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H E M O G E N Y X P H A R M A C E U T I C A L S P L C
A N N U A L R E P O R T & F I N A N C I A L S TAT E M E N T S
F O R T H E Y E A R E N D E D 3 1 D E C E M B E R 2 0 2 0
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 2
C O N T E N T S
Company Information
Chairman’s Statement
Board of Directors and Senior Management
Strategic Report
Directors’ Report
Governance Report
Directors’ Remuneration Report
Independent Auditor’s Report
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Company Statement of Financial Position
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Consolidated Statement of Cash Flows
Company Statement of Cash Flows
Notes to the Financial Statements
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Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020
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UK Solicitors
Cooley (UK) LLP
Dashwood
69 Old Broad Street
London
EC2M 1QS
US Solicitors
Rubin & Rudman LLP
50 Rowes Wharf
Boston
Massachusetts 0211
Principal Bankers
Metro Bank plc
One Southampton Row
London
WC1B 5HA
Registrar
Computershare Investor Services plc
The Pavilions
Bridgwater Road
Bristol
BS13 8AE
C O M P A N Y I N F O R M A T I O N
Directors
Dr Vladislav Sandler (Chief Executive Officer)
Professor Sir Marc Feldmann (Chairman)
Alexis Sandler (Non-Executive Director)
Peter Redmond (Non-Executive Director)
Company Secretary
Andrew Wright
Registered Office
5 Fleet Place
London
EC4M 7RD
Registered Number
08401609 (England and Wales)
Joint Brokers
SP Angel Corporate Finance LLP
Prince Frederick House
35-39 Maddox Street
London
W1S 2PP
Peterhouse Capital Limited
80 Cheapside
London
EC2V 6EE
Independent Auditor
PKF Littlejohn LLP
Statutory Auditor
15 Westferry Circus
Canary Wharf
London
E14 4HD
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020
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Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the Year Ended 31 December 2020
C H A I R M A N ’ S S T A T E M E N T
C H A I R M A N ’ S S T A T E M E N T
It is my pleasure to report that over the past year there
was further significant development for Hemogenyx
Pharmaceuticals. The period saw further growth and
acceleration of the development of the Company’s
pipeline. This was marked by the creation of additional
technologies and product candidates, strengthened
intellectual property protection, partnerships with yet
more internationally renowned institutions, and – despite
the challenges posed by the coronavirus pandemic –
continued material steps toward the important transition
from a pre-clinical to a clinical study-stage business.
The Company’s principal business is the development
of new treatments for serious blood diseases such as
blood cancers and severe autoimmune diseases, while
also focusing on the multi-billion dollar bone marrow/
hematopoietic stem cell transplant market. Our products
address large and growing needs, and could enable
a much wider range of patients to be treated than is
presently the case since they should be more suitable
for patients who are currently deemed unfit for bone
marrow transplants or for whom there is a lack of suitable
donors.
The Company’s subsidiary, Immugenyx LLC, continues
work on Advanced Hematopoietic Chimeras – mice
with uniquely humanised blood/immune systems – as a
platform for creating models of various diseases and for
discovering treatments and developing new drugs. The
5
last year has also seen the establishment of an exciting
and flexible new platform technology that may be applied
to create treatments for some forms of cancer and also
for viruses such as SARS-CoV-2, the virus responsible for
COVID-19. As a result, the pipeline has grown to a roster
of six product candidates, compared to two when the
Company first listed on the London Stock Exchange in
2017. This number is unusual for such a small company
as Hemogenyx Pharmaceuticals.
The Company’s six product candidates are:
• CDX antibody – a bispecific antibody targeting
a majority of forms of relapsed/refractory acute
myeloid leukaemia (“R/R AML”), subset of acute
lymphoblastic leukaemia (“ALL”), and myelodysplastic
syndrome (myelodysplasia or “MDS”) – conditioning
bone marrow transplants to substitute traditional
chemotherapy and/or radiation.
• CAR-T cell therapy – chimeric antigen receptor T-cells
that are engineered for use in immunotherapy, also
targeting R/R AML and being developed as a potential
alternative conditioning regimen for bone marrow
transplants.
• Hu-PHEC stem cell therapy – Human Post-natal
Hemogenic Endothelial Cells are a type of cell and
associated cell therapy that generate cancer-free
hematopoietic stem cells for use in transplants to treat
blood disorders.
• Humanised mice – Advanced peripheral blood
Hematopoietic Chimera mice are a novel type of
humanised mice that serve as a platform technology
to model a wide variety of diseases for drug discovery
and target validation.
• Undisclosed – the Company’s early-stage programme
designed for the discovery and validation of novel
targets and
the
treatment of Lupus and/or other autoimmune diseases,
in collaboration with the global biopharmaceutical
company Eli Lilly.
therapeutic-like molecules
for
• CBR platform – a recently developed platform whose
first application is the programming of immune cells
for targeting viral pathogens including SARS-CoV-2
and other existing and yet unknown viruses. A further
potential application of the CBR platform is to target
malignant cells that cause cancers.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 6
C H A I R M A N ’ S S T A T E M E N T
These product candidates,
their current state of
development, and scientific and commercial progress in
the financial year and into 2021 are further elaborated
below.
CDX Antibody
The Company’s work on its bispecific antibody targeting
some forms of R/R AML, ALL and MDS, its first major
project, continued apace in 2020. Most notably, the
collaboration with the global pharmaceutical company
referred to as “GlobalCo” to co-develop the antibody
continued through the year, with some extensions to
allow for the impact of the COVID-19 pandemic on
GlobalCo’s operations.
The Company believes that the use of FLT3-CD3 (FMS-
like tyrosine kinase 3) bispecific antibodies to eliminate
hematopoietic stem cells/hematopoietic progenitors
(“HSC/HP”) will make conditioning for bone marrow
transplants safer by eliminating the side effects that
accompany traditional methods of patient preparation
transplantation. The
(“BM”)/HSC
for bone marrow
Company’s studies to date suggest that the antibodies
will significantly reduce and possibly in some cases
eliminate malignant cells and cancer stem cells in
patients with refractory or relapsed FLT3-expressing
AML. Effective and non-toxic conditioning will extend
the use of BM/HSC transplantation to older and more
frail patients and potentially target additional indications
including autoimmune diseases such as Lupus and
Multiple Sclerosis (“MS”) for which the risk of conventional
BM transplantation has been a major road-block. The
risk profile of BM/HSC transplantation using chemo/
radiation conditioning regimes is currently poor. The
anticipated drastically improved potential safety profile
of conditioning with FLT3-CD3 antibodies will increase
the benefit/risk ratio of BM/HSC
transplantations,
potentially growing the market for such treatments
radically and saving greater numbers of lives. These
antibodies may also be combined (concurrently or in
tandem) with traditional components of conditioning
regimens and thus may increase their efficacy while
having the potential to lower their dosage, toxicity and
corresponding level of undesirable side effects.
The additional time afforded by the extensions to the
agreement was used effectively, with a number of
additional variants of the antibody developed and tested
systematically. The development stage of the agreement
concluded at the start of 2021 with the selection of a
highly promising clone with regard to manufacturability,
yield and stability, as further described in the section
below covering events subsequent to the 2020 financial
year.
The antibody is now ready to be taken forward to the
final stage of testing prior to filing an Investigational
New Drug application with the United States’ Federal
Drug Administration (“FDA”) for approval to commence
clinical trials. These remaining pre-clinical studies will
involve tests in Rhesus monkeys to demonstrate their
safety and predict their efficacy in human trials. Clinical
trials would then commence with a group of patients
with R/R FLT3+ AML who are qualified for HSC/HP
transplantation, in order to obtain preliminary data on
safety/dose escalation and on efficacy for elimination of
both malignant cells and HSC/HP (i.e. conditioning for
bone marrow transplantation).
The Company’s patent applications designed to protect
its intellectual property progressed during the year and
should begin to bear fruit in the near future. An additional
composition of matter patent application (covering novel
sequences of the antibodies discovered and validated
by the Company in collaboration with GlobalCo) is
expected to be filed following completion of the GlobalCo
collaboration agreement.
CAR-T Cell Therapy
Chimeric Antigen Receptor T-cells are a novel form of
immunotherapy that reprogrammes a patient’s own
T-cells to recognise antigens expressed by cancerous
cells and hence destroy them. The Company’s proprietary
CAR-T product candidate, which the Company refers to
as HEMO-CAR-T, was constructed using its proprietary
humanised monoclonal antibody against a target of the
FLT3 protein that is over-expressed in AML cells and
can be found on their surface. Although a relatively
recent addition to the Company’s pipeline, this product
candidate saw particularly rapid progress during 2020.
Testing demonstrated that HEMO-CAR-T was able to
effectively programme human T-cells to identify and
destroy human AML-derived cells in vitro (in non-animal
studies) and in vivo (in animal studies).
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 7
C H A I R M A N ’ S S T A T E M E N T
HEMO-CAR-T was further engineered during the year by
the Company’s scientists in order to increase the safety
and versatility of these cells. This led to the introduction
of a safety switch mechanism that modulates the
activity of HEMO-CAR-T cells and turns them into a
“controllable drug” dubbed SAFE-HEMO-CAR-T. This
enhancement should dramatically improve the safety
and potential versatility of HEMO-CAR-T cells for the
treatment of AML and/or conditioning of bone marrow
transplants, as well as a number of additional potential
indications. SAFE-HEMO-CAR-T therefore represents
a tuneable treatment designed to offer control over
immune response, alleviating the risk of cytokine release
syndrome, a hard-to-predict issue that has arisen during
clinical trials of several other CAR-T therapies, slowing
their development.
We were delighted to announce in August that we
entered into a Sponsored Research Agreement with the
University of Pennsylvania (“Penn”), one of the pioneers
in this field, to advance HEMO-CAR-T through IND-
enabling studies towards clinical trials. Moreover, if the
collaboration with Penn continues to prove successful,
the work will continue right through to achievement of
clinical proof of concept. Penn’s work is led by Dr Saar
Gill, Assistant Professor of Medicine, a haematologist-
oncologist physician scientist and Scientific Co-Director
of the Cell Therapy and Transplantation program at
Penn. Dr Gill’s laboratory is part of the Center for Cellular
Immunotherapies (“CCI”) whose Director, Dr Carl H.
June, conducted pioneering clinical trials of genetically
engineered cells including CAR-T cells in patients with
HIV and diverse forms of cancer.
is noteworthy that Penn
It
is one of the global
leaders in this field and does not often work with
pharmaceutical groups. The CCI team was responsible
for the development of the first of only two CAR-T cell
therapies that have received approval to date from the
FDA, tisagenlecleucel, now sold by Novartis under the
Kymriah® brand name for the treatment of ALL. The
Directors believe that this is arguably the best-qualified
academic team in the world with which to partner to take
this product candidate forward.
Hu-PHEC Stem Cell Therapy
The Company’s Human Postnatal Hemogenic Endothelial
Cells ("Hu-PHECs") are a stem cell therapy product
candidate based on Co-Founder and CEO Dr Vladislav
Sandler’s discovery that hematopoietic progenitor stem
cells survive into adulthood. The cells address the
problem of blood stem cell donor availability and issues
around relapse or cell rejection after transplantation.
Hu-PHECs may be used as a source of cancer-free,
patient-matched blood stem cells for transplantation into
a patient.
The Company’s subsidiary in Belgium, Hemogenyx-Cell
SPRL, has been considering plans with a number of
potential Belgian-based partners, including Orgenesis,
Inc. – the provider of funding to Hemogenyx-Cell and
also to Immugenyx in a separate agreement through
convertible loans – regarding key building blocks for the
path through development towards clinical trials of Hu-
PHECs, including the establishment of a cell bank.
The Company’s intellectual property portfolio began with
the licensing of the then-pending patent to Dr Sandler’s
discovery from Cornell University, where he worked at
the time, titled Post-Natal Hemogenic Endothelial Cells
and their isolation and use. Patent applications were
approved by the United States Patent and Trademark
Office and issued on 25 February 2020 as Patent
Number 10,570,373, and by the European Patent Office
on 13 May 2020 as Patent Number 3068875. The patent
applications were filed in 2014 and are the subject of
Hemogenyx Pharmaceuticals’ exclusive, worldwide
sublicensable licence first granted in 2015 and restated
in 2019.
Humanised Mice
The Company’s work is greatly accelerated by its
uniquely humanised mice, referred to as Advanced
Hematopoietic Chimeras (“AHC”) and a further enhanced
form, Advanced peripheral blood Hematopoietic
Chimeras (“ApbHC”) that produce a wide range of mature
blood cell populations such as human T-cells, B-cells
and antibody-producing plasma cells. Unlike other
humanised mice, ApbHC do not suffer from Graft versus
Host Disease, a disease that complicates and often
renders impossible the efficient use of peripheral blood
mononuclear cells in transplanted mice, shortening their
lifespan and suitability for testing, due to immune cells
attacking the host. ApbHC mice also survive for longer
than other known mouse models, enabling more testing
and more robust results, and thus making them a better
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 8
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the Year Ended 31 December 2020
C H A I R M A N ’ S S T A T E M E N T
potential predictor of outcomes in human studies.
In addition to their
inherent value to the Group
internally, the Company or its subsidiary Immugenyx
LLC have struck several past and ongoing collaboration
agreements involving ApbHC with such highly-regarded
pharmaceutical industry names as Eli Lilly and Company
(“Lilly”) and Janssen Research & Development LLC (a J&J
company).
Undisclosed
On 26 June 2020, we announced the aforementioned
Biological Investigation and Material Supply Agreement
with Lilly. Under the agreement, Lilly supplies the
Company with biological materials and
related
confidential information in order for the Company to
perform research and development activities aimed at the
discovery and validation of novel materials to be used for
the treatment of Lupus and possibly other autoimmune
diseases. This work is complementary to the Company’s
own development currently being undertaken in this
field. Confidentiality stipulations in the agreement mean
that developments must remain undisclosed for the time
being.
The involvement of Lilly is another major vote of
confidence in the Company and its talented team
of scientific researchers, as it joins the other global
companies mentioned previously
pharmaceutical
on the roster of the Company’s collaborators. This
close collaboration offers the potential for ongoing
licensing arrangements with a major
value-adding
pharmaceutical company with the benefit of its global
reach and large-scale resources.
CBR
The Company has been developing a new cell therapy
platform which the Company refers to as CBR, the
essence of which is the programming of immune cells
using a novel type of modifiable synthetic receptor to
destroy viral pathogens including SARS-CoV-2, which
causes COVID-19. Not only can this type of synthetic
receptor potentially combat viral pathogens, it can also
potentially be modified to programme immune cells
to destroy malignant cells causing cancer. The novel
synthetic receptor has no connection to, and does
not resemble, any known or widely used CARs (e.g.,
HEMO-CAR-T), and the Directors are not aware of any
direct competitor for this product candidate at this
time. Hemogenyx Pharmaceuticals is now engaged
in preclinical validation of two CBR-based product
candidates: one for the treatment of COVID-19, and the
other for the treatment of an undisclosed type of cancer.
Scientific Community Engagement
The Company’s talented team of scientists has continued
to receive recognition from the scientific community
and has made well-received presentations on its CDX
antibody and CAR-T therapy product candidates at the
highly influential Keystone Symposia for Advances in
Cancer Immunotherapy in August, and at the American
Society of Hematology meeting and exposition in
December. Following the year end, the Company also
presented its expanded range of product candidates at
the H.C. Wainwright Global Life Sciences Conference in
March 2021, showcasing Hemogenyx Pharmaceuticals
as a leader in the field of development of medicines for
the treatment of blood and autoimmune diseases to the
investment community.
Miscellaneous
In July, the Company announced that its U.S. subsidiary
in
was renamed Hemogenyx Pharmaceuticals LLC
order to align the Company’s names across entities and
countries, and henceforth always should be referred to
as Hemogenyx Pharmaceuticals.
Post Period End Updates
Following the end of the period under review, the
Company has continued to make progress in a number
of areas and can highlight to shareholders the following
developments:
Convertible Debt Facility
In November 2020, Mint Capital Limited (“Mint”) and the
Company entered into a Financing Facility agreement
(“Financing Facility”) whereby Mint agreed to subscribe
for up to £60 million in aggregate principal amount of
unsecured Convertible Loan Notes (“CLNs”) pursuant
to a subscription agreement. The shareholders of the
Company approved the facility at a general meeting in
January 2021. Further details of the Financing Facility are
set out under the Financial Results heading below.
The proceeds of the first tranche of £12,000,000 should
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the Year Ended 31 December 2020
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C H A I R M A N ’ S S T A T E M E N T
enable the Company to progress at least two of its
product candidates – the CDX antibody and HEMO-
CAR-T – through IND-enabling studies into clinical trials
and, ultimately, to achieve clinical proof of concept.
CDX Antibody
The Company announced in January 2021 that work
with GlobalCo has concluded under the CDX antibody
development agreement. The result was the selection
of a clone of the antibody that is ready for IND-enabling
studies, the key step toward clinical trials. The Company
recently received notice that GlobalCo will not in-license
the CDX antibody at this juncture, and accordingly
gave notice to GlobalCo of its intention to exercise
its own option to license GlobalCo’s contributions on
an exclusive, worldwide basis. As at the date of this
document, the Company and GlobalCo are engaged
actively in discussions regarding its future development
and their respective intellectual property embodied in
the final selected clone.
CAR-T Cell Therapy
Further to the Sponsored Research Agreement with the
University of Pennsylvania that commenced in August
2020, a further Master Translational Research Services
Agreement was signed in January 2021 under which the
Company has retained Penn to conduct additional R&D
activities with the involvement of various organisations
within Penn. As with the prior agreement, these activities
will involve Dr Saar Gill and his laboratory. The intended
outcome of the complex of activities under the agreement
is attaining clinical proof of concept for HEMO-CAR-T,
including its variations such as SAFE-HEMO-CAR-T, for
the treatment of AML. The principal stages of activity are:
1. Vector manufacturing for the delivery of HEMO-
CAR-T to the patient’s T-cells;
2. An
investigational new drug
(“IND”) filing
for
permission to conduct clinical trials; and
3. Clinical manufacturing of patient-specific HEMO-
CAR programmed T-cells.
The Company has initiated the process of engaging
contract manufacturing organizations
for product
development and manufacturing of DNA plasmids, viral
vectors and HEMO-CAR-T cells under Current Good
Manufacturing Practices ("CGMPs") to support Phase
I clinical trials and has contracted Randall Tlachac and
his company Quality Systems LLC ("Quality Systems")
to provide oversight and direct product development,
manufacturing and quality control operations.
Mr Tlachac has extensive experience in the successful
development of cell and gene-based therapies, having
led the development of more than 30 products to Phase
I/II clinical trial stage, and played a major role in the
implementation of Good Tissue Practices regulations
since their promulgation in 2004. Quality Systems will
be responsible for supporting the Company’s chemistry,
manufacturing, and controls ("CMC") efforts, including
providing support for product development, operations,
and quality, and for assisting the Company in the
implementation of
internal documentation systems,
development of CMC sections of regulatory submissions,
manufacturing supply agreements, Master Files and
other tasks.
Randall Tlachac has played the principal role in the
approval of 7 New Drug Applications ("NDAs"), and
has extensive experience with development of a wide
array of products: over 70 Investigational New Drug
("IND") applications including multi-specific antibodies,
cell, tissue and gene therapy products, CAR therapies,
therapeutic proteins, peptides, peptide conjugates,
small molecule
cationic antimicrobial peptides,
pharmaceuticals nanoparticle formulations, and sterile
injectable pharmaceuticals. Mr Tlachac’s agreement
to work with the Company is further testament – if
further proof were needed than the involvement of Dr
Gill and University of Pennsylvania, and of multiple
pharmaceutical company partners – of the quality of the
Company’s work and its prospects to proceed to clinical
trials and beyond rapidly.
Paycheck Protection Program Loan Forgiveness
A loan from the U.S. Small Business Administration under
the Paycheck Protection Program – described in Note 23
to the financial statements – was forgiven in April 2021.
Overall, very rapid progress has continued despite the
restrictions of COVID-19.
10
C H A I R M A N ’ S S T A T E M E N T
Financial Results
During the year the Group made a loss of £2,095,023
(2019: £1,453,144 loss).
As at 31 December 2019 a total of US$1,500,000 of the
total facilities available from convertible loan facilities
from Orgenesis Inc. had been paid over to the company.
The remaining $500,000 was paid over in February
2020.
On 30 January 2020 the Company announced that it had
raised £648,200 before expenses through a placing and
subscription of 36,011,116 ordinary shares at a price of 1.8p
per share. In May, the Company announced a conditional
fundraising of £2,500,000 (before expenses) through an
oversubscribed placing of 35,714,286 ordinary shares
at a price of 7p per share. The raise was conditional on
shareholders approving corresponding resolutions at
the 4 June AGM and completed immediately thereafter.
In May, the Company issued and allotted 668,000
shares at an exercise price of 5.25p per share for a total
consideration of £35,070, pursuant to the exercise of
warrants.
In July, the Company’s principal broker, SP Angel
Corporate Finance LLP (“SP Angel”), published an
updated research note that emphasised the Company’s
ongoing research progress and diversification of its
product candidate portfolio. The note draws comparisons
with the valuations of peer companies specialising in
blood diseases and with early-stage (preclinical through
to Phase II clinical trial stage) UK-listed companies, and
concluded that at the time – as now – the Company’s
market capitalisation remains well below its peer-
group averages and indicates upside potential for
the Company’s shareholders, particularly taking into
account the pipeline of assets in development and
multiple collaboration agreements with leading names
in the pharmaceutical industry. The Directors and the
Company’s management and staff remain focused on
delivering value to shareholders and saving lives.
The key terms of the Mint Financing Facility and CLNs
include:
• A principal amount of up to £60,000,000, split into
denominations of £50,000 per loan note, subscribed
for at par and with no interest payable.
• The CLNs are to be issued in up to nine tranches.
The first tranche of £12,000,000 in principal amount
was issued on 3 February 2021. The subsequent
eight tranches are issuable at the sole discretion of,
and in the amounts determined by, the Company at
respective intervals of 90 days after this date.
• Each tranche of CLNs is redeemable at par on the
date falling 36 months after the relevant issue date.
• Each of the CLNs is convertible into ordinary shares
of 1 pence each at any time during the period
commencing on the fifth business day following the
relevant issue date and ending at 5.00 p.m. London
time on the business day immediately prior to the
relevant maturity date.
• The price used for conversion will be equal to a 10 per
cent discount to the lesser of (i) 125 per cent. of the
closing-bid price as reported by Bloomberg for one
ordinary share one trading day before the relevant
issue date (subject to adjustment to reflect any sub-
division or consolidation of the ordinary shares) and (ii)
the lowest closing bid-price as reported by Bloomberg
for an ordinary share from the three consecutive
trading days ending on the day prior to the date of
service of the relevant conversion notice (or if such
conversion notice is served after 4.35pm on any
such date, then the three consecutive trading days
ending on the day such conversion notice is served).
In no event shall the conversion price be less than the
nominal value of an ordinary share.
• A holder will not be permitted to submit a conversion
notice in respect of the CLNs if the total ordinary
shares held by the holder following the execution of
such conversion notice would exceed 29.9% of the
Company’s total ordinary shares.
•
If the Company commits an “event of default” then the
notes could be redeemed at 114-120% of the principal
amount of the convertible loan at the option of the
holder.
• The Company also has the ability to redeem the CLNs
under certain circumstances at 114% of their principal
amount.
• Subject to limited exceptions, the CLNs are not
transferable.
• Prior to conversion, the CLNs do not entitle the holder
to any voting rights in the Company.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 11
approaches its next phase of growth, the investment
rationale is stronger than ever. Careful application of the
team’s expertise and ingenuity have given the Company
a strong portfolio of complementary product candidates
that reduce reliance on any one initiative and give it
multiple material opportunities for success. Together,
these treatments aim to provide an end-to-end solution
to removing the need for dangerous bone marrow
transplant conditioning regimens and eliminating the
need for bone marrow donors, and now have potential
applicability to a range of blood and autoimmune
disease as well as viral infections. The Company’s
patent protections are growing, and it has continuing
recognition in the form of collaborations with some of
the largest and most respected groups in cutting-edge
biopharmaceutical development.
Shareholders may have confidence that the Company’s
prospects remain excellent. My fellow directors and I
continue to look forward to the realisation of Hemogenyx
Pharmaceuticals’ great potential to deliver rewards both
to shareholders in the form of increased value and to
our target patients and society at large as a life-saving
company.
Prof Sir Marc Feldmann AC, FRS
MB BS, PhD, FRCP, FRCPath, FAA, F Med Sci
Chairman
30 April 2021
C H A I R M A N ’ S S T A T E M E N T
The Company has agreed to pay a fee of 5% of the
aggregate principal value of the CLNs issued to the
arranger for the Financing Facility, payable in shares,
subject to the Directors having the necessary shareholder
authorities in place to issue such new shares and such
issue not requiring the publication of a prospectus by
the Company, and otherwise payable in cash. 7,741,935
shares were allotted as an arrangement fee to the
arranger of the Financing Facility for the first tranche of
funding.
To date, Mint has converted loan notes with principal
value of £2,500,000 into shares, leaving convertible
loan notes to a value of £9,500,000 outstanding. A
conversion notice for a further £900,000 in principal
value of loan notes was received from Mint on 23 April
2021 and the corresponding shares will be allotted on
or around 4 May 2021, after publication of this report,
leaving convertible loan notes to a value of £8,600,000
outstanding.
Scientific Advisory Board & Board Update
I have chaired the Scientific Advisory Board since
September 2017 and have worked with the Company
to widen its expertise and to bring in advisers that can
specifically help at each stage to which the Company’s
product development has advanced.
Our Scientific Advisory Board, under my Chairmanship,
brings together experienced experts with extensive
biotech and large pharma drug development experience
and their calibre is a reflection of the potential opportunity
that our therapies present.
There were no changes to the composition of the Board
during 2020. The Board has continued to demonstrate
its confidence in the ongoing success of the business
throughout the period under review and post-period
end. I have elected to receive most of my remuneration
in share options and collectively we remain confident
that the Company’s shares should deliver significant
shareholder return over the long term.
Conclusion
In all, the Company has made impressive progress
in 2020 and into 2021, particularly considering its
highly efficient use of capital and small but talented
scientific advisory and research team. As the Company
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 1212
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Annual Report & Financial Statements for the Year Ended 31 December 2020
B O A R D O F D I R E C T O R S
A N D S E N I O R M A N A G E M E N T
13
B O A R D O F D I R E C T O R S A N D S E N I O R M A N A G E M E N T
Professor Sir Marc Feldmann – Non-Executive Director
& Chairman – appointed 9 April 2018
knighthood equivalent, the Companion of the Order of
Australia.
Professor Sir Marc Feldmann is a pre-eminent medically
trained immunologist at the University of Oxford where
he was Head of the Kennedy Institute of Rheumatology
until 2014 and now Emeritus Professor. He trained in
medicine at Melbourne University and then earned a
Ph.D. in Immunology at the Walter & Eliza Hall Institute
with Sir Gus Nossal, before working in London at
the Imperial Cancer Research Fund. Sir Marc's main
research interests are immunoregulation, understanding
mechanisms of autoimmunity and the role of cytokines
in disease, and working out how to fill unmet medical
needs.
for
His work in London led to the generation of a new
hypothesis
the mechanism of autoimmunity,
linking upregulated antigen presentation and cytokine
expression. Testing this hypothesis led to the discovery,
with colleague Sir Ravinder Maini, of the pivotal role of
TNFα (Tumour Necrosis Factor alpha) in the pathogenesis
of rheumatoid arthritis. This major discovery has
revolutionised therapy not only of rheumatoid arthritis but
other chronic inflammatory diseases (e.g. inflammatory
bowel disease, psoriasis, and ankylosing spondylitis), and
helped change the perception of monoclonal antibodies
from niche products to mainstream therapeutics. Anti-
TNF therapeutics are the current leading drug class with
2016 sales exceeding US$36 billion.
This has led to much scientific recognition, for example
election to the Royal Society and Academy of Medical
Sciences in London, the National Academy of Sciences
USA and the Australian Academy of Science, and multiple
major International prizes including the Crafoord Prize
of the Royal Swedish Academy of Sciences, the Albert
Lasker Clinical Research Award (NY), the Ernst Schering
Prize, the Paul Janssen Award for Biomedical Research,
and the Canada-Gairdner Award. He was also the first
recipient in biology or medicine of the EU/European
Patent Office Inventor of the Year Award in the Lifetime
Achievement category. In addition, Sir Marc has advised
more than 20 of the largest pharmaceutical and biotech
companies in the world and has mentored some of the
most successful scientists, many of whom have become
senior figures in the commercial pharmaceutical world.
Sir Marc was knighted in the 2010 Queen's Birthday
Honours, and was honoured in Australia with the
Sir Marc has been at the forefront of promoting effective
scientific-medical-pharmaceutical interactions. He has
built up a huge network of friends and collaborators who
meet regularly in Oxford and who will help Hemogenyx
Pharmaceuticals to grow and enter clinical trials.
Dr Vladislav Sandler – Chief Executive Officer –
appointed 4 October 2017
Dr Vladislav Sandler is the Co-Founder and CEO of
Hemogenyx Pharmaceuticals and a research Assistant
Professor at the State University of New York (SUNY)
Downstate. Dr Sandler is a widely published stem cell
scientist with decades of experience in scientific research.
In particular, Dr Sandler has extensive experience
developing novel methods of direct reprogramming
of somatic cells
functional and engraftable
hematopoietic stem cells, as well as developing novel
sources of pluri- and multi-potent cells.
into
Dr Sandler has conducted his research in Russia, Israel,
Canada and the United States, including at the Children's
Hospital at Harvard Medical School, the Salk Institute
for Biological Sciences, Harvard University and Albert
Einstein College of Medicine, among others. He also
led a team of scientists at Advanced Cell Technologies,
Inc. and was most recently on the faculty of Weill Cornell
Medical College. While at Cornell, Dr Sandler made the
significant discovery that the cells that give rise to blood
stem cells during mammalian development continue
to exist after birth, and he developed the method of
isolation of these cells from humans. As a result of this
important work, Dr Sandler was awarded the inaugural
Daedalus Fund Award for Innovation at Cornell. He went
on to found Hemogenyx Pharmaceuticals in order to
further pursue this significant scientific discovery and
his dedication to the translation of science into clinical
practice.
Dr Sandler has published numerous peer-reviewed
papers and has received a number of awards and
fellowships
for his scientific research. Dr Sandler
received his PhD from the University of British Columbia.
He is a member of the International Society for Stem Cell
Research.
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B O A R D O F D I R E C T O R S A N D S E N I O R M A N A G E M E N T
Alexis Sandler – Non-Executive Director
appointed 4 October 2017
Peter Redmond – Non- Executive Director
appointed 4 October 2017
Peter Redmond is a corporate financier with some 30
years’ experience in corporate finance and venture
capital. He has acted on and assisted a wide range of
companies to attain a listing over many years, on the
Unlisted Securities Market, the Full List and AIM, whether
by IPO or in many cases via reversals, across a wide range
of sectors, ranging from technology through financial
services to natural resources and, in recent years has
done so as a director of the companies concerned. He
has been active over many years in corporate rescues
and reconstructions on AIM and in reverse transactions
into a range of investing companies. He was a founder
director of Cleeve Capital plc (now Satellite Solutions
plc) and Mithril Capital plc (now BeHeard Group plc),
both of which were admitted to the Standard List of the
London Stock Exchange, and took a leading role in the
reconstruction and refinancing of AIM-quoted Kennedy
Investments plc and 3Legs Resources plc (now SalvaRx
plc). Peter is Chairman of AIM-quoted Pires Investments
plc and URA Holdings plc.
Alexis M. Sandler is the co-founder of Hemogenyx
Pharmaceuticals, for which she has served as the Chief
Operating Officer. Ms Sandler is an attorney specialising
in intellectual property, with almost 15 years of experience
representing a range companies and institutions. Ms
Sandler is especially skilled at handling diverse interests
in day-to-day matters of organisations, multi-party
agreements and long-term strategic planning.
Ms Sandler began her legal practice in Los Angeles
at Hogan & Hartson LLP (now Hogan Lovells), where
she specialised in entertainment and media law and
intellectual property. She then worked for several years
at Katten Muchin Rosenman LLP representing studios,
production companies, television networks and other
major media companies in all aspects of entertainment,
media and intellectual property law. For three years, Ms
Sandler worked as the Director of Business and Legal
Affairs for a division of the Fox Entertainment Group, during
which time she was named one of Southern California’s
Best Young Lawyers by Los Angeles magazine. While
at Fox, Ms Sandler successfully negotiated hundreds of
major distribution agreements, in addition to advising the
company on important corporate and other legal matters.
Ms Sandler went on to become the General Counsel at
a Smithsonian affiliate museum in New York City. Ms
Sandler is currently the Associate General Counsel for a
major New York City cultural institution. She also serves
as the Secretary of the Board of Directors for MoMA PS1,
the contemporary art space.
Ms Sandler received her AB from Harvard University and
her JD from the UCLA School of Law and is a member of
the State Bar of New York and the State Bar of California.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 Hemogenyx Pharmaceuticals plc
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The Directors present
their Strategic Report of
Hemogenyx Pharmaceuticals plc for the year ended 31
December 2020.
Introduction
This Strategic Report comprises a number of sections,
namely: the Group’s objectives, the Group’s strategy and
business model, a review of the Group’s business using
key performance indicators, and the principal risks and
uncertainties facing the business. The disclosures under
s172 of the Companies Act 2006 are included in the
Governance Report.
Objectives
The Group’s objective is to develop breakthrough
therapies for the treatment of blood and autoimmune
diseases.
Strategy and Business Model
The Group’s long-term strategy is to create a suite of
products to address current problems associated with
the treatment of blood disorders such as cancers and
autoimmune diseases, with viral infections, and with
bone marrow, or hematopoietic stem cell, transplants.
The latter represents an important part of the solution
to treating blood-related diseases, with the opportunity
to improve outcomes through reduced blood stem
cell transplant rejection and relapse, and if successful
potentially provides long-term cures for these diseases.
The Group’s business model aims to advance its therapies
through clinical proof-of-concept, taking them towards a
final stage of development. A goal is the licensing of one
or more of its therapies to partners in return for potential
upfront payments, research funding support, success
milestone and royalty payments.
Operational Review and Outlook
The operational review and outlook are set out in the
Chairman’s Statement.
Financial Review
The Group incurred a loss for the year to 31 December
2020 of £2,095,023 (31 December 2019 – loss of
£1,453,144).
In the year to 31 December 2020 the loss mainly
arose from operational expenses pursuing the Group’s
objectives listed above as well as salaries, consulting and
professional fees, and general administration expenses.
These expenses have been met from the proceeds of
the issue of convertible loans and equity placings. The
Group received other income of £85,237 (2019 - £213,126)
from collaborations with partners.
Cash flow and cash position
Cash used in operations totalled £1,798,404 (31 December
2019: £1,199,873).
As at 31 December 2020, the Group had a cash balance
of £1,812,299 (31 December 2019: £498,679).
Key Performance Indicators
The Directors have identified the KPIs below that they
feel are the most vital measurements for the Group to
monitor given its current stage of development. KPIs are
monitored on an annual basis to ensure that the remain
the most important and relevant measure of performance
and progress.
Cash management
In addition to the revenues from collaborations with
partners mentioned above, the Group continued to draw
on the cash provided by the convertible loan facilities
from Orgenesis Inc. for a maximum of US$2,000,000.
As at 31 December 2020 the total available facility of
US$2,000,000 (£1,465,076) had been paid over to the
Company. This was supplemented by proceeds totalling
£3,148,200 before expenses from two placings that took
place in the year and from the conversion of warrants for
a further contribution of £35,070. The cash position at
31 December 2020 was £1,812,299 (31 December 2019:
£498,679).
The Group carefully plans expenditure with rolling cash
flow forecasts and tight financial control. The Group takes
a collaborative cost sharing approach with business
partners and avoids long-term commitments as far as
possible.
Intellectual property
The Group will focus on developing new conditioning
treatments, drugs and cell therapy products for blood
and autoimmune diseases, HSC/BM transplantation, and
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viral infections. The Group, or its licensors, has applied for
patents to protect its proprietary technology and future
products, which are in varying stages of development.
The success of the Group will depend largely on the
Group’s ability to implement successful drug development
programmes, obtain the required regulatory approvals (in
various territories), protect and exploit its own intellectual
property and know-how, and the intellectual property
and know-how licensed to it, and to generate a cash flow
in accordance with the strategy of the Group. Intellectual
property is protected by the Group through taking a pro-
active approach to filing patents over its products and
technologies, as well as the diligent maintenance and
protection of such patents and licences.
The Group patent portfolio currently includes:
CDX bi-specific antibodies
The patent application relating to CDX bi-specific
antibodies was filed by Hemogenyx Pharmaceuticals LLC
in the USA on 4 April 2016 ("CDX Patent"). The invention
summarised in the patent application is a method of
eliminating hematopoietic stem cells/hematopoietic
progenitors ("HSC"/"HP") in a patient using bi-specific
antibodies specifically binding to a protein predominantly
expressed on the surface of HSC/HP and to a protein
uniquely expressed on a surface of immune cells. The
bound bi-specific antibodies redirect immune cells to
eliminate HSC/HP. The invention relates to the required
conditioning of a patient prior to a BM/HSC transplant.
In this respect, the invention serves two main purposes:
•
it provides adequate immunosuppression of the
patient and clears sufficient niche space in the
bone marrow for the transplant of HSC. This allows
transplanted cells to engraft in the recipient; and
•
it could potentially help to eradicate the source of
malignancy.
The provisional patent application is converted to a PCT
application and broadened to cover the composition
of matter (in this case, novel sequences of antibodies).
On April 4 2017, a PCT (Patent Cooperation Treaty)
application was filed by Hemogenyx Pharmaceuticals
which includes additional claims that extend the CDX
Patent set out in the provisional patent application. These
claims protect specific sequences of several high-quality
clones discovered and validated by the Group. The claim
extension transforms the original "method" provisional
patent application into a "composition of matter" PCT
application.
In July 2019 the Group filed an additional composition of
matter patent application in relation to newly-discovered
monoclonal antibodies against a
target protein
expressed on the surface of hematopoietic stem cells/
hematopoietic progenitors and a number of leukaemias,
such as AML. It also covers a method of application of
the Group’s bi-specific CDX antibodies for conditioning
patients for bone marrow transplantation.
An additional composition of matter patent application
(covering novel sequences of the antibodies discovered
and validated by the Company in collaboration with
GlobalCo) is expected to be filed following completion of
the GlobalCo collaboration agreement.
Hu-PHEC cell therapy
The patent relating to Hu-PHEC was filed by Cornell
University ("Cornell Patent") in several jurisdictions on 13
November 2014. The patent was approved and issued
in the United States of America on 25 February 2020
and published by the European Patent Office on 13 May
2020. The invention summarises a method of isolation
and identification of post-natal hemogenic endothelial
cells, as well as the provision of substantially purified
populations of post-natal hemogenic endothelial cells,
compositions of post-natal endothelial cells and methods
to utilise post-natal hemogenic endothelial cells to
regenerate the hematopoietic system in a patient.
Advanced Hematopoietic Chimeras
The provisional patent application relating to the Group’s
proprietary humanised mouse model, the Advanced
Hematopoietic Chimera, is an application filed by Dr
Sandler and Dr Rita Simone in the USA on 20 February
2018 ("AHC Patent"). The invention summarised in the
patent application is mice whose hematopoietic system
is at least 40% humanised and methods for preparing the
same. The patent was assigned to the Group’s subsidiary
Immugenyx LLC on 24 May 2018. In June 2019 the Group
announced that Immugenyx LLC has further refined
its work to develop the Advanced peripheral blood
Hematopoietic Chimera ("ApbHC") as a research and
development tool. The major advantage of the ApbHC
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compared to other humanised mouse models known to
the Group is the absence of Graft versus Host Disease,
a disease that complicates and often renders impossible
the efficient use of peripheral blood mononuclear cells in
transplanted mice. The ApbHC can potentially be used
for testing multi-specific antibodies, including its own bi-
specific CDX antibody, as well as for the development
and testing of new cell therapies involving immune cell
programming such as CAR-T. ApbHC can also potentially
be used for the modeling of autoimmune diseases, such
as Systemic Lupus Erythematosus (aka Lupus), with a
goal of developing fundamentally new treatments for
those diseases. Furthermore, ApbHC can be used as a
tool for the rapid development and/or isolation of human
antibodies against previously unknown human-specific
pathogens
applications),
known in biosecurity circles as "Disease X," such as the
novel coronavirus.
(bioprotection/biodefence
Product development
The Group develops therapies to transform bone
marrow and blood stem cell transplant procedures.
These therapies aim to replace the need for existing
methods of preparation of patients for transplantation,
such as chemotherapy and radiation treatments, and at
the same time address the problem of finding matching
stem cell donors whilst reducing the risk of blood stem
cell rejection after transplantation.
The Group’s key products, CDX antibodies, CAR-T
therapy, the CBR platform, and Hu-PHEC cell therapy,
are currently in preclinical development. In addition,
the Group’s AHC product is currently the subject of
collaborations with other pharmaceutical companies to
evaluate AHCs’ effectiveness as platforms for disease
modelling and drug discovery.
The Directors monitor product development through
pre-clinical results. The CDX and CAR-T products have
been successfully evaluated in the Group’s proprietary
humanised mouse model, achieving proof of concept.
Furthermore, we have achieved a notable demonstration
of CDX’s activity versus AML cells in vitro and in vivo. If
successful, the Company may be able to use the CDX
and/or CAR-T products to eliminate R/R AML in patients
who qualify for bone marrow transplantation. The
Company is also investigating the possibility of using its
CDX antibodies in combination with other treatments for
AML to increase their effectiveness.
Diversity
Hemogenyx Pharmaceuticals is committed to workplace
diversity which includes but is not limited to gender, age,
ethnicity and cultural background.
Hemogenyx Pharmaceuticals’ Diversity Policy defines
initiatives which assist the Company in maintaining and
improving the diversity of its workforce. The table below
highlights the proportion of women engaged by the
Group:
Organisation as a whole
Executive management team
Board
Men Women
6
2
3
6
-
1
Board of Advisors
The Group engages the services of a Board of Advisors
who are highly experienced
the clinical
development of treatments and regulatory processes
to commercialisation. In addition to Professor Sir Marc
Feldmann, who runs the Board of Advisors in addition to
his role as Chairman, the advisors are:
in both
Dr H. Michael Shepard, Ph.D.
SCIENTIFIC ADVISOR
• Led the discovery and development of many successful
cancer treatments including Herceptin/trastuzumab -
annual sales exceed $6.5 billion worldwide
• Received Harvard Medical School's prestigious
Warren Alpert Prize in recognition of contributions to
the field of cancer treatment research
• Founded NewBiotics, Inc., acquired by Kiadis Pharma
• Founded BioLogix, acquired by Symphogen
Dr Koen van Besien M.D.
CLINICAL ADVISOR
• Professor of Medicine and Director of the Stem Cell
Transplant Program at NYP-Weill Cornell College of
Medicine
• Developed novel methods of transplantation for those
patients who lack matching donors
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• >200 publications in peer reviewed journals
Risks relating to the Group’s business strategy
19
• Editor in Chief of the journal Leukemia and Lymphoma
Corporate Responsibility
We have defined the scope of our Group’s responsible
business practices as falling within the following key
focus areas:
• Health and Safety – ensuring the safety and well-
being of our staff
• Environment – managing our environmental impact
areas of waste, energy and water
• Employees – supporting our people to develop and
flourish within the business
• Community – positive interaction with the communities
in which we operate
• Ethical Standards – operating to the highest ethical
standards
We remain committed to ensuring these activities
become embedded in how we operate and contribute
towards the success of our business. This includes not
only identifying and managing business risk but exploring
opportunities to add value to the business.
Greenhouse Gas Emissions
Given the nature of its activities, there is limited scope
for the Group to have a major impact on environmental
matters. Nevertheless, the Directors are mindful of
their responsibilities in this regard and strive to seek
improvements may be made;
opportunities where
these are generally concentrated in areas of energy
conservation, recycling and waste control.
Principal Risks and Uncertainties
The Group operates in an uncertain environment and
is subject to a number of risk factors. The Directors
have carried out a robust assessment of the principal
risks facing the Group, including those that threaten
its business model, future performance, solvency or
liquidity. They consider the following risk factors are of
particular relevance to the Group’s activities and to any
investment in the Group. It should be noted that the list
is not exhaustive and that other risk factors not presently
known or currently deemed immaterial may apply.
The risk factors are summarised below:
The Group’s business is relatively undeveloped
The operations of Hemogenyx Pharmaceuticals are at a
relatively early stage and, to date, no commercial sales of
its products have been made. The ability of the Group to
achieve commercialisation is dependent on a number of
factors, many of which are outside of the Group’s control.
Examples of factors outside of the Group’s control are
the impact of Brexit, capital market conditions, FDA
approval and competition.
Business strategy of the Group
The development of clinical products for new medical
treatments is inherently uncertain, with high failure
rates in clinical studies for both early and late stage
development products and such clinical studies can be
expensive, time-consuming and complicated and there
is no certainty as to the outcome of such studies. Even
once clinical studies have been successfully carried
out, later phase trials may not successfully replicate or
improve on such outcomes.
Staffing and key personnel
The Group is reliant on a number of the key personnel,
in particular Dr Vladislav Sandler who is the founder
of Hemogenyx Pharmaceuticals (refer to Corporate
Governance Report for further detail). Whilst the Group
has endeavoured to ensure that it has contractual
arrangements which include non-compete restrictions
in place with such persons to lessen the risk of them
ceasing to be involved with the Group, in the event that
the Group was to lose the services of such individuals, its
results could be adversely affected.
Costs of commercialisation
The ability of the Group to bring its products to first
commercial sale will be dependent in part on the overall
costs of manufacturing and the costs involved could be
significant and there is no guarantee that the sale prices
achievable for its products will be viable and sustainable.
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Clinical studies and timelines risk
Hemogenyx Pharmaceuticals is currently progressing
its product candidates through preclinical development.
Although encouraging results have been achieved so
far, there can be no certainty that these results can be
reproduced in clinical trials. The monies raised in the
Placings and Subscriptions, as well as the Orgenesis and
Mint Capital convertible loans, are intended to support
those preclinical development activities.
The development of clinical products for new medical
treatments is inherently uncertain, with high failure
rates in clinical studies for both early- and late-stage
development products. Furthermore, such clinical studies
(Phase 1, Phase 2a/2b, Phase 3) are typically expensive,
complex, can take considerable time to complete and
have uncertain outcomes.
Furthermore, as a result of adverse, undesirable,
unintended or inconclusive results from any testing or
clinical trials (which have yet to be designed), the future
progress, planning and potential treatment outcome of
the products and clinical programmes may be affected
and may potentially prevent or limit the commercial
use of one, many or all of the Company's products. In
addition, later phase clinical trials may fail to show the
desired safety and efficacy obtained in earlier studies,
and a successful completion of one stage of clinical
investigational clinical product
development of an
does not ensure that subsequent stages of clinical
development will be successful.
Failure can occur at any stage of clinical development and,
as a result, enforced delays to the clinical development
plan could delay or prevent commercialisation of
the Company's product candidates. Various factors
associated with the potential failure or delay in completing
a clinical programme include, but are not limited to:
• Delays in securing clinical investigators or clinical
study sites;
• Delays in securing any regulatory authority, hospital
institutional review board
ethics committee, or
approval or approvals necessary to commence a
clinical study;
• Delays or failure to recruit a sufficient number of
clinical study participants in accordance with the
clinical study protocol;
• Difficulty or inability to monitor subjects adequately
during or after treatment;
•
Inability to replicate in Phase 3 controlled studies
any safety and efficacy data obtained from controlled
Phase 2a/2b clinical studies;
• Difficulty or inability to secure clinical investigator
compliance to follow the approved clinical study
protocol; and
• Unexpected adverse events or any other safety or
related issues.
Research and development risk
The Group operates in the biotechnology and bio-
pharmaceutical development sectors and carries
out complex scientific research. If the research or
preclinical testing or clinical trials of any of Hemogenyx
Pharmaceuticals’ product candidates fail, meaning that
these candidates will not be licensed or marketed, this
would result in a complete absence of revenue from
these failed candidates. Positive results from preclinical
and early clinical studies do not guarantee positive
results from clinical trials required to permit application
for regulatory approval. Furthermore, the Group may
discontinue the development of candidates if results are
not positive or unlikely to further its progress towards a
meaningful outcome or collaboration.
Intellectual property (IP) infringement
The Group may be subject to future litigation concerning
its own IP and the IP of others. Adverse judgements in
relation to its IP would likely have negative outcomes for
its results of operations.
Intellectual property (IP) control
The Group is partially reliant on an exclusive, world-wide
licence of a patent from Cornell University for its Hu-
PHEC line of business. The exclusivity and exploitable
territory for this licence depend on the Group meeting
various developmental milestones.
Environmental and other regulatory requirements
The event of a breach with any environmental or
regulatory requirements may give rise to reputational,
financial or other sanctions against the Group, and
therefore the Board considers these risks seriously and
designs, maintains and reviews its policies and processes
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so as to mitigate or avoid these risks. Whilst the Board
has a good record of compliance, there is no assurance
that the Group’s activities will always be compliant.
Financing
The Group’s ability to develop its product through to
commercial sale will depend upon the Group’s ability
to obtain financing primarily through a further raising
of new equity capital. Although the Group has been
successful in raising new equity capital, there can be no
guarantee that it will be able to do so in the future. The
Group may not be successful in procuring the requisite
funds on terms which are acceptable to it (or at all) and,
if such funding is unavailable, would raise questions
over its ability to further develop its products through
to commercialisation. Further, Shareholders’ holdings
of Ordinary Shares may be materially diluted if debt
financing is not available.
conditions,
Market conditions
Market
including general economic
conditions and their effect on exchange rates, interest
rates and inflations rates, may impact the ultimate value
of the Group regardless of its operating performance. The
Group also faces competition from other organisations,
some of which may have greater resources or be more
established in a particular territory. The Board considers
and reviews all market conditions to try and mitigate any
risks that may arise from these.
Political and country risk – UK departure from the EU
The Company is quoted in the United Kingdom (UK) and
operates in the UK and European Union (EU), in addition
to other territories. Since a significant proportion of the
regulatory framework in the UK applicable to the Group’s
business and its product candidates is derived from EU
directives and regulations, Brexit and any ultimate trade
deals struck between the UK and EU could materially
impact the regulatory regime with respect to the
development, manufacture, importation, approval and
commercialisation of the Group’s product candidates in
the UK or the EU. For example, as a result of the uncertainty
surrounding Brexit, the EMA relocated to Amsterdam
from London. Following the Transition Period, the UK
is no longer covered by the centralised procedures for
obtaining EU-wide marketing authorisation from the
EMA and, unless a specific agreement is entered into,
a separate process for authorisation of drug products,
including the Company’s drug candidates, will be
required in the UK, the potential process for which is
currently unclear. Moreover, in the US, tariffs on certain
US imports have recently been imposed, and the EU
and other countries have responded with retaliatory
tariffs on certain US exports. In addition, the Group may
be required to pay taxes or duties or be subjected to
other hurdles in connection with the importation of the
Group’s candidates into the EU, or the Group may incur
expenses in establishing a manufacturing facility in the
EU in order to circumvent such hurdles. Any further
changes in international trade, tariff and import/export
regulations as a result of Brexit or otherwise may impose
unexpected duty costs or other non-tariff barriers on
the Group. As a result, given the ongoing uncertainty
surrounding the situation, the Company is monitoring
matters and seeking advice as to how to mitigate the
risks arising.
Pandemic and business disruption risk
The Company may be affected by disruptions to its
operations in one or more locations, particularly in the
near future in light of responses to the novel coronavirus
or other potential pandemics. The Company’s New York
operations are classed as an essential business and have
not been subject to closure, and work has continued to
date with prudent hygiene and distancing measures in
place including limited work in the laboratory on rota
and work from home. All laboratory staff have been
fully vaccinated. The Company is allowing for extended
delivery times for some supplies, and for slower
progress with collaboration partners. The Board and UK
management continue to operate remotely, as usual. At
present the Company believes that there should be no
significant material disruption to its work, but the Board
continues to monitor these risks and the Company’s
business continuity plans.
Approved by the Board on 30 April 2021
Dr Vladislav Sandler
CEO
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 2222
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the Year Ended 31 December 2020
D I R E C T O R S ’ R E P O R T
F O R T H E Y E A R E N D E D
3 1 D E C E M B E R 2 0 2 0
23
D I R E C T O R S ’ R E P O R T
F O R T H E Y E A R E N D E D 3 1 D E C E M B E R 2 0 2 0
The Directors present their report with the audited
financial statements of the Group for the year ended 31
December 2020.
The Company’s Ordinary Shares were admitted to listing
on the London Stock Exchange under the name Silver
Falcon plc, on the Official List pursuant to Chapters 14
of the Listing Rules, which sets out the requirements for
Standard Listings, on 9 November 2015.
On 4 October 2017 the Company’s shareholders voted
in favour of acquiring the biotechnology company
Hemogenyx Pharmaceuticals Limited, with shares being
readmitted to trading on 5 October 2017 under the name
Hemogenyx Pharmaceuticals plc.
and complementary products include immunotherapy
product candidates for the treatment of AML and other
blood malignancies and patient conditioning – the
CDX bi-specific antibody and CAR-T therapy, and a cell
therapy product for BM/HSC transplantation – the Hu-
PHEC. Each of these products holds the potential to
revolutionise the way BM/HSC transplants are being
performed or diseases of the blood are treated, offering
solutions that mitigate the dangers and limitations
associated with the current standard of care.
The Group has three companies that are located outside
of the UK. The principal laboratory of the Group is
located in Brooklyn, New York, USA. The Group also has
a subsidiary in Liège, Belgium.
is
Principal Activity
the discovery,
The Group’s principal activity
development and commercialisation of a suite of
products to address current problems associated with
the treatment of blood disorders such as cancers and
autoimmune diseases, with viral infections, and with
bone marrow, or hematopoietic stem cell, transplants.
The company's leading technologies aim to change
the way in which bone marrow/hematopoietic stem cell
("BM"/"HSC") transplants are performed and improve
their efficacy. Hemogenyx Pharmaceuticals’ distinct
Results and Dividends
The Consolidated Statement of Comprehensive Income
set out on page 50 shows a loss for the year amounting
to £2,095,023 (2019: loss of £1,453,144). The Directors do
not propose a dividend in respect of the year ended 31
December 2020 (31 December 2019: nil).
Directors and Directors’ Interests
The Directors who held office during the year were as
follows:
Professor Sir Marc Feldmann
Dr Vladislav Sandler
Alexis Sandler
Peter Redmond
Date Appointed
Date Resigned
9 April 2018
4 October 2017
4 October 2017
29 July 2015
-
-
-
-
The Directors of the Company who held office at 31 December 2020 had the following beneficial interests in the
Ordinary shares of the Company at 31 December 2020 according to the register of directors’ interests:
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 24
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Director
At 31 December 2020
At 31 December 20219
Professor Sir Marc Feldmann
Peter Redmond*
Dr Vladislav Sandler
Alexis Sandler
-
5,596,270
41,544,677
-
5,040,714
41,544,677
75,090,685
75,090,685
*Peter Redmond holds the majority of these shares through Catalyst Corporate Consultants Ltd of which he is the sole
shareholder.
At the date of this report, there have been no further changes to the Directors’ beneficial interest in the Ordinary shares
of the Company as disclosed in the table above.
According to the Register of Directors’ Interests, no rights to subscribe for shares in or debentures of Group companies
were granted to any of the Directors or their immediate families, or exercised by them, during the financial year except
as indicated below (see Note 20 for detail on option plans):
OPTIONS
Number of
options at
start of year
Date of grant
Options
granted
or acquired
during year
Options
lapsed
during year
Number of
options at
end of year
Professor Sir Marc Feldmann
Dr Vladislav Sandler
Peter Redmond
9 Apr 2018
18,002,568
18,002,568
-
-
20 August 2020
13 July 2020
-
-
-
-
5,000,000
5,000,000
2,200,000
2,200,000
-
-
-
-
-
-
18,002,568
18,002,568
5,000,000
5,000,000
2,200,000
2,200,000
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 25
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Qualifying Third Party Indemnity Provision
At the date of this report, the Company has a third-party indemnity policy in place for all Directors.
Substantial Shareholders
As at 31 December 2020, the total number of issued Ordinary Shares with voting rights in the Company was 433,636,255
(now: 494,343,020). The Company has been notified of the following interests of 3 per cent or more in its issued share
capital as at the date of approval of this report.
Party Name
Alexis Sandler
Vladislav Sandler
Craig Auringer
Samantha Bauer
Relationship Agreement
In accordance with Listing Rule 9.8.4(14)R, the Company
has set out below a statement describing the relationship
agreement entered into by the Company with its principal
shareholder.
On 8 September 2017, the Company entered into a
Relationship Agreement with Dr Vladislav Sandler and
Alexis Sandler (the “Controlling Parties”), which came
into force at the Company’s re-admission. The principal
purpose of the Relationship Agreement is to ensure that
the Company is capable at all times of carrying on its
business independently of the Controlling Parties.
If the Company ceases to be admitted to the Main
Market of the London Stock Exchange, or the Controlling
Parties (together with their associates) cease to hold 20
per cent or more of the voting rights over the Company’s
shares the Relationship Agreement shall terminate save
for certain specified provisions.
The Relationship Agreement provides that the Controlling
Parties undertake to use all reasonable endeavours to
procure that they and their associates shall:
• conduct all transactions with the Company on an arm’s
length basis and on a normal commercial basis;
• not take any action that would have the effect of
preventing the Company from complying with its
obligations under the Listing Rules or the corporate
governance principles adopted by the Group;
Number of Ordinary
Shares
% of
Share Capital
75,090,685
41,544,677
23,837,250
17,082,201
15.19
8.80
4.82
3.46
• not propose or procure the proposal of a shareholder
resolution which is intended to, or appears to be
intended to, circumvent the proper application of the
Listing Rules; and
• not take any actions which is intended to, or appears
to be intended to, breach or circumvent the proper
application of the Relationship Agreement, the Listing
Rules or the corporate governance principles adopted
by the Group.
The Directors believe that the terms of the Relationship
Agreement enable the Company to carry on
its
business independently from the Controlling Parties
and their affiliates and ensure that all transactions and
relationships between the Company and the Controlling
Parties are, and will be, at arm’s length and on a normal
commercial basis. The Company has and, in so far as it is
aware, the Controlling Parties and their associates have,
complied with the independence provisions set out in the
Relationship Agreement from the date of the agreement,
through the relevant period under review. The ordinary
shares owned by the Controlling Parties rank pari passu
with the other ordinary shares in all respects.
Share Capital
Details of the issued share capital, together with details
of the movement in issued share capital during the year,
are shown in Note 18 to the financial statements.
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Financial Instruments
Details of the use of the Company’s financial risk
management objectives and policies as well as exposure
to financial risk are contained in the Accounting policies
and Note 25 of the financial statements.
Greenhouse gas emissions
Greenhouse gas emissions, energy consumption and
energy efficiency disclosures have not been provided
because the Company has consumed less than 40,000
kWh of energy during the period.
Future Developments and Events Subsequent to the
Year End
Further details of the Group’s future developments and
events subsequent to the year end are set out in the
Chairman’s Statement and Strategic Report.
Auditors
The auditors, PKF Littlejohn LLP, have expressed their
willingness to continue in office and a resolution to
reappoint them will be proposed at the Annual General
Meeting.
Corporate Governance
The Corporate Governance report forms part of the
Directors’ Report and is disclosed on pages 28-34.
Going Concern
The Company’s business activities, together with facts
likely to affect its future operations and financial and
liquidity positions are set out in the Chairman’s Statement
and Directors’ Strategic Report. In addition, Note 25 to
the financial statements discloses the Company’s capital
risk management policy and Note 2 details further
considerations made by the Directors in respect of going
concern, including an assessment of the possible impact
on the Company arising from COVID-19.
The Directors, having made due and careful enquiry, are
of the opinion that the Company has access to sufficient
funding in order to execute its operations over the
next 12 months. The Directors therefore have made an
informed judgment, at the time of approving the financial
statements, that there is a reasonable expectation that
the Company has adequate resources to continue in
operational existence for the foreseeable future. As a
result, the Directors have adopted the going concern
basis of accounting in the preparation of the annual
financial statements.
Political Donations
The Group made no political donations during the year
(2019: £nil).
Charitable Donations
There were no charitable donations made by the Group
in the current or prior year.
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Annual
Report and the financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law
the Directors have elected to prepare the financial
statements in accordance with international accounting
standards in conformity with the Companies Act 2006.
Under Company law the Directors must not approve the
financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the
Company and of the profit or loss of the Company for
that year.
In preparing these financial statements, the Directors are
required to:
• Select suitable accounting policies and then apply
them consistently;
• Make judgments and accounting estimates that are
reasonable and prudent;
• State whether applicable international accounting
standards in conformity with the Companies Act
2006 have been followed, subject to any material
departures disclosed and explained in the financial
statements; and
• Prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Company will continue in business.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
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the Business review,
• the Annual Report and financial statements,
including
fair
review of the development and performance of
the business and the position of the Group and
parent company, together with a description of
the principal risks and uncertainties that they face.
includes a
Disclosure of Information to Auditors
So far as the Directors are aware, there is no relevant
audit information of which the Company’s auditors are
unaware, and each Director has taken all the steps that
he ought to have taken as a Director in order to make
himself aware of any relevant audit information and to
establish that the Company’s auditors are aware of that
information.
Approved by the Board on 30 April 2021
Dr Vladislav Sandler
CEO
explain the Group and parent company’s transactions
and disclose with reasonable accuracy at any time the
financial position of the Group and parent company and
enable them to ensure that the financial statements
and the Directors’ remuneration report comply with the
Companies Act 2006 and, as regards the group financial
statements, international financial reporting standards
adopted pursuant to Regulation (EC) No.1606/2002 as it
applies in the European Union. They are also responsible
for safeguarding the assets of the Group and parent
company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
They are also responsible to make a statement that they
consider that the annual report and accounts, taken
as a whole, is fair, balanced, and understandable and
provides the information necessary for the shareholders
to assess the Group and parent company’s position and
performance, business model and strategy.
The Directors are responsible for the maintenance
and integrity of the corporate and financial information
included on the Company’s website. Legislation in
the United Kingdom governing the preparation and
dissemination of the financial statements may differ from
legislation in other jurisdictions.
Directors’ Responsibility Statement Pursuant to
Disclosure and Transparency Rules
Each of the Directors, whose names and functions
are listed on page 3, confirms that, to the best of their
knowledge and belief:
in accordance with
• the group and company financial statements have
been prepared
international
financial reporting standards adopted pursuant to
Regulation (EC) No.1606/2002 as it applies in the
European Union, and give a true and fair view of the
assets, liabilities, financial position and loss of the
Group and parent company; and
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 28
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the Year Ended 31 December 2020
G O V E R N A N C E R E P O R T
29
G O V E R N A N C E R E P O R T
Introduction
The Company recognises the importance of, and is
committed to, high standards of Corporate Governance.
The Company has voluntarily applied the main and
supporting principles set out in the UK Code of
Corporate Governance published by the Financial
Reporting Council in 2018 ("the Code"). The Code has
been followed to the extent practicable for a company
of its size and nature. The Code can be found at frc.org.
uk/our-work/publications/Corporate-Governance. The
ways in which the Company has applied the Code are
explained below:
• The Code requires that a smaller company should have
at least two Independent Non-Executive Directors.
As at 31 December 2020 the Board consisted of an
Executive Director and three Non-Executive Directors.
The Non-Executive Directors are interested in either
ordinary shares in the Company, options over ordinary
shares in the Company, or both, and cannot therefore
be considered fully independent under the Code.
The remuneration of the Non-Executive Directors
includes options and this is contrary to best practice,
and thus the Company is not in full compliance.
However, the Directors consider the present structure
and arrangements to be adequate given the size
and stage of development of the Company, and all
are considered to be independent in character and
judgement.
• Directors appointed by the Board are subject to
election by shareholders at the Annual General
Meeting of the Company following their appointment
and thereafter are subject to re-election in accordance
with the Company’s articles of association. The terms
and conditions of appointment of Non-Executive
Directors will be made available upon written request.
The Board has voluntarily adopted a code for Directors’
dealings based on the Model Code contained in the Listing
Rules of the UK Listing Authority that was previously
in force. The Board will be responsible for taking all
proper and reasonable steps to ensure compliance with
the code by the Directors. Compliance with the code
is being undertaken on a voluntary basis and the FCA
will not have the authority to (and will not) monitor the
Company’s voluntary compliance with it, nor to impose
sanctions in respect of any failure by the Company to so
comply. In addition, the Company will take all proper and
reasonable steps to ensure compliance by the Founders
with the Code for dealings in the Ordinary Shares.
The Company is small with a modest resource base. The
Company has a clear mandate to optimise the allocation
of limited resources to support its development plans. As
such, the Company strives to maintain a balance between
conservation of
limited resources and maintaining
robust corporate governance practices. As the Company
evolves, the Board is committed to enhancing the
Company’s corporate governance policies and practices
deemed appropriate for the size and maturity of the
organisation.
Set out below are the Company’s corporate governance
practices for the year ended 31 December 2020.
Committees
The Company has established audit, remuneration and
nomination committees.
Audit Committee
The Audit Committee has responsibility for, among other
things, the monitoring of the integrity of the financial
statements of the Company and its Group and the
involvement of the Group's auditors in that process. It
focuses in particular on compliance with accounting
policies and ensuring that an effective system of external
audit and financial control is maintained, including
considering the scope of the annual audit and the extent
of the non-audit work undertaken by external auditors
and advising on the appointment of external auditors.
The ultimate responsibility for reviewing and approving
the annual report and accounts and the half-yearly
reports remains with the Board. The Audit Committee will
meet at least three times a year at the appropriate times
in the financial reporting and audit cycle.
The members of the Audit Committee are Peter
Redmond, who acts as chairman of the committee, and
Professor Sir Marc Feldmann.
The Group’s external auditor is PKF Littlejohn LLP who
has served as external auditor for five years. The role of
external auditor last went to tender in 2015. The Audit
Committee closely monitors the level of audit and non-
audit services that they provide to the Company and
Group.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 30
G O V E R N A N C E R E P O R T
Having assessed the performance, objectivity and independence of the auditors, the Committee will be recommending
the reappointment of PKF Littlejohn LLP as auditors to the Company at the 2021 Annual General Meeting.
During the year to 31 December 2020 the Audit Committee considered the following key issues in relation to the
Financial Statements:
Issue
Action
Accounting policies
The Committee reviewed and discussed the significant accounting policies with
management and the external auditor and reached the conclusion that each
policy was appropriate to the Group.
Carrying value of investment
in Hemogenyx Pharmaceuticals
LLC
The Committee reviewed the impairment assessment report prepared by
management and agreed that given the reasonable expectation that the Group
will achieve its milestone targets over the next 18 months that no impairment to
the value of the investment in Hemogenyx Pharmaceuticals LLC was required
as at 31 December 2020.
Going Concern review
The Committee considered the ability of the Group to operate as a Going
Concern considering cash flow forecasts for the next 12 months and milestone
achievements. It was determined by the Committee that it was reasonable to
expect that the Group has or will have access to sufficient funding in order
to achieve its 12-month milestone targets and that it was appropriate for the
Financial Statements to be prepared on a going concern basis.
Review of audit and non-audit
services and fees
The external auditor is not engaged by the Group to carry out any non-audit
work in respect of which it might, in the future, be required to express an audit
opinion.
The Committee reviewed the fees charged for the provision of audit and non-
audit services and determined that they were in line with fees charged to
companies of similar size and stage of development.
The Committee considered and was satisfied the external auditor’s assessment
of its own independence.
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Annual Report & Financial Statements for the Year Ended 31 December 2020
31
G O V E R N A N C E R E P O R T
Remuneration Committee
The remuneration committee reviews the performance
of the Executive Directors and makes recommendations
to the Board on matters relating to their remuneration
and terms of employment. The committee also makes
recommendations to the Board on proposals for the
granting of share awards and other equity incentives
pursuant to any share award scheme or equity incentive
scheme in operation from time to time. The Remuneration
Committee will meet at least twice a year.
The members of the Remuneration Committee are Peter
Redmond, who acts as chairman of the committee, and
Alexis Sandler.
Nomination Committee
The Nomination Committee is responsible for considering
and making recommendations to the Board in respect
of appointments to the Board, the Board committees
and the chairmanship of the Board committees. It is
also responsible for keeping the structure, size and
composition of the Board under regular review, and for
making recommendations to the Board with regard to
any changes necessary, taking into account the skills
and expertise that will be needed on the Board in the
future. The Nomination Committee meets at least once
a year.
The members of the Nomination Committee are Peter
Redmond, who acts as chairman of the committee,
Professor Sir Marc Feldmann, and Alexis Sandler.
Leadership
The Company is headed by an effective Board which is
collectively responsible for the long-term success of the
Company.
The role of the Board: the Board sets the Company’s
strategy, ensuring that the necessary resources are
in place to achieve the agreed strategic priorities, and
reviews management and financial performance. It is
accountable to shareholders for the creation and delivery
of strong, sustainable financial performance and long-
term shareholder value. To achieve this, the Board directs
and monitors the Company’s affairs within a framework of
controls which enable risk to be assessed and managed
effectively. The Board also has responsibility for setting
the Company’s core values and standards of business
conduct and for ensuring that these, together with the
Company’s obligations to its stakeholders, are widely
understood throughout the Company. The Board has a
formal schedule of matters reserved which is provided
later in this report.
Board Meetings: the core activities of the Board are
carried out in scheduled meetings of the Board. These
meetings are timed to link to key events in the Company’s
corporate calendar and regular reviews of the business
are conducted. Additional meetings and conference
calls are arranged to consider matters which require
decisions outside the scheduled meetings. During the
year, the Board met on 15 occasions.
Outside the scheduled meetings of the Board, the
Directors maintain frequent contact with each other to
discuss any issues of concern they may have relating to
the Company or their areas of responsibility, and to keep
them fully briefed on the Company’s operations.
Matters reserved specifically for the Board: the Board
has a formal schedule of matters reserved that can only
be decided by the Board. The key matters reserved are
the consideration and approval of:
• The Company’s overall strategy;
• Financial statements and dividend policy;
• Management structure including succession planning,
appointments and remuneration; material acquisitions
and disposal, material contracts, major capital
expenditure projects and budgets;
• Capital structure, debt and equity financing and other
matters;
• Risk management and internal controls;
• The Company’s corporate governance and compliance
arrangements; and
• Corporate policies
Summary of the Board’s work in the year: during the year,
the Board considered all relevant matters within its remit,
but focused in particular on the development and risk
diversification of the Company.
32
G O V E R N A N C E R E P O R T
Attendance at meetings
Number held and entitled to attend
Number attended
Dr Vladislav Sandler
Professor Sir Marc Feldmann
Alexis Sandler
Peter Redmond
15
15
15
15
15
15
15
13
The Board is pleased with the high level of attendance
and participation of Directors at Board and committee
meetings.
The Chairman sets the Board Agenda and ensures
adequate time for discussion.
Non-Executive Directors: the Non-Executive Directors
bring a broad range of business and commercial
experience to the Company and have a particular
responsibility
and
to
challenge
the Executive
the performance of
constructively
management (where appointed) and to monitor the
performance of the management team in the delivery of
the agreed objectives and targets.
independently
All directors with the exception of the CEO and Professor
Sir Marc Feldmann were appointed for an initial term
of 12 months. These terms were extended by mutual
agreement after satisfactory performance and re-
election by shareholders.
Other governance matters: all of the Directors are aware
that independent professional advice is available to each
Director in order to properly discharge their duties as a
Director. In addition, each Director and Board committee
has access to the advice of the Company Secretary.
The Company Secretary: the Company Secretary is
Andrew Wright. He is responsible for the Board complying
with UK procedures.
Effectiveness
For the period under review the Board comprised a
Chief Executive Officer, a Non-Executive Chairman, and
two independent Non-Executive Directors. Biographical
details of the Board members are set out on pages 12-14
of this report.
The Directors are of the view that the Board and its
committees consist of Directors with an appropriate
balance of skills, experience, independence and diverse
backgrounds to enable them to discharge their duties
and responsibilities effectively.
Independence: the Non-Executive Directors bring a
broad range of business and commercial experience
to the Company. The Board considers each of the Non-
Executive Directors to be independent in character and
judgement.
Appointments: the Board is responsible for reviewing
and the structure, size and composition of the Board and
making recommendations to the board with regards to
any required changes.
Commitments: all Directors have disclosed any significant
commitments to the Board and confirmed that they have
sufficient time to discharge their duties.
Induction: all new Directors received an induction as
soon as practical on joining the Board.
Conflict of interest: a Director has a duty to avoid a
situation in which he or she has, or can have, a direct or
indirect interest that conflicts, or possibly may conflict with
the interests of the Company. The Board had satisfied
itself that there is no compromise to the independence
of those Directors who have appointments on the
Boards of, or relationships with, companies outside the
Company. The Board requires Directors to declare all
appointments and other situations which could result in
a possible conflict of interest.
Board performance and evaluation: Hemogenyx
Pharmaceuticals plc has a policy of appraising Board
reviewed various
performance annually. Having
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 33
The Directors carry out a risk assessment before signing
up to any commitments.
Workforce policies and practices
The Board is responsible for ensuring that workforce
policies and practices are consistent with the Group’s
values and support its long term sustainable success,
and that staff are able to raise any matters of concern.
The Non-executive Director designated to engage
with the workforce on these matters is Alexis Sandler.
Ms Sandler, and in turn the Board, review the Group’s
policies and procedures, including anti-harassment and
discrimination policies, sexual harassment reporting
procedures, and procedures for reporting grievances
or other concerns, and oversee the proportionate and
independent investigation of any matters arising from
them. These policies are provided to workers prior to the
start of their work with the Group, and hard copies are
posted prominently in the Group’s operating premises
together with other legally required notices.
Relations with stakeholders
The Company is committed to a continuous dialogue with
shareholders as it believes that this is essential to ensure
a greater understanding of and confidence amongst its
shareholders in the medium and longer term strategy
of the Group and in the Board’s ability to oversee its
implementation. It is the responsibility of the Board as a
whole to ensure that a satisfactory dialogue takes place.
Section 172 of the Companies Act 2006 requires
Directors to take into consideration the interests of
stakeholders in their decision making. The Board is
committed to understanding and engaging with all key
stakeholder groups of the Company in order to maximise
value and promote long-term Company success in line
with our strategic objectives. The Board recognises its
duties under Section 172 and continuously has regard
to how the Company’s activities and decisions will
impact employees, those with which it has a business
relationship, the community and environment and its
reputation for high standards of business conduct. In
weighing all of the relevant factors, the Board, acting in
good faith and fairly between members, makes decisions
and takes actions that it considers will best lead to the
long-term success of the Company.
G O V E R N A N C E R E P O R T
approaches to Board appraisal, it has concluded that for a
company of its current scale, an internal process in which
all Board members submit answers to a questionnaire
that considers the functionality of the Board and its
committees is most appropriate at this stage.
Accountability
The Board is committed to providing shareholders with
a clear assessment of the Company’s position and
prospects. This is achieved through this report and as
required other periodic financial and trading statements.
Going concern: the Company’s business activities,
together with factors likely to affect its future operations,
financial position, and liquidity position are set out
in the Chairman’s Statement and the principal risks
and uncertainties sections of the Strategic Report. In
addition, the Notes to the Financial Statements disclose
the Company’s financial risk management practices with
respect to its capital structure, liquidity risk, interest rate
risk, credit risk, and other related matters.
The Directors, having made due and careful enquiry, are
of the opinion that the Company has adequate working
capital to execute its operations and has the ability to
access additional financing over the next 12 months. The
Directors, therefore, have made an informed judgement,
at the time of approving financial statements, that there
is a reasonable expectation that the Company has
adequate resources to continue in operational existence
for the foreseeable future. As a result, the Directors
have continued to adopt the going concern basis of
accounting in preparing the annual financial statements.
Internal controls: the Board of Directors reviews the
effectiveness of the Company’s system of internal controls
in line with the requirement of the Code. The internal
control system is designed to manage the risk of failure
to achieve its business objectives. This covers internal
financial and operational controls, compliances and risk
management. The Company has necessary procedures
in place for the year under review and up to the date of
approval of the Annual Report and financial statements.
The Directors acknowledge their responsibility for the
Company’s system of internal controls and for reviewing
its effectiveness. The Board confirms the need for
an ongoing process for identification, evaluation and
management of significant risks faced by the Company.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 34
G O V E R N A N C E R E P O R T
During the year, the Board assessed
its current
activities between the Board and its stakeholders,
which demonstrated that the Board actively engages
with its stakeholders and takes their various objectives
into consideration when making decisions. Specifically,
actions the Board has taken to engage with
its
stakeholders in 2020 include:
• Attended the 2020 AGM, which was a closed
meeting in 2020 due to the restrictions imposed
by the UK government’s response to the COVID-19
pandemic, prepared to answer any questions raised
by shareholders, and held an additional shareholder
webinar to hear from and provide additional feedback
to investors;
• Arranged meetings with certain stakeholders to
provide
the Company’s
research and development activities and other
general corporate updates;
them with updates on
• Made presentations at conferences and published
recordings and slide decks on the Company’s research
and development;
• Evaluated the relationships with the Company’s various
collaborators through management and identified
ways to strengthen relationships and arrangements
with key collaborations; and
• Monitored company culture and engaged with
improve
to continuously
employees on efforts
company culture and morale.
that appropriate steps and
The Board believes
considerations have been taken during the year so that
each Director has an understanding of the various key
stakeholders of the Company. The Board recognises its
responsibility to contemplate all such stakeholder needs
and concerns as part of its discussions, decision-making,
and in the course of taking actions, and will continue
to make stakeholder engagement a top priority in the
coming years.
The Board’s primary shareholder contact is through Peter
Redmond, the Non-Executive Director responsible for
shareholder relations. The Chairman, the CEO and other
Directors, as appropriate, make themselves available for
contact with major shareholders and other stakeholders
in order to understand their issues and concerns.
The Company plans to use the AGM as an opportunity to
communicate with its shareholders. Notice of the AGM will
be issued shortly and at least 21 days before the date of
the meeting. To ensure compliance with the Governance
Code, the Board proposes separate resolutions for
each issue and proxy forms allow shareholders who are
unable to attend the AGM – as may again be a particular
issue this year in light of travel and meeting restrictions
resulting from the COVID-19 pandemic – to vote for or
against or to withhold their vote on each resolution. The
results of all proxy voting will be published on the Group’s
web site after the AGM. Shareholders who attend the
AGM will have the opportunity to ask questions.
The Group’s web site at https://hemogenyx.com is the
primary source of information on the Group. The web site
includes an overview of the activities of the Group and all
recent Group announcements.
Viability statement
In accordance with the UK Corporate Governance
in July 2018, the Directors have
Code published
assessed the prospects of the Group and concluded
that it is appropriate to adopt the going concern basis
of accounting. The assessment of going concern is
disclosed in Note 2.
The Board’s assessment of the Group’s current position
and principal risks are disclosed in the Directors’ Strategic
Report on pages 15 to 21.
Dr Vladislav Sandler
CEO
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the Year Ended 31 December 2020
35
D I R E C T O R S ’ R E M U N E R A T I O N R E P O R T
36
D I R E C T O R S ’ R E M U N E R A T I O N R E P O R T
Company are provided with appropriate incentives to
encourage enhanced performance and are, in a fair
and responsible manner, rewarded for their individual
contributions to the success of the Company;
• recommend and monitor the level and structure of
remuneration for senior management;
• when setting remuneration policy for directors, review
and have regard to the remuneration trends across the
Company, and review the on-going appropriateness
and relevance of the remuneration policy;
• obtain
reliable, up-to-date
information about
remuneration in other companies. To help it fulfil its
obligations the Committee shall have full authority to
appoint remuneration consultants and to commission
or purchase any reports, surveys or information which
it deems necessary, within any budgetary restraints
imposed by the Board;
• be exclusively
responsible
the
selection criteria, selecting, appointing and setting the
terms of reference for any remuneration consultants
who advise the Committee;
for establishing
• approve the design of, and determine targets for, any
performance related pay schemes operated by the
Company and approve the total annual payments
made under such schemes;
• review the design of all share incentive plans for
approval by the Board and shareholders. For any such
plans, determine each year whether awards will be
made, and if so, the overall amount of such awards,
the individual awards to executive directors, company
secretary and other designated senior executives and
the performance targets to be used;
• ensure that contractual terms on termination, and any
payments made, are fair to the individual, and the
Company, that failure is not rewarded and that the
duty to mitigate loss is fully recognised; and
• oversee any major changes in employee benefits
structures throughout the Company.
The Company has an established
remuneration
committee. The Committee reviews the scale and
structure of the Directors’ fees, taking into account the
interests of shareholders and the performance of the
Company and directors.
The items included in this report are unaudited unless
otherwise stated.
Statement of Hemogenyx Pharmaceutical plc’s Policy
on Directors’ Remuneration by the Chairman of the
Remuneration Committee
As Chairman of the Remuneration Committee I am
introduce our Directors’ Remuneration
pleased
Report. One of the Remuneration Committee’s aims is
to provide clear, transparent remuneration reporting for
our shareholders which adheres to the best practice
corporate governance principles that are required for
listed organisations.
to
The Directors’ Remuneration Policy, which is set out
on pages 37 to 38 of this report, will be submitted to
shareholders for approval at our Annual General Meeting.
A key focus of the Directors’ Remuneration Policy is
to align the interests of the Directors to the long-term
interests of the shareholders and aims to support a
high-performance culture with appropriate reward for
superior performance, without creating incentives that
will encourage excessive risk taking or unsustainable
company performance. This is underpinned through the
implementation and operation of incentive plans.
Key Activities of the Remuneration Committee
The key activities of the Remuneration Committee are:
• to determine and agree with the Board the framework
or broad policy for the remuneration of the Company's
chairman, chief executive, the executive directors, the
company secretary and such other members of the
executive management as it is designated to consider;
•
in determining such policy, take into account all
factors which it deems necessary including relevant
legal and regulatory requirements, the provisions and
recommendations of the UK Corporate Governance
Code (the "Code") and associated guidance. The
objective of such policy shall be to ensure that
members of the executive management of the
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 37
D I R E C T O R S ’ R E M U N E R A T I O N R E P O R T
Members
The Remuneration Committee comprises the following independent Non-Executive Directors:
Name
Peter Redmond
Alexis Sandler
Position
Chairman
Member
Date of appointment
5 October 2017
5 October 2017
Remuneration Components
The Company remunerates directors in line with best
market practice in the industry in which it operates. The
components of Director remuneration that are considered
by the Board for the remuneration of directors in future
years are likely to consist of:
• Base salaries
• Pension and other benefits
• Annual bonus
• Share incentive arrangements
The Executive Director has entered into a service
agreement with the Company and the Non-Executive
Directors have entered into letters of appointment with
the Company.
All such contracts impose certain restrictions as regards
the use of confidential information and intellectual
property and the Executive Director’s service contract
imposes restrictive covenants which apply following the
termination of the agreement.
The Executive Director Dr Vladislav Sandler is entitled to
pay at a rate of £1,500 per day for time spent in the UK
on the Company’s business. In addition, Dr Sandler has
a separate contract with Hemogenyx Pharmaceuticals
LLC effective 1 September 2017 appointing him as CEO
and Chief Scientific Officer of that company for an initial
three-year term with automatic continuation and setting
out his duties in relation to his day-to-day to work in
connection with Hemogenyx Pharmaceuticals’ product
candidates. Pursuant to this contract, Dr Sandler is
currently entitled to receive $187,500 per annum and
four weeks’ holiday a year. Dr Sandler is also subject to
certain non-compete and non-interference covenants
in the event of its termination (subject to certain limited
exceptions). Dr Sandler also has a separate contract with
Immugenyx LLC effective from 1 January 2019 appointing
him as CEO and Chief Scientific Officer of that company
for an initial three-year term with automatic continuation
and setting out his duties in relation to his day-to-day
work in connection with Immugenyx’s development of
its AHC. Pursuant to this contract, Dr Sandler receives
$60,000 and 10,000 ownership units in Immugenyx LLC
per annum. This contract has the same non-compete and
non-interference covenants in the event of its termination
as his contract with Hemogenyx Pharmaceuticals LLC.
Other Matters
The Company does not currently have any annual or
long-term incentive schemes or any other scheme
interests in place for any of the Directors.
The Company has established a workplace pension
scheme but it does not presently have any employees
qualifying under the auto-enrolment pension rules
who have not opted out of the scheme. It does not
currently pay pension amounts in relation to Directors’
remuneration. The Company has not paid out any excess
retirement benefits to any Directors or past Directors.
The Company has not paid any compensation to past
Directors.
Recruitment Policy
Base salary levels will take into account market data
for the relevant role, internal relativities, their individual
experience and their current base salary. Where an
individual is recruited at below market norms, they may
be re-aligned over time (e.g. two to three years), subject
to performance in the role. Benefits will generally be in
accordance with the approved policy.
For external and internal appointments, the Board may
agree that the Company will meet certain relocation and/
or incidental expenses as appropriate.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 38
D I R E C T O R S ’ R E M U N E R A T I O N R E P O R T
Payment for Loss of Office
The Committee will honour Executive Directors’
contractual entitlements. Service contracts do not
contain liquidated damages clauses. If a contract is to be
terminated, the Committee will determine such mitigation
as it considers fair and reasonable in each case. There is
no agreement between the Company and its Executive
Directors or employees, providing for compensation for
loss of office or employment that occurs because of a
takeover bid.
The Committee reserves the right to make additional
payments where such payments are made in good
faith in discharge of an existing legal obligation (or by
way of damages for breach of such an obligation); or by
way of settlement or compromise of any claim arising in
connection with the termination of an Executive Director’s
office or employment.
Service Agreements and Letters of Appointment
The Executive Director’s service agreement had an initial
term of two years and may subsequently be terminated
by the Company or the Executive Director by giving 6
months’ notice.
Name
Date of service
agreement
Notice period by
Company (months)
Notice period by
Director (months)
Dr Vladislav Sandler
4 October 2017
6
6
The Non-Executive Directors of the Company do not have service contracts but are appointed by letters of appointment.
Each Non-Executive Director’s term of office runs for an initial period of one year unless terminated earlier upon written
notice or upon their resignations.
The terms of the Non-Executive Directors’ appointments are subject to their re-election by the Company’s shareholders
at any Annual General Meeting at which the Non-Executive Directors stand for re-election.
The details of each Non-Executive Director’s current term are set out below:
Name
Alexis Sandler
Peter Redmond
Date of service
agreement
4 October 2017
4 October 2017
Professor Sir Marc Feldmann
9 April 2018
Current
term
(years)
Notice period
by Company
(months)
Notice period
by Director
(months)
Date of
resignation
1
1
3
3
3
3
3
3
3
-
-
-
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 39
D I R E C T O R S ’ R E M U N E R A T I O N R E P O R T
Executive Directors’ Remuneration (audited)
The table below sets out the remuneration received by each Executive Director for the years ended 31 December 2020
and 2019. Dr Vladislav Sandler was the highest paid Director:
Executive Directors
Basic salary
2020
£’000
Pension
2020
£’000
Dr Vladislav Sandler
Total
200
200
5
5
Executive Directors
Basic salary
2019
£’000
Pension
2019
£’000
Dr Vladislav Sandler
Total
145
145
4
4
Total
2020
£’000
205
205
Total
2019
£’000
149
149
Non-Executive Directors’ Remuneration
The table below sets out the remuneration received by each Non-Executive Director during the years ended 31
December 2020 and 2019:
Basic salary
2020
£’000
Total
2020
£’000
Alexis Sandler
Peter Redmond
Professor Sir Marc Feldmann
Total
27
42
13
82
27
64
13
104
Basic salary
2019
£’000
Total
2019
£’000
Alexis Sandler
Peter Redmond
Professor Sir Marc Feldmann
Total
10
36
12
59
10
36
12
59
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 40
D I R E C T O R S ’ R E M U N E R A T I O N R E P O R T
Relative importance of spend on pay
The table below illustrates the year-on-year change in total remuneration compared to distributions to shareholders
and loss before tax for the financial years ended 31 December 2020 and 2019:
Year ended 31 December 2020
Year ended 31 December 2019
Percentage change
Distributions to
shareholders
£
-
-
n/a
Total employee pay
(including stock
based compensation)
£
1,130,763
691,992
63.4%
Operational
cash outflow
£
1,798,404
1,199,873
49.9%
Total employee pay includes wages and salaries, social security costs, healthcare cost, 401K scheme cost and share-
based payments for employees in continuing operations. Further details on Employee remuneration are provided in
Note 8.
Operational cash outflow has been shown in the table above as cash flow monitoring and forecasting is an important
consideration for the Remuneration Committee and Board of Directors when determining cash-based remuneration for
directors and employees.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 41
D I R E C T O R S ’ R E M U N E R A T I O N R E P O R T
Historical share price performance comparison
The table below compares the share price performance (based on a notional investment of £100) of Hemogenyx
Pharmaceuticals plc against the FTSE SmallCap and FTSE Techmark Mediscience for the period November 2015 to
December 2020 calculated on a month end spot basis. The FTSE SmallCap has been chosen to provide a wider market
comparator constituting companies of an appropriate size and the FTSE Techmark Mediscience chosen due to sector
relevance:
Investment Performance Comparison
500.00
400.00
300.00
200.00
100.00
-
5
1
-
V
O
N
6
1
-
N
A
J
6
1
-
R
A
M
6
1
-
Y
A
M
6
1
-
P
E
S
6
1
-
V
O
N
7
1
-
N
A
J
7
1
-
R
A
M
7
1
-
Y
A
M
7
1
-
L
U
J
7
1
-
P
E
S
7
1
-
V
O
N
8
1
-
N
A
J
8
1
-
R
A
M
8
1
-
Y
A
M
8
1
-
L
U
J
8
1
-
P
E
S
8
1
-
V
O
N
9
1
-
N
A
J
9
1
-
R
A
M
9
1
-
Y
A
M
9
1
-
L
U
J
9
1
-
P
E
S
9
1
-
V
O
N
0
2
-
N
A
J
0
2
-
R
A
M
0
2
-
Y
A
M
0
2
-
L
U
J
0
2
-
P
E
S
0
2
-
V
O
N
HEMO
FTSE small cap
FTSE Techmark Mediscience
Hemogenyx Pharmaceuticals plc was listed in November 2015 (under the name Silver Falcon plc) and therefore no
historical share price data exists prior to this period. There was also no data between December 2015 and October
2017 pending completion of a transaction. It is for these reasons that the historical investment performance is not
reflective of the current Group.
Consideration of shareholder views
The Board considers shareholder feedback received and guidance from shareholder bodies. This feedback, plus any
additional feedback received from time to time, is considered as part of the Company’s annual policy on remuneration.
Approved on behalf of the Board of Directors.
Peter Redmond
Director & Remuneration Committee Chairman
30 April 2021
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 42
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the Year Ended 31 December 2020
I N D E P E N D E N T A U D I T O R ’ S
R E P O R T T O T H E M E M B E R S O F
H E M O G E N Y X P H A R M A C E U T I C A L S P L C
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the Year Ended 31 December 2020
43
I N D E P E N D E N T A U D I T O R ’ S R E P O R T T O T H E
M E M B E R S O F H E M O G E N Y X P H A R M A C E U T I C A L S P L C
Opinion
We have audited the financial statements of Hemogenyx
Pharmaceuticals Plc (the ‘parent company’) and its
subsidiaries (the ‘group’) for the year ended 31 December
2020 which comprise the Consolidated Statement of
Comprehensive Income, the Group and Parent Company
Statements of Financial Position, the Group and Parent
Company Statements of Changes in Equity, the Group
and Parent 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 accounting standards
in conformity with the requirements of the Companies
Act 2006 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 December 2020 and of the group’s and
parent company’s loss for the year then ended;
• the group financial statements have been properly
prepared in accordance with international accounting
standards in conformity with the requirements of the
Companies Act 2006;
• the parent company financial statements have been
properly prepared in accordance with international
accounting standards
the
requirements of the Companies Act 2006 and as
applied in accordance with the provisions of the
Companies Act 2006; and
in conformity with
• the financial statements have been prepared in
accordance with the requirements of the Companies
Act 2006 and as regard to the group financial
statements, international financial reporting standards
adopted pursuant to Regulation (EC) No 1606/2002 as
it applies in the European Union.
Basis for opinion
We conducted our audit in accordance with International
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are
further described in the Auditor’s responsibilities for the
audit of the financial statements section of our report.
We are independent of the group and parent company
in accordance with the ethical requirements that are
relevant to our audit of the financial statements in the
UK, including the FRC’s Ethical Standard as applied to
listed public interest entities, and we have fulfilled our
other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a
basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded
that the director's use of the going concern basis of
accounting in the preparation of the financial statements is
appropriate. Our evaluation of the directors’ assessment
of the group’s and parent company’s ability to continue
to adopt the going concern basis of accounting included
a review of management’s assessment of the going
concern basis, together with budgets and cash flow
forecasts for the 12 months following the reporting date.
This included a review for reasonableness of assumptions
used to prepare the budget and consideration of the
impact of COVID-19.
Based on the work we have performed, we have not
identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast
significant doubt on the group's or parent company’s
ability to continue as a going concern for a period of at
least twelve months from when the financial statements
are authorised for issue.
In relation to the entities reporting on how they have
applied the UK Corporate Governance Code, we have
nothing material to add or draw attention to in relation to
the directors’ statement in the financial statements about
whether the director’s considered it appropriate to adopt
the going concern basis of accounting.
Our responsibilities and the responsibilities of the
directors with respect to going concern are described in
the relevant sections of this report.
44
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M E M B E R S O F H E M O G E N Y X P H A R M A C E U T I C A L S P L C
Our approach to the audit
The group includes the listed parent company and the
US based subsidiaries. We tailored the scope of our
audit to ensure that we performed enough work to be
able to give an opinion on the financial statements as a
whole, taking into account the structure of the group and
the company, the accounting processes and controls,
and the industry in which they operate.
All entities in the group were audited by a single
engagement team. We did not rely on the work of any
component auditors.
As part of our planning we assessed the risk of material
misstatement including those that required significant
auditor consideration at the component and group level.
Procedures were then performed to address the risk
identified and for the most significant assessed risks of
material misstatement, the procedures performed are
outlined below in the key audit matters section of this
report.
Key audit matters
Key audit matters are those matters that, in our
professional judgment, were of most significance in our
audit of the financial statements of the current period
and include the most significant assessed risks of
material misstatement (whether or not due to fraud) we
identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources
in the audit; and directing the efforts of the engagement
team. These matters were addressed in the context of
our audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide a
separate opinion on these matters.
Our application of materiality
For the purposes of determining whether the financial
statements are free from material misstatement, we
define materiality as the magnitude of misstatement
that makes it probable that the economic decisions of
a reasonably knowledgeable person, relying on the
financial statements, would be changed or influenced.
We also determine a level of performance materiality
which we use to assess the extent of testing needed to
reduce an appropriately low level the probability that the
aggregate of uncorrected and undetected misstatements
exceeds materiality for the financial statements as a
whole.
Materiality for the group financial statements was
set at £46,000 (2019: £31,000). This was calculated
based on 2% of total expenses for the year. Using our
professional judgement, we have determined this to be
the principal benchmark within the financial statements
as it will be most relevant to stakeholders in assessing
the financial performance of the group in its early years
of development as the group is not currently revenue
generating.
Materiality for the parent company financial statements
was set at £40,000
(2019: £25,000). This was
calculated based on a factor of group materiality. We
have determined this level of materiality for the parent
company to gain sufficient coverage of expenses.
We also determine a level of performance materiality
which we use to assess the extent of testing needed
to reduce to an appropriately low level the probability
that the aggregate of uncorrected and undetected
misstatements exceeds materiality for the financial
statements as a whole. Performance materiality for the
group financial statements was set at £32,000 (2019:
£21,700) and the parent company was set at £28,000
(2019: £17,500), being 70% of materiality for the financial
statements as a whole respectively.
We agreed to report to those charged with governance all
corrected and uncorrected misstatements we identified
through our audit with a value in excess of £2,300 and for
the parent company a value in excess of £2,000. We also
agreed to report any other audit misstatements below
that threshold that we believe warranted reporting on
qualitative grounds.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 45
I N D E P E N D E N T A U D I T O R ’ S R E P O R T T O T H E
M E M B E R S O F H E M O G E N Y X P H A R M A C E U T I C A L S P L C
Key Audit Matter
How our scope addressed this matter
Carrying Value of investments in and loans to
subsidiary undertakings
Investments held by the parent company in
Hemogenyx LLC and loans to subsidiaries
are a significant balance. The subsidiary
undertakings are not yet revenue generating.
We undertook audit procedures which included:
• Reviewing the directors’ assessment of the carrying value and
their conclusions thereof.
• Review of the subsidiary’s financial performance.
There is a risk that the investments and loans
are overstated if the subsidiary undertakings
are unable to generate sufficient future
profits or gains in the foreseeable future.
• The assessment of recoverability determined by the development
success of new medicines and treatments.
• Review and assessment of the progress of the individual projects
under development.
• We also reviewed board minutes for any indications of changes
in investments held by the parent Company and also agreed
ownership documents of all the subsidiaries in the group.
• We also reviewed the market capitalisation of the group on the
London Stock Exchange at the date of this report as a guide and
to provide further assurance of its carrying value subsequent to
the year end.
Our work did not identify any issues with the carrying value of
investments in and loans to subsidiary undertakings.
We undertook audit procedures which included:
• Confirming that the cost of intangibles is correctly recorded by
agreeing to the price to the supporting documentation.
• Review of the directors’ assessment on the intangible assets
carrying value and challenging of the underlying assumptions.
• Review of the events after the year-end for indicators of
impairment.
The Directors’ judgements in their assessment are reasonable and
our work did not identify any impairment indicators regarding the
carrying value of intangible assets.
Investment: £8.0m (Note 16)
Loan: £2.8m (Note 15)
Carrying value of the intangible assets
The carrying value of the Intangible Asset
recorded in the subsidiary’s books is the other
key risk area as these items will ultimately
result in the main source of income for the
group.
This asset mainly derives from an exclusive
license agreement signed in January 2015,
where the Company purchased the patent
rights surrounding the two main products
under development
for $347,500. The
directors concluded that no impairment was
required at this stage and amortisation will
commence once these products are ready for
marketing.
Intangible asset: £255k (Note 14)
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 46
I N D E P E N D E N T A U D I T O R ’ S R E P O R T T O T H E
M E M B E R S O F H E M O G E N Y X P H A R M A C E U T I C A L S P L C
Other information
The other information comprises the information included
in the annual report, other than the financial statements
and our auditor’s report thereon. The directors are
responsible for the other information contained within
the annual report. Our opinion on the group and parent
company financial statements does not cover the other
information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of
assurance conclusion thereon. Our responsibility is to
read the other information and, in doing so, consider
whether the other information is materially inconsistent
with the financial statements or our knowledge obtained
in the course of the audit, or otherwise appears to
be materially misstated. If we identify such material
inconsistencies or apparent material misstatements,
we are required to determine whether this gives rise
to a material misstatement in the financial statements
themselves. If, based on the work we have performed,
we conclude that there is a material misstatement of this
other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the
Companies Act 2006
In our opinion the part of the directors’ remuneration
report to be audited has been properly prepared in
accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the
course of the audit:
• 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
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 and the part
of the directors’ remuneration report to be audited
are not in agreement with the accounting records and
returns; or
• certain disclosures of directors’
specified by law are not made; or
remuneration
• we have not received all the
information and
explanations we require for our audit.
Corporate governance statement
The Listing Rules require us to review the directors'
statement in relation to going concern, longer-term
viability and that part of the Corporate Governance
Statement relating to the group’s and parent company's
compliance with the provisions of the UK Corporate
Governance Statement specified for our review.
Based on the work undertaken as part of our audit, we
have concluded that each of the following elements
of the Corporate Governance Statement is materially
consistent with the financial statements or our knowledge
obtained during the audit:
• Directors' statement with regards the appropriateness
of adopting the going concern basis of accounting
and any material uncertainties identified;
• Directors’ explanation as to its assessment of the
entity’s prospects, the period this assessment covers
and why they period is appropriate;
• the strategic report and the directors’ report have
been prepared in accordance with applicable legal
requirements.
• Directors' statement that they consider the annual
report and the financial statements, taken as a whole,
to be fair, balanced and understandable;
Matters on which we are required to report by
assessment of the emerging and principal risks;
• Board’s confirmation that it has carried out a robust
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.
• The section of the annual report that describes the
review of effectiveness of risk management and
internal control systems; and
• The section describing the work of the audit committee.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020
47
I N D E P E N D E N T A U D I T O R ’ S R E P O R T T O T H E
M E M B E R S O F H E M O G E N Y X P H A R M A C E U T I C A L S P L C
Responsibilities of directors
As explained more fully in the statement of directors’
responsibilites,
for
the directors are
the preparation of the group and parent company
financial statements and for being satisfied that they
give a true and fair view, and for such internal control
as the directors determine is necessary to enable the
preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
responsible
In preparing the group and parent company financial
statements, the directors are responsible for assessing
the group and the parent company’s ability to continue
as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern
basis of accounting unless the directors either intend to
liquidate the group or the parent company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and
to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is
not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in
the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the
basis of these financial statements.
Irregularities, including fraud, are instances of non-
compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of
irregularities, including fraud. The extent to which our
procedures are capable of detecting
irregularities,
including fraud is detailed below:
• We obtained an understanding of the group and
parent company and the sector in which they operate
to identify laws and regulations that could reasonably
be expected to have a direct effect on the financial
statements. We obtained our understanding in this
regard
through discussions with management,
application of cumulative audit knowledge and
experience of the sector.
• We determined the principal laws and regulations
relevant to the group and parent company in this
regard to be those arising from Companies Act 2006,
LSE listing rules, Disclosure and Transparency Rules
and UK Corporate Governance Code
(voluntary
adoption).
• We designed our audit procedures to ensure the audit
team considered whether there were any indications
of non-compliance by the group and parent company
with those laws and regulations. These procedures
included, but were not limited to:
• Enquiries of management
• Review of minutes
• Review of RNS publications.
• As in all of our audits, we addressed the risk of fraud
arising from management override of controls by
performing audit procedures which included, but
were not limited to: the testing of journals; reviewing
accounting estimates for evidence of bias; and
evaluating the business rationale of any significant
transactions that are unusual or outside the normal
course of business.
Because of the inherent limitations of an audit, there is
a risk that we will not detect all irregularities, including
those leading to a material misstatement in the financial
statements or non-compliance with regulation. This
risk increases the more that compliance with a law or
regulation is removed from the events and transactions
reflected in the financial statements, as we will be less
likely to become aware of instances of non-compliance.
The risk is also greater regarding irregularities occurring
due to fraud rather than error, as fraud involves
intentional concealment, forgery, collusion, omission or
misrepresentation.
A further description of our responsibilities for the audit
of the financial statements is located on the Financial
Reporting Council’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of
our auditor’s report.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 48
I N D E P E N D E N T A U D I T O R ’ S R E P O R T T O T H E
M E M B E R S O F H E M O G E N Y X P H A R M A C E U T I C A L S P L C
members those matters we are required to state to them
in an auditor’s report and for no other purpose. To the
fullest extent permitted by law, we do not accept or
assume responsibility to anyone, other than the company
and the company's members as a body, for our audit
work, for this report, or for the opinions we have formed.
David Thompson (Senior Statutory Auditor)
For and on behalf of PKF Littlejohn LLP
Statutory Auditor
15 Westferry Circus
Canary Wharf
London E14 4HD
30 April 2021
Other matters which we are required to address
We were appointed by the audit committee on 2 March
2020 to audit the financial statements for the period
ending 31 December 2020 and subsequent financial
periods. Our total uninterrupted period of engagement is
6 years, covering the periods ending 31 December 2015
to 31 December 2020.
We have recently become aware that, during the period
of 1 May 2020 to 25 June 2020, Welbeck Associates
Limited provided trust account services to Hemogenyx
Pharmaceuticals Plc. The trust account was administered
by a director of Welbeck Associates Limited, who is also
a partner of PKF Littlejohn LLP. This service involved the
use of an account held in trust to collate and transfer
receipts from potential equity investors into the company
relating to funds brokered by Peterhouse Capital Limited.
We are satisfied that it does not meet the definition of
accounting services under the FRC Ethical Standard
which would be subject to an outright prohibition under
the FRC Ethical Standard. This is because they do not
involve the maintenance of accounting records nor do
they involve the preparation of financial statements or
other subject matter. It is Peterhouse Capital Limited
which maintains the accounting records relevant to this
service.
Our safeguards in respect of this non-audit service have
centred on the fact that the partner was not involved in
the audit engagement in any capacity. The service did
not involve making any judgements and as noted above,
instructions were taken only from Peterhouse Capital
Limited and not from Hemogenyx Pharmaceuticals Plc.
We confirm that this safeguard was applied and that it
enables us to conclude that our professional judgement
and our audit report are not affected by the provision of
the trust account service.
Our audit opinion is consistent with the additional report
to the audit committee.
Use of our report
This report is made solely to the company’s members,
as a body, in accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company’s
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the Year Ended 31 December 2020
49
F I N A N C I A L S T A T E M E N T S F O R T H E
Y E A R E N D E D 3 1 D E C E M B E R 2 0 2 0
50
C O N S O L I D A T E D S T A T E M E N T
O F C O M P R E H E N S I V E I N C O M E
Continuing Operations
Note
6
12
7
10
Revenue
Administrative Expenses
Depreciation Expense
Operating Loss
Other Income
Finance Income
Finance Costs
Loss before Taxation
Income tax
Loss for the year
Loss attributable to:
- Owners of Hemogenyx Pharmaceuticals plc
- Non-controlling interests
Items that will be reclassified subsequently to
profit or loss:
Translation of foreign operations
Other Comprehensive income for the year
Year Ended
31 December 2020
£
Year Ended
31 December 2019
£
-
-
(2,043,633)
(106,753)
(1,589,407)
(94,726)
(2,150,386)
(1,684,133)
85,237
3,365
(33,239)
213,126
14,191
(31,328)
(2,095,023)
(1,488,144)
-
35,000
(2,095,023)
(1,453,144)
(2,082,220)
(12,803)
(2,095,023)
(1,450,627)
(2,517)
(1,453,144)
(61,119)
(61,119)
16,176
16,176
Total comprehensive income for the year
(2,156,142)
(1,436,968)
Attributable to:
Owners of Hemogenyx Pharmaceuticals plc
Non-controlling interests
Total comprehensive loss for the year
Basic and diluted loss per share attributable to the equity
owners of the Company
11
(2,143,339)
(12,803)
(2,156,142)
(0.005)
(1,434,451)
(2,517)
(1,436,968)
(0.004)
The Notes to the Financial Statements form an integral part of these Financial Statements.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020
C O N S O L I D A T E D S T A T E M E N T
O F F I N A N C I A L P O S I T I O N
Group
Note
31 December 2020
£
31 December 2019
£
51
Assets
Non-current assets
Property, plant and equipment
Right of use asset
Deferred financing costs
Intangible asset
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Equity and Liabilities
Equity attributable to shareholders
Paid-in Capital
Called up share capital
Share premium
Other reserves
Reverse asset acquisition reserve
Foreign currency translation reserve
Retained Earnings
Equity attributable to owners of the Company
Non-controlling interests
Total Equity
Liabilities
Non-current liabilities
Lease liabilities
Borrowings
Total non-current liabilities
Current liabilities
Trade and other payables
Borrowings
Lease liabilities
Total Current Liabilities
Total Liabilities
Total equity and liabilities
12
13
28
14
17
18
19
20
4
13
23
22
23
13
222,858
45,885
223,615
254,955
747,313
104,972
1,812,299
1,917,271
123,922
109,442
-
262,050
495,414
55,804
498,679
554,483
2,664,584
1,049,897
4,336,363
9,990,965
764,815
(6,157,894)
(7,896)
(8,035,514)
890,838
(15,158)
875,680
10,028
-
10,028
160,771
1,579,378
38,726
1,778,875
3,612,429
7,699,789
399,229
(6,157,894)
53,223
(5,953,294)
(346,518)
(2,517)
(349,035)
73,192
1,144,167
1,217,359
141,677
-
39,896
181,573
1,788,903
1,398,932
2,664,584
1,049,897
This report was approved by the Board and authorised for issue on 30 April 2021 and signed on its behalf by:
Dr Vladislav Sandler, CEO
The Notes to the Financial Statements form an integral part of these Financial Statements.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020
52
C O M P A N Y S T A T E M E N T O F
F I N A N C I A L P O S I T I O N
Company
Note
31 December 2020
£
31 December 2019
£
Assets
Non-current assets
Loan to subsidiaries
Deferred financing costs
Investment in subsidiary
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Equity and Liabilities
Equity attributable to shareholders
Paid-in Capital
Called up share capital
Share premium
Other reserves
Retained Earnings
Total Equity
Liabilities
Current liabilities
Trade and other payables
Total Current Liabilities
Total Liabilities
15
28
16
17
18
19
20
22
2,766,051
213,472
8,000,000
10,979,523
61,448
1,036,214
1,097,662
1,570,839
-
8,000,000
9,570,839
6,282
14,505
20,787
12,077,185
9,591,626
4,336,363
9,990,965
749,767
(3,136,290)
11,940,805
3,612,429
7,699,789
386,662
(2,205,815)
9,493,065
136,380
136,380
98,561
98,561
136,380
98,561
Total equity and liabilities
12,077,185
9,591,626
Hemogenyx Pharmaceuticals plc has used the exemption granted under s408 of the Companies Act 2006 that allows
for the non-disclosure of the Income Statement of the parent company. The after-tax loss attributable to Hemogenyx
Pharmaceuticals plc for the year ended 31 December 2020 was £930,475 (2019: £486,048).
This report was approved by the Board and authorised for issue on 30 April 2020 and signed on its behalf by:
Dr Vladislav Sandler, CEO
The Notes to the Financial Statements form an integral part of these Financial Statements.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020
53
C O N S O L I D A T E D S T A T E M E N T O F
C H A N G E S I N E Q U I T Y
Group
Called
up Share
Capital
Share
Premium
Other
reserves
Reverse
acquisition
reserve
Foreign
currency
translation
reserve
Retained
earnings
Non-
Controlling
interests Total Equity
As at 1 January 2019
3,601,762 7,340,267
686,851
(6,157,894)
37,047
(4,548,867)
£
£
£
£
£
£
£
-
£
959,166
Loss in year
Other Comprehensive
Income
Total comprehensive
income for the year
Issue of shares –
exercise of warrants
Embedded derivate on
convertible note
Issue of options
Writeback of
options lapsed
Write-back of
warrants exercised
-
-
-
-
-
-
10,667
21,333
-
-
-
-
-
-
-
-
-
-
-
6,280
90,487
(46,200)
338,189
(338,189)
-
-
-
-
-
-
-
-
-
(1,450,627)
(2,517)
(1,453,144)
16,176
-
-
16,176
16,176
(1,450,627)
(2,517)
(1,436,968)
-
-
-
-
-
-
-
-
46,200
-
-
-
-
-
-
32,000
6,280
90,487
-
-
As at 31 December 2019
3,612,429 7,699,789
399,229 (6,157,894)
53,223 (5,953,294)
(2,517)
(349,035)
Loss in year
Other Comprehensive
Income
Total comprehensive
income for the year
-
-
-
-
-
-
Issue of shares, net
717,254 2,262,786
Exercise of warrants
6,680
28,390
-
-
-
-
-
Embedded derivate
on convertible note
Issue of options
Purchase of
subsidiary shares
-
-
-
-
-
-
2,482
363,104
-
-
-
-
-
-
-
-
-
-
(2,082,220)
(12,803)
(2,095,023)
(61,119)
-
-
(61,119)
(61,119)
(2,082,220)
(12,803)
(2,156,142)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,980,040
35,070
2,482
363,104
162
162
As at 31 December 2020 4,336,363 9,990,965
764,815 (6,157,894)
(7,896)
(8,035,514)
(15,158)
875,681
The Notes to the Financial Statements form an integral part of these Financial Statements.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 54
C O M P A N Y S T A T E M E N T O F
C H A N G E S I N E Q U I T Y
Company
Called up Share
Capital
Share Premium Other reserves
Retained
earnings/(loss)
Total Equity
As at 1 January 2019
3,601,762
7,340,267
680,564
(1,765,967)
9,856,626
£
£
£
£
£
Loss in year
Other Comprehensive Income
Total comprehensive income for
the year
Issue of shares – exercise of
warrants
Issue of options
Write-back of options lapsed
Write-back of warrants exercised
-
-
-
-
-
-
10,667
21,333
-
-
-
-
90,487
(486,048)
(486,048)
-
-
(486,048)
(486,048)
-
-
32,000
90,487
-
-
-
-
-
-
-
(46,200)
(46,200)
338,189
(338,189)
-
As at 31 December 2019
3,612,429
7,699,789
386,662
(2,205,815)
9,493,065
Loss in year
Other Comprehensive Income
Total comprehensive income
for the year
-
-
-
-
-
-
Issue of shares
717,254
2,262,786
Exercise of warrants
6,680
28,390
-
-
-
-
-
Issue of options
-
-
363,105
(930,475)
(930,475)
-
-
(930,475)
(930,475)
-
-
-
2,980,040
35,070
363,105
As at 31 December 2020
4,336,363
9,990,965
749,767
(3,136,290)
11,940,805
The Notes to the Financial Statements form an integral part of these Financial Statements.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 55
C O N S O L I D A T E D S T A T E M E N T O F C A S H F L O W S
Group
Cash flows generated from operating activities
Loss before income tax
Depreciation
Other Non-cash items
Interest income
Interest expense
Compensation settled in shares
Share based payments
Foreign exchange gain/(loss)
(Decrease) in trade and other payables
(Increase)/decrease in trade and other receivables
Prepaid and deposits
Note
Year Ended
31 December 2020
£
Year Ended
31 December 2019
£
12
20
(2,095,023)
106,753
172
(3,365)
33,239
-
363,104
(146,772)
(35,738)
(21,397)
623
(1,453,144)
94,726
-
(14,191)
31,328
32,000
90,487
20,745
(17,880)
16,056
-
Net cash outflow used in operating activities
(1,798,404)
(1,199,873)
Cash flows generated from financing activities
Proceeds from issuance of equity securities
Proceeds from exercise of warrants
Proceeds from borrowings
Share issue costs
Deferred financing costs
Payment of lease liabilities
3,148,200
35,070
461,776
(168,160)
(223,615)
(41,249)
23
13
-
-
-
-
-
(39,393)
Net cash flow generated from (used in) financing activities
3,212,022
(39,393)
Cash flows generated from investing activities
Interest income
Purchase of property, plant & equipment
3,365
(173,047)
14,191
(11,918)
Net cash flow generated from (used in) investing activities
(169,682)
2,273
Net increase /(decrease) in cash and cash equivalents
1,243,936
(1,236,993)
Effect of exchange rates on cash
69,684
(26,756)
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
498,679
1,812,299
1,762,428
498,679
The Notes to the Financial Statements form an integral part of these Financial Statements.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 56
C O M P A N Y S T A T E M E N T O F C A S H F L O W S
Company
Cash flows generated from operating activities
Loss before income tax
Foreign exchange (gain)
Interest income
Compensation settled in shares
Share based payments
(Decrease) in trade and other payables
Decrease in trade and other receivables
Note
Year Ended
31 December 2020
£
Year Ended
31 December 2019
£
(930,475)
(486,048)
26,508
-
-
363,105
(13,153)
(4,195)
48,621
(76)
32,000
90,487
(35,524)
69,692
20
Net cash outflow used in operating activities
(558,210)
(280,848)
Cash flows generated from financing activities
Proceeds from issuance of equity securities
Proceeds from exercise of warrants
Share issue costs
Deferred financing costs
Net cash flow generated from financing activities
Cash flows generated from investing activities
Interest income
Loan to related parties
Net cash flow generated from investing activities
3,148,200
35,070
(168,160)
(213,472)
2,801,638
-
-
-
-
-
-
(1,221,678)
(1,221,678)
76
(151,914)
(151,838)
Net (Decrease)/increase in cash and cash equivalent
1,021,750
(432,686)
Effect of exchange rates on cash
(41)
(13,812)
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
14,505
1,036,214
461,003
14,505
The Notes to the Financial Statements form an integral part of these Financial Statements.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
57
the discovery, development
1. General information
The Group’s business is preclinical-stage biotechnology
focused on
and
innovative treatments relating
commercialisation of
to bone marrow/hematopoietic (blood-forming) stem
cell (BM/HSC) transplants for blood diseases, including
failure,
leukaemia,
autoimmune disease, and viral infections. The products
under development are designed to address a range
of problems that occur with current standard of care
treatments.
lymphoma and bone marrow
The Company’s registered office is located at 5 Fleet
Place, London EC4M 7RD, and it is listed on the London
Stock Exchange.
2. Summary of significant accounting policies
the
The principal accounting policies applied
preparation of these financial statements are set out
below. These policies have been consistently applied to
all the years presented, unless otherwise stated.
in
Basis of preparation
The financial statements have been prepared
in
accordance with international accounting standards
in conformity with the Companies Act 2006 and
international financial reporting standards adopted
pursuant to Regulation (EC) No.1606/2002 as it applies in
the European Union. The financial statements have been
prepared under the historical cost convention.
Basis of consolidation
The consolidated financial statements comprise the
financial statements of Hemogenyx Pharmaceuticals
plc and its subsidiaries as at 31 December 2020. The
financial statements of the subsidiaries are prepared for
the same reporting period as the parent company, using
consistent accounting policies.
intra-group balances, transactions,
All
income and
expenses and profits and losses resulting from intra-
group transactions that are recognised in assets, are
eliminated in full.
Subsidiaries are fully consolidated from the date of
acquisition, being the date on which the Group obtains
control, and continue to be consolidated until the date
that such control ceases. Hemogenyx Pharmaceuticals
plc owns the majority of the shareholdings and has
operational control over all its subsidiaries. Please
refer to Note 4 for information on the consolidation of
Hemogenyx Pharmaceuticals LLC.
Hemogenyx Pharmaceuticals plc has used the exemption
grated under s408 of the Companies Act 2006 that
allows for the non-disclosure of the Income Statement
of the parent company. The after-tax loss attributable to
Hemogenyx Pharmaceuticals plc for the year ended 31
December 2020 was £930,475 (2019: £486,048).
Research and development expenditure
i. Research and development
Expenditure on research activities, undertaken with
the prospect of gaining new scientific or technical
knowledge and understanding, is expensed in profit or
loss as incurred. Development activities involve a plan
or design for the production of new or substantially
improved products and processes. Development
expenditures are capitalised only if development costs
can be measured reliably, the product or process is
technically and commercially feasible, future economic
benefits are probable, and the Company intends to, and
has sufficient resources to, complete development and
to use or sell the asset. No development costs have
been capitalised to date.
ii. Clinical trial expenses
Clinical trial expenses are a component of the Company's
research and development costs. These expenses
include fees paid to contract research organisations,
clinical sites, and other organisations who conduct
development activities on the Company's behalf. The
amount of clinical trial expenses recognised in the period
related to clinical agreements is based on estimates of
the work performed using an accrual basis of accounting.
These estimates incorporate factors such as patient
enrolment, services provided, contractual terms, and
prior experience with similar contracts.
iii. Government grants
Government grants relate to financial grants from
governments, public authorities, and similar
local,
national or international bodies. These are recognised
when there is a reasonable assurance that the Company
will comply with the conditions attaching to them, and
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 58
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that the grant will be received. Government grants
relating to research and development are off-set against
the relevant costs.
Intangibles
Research and development
is written off as
incurred.
Research expenditure
Development costs are capitalised only if the expenditure
can be measured reliably, the product or process is
technically and commercially feasible, future economic
benefits are probable, the Group intends to and has
sufficient resources to complete development and to
use or sell the asset, and it is able to measure reliably the
expenditure attributable to the intangible asset during its
development.
The Group’s view is that capitalised assets have a finite
useful life and to that extent they should be amortised
over their respective unexpired periods with provision
made for impairment when required. Assets capitalised
are not amortised until the associated product is available
for use or sale. Amortisation is calculated using the
straight-line method to allocate the costs of development
over the estimated useful economic lives. Estimated
useful economic life is assessed by reference to the
remaining patent life and may be adjusted after taking
into consideration product and market characteristics
such as fundamental building blocks and product life
cycle specific to the category of expenditure.
Intellectual property (IP)
IP assets (comprising patents, know-how, copyright and
licences) acquired by the Group as a result of a business
combination are initially recognised at fair value or as a
purchase at cost and are capitalised.
Internally generated IP costs are written off as incurred
except where IAS 38 criteria, as described in research
and development above, would require such costs to be
capitalised.
The Group’s view is that capitalised IP assets have a finite
useful life and to that extent they should be amortised
over their respective unexpired periods with provision
made for impairment when required. Capitalised IP
assets are not amortised until the Group is generating
an economic return from the underlying asset and as
such no amortisation has been incurred to date as the
products to which they relate are not ready to be sold
on the open market. When the trials are completed and
the products attain the necessary accreditation and
clearance from the regulators, the Group will assess
the estimated useful economic like and the IP will be
amortised using the straight-line method over their
estimated useful economic lives.
less accumulated depreciation or
Fixed assets
All property, plant and equipment are stated at historical
cost
impairment
value. Cost includes the original purchase price and
expenditure that is directly attributable to the acquisition
of the items to bring the asset to its working condition.
Depreciation is provided at rates calculated to write off
the cost less estimated residual value of each asset over
its expected useful economic life. Right of Use assets are
depreciated over their expected useful economic life on
the same basis as owned assets, or where shorter, the
lease term. Assets are reviewed for impairment when
events or changes in circumstances indicate that the
carrying amount may not be recoverable.
The following rates are used:
Computer equipment
Property, plant & equipment
33%
20% - 50%
Straight-line
Straight-line
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 59
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Impairment of non-financial assets
The Group is required to review, at least annually,
whether there are indications (events or changes in
circumstances) that non-financial assets have suffered
impairment and that the carrying amount may exceed
the recoverable amount. If there are indications of
impairment then an impairment review is undertaken. An
impairment charge is recognised within operating costs
for the amount by which the carrying amount exceeds
its recoverable amount. The recoverable amount is the
higher of the asset’s fair value less costs to sell and
the value-in-use. In the event that an intangible asset
will no longer be used, for example, when a patent is
abandoned, the balance of unamortised expenditure is
written off.
Impairment reviews require the estimation of the
recoverable amount based on value-in-use calculations.
Non-financial assets relate typically to investments in
related parties and in-process development and patents,
and require broader assumptions than for developed
technology. Key assumptions taken into consideration
relate to technological, market and financial risks
and include the chance of product launch taking into
account the stage of development of the asset, the
scale of milestone and royalty payments, overall market
opportunities, market size and competitor activity,
revenue projections, estimated useful lives of assets
(such as patents), contractual relationships and discount
rates to determine present values of cash flows.
Investments
Equity investments in subsidiaries are held at cost, less
any provision for impairment. As there is no quoted
price in an active market, fair value cannot be reliably
measured.
distancing measures in place including limited work in
the laboratory on rota and work from home. The Group is
allowing for extended delivery times for some supplies,
and for slower progress with collaboration partners.
The Board and UK management continue to operate
remotely, as usual. At present the Group believes that
there should be no material disruption to its work, but the
Board continues to monitor these risks and the Group’s
business continuity plans.
The Directors have reviewed projections for a period
of at least 12 months from the date of approval of the
financial statements. The financial statements have
been prepared on the going concern basis. The Group’s
forecasts and projections, taking account of reasonably
possible changes in trading performance, show that
the Group will not require further funding in the next 12
months. As discussed in Note 28, the Group has entered
into a financing agreement which will provide up to £60
million of financing to the Group over the next few years.
The Directors therefore believe that the Group has or
will have access to sufficient funding in order to execute
its operations over the next 12 months. Therefore, the
Directors consider the going concern basis appropriate.
Trade and other receivables and payables
Trade and other receivables are amounts due from
customers for services performed in the ordinary course
of business. If collection is expected in one year or
less (or in the normal operating cycle of the business if
longer), they are classified as current assets. If not, they
are presented as non-current assets.
Trade and other receivables are recognised initially at
fair value, and subsequently measured at amortised cost
using the effective interest method, less provision for
impairment.
Going concern
requires
The preparation of financial statements
an assessment on the validity of the going concern
assumption.
The Directors have given particular thought to the
impact on the Group that may result from the novel
coronavirus and any other potential pandemics that may
arise. The Group’s New York operations are classed as
an essential business and are not subject to closure,
and so work has continued with prudent hygiene and
Other
liabilities measured at amortised cost are
obligations to pay for goods or services that have
been acquired in the ordinary course of business from
suppliers. The liabilities are classified as current liabilities
if payment is due within one year or less (or in the normal
operating cycle of the business if longer). If not, they are
presented as non-current liabilities.
The liabilities are recognised initially at fair value, and
subsequently measured at amortised cost using the
effective interest method.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 60
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Foreign currencies
Functional and presentation currency
The Company’s presentation currency is the British Pound
Sterling (“£”). The functional currency for the Company,
being the currency of the primary economic environment
in which the Company operates, is the British Pound
Sterling. The individual financial statements of each of
the Company’s wholly owned subsidiaries are prepared
in the currency of the primary economic environment in
which it operates (its functional currency).
The financial statements of Hemogenyx Pharmaceuticals
LLC, Immugenyx LLC and Hemogenyx-Cell SPRL have
been translated in to Pound Sterling in accordance with
IAS 21 The Effects of Changes in Foreign Exchange
Rates. This standard requires that assets and liabilities
be translated using the exchange rate at period end, and
income, expenses and cash flow items are translated
using the rate that approximates the exchange rates at
the dates of the transactions (i.e. the average rate for the
period). The foreign exchange differences on translation
of Hemogenyx Pharmaceuticals LLC, Immugenyx LLC
and Hemogenyx-Cell SPRL are recognised in other
comprehensive income (loss).
Foreign currency transactions
Foreign currency transactions are translated into the
functional currency using the exchange rates prevailing
on the dates of the transactions. Foreign exchange
gains and losses resulting from the settlement of
such transactions and from the translation at period-
end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in
profit and loss.
Share capital
Ordinary Shares are classified as equity. Equity
instruments issued by the Hemogenyx Pharmaceuticals
Group are recorded at the proceeds received, net of
direct issue costs.
Cash
Cash consists of cash bank deposit balances.
Deferred Financing Costs
Deferred financing costs represent direct expenditures
made by the Company for the financing transaction
completed in January 2021. These costs will be offset
against the proceeds received in 2021 from the financing
transactions.
Share based payments
The Group has applied the requirements of IFRS 2 Share-
based Payment for all grants of equity instruments.
The Group operates an equity-settled share option plan
to certain shareholders. The fair value of the service
received in exchange for the grant of options and warrants
is recognised as an expense. Equity-settled share based
payments are measured at fair value (excluding the
effect of non-market based vesting conditions) at the
date of grant. The fair value determined at the grant date
of equity-settled share-based payment is expensed on a
graded vesting basis over the vesting period, based on
the Group's estimate of shares that will eventually vest
and adjusted for the effect of non-market based vesting
conditions.
Fair value is measured by use of the Black-Scholes
model. The expected life used in the models has been
adjusted, based on management's best estimate, for the
effects of non-transferability, exercise restrictions, and
behavioural considerations.
In addition, the Group issues equity-settled share-based
payments to the directors, senior management and
employees (“Employee Share Options”), to corporate
finance advisers for assistance in raising private equity,
and to its Scientific Advisory Board members (“Non-
employee Share Options”). Equity-settled share-based
payments are measured at fair value at the date of grant
for Employee Share Options and the date of service for
Non-employee Share Options. The fair value determined
at the grant date or service date, as applicable, of the
equity-settled share-based payments is expensed, with
a corresponding credit to equity, on a straight-line basis
over the vesting period, based on the Group’s estimate
of shares that will eventually vest. At each subsequent
reporting date, the Group calculates the estimated
cumulative charge for each award having regard to any
change in the number of options that are expected to
vest and the expired portion of the vesting period. The
change in this cumulative charge since the last reporting
date is expensed with a corresponding credit being made
to equity. Once an option vests, no further adjustment is
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 61
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
made to the aggregate amount expensed.
The fair value is calculated using the Black Scholes
method for both Employee and Non-employee Share
Options as management views the Black Scholes method
as providing the most reliable measure of valuation. The
expected life used in the model has been adjusted,
based on management’s best estimate, for the effects of
non-transferability exercise restrictions and behavioural
considerations. The market price used in the model is
the issue price of Company shares at the last placement
of shares immediately preceding the calculation date.
The fair values calculated are inherently subjective and
uncertain due to the assumptions made and the limitation
of the calculations used.
Taxation
Current tax
Current taxation is based on the results for the year as
adjusted for items that are non-assessable or disallowed.
It is calculated using rates that have been enacted, or
substantially enacted, by the balance sheet date. Current
income tax assets and liabilities are measured at the
amount expected to be recovered from or paid to the
relevant taxation authorities.
Deferred tax
Deferred income tax is recognised on all temporary
differences arising between the tax bases of assets
and liabilities and their carrying amounts in the financial
statements, with the following exceptions:
• where the temporary difference arises from the initial
recognition of goodwill or of an asset or liability in a
transaction that is not a business combination and, at
the time of the transaction, affects neither accounting
nor taxable profit or loss;
•
in respect of taxable temporary differences associated
with investment in subsidiaries, associates and joint
ventures, where the timing of the reversal of the
temporary differences can be controlled and it is
probable that the temporary differences will not
reverse in the foreseeable future; and
• deferred income tax assets are recognised only to
the extent that it is probable that taxable profit will
be available against which the deductible temporary
differences, carried forward tax credits or tax losses
can be utilised.
Deferred income tax assets and liabilities are measured
on an undiscounted basis at the tax rates that are
expected to apply when the related asset is realised or
liability is settled, based on tax rates and laws enacted
or substantively enacted at the statement of financial
position date.
The carrying amount of deferred income tax assets is
reviewed at each statement of financial position date.
Deferred income tax assets and liabilities are offset, only
if a legally enforcement right exists to set off current tax
assets against current tax liabilities, the deferred income
taxes related to the same taxation authority and that
authority permits the Company to make a single net
payment.
Income tax is charged or credited directly to equity if it
relates to items that are credited or charged to equity.
Otherwise income tax is recognised in the statement of
comprehensive income.
Financial Assets and Liabilities
Financial assets and liabilities are recognised in the
Company’s statement of financial position when the
Company becomes a party to the contractual provisions
of the instrument. The Company currently does not use
derivative financial instruments to manage or hedge
financial exposures or liabilities.
Loans and receivables are non-derivative financial assets
with fixed or determinable payments that are not quoted
in an active market. They are included in current assets,
except for maturities greater than 12 months after the
end of the reporting period. These are classified as non-
current assets. The Company’s loans and receivables
comprise Trade and Other Receivables and Cash and
Cash Equivalents in the Statement of Financial Position.
Impairment of Financial Assets
The Company and Group assesses at each reporting
date whether a financial asset is impaired and will
recognise the impairment loss immediately through the
consolidated statement of comprehensive loss.
Interest Bearing Loans and Borrowings
Borrowings are initially recognised at the fair value
of consideration received
less directly attributable
transaction costs. After initial recognition, borrowings
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 62
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
are subsequently measured at amortised cost using the
effective interest rate method. Where borrowings are
provided by shareholders at an interest rate discounted
to market rates, the difference on initial fair value is taken
to equity as a capital contribution.
Where the Group has entered into a hybrid instrument
whereby there is a debt instrument and an embedded
derivative financial liability, the fair value of the debt
instrument less the fair value of the derivative financial
liability is equal to loan recognised on initial measurement.
follows
IFRS 15, Revenue from Contracts with Customers
IFRS 15, which establishes
The Company
principles for reporting useful information to users of
financial statements about the nature, amount, timing,
and uncertainty of revenue and cash flows arising from
an entity’s contracts with customers. The standard
establishes a five-step principle-based approach for
revenue recognition and is based on the concept of
recognising an amount that reflects the consideration for
performance obligations only when they are satisfied,
and the control of goods or services is transferred.
The majority of the Group’s revenue is derived from fees
related to collaboration agreements.
Management reviewed contracts where the Group
received consideration in order to determine whether
or not they should be accounted for in accordance
with IFRS 15. To date, Hemogenyx Pharmaceuticals has
entered into few transactions that meet the scope of IFRS
15. Instead, most income has been generated through
collaboration agreements and grants with counterparties
that do not meet the definition of a customer, and
therefore the contracts fall outside the scope of IFRS 15
and have been accounted for in accordance with IAS 20.
Income is recognised at either a point-in-time or over
time, depending on the nature of the services and
existence of acceptance clauses.
IFRS 16, Leases
IFRS 16 requires lessees to recognise a lease liability
reflecting future lease payments and a ‘right-of-use
asset’ for virtually all lease contracts. IFRS 16 includes
an optional exemption for certain short-term leases and
leases of low-value assets; however, this exemption can
only be applied by lessees. For lessors, the accounting
remains substantially unchanged. IFRS 16 provides
updated guidance on the definition of a lease (as well
as the guidance on the combination and separation of
contracts); under IFRS 16, a contract is, or contains, a
lease if the contract conveys the right to control the use
of an identified asset for a period of time in exchange for
consideration.
The right-of-use asset and lease liability are both based
on the present value of lease payments due over the
term of the lease, with the asset being depreciated in
accordance with IAS 16 Property, Plant and Equipment
and the liability increased for the accretion of interest
and reduced by lease payments.
Note 13 sets out the key impacts on the Consolidated
Statement of Comprehensive Loss and the Consolidated
Statement of Financial Position of the adoption of the
standard.
Segmental reporting
The Group’s operations are located in New York, USA
and in Liège, Belgium with the head office located in the
United Kingdom. The main assets of the Group, cash
and cash equivalents, are held in the United Kingdom,
Belgium and the United States. The Board ensures that
adequate amounts are transferred internally to allow all
companies to carry out their operations on a timely basis.
The Group currently has one reportable segment – a
biotechnology company focused on the discovery,
development and commercialisation of
innovative
treatments relating
to bone marrow/hematopoietic
(blood-forming) stem cell (BM/HSC) transplants for blood
disease.
to References
New Accounting Standards and Interpretations issued
and applied in the Financial Statements
Amendments
the Conceptual
Framework in IFRS Standards: included are revised
definitions of an asset and a liability as well as new
guidance on measurement
and derecognition,
presentation and disclosure.
to
Amendment to IFRS 3: Business Combinations: the
amendments clarify that to be considered a business,
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 63
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
an acquired set of activities and assets must include,
at a minimum, an input and a substantive process that
together significantly contribute to the ability to create
outputs. The definition removes the reference to an
ability to reduce costs, and the assessment of whether
market participants are capable of replacing any missing
inputs or processes and continuing to produce outputs.
An optional concentration test that permits a simplified
assessment of whether an acquired set of activities and
assets is not a business has been included as part of the
amendments.
Amendments to IAS 1 and IAS 8: Definition of Material:
the amendments clarify the definition of material and
how it should be applied. The amendments ensure that
the definition of material is consistent across all IFRS
Standards.
Adoption of the above standards did not have a material
impact on the consolidated financial statements.
New Accounting Standards and Interpretations in
issue but not applied in the Financial Statements
The standards and interpretations that are issued, but not
yet effective, up to the date of issuance of the financial
statements are listed below. The Group and Company
intend to adopt these standards, if applicable, when they
become effective. These are summarised below:
Amendments to IAS 1: Classification of Liabilities as
Current or Non-current: the amendments clarify that
the classification of liabilities as current or non-current
should be based on rights that are in existence at the
end of the reporting period, and refer to the "right"
to defer settlement by at least twelve months. They
make explicit that only rights in place "at the end of
the reporting period" should affect the classification
of a liability. The amendments clarify that classification
is unaffected by expectations about whether an entity
will exercise its right to defer settlement of a liability,
and clarify that settlement refers to the transfer to the
counterparty of cash, equity instruments, other assets or
services. Issued 23 January 2020, applies to accounting
periods beginning on or after 1 January 2022, subject to
EU endorsement.
Amendment to IAS 1: Classification of Liabilities as
Current or Non-current – Deferral of Effective Date: the
amendment defers the effective date of the January 2020
amendments to IAS 1 by one year to annual reporting
periods beginning on or after 1 January 2023. Issued
15 July 2020, applies to accounting periods beginning
on or after 1 January 2023 with early application of the
January 2020 amendments permitted, subject to EU
endorsement.
to
to
IFRS 3: Business Combinations
Amendments
– reference
the Conceptual Framework: The
changes in Reference to the Conceptual Framework
(Amendments to IFRS 3) update IFRS 3 so that it refers
to the 2018 Conceptual Framework instead of the 1989
Framework. They also add to IFRS 3 a requirement that,
for transactions and other events within the scope of
IAS 37 or IFRIC 21, an acquirer applies IAS 37 or IFRIC
21 (instead of the Conceptual Framework) to identify
the liabilities it has assumed in a business combination.
Lastly, they add to IFRS 3 an explicit statement that an
acquirer does not recognise contingent assets acquired
in a business combination. Issued 14 May 2020, applies
for annual periods beginning on or after 1 January 2020,
with early application permitted if an entity also applies
all other updated references at the same time or earlier,
subject to EU endorsement.
Annual Improvements to IFRS Standards 2018-2020:
The pronouncement contains amendments to four
International Financial Reporting Standards (IFRSs) as
result of the IASB's annual improvements project:
•
•
IFRS 1 First-time Adoption of International Financial
Reporting Standards: subsidiary as a first-time adopter
- The amendment permits a subsidiary that applies
paragraph D16(a) of IFRS 1 to measure cumulative
translation differences using the amounts reported by
its parent, based on the parent’s date of transition to
IFRSs.
IFRS 9 Financial Instruments - fees in the ‘10 per
cent’ test for derecognition of financial liabilities
- The amendment clarifies which fees an entity
includes when it applies the ‘10 per cent’ test in
IFRS 9 in assessing whether to derecognise a
financial liability. An entity includes only fees paid
or received between
(the borrower)
and the lender, including fees paid or received by
either the entity or the lender on the other’s behalf.
the entity
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020
64
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Valuation of stock options
Management uses the Black Scholes model to value the
share options. The model requires use of assumptions
regarding volatility, risk free interest rate and a calculation
of the value of the option at the time of the grant. Please
see Note 20 for details.
impairment analysis
is carried out. The
Intangible assets impairment
When there is an indicator of a significant and permanent
reduction in the value of intangible assets, an impairment
is
review
principally based on estimated discounted future cash
flows. The determination of the assumptions is subjective
and requires the exercise of considerable judgement
about the outcome of research and development activity,
probability of technical and regulatory success, amount
and timing of projected future cash flow or changes in
market conditions. Any changes in key assumptions
could materially affect whether an impairment exists. See
Note 14 for further details.
4. Reverse acquisition and LSE listing
On 4 October 2017, the Company acquired the entire
issued share capital of Hemogenyx Pharmaceuticals LLC,
a private company incorporated in the United States,
by way of a share for share exchange. In substance,
the shareholders of Hemogenyx Pharmaceuticals LLC
acquired a controlling interest in the Company and
the transaction has therefore been accounted for as
a reverse acquisition. Following the completion of
the transaction the Company changed its name to
Hemogenyx Pharmaceuticals plc.
The reverse acquisition reserve that arose from the
reverse takeover is $6,157,894 at December 31, 2020
and 2019 and is made up of the following:
IFRS 16 Leases - Lease incentives - the amendment
to Illustrative Example 13 accompanying IFRS 16
removes from the example the illustration of the
reimbursement of leasehold improvements by the
lessor in order to resolve any potential confusion
regarding the treatment of lease incentives that might
arise because of how lease incentives are illustrated
in that example. Issued 14 May 2020, applicable for
annual periods beginning on or after 1 January 2022
with early application permitted in respect of IFRS
1, IFRS 9, and IAS 41. The amendment to IFRS 16
only regards an illustrative example, so no effective
date is stated. All subject to EU endorsement.
The Group has not early adopted any of the above
standards and the directors are assessing the impact on
future financial statements. There are no other IFRS or
IFRIC interpretations that are not yet effective that would
be expected to have a material impact on the Group.
3. Significant accounting judgements, estimates and
assumptions
The preparation of the financial statements in conformity
with International Financial Reporting Standards requires
the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the
process of applying the Company’s accounting policies.
Estimates and judgements are continually evaluated,
and are based on historical experience and other
factors, including expectations of future events that are
believed to be reasonable under the circumstances. The
estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts
of assets and liabilities within the next financial year are
discussed below.
The principal areas in which judgement is applied are as
follows:
Fair value disclosure
The embedded derivative elements of the convertible
notes are measured using a risk-based pricing model.
The computed fair value was not significant in 2020 and
2019.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
As at start of year
Pre-acquisition losses of Hemogenyx Pharmaceuticals plc1
Hemogenyx Pharmaceuticals LLC issued capital at acquisition2
Investment in Hemogenyx Pharmaceuticals LLC3
Reverse acquisition expense4
As at December 31, 2020 and 2019
65
Components
£
-
(799,763)
1,010,849
(8,000,000)
1,631,020
(6,157,894)
The movements on the Reverse acquisition reserve are as follows:
1. These consolidated financial statements present the legal capital structure of the Company. However, under
reverse acquisition accounting rules, the Company was not acquired until 4 October 2017 and therefore the entry
above is required to eliminate the initial retained losses of the Company.
2. Hemogenyx Pharmaceuticals LLC had issued share capital of equivalent to £1,010,849 as at 4 October 2017. As
these financial statements present the capital structure of the parent entity, the issue of equity by Hemogenyx
Pharmaceuticals LLC has been recorded in this reserve.
3. The Company issued 228,571,428 shares at £0.035 each, totalling £8,000,000 for the entire issued capital of
Hemogenyx Pharmaceuticals LLC. The above entry is required to eliminate the balance sheet impact of this
transaction.
4. The entry above represents the difference between the value of the equity issued by the Company, and the
deemed consideration given by Hemogenyx Pharmaceuticals LLC to acquire the Company.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 66
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
5. Segment Information
The Group has one reportable segment, the development of breakthrough therapies for the treatment of blood
diseases, and administrative functions in the United Kingdom, and therefore the segmental information is the same as
that presented in the primary statements.
The following tables present expenditure and certain asset information regarding the Group’s geographical segments
for the year ended 31 December 2020 and 2019:
Revenue
SEGMENT ASSETS
United Kingdom
• Non-current
• Current
United States
• Non-current
• Current
Belgium
• Non-current
• Current
Total
• Non-current
• Current
CAPITAL EXPENDITURE
United Kingdom
United States
Belgium
Year Ended
31 December 2020
£
348,472
1,097,662
533,841
798,515
-
21,094
882,313
1,917,271
-
173,047
-
173,047
Year Ended
31 December 2019
£
-
20,787
495,414
513,729
-
19,967
495,414
554,483
-
11,918
-
11,918
Capital expenditure consists of the purchase of property, plant and equipment.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 67
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
6. Expenses by nature
Laboratory expenses
Consumable equipment and supplies
Contractors & consultants
Travel
Staff Costs
Insurance
Other
Legal and professional fees
Foreign exchange loss / (gain)
Total Administrative Expenses
Group
Year Ended
31 December 2020
Group
Year Ended
31 December 2019
£
83,662
267,057
(1,459)
4,218
1,130,764
39,303
80,187
505,812
(65,910)
2,043,633
£
21,246
400,571
47,666
33,505
691,992
50,499
74,815
256,092
13,021
1,589,407
7. Other income
Other income of £85,237 during the year to 31 December 2020 (2019: £213,126) relates to funds received from a third
party under a research collaboration programme.
8. Employees
Wages and salaries
Social security
Share based payments
Pension contributions
Group
Group
Company
Company
Year Ended
31 December 2020
Year Ended
31 December 2019
Year Ended
31 December 2020
Year Ended
31 December 2019
£
713,788
37,732
363,105
16,138
£
547,127
40,667
90,487
13,711
1,130,763
691,992
£
208,750
2,506
363,105
250
574,611
£
118,251
-
90,487
-
208,738
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 68
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Average number of people (including Executive Directors) employed:
Group
Group
Company
Company
Year Ended
31 December 2020
Year Ended
31 December 2019
Year Ended
31 December 2020
Year Ended
31 December 2019
5
3
8
5
2
7
-
2
2
-
2
2
Research & development
Administration
9. Auditor’s remuneration
Fees payable to the Company auditor:
Audit of the financial statements of the Group
and Company
10. Income tax
Current Tax:
New York City Biotech tax credit – prior years
Tax on loss on ordinary activities
Company
Year Ended
31 December 2020
Company
Year Ended
31 December 2019
£
£
45,090
45,090
45,000
45,000
Company
Year Ended
31 December 2020
Company
Year Ended
31 December 2019
£
-
-
£
35,000
35,000
Loss on ordinary activities before tax
(2,095,023)
(1,453,144)
Analysis of charge in the year:
Loss on ordinary activities multiplied by
weighted average tax rate for the group of
23.10% (2019: 26.16%)
Disallowed items
Timing differences
New York City Biotech tax credit
Tax losses carried forward
Current Tax charge
(483,950)
116
68,990
-
(414,844)
-
(380,142)
23,137
-
35,000
(357,005)
35,000
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 69
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Weighted average tax rate is calculated by reference to the tax rates effective in each of the jurisdictions. The tax rates
effective at 31 December 2020 are 19%, 26% and 29% in the UK, the USA and Belgium respectively.
The Group has accumulated tax losses arising in the UK of approximately £1,447,000 (Dec 2019: £880,391) that should
be available, under current legislation, to be carried forward against future profits. No deferred tax asset has been
recognised against these losses. The Group has tax losses carried forward in the US of approximately £3,145,000
available under current rules until 2037. No deferred tax asset has been recognised against these losses.
11. Earnings per share
The calculation of the basic and fully diluted earnings per share is calculated by dividing the loss for the year from
continuing operations attributable to equity owners of the Group of £(2,082,220) (2019: £(1,450,627)) by the weighted
average number of ordinary shares in issue during the year of 414,833,093 (2019: 360,719,748).
Dilutive loss per Ordinary Share equals basic loss per Ordinary Share as, due to the losses incurred in 2020 and 2019,
there is no dilutive effect from the subsisting share options. See Note 20 for details of stock options and warrants
outstanding.
12. Property, plant and equipment
Group
Cost
31 December 2018
Additions
Foreign exchange movement
31 December 2019
Additions
Foreign exchange movement
31 December 2020
Accumulated depreciation and impairment losses
31 December 2018
Depreciation
Foreign exchange movement
31 December 2019
Depreciation
Foreign exchange movement
31 December 2020
Carrying amounts
31 December 2018
31 December 2019
31 December 2020
Property, plant &
equipment
Computer
equipment
£
274,877
6,355
(11,118)
270,114
167,007
(12,013)
425,108
100,934
55,464
(6,062)
150,336
67,499
(8,052)
209,783
173,943
119,778
215,325
£
-
5,563
(184)
5,379
6,040
(462)
10,957
-
1,284
(49)
1,235
2,360
(171)
3,424
-
4,144
7,533
Total
£
274,877
11,918
(11,302)
275,493
173,047
(12,475)
436,065
100,934
56,748
(6,111)
151,571
69,859
(8,223)
213,207
173,943
123,922
222,858
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 70
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
13. Leases
The Group adopted IFRS 16 using the modified retrospective approach with the effect of applying this standard at the
date of initial recognition of 1 January 2019.
As a lessee, the Group has previously classified leases as operating or finance leases based on whether the lease
transferred significantly all of the risks and rewards incidental to the ownership of the underlying asset. Under IFRS
16, the Group recognises right-of-use assets and lease liabilities for all leases on its balance sheet. Each of the two US
subsidiaries has an agreement for the lease of laboratory facilities to which IFRS 16 has been applied.
The key impacts on the Statement of Comprehensive Income and the Statement of Financial Position are as follows:
Group & Company
Balance on transition
Additions
Depreciation
Interest
Lease payments
Foreign exchange movements
Carrying value at 31 December 2019
Depreciation
Revaluation
Interest
Lease payments
Foreign exchange movements
Carrying value at 31 December 2020
Right of
use asset
Lease
liability
Income
statement
£
-
145,923
(37,978)
-
-
1,497
109,442
(36,894)
(23,777)
-
-
(2,886)
45,885
£
-
(145,923)
-
(6,830)
39,393
272
(113,088)
-
32,031
(3,637)
39,431
(3,491)
£
-
-
(37,978)
(6,830)
-
-
(44,808)
(36,894)
-
(3,637)
-
-
(48,754)
(40,531)
14. Intangible assets
On 15 January 2015, the Company entered into an Exclusive License Agreement with Cornell University to grant to
the Company patent rights to patent PCT/US14/65469 entitled Post-Natal Hematopoietic Endothelial Cells and Their
Isolation and Use and rights to any product or method deriving therefrom. The Company paid Cornell University USD
$347,500 for such licence rights.
Cost
31 December 2018
Exchange movements
31 December 2019
Exchange movements
31 December 2020
Intellectual Property
£
272,753
(10,703)
262,050
(7,095)
254,955
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 71
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
The carrying value of intangible assets is reviewed for indications of impairment whenever events or changes in
circumstances indicate that the carrying value may exceed the recoverable amount. The products to which they relate
are not ready to be sold on the open market. When the trials are completed and the products attain the necessary
accreditation and clearance from the regulators, the Group will assess the estimated useful economic life and the
IP will be amortised using the straight-line method over their estimated useful economic lives. The directors are of
the view that no impairment is required as the test results to date have been very positive and these products are
now being moved on towards the clinical trial phase. Accordingly, the directors continue to believe that the products
will eventually attain the necessary accreditation and clearance from the regulators and so no impairment has been
considered necessary.
Amortisation will be charged to operating costs in the Statement of Comprehensive Income when the Group achieves
product sales.
15. Loan to subsidiary
Loan to Hemogenyx Pharmaceuticals LLC
Company
Year Ended
31 December 2020
Company
Year Ended
31 December 2019
£
2,766,051
2,766,051
£
1,570,839
1,570,839
Hemogenyx Pharmaceuticals plc has made cumulative loans to Hemogenyx Pharmaceuticals LLC of US$3,769,332
(£2,766,051) as at 31 December 2020 (Dec 2019: (US$2,096,915 (£1,570,839). The loans are interest free and will be
repaid when Hemogenyx LLC’s operational cash flow allows. Management has undertaken an impairment assessment
of the loan as at 31 December 2020 and has determined that that there was no impairment required. The interest rate
and impairment assessment are reviewed on an annual basis.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 72
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
16. Investment in subsidiary
Name
Address of the
registered office
Nature
of business
Proportion of
ordinary shares held
directly by parent
(%)
Proportion of
ordinary shares held
ultimately by parent
(%)
Hemogenyx UK
Limited
5 Fleet Place, London, UK
EC4M 7RD
Holding Company
100
-
Hemogenyx
Pharmaceuticals
LLC
9 East Lookerman Street,
Suite 3A, Dover, Kent,
Delaware, USA, 19901
Immugenyx LLC c/o Corporation Service
Company
251 Little Falls Drive,
Wilmington, Delaware,
USA, 19808
Biomedical sciences
-
100
Biomedical sciences
-
95.79%
Hemogenyx-Cell
SPRL
Avenue du Parc Industriel
89, 4041 Milmort, Belgique
Biomedical sciences
-
100
The remaining shares in Immugenyx LLC are held by Dr Vladislav Sandler and by an employee, Carina Sirochinsky,
as part of their compensation under their respective roles as CEO and Director of Operations. Dr Sandler and Ms
Sirochinsky receive 10,000 and 1,000 shares respectively for each year of employment from January 2019. At 31
December 2020, Hemogenyx Pharmaceuticals LLC, Dr Sandler and Ms Sirochinsky each owns 500,000, 20,000 and
2,000 shares in Immugenyx LLC, respectively.
17. Trade and other receivables
Group
Group
Company
Company
Year Ended
31 December 2020
Year Ended
31 December 2019
Year Ended
31 December 2020
Year Ended
31 December 2019
£
50,971
5,297
48,704
£
2,237
30,075
23,492
104,972
55,804
£
50,971
-
10,477
61,448
£
2,237
-
4,045
6,282
VAT receivable
Trade & other receivables
Prepayments
Total trade and other
receivables
There are no material differences between the fair value of trade and other receivables and their carrying value at the
year-end. No receivables were past due or impaired at the year-end.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
18. Called up share capital
Company
As at 31 December 2018
Issue of shares 28 June 2019
As at 31 December 2019
Issue of shares – placement
Issue of shares – warrant exercise
Number of shares
360,176,184
1,066,667
361,242,853
71,725,402
668,000
73
£
3,601,762
10,667
3,612,429
717,254
6,680
As at 31 December 2020
433,636,255
4,336,363
During 2020, the Company raised £648,200 before expenses through a placing and subscription of 36,011,116 ordinary
shares at a price of 1.8p per share. The Company also raised £2,500,000 before expenses through a placing and
subscription of 35,714,286 ordinary shares at a price of 7p per share. The Company received £35,070 from the exercise
of 668,000 warrants at an exercise price of 5.25p per share.
19. Share premium
Group & Company
As at 31 December 2018
Issue of shares 28 June 2019
Writeback of value of placement warrants lapsed
As at 31 December 2019
Issue of shares – placement
Share issuance costs
Issue of share – warrant exercise
As at 31 December 2020
£
7,340,267
21,333
338,189
7,699,789
2,430,946
(168,160)
28,390
9,990,965
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 74
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
20. Other reserves
Group
As at start of year
Charge for the year - employees
Fair value of warrants lapsed
Fair value of options lapsed
Convertible Note embedded derivative
As at end of year
Company
As at start of year
Charge for the year - employees
Fair value of warrants lapsed
Fair value of options lapsed
As at end of year
Year Ended
31 December 2020
Year Ended
31 December 2019
£
399,229
363,104
-
-
2,482
764,815
£
686,851
90,487
(338,189)
(46,200)
6,280
399,229
Year Ended
31 December 2020
Year Ended
31 December 2019
£
386,662
363,105
-
-
749,767
£
680,564
90,487
(338,189)
(46,200)
386,662
The expense recognised for employee and non-employee services during the year is shown in the following table:
Group and Company
Expense arising from equity-settled share-based
payment transactions
Total expense arising from share-based payment transactions
Year Ended
31 December 2020
Year Ended
31 December 2019
£
363,105
363,105
£
90,487
90,487
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 75
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Employee Plan
Under the Employee Plan (“EMP”) share options are
granted to directors and employees at the complete
discretion of the Company. The fair value of the options
is determined by the Company at the date of the grant.
Options granted vest in tranches on each of the following
events/dates:
i. Admission to the LSE (“Admission”);
ii. On the date falling six (6) months after Admission;
iii. On the date falling twelve
(12) months after
Admission; and
iv. On the date falling twenty-four (24) months after
Admission
On the provision that the option holder remains an
employee of the Group.
Options granted to most other option holders from 4
January 2018 onwards vest in equal tranches of 12.5%
every three months from the date of grant, until fully
vested.
The fair value of the options is determined using the Black
Scholes method as stated in Note 2. The contractual life
of each option granted is between two and five years.
There are no cash settlement alternatives.
Options are settled when the Company receives a notice
of exercise and cash proceeds from the option holder
equal to the aggregate exercise price of the options
being exercised.
Employees, including directors*
Members of the Scientific Advisory Board
Total
Non-Employee Plan
Under the Non-Employee Plan (“NEMP”) share options
are granted to non-employees at the complete discretion
of the Company. The exercise price of the options is
determined by the Company at the date of the grant. The
options vest at the date of the grant.
The fair value of the options is determined using the
Black Scholes method as stated in Note 2 and not the
value of services provided as this is deemed the most
appropriate method of valuation. In all cases non-
employee option holders received cash remuneration
in consideration for services rendered in accordance
with agreed letters of engagement. The contractual life
of each option granted ranges from two to five years.
There are no cash settlement alternatives. Volatility was
determined by calculating the volatility for three similar
listed companies and applying the average of the four
volatilities calculated.
Options are settled when the Company receives a notice
of exercise and cash proceeds from the option holder
equal to the aggregate exercise price of the options
being exercised.
A schedule of options granted is below:
Number options
31,319,036
11,146,751
42,465,787
* Details of options held by individual directors are disclosed in the Directors’ Report.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020
76
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Group & Company
2020
Number
2020
Weighted
Average Exercise
Price pence
2019
Number
2019
Weighted
Average Exercise
Price pence
Outstanding at the beginning
of the year
30,553,076
Granted during the year
11,912,711
Lapsed during the year
Cancelled during the year
-
-
Outstanding at end of year
42,465,787
Exercisable at end of year
36,812,610
3.5
7.4
-
-
4.6
4.5
36,071,741
712,085
(6,230,750)
-
30,553,076
22,428,934
3.5
3.5
3.5
-
3.5
3.5
The weighted average remaining contractual life for the share options outstanding as at 31 December 2020 is 2.52
years (2019: 2.84). The weighted average fair value of options granted during the year was 0.042 pence (2019: 0.007).
The weighted average exercise price for options outstanding at the end of the year was 4.5 pence (2019: 3.5).
The following table lists the inputs to the models used for the two plans for the years ended 31 December 2020 and
31 December 2019:
Expected volatility %
Risk-free interest rate %
Expected life of options (years)
WAEP - pence
Expected dividend yield
Model used
July-Aug-2020
(EMP)
64-75
0.52-1.0
5
7.4
-
Jan-2019
(EMP)
52.12
0.956
5
3.5
-
Black Scholes
Black Scholes
Warrants
The share placement that completed on 4 October 2017 with the issue of 57,142,857 shares at £0.035 carried 1 for 2
warrants for qualifying shareholders over 62,021,429 new ordinary shares at £0.04 per share. In order to qualify for these
warrants the shareholder must have retained the shares for a period of 60 days after admission. The warrants expired
on 4 October 2019. Warrants were also issued to the brokers who raised funds for that share placement. The warrants
were equal in value to 2% of the total number of new shares issued for the funds raised by each broker, exercisable
at £0.0525 per warrant for a term of three years from the date of the placing, as prescribed in the Company’s 2017
prospectus. Optiva exercised 668,000 warrants in May 2020. No warrants were issued in 2020.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020
77
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
21. Capital and reserves
The nature and purpose of equity and reserves are as follows:
Share capital comprises the nominal value of the ordinary issued share capital of the Company.
Share premium represents consideration less nominal value of issued shares and costs directly attributable to the issue
of new shares.
Other reserves represents the value of options in connection with share-based payments, warrants connected with
share placements issued by the Company, and the value of the deemed embedded derivative connected with the
Convertible Note liability.
Reverse asset acquisition reserve is the reserve created in accordance with the acquisition of Hemogenyx
Pharmaceuticals LLC on 5 October 2017.
Foreign currency translation reserve is used to recognise the exchange differences arising on translation of the assets
and liabilities of foreign branches and subsidiaries with functional currencies other than Pounds Sterling, as well as the
revaluation of intercompany loans.
Retained earnings represent the cumulative retained losses of the Company at the reporting date.
22. Trade and other payables
Trade and other payables
Accruals and deferred income
Total
Current liabilities
Non-current liabilities
Group
Group
Company
Company
Year Ended 31
December 2020
Year Ended 31
December 2019
Year Ended 31
December 2020
Year Ended 31
December 2019
£
113,241
47,530
£
61,407
80,270
160,771
141,677
160,771
-
141,677
-
£
£
88,853
34,561
47,527
136,380
136,380
-
64,000
98,561
98,561
-
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 78
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
23. Borrowings
The borrowings are comprised of borrowings and convertible notes. The Group follows IFRS 9, and as a result, where
the instruments contained liability classified embedded derivatives, an election was taken to fair value the entire
financial instrument through profit or loss rather than split out the embedded derivative. At 31 December 2019 all
borrowings were classified as long-term due to their maturity being more than 12 months from the balance sheet date.
At 31 December 2020, all borrowings were classified as current due to their maturity being less than 12 months from
the balance sheet date. The notes payable consists of the following:
Group & Company
Borrowings
Balance at 1 January
Drawdowns
Interest expense
Value of embedded derivative transferred to Other Reserves
Foreign exchange movement
Balance at 31 December
Convertible Notes
Balance at 1 January
Drawdowns
Interest expense
Value of embedded derivative transferred to Other Reserves
Foreign exchange movement
Balance at 31 December
Payroll Protection Loan borrowing
Foreign exchange movement
Balance at 31 December
Total Borrowings at 31 December
Year Ended
31 December 2020
Year Ended
31 December 2019
£
£
571,628
191,146
15,206
(1,033)
(23,230)
753,717
572,539
191,161
15,272
(941)
(24,966)
753,065
79,469
(6,873)
72,596
583,269
-
12,743
(6,280)
(18,104)
571,628
589,557
-
11,755
(6,040)
(22,733)
572,539
-
-
-
1,579,378
1,144,167
A summary of the debt facilities is as follows:
During 2018 Orgenesis entered in to two debt facility
agreements with the Group, one each with Hemogenyx
Pharmaceuticals LLC and Immugenyx LLC:
1) On 7 November 2018 the Group entered into a loan
agreement with Orgenesis Inc., an organisation with which
the Group has an existing collaboration agreement. The
loan amount was for not less than US$1,000,000 with the
proceeds of the loan to be used solely for the development
of the cell therapy technology in accordance with the
plan of the collaboration agreement. As at reporting
(£692,901)
date drawdowns totalling US$1,000,000
had been made with Hemogenyx Pharmaceuticals LLC
receiving the funds. The loan carries an interest rate of
2% and has a term of three years. Orgenesis has the
option to convert both principal and accrued interest into
equity in Hemogenyx-Cell at any time prior to maturity.
Hemogenyx-Cell SPRL (“Hemo-Cell”) is a wholly owned
Belgian entity and was incorporated in April 2019 at
which point this loan facility was treated as a borrowing
in accordance with the provisions of IAS39.
2) On 7 November 2018 the Group entered into a
loan agreement, through its wholly owned subsidiary
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 79
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
Immugenyx LLC, with Orgenesis Inc., an organisation with
which the Group has an existing collaboration agreement.
The loan amount was for not less than US$1,000,000
with the proceeds of the loan to be used solely for
the development of the cell therapy technology in
accordance with the plan of the collaboration agreement.
As at reporting date drawdowns totalling US$1,000,000
(£753,065) had been made. The loan carries an interest
rate of 2% and has a term of three years. Orgenesis has
the option to convert both principal and accrued interest
into equity in Immugenyx LLC at any time prior to maturity.
This loan has been treated in accordance with treated in
accordance with the provisions of IAS39.
Paycheck Protection Program Loan
On 1 May 2020, the Company received loan proceeds in
the amount of approximately $99,000 under the Paycheck
Protection Program (“PPP”). The PPP, established as part
of the Coronavirus Aid, Relief and Economic Security
Act, as amended (“CARES Act”), provides for loans to
qualifying businesses for amounts up to 2.5 times of the
average monthly payroll expenses of such qualifying
business. The loans and accrued interest are forgivable
after certain time periods further defined in the CARES
Act (the “Covered Period”) as long as the borrower uses
the loan proceeds for eligible purposes, including payroll,
benefits, rent and utilities, and maintains its payroll
levels. The amount of loan forgiveness will be reduced if
the borrower terminates employees or reduces salaries
during the Covered Period.
Any unforgiven portion of the PPP loan would be payable
over two years at an interest rate of 1%, with a deferral
of payments for the first six months. The Company used
the proceeds for purposes consistent with the PPP and
the loan was forgiven in its entirety in April 2021. The
outstanding balance at 31 December 2020, prior to loan
forgiveness, is included in short term borrowings.
24. Related party disclosures
There were no related party disclosures other than
Directors’ remuneration as disclosed in the Remuneration
Report section of the Directors’ Report. There are no key
management personnel other than the Directors and the
Company Secretary.
amounts receivable, accounts payable and accrued
liabilities and deferred payment.
Fair value of financial assets and liabilities
Fair values have been determined for measurement
and/or disclosure purposes based on the following
methods. When applicable, further information about the
assumptions made in determining fair values is disclosed
in the notes specific to that asset or liability.
The carrying amount for cash, accounts receivable,
and accounts payable and accrued liabilities on the
statement of financial position approximate their fair
value because of the limited term of these instruments.
The fair value of deferred payment approximates its fair
value. The investment is carried at cost as it is not traded
on an active market.
Fair value hierarchy
Financial instruments that are measured subsequent
to initial recognition at fair value are grouped in Levels
1 to 3 based on the degree to which the fair value is
observable:
• Level 1 fair value measurements are those derived
from quoted prices (unadjusted) in active markets for
identical assets or liabilities; and
• Level 2 fair value measurements are those derived
from inputs other than quoted prices included within
level 1 that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived
from prices); and
• Level 3 fair value measurements are those derived
from valuation techniques that include inputs for the
asset or liability that are not based on observable
market data (unobservable inputs).
The Group did not have any financial instruments in
Level 1, 2 and 3.
Financial risk management objectives and policies
The Company has exposure to the following risks from
its use of financial instruments:
• Credit risk
• Liquidity and funding risk
25. Financial instruments
The Group’s financial instruments consist of cash,
• Market risk
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020
80
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
The following table sets out the amortised costs categories of financial instruments held by the Company as at the year
ended 31 December 2020 and year ended 31 December 2019:
Group
Group
Company
Company
Year Ended
31 December 2020
Year Ended
31 December 2019
Year Ended
31 December 2020
Year Ended
31 December 2019
£
£
£
£
Assets
Trade and other
receivables, except
prepayments
Cash and cash equivalents
Liabilities
Trade and other payables
Lease liabilities
Borrowings
56,267
1,812,299
32,312
50,971
498,679
1,036,214
1,868,566
640,433
1,087,185
2,237
14,505
16,742
(113,241)
(48,754)
(1,579,378)
(1,707,741)
(61,407)
(113,088)
(1,144,167)
(1,318,662)
(88,853)
(34,561)
-
-
-
-
(88,853)
(34,561)
Group
1 January 2019 Cash flows
Non-cash changes
31 December 2019
Share
repayment
Foreign
exchange
movements
Interest
charge
Long-term
borrowings
Short-term
borrowings
1,172,826
-
Total
1,172,826
-
-
-
-
-
-
(53,157)
24,498
1,144,167
-
-
-
(53,157)
24,498
1,144,167
Group
1 January 2020 Cash flows
Non-cash changes
31 December 2020
Share
repayment
Foreign
exchange
movements
Interest
charge
Short-term
borrowings
(1)
Long-term
borrowings
1,144,167
461,776
(1,891)
(54,949)
30,275
1,579,378
-
-
-
-
-
Total
1,144,167
461,776
(1,891)
(54,949)
30,275
1,579,378
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 81
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
(1) Borrowings reclassified to short term since all balance
are due within twelve months of December 31, 202
rates expose the Group to fair value interest rate risk.
The Company's management monitors the interest rate
fluctuations on a continuous basis and acts accordingly.
a) Credit risk
The Group had receivables of £3,668 owing from
customers (31 December 2019: £28,279). All bank
deposits are held with Financial Institutions with a
minimum credit rating of AAA.
b) Liquidity and funding risk
The Group regularly reviews its major funding positions
to ensure that it has adequate financial resources
in meeting its financial obligations. The Group takes
liquidity risk into consideration when deciding its sources
of funds. The principle liquidity risk facing the business
is the risk of going concern which has been discussed
in Note 2.
c) Market risk
Interest rate risk
Interest rate risk is the risk that the value of financial
instruments will fluctuate due to changes in market
interest rates. The Group's income and operating cash
flows are substantially independent of changes in
market interest rates as the Group has no significant
interest-bearing assets. The borrowings issued at fixed
The Company has floating rate financial assets in the
form of deposit accounts with major banking institutions;
however, it is not currently subjected to any other interest
rate risk.
Based on cash balances as above as at the statement of
financial position date, a rise in interest rates of 1% would
not have a material impact on the profit and loss of the
Company and such is not disclosed.
The interest rates on the Convertible Notes are fixed
and hence a rise in interest rates of 1% would not have a
material impact on the profit and loss of the Group and
such is not disclosed.
In relation to sensitivity analysis, there was no material
difference to disclosures made on financial assets and
liabilities.
At the reporting date the interest rate profile of interest-
bearing financial instruments was:
Group
Group
Company
Company
Year Ended
31 December 2020
Year Ended
31 December 2019
Year Ended
31 December 2020
Year Ended
31 December 2019
£
£
£
£
Financial Assets
Cash and cash equivalents
1,812,299
498,679
1,036,214
14,505
Financial Liabilities
Borrowings
(1, 579,378)
(1,144,167)
-
-
Foreign currency risk
The Group operates internationally and has monetary
assets and liabilities in currencies other than the
functional currency of the operating company involved.
The Group seeks to manage its exposure to this risk by
ensuring that where possible, the majority of expenditure
and cash of individual subsidiaries within the Group are
denominated in the same currency as the functional
currency of that subsidiary.
The Group has not entered into any derivative instruments
to manage foreign exchange fluctuations.
The following table shows a currency of net monetary
assets and liabilities by functional currency of the
underlying companies for the years ended 31 December
2020 and 31 December 2019:
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 82
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
31 December 2019
Functional Currency
Currency of net monetary
assets (liabilities)
Pound Sterling
£
US Dollars
£
Pound Sterling
US Dollars
Euros
Total
13,354
1,151
-
-
(679,961)
-
14,505
(679,961)
31 December 2020
Functional Currency
Currency of net monetary
assets (liabilities)
Pound Sterling
£
US Dollars
£
Pound Sterling
US Dollars
Euros
Total
1,024,010
12,204
-
-
(70,670)
-
1,036,214
(70,670)
Euro
£
-
(571,628)
19,967
(551,661)
Euro
£
-
(753,623)
(732,623)
Total
£
13,354
(1,250,438)
19,967
(1,217,117)
Total
£
1,024,010
(58,466)
(753,623)
232,920
Capital risk management
The Group defines capital as the total equity of the
Company. The Group’s 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 benefits for other stakeholders and to
maintain an optimal capital structure to reduce the cost
of capital.
In order to maintain or adjust the capital structure, the
Group may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new
shares or sell assets to reduce debt.
Fair value of financial assets and liabilities
There are no material differences between the fair value
of the Group’s financial assets and liabilities and their
carrying values in the financial statements.
26. Commitments
Licence
Milestone and royalty payments that may become due
under the licence agreement are dependent on, among
other factors, clinical trials, regulatory approvals and
ultimately the successful development of a new drug, the
outcome and timing of which are uncertain.
certain development,
The Group’s minimum future payments contingent
upon meeting
regulatory
and commercialisation milestones
total £780,484
($500,000) on receipt
($1,035,000) plus £377,045
of marketing approval from each additional market
excluding the United States of America and the European
Union. Upon commencement of commercial production,
the Group will pay a royalty between 2 to 5% on all net
sales. In addition, the Group pays an annual licence
maintenance fee of up to £56,557 ($75,000) until the
commercial sales are achieved.
27. Ultimate controlling party
The Directors have determined that there is no controlling
party as no individual shareholder holds a controlling
interest in the Company
28. Subsequent events
In November 2020, Mint Capital Limited (“Mint”) and the
Company entered into a Financing Facility agreement
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020
83
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
(“Financing Facility”) whereby Mint has conditionally
agreed to subscribe for up to £60 million in aggregate
principal amount of Convertible Loan Notes pursuant
to an agreement entered into with the Company (the
“Subscription Agreement”). The shareholders of the
Company approved the facility in January 2021 and a
prospectus was published on 29 January 2021.
The key terms of the Convertible Loan Notes include:
• A principal amount of up to £60,000,000, split into
denominations of £50,000 per Convertible Loan Note.
The Convertible Loan Notes will be subscribed for at
par.
• The Convertible Loan Notes are to be issued in up
to nine tranches. The first tranche of £12,000,000 in
principal amount was issued on 3 February 2021. The
subsequent eight tranches are issuable at the sole
discretion of, and in the amounts determined by, the
Company at respective intervals of 90 days after the
Initial Issue Date. The aggregate maximum principal
amount of the Convertible Loan Notes is limited to
£60,000,000.
• No interest is payable on the Convertible Loan Notes.
• The Convertible Loan Notes are unsecured.
• Each tranche of Convertible Loan Notes issued is
redeemable at par on the date falling 36 months after
the relevant Issue Date (the “Maturity Date”).
• Each of the Convertible Loan Notes is convertible into
ordinary shares of £0.01 (1 pence) each in the capital of
the Company (“Ordinary Shares”) at any time during
the period commencing on the fifth business day
following the relevant Issue Date and ending at 5.00
p.m. London time on the business day immediately
prior to the relevant Maturity Date (the “Conversion
Period”).
• The price used for the conversion (the “Conversion
Price”) will be equal to a 10 per cent discount to the
lesser of (i) 125 per cent. of the closing-bid price as
reported by Bloomberg for one Ordinary Share one
trading day before the relevant Issue Date (subject to
adjustment to reflect any sub-division or consolidation
of the Ordinary Shares) and (ii) the lowest closing
bid-price as reported by Bloomberg for an Ordinary
Share from the three consecutive trading days ending
on the day prior to the date of service of the relevant
conversion notice (or if such conversion notice is
served after 4.35pm on any such date, then the three
consecutive trading days ending on the day such
conversion notice is served. In no event shall the
Conversion Price be less than the nominal value of an
Ordinary Share.
• A holder will not be permitted to submit a conversion
notice in respect of the Convertible Loan Notes if the
total Ordinary Shares held by the holder following the
execution of such conversion notice would exceed
29.9% of the Company’s total Ordinary Shares.
•
If the Company commits an “event of default” then the
notes could be redeemed at 114-120% of the principal
amount of the convertible loan at the option of the
holder.
• The Company also has the ability to redeem the
convertible loan under certain circumstances at 114%
of the principal amount of the convertible loan.
• Subject to limited exceptions, the Convertible Loan
Notes will not be transferable.
• Prior to conversion, the Convertible Loan Notes do not
entitle the holder to any voting rights in the Company.
Arrangement fee
The Company agreed to pay a fee of 5% of the aggregate
principal value of the Convertible Loan Notes issued to
the arranger for the Facility (the “Arranger”). Such fee
was paid by the allotment and issue of new Ordinary
Shares.
Draw down
The Company received £12,000,000 from the first drawn
down of the Financing Facility agreement in February
2021. The price of the conversion of the convertible loan
notes issued under the Financing Facility agreement
into common shares of the Company, as defined by
the Financing Facility agreement will be the lesser of (i)
8.4375p and (ii) 90% of the lowest closing bid price as
reported on Bloomberg from the three closing bid prices
immediately preceding a conversion.
The company issued 7,741,935 shares in February 2021
as an arrangement fee to the arranger of the Financing
Facility.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2020 84
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the Year Ended 31 December 2020
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
The Company received a conversion notice from Mint in
respect of £650,000 in principal amount of Convertible
Loan Notes and issued 13,131,313 shares to Mint in March
2021. Further conversion notices were received from
Mint in respect of £900,000 and £950,000 in principal
amount of Convertible Loan Notes. The Company issued
a further 14,285,714 shares to Mint in March 2021, and
24,547,803 shares in April 2021; both of these allotments
of shares were admitted to trading on the London Stock
Exchange’s main market in April 2021. To date, Mint has
converted loan notes with principal value of £2,500,000
into shares, leaving convertible loan notes to a value of
£9,500,000 outstanding. A conversion notice for a further
£900,000 in principal value of loan notes was received
from Mint on 23 April 2021 and the corresponding shares
will be allotted on or around 4 May 2021, after publication
of this report, leaving convertible loan notes to a value of
£8,600,000 outstanding.
Deferred financing costs
Group costs of £223,615 were incurred prior to the year
end in connection with the setting up of the Financing
Facility. These costs were deferred pending the first draw
down under the Financing Facility and will be amortised
through profit and loss from that date.
Paycheck Protection Program
The loan from the U.S. Small Business Administration
under the Paycheck Protection Program (described in
Note 23 to the financial statements above) was forgiven
in April 2021.
29. Copies of the annual report
Copies of the annual report will be available on the
Company’s web site at https://hemogenyx.com and from
the Company’s registered office, 5 Fleet Place London
EC4M 7RD.
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the Year Ended 31 December 2020
85
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H E M O G E N Y X . C O M