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e-therapeutics plc
17 Blenheim Office Park
Long Hanborough
Oxfordshire
OX29 8LN
United Kingdom
(Registered Office)
Tel: +44 (0) 1993 880000
Fax: +44 (0) 1993 880207
Incorporated in England and Wales, company number: 04304473
etherapeutics.co.uk
Accelerating
the path to
better therapies
Annual Report 2021
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We Construct
in-silico Models of Biological Functions
We Identify
Novel Targets and Mechanisms
We Design
Novel Small Molecules and RNAi Therapeutics
Strategic Report
01 Highlights
02 Chairman’s Statement
04 Chief Executive Officer's Statement
08 Our Business Model
10 Our Approach
12 Our Strategy
14 Our People
16
18 Key Performance Indicators
20 Risk Management
S.172(1) Statement
27
Financial Review
Governance
Executive Team
Scientific Advisory Board
28
30
31 Board of Directors
32 Directors’ Report
34 Corporate Governance Statement
42
Audit Committee Report
43 Directors’ Remuneration Report
51 Directors’ Responsibilities Statement
Financial Statements
Independent Auditor’s Report to the Members of e-therapeutics plc
Consolidated Income Statement
52
58
58 Consolidated Statement of Comprehensive Income
59 Consolidated Statement of Changes in Equity
60 Balance Sheets
61 Consolidated Statement of Cash Flow
62 Company Statement of Cash Flow
63 Notes to the Consolidated Financial Statements
Other
77 Notice of Annual General Meeting
79
82 Advisers
Explanatory Notes to the Resolutions
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Highlights
Fundraises during the year are enabling the Group’s next stage
of growth and value creation
Operational
Financial
Revenue
£0.3m
(2020: £0.5m)
Year end cash
£13.0m
(2020: £3.8m)
Increase/(decrease) in cash in the year
£9.2m
(2020: £(2.1)m)
R&D spend
£2.7m
(2020: £2.1m)
Operating loss
£4.5m
(2020: £2.9m)
R&D tax credit receivable
£0.8m
(2020: £0.6m)
Management restructure and subsequent
appointment of Ali Mortazavi as CEO
Ali Mortazavi joined us as Executive Chairman towards the start of the year
with Iain Ross stepping down as Non-Executive Chairman, Ray Barlow
stepping down as Chief Executive Officer and Steve Medlicott stepping down
as Chief Financial Officer. Reflecting his commitment to e-therapeutics,
with effect from 12 October 2020, Ali Mortazavi was appointed as Chief
Executive Officer. Post year end, Trevor Jones, who has been an independent
Non-Executive Director since 2015, has been appointed as Non-Executive
Chairman and Karl Keegan was appointed Chief Financial Officer in March.
Expansion into RNA Interference (“RNAi”)
In May 2020, the Company announced expansion into RNAi as a
therapeutic modality having designed a novel GalNAc small interfering
RNA (siRNA) that will leverage our expertise in network biology and, since
the year end, filed a patent application and commenced experiments to
characterise the platform. The Company expects to offer this proprietary
platform to potential partners in 2021-22.
Collaboration with Galapagos NV
(“Galapagos”) announced
In June 2020, the Company announced a collaboration with Galapagos to
identify new therapeutic approaches to modulate a specific mechanism
involved in idiopathic pulmonary fibrosis (“IPF”). Significant progression
has been made on this collaboration during the year and post period, this
collaboration has achieved two success-based milestones. The Company
remains in business development discussions for both network-driven and
functional genomics technologies with multiple potential partners.
Scientific Advisory Board (“SAB”) launched
During the year, a SAB was created. Headed by Dr Paul Burke, with
members Dr Bill Harte and Professor John Mattick, who all have
considerable industry experience and will provide strategic advice and
insight on transforming the drug discovery process.
COVID-19 project
In response to the COVID-19 pandemic, the Company initiated a project
to identify approved and known drugs, both alone and as synergistic
combinations, that could rapidly be repositioned for the treatment of
COVID-19.
Compounds identified through the Company's network-driven discovery
platform have been tested by Wuxi App Tec in cell-based assays and show
potent anti-inflammatory and antiviral activity. This activity is expected to
be generically applicable, raising the prospect of utility against both existing
and new emergent strains of coronavirus.
The Company strengthened
its financial position raising
total gross funds of £13.2m
Completed equity fundraises of £1.6m and £11.6m in February and July 2020 respectively to scale the Group’s business model
with focus on further developing the Group's informatics platform capabilities, building and populating an internal pipeline of
high-conviction early assets and expanding the team to support the scale-up.
This is the foundation of the Group's strategic aims, as shown on pages 12 and 13
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Chairman’s Statement
Dear Shareholder,
During the financial year ended 31 January 2021, we have seen
good momentum in growing shareholder value, leveraging the
funds raised to deliver scientific progress and building upon
current and prospective partnerships and collaborations. The
Company has ended the period in a secure financial position
which will enable it to make significant progress in the year
ahead and beyond.
In my first statement as Chairman, I am
pleased to report that the Company is now
well positioned for future success. Over the last
12 months e-therapeutics has made significant
progress across the business and raised
significant funding to support its strategy for
value creation. The proceeds have facilitated
a number of initiatives, with a particular focus
on expanding the Company’s computational
platform capabilities, internal asset pipeline
prospects and success in securing partnerships
and collaborations.
In light of the recent uncertainty arising from
the COVID-19 pandemic, we have been quick
to adapt to the changing circumstances and
there has been minimal impact on our business.
Indeed for our Company, the situation has
opened up new opportunities. The speed at
which the Company has reacted to changing
circumstances and the support it has offered
its employees is a credit to the leadership of
CEO, Ali Mortazavi and the Executive Leadership
Team.
Executing on a focused
strategy
e-therapeutics’ ambition is to transform the
drug discovery process. We are leveraging our
computational platform and network biology
expertise to accelerate the identification
and development of effective therapies, in
particular through the synergy between our
computational approaches and our recently
added proprietary RNAi technology platform.
Our goal is to establish e-therapeutics as the
leading platform in computational biology:
1.
To win commercial deals and achieve
industrial validation of our informatics
platform
2.
Establish a validated RNAi platform
3.
Develop high-conviction internal assets
4.
5.
Develop the Company to a sufficient
scale through platform development and
recruitment
Provide guidance, development and
feedback to people to enable them to fulfil
their role
The period has seen significant delivery
against this strategy with the following notable
achievements:
• The Company announced a collaboration
with Galapagos to identify new therapeutic
approaches to modulate a specific
mechanism involved in Idiopathic
Pulmonary Fibrosis (IPF) and potentially
other fibrotic indications. In addition, the
Company has existing partnerships with
Novo Nordisk and this partnership on Type-
2 diabetes has been extended with the
potential to progress to a larger discovery
project . The Company expansion into RNA
interference (RNAi) and the establishment
of a proprietary siRNA platform with siRNA
as the drug modality of choice for our
internal pipeline was a key achievement
during 2020.
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The Company continued to build its Executive
competencies with the appointments of Laura
Roca-Alonso as Chief Business officer, Stephanie
Maley as Chief People Officer and, post period,
the appointment of Karl Keegan as Chief
Financial Officer.
I should like to thank our dedicated staff for their
very significant contribution to the Company
and for their continued diligence, agility and
commitment throughout this difficult time.
In my opinion, the Board restructuring has
denoted a turning point in the leadership
and direction of e-therapeutics and we are
now in a strong position under the leadership
of Ali Mortazavi to execute on our strategy. I
warmly welcome all the new appointments
to our company. I am delighted to have been
appointed as Chairman and I now look forward
to completing the search for an additional
Non- Executive Director to strengthen the Board
further and to support the Company’s future
success.
Professor Trevor Jones CBE
Independent Non-Executive Chairman
12 May 2021
• Significant progress has been made on
our GAINAc siRNA platform and we have
recently filed a patent application relating
to specific hepatocyte targeting for
liver gene silencing which will provide a
competitive advantage in developing our
RNAi therapeutic pipeline.
•
•
•
•
In addition to its partnerships/
collaborations, the Company intends
to extract and retain further value from
its platform by building an in-house
pipeline of assets to provide out-licensing
opportunities, through a data-driven and
flexible partnering strategy at the right
value inflection points. The Company has
developed a proprietary disease-agnostic
platform to produce valuable disease
biology insights and potential drug targets
and candidates.
In December 2020, the Company
announced it had deployed its network
biology platform to identify clinical
stage compounds that either singly or in
combination could be repurposed rapidly
to treat COVID-19 and it has generated very
encouraging results.
Innovations continue to be made to our
core platform technologies including
increased automation and in the area of
target identification. Significant headway
has been made in recruiting further skilled
people to the team.
In order to support and develop our
people, the appointment of our Chief
People Officer has resulted in new
initiatives, regular interactive learning
and cross-team collaboration sessions as
well as the implementation of a new HR
framework.
Strengthened financial
position
During the period under review, the
Board and management have continued
to implement robust financial control. A
particular achievement during the period was
the Board’s commitment to strengthen the
financial position of the Company by securing
new investors and raising funds to enable the
Company’s next stage of growth and value
creation.
I am delighted that in the most recent fund raise
we welcomed new institutional shareholders
and retail shareholders, through a specific Retail
Offer via PrimaryBid. As a result the overall
size and shape of our shareholder base has
significantly changed. I should like to thank
all our new and existing shareholders for their
continued support.
The funds raised in the period gives the
Company sufficient working capital for at least
12 months and with an element of discretionary
spend.
Board and Executive Team
In February 2020, we announced a restructuring
of the Board and Executive Team resulting in
the appointment of Ali Mortazavi as Executive
Chairman. In addition, Michael Bretherton
was appointed Non-Executive Director.
Subsequently in October 2020, Ali Mortazavi was
also appointed Chief Executive of the Company
in addition to his role as Chairman.
Post period in March 2021, a further
reorganisation of the Board resulted in my
appointment to the role of Independent
Non- Executive Chairman with Ali Mortazavi
continuing in his role as Chief Executive Officer.
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Chief Executive Officer's Statement
Prior to investing and becoming the CEO, I conducted detailed
due diligence into the full range of computational approaches
in drug discovery. I was struck by the Company’s “biology first”
approach and the interest its network biology capabilities were
receiving from large biopharmaceutical companies
I am pleased to report my first set of full year
results for e-therapeutics as CEO. We have begun
to build momentum as we move forward with
our strategy, accelerated by our substantial new
investment completed last year.
Despite some of the most challenging conditions
that we have all seen in our lifetimes, this year
has been a pivotal and successful year for
e-therapeutics. The COVID-19 pandemic has
affected every individual in very different and
sometimes tragic ways but, out of necessity, it
has also opened up opportunities for businesses
such as ours.
e-therapeutics’ expertise in network
biology and drug development, coupled
with our nascent RNAi platform, gives
us a synergistic competitive advantage
through effective drug discovery
target identification and a validated
development path. This expertise
underpins many of the operational highlights
for the Company this year. Our collaboration
agreement with Galapagos in IPF, with
potential in other fibrotic conditions and
our type-2 diabetes agreement with Novo
Nordisk are validation of our platform,
highlighting the ability of our network
approach and expertise to go beyond pure
in silico predictions and identify potentially
clinically viable interventions with supporting
laboratory data.
The significant progress made on our
GalNAc siRNA platform will enable us to
benchmark it against those of competitor
RNAi companies. In parallel, we have also
established a dedicated group to leverage
our computational network biology discovery
platform specifically at target genes in
hepatocytes, which are amenable to GalNAc
delivery. We believe that the combination
of these elements will enable us to offer an
attractive business development proposition
to potential collaborators.
e-therapeutics’ computational platform
is capable of discovering novel drug
targets and active small molecules and of
uncovering new biological mechanisms and
genetic insights. In our COVID-19 project
launched this year, we have deployed that
capability to investigate known compounds
in a novel context and have uncovered new
mechanisms that mitigate infection-induced
hyperinflammation as well as discovering a
potent anti-viral strategy.
The most significant challenge for the
Company was having sufficient capital to
allow us to realise opportunities and I am
very pleased that we were able to secure
the financing to execute on our strategy and
business model.
Strategy
e-therapeutics’ ambition is to transform
the drug discovery process, leveraging its
computational network biology platform
(drug discovery) to find novel targets to
address mechanisms underpinning complex
disease. The business model incorporates
out- licensing of targets and compounds in
addition to the development of an in house
pipeline of RNAi therapeutics.
Drug Discovery –
Computational Network
Driven Biology Platform
The Company was, and is, one of the
few purely “biology first” computational
companies that I have come across, in
contrast to competitors who are primarily
focused on computational approaches to
small molecule chemistry. This approach
starts with a biological question such as
“which processes in COVID-19 disease
might it make most sense to address?” One
answer could be “hyperinflammation”. From
a knowledge of just some of the proteins
involved we are able to use our proprietary
platform and data resources to construct
bespoke network models that capture the full
complexity of this process and predict missing
information. These models are analysed using
our cutting- edge network analytics which
leverage network science, network statistics
and ML/AI approaches to derive new drug
targets, biological mechanisms and active
small molecules, as well as providing genetic
support for target choices.
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Establishing world
leading hepatocyte
expertise, generating
novel hepatocyte-
expressed targets and
a focus on expanding
our collaborations
The platform is disease agnostic and the
Company has completed multiple in-house
and partnered projects in diverse disease
areas such as fibrosis, type-2 diabetes,
CNS and oncology indications, to name
but a few. I believe that e-therapeutics is
addressing the most critical unmet need
in drug discovery/development – the
modelling and interpretation of complex
human biology. Biological functions are
controlled by networks of genes and proteins
and we construct in silico models of these
functions to interpret human biology/disease
states. We believe that the Company has
the most complete datasets, predictive AI/
ML algorithms and the most experienced
computational biologists, informaticians and
data scientists in the field of network biology
and these assets provide an important barrier
to entry for competitors.
Informatics and drug
development
Historically, the Company has operated a
hybrid partnership/collaboration model and
the use of small molecules as a drug modality
for its internal pipeline. However, the time,
costs and time to value inflection in small
molecule drug development makes this
difficult for a small company to prosecute.
By way of example, even after our in-house
computational methods have generated
a biological hypothesis, target, active
chemical matter and an indication to pursue,
it typically takes 3-4 years and c.US$3-5m
to create a lead compound to take into
IND enabling studies. In addition, a further
2 years would most likely be needed to
generate human phase 1 data where potential
partnership discussions could begin. Clearly,
these timelines and costs in addition to the
additional centralised overheads are hugely
capital intensive and at most, we would only
be able to prosecute one high conviction
candidate.
As such, small molecule drug development
now forms part of the Company’s
partnership/ collaboration strategy and we
will endeavour to structure transactions
where we have some upside economics/
opt-ins with biopharmaceutical collaborators
who use e-therapeutics’ network driven
computational biology platform but who
wish to develop small molecules in the clinic
independently and at their own cost.
RNAi Platform the new drug
modality of choice for our
internal pipeline
One of the key achievements of the year has
been to establish RNAi as the drug modality of
choice for our internal pipeline. Importantly,
this is not a choice that many companies
can easily make and we have deep in-house
expertise in this field which we believe gives
us a competitive advantage. It is fair to say
that without this expertise, it would have
taken a significantly longer time to file IP and
develop the multiple RNA chemistries which
we have developed this year.
Liver Presents Large
Commercial Opportunities
for RNA Therapies
Focused delivery of siRNAs to the liver has
striking advantages over small molecules in
terms of timelines, costs and value inflection
points: in contrast to the 3-4 years and
c.US$3-5m to create a lead small molecule
compound an siRNA attached to a GalNAc
delivery system can be synthesised in 4-5
months and for a cost of c.US$200-300K. In
addition, as one of the most sought-after
drug modalities, there have been multiple
collaboration transactions pre-IND filing as
opposed to at a later stage (Phase 1-2) with
small molecules.
We have recently filed a patent application
related to the chemistry of novel GaINAc
conjugated siRNAs. In addition, a number of
siRNA constructs have been designed with
potentially beneficial safety and potency
profiles and additional patent applications
are expected to be filed shortly. We believe
that the new patent applications, combined
with our extensive know-how, will provide
a significant competitive advantage in
further developing our RNAi therapeutic
pipeline. The new constructs will include
features to minimise potential microRNA
off-target effects, thermally destabilising
regions of the siRNA for reduced toxicity and
important position-specific stabilisation
chemistries to improve potency. Multiple in
vitro and in vivo experiments are underway
to test these constructs with contract
research organisations in Germany and
China. We expect to offer our proprietary
platform to potential business development
partners in 2021-2022 and anticipate that
these constructs will demonstrate at least
equivalence to competitors' platforms.
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Chief Executive Officer's Statement
(continued)
Liver Focused Informatics
Team
The advantages of RNAi as a drug modality
extend beyond the delivery platform. In
Q3 2020, we established a liver-focused
scientific group which is actively engaged in
curating, generating and mining hepatocyte-
specific data and knowledge resources
specifically designed to complement our
computational platform. This focus on
one cell type is an important driver for
novel targets and mechanisms and we
believe will improve the performance
of our network models and algorithms.
Efforts in this area include proprietary data
resources in hepatocyte biology such as our
hepatocyte-specific interactome, which is
an important and recently completed map
of hepatocyte network biology, a complete
genome-wide siRNA signature database for
human hepatocytes and a comprehensive
hepatocyte-centric knowledge resource
leveraging natural language processing (NLP),
our in-house proprietary data, knowledge
graphs and AI-driven inference approaches.
By deploying our cutting-edge informatics
platform alongside our novel RNAi technology
platform, we believe that we can harness the
many therapeutic opportunities in the liver
which have yet to be identified.
The hepatocyte team comprises highly skilled
scientists and physicians whose objective
is to identify novel hepatocyte-expressed
targets for complex indications such as
cardiovascular and metabolic diseases. This
team will conduct validation of those targets
in appropriate phenotypic assay systems and
animal models and assess genetic support for
the therapeutic targets using our functional
genomics capability. We are in a unique
position of using our “Hepatocyte Atlas” and
computational modeling of biology to feed
a drug platform which can have multiple
shots on goal due to the costs and timelines
outlined.
Partnerships and
Collaborations
In Q2 2020, we announced a collaboration
agreement with Galapagos to identify new
therapeutic approaches to modulate a
specific mechanism involved in IPF and
potentially in other fibrotic indications with
high unmet need. The project has successfully
achieved two pre-defined milestones to
date. In this period we also extended our
collaboration with Novo Nordisk in type 2
diabetes until March 2021, after which there
is a six month option period to progress the
collaboration to a larger discovery project.
COVID-19 Project
Our project to find compounds for the
treatment of COVID-19 using our platform
generated very encouraging results. In Q2
2020, small molecule compounds predicted
by our platform were tested in validated
SARS-CoV-2 in vitro assays at WuXi AppTech.
These compounds showed potent anti-
inflammatory and anti-viral activity and
confirmed our in silico predictions. We
identified a clear mechanism, target and
clinical stage compounds. This activity
also extended to other alpha and beta
coronaviruses and we expect this to be
generically applicable, raising the prospect
of utility against both existing coronaviruses
that cause serious disease such as SARS
and MERS and against new emergent strains
of coronavirus. This data set is a strong
validation of our platform and the network
biology approach to drug discovery.
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Ali Mortazavi
Chief Executive Officer
12 May 2021
Capital and People
The success of the two fundraises in the year
have enabled us to make significant hires in
all aspects of our business and headcount
since I joined in February 2020 has risen from
16 to 25. I would like to thank the dedicated
team, the Board and our shareholders for
their hard work and support during the year.
I believe that we have a unique blend of
individual skillsets in the Company and look
forward with great confidence to the coming
year and beyond.
Outlook
The last twelve months have been very
encouraging as we have continued to develop
our strategy and consistently demonstrated
our scientific capabilities and further
validation of our platforms. Importantly, with
further investment to continue to develop
our capabilities we now enter the next year
ready to deliver on our exciting plans and with
multiple opportunities.
The Company will look to maximise the value
of its computational network driven biology
platform through creating deal structures and
positioning e-therapeutics as a global leader
in network biology. Our ambition is to secure
multiple research collaborations each year.
The Company will also look to commence
RNAi platform partnerships/deals - an area
currently commanding significant and
attractive deals - and we anticipate business
development opportunities in the second half
of 2021.
Our priorities for the coming year are to:
• Expand computational platform
collaborations
• Establish world leading hepatocyte
expertise
•
Identify novel hepatocyte-expressed
targets
• Commence RNAi in vivo studies and
platform partnerships
The Company aims to maximise the value
of its internal platform capabilities through
two core channels - entering into platform
collaborations with strategic partners and
through the generation of in-house datasets
to support development candidates. In
addition to its partnerships, the Company
intends to extract and retain further value
from its platform by building an in-house
pipeline of assets to provide out-licensing
opportunities, through a data-driven and
flexible partnering strategy at the right value
inflection points.
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Our Business Model
e-therapeutics has a powerful data-driven approach to drug
discovery. We model biology to better address disease
complexity.
What is network biology?
We often take our health for granted. The cells and tissues in our
bodies work steadily and reliably in the face of constant challenge.
This stability comes about because the underlying molecules (such
as proteins and nucleic acids) are organised to function in complex,
robust networks, giving rise to reliable and predictable behaviour
(a phenotype). Even when we develop a disease, the underlying
networks remain robust and difficult to change.
Modelling and analysis of these networks provides a novel approach
to drug discovery that explicitly considers the true complexity
of biology. By representing, as closely as possible, the biological
systems we are seeking to perturb we increase the likelihood of
identifying and developing effective therapies.
Our platform
Our data-driven approach addresses some of the key challenges of
the industry, such as extracting value from big data and incorporating
the full complexity of disease in drug discovery. Our proprietary in
silico platform serves as a powerful laboratory, which enables us to
computationally test millions of potential therapeutic interventions.
Our NDD (network-driven drug discovery) technology performs
computational phenotypic screens to quickly identify more
efficacious drugs, with insights into their mechanism of action.
Deploying assays that replicate human disease biology more closely
in early screening greatly improves translatability and helps avoid
extremely costly late-stage failures.
Our GAINs (genome-associated interactions networks) technology
interprets genomic data in the context of the biological networks
in which the genes function. This allows us to extract value from
complex, noisy datasets and identify key disease-related biological
processes and pathways that can support a target identification or an
NDD project.
Our RNAi platform, currently in development, will complement our
powerful and unique computational toolset. RNAi constructs are
highly specific and can be designed to modulate any gene, enabling
us to rapidly harness novel targets identified computationally.
8
e.g. Network modelling cytokine storm in Covid-19
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How we create value
Disease of Interest
Biological question
Extensive network and
disease biology expertise
Experimental assay systems
informed by network biology
ETX
in silico
Discovery Engine
Proprietary databases:
empirical data integrated
with AI generated data
Collection of network algorithms
aimed at biological understanding,
compound and target prediction
Modality agnostic
RNAi based
Outputs from our computational platform include:
Novel biological hypotheses
Assays to assess those hypotheses
Active compounds
Mechanism of action (MOA) of active compounds
Novel target identification and validation
Human genetic validation
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Our Approach
-
NDD - Small molecule discovery
Target identification
GAINs - Functional genomics
Genomic dataset
collation (GWAS/meta
analyses)
ETX in silico
Discovery Engine
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-
NDD - Small molecule discovery
Target identification
GAINs - Functional genomics
Genomic dataset
collation (GWAS/meta
analyses)
ETX in silico
Discovery Engine
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Our Strategy
Our strategy is designed to increase growth and improve our long-term financial
performance. An overview of the strategic and operational milestones reached in 2020/21
and our future priorities are provided in the following table:
1
Secure commercial deals
and achieve industrial
validation of our
informatics platform
Establish
a competitive
RNAi platform
2
Advancements in the year
• Collaboration with Galapagos announced, to identify new
Advancements in the year
• Announcement of our expansion into RNAi as a therapeutic
therapeutic approaches to modulate a specific mechanism
involved in IPF
modality
• Design, with patent filed, of novel GalNAc-conjugated siRNAs
• Appointment of Chief Business Officer and expansion of
(short interfacing RNA)
business development team planned
• New team established to identify novel hepatocyte-expressed
therapeutic targets
Plans for the coming year
•
Implement strategic plans developed during the year
Plans for the coming year
• Completion of characterisation experiments
• Progress current collaborations to key milestones, validating
the performance of our in silico Discovery Engine
• We expect to offer our proprietary RNAi platform to potential
business development partners in the coming financial year
Link to KPIs
• Number of significant new commercial deals signed during the
year
Link to KPIs
• R&D spend
• Number of significant new commercial deals signed during the
year
Link to principal risks
• Funding the business
• Protecting our IP
• Competition and new technologies
• Recruiting the best people
• Retaining and motivating the best people
• Engaging a team during remote working
• Ensuring the integrity and security of our information
Link to principal risks
• Funding the business
• Protecting our IP
• Competition and new technologies
• Recruiting the best people
• Retaining and motivating the best people
• Engaging a team during remote working
• Developing employees and sharing knowledge
• Reliance on key suppliers
• Ensuring the integrity and security of our information
1
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12
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Develop high-
conviction
internal assets
3
Advancements in the year
• Experiments commenced to validate
siRNA constructs
• Completed human hepatocyte-specific
protein interactome
4
Develop the
Group to a
sufficient scale
through platform
development and
recruitment
5
Provide guidance,
development and
feedback to people
to enable them to
fulfil their role
Advancements in the year
•
Innovations continue to be made to our
core platform technologies including
increased automation and in the area
of target identification
• Significant headway has been made to
recruit skilled people, increasing from
15 FTEs at the date of the July
fundraise to 25 FTEs at the year end
Advancements in the year
• Appointment of Chief People Officer
•
Introduction of regular interactive
“Lunch and Learn” sessions and
monthly Group-wide meetings to
encourage cross-team collaborations
•
Implementation of new HR system
Plans for the coming year
Identify indications of interest
•
• Design RNAi constructs to down-
regulate novel target genes
Plans for the coming year
• Further evolve in silico Discovery Engine
to support scale up and accelerate both
partnered and in-house projects
Plans for the coming year
• Develop performance management
and talent management as part of our
HR strategy
• Continue to recruit skilled people in line
with the plans for scaling our business
model
Link to KPIs
• R&D spend
Link to KPIs
• R&D spend
• Employee turnover
• Employee retention
• Average headcount
Link to KPIs
• R&D spend
• Employee turnover
• Employee retention
• Average headcount
Link to principal risks
• Funding the business
• Feasibility of drug candidates
• Protecting our IP
• Recruiting the best people
• Retaining and motivating the best
people
• Engaging a team during remote working
• Developing employees and sharing
Link to principal risks
• Funding the business
• Protecting our IP
• Recruiting the best people
• Retaining and motivating the best
people
• Engaging a team during remote working
• Developing employees and sharing
Link to principal risks
• Funding the business
• Recruiting the best people
• Retaining and motivating the best
people
• Engaging a team during remote working
• Developing employees and sharing
knowledge
knowledge
• Ensuring the integrity and security of
knowledge
• Ensuring the integrity and security of
our information
• Ensuring the integrity and security of
our information
our information
13
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Our People
Developing an employee proposition which engages
and retains our people, whilst also ensuring their wellbeing,
has been a key priority. The global pandemic and people
expansion plans could have had a negative impact on our
culture, however, by paying attention to onboarding and
employee voice we have retained our positive ethos.
Stephanie Maley
Chief People Officer
Highlights in the current year:
Plans for the coming year:
• Enhanced our family leave policies, benefits and pay
• Create additional employee engagement initiatives
•
Implemented Reward Gateway to engage our people and
provide additional benefits
• Launched our new HR information system, BambooHR
• Continue to attract and retain the best people
•
Introduce online performance management framework
Our culture
We value individuality and self-awareness
and at the heart of our organisation is a
philosophy of honesty and authenticity. The
Group adopts a policy of equal opportunities
and diversity in the recruitment and
engagement of staff, as well as during the
course of their employment. We endeavour
to promote the best use of our people on
the basis of individual skills and experience,
matched against those required for the work
to be performed.
We recognise the importance of investing
in our people, as identified in our strategic
objectives on pages 12 and 13, and provide
opportunities for training and personal
development and encourage our people to be
involved in the planning and direction of their
own work in line with our people strategy.
Wellbeing
The wellbeing of our employees is important
to us. During the year, we have introduced
Reward Gateway, an employee engagement
platform to recognise and support
employees’ mental, physical and financial
wellbeing. We want to encourage people
to get out and stay fit where it has been
legal and safe to do so. We participated in
a charitable event for the Helen & Douglas
House called ‘The Race from North Pole’. This
challenged our people to walk, cycle, scoot,
hop, skip or run as many miles as possible
during December to raise money to help
terminally ill children and fund emergency
lifeline care over Christmas.
Health & Safety
First and foremost, we want to ensure that
our people are healthy and safe. This is why
we invoked a Group-wide working from
home policy on 9th March, weeks before the
government mandated lockdown, and we
have continued to work from home since
then. We will only resume office-based
working when we believe it is safe to do so.
Flexible Working
In order to support our people working from
home, we have provided all the equipment
needed to work safely and comfortably.
Remote working has brought its challenges,
but through personal engagement and
communication, we have worked to ensure
everyone has had the flexibility to manage
their own work life balance during the
pandemic. We have bolstered our remote
working policies and held various successful
virtual social events to reiterate the value
each and every person brings to the team.
Attracting & developing talent
Remote working has also allowed us to
broaden our search for the best candidates
in our recruitment drive following the
fundraises. Whilst previously we have
focussed on hiring people who can easily
14
access our Oxford office, instead we have
been able to consider people who are outside
not only Oxford, but also the UK. This has
generated an increased interest in our roles
and we have been able to hire a number of
high calibre candidates who would previously
not have been attracted due to their
geography.
Engaging our people
We advocate an open culture where people
are free to express their thoughts and ask
questions. We hold regular virtual Company
Forums to which everyone is invited, where
key company messages are communicated,
views and opinions sought. We have
undertaken surveys to capture feedback from
all our people in order to help us gauge and
identify ways in which we can further support
them. We have revised our family-friendly
and flexible working policies to ensure that
each employee is supported in finding a work
pattern that suits them. Our policies and HR
processes have been supported by the recent
introduction of a new HR system.
Stephanie Maley
Chief People Officer
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Our people are vital to our success and the current financial year has
brought unique challenges in ensuring we provide the right environment
to allow each and every person to continue being able to do their best
work. The advancement of our HR strategy during the year has been
underpinned by the appointment of our Chief People Officer.
We have worked closely together on both internal
projects and projects with our external partners, covering
several therapeutic areas, including neurodegenerative
diseases, fibrosis and our recent COVID19 project. We have
combined our expertise in biology and computational
biology and have successfully found novel approaches to
target disease processes and to gain insights into biological
mechanisms. We enjoy working together and as part of
a cross-functional team of talented people who work
passionately toward a shared goal.
Inȇs de Santiago
Principal
Computational
Biologist
Marie Weston
Principal Disease
Biologist
The opportunity that e-therapeutics has provided exceeds the
expectation of any newly graduated student. Research is at the
heart of the company’s operations and is the reason my job keeps
me interested. There is a great culture within the company with a
key factor being trust, it has eased the pressure of starting a new
role fresh out of university. The freedom given to you surrounding
work allows you to explore solutions that would not be found if you
were just completing regimented tasks.
Jonah Lloyd
Scientific Software
Engineer
Throughout the coronavirus pandemic we have continued to support
our employees working remotely by strengthening our range and use of
technology. We have established a concierge-style onboarding experience
to ensure that new employees have the right tools and information from
day one, we have also held 1:1 on-demand training sessions to increase the
adoption of our collaboration tools.
During the year we ran a 4-week awareness campaign to coincide with our
introduction of Reward Gateway, helping to raise the importance of mental
and physical wellbeing for our staff; and following staff feedback we have
implemented the Icebreaker app to encourage staff to regularly take 15
minutes to network with a randomly paired colleague, build relationships
and reduce isolation.
Callum Bowdrey-
Roberts
Information
Governance &
Digital Operations
Manager
15
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Financial Review
Revenue
£0.3m
(2020: £0.5m)
(2019: £0.0m)
R&D Spend
£2.7m
(2020: £2.1m)
(2019: £3.7m)
Operating Loss
£4.5m
(2020: £2.9m)
(2019: £5.1m)
Loss for the year
£3.7m
(2020: £2.3m)
(2019: £4.0m)
Cash Balance
£13.0m
(2020: £3.8m)
(2019: £5.9m)
Cashflow movement
£9.2m
(2020: £(2.1)m)
(2019: £(1.2)m)
R&D Credit Receivable
£0.8m
(2020: £0.6m)
(2019: £1.1m)
Average Headcount
18
(2020: 16)
(2019: 18)
1616
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Our people and
processes have
responded well
to a financial year
that has brought
a lot of change
to e-therapeutics
– with a new
management
team and gross
fundraises totalling
£13.2m in the year
enabling us to focus
on streamlining and
scaling our business
model and pushing
forward with our
strategic aims
Operating loss
The operating loss for the year, of £4.5m (2020:
£2.9m), is £1.6m greater than the operating
loss in the prior year, due to the one-off
administrative expenses during the current year
referred to above and as plans for expanding
the business are put into motion.
R&D tax credits
We are anticipating an R&D tax credit of £0.8m
(2020: £0.6m) to be received in relation to the
current year, bringing the loss for the year to
£3.7m (2020: £2.3m). The R&D tax credit claim
has not yet been submitted to HM Revenue and
Customs, yet historically the amounts received
have been materially in line with the receivable
booked at the year end.
Cash flow
The year-end cash position is £13.0m (2020:
£3.8m), with the most significant inflow
during the year being the gross fundraises of
£13.2m, with associated costs of £0.6m. After
adjusting for the net fundraises, the R&D tax
credit received during the year, of £0.6m (2020:
£1.1m), the non-cash charges of share options
under IFRS 2, of £0.4m, and depreciation,
amortisation and impairment of £0.1m, the
underlying cash burn of £4.0m (2020: £3.2m) is
broadly in line with the operating loss.
Financial outlook
In the coming financial year, we will drive
forward with the strategic plans formulated
during the large mid-year fundraise, validating
our platform technologies, developing our RNAi
platform and progressing our high-conviction
in-house RNAi and small molecule assets.
Our budget, which has been prepared taking
risk factors such as Covid-19 and Brexit into
consideration, shows that we have sufficient
funds to continue in operational existence
for at least 12 months from the signing of
these financial statements. We anticipate a
significant increase in our rate of spend, but
our budget remains prudent and incorporates
discretionary spend which would only be
incurred if data supported that it remained the
best strategic direction for the Group.
Ali Mortazavi
Chief Executive Officer
12 May 2012
Revenue
In June 2020, we signed a collaboration
agreement with Galapagos to identify new
therapeutic approaches to modulate a specific
mechanism involved in IPF and potentially
in other fibrotic indications. Revenue during
the year, of £0.3m, relates to the partial
recognition of upfront payments and achieved
milestones during the year, in accordance with
IFRS 15. Additional revenue is expected to be
recognised in the coming financial year as this
collaboration further advances. The business
development functions of the Group have been
strengthened during the year, including the hire
of a Chief Business Officer in April 2020, and it
is expected that further collaborations will be
signed in the coming financial year. Revenue in
the prior year, of £0.5m, related to deals with
Novo Nordisk in the area of type-2 diabetes,
which successfully completed in the prior year.
Fundraises
The Fundraises during the year (gross £1.6m in
February 2020 and gross £11.6m in July 2020)
have enabled the Group to refocus its strategy
on enhancing and validating our platform
technologies and developing our internal asset
pipeline. It was also announced during the
year that e-therapeutics would be expanding
into RNA as a therapeutic modality, with
computational drug discovery outcomes to be
harnessed both internally and in partnership
with collaborators. The development of a
proprietary RNAi platform commenced during
the year, more details on which can be found in
the CEO’s Statement on page 4.
R&D expenditure
An increase in R&D expenditure began to
materialise after the half-year fundraise
and the full year expenditure totalled £2.7m
(2020: £2.1m). R&D spend is expected to
increase significantly in the coming year,
with the advancements of internal discovery
programmes, both small molecule and RNAi,
along with the release of a competitive and
functional RNAi platform.
Administrative expenditure
Administrative expenditure for the year totalled
£2.1m (2020: £1.2m), with the management
restructure in February 2020 resulting in one-off
redundancy costs of £0.4m. In the coming year
we will continue to invest in our people, both in
terms of recruitment and ongoing motivation
and development. We will also continue to
improve our underlying system infrastructure
and processes to ensure that they grow with
the business, enabling our employees to
work efficiently and ensuring the safety of
our information assets. Although we are not
expecting the same level of one-off expenditure,
we are expecting the underlying cost base to
increase as the business continues to grow.
17
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Key Performance Indicators
Measuring our progress
2020
2019
2020
2019
Financial KPIs
Cash as reported in the Balance Sheet
R&D spend as reported in the Income Statement
0
0
1
1
2021
2021
£13.0m
2021
£13.0m
2021
£2.7m
£2.7m
2021
2020
£3.8m
2020
£3.8m
2019
£5.9m
2019
£5.9m
2020
2019
£2.1m
2020
£2.1m
2020
2019
£3.7m
2019
£3.7m
2021
2020
2019
1
1
1
1
1
1
Towards the start of the year a gross £1.6m fundraise was
undertaken to cover working capital arrangements following a
management restructure. In July 2020, there was an additional
placing to raise gross £11.6m. This is to enable the Group to
streamline and characterise its informatics platform, expand
into RNAi as a therapeutic modality with the development of a
GalNAc-siRNA platform and build an internal pipeline of pre-
clinical assets. Our budgets show that the Group has sufficient
cash to continue in operational existence for at least 12 months
from the signing of these financial statements.
The core foundation of our strategy is based upon enhancing
our platform and innovating new processes and technologies to
derive long-term value. In the prior year, spend on internal asset
development had been significantly reduced. However, following
the fundraises during the year, we have continued to enhance our
informatics platform, including our NDD and GAINs technologies,
and have also commenced the development of an RNAi platform.
We have also commenced a project identifying combinations
of compounds with useful activity against Sars-CoV-2, the virus
which causes COVID-19. We anticipate significantly increased R&D
spend in the coming financial year as we characterise and launch
our RNAi platform and build our discovery asset portfolio.
18
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Non-financial KPIs
Number of significant new commercial deals
signed during the year
0
1
2021
£13.0m
2020
£3.8m
2019
£5.9m
£2.7m
£2.1m
£3.7m
2021
2020
2019
1
1
1
Employee turnover
0
2021
2020
2019
27
27%
19%
17%
2020
2019
2021
2020
2019
During the year, we entered a collaboration agreement with
Galapagos to identify new therapeutic approaches to modulate a
specific mechanism involved in IPF and potentially other fibrotic
conditions. This collaboration combines our expertise in network
biology and in silico phenotypic screening with Galapagos’
deep knowledge of IPF and fibrosis. The commercial deal in the
prior year related to the GAINs deal with Novo Nordisk in Type-2
diabetes and the one in the year before related to the NDD deal
with Novo Nordisk, also in the area of Type-2 diabetes. The Group
remains in business development discussions and anticipates
further commercial deals to be signed in the coming financial
year.
Employee turnover is calculated as the number of leavers in the
year over the average employees in the year. The KPIs during the
year are skewed by the management restructure that occurred
towards the start of the year and excluding the executive
directors that formed part of this restructure, employee turnover
is 16%, which is comparable to previous years. Our employees are
vital to our success and we have implemented various initiatives
to retain employees during the year, from bolstering our benefits
offering to support physical, mental and financial health, to
introducing new processes and systems to ensure an efficient
and transparent HR offering. We will continue enhancing our
people strategy during the coming financial year.
Employee retention
Average Headcount
2021
2020
2019
69%
78%
84%
2021
2020
2019
16
18
18
Employee retention is calculated as the number of employees
with greater that one year's service at the current year end
over the total headcount at the prior year end. Again, this KPI
is skewed by the management restructure towards the start of
the year and, excluding the executive directors that formed part
of this restructure, employee retention would be 79%, which is
comparable to the prior years.
During the year, placings raised total gross proceeds of £13.2m
to scale-up the business, and a recruitment drive to source the
best people is a cornerstone to this scale-up. Accordingly, there
were high levels of recruitment in the latter half of the financial
year and, although the average headcount is comparable to
the previous years, the headcount at 31 January 2021 was 25
compared to 16 at 31 January 2020. We anticipate an increase
in the average headcount in the coming financial year as
recruitment efforts continue.
19
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Risk Management
The Group remains committed
to understanding, analysing
and addressing risk and identifying
procedures to minimise risk impact
The Board is accountable
for identifying procedures
to minimise risk impact and
implementing these at every
level of the business, in an
ongoing process overseen by the
Audit Committee. The Executive
Committee manage the day-to-
day implementation of the risk
management framework.
Risks continue to be monitored in an open
and robust way, with specialists being
engaged where it is deemed appropriate to
the risk identified.
The Group's system of risk management and
internal control is embedded throughout
every level of the business. Our risk
management framework is designed to
assess our risks and ensure that mitigations
are appropriate to keep the risks within the
acceptable risk level policy of the Group. Our
business continuity management strategy
is designed to safeguard the Group’s assets
and the reliability of information within the
business as well as the health and safety of
our employees. We ensure that opportunities
as well as risks are identified and that the
Board has the correct information to drive
shareholder value.
Our risk assessments and risk registers are
used to drive our business continuity plans,
underpinned by our employee policies.
The Group’s approach to risk management and business continuity:
Board
Operational: Executive Committee
Compliance: Audit Committee
Risk management framework
Executive Committee
Employees
Third party consultants
20
IT & systems integrity
Financial, legal,
H&S & regulatory
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COVID-19
Towards the start of the financial year we effectively transitioned to a virtual company
as the UK entered lockdown. Our priority is the safety of our employees, and as such
we have not reopened our offices since the start of March 2020, and we will not until
we believe it is safe to do so. Remote working has brought challenges in IT security
and infrastructure as well as in employee engagement, resource management and
knowledge-sharing. However, we have bolstered our remote-working policy and
strengthened our HR strategy, more about which can be read on pages 14 to 15. During
the year, the Group successfully raised gross proceeds of £13.2m. This reduces the
Group’s going concern risk and will be used to streamline and scale business operations
to support long-term value creation, including enhancement of our current platform
technologies, expansion into RNAi as a therapeutic modality and development of in-
house discovery assets to a value inflection point. Therefore, although this financial year
has forced us to develop a new way of operating, the relative small size of our company
has worked in our favour and we have been able to respond quickly and with agility –
thanks to the hard work and dedication of our employees.
BREXIT
Our operations are largely UK-based. Our people are our key resource and we will
continue to support our people however we can, including support with any impact
on them that Brexit may have. Our current business model does not include importing
or exporting to the UK. Whilst aspects of our supply chain are EU-based, we do not
anticipate Brexit to significantly impact our working relationships with suppliers, or any
other stakeholders.
CLIMATE CHANGE
We are a largely, and
increasingly, virtual company
- our platform technologies
are in silico and the COVID-19
pandemic has caused us to
invoke a full working from home
policy during the year. However,
when our offices are open we
encourage employees to enjoy
a healthy lifestyle. This includes
offering a cycle to work scheme
and a flexible working policy,
which allows our employees
to miss the rush hour. Such
initiatives have the double
benefit of improving employee
wellbeing and reducing their
impact on the environment.
This is an area that we remain
conscious of and are always
open to initiatives to improve
our working policies to make
them more environmentally
friendly.
21
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Risk Management (continued)
Principal risks and uncertainties
No change in risk level since prior year
Decrease in risk level since prior year
Increase in risk level since prior year
Strategic risks
Funding the business
Risk
Key mitigations
The biotechnology and pharmaceutical industries
are very competitive, with many major players having
substantial R&D departments with greater resources
and financial support. The Group aims to continue to
find suitable collaboration partners and eventually
generating enough revenue to sustain the business.
Without this, reliance falls on investors or potential M&A
opportunities. Failure to generate additional funding
from these sources if required would completely
compromise the Group’s ability to achieve its strategic
objectives.
•
•
•
We raised gross proceeds of £13.2m during the year through the placing
of share capital, to scale the Group's business model - see the CEO's
statement on page 4.
We won a project with a key collaborator during the year and have
strengthened our business development team through recruitment,
including the appointment of a Chief Business Officer - see our business
model on page 8.
Focus on technology enhancement and people development – see our
strategic priorities on pages 12 to 13.
Feasibility of drug candidates
Risk
Key mitigations
Drug candidates can fail due to a lack of efficacy
or potency, unacceptable toxicology results or
insurmountable challenges in medicinal chemistry.
This is the main reason that the conventional
pharmaceutical R&D model takes many years
and billions of dollars from discovery to approved
medicine. Therefore, there is a risk that we will not
successfully identify any viable drug candidates.
•
•
Focus on technology enhancement and people development, not only
internal asset development – see our strategic priorities on pages 12 to
13.
Our network-driven approach is designed to de-risk traditional drug
discovery approaches, through the application of our complementary
NDD and GAINS technologies, enhanced by our expansion into RNAi as
a therapeutic modality. Furthermore, our approach is disease agnostic -
see more in Our Business Model on page 8 and Our Approach on page 10.
Protecting our Intellectual Property (“IP”)
Risk
Key mitigations
If our IP rights are not adequately secured or defended
against infringement, or conversely become subject
to infringement claims by others, commercial
exploitation could be completely inhibited.
•
•
The operation and maintenance of our informatics platform, the key
technological mechanism for value creation, requires detailed, advanced
know-how and expertise which would be difficult and time consuming
for competitors to replicate – see Our Approach on page 10.
We actively manage our IP, engaging with specialists to apply for an
defend IP rights – see our risk management framework on page 20.
22
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Strategic risks (continued)
Competition and new technologies
Risk
Key mitigations
The scientific and technological sectors are fast
growing and there is a risk that competitors develop
new technologies that supersede our platform. There
is a risk that we will not keep up to date with the latest
developments and that our platform isn’t current and
therefore not valuable to our customers.
•
•
Continuously work to improve our technologies and develop new
internal assets in key areas of science that are valuable to our customers
- see our strategic aims on pages 12 to 13.
Since the latest fundraise, we have continued to invest in our core
platform technologies and we are specifically working towards
establishing a validated RNAi platform. Our NDD and GAINS technologies,
which leverage our expertise in network biology and provide genetic
validation as an important de-risking checkpoint, complemented by our
expansion into RNAi gives us an edge over competitors - see more in the
CEO's statement on page 4.
Operational risks
Recruiting the best people
Risk
Key mitigations
The knowledge skill set of our employees is
fundamental to the ongoing success of the Group, yet
often intuitional and hard to document. Recruitment
is an imperative cornerstone to our plans to scale the
business following the fundraises during the year. This
brings challenges of attracting the right people, both in
terms of skillset and cultural fit, as well as ensuring that
knowledge is shared both ways with the current team.
The wrong people would jeopardise the culture that we
have worked hard to create.
•
•
Recruitment processes are tailored to identify and attract the best
candidates for specific roles, aiming to provide competitive rewards and
incentives to our people – see Our People strategy on page 14.
We welcomed a Chief People Officer onto the Executive Committee
during the year - see her biography on page 29.
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Risk Management (continued)
Principal risks and uncertainties (continued)
No change in risk level since prior year
Decrease in risk level since prior year
Increase in risk level since prior year
Operational risks (continued)
Retaining and motivating the best people
Risk
Key mitigations
The challenges of recruiting and onboarding the
best people in light of our plans to grow the business
following the year’s fundraises exacerbates the
challenge of retaining and motivating people. Large
change such as the management restructure during the
year and the increases in headcount can impact team
dynamics increasing the risk of poor retention.
•
We are committed to providing a working environment to encourage
people retention and undertake industry and size specific annual
benchmarking – see our people strategy on page 14 and our corporate
governance statement on page 34.
Engaging a team during remote working
Risk
Key mitigations
Since early March 2020, we have temporarily closed
our offices as a result of COVID-19 in order to reduce
risks to our employees. The risks of remote working
include the risk of loss of innovation from ad hoc
conversations, loss of a sense of team and reduced
morale.
•
•
•
•
We have provided our employees with all the equipment that they need
to work from home safely and comfortably.
We hold various and regular virtual interactive employee events to
ensure that each employee feels valued.
We have revised our family-friendly and flexible working policies to
ensure that each employee feels supported in finding a work pattern that
suits them.
We have introduced Reward Gateway which is an employee engagement
platform to recognise and support employees’ mental, physical and
financial wellbeing – see more on our people strategy on page 14.
Developing employees and sharing knowledge
Risk
Key mitigations
Our employees are vital to our success and it is
important to enable them to continue to develop both
personally and professionally. It is key to the Group
that knowledge is being shared across teams and
individuals so that we can build collective knowledge
and work together to accelerate innovation. To not
do so would significantly increase the risk of us not
achieving our strategic aims.
•
•
•
We hold a variety of virtual catch-ups which include bi-weekly interactive
“Lunch and Learn” sessions and monthly Group-wide meetings.
We encourage cross team collaborations built upon a foundation of SOPs
and an online platform to encourage employees to share their findings
with each other.
We will focus on our performance management and talent management
as part of our HR strategy for the coming year - see more on our people
strategy on page 14.
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Operational risks (continued)
Reliance on key suppliers
Risk
We work with a various key suppliers who provide data
for our platform technologies and testing on a variety
of our internal projects. It is important that we retain
strong relations with these suppliers so that we can
continue working with them. However, there is a risk
of failure from these key suppliers in providing us with
sound research and data.
Key mitigations
•
•
•
The Group has effective supply chain management and work with
specialist CROs to carry out testing on our internal projects. These CROs
are carefully selected based on our criteria and all research data is
systematically reviewed by our senior scientists.
We work with various suppliers in order to minimise the risk of over-
reliance on any particular supplier.
We continuously improve and innovate our own platform technologies
which in turn improves the reliance that can be placed on the data
provided.
Ensuring the integrity and security of our information
Risk
Key mitigations
Cyber risk encompasses the risks of cyber crime, IT
systems failure, data protection and data theft or
misappropriation. Our network-driven discovery
platform is the foundation of our strategy and our
technology is imperative to our long-term success.
Any attacks could threaten the integrity of our core
technology or IP and lead to a misappropriation of
our data or, ultimately, our cash balance, which is
fundamental to our going concern status. This is a risk
exacerbated by the increasing sophistication of cyber
criminals. Threats arise not only from hackers, malware
or known third parties, but can unfortunately also arise
from employee action or inaction, whether intentional
or not, and we acknowledge this so that it can be
addressed and mitigated as far as possible.
Additional risks have arisen following the increase in
remote working which, in turn, increases the necessity
to secure, monitor and protect an increasingly mobile
and dispersed workforce, and maintain employee
awareness of new cyber security threats.
•
We have been independently audited by an accredited body and been
awarded Cyber Essentials Plus certification, as part of which the Group is
required to maintain:
•
•
•
•
•
•
A business continuity management strategy and established
information privacy and security policies.
Regular employee training, which we provide in-house and via third
party specialists.
Physical and software-based protection such as firewalls,
antimalware, antiphishing, encryption, and website risk analysis
which are reviewed as part of annual systems vulnerability testing.
Regular data backups of key systems and information, which are
tested regularly.
A register of our categorised data, recording access limitation and
security measures, including a review of our data processors, cloud-
based storage providers and organisational data flows.
A log of all security incidents, which is reported to the Board. There
have been no significant incidents and no cyber breaches during
the year.
•
See our risk management framework on page 20.
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Risk Management (continued)
Principal risks and uncertainties (continued)
No change in risk level since prior year
Decrease in risk level since prior year
Increase in risk level since prior year
Recognising R&D tax credits receivable
Risk
Key mitigations
We have recognised an R&D tax receivable on the
Balance Sheet of £769,035 (2020: £557,000). This claim
and, as such, there is a risk that the claim may not be
successful.
•
•
Third party advice is sought regarding the R&D tax credits that the Group
is eligible to claim.
Historically, claims have been successful and the Group expects the
current year to be successful – see the Note 11 to the financial statements
for more information on the tax receivable balance.
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Section 172(1) Statement
The Directors acknowledge their duty under S.172 of the Companies Act 2006 and consider that they have, both individually and together, acted in
the way that, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole. In doing so, they
have had regard (amongst other matters) to:
Responsibility
Our Approach
the likely consequences of any decision in the long term
the interests of the Company’s employees
the need to foster the Company’s business relationships with
suppliers, customer and others
the impact of the Company’s operations on the community
and the environment
the desirability of the Company maintaining a reputation for
high standards of business conduct
the need to act fairly as between members of the Company
The Group’s long-term strategic objectives, including progress made
during the year and principal risks to these objectives, are shown on
pages 12 and 13.
Our employees are fundamental to us achieving our long-term strategic
objectives, as more fully disclosed in Principle 3 of the Corporate
Governance Statement on pages 34 to 41 and the Our People section on
pages 14 to 15.
A consideration of our relationship with wider stakeholders and their
impact on our long-term strategic objectives is also disclosed in Principle
3 of the Corporate Governance Statement on pages 34 to 41.
The Group operates honestly and transparently. We consider the impact
on the environment on our day-today operations and how we can
minimise this. Further disclosure on how we promote a corporate culture
based on ethical values and behaviours is included in Principle 8 of
the Corporate Governance Statement on pages 34 to 41 and in the Risk
Management section on page 21.
Our intention is to behave in a responsible manner, operating within the
high standard of business conduct and good corporate governance. Not
only is this covered in our Corporate Governance Statement on pages 34
to 41, but is also epitomised in our risk management and business
continuity framework on pages 20 to 26.
Our intention is to behave responsibly towards our shareholders and treat
them fairly and equally, so that they too may benefit from the successful
delivery of our strategic objectives.
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Executive Team
The Executive Team operates under the direction and authority of the Chief Executive Officer, Ali Mortazavi, and comprises of Ali’s direct reports.
The Team assists the Board in implementing strategy and policies and managing the operational and financial performance of the Group.
Colin Stubberfield,
PhD
Chief Research Officer
Appointed: October 2013
My role involves the application of the
ETX platform technology to internal
and partnered drug discovery projects.
I oversee the progress of projects with
our CRO partners and biopharma
collaborators.
By background I am a biochemist/cell
biologist and have spent my career
within the biopharma industry in both
line and project management roles. I
have been part of research teams in big/
mid-size pharma companies, as well as
smaller biotechs, and have worked with
NCE and antibody discovery projects.
Although I have probably spent most
time in oncology, I have also worked
in inflammation, anti-infectives and
fibrosis.
Jonny Wray,
PhD
Chief Technology Officer
Alan Whitmore,
BSc PhD BMBCh MRCGP
Chief Scientific Officer
Appointed: October 2011
Appointed: December 2014
I am responsible for conceptualizing,
defining, and implementing the network-
driven approach to drug discovery
pioneered at e-therapeutics.
I have over 30 years-experience in
applying computational approaches
to the study of complex biological
problems. My PhD (Newcastle, UK)
and Post-doctoral (The Neurosciences
Institute at The Scripps Research
Institute, US) studies were in
computational neuroscience focused
on how networks of the brain give
rise to perception and function. After
leaving academia, I moved into applied
bioinformatics and software engineering
at a number of biotech companies in
the San Francisco Bay Area. My role at
e-therapeutics merges my academic
and industry experience, designing and
developing the informatics to drive our
network-biology based approach to drug
discovery.
I have been instrumental in defining and
developing the conceptual framework on
which the network-driven drug discovery
approach pioneered at e-therapeutics
is based.
I moved from academia into biotech
13 years ago and have worked in both
drug delivery and drug discovery. I am
a clinician scientist with over 30 years’
experience in cell biology research and
clinical medicine in a variety of roles
including MRC Fellow, UCL Laboratory
for Molecular Cell Biology, Visiting
Fellow, The Jackson Laboratory USA,
Lecturer & Medical Advisor UCL Institute
of Ophthalmology, Hon Senior Lecturer
UCL School of Pharmacy as well as senior
clinical management positions. I gained
a BSc (Biology & Computing), and a PhD
in neuroscience from the University of
London followed by postdoctoral work
in Cambridge and medical studies at
Oxford leading to the BM BCh in clinical
medicine.
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Laura Roca-Alonso,
PhD
Chief Business Officer
Stephanie Maley,
CIPD
Chief People Officer
Karl Keegan,
MPhil PhD MSc (Finance)
Chief Finance Officer
Appointed: April 2020
Appointed: March 2020
Appointed: March 2021
I oversee our business and corporate
development efforts, including securing
and managing partnerships as well as
maximising the value of our platform and
the growth of the business. I work closely
with the rest of the team to drive the
execution of the corporate strategy.
My background is in advanced
therapeutics and I have previously held
senior BD and strategy positions at
fast-paced organisations like Gyroscope
Therapeutics and Silence Therapeutics.
I received my PhD from Imperial College
London, MRes in Biomedicine from UCL
and BSc(Hons) in Biotechnology from
UAB.
I have worked in Human Resources for
over 20 years, initially in the Private
Banking industry, then latterly in drug
discovery. I am responsible for designing
HR strategy which is aligned to and
underpins the strategic direction and
goals of the organisation. I work closely
with the rest of the team to execute these
goals, as well as ensure our people are
developed, supported and engaged.
I am responsible for the oversight of the
financial reporting, capital structure
and risk management frameworks of
e-therapeutics.
My career history is weighted towards
capital markets and corporate strategy
with a history of public CFO, IPO and
pharma/biotech experience.
I received my BSc in Pharmacology
from University College Dublin, MPhil
and PhD degrees from the University
of Cambridge and MSc (Finance) from
London Business School.
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GOVERNANCE
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Scientific Advisory Board
Dr Paul Burke
Chair of SAB
Professor John Mattick
Member of SAB
Dr Bill Harte
Member of SAB
Appointed: May 2020
Appointed: September 2020
Appointed: September 2020
Dr Harte is a pharmaceutical veteran
and serial entrepreneur with more than
30 years in both research and executive
positions. He currently serves as the
Chief Translational Officer at the Case
Western Reserve University School
of Medicine advising and translating
preclinical programs into patients.
Previously, Bill had executive roles at
Amgen, Bristol Myers Squibb, Visum
Therapeutics and E3X therapeutics.
Dr Harte’s broad experience spans
computational chemistry, structural
biology and modelling, medicinal
chemistry, product development and
portfolio prioritisation as well as CEO
experience. Bill has also done extensive
work with top-tier VC firms.
John Mattick is Professor of RNA
Biology at UNSW Sydney, and one of the
world’s foremost experts in the field. He
was previously the Chief Executive of
Genomics England, Executive Director of
the Garvan Institute of Medical Research
in Sydney, Director of the Institute for
Molecular Biology at the University
of Queensland, and Director of the
Australian Genome Research Facility. He
has published over 300 scientific articles,
which have been cited over 70,000
times. His work has received editorial
coverage in Nature, Science, Scientific
American and The New York Times,
among others. His awards include the
International Union of Biochemistry and
Molecular Biology Medal, the Australian
Government Centenary Medal, the
University of Texas MD Anderson Cancer
Center Bertner Award for Distinguished
Contributions to Cancer Research, and
the Human Genome Organisation Chen
Medal for Distinguished Achievement in
Human Genetics and Genomic Research.
Dr. Paul Burke is Principal of Burke
Bioventures LLC, a Cambridge,
Massachusetts-based biotechnology
consultancy focused on translating
research breakthroughs—particularly
those based on nanotechnology,
targeting, and RNA—into products.
He provides strategic advice and
scientific direction for biotechnology,
pharmaceutical, and drug delivery
companies and interim R&D
management of venture-backed
start-ups. Dr. Burke was formerly the
founding head of Pfizer’s global Center of
Excellence for targeted drug delivery and
imaging, and Chief Technology Officer
of the Oligonucleotide Therapeutics
Unit. Previously he was Executive
Director, RNA Therapeutics at Merck &
Co. where he led delivery R&D, charged
with developing enabling technologies
for maximizing value from the company’s
$1.1B acquisition of Sirna Therapeutics.
The effort encompassed five discovery
and preclinical departments and
multiple external partnerships. Dr.
Burke joined Merck following a decade-
long tenure at Amgen, where he held
positions of increasing responsibility
including his most recent as Executive
Director, Pharmaceutics. He received
his B.S. in Chemistry with Distinction
and Departmental Honors from Harvey
Mudd College and his Ph.D. in Biological
Chemistry from MIT. He is an Affiliate
Professor of Bioengineering at the
University of Washington and, for the
winter 2017 term, was the Distinguished
Visiting Professor at City of Hope’s
Beckman Research Institute.
Credit: Susan Wilson Photography
(Photo)
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Board of Directors
Ali Mortazavi
Chief Executive Officer
Professor Trevor Jones CBE
Independent Non-Executive
Chairman
Michael Bretherton
Non-Executive Director
R
A
A
R
Ali was appointed to the Board as
Executive Chairman in February 2020,
appointed Chief Executive Officer in
October 2020 retaining his position as
Chairman and subsequently slitting
these roles in March 2021 and continues
as Chief Executive Officer.
Ali has extensive experience in the
biotechnology sector and financial
markets. Recent roles include Chief
Executive Officer of Silence Therapeutics
plc, from 2012 to 2018, as well as a
founder shareholder of Evolution Group,
a U.K. based Investment Bank, from 2001
to 2008.
Ali is an experienced investor in small
companies and has held numerous
declarable stakes in listed and private
biotechnology and technology
companies.
Trevor was appointed to the Board
in October 2015 as a Non-Executive
Director and appointed Independent
Non-Executive Chairman in March 2021.
Trevor has over 40 years’ distinguished
experience in the pharmaceutical
and biotechnology industry as well as
in academia. He is currently a Non-
Executive Director of the life sciences
investment company Arix Bioscience
plc. He is also Visiting Professor at King’s
College, London and holds honorary
degrees and Gold Medals from seven
universities.
Previously, Trevor held significant roles
in industry including Director of Allergan
Inc. from 2005 to 2015 and R&D Director
of The Wellcome Foundation from 1987
to 1994, where he was responsible for the
development of AZT, Zovirax, Lamictal,
Malarone and other medicines.
Trevor has also held a number of
advisory and regulatory roles including
Director General of the Association of
the British Pharmaceutical Industry
(“ABPI”), Board member of the
European Federation of Pharmaceutical
Industry Associations (“EFPIA”)
and the International Federation
of Pharmaceutical Manufacturers
Associations (“IFPMA”), a member of the
UK Government regulatory agency, The
Medicines Commission, a member of the
UK Government Pharmaceutical Industry
Ministerial Strategy Working Group
on Pharmaceuticals, an adviser to the
Cabinet Office on the Human Genome
Project, a member of the Prime Minister’s
Task Force on the Competitiveness of the
Pharmaceutical Industry (“PICTF”) and
Chair of the Government Advisory Group
on Genetics Research.
Michael was appointed to the Board as
a Non-Executive Director in February
2020. He is also Chairman of the Audit
Committee and a member of the
Remuneration Committee.
Michael is currently Chief Executive
Officer of Sarossa plc. In addition, he is
Chairman of Adams plc and Hardy plc
and he is also a non-executive director
of Blake Holdings Limited and ORA
Limited. Michael has been a director of a
number of other AIM quoted companies
during the last ten years, including
DeepMatter Group plc, Tissue Regenix
Group plc, Nanoco Group plc and Ceres
Power Holdings plc. He has a degree
in Economics from Leeds University
and is a member of the Institute of
Chartered Accountants in England and
Wales. His early career included working
as an accountant and manager with
PriceWaterhouse for 7 years in London
and Abu Dhabi.
Key
Chair of Committee
Member of Committee
A
Audit Committee
R
Remuneration Committee
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GOVERNANCE
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Directors' Report
The Directors present their Annual Report
together with the financial statements
and Auditor’s Report for the year ended 31
January 2021. The Corporate Governance
Statement on pages 34 to 41 also forms part
of this Directors’ Report.
General information
e-therapeutics plc is a public limited company
incorporated in the United Kingdom,
registered number 04304473, which is listed
on the Alternative Investment Market (“AIM”)
of the London Stock Exchange.
Review of business
The Group continues to invest in drug
discovery research activities. The Strategic
Report on pages 1 to 27 forms part of this
Directors’ Report and provides a review of the
business, including the Group’s trading for the
year ended 31 January 2021, an indication of
likely future developments, key performance
indicators and risks.
Results and dividend
The Group has reported its consolidated
financial statements in accordance with
international accounting standards in
conformity with the requirements of the
Companies Act 2006. The results for the
period and financial position of the Company
and the Group are set out in the financial
statements and reviewed in the Financial
Review within the Strategic Report.
The Directors do not recommend the
payment of a dividend (2020: £nil).
Directors’ interests
The Directors’ interests in the Company’s
shares and options over ordinary shares are
shown in the Directors’ Remuneration Report
on pages 43 to 50.
No Director has any beneficial interest in the
share capital of any subsidiary or associate
undertaking.
Directors’ remuneration
Details of the Directors’ remuneration appear
in the Directors’ Remuneration Report on
pages 43 to 50.
Directors’ and officers’ liability
insurance
The Company has, as permitted by the
Companies Act 2006, maintained insurance
cover on behalf of the Directors, indemnifying
them against certain liabilities which may be
incurred by them in relation to the Company.
Political donations
The Group made no political donations during
the current or prior year.
Financial instruments – risk
management
The Group’s financial risk management
policy is set out in Note 20 to the financial
statements.
Directors
The Directors of the Company who served during the year ended 31 January 2021 and up to the date of this Report were:
Director
Ali Mortazavi
Trevor Jones
Capacity
Chief Executive Officer
Non-Executive Chairman
Date of appointment if during
the year or up to the date of
this Report
10 February 2020
Date of resignation if during
the year or up to the date of
this Report
Michael Bretherton
Non-Executive Director
10 February 2020
Ray Barlow
Steve Medlicott
Iain Ross
Chief Executive Officer
Chief Financial Officer
Non-Executive Chairman
Christine Soden
Non-Executive Director
10 February 2020
10 February 2020
10 February 2020
10 February 2020
Ali Mortazavi was appointed as Executive Chairman on 10 February 2020. He was appointed Chief Executive Officer from 12 October 2020 and retaining his position as Chairman. With
effect from 1 March 2021, the roles were split, with Ali Mortazavi continuing in his role as Chief Executive Officer and Trevor Jones being appointed as Non-Executive Chairman. Trevor
Jones has served as a Non-Executive Director since 2015.
Major shareholdings
As at 21 April 2021 (being the latest practicable date prior to the publication of this Report) the Company had been notified of the following
shareholders with 3% or more of the issued share capital of the Company:
Richard Griffiths and controlled undertakings
Ali Mortazavi
Robert Quested
Trillian Ltd
Lombard Odier Asset Management
David Norwood
*as of 11/4/2021
Ordinary shares of
0.1p each
Number
118,539,105
50,666,666
49,484,948
28,333,333
20,265,820
15,465,789
% of ordinary shares of
0.1p each
held at 21 April 2021
28.17
12.04
11.76
6.73
4.82*
3.68
Most recently notified details of significant shareholdings may be found on the Company’s website, at www.etherapeutics.co.uk/investors/
shareholder-information
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Research and development
During the year ended 31 January 2021 the
Group’s expenditure on R&D was £2,705,000
(2020: £2,104,000).
Statement of engagement with
suppliers, customers and others in
a business relationship with the
Company
The Directors are mindful of their statutory
duty to act in the way they each consider,
in good faith, would be most likely to
promote the success of the Company for
the benefits of its members as a whole, as
set out in our S.172(1) statement on page 27.
A consideration of the Company's relationship
with wider stakeholders, including supplier
and customers, is disclosed in Principle 3
of the Corporate Governance Statement on
pages 34 to 41.
Articles of association and capital
structure
The Company’s share capital, traded on AIM,
comprises a single class of ordinary shares
of 0.1p each in nominal value, each carrying
one vote and all ranking equally. The rights
and obligations attaching to the Company’s
ordinary shares are set out in the Company’s
articles of association, copies of which can
be obtained from Companies House in the
UK, downloaded from the Company’s website
at www.etherapeutics.co.uk/investors/
Aim Rule 26 or by writing to the Company
Secretary at 17 Blenheim Office Park, Long
Hanborough, Oxfordshire OX29 8LN.
Details of the issued share capital, together
with details of the movements in the
Company’s issued share capital during the
year, are shown in Note 21 to the financial
statements. There are no restrictions on
the transfer or voting of securities in the
Company, and there are no agreements
known to the Company which might result in
such restrictions. There are no shareholdings
carrying special rights with regard to the
control of the Company.
As at 31 January 2021, the Company’s issued
share capital was £420,774, divided into
420,773,546 ordinary shares of 0.1p each in
nominal value.
Re-election of Directors
The appointment of the Chief Executive
Officer is terminable by either the Company
or the Chief Executive Officer on six months’
notice. The appointments of both of the
Non-Executive Directors are terminable by
either the Company or the individual Director
on three months’ notice. Each appointment is
contingent on satisfactory performance and
on re-election criteria.
In accordance with the Company’s articles of
association, each Director must be subject
to re-election at least every three years. All
newly appointed Directors are also subject
to election by the shareholders at the first
Annual General Meeting following their
appointment. Accordingly, Trevor Jones , who
was appointed as non-executive chairman on
1 March 2021, will offer himself for election at
the forthcoming Annual General Meeting of the
Company on 16 June 2021.
Disclosure of information to
Auditor
Each Director who held office at the date of
approval of this Report confirms that, so far
as the Director is aware, there is no relevant
audit information of which the Company’s
Auditor is unaware and the Director has taken
all the steps that he or she ought to have
taken as a Director to make himself or herself
aware of any relevant audit information and
to establish that the Company’s Auditor is
aware of that information. This confirmation
is given and should be interpreted in
accordance with the provisions of section 418
of the Companies Act 2006.
Independent Auditor
In accordance with section 489 of the
Companies Act 2006, a resolution for the
re-appointment of Grant Thornton UK LLP
as Auditor of the company is to be proposed
at the forthcoming Annual General Meeting.
Grant Thornton UK LLP was first appointed as
auditor of the company at the Annual General
Meeting in June 2020 following a tender
process.
Subsequent events
There were no material subsequent
events requiring disclosure in the financial
statements.
Annual General Meeting
The Annual General Meeting of the Company
will be held at the offices of Stephenson
Harwood LLP, 1 Finsbury Circus, London
EC2M 7SH on 16 June 2021 at 1pm. The notice
convening the meeting is set out on pages
77 and 78 together with a summary of the
business to be transacted. A copy of the
notice is also available on the Company’s
website at www.etherapeutics.co.uk/
investors/reports-results.
Going Concern
Although the Group has recognised revenue
from commercial deals during the current and
prior year, it is still largely reliant on its cash
balance to fund ongoing operations.
At 31 January 2021, we reported cash and
liquid resources of The Board has prepared
detailed strategic plans as part of the
fundraise process in July 2020, which raised
total gross proceeds, along with the smaller
fundraise in February 2020, of £13,203,000. We
have also prepared a detailed budget for the
forthcoming financial year, which supports
the view that the Group has sufficient cash to
meet it's operational requirements for at least
12 months from the signing of these financial
statements.
By order of the Board
Ali Mortazavi
Chief Executive Officer
12 May 2021
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Corporate Governance Statement
Statement by the Non-Executive Chairman
The Board is
committed to
building shareholder
value in an open,
transparent and
ethical manner.
As individual Directors we are mindful of our
statutory duty to act in the way each of us
considers, in good faith, would be most likely
to promote the success of the Company for
the benefits of its members as a whole, as set
out in our s.172(1) statement on page 27.
We continue to evaluate how we govern the
Group on an ongoing basis, working for the
best long-term interests of our shareholders
in an open, transparent and ethical manner.
The Board considers that the corporate
governance framework adopted can grow
with the Group.
The principal methods of communicating our
application of the QCA Code are this Annual
Report and through our website, at www.
etherapeutics.co.uk/investors/ corporate-
governance. The QCA Code sets out 10
principles, in three broad categories, and in
this Corporate Governance Statement I have
set out the Group’s application of the QCA
Code, including, where appropriate, cross-
references to other sections of the Annual
Report. Further information on how we
comply with the QCA principles can be found
on website above.
Professor Trevor Jones CBE
Non-Executive Chairman
12 May 2021
As the newly appointed Non-Executive
Chairman of e-therapeutics, and on behalf
of the Board, I have pleasure in presenting
the Corporate Governance Statement for the
year ended 31 January 2021. I am responsible
for leading the Board so as to ensure that the
Company has in place the strategy, people
and structure to deliver value to shareholders
and other stakeholders of the Group as
a whole over the medium to long term,
supported by a corporate culture based on
sound ethical values and behaviour, as more
fully explained in the Corporate Governance
Statement on the following pages.
This financial year has provided unique
challenges in delivering a robust governance
management framework. The working from
home policy that has remained in force since
9 March 2020, for the safety of our people
in light of the COVID-19 pandemic, has
highlighted the importance of an embedded
corporate culture and strategy.
The Directors recognise the fundamental
need for good corporate governance
in providing an efficient, effective and
dynamic system to ensure that the Group is
managed in the right way for the benefit of all
shareholders over the medium to long term.
In view of this, the Board of e-therapeutics
has chosen to apply the QCA Corporate
Governance Code (the “QCA Code”) published
by Quoted Companies Alliance. The QCA
Code is a pragmatic and practical tool, which
adopts a principles-based approach to
corporate governance, which the Directors
believe is an appropriate framework for the
relatively small company that e-therapeutics
is, at an early revenue-generating stage of
development.
The QCA Code recommends that the chair of
a Board should not also fulfil the role of Chief
Executive. During the year, Ali Mortazavi acted
as Chairman and Chief Executive Officer.
Following due consideration by the Board,
Ali's role was split on 1 March 2021, with Ali
continuing as Chief Executive Officer and
myself being appointed as Non-Executive
Chairman. I have served as a Non-Executive
Director since 2015. We continue to search
for an additional Non-Executive Director to
further strengthen the Board.
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Suppliers
We engage in open discussions with key suppliers and expert advisors
to review progress on internal discovery programmes, platform
technology and corporate functions to ensure that we continue to
remain aligned with our strategic objectives.
Customers
We approach all of our commercial collaborations with honesty and
transparency. A successful working relationship is beneficial to all
parties involved as successful projects can lead to further deals that
would add value to both our shareholders and our customers, either
through advancing an asset further through the drug discovery process
or by applying our expertise and technologies, such as our NDD or
GAINs technologies, to a different area of biology or in a different way
to the same area of biology.
Health and safety
We are committed to high standards of health and safety at work
and understand that successful health and safety management
involves integrating sound principles and practice into its day-to-day
management arrangements and requires the collaborative effort of all
of our employees. Our health and safety procedures are independently
audited on an annual basis.
4
Embed effective risk management,
considering both opportunities and threats,
throughout the organisation
The Board has overall responsibility for the Group’s internal control
systems and for monitoring their effectiveness and is accountable
for identifying procedures to minimise risk impact and implementing
these at every level of the business in an ongoing process overseen by
the Audit Committee.
See our risk management framework and principal risks on pages 20
to 26.
Delivery Growth: Principles 1-4
1
Establish a strategy and business model which
promote long-term value for shareholders
We bring to the biotechnology and pharmaceutical industries the
power to discover new and better drugs in a more efficient and
effective way – our network-driven approach is disruptive to the
conventional pharmaceutical R&D model.
See our business model and our strategic objectives on pages 8 and 12
to 13, respectively.
2
Seek to understand and meet shareholder
needs and expectations
The Board is keen to promote greater awareness of the Group and a
detailed report on the Group’s activities during the reporting period
is contained within the Chief Executive Officer's Statement on page 4.
More recent Company announcements may be found at www.
etherapeutics.co.uk/ investors/regulatory-announcements.
Responsibility for day-to-day shareholder liaison lies with Ali Mortazavi
as Chief Executive Officer and ultimately lies with the Board.
The Company receives occasional feedback direct from investors.
The Directors take all feedback very seriously and shareholders’ views
and concerns are carefully considered by the Board, with appropriate
action being taken where necessary. None of the feedback received
from investors has involved non-compliance with the QCA Code.
3
Take into account wider stakeholder and
social responsibilities and their implications
for long-term success
In addition to our shareholders, we believe our main stakeholder
groups are our employees, suppliers and customers.
Employees
Our people give us the knowledge that feeds into our network biology
expertise and our core technological capabilities and that knowledge
flows through our business model to directly create value for our
shareholders. Accordingly, the long-term success of the Group relies
upon the knowledge and dedication of our people, as reflected in
our strategic objectives on pages 12 to 13 and our principal risks on
pages 20 to 26. The Board therefore understands the importance of
employee engagement, not only by offering a beneficial remuneration
package and professional development support, but in engaging
employees with the strategy of the Group. During the year. we have
appointed a Chief People Officer and developed our people strategy,
more on which can be read on page 14.
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Corporate Governance Statement (continued)
Maintain a dynamic management framework: Principles 5-9
5
Maintain the Board as a well functioning,
balanced team led by the Chair
7
Evaluate Board performance based on clear
and relevant objectives, seeking continuous
improvement
To enable the Board to discharge its duties, briefing papers are
distributed to all Directors in advance of Board and Committee
meetings. All Directors have access to the advice and services of the
Company Secretary who is responsible for ensuring that the Board
procedures are followed and that applicable rules and regulations are
complied with.
The Board is responsible to shareholders and sets the Group’s strategy
for achieving long-term success. It is ultimately responsible for the
management, governance, controls, risk management, direction and
performance of the Group. The Group is satisfied that the current
Board as a whole is sufficiently resourced to discharge its governance
obligations on behalf of all stakeholders, although the Directors are
searching for an additional Non-Executive Director to strengthen the
Board.
Board of Directors
On 10 February 2020, Steve Medlicott and Ray Barlow stepped down as
Executive Directors and Iain Ross and Christine Soden stepped down
as Non-Executive Directors. On this day, Ali Mortazavi was appointed
as Executive Chairman and Michael Bretherton was appointed as
Non-Executive Director alongside Trevor Jones. Recognising Ali
Mortazavi's commitment to and impact on e-therapeutics' success,
he was appointed as Chairman and Chief Executive Officer with effect
from 1 August 2020, which is a departure from the recommendations
of the QCA Code. The dual aspects of his role were separated on 1
March 2021, with Ali Mortazavi continuing on as Chief Executive Officer
and Trevor Jones being appointed as Non-Executive Chairman. The
biographies of the Executive Committee, Scientific Advisory Board and
Board are on pages 28 to 31. Additional information on the governance
structure of the Group can be seen on pages 38 to 41 within this
statement.
Also during the year, we have formalised an Executive Committee made
up of senior management and Ali Mortazavi to manage the day-to-day
operational delivery of the business model and corporate strategy.
Furthermore, a Scientific Advisory Board has been created during the
year.
All Directors also have access to the Company Secretary.
6
Ensure that between them the Directors have
the necessary up-to-date experience and skills
The current Directors’ biographical details are set out on page 31 and
provide an indication of the breadth of skills and experience of the
Board. Full details of the Board’s skills and experience can be found on
page 39.
The CEO of the Company is measured against a clearly defined
set of personal objectives agreed by the Board and monitored by
the Remuneration Committee. The Board keeps under review its
composition and the balance of skills and experience of Non-Executive
Directors. The Board undertook a review of corporate governance
practices during 2020 and has begun Board member appraisals as part
of a formal Board appraisal process during 2021.
8
Promote a corporate culture that is based on
ethical values and behaviours
We value individuality and self-awareness and at the heart of our
organisation is a philosophy of honesty and authenticity. The Group
adopts a policy of equal opportunities and diversity in the recruitment
and engagement of staff, as well as during the course of their
employment. We endeavour to promote the best use of our human
resources on the basis of individual skills and experience, matched
against those required for the work to be performed.
We recognise the importance of investing in our employees, as
identified in our strategic objectives on pages 14 to 15, and provide
opportunities for training and personal development and encourage
the involvement of employees in the planning and direction of their
own work in line with our people strategy as discussed on page 14. We
are committed to respecting the human rights of our employees, to
providing them with favourable working conditions that are free from
unnecessary risk and to maintaining fair and competitive terms and
conditions of service at all times.
These values are applied regardless of age, race, religion, gender,
sexual orientation or disability.
Whilst the Group will continue to make all appointments based on the
best candidate for the role, it is acknowledged that diversity supports
the strength and future success of the business and the Group remains
focused on achieving the right level of diversity whether related to
ethnicity, gender, creed or culture.
We understand that the inherent uncertainty around the long-term
outlook of an R&D company can impact morale and we address this
by being honest about the Group’s prospects and emphasising that
the contribution of each individual counts and is recognised. Regular
meetings are held at which all employees have an opportunity to
discuss any matters that they wish to raise in an open forum and
receive updates on performance against our strategic aims. The Chief
Executive Officer and all members of the Executive Committee are
available and willing for all employees to discuss more sensitive or
personal matters.
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9
Maintain governance structures and processes
that are fit for purpose and support good
decision making
Build trust: Principle 10
10
Communicate how the Company is governed
and is performing
The Board has established an Audit Committee and a Remuneration
Committee. As mentioned above, the work of each of the Board
Committees undertaken during the year ended 31 January 2021 is
detailed in the Audit Committee Report on page 42 and the Directors’
Remuneration Report on pages 43 to 50.
The results of the proxy votes received in relation to the 2020 Annual
General Meeting are available at www.etherapeutics.co.uk/reports-
results. No resolutions had a significant proportion (>20%) of votes cast
against them at that meeting.
The Board has a healthy dialogue with all of its stakeholders, and
throughout the course of the financial year the Board communicates
with shareholders to seek their views, concerns and expectations.
As Non-Executive Chairman, Trevor Jones is responsible for leadership
of the Board, ensuring its effectiveness in all aspects of its role, setting
its agenda in consultation with the other Directors and ensuring that
the Directors receive accurate, timely and clear information.
He also facilitates effective communication with shareholders and
facilitates the effective contribution of Non-Executive Directors. Ali
Mortazavi is responsible for the operational management of the Group
and the implementation of Board strategy and policy. The Company
Secretary, is responsible for the health and safety matters of the Group
and there is a dedicated staff member who acts as Data Protection
Officer.
The Board is responsible to shareholders for the effective stewardship
of the Group’s affairs and there is a formal schedule of matters
reserved for decision by the Board in place which enables the Board to
provide leadership and ensure effectiveness. A copy of this schedule is
available on the Corporate Governance page of our website.
Board Committees
The Board has established Audit and Remuneration Committees.
Given the size of the Board, a nomination committee has not been
established. New appointments of Directors are considered by the
Board as a whole.
The Committees’ terms of reference can be found on the Corporate
Governance page of our website. The Audit Committee Report and the
Directors’ Remuneration Report for the year ended 31 January 2021 are
set out on page 42 and pages 43 to 50, respectively.
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Corporate Governance Statement (continued)
Governance structure
As Non-Executive Chairman, Trevor Jones is responsible for organising the business of the Board, ensuring its effectiveness and setting its agenda
in consultation with the other Directors. He facilitates the effective contribution of the Directors and ensures that they receive accurate, timely and
clear information and that they communicate effectively with shareholders.
Below is a summary of the various Board’s that are currently in place along with their key duties and responsibilities:
Executive Committee
Audit Committee
• The Executive Team assists the Board in implementing
strategy and policies and managing the operational and
financial performance of the Group.
• Lead by Ali Mortazavi as Chief Executive Officer.
• The Audit Committee is responsible for all aspects of the
financial reporting of the Group and ensuring the internal
controls are adequate to sufficiently mitigate risk.
• Lead by Michael Bretherton as Chair of the Audit
Committee.
• Further details can be found within the Audit Committee
Report on page 42.
Members: See pages 28 and 29
Members: See page 31
Board
• The Board is responsible for establishing a strategy
and business model which promotes long-term value
for shareholders in alignment with the Group’s vision,
mission and values.
• Oversees the adoption and delivery of the corporate
governance model.
• Lead by Trevor Jones as Non-Executive Chairman.
Members: See page 31
Remuneration Committee
Scientific Advisory Board
• The Remuneration Committee is responsible for ensuring
the levels of remuneration are sufficient to attract and
retain the executive directors and senior management
needed in order to support the Group’s strategy and
promote long-term sustainable success.
• Lead by Trevor Jones as Chair of the Remuneration
Committee.
• Further details can be found within the Directors’
Remuneration Report on page 43.
• The SAB provide strategic advice and insight to help the
Group continue to grow and meet our future commercial
goals.
• The members of the SAB have a significant amount of
industry experience including, but not limited to, genetics,
computational approaches to drug discovery and deep
drug development expertise, across small molecules and
RNAi.
• Lead by Dr Paul Burke as Chair of the SAB.
Members: See page 31
Members: See page 30
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Board and Committee Skills and Experience
The Board and committees have a broad range of skills, including in-depth experience in the biotechnology and pharmaceutical sector, and an
appropriate balance of financial and public market skills and experience to enable the Board to deliver the Group’s strategy for the benefit of
shareholders over the medium to long term. The balance of skills and experience of the Board and committees during the year under review and
up to the date of this Report is summarised below:
Biotech /
pharma sector
Financial
Strategic
Leadership
Corporate
Governance
Employee
Engagement &
Remuneration
Other public
company
(Board level)
Executive Director:
Ali Mortazavi
Non-Executive Directors:
Michael Bretherton
Trevor Jones
Executive Committee:
Stephanie Maley
Karl Keegan
Laura Roca-Alonso
Colin Stubberfield
Alan Whitmore
Jonny Wray
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
Each Director takes responsibility for maintaining their own skill set, which includes roles and experience with other boards and organisations as
well as attending formal training and seminars. The experience and knowledge of each of the Directors gives them the ability to constructively
challenge the Group’s strategy and to scrutinise performance. Directors may also take independent professional advice at the Group’s expense
where necessary in the performance of their duties.
Throughout their period in office, the Directors are regularly updated on the Group’s business, the competitive and regulatory environments in
which it operates, corporate social responsibility matters and other changes affecting the Group and the industry it operates in as a whole by
written briefings and meetings with senior management and, where appropriate, external advisers. Directors are also advised on appointment of
their legal and other duties and obligations as a Director of an AIM-listed company, both in writing and in meetings with the Company Secretary.
They are reminded of these duties and they are also updated on changes to the legal and governance requirements of the Company and on
themselves as Directors.
The Company Secretary provides information and advice on corporate governance and individual support to Directors on any aspect of their role.
The Company Secretary is also responsible for ensuring that Board procedures are followed, that the Company complies with company law and
AIM Rules and that the Board receives the information it needs to fulfil its duties effectively.
e-therapeutics is a strong supporter of diversity in the boardroom and remains of the opinion that appointments to the Board should be made
relative to a number of different criteria, including diversity of gender, background and personal attributes, alongside the appropriate skill set,
experience and expertise.
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Corporate Governance Statement (continued)
Independence of Directors
The Board has considered and determined that, since the date of his respective appointment, Trevor Jones is independent in character and
judgement and he:
•
•
•
•
•
has not been an employee of the Group within the last five years;
has not, or has not had within the last three years, a material business relationship with the Group;
has no close family ties with any of the Group’s advisers, Directors or senior employees;
does not hold cross-directorships or have significant links with other Directors through involvement in other companies or bodies; and
does not represent a significant shareholder.
Michael Bretherton is not considered independent because of his potential dealing with one of the Company's major shareholders,
Richard Griffiths. Richard Griffiths owns 28.17% of the ordinary share capital of e-therapeutics through a number of his controlled companies
including Blake Holdings Limited, where Michael is also a non-executive director. Michael is deemed independent in all other matters.
The QCA Code recommends that a Board has at least two independent non-executive directors. The Directors are searching for an additional
independent non-executive director to further strengthen the Board.
Both the Non-Executive Directors constructively challenge and help develop proposals on strategy and bring strong, judgement, knowledge and
experience to the Board’s deliberations. The Non-Executive Directors are of sufficient experience and competence that their views carry significant
weight in the Board’s decision making.
Trevor Jones receives 50% of his remuneration by the issue of fully paid shares. The Board considers that this arrangement aligns the interests of
shareholders and the Non-Executive Directors in an appropriate manner.
The Company Secretary maintains a register of outside interests and any potential conflicts of interest are reported to the Board. The Non-Executive
Directors have regular opportunities to meet without the Chief Executive Officer being present (including time after Board and Committee meetings).
Time commitments
On joining the Board, Non-Executive Directors receive a formal appointment letter, which identifies the terms and conditions of their appointment
and, in particular, the time commitment expected of them. A potential Director candidate (whether an Executive Director or Non-Executive
Director) is required to disclose all significant outside commitments prior to their appointment. The Board is satisfied that both the Non-Executive
Directors and Executive Chairman, can, and do, devote sufficient time to the Company’s business.
Attendance at Board and Committee meetings
During the financial year, the Board met nine times by video conference in person and twice by telephone. In addition, authority was delegated
on an ad hoc basis to subcommittees to deal with statutory matters, such as the final approval of the announcements of the full year results and
interim statement. Attendance at those subcommittee meetings is not reported below. The number of meetings attended by each Director who
held office during the year was as follows:
Board
Audit Committee
Remuneration
Committee
Scientific Advisory
Board
Executive
Committee
Executive Directors:
Ali Mortazavi
Ray Barlow
Steve Medlicot
Non-Executive Directors:
Trevor Jones
Michael Bretherton
Iain Ross
Christine Soden
SAB Committee:
Paul Burke
John Mattick
Bill Harte
Executive Committee:
Alan Whitmore
Jonny Wray
Colin Stubberfield
Laura Roca-Alonso
Karl Keegan
Stephanie Maley
40
8/8
1/1
1/1
9/9
8/8
1/1
1/1
2/2
2/2
3/3
3/3
14/15
13/15
15/15
15/15
8/13
0/0
7/8
1/1
1/1
1/1
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Attendance is expressed as the number of meetings attended/number eligible to attend. Directors’ attendance by invitation at meetings of
Committees of which they are not a member is not reflected in the above table.
Board Performance
The Board is mindful that it needs to continually monitor and identify ways in which it might improve its performance and recognises that board
evaluation is a useful tool for enhancing a board’s effectiveness.
Any performance related remuneration is determined by the Remuneration Committee.
In conducting the formal annual evaluation, the Board undertakes a rigorous assessment of its own performance, balance of skills, experience,
independence, diversity (including gender diversity) and other factors relevant to its effectiveness (and also of that of its Committees) and the
performance of its individual Directors.
The Board commenced a formal evaluation of its performance in early 2020, but in view of the restructuring of the Board on 10 February 2020, the
process was not concluded. A formal evaluation of the current Board and its Committees will be undertaken in due course.
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Audit Committee Report
Statement by the Chair of the Audit Committee
On behalf of the Board, I am pleased to
present our Audit Committee Report for the
year ended 31 January 2021.
Audit fees for the Company for the year total
£49,400 (2020: £39,000), compared with
nonaudit fees of £nil (2020: £3,000).
The Audit Committee is responsible for all
aspects of the financial reporting of the
business and has considered not only the
integrity of financial reporting, but also
how the challenges faced by the Group may
flow through into internal control and the
procedures implemented to sufficiently
mitigate risk.
The Group’s risk management is a permanent
focus of the Audit Committee, although
particular focus would be made in the context
of any issues raised by the independent
Auditor, a member of the Board or any
employee under the ‘whistle blowing’ policy.
Details of the Group’s risk management,
including principal risks and mitigations,
are shown on pages 20 to 26. The Audit
Committee is particularly pleased with the
Group's achievement of Cyber Essentials
Plus accreditation during the year, with
an independent auditor verifying our
commitment to cyber security.
The Audit Committee is also responsible for
monitoring the integrity of the consolidated
financial statements of the Company
and any formal announcements relating
to the Company’s and Group’s financial
performance, including a review of the
Group’s accounting policies and areas of
significant judgement and uncertainty.
The Audit Committee manages the
relationship between the Company and its
external Auditor.
The independence of the Auditor is kept
under review and is considered at least
annually with the aid of a memorandum
presented to the Audit Committee by the
Auditor.
The Audit Committee reviews the fee
proposals presented by the Auditor and the
scope of work is monitored carefully to ensure
that independence is not compromised.
The Audit Committee is satisfied with the
independence, objectivity and effectiveness
of the external Auditor and the Audit
Committee has not felt it necessary at this
stage to propose re-tendering of the audit
contract. A resolution for the re-appointment
of Grant Thornton UK LLP as the statutory
Auditor will therefore be proposed at this
year’s Annual General Meeting.
No other formal recommendations have been
made to the Board by the Audit Committee
and no external reports have been
commissioned on financial control processes
during the year ended 31 January 2021.
Membership and meetings of the
Audit Committee
The Audit Committee is chaired by myself,
Michael Bretheton. I took over from Christine
Soden on 10 February 2020. The other
member is Trevor Jones.
Whilst Trevor is considered independent, I am
not because I act as a Non-Executive Director
on the Board of Blake Holdings Limited, a
company controlled by, and through which
shares in e-therapeutics are held by, Richard
Griffiths, a significant shareholder who owns
[•]% of the ordinary share capital of the
Company. Given that there are currently only
two Non-Executive Directors on the Board,
and given my relevant financial skills and
experience, myself and Trevor believe that it is
the right course of action for me to chair this
Committee and that my potential dealings
with Richard Griffiths do not impair my ability
to do so. However, we continue to search
for an additional Non-Executive Director to
further strengthen the Board.
At the invitation of the Committee,
representatives of the external Auditor usually
attend Committee meetings.
Two meetings of the Audit Committee were
held during the year ended 31 January 2021
and one further meeting after the year end.
In addition to formal reviews of reports from
the external Auditor, the Audit Committee
discussed matters relating to financial policy,
controls and reporting, as follows:
Date
March 2020
December 2020
May 2021
Matters discussed
Review of external
audit for the year
ended 31 January
2020
Internal controls and
risk management
Review of audit
planning report
including audit risk
areas for the year
ended 31 January
2021
Review of external
audit for the year
ended 31 January
2021
Internal controls and
risk management
The Audit
Committee acts
independently to
ensure the interests
of shareholders are
protected in relation
to financial reporting,
internal controls and
risk management.
Michael Bretherton
Chair of the Audit Committee
12 May 2021
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Directors' Remuneration Report
Statement by the Chair of the Remuneration Committee
The Remuneration
Committee aims
to attract, retain
and motivate
the executive
management of
the Group.
Professor Trevor Jones CBE
Chair of the Remuneration Committee
12 May 2021
The Directors’ Remuneration Policy
and Statement of Remuneration which
follow this annual statement set out the
Remuneration Committee’s approach to
future remuneration and provides details of
remuneration for the year ended 31 January
2021. This Report is intended to provide
shareholders with sufficient information
to judge the impact of the decisions taken
by the Remuneration Committee and to
assess whether remuneration packages for
Directors are fair in the context of business
performance.
The parts of the Statement of Remuneration
that are subject to audit are highlighted within
that statement.
The Remuneration Committee is mindful
of shareholder views and interests and we
believe that our Directors’ Remuneration
Policy continues to be aligned with the
achievement of the Group’s business
objectives. As always, the Annual General
Meeting provides an opportunity for face-to-
face discussions on important matters for the
Company and its shareholders and I will be
available to answer any questions you may
have.
As Chairman of the Remuneration Committee,
I am pleased to present our Directors’
Remuneration Report for the year ended 31
January 2021.
This Report does not constitute a full
directors’ remuneration report in accordance
with the Companies Act 2006. As a company
whose shares are admitted to trading on
AIM, the Company is not required by the
Companies Act 2006 to prepare such a
report. We do, however, aim to achieve
transparency in our decision making process
and have regard to the principles of the QCA
Code which we consider to be appropriate
for an AIM-listed company of our size. This
Report provides details of remuneration for
all Directors and gives a general statement
of policy on Directors’ remuneration as it is
currently applied. It also provides a summary
of the long-term share incentive scheme
currently in place.
Towards the start of the year we welcomed
Ali Mortazavi as Executive Chairman, with
Ray Barlow and Steve Medlicott stepping
down as Executive Directors. With effect from
1 August 2021 Ali Mortazavi was appointed
Chairman and Chief Executive Officer and
his remuneration was reviewed accordingly,
with reference to industry and size-specific
benchmarking surveys available. Post year
end, on 1 March 2021, his role was split, with
Ali continuing on as Chief Executive Officer
and myself being appointed as Independent
Non-Executive Chairman.
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Directors' Remuneration Report (continued)
Key Responsibilities of the Remuneration Committee
The Remuneration Committee is responsible
for reviewing and recommending the
framework and policy for remuneration of the
Executive Director.
The Remuneration Committee is responsible
for recommending any changes in the
structure of remuneration packages for the
Executive Director. It also plays an important
role when an Executive Director joins and
leaves the Company. It recommends to the
Board the terms of employment for any
appointment of an Executive Director and any
subsequent changes which may be needed.
It also reviews any payments which might
arise on termination of an Executive Director’s
contract.
The Remuneration Committee recognises the
importance of our reward and performance
strategy in recruiting and retaining high
quality individuals who can lead, develop and
sustain business growth over the longer term,
bearing in mind that, being an R&D business
only starting out on its revenue-generating
activities, the long-term prospects are higher
risk than non-R&D companies and that the
Directors need to be awarded accordingly.
Membership and meetings of the
Remuneration Committee
The Remuneration Committee is chaired by
myself, Trevor Jones Independent Non-
Executive Chairman. The other member
is Michael Bretherton, who has disclosed
to the Board potential dealings with one
of the Company's major shareholders,
Richard Griffiths, who, holds 28.17% of the
issued ordinary shares through a number
of controlled companies, including Blake
Holdings Limited where Michael is also a
Non-Executive Director. Michael is therefore
not deemed to be independent but, due
to the size of the Board is required to sit
on the Remuneration Committee. We do
not believe his potential dealings with
Richard Griffiths impact his ability to be
a balanced and impartial member of the
Committee. We continue to search for an
additional independent Non-Executive
Director to further strengthen the Board. The
Company Secretary acts as secretary to the
Remuneration Committee.
Other Directors may attend by invitation
of the Remuneration Committee. It is a
fundamental principle that no individual
should be able to participate in discussions
about their own remuneration. The
Remuneration Committee operates within
terms of reference adopted by the Committee
and approved by the Board in March 2020.
The Remuneration Committee met three
times this year, and the main matters of
business were:
•
•
•
decision on awards to be made under
the e-therapeutics Performance Share
Plan 2013 (the "PSP");
approval of the Long-Term Incentive Plan
2020 (the "LTIP") and;
review of remuneration for the Executive
Director.
The Remuneration Committee did not
undertake formal benchmarking of Directors’
remuneration in the year ended 31 January
2021, although did compare current
remuneration with published surveys, and
does not have retention agreements with any
external remuneration consultants. Advice
is taken from external advisers as needed in
relation to specific questions and projects.
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Remuneration Policy
Policy on executive remuneration
The policy of the Remuneration Committee is to ensure that the Executive Director is fairly rewarded for his individual contribution to the Group’s
overall performance and to provide a competitive remuneration package to the Executive Director (including long-term incentive plans) to
attract, retain and motivate individuals of the experience and competence required to ensure that the Company is managed successfully in the
interests of shareholders. In addition, the Remuneration Committee’s policy is to reward performance in a way which seeks to align the interests of
management with those of shareholders.
The main elements of the remuneration package of the Executive Director is set out below:
Purpose and
link to strategy
Basic salary
Attract and retain Executive
Directors with sufficient
experience and competence
to deliver strategy.
Benefits
Provide benefits consistent
to the role
Discretionary bonus
Incentivise achievement
of business objectives by
providing a reward for
performance against annual
targets.
Long-term incentives
Alignment of interests with
shareholders delivered in
the form of shares.
Pension
Attract and retain Executive
Directors for the long term
by providing funding for
retirement.
Operation
Maximum potential value
Paid in 12 equal monthly instalments
during the year.
Reviewed annually and as required to reflect the role, responsibility and
performance of the individual an the Group and informally to take into account
rates of pay for comparable roles in similar companies. There is no prescribed
minimum or maximum increase. Annual rates are set out on page 50.
Currently these consist of health
insurance and membership of a
Group life assurance scheme
The Remuneration Committee reviews the level of benefit provision from time-to-
time and has the flexibility to add or remove benefits to reflect changes in market
practices or the operational needs of the Group.
Paid in cash after the end of the
financial year to which it relates.
The maximum annual bonus is currently capped at 50% of basic salary. Targets
are based on the appropriate progression of specific projects, together with the
performance of the business as a whole. Payment of any bonus is subject to the
overarching direction of the Remuneration Committee. The maximum bonus
typically requires a very high level of performance.
Grant of awards under the PSP (pre
November 2020) and LTIP
(November 2020 onwards). Partici-
pants are entitled to acquire award
shares after a vesting period and
subject to payment of an
exercise price.
There is no individual limit. For performance metrics attached to outstanding
rewards see page 49 and Note 9 to the financial statements.
The Executive Directors are entitled
to participate in money purchase
arrangements.
The Company makes payments of 10% of basic salary into any pension scheme
or similar arrangement as the participating Executive Director may
reasonably request. Such payments are not counted for the purpose of
determining bonuses or awards under the PSP/LTIP.
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Directors' Remuneration Report (continued)
Remuneration Policy (continued)
Long-term incentives
Long-term incentive awards are used to ensure that the focus of the Director remains on the long-term added value to the shareholders. Details
of share options granted during the year can be found in the Statement of Remuneration on pages 48 to 50. The Remuneration Committee will
consider granting further options in the coming financial year upon careful consideration of the Group’s performance and long-term goals.
Differences from remuneration policy for all employees
All employees of the Group are entitled to base salary, benefits and bonus. The opportunity to earn a bonus is made available to all of the Group’s
employees. The maximum opportunity available is based on the seniority and responsibility of the role.
All the Company’s employees are eligible to be considered for awards under the PSP (pre-November 2020) or LTIP (November 2020 onwards).
Statement of consideration of employment conditions of employees
The Remuneration Committee receives reports on an annual basis on the level of pay rises awarded across the Group and takes these into account
when determining total remuneration for the Executive Director.
In addition, the Remuneration Committee receives regular reports on the structure of remuneration for senior management in the tier below the
Executive Director and uses this information to ensure a consistency of approach for the most senior managers in the Company. The Remuneration
Committee also approves the award of any long-term incentives.
The Remuneration Committee does not specifically invite colleagues to comment on the Directors’ Remuneration Policy, but it does take note of
any comments made by colleagues.
Statement of consideration of shareholder views
As Chairman of the Remuneration Committee I may consult with major shareholders from time to time, or when any significant remuneration
changes are proposed, to understand their expectations with regard to Executive Director's’ remuneration, and report back to the Remuneration
Committee. The Remuneration Committee previously consulted with certain major shareholders in relation to the introduction of the PSP and
awards made under the plan. Any other concerns raised by individual shareholders are also considered. The Remuneration Committee also takes
into account emerging best practice.
Approach to recruitment remuneration
The Remuneration Committee’s approach to recruitment remuneration is to offer a market competitive remuneration package sufficient to attract
candidates who are appropriate to the role but without paying any more than is necessary.
Any new Executive Director’s regular remuneration package would include the same elements and be in line with the policy table set out earlier in
this Directors’ Remuneration Policy, including the same limits on performance-related remuneration.
Non-Executive Directors' fee policy
The policy for the remuneration of the Non-Executive Directors is as set out below. Non-Executive Directors cannot participate in the PSP or LTIP.
Non-Executive Directors are not eligible for pension contributions.
Purpose and link to strategy
Operation
Maximum potential value
Attract Non-Executive Directors with a broad
range of experience and skills to oversee the
implementation of the Company’s strategy.
Non-Executive Director fees are determined by the
Board within the limits set out in the articles of
association and are paid in 12 equal monthly
instalments during the year (subject to part-payment
of fees in fully paid shares by agreement between
the Company and the Director).
There is no prescribed minimum or maxi-
mum range increase. Annual rates are set out
on page 50.
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Directors’ service contracts, notice periods and termination payments
Provision
Notice periods in Executive
Director’s service contracts
Compensation for loss of office
Treatment of annual bonus on
termination
Treatment of unvested PSP or LTIP
awards
Exercise of discretion
All Directors
Policy
Six months by the Company or Chief Executive. The Executive Director may be required to work during the notice
period.
Depending on the notice period, no more than 12 months’ basic salary and benefits (including Company pension
contributions and other non-cash benefits).
Bonuses which have already been declared and paid before the giving of notice may be retained by the Executive
Director.
Awards lapse on the termination of employment, although the Board has a discretion (which may be exercised
within the 30-day period following the termination of employment) to treat awards as not lapsing.
Intended only to be relied upon to provide flexibility in exceptional or inequitable circumstances. The
Remuneration Committee’s determination will take into account the particular circumstances of the Executive
Director’s departure and the recent performance of the Company.
All Directors are subject to re-election every three years. No compensation is payable if they are required to stand
down.
In the event of the negotiation of a compromise or settlement agreement between the Company and a departing Director, the Remuneration
Committee may make such payments it considers reasonable in settlement of potential legal claims. Such payments may also include reasonable
reimbursement of professional fees in connection with such agreements. The Remuneration Committee may also include the reimbursement
of repatriation costs or fees for professional or outplacement advice in the termination package, if it considers it reasonable to do so. It may also
allow the continuation of benefits for a limited period.
Directors’ service contracts and letters of appointment
Copies of the current Directors’ service contracts and letters of appointment (listed below) are available for inspection at the Company’s registered
office.
Director
Ali Mortazavi
Trevor Jones
Michael Bretherton
Date of service contract / letter of appointment
10 February 2020 and subsequently 11 October 2020
28 October 2015 and subsequently 23 February 2021
10 February 2020
Directors’ insurance and indemnity
Directors’ and officers’ liability insurance is provided at the cost of the Company for all Directors and officers. The articles of association provide for
the Company to indemnify Directors against losses and liabilities properly incurred in the execution of their duties.
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Directors' Remuneration Report (continued)
Statement of Remuneration
Directors’ remuneration
Remuneration arrangements for the Executive Director are set by
the Remuneration Committee. Remuneration is designed to align
Executive Director's remuneration with shareholders’ interests. As
well as fixed compensation, Executive Director and other employees
can receive cash bonuses based on achievement of individual and
corporate objectives.
The maximum bonus for the Executive Director is 50% of basic
salary, dependent on the Company’s and the Executive Director’s
performance during the year. The Remuneration Committee decides
the bonuses to be awarded.
The remuneration of the Directors for the years ended 31 January 2021
and 31 January 2020 is shown below:
Executive Directors
Ali Mortazavi a
Ray Barlow b
Steve Medlicott b
Non-Executive Directors
Trevor Jones
Michael Bretherton
Iain Ross
Christine Soden
Executive Directors
Ray Barlow
Steve Medlicott
Non-Executive Directors
Iain Ross
Trevor Jones
Christine Soden
Base
salary
£000
Bonus
£000
2021
Contributions
to money
purchase
schemes
£000
Compensation
for loss of office
and payments in
lieu of notice
£000
Benefits
in kind
£000
Total
remuneration
£000
107
67
5
40
39
2
1
261
–
–
–
–
–
–
–
-
10
28
–
–
–
-
–
38
16
–
–
–
–
–
–
16
–
175
73
–
–
–
–
248
133
270
78
40
39
2
1
563
Base
salary
£000
Bonus
£000
2020
Contributions
to money
purchase
schemes
£000
Compensation
for loss of office
and payments in
lieu of notice
£000
Benefits
in kind
£000
Total
remuneration
£000
300
151
81
40
40
612
-
-
–
–
–
-
38
–
–
–
–
38
1
–
–
–
–
1
–
–
–
–
–
–
339
151
81
40
40
651
a. Ali Mortazavi was appointed as Executive Chairman on 10 February 2020. He was appointed Chief Executive Officer with effect from 12 October 2020 and retaining his position as
Chairman and his salary was increased in accordance with his new role. With effect from 1 March 2021 the roles were split, with Ali continuing as Chief Executive Officer and Trevor
Jones being appointed as Non-Executive Chairman.
b. Ray Barlow and Steve Medlicott resigned on 10 February 2020. Ray Barlow served on gardening leave until his termination date of 10 April 2021. Steve Medlicott stepped down with
immediate effect.
c. Trevor Jones was appointed as Non-Executive Chairman on 1 March 2021.
d. Michael Bretherton was appointed on 10 February 2020.
e.
Iain Ross and Christine Soden resigned on 10 February 2020. Both were awarded share options in lieu of serving their notice periods, which were 6 months and 3 months, respectively.
Iain was awarded 1,350,000 options and Christine was awarded 333,333 options. These options were exercisable at 0.1 pence per share and vested when the Company's share price
reached and remained at 6.0 pence for a period of 30 consecutive days, but did not become exercisable before 11 August 2020.
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The Company operates a share scheme (the PSP) under which the
Executive Director has received options to acquire ordinary shares in
the Company. Up on his initial appointment, Ali Mortazavi was awarded
9,672,836 share options with an exercise price of 0.1p and a vesting
period of 2 years. The options had a performance condition attached
whereby options will only vest if the share price stays above 6.0p for
30 consecutive days. More information can be found in Note 10 to the
financial statements.
Options granted to, and held by, Directors who served during the year
are summarised below:
Ali Mortazavi
Ray Barlow
Steve Medlicott
Options
held at
beginning of
the year
No.
-
7,500,000
2,000,000
9,500,000
Options
granted
during
the year
No.
9,672,836
-
-
9,672,836
2020
Options
exercised
during
the year
No.
-
-
-
-
Options
forfeited
during
the year
No.
-
(7,500,000)
(2,000,000)
(9,500,000)
Options
held at
end of
the year
No.
9,672,836
-
-
9,672,836
The options granted to, and held by, Directors who served during the year, represent the following awards:
Steve Medlicott
Steve Medlicott
Steve Medlicott
Ray Barlow
Ray Barlow
Ray Barlow
Ray Barlow
Ali Mortazavi
At end of year
-
-
-
-
-
-
-
9,672,836
At beginning of year
666,666
666,667
666,667
2,000,000
1,750,000
1,750,000
2,000,000
-
Exercise price (p)
16.76
20.95
25.14
16.76
20.95
25.14
2.70
0.1
Date from which
exercisable
23 November 2018
23 November 2018
23 November 2019
2 May 2019
2 May 2019
2 May 2019
28 March 2021
11 February 2022
Expiry date
23 November 2026
23 November 2026
23 November 2026
2 May 2027
2 May 2027
2 May 2027
28 March 2029
11 February 2030
Steve Medicott and Ray Barlow resigned in February 2020. As a result, Ray Barlow's options lapsed in full. Steve Medicott options lapsed in full with
the exception of 666,666 vested share options awarded in November 2016 with an exercise price of 16.76p. Steve Medicott did not exercise these
options so these also lapsed.
The mid-market price of the Company’s shares at 31 January 2021 (the last trading day of the period) was 18.63p and the range during the year was
3.75p to 21.75p.
Directors’ shareholdings
The Directors of the Company who served during the year, and their interests in the issued ordinary shares of the Company, were as follows:
Ali Mortazavi
Trevor Jones
Michael Bretherton
Ray Barlow (resigned 10 February 2020)
Steve Medlicott
Iain Ross (resigned 10 February 2020)
Christine Soden (resigned 10 February 2020)
Ordinary shares of 0.1p each at
31 January 2021
50,666,666
1,031,955
500,000
1,450,000
1,550,000
1,700,000
370,000
During the period between 31 January 2021 and 21 April 2021, the Company received no notifications under the Market Abuse Regulation.
Details of the most recently notified transactions in the ordinary shares of the Company by the Directors are available on the Company’s website at
www.etherapeutics.co.uk/investors/regulatory-announcements.
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Directors' Remuneration Report (continued)
Statement of Remuneration (continued)
Implementation of Remuneration Policy for the year ended 31 January 2022
The salaries and fees to be paid to Directors in the year ended 31 January 2022 are set out in the table below, together with any increase expressed
as a percentage:
Ali Mortazavi
Trevor Jones
Michael Bretherton
Annual base salary/fees
31 January
2022
£000
200
55
40
31 January
2021
£000
124
40
n/a
Increase/
(Decrease)
61.3%
37.5%
n/a
The increased fees for Ali Mortazavi reflect his appointment as Chief
Executive Officer with effect from 12 October 2020 and the increased
fees for Trevor Jones reflect his appointment as Non-Executive
Chairman with effect from 1 March 2021.
The basis for determining annual bonus payments for the year to
31 January 2021 is set out in the Remuneration Policy on pages 43 to
50. The performance targets are considered commercially sensitive
because of the information that they would provide to the Company’s
competitors, but are aligned with the strategic objectives set out on
pages 12 to 13 of the Strategic Report.
The Remuneration Committee may make further awards under the
LTIP during the year ending 31 January 2022. These awards will be
made subject to appropriate exercise prices and vesting periods.
Conclusion
This Report is intended to provide shareholders with sufficient
information to judge the impact of the decisions taken by the
Remuneration Committee and to assess whether remuneration
packages for Directors are fair in the context of business performance.
The Remuneration Committee is mindful of shareholder views, and
we believe that our Directors’ remuneration policy is aligned with the
achievement of the Company’s business objectives and the interests of
shareholders.
The Directors’ Remuneration Report, including the Remuneration
Policy and Statement of Remuneration, were approved by the
Remuneration Committee and by the Board on 12 May 2021.
Professor Trevor Jones CBE
Chair of the Remuneration Committee
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Directors' Responsibilities Statement
The Directors are responsible for preparing the Annual Report and
the financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial statements
for each financial year. Under that law, the Directors are required
to prepare the Group financial statements in accordance with
International Financial Reporting Standards (“IFRSs”) as adopted
by the European Union and Article 4 of the International Accounting
Standard (“IAS”) Regulation, and have also chosen to prepare the
parent Company financial statements under IFRSs as adopted by the
European Union. Under company law, the Directors must not approve
the accounts unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and Company and of the profit
or loss of the Group and Company for that period. In preparing these
financial statements, IAS 1 requires that directors:
The Directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the Group and Company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the 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.
The Directors are responsible for the maintenance and integrity of
the corporate and financial information included on the Company’s
website (www.etherapeutics.co.uk). Legislation in the United Kingdom
governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Responsibilities statement
We confirm that, to the best of our knowledge:
•
•
•
•
properly select and apply accounting policies;
present information, including accounting policies, in a manner
that provides relevant, reliable, comparable and understandable
information;
provide additional disclosures when compliance with the
specific requirements in IFRSs are insufficient to enable users to
understand the impact of particular transactions, other events
and conditions on the entity’s financial position and financial
performance; and
make an assessment of the Company’s ability to continue as a
going concern.
•
•
•
the financial statements, prepared in accordance with the
relevant reporting framework, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the
Company and the undertakings included in the consolidation
taken as a whole;
the Strategic Report includes a fair review of the development and
performance of the business and the position of the Company
and the undertakings included in the consolidation taken as
a whole, together with a description of the principal risks and
uncertainties that they face; and
the Annual Report and financial statements, taken as a whole, are
fair, balanced and understandable and provide the information
necessary for shareholders to assess the Company’s position and
performance, business model and strategy.
This Directors’ Responsibilities Statement was approved by the Board
of Directors on 12 May 2020 and is signed on its behalf by:
Ali Mortazavi
Chief Executive Officer
12 May 2021
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Auditor's Report
Independent Auditor’s Report to the Members of e-therapeutics plc
Opinion
Our opinion on the financial statements is unmodified
We have audited the financial statements of e-Therapeutics plc
(the ‘parent company’) and its subsidiaries (the ‘group’) for the year
ended 31st January 2021 which comprise the consolidated income
statement, the consolidated statement of comprehensive income, the
consolidated statement of changes in equity, the balance sheets, the
consolidated and company statements of cash flow and notes to the
consolidated financial statements, including a summary of significant
accounting policies. The financial reporting framework that has
been applied in their preparation is applicable law and international
accounting standards in conformity with the requirements of the
Companies Act 2006.
In our opinion:
•
•
•
the financial statements give a true and fair view of the state of
the group’s and of the parent company’s affairs as at 31 January
2021 and of the group’s loss for the year then ended;
the group financial statements have been properly prepared
in accordance with international accounting standards in
conformity with the requirements of Companies Act 2006;
the parent company financial statements have been properly
prepared in accordance with international accounting standards
in conformity with the requirements of Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on
Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under
those standards are further described in the ‘Auditor’s responsibilities
for the audit of the financial statements’ section of our report. We are
independent of the group and the parent company in accordance with
the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as applied to
listed entities, and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Conclusions relating to going concern
We are responsible for concluding on the appropriateness of the
directors’ use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on
the group’s and the parent company’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our report to the related disclosures
in the financial statements or, if such disclosures are inadequate, to
modify the auditor’s opinion. Our conclusions are based on the audit
evidence obtained up to the date of our report. However, future events
or conditions may cause the group or the parent company to cease to
continue as a going concern.
In our evaluation of the directors’ conclusions, we considered the
inherent risks associated with the group’s and the parent company’s
business model including effects arising from macro-economic
uncertainties such as Brexit and Covid-19, we assessed and challenged
Materiality
Key audit
matters
Scoping
Overview of our audit approach
Overall materiality:
•
•
•
•
•
Group: £212,000, which represents approximately 4.7% of the group’s loss before tax.
Parent company: £211,000, which represents approximately 4.7% of the parent company’s loss
before tax.
The key audit matters for the Group and Parent company were identified as the application of
IFRS 15 to the Galapagos contract and the valuation of the share options issued during the year
with respect to the resultant IFRS 2 cost recognised. These are both new key audit matters in
the current year.
Our auditor’s report for the year ended 31 January 2020 included one key audit matter that has
not been reported as a key audit matter in our current year’s report. This relates to the carrying
value of goodwill in the Parent company. The goodwill in the parent company was written off in
the prior year and therefore was not relevant for the current year audit.
We performed a full scope audit on the Parent Company financial statements of e-Therapeutics
plc and analytical procedures on the financial information of its non-significant subsidiaries,
Searchbolt Limited and InRotis Technologies Limited.
52
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the reasonableness of estimates made by the directors and the related
disclosures and analysed how those risks might affect the group’s
and the parent company’s financial resources or ability to continue
operations over the going concern period.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the group’s and the parent
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.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to fraud)
that we identified. These matters included those that had the greatest
effect on: the overall audit strategy; the allocation of resources in the
audit; and directing the efforts of the engagement team. These matters
were addressed in the context of our audit of the financial statements
as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
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.
The responsibilities of the directors with respect to going concern
are described in the ‘Responsibilities of directors for the financial
statements’ section of this report.
In the graph below, we have presented the key audit matters,
significant risks and other risks relevant to the audit.
Description
Audit response
KAM
Disclosures
Our results
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Auditor's Report (continued)
Key Audit Matter - Group and Parent
How our scope addressed the matter – Group and
Parent
Share option charge may be inaccurately recognised
We identified the share option charge as one of the most significant
assessed risks of material misstatement due to error.
In responding to the key audit matter, we performed the following audit
procedures:
A significant number of share options were issued during the current year
as set out in note 9 to the consolidated financial statements. As a result, the
charge increased significantly from £36,631 to £421,621 in the current year.
The share option charge is recognised in line with International Financial
Reporting Standard (‘IFRS’) 2 ‘Share-based Payment’, which requires
management to make an assessment of the fair value of the options issued,
and to select an appropriate model and assumptions in order to do so.
The selection, application and calculation of the models and underlying
assumptions requires significant management judgement that could
indicate a potential for management bias. These judgements mainly centre
on the choice of models used in performing these valuations and their
key inputs. In order to support their assessment, management utilised an
external expert.
Relevant disclosures in the Annual Report
and Accounts 2021
•
•
Financial statements: Note 9. Share-based payments
Audit committee report: Page 42
•
•
•
•
•
•
Obtained and read the option agreements issued during the year
and agreed key terms to management’s assessment;
Obtained and read the valuation model prepared by management’s
expert;
Assessed whether appropriate share option pricing models had
been used based on the underlying vesting conditions;
Utilised our internal valuation experts to test the accuracy and
integrity of management’s model;
Identified and assessed the key inputs that have been used in the
models (being primarily the strike price of the option, the current
stock price and the time to expiration), by reference to supporting
documentation, such as award deeds for share options granted to
employees and publicly available share price information from AIM;
and
Evaluated the disclosures in financial statements to assess whether
these are complete and accurate.
Our results
Overall, based on our audit work, we determined that the judgements
made by management were consistently applied and that the share
based payment charge was recognised appropriately and in accordance
with IFRS 2.
Revenue recognition
We identified revenue recognition (including contract accounting) as one of
the most significant assessed risks of material misstatement due to error.
Revenue recognition
In responding to the key audit matter, we performed the following audit
procedures:
The total amount of revenue recognised during the year ended 31 January
2021 was £316,863 (2020: £456,000).
Revenue is recognised at the fair value of consideration receivable in respect
of the performance of contracts and the provision of services. The group
adopted International Financial Reporting Standard (IFRS) 15) 'Revenue
from Contracts with Customers' for the financial year ended 31 January
2021. Significant judgement was required by management in the initial
application of IFRS 15 to the company's contract revenue.
The company entered into a new type of contract in the year ended 31
January 2021 that spans multiple years. This is the entity’s only ongoing
revenue contract in the financial year. Determining the amount of revenue to
be recognised on such contracts requires management to make a number
of assumptions to determine the level of revenue that is recognised for
each period, as well as the associated deferrals. The most significant of
those assumptions include the identification of separable performance
obligations and the allocation of the transaction price to different
performance obligations within the contract.
•
•
•
Assessed whether the group’s accounting policies adopted by the
directors are in accordance with the requirements of IFRS 15, and
whether management accounted for revenue in accordance with
those accounting policies, including the accounting and disclosure
for the transition to IFRS 15;
Agreed details used in management’s assessment of the contract
to contract terms and gaining an understanding of the key
performance obligations within the contract;
Obtained copies of all revenue generating contracts in the year,
developed an understanding of the key terms of each contract and
determined the expected revenue recognition for each contract
based on those terms and the revenue recognition policy. We then
compared our expectations against management’s and investigated
any differences; and
Identified contracts that spanned the year-end and re-calculated
the expected deferred and accrued income and compared this to
management’s calculation
Financial statements: Note 5, Segmental Reporting
Audit committee report: page 42
•
•
54
Key observations
Overall, based on our audit work, we determined that the judgements
made by management wereconsistently applied and that revenue was
recognised in accordance with the policies adopted by the Group and
Parent Company.
e-therapeutics plc Annual Report 2021
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Our application of materiality
We apply the concept of materiality both in planning and performing the audit, and in evaluating the effect of identified misstatements on the
audit and of uncorrected misstatements, if any, on the financial statements and in forming the opinion in the auditor’s report.
Materiality was determined as follows:
Materiality measure
Group
Parent
Materiality for financial
statements as a whole
Materiality threshold
We define materiality as the magnitude of misstatement in the financial statements that, individually or in the
aggregate, could reasonably be expected to influence the economic decisions of the users of these financial
statements. We use materiality in determining the nature, timing and extent of our audit work.
£212,000 which is approximately 4.7% of the Group’s
loss before tax. This benchmark is considered the
most appropriate because it is a key driver of business
performance.
£211,000 which is approximately 4.7% of the Parent’s
loss before tax. This benchmark is considered the
most appropriate because it is a key driver of business
performance.
We have consistently used loss before tax as the
underlying benchmark. We selected this benchmark
because the main focus of the group currently is
going concern, and their main indicator of this is their
cash levels. There are very few non-cash based P&L
transactions, and therefore loss before tax is considered
a good indicator of cash burn. As such, loss before tax is
considered a reasonable benchmark upon which to make
an assessment.
We have consistently used loss before tax as the
underlying benchmark. We selected this benchmark
because the main focus of the parent company currently
is going concern, and the main indicator of this ais their
cash levels. There are very few non-cash based P&L
transactions, and therefore loss before tax is considered
a good indicator of cash burn. As such, loss before tax is
considered a reasonable benchmark upon which to make
an assessment.
Significant judgements made by
the auditor in determining the
materiality
Materiality for the current year is higher than the
level determined for the year ended 31 January 2020
(£125,000) due to an increase in losses made in the year
ending 31 January 2021.
Materiality for the current year is higher than the
level determined for the year ended 31 January 2020
(£124,000) due to an increase in losses made in the year
ending 31 January 2021.
Significant revision(s) of materiality
threshold that were made as the
audit progressed
As the audit progressed, the materiality level determined
was revised.
As the audit progressed, the materiality level determined
was revised.
At the planning stage of the audit, we calculated
materiality based on pro-rated figures for the first 9
months of the year. This was then revised at fieldwork
when the full year’s final figures were obtained.
At the planning stage of the audit, we calculated
materiality based on pro-rated figures for the first 9
months of the year. This was then revised at fieldwork
when the full year’s final figures were obtained.
Performance materiality used to
drive the extent of our testing
We set performance materiality at an amount less than materiality for the financial statements as a whole to reduce
to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements
exceeds materiality for the financial statements as a whole.
Performance materiality threshold £159,000 which is 75% of financial statement materiality
£158,360 which is 75% of financial statement materiality.
Significant judgements made
by auditor in determining the
performance materiality
In determining materiality, we made the following
significant judgements:
In determining materiality, we made the following
significant judgements:
Our prior year experience with auditing the financial
statements of the group – as a result we have a better
understanding of the business and the processes in
place. There were few adjustments in the prior year, .
Therefore, 75% of financial statement materiality was
deemed appropriate.
Our prior year experience with auditing the financial
statements of the parent company – as a result we have a
better understanding of the business and the processes
in place. There were few adjustments in the prior year.
Therefore, 75% of financial statement materiality was
deemed appropriate.
Specific materiality
We determine specific materiality for one or more particular classes of transactions, account balances or disclosures
for which misstatements of lesser amounts than materiality for the financial statements as a whole could reasonably
be expected to influence the economic decisions of users taken on the basis of the financial statements.
Specific materiality threshold
We determined a lower level of specific materiality for
certain areas such as Directors’ remuneration and related
party transactions.
We determined a lower level of specific materiality for
certain areas such as Directors’ remuneration and related
party transactions.
Communication of
misstatements to the audit
committee
Threshold for communication
We determine a threshold for reporting unadjusted differences to the audit committee.
£10,600 and misstatements below that threshold that, in
our view, warrant reporting on qualitative grounds.
£10,500 and misstatements below that threshold that, in
our view, warrant reporting on qualitative grounds.
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Auditor's Report (continued)
The graph below illustrates how performance materiality interacts with our overall materiality and the tolerance for potential uncorrected
misstatements.
Overall materiality – Group
Overall materiality – Parent
Loss before
tax
£(4,233,000)
FSM
£212,000,
4.7%
PM
£159,000,
75%
TFPUM
£53,000, 25%
Loss before
tax
£(4,233,000)
FSM
£211,000,
4.7%
PM
£158,360,
75%
TFPUM
£52,750, 25%
FSM: Financial statements materiality, PM: Performance materiality, TFPUM: Tolerance for potential uncorrected misstatements
An overview of the scope of our audit
We performed a risk-based audit that requires an understanding of the group’s
and the parent company’s business and in particular matters related to:
Identifying significant components
•
•
Determining the scope of the group audit based on our understanding
of the group structure and the relative contribution of revenue,
expenses and net assets of each component to the group;
As the two subsidiaries, Searchbolt and InRotis Technologies, constitute
a negligible percentage of the group’s total assets, revenues and loss
before taxation, these are not significant components within the scope
of our audit;
Type of work to be performed on financial information
of parent and other components (including how it
addressed the key audit matters)
•
•
•
Based on our assessment of the group as above, we focused our group
audit scope primarily on the group and parent company, e-therapeutics
plc. This component was subject to an audit of financial information
(full-scope audit) and represented 99.52% of the group’s loss before tax,
100% of the group’s revenue and 98% of the group’s net assets;
At the group level we also tested the consolidation process and
carried out analytical procedures at the remaining two components to
confirm our conclusion that there were no significant risks of material
misstatement arising from the aggregated financial information of those
remaining components; and
We identified application of IFRS 15 to the Galapagos contract and
valuation of the share based payment schemes as the key audit matters
and the procedures performed in respect of these have been included
in the key audit matters section of our report
Performance of our audit
•
56
Due to lockdown restrictions imposed as a result of the ongoing
COVID-19 pandemic, the audit team were not able to visit the
locations and the audit was performed entirely online using virtual
communication platforms.
Audit approach
Full-scope audit
Analytical procedures
No. of
components
1
2
% coverage
total assets
98%
2%
% coverage
revenue
100%
0%
% coverage
LBT
99.52%
0.48%
Other information
The directors are responsible for the other information. 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.
In connection with our audit of the financial statements, 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 there is a material
misstatement in the financial statements or a material misstatement of the
other information. 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.
Our opinion on other matters prescribed by the
Companies Act 2006 is unmodified
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the strategic report and the directors’ report
for the financial year for which the financial statements are prepared is
consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in
accordance with applicable legal requirements.
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Matter on which we are required to report under the
Companies Act 2006
statements may not be detected, even though the audit is properly
planned and performed in accordance with the ISAs (UK).
In the light of the knowledge and understanding of the group and the
parent 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.
Matters on which we are required to report by
exception
We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:
•
•
•
•
adequate accounting records have not been kept by the parent
company, or returns adequate for our audit have not been received
from branches not visited by us; or
the parent company 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.
Responsibilities of 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 group’s and the parent company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the directors either
intend to liquidate the group or the parent company or to cease operations,
or have no realistic alternative but to do so.
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.
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.
Explanation as to what extent the audit was
considered capable of detecting irregularities,
including fraud
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. Owing to the inherent limitations of an audit,
there is an unavoidable risk that material misstatements in the financial
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 that
are applicable to the group and determined that the most significant which
are directly relevant to the financial statements are those related to the
reporting frameworks (IFRS, the Companies Act 2006 and QCA Corporate
Governance Code) and AIM rules.
In addition, we concluded that there are certain significant laws and
regulations, such as Employment Law, that may have an effect on the
determination of the amounts and disclosures in the financial statements
and those laws and regulations relating to employee matters.
We understood how e-therapeutics plc is complying with those legal and
regulatory frameworks by making enquiries of management, including
those individuals responsible for legal and compliance procedures, and
the company secretary. We corroborated our enquiries through our review
of board minutes, audit committee minutes and correspondence received
from regulatory bodies.
We assessed the susceptibility of e-therapeutics plc’s Consolidated
Financial Statements to material misstatement, including how fraud
might occur, by making enquires of management and those charged with
governance. We utilised internal and external information to corroborate
these enquiries and to perform a fraud risk assessment. We considered the
risk of fraud to be higher through the potential for management override
of controls resulting from/facilitated by management bias in developing
significant account estimates and posting inappropriate journal entries.
Audit procedures performed by the group engagement team and
component auditors for those components included in the scope of our
audit included:
•
•
•
evaluation and testing of the design effectiveness of management's
controls designed to prevent and detect irregularities;
challenging assumptions and judgments made by management in its
significant accounting estimates, which are set out on page 66, and
include revenue recognition, going concern and taxation;
identifying and testing journal entries, focussing on those categories
of journals deemed higher risk based on our risk assessment
procedures.
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.
Mark Bishop FCA
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Oxford
12 May 2021
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Consolidated Income Statement
for the year ended 31 January 2021
Revenue
Cost of sales
Gross profit
Research and development expenditure
Administrative expenses
Operating loss
Investment income
Loss before tax
Taxation
Loss for the year attributable to equity holders of the Company
Loss per share: basic and diluted
Notes
5
10
11
12
2021
£000
317
–
317
(2,705)
(2,097)
(4,485)
17
(4,468)
784
(3,684)
(0.99)p
2020
£000
456
–
456
(2,104)
(1,240)
(2,888)
15
(2,873)
526
(2,347)
(0.87)p
Consolidated Statement of
Comprehensive Income
for the year ended 31 January 2021
Loss for the financial year
Other comprehensive income
Total comprehensive loss for the year attributable to equity holders of the Company
2021
£000
(3,684)
–
(3,684)
2020
£000
(2,347)
–
(2,347)
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Consolidated Statement of Changes in Equity
for the year ended 31 January 2021
Group
As at 1 February 2019
Total comprehensive income for year
Loss for the financial year
Total comprehensive loss for year
Transactions with owners, recorded directly in equity
Issue of ordinary shares
Equity-settled share-based payment transactions
Total contributions by and distribution to owners
As at 31 January 2020
Total comprehensive income for year
Loss for the financial year
Total comprehensive loss for year
Transactions with owners, recorded directly in equity
Issue of ordinary shares
Equity-settled share-based payment transactions
Total contributions by and distribution to owners
As at 31 January 2021
Company
As at 1 February 2019
Total comprehensive income for year
Loss for the financial year
Total comprehensive loss for year
Transactions with owners, recorded directly in equity
Issue of ordinary shares
Equity-settled share-based payment transactions
Total contributions by and distribution to owners
As at 31 January 2020
Total comprehensive income for year
Loss for the financial year
Total comprehensive loss for year
Transactions with owners, recorded directly in equity
Issue of ordinary shares
Equity-settled share-based payment transactions
Total contributions by and distribution to owners
As at 31 January 2021
Share
capital
£000
269
Share
premium
£000
65,165
Retained
earnings deficit
£000
(58,632)
–
–
–
–
–
269
–
–
152
–
152
421
–
–
11
–
11
65,176
–
–
12,492
–
12,492
77,668
(2,347)
(2,347)
–
36
36
(60,943)
(3,684)
(3,684)
–
422
422
(64,205)
Share
capital
£000
269
Share
premium
£000
65,165
Retained
earnings deficit
£000
(56,060)
–
–
–
–
–
269
–
–
152
–
152
421
–
–
11
–
11
65,176
–
–
12,492
–
12,492
77,668
(5,171)
(5,171)
–
36
36
(61,195)
(3,682)
(3,682)
–
422
422
(64,455)
Total
£000
6,802
(2,347)
(2,347)
11
36
47
4,502
(3,684)
(3,684)
12,644
422
13,066
13,884
Total
£000
9,374
(5,171)
(5,171)
11
36
47
4,250
(3,682)
(3,682)
12,644
422
13,066
13,634
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Balance Sheets
as at 31 January 2021
Non-current assets
Intangible assets
Property, plant and equipment
Investments
Current assets
Tax receivable
Trade and other receivables
Prepayments
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Lease liability
Contract liability
Non-current liabilities
Lease liability
Total liabilities
Net assets
Equity
Share capital
Share premium
Retained earnings deficit
Total equity attributable to equity holders of the Company
Group
Company
Notes
13
14
15
11
16
17
18
19
18
21
2021
£000
82
80
–
162
769
57
296
13,027
14,149
14,311
327
23
77
427
–
427
13,884
421
77,668
(64,205)
13,884
2020
£000
110
93
–
203
557
36
149
3,841
4,583
4,786
215
46
–
261
23
284
4,502
269
65,176
(60,943)
4,502
2021
£000
82
80
–
162
769
57
296
12,776
13,898
14,060
326
23
77
426
–
426
13,634
421
77,668
(64,455)
13,634
2020
£000
110
93
–
203
557
36
149
3,840
4,582
4,785
466
46
–
512
23
535
4,250
269
65,176
(61,195)
4,250
As permitted by section 408 of the Companies Act 2006, no separate Statement of Comprehensive Income is presented in respect of the parent
Company. The Company reported a loss for the financial year ended 31 January 2021 of £3,682,000 (2020: loss of £5,171,000).
These financial statements were approved and authorised for issue by the Board of Directors on 12 May 2021 and were signed on its behalf by:
Ali Mortazavi
Chief Executive Officer
Registered number: 04304473
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Consolidated Statement of Cash Flow
for the year ended 31 January 2021
Group
Loss for the year
Adjustments for:
Depreciation, amortisation and impairment
Equity–settled share–based payment expense
Investment income
Taxation
Operating cash flows before movements in working capital
Decrease in trade and other receivables
Decrease in trade and other payables
Tax received
Net cash used in operating activities
Interest received
Acquisition of other intangible assets
Acquisition of property, plant and equipment
Net cash (used in)/from investing activities
Proceeds from issue of share capital
Repayment of lease liability
Net cash (used in)/from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at 1 February
Cash and cash equivalents at 31 January
Notes
13,14
9
10
11
13
14
18
2021
£000
(3,684)
–
112
422
(17)
(802)
(3,969)
(168)
189
590
(3,358)
17
(18)
(53)
(54)
12,644
(46)
12,598
9,186
3,841
13,027
2020
£000
(2,347)
97
36
(15)
(547)
(2,776)
161
(500)
1,088
(2,027)
15
(11)
(5)
(1)
11
(46)
(35)
(2,063)
5,904
3,841
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Company Statement of Cash Flow
for the year ended 31 January 2021
Company
Loss for the year
Adjustments for:
Depreciation, amortisation and impairment
Equity–settled share–based payment expense
Investment income
Taxation
Operating cash flows before movements in working capital
Decrease in trade and other receivables
Decrease in trade and other payables
Tax received
Net cash used in operating activities
Interest received
Acquisition of other intangible assets
Acquisition of property, plant and equipment
Net cash (used in)/from investing activities
Proceeds from issue of share capital
Repayment of lease liability
Net cash (used in)/from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at 1 February
Cash and cash equivalents at 31 January
Notes
13,14
9
10
11
13
14
18
2021
£000
(3,683)
112
422
(17)
(802)
(3,968)
(167)
(63)
590
(3,608)
17
(18)
(53)
(54)
12,644
(46)
12,598
8,936
3,840
12,776
2020
£000
(5,171)
2,921
36
(15)
(547)
(2,776)
161
(501)
1,088
(2,028)
15
(11)
(5)
(1)
11
(46)
(35)
(2,064)
5,904
3,840
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Notes to the Consolidated Financial Statements
1. General information
e-therapeutics plc (the “Company”) is a company incorporated and
domiciled in the UK. The nature of the operations and principal
activities of the Company and its subsidiary undertakings (the “Group”)
are set out in the Strategic Report (pages 1 to 27) and the Directors’
Report (pages 32 and 33). The registered address of the Company is 17
Blenheim Office Park, Long Hanborough, Oxfordshire OX29 8LN.
These consolidated financial statements are presented in the currency
of the economic environment in which the Group operates, being
Sterling. Financial information presented has been rounded to the
nearest thousand pounds.
The Group financial statements consolidate those of the Company
and its subsidiaries. The parent Company financial statements present
information about the Company as a separate entity and not about its
Group.
2. Standards and interpretations applied for the first
time
No new standards, amendments or interpretations have become
effective for the first time in these financial statements that have a
material impact on the amounts reported or disclosures made.
3. Significant accounting policies
Basis of accounting
The Group financial statements have been prepared on a going
concern basis under the historical cost basis of accounting, except
where fair value measurement is required under IFRS as described
below and in accordance with International Financial Reporting
Standards (IFRS), and interpretations issued by the IFRS Interpretations
Committee (IFRS IC) and the Companies Act 2006 applicable to
companies reporting under IFRS. The principal accounting policies
are set out below and have, unless otherwise stated, been applied
consistently to all years presented.
Going concern
Although the Group has recognised revenue from commercial deals
during the current and prior year, it is still largely reliant on its cash
balance to fund ongoing operations.
At 31 January 2021, we reported cash and liquid resources of
£13,027,000 and an underlying cash burn during the year, excluding
R&D tax credits received and the net proceeds from fundraises, of
£4,030,000.
We prepared detailed strategic plans as part of the fundraise process
in July 2020, which raised total gross proceeds, along with the smaller
fundraise in February 2020, of £13,203,000. We have also prepared
a detailed budget for 16 months, which supports the view that the
Group has sufficient cash to meet it's operational requirements for
at least 12 months from the signing of these financial statements.
The budget includes a significant increase in R&D expenditure, in
line with progressing our strategic aims as detailed on pages 12 to
13 of the Strategic Report. This expenditure is largely uncommitted
and discretionary and would be reduced or postponed if required to
manage the Group's cash resources.
The financial performance and position of the Group are discussed in
more detail on page 17 of the Strategic Report.
These financial statements have been prepared on the going concern
basis since, given the points discussed above, the Directors have
a reasonable expectation that the parent Company and the Group
have adequate resources to continue in operational existence for the
foreseeable future.
Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 31 January each year, from the date
control commences until the date that control ceases.
Intragroup assets and liabilities, equity, income, expenses and cash
flows relating to transactions between members of the Group are
eliminated in preparing the consolidated financial information.
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Notes to the Consolidated Financial Statements (continued)
Foreign currencies
The individual financial statements of each Group company are
presented in Sterling, being the functional currency. Transactions in
foreign currencies are recognised at the rates of exchange prevailing
on the dates of the transactions. At each Balance Sheet date, monetary
assets and liabilities that are denominated in foreign currencies are
retranslated at the rates prevailing at that date. Exchange differences
are recognised in the Income Statement.
Revenue
Rendering of services under contracts with
customers
Revenue is recognised on collaborative transactions in the area of drug
discovery. All contracts with customers are reviewed individually in
accordance with the IFRS 15 five-step process for revenue recognition.
Where consideration is fixed and services are deemed to be transferred
over time, on the basis that customers influence the direction of
the project and therefore the requirements of the performance
obligations to be delivered, revenue is recognised over time based
on the ratio of time spent by employees in the period to the total
time expected to be spent to complete the performance obligation.
All other revenue for services is recognised at the point at which the
performance obligation, as defined in the contract and as aligned
to a customer deliverable, has been completed. Every performance
obligation has a defined transaction price. Milestone payments, all of
which have a defined transaction price, are considered to be variable
consideration and associated revenue will be recognised when the
related performance obligation is satisfied and the Group considers
that it is highly probable that there will not be a significant reversal
of cumulative revenue in future periods, e-therapeutics utilise its
powerful computer-based platform technologies in the delivery of
its projects with collaborators. Licence income fees associated with
the right to access the Group’s proprietary platform throughout the
project are recognised as revenue over the length of the contract in
accordance with IFRS 15.B58. Customers may be invoiced wholly or
partly up-front front, with the balance upon completion of specific
performance obligations. The Group recognises contract liabilities on
the Balance Sheet for consideration received in excess of the revenue
recognised.
Investment income
Interest income is recognised in the Income Statement as it accrues
on a time basis, by reference to the principal outstanding and effective
interest rate applicable.
Expenses
Defined contribution pension plans
Payments to defined contribution pension plans are recognised as an
expense when employees have rendered service entitling them to the
contributions.
Share-based payment transactions
Equity-settled share-based payments to employees are measured at
fair value of the equity instruments at the grant date, excluding the
effect of non-market-based vesting conditions. Details regarding the
determination of the fair value are included in Note 9.
The grant-date fair value is expensed over the vesting period, based on
the Group’s estimate of equity instruments that will eventually vest. At
each Balance Sheet date, the Group revises its estimate of the number
of equity instruments expected to vest as a result of the effect of non-
market-based vesting conditions and the impact of the revision of the
original estimates is recognised in the Income Statement such that the
cumulative expense reflects the revised amount.
Taxation
Tax is recognised in the Income Statement except to the extent that
it relates to items recognised directly in equity, in which case it is
recognised in equity. Small and medium sized enterprises (“SME”) R&D
tax credits receivable are recognised within taxation in the Income
Statement. Research and Development Expenditure Credit (“RDEC”) is
recognised within operating loss.
Current tax is the expected tax payable on the taxable profit for the
year, using tax rates enacted or substantively enacted at the Balance
Sheet date, and any adjustment to tax payable in respect of previous
years. R&D tax credits are recognised in the period to which the
corresponding R&D spend relates, to the extent that any R&D tax
credits receivable are expected to be recovered and meet R&D tax rule
requirements.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities in
the financial statements and the corresponding tax bases used in the
computation of taxable profit, using tax rates that are expected to
apply in the period when the liability is settled or the asset is realised
based on tax laws that have been enacted or substantively enacted at
the Balance Sheet date. A deferred tax asset is recognised only to the
extent that it is probable that future taxable profits will be available
against which deductible temporary differences can be utilised.
The Group is committed to maintaining the highest level of ethical
standards when conducting business and has a zero tolerance
approach towards the criminal facilitation of tax evasion. We have
adopted appropriate policies and procedures to apply best practice to
prevent the criminal facilitation of tax evasion.
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3. Significant accounting policies Basis of
accounting (continued)
Intangible assets
Goodwill
Goodwill is initially recognised and measured as set out in the
‘Business combinations’ policy above. Goodwill is not amortised but is
tested at least annually for impairment, reducing the carrying amount
down to the recoverable amount if this is lower. The recoverable
amount is calculated as the higher of fair value less costs to sell and
value in use. Goodwill is stated at cost less accumulated impairment
losses.
R&D expenditure
All R&D expenditure, which comprises a proportion of employee
salaries and directly attributable overheads, is recognised in the
Income Statement as incurred on the basis that the recognition criteria
of IAS 38 ‘Intangible Assets’ are not met.
Patents and trademarks
External expenditure on the creation of patents and trademarks is
capitalised and carried at cost less accumulated amortisation and
accumulated impairment losses. Expenditure to maintain patents
and trademarks after the date of their grant is written off as incurred.
Patents and trademarks are amortised on a straight-line basis over the
remainder of their term from the date of their grant.
Derecognition
An intangible asset is derecognised on disposal or when no future
economic benefits are expected from use or disposal. Gains or losses
from derecognition of an intangible asset are recognised in the Income
Statement.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated
depreciation and any recognised impairment losses. Depreciation
is charged to the Income Statement on a straight-line basis over the
estimated useful lives of the assets, on the following bases:
Right-to-use property
Over the remaining lease term
Plant and equipment
33% per annum
Fixtures and fittings
15% per annum
Depreciation methods, useful lives and residual values are reviewed
at each Balance Sheet date, with the effect of any changes in estimate
accounted for on a prospective basis.
An item of property, plant and equipment is derecognised upon
disposal or when no future economic benefits are expected to arise
from the continued use of the asset. The gain or loss arising on the
disposal of an asset is determined as the difference between the sales
proceeds and the carrying amount of the asset and is recognised in the
Income Statement.
Impairment of intangible and tangible assets
The carrying amounts of the Group’s intangible and tangible assets
are reviewed at each Balance Sheet date to determine whether there is
any indication of impairment. If any such indication exists, the asset’s
recoverable amount is estimated and an impairment loss is recognised
in the Income Statement to the extent that the carrying amount of an
asset or its cash-generating unit exceeds its recoverable amount.
Where an impairment loss subsequently reverses, the carrying amount
of the asset or its cash-generating unit is increased to the revised
estimate of its recoverable amount, but so that the increased carrying
amount does not exceed the carrying amount that would have been
determined had no impairment loss been recognised for the asset or
cash-generating unit in prior years.
Leased assets
Right-of-use assets are measured at cost, being the initial
measurement of the lease liability less any prepaid amounts and
less depreciation which is calculated on a straight-line basis over the
lease term. A corresponding lease liability is recognised at the present
value of lease payments unpaid at the Balance Sheet date. The Group
does not discount lease liabilities on the basis that it is immaterial.
Subsequent to initial measurement, the liability will be reduced by
lease payments.
The Group has elected to account for short-term leases using the
practical expedients. Payments in relation to these leases are
recognised as an expense in the Income Statement on a straight-line
basis over the lease term.
Investments in subsidiaries
Investments in subsidiaries are shown in the Company Balance Sheet
at cost and are reviewed annually for impairment.
Financial Instruments
The Group applies IFRS 9 ‘Financial Instruments’. Financial assets
and financial liabilities are recognised in the Group’s Balance Sheet
when the Group becomes a party to the contractual provisions of the
instrument and are initially measured at fair value.
Financial assets
All financial assets will be realised through the collection of contractual
cash flows, hence they are subsequently measured at amortised
cost using the effective interest method, less expected credit losses
judged as the discounted probability weighted outcomes of default at
recognition. Interest income is recognised in the Income Statement,
except for short-term receivables when the recognition of interest
would be immaterial.
Financial liabilities
All financial liabilities are measured at amortised cost using the
effective interest method. The Group derecognises financial liabilities
when the Group’s obligations are discharged, cancelled or expired.
The difference between the carrying amount and the consideration
payable is recognised in the Income Statement.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances, demand deposits
and term deposits with an initial maturity of less than three months.
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Notes to the Consolidated Financial Statements (continued)
The current tax receivable, of £769,000 (2020: £557,000),
represents an R&D tax credit based on an advance claim with
HMRC. The final receivable is subject to judgement and the
correct application of complex R&D tax rules. The minimum
receipt approved by HMRC could be £nil. Historically, final claims
have been successful and materially in line with the receivable
recognised in the financial statements. The Group expects the
current year to be successful too. Further details of the decision
to recognise the tax receivable in full can be found in the principal
risks within the Strategic Report on page 26.
5. Segmental Reporting
Financial information is reported to the Group's Chief Executive Officer
(the Chief Operation Decision Maker) as one business segment, being
that of drug discovery.
All Group activities are carried out in the UK and all of the Group's
assets and liabilities are located in the UK, with the exception of
immaterial activities and assets relating to one employee (2020: nil)
who works in a permanent establishment in the Republic of Ireland
which was registered during the year.
Revenue recognised, of £317,000 (2020: £456,000) includes £nil (2020:
£206,000) included in the contract liability balance at the beginning of
the period.
There are no transaction prices relating to the performance obligations
from existing contracts that are unsatisfied or partially satisfied as at 31
January 2021.
Revenue during the current financial year was reliant upon a single
external customer. Revenue during the prior financial year was reliant
upon a single, different, external customer. Management expects to
enter into further commercial collaborations in the coming financial
year, diversifying revenue from external customers.
4. Accounting judgements and sources of estimation
•
uncertainty
The preparation of financial statements requires management to
make judgements, estimates and assumptions that may affect the
application of accounting policies and the reported amounts of
assets, liabilities, income and expenses. The estimates and underlying
assumptions are reviewed on an ongoing basis.
The following are the key judgements that management have made
in the process of applying the Group’s accounting policies and that
have the most significant effect on the amounts recognised in these
financial statements:
•
•
•
Management considers the continued adoption of the going
concern basis appropriate. .
As detailed in Note 3, there are various revenue streams from
collaborative partnerships. Management review these revenue
streams against the IFRS 15 criteria to establish whether revenue
should be recognised over time or at a point in time. Revenue
recognised over time results in a difference between up-front
cash receipts and revenue recognised, the balance of which is
recorded on the Balance Sheet. At the year end, contract liabilities
were £77,000 (2020: £nil), as disclosed in Note 19. Revenue of
£317,000 (2020: £456,000) is made up of £163,000 (2020: £nil)
recognised at a point in time and £154,000 (2020: £456,000) over
time. Variable consideration consists of future potential pre-
clinical and clinical development and commercial milestone
payments and it is deemed by the directors to be fully constrained
at this time given the uncertainty around drug development.
The Directors have not recognised a deferred tax asset based on
an assessment of the probability that future taxable income will
be available against which the deductible temporary differences
and tax loss carry-forwards can be utilised. The potential deferred
tax asset is disclosed in Note 11.
The following are the key assumptions concerning estimation
uncertainty that may have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the
next financial year:
•
Revenue recognised from collaborative partnerships, and
corresponding contract liabilities, reflect management’s best
estimate of each contract’s stage of completion. Management
estimates project progress at each reporting date, with
consideration to project plans outlined in customer contracts,
and remeasures revenue accordingly. There were commercial
contracts in progress at the year end and management has
recognised revenue in accordance with IFRS 15 using the 5-step
process. As a result, at the year end contract liabilities of £77,000
(2020: £nil) were recognised on the Balance Sheet.
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6. Auditor’s remuneration
Amounts receivable by the Auditor and its associates in respect of:
– audit of the Group’s annual financial statements
– other services
2021
£000
49
–
2020
£000
39
3
7. Staff numbers and costs
The average number of persons employed by the Group and the Company (including Executive Directors and excluding Non-Executive Directors)
during the year, analysed by category, was as follows:
R&D staff
Finance and administration staff
Executive Directors
The aggregate payroll costs of these persons were as follows:
Wages and salaries
Share-based payments (see Note 9)
Social security costs
Contributions to money purchase pension schemes
Compensation for loss of office
Number of employees
Group and Company
2021
12
5
1
18
Group and Company
2021
£000
1,805
422
248
241
248
2,964
2020
12
2
2
16
2020
£000
1,658
36
206
176
–
2,076
The Group makes defined pension contributions into money purchase schemes nominated by employees. The total expense relating to these
plans is £241,000 (2020: £176,000). As the reporting date, there were outstanding contributions of £43,000 (2020: £14,000).
8. Directors’ remuneration
Directors’ emoluments
Contributions to money purchase schemes
Compensation for loss of office
2021
£000
277
38
248
563
2020
£000
613
38
–
651
The remuneration of the highest paid Director during the year was £242,000 (2020: £300,000). Contributions to money purchase schemes in respect
of the highest paid Director during the year were £28,000 (2020: £38,000).
During the year, two Directors (2020: one) accrued retirement benefits under a money purchase scheme. No Director sold or exercised share
options during the year. Further information on the directors' remuneration can be found within the Directors' Remuneration Report on pages 43
to 50.
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Notes to the Consolidated Financial Statements (continued)
9. Share-based payments
The Group uses share options to incentivise, attract and retain the best people as part of our comprehensive people strategy and to align
remuneration with the medium to long-term strategic goals of the Group. All options granted before October 2020 were granted under
the e-therapeutics Performance Share Plan 2013 (the “PSP”) and all options granted from October 2020 onwards were granted under the
e-therapeutics Long Term Incentive Plan (the “LTIP”), which was launched during the year.
A number of share options granted during the year carry no performance conditions on the basis that the key aim was to ensure the continued
motivation of the current employees throughout a period of significant change in the management structure of the Group during the year and to
attract certain new skills integral to the Group’s strategy during the high levels of team growth and development enabled by the fundraises during
the year, details of which are included in the Strategic Report accompanying these Financial Statements. Going forward, management understand
the importance of attaching performance conditions to share options granted and will continue to fully consider this on a case-by-case basis
depending on how the granting of options fits in with our overall people strategy. Share options in issue during the year have no performance
conditions unless otherwise stated.
Vest periods reflect a period of time that management believe will motivate and retain employees whilst understanding that, given the increased
risk of long-term prospects in an R&D business in the stage of its life cycle of e-therapeutics, a longer vesting period may have an adverse effect on
employee motivation.
If options remain unexercised after a period of ten years from the date of grant the options expire, unless otherwise stated.
The terms and conditions of all options in issue during the year are shown below:
Date of grant
November 2016
November 2016
November 2016
May 2017
May 2017
May 2017
April 2018
November 2018
March 2019
March 2019
March 2019
March 2019
May 2019
February 2020
February 2020
March 2020
April 2020
November 2020
December 2020
December 2020
January 2021
Total
Number of
instruments at
end of year
-
Number of
instruments at
beginning of year
2,097,499
Exercise price
(p)
16.76
Vesting period
2 years
-
-
-
-
-
-
-
1,600,000
-
-
-
500,000
-
9,672,836
5,450,000
3,000,000
1,700,000
500,000
100,000
100,000
2,097,500
2,097,500
2,000,000
1,750,000
1,750,000
1,178,000
1,550,000
2,200,000
666,667
666,667
666,666
500,000
-
-
-
-
-
-
-
-
22,622,836
19,220,500
20.95
25.14
16.76
20.95
25.14
16.76
7.25
2.80
2.70
2.70
2.70
2.08
0.1
0.1
0.1
0.1
0.1
3.0
0.1
3.0
2 years
3 years
1 year
2 years
Date
exercisable
Upon vesting
Upon vesting
Upon vesting
2 years from grant
Upon vesting
1 month – 3 years
Upon vesting or 2 years from
grant, whichever is later
2 years
3 years
3 years
Immediately
1 year
2 years
3 years
6 months or when performance
condition met, whichever is later
2 years
3 years
3 years
3 years
3 years
3 years
3 years
Upon vesting
Upon vesting
Upon vesting
2 years from grant
2 years from grant
Upon vesting
Upon vesting
Upon vesting
Upon vesting
Upon vesting
Upon vesting
Upon vesting
Upon vesting
Upon vesting
Upon vesting
Performance
conditions
1
1
1
1
1
1
1
2
2
2
3
4
5
Note 1
The exercise prices of 16.76p, 20.95p and 25.14p are 200%, 250% and 300% of the share price at the date the PSP rules were approved, respectively, to align remuneration with the
strategic aim of long-term share price growth.
Note 2
Options vest on a straight-line basis between 50% and 100% if share performance is between the minimum and maximum performance targets. These targets are based on the
percentage increase in share price in relation to a comparator group of peer companies.
Note 3
These options were granted to former non-executive directors in lieu of their directors’ fees for their respective notice periods. Options included the performance condition whereby they
would vest in full if e-therapeutics’ share price reached and remained at 6.0p for a period of 30 consecutive days, but would not become exercisable before 11 August 2020. The options
vested and were exercised during the year.
Note 4
These options were granted to Ali Mortazavi upon his initial appointment as Executive Chairman. During the year, with effect from 1 August 2020, Ali was appointed as Chairman and
CEO before subsequently, post year in, with effect from 1 Mach 2020 his role was split with Ali continuing as CEO and Trevor Jones being appointed as Non-Executive Chairman. Options
include the performance condition whereby they will vest in full if e-therapeutics’ share price reaches and remains at 6.0p for a period of 30 consecutive days. This performance condition
has been met during the year.
Note 5
Of these, 800,000 options expire seven years after the date of grant.
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9. Share-based payments (continued)
The number and weighted average exercise prices of share options are as follows:
Options
Outstanding at the beginning of the year
Exercised during the year
Forfeited during the year
Expired during the year
Granted during the year
Outstanding at the end of the year
Exercisable at the end of the year
Weighted
average
exercise price
2021
(p)
15.1
(0.1)
(16.1)
(17.1)
0.2
0.4
–
Number of
options
2021
19,220,500
(1,683,333)
(16,891,334)
(729,166)
22,706,169
22,622,836
–
Weighted
average
exercise price
2020
(p)
18.8
–
(17.1)
–
2.7
15.1
20.1
Number of
options
2020
18,996,500
–
(4,726,000)
–
4,950,000
19.220,500
11,598,056
The options outstanding at the year-end have a weighted average remaining contractual life of 9 years (2020: 8 years).
Where options have performance conditions attached, the fair value of those options has been valued using the Monte Carlo option pricing model.
Where options have no performance conditions attached, the fair value of those options has been valued using the Black Scholes option pricing
model. In both models, volatility has been estimated by reference to historical share price data over a period commensurate with the expected
term of the options awarded.
The assumptions for the options grants during the current year were:
Date of grant
Option pricing model used
Share price at date of grant (p)
Minimum vesting period
Exercise price (p)
Expected volatility
Risk-free rate
Dividend yield
Number of shares
Fair value per option (p)
January
2021
Black
Scholes
17.2
3 years
3.0
75.01%
-0.11%
0%
100,000
14.82p
December
2020
Black
Scholes
16.75
3 years
0.1
74.64%
-0.12%
0%
100,000
16.65p
December
2020
Black
Scholes
15.2
3 years
3.0
74.55%
-0.01%
0%
500,000
12.99p
November
2020
Black
Scholes
12.95
3 years
0.1
74.74%
-0.10%
0%
1,700,000
13.52p
April
2020
Black
Scholes
8.45
3 years
0.1
69.72%
0.12%
0%
3,000,000
8.15p
March
2020
Black
Scholes
6.95
3 years
0.1
68.93%
0.42%
0%
5,950,000
7.00
February
2020
Monte
Carlo
4.8 (Note 1)
2 years
0.1
70.5%
0.47%
0%
9,672,836
3.8p
February
2020
Monte
Carlo
4.8 (Note 1)
6 months
0.1
71.8%
0.68%
0%
1,683,333
4.6p
Note 1
In calculating the fair value of the share options granted it has been assumed that the maximum performance target is met.
The total expense recognised for the year arising from equity-settled share-based payments is as follows:
Group and Company equity-settled share-based payments
2021
£000
422
2020
£000
36
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Notes to the Consolidated Financial Statements (continued)
10. Investment income
Bank interest receivable
11. Tax
Current tax:
SME R&D tax credit receivable for the current year
Adjustments for prior year in respect of SME R&D tax credit
Current tax credit
Deferred tax
Total on loss on ordinary activities
2021
£000
17
2021
£000
(751)
(33)
(784)
–
(784)
2020
£000
15
2020
£000
(536)
10
(526)
–
(526)
The standard rate of corporation tax applied to reported profit is 19% (2020: 19%). The credit for the year can be reconciled to the Consolidated
Income Statement as follows:
Loss before tax
Tax at the UK corporation tax rate of 19% (2020: 19%)
Expenses not deductible for tax purposes
Enhanced relief for SMEs in relation to R&D
Unrelieved tax losses
Other
Adjustments in respect of prior year
Total tax credit for the year
2021
£000
(4,468)
(849)
-
(323)
396
25
(33)
(784)
2020
£000
(2,873)
(546)
4
(231)
230
7
10
(526)
The total tax credit recognised with the Consolidated Income Statement is £802,000 (2020: £547,000), which is made up the small or medium-
sized enterprise ("SME") R&D tax relief of £784,000 (2020: £526,000) and Research and Development Expenditure Credit ("RDEC") of £18,000
(2020: £21,000). The SME tax credit is shown within taxation, as reconciled above. The RDEC is included within administrative expenses in the
Consolidated Income Statement on the basis that the RDEC is treated as taxable income, being an 'above the line' relief.
The tax receivable on the Balance Sheet, of £769,000 (2020: £557,000), is made up of SME tax relief of £751,000 (2020: £536,000) and RDEC of £18,000
(2020: £21,000). Historically, R&D credits relating to both the SME scheme and the RDEC scheme have been received from HMRC as a single payment.
The Group has accumulated losses available to carry forward against future trading profits of £28,835,000 (2020: £26,855,000). No deferred tax has
been recognised in respect of tax losses since it is uncertain at the Balance Sheet date as to whether future profits will be available against which
the unused tax losses can be utilised. At the Budget 2020, the UK Government announced that the corporation tax main rate for the years starting
1 April 2020 and 2021 would remain at 19%. At the Budget 2021, the UK Government announced that the corporation tax main rate for the year
starting 1 April 2022 will remain at 19% and that legislation will be introduced to set the main rate at 25% for the year starting 1 April 2023. The
estimated value of the deferred tax asset not recognised, measured at the main rate of 19% (2020: 17%), is £5,499,000 (2020: £4,589,000).
The increase in the current year tax credit is due to an increased R&D credit, as a result of higher qualifying expenditure during the year, enabled by
the fundraise during the year. The current year R&D credit has not yet been approved by HMRC and, therefore, there is a risk that this claim may not
be successful. Further details of this risk mitigation are disclosed in the principal risks within the Strategic Report on pages 20 to 26.
12. Loss per share
The calculation of the basic and diluted earnings per share is based on the following data:
Earnings for the purposes of basic earnings per share and diluted earnings per share, being loss attributable to owners
of the Company (£000)
2021
(3,684)
2020
(2,347)
Weighted average number of ordinary shares for the purposes of basic earnings per share and diluted earnings per share
(number)
373,215,456
268,855,366
Loss per share – basic and diluted (p)
(0.99)
(0.87)
Diluted EPS is calculated in the same way as basic EPS but also with reference to reflect the dilutive effect of share options in existence at the year
end over 22,622,836 (2020: 19,220,500) ordinary shares (see Note 9). The diluted loss per share is identical to the basic loss per share, as potential
dilutive shares are not treated as dilutive since they would reduce the loss per share.
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13. Goodwill and intangible assets
Cost
As at 1 February 2019
Additions
As at 31 January 2020
Additions
As at 31 January 2021
Amortisation and impairment
As at 1 February 2019
Impairment losses
Amortisation charge for the year
As at 31 January 2020
Impairment losses
Amortisation charge for the year
As at 31 January 2021
Net book value
As at 1 February 2019
As at 31 January 2020
As at 31 January 2021
Group
Patents and
trademarks
£000
Goodwill
£000
2,101
–
2,101
–
2,101
2,101
–
–
2,101
–
–
2,101
–
–
–
1,320
11
1,331
18
1,349
1,201
3
17
1,221
30
16
1,267
119
110
82
Company
Patents and
trademarks
£000
Goodwill
£000
2,824
–
2,824
–
2,824
–
2,824
–
2,824
–
–
2,824
2,824
–
–
1,320
11
1,331
18
1,349
1,201
3
17
1,221
30
16
1,268
119
110
82
Total
£000
3,421
11
3,432
18
3,450
3,302
3
17
3,322
30
16
3,368
119
110
82
Total
£000
4,144
11
4,155
18
4,173
1,201
2,827
17
4,045
30
16
4,092
2,943
110
82
Research and development costs of £2,705,000 (2020: £2,104,000) have been recognised in the Consolidated Income Statement.
Amortisation
Amortisation has been charged on patents for which the registration process is complete, over the term granted. Amortisation is included within
administrative expenses.
The goodwill in the Company Balance sheet arose following the hive up of the trade and assets of InRotis Technologies Limited in 2007 and was
fully impaired during the prior year, reflecting the significant advancements in technology, such as the launch of GAINs in the prior year, to the
extent that management deem that the business model is now founded upon a different technological capability that is was at the date of the hive
up in 2007 and to which the goodwill is allocated.
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Notes to the Consolidated Financial Statements (continued)
14. Property, plant and equipment
Group and Company
Cost
As at 1 February 2019
On transition to IFRS 16
Additions
Disposals
As at 31 January 2020
Additions
Disposals
As at 31 January 2021
Depreciation
As at 1 February 2019
Depreciation charge for the year
Disposals
As at 31 January 2020
Depreciation charge for the year
Disposals
As at 31 January 2021
Net book value
As at 1 February 2019
As at 31 January 2020
As at 31 January 2021
Right-to-use
Property
£000
Plant and
equipment
£000
Fixtures and
fittings
£000
Total
£000
–
123
–
–
123
–
–
123
–
46
–
46
46
–
92
–
77
31
198
–
5
(41)
162
53
(1)
214
161
29
(41)
149
18
(1)
167
37
13
47
107
–
–
(4)
103
–
–
103
102
2
(4)
100
1
–
101
5
3
2
305
123
5
(45)
388
53
(1)
440
263
77
(45)
295
66
(1)
360
42
93
80
Total
£000
2,374
2,374
–
Disclosure relating to the corresponding lease relating to the right-of-use asset is shown in Note 18.
Depreciation charges are included within administrative expenses.
15. Investments in subsidiaries – Company
Cost
As at 1 February 2019, 31 January 2020 and 31 January 2021
Provision for impairment
As at 1 February 2019, 31 January 2020 and 31 January 2021
Net book value
As at 1 February 2019, 31 January 2020 and 31 January 2021
The Company directly holds 100% of the ordinary share capital of two subsidiary undertakings as follows:
InRotis Technologies Limited
Principal activity
Dormant
Searchbolt Limited
Search engine technology
development
Registered address
17 Blenheim Office Park, Long Hanborough, Oxfordshire,
OX29 8LN, UK
17 Blenheim Office Park, Long Hanborough, Oxfordshire,
OX29 8LN, UK
Registered
number
05019565
06323379
InRotis Technologies Limited is exempt from the requirement for an audit under section 480 of the Companies Act 2006.
Searchbolt Limited is exempt from the requirement for an audit by virtue of section 479A of the Companies Act 2006 and has been provided with a
statutory guarantee by the Company, its immediate parent, as required by section 479C of the Companies Act 2006.
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16. Trade and other receivables
Trade receivables
Other receivables
Group
Company
2021
£000
–
57
57
2020
£000
23
13
36
2021
£000
–
57
57
2020
£000
23
13
36
There is expected credit loss provision in respect of other receivables in the current or prior year for the Group or the Company. All debts are not
past due in the current or prior year. The Group and the Company’s management has received no indication that any unimpaired amounts will be
irrecoverable. Further details of financial assets are shown in Note 20.
17. Trade and other payables
Current:
Trade payables
Amounts due to Group undertakings
Other taxation and social security
Other payables
Accrued expenses
Group
2021
£000
50
–
83
43
151
327
2020
£000
55
–
69
24
67
215
Company
2021
£000
50
–
83
43
150
326
2020
£000
55
253
69
24
65
466
The Group has financial risk management policies in place to ensure that all payables are paid within the pre-agreed credit terms. Further details of
financial liabilities are shown in Note 20.
18. Lease liability
Current:
Lease liability
Non-current:
Lease liability
Group
2021
£000
23
–
23
2020
£000
46
23
69
Company
2021
£000
23
–
23
2020
£000
46
23
69
The lease liability relates to an office property. The remaining term of this lease is 8 months. The corresponding right-of-use asset is disclosed in
Note 14.
The Group has elected not to recognise a lease liability for short term leases (leases with an expected term of 12 months or less). Payments made
under such leases are expenses on a straight-line basis. The amount recognised within administrative expenses was £6,000 and the minimum lease
payment at the Balance Sheet date totalled £500.
The change in the Group’s lease liability, being the only liability arising from financing activities, can be classified as follows:
As at 1 February 2019
Adoption of IFRS 16
Cash flows: Repayments
As at 31 January 2020
Cash flows: Repayments
As at 31 January 2021
£’000
–
115
(46)
69
(46)
23
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Notes to the Consolidated Financial Statements (continued)
19. Contract liabilities
Current:
Contract liabilities
Group
2021
£000
77
77
2020
£000
–
–
Company
2021
£000
77
77
2020
£000
–
–
Revenue relating to collaborative partnerships utilising the Group’s proprietary computational biology platform is recognised over the expected
length of the project, which does not necessarily correlate to the schedule of payments made by customer in relation to such contracts. A contract
liability is recognised in relation to individual contracts when payments are received in advance and is released over the service period.
20. Financial instruments
The prime objectives of the Group’s policy towards financial instruments are to maximise returns on the Group’s cash balances, manage the
Group’s working capital requirements and finance the Group’s ongoing operations. Details of the significant accounting policies for each class of
financial asset, financial liability and equity instrument are disclosed in Note 3.
The carrying amount of financial assets, all measured as loans and receivables at amortised cost, and financial liabilities, all measured at
amortised cost, are as follows:
Financial assets:
Included within other receivables (Note 16)
Cash and cash equivalents
Financial liabilities:
Trade payables (Note 17)
Amounts due to Group undertakings (Note 17)
Lease liability (Note 18)
Included within other payables (Note 17)
Group
2021
£000
57
13,027
13,084
50
–
23
43
116
2020
£000
13
3,841
3,854
55
–
69
19
143
Company
2021
£000
57
12,776
12,833
50
–
23
43
116
2020
£000
13
3,841
3,853
55
253
69
19
396
Management believes that there is no material difference between the carrying value of financial assets or financial liabilities and their fair value.
There were no net gains or losses, except interest revenue, recognised in the Income Statement in relation to financial assets or liabilities
recognised at amortised cost. Interest received on cash balances and fixed-term deposits totalled £17,000 (2020: £15,000).
Capital management
The Group finances its operations through its revenue-generating commercial collaborations, the issue of new shares and the management of
working capital. The Group’s capital resources are managed to ensure it has resources available to invest in operational activities designed to
generate future income. These resources were represented by £13,027,000 of cash as at 31 January 2021 (2020: £3,841,000).
Management of financial risk
The key risks associated with the Group’s financial instruments are credit risk, liquidity risk and interest rate risk. The Board is responsible for
managing these risks and the policies adopted, which have remained largely unchanged throughout the year, and are set out below.
Credit risk
The Group has adopted a treasury policy that aims to maintain a high level of security of deposited funds as well as optimising income generated
from those funds and ensuring that the Group has adequate working capital for ongoing activities. Management considers the credit risks on liquid
funds to be limited, since the counterparties are banks with high credit ratings and balances are monitored to prevent over reliance on any one
bank. There are no material supplier financing arrangements. A list of approved deposit counterparties with monetary limits for each is maintained
and is reviewed by the Audit Committee.
The carrying amount of trade and other receivables, of £57,000 (2020: £36,000) represents the maximum exposure to credit risk from financial
assets excluding cash. Management do not expect any future credit loss, hence no loss allowance has been recognised in these financial
statements for the current or prior year. Management consider the Group’s exposure to credit risk to be immaterial.
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The Group only deals with reputable customers and customers are required to pay an up-front element, which mitigates the credit risk. Credit
terms average 45 days (2020: 45 days).
Liquidity risk
The Group manages its liquidity risk by monitoring short-term cash flows, both short and long term, against monthly forecast requirements and
the longer-term cash flows against annual budgets and rolling monthly cash forecasts and by matching the maturity profiles of financial assets
and liabilities. All of the financial liabilities disclosed in the table above have a contractual maturity of less than three months (2020: less than three
months). The Group has sufficient cash balances available to fulfil these liabilities as they fall due.
Interest rate risk
The Group has no interest-bearing debt in issue and therefore interest rate risk applies only to the return achieved on cash deposits. The trade and
other payables do not bear interest. Interest received on cash balances was £17,000 (2020: £15,000), earned at interest rates of between 0% and 1%
(2020: 0% and 1%). Management do not consider that a fluctuation in interest rates would have a material impact on the Group.
Foreign exchange rate risk
Financial assets and liabilities at the year end and at the prior year end that are not originally Sterling balances are immaterial. Net foreign
exchange gains of £nil (2020: £nil) are recognised in administrative expenses.
21. Share capital
The share capital of e-therapeutics plc consists of fully paid ordinary shares with a nominal value of £0.001 each. The Company has one class
of ordinary shares, which carries no right to fixed income. All shares are equally eligible to receive dividends and the repayment of capital and
represent one vote at shareholders’ meetings.
In issue at 1 February
Share issue
Total shares authorised and in issue at 31 January – fully paid
No. of ordinary shares
2021
'000
269,125
151,649
420,774
2020
'000
268,690
435
269,125
As part of fundraise initiatives during the year, 53,302,355 shares were issued with a settlement date of 18 February 2020 at a price of 3.0p per share
to raise gross proceeds of £1.6m for general working capital purposes and 96,596,758 shares were issued with settlement dates of 15-22 July 2020
at a price of 12.0p per share to raise gross proceeds of £11.6m to enable e-therapeutics' next stage of growth and value creation by expanding
platform capabilities and asset pipeline.
In addition, 65,602 shares were issued during the year as part-payment of non-executive director fees and 1,683,333 shares were issued upon the
exercise of share options granted to former non-executive directors in lieu of fees during their notice period.
Proceeds received in excess to the nominal value of the shares issued during the year have been included in share premium.
As at 31 January 2021, the Company had 420,773,546 ordinary shares of 0.1p each in issue.
22. Capital commitments
At the year end, the Group had not entered into contractual commitments for the acquisition of any capital items (2020: £nil).
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Notes to the Consolidated Financial Statements (continued)
23. Related parties
Balances and transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are
not disclosed in this note.
The remuneration of the Directors, who are the key management personnel of the Group, is disclosed in Note 8.
Key management personnel
The Executive Committee and Board of Directors are designated as key management personnel. An Executive Committee was formally created
following the management restructure that saw the initial Board appointment of Ali Mortazavi towards the beginning of the year. In the prior year,
only the Board of Directors were deemed to be key management personnel. Key management personnel remuneration includes the following
expenses:
Short-term employee benefits:
Salaries including bonuses
Social security costs
Health insurance
Compensation for loss of office
Post-employment benefits:
Defined contribution pension plans
Share-based payments
Total remuneration
2021
£000
1,107
173
16
248
1,544
102
443
2,089
2020
£000
612
79
1
–
692
38
10
740
Included within salaries including bonuses is £248,000 (2020: £nil) in relation to compensation for loss of office and payments in lieu of notice.
Not key management personnel exercised share options during the year (2020: nil).
24. Subsequent events
There have been no events since the Balance Sheet date that require disclosure in these financial statements.
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Notice of Annual General Meeting
(incorporated and registered in England and Wales under number 04304473) THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE
ATTENTION.
If you are in any doubt about its content or as to what action you should take, you should consult your stockbroker, solicitor, accountant
or other independent professional adviser authorised under the Financial Services and Markets Act 2000 if you are in the United
Kingdom, or another appropriately authorised independent adviser if you are in a territory outside the United Kingdom.
If you have sold or transferred all your shares in e-therapeutics plc, please pass this document and the accompanying proxy form to
the purchaser or transferee or to the stockbroker or other agent through whom you made the sale or transfer, for transmission to the
purchaser or transferee.
Notice is hereby given that the 2021 Annual General Meeting of e-therapeutics plc (the “Company”) will be held at the registered office
at 17 Blenheim Office park, Long Hanborough, Oxfordshire OX29 8LN at 13:00 on 16 June 2021 to consider and, if thought fit, pass the
following resolutions as ordinary resolutions other than resolutions 5 and 7, which will be proposed as special resolutions:
Ordinary business
1.
To receive the accounts for the financial year ended 31 January 2021 together with the Directors’ Report and the Auditor’s Report for that
period.
2.
3.
4.
To elect Trevor Jones, who was appointed by the Board since the last Annual General Meeting, as a Non-Executive Chairman of the Company.
To re-appoint Grant Thornton UK LLP as the Auditor of the Company.
To authorise the Directors to set the remuneration of the Auditor of the Company.
Special business
To consider and, if thought fit, to pass the following resolutions, of which resolution 6 will be proposed as an ordinary resolution, and resolutions 5
and 7 will be proposed as special resolutions:
5.
That the Directors shall:
a)
b)
have general and unconditional authority for the purposes of section 551 of the Companies Act 2006 (the “Act”) to exercise all powers of
the Company to allot 93,750,000 ordinary shares of 0.1 pence each, with an aggregate nominal value of £93,750 in connection with the
conditional firm placing, subscription and retail offer, the results of which were announced on 14 May 2021 (the “Fundraising Shares”); and
be and are hereby empowered pursuant to section 570 of the Act to allot the Fundraising Shares pursuant to the authority conferred by
part (a) of this resolution for cash, as if section 561(1) of the Act did not apply to such allotment,
provided that this power shall expire on the earlier of: (i) the date falling 15 months after the date of the passing of this resolution; and (ii) the
conclusion of the annual general meeting of the Company to be held in 2022 (save that the Company may, at any time before the expiry of
such power, make any offer or enter into any agreement which would or might require equity securities to be allotted after the expiry of such
power and the Directors may allot equity securities in pursuance of any such offer or agreement as if such power conferred hereby had not
expired). This authority is in addition to the authorities to be granted pursuant to resolutions 6 and 7 below.
6.
That the Directors be and are hereby generally and unconditionally authorised for the purposes of section 551 of the Act, to exercise all the
powers of the Company to allot shares and grant rights to subscribe for, or convert any security into, shares:
a)
b)
up to an aggregate nominal amount (within the meaning of section 551(3) and (6) of the Act) of: (i) £140,117.59 (being 33.3% of the
Company’s issued share capital as at close of business on 20 May 2021; and (ii) an additional £31,218.75 following the issue and allotment
of the Fundraising Shares (which, when aggregated with the amount authorised pursuant to (a)(i), comprises 33.3% of the Company’s
enlarged issued share capital following such issue and allotment), in each case, such amount to be reduced by the nominal amount
allotted or granted under (b) below in excess of such sum; and
comprising equity securities (as defined in section 560(1) of the Act) up to an aggregate nominal amount of: (i) £280,655.96 (being
66.7% of the Company’s issued share capital as at close of business on 20 May 2021); and (ii) an additional £62,437.50 following the issue
and allotment of, the Fundraising Shares (which, when aggregated with the amount authorised pursuant to (b)(i), comprises 66.7%
of the Company’s enlarged issued share capital following such issue and allotment), in each case, such amount to be reduced by any
allotments or grants made under (a) above, in connection with or pursuant to an offer by way of a rights issue in favour of holders of
ordinary shares in proportion (as nearly as practicable) to the respective number of ordinary shares held by them on the record date for
such allotment (and holders of any other class of equity securities entitled to participate therein or if the Directors consider it necessary,
as permitted by the rights of those securities), but subject to such exclusions or other arrangements as the Directors may consider
necessary or appropriate to deal with fractional entitlements, record dates or legal, regulatory or practical difficulties which may arise
under the laws of, or the requirements of any regulatory body or stock exchange in any territory or any other matter whatsoever,
these authorities to expire on the earlier of: (i) the date falling 15 months after the date of the passing of this resolution; and (ii) the conclusion
of the annual general meeting of the Company in 2022 (save that the Company may before such expiry make any offer or enter into any
agreement which would or might require shares to be allotted or rights to be granted, after such expiry and the Directors may allot shares,
or grant rights to subscribe for or to convert any security into shares, in pursuance of any such offer or agreement as if the authorisations
conferred hereby had not expired).
77
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Notice of Annual General Meeting (continued)
7.
That, subject to the passing of resolution 6 above, the Directors be and are hereby empowered pursuant to section 570(1) of the Act to allot
equity securities (as defined in section 560(1) of the Act) of the Company for cash pursuant to the authorisation conferred by that resolution,
as if section 561 of the Act did not apply to any such allotment, provided that this power shall be limited to the allotment of equity securities
for cash:
a)
in connection with or pursuant to an offer of or invitation to acquire equity securities (but in the case of the authorisation granted
under resolution 6(b), by way of a rights issue only) in favour of holders of ordinary shares in proportion (as nearly as practicable)
to the respective number of ordinary shares held by them on the record date for such allotment (and holders of any other class of
equity securities entitled to participate therein or if the Directors consider it necessary, as permitted by the rights of those securities)
but subject to such exclusions or other arrangements as the Directors may consider necessary or appropriate to deal with fractional
entitlements, record dates or legal regulatory or practical difficulties which may arise under the laws of or the requirements of any
regulatory body or stock exchange in any territory or any other matter whatsoever; and
b)
in the case of the authorisation granted under resolution 6(a) above, and otherwise than pursuant to paragraph (a) of this resolution, up to an
aggregate nominal amount of: (i) £140,117.59 (being 33.3% of the Company’s issued share capital as at close of business on 20 May 2021); and
(ii) an additional £31,218.75 following the issue and allotment of the Fundraising Shares (which, when aggregated with the amount authorised
pursuant to (b)(i), comprises 33.3% of the Company’s enlarged issued share capital following such issue and allotment),)
provided that this power shall expire on the earlier of: (i) the date falling 15 months after the date of the passing of this resolution; and (ii) the
conclusion of the annual general meeting of the Company to be held in 2022 (save that the Company may, at any time before the expiry of
such power, make any offer or enter into any agreement which would or might require equity securities to be allotted after the expiry of such
power and the Directors may allot equity securities in pursuance of any such offer or agreement as if such power conferred hereby had not
expired).
Recommendation
Your Board believes that the resolutions to be proposed as ordinary and special business at the 2021 Annual General Meeting are in the best
interests of the Company and its shareholders as a whole. Accordingly, your Directors unanimously recommend that shareholders vote in favour of
the resolutions, as they intend to do in respect of their own beneficial holdings of shares in the Company.
Action to be taken
Our preference had been to welcome shareholders in person to our 2021 Annual General Meeting, particularly given the constraints we faced
in 2020 due to the COVID-19 pandemic. However, at present, the restrictions do not allow for more than 6 persons in a room. We are therefore
proposing to hold the Annual General Meeting at 17 Blenheim Office Park, Long Hanborough, Oxfordshire, OX29 8LN, UK with the minimum
attendance required to form a quorum. Shareholders will not be permitted to attend the Annual General Meeting in person but can be represented
by the Chair of the meeting acting as their proxy. Whilst this means shareholders are unable to attend virtually or physically, shareholders are
encouraged to complete proxy forms appointing the Chair of the meeting as their proxy.
A form of proxy for use at the AGM is enclosed. You are requested to complete and return the form of proxy in accordance with the instructions
printed thereon as soon as possible and in any event so that it is received by the Company’s registrar, Neville Registers Limited, Neville House,
Steelpark Road, Halesowen, B62 8HD not later than 13:00 on 14 June 2021.
Despite not being able to attend the AGM, we encourage shareholders to ask questions and engage with us. You can contact us to ask questions
by e-mailing contact@etherapeutics.co.uk with the subject AGM no later than 11 June 2021. Your questions will be considered and answered
immediately following the AGM and the responses to questions will be provided on our website.
By order of the Board
Haddletons
Company Secretary
20 May 2021
Registered office
17 Blenheim Office Park
Long Hanborough
Oxfordshire
OX29 8LN
Registered in England and Wales number 04304473
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Explanatory Notes to the Resolutions
The notes on the following pages explain the resolutions to be proposed at the 2021 Annual General Meeting of e-therapeutics plc (the “Company”)
to be held at 17 Blenheim Office Park, Long Hanborough, Oxfordshire, OX29 8LN at 13:00 on 16 June 2021 .
Resolutions 1 to 4 and resolution 6 are proposed as ordinary resolutions. This means that for each of those resolutions to be passed, more than
half of the votes cast must be in favour of each resolution. Resolutions 5 and 7 are proposed as special resolutions. This means that for those
resolutions to be passed, at least three quarters of the votes cast must be in favour of each resolution.
Resolution 1 – Adoption of Report and Accounts
For each financial year, the Directors are required to present the Directors’ Report, the audited accounts and the Auditor’s Report to shareholders
at a general meeting. The financial statements and reports laid before the 2021 Annual General Meeting are for the financial year ended 31 January
2021, and the Company proposes a resolution on its financial statements and reports.
Resolution 2 – Election of Directors
In accordance with the Company’s articles of association, any Director appointed by the Board during the year and up to the date of approval
of the Annual Report and Accounts stand at the next Annual General Meeting following appointment. Accordingly, Trevor Jones, having been
appointed as Non-Executive Chairman on 1 March 2021 will stand for election by shareholders. His biography appears on page 31 of the Annual
Report and Accounts for the year ended 31 January 2021.
The Board is satisfied that Trevor Jones will contribute effectively and demonstrate commitment to his roles as Independent Non-Executive
Chairman, respectively. Accordingly, the Board unanimously recommends the election of Trevor Jones.
Resolutions 3 and 4 – Re-appointment of Auditor and Auditor’s remuneration
Resolutions 3 and 4 propose the re-appointment of Grant Thornton LLP as the Company’s Auditor for the year ending 31 January 2021 and the
authorisation of the Directors to agree the Auditor’s remuneration. The Directors will delegate this authority to the Audit Committee.
Resolution 5 – Authority to allot shares and disapplication of pre-emption rights following a placing of, and
subscription for, new ordinary shares in the capital of the Company
Under the Act, the Directors may only allot unissued shares in the capital of the Company and grant rights to subscribe for, or convert, any security
into shares in the Company if they are authorised to do so by the shareholders. As set out in the Company’s announcement on 14 May 2021, the
Company successfully completed a placing, subscription and retail offer via PrimaryBid which conditionally raised gross proceeds of £22.5 million
for the Company. Completion of this fundraising was conditional on, amongst other things, receipt of shareholder approval pursuant to this
Resolution 5.
Resolution 6 – Authority to allot shares
Your Directors may only allot shares or grant rights over shares if authorised to do so by shareholders. This resolution, if passed, will give the
Directors flexibility to act in the best interests of shareholders, when the opportunity arises, by issuing new shares. Accordingly, resolution 6 will
be proposed as an ordinary resolution to grant new authorities to allot shares and grant rights to subscribe for, or convert any security into, shares
(a) up to an aggregate nominal amount of: (i) £140,117.59; and (ii) an additional £31,218.75 following the issue and allotment of the Fundraising
Shares and (b) in connection with a rights issue up to an aggregate nominal amount (reduced by allotments under part (a) of the resolution) of: (i)
£280,655.96; and (ii) an additional £62,437.50 following the issue and allotment of the Fundraising Shares.
These amounts represent approximately 33.3% and approximately 66.7% respectively of the total issued ordinary share capital of the Company
as at close of business on 20 May 2021, being the last practicable day prior to the publication of this notice, and the additional amount taking into
consideration the enlarged issued ordinary share capital of the Company following the issue and allotment of the Fundraising Shares. If given,
these authorities will expire on the earlier of the date falling 15 months after the date of the passing of this resolution and the conclusion of the
annual general meeting of the Company in 2022.
Your Directors have no present intention of issuing shares pursuant to this authority, although they did issue shares pursuant to a similar authority
taken at the last Annual General Meeting. As at the date of this notice the Company holds no treasury shares.
Resolutions 7 – Disapplication of pre-emption rights
Your Directors also require additional authority from shareholders to allot equity securities for cash and otherwise than to existing shareholders
pro rata to their holdings. Resolution 7 will be proposed as a special resolution to grant such an authority. Apart from offers or invitations in
proportion to the respective number of shares held, the authority will be limited to the allotment of equity securities for cash up to an aggregate
nominal value of: (i) £140,117.59 (being 33.3% of the Company’s issued ordinary share capital as at close of business on 20 May 2021, being the last
practicable day prior to the publication of this notice); and (ii) an additional £31,218.75 following the issue and allotment of the Fundraising Shares.
If given, this authority will expire on the earlier of the date falling 15 months after the date of the passing of this resolution and the conclusion of the
Annual General Meeting of the Company in 2022.
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Explanatory Notes to the Resolutions (continued)
Procedural and Explanatory Notes
The following notes explain your general rights as a shareholder of the Company and your right to vote by proxy at this meeting..
Entitlement to vote
1.
The right to vote at the 2021 Annual General Meeting is determined by reference to the Company’s register of members. Only a member
entered in the register of members as at close of business on 14 June 2021 (or, if the 2021 Annual General Meeting is adjourned, in the
register of members as at the close of business on the date which is two business days before the time of the adjourned 2021 Annual General
Meeting) is entitled to vote at the 2021 Annual General Meeting and a member may vote in respect of the number of ordinary shares registered
in the member’s name at that time. Changes to the entries in the register of members after that time shall be disregarded in determining the
rights of any person at the 2021 Annual General Meeting.
2.
3.
4.
5.
6.
7.
A member entitled to vote at the meeting convened by the above notice is entitled to appoint the chair as his or her proxy to exercise all or any
of his or her rights to vote at a meeting of the Company. On a poll vote, all of a member’s voting rights may be exercised by one or more duly
appointed proxies.
A form of appointment of proxy is enclosed. To appoint the chair as proxy, this form must be completed and signed and sent or delivered to
Neville Registrars Limited, Neville House, Steelpark Road, Halesowen, West Midlands B62 8HD. In the case of a member which is a company,
the proxy form must be executed under its common seal or signed on its behalf by an officer of the Company or an attorney of the Company.
If you return more than one proxy appointment in respect of a share, that received last by the registrar before the latest time for the receipt of
proxies will take precedence.
The form of proxy includes a vote withheld option. Please note that a vote withheld is not a vote in law and will not be counted in the
calculation of the proportion of the votes for and against any particular resolution.
The appointment of a proxy and the original or duly certified copy of the power of attorney or other authority (if any) under which it is signed
or authenticated should be deposited with Neville Registrars Limited at the address shown on the proxy form not later than 13:00 on 14 June
2021 or 48 hours before the time for holding any adjourned meeting or (in the case of a poll not taken on the same day as the meeting or
adjourned meeting) for the taking of the poll at which it is to be used or lodged.
In the case of joint holders of shares, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted
by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the
Company’s register of members in respect of the joint holding (the first named being the most senior).
CREST members who wish to appoint a proxy or proxies by using the CREST electronic appointment service may do so by using the
procedures described in the CREST Manual (available via www.euroclear.com/CREST) subject to the provisions of the Company’s articles
of association. CREST personal members or other CREST sponsored members, and those CREST members who have appointed a voting
service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their
behalf. To be valid, the appropriate CREST message, regardless of whether it constitutes the appointment of a proxy or an amendment to
the instructions given to a previously appointed proxy, must be transmitted so as to be received by our agent, Neville Registrars Limited,
whose CREST participant ID is 7RA11, by 13:00 on 14 June 2021. The Company may treat as invalid a proxy appointment sent by CREST in the
circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.
8.
Save through CREST, we do not have a facility to receive proxy forms electronically. Therefore, you may not use any electronic address
referred to in the proxy form or any related document to submit your proxy form.
Voting results
9.
The results of the voting at the 2021 Annual General Meeting will be announced through a regulatory information service and will appear on
our website www.etherapeutics.co.uk as soon as reasonably practicable.
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Inspection of documents
10.
The following documents are available for inspection during normal business hours at the registered office of the Company on any business
day and they may also be inspected at the offices of Stephenson Harwood LLP, 1 Finsbury Circus, London EC2M 7SH from 12:45 on the day of
the meeting until the conclusion of the meeting:
10.1 copies of Directors’ service contracts with the Company; and
10.2 copies of the Non-Executive Directors’ letters of appointment.
Corporate representatives
11.
A shareholder of the Company which is a corporation may authorise a person or persons to act as its representative(s) at the 2021 Annual
General Meeting. In accordance with the provisions of the Act, each such representative may exercise (on behalf of the corporation) the same
powers as the corporation could exercise if it were an individual shareholder of the Company, though there are restrictions on more than one
such representative exercising powers in relation to the same shares.
Nominated persons
12.
Any person to whom this notice is sent as a person nominated under section 146 of the Act to enjoy information rights (a Nominated Person)
may, under an agreement between him/her and the member by whom he/she was nominated, have a right to be appointed (or to have
someone else appointed) as a proxy for the 2021 Annual General Meeting. If a Nominated Person has no such proxy appointment right or does
not wish to exercise it, he/she may, under any such agreement, have a right to give instructions to the member as to the exercise of voting
rights
The statement of the rights of members in relation to the appointment of proxies in paragraph 2 above does not apply to Nominated Persons.
The rights described in that paragraph can only be exercised by members of the Company.
Issued share capital and total voting rights
13.
As at close of business on 20 May 2021 , being the last practicable day prior to the publication of this notice, the Company’s issued share
capital comprised 420,773,546 ordinary shares of 0.1 pence. Each ordinary share carries the right to one vote at a general meeting of the
Company and, therefore, the total number of voting rights in the Company as at the date of this notice is 420,773,546.
Members’ requests under section 527 of the Act
14.
Under section 527 of the Act members meeting the threshold requirements set out in that section have the right to require the Company to
publish a statement on a website setting out any matter relating to: (i) the audit of the Company’s Accounts (including the Auditor’s Report
and the conduct of the audit) that are to be laid before the 2021 Annual General Meeting; or (ii) any circumstance connected with an Auditor
of the Company ceasing to hold office since the last annual general meeting. The Company may not require the members requesting any such
website publication to pay its expenses in complying with sections 527 or 528 of the Act. Where the Company is required to place a statement
on a website under section 527 of the Act, it must forward the statement to the Company’s Auditor not later than the time when it makes the
statement available on the website. The business which may be dealt with at the 2021 Annual General Meeting includes any statement that
the Company has been required under section 527 of the Act to publish on a website.
Website
15. A copy of this notice, and other information required by section 311A of the Act, can be found at www.etherapeutics.co.uk.
Except as provided above, members who have general queries about the meeting should contact the Company Secretary in writing at the
Company’s registered office. No other methods of communication will be accepted.
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Bankers
Bank of Scotland
75 George Street
Edinburgh
EH2 3EW
Company Secretary
Haddletons
Windsor House
Cornwall Road
Harrogate
HG1 2PW
Advisers
Nominated adviser and broker
SP Angel Corporate Finance LLP
Prince Frederick House
35-39 Maddox Street
London
W1S 2PP
Auditor to the Company
Grant Thornton UK LLP
1020 Eskdale Road
Winnersh Triangle
Wokingham
RG41 5TS
Registrars
Neville Registrars Limited
Neville House
Steelpark Road
Halesowen
B62 8HD
Solicitors
Stephenson Harwood LLP
1 Finsbury Circus
London
EC2M 7SH
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e-therapeutics plc
17 Blenheim Office Park
Long Hanborough
Oxfordshire
OX29 8LN
United Kingdom
(Registered Office)
Tel: +44 (0) 1993 880000
Fax: +44 (0) 1993 880207
Incorporated in England and Wales, company number: 04304473
etherapeutics.co.uk
Accelerating
the path to
better therapies
Annual Report 2021