires 800 patients in 2:1
randomisation (550 active, 250
placebo) and the primary endpoint
would be the rate of recurrence of
CDI at six weeks post‑treatment in
adult patients treated with
antibiotics for a first episode
or first recurrence of CDI.
The treatment regimen will be an
oral capsule of an NTCD‑M3 dose of
107 spores (or placebo) once daily
for seven days starting after the
last antibiotic course.
Sampling will take place to confirm
NTCD‑M3 colonisation, assess
changes in the faecal microbiome
during treatment with NTCD‑M3 and
the recurrence rate of CDI. The plan is
to complete the manufacturing tech
transfer and set up in 2021 and,
subject to funding, start Phase 3
recruitment in 2022 and finish
in 2024.
The market for Europe and the rest of
the world is estimated by Destiny
Pharma to be a similar size, so global
sales per annum of c.$0.5 billion could
be achieved.
There is also the potential for
additional indications (prevention
/multiple recurrence) that could
double the peak sales to
c.$1 billion per annum.
The extra costs of care in the US per
CDI patient range from $10,000
to $20,000 and the total annual
CDI‑attributable cost in the US alone
was estimated in 2016 at $6.3 billion.
Total annual CDI hospital
management required nearly
2.4 million days of inpatient stay.
This is a significant burden on
the US healthcare system.
In summary, the key advantages
of NTCD-M3 are:
• clinical data appears superior
to all current treatments and
drugs in development;
• can be used as an adjunct to any
standard of care CDI antimicrobial
/antibiotic therapy;
• strong safety profile, simple to
administer as a solid capsule once
daily and rapidly effective;
• first line therapy – not limited
for use by the FDA to treat CDI
“not responding to standard
therapies” as is the case for Faecal
Matter Transplants (“FMT”) and
their derivatives;
• avoids concern about the
long‑term safety of permanently
altering the microbiota of patients
who receive FMT since NTCD‑M3
has a maximum detection period
in the stool of 22 weeks,
an indication that the patient’s
own microbiota has recovered; and
•
low cost of goods – long shelf life
– lower treatment costs.
13
Strategic reportDestiny Pharma plc Annual Report and Financial Statements 2020 CEO’s operational and strategic review
continued
Our SPOR-COV collaboration is funded
by an £800,000 Innovate UK grant.
SPOR-COV COVID-19 programme
The SPOR‑COV prophylactic
approach targets the innate immune
system with the potential to develop
COVID‑19 protection within a few days
of treatment. The product consists of
a proprietary formulation of Bacillus
bacteria that will be administered
nasally as a spray. SPOR‑COV has
already been shown by SporeGen to
provide complete (100%) protection
in pre‑clinical models of influenza.
SPOR‑COV is different to vaccines
in that it utilises the innate immune
system with the aim of developing
COVID‑19 protection within a few days
after dosing. As an “easy to use” first
line of defence, it has the potential to
reduce COVID‑19 infection rates and
transmission significantly. The final
SPOR‑COV product is planned to
be straightforward to produce at
both high volumes and at low cost.
Additional attributes are that it can be
stockpiled almost indefinitely without
the need for cold chain refrigeration
as it is a very stable product. It could
be made available globally as a
cost‑effective measure in the fight
against COVID‑19 as well as new
COVID strains and other
respiratory viral infections.
In September, Destiny Pharma
announced that Innovate UK (“IUK”)
awarded a grant of £800,000 to fund
the majority of the £1 million cost of
the initial SPOR‑COV programme.
The pre‑clinical efficacy work is
being performed in collaboration
with Professor Aras Kadioglu, at the
University of Liverpool, who is
Professor of Bacterial Pathogenesis
in the Department of Clinical Infection,
Microbiology & Immunology,
where he heads the Bacterial
Pathogenesis and Immunity group
and is a leading expert in respiratory
infection models and host immunity
to infection.
The manufacturing and formulation
development work will be carried out
by HURO, an experienced
manufacturer of bacterial product
formulations based in Vietnam and
part of PAN Group.
The plan is to complete the required
pre‑clinical safety and efficacy studies
and also develop the manufacturing
process by early 2022 and be ready
to commence the first human clinical
studies thereafter.
Our XF platform
The XF platform presents the
opportunity to deliver “prevention
rather than cure” at sensible pricing
whilst delivering safe, effective
anti‑infective treatments that
also address the issue of AMR.
The company’s XF intellectual
property is well established and
is still being expanded. Currently,
Destiny Pharma has 85 granted and
two pending patents within three
patent families, covering composition
of matter, novel mechanism of action
and bacterial biofilm action.
The Board believes that the increasing
governmental pressure and financial
incentives that are being implemented
by leading institutions such as the
WHO, UN, FDA and G7/G20 will
further increase the options available
for profitable commercialisation and
the generation of shareholder value.
The UK and US governments are
taking the lead here in the last
twelve months by introducing
new regulations with clear financial
incentives that may be available for
novel anti‑infectives such as those
being developed by Destiny Pharma.
14
Strategic reportDestiny Pharma plc Annual Report and Financial Statements 2020 The key potential benefits of
the XF platform are significant:
• ultra‑rapid bacteria kill: Studies
have shown the XF drugs killing
bacteria in vitro in less than
15 minutes; faster acting than
standard antibiotics currently
in use;
• ability to kill bacteria in any growth
phase: This is an important feature
as bacteria are not always actively
growing. XF drugs can kill bacteria
even when dormant;
• ability to kill bacteria within
bacterial biofilms: Biofilms are an
increasing problem that are poorly
treated by current drugs as they
act as a protective barrier for
bacteria. They are associated
with indwelling medical devices;
• active against all Gram‑positive
bacteria tested to date and
selected Gram‑negative bacteria:
This includes clinically important
and infection‑causing strains,
such as: Staphylococcus aureus,
Listeria monocytogenes,
Propionibacterium acnes,
Group G Streptococcus,
Mycobacterium tuberculosis,
Streptococcus pneumonia,
Bacillus anthracis; Yersinia
pestis; Acinetobacter baumannii;
Pseudomonas aeruginosa; and
Clostridium difficile; and
• no bacterial (MRSA) resistance
is seen to emerge: No bacterial
(MRSA) resistance was seen to
emerge in a landmark in vitro
study of bacterial resistance
that compared XF‑73 to standard
antibiotics currently in use.
Clinical data underpinning the
XF-73 nasal programme is strong
The recent announcement of positive
Phase 2b results confirm the potential
of XF‑73 gel. XF‑73 (exeporfinium
chloride) was awarded Qualified
Infectious Disease Product (“QIDP”)
status by the FDA in 2015. Within the
QIDP award, the FDA also confirmed a
new US disease indication for XF‑73;
namely the “prevention of
post‑surgical staphylococcal
infections”, including MRSA. This
represents a new US market for which
no existing product is approved.
“ It is highly recommended that US surgeons
perform nasal decolonisation prior to
surgery on all cardiac surgical patients.
Rating 1A – the highest possible.”
Guidelines for Perioperative Care in Cardiac Surgery: Enhanced Recovery
After Surgery Society Recommendations – Daniel T. Engelman, MD; Walid
Ben Ali, MD; Judson B. Williams, MD, MHS; et al 2020
There are 41 million
surgeries per year in
the US, half of which
are at a high risk
of infection
15
Strategic reportDestiny Pharma plc Annual Report and Financial Statements 2020 CEO’s operational and strategic review
continued
The recently completed Phase 2b
study was a multi‑centre, randomised,
placebo‑controlled study of multiple
applications of a single concentration
of XF‑73 nasal gel to assess the
antimicrobial effect of XF‑73 on
commensal Staphylococcus aureus
nasal carriage in patients scheduled
for surgical procedures.
Destiny Pharma’s experience in
carrying out this clinical study has
confirmed the increasing compliance
in US hospitals with best practice,
whereby patients are screened, and
carriers of Staphylococcus aureus are
decolonised prior to surgery. This is
very supportive of the potential sales
in the initial market for XF‑73 nasal
gel in the large US hospital
surgery market.
Clinical data underpinning the
XF-73 nasal programme is strong
continued
QIDP status identifies XF‑73 as
a drug that is intended to treat
serious or life‑threatening infections,
including those caused by antibiotic
resistant pathogens. The FDA also
awarded XF‑73 nasal Fast Track
status in 2019, recognising it as a
priority drug for US development.
Destiny Pharma has now completed
seven successful Phase 1/2 clinical
trials in over 300 subjects with XF‑73,
which included measures of its
efficacy in reducing nasal colonisation
by Staphylococcus aureus.
Efficacy conclusion – very strong Phase 2b data supporting XF-73 target product profile (“TPP”)
• XF‑73 reduced the mean nasal burden of S. aureus in patients undergoing open chest open heart surgery by
2.5 log (99.5% reduction) in the 24 hours immediately before surgery in the micro‑ITT population. The effect
was maintained during surgery, considered the period when the risk for infections is the highest.
• XF‑73 showed 2.1 log (99.2%) greater reduction than placebo in the same patient population and this difference
in reduction of nasal burden of S. aureus was statistically significant (p<0.0001) in both the micro‑ITT and per
protocol populations.
• A significantly higher reduction of burden of nasal S. aureus in XF‑73 arm compared to placebo arm in the 24 hours
before surgery was also observed when the data was analysed by AUC. This higher reduction was also seen when
analysing the percentage of patients reaching a specific log value over time.
XF-73 on track to deliver compelling target product profile (“TTP”)
Ideal nasal
decolonisation
product attributes
Easy to apply, safe gel
XF-73 TPP claims
Evidence
Specifically designed for nose.
Non‑irritant, no side effects.
Good compliance
Seven clinical studies including
P1 dermal sensitivity/irritancy.
Plus latest P2 safety data
Fast acting, targeting all
S. aureus strains and killing
for period of risk
All antibiotic strains of S. aureus
including MRSA/biofilms.
Sub‑15 minute kill. Novel MOA
Extensive microbiology updated
on regular basis. Several
published papers. Phase 2b
shows high efficacy after
four doses in 24 hours
Easy to use in hospital
environment
Fits into existing protocols with
high patient/medical staff
compliance
Phase 2b trial data and
feedback. Market research
studies
Stable, low‑cost product
Stable gel stored at room
temperature. Mature production
process
Multi‑kg process established.
Pricing tested by market
research. Low COGS forecast
Addresses AMR threat
Does not create resistance/
superbugs. S. aureus/MRSA
not resistant to XF‑73
Published “passage” studies
supported by peer reviews and
testing of clinical samples
ü
ü
ü
ü
ü
16
Strategic reportDestiny Pharma plc Annual Report and Financial Statements 2020 The medical need to combat
surgical infections is significant
Patient carriage of Staphylococcus
aureus strains, including MRSA,
is recognised as a growing problem
and the testing of patients entering
hospital for surgery is widespread
in many countries, including the
US. Landmark outcome studies
(Bode et al 2010) have demonstrated
that reduction of all strains of
Staphylococcus aureus can
significantly reduce the post‑surgical
infection rate by 60% and
reduce mortality.
In response to these and other
findings, the US Surgical Infection
Society (“SIS”), the Society for
Hospital Epidemiologists of America
(“SHEA”), the Infectious Disease
Society of America (“IDSA”) and
the American Society of Hospital
Pharmacists (“ASHP”) published
guidelines recommending that in
the US all Staphylococcus aureus
(including MRSA) carriers should be
decolonised in all cardiovascular
and most orthopaedic surgeries.
AHRQ/IDSA/SHEA recommended
an even more aggressive treatment
strategy, universal decolonisation
(“UD”) of all intensive care unit
(“ICU”) patients without screening,
awarding a Grade I (highest) level of
evidence rating. US hospital groups,
including the Hospital Corporation of
America, are now implementing UD
for all patients entering the ICU.
In 2020, the Journal of the American
Medical Association (“JAMA”)
published updated guidelines that
instruct US surgeons to perform
topical intranasal decolonisation prior
to surgery with the highest strength,
IA recommendation.
This publication advocates
improving recovery after surgery and
the recommendation was clear that
topical therapy be applied universally
to all cardiac surgical patients, not
only Staphylococcus aureus carriers.
This is clear support for the approach
proposed by Destiny Pharma with
XF‑73 nasal gel.
In Europe, similar guidelines exist
recommending decolonisation of
Staphylococcus aureus positive
patients prior to certain surgeries.
The antibiotic mupirocin is often used
off‑label in the US for these
applications, although it has two key
disadvantages in that it is slow acting,
requiring five days of dosing,
and staphylococcal resistance to
mupirocin can develop rapidly and
become widespread. Consequently,
many guidelines are accompanied
with a resistance warning related to
mupirocin use. In 2020 another new
review concluded that global
mupirocin‑resistant Staphylococcus
aureus prevalence had increased to
7.6% and that mupirocin‑resistant
MRSAs have increased by 13.8% and
consequently the monitoring of
mupirocin use remains critical.
Destiny Pharma believes this is clear
support for the need for an alternative
treatment for nasal decolonisation as
presented by the XF‑73 programme.
(Ref. Mupirocin Resistance in
Staphylococcus aureus: A Systematic
Review and Meta‑Analysis – Dadashi
et al 2020).
Guidelines support need for XF-73 nasal product
“Perform topical intranasal
decolonisation prior to surgery”
(Highest level recommendation).
For enhanced recovery after
surgery it is recommended
that topical therapy be applied
universally to all cardiac surgical
patients, not only S. aureus carriers.
Guidelines for Perioperative
Care in Cardiac Surgery: Enhanced
Recovery After Surgery Society
Recommendations (Engelman et
al 2019)
New Asian guidelines recommend
decolonisation of S. aureus in
surgical patients to prevent
surgical site infections.
Guidelines warn of issue of
antibiotic resistance highlighting
the need for new approaches.
APSIC Guidelines for the
Prevention of Surgical Site
Infections (Ling et al 2019)
Global mupirocin-resistant
S. aureus prevalence has
increased to 7.6% and
mupirocin-resistant MRSAs
significantly increased to 13.8%.
Monitoring of
mupirocin-resistance
development remains critical.
Mupirocin resistance in
Staphylococcus aureus:
A Systematic Review and
Meta‑analysis (Dadashi et al 2019)
17
Strategic reportDestiny Pharma plc Annual Report and Financial Statements 2020 CEO’s operational and strategic review
continued
XF-73 nasal gel can be priced competitively, has an excellent
safety profile and addresses the key challenge of AMR.
The target market represents a $1 billion sales opportunity.
Outlook
The strong balance sheet will provide
Destiny Pharma with working capital
through to Q4 2022 enabling it to
complete the preparation of NTCD‑M3
for its single Phase 3 study. Following
the recent positive Phase 2b clinical
trial results for XF‑73 nasal, Phase 3
preparation can now start and the
successful Phase 2b results will enable
us to deliver a strong package for
potential partnering discussions
and will assist in planning the
further Phase 3 development with
regulatory authorities.
Our cash resources are also being
used to develop new clinical
candidates from the preclinical XF
pipeline, contribute to our COVID‑19
SPOR‑COV project and to capitalise
on commercial opportunities including
additional grant funding, partnering
and licensing. Destiny Pharma will
continue to establish discovery stage
research programmes through existing
and new collaborations and, where
possible, seek additional non‑dilutive
funding support as it has done
successfully in the period under review.
During the coming year we will also
progress our financial strategy for
funding the Phase 3 clinical studies for
our two lead assets planned to start in
2022. This will include actively seeking
partners as well as exploring
alternative funding options.
Destiny Pharma now has a great
opportunity as a focused UK
biotechnology company with full
control of two high quality clinical
assets targeted at infection prevention
and backed up by strong Phase 2
clinical data and clear commercial
positioning. The Board and employees
are excited about the next stage in
the company’s development and
delivering on our strategy to build
a world leading infection
prevention company.
Neil Clark
Chief Executive Officer
13 April 2021
The commercial opportunity for
XF-73 is over a billion dollars
There is a significant market for a new
drug that can assist in the “prevention
of post‑surgical staphylococcal
infections”, particularly in the US.
There are approximately 41 million
surgeries per year in the US alone,
all of which expose patients to the
risk of post‑surgical infections.
The market analysis undertaken
by Destiny Pharma and its specialist
consultants supports the view that
XF‑73 could achieve annual peak
sales in the US alone of over $1 billion
and peak sales in Europe and
the rest of the world could be
$500 million for the initial indication
of “prevention of post‑surgical
staphylococcal infections”.
The most recent independent
review carried out in 2019 updated
the company’s understanding of
current US clinical practice, the
competitor environment for the
proposed XF‑73 nasal gel formulation,
pricing sensitivities and the payers’
assessment of the target product
profile (“TPP”) of XF‑73.
The study conclusions were very
encouraging and reported that the
sample of US treaters (surgeons,
infectious disease specialists and
ICU specialists) and payers (hospital
medical directors, pharmacy services
directors, microbiologists and clinical
directors) who were consulted
confirmed that XF‑73’s target
product profile is superior when
compared to existing treatments.
This included off‑label use of
the antibiotic mupirocin, with the
conclusion being that XF‑73 has the
potential to replace mupirocin as the
preferred treatment. There was also
strong support for a pricing strategy
that could be at the higher end of
previous assumptions.
18
Strategic reportDestiny Pharma plc Annual Report and Financial Statements 2020 Financial review
We successfully advanced and expanded
our development programmes whilst
carefully managing our cash resources
during 2020. Funds raised to acquire
NTCD-M3 further strengthened the
company’s balance sheet at the year end.
Our key focus during 2020 was on
progressing our lead XF‑73 nasal gel
programme through a Phase 2b clinical
trial, which accounts for the majority of
our R&D spend during the year. Despite
the impact of the COVID‑19 pandemic
on activity levels we successfully
completed patient recruitment into the
study during December and reported
positive data at the end of March 2021.
We also continued to develop our
earlier programmes in conjunction
with our research partners and were
pleased to announce two further
grant‑funded collaborations, with
Cardiff University and SporeGen Ltd,
during the year.
In November we announced that we
had successfully raised equity funding
of £10.4 million to acquire the global
rights to NTCD‑M3, a Phase 3 ready
asset for prevention of C. difficile
infection (“CDI”) recurrence. The initial
acquisition cost of £2.3 million has been
recognised as an intangible asset in the
balance sheet at 31 December 2020.
Future development milestones
payable under the terms of the licence
will be recognised within intangibles at
the time they are paid. In addition to
the initial acquisition cost, net funds are
being used to complete the preparation
of NTCD‑M3 for its single Phase 3
clinical study and for general working
capital purposes. We were very pleased
to receive support from both existing
and new investors in bringing this
attractive late stage asset into our
portfolio during the year.
Shaun Claydon
Chief Financial Officer
Revenue
Destiny Pharma is a clinical stage
research and development company
and is yet to commercialise and
generate sales from its current
programmes.
The company received grant income
of £0.01 million (2019: £0.3 million)
during the period.
Administrative expenses
Administrative expenses, which exclude
the share‑based payment charge of
£0.1 million (2019: £0.2 million) during
the period, amounted to £6.4 million
(2019: £5.7 million). Included within this
total are R&D costs totalling £4.5 million
(2019: £3.8 million) which reflect,
in particular, the increase in activity
in relation to our Phase 2b clinical trial.
Other administrative costs remained
flat at £1.9 million (2019: £1.9 million)
reflecting a reduction in overhead
costs due to reduced activity levels
brought about by COVID‑19, which
were offset by one‑off corporate costs
in relation to the NTCD‑M3 acquisition.
Taxation
The company received a repayment of
£0.8 million in respect of the R&D tax
credit claimed during the year ended
31 December 2019. The R&D tax
credit receivable in the balance
sheet of £1.1 million is an estimate
of the cash repayment the company
expects to qualify for in respect of
activities during the year ended
31 December 2020.
However, as at the date of this report,
these amounts have not yet been
agreed with HMRC.
Loss per share
Basic and diluted loss per share for the
year was 12.0 pence (2019: 10.7 pence).
Cash, cash equivalents
and term deposits
The company’s cash, cash
equivalents and term deposits at
the year end totalled £9.7 million
(2019: £7.5 million).
The net cash outflow from operating
activities in 2020 was £5.5 million
(2019: £4.6 million) against an
operating loss of £6.5 million
(2019: £5.5 million), with the major
reconciling items being the non‑cash
charge for share‑based payments of
£0.1 million, the R&D credit received
of £0.8 million and other net
movements in working capital
of £0.1 million.
Net proceeds (after expenses) from
the equity fundraise of £9.6 million
were applied to the initial upfront
payment of £2.3 million to acquire
NTCD‑M3, with the balance included
in the company’s year‑end
cash reserves.
Outlook
The company remains financially
robust and well positioned to advance
the development of its lead assets
and earlier pipeline during 2021 with
an estimated cash runway to Q4 2022.
Shaun Claydon
Chief Financial Officer
13 April 2021
19
Strategic reportDestiny Pharma plc Annual Report and Financial Statements 2020 Risks and uncertainties
Destiny Pharma’s business is subject to a number of risks and
uncertainties in common with other biotechnology companies
operating in the field of drug research and development.
The management of risk is a key responsibility of the Board of Directors. The Board ensures all risks are understood
and appropriately managed and that a robust risk management process is maintained to identify, quantify, minimise
and manage important risks. The company operates a comprehensive risk register, overseen by the Audit Committee,
which identifies risks, prioritises them by likelihood and impact, and records the actions needed to mitigate and monitor
those risks. The Board is also prepared to act swiftly to formulate contingency plans to manage the situation if any
risk materialises.
Operational risk management
To effectively manage the business,
including risks, the company regularly
reviews the progress of key activities
as follows:
• the Board of Directors meets
regularly and reviews operational
progress against the company’s
strategy and key objectives;
• the Audit Committee meets
regularly and reviews the risk
register and mitigation plans to
ensure these remain appropriate;
and
• senior management and quality
teams meet on a monthly basis to
discuss operational progress and,
during these meetings, identify
and discuss areas of risk and
communicate these to the
Board as appropriate.
The principal risks and uncertainties identified by Destiny Pharma in the year
ended 31 December 2020 are set out below:
COMMERCIAL
Commercial risks which may have an impact on the company’s ability
to commercialise its products and deliver value to shareholders.
OPERATIONAL
Operational risks which may impact on the company’s ability to deliver
on its objectives.
FINANCIAL
Financial risks which may impact on the sustainability or liquidity
of the company – affected by internal or external risks.
C
O
F
Principal risk
Category
Mitigation
Technical, clinical or regulatory
milestones may not be delivered
successfully, leading to delays,
changes or the abandonment
of development programmes.
There may also be changes in the
regulatory environment that can
impact the approval of clinical
trials and product filings.
Clinical studies may not give
the expected results, leading to
a requirement to run additional
clinical trials (at additional,
unexpected cost), or programmes
being delayed or abandoned.
20
O
O
These are inherent risks in drug development.
To mitigate the risks, the Scientific Advisory Board,
expert consultants and management will regularly review
project progress, industry guidelines and manage any
issues. The company also works with expert regulatory
consultants to monitor the latest regulations and planned
changes to the regulatory environment.
The company plans to develop and in‑licence a range
of products to reduce reliance on its lead asset. During
the year we acquired NTCD‑M3, a Phase 3 ready asset
for the treatment of recurrence of Clostridioides difficile
infections. Clinical trials are designed to ensure that
meaningful and relevant data is produced. Trials are closely
monitored to manage timelines and cash requirements.
Strategic reportDestiny Pharma plc Annual Report and Financial Statements 2020 Principal risk
Category
Mitigation
Inability to raise sufficient
capital when needed may lead
to delays, reduction or abandoning
development programmes.
Changes to tax legislation
may reduce the availability of
tax credits on R&D expenditure.
This could reduce R&D tax refunds
on eligible expenditure and
adversely affect the company’s
cash flow and cash runway.
Destiny Pharma may not be
able to enter into partnering
relationships for the
commercialisation of
its drug pipeline assets.
Destiny Pharma’s products may
not generate market acceptance
from the purchasers and decision
makers who are the eventual users
and buyers of the products and/or
more effective and cheaper
competing products may
enter the market.
Dependence on a small number
of CMC suppliers, the loss of whom
through contractual disputes or
supplier bankruptcy may cause
programme delays, increase costs
and limit partnering potential.
F
F
C
C
O
The company successfully raised £10.4 million via a
Placing and Open Offer in November 2020 to fund the
acquisition and development of NTCD‑M3 and provide
additional working capital through to Q4 2022.
The Board has put in place investor relations and
partnering strategies that should support future
cash requirements. The virtual business model
maintains a low overhead base which allows some
flexibility in managing spending commitments.
The company, in conjunction with its tax advisers,
continually reviews any proposed changes to the UK
R&D tax credit regime. The virtual model maintains a low
overhead base which allows some flexibility in managing
spending commitments.
A partnering strategy is in place to locate potential
partners. The relationship with China Medical Systems
represents the first such relationship. The company has
recently recruited a full‑time Chief Business Officer and
other partnering activities are planned to enable Destiny
Pharma to complete the right deal at the right time to
deliver shareholder value.
Destiny Pharma conducts commercial market analysis
to ensure that development activities are directed towards
viable markets. Destiny Pharma also has a network of key
opinion leaders who assist with this ongoing review.
The company is developing additional CMC supplier
relationships to expand the breadth of its supplier
base and enable the scale up of its processes.
21
Strategic reportDestiny Pharma plc Annual Report and Financial Statements 2020 Our stakeholders
Striving for high standards.
Section 172(1) statement
Directors of a company must act
in a way that they consider, in good
faith, would most likely promote
the success of the company for the
benefit of its members as a whole,
taking into account the factors listed
in section 172 of the Companies
Act 2006.
Engagement with our shareholders
and wider stakeholder groups plays
an essential role throughout Destiny
Pharma’s business. We are aware
that each stakeholder group requires
a tailored engagement approach in
order to foster effective and mutually
beneficial relationships.
Our understanding of stakeholders
is then factored into boardroom
discussions, regarding the potential
long‑term impacts of our strategic
decisions on each group, and how
we might best address their needs
and concerns.
The Board regularly reviews our
principal stakeholders and how we
engage with them. The stakeholder
voice is brought into the boardroom
throughout the annual cycle
through information provided by
management and also by direct
engagement with stakeholders
themselves.
The relevance of each stakeholder
group may increase or decrease
depending on the matter or issue
in question, so the Board seeks to
consider the needs and priorities of
each stakeholder group during its
discussions and as part of its
decision making.
The table below acts as our section
172(1) statement by setting out the
key stakeholder groups, their
interests and how Destiny Pharma
has engaged with them over the
reporting period. This should be
read in conjunction with the
corporate governance report
on pages 24 to 35.
Stakeholder
Their interests
How we engage
OUR EMPLOYEES
OUR SUPPLIERS AND
PARTNERS
• Training, development
and career prospects
• Health and safety
• Working conditions
• Diversity and inclusion
• Human rights and
modern slavery
• Fair pay, employee benefits
• Open and regular
informal dialogue
• Ongoing training and
development opportunities
• Whistleblowing procedures
• Employee benefits packages
• Formal annual reviews
• Board‑level engagement
on company strategy
• Workers’ rights
•
Initial meetings and negotiations
• Supplier engagement
• Performance management
and management to prevent
modern slavery
and feedback
• Board approval of
• Fair trading and payment terms
significant contracts
• Sustainability and
environmental impact
• Collaboration
• Long‑term partnerships
• Direct engagement between
suppliers and specified
company contact
22
Strategic reportDestiny Pharma plc Annual Report and Financial Statements 2020 Stakeholder
Their interests
How we engage
OUR INVESTORS
• Comprehensive review
of financial performance
of the business
• Business sustainability
• High standard of governance
• Success of the business
• Ethical behaviour
• Awareness of long‑term strategy
and direction
• Regular reports and analysis
on investors and shareholders
• Annual Report
• Company website
• Shareholder circulars
• AGM
• Stock exchange announcements
• Press releases
• Analyst research
• One‑to‑one meetings
• Presentations at investor
conferences and via
online platforms
• Compliance with regulations
• Company website
• Worker pay and conditions
• Stock exchange announcements
• Gender pay
• Annual Report
REGULATORY BODIES
• Health and safety
• Direct contact with regulators
• Treatment of suppliers
• Compliance updates at
• Waste and environment
•
Insurance
Board meetings
• Risk reviews
• Sustainability
• Human rights
• Energy usage
• Recycling
• Waste management
• Community outreach and CSR
• Oversight of corporate
responsibility plans
• Workplace recycling policies
and processes
COMMUNITY AND
ENVIRONMENT
The strategic report has been approved by the Board and is signed on its behalf by:
Neil Clark
Chief Executive Officer
13 April 2021
23
Strategic reportDestiny Pharma plc Annual Report and Financial Statements 2020 Introduction to corporate governance
The Directors support high standards of corporate governance
and consider strong governance to be a key element in the
development and success of the company.
Board of Directors
The Board is responsible for the
direction and overall performance of
the company with emphasis on policy
and strategy, financial results and
major operational issues.
During the year, the Board comprised
three Executive Directors and the
Non‑executive Chairman, and at least
two other Non‑executive Directors
who are independent of management.
A full list of the Directors who served
during the year, together with their
skills and experience, is set out in the
Directors’ report on page 35 of this
Annual Report. Dr Huaizheng Peng is
an appointee of CMS, a shareholder
and strategic partner of the company,
and therefore he cannot be regarded
as an independent Director. In
addition, as a minor shareholder and
having served on the Board for in
excess of ten years, Peter Morgan
cannot be regarded as independent.
Notwithstanding these factors, the
Board considers that both Dr Peng
and Mr Morgan offer a diverse range
of skills and experience and use their
independent judgement to challenge
all matters, whether strategic or
operational, helping the Board to
discharge its duties and
responsibilities effectively. The Board
considers Dr Debra Barker to be
independent.
The QCA Code
Destiny Pharma considers that the
QCA Corporate Governance Code
(the “QCA Code”) is the most
suitable framework for smaller
listed companies and, consequently,
formally adopted the QCA Code
during the 2018 financial year, having
informally followed its principles
since its IPO in September 2017.
The Board considers that the
company complies with the QCA
Code so far as it is practicable
having regard to its size, nature
and current stage of development.
The Board understands that the
application of the QCA Code
supports the company’s medium
to long‑term success whilst
simultaneously managing risks and
provides an underlying framework
of commitment and transparent
communications with stakeholders.
Governance changes during the
year included the appointment
of Dr Debra Barker as Chair of
the Remuneration Committee,
replacing Nick Rodgers.
24
The table below shows how the company addresses the ten principles
underpinning the QCA Code:
Deliver growth
1. Establish a strategy and business model which promote long‑term value for
shareholders. See “business model” on page 10.
2. Seek to understand and meet shareholder needs and expectations. See the
“corporate governance” section of our website www.destinypharma.com and
“our stakeholders” on pages 22 and 23.
3. Take into account wider stakeholder and social responsibilities and their
implications for long‑term success. See the “corporate governance” section
of our website and “our stakeholders” on pages 22 and 23.
4. Embed effective risk management, considering both opportunities and threats,
throughout the organisation. See “risks and uncertainties” on pages 20 and 21.
Maintain a dynamic management framework
5. Maintain the Board as a well‑functioning, balanced team led by the Chair.
See this section.
6. Ensure that between them the Directors have the necessary up‑to‑date experience,
skills and capabilities. See this section and “Board of Directors” on pages 28 and 29.
7. Evaluate Board performance based on clear and relevant objectives, seeking
continuous improvement. See this section.
8. Promote a corporate culture that is based on ethical values and behaviours.
See this section and the “corporate governance” section of our website.
9. Maintain governance structures and processes that are fit for purpose and support
good decision making by the Board. See the “corporate governance” section of
our website and “our stakeholders” on pages 22 and 23.
Build trust
10. Communicate how the company is governed and is performing by maintaining a
dialogue with shareholders and other relevant stakeholders. See this section,
the “corporate governance” section of our website and “our stakeholders”
on pages 22 and 23.
Destiny Pharma plc Annual Report and Financial Statements 2020Governance The Board
Audit Committee
Remuneration Committee
Nomination Committee
The Board considers there to be
sufficient independence on the Board
given the size and stage of
development of the company and that
all the Non‑executive Directors are of
sufficient competence and calibre to
add strength and objectivity to its
activities and bring considerable
experience in scientific, operational
and financial development of
biopharmaceutical products and
companies. The composition of the
Board is regularly discussed by the
Board and Nomination Committee.
Appropriate Directors’ and officers’
liability insurance has been arranged
by the company.
There is a clear separation of the
roles of Chief Executive Officer
and Chairman. The Chairman is
responsible for overseeing the
running of the Board and
ensuring its effectiveness.
The Chairman ensures members
of the Board receive timely and
appropriate information and that
effective communication occurs with
institutional and other shareholders.
The Chief Executive Officer has the
responsibility for implementing the
strategy of the Board and managing
the day‑to‑day business activities of
the company.
The Board, led by the Chairman,
is responsible to stakeholders for the
proper management of the company
and meets at least six times a year.
All relevant information is circulated
in good time together with a formal
scheduled agenda covering key areas
of the company’s affairs, including
research and development, strategy,
and operational and financial
performance, which allows the Board
to review and discuss the activities of
the business.
The Board convenes at least one
strategy meeting each year and other
ad hoc meetings, where appropriate,
to discuss the activities of the
business or other matters.
Non‑executive Directors are required
to devote sufficient time and
commitment to fulfil their Board
duties, including attending strategy
meetings, shareholder meetings and
discussions about specific aspects of
the business where appropriate.
The Board is kept appraised
of developments in governance and
regulations as appropriate, including
regular updates and presentations
from the company’s Nomad and
legal advisers.
All Directors are subject to re‑election
by shareholders at least once every
three years. Directors appointed
during any year are subject to
re‑election at the first Annual General
Meeting following their appointment.
Attendance at Board meetings
The Directors’ attendance at Board and committee meetings over the course of 2020 was as follows:
Director
Neil Clark
Dr William Love
Shaun Claydon
Peter Morgan
Dr Huaizheng Peng
Nick Rodgers
Dr Debra Barker
Board
meeting
Audit
Committee
Remuneration
Committee
Nomination
Committee
10/10
10/10
10/10
10/10
10/10
10/10
10/10
—
—
4/4
4/4
—
4/4
—
—
—
—
7/7
—
7/7
7/7
—
—
—
1/1
—
1/1
1/1
25
Destiny Pharma plc Annual Report and Financial Statements 2020Governance
Introduction to corporate governance
continued
Share Dealing Code
The Board has adopted a code on
dealings in relation to the securities
in the company. Directors and other
relevant employees are required to
comply with the Share Dealing
Code and the Board takes proper and
reasonable steps to secure compliance.
Internal control
The Board is responsible for the
effectiveness of the company’s
internal control and quality systems
and is supplied with information to
enable it to discharge its duties.
Internal control and quality systems
are designed to meet the particular
needs of the company and to manage
rather than eliminate the risk of failure
to meet business objectives and can
only provide reasonable and not
absolute assurance against material
misstatement or loss. The internal
control system includes controls
covering financial, operational and
regulatory compliance areas together
with risk management. The principal
risks and uncertainties for the
company are set out on pages 20
and 21. The company maintains a risk
register which is reviewed and
updated regularly.
Remuneration Committee
The Remuneration Committee
comprises three members, all of
whom are Non‑executive Directors:
Nick Rodgers (Chair), Peter Morgan
and Dr Debra Barker. Since the
year end, Dr Barker has replaced
Mr Rodgers as Chair of the
Remuneration Committee.
The Remuneration Committee,
which meets at least twice a year,
is responsible for considering the
remuneration packages for Executive
Directors and the bonus and share
option strategy for the company
and making recommendations as
appropriate. The Remuneration
Committee works within the
framework of a compensation
policy approved by the Board.
The Remuneration Committee is
also responsible for reviewing the
performance of the Executive
Directors and ensuring that they are
fairly and responsibly rewarded for
their individual contributions to the
company’s overall performance.
The Committee’s scope extends to all
remuneration of Directors, including
bonus and share options.
None of the Committee members
has any day‑to‑day responsibility for
running the company and no Director
participates in discussions about his or
her own remuneration.
Nomination Committee
The Nomination Committee
comprises three members, all of
whom are Non‑executive Directors:
Nick Rodgers (Chair), Peter Morgan
and Dr Debra Barker.
The Nomination Committee meets at
least once a year, is responsible for
considering the composition and
efficacy of the Board as a whole,
and for making recommendations
as appropriate. The Committee also
considers succession planning for
Directors and senior executives
to ensure that the requisite skills
are available to the Board.
The Nomination Committee also
seeks to promote diversity of gender,
social and ethnic background.
Board performance evaluation
The Directors consider that the
company and Board are not yet of a
sufficient size for an external Board
evaluation to make commercial and
practical sense. However, the Board
does carry out a thorough internal
annual review of its performance
and that of its individual Directors
and the Chairman. The Directors are
encouraged to suggest changes that
they feel would benefit the company
and the company’s advisers provide
updates on best practice where they
think that appropriate. Concerns can
also be directed towards the Chairman,
who seeks to act as a sounding board
for any concerns that Directors may
have. As the company grows, the Board
will keep under review the need for
more formal evaluation processes.
Board committees
The Board has established Audit,
Remuneration and Nomination
Committees, each with formally
delegated duties, responsibilities
and written terms of reference.
The performance of these committees
is reviewed by the Chair of the
Committee and the Chairman of the
Board on a regular basis.
Audit Committee
The Audit Committee comprises
two members, who are both
Non‑executive Directors: Peter Morgan
(Chair) and Nick Rodgers.
The Audit Committee, which meets
at least twice a year, is responsible
for considering the financial reporting,
accounting policies and annual
statement as well as keeping under
review the scope and results of the
audit, its cost effectiveness and the
independence and objectivity of
the auditor. In particular any major
accounting issues, judgements
or changes are discussed by the
Committee. Due to the size of the
company, there is currently no
internal audit function, although
the Audit Committee has oversight
responsibility for public reporting,
overall good governance and the
company’s internal controls.
Other members of the Board, as well
as the auditor, are invited to attend
the Audit Committee meetings as and
when appropriate, and the Chair of
the Committee also has a direct line
of communication with the auditor.
26
Destiny Pharma plc Annual Report and Financial Statements 2020Governance Employment and
corporate culture
The company seeks to maintain
the highest standards of integrity
and probity in the conduct of its
operations. These values are
embodied in the written policies and
working practices adopted by all
employees of the company. An open
culture is actively encouraged with
regular communications to staff
regarding progress and staff feedback
is regularly sought. The Executive
Directors regularly monitor the
company’s cultural environment and
seek to address any concerns that
may arise, escalating these to Board
level as necessary.
The Board recognises its legal
responsibility to ensure the wellbeing,
safety and welfare of its employees
and to maintain a safe and healthy
working environment for them and
for its visitors. A report on how we
engage with our stakeholders and
consider environmental factors is
detailed on pages 22 and 23.
Investor relations
The Board places a high priority on
regular communications with its
shareholders. The Board as a whole is
responsible for ensuring that effective
dialogue with shareholders takes
place, while the Chairman and Chief
Executive Officer ensure that the
views of shareholders are
communicated to the Board as a
whole. The Board communicates with
shareholders through one‑to‑one
meetings, the announcement of
half‑year and full‑year results,
presentations to analysts and through
regular updates to the company’s
website, which contains copies of all
financial reports and statements and
latest presentations. The company
also presents regularly at private
investor events and is increasing its
use of video presentations via online
private shareholder platforms to reach
a wider audience. This ensures that
smaller shareholders are able to
engage with senior management.
Shareholders are able to attend the
company’s AGM, which provides an
excellent opportunity to engage
directly with the Board and discuss
the company’s strategy and
performance in more detail.
Corporate social responsibility
The Board recognises the importance
of assessing the impact and benefits
of the company’s activities on society,
its community and the environment
and endeavours to consider the
interests of shareholders and other
stakeholders, such as employees,
suppliers and business partners,
when operating its business. A report
on how we engage with our
stakeholders and consider
environmental factors is detailed
on pages 22 and 23.
UK Bribery Act 2010
The Board has established a bribery
policy to achieve compliance with the
UK Bribery Act 2010, which came into
effect on 1 July 2011. A training
programme is in place for all
Directors, staff and contractors.
Agreements with third parties contain
statements that the company and its
associates are required to adhere at
all times to the UK Bribery Act 2010.
Nick Rodgers
Chairman
13 April 2021
27
Destiny Pharma plc Annual Report and Financial Statements 2020Governance Board of Directors
Strong leadership
The Board has a broad range of experience from
senior leadership roles in life science, investment
and listed companies.
Nick Rodgers
Chairman
Dr William Love
Founder and
Chief Scientific Officer
Neil Clark
Chief Executive Officer
Shaun Claydon
Chief Financial Officer
and Company Secretary
Mr Rodgers has considerable
board experience in both
public and private growth
companies, particularly
those in the life science
sector, as well as a
background as a successful
corporate financier and
investment banker.
Mr Rodgers is currently
chairman of SEHTA, one
of the largest health
technology networking
organisations in the UK,
and a director of three
private companies.
He was a non‑executive
director and then chairman
of fully listed Oxford
Biomedica plc, a leading
gene and cell therapy
company, from 2004
until 2016.
Previously, Mr Rodgers
headed up both the Life
Science and Corporate
Finance departments at
Evolution Beeson Gregory
(now Investec), advising
many listed life science
companies from 1989
until 2003.
Dr Love was a senior
scientist at Ciba Geigy/
Novartis, focused on novel
drug delivery technologies
and involved in the
development of the
world’s leading eye‑care
pharmaceutical, Visudyne.
In 1997, Dr Love founded
Destiny Pharma and he
is the co‑inventor of the
XF drug platform.
Dr Love was a founding
member of the BEAM
Alliance, an EU SME
group focused on
promoting antimicrobial
drug development. He is
an expert advisory board
member of Global AMR
Innovation Fund, appointed
by Professor Dame Sally
Davies in October 2016.
Dr Love is the named
inventor in more than
70 patents. He has
experience in drug R&D
from discovery and lead
identification, through
pre‑clinical development
and into Phase 1/2 clinical
development in the UK,
EU and US.
Mr Clark qualified as an
accountant with PwC in
Cambridge, UK and worked
for over ten years on a
variety of national and
international assignments in
audit, corporate finance
and consultancy.
In 1997, Mr Clark joined
CeNeS Pharmaceuticals plc,
a venture capital backed
private UK biotech
company. Following the
successful flotation of
CeNeS in 1999, he was
appointed CFO. In 2005,
he became CEO and led the
company through to its sale
in 2008.
Mr Clark then joined
Ergomed in January 2009
and was CFO during its IPO
in July 2014 until his move
to be full‑time CEO of
PrimeVigilance (Ergomed’s
successful drug safety
business) in January 2016.
Mr Clark is a Fellow of the
Institute of Chartered
Accountants in England
and Wales and has a BSc
in Bioscience from the
University of Nottingham.
Mr Claydon is an
accomplished corporate
financier and qualified
Chartered Accountant with
over 16 years’ board‑level
experience, including within
the biotechnology sector.
He has extensive experience
of delivering financial and
operating results, and from
2015 served as CFO of
Creabilis, a venture backed
clinical stage specialty
pharmaceutical company
focused on dermatology
treatments, during which he
led the $150 million sale of
the business to Sienna
Biopharmaceuticals.
From 2009 to 2014,
Mr Claydon was CFO and
chief operating officer of
Orteq Sports Medicine,
a medical device company
and world leader in the field
of biodegradable polymer
technologies.
Prior to these positions
Mr Claydon held a number
of senior financial
consultancy and corporate
finance roles, including at
PwC, Evolution Beeson
Gregory (now Investec) and
HSBC Investment Banking.
28
Destiny Pharma plc Annual Report and Financial Statements 2020Governance Dr Huaizheng Peng
Non‑executive Director
Peter Morgan
Non‑executive Director
Dr Debra Barker
Non‑executive Director
Dr Peng serves as general
manager of International
Operations for China
Medical System Holdings,
a specialty pharmaceutical
company listed on the
Hong Kong Stock Exchange.
He also served as an
independent non‑executive
director of China Medical
System Holdings Ltd
between 2007 and 2010.
Dr Peng was a partner
of Northland Bancorp,
a private equity firm. Before
that, he worked as head
of life sciences and as
director of corporate
finance at Seymour Pierce,
a London‑based investment
bank and stockbroker.
Earlier in his career, Dr Peng
was a senior portfolio
manager, specialising in
global life science and
Asian technology
investment at Reabourne
Technology Investment
Management Limited.
Mr Morgan’s early career
was spent in the
pharmaceutical industry,
working as a product
manager in the UK before
moving to become
managing director of a
Ciba‑Geigy (now Novartis)
subsidiary in Scandinavia.
Mr Morgan was a founding
director of Beaufort Group
Limited, a business services
company which provided
support to pharmaceutical
companies.
From 2007 until 2015,
Mr Morgan was a
non‑executive director
of Oncimmune Limited,
a cancer diagnostics
company which floated
on AIM in 2016.
Mr Morgan has advised
many of the world’s top
pharmaceutical companies,
including Amgen, Bayer,
GSK, Novartis, Novo
Nordisk, Pfizer and Roche,
as well as Quintiles, the
world’s largest clinical
research organisation.
He has a BSc from the
University of Nottingham
and an MBA from London
Business School.
Dr Barker has worked at
Novartis, Roche, GSK (then
SmithKline Beecham) and
most recently at Polyphor
as Chief Medical and
Development Officer.
Dr Barker is currently
on the board of Hutman
Diagnostics, a molecular
diagnostic company
specialising in antimicrobial
resistance, and BerGenBio,
an oncology company
targeting immune‑evasive
and therapy resistant
cancers.
At Novartis Dr Barker
held several senior roles
including Head of
Development for
Anti‑Infectives, Immunology
and Transplantation.
Dr Barker was also the
medical lead for
Swiss‑based anti‑infective
specialist Polyphor’s highly
successful IPO on the SIX
Swiss Exchange.
Board diversity:
– 6
– 1
Male
Female
Board tenure:
– 4
– 2
1–5 years
5+ years
Board skills:
– 6
– 4
– 3
– 2
Biotechnology/
Pharmaceuticals
Financial
Business development
Clinical
29
Destiny Pharma plc Annual Report and Financial Statements 2020Governance Directors’ remuneration report
The Remuneration Committee of the Board of Directors
is responsible for determining and reviewing compensation
arrangements for the Executive Directors and Chairman
of the company.
The Remuneration Committee
comprises Dr Debra Barker (Chair),
Nick Rodgers and Peter Morgan.
Dr Barker replaced Mr Rodgers as
Chair on 1 January 2021.
The Remuneration Committee
additionally links part of key
management remuneration to the
company’s financial and operational
performance.
Introduction
The Remuneration Committee
assesses the appropriateness of the
nature and amount of emoluments of
such officers on a periodic basis and is
guided by an approved remuneration
policy and takes into account relevant
employment market conditions with
the overall objective of ensuring
maximum stakeholder benefit from
the retention of a high‑quality
Board and executive team.
Components of the remuneration
package of Executive Directors
The principal components of the
Executive Directors’ remuneration
packages are base salary, a
performance‑related bonus in the
form of cash and share options, and
medium and long‑term incentives in
the form of share options, pension
contributions and other benefits.
Base salary
Base salaries are reviewed annually,
taking account of increases awarded to
employees as a whole, the performance
of the company and the individual’s,
skills and experience, and external
factors such as salaries in comparable
companies and inflation. For the 2021
financial year the Board considered it
appropriate to award an inflation‑only
increase to the Executive Directors and,
in addition, the Chief Financial Officer’s
salary was increased to reflect the
change in his commitment to full time.
Performance‑related bonus
The Remuneration Committee, in discussion with the Executive Directors, establishes performance criteria at the
beginning of each financial year that are aligned with the company’s strategic objectives and are designed to be
challenging. Annual bonuses are payable at the discretion of the Remuneration Committee.
For the 2020 financial year the Remuneration Committee decided the following:
• bonuses of up to a maximum of 50% of base salary for the Executive Directors could be earned for performance
against annual operational, financial and personal objectives;
• 75% of the annual bonus would be by reference to corporate objectives and 25% to individual objectives; and
• any annual bonus for the Executive Directors is payable in cash and share option awards in the following proportions:
50% cash and 50% share option awards.
The 2020 financial year corporate objectives were weighted as follows:
Objective
Weighting
Achievement
Complete Phase 2b clinical study for XF‑73 nasal
Complete in‑licensing of NTCD‑M3
Complete equity financing for NTCD‑M3
Secure partnering deal
Complete Phase 3 preparation/commercialisation plans
Total
27%
20%
20%
20%
13%
100%
13%
20%
20%
—
7%
60%
The Executive Directors were awarded 60% of the maximum bonus achievable for the 2020 financial year.
30
Destiny Pharma plc Annual Report and Financial Statements 2020Governance
For the 2021 financial year, the Remuneration Committee decided the following:
• bonuses of up to a maximum of 75% of base salary for the Executive Directors could be earned for performance
against annual operational, financial and personal goals;
• 75% of the annual bonus would be by reference to corporate objectives and 25% to individual objectives; and
• any annual bonus for the Executive Directors is payable in cash and share option awards in the following proportions:
50% cash and 50% share option awards.
The 2021 financial year corporate objectives are weighted as follows:
Objective
Announce successful XF‑73 nasal Phase 2b data
Finalise achievable plan for XF‑73 Phase 3 clinical study
Progress NTCD‑M3 project in line with agreed development plan
Secure financing to support development plans
Secure partnering deal
Total
Weighting
7%
13%
13%
27%
40%
100%
The number of share options comprised within the deferred bonus award is set on grant at such number equal in value to
the portion of bonus being deferred. Such share option awards to Executive Directors will ordinarily vest after two years,
subject to continued employment.
Long‑term incentive plan (“LTIP”)
The primary long‑term incentive arrangements for Executive Directors are performance share option awards under the
LTIP established by the Board on 22 December 2020. Performance share option awards will ordinarily be granted on an
annual basis and will vest three years from award subject to the participant’s continued service and to the extent to
which the performance conditions for the awards are satisfied.
Performance awards are set at a maximum of 100% of base salary for the Chief Executive Officer and 80% for other
Executive Directors. Performance awards to Executive Directors under the LTIP were made on 22 December 2020 and
are detailed in the table on page 33.
Recovery and withholding provisions may be operated at the discretion of the Remuneration Committee in respect of share
option awards under the performance‑related bonus plan and the LTIP in certain circumstances (including where there has
been a material misstatement of the company’s financial statements or in the event of misconduct by a participant).
The company has adopted shareholding guidelines to encourage Executive Directors to build or maintain a shareholding
in the company of at least 200% of base salary. Executive Directors will be required to retain 50% of shares from the
exercise of deferred bonus awards and LTIP awards (on a net of tax basis) until the shareholding guideline is met.
Pension arrangements
Pension is provided to Executive Directors via a cash contribution to the individual’s personal pension scheme. The level
of pension contribution for Executive Directors is 10% of base salary.
Other benefits
Other benefits for Executive Directors include life assurance, private medical insurance and income protection.
31
Destiny Pharma plc Annual Report and Financial Statements 2020Governance
Directors’ remuneration report continued
Remuneration of the Chairman and Non-executive Directors
It is the company’s policy to provide fees that attract and retain skilled individuals with appropriate experience who can
add value to the Board. Fees are reviewed on an annual basis to ensure they remain competitive and adequately reflect
the time commitments and overall contribution to the role. The Remuneration Committee is responsible for making
recommendations to the Board on the fees payable to the Chairman. The Board is responsible for determining the fees
payable to the company’s Non-executive Directors.
The Non-executive Director fees, including the fees of the Chairman, were reviewed during the 2020 financial year and
were increased by 3% to £41,200 and £82,400 respectively with effect from 1 January 2021. In addition, the Chairman
was awarded a bonus for the 2020 financial year of £8,000, payable in Destiny Pharma shares (on a net of tax basis).
The shares are payable in two tranches following the announcement of the company’s 2020 annual and 2021 interim
results, subject to the Chairman remaining in post.
Emoluments of Directors
Details of the nature and amount of each element of the emoluments of each Director who served during the year ended
31 December 2020 are as follows:
Short-term
employee
benefits
£’000
Post-
employment
benefits
£’000
Bonus
£’000
Other
benefits
£’000
Total(1)
2020
£’000
Total
2019
£’000
Neil Clark
Dr William Love
Shaun Claydon
Peter Morgan
Dr Huaizheng Peng
Nick Rodgers
Dr Debra Barker
Total
233
197
170
40
40
80
40
800
69
59
51
—
—
—
—
179
20
15
17
—
—
—
—
52
3
4
2
—
—
—
—
9
325
275
240
40
40
80
40
1,040
300
250
128
40
40
80
—
838
(1) Total emoluments include the bonus payable in relation to the year ended 31 December 2020, of which 50% was settled in cash and
50% in deferred share option awards after the end of the financial year.
32
Destiny Pharma plc Annual Report and Financial Statements 2020Governance
Directors’ share options and awards
Options in the company’s shares held by the Directors holding office at 31 December 2020 are set out below:
Exercise
price
At 1 January
2020
Granted in
the year
Cancelled
At 31 December
2020
Latest
vesting date
Date of grant/award
Executive
Neil Clark
16 May 2017 option grant
£0.01
2 June 2017 option grant
£0.01
172,152
172,152
4 June 2018 option grant
£0.01
200,000
22 Dec 2020 option grant
£0.01
22 Dec 2020 performance
share option award
£0.01
—
—
544,304
Dr William Love
1 Sep 2012 option grant
£0.2484
406,500
2 June 2017 option grant
£0.01
358,894
22 Dec 2020 option grant
£0.01
22 Dec 2020 performance
share option award
£0.01
—
—
765,394
Shaun Claydon
25 Oct 2018 option grant £0.765
150,000
25 Oct 2018 option grant
£0.01
150,000
16 June 2020 option grant
£0.01
22 Dec 2020 option grant
£0.01
22 Dec 2020 performance
share option award
£0.01
—
—
—
—
—
—
205,695
353,692
559,387
—
—
125,000
240,511
365,511
—
—
125,000
125,000
261,538
—
—
—
—
—
—
—
—
—
—
—
172,152
172,152
Vested
Vested
200,000
4 June 2021
205,695
22 Dec 2023
353,692
22 Dec 2023
1,103,691
406,500
358,894
Vested
Vested
125,000
22 Dec 2023
240,511
22 Dec 2023
1,130,905
(150,000)
—
n/a
Vested
150,000
125,000
25 Oct 2021
125,000
22 Dec 2023
261,538
22 Dec 2023
—
—
—
—
300,000
511,538
(150,000)
661,538
Non-executive
Peter Morgan
2 June 2017 option grant
£0.01
719,962
719,962
—
—
—
—
719,962
719,962
Vested
The options are exercisable at various dates up to December 2030.
33
Destiny Pharma plc Annual Report and Financial Statements 2020Governance
Directors’ remuneration report continued
Directors’ interests
The interests of the Directors holding office at 31 December 2020 in the shares of the company are set out below:
Ordinary shares of £0.01 each
Neil Clark
Dr William Love(1)
Shaun Claydon
Peter Morgan
Dr Huaizheng Peng
Nick Rodgers
Dr Debra Barker
31 December
2020
31 December
2019
38,462
—
6,859,500
6,859,500
—
—
1,025,500
1,025,500
—
47,462
38,461
—
—
—
(1) 3,667,700 of these ordinary shares are held by Dr Love directly and 3,191,800 are held by his wife, Carole Love.
The company’s shares were admitted to trading on AIM on 4 September 2017. The market price of the company’s shares
at the end of the reporting period was 68.5 pence (2019: 44.0 pence) and the range during the period from admission to
the end of the reporting period was 30.4 pence to 235.0 pence (2019: 36.5 pence to 235.0 pence) per share.
On behalf of the Board.
Dr Debra Barker
Remuneration Committee Chair
13 April 2021
34
Destiny Pharma plc Annual Report and Financial Statements 2020Governance
Directors’ report
The Directors present their report together with
the audited accounts of Destiny Pharma plc.
Directors
Those who served as Directors
during the year are:
• Nick Rodgers,
Non‑executive Chairman;
• Neil Clark,
Chief Executive Officer;
• Dr William Love,
Founder and Chief
Scientific Officer;
• Shaun Claydon,
Chief Financial Officer;
• Peter Morgan,
Non‑executive Director;
• Dr Huaizheng Peng,
Non‑executive Director; and
• Dr Debra Barker,
Non‑executive Director.
Results and dividends
The loss after taxation for the year
ended 31 December 2020 was
£5.4 million (2019: £4.7 million).
Directors’ interests
Directors’ interests at
31 December 2020 in the shares
and share options of the company are
shown in the Directors’ remuneration
report on pages 30 to 34.
Financial instruments
The company’s principal financial
instruments comprise cash balances,
term deposits, and other payables and
receivables that arise in the normal
course of business. The risks
associated with these financial
instruments are disclosed in note 15
to the financial statements.
Research and development
For details of the company’s research
and development, please refer to the
strategic report, which forms part of
this Annual Report.
Future developments
Further information regarding the
future developments of the company
is contained in the strategic report,
which forms part of this
Annual Report.
Directors’ liabilities
Subject to the conditions set out
in the Companies Act 2006, the
company has arranged appropriate
Directors’ and officers’ liability
insurance to indemnify the Directors
against liability in respect of
proceedings brought by third parties.
Such provisions remain in force at the
date of this report.
Disclosure of information
to the auditor
So far as each person who was a
Director at the date of approving this
report is aware, there is no relevant
audit information, being information
needed by the auditor in connection
with preparing its report, of which the
auditor is unaware. Having made
enquiries of fellow Directors, each
Director has taken all the steps that
he ought to have taken as a Director
in order to have made himself aware
of any relevant audit information and
to establish that the auditor is aware
of that information.
Re-appointment of the auditor
In accordance with section 489 of
the Companies Act 2006, a resolution
to re‑appoint Crowe U.K. LLP will be
proposed at the next Annual
General Meeting.
Board committees
Information on the Audit,
Remuneration and Nomination
Committees is included in the
corporate governance section of the
Annual Report on pages 24 to 35.
Annual General Meeting
The Annual General Meeting will be
held on 3 June 2021 as stated in the
notice that accompanies this
Annual Report.
By order of the Board.
Shaun Claydon
Company Secretary
13 April 2021
35
Destiny Pharma plc Annual Report and Financial Statements 2020Governance Statement of Directors’ responsibilities
The Directors are responsible for
preparing the Annual Report and
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 financial statements in accordance
with International Financial Reporting
Standards (“IFRSs”) as adopted by
the EU and applicable law.
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 company and
of the profit or loss of the 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 applicable
accounting standards have been
followed, 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
company will continue in business.
The Directors are responsible for
keeping adequate accounting records
that are sufficient to show and explain
the company’s transactions and
disclose with reasonable accuracy at
any time the financial position of the
company and enable them to ensure
that the financial statements comply
with the Companies Act 2006. They
are also responsible for safeguarding
the assets of the company and hence
for taking reasonable steps for the
prevention and detection of fraud and
other irregularities.
They are further responsible for
ensuring that the strategic report
and Directors’ report, and other
information included in the Annual
Report and Financial Statements,
are prepared in accordance with
applicable law in the United Kingdom.
The maintenance and integrity of the
Destiny Pharma plc website is the
responsibility of the Directors; the
work carried out by the auditor does
not involve the consideration of these
matters and, accordingly, the auditor
accepts no responsibility for any
changes that may have occurred in
the accounts since they were initially
presented on the website.
Legislation in the United Kingdom
governing the preparation and
dissemination of the accounts and the
other information included in annual
reports may differ from legislation in
other jurisdictions.
36
Destiny Pharma plc Annual Report and Financial Statements 2020Financial statements
Independent auditor’s report
to the shareholders of Destiny Pharma plc
Opinion
We have audited the financial
statements of Destiny Pharma plc
for the year ended 31 December 2020,
which comprise:
• the statement of comprehensive
income for the year ended
31 December 2020;
• the statement of financial position as
at 31 December 2020;
• the statement of cash flows and
statement of changes in equity for
the year ended 31 December 2020;
and
• the notes to the financial statements,
which include a summary of
significant accounting policies and
other explanatory information.
The financial reporting framework that
has been applied in the preparation of
the company financial statements
is applicable law and International
Financial Reporting Standards
(“IFRSs”) as adopted by the
European Union.
In our opinion, the financial statements:
• give a true and fair view of the state
of the company’s affairs as at
31 December 2020 and of the
company’s loss for the period
then ended;
• have been properly prepared
in accordance with International
Financial Reporting Standards
as adopted by the European
Union; and
• 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 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, 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 company’s ability
to continue to adopt the going
concern basis of accounting included
as assessment of the appropriateness
of the approach, assumptions and
arithmetic accuracy of the model used
by management when performing
their going concern assessment for a
period of at least twelve months from
the date of the approval of the
financial statements. We challenged
the underlying data and key
assumptions used to make the
assessment and the results of
management’s stress testing, to
assess the reasonableness of
economic assumptions.
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 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.
Overview of our audit approach
Materiality
In planning and performing our audit
we applied the concept of materiality.
An item is considered material if
it could reasonably be expected
to change the economic decisions
of a user of the financial statements.
We used the concept of materiality
to both focus our testing and
to evaluate the impact of
misstatements identified.
Based on our professional judgement,
we determined overall materiality for
the company financial statements as
a whole to be £330,000
(2019: £200,000) based on
approximately 5% (2019: 4%) of loss
before tax. Loss before tax is the most
relevant measure in assessing the
performance of the company,
and is a generally accepted
auditing benchmark.
We use a different level of materiality
(“performance materiality”) to
determine the extent of our testing
for the audit of the financial
statements. Performance materiality
is set based on the audit materiality as
adjusted for the judgements made as
to the entity risk and our evaluation of
the specific risk of each audit area
having regard to the internal
control environment.
Where considered appropriate,
performance materiality may be
reduced to a lower level, such as
for related party transactions and
Directors’ remuneration.
We agreed with the Audit Committee
to report to it all identified errors in
excess of £10,000 (2019: £7,500).
Errors below that threshold would
also be reported to it if, in our opinion
as auditor, disclosure was required on
qualitative grounds.
Overview of the scope of
our audit
The company’s operations are based
in the UK at one central operating
location. The audit team performed
a full scope audit on the company.
37
Destiny Pharma plc Annual Report and Financial Statements 2020Financial statements Independent auditor’s report continued
to the shareholders of Destiny Pharma plc
Responsibilities of the Directors
for the financial statements
As explained more fully in the
Directors’ responsibilities statement,
the Directors are responsible for the
preparation of the 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 financial statements,
the Directors are responsible for
assessing 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 company or to cease
operations, or have no realistic
alternative but to do so.
Key audit matters
There were no matters which
we consider should be separately
reported as key audit matters.
Other information
The Directors are responsible for
the other information contained
within the Annual Report. The other
information comprises the information
included in the Annual Report,
other than the financial statements
and our auditor’s report thereon.
Our opinion on the 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 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.
Opinion on other matters
prescribed by the Companies
Act 2006
In our opinion, based on the work
undertaken in the course of our 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 Directors’ report and strategic
report have been prepared in
accordance with applicable
legal requirements.
Matters on which we are
required to report by exception
In light of the knowledge and
understanding of the company
and its 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 where 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 financial statements 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.
38
Destiny Pharma plc Annual Report and Financial Statements 2020Financial statements 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:
We obtained an understanding of
the legal and regulatory frameworks
within which the company operates,
focusing on those laws and
regulations that have a direct effect
on the determination of material
amounts and disclosures in the
financial statements. The laws
and regulations we considered in
this context were the Companies
Act 2006 and taxation legislation.
Technical, clinical or regulatory laws
and regulations which are inherent
risks in drug development are
mitigated and managed by the
Scientific Advisory Board and
management in conjunction
with expert regulatory consultants
in order to monitor the latest
regulations and planned changes
to the regulatory environment.
We identified the greatest risk
of material impact on the financial
statements from irregularities,
including fraud, to be the override
of controls by management. Our audit
procedures to respond to these risks
included enquiries of management
about their own identification and
assessment of the risks of
irregularities, sample testing on
the posting of journals and reviewing
accounting estimates for biases.
Owing to the inherent limitations of
an audit, there is an unavoidable risk
that we may not have detected some
material misstatements in the financial
statements, even though we have
properly planned and performed
our audit in accordance with auditing
standards. We are not responsible for
preventing non‑compliance and
cannot be expected to detect
non‑compliance with all laws
and regulations.
These inherent limitations are
particularly significant in the case
of misstatement resulting from fraud
as this may involve sophisticated
schemes designed to avoid detection,
including deliberate failure to record
transactions, collusion or the
provision of intentional
misrepresentations.
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.
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.
Stephen Bullock
(Senior Statutory Auditor)
for and on behalf of Crowe U.K. LLP
Statutory Auditor, London
13 April 2021
39
Destiny Pharma plc Annual Report and Financial Statements 2020Financial statements Statement of comprehensive income
For the year ended 31 December 2020
Continuing operations
Other operating income
Administrative expenses
Share‑based payment expense
Loss from operations
Finance income
Loss before tax
Taxation
Loss and total comprehensive loss for the year from continuing operations
Loss per share – pence
Basic
Diluted
Year ended
31 December
2020
£
Year ended
31 December
2019
£
Notes
6
7
3
5
8
8
12,450
305,906
(6,425,471)
(5,687,003)
(139,491)
(203,655)
(6,552,512)
(5,584,752)
71,611
63,478
(6,480,901)
(5,521,274)
1,069,824
813,250
(5,411,077)
(4,708,024)
(12.0)p
(12.0)p
(10.7)p
(10.7)p
40
Destiny Pharma plc Annual Report and Financial Statements 2020Financial statements
Statement of financial position
As at 31 December 2020
Assets
Non-current assets
Property, plant and equipment
Intangible assets
Non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Prepayments
Current assets
Total assets
Equity and liabilities
Equity
Share capital
Share premium
Accumulated losses
Shareholders’ equity
Current liabilities
Trade and other payables
Current liabilities
Total equity and liabilities
As at
31 December
2020
£
As at
31 December
2019
£
Notes
9
10
11
12
18,141
2,261,435
2,279,576
32,922
—
32,922
1,172,403
911,198
9,744,217
7,479,642
508,363
133,702
11,424,983
8,524,542
13,704,559
8,557,464
13
598,169
438,652
27,085,506
17,296,337
(15,247,250)
(9,975,664)
12,436,425
7,759,325
14
1,268,134
1,268,134
798,139
798,139
13,704,559
8,557,464
The financial statements, accompanying policies and notes 1 to 19 (forming an integral part of these financial
statements), were approved and authorised for issue by the Board on 13 April 2021 and were signed on its behalf by:
Neil Clark
Chief Executive Officer
Shaun Claydon
Chief Financial Officer
41
Destiny Pharma plc Annual Report and Financial Statements 2020Financial statements
Statement of changes in equity
For the year ended 31 December 2020
1 January 2019
Comprehensive loss for the year
Total comprehensive loss
Total comprehensive loss for the year
Contributions by and distributions to owners
Issue of share capital
Share‑based payment expense
Total contributions by and distributions to owners
31 December 2019
Comprehensive loss for the year
Total comprehensive loss
Total comprehensive loss for the year
Contributions by and distributions to owners
Issue of share capital
Costs of share issue
Share‑based payment expense
Share
capital
£
Share
premium
£
Accumulated
losses
£
Total
£
435,626
17,292,284
(5,471,295)
12,256,615
—
—
3,026
—
3,026
—
—
(4,708,024)
(4,708,024)
(4,708,024)
(4,708,024)
4,053
—
4,053
—
203,655
203,655
7,079
203,655
210,734
438,652
17,296,337
(9,975,664)
7,759,325
—
—
—
—
(5,411,077)
(5,411,077)
(5,411,077)
(5,411,077)
159,517
10,209,105
(419,936)
—
—
—
—
10,368,622
(419,936)
—
139,491
139,491
Total contributions by and distributions to owners
159,517
9,789,169
139,491
10,088,177
31 December 2020
598,169
27,085,506
(15,247,250)
12,436,425
42
Destiny Pharma plc Annual Report and Financial Statements 2020Financial statements
Statement of cash flows
For the year ended 31 December 2020
Cash flows from operating activities
Loss before income tax
Depreciation of property, plant and equipment
Share‑based payment expense
Finance income
Increase in trade and other receivables and prepayments
Increase in trade and other payables
Cash used in operations
Tax received
Net cash used in operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Sale of other financial assets
Interest received
Net cash inflow from investing activities
Cash flows from financing activities
New shares issued net of issue costs
Net cash inflow from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
Year ended
31 December
2020
£
Year ended
31 December
2019
£
(6,480,901)
(5,521,274)
16,881
139,491
18,440
203,655
(71,611)
(63,478)
(6,396,140)
(5,362,657)
(379,293)
(79,800)
469,995
(3,653)
(6,305,438)
(5,446,110)
813,250
815,316
(5,492,188)
(4,630,794)
(2,099)
(20,942)
(2,261,435)
—
—
5,000,000
71,611
63,478
(2,191,923)
5,042,536
9,948,686
9,948,686
2,264,575
7,079
7,079
418,821
7,479,642
7,060,821
9,744,217
7,479,642
43
Destiny Pharma plc Annual Report and Financial Statements 2020Financial statements
Notes to the financial statements
For the year ended 31 December 2020
1. Accounting policies
General information
Destiny Pharma plc (the “company”)
was incorporated and domiciled in
the UK on 4 March 1996 with
registration number 03167025.
The company’s registered office is
located at Unit 36, Sussex Innovation
Centre, Science Park Square, Falmer,
Brighton BN1 9SB.
The company is engaged in the
discovery, development and
commercialisation of novel medicines
that prevent serious infections.
Basis of preparation
The financial statements have been
prepared in accordance with
International Financial Reporting
Standards (“IFRSs”) as adopted by
the European Union. The financial
statements have been prepared
under the historical cost convention.
The company’s financial statements
have been presented in pounds
sterling (“GBP”), being the
functional and presentation
currency of the company.
Standards and
interpretations issued
Certain new accounting standards
and interpretations have been
published that are not mandatory for
31 December 2020 reporting periods
and have not been early adopted by
the company. These standards are not
expected to have a material impact on
the entity in the current or future
reporting periods and on foreseeable
future transactions.
Segment reporting
The chief operating decision‑maker
is considered to be the Board of
Directors of the company. The chief
operating decision‑maker allocates
resources and assesses performance
of the business and other activities
at the operating segment level.
The chief operating decision‑maker
has determined that the company
has one operating segment, the
development and commercialisation
of pharmaceutical formulations.
All activities take place in the
United Kingdom.
Financial instruments
Financial assets and financial liabilities
are recognised when the company
becomes a party to the contractual
provisions of the instrument.
44
The company currently does not
use derivative financial instruments to
manage or hedge financial exposures
or liabilities.
Cash and cash equivalents
Bank balances and cash in the
statement of financial position
comprise cash at banks and on hand.
Financial assets
Financial assets are initially measured
at fair value plus, in the case of a
financial asset not at fair value
through profit or loss, transaction
costs. The company holds the
financial assets with the objective
to collect the contractual cash
flows and therefore measures them
subsequently at amortised cost using
the effective interest method.
Leases
The company has elected not to
adopt IFRS 16. Lease payments are
treated as an expense in the period
in which they are incurred. Adopting
IFRS 16 would not have a material
impact on the financial statements.
Trade and other payables
Trade and other payables are initially
recognised at fair value. Fair value is
considered to be the original invoice
amount, discounted where material,
for short‑term payables. Long‑term
payables are measured at amortised
cost using the effective interest rate
method.
Derecognition of financial
assets and liabilities
a) Financial assets
A financial asset is derecognised
where:
• the right to receive cash flows
from the asset has expired;
• the company retains the right to
receive cash flows from the asset,
but has assumed an obligation to
pay them in full without material
delay to a third party under a
pass‑through arrangement; or
• the company has transferred the
rights to receive cash flows from
the asset; and
• either has transferred
substantially all the risks
and rewards of the asset; or
• has neither transferred nor
retained substantially all the
risks and rewards of the asset,
but has transferred control of
the asset.
b) Financial liabilities
A financial liability is derecognised
when the obligation under the liability
is discharged, cancelled or expires.
Where an existing financial liability is
replaced by another from the same
lender on substantially different
terms, or the terms of an existing
liability are substantially modified,
such an exchange or modification
is treated as a derecognition of the
original liability and the recognition
of a new liability, and the difference
in the respective carrying amounts
is recognised in the statement of
comprehensive income.
Impairment of financial assets
Financial assets are assessed for
indicators of impairment at the end
of the reporting period. The company
recognises an allowance for expected
credit losses (“ECLs”) for all debt
instruments not held at fair value
through profit or loss. ECLs are based
on the difference between the
contractual cash flows due in
accordance with the contract and all
the cash flows that the company
expects to receive, discounted at an
approximation of the original effective
interest rate.
For credit exposures for which there
has not been a significant increase in
credit risk since initial recognition,
ECLs are provided for credit losses
that result from default events that
are possible within the next twelve
months (a “twelve‑month ECL”).
For those credit exposures for which
there has been a significant increase
in credit risk since initial recognition,
a loss allowance is required for credit
losses expected over the remaining
life of the exposure, irrespective of the
timing of the default (a “lifetime ECL”).
Share‑based payments
Employees (including Directors and
senior executives) of the company
receive remuneration in the form of
share‑based payment transactions,
whereby these individuals render
services as consideration for equity
instruments (“equity‑settled
transactions”). These individuals are
granted share option rights approved
by the Board. No cash‑settled awards
have been made or are planned.
Destiny Pharma plc Annual Report and Financial Statements 2020Financial statements The cost of equity‑settled
transactions is recognised,
together with a corresponding
increase in equity, over the period in
which the performance and/or service
conditions are fulfilled, ending on the
date on which the relevant individuals
become fully entitled to the award
(“vesting point”). The cumulative
expense recognised for equity‑settled
transactions at each reporting date
until the vesting date reflects the
extent to which the vesting period
has expired and the company’s best
estimate of the number of equity
instruments and value that will
ultimately vest. The statement of
comprehensive income charge for the
year represents the movement in the
cumulative expense recognised as at
the beginning and end of that period.
The fair value of share‑based
remuneration is determined at the
date of grant and recognised as an
expense in the statement of
comprehensive income on a
straight‑line basis over the vesting
period, taking account of the
estimated number of shares that will
vest. The fair value is determined by
use of a Black‑Scholes model or a
Monte Carlo model.
Property, plant and equipment
Property, plant and equipment are
stated at cost less accumulated
depreciation and impairment losses,
if any. The cost of an asset comprises
its purchase price and any directly
attributable costs of bringing the
asset to its present working condition
and location for its intended use.
Depreciation is provided at the
following annual rates in order to
write off each asset over its estimated
useful life:
• plant and machinery – between
two and ten years.
Intangible assets
Intangible assets relating to
intellectual property rights acquired
through licensing agreements are
carried at historical cost less
accumulated amortisation and
any provision for impairment.
The company is expected to incur
future contractual milestone
payments linked to the intellectual
property rights it holds. Milestone
payments associated with these rights
are capitalised when incurred.
Amortisation will commence when the
product or products underpinned by
the intellectual property become
available for commercial use.
Taxation
Current taxes are based on the results
shown in the financial statements and
are calculated according to local tax
rules, using tax rates enacted or
substantially enacted by the
statement of financial position date.
R&D tax credits are recognised on an
accruals basis and are included as a
current asset within trade and other
receivables.
Research and development
Development costs and expenditure
on pure and applied research are
charged to the profit and loss account
in the year in which they are incurred.
Expenditure incurred on the
development of internally generated
products will be capitalised from
when Phase 3 trials are completed
and regulatory approval is obtained.
Government grants
Government grants are included
within other operating income and are
recognised where there is reasonable
assurance that the grant will be
received and all attached conditions
will be complied with. When the grant
relates to an expense item, it is
recognised as income on a systematic
basis over the periods that the related
costs, for which it is intended to
compensate, are expensed.
Government grants comprise
amounts from the UK‑China AMR
grant fund, set up by Innovate UK and
the Department of Health and Social
Care, with the Chinese Ministry of
Science and Technology. This grant
funding is being used to support a
research programme which seeks to
extend the knowledge base and
activity profile of the company’s novel
XF drugs. There are no unfulfilled
conditions or contingencies relating
to grant income recognised in the
income statement.
Foreign currency
Transactions in foreign currencies are
initially recorded using the functional
currency rate ruling at the date of the
transaction. Monetary assets and
liabilities denominated in foreign
currencies are re‑translated at the
functional currency rate of exchange
ruling at the statement of financial
position date.
Any resulting exchange differences
are included in the statement of
comprehensive income.
Pension costs
Contributions are made to the
personal pension plans of certain
employees. The expenditure is
charged to the profit and loss account
in the period to which it relates.
Going concern
The company has not yet recorded
any revenues and funds its
operations through periodic
capital issues and research grants.
Management prepares detailed
working capital forecasts which
are reviewed by the Board on a
regular basis. Cash flow forecasts
and projections take into account
sensitivities on receipts, and costs.
In their assessment of going
concern, the Directors have
considered the possible impact on
the business of the COVID‑19
pandemic. Having made relevant
and appropriate enquiries,
including consideration of the
company’s current cash resources
and the working capital forecasts,
the Directors have a reasonable
expectation that the company will
have adequate cash resources to
continue to meet the requirements
of the business for at least the
next twelve months. Accordingly,
the Board continues to adopt the
going concern basis in preparing
the financial statements.
Critical accounting judgements
and key sources of estimation
uncertainty
In the application of the
company’s accounting policies,
the Directors are required to make
judgements, estimates
and assumptions about the
carrying amounts of assets and
liabilities that are not readily
apparent from other sources.
The estimates and associated
assumptions are based on
historical experience and other
factors that are considered to be
relevant. Actual results may differ
from these estimates.
45
Destiny Pharma plc Annual Report and Financial Statements 2020Financial statements Notes to the financial statements continued
For the year ended 31 December 2020
1. Accounting policies continued
Critical accounting judgements and key sources of estimation uncertainty continued
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of
the revision and future periods if the revision affects both current and future periods.
The following critical accounting judgements have been made by the Directors.
Share‑based payments
The Directors have to make judgements when deciding on the variables to apply in arriving at an appropriate valuation
of share‑based compensation and similar awards, including appropriate factors for volatility, risk‑free interest rate and
applicable future performance conditions and exercise patterns. Further details of these factors can be found in note 13.
2. Directors and employees
The average number of persons employed by the company, including Executive and Non‑executive Directors, during the
year was as follows:
Research and development
Corporate and administration
Non‑executive Directors
Their aggregate remuneration, including Directors, comprised:
Wages and salaries
Social security costs
Other benefits
Pension costs
Share‑based payment expense
31 December
2020
31 December
2019
9
5
14
3
17
7
5
12
4
16
31 December
2020
£
31 December
2019
£
1,740,274
1,529,854
183,595
87,636
94,561
139,491
149,833
74,927
83,061
187,410
2,245,557
2,025,085
Details of Directors’ remuneration can be found in the Directors’ remuneration report and are summarised below:
Directors’ remuneration
Pension costs
Other benefits
Share‑based payment expense
31 December
2020
£
31 December
2019
£
986,525
910,594
51,528
8,422
80,717
53,315
7,887
170,432
Included in the above Directors’ remuneration are amounts paid to third parties for Directors’ services which are
disclosed in note 18.
The number of Directors to whom retirement benefits were accruing was as follows:
Defined contribution schemes
31 December
2020
31 December
2019
3
3
The company defines key management personnel as the Directors of the company.
The company makes payments into both occupational pension and personal pension funds held by staff. The pension
cost charge represents contributions payable by the company to the funds. The amount due to the funds at
31 December 2020 was £8,265 (2019: £4,141).
46
Destiny Pharma plc Annual Report and Financial Statements 2020Financial statements
3. Net finance income
Finance income
Deposit account interest
4. Auditor’s remuneration
Fees payable to the company’s auditor for:
Audit of the company’s annual accounts
Audit‑related assurance services
Tax services
Total
5. Income tax
31 December
2020
£
31 December
2019
£
71,611
63,478
31 December
2020
£
31 December
2019
£
25,500
2,900
3,500
31,900
24,250
4,600
2,500
31,350
31 December
2020
£
31 December
2019
£
Research and development tax credits based on costs in the financial year
(1,069,824)
(839,079)
Non‑recoverable tax credit in prior year
Tax reconciliation
Loss before tax
—
25,829
(1,069,824)
(813,250)
31 December
2020
£
31 December
2019
£
(6,480,901)
(5,521,274)
Loss before tax multiplied by the UK corporation tax rate of 19% (2019: 19%)
(1,231,371)
(1,049,042)
Effects of:
Non‑deductible expenditure
Employee share acquisition relief
R&D enhanced expenditure
Lower tax rate on R&D losses
Tax losses carried forward
Total tax credit on loss
29,738
38,911
(26,503)
(43,860)
(792,343)
(621,447)
332,014
618,641
260,404
575,955
(1,069,824)
(839,079)
There were no tax charges in the period. There are tax losses available to carry forward amounting to approximately
£20.2 million (2019: £16.9 million), which includes £nil (2019: £0.2 million) in respect of tax deductions on share options.
A deferred tax asset on losses is not recognised in the accounts due to the uncertainty of future profits against which
they will be utilised.
47
Destiny Pharma plc Annual Report and Financial Statements 2020Financial statements
Notes to the financial statements continued
For the year ended 31 December 2020
6. Other operating income
Government grants received during the year
Government grants accrued at 31 December
Included in trade and other receivables (note 11)
31 December
2020
£
31 December
2019
£
12,450
—
269,216
36,690
12,450
305,906
—
36,690
Grant funding has been received to support research and development activities which seek to extend the knowledge
base and activity profile of the company’s novel XF drugs. There are no unfulfilled conditions or contingencies attached
to these grants.
7. Administrative expenses
Administrative expenses include:
Staff costs – research and development
– other
Research and development costs
Depreciation
Foreign exchange differences
31 December
2020
£
1,273,908
832,158
31 December
2019
£
973,772
829,625
3,221,707
2,851,672
16,881
11,488
18,440
45,787
8. Loss per ordinary share
The calculation for loss per ordinary share (basic and diluted) for the relevant period is based on the earnings after
income tax attributable to equity shareholders for the period. As the company made losses during the period, there are
no dilutive potential ordinary shares in issue, and therefore basic and diluted loss per share are identical. The calculation
is as follows:
Loss for the year attributable to shareholders
Weighted average number of shares
Loss per share – pence
– Basic and diluted
31 December
2020
£
31 December
2019
£
(5,411,077)
(4,708,024)
45,219,999
43,799,945
(12.0)p
(10.7)p
48
Destiny Pharma plc Annual Report and Financial Statements 2020Financial statements
9. Property, plant and equipment
Cost
At 1 January 2019
Additions
At 31 December 2019
Additions
At 31 December 2020
Depreciation
At 1 January 2019
Charge for the year
At 31 December 2019
Charge for the year
At 31 December 2020
Net book value
At 1 January 2019
At 31 December 2019
At 31 December 2020
10. Intangible assets
Cost
At 31 December 2019
Additions
At 31 December 2020
Plant and
machinery
£
97,147
20,942
118,089
2,099
120,188
66,726
18,440
85,167
16,881
102,048
30,421
32,922
18,141
Acquired
development
programmes
£
—
2,261,435
2,261,435
In November 2020, the company acquired NTCD‑M3, a development stage programme for preventing toxic strains
of C. difficile proliferating in the colon after antibiotic treatment. The asset has not been amortised in the year as the
programme has not yet generated products available for commercial use.
The programme has been assessed for impairment. The company considers the future development costs, the probability
of successfully progressing to product approval and the likely commercial returns, among other factors. The result of this
assessment did not indicate any impairment in the year.
The key sensitivity for all development programmes is the probability of successful completion of clinical trials in
order to obtain regulatory approval for sale. Should trials be unsuccessful, the programme will be fully impaired.
49
Destiny Pharma plc Annual Report and Financial Statements 2020Financial statements
Notes to the financial statements continued
For the year ended 31 December 2020
11. Trade and other receivables
Other receivables
Research and development tax repayment
12. Cash and cash equivalents
Cash and bank balances
13. Share capital
Ordinary shares of £0.01 each
Authorised(1)
Allotted and fully paid
At 1 January
Issued for cash during the year
At 31 December
31 December
2020
£
102,579
1,069,824
1,172,403
31 December
2019
£
72,119
839,079
911,198
31 December
2020
£
31 December
2019
£
9,744,217
7,479,642
31 December
2020
Number
31 December
2019
Number
n/a
n/a
43,865,195
43,562,598
15,951,726
302,597
59,816,921
43,865,195
(1) During the year ended 31 December 2017 the company adopted new Articles of Association, which do not require the company
to have authorised share capital.
Authorised
Allotted and fully paid
Share premium account
31 December
2020
£
31 December
2019
£
n/a
n/a
598,169
438,652
31 December
2020
£
31 December
2019
£
27,085,506
17,296,337
15,951,726 ordinary shares were issued during the year at a premium of £10,209,105. Transactional costs associated with
the issue of shares in the year totalling £419,936 have been charged against share premium.
Each ordinary share ranks pari passu for voting rights, dividends and distributions, and return of capital on winding up.
50
Destiny Pharma plc Annual Report and Financial Statements 2020Financial statements
Share options
The company’s share‑based payment arrangements are summarised below.
Unapproved Scheme 2000
Established on 15 November 2000. Options are granted at the discretion of the Directors. The price per share to be
paid on exercise of an option will be the market value as agreed with the Share Valuation Division of HM Revenue and
Customs at the time of the grant of the option and as detailed in the option certificate. Options may be exercised three
years from the date of grant and lapse on the expiry of ten years from the date of grant of the option.
EMI Scheme 2000
Established on 15 November 2000. Options granted under the EMI Scheme are on substantially the same terms as
options granted under the Unapproved Scheme, save that the EMI Scheme rules comply with the terms of the enterprise
management incentive as set out in Schedule 14 of the Finance Act 2000.
Employee LTIP 2017 (EMI and non-tax advantaged options)
Established on 18 April 2017. Options are granted at the discretion of the Directors to eligible employees. The price
per share to be paid on exercise will be the market value as agreed with HMRC at the time of the grant of the option.
Options lapse on the expiry of ten years from the date of grant, the date specified in any leaver provisions or any other
lapse date specified in the relevant option agreement.
Non-Employee LTIP 2017 (non-tax advantaged options)
Established on 18 April 2017. Options are granted on substantially similar terms to the Employee LTIP Scheme except that
the EMI and/or employment‑related provisions and requirements do not apply. These options can be granted to any
Director of, or individual providing consultancy or other services to, the company.
Employee LTIP 2018 (EMI and non-tax advantaged options)
Established on 25 January 2018. Options are granted at the discretion of the Directors to eligible employees.
The exercise price per share is determined by the Directors, such price being not less than the nominal value of a share.
Options lapse on the expiry of ten years from the date of grant, the date specified in any leaver provisions or any other
lapse date specified in the relevant option agreement.
Employee LTIP 2020 (EMI and non-tax advantaged options)
Established on 22 December 2020. Options are granted at the discretion of the Directors to eligible employees and may
be subject to one or more performance conditions. The exercise price per share is determined by the Directors, such price
being not less than the nominal value of a share. Options subject to performance conditions will lapse at the end of the
performance period (typically three years) if the applicable performance conditions are not met. Options where there are
no performance conditions or where performance conditions are met during the performance period lapse on the expiry
of ten years from the date of grant, the date specified in any leaver provisions or any other lapse date specified in the
relevant option agreement.
Grants of options
On 19 June 2020, 165,000 Employee LTIP 2018 options were granted to two employees at an exercise price of £0.01 per
ordinary share. The fair value per option was £0.39.
On 22 December 2020, 340,000 Employee LTIP 2018 options were granted to seven employees at an exercise price of
£0.65 per ordinary share, the fair value per option was £0.52, 570,695 Employee LTIP 2018 options were granted to four
employees at an exercise price of £0.01 per ordinary share, the fair value per option was £0.66, and 1,074,925 2020
Performance targeted LTIP options were granted to four employees at an exercise price of £0.01 per ordinary share,
the fair value per option was £0.35.
51
Destiny Pharma plc Annual Report and Financial Statements 2020Financial statements Notes to the financial statements continued
For the year ended 31 December 2020
13. Share capital continued
IFRS 2 valuation
The estimated fair value of share options granted during the period without performance conditions has been calculated
by applying a Black‑Scholes option pricing model. The fair value of options with performance conditions has been
estimated using Monte Carlo modelling. The weighted average exercise price of options granted in the period was
£0.11 (2019: £0.01).
Measurement assumptions were as follows:
Share price
Exercise price
Expected volatility
Expected option life
Risk‑free rate
Expected dividends
Model used
2020
2020
£0.665 £0.400 – £0.665
£0.01
£0.01 – £0.65
76%
49% – 76%
2019
£0.785
£0.01
49%
3 years
10 years
10 years
0.38% 0.28% – 0.38%
£nil
£nil
0.92%
£nil
Monte Carlo Black-Scholes
Black‑Scholes
Prior to the year ended 31 December 2020, historical volatility was measured using a composite basket of listed entities
in similar operating environments, given the limited trading history of the company following its IPO in 2017; with effect
from the year ended 31 December 2020, historical volatility is measured using the company’s share price only.
The number and weighted average exercise prices of share options were as follows:
31 December 2020
31 December 2019
Balance outstanding at beginning of the year
Granted during year
Exercised during year
Cancelled during year
Lapsed during year
Options outstanding at end of the year
Options exercisable at the end of the year
Weighted
average
exercise price
Number of
options
Weighted
average
exercise price
Number of
options
7,090,226
2,150,620
£0.068
7,098,823
£0.111
335,000
—
—
(302,597)
(150,000)
£0.765
—
—
—
(41,000)
9,090,846
6,555,226
£0.067
£0.056
7,090,226
6,455,226
£0.075
£0.010
£0.023
—
£1.066
£0.068
£0.068
The expense arising from share‑based payment transactions recognised in the year was as follows:
31 December
2020
£
31 December
2019
£
139,491
203,655
31 December
2020
£
31 December
2019
£
725,593
49,015
485,261
8,265
1,268,134
513,508
45,761
234,729
4,141
798,139
Share‑based payment expense
14. Trade and other payables
Trade payables
Social security and other taxes
Accrued expenses
Pension contributions payable
52
Destiny Pharma plc Annual Report and Financial Statements 2020Financial statements
15. Financial instruments – risk management
The company is exposed through its operations to credit risk, liquidity risk and foreign exchange risk. In common with
all other businesses, the company is exposed to risks that arise from its use of financial instruments. This note describes
the Directors’ objectives, policies and processes for managing those risks and the methods used to measure them.
Further quantitative information in respect of these risks is presented throughout these financial statements.
Financial instruments
Categories of financial instruments
Financial assets measured at amortised cost
– Cash
– Other financial assets
– Other receivables
Financial liabilities
31 December
2020
£
31 December
2019
£
9,744,217
7,479,641
—
102,579
—
72,119
– Financial liabilities measured at amortised cost
1,210,854
748,237
Credit risk
The company’s credit risk arises from cash and cash equivalents with banks and financial institutions. For banks and
financial institutions, only independently rated parties with minimum rating A‑/A3 or equivalent are accepted.
Liquidity risk
Liquidity risk arises from the Directors’ management of working capital and is the risk that the company will encounter
difficulty in meeting its financial obligations as they fall due. Further details on the going concern basis of preparation
are provided in note 1.
The maturity profile of the company’s financial liabilities, including estimated interest payments, is set out below.
31 December 2020
Carrying
amount
£
Contractual
cash flows
£
1 year or less
£
1 to 2 years
£
2 to 5 years
£
>5 years
£
Trade payables
725,593
725,593
725,593
Social security and
other taxes
49,015
Accrued expenses
485,261
49,015
485,261
49,015
485,261
Pension contributions
payable
8,265
8,265
8,265
1,268,134
1,268,134
1,268,134
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Contractual
cash flows
£
1 year or less
£
1 to 2 years
£
2 to 5 years
£
>5 years
£
513,508
513,508
Carrying
amount
£
513,508
31 December 2019
Trade payables
Social security and
other taxes
45,761
45,761
45,761
Accrued expenses
234,729
234,729
234,729
Pension contributions
payable
4,141
4,141
4,141
798,139
798,139
798,139
—
—
—
—
—
—
—
—
—
—
Foreign exchange risk
Foreign exchange risk arises when the company enters into transactions denominated in a currency other than its
functional currency. The main trading currencies of the company are pounds sterling, the US dollar and the euro.
The exposure to foreign exchange is monitored by the company’s finance function and exposures are generally
managed through hedging via the currency denomination of cash and any realised impact currently is not
material to the company.
—
—
—
—
—
53
Destiny Pharma plc Annual Report and Financial Statements 2020Financial statements
Notes to the financial statements continued
For the year ended 31 December 2020
15. Financial instruments – risk management continued
Foreign exchange risk continued
The company’s exposure to foreign currency risk at 31 December 2020 and 31 December 2019 was as follows:
31 December 2020
Cash and cash equivalents
Trade and other payables
Net exposure
31 December 2019
Cash and cash equivalents
Trade and other payables
Net exposure
Sterling
£
US dollar
£
8,494,309
1,246,336
Euros
£
3,572
Total
£
9,744,217
(803,286)
(451,086)
(13,762)
(1,268,134)
7,691,023
795,250
(10,190)
8,476,083
Sterling
£
6,460,328
US dollar
£
674,559
Euros
£
Total
£
344,754
7,479,641
(655,191)
(29,449)
(113,499)
(798,139)
5,805,137
645,110
231,255
6,681,502
The following table considers the impact of a change to the pounds sterling/euro and US dollar exchange rates of +/–
10% at 31 December 2020 and 31 December 2019, assuming all other variables, in particular other exchange rates and
interest rates, remain constant. If these changes were to occur, the figures in the table below reflect the impact on loss
before tax. This calculation assumes that the change occurred at the balance sheet date and had been applied to risk
exposures existing at that date.
10% increase in US dollar
10% decrease in US dollar
10% increase in euro
10% decrease in euro
31 December
2020
£
31 December
2019
£
(72,295)
88,361
926
(1,132)
(60,114)
69,885
(22,480)
24,151
16. Capital risk management
The Directors’ objectives when managing capital are to safeguard the company’s ability to continue as a going concern
in order to provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal capital
structure to reduce the cost of capital. At the date of these financial statements, the company had been financed from
shareholders. In the future, the capital structure of the company is expected to consist of equity attributable to equity
holders of the company, comprising issued share capital and reserves.
The company is not subject to any externally imposed capital requirements.
17. Financial commitments
In November 2020, the company entered into an exclusive licence agreement to obtain intellectual property rights
and materials relating to NTCD‑M3 from NTCD, LLC. Upon entering into the agreement, the company made a payment
of $3 million to NTCD, LLC. The company has agreed to use commercially reasonable efforts to develop and
commercialise NTCD‑M3. The company has agreed to make further payments under the agreement based on specified
clinical, regulatory and commercial milestones and, following commencement of commercial sales, to pay royalties on
future revenue generated from licensed products. Because of the uncertainties inherent in estimating the probability
and timing of future milestone events, possible future cash outflows under the agreement cannot be reliably measured.
At the date of approval of the financial statements, the Directors consider that it is more likely than not that the company
will be required to pay an additional milestone payment of $2 million on dosing the first patient in a Phase 3 clinical trial,
further milestone payments being obligations which will be confirmed only by uncertain future events that are not
wholly within the control of the company.
18. Related party transactions
During the year £40,319 (2019: £nil) was paid to Barker BioMedical GmbH for the services of Dr Debra Barker as
a Non‑executive Director of the company. The amount due to Barker BioMedical GmbH at 31 December 2020 was
£10,000 (2019: £nil). The balance is included in trade payables.
19. Ultimate controlling party
As no shareholder owns in excess of 50% of the total share capital of the company, the Directors consider there to be
no ultimate controlling party.
54
Destiny Pharma plc Annual Report and Financial Statements 2020Financial statements
Glossary
AHRQ
Agency for Healthcare Research
and Quality
AIM
The market of that name operated
by the London Stock Exchange
AMR
Antimicrobial resistance
ASHP
American Society of Hospital
Pharmacists
BARDA
Biomedical Advanced Research
and Development Authority
Carb-X
A biopharmaceutical accelerator
created as a partnership between
a number of governmental and
non‑governmental organisations,
to spur product development in
the anti‑bacterial field
CDC
Centers for Disease Control
and Prevention
CDI
Clostridioides difficile infections
CMS
China Medical System Holdings
Limited
The Code/Corporate
Governance Code
The UK Corporate Governance Code
published by the Financial Reporting
Council, as the same may be varied or
amended
The company
Destiny Pharma plc
EMA
European Medicines Agency
EMI
Enterprise Management Incentive
IDSA
Infectious Disease Society of America
EU
The European Union
FAO
The Food and Agriculture
Organization of the United States
FDA
US Food and Drug Administration
G20
The G20 is an international forum for
the governments and central bank
governors which includes the EU and
19 other countries
IFRS
International Financial Reporting
Standards (including International
Accounting Standards)
IMI
The Innovative Medicines Initiative
IND
Investigational new drug –
a temporary exemption from the
FDA’s requirement that a drug be the
subject of an approved marketing
application before being shipped
across state lines
GAAP
UK Generally Accepted Accounting
Practice as published by the FRC,
applicable for periods prior to
1 January 2015
IPO
Initial public offering
London Stock Exchange
London Stock Exchange plc
GAIN
Generating Antibiotics Incentives Now
LTIP
Long‑term incentive plan
GAMRIF
The Global Antimicrobial Resistance
Innovation Fund
LTIP EMI Options
The EMI‑approved options
granted pursuant to the LTIP
Employee Schemes
GBP
Pounds sterling
HAP
Hospital‑acquired pneumonia
HMRC
Her Majesty’s Revenue and Customs
ICU
Intensive care unit
LTIP Employee Schemes
The LTIP (EMI and non‑tax
advantaged (non‑EMI)) share option
schemes adopted by the company
on 18 April 2017, 25 January 2018 and
22 December 2020 for the benefit of
Directors and employees
55
Destiny Pharma plc Annual Report and Financial Statements 2020Financial statements Glossary continued
LTIP (NTA) Employee Options
The non‑tax advantaged options
granted pursuant to the LTIP
Employee Scheme
OIE
Office Internationale des Epizooties,
also known as the World Organisation
for Animal Health
ONS
Office for National Statistics
Ordinary shares
The ordinary shares of £0.01 each
in the capital of the company
UD
Universal decolonisation
UN
United Nations
VAP
Ventilator‑associated pneumonia
WHO
World Health Organization
QIDP
Qualified Infectious Disease Product
status granted by the FDA
WT
Wellcome Trust
R&D
Research and development
XF-70
A molecule from the XF drug platform,
distinct from XF‑73
SHEA
Society for Hospital Epidemiologists
of America
XF-73
Exeporfinium chloride
SIS
Surgical Infection Society
SPOR-COV
A biotherapeutic product for the
prevention of COVID‑19 and other
viral respiratory infections
MRSA
Methicillin‑resistant
Staphylococcus aureus
MSSA
Methicillin‑sensitive
Staphylococcus aureus
NHS
National Health Service
NIAID
National Institute of Allergy and
Infectious Diseases
NICE
National Institute for Health and
Care Excellence
NTAP
New Technologies Add‑on Payment
NTCD-M3
Non‑toxigenic Clostridium difficile
strain M3
OECD
The Organisation for Economic
Co‑operation and Development,
an intergovernmental economic
organisation with 35 member countries
56
Destiny Pharma plc Annual Report and Financial Statements 2020 Corporate information
Registered office
Destiny Pharma plc
Unit 36 Sussex Innovation Centre
Science Park Square
Falmer
Brighton BN1 9SB
Nominated adviser
and joint broker
finnCap Limited
One Bartholomew Close
London
EC1A 7BL
Company number
03167025
Website
www.destinypharma.com
Company Secretary
Shaun Claydon
Joint broker
WG Partners
85 Gresham Street
London EC2V 7NQ
Solicitors
Irwin Mitchell LLP
40 Holborn Viaduct
London EC1N 2PZ
Covington & Burling LLP
265 Strand
London WC2R 1BH
Registrar
Link Market Services Limited
Link Group
Central Square
29 Wellington Street
Leeds
LS1 4DL
Auditor
Crowe U.K. LLP
55 Ludgate Hill
London
EC4M 7JW
Public relations
Optimum Strategic
Communications
Warnford Court
29 Throgmorton Street
London EC2N 2AT
Imagery throughout
Cover
Staphylococcus aureus
Page 7
Novel Coronavirus
Page 8
Staphylococcus aureus
Bacterium Enterobacteriaceae
Pages 10 and 11
Staphylococcus aureus
Staphylococcus aureus
Novel Coronavirus
SARS-CoV-2 virus
Page 4
Page 6
Staphylococcus aureus
Page 13
Bacterium Enterobacteriaceae
Clostridioides difficile
Page 23
SARS-CoV-2 virus
MRSA
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