Evgen Pharma plc
Annual Report & Accounts 2019
REALISING THE
CLINICAL POTENTIAL
OF SULFORAPHANE
Evgen is a clinical stage drug development company
focussed on the development of sulforaphane-based
compounds, a new class of pharmaceuticals which
are synthesised in a proprietary, well-tolerated, stable
formulation. Our pipeline exploits sulforaphane’s
activity in two separate biochemical pathways;
inhibition of STAT3, of importance in cancer,
and up-regulation of Nrf2, a target for reducing
neurodegeneration.
REVIEW OF THE YEAR
Chairman’s Statement
Strategic Report
GOVERNANCE
Board of Directors
Directors’ Report
Corporate Governance Report
Remuneration Committee Report
Audit Committee Report
Statement of Directors’ Responsibilities
Independent Auditors’ Report
FINANCIAL STATEMENTS
01
02
06
07
09
11
15
16
17
Consolidated Statement of Comprehensive Income
19
Consolidated and Company Statements of Financial Position 20
21
Consolidated Statement of Changes in Equity
22
Company Statement of Changes in Equity
23
Consolidated and Company Statements of Cash Flows
24
Notes to the Financial Statements
ADDITIONAL INFORMATION
Addresses and Advisers
IBC
CHAIRMAN’S STATEMENT
Evgen has made considerable progress during the past year. Patient
enrolment and treatment was completed in both Phase II trials of our
lead product candidate, SFX-01; a Phase IIa trial in metastatic breast
cancer (“mBC’’) and a Phase IIb trial in subarachnoid haemorrhage
(“SAH”). Most importantly, we released top line data from the mBC
trial that clearly demonstrated clinical proof of concept for SFX-01.
SFX-01 was well tolerated and was effective at stabilising disease and
inducing responses in patients whose disease has progressed on
hormonal therapies; providing the impetus to embark on randomised
studies in these populations of breast cancer patients which we are
currently planning. This result was particularly gratifying given the
advanced nature of the disease in the patient group treated. Whilst the
efficacy data has been well-received by clinicians and other informed
commentators we have also been much encouraged by the safety and
tolerability profile which is unusually good for an oncology product. This
positions SFX-01 for use alongside existing breast cancer drugs in a
number of different treatment pathways.
We stepped up our attendance at international conferences presenting
at The World Orphan Drug Congress in the US, the San Antonio Breast
Cancer Symposium 2018 and at a closed meeting in Madrid to senior
scientists from pharmaceutical companies and academia with a
common interest in the Nrf-2 pathway. This was followed by inclusion
of SFX-01 in a Nature Reviews Drug Discovery paper focussing on the
Nrf2/ KEAP1 pathway, in which scientific interest is escalating and for
which SFX-01 is a potent activator.
Early data from a collaboration with Imperial College has provided
further insight into the potential mechanism of action of SFX-01 in
mBC, identifying potential biomarkers for determining the efficacy of
SFX-01 in this indication.
We were very pleased with the oversubscribed fundraising completed
in May 2019 which achieved £5m before expenses in difficult market
conditions. This provides us with a strengthened balance sheet, the
resources to undertake product formulation that will facilitate the next
mBC trial and other investigator-led clinical studies, and funds to
complete further toxicology studies that will remove current restrictions
on the duration of clinical trial treatment phases.
During the current financial year we expect to report secondary
endpoints from the mBC trial and the full read out from our SAH trial.
We also anticipate an agreement to support at least one investigator-
led Phase II trial in a new indication. There are therefore a number
of events that could lead to substantial value enhancement in the
business.
Barry Clare
Chairman
12 June 2019
Annual Report & Accounts 2019 01
Evgen Pharma plc
REVIEW OF THE YEARGOVERNANCE FINANCIAL STATEMENTS
STRATEGIC REPORT
The Directors present their Strategic Report for the year ended
31 March 2019. The Operational Overview, Key Performance
Indicators, Financial Review and Principal Risks and Uncertainties
sections form part of the Strategic Report.
OPERATIONAL OVERVIEW
Background
Evgen is developing a platform, comprising expertise, intellectual
property and clinical data, around a new class of pharmaceuticals
based on a molecule called sulforaphane. Sulforaphane has attracted
huge scientific interest and has been shown to have anti-cancer and
neuroprotective qualities in a wide range of preclinical and clinical
studies, for example breast cancer, prostate cancer, multiple sclerosis
and autism. In particular, we are seeking to exploit sulforaphane’s
modulation of two separate and unrelated mechanistic targets; Nrf2
and STAT3.
Evgen has exclusive rights to the only technology (Sulforadex®) proven
to synthesise this very unstable molecule in a stabilised composition
that will satisfy regulatory and medicinal needs for a pharmaceutical
and that can be used as a therapeutic.
Objective and strategy
Evgen’s ambition is to be the world leader in sulforaphane and
sulforaphane-like compounds, establishing a leading position in this
new class of pharmaceuticals. The strategy to achieve this objective
is to:
• continue clinical development of SFX-01 in SAH and metastatic
breast cancer (see below);
• capitalise on the broad potential of SFX-01 by appraising and, if
commercially appropriate, initiating clinical studies in additional
cancer and neurological indications;
•
support investigator-initiated studies (i.e. academic units
typically with grant funding) in new areas to increase scientific
understanding and expand the clinical applications of SFX-01 in a
cost-effective manner (see below);
• expand our intellectual property portfolio, including specific dose
regimes, product formulations and new uses, and composition of
matter based on novel sulforaphane analogues;
Pipeline
SFX-01 IN BREAST CANCER
Breast cancer is the biggest cause of cancer deaths in women
worldwide. In around 75% of breast cancers, the hormone oestrogen
plays a key part in tumour growth. Such tumours express the oestrogen
receptor (ER+) and, if the cancer is metastatic, endocrine therapy is
the main treatment. It is thought that hormone independent cancer
stem-like cells are implicated in the development of resistance to
hormone therapy and the spread of the disease by metastases. Since
2012, Evgen has worked with University of Manchester scientists
at the Cancer Research UK Manchester Institute and together we
have generated promising data showing SFX-01 reduces the number
of cancer stem-like cells in patient-derived breast cancer tissue
in xenograft models. The xenograft studies used a combination of
hormone therapy and SFX-01, with the role of SFX-01 being to target
the cancer stem-like cell population. Crucially, the data also showed
that SFX-01 is unique, compared with existing therapies, in deactivating
phosphorylated STAT3, a key agent in cancer proliferation and
resistance to current standards of care.
STEM (‘SFX-01 in the Treatment and Evaluation of Metastatic Breast
Cancer’) is a multi-centre, Phase IIa clinical trial led by Principal
Investigator Dr Sacha Howell of the Christie Hospital in Manchester.
The trial has completed, having treated 46 patients from 14 sites in
the UK, France, Spain and Belgium. Top line data was released in
March 2019 showing that the trial met its primary endpoints of safety/
tolerability and clinical benefit rate (CBR) as measured by RECIST
(Response Evaluation Criteria In Solid Tumours).
All STEM patients had been on endocrine therapy prior to entry to the
trial, and having responded to such therapy for at least six months then
presented with progressive disease, thereby demonstrating the start of
resistance to the hormone therapy. Once entered into the trial, patients
continued to receive their failing hormone therapy in addition to SFX-01
and have regular scans through to week 24. Patients discontinued the
trial when one of the scans shows disease progression or at week 24.
After 24 weeks, for responding patients, there was a compassionate
use programme that provides continued access to SFX-01 with follow-
up for safety.
In March 2019 we announced top line final data from the trial
demonstrating clinical proof of concept by showing that:
• complete one or more licensing agreements when attractive terms
• SFX-01 can both stabilise and shrink endocrine resistant metastatic
are achievable;
breast cancers.
•
in due course, opportunistically diversify the product pipeline,
where the Directors believe such opportunities have a good
strategic fit.
The key challenges in delivering this strategy include:
• SFX-01 was well tolerated with no safety concerns arising.
In particular:
• The Clinical Benefit Rate across all patients was c. 24%.
• Disease stabilisation was seen in patients from all participating
• Conducting appropriately designed clinical trials that may
countries.
demonstrate the efficacy of SFX-01;
• Assembling the necessary toxicology package and completing
product formulation and development such that SFX-01 will satisfy
regulatory and commercial requirements;
• Accessing sufficient capital to enable execution of these activities.
These challenges are being addressed through the use of a panel
of expert consultants in the relevant fields, a sustained investor
relations and fundraising effort and a focussed business development/
partnership activity.
• An objective response was seen in 2 patients (4%), being a
reduction in tumour size of at least 30% on one scan.
• 13 patients entered the compassionate use programme after 24
weeks.
The data showed an excellent and unusually good safety and tolerability
profile for an anti-cancer drug. It was significantly better than that for
everolimus or exemestane, drugs currently used at the same stage of
the treatment pathway as that in which we anticipate SFX-01 being
deployed.
02
Evgen Pharma plc
Annual Report & Accounts 2019
In a subsequent independent review of the data, Dr Mary Stuart, a
world-wide acknowledged expert in the breast cancer field, concluded:
for six months from the initial haemorrhage. We anticipate the read-out
to be at the end of Q3 or early Q4 of this calendar year.
“Patients participating in the STEM study had generally poor prognosis,
with over 70% of patients having visceral disease. If these patients
had remained on their therapy without any change, they would have
continued to have unchecked disease progression. However, the
STEM results show that SFX-01 has promising evidence of activity and
suggests it may reverse resistance to endocrine therapy”.
We believe SFX-01 will initially be used in second-line mBC therapy
where the market opportunity is substantial. We are working on a trial
design to show benefit in this setting, likely to be a randomised, placebo-
controlled phase IIb trial.
SFX-01 IN SUBARACHNOID HAEMORRHAGE
Aneurysmal SAH is a form of stroke, caused by a ruptured aneurysm
which leads to a bleed in the subarachnoid space of the brain. It is
a relatively rare condition, accounting for around 5% of all strokes. It
is fatal in approximately 50% of cases with approximately 15% dying
before they reach hospital. A delayed cerebral ischaemia (DCI), which
happens 3-14 days after the initial haemorrhage, remains the single
most important cause of morbidity and mortality in those patients that
survive the initial bleed. Over 60% of surviving patients suffer some
permanent neurological deficit.
Nimodipine, the current standard of care, is a generic and has been
used for more than 20 years, during which time there have been no
significant clinical advances in the treatment of SAH. Whilst SAH is
relatively rare, the market potential for this devastating condition, with
its high unmet clinical need, is significant.
SFX-01 is aimed at reducing the neurological damage associated
with the DCI via the up-regulation of the Nrf2-ARE (nuclear factor
erythroid2-related factor 2–antioxidant response element) pathway.
Sulforaphane, the active principal in SFX-01, is a well-known activator
of the Nrf2–ARE pathway which plays a protective role in many
physiological stress processes such as inflammatory damage, oxidative
stress, and the accumulation of toxic metabolites, which are all
involved in the DCI following SAH. The trial is a double-blind, placebo-
controlled study of 90 patients; 45 receiving nimodipine and placebo
and 45 receiving nimodipine and SFX-01. The primary endpoints are
Transcranial Doppler (essentially blood flow as measured by ultrasound
through the brain’s blood vessels and a measure of the DCI), safety and
pharmacokinetics.
Importantly, secondary endpoints include a cognitive measurement of
clinical improvement (“the modified Rankin Scale”) assessed at 7, 28,
90 and 180 days post haemorrhage. Potential follow-on studies would
almost certainly have primary clinical endpoints based on such clinical
outcomes.
The trial has completed the recruitment, treatment and 3 month
assessment phases, leaving a small number of patients still awaiting
their 6 month cognitive assessments. Patients were recruited from 3
centres; University Hospital Southampton, Western General Hospital in
Edinburgh and St Bartholomew’s Hospital in London.
As announced in March 2019 we have decided to announce the
primary endpoints (safety, tolerability and measures of blood flow in
the brain) and secondary endpoints (relating to cognitive function) at
the same time, rather than announcing them separately as previously
indicated. This approach fully protects the blinded integrity of the
secondary endpoint data which continues to be collected post-dosing
Preclinical work and investigator-led clinical studies
In addition to our core in-house programmes, we continue to support
academic research and we will facilitate investigator-initiated studies
(completely or largely funded by the investigator or relevant charities)
to broaden the range of applications for SFX-01 and increase our
mechanistic understanding in these different disease areas.
Currently, we are working with research groups conducting pre-clinical
work to investigate the potential of SFX-01, inter alia, in: triple negative
breast cancer (University of Manchester, UK), prostate cancer (Tulane
University, US), glioblastoma (University of L’Aquila, Italy), osteoarthritis
(RVC, University of London, UK) and ischaemic stroke and autism
(both at King’s College London, UK). Furthermore, we are working
with the University of Dundee to support their grant applications which
could potentially finance a clinical trial in patients with non-alcoholic
steatohepatitis (NASH), a form of fatty liver disease.
Data from an earlier collaboration with the University of Southampton
was published showing that SFX-01 reduces residual disability after
experimental autoimmune encephalomyelitis (a model for multiple
sclerosis) both prophylactically and after disease induction.
We are hopeful that some of these projects will progress into clinical
evaluation over the next few years funded by 3rd parties.
Finally, we have a mechanistic collaboration with Imperial College,
London to use advanced chemical proteomics technology to detect
targets for SFX-01 and other sulforaphane analogues in live cells
or tissues in specific disease model systems. This should provide
greater understanding of mechanism(s) of action and contribute data
important for current and future clinical development. The first data
from this collaboration was presented at the end of March providing
further elucidation of the potential mechanism of action of SFX-01 in
metastatic breast cancer, and suggesting biomarkers for determining
the efficacy of SFX-01 in this indication. In particular, that SFX-01
influences growth hormone signalling and that phosphorylated STAT3
and, interestingly, MIF (macrophage migration inhibitory factor), may
be a useful biomarker for response to SFX-01.
Recent advances in sulforaphane science
In the calendar year 2018 there were 233 scientific publications
studying sulforaphane, up from 184 in 2017 (source: Pubmed). Some
highlights include:
• Sulforaphane has been shown, again, to suppress the growth of
triple negative breast cancer stem-like cells in in-vitro and in-vivo
(Castro et al., Cancer Prev Res, 2019). The researchers, based at
the NCI (National Cancer Institute) in the United States, found that
sulforaphane significantly decreased the expression of cancer-
specific and various stem cell markers, and concluded that it
warrants clinical evaluation.
• The preclinical and clinical evidence associated with sulforaphane
as a potential treatment for autism continues. Nadeen et al. (Behav
Brain Res, 2019) showed that sulforaphane ameliorated autism-
like symptoms in a preclinical animal model through the activation
of Nrf-2 which (a) suppressed Th17 related signaling and (b)
rectified the oxidant-antioxidant imbalance in periphery and brain
in a preclinical model; Th17 immune responses and oxidative
stress are reported to be elevated in human autistic subjects.
Annual Report & Accounts 2019 03
Evgen Pharma plc
REVIEW OF THE YEARGOVERNANCE FINANCIAL STATEMENTS STRATEGIC REPORT
continued
Recent advances in sulforaphane science (continued)
Furthermore, in a small open label clinical study Bent et al. (Mol
Autism, 2018) dosed children with autism for 12 weeks with a
frozen botanical extract containing sulforaphane. There was a
statistically significant improvement in social responsiveness (Social
Responsiveness Scale-SRS) from baseline and changes in urinary
metabolites were correlated with changes in symptoms.
• A number of recent studies point towards sulforaphane as a
potential treatment for neuropsychiatric disorders, including
schizophrenia. Excess oxidative stress is increasingly thought to
participate in the pathophysiology of brain disorders, and decreases
in the major antioxidant, glutathione (GSH), have been reported in
multiple studies. Activation of Nrf-2 leads to increased expression
of genes that produce GSH. Sedlak et al. (Mol Neuropsychiatry,
2018) reported that sulforaphane increased GSH levels in the
blood and specific areas of the brain in healthy human subjects
following 7 days of daily oral administration. The publication
concludes with the statement: “This clinical pilot study suggests
the value of exploring relationships between peripheral GSH and
clinical/ neuropsychological measures, as well as the influences
sulforaphane has on functional measures that are altered in
neuropsychiatric disorders”.
INTELLECTUAL PROPERTY UPDATE
During, and since, the last reporting period our IP portfolio has been
further strengthened with a number of key patents being granted.
The current status of the intellectual property portfolio is as follows:
• From the “parent” patent family entitled “Stabilised Sulforaphane”
patents are granted in Australia, Canada, EU, US and Hong Kong
and further applications are pending in Japan, EU and Hong Kong.
• The principal manufacturing patent application, entitled “Methods
of Synthesising Sulforaphane” is granted in Australia, China,
Europe, Japan and the US and further applications are pending in
Brazil, Canada, US and India.
• A second manufacturing patent which is directed to methods of
isolating and purifying sulforaphane or analogues from natural
sources has been granted in Europe, US, Japan and China.
• The patent application providing protection around novel analogues
based on sulforaphane, and entitled “Sulforaphane-Derived
Compounds” is granted in Australia, China, Europe, Japan and the
US and pending in Canada.
In May 2018, in an important development, the Group gained a patent
in Europe containing claims to a particular method of stabilising
sulforaphane by complexation with alpha-cyclodextrin; a similar
divisional application remains pending in Japan. In April 2019, the
Group also received notification of the intention to grant a compositional
patent in Europe directed to a composition comprising a complex of
sulforaphane and alpha-cyclodextrin. The Group has long held broad
compositional patent protection in the United States since patent grant
in 2011 and in Canada since grant in 2014.
KEY PERFORMANCE INDICATORS
Key Performance Indicators include a range of financial and non-
financial measures (such as clinical trial progress). Details about the
progress of our development programs (non-financial measures) are
included elsewhere in this Strategic Report, and below are the other
indicators (financial measures) considered pertinent to the business.
Year-end cash and short-term investments and cash
on deposit held: (2018: £3.6m)
2019 (£m)
2.0
The reduction in year-end cash reflects working capital, pre-clinical and
clinical expenditures during the year offset in part by the fundraising in
October 2018 which raised £750k before expenses.
Net cash outflow (including short-term investments)
(2018 outflow: £0.2m)
2019 (£m)
1.6
The net cash outflow again reflects working capital, pre-clinical and
clinical expenditures during the year offset in part by the fundraising
completed during the year.
Operating loss: (2018: £3.0m)
2019 (£m)
3.1
The operating loss reflects pre-clinical and clinical activity in the year
and related product manufacture.
PEOPLE
We were delighted to welcome Susan Clement-Davies as a non-
executive director. Susan brings a wealth of experience in capital
markets, M&A and licensing/partnering, particularly in the life science
sector, from her time with Citigroup and Torreya. We would like thank
Marc d’Abbadie who resigned from the Board in November 2018 for
his support and contribution which has been much appreciated.
FINANCIAL REVIEW
The financial performance for the year ended 31 March 2019 was in
line with expectations.
Losses
The total loss for the year was £2.6m (31 March 2018: £2.6m)
including a charge for share-based compensation of £0.1m (2018:
£0.1m). Operating expenses excluding share based compensation
increased slightly to £3.0m (2018: £2.9m) reflecting similar levels of
both clinical activity and general and administrative costs.
Share based compensation
Accounting standards require a charge to be made against the grant
of share options and recognised in the Consolidated Statement of
Comprehensive Income. This amounted to £0.1m (2018: £0.1m) and
has no impact on cash flows.
Headcount
Average headcount of the Group for the year was 8 (2018: 9).
Taxation
The Group has elected to claim research and development tax credits
under the small or medium enterprise research and development
scheme of £0.49m (2018: £0.44m).
04
Evgen Pharma plc
Annual Report & Accounts 2019
Share capital
In October 2018, 5,555,558 ordinary shares of 0.25p each were issued
pursuant to a placing to existing and new shareholders at 13.5p per
share. The placing raised £0.75m before expenses.
A total of 158,918 ordinary shares of 0.25p each were issued pursuant
to exercises of share options granted under individual share option
grants. These options had exercise prices of between nil and 10.6p per
share.
A share placing was completed in May 2019 after the year end
which raised £5m before expenses in difficult market conditions.
This provides us with a strengthened balance sheet, the resources
to undertake product formulation that will facilitate the next mBC
trial and other investigator-led clinical studies, and funds to complete
further toxicology studies that will remove current restrictions on the
duration of clinical trial treatment phases. The placing comprised the
issue of 33,333,329 ordinary shares of 0.25p each to existing and new
shareholders at 15.0p per share.
Cash flows and financial position
The cash position at 31 March 2019 decreased to £2.0m (31 March
2018: £3.6m). Continued clinical expenditure on the two phase II trials
of SFX-01 and recurring general and administrative costs were partially
offset by the share placing proceeds (£0.75m before expenses) and
receipt of the 2018 tax credit (£0.44m).
PRINCIPAL RISKS AND UNCERTAINTIES
Evgen is a biopharmaceutical company and, in common with other
companies operating in the sector, is subject to a number of risks. The
principal risks and uncertainties identified by the Group for the year
ended 31 March 2019 are set out below.
Development
The Group is at a relatively early stage of development and may not be
successful in its efforts to develop approved or marketable products.
Technical risk is present at each stage of the development process
which is a highly regulated environment which presents technical and
operational risk. There can be no guarantee that the Group will be
able to, or that it will be commercially advantageous for the Group to,
develop its Intellectual Property through entering into licensing deals
with pharmaceutical companies.
Commercial
The biotechnology and pharmaceutical industries are very competitive.
The Group’s competitors include major multinational pharmaceutical
companies, biotechnology companies and research institutions. Many
of its competitors have substantially greater financial, technical and
other resources. The Group’s competitors may succeed in developing,
acquiring or licensing drug product candidates that are more effective
or less costly than those the Group is developing, or may develop, and
this may have a material adverse impact on the Group.
Regulatory
The Group’s operations are subject to laws, regulatory approvals, and
certain government directives, recommendations and guidelines. There
can be no assurance that future legislation will not impose further
government regulation which may adversely affect the business or
financial condition of the Group.
Intellectual property (IP)
The Group’s success depends in part on its ability to obtain and
maintain patent protection for its technology and potential products in
the United States, Europe and other countries. If the Group is unable to
obtain and maintain patent protection for its technology and potential
products, or if the scope of patent protection is not sufficiently broad,
competitors could develop and commercialise similar technology
and products, which could materially affect the Group’s ability to
successfully commercialise its technology and potential products.
The Group is exposed to additional IP risks, including infringement
of IP rights, involvement in lawsuits and the inability to protect the
confidentiality of its trade secrets which could have an adverse effect
on the success of the Group.
Financial
The Group has a limited operating history, has incurred significant
losses since its inception and does not have any approved or revenue
– generating products. The Group expects to incur losses for the
foreseeable future, and there is no certainty that the business will
generate a profit. The Group may not be able to raise additional funds
that will be required to support its product development programs or
commercialisation efforts, and any additional funds that are raise may
cause dilution to existing shareholders.
Operational
The Group’s future development and prospects depend to a material
extent on the experience, performance and continued service of its
senior management team including the Directors. The Directors believe
the senior management team is appropriately structured for the Group’s
size and stage of development and is not overly dependent on any
one individual. The Group has entered into contractual arrangements
with these individuals with the aim of securing the services of each
of them. Retention of these services or the identification of suitable
replacements cannot be guaranteed. The loss of the service of any
of the Directors or senior management and the cost of recruiting
replacements may have a material adverse effect on the Group and its
commercial and financial performance.
OUTLOOK
The outlook for Evgen is positive. Our metastatic breast cancer Phase II
trial achieved its primary endpoints and we have a further Phase II trial
to report in the current year in a different disease area. Furthermore,
we support investigator-led academic studies in new disease areas
and these are generating preclinical data which may ultimately support
further trials, either of SFX-01 or novel analogues. These include further
opportunities in cancer and neurology but also in other fields. All have
considerable commercial opportunity and we look forward to the future
with confidence.
This report was approved by the Board of Directors on 12 June 2019
and signed on behalf of the Board of Directors by:
Barry Clare
Chairman
Dr Stephen Franklin
Chief Executive Officer
12 June 2019
12 June 2019
Annual Report & Accounts 2019 05
Evgen Pharma plc
REVIEW OF THE YEARGOVERNANCE FINANCIAL STATEMENTS DR SUSAN FODEN Non-Executive Director and Senior Independent
Director
Susan has an MA, D.Phil in biochemistry from the University of
Oxford. Susan held research appointments at AEA Technology,
Harwell, before joining Celltech plc in 1983 where she became head
of academic liaison. In 1987, Susan was appointed Chief Executive
of Cancer Research Campaign Technology Ltd (‘‘CRCT’’) establishing
the company and building its operations to one with significant royalty
streams and equity in spin-out companies. From 1998 to 2000, she
was also Chief Executive of Cancer Research Ventures Ltd, a subsidiary
of CRCT, set up to transfer cancer technologies outside the Cancer
Research Campaign portfolio in the UK and overseas. In 2000, Susan
joined Merlin Biosciences Ltd where she was an investor director with
a focus on healthcare until 2003. Susan holds various Non-Executive
Directorships including BTG plc, Vectura Group plc and BerGenBio AS.
She is a member of the Investment Committee for CD3, a joint initiative
between the University of Leuven and the European Investment Fund.
Susan was appointed as a Non-Executive Director of Evgen Limited in
2011 and became a Director of Evgen Pharma plc in November 2014.
Susan has considerable Remuneration Committee experience from
other companies.
DR ALAN BARGE Non-Executive Director
Alan has held high-level strategic leadership roles in oncology with
global pharmaceutical companies. He was formerly Chief Medical
Officer of Singapore-based ASLAN Pharmaceuticals PTE and of
BerGenBio. He was the Clinical Vice President and Head of Oncology
& Infection at AstraZeneca where he was directly responsible for
the company’s overall strategy in oncology and infection, from drug
discovery to proof-of-concept. He was also the Head of the Therapy
Area Portfolio Team and accountable for the design and delivery of
all projects and budgetary accountability of approximately US$200
million per annum at AstraZeneca. Prior to this, Alan held other
positions in AstraZeneca, including Clinical Vice President (Oncology
& Infection), Worldwide Medical Director (Iressa), and Global Product
Director (Emerging Oncology). Prior to his career at AstraZeneca, Alan
was European Medical Director for Amgen Inc. Alan was appointed
a Director of Evgen Pharma plc in October 2015. He is currently an
adviser to a family office on biotechnology investments.
SUSAN CLEMENT-DAVIES Non-Executive Director
Susan is an experienced financier with over 25 years of capital markets
and investment banking experience, including 10 years at Citigroup
as Managing Director of Equity Capital Markets and most recently
as Managing Director of Torreya, an investment bank solely focused
on life sciences. Susan has a BSc in Economics from University
College London and a MSc in Economics from the London School
of Economics. Susan became a Director of Evgen Pharma plc in
November 2018.
THE BOARD OF DIRECTORS
BARRY CLARE Chairman
Barry brings considerable healthcare, strategy, NED and Chairman
experience to the Group. He is an experienced healthcare company
Director who joined Evgen Limited as Chairman in 2009. Having
graduated in Natural Sciences at Cambridge University, Barry joined
Procter & Gamble where he spent 10 years working in a variety of
product development roles in the UK and in Europe. In 1984, he
joined Diversey Corporation, the speciality chemicals division of Molson
Companies, as corporate Vice President and VP Marketing in Canada
where he led its transformation from a commodity chemical supplier
to a leading differentiated business solutions provider to the food and
hospitality industries. In 1991, Barry joined Boots Company plc as
managing Director of Boots Healthcare International, the company’s
over-the-counter (‘‘OTC’’) consumer healthcare division. Between 1991
and 2001, the business became the fastest growing OTC company in
Europe and included the global expansion of brands such as Nurofen,
Strepsils and Clearasil. In 1999, he was appointed to the board of
Boots Company plc and became managing Director of Boots Retail
International. He was appointed group marketing director of Boots
Company plc in 2002, a position he held until 2003 when he left to set
up Clarat Partners LLP, a specialist firm to participate in transactions in
the healthcare, medical devices, beauty, personal care and well-being
sectors. Barry, who served as a Non-Executive Director of Standard
Chartered plc between 2001 and 2003, is on the board of several
private healthcare companies and is Deputy Chairman, Manchester
University NHS Foundation Trust . Barry has been a Director and
Chairman of Evgen Limited since November 2009 and Evgen Pharma
plc since October 2014.
DR STEPHEN FRANKLIN Chief Executive Officer
Steve, the founder of Evgen Pharma, has over 20 years’ commercial
experience in life science industries, focusing on the commercialisation
of new technology. He was the CEO of Provexis plc, a science-based
nutraceutical company, and led that company through its admission
to AIM in 2005. Prior to that, Steve was a Principal Executive with
ANGLE plc and held a business development role with Manchester
Biotech (now UMIC), one of the largest campus-based incubators
in Europe. At ANGLE and UMIC he helped establish and support
a portfolio of healthcare businesses. Steve has a BSc in Biology
(York), a PhD in Applied Biochemistry (Nottingham) and an MBA
with distinction (Nottingham). He is a Fellow of the Royal Society of
Medicine and an alumnus of the Royal Commission for the Exhibition
of 1851. Since founding Evgen Limited in 2008, Steve has successfully
in-licensed technologies, taken SFX-01 from preclinical safety and
toxicology studies to Phase II trials, and has established collaborations
with research institutes in the UK, USA and a number of European
countries. Steve has been a Director of Evgen Limited since November
2007 and of Evgen Pharma plc since October 2014.
RICHARD MOULSON Chief Financial Officer
Richard is a qualified chartered accountant with over 20 years’ post-
qualification experience working as a chief financial officer for UK
quoted and private equity and venture capital owned companies.
Richard trained with Coopers & Lybrand and spent 10 years with
Deutsche Morgan Grenfell in corporate finance working on fundraisings,
IPOs and M&A transactions in the UK and internationally. He has
considerable life science experience in companies including Intercytex
Group Plc, ReNeuron Group plc and Cobra Therapeutics Ltd, and
currently provides part-time CFO and finance consulting services to
SMEs with a focus on life science businesses. Richard became a
Director of Evgen Pharma plc in January 2017.
06
Evgen Pharma plc
Annual Report & Accounts 2019
DIRECTORS’ REPORT
for the year ended 31 March 2019
Financial Statements
The Directors of Evgen Pharma plc (registered in England and Wales: 09246681) present their report together with the audited consolidated
financial statements and the Company financial statements for the year ended 31 March 2019.
Directors
The Directors of the Company who served during the year and up to the date of this report, unless otherwise indicated, are as follows:
Stephen Franklin
Barry Clare
Richard Moulson
Susan Foden
Alan Barge
Susan Clement-Davies
Marc d’Abbadie
Capacity
Chief Executive Officer
Chairman
Chief Financial Officer
Non-Executive and Senior Independent Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Appointed 2 October 2014
Appointed 2 October 2014
Appointed 17 January 2017
Appointed 21 November 2014
Appointed 21 October 2015
Appointed 1 November 2018
Resigned 7 November 2018
Biographical details of Evgen’s Directors are shown on page 6.
The Group maintained Directors’ and Officers’ liability insurance cover throughout the year.
Principal activities of the Group
Details of current and future trading as well as the principal risks and uncertainties are included in the Strategic Report on pages 2 - 5.
Business Review and Key Performance Indicators
The review of the business, future trading and key performance indicators are covered in the Strategic Report.
Financial results and dividends
The Group’s results for the year ended 31 March 2019 are presented on page 19. The Group’s net loss after tax for the year was £2.6m (2018:
£2.6m).
Directors’ interests in share options
Details of Directors’ interests in shares, share options and service contracts are shown in the Directors’ Remuneration Report.
Research and Development
The Group is continuing to research products in its chosen area.
Employee involvement
Employee involvement in the overall performance of the Group is encouraged through both formal and informal meetings which deal with a range of
matters including the Group’s financial performance, development progress and health and safety. Copies of the Annual Report and Interim Report
are made available to all employees.
Political donations
The Group made no political donations in the current or prior year.
Authority to issue shares
At the Annual General Meeting on 18 July 2019 authority will be sought from shareholders to allow the Directors to allot relevant securities up to
an aggregate nominal value of £110,271, representing one-third of the issued share capital, and to allot for cash equity securities having a nominal
value not exceeding in aggregate £66,162 (being 20% of the issued share capital).
Post-year end share placing
Subsequent to the year end 33,333,329 ordinary shares were issued at a price of 15p per share raising £5.0 million before expenses.
Substantial shareholdings
At 11 June 2019, the Company had received notification from the following financial institutions of their and their clients’ interest in the following
disclosable holdings, which represent 3% or more of the voting rights of the issued share capital of the Company:
Shareholders having a major interest
Number of shares held
% of issued share capital
North West Funds (Biomedical) LP
Mercia Fund Managers
AXA Framlington Investment Management Limited
Ora Capital
Seneca Investment Managers
Amati Global
Newlands Capital
TS Capital
16,186,446
15,723,818
11,848,884
10,325,000
7,243,097
6,666,667
6,044,815
5,078,334
12.2%
11.9%
8.9%
7.8%
5.5%
5.0%
4.6%
3.8%
Annual Report & Accounts 2019 07
Evgen Pharma plc
REVIEW OF THE YEARGOVERNANCE FINANCIAL STATEMENTS DIRECTORS’ REPORT
continued
Going concern
At 31 March 2019, the Group had cash and cash equivalents, including short-term investments and cash on deposit, of £2.0 million. Subsequent to
the year end the Company received £5m before expenses through a share placing.
The Directors have prepared detailed financial forecasts and cash flows looking beyond 12 months from the date of the approval of these financial
statements. In developing these forecasts, the Directors have made assumptions based upon their view of the current and future economic
conditions that will prevail over the forecast period.
The Directors estimate that the cash held by the Group together with known receivables will be sufficient to support the current level of activities
beyond the end of 2020.
Strategic Report
The information required by schedule 7 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 has
been included in the separate Strategic Report in accordance with section 414C (11) of the Companies Act 2006 (Strategic Report and Directors’
Reports) Regulations 2013.
Disclosure of information to auditor
In the case of each of the persons who are Directors of the Company at the date when this report is approved:
•
so far as each of the Directors is aware, there is no relevant audit information (as defined in the Companies Act 2006) of which the Company’s
auditor so far as each of the Directors is aware, there is no relevant audit information (as defined in the Companies Act 2006) of which the
Company’s auditor are unaware; and
• each of the Directors has taken all steps that he/she ought to have taken as a Director to make himself/herself aware of any relevant audit
information and to establish that the Company’s auditor are 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 Auditors
RSM UK Audit LLP have expresses their willingness to continue in office as auditors for the year. A resolution to reappoint them will be presented at
the forthcoming AGM.
Annual General Meeting
The notice convening and giving details of the 2019 AGM of the Company to be held at the offices of RSM UK Audit LLP, 3 Hardman Street,
Manchester M3 3HF on 18 July 2019 has been sent to shareholders.
Approved by the Board of Directors and signed on behalf of the Board
Dr Stephen Franklin
Chief Executive Officer
12 June 2019
Evgen Pharma plc
Liverpool Science Park Innovation Centre 2
146 Brownlow Hill
Liverpool
Merseyside
L3 5RF
Company registration number: 09246681
08
Evgen Pharma plc
Annual Report & Accounts 2019
CORPORATE GOVERNANCE REPORT
The Board applies the Quoted Companies Alliance (“QCA”) Corporate Governance Code (to the extent practical given the Group’s size and stage of
development). The Directors support high standards of corporate governance and regards the QCA Code as appropriate to its stage of development.
Full details of our Corporate Governance approach can be found on our website: www.evgen.com.
Board Structure
The Board is responsible to shareholders for the proper management of the Group. A statement of Directors’ responsibilities is set out on page 16.
The Non-Executive Directors have a particular responsibility to ensure that the strategies proposed by the Executive Directors are fully considered.
The Board comprises the myself, two Executive Directors and three Non-Executive Directors. The Board considers all the Non-Executive Directors
to be independent. Non-Executive Directors receive a fee for their services. The Board holds regular meetings and is responsible for formulating,
reviewing and approving the Group’s strategy, budgets and corporate actions and overseeing the Group’s progress to its goals.
The Board collectively has considerable experience in scientific, operational and financial development of biopharmaceutical companies. The
experience, personal qualities and skills of the Directors are set out on page 6. The Directors regularly review the composition of the Board to ensure
that it has the necessary breadth and depth of skills to support the ongoing development of the Group.
The Chairman and Non-Executive Directors maintain their skillsets through a combination of other executive, non-executive and advisory roles. In
addition, knowledge is kept up to date on key issues and developments pertaining to the Group, and corporate governance matters, through updates
from the Executive Directors and various external advisers.
The Board has sought advice during the year from remuneration consultancies in connection with the adjustments to the LTI Plan noted in the
Remuneration Committee’s report on page 12.
Board Committees
The Board has established Audit and Remuneration Committees of the Board with formally delegated duties and responsibilities. The membership
and activity of these Committees is discussed in more detail in their respective reports.
Group culture
The Board seeks to maintain the highest standards of integrity and probity in the conduct of the Group’s operations. These values are enshrined in
the working practices adopted by all employees in the Group and consistent with the Group’s strategy; they reflect the high ethical and regulatory
compliance required of a biopharmaceutical business. The small number of staff within the Group allows for an open culture to be maintained
with weekly communication to staff regarding progress, and staff feedback is regularly sought. Non-Executive Directors have frequent contact with
various staff members and are able to monitor culture accordingly.
The Group is committed to providing a safe environment for its staff and all other parties for which the Group has a legal or moral responsibility in
this area. Health and Safety is a standing agenda item at all Board meetings with any incidents reported at these meetings.
Frequency of, and attendance at, meetings
During the year the Group held formal Board meetings, Audit Committee meetings and Remuneration Committee meetings with attendance at
these meetings as follows:
Stephen Franklin
Barry Clare
Richard Moulson
Susan Foden
Alan Barge
Susan Clement-Davies1
Marc d’Abbadie2
1 Appointed 1 November 2018
2 Resigned 7 November 2018
Board Meetings
Audit Committee
Remuneration Committee
11/11
11/11
11/11
11/11
11/11
4/4
4/7
N/A
N/A
N/A
3/3
3/3
1/1
1/2
N/A
4/4
N/A
4/4
4/4
N/A
N/A
Alan Barge, Sue Foden and Susan Clement-Davies are considered to be independent Non-Executive Directors. These Directors are required to
work a minimum of two days per month. Richard Moulson is required to work a minimum of two days per week
Annual Report & Accounts 2019 09
Evgen Pharma plc
REVIEW OF THE YEARGOVERNANCE FINANCIAL STATEMENTS CORPORATE GOVERNANCE REPORT
continued
Risk Management and Control
The Board is responsible for the systems of risk management and internal control and for reviewing their effectiveness. The internal controls are
designed to manage rather than eliminate risk and provide reasonable but not absolute assurance against material misstatement or loss. Through
the activities of the Audit Committee, the effectiveness of these internal controls is reviewed annually.
The Group operates in an inherently high risk and heavily regulated sector and this is reflected in the principal risks and uncertainties set out on
page 5.
The Group maintains a risk register to monitor the various operating, financial, commercial and strategic risks faced by the business. This is
reviewed and discussed at each monthly Board meeting.
A comprehensive budgeting process is completed once a year and is reviewed and approved by the Board. The Group’s results, compared with the
budget, are reported to the Board at each monthly Board meeting.
The Group maintains appropriate insurance cover in respect of actions taken against the Directors because of their roles, as well as against material
loss or claims against the Group. The insured values and type of cover are comprehensively reviewed on a periodic basis.
The senior management team meet weekly to monitor clinical progress and to consider new risks and opportunities presented to the Group,
communicating and advising the Board as appropriate.
Corporate Social Responsibility
The Board recognises the growing awareness of social, environmental and ethical matters and it endeavours to take into account the interest of the
Group’s stakeholders, including its investors, employees, suppliers and business partners, when operating the business.
Employment
The Board recognises its legal responsibility to ensure the well-being, safety and welfare of its employees and maintain a safe and healthy working
environment for them and for its visitors.
Relations with shareholders
The Board recognises the importance of communication with its shareholders to ensure that its strategy and performance is understood and that it
remains accountable to shareholders. Our website has a section dedicated to investor matters and provides useful information for the Company’s
owners. The Board as a whole is responsible for ensuring that a satisfactory dialogue with shareholders takes place, while the Chairman and CEO
ensure that the views of the shareholders are communicated to the Board as a whole. The Board ensures that the Group’s strategic plans have been
carefully reviewed in terms of their ability to deliver long-term shareholders value. Fully audited Annual Reports are published, and Interim Results
statements notified via Regulatory Information Service announcements. All financial reports and statements are available on the Company’s website.
Shareholders are welcome to attend the Group’s AGM, where they will have the opportunity to meet the Board. All shareholders will have at least
21 days’ notice of the AGM at which the Directors will be available to discuss aspects of the Group’s performance and to receive questions.
Board Performance
The Board is in the process of engaging an independent third party organisation to manage a process for evaluation of its own performance, that
of its committees and individual Directors, including the Chairman. The results of the evaluation process will be analysed and reported back to the
Board for subsequent follow-up.
The Board may utilise the results of the evaluation process when considering the adequacy of the composition of the Board and for succession
planning.
Appraisals are carried out annually with all Executive Directors.
Barry Clare
Chairman
12 June 2019
10
Evgen Pharma plc
Annual Report & Accounts 2019
REMUNERATION COMMITTEE REPORT
The members of the Remuneration Committee are Susan Foden, Barry Clare and Alan Barge. Susan Foden is the Chair of the Remuneration
Committee.
The responsibilities of the Committee include the following:
• Determining and agreeing with the Board the remuneration policy for all Directors.
• Within the terms of the agreed policy, determining the total individual remuneration package for Executive Directors.
• Overseeing the evaluation of Executive Officers.
Our aim is to deliver a remuneration programme that rewards both achievement of short-term goals and fulfilment of our longer-term objectives in
realising the clinical potential of sulforaphane.
The remuneration policy is the responsibility of the Remuneration Committee, a sub-committee of the Board. Details of the members and remit of
the Committee is provided in the Corporate Governance section. The Executive Directors attended meetings by invitation but no Director is involved
in discussions relating to their own remuneration.
We recognise the need to retain and motivate our Executive Directors and senior management team and the need to avoid making remuneration
decisions solely based on shorter-term volatility. Accordingly, we include two performance-based elements in our remuneration programme; a
shorter term annual bonus programme, with payment amounts based on the previous year’s achievement against pre-set personal and corporate
goals for that year; and a longer-term equity-based programme of share options, vesting over three years and directed towards the achievement of
substantial, longer-term strategic objectives.
Remuneration Policy for Executive Directors
The Remuneration Committee sets a remuneration policy that aims to align Executive Directors’ remuneration with shareholders’ interests and
attract and retain the best talent for the benefit of the Group. The Company seeks to strike an appropriate balance between fixed and performance-
related reward, forming a clear link between pay and performance.
Since its IPO Evgen has operated the following share plans:
• Evgen Deferred Bonus Plan (DBP)
• Evgen Long Term Incentive Plan (LTIP)
These plans are intended to maintain remuneration policy in line with market practice for an AIM listed company and ensure alignment between
the reward strategy and business strategy. The Committee will continue to review the Company’s remuneration policy on a regular basis to ensure it
remains fit for purpose for the Company, drives high levels of executive performance and remains competitive in the market.
The remuneration of the Executive Directors during the year ended 31 March 2019 is set out below:
Basic salary
Basic salaries are reviewed annually.
The purpose of the base salary is to:
reflect market rates to support the recruitment and retention of key individuals;
•
•
reflect the individual’s experience, role and contribution with the Company; and
• ensure that the Executive Directors are fairly rewarded for carrying out their duties.
Bonuses
Executive Directors participate in a bonus plan under which they are entitled to a maximum annual bonus of 50% of salary. Other employees
are entitled to bonuses under the plan at lower percentages of salary. Annual bonus entitlements are based on the achievement of pre-set Group
corporate, financial and personal performance targets.
The performance targets for the financial year ending 31 March 2020 have been set by the Remuneration Committee and include Group corporate,
financial and personal performance targets.
The Remuneration Committee considers that the targets will support the business strategy, and that bonus arrangements represent an important
element of the performance-related pay for the Executive Directors.
In order to align executives’ interests with those of shareholders and manage cash costs, a proportion of the bonus payable to the Executives may
be paid in cash and a proportion may be paid in shares through the Deferred Bonus Plan which was adopted by the Company on Admission. The
Committee will determine on an annual basis the level of deferral of the bonus payment into Company share awards in the form of nil cost options
up to a maximum of 50% of the bonus earned. DBP awards will vest at the end of a three-year period from the relevant date of grant.
Benefits
Benefits in the form of private medical insurance and death in service insurance are provided to Executive Directors.
Annual Report & Accounts 2019 11
Evgen Pharma plc
REVIEW OF THE YEARGOVERNANCE FINANCIAL STATEMENTS REMUNERATION COMMITTEE REPORT
continued
Long term incentives
SHARE PLANS OPERATED PRIOR TO ADMISSION
Prior to Admission the Company granted share awards under stand-alone option agreements as well as operating the following share plans:
• Evgen 2008 Share Option Scheme
• Evgen Limited Enterprise Management Incentive Plan
Further details of outstanding options under these arrangements are as set out on page 14.
LONG TERM INCENTIVE PLAN
On Admission the Company adopted the LTIP which allows for share awards to be made in the form of nil cost options. The Company believes
that the LTIP aligns the interest of Executive Directors with those of shareholders and on an ongoing basis will form a significant part of their
performance-related pay.
On an ongoing basis the maximum annual individual limit is 100% of salary, although awards up to 150% of salary may be awarded in exceptional
circumstances. Share awards will normally vest over a three year period subject to the achievement of stretching corporate performance targets.
During recent months the Remuneration Committee has reviewed the use of absolute total shareholder return as the sole determinant of option
vesting. For each for the grants made in 2015 and potentially 2016 the criteria either have not been met or are unlikely to be met and thus none of
the options have or will vest.
The absence of vesting of these options is a fair reflection of the share price performance since IPO and returns to shareholders but of course does
not achieve the aims of the LTIP to retain and incentivise key staff nor allow them to build a meaningful stake in the company going forward.
Taking all this into consideration, the Committee decided to rebase the reward structure and performance criteria for the LTIP awards so that
management have a realistic chance of achieving a return on the option grants made in 2019 and onwards which would vest in 2022 and following
years.
After taking advice from external experts such as RSM, vesting based on the achievement of absolute total shareholder return targets has been
changed to a combination of total shareholder return measured against an index of comparator companies (70%), and performance against
strategic corporate objectives over three years (30%). The Committee believe these measures will provide a better assessment of management
performance and will be applicable to awards made subsequent to the 2019 AGM.
Pension
The Group pays pension contributions for Executive Directors and employees into personal pension schemes.
Executive Directors’ service contracts and termination provisions
The service contracts of Executive Directors are approved by the Board. The service contracts may be terminated by either party giving 6 or 12
months’ notice to the other. The details of the Directors’ service contracts are summarised below:
Stephen Franklin
Richard Moulson
Date of Contract
14 October 2015
17 January 2017
Notice period
12 months
6 months
Non-Executive Directors
The Non-Executive Directors have entered into letters of appointment with the Company, with the Board determining the fees paid to the Non-
Executive Directors, with regard to market comparatives and similar businesses. The Non-Executive Directors do not currently participate in the
Group’s pension, bonus or option schemes. The appointments are terminable on one month’s notice by either party.
The Non-Executive Directors do not receive any pension, or bonus or benefits from the Company. The contractual terms of the Non-Executive
Directors are reviewed by the Board annually. Current contracts are set out below:
Barry Clare
Susan Foden
Alan Barge
Susan Clement-Davies
Date of Contract
14 October 2015
14 October 2015
14 October 2015
1 November 2018
Initial term
1 month notice
Three years
Three years
Three years
Non-Executive Directors are typically expected to serve two three-year terms but may be invited by the Board to serve for an additional period,
12
Evgen Pharma plc
Annual Report & Accounts 2019
Directors’ remuneration during the year ended 31 March 2019
The Directors received the following remuneration during the year:
Salaries
and fees
£
Taxable
benefits
£
Bonuses
£
Pension
contributions
£
Total year
ended
31 March
2019
£
Salaries
and fees
£
Taxable
benefits
£
Bonuses
£
Pension
contributions
£
Total year
ended
31 March
2018
£
155,450
70,635
3,313
3,008
54,408
20,036
15,129
—
228,300
93,679
151,290
76,180
2,375
1,971
45,387
16,000
15,550
—
214,602
94,151
35,000
26,500
24,300
15,986
9,375
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
35,000
26,500
24,300
15,986
9,375
35,000
26,500
22,500
26,500
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
35,000
26,500
22,500
26,500
—
337,246
6,321
74,444
15,129
433,140
337,970
4,346 61,387
15,550
419,253
Executive
Stephen Franklin
Richard Moulson1
Non-Executive
Barry Clare
Susan Foden
Alan Barge2
Marc d’Abbadie3
Susan Clement-Davies
Susan Clement-Davies became a Director of Evgen Pharma plc on 1 November 2018. Marc d’Abbadie resigned as a Director on 7 November 2018.
There were no LTIP gains during the year (2018: £nil).
No Directors waived emoluments in the period ended 31 March 2019.
1 Includes fees of £14,950 (2018: £17,970) paid to FD Consult Ltd, a related party as detailed in Note 18.
2 Includes fees of £1,800 (2018: £nil) paid to Alan Barge, as detailed in Note 18.
3 Includes fees of £15,986 (2018: £26,500) paid to SPARK Impact Limited, as detailed in Note 18.
Directors’ shareholdings
The Directors who served during the year, together with their beneficial interest in the shares of the Company are as follows:
Ordinary shares of 0.25p each
Executive
Stephen Franklin
Richard Moulson
Non-Executive
Barry Clare1
Susan Foden
Alan Barge
Susan Clement-Davies
Marc d’Abbadie2
At
31 March
2019
1,416,867
41,667
1,023,441
—
—
—
16,186,446
At
31 March
2018
1,416,867
41,667
1,023,441
—
—
—
16,186,446
1 Of the ordinary shares set out above Barry Clare is indirectly interested in 592,508 (2018: 592,508) ordinary shares in the Company held by Clarat
Partners LLP by virtue of being a member of Clarat Partners LLP.
2 Marc d’Abbadie is an employee of SPARK Impact Limited which manages North West Fund for Biomedical which is a shareholder in the
Company, and he has a carried interest in North West Fund for Biomedical. Marc d’Abbadie does not hold any shares in the Company directly and
resigned as a Director on 7 November 2018.
Bonus
In recognition of contributions made during the current period, the Committee determined to pay cash bonuses to certain of the Executive Directors
as set out in the table above.
Benefits/Pensions
Details of payments in respect of benefits and pensions arrangements for the Executive Directors are set out in the table above.
Annual Report & Accounts 2019 13
Evgen Pharma plc
REVIEW OF THE YEARGOVERNANCE FINANCIAL STATEMENTS
REMUNERATION COMMITTEE REPORT
continued
Directors’ Share Options
Share options are granted under the LTIP as follows:
• An initial award to Executive Directors on joining the Company to support the recruitment and retention of key individuals.
• As an annual award to Executive Directors, to be made henceforward around the time of the AGM.
In relation to existing grants annual awards vest on the third anniversary from the date of grant. The percentage that vest is determined by the
Company’s share price or total shareholder return (TSR) on the vesting date. In the case of awards made during 2015 and 2016, from 25% if the
price is at least 37p up to 100% on a straight-line basis if it is 55p or greater; if the price is less than 37p these options lapse. For awards made
during 2017 and 2018, vesting is on a similar straight-line basis by reference to TSR where 25% vest if TSR is 10% from the date of grant and
100% vest if it is 20%; if TSR is less than 10% these options will lapse.
Henceforward, the quantum vesting at 3 years will based on relative shareholder return against a basket of comparable companies and achievement
of specified corporate goals. The former will account for up to 70% of the total that may vest; with vesting nil at below median performance, 25%
thereof at median and then on a straight-line basis up to 100% at upper quartile. Achievement of corporate goals will account for up to 30% of total
potential vesting, except that there will be no vesting unless at least median relative shareholder return is achieved.
Details of these LTIP awards together with outstanding options granted to the Executive Directors prior to Admission are set out in the table below.
Aggregate emoluments disclosed above do not include any amounts for the value of options to acquire ordinary shares in the Company granted to or
held by the Directors. Details of these options are as follows:
Director
Plan
Date of
grant
At
1 April
2018
Granted
during
the period
Lapsed
during
the period
Exercised
during
the period
At
31 March
2019
Price
per share
(£)
Date from
which
exercisable
Expiry
date
Stephen Franklin Pre IPO
Pre IPO
Pre IPO
Pre IPO
LTIP
LTIP
LTIP
LTIP
LTIP
LTIP
21 Nov 2011
23 Dec 2013
26 Jun 2015
26 Jun 2015
21 Oct 2015
21 Oct 2015
21 Oct 2015
31 Oct 2016
21 Dec 2017
28 Jan 2019
1,015,200
1,940,800
884,000
132,800
389,189
389,189
389,189
276,173
437,760
—
—
—
—
—
—
—
—
—
—
471,061
—
—
—
—
—
—
(389,189)
—
—
—
—
—
—
—
—
—
—
—
—
—
1,015,200
1,940,800
884,000
132,800
389,189
389,189
—
276,173
437,760
471,061
0.05
0.0265375
0.008875
0.00875
Nil
Nil
Nil
Nil
Nil
Nil
31 Aug 2013
21 Oct 2015
21 Oct 2015
21 Oct 2015
21 Oct 2015
21 Oct 2016
21 Oct 2018
31 Oct 2019
21 Dec 2020
28 Jan 2022
20 Nov 2021
22 Dec 2023
26 Jun 2025
26 Jun 2025
20 Oct 2025
20 Oct 2025
20 Oct 2025
30 Oct 2026
20 Dec 2027
27 Jan 2029
5,854,300
471,061
(389,189)
— 5,936,172
Barry Clare
Pre IPO
Pre IPO
Pre IPO
Pre IPO
LTIP
LTIP
LTIP
18 Aug 2010
11 Jan 2011
25 Nov 2011
14 Aug 2013
21 Oct 2015
21 Oct 2015
21 Oct 2015
456,000
86,400
272,000
224,800
145,945
145,946
145,946
—
—
—
—
—
—
—
—
—
—
—
—
—
(145,946)
—
—
—
—
—
—
—
456,000
86,400
272,000
224,800
145,945
145,946
—
0.008875
0.00875
0.05
0.10615
Nil
Nil
Nil
21 Oct 2015
8 Jul 2014
31 Aug 2013
14 Aug 2015
21 Oct 2015
21 Oct 2016
21 Oct 2018
17 Aug 2020
10 Jan 2021
24 Nov 2021
13 Aug 2023
20 Oct 2025
20 Oct 2025
20 Oct 2025
1,477,037
— (145,946)
— 1,331,091
Richard Moulson
LTIP
LTIP
21 Dec 2017
28 Jan 2019
289,352
—
—
155,682
289,352
155,682
Susan Foden
Pre IPO 25 Nov 2011
136,000
Alan Barge
Pre IPO 1 May 2012
272,000
—
—
—
—
—
—
—
—
—
289,352
155,682
— 445,034
Nil
Nil
21 Dec 2020
28 Jan 2022
20 Dec 2027
27 Jan 2029
— 136,000
0.05 31 Aug 2013 24 Nov 2021
— 272,000
0.05
1 May 2014
1 May 2022
8,028,689
626,743 (535,135)
— 8,120,297
Susan Foden
Remuneration Committee Chair
12 June 2019
14
Evgen Pharma plc
Annual Report & Accounts 2019
AUDIT COMMITTEE REPORT
The Audit Committee is a subcommittee of the Board and is responsible
for ensuring effective governance over financial reporting and internal
controls. The Committee represents the interests of the shareholders
in relation to the integrity of information and the effectiveness of
audit processes in place. The members of the Audit Committee are
Susan Clement-Davies (Chair), Susan Foden and Alan Barge. Susan
Clement-Davies was appointed at the end of March 2019 following the
resignation of Marc d’Abbadie from the Board who was the previous
Chair. She has relevant financial experience.
The Committee has responsibility for, amongst other things, planning
and reviewing the Annual Report and Accounts and Interim
Statements involving, where appropriate, the external auditors. The
Committee also approves external auditors’ fees and ensures the
auditors’ independence as well as focusing on compliance with legal
requirements and accounting standards. It is also responsible for
ensuring that an effective system of internal control is maintained. The
ultimate responsibility for reviewing and approving the annual financial
statements and interim statements remains with the Board.
The responsibilities of the Committee include the following:
• Monitoring the integrity of the financial statements of the Group
• Reviewing the accounting policies, accounting treatments and
disclosures in the financial statements
• Reviewing the Group’s internal financial controls and risk
management systems
• Overseeing the Group’s relationship with external auditors, including
making recommendations to the Board as to the appointment or
re-appointment of the external auditors, reviewing their terms of
engagement, and monitoring the external auditors’ independence,
objectivity and effectiveness.
The Audit Committee normally meets at least three times a year with
time allowed for discussion without any members of the executive
team being present, to allow the external auditor to raise any issues of
concern. Audit Committee meetings may be attended, by invitation,
by the Chief Financial Officer and other Directors and by the Group’s
auditors.
During the year ended 31 March 2019, the Audit Committee met three
times. The Committee reviewed and approved the financial statements
for the year ended 31 March 2018, the interim results for the six
months to 30 September 2018 and the external auditor’s plan for the
2019 external audit. The Audit Committee has satisfied itself that the
external auditor is independent. The Audit Committee has concluded
that the external audit process was effective, that the scope of the audit
was appropriate and that significant judgements have been robustly
challenged. No significant issues have been reported by the auditor.
The Audit Committee does not believe it necessary at this time to
propose re-tendering of the audit contract. A resolution for the re-
appointment of RSM as the statutory auditor will be proposed at the
forthcoming Annual General Meeting. No formal recommendations
other than the approval of the Interim Statement and Annual Report
and Accounts have been made to the Board by the Audit Committee.
Susan Clement-Davies
Audit Committee Chair
12 June 2019
Annual Report & Accounts 2019 15
Evgen Pharma plc
REVIEW OF THE YEARGOVERNANCE FINANCIAL STATEMENTS STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the Group’s and the Company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the Group and 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
Group and 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 Evgen Pharma plc
website.
Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in other
jurisdictions.
The Directors are responsible for preparing the Strategic Report and
the Directors’ Report and the financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare Group and Company
financial statements for each financial year. The Directors are required
by the AIM rules of the London Stock Exchange to prepare Group
financial statements in accordance with International Financial
Reporting Standards (“IFRS”) as adopted by the European Union
(“EU”) and have elected under company law to prepare the Company
financial statements in accordance with IFRS as adopted by the EU.
The financial statements are required by law and IFRS adopted by
the EU to present fairly the financial position of the Group and the
Company and the financial performance of the Group. The Companies
Act 2006 provides in relation to such financial statements that
references in the relevant part of that Act to financial statements giving
a true and fair view are references to their achieving a fair presentation.
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair view
of the state of affairs of the Group and the Company and of the profit or
loss of the Group for that period.
In preparing the Group and Company financial statements, the
Directors are required to:
a. select suitable accounting policies and then apply them
consistently;
b. make judgements and accounting estimates that are reasonable
and prudent;
c. state whether they have been prepared in accordance with IFRSs
adopted by the EU; and
d. prepare the financial statements on the going concern basis unless
it is inappropriate to presume that the Group and the Company will
continue in business.
16
Evgen Pharma plc
Annual Report & Accounts 2019
INDEPENDENT AUDITORS’ REPORT
to the members of EVGEN PHARMA plc
Opinion
We have audited the financial statements of Evgen Pharma plc (the
‘parent company’) and its subsidiaries (the ‘group’) for the year
ended 31 March 2019 which comprise the consolidated statement of
comprehensive income, the consolidated and company statements
of financial position, the consolidated statement of changes in equity,
the company statement of changes in equity, the consolidated
and company statements of cash flows and notes to the 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 Financial Reporting Standards
(IFRSs) as adopted by the European Union and, as regards the parent
company financial statements, as applied in accordance with the
provisions of the Companies Act 2006.
In our opinion
•
•
•
•
the financial statements give a true and fair view of the state of the
group’s and of the parent company’s affairs as at 31 March 2019
and of the group’s loss for the year then ended;
the group financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union;
the parent company financial statements have been properly
prepared in accordance with IFRSs as adopted by the European
Union and as applied in accordance with the Companies Act 2006;
and
the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards
on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of
our report. We are independent of the group and parent company
in accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the FRC’s Ethical
Standard as applied to SME 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 have nothing to report in respect of the following matters in relation
to which the ISAs (UK) require us to report to you where:
•
•
the directors’ use of the going concern basis of accounting in the
preparation of the financial statements is not appropriate; or
the directors have not disclosed in the financial statements any
identified material uncertainties that may cast significant doubt
about the group’s or the parent company’s ability to continue to
adopt the going concern basis of accounting for a period of at least
twelve months from the date when the financial statements are
authorised for issue.
Key audit matters
Key audit matters are those matters that, in our professional judgment,
were of most significance in our audit of the group and parent company
financial statements of the current period and include the most
significant assessed risks of material misstatement (whether or not due
to fraud) we identified, including those which had the greatest effect
on the overall audit strategy, the allocation of resources in the audit
and directing the efforts of the engagement team. These matters were
addressed in the context of our audit of the group and parent company
financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
REVIEW OF THE YEAR
GOVERNANCE
FINANCIAL STATEMENTS
Parent company key audit matter
Carrying value of intra-group balances
The risk
At 31 December 2018 the parent company balance sheet includes
amounts due from subsidiary undertakings of £7,498,000 (2017:
£6,432,000) as disclosed in Note 11 and sources of estimation
uncertainty on page 28. The key audit matter is that this balance
may not be recoverable owing to ongoing losses sustained in the
group’s subsidiary undertaking. The recovery of these balances is
judgemental and the directors have provided us with their assessment
of recoverability through multiple scenarios, including the present value
of future cashflows and also through assessing the value of the group
(including assessment of the current market capitalisation).
Our response
We performed work on the directors’ assessment as follows:
• Reviewing forecasts and challenging the assumptions used in
determining the present value of future cashflows, including the
time value of money and probability weighted income streams;
• Challenging management on their assessment of the valuation of
the group; and
• Ensuring adequate disclosure in the notes to the financial
statements.
Our application of materiality
When establishing our overall audit strategy, we set certain thresholds
which help us to determine the nature, timing and extent of our audit
procedures. When evaluating whether the effects of misstatements,
both individually and on the financial statements as a whole, could
reasonably influence the economic decisions of the users we take
into account the qualitative nature and the size of the misstatements.
During planning materiality for the group financial statements as
a whole was calculated as £123,000, which was not significantly
changed during the course of our audit. Materiality for the parent
company financial statements as a whole was calculated as £114,000,
which was not significantly changed during the course of our audit.
We agreed with the Audit Committee that we would report to them
all unadjusted differences in excess of £5,000, as well as differences
below that threshold that, in our view, warranted reporting on qualitative
grounds.
An overview of the scope of our audit
The audit was scoped to ensure that the audit team obtained
sufficient and appropriate audit evidence in relation to significant
operations of the Group during the year ended 31 March 2019 and
the appropriateness of the going concern assumption used in the
preparation of the financial statements. This included the performance
of full statutory audits on each of the subsidiary undertakings. As part
at our planning we assessed the risk of material misstatement including
those that required significant auditor consideration at the component
and group level. Procedures were designed and performed to address
the risk identified and for the most significant assessed risks of material
misstatement, the procedures performed are outlined above in the key
audit matters section of this report.
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.
Annual Report & Accounts 2019 17
Evgen Pharma plc
REVIEW OF THE YEARGOVERNANCE FINANCIAL STATEMENTS Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level
of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council’s website at:
http://www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor’s report.
Use of our report
This report is made solely to the company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the
company’s members those matters we are required to state to them
in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone
other than the company and the company’s members as a body, for
our audit work, for this report, or for the opinions we have formed.
Graham Bond, FCA (Senior Statutory Auditor)
For and on behalf of RSM UK Audit LLP, Statutory Auditor
Chartered Accountants
14th Floor
20 Chapel Street
Liverpool
L3 5RF
12 June 2019
INDEPENDENT AUDITORS’ REPORT
continued
Other information (continued)
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.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the
audit:
•
the information given in the Strategic Report and the Directors’
Report for the financial year for which the financial statements are
prepared is consistent with the financial statements; and
the Strategic Report and the Directors’ Report have been prepared
in accordance with applicable legal requirements.
•
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the
parent company and their environment obtained in the course of the
audit, we have not identified material misstatements in the Strategic
Report or the Directors’ Report.
We have nothing to report in respect of the following matters in relation
to which the Companies Act 2006 requires us to report to you if, in our
opinion:
• 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
As explained more fully in the directors’ responsibilities statement set
out on page 16, 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.
18
Evgen Pharma plc
Annual Report & Accounts 2019
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 March 2019
Operating expenses
Operating expenses
Share based compensation
Total operating expenses
Operating loss
Loss on ordinary activities before taxation
Taxation
Loss and total comprehensive expense attributable to
equity holders of the parent for the year
Loss per share attributable to
equity holders of the parent (pence)
Basic loss per share
Diluted loss per share
Notes
3
5
3
3
6
7
Year
ended
31 March
2019
£’000
(2,985)
(135)
(3,120)
(3,120)
(3,120)
496
(2,624)
(2.74)
(2.74)
Year
ended
31 March
2018
£’000
(2,915)
(111)
(3,026)
(3,026)
(3,026)
443
(2,583)
(3.28)
(3.28)
Annual Report & Accounts 2019 19
Evgen Pharma plc
REVIEW OF THE YEARGOVERNANCE FINANCIAL STATEMENTS CONSOLIDATED AND COMPANY STATEMENTS OF FINANCIAL POSITION
as at 31 March 2019
Group Company
As at
31 March
2019
£’000
As at
31 March
2018
£’000
As at
31 March
2019
£’000
As at
31 March
2018
£’000
Notes
8
9
10
11
12
13
14
14
14
14
14
6
98
—
104
135
492
2,033
2,660
2,764
688
688
247
13,240
2,067
1,722
(15,200)
2,076
2,764
12
113
—
125
77
432
3,626
4,135
4,260
389
389
233
12,560
2,067
1,587
(12,576)
3,871
4,260
—
—
73
73
7,562
162
1,903
9,627
9,700
217
217
247
13,240
—
1,106
(5,110)
9,483
9,700
—
—
73
73
6,490
71
3,499
10,060
10,133
195
195
233
12,560
—
971
(3,826)
9,938
10,133
ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
Investments in subsidiary undertaking
Total non-current assets
Current assets
Trade and other receivables
Current tax receivable
Cash and cash equivalents
Total current assets
Total assets
LIABILITIES AND EQUITY
Current liabilities
Trade and other payables
Total current liabilities
Equity
Ordinary shares
Share premium
Merger reserve
Share based compensation
Retained deficit
Total equity attributable to equity holders of the parent
Total liabilities and equity
No Statement of Comprehensive Income is presented in these financial statements for the parent company as provided by Section 408 of the
Companies Act 2006. The loss for the financial year dealt with in the financial statements of the parent company was £1,284k (2018: £1,051k).
The financial statements on pages 19 to 40 were approved by the Board of Directors and authorised for issue on 12 June 2019 and were signed on
its behalf by:
Stephen Franklin
Chief Executive Officer
12 June 2019
Evgen Pharma plc,
Registered number: 09246681
20
Evgen Pharma plc
Annual Report & Accounts 2019
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2019
Balance at 31 March 2017
Total comprehensive expense
for the period
Transactions with owners
Share issue – cash
Share issue – options exercised
Share based compensation – share options
Total transactions with owners
Balance at 31 March 2018
Total comprehensive expense for the period
Transactions with owners
Share issue – cash
Share issue – options exercised
Share based compensation – share options
Total transactions with owners
Ordinary
shares
£’000
Share
premium
£’000
183
10,495
Merger
reserve
£’000
2,067
Share
based
compensation
£’000
Retained
deficit
£’000
1,476
(9,993)
Total
£’000
4,228
(2,583)
(2,583)
—
48
2
—
50
233
—
14
—
—
14
—
2,034
31
—
2,065
12,560
—
668
12
—
680
—
—
—
—
—
—
—
—
111
111
—
—
—
—
2,067
—
1,587
—
(12,576)
(2,624)
—
—
—
—
—
—
135
135
—
—
—
—
2,082
33
111
2,226
3,871
(2,624)
682
12
135
829
Balance at 31 March 2019
247
13,240
2,067
1,722
(15,200)
2,076
Annual Report & Accounts 2019 21
Evgen Pharma plc
REVIEW OF THE YEARGOVERNANCE FINANCIAL STATEMENTS COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2019
Attributable to equity holders of the parent
Ordinary
shares
£’000
183
—
48
2
—
50
Share
premium
£’000
10,495
—
2,034
31
—
2,065
233
12,560
—
14
—
—
14
247
—
668
12
—
680
Share
based
compensation
£’000
861
—
—
—
110
110
971
—
—
—
135
135
Retained deficit
£’000
(2,775)
(1,051)
—
—
—
—
(3,826)
(1,284)
—
—
—
—
Total
£’000
8,764
(1,051)
2,082
33
110
2,226
9,938
(1,284)
682
12
135
829
13,240
1,106
(5,110)
9,483
Balance at 31 March 2017
Total comprehensive expense for the period
Transactions with owners
Share issue – cash
Share issue – options exercised
Share based compensation – share options
Total transactions with owners
Balance at 31 March 2018
Total comprehensive expense for the period
Transactions with owners
Share issue – cash
Share issue – options exercised
Share based compensation – share options
Total transactions with owners
Balance at 31 March 2019
22
Evgen Pharma plc
Annual Report & Accounts 2019
CONSOLIDATED AND COMPANY STATEMENTS OF CASH FLOWS
for the year ended 31 March 2019
Group Company
Cash flows from operating activities
Loss before taxation
Depreciation and amortisation
Share based compensation
Changes in working capital
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Cash used in operations
Taxation received
Year
ended
31 March
2019
£’000
(3,120)
21
135
(2,964)
(58)
299
241
436
Year
ended
31 March
2018
£’000
(3,026)
21
111
(2,894)
7
(125)
(118)
671
Net cash used in operating activities
(2,287)
(2,341)
Cash flows (used in)/generated from investing activities
Acquisition of tangible fixed assets
Net cash (used in)/generated from investing activities
Cash flows from financing activities
Proceeds from issue of shares
Issue costs
Net cash generated from financing activities
Movements in cash and cash equivalents in the period
Cash and cash equivalents at start of period
Cash and cash equivalents at end of period
—
—
761
(67)
694
(1,593)
3,626
2,033
(7)
(7)
2,333
(218)
2,115
(233)
3,859
3,626
Year
ended
31 March
2019
£’000
Year
ended
31 March
2018
£’000
(1,461)
—
135
(1,326)
(1,072)
22
(1,050)
86
(2,290)
—
—
761
(67)
694
(1,596)
3,499
1,903
(1,129)
—
111
(1,018)
(1,254)
(38)
(1,292)
7
(2,303)
—
—
2,333
(218)
2,115
(187)
3,686
3,499
Annual Report & Accounts 2019 23
Evgen Pharma plc
REVIEW OF THE YEARGOVERNANCE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
1. GENERAL INFORMATION
Evgen Pharma plc (‘the Company’) is a public limited company incorporated in England & Wales and was admitted to trading on the AIM market
of the London Stock Exchange under the symbol EVG on 21 October 2015. The address of its registered office is Liverpool Science Park Innovation
Centre 2, 146 Brownlow Hill, Liverpool, Merseyside L3 5RF. The principal activity of the Company is clinical stage drug development.
2. SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PREPARATION
Basis of preparation
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (‘IFRS’) as adopted by
the European Union, IFRIC interpretations and the Companies Act 2006 applicable to companies operating under IFRS.
The consolidated financial statements have been prepared under the historical cost convention modified by the revaluation of certain financial
instruments.
The consolidated financial statements are presented in Sterling (£) and rounded to the nearest £000. This is the predominant functional currency
of the Group, and is the currency of the primary economic environment in which it operates. Foreign transactions are accounted in accordance with
the policies set out below.
Basis of consolidation
The financial statements incorporate the financial statements of the Company and entities controlled by the Company. Control is achieved when the
Company has the power over the investee; is exposed, or has rights, to variable return from its involvement with the investee; and, has the ability
to use its power to affect its returns. The Company reassesses whether it controls an investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control listed above.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of
the subsidiary. Specifically, the results of subsidiaries acquired or disposed of during the period are included in the Consolidated Statement of
Comprehensive Income from the date the Company gains control until the date when the Company ceases to control the subsidiary.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with the Group’s
accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between the members of the Group are
eliminated on consolidation.
Going concern
As part of their going concern review the Directors have followed the guidelines published by the Financial Reporting Council entitled ‘‘Guidance on
Risk Management and Internal Control and Related Financial and Business Reporting’’. The Directors have prepared detailed financial forecasts
and cash flows looking beyond 12 months from the date of the approval of these financial statements. In developing these forecasts, the Directors
have made assumptions based upon their view of the current and future economic conditions that will prevail over the forecast period.
At 31 March 2019, the Group had cash and cash equivalents, including short-term investments and cash on deposit, of £2.0 million. Subsequent to
the year end the Company received £5m before expenses through a share placing.
The Directors estimate that the cash held by the Group together with known receivables will be sufficient to support the current level of activities
beyond the end of 2020.
Currencies
Functional and presentational currency
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or
at an average rate for a period if the rates do not fluctuate significantly. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised
in the Consolidated Statement of Comprehensive Income. Non-monetary items that are measured in terms of historical cost in a foreign currency are
not retranslated.
Intangible assets
Intangible assets with finite useful lives that are acquired externally are carried at cost less accumulated amortisation and impairment losses.
Amortisation is recognised on a straight-line basis over their estimated useful lives as below. The estimated useful life and amortisation method are
reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.
Licences – 10-20 years
An impairment review is performed annually.
24
Evgen Pharma plc
Annual Report & Accounts 2019
2. SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PREPARATION (continued)
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any impairment losses. Cost includes the original purchase
price of the asset and the costs attributable to bringing the asset to its working condition for its intended use.
Plant, fixtures and fittings – 3 years reducing balance
IT Equipment – 3 years straight line
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 Consolidated Statement of Comprehensive Income.
At each reporting date, the Group reviews the carrying amounts of its property, plant and equipment assets to determine whether there is any
indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order
to determine the extent of the impairment loss (if any).
Research and development expenditure
All research and development costs, whether funded by third parties under licence and development agreements or not, are included within
operating expenses and classified as such. Research and development costs relating to clinical trials are recognised over the period of the clinical
trial based on information provided by clinical research organisations. All other expenditure on research and development is recognised as the work
is completed.
All ongoing development expenditure is currently expensed in the period in which it is incurred. Due to the regulatory and other uncertainties
inherent in the development of the Group’s programmes, the criteria for development costs to be recognised as an asset, as prescribed by IAS 38,
‘Intangible assets’, are not met until the product has been submitted for regulatory approval, such approval has been received and it is probable
that future economic benefits will flow to the Group. The Group does not currently have any such internal development costs that qualify for
capitalisation as intangible assets.
Income tax
The tax expense or credit represents the sum of the tax currently payable or recoverable and the movement in deferred tax assets and liabilities.
(a) Current income tax
Current tax, including R&D tax credits, is based on taxable income for the period and any adjustment to tax from previous periods. Taxable income
differs from net income in the Consolidated Statement of Comprehensive Income because it excludes items of income or expense that are taxable or
deductible in other periods or that are never taxable or deductible. The calculation uses the latest tax rates for the period that have been enacted or
substantively enacted by the dates of the Consolidated Statement of Financial Position.
(b) Deferred tax
Deferred tax is calculated at the latest tax rates that have been substantially enacted by the reporting date that are expected to apply when settled.
It is charged or credited in the Consolidated Statement of Comprehensive Income, except when it relates to items credited or charged directly to
equity, in which case it is also dealt with in equity.
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 income, and is accounted for using the liability method.
Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is
probable that taxable income will be available against which the asset can be utilised. Such assets are reduced to the extent that it is no longer
probable that the asset can be utilised.
Deferred tax assets and liabilities are offset when there is a legal right to offset current tax assets and liabilities and when the deferred tax assets and
liabilities relate to taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention
to settle the balances on a net basis.
Deferred tax assets are not recognised due to uncertainty concerning crystallisation.
Annual Report & Accounts 2019 25
Evgen Pharma plc
REVIEW OF THE YEARGOVERNANCE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
continued
2. SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PREPARATION (continued)
Operating leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Rentals
payable under operating leases (net of any incentives received from the lessor) are charged to the Consolidated Statement of Comprehensive
Income on a straight-line basis over the term of the relevant lease.
Payroll expense and related contributions
Wages, salaries, payroll tax, paid annual leave and sick leave, bonuses, and non-monetary benefits are accrued in the period in which the
associated services are rendered.
Pension costs
The Group makes contributions to the private pension schemes of Directors and employees.
Share-based compensation
The Group issues share based payments to certain employees and Directors and warrants have been issued to certain suppliers. Equity-settled
share-based payments are measured at fair value at the date of grant and expensed on a straight-line basis over the vesting period, along with a
corresponding increase in equity.
At each reporting 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. The impact of any revision is recognised in the Consolidated Statement of Comprehensive Income, with a corresponding
adjustment to equity reserves.
The fair value of share options and warrants are determined using a Black-Scholes model, taking into consideration the best estimate of the
expected life of the option or warrant and the estimated number of shares that will eventually vest.
Operating segments
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief
operating decision-maker is responsible for allocating resources and assessing performance of operating segments.
The Directors consider that there are no identifiable business segments that are subject to risks and returns different to the core business. The
information reported to the Directors, for the purposes of resource allocation and assessment of performance is based wholly on the overall activities
of the Group. The Group has therefore determined that it has only one reportable segment under IFRS 8.
The results and assets for this segment can be determined by reference to the Consolidated Statement of Comprehensive Income and Consolidated
Statement of Financial Position.
Financial instruments
Financial assets and financial liabilities are recognised in the Group’s Consolidated Statement of Financial Position when the Group becomes party
to the contractual provisions of the instrument. Financial assets are de-recognised when the contractual rights to the cash flows from the financial
asset expire or when the contractual rights to those assets are transferred. Financial liabilities are de-recognised when the obligation specified in the
contract is discharged, cancelled or expired.
Trade and other receivables
Trade and other receivables that do not contain a significant financing component are initially recognised at fair value and subsequently held at
amortised cost less provision for impairment.
IFRS 9 introduces an impairment model. Under lAS 39, an entity only considers those impairments that arise as a result of incurred loss events. The
effects of possible future loss events cannot be considered, even when they are expected. IFRS 9 introduces an expected credit loss model which
broadens the information that an entity is required to consider when determining its expectations of impairment. Under this model, expectations of
future events must be taken into account and this could result in the earlier recognition of impairments.
Cash, cash equivalents and short-term investments
Cash and cash equivalents consist of cash on hand, demand deposits, and other short-term highly liquid investments that are readily convertible to
a known amount of cash and are subject to an insignificant risk of changes in value.
26
Evgen Pharma plc
Annual Report & Accounts 2019
2. SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PREPARATION (continued)
Trade and other payables
Trade and other payables are not interest-bearing and are stated at nominal value.
Classification as debt or equity
Debt and equity instruments issued by the Group are classified as either financial liabilities or as equity in accordance with the substance of the
contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all its liabilities. Equity instruments
issued by the Group are recognised as the proceeds received, net of direct issue costs.
Financial risk management
Financial risk factors
The Group’s activities expose it to certain financial risks: market risk, credit risk and liquidity risk. The overall risk management programme focuses on
the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance. Risk management is
carried out by the Directors, who identify and evaluate financial risks in close co-operation with key staff.
(a) Market risk
Market risk is the risk of loss that may arise from changes in market factors such as competitor pricing, interest rates, foreign exchange rates
(see Note 17).
(b) Credit risk
Credit risk is the financial loss to the Group if a customer or counterparty to financial instruments fails to meet its contractual obligation. Credit risk
arises from the Group’s cash and cash equivalents and receivables balances.
(c) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. This risk relates to the Group’s prudent liquidity
risk management and implies maintaining sufficient cash. The Directors monitor rolling forecasts of the Group’s liquidity and cash and cash equivalents
based on expected cash flow.
Capital risk management
The Group has been funded by equity and loans. The components of shareholders’ equity are:
(a) The share capital and share premium account arising on the issue of shares
(b) Merger reserve, which was created as a result of the acquisition by the Company of the entire issued share capital of Evgen Limited on
5 December 2014. This reserve is not considered to be distributable
(c) The share based compensation reserve results from the Group’s grant of equity-settled share options to selected employees and Directors
(d) The retained deficit reflecting comprehensive loss to date.
The Group’s objective when managing capital is to maintain adequate financial flexibility to preserve its ability to meet financial obligations, both
current and long term. The capital structure of the Group is managed and adjusted to reflect changes in economic conditions. The Group funds its
expenditures on commitments from existing cash and cash equivalent balances, primarily received from issuances of shareholders’ equity. There are
no externally imposed capital requirements. Financing decisions are made based on forecasts of the expected timing and level of capital and operating
expenditure required to meet the Group’s commitments and development plans.
Fair value estimation
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values because of the short
term nature of such assets and the effect of discounting liabilities is negligible.
Significant management judgement in applying accounting policies and estimation uncertainty
When preparing the financial statements, the Directors make estimates and assumptions about the recognition and measurement of assets,
liabilities, income and expenses.
Annual Report & Accounts 2019 27
Evgen Pharma plc
REVIEW OF THE YEARGOVERNANCE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
continued
2. SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PREPARATION (continued)
Estimation uncertainty
Receivables from the subsidiary represents an interest free amounts advanced to group companies with no fixed repayment dates, being amounts
due from Evgen Limited advanced to support the Group’s research expenditure. In accordance with IFRS 9 ‘Financial Instruments’, where the
counterparty would not be able to repay the loan if demanded at the reporting date, the Company has made an assessment of expected credit
losses.
The R&D tax credit figure of £0.49m included in the accounts is a management estimate which is subject to amendment by HMRC.
Share based payment charge
During the years ended 31 March 2019 and 31 March 2018, the Group issued a number of share options to certain employees. A Black-Scholes
model was used to calculate the appropriate charge for these periods. The use of this model to calculate a charge involves using a number of
estimates and judgements to establish the appropriate inputs to be entered into the model, covering areas such as the use of an appropriate
interest rate and dividend rate, exercise restrictions and behavioural considerations. A significant element of judgement is therefore involved in the
calculation of the charge. The total charge recognised in the year to 31 March 2019 was £135,000 (year to 31 March 2018 £111,000).
Accounting developments
During the year the Group and Company adopted the following standards effective from the 1 January 2018. The Group has applied these
standards in the preparation of the financial statements, and has not adopted any new or amended standards early.
•
•
•
•
IFRS 2 Classification and measurement of share-based payment transactions
IFRS 15 Revenues from Contracts with Customers is effective for periods beginning on or after 1 January 2018. It introduces a five-step
approach to the timing of revenue recognition based on performance obligations in customer contracts, The Group has adopted IFRS 15 for the
financial year starting 1 April 2018. The new standard has not had a material impact on the Group’s financial statements as the Group has no
revenue bearing contracts with customers.
IFRS 16 is not expected to have a material effect on the Group’s figures since there are no material leases of over 12 months.
IFRS 9 Financial instruments replaces lAS 39 Financial Instruments: Recognition and Measurement. The standard is effective for accounting
periods beginning on or after 1 January 2018. The standard covers three elements:
– Classification and measurement: Changes to a more principle-based approach to classify financial assets as either held at amortised cost,
fair value through other comprehensive income (FVOCI) or fair value through profit or loss, dependent on the business model and cash flow
characteristics of the financial asset;
–
Impairment: Moves to an impairment model based on expected credit losses based on a three-stage approach; and
– Hedge accounting: The IFRS 9 hedge accounting requirements are designed to allow hedge accounting to be more closely aligned with the
Group’s underlying risk management.
The Group has adopted IFRS 9 for the financial year starting 1 April 2018. The Group does not hold complex financial instruments and therefore
the majority of changes to the standard do not change the existing accounting for assets and liabilities held. All the Company’s financial assets were
previously classified as loans and receivables under lAS 39 and are classified as assets at amortised cost under IFRS 9. All financial liabilities will
continue to be measured at amortised cost. The Group has chosen not to restate comparatives on adoption of IFRS 9 given the immaterial nature of
the transitional impacts.
28
Evgen Pharma plc
Annual Report & Accounts 2019
3. OPERATING LOSS
An analysis of the Group’s operating loss has been arrived at after charging/(crediting):
Research and development expenses:
Amortisation of licences
Other research and development
Staff costs (including share based compensation) – Note 5
Establishment and general:
Depreciation of property, plant and equipment
Operating lease cost – land and buildings
Foreign exchange loss/(profit)
Other administrative expenses
Total operating expenses
Year
ended
31 March
2019
£’000
15
1,689
879
6
32
—
499
3,120
Year
ended
31 March
2018
£’000
15
1,669
759
6
22
(1)
556
3,026
The Group has one reportable segment, namely the development of pharmaceutical products all within the United Kingdom.
4. AUDITOR’S REMUNERATION
The analysis of the auditor’s remuneration is as follows:
Fees payable to the Group’s auditors for the audit of:
the consolidated and Company annual accounts
the subsidiary’s annual accounts
Total audit fees
Audit related services
Total audit related fees
Other services
Total non-audit fees
Year
ended
31 March
2019
£’000
Year
ended
31 March
2018
£’000
16
15
31
3
3
8
8
15
14
29
4
4
8
8
Annual Report & Accounts 2019 29
Evgen Pharma plc
REVIEW OF THE YEARGOVERNANCE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
continued
5. EMPLOYEES AND DIRECTORS
The average monthly number of persons (including Executive Directors) employed by the Group was:
Management
Administration
Development
Non-Executive
Average total persons employed
As at 31 March 2019 the Group had 7 employees (31 March 2018: 11).
Staff costs in respect of these employees were:
Wages and salaries
Employers National Insurance
Employers pension costs
Total payrolled employee costs
Share-based payments
Total employee costs
Group Company
Year
ended
31 March
2019
Number
3
—
2
3
8
Year
ended
31 March
2018
Number
Year
ended
31 March
2019
Number
Year
ended
31 March
2018
Number
3
1
2
3
9
3
—
2
3
8
3
—
2
3
8
Group Company
Year
ended
31 March
2019
£’000
638
83
23
744
135
879
Year
ended
31 March
2018
£’000
564
60
24
648
111
759
Year
ended
31 March
2019
£’000
634
83
22
739
135
874
Year
ended
31 March
2018
£’000
545
58
23
626
111
737
The Group makes contributions to the private pension schemes of Directors and employees. One Director received payments into a private pension
scheme.
The total remuneration of the highest paid Director excluding grants of share options was £228,300 (31 March 2018: £214,602).
The Directors have the authority and responsibility for planning, directing and controlling, directly or indirectly, the activities of the Group and they
therefore comprise key management personnel as defined by IAS 24.
Aggregate emoluments of Directors:
Group and Company
Year
ended
31 March
2019
£’000
418
55
15
—
488
Year
ended
31 March
2018
£’000
403
35
16
—
454
Salaries and other short-term employee benefits
Employers National Insurance
Pension contributions
Options vesting under share option schemes
Total remuneration including vesting of share options
Directors emoluments include amounts payable to third parties as described in Note 18
30
Evgen Pharma plc
Annual Report & Accounts 2019
6. TAXATION
Current tax
Current period – UK corporation tax
R&D tax credit
Adjustments in respect of prior periods
Net tax credit
Year
ended
31 March
2019
£’000
—
492
4
496
The tax charge for each period can be reconciled to the loss per consolidated statement of comprehensive income as follows:
Loss on ordinary activities before taxation
Loss before tax at the effective rate of corporation tax in the United Kingdom of 19%
(2018: 19%)
Effects of:
Losses not recognised
R&D tax credit
Tax credit for the year
Year
ended
31 March
2019
£’000
(3,120)
(593)
593
(496)
(496)
Year
ended
31 March
2018
£’000
—
432
11
443
Year
ended
31 March
2018
£’000
(3,026)
(575)
575
(443)
(443)
The Group has an unrecognised deferred tax asset of £2.8m (2018: £2.5m) related to accumulated tax losses. The Company has an unrecognised
deferred tax asset of £1.5m (2018: £1.3m) related to accumulated tax losses. These assets are not recognised due to the uncertainty in the timing
of crystallisation.
Annual Report & Accounts 2019 31
Evgen Pharma plc
REVIEW OF THE YEARGOVERNANCE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
continued
7. LOSS PER SHARE
Basic loss per share is calculated by dividing the loss for the period attributable to equity holders by the weighted average number of ordinary shares
outstanding during the year.
For diluted loss per share, the loss for the year attributable to equity holders and the weighted average number of ordinary shares outstanding
during the year is adjusted to assume conversion of all dilutive potential ordinary shares.
As at 31 March 2019 the Group had 9,075,599 (2018: 8,665,255) share options outstanding which are potentially dilutive.
The calculation of the Group’s basic and diluted loss per share is based on the following data:
Year
ended
31 March
2019
£’000
Year
ended
31 March
2018
£’000
Loss for the year attributable to equity holders for basic loss and adjusted for the effects of dilution
(2,624)
(2,583)
Weighted average number of ordinary shares for basic loss per share
Effects of dilution:
Share options
Year
ended
31 March
2019
Number
Year
ended
31 March
2018
Number
95,857,230
78,697,455
—
—
Weighted average number of ordinary shares adjusted for the effects of dilution
95,857,230
78,697,455
Loss per share – basic and diluted
Year
ended
31 March
2019
Pence
(2.74)
Year
ended
31 March
2018
Pence
(3.28)
The loss and the weighted average number of ordinary shares for the years ended 31 March 2018 and 2019 used for calculating the diluted loss
per share are identical to those for the basic loss per share. This is because the outstanding share options would have the effect of reducing the loss
per ordinary share and would therefore not be dilutive under the terms of International Accounting Standard (‘‘IAS’’) No 33.
Subsequent to the year end 33,333,329 ordinary shares were issued pursuant to a share placing. Had this event occurred during the reporting
period the number of shares used in the loss per share calculation would have been significantly different.
32
Evgen Pharma plc
Annual Report & Accounts 2019
8. PROPERTY, PLANT AND EQUIPMENT
Group
Cost
At 31 March 2017
Additions
Disposals
At 31 March 2018
Disposals
At 31 March 2019
Accumulated Depreciation
At 31 March 2017
Charge for the period
Disposals
At 31 March 2018
Charge for the period
Disposals
At 31 March 2019
Net Book Value
At 31 March 2017
At 31 March 2018
At 31 March 2019
Plant, fixtures &
fittings
£’000
IT
Equipment
£’000
2
—
—
2
—
2
1
—
—
1
—
—
1
1
1
1
17
7
(1)
23
(1)
22
7
6
(1)
12
6
(1)
17
10
11
5
Total
£’000
19
7
(1)
25
(1)
24
8
6
(1)
13
6
(1)
18
11
12
6
Depreciation is charged to operating expenses. As at 31 March 2019, the Company had no property, plant and equipment (31 March 2018: £nil).
9. INTANGIBLE ASSETS
Group
Cost
At 31 March 2017, 31 March 2018 and 31 March 2019
Amortisation
At 31 March 2017
Charge for the period
Amortisation
At 31 March 2018
Charge for the period
At 31 March 2019
Net Book Value
At 31 March 2017
At 31 March 2018
At 31 March 2019
Intangible assets constitute licenses to intellectual property. The remaining amortisation periods are between 2 and 17 years.
Licences
£’000
168
40
15
55
15
70
128
113
98
Annual Report & Accounts 2019 33
Evgen Pharma plc
REVIEW OF THE YEARGOVERNANCE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
continued
9. INTANGIBLE ASSETS (continued)
Amortisation is charged to operating expenses. The Group reviewed the amortisation period and the amortisation method for the intangible assets at
the end of the reporting period and considered them appropriate.
The Group continually monitors events and changes in circumstances that could indicate that the intangible assets may be impaired.
As at 31 March 2019, the Company had no intangible assets.
10. INVESTMENTS IN SUBSIDIARY UNDERTAKINGS
The consolidated financial statements of the Group as at 31 March 2019 include:
Name of subsidiary
Evgen Limited
Class of share
Place of
incorporation
Principle
activities
Proportion of
ownership
interest
Proportion of
voting rights
held
Ordinary United Kingdom
Operations
100%
100%
The registered office of Evgen Limited is 146 Brownlow Hill, Liverpool, L3 5RF.
11. TRADE AND OTHER RECEIVABLES
Amounts receivable within one year
Other receivables
Other taxation and social security
Prepayments
Amounts due from subsidiary undertakings
Trade and other receivables
Group Company
Year ended
31 March
2019
£’000
Year ended
31 March
2018
£’000
Year ended
31 March
2019
£’000
Year ended
31 March
2018
£’000
15
82
38
—
135
3
28
46
—
77
—
28
36
7,498
7,562
3
11
44
6,432
6,490
The Directors believe that the carrying value of trade and other receivables represents their fair value. In determining the recoverability of trade
receivables, the Group considers any change in the credit quality of the receivable from the date credit was granted up to the reporting date.
In addition, an expected credit losses model is used which broadens the information that an entity is required to consider when determining its
expectations of impairment. Under this model, expectations from future events are taken into account which could result in the earlier recognition of
impairments. Details on the Group’s credit risk management policies are shown in Note 17. The Group does not hold any collateral as security for its
trade and other receivables.
12. CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
Group Company
Year ended
31 March
2019
£’000
Year ended
31 March
2018
£’000
Year ended
31 March
2019
£’000
Year ended
31 March
2018
£’000
Cash at bank and in hand
2,033
3,626
1,903
3,499
At 31 March 2019 the Group and Company had no deposits with original maturity of twelve months or less (2018: £nil).
34
Evgen Pharma plc
Annual Report & Accounts 2019
13. TRADE AND OTHER PAYABLES
Amounts falling due within one year
Trade payables
Other taxation and social security
Accrued expenses
Trade and other payables
Group Company
As at
31 March
2019
£’000
As at
31 March
2018
£’000
As at
31 March
2019
£’000
As at
31 March
2018
£’000
532
70
86
688
102
22
265
389
94
70
53
217
48
21
126
195
Trade and other payables principally consist of amounts outstanding for trade purchases and ongoing costs. They are non-interest bearing and are
normally settled on 30 to 45 day terms. The Directors consider that the carrying value of trade and other payables approximates to their fair value.
All trade and other payables are denominated in Sterling. The Group has financial risk management policies in place to ensure that all payables are
paid within the credit timeframe and no interest has been charged by any suppliers as a result of late payment of invoices during the period.
The fair value of trade and other payables approximates to their current book values.
14. ISSUED CAPITAL AND RESERVES
Ordinary shares
Ordinary shares of 0.25p each
At 31 March 2018
Issued on exercise of options
Issued under placing agreement
At 31 March 2019
Company
Number
93,276,858
158,918
5,555,558
98,991,334
Share Capital
£’000
233
—
14
247
On 10 July 2018 80,000 ordinary shares were issued in connection with the exercise of share options at an exercise price of 7.3p per share
payable in cash.
On 18 October 2018 5,555,558 ordinary shares were issued at a price of £0.135 raising £0.8 million which after share issue expenses of
£0.1 million gave net consideration of £0.7 million.
On 19 December 2018 18,918 ordinary shares were issued in connection with the exercise of nil cost share options. On the same date 60,000
share options were issued for cash at an exercise price of 10.612p per share.
Subsequent to the year end 33,333,329 ordinary shares were issued at a price of £0.15 raising £5.0 million which after share issue expenses of
£0.3 million gave net consideration of £4.7 million.
The ordinary shares rank pari passu in all respects in relation to dividends and repayment of capital, and have equal voting rights with one vote
per share. There are no restrictions on the transferability of the shares.
The Group and Company do not have an authorised share capital as provided by the Companies Act 2006.
Other reserves
The share premium reserve represents the difference between the net proceeds of equity issues and the nominal share capital of the shares issued.
The merger reserves at 31 March 2019 and 2018 arose from the acquisition of Evgen’s sole subsidiary, Evgen Ltd, in 2014 which is accounted for
using the merger method of accounting.
The share based compensation reserve reflects the aggregate fair value of equity-settled share based payment transactions.
Reserves classified as retained deficit represent accumulated losses. None of the reserves are distributable.
Annual Report & Accounts 2019 35
Evgen Pharma plc
REVIEW OF THE YEARGOVERNANCE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
continued
15. SHARE-BASED PAYMENTS
Certain Directors and employees of the Group hold options to subscribe for shares in the Group under share option schemes. The number of shares
subject to options, the periods in which they were granted and the period in which they may be exercised are given below.
The Group operates three share option schemes (31 March 2018: three), in addition share options have been granted under standalone
unapproved share option agreements. Options are currently granted for £nil consideration and are exercisable at a price determined on the date of
the grant.
At 31 March 2019 the Company had 9,075,599 (2018: 8,665,255) unissued ordinary shares of £0.0025 under the Company’s share option
schemes, details of which are as follows:
Grant date
18 August 2010
18 August 2010
11 January 2011
11 January 2011
25 November 2011
25 November 2011
25 November 2011
01 May 2012
14 August 2013
23 December 2013
26 June 2015
26 June 2015
21 October 2015
21 October 2015
08 June 2016
31 October 2016
31 October 2016
21 December 2017
06 July 2018
28 January 2019
Number
456,000
264,000
86,400
57,600
136,000
1,015,200
272,000
272,000
224,800
1,940,800
884,000
132,800
778,378
291,891
38,237
276,173
13,082
741,191
368,304
826,743
9,075,599
Option price
(£)
Date from which
exercisable
0.008875
0.00875
0.00875
0.00875
0.05
0.05
0.05
0.05
0.10615
0.0265372
0.008875
0.00875
—
—
—
—
—
—
—
—
21 October 2015
21 October 2015
08 July 2014
08 July 2014
31 August 2013
31 August 2013
31 August 2013
01 May 2014
14 August 2015
21 October 2015
21 October 2015
21 October 2015
21 October 2015
21 October 2015
08 June 2019
30 October 2019
30 October 2019
21 December 2020
06 July 2021
28 January 2022
Movements on share options during the year were as follows:
Exercise price
0.073
0.008875
0.00875
0.00875
0.05
0.05
0.10615
0.0265372
0.008875
0.00875
Nil
Nil
Nil
Nil
Nil
Nil
At
1 April
2018
80,000
456,000
264,000
144,000
1,423,200
272,000
284,800
1,940,800
884,000
132,800
1,624,322
53,473
298,626
807,234
—
—
Granted
Exercised
—
—
—
—
—
—
—
—
—
—
—
—
—
—
368,304
826,743
(80,000)
—
—
—
—
—
(60,000)
—
—
—
(18,918)
—
—
—
—
—
Lapsed/
cancelled
—
—
—
—
—
—
—
—
—
—
(535,135)
(15,236)
(9,371)
(66,043)
—
—
At
31 March
2019
—
456,000
264,000
144,000
1,423,200
272,000
224,800
1,940,800
884,000
132,800
1,070,269
38,237
289,255
741,191
368,304
826,743
Date from
which
exercisable
24 July 2011
21 October 2015
21 October 2015
08 July 2014
31 August 2013
01 May 2014
14 August 2015
21 October 2015
21 October 2015
21 October 2015
21 October 2015
08 June 2019
30 October 2019
21 December 2020
06 July 2021
28 January 2022
8,665,255
1,195,047
(158,918)
(625,785)
9,075,599
Expiry date
18 August 2020
18 August 2020
11 January 2021
11 January 2021
25 November 2021
25 November 2021
25 November 2021
01 May 2022
14 August 2023
23 December 2023
26 February 2025
26 February 2025
21 October 2025
21 October 2025
08 June 2026
30 October 2026
30 October 2026
20 December 2027
06 July 2028
28 January 2029
Expiry date
24 July 2018
18 August 2020
18 August 2020
11 January 2021
25 November 2011
01 May 2022
14 August 2023
23 December 2023
26 February 2025
26 February 2025
21 October 2025
08 June 2026
30 October 2026
20 December 2027
06 July 2028
28 January 2029
36
Evgen Pharma plc
Annual Report & Accounts 2019
15. SHARE-BASED PAYMENTS (continued)
As at the year end, the reconciliation of share option scheme movements is as follows:
Outstanding at start of the year
Granted
Exercised
Lapsed/cancelled
Outstanding at end of year
Exercisable at end of year
As at 31 March 2019
As at 31 March 2018
Weighted
average exercise
price
£
0.0218
—
0.0768
—
0.0195
0.0259
Number
8,665,255
1,195,047
(158,918)
(625,785)
9,075,599
6,811,869
Weighted
average exercise
price
£
0.0256
—
0.0397
—
0.0218
0.0271
Number
8,695,621
807,234
(837,600)
—
8,665,255
6,970,787
Options are only exercisable for cash. Options vest 3 years from grant subject to the achievement of absolute total shareholder return targets.
Options which do not vest lapse. In general options also lapse if an employee leaves the Group.
The Group has accounted for the charge arising from the issue of share options as below:
The total charge recognised for the year ended 31 March 2019 is £135,000 (2018: £111,000). The fair values of the options granted have been
estimated using a Black Scholes model. Assumptions used were an option life of 5 years, a risk-free rate of 2 per cent., a volatility of 60 per cent.
and no dividend yield. The expected volatility is assessed by reference to historic volatility and on the advice of the Company’s brokers.
The weighted average remaining contractual life of share options outstanding at the end of the year was 5.46 years (2018: 5.91 years).
The weighted average fair value of options granted as of the grant date was £0.42 (2018: £0.44).
The weighted average share price used in the Black Scholes model was £0.36 (2018: £0.05).
Warrants
On 21 October 2015 the Company issued warrants over 1,457,418 ordinary shares with an exercise price of £0.37 and a warrant life of 5 years.
16. OPERATING LEASE ARRANGEMENTS
Minimum lease payments under operating leases recognised as an expense in the period
Year
ended
31 March
2019
£’000
22
Year
ended
31 March
2018
£’000
22
As at the year end, the Group has future aggregate minimum lease payments under non-cancellable operating leases, which fall due as follows:
Within one year
Group Company
Year
ended
31 March
2019
£’000
15
Year
ended
31 March
2018
£’000
15
Year
ended
31 March
2019
£’000
15
Year
ended
31 March
2018
£’000
15
Operating lease payments represent rentals payable by the Group for its serviced office space.
Annual Report & Accounts 2019 37
Evgen Pharma plc
REVIEW OF THE YEARGOVERNANCE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
continued
17. FINANCIAL RISK MANAGEMENT
The main risks arising from the Group’s financial instruments are cash flow and liquidity, credit risk and foreign currency risk. The Group’s financial
instruments comprise cash and various items such as trade receivables and trade payables, which arise directly from its operations.
Cash flow and liquidity risk
Management monitors the level of cash on a regular basis to ensure that the Group has sufficient funds to meet its commitments where due. The
table below analyses the Group and Company’s financial assets and liabilities by category:
Group Company
Year ended
31 March
2019
Year ended
31 March
2018
Year ended
31 March
2019
Year ended
31 March
2018
Financial assets at
amortised cost
£’000
Financial assets at
amortised cost
£’000
Financial assets at
amortised cost
£’000
Financial assets at
amortised cost
£’000
15
—
2,033
2,048
3
—
3,626
3,629
—
7,498
1,903
9,401
3
6,432
3,499
9,934
Group Company
Year ended
31 March
2019
Year ended
31 March
2018
Year ended
31 March
2019
Year ended
31 March
2018
Financial liabilities
at amortised cost
£’000
Financial liabilities
at amortised cost
£’000
Financial liabilities
at amortised cost
£’000
Financial liabilities
at amortised cost
£’000
531
86
617
102
265
367
94
54
148
48
126
175
Assets as per statement of financial position
Other receivables
Amounts due from subsidiary undertakings
Cash and cash equivalents
Liabilities as per statement of financial position
Trade payables
Other creditors and accruals
Credit risk
The Group gives careful consideration to which organisations it uses for banking in order to minimise credit risk. The Group holds cash with one
large bank in the UK, an institution with an A2 credit rating (long term, as assessed by Moody’s). The amounts of cash held with this bank at the
reporting date can be seen in the financial assets table above. All of the cash and equivalents were denominated in UK sterling.
There was no significant concentration of credit risk at the reporting date.
The carrying amount of financial assets recorded in the Consolidated Statement of Financial Position, net of any allowances for losses, represents
the Group’s maximum exposure to credit risk without taking account of the value of any collateral obtained.
No allowance has been made for impairment losses. In the Directors’ opinion, there has been no impairment of financial assets during the period.
An allowance for impairment is made where there is an identified loss event which, based on previous experience, is evidence of a reduction in the
recoverability of the cash flows. The Directors consider the above measures to be sufficient to control the credit risk exposure. No collateral is held
by the Group as security in relation to its financial assets.
38
Evgen Pharma plc
Annual Report & Accounts 2019
17. FINANCIAL RISK MANAGEMENT (continued)
Foreign currency risk
The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s use of suppliers operating overseas, primarily
denominated in Euro and US dollars. The Group’s exposure to foreign currency changes for all other currencies is not material.
The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the year-end were nil (2018: nil).
At present the Group does not make use of financial instruments to minimise any foreign exchange gains or losses so any fluctuations in foreign
exchange movements may have a material adverse impact on the results from operating activities.
Fair value of financial assets and liabilities
There is no material difference between the fair value and the carrying values of the financial instruments because of the short maturity period of
these financial instruments and their intrinsic size and risk.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group’s financial
assets are cash and cash equivalents and trade and other receivables. The carrying value of these assets represent the Group’s maximum exposure
to credit risk in relation to financial assets.
The Group’s policy is to minimise the risks associated with cash and cash equivalents by placing these deposits with institutions with a recognised
high credit rating.
The Group’s credit risk is primarily attributable to its trade receivables. The amounts presented in the balance sheet are net of allowances for
doubtful receivables, estimated by the Group’s management based on prior experience and their assessment of the current economic environment.
An allowance for impairment is made where there is an identified loss event, which, based on previous experience, is evidence of a reduction in the
recoverability of the cash flows. The Group continually reviews customer credit limits based on market conditions and historical experience.
Capital risk management
The Group considers capital to be shareholders’ equity as shown in the consolidated statement of financial position, as the Group is primarily funded
by equity finance. The Group is not yet in a position to pay a dividend.
The objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for
shareholders and for other stakeholders. In order to maintain or adjust the capital structure the Group may return capital to shareholders and issue
new shares.
Annual Report & Accounts 2019 39
Evgen Pharma plc
REVIEW OF THE YEARGOVERNANCE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS
continued
18. RELATED PARTY TRANSACTIONS
Group
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in
this note.
Key management compensation is disclosed in note 5 of the consolidated financial statements. Directors’ emoluments are disclosed in the
Remuneration Committee Report.
During the year ended 31 March 2019, the Group purchased services totalling £131,661 (year ended 31 March 2018: £187,822) from The Clinical
Trial Company Limited, a company of which Richard Moulson, a Director, is also a Director. The amount owed to The Clinical Trial Company Limited
at 31 March 2019 was £13,922 (31 March 2018: £2,077).
During the year ended 31 March 2019, the Group purchased consultancy services totalling £1,800 (year ended 31 March 2018: £nil) from Dr Alan
Barge, a Director. The amount owed to Dr Alan Barge at 31 March 2019 was £nil (31 March 2018: £nil).
During the year ended 31 March 2019, the Group purchased consultancy services totalling £14,950 (year ended 31 March 2018: £17,970) from
FD Consult Ltd, a company controlled by Richard Moulson. The amount owed to FD Consult Ltd at 31 March 2019 was £nil (31 March 2018: £nil).
During the year ended 31 March 2019, the Group was charged monitoring and Director fees totalling £15,986 relating to Marc d’Abbadie’s services
(year ended 31 March 2018: £26,500) by SPARK Impact Limited, manager of North West Fund for Biomedical, a shareholder. The amount owed to
SPARK Impact, manager of North West Fund for Biomedical at 31 March 2019 was £nil (31 March 2018: £nil).
Company
The Company is responsible for financing and setting Group strategy. The Company’s subsidiary carried out the Group’s development strategy
and managed the Group’s intellectual property. The Company provides interest free and unsecured funding to its subsidiary with no fixed date of
repayment. Details of intercompany balances can be found in Note 11.
40
Evgen Pharma plc
Annual Report & Accounts 2019
LEGAL ADVISERS
Pinsent Masons LLP
30 Crown Place
London
EC2A 4ES
FINANCIAL PUBLIC RELATIONS
Buchanan Communications Limited
107 Cheapside
London
EC2V 6DN
ADDRESSES AND ADVISERS
EVGEN PHARMA PLC
Registered office:
Liverpool Science Park Innovation Centre 2
146 Brownlow Hill
Liverpool
Merseyside
L3 5RF
Website: www.evgen.com
Registered number: 09246681
Domiciled in the United Kingdom
Registered in England and Wales
STATUTORY AUDITORS
RSM UK Audit LLP
14th Floor
20 Chapel Street
Liverpool
L3 9AG
NOMINATED ADVISER AND BROKER
finnCap Ltd
60 New Broad Street
London
EC2M 1JJ
REGISTRAR
SLC Registrars (a division of Equiniti Limited)
Elder House
St. Georges Business Park
Brooklands Road
Weybridge
Surrey
KT13 0TS
Designed and produced by corporateprm, Edinburgh and London. www.corporateprm.co.uk
EVGEN PHARMA PLC
Registered office:
Liverpool Science Park Innovation Centre 2
146 Brownlow Hill
Liverpool
Merseyside
L3 5RF
Website: www.evgen.com
Registered number: 09246681
Domiciled in the United Kingdom
Registered in England and Wales