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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 1
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 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 2021 3
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 (England and Wales)
08401609
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 2021
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Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the Year Ended 31 December 2021
C H A I R M A N ’ S S T A T E M E N T
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 C H A I R M A N ’ S S T A T E M E N T
We achieved significant progress in our lead projects in
2021, having decided to focus on those developments
which we felt promised progression to human trials or
other milestones most quickly. Key to this was the work
we have done on our CAR-T cell therapy for blood
cancers, while we have also taken our CDX antibody
project forward following completion of the work carried
out by Eli Lilly and Company (“Lilly”) and the signing of
a licensing agreement with Lilly for intellectual property
developed by it. Building on lines of research we had been
developing previously, we have also filed a provisional
patent application for our Chimeric Bait Receptor (“CBR”)
platform technology, a novel approach which potentially
has the capacity to cure most viral infections, both known
and yet to appear, and certain cancers.
As a result of this programme of activity and outstanding
scientific work the Company now has a strong roster of
assets, and is firmly on the path to taking them to market.
Financially, as the accounts show, our operating loss
rose to approximately £2.7 million over the period, up
from approximately £2.2 million in 2020. Operating
costs remained very low for a biotechnology company
developing such cutting-edge assets as ours, but we
have made strong progress largely thanks to the quality
and effectiveness of our scientific team and the expertise
of our consultants.
5
Overall, however, the Group made a loss of £5,108,310
(2020: £2,095,023 loss) during the period under review.
Approximately half this figure arose in connection with
the convertible loan facility through which we raised
£12 million during the period, which consisted in part
of introductory, legal and exchange listing fees, and in
part of the discount on the market value of the shares
issued upon conversion of the debt to shares; this latter
component is a non-cash loss arising for accounting
reasons and contributed to the increased reported loss
for the year.
The convertible loan facility did not operate as we
expected. Consequently, we decided to terminate the
facility through a partial repayment and replacement
of the facility balance with conventional equity, thanks
to the efforts of our brokers. While this has proved to
be expensive and our share price has fallen back
substantially, conventional sources of finance on this scale
were not available at the time and these arrangements
have crucially enabled us to raise sufficient funds to
take our key projects significantly forward and to bring
our lead CAR-T product candidate close to being ready,
subject to the work now being carried out, for human
trials in the coming months.
I review progress and developments on our lead projects
below. I shall refer to our other projects more briefly, with
the reasons for the priorities that we have selected.
CAR-T cell therapy
Our chimeric antigen receptor T-cells are developed
to be a treatment for relapsed/refractory (“R/R”) Acute
Myeloid Leukaemia (“AML”), the most common form of
leukaemia and one for which there are currently no fully
effective treatments. AML has a five-year survival rate
of less than 30% in adults and is currently treated using
chemotherapy, rather than the potentially more effective
form of therapy being developed by Hemogenyx
Pharmaceuticals.
Our CAR-T therapy is expected to be a novel form of
immunotherapy that programmes a patient’s own T-cells
to recognise an antigen expressed by cancerous cells
and hence destroy these cells. The product we are
developing, which we refer to as HEMO-CAR-T, was
constructed using our proprietary humanised monoclonal
antibody against a target, the FLT3 protein, that is over-
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021
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C H A I R M A N ’ S S T A T E M E N T
expressed in AML cells and can be found on their
surface. Testing has demonstrated that HEMO-CAR-T is
able to effectively programme human T-cells to identify
and destroy human AML-derived cells both in vitro (in
non-animal studies) and in vivo (in animal studies).
We have made strong progress over the past two years
in the development of HEMO-CAR-T. The programme
has seen very encouraging results to date and promises
to represent a major breakthrough in the treatment of
AML. The Company is now focusing its greatest efforts
on this asset, which remains proprietary and wholly
owned by the Company.
In January 2021, we announced that we had entered into
a Master Translational Research Services Agreement
with the University of Pennsylvania (“Penn”) to advance
HEMO-CAR-T toward and through clinical trials. The
collaboration with Penn, the world’s leading experts in
CAR-T therapies, is of vital importance and demonstrates
the potential value of our development. The intended
outcome of the relationship is clinical proof of concept
for HEMO-CAR-T.
In preparation for human trials, the Company engaged
Quality Systems LLC (“Quality Systems”) to oversee
chemistry, manufacturing and controls processes and to
assist with the compilation of regulatory filings. Quality
Systems is an expert in this field and has taken more than
30 cell and gene-based therapies to Phase I/II of clinical
trials.
(“WuXi ATU”)
In December 2021, we engaged
leading contract
manufacturing organisation WuXi Advanced Therapies
ATU
for product development and
manufacturing of the DNA plasmids and viral vectors
required to manufacture HEMO-CAR-T cells to support
Phase I clinical trials. This partnership is key in accelerating
the timeline to deliver this innovative therapy to patients
in need of a more effective treatment for AML. Work on
these precursors for the creation of HEMO-CAR-T is now
well advanced.
We are now at an advanced stage of completing our
application for Investigational New Drug (“IND”) status.
Work on manufacturability, quality, safety and other
key parts of the development of HEMO-CAR-T has
continued and we expect to be in a position scientifically
to commence trials once the IND designation has been
granted.
CDX antibody
CDX is a bispecific antibody targeting a majority of
forms of relapsed/refractory AML, a subset of ALL,
and myelodysplastic syndrome; it may also be used in
conditioning patients for bone marrow transplants in a
more benign way compared to traditional chemotherapy
and/or radiotherapy protocols. CDX was the subject of our
development collaboration with Lilly which concluded in
2021. The partnership resulted in the selection of a clone
of the antibody that is ready for IND-enabling studies, the
final step before applying for a licence to conduct clinical
trials.
Effective and non-toxic conditioning may extend the
use of bone marrow transplantation to older and more
frail patients and potentially target additional indications
including autoimmune diseases, such as lupus and
multiple sclerosis, for which the risk of conventional bone
marrow transplantation has been a major road-block.
The potential applications of the CDX antibody have far
wider potential than initially anticipated, and we now
believe that CDX may be used not only for conditioning
for bone marrow transplants but also as a direct
treatment, or when used in combination with other
existing treatments, for AML and other blood cancers.
In October 2021 we secured an exclusive worldwide
licence for all applications to
intellectual property
developed by Lilly related to the final form of the CDX
bispecific antibody. With patent protection now secured
(as described below), and
following the valuable
contributions made by Lilly, we believe that CDX should
attract significant interest from financial or strategic
partners in taking the asset forward to animal toxicology
studies and ultimately clinical trials.
Following the year end, in January, the Company
announced a partnership with Selexis SA (“Selexis”)
to leverage Selexis’s SUREtechnology Platform™ of
protein expression technologies and modular workflows
to advance the Company’s CDX bispecific antibody
toward human trials. The service agreement will help the
Company to reduce the time, effort, and costs associated
with developing the cell line for the antibody for the
treatment of AML.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 C H A I R M A N ’ S S T A T E M E N T
CBR
CBR is a novel platform technology that constitutes a new
paradigm for treating viral infections and some forms of
cancer. The Company has been working on CBR since
before the start of the COVID-19 pandemic, leveraging
prior discoveries by the Company, and we have made
considerable progress over the course of 2021.
is
the CBR-based approach
The essence of
to
programme immune cells to destroy pathogens using
a novel type of modifiable synthetic receptor. We have
ascertained that this approach can also potentially be
used to destroy malignant cells causing certain types of
cancer, making it a broadly applicable and exciting new
class of therapy. Detailed work has been undertaken by
our scientists to prove the efficacy and widen the scope
of the platform. We have achieved laboratory proof of
concept for a CBR construct that eliminates the SARS-
CoV-2 virus responsible for COVID-19. The Company is
planning to conduct in vivo tests of the anti-SARS-CoV-2
CBR construct. Work also continues on a CBR construct
for cancer.
Although work to date has been focussed on specific
viruses, in particular SARS-CoV-2, the CBR approach is
applicable in principle to almost any form of virus. We
believe it is likely to be of particular value in combatting
emerging or rare forms of viral infection, treating sufferers
where effective vaccines or anti-viral drugs have not yet
been developed or have failed to be effective. These
may include future mutations of the SARS-CoV-2 virus
and also new viruses that may cause new pandemics,
referred to as “Disease X”, which scientists have warned
to be highly likely in the coming years.
Major advantages of our CBRs for combatting viral
infections are: (1) the use of a bait makes CBRs
insensitive to mutations of the targeted virus, preventing
the development of resistance; (2) CBRs are made
from naturally occurring receptors that are responsible
for the function of immune cells and endow the host’s
own immune system with the ability to destroy invading
pathogens; and (3) CBRs are modular synthetic receptors
that can be rapidly reconfigured to attack almost any
virus, bacteria, or malignant cells.
The Company has said relatively little about its work on
CBR to date as it is a potentially broadly applicable and
7
that
highly valuable new method of creating immunotherapy
treatments
to any other
is not comparable
developments taking place, as far as we are aware. Now
that we have achieved proof of concept and a provisional
patent application has been filed in relation to CBR we
can consider business development options. We believe
that the technology should attract interest from a range
of potential partners with whom we can now hold more
substantive conversations.
Other assets
The Company’s portfolio also includes its licence to the
Hu-PHEC cell therapy approach that was the subject
of CEO and Co-founder Dr Vladislav Sandler’s original
discovery while working at Cornell University, and its
Advanced Hematopoietic Chimera (“AHC”) humanised
mice that uniquely do not suffer from graft-versus-host
disease. These remain potentially valuable assets.
Some work continues in the background, including
collaborations using our AHC as platforms for disease
modelling. Shareholders will be aware that we entered
into joint ventures in 2018 to take these projects
forward but these were ultimately without result and the
convertible loans to subsidiaries associated with them
were repaid during 2021. However, our pragmatic focus
has been on our lead assets and on becoming a clinical
trial-stage business.
Patents
The Company continued
to strengthen
protection of its pipeline assets through 2021.
the
legal
In June 2021, the Company received US patent approval
in relation to CDX, covering its method of use for
conditioning patients for bone marrow/hematopoietic
stem cell transplantation. It also covers a subset of
sequences of monoclonal antibodies against target
proteins existing on the surface of hematopoietic stem
cells/hematopoietic progenitors and/or a number of
leukaemias. This patent solidifies the Company’s leading
position in the development of ground-breaking cancer-
related therapies and protects the Company’s intellectual
property in this key asset.
In August 2021, the Company received US patent
approval covering sequences of monoclonal antibodies
to the human FLT3/FLK2 receptor protein that is found on
the surface of AML cells, hematopoietic (blood forming)
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 88
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the Year Ended 31 December 2021
outsourcing this work. They also open up the possibility
of manufacturing cells for other organisations as a
potential source of revenue. The new laboratory will
enable us to grow as we proceed to clinical trials and
commercialisation of our pipeline products, and has other
advantages including proximity to Columbia University
and other life sciences institutions. It is gratifying that the
Company’s highly talented and dedicated scientific team
now has the space and quality of facilities that it needs to
further its crucial work.
Conclusion
Overall, 2021 was an important year for Hemogenyx
Pharmaceuticals in terms of product development and
strategic focus, and the present year has continued this
positive progress. It remains for me to thank our expert
and committed team of scientists and our informed and
influential group of scientific and business advisers. We
particularly look forward to taking our key CAR-T project
toward human trials and to seeking partnerships and
other financing arrangements to further the development
of our CDX and CBR assets over the rest of 2022.
Prof Sir Marc Feldmann AC, FRS
MB BS, PhD, FRCP, FRCPath, FAA, F Med Sci
Chairman
29 April 2022
C H A I R M A N ’ S S T A T E M E N T
stem cells and progenitors, and dendritic cells. These
monoclonal antibodies have allowed the Company to
develop both the bispecific CDX antibody and HEMO-
CAR-T as treatments for AML as well as potential
treatments for other types of blood cancers, and CDX as
a product for bone marrow transplant conditioning.
The Company has made further patent applications in
relation both to HEMO-CAR-T and to the CDX bi-specific
antibodies, the latter being a joint application with Lilly.
Following the period covered by these accounts, in
March 2022, the Company filed a seminal provisional
patent application protecting its intellectual property
rights in its CBR platform, as mentioned above.
Scientific and business advisers
The scientific advisory board, which I chair, continues
to provide valuable guidance to the Company and
its scientists. During 2021 and into 2022 it has been
particularly useful in shaping the Company’s intended
protocol for clinical trials of its CAR-T therapy, leveraging
our advisers’ extensive experience. The Company has
now also bolstered its commercial expertise through the
appointment in July 2021 of Dr Alan E. Walts as a business
adviser and board observer on an initial 12-month term. Dr
Walts is a highly qualified life sciences industry veteran,
having served as a senior manager at Genzyme in a
career there lasting over 25 years. He is now a Venture
Partner with Advent Life Sciences, a position he has held
since January 2014, and has positions with several other
public, private and charitable life sciences organisations.
Dr Walts’s input has been instrumental in shaping the
Company’s strategy for developing its pipeline of assets,
and in introducing the Company to several potential
partners.
New laboratory premises
The Company recently occupied new premises in the
Manhattanville Factory District of New York. The premises,
custom built to our requirements, are significantly larger
than our original laboratory and include two clean rooms,
enabling us to carry out some procedures which we
have until now had to outsource to third parties. These
will commence with the manufacturing of HEMO-CAR-T
cells for clinical trials in-house, a process that alone can
save the Company over US$2 million compared with
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Annual Report & Financial Statements for the Year Ended 31 December 2021
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A N D S E N I O R M A N A G E M E N T
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Annual Report & Financial Statements for the Year Ended 31 December 2021
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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
Professor Sir Marc Feldmann – Non-Executive
Director & Chairman – appointed 9 April 2018
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
knighthood equivalent, the Companion of the Order of
Australia.
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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Annual Report & Financial Statements for the Year Ended 31 December 2021
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
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 20 years of experience
representing a range companies and institutions.
Ms Sandler is the Vice President and General Counsel of
Pace University. A talented and respected attorney with
a wide range of experience and expertise, Ms Sandler
previously served for nearly a decade as in-house
counsel for The Museum of Modern Art. Prior to that, she
worked as the director of business and legal affairs for a
major media and entertainment company, and in private
practice for several prominent law firms.
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.
Peter Redmond is a corporate financier with some 40
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
former Unlisted Securities Market, the Main Market of the
London Stock Exchange and AIM, whether by IPO or in
many cases via reverse takeovers, 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 and investor of the companies
concerned.
He was a founder director of Cleeve Capital plc (now
BigBlu Operations Limited) and Mithril Capital plc, both
formerly listed on AIM prior to reverse takeovers, and of
Silver Falcon plc, the Company into which Hemogenyx
Pharmaceuticals reversed, and he took a leading role
in negotiating and effecting the reverse takeover. He
undertook the same role in the rescue, reconstruction
and refinancing of AIM-quoted 3Legs Resources plc
(now SalvaRx Group plc) and now Standard Listed URA
Holdings plc and several other companies, and took
a significant active part in fundraising for the above
companies.
He is currently a director of Standard Listed URA Holdings
plc.
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the Year Ended 31 December 2021
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D I R E C T O R S ’ S T R A T E G I C 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 1
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D I R E C T O R S ’ S T R A T E G I C 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 1
The Directors present
their Strategic Report of
Hemogenyx Pharmaceuticals plc for the year ended 31
December 2021.
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 and of viral infections.
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
2021 of £5,108,310 (31 December 2020 – loss of
£2,095,023).
In the year to 31 December 2021 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 £99,943
(2020 – £85,237) from collaborations with partners, and
£71,932 (2020: nil) from the forgiveness of a loan under
the United States Payment Protection Program in 2021
for a total of £171,875 (2020 – £85,237). Finance costs
connected with the convertible loan arrangement have
been expensed to profit or loss in ull in the year, following
the cessation of that acility, which would otherwise have
been deferred and spread over the life of the convertible
loans.
Cash flow and cash position
in operations
Cash used
December 2020: £1,798,404).
totalled £2,627,298
(31
As at 31 December 2021, the Group had a cash balance
of £6,840,969 (31 December 2020: £1,812,299).
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 they remain
the most important and relevant measure of performance
and progress.
Cash management
The Group supplemented its funding with proceeds
totalling £12,000,000 resulting from the issuance of
convertible loans that took place in the year. The lender
converted £10,400,000 of such loan into shares of the
Company and we repaid the remaining £1,600,000. We
also repaid loans to Orgenesis Inc. during 2021, such
that at 31 December 2021 there was no outstanding
indebtedness. The cash position at 31 December 2021
was £6,840,969 (31 December 2020: £1,812,299).
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.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 15
D I R E C T O R S ’ S T R A T E G I C 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 1
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
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") and
awarded as Patent Number US 11,021,536 B2 on 1 June
2021. 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.
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. An additional composition of
matter patent application (covering novel sequences of
the antibodies discovered and validated by the Company
in collaboration with Lilly) has been filed following
completion of the Lilly collaboration agreement.
Monoclonal antibodies
In July 2019 the Group filed a composition of matter
patent application entitled MONOCLONAL ANTIBODIES
TO HUMAN FLT3/FLK2 RECEPTOR PROTEIN 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. The patent was granted on 31
August 2021 as Patent Number US 11,104,738. This patent
covers composition of matter (sequences) of monoclonal
antibodies to the human FLT3/FLK2 receptor protein
that is found on the surface of acute myeloid leukemia
(AML) cells, hematopoietic (blood forming) stem cells and
progenitors (HSC/HP), and dendritic cells. It also covers
a method of application of the Group’s bi-specific CDX
antibodies for conditioning patients for bone marrow
transplantation.
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.
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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
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.
Chimeric Bait Receptor
In March 2022, the Company filed a seminal provisional
patent application protecting its rights to the intellectual
property covering CBR.
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. A CBR construct
designed to target SARS-CoV-2 has been tested in vitro.
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
7
2
3
6
-
1
Board of Advisors
The Group engages the services of a Board of Advisors
the clinical
who are highly experienced
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
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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
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
opportunities where
improvements may be made;
these are generally concentrated in areas of energy
conservation, recycling and waste control.
• Founded NewBiotics, Inc., acquired by Kiadis Pharma
Principal Risks and Uncertainties
• 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
• >200 publications in peer reviewed journals
• 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.
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:
Risks relating to the Group’s business strategy
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
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
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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.
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
development of an
investigational clinical product
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
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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.
The departure of the UK from the EU is now complete
and impact on the business, whose current operations
are principally in the US, has been negligible. 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. The Company is monitoring matters and will seek
advice, where necessary, as to how to mitigate the risks
arising.
Environmental and other regulatory requirements
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 29 April 2022
Dr Vladislav Sandler
CEO
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
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.
Market conditions
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
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 202020
Hemogenyx Pharmaceuticals plc
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Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the Year Ended 31 December 2021
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The Directors present their report with the audited
financial statements of the Group for the year ended 31
December 2021.
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.
Principal Activity
is
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
and complementary products include immunotherapy
product candidates for the treatment of AML and other
Professor Sir Marc Feldmann
Dr Vladislav Sandler
Alexis Sandler
Peter Redmond
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. Additionally, the Group is
developing CBR, a novel platform technology potentially
capable of programming immune cells to attract and
destroy a wide range of viruses and malignant (cancer-
causing) cells.
The Group has three companies that are located outside
of the UK. The principal laboratory of the Group is
located in Manhattan, New York, USA. The Group also
had a subsidiary in Liège, Belgium that was dissolved on
30 March 2022.
Results and Dividends
The Consolidated Statement of Comprehensive Income
set out on page 48 shows a loss for the year amounting
to £5,108,310 (2020: loss of £2,095,023). The Directors
do not propose a dividend in respect of the year ended
31 December 2021 (31 December 2020: nil).
Directors and Directors’ Interests
The Directors who held office during the year and up to
the date of this report were as follows:
Date Appointed
Date Resigned
9 April 2018
4 October 2017
4 October 2017
29 July 2015
-
-
-
-
22
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The Directors of the Company who held office at 31 December 2021 had the following beneficial interests in the
Ordinary shares of the Company at 31 December 2021 according to the register of directors’ interests:
Director
At 31 December 2021
At 31 December 2020
Professor Sir Marc Feldmann
Peter Redmond*
Dr Vladislav Sandler
Alexis Sandler
-
5,596,270
41,544,677
-
5,596,270
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, save
for the annual grant of 10,000 ownership units in Immugenyx LLC due to Dr Vladislav Sandler under the terms of his
appointment as CEO and Chief Scientific Officer of that company. Grants of options are 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
5,000,000
5,000,000
13 July 2020
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 2021 23
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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 2021, the total number of issued Ordinary Shares with voting rights in the Company was 979,749,321
(now: 979,749,321). The Company has been notified of the following interests of 3 per cent or more in its issued share
Party Name
Alexis Sandler
Vladislav Sandler
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(s).
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 was to ensure
that the Company was capable at all times of carrying
on its business independently of the Controlling Parties.
The Relationship Agreement provided 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;
• 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 action which was intended to, or
appeared 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.
Number of Ordinary
Shares
75,090,685
41,544,677
% of
Share Capital
7.66
4.24
The Directors believed that the terms of the Relationship
Agreement enabled 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 were 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
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.
independence provisions set out
According to the terms of the Relationship Agreement, 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. During the course of 2021,
the shareholding of the Controlling Parties fell below
20% and accordingly the Relationship Agreement has
now terminated.
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.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 24
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Financial Instruments
Greenhouse Gas Emissions
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.
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.
Corporate Governance
The Corporate Governance report forms part of the
Directors’ Report and is disclosed on pages 27-32.
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.
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
(2020: £nil).
Charitable Donations
There were no charitable donations made by the Group
in the current or prior year.
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, based on consumption
figures derived from utility bills for the Company’s
premises.
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.
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 Group and
Company financial statements in accordance with UK-
adopted international accounting standards.
Under Company law the Directors must not approve
the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of
the Group and Company and of the profit or loss of the
Group 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 UK-adopted international
accounting standards have been followed, subject to
any material departures disclosed and explained in
the financial statements; and
• Prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Group and Company will continue in business.
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25
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 29 April 2022
Dr Vladislav Sandler
CEO
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
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. 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:
• the group and company financial statements have
in accordance with UK-adopted
been prepared
international accounting standards, and give a true
and fair view of the assets, liabilities, financial position
and loss of the Group; and
• the Annual Report and financial statements, including
the Business review, includes a fair review of the
development and performance of
the business
and the position of the Group and parent company,
together with a description of the principal risks and
uncertainties that they face.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 2626
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the Year Ended 31 December 2021
G O V E R N A N C E R E P O R T
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the Year Ended 31 December 2021
27
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 2021 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 2021.
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 six 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 it provides to the Company and Group.
28
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 auditor, the Committee will be recommending
the reappointment of PKF Littlejohn LLP as auditor to the Company at the 2022 Annual General Meeting.
During the year to 31 December 2021 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 2021.
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.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 29
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 24 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.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 30
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
Professor Sir Marc Feldmann
Alexis Sandler
Peter Redmond
24
24
24
24
24
18
24
23
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 11-12
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 2021
31
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 in 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.
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.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 32
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the Year Ended 31 December 2021
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 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
Code published
in July 2018, the Directors have
assessed the prospects of the Group and concluded
that it is appropriate to adopt the going concern basis
of accounting based on the amount of cash on hand at
the end of the year and at the time of publication of this
report. 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 17-19.
Dr Vladislav Sandler
CEO
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 2021 include:
• Attended the 2021 AGM, which was once again a
closed meeting in 2021 due to the restrictions imposed
by the UK government’s response to the COVID-19
pandemic, prepared to answer any questions raised
by shareholders;
• Arranged meetings with certain stakeholders to
the Company’s
provide
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.
The Board believes
that appropriate steps and
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.
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the Year Ended 31 December 2021
33
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
34
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
to
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.
The Directors’ Remuneration Policy, which is set out
on pages 35 to 39 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 requi rements, 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 2021 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
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 was
entitled to receive $225,000 in 2021 and is currently
entitled to receive $275,000 per annum (due to rise to
$324,000 in 2023) 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 $64,889 (2021:
$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
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 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
agree that the Company will meet certain relocation and/
or incidental expenses as appropriate.
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 No -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
-
-
-
* Finalisation of a new service agreement is pending. Sir Marc has indicated his willingness to continue in office on
agreed terms, having put himself forward for re-election by shareholders as a Director at the 2021 Annual General
Meeting.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 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
Executive Directors’ Remuneration (audited)
The table below sets out the remuneration received by each Executive Director for the years ended 31 December 2021
Executive Directors
Basic salary
2021
£’000
Pension
2021
£’000
Dr Vladislav Sandler
Total
206
206
7
7
Executive Directors
Basic salary
2020
£’000
Pension
2020
£’000
Dr Vladislav Sandler
Total
200
200
5
5
Total
2021
£’000
213
213
Total
2020
£’000
205
205
Non-Executive Directors’ Remuneration
The table below sets out the remuneration received by each Non-Executive Director during the years ended 31
December 2021 and 2020:
Basic salary
2021
£’000
Total
2021
£’000
Alexis Sandler
Peter Redmond
Professor Sir Marc Feldmann
Total
45
50
15
110
45
50
15
110
Basic salary
2020
£’000
Total
2020
£’000
Alexis Sandler
Peter Redmond
Professor Sir Marc Feldmann
Total
27
42
13
82
27
42
13
82
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 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
Relative importance of spend on pay
The table below illustrates the year-on-year change in total remuneration compared to distributions to shareholders
Year ended 31 December 2021
Year ended 31 December 2020
Percentage change
Distributions to
shareholders
£
-
-
n/a
Total employee pay
(including stock
based compensation)
£
1,007,817
1,130,763
(10.9%)
Operational
cash outflow
£
2,627,298
1,798,404
46.1%
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 2021
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
Historical share price performance comparison
The chart 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 2021 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
450
400
350
300
250
200
150
100
50
0
V-15
N-16
R-16
O
A
JA
M
M
N
AY-16
JUL-16
SEP-16
V-16
N-17
R-17
A
O
JA
M
M
N
AY-17
JUL-17
SEP-17
V-17
N-18
R-18
O
A
JA
M
M
N
AY-18
JUL-18
SEP-18
V-18
N-19
R-19
O
A
JA
M
M
N
AY-19
JUL-19
SEP-19
0
V-19
0
N-2
O
JA
N
0
R-2
A
M
AY-2
M
0
JUL-2
SEP-2
0
0
N-21
R-21
V-2
A
JA
O
M
M
N
AY-21
SEP-21
V-21
DEC-21
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
29 April 2022
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 4040
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the Year Ended 31 December 2021
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 2021
41
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
2021 which comprise the Consolidated Statement of
Comprehensive Income, the Consolidated and Company
Statements of Financial Position, the Consolidated
and Company Statements of Changes in Equity, the
Consolidated and Company Statements of Cash
Flows and notes to the financial statements, including
significant accounting policies. The financial reporting
framework that has been applied in their preparation is
applicable law and UK-adopted international accounting
standards and as regards the 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 2021 and of the group’s loss
for the year then ended;
• the group financial statements have been properly
prepared in accordance with UK-adopted international
accounting standards;
• the parent company financial statements have been
properly prepared in accordance with UK-adopted
international accounting standards and as applied in
accordance with the provisions of the Companies Act
2006; and
• the financial statements have been prepared in
accordance with the requirements of the Companies
Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are
further described in the Auditor’s responsibilities for the
audit of the financial statements section of our report.
We are independent of the group 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 directors’ use of the going concern basis of
accounting in the preparation of the financial statements is
appropriate. Our evaluation of the directors’ assessment
of the group’s and 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 cashflows for
the 12 months following the reporting date. We have
reviewed all the key inputs into the cash flow forecast,
with particular emphasis on those areas of judgment and
estimation uncertainty, and ensured they are appropriate,
and no evidence of management bias exists. We
assessed the levels of cash available to the group post
year-end and how they are sufficient to cover expected
outgoing costs over the cash flow forecast period. We
reviewed post-period end RNS announcements and
discussions with management on future plans.
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 entity’s 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 directors 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.
42
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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 application of materiality
Our approach to the audit
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 to 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 as a whole
was set at £54,000 (2020: £46,000). 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 during its years
of development as the group is not currently revenue
generating.
Materiality for the parent company financial statements
as a whole was set at £20,000 (2020: £40,000) based
on 2% of total expenses. We have determined this level
of materiality for the parent company to gain sufficient
coverage of expenses.
for
Performance materiality
the group financial
statements was set at £37,000 (2020: £32,000) and the
parent company was set at £14,000 (2020: £28,000),
being 70% of materiality for the financial statements as a
whole respectively. A benchmark of 70% for performance
materiality was applied to provide sufficient coverage of
significant and residual risks.
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 £2,000 for
the group financial statements and £1,000 for the parent
company financial statements. We also agreed to report
any other audit misstatements below that threshold that
we believe warranted reporting on qualitative grounds.
The scope of our audit was influenced by our application
of materiality. The quantitative and qualitative thresholds
for materiality determine the scope of our audit and the
nature, timing, and extent of our audit procedures.
The group includes the listed parent company and its
US based subsidiaries. We assessed the structure of the
group, its accounting processes and controls, and the
industry in which it operates, in order to determine the
scope of our audit work and ensure that we obtained
sufficient and appropriate audit evidence on which to
base our group audit opinion. Those entities of the group
which were considered to be significant components,
being Hemogenyx LLC and Immugenyx Pharmaeuticals
LLC, were subject to full scope audit procedures by
PKF Littlejohn LLP. We did not rely on the work of any
component auditors. Procedures were performed to
address the assessed risks of material misstatement.
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.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 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
43
Carrying value of the intangible assets
(Group - Note 14)
The carrying value of intangible assets of
£441k was recorded in the subsidiary’s
books. There is a risk that the carrying value
is impaired. The intangibles are patent
rights and therefore this will ultimately
result in the main source of income for the
group.
required
The directors concluded that no impairment
was
and amortisation will
commence once these products are ready
for marketing.
Carrying Value of investments in, and
loans to, subsidiary undertakings
(Company - Note 16 and Note 15
respectively)
We performed the following procedures to address this identified
risk:
• Substantively tested the additions recognised during the year
and agreed the purchase price to supporting documentation.
• Reviewed the directors’ assessment for indicators of impairment
and challenging the underlying assumptions used.
• Reviewed the events after the year-end for indicators of
impairment.
Through the performance of the above testing, we obtained
sufficient assurance that the carrying value of the intangible
assets was not impaired, and no indicators of impairment existed
at year-end.
Investments held by the parent company
in subsidiaries, as of 31 December 2021,
totals £8.0m. Loans to those subsidiaries,
as of 31 December 2021, are reported as
£13.2m.
We performed the following procedures to address this identified
risk:
• Reviewed the directors’ assessment of the carrying value of
investments and loans to subsidiary undertakings, and their
conclusions thereof.
These are significant balances due to
the parent company. If the subsidiary
undertakings are unable
to generate
sufficient future profits or gains in the
foreseeable future, there is a risk that both
the investment and loans held in those
entities are overstated.
• Reviewed
the subsidiary’s financial performance and
development progress to corroborate the directors’ assessment
of recoverability.
• Reviewed and assessed the current state of development,
and scientific and commercial progress of the products under
development.
• Reviewed board minutes for any indications of changes in
investments held by the parent company.
• Agreed ownership documents of all the subsidiaries in the
group.
• Reviewed the market capitalisation of the group to provide
further assurance of the carrying value of the investments and
loans to subsidiary undertakings subsequent to the year end.
Through the performance of the above testing, we obtained
sufficient assurance that the carrying value of investments in, and
loans to, subsidiary undertakings are not materially overstated.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 44
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
• the strategic report and the directors’ report have
been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by
exception
In the light of the knowledge and understanding of the
group and the parent company and their environment
obtained in the course of the audit, we have not identified
material misstatements in the strategic report or the
directors’ report.
We have nothing to report in respect of the following
matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by
the parent company, or returns adequate for our audit
have not been received from branches not visited by
us; or
• the parent company financial statements 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
We have reviewed 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 voluntary compliance with the
provisions of the UK Corporate Governance Statement
specified for our review by the Listing Rules.
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 and our
knowledge obtained during the audit:
• Directors’
statement with
the
appropriateness of adopting the going concern basis
of accounting and any material uncertainties identified
set out on page 31;
regards
to
• Directors’ explanation as to its assessment of the
entity’s prospects, the period this assessment covers
and why the period is appropriate set out on page 31;
• Directors’ statement on whether it has a reasonable
expectation that the group will be able to continue in
operation to meet its liabilities set out on page 32;
• Directors' statement that they consider the annual
report and the financial statements, taken as a whole,
to be fair, balanced, and understandable set out on
page 25;
• Board’s confirmation that it has carried out a robust
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 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
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45
assessment of the emerging and principal risks set out
on page 17;
• Section of the annual report that describes the review
of effectiveness of risk management and internal
control systems set out on page 31; and
• Section describing the work of the audit committee
set out on page 27-28.
Responsibilities of directors
responsible
As explained more fully in the statement of directors’
responsibilities,
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.
In preparing the group and parent company financial
statements, the directors are responsible for assessing
the group’s and the parent company’s ability to continue
as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern
basis of accounting unless the directors either intend to
liquidate the group or the parent company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and
to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is
not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in
the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the
basis of these financial statements.
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 and
application of our 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 the Companies Act
2006, the FCA Listing Rules, the Disclosure Guidance
and Transparency Rules Sourcebook and the UK
Corporate Governance Code.
• We designed our audit procedures to ensure the we
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
• 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.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 46
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the Year Ended 31 December 2021
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
Use of our report
This report is made solely to the company’s members,
as a body, in accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work has been
undertaken so that we might state to the company’s
members those matters we are required to state to them
in an auditor’s report and for no other purpose. To the
fullest extent permitted by law, we do not accept or
assume responsibility to anyone, other than the company
and the company's members as a body, for our audit
work, for this report, or for the opinions we have formed.
David Thompson (Senior Statutory Auditor)
For and on behalf of PKF Littlejohn LLP
Statutory Auditor
15 Westferry Circus
Canary Wharf
London E14 4HD
29 April 2022
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.
Other matters which we are required to address
We were appointed by the audit committee on 30 April
2021 to audit the financial statements for the period
ending 31 December 2021 and subsequent financial
periods. Our total uninterrupted period of engagement is
7 years, covering the periods ending 31 December 2015
to 31 December 2021.
the period subject
During
to audit, a non-audit
service prohibited by the FRC’s Ethical Standard was
inadvertently provided by the Firm to the parent company.
This service involved the preparation of a valuation of
the non-cash consideration of shares for the purposes
of Section 593(1) of the Companies Act 2006 by the
Firm’s valuation partner. This non-permitted valuation
service was provided without the knowledge or approval
of the Firm’s central ethics function. As the consultation
required by the Firm’s policies and procedures did not
take place in respect of this service, this was assessed
as an inadvertent breach. In reviewing the nature of this
inadvertent breach, specifically that it involved amounts
that would not be subject to review or consideration in
the audit, no judgements were made in providing the
valuation and that it was provided by a partner separate
from the audit engagement team, we concluded that this
did not affect our professional judgement or our audit
report. Accordingly, in reporting the inadvertent provision
of a prohibited non-audit service to those charged with
governance, we determined that our independence had
not been compromised and that we could continue to
carry out the audit of the group and parent company,
with their approval.
Our audit opinion is consistent with the additional report
to the audit committee.
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the Year Ended 31 December 2021
47
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 1
48
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
23
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 2021
£
Year Ended
31 December 2020
£
-
-
(2,576,414)
(126,340)
(2,043,633)
(106,753)
(2,702,754)
(2,150,386)
171,875
17,958
(2,595,389)
85,237
3,365
(33,239)
(5,108,310)
(2,095,023)
-
-
(5,108,310)
(2,095,023)
(5,099,228)
(9,082)
(5,108,310)
(2,082,220)
(12,803)
(2,095,023)
(18,025)
(18,025)
(61,119)
(61,119)
Total comprehensive income for the year
(5,126,335)
(2,156,142)
Attributable to:
Owners of Hemogenyx Pharmaceuticals plc
Non-controlling interests
Total comprehensive income for the year
Basic and diluted loss per share attributable to the
equity owners of the Company
(5,117,253)
(9,082)
(5,126,335)
(0.007)
(2,143,339)
(12,803)
(2,156,142)
(0.005)
11
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 2021
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
49
Group
Assets
Non-current assets
Property and equipment
Right of use asset
Security deposits
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
Total non-current liabilities
Current liabilities
Trade and other payables
Borrowings
Lease liabilities
Total Current Liabilities
Total Liabilities
Total equity and liabilities
Note
31 December 2021
£
31 December 2020
£
12
13
26
23
14
17
18
19
20
4
13
22
23
13
787,887
9,242
142,599
-
441,493
1,381,221
298,220
6,840,969
7,139,189
222,858
45,885
-
223,615
254,955
747,313
104,972
1,812,299
1,917,271
8,520,410
2,664,584
9,797,493
16,808,647
904,226
(6,157,894)
(25,921)
(13,134,742)
8,191,809
(24,240)
8,167,569
-
342,689
-
10,152
352,841
352,841
4,336,363
9,990,965
764,815
(6,157,894)
(7,896)
(8,035,514)
890,839
(15,158)
875,681
10,028
10,028
160,771
1,579,378
38,726
1,778,875
1,788,903
8,520,410
2,664,584
This report was approved by the Board and authorised for issue on 29 April 2022 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 2021
50
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 2021
£
31 December 2020
£
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
Total equity and liabilities
15
23
16
17
18
19
20
22
13,214,507
-
8,000,000
21,214,507
15,478
111,245
126,723
2,766,051
213,472
8,000,000
10,979,523
61,448
1,036,214
1,097,662
21,341,230
12,077,185
9,797,493
16,808,647
903,122
(6,302,461)
21,206,801
134,429
134,429
134,429
4,336,363
9,990,965
749,767
(3,136,290)
11,940,805
136,380
136,380
136,380
21,341,230
12,077,185
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 2021 was £3,166,171 (2020: £930,475).
This report was approved by the Board and authorised for issue on 29 April 2022 and signed on its behalf by:
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 2021
51
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 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 derivative 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
Loss in year
Other Comprehensive
Income
Total comprehensive
income for the year
Conversion of debt to
equity
-
-
-
-
-
-
5,373,710 5,026,290
Shares issued to
arrangers of debt facility
77,420
522,580
Shares issued to
consultant
Charge recognised upon
conversion of debt
Issue of options
Adjustment to
Embedded derivative on
convertible note
As at 31 December 2021
10,000
56,337
1,212,475
-
-
-
-
-
153,355
(13,944)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(5,099,228)
(9,082)
(5,108,310)
(18,025)
-
-
(18,025)
(18,025)
(5,099,228)
(9,082)
(5,126,335)
-
-
-
-
-
-
-
-
-
-
-
-
- 10,400,000
-
-
-
-
-
600,000
66,337
1,212,475
153,355
(13,944)
9,797,493 16,808,647 904,226 (6,157,894)
(25,921)
(13,134,742)
(24,240)
8,167,569
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 2021 52
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
Total Equity
As at 31 December 2019
3,612,429
7,699,789
386,663
(2,205,815)
9,493,066
£
£
£
£
£
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
-
-
363,104
(930,475)
(930,475)
-
-
(930,475)
(930,475)
-
-
-
2,980,040
35,070
363,104
As at 31 December 2020
4,336,363
9,990,965
749,767
(3,136,290)
11,940,805
Loss in year
Other Comprehensive Income
Total comprehensive income
for the year
-
-
-
-
-
-
Conversion of debt to equity
5,373,710
5,026,290
Shares issued to arrangers of
debt facility
77,420
522,580
Shares issued to consultant
10,000
56,337
-
-
-
-
-
-
-
(3,166,171)
(3,166,171)
-
-
(3,166,171)
(3,166,171)
-
-
-
-
-
10,400,000
600,000
66,337
1,212,475
153,355
Charge recognised upon
conversion of debt
Issue of options
-
-
1,212,475
-
153,355
As at 31 December 2021
9,797,493
16,808,647
903,122
(6,302,461)
21,206,801
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 2021 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 A S H F L O W S
Group
Note
Year Ended
31 December 2021
£
Year Ended
31 December 2020
£
Cash flows generated from operating activities
Loss before income tax
Depreciation
Other non-cash items
Interest income
Interest expense
Beneficial conversion charge related to convertible debt
Share based payments
Foreign exchange gain
Increase/(decrease) in trade and other payables
Increase in trade and other receivables
Prepaid and deposits
12,13
23
20
(5,108,310)
126,340
77
(17,958)
923,361
1,212,475
153,355
(18,025)
298,070
(196,683)
-
(2,095,023)
106,753
172
(3,365)
33,239
-
363,104
(146,772)
(35,738)
(21,397)
623
Net cash outflow used in operating activities
(2,627,298)
(1,798,404)
Cash flows generated from financing activities
Proceeds from issuance of debt and equity securities
Proceeds from exercise of warrants
Proceeds from borrowings
Share issue costs
Repayment of loans and borrowings
Deferred financing costs
Payment of lease liabilities
Net cash flow generated from financing activities
Cash flows generated from investing activities
Interest income
Payment of security deposit for lease
Payment for intangible assets
Purchase of property & equipment
23
23
23
23
13
14
12
12,000,000
3,148,200
-
-
-
(3,183,281)
-
(39,079)
35,070
461,776
(168,160)
-
(223,615)
(41,249)
8,777,640
3,212,022
17,958
(138,913)
(181,743)
3,365
-
-
(636,255)
(173,047)
Net cash flow generated from investing activities
(938,953)
(169,682)
Net increase in cash and cash equivalents
5,211,389
1,243,936
Effect of exchange rates on cash
(182,719)
69,684
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
1,812,299
6,840,969
498,679
1,812,299
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 2021 54
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
Beneficial conversion charge related to convertible debt
Share based payments
(Decrease) in trade and other payables
Decrease/(increase) in trade and other receivables
Adjustments to net loss for cash items
Net cash outflow used in operating activities
Cash flows generated from financing activities
Proceeds from issuance of debt and equity securities
Proceeds from exercise of warrants
Share issue costs
Repayment of loans and borrowings
Deferred financing costs
Note
Year Ended
31 December 2021
£
Year Ended
31 December 2020
£
(3,166,171)
(930,475)
(184,759)
26,508
883,692
1,212,475
153,355
-
45,970
(5,821)
-
-
363,104
(13,153)
(4,194)
-
(1,061,259)
(558,210)
12,000,000
3,148,200
-
-
(1,600,000)
-
35,070
(168,160)
-
(213,472)
23
20
23
23
Net cash flow generated from financing activities
10,400,000
2,801,638
Cash flows generated from investing activities
Loan to related parties
(10,263,778)
(1,221,678)
Net cash flow generated from investing activities
(10,263,778)
(1,221,678)
Net (decrease)/increase in cash and cash equivalents
(925,037)
1,021,750
Effect of exchange rates on cash
68
(41)
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
1,036,214
111,245
14,505
1,036,214
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 2021 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
55
1. General information
the discovery, development
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 2021. 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
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 2021 was £3,166,171 (2020: £930,475).
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.
include
fees paid
ii. Clinical trial expenses
Clinical trial-related expenses are a component of the
Company's research and development costs. These
expenses
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 2021 56
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
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 life and the IP will be
amortised using the straight-line method over their
estimated useful economic lives.
Property and equipment
All property and equipment are stated at historical cost
less accumulated depreciation or 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
Leasehold improvements
33%
12.5%
Property, plant & equipment
20% - 50%
Straight-line
Straight-line
Straight-line
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 57
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
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.
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 COVID-19 and any other
potential pandemics that may arise. The Group’s New
York operations were classed as an essential business
and were not subject to closure during lockdown
periods, and so work continued with prudent hygiene
and distancing measures in place including limited work
in the laboratory on rota and work from home. The Group
allowed for extended delivery times for some supplies,
and for slower progress with collaboration partners.
The Board and UK management continued to operate
remotely, as usual. At the present time work has returned
to normal, and the Group believes that there should be
no material disruption to its work in the event of further
pandemic-related restrictions. The Board continues to
monitor these risks and the Group’s business continuity
plans.
The Company raised £12,000,000 before expenses
through convertible debt placings during the period, all
of which was converted to equity except for £1,600,000
which was repaid. The Group had cash and cash
equivalents totalling £6,840,969 as at 31 December
2021.
The Directors, having made due and careful enquiry,
are of the opinion that the Group and Company have or
will have 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 Group and 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.
Notwithstanding the Group’s cash balance, should the
Group elect to raise additional capital within the next
year, it cannot be certain that such additional funding will
be available on acceptable terms, or at all. To the extent
that the Company raises additional funds by issuing
equity securities, the Company’s stockholders may
experience dilution. Any debt financing, if available, may
involve restrictive covenants. If the Company is unable to
raise additional capital when required or on acceptable
terms, it may have to (i) significantly delay, scale back or
discontinue the development and/or commercialisation
of one or more product candidates; (ii) seek collaborators
for product candidates at an earlier stage than otherwise
would be desirable and on terms that are less favourable
than might otherwise be available; or (iii) relinquish or
otherwise dispose of rights to technologies, product
candidates or products that it would otherwise seek to
develop or commercialise on unfavourable terms.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 58
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
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.
liabilities measured at amortised cost are
Other
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.
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 Pounds 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 at 31 December 2020 represent
direct expenditures made by the Company for the
financing transaction completed in January 2021. These
costs were 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 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”). In 2021, the Group adopted the
“Hemogenyx Pharmaceuticals plc 2021 Equity Incentive
Plan with Non-Employee Sub-Plan” (the “EIP”) for the
grant of options, restricted shares, and restricted share
units to employees, directors and consultants of the
Company and its subsidiaries over ordinary shares in
the capital of the Company, to be put to the Company’s
shareholders for approval at the 2022 AGM. Equity-
settled share-based payments are measured at fair value
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 59
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
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 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,
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 60
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
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 assess 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
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.
IFRS 15, Revenue from Contracts with Customers
follows
The Company
IFRS 15, which establishes
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.
Segmental reporting
The Group’s operations are located in New York, USA and
in Liège, Belgium (prior to the dissolution of Hemogenyx-
Cell SPRL in 2022) 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
immune system
treatments relating to blood and
disorders and viral infections.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 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
61
New Accounting Standards and Interpretations issued
and applied in the Financial Statements
to
to References
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.
The Group has applied the following amendments for the
first time for the annual reporting period commencing 1
January 2021:
Interest Rate Benchmark Reform – Phase 2,
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and
IFRS 16 became effective from January 1, 2021. These
amendments address issues that might affect financial
reporting when an existing interest rate benchmark
(i.e. Interbank offered rate – IBOR) is replaced with
an alternative benchmark interest rate. The effects
of interest rate benchmark reform on the Group and
Company’s financial instruments and risk management
strategies did not have a material impact on the Group’s
consolidated financial statements and are not expected
to have a significant impact in future periods.
IASB
On March 31, 2021, the
issued COVID-19-
Related Rent Concessions beyond June 30, 2021, an
amendment to IFRS 16 effective from August 31, 2021
onwards. The amendment enables lessees, subject
to certain conditions, to opt out of the requirement to
determine whether a COVID-19-related rent concession
is a lease modification. Application of this amendment
had no material impact on the Group and Company.
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:
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 entity (the borrower) and the lender, including fees
paid or received by either the entity or the lender on
the other’s behalf.
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.
•
IAS 41 – This amendment removes the requirement
for entities to exclude taxation cash flows when
measuring the fair value of a biological asset using a
present value technique.
On 12 February 2021 the IASB issued an amendment
to IAS 1 concerning accounting policy disclosures, and
an amendment to IAS 8 concerning the definition of
accounting estimates. On 7 May 2021 the IASB issued
an amendment to IAS 12 concerning deferred tax related
to assets and liabilities arising from a single transaction.
The Company does not expect any material impact from
the application of these two amendments, which are
effective for annual reporting periods beginning on or
after 1 January 2023. The Company will not early adopt
these amendments.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 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
On 23 January 2020 the IASB issued Classification of
Liabilities as Current or Non-current, an amendment to
IAS 1. On 14 May 2020 the IASB issued Reference to
the Conceptual Framework, an amendment to IFRS 3;
Proceeds before Intended Use, an amendment to IAS
16; Onerous Contracts – Cost of Fulfilling a Contract, an
amendment to IAS 37; and Annual Improvements to IFRS
standards 2018-2020. The Company does not expect
a material impact from those amendments, which are
effective for annual reporting periods beginning on or
after 1 January 2022.
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 or
Company.
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:
Convertible debt
The accounting treatment of the shares issued to
Arrangers and Introducers of the debt financing requires
the Group to consider the purpose of the issuance of
such shares, and whether they directly relate to the
procurement of the debt facility. Shares issued to such
Arrangers and Introducers were a condition of, and
therefore judged to be directly related to, the procurement
of the debt facility and were accordingly capitalised.
Shares not issued in relation to the debt financing were
not capitalised and were treated as an administrative
expense. The fair value of the shares issued was based
upon the quoted price of the Company’s ordinary shares
at the date of issuance. The fair value of the shares
issued upon conversion of the debt to ordinary shares
was based upon the quoted price of our ordinary shares
at the date of conversion. The difference between such
fair value and the amount of the debt converted plus
related accrued interest is considered a debt discount
and is recognised as a non-cash finance charge to the
consolidated statement of comprehensive income. See
Note 23 for details.
Fair value disclosure
The embedded derivative elements of the convertible
notes were measured using a risk-based pricing model.
The computed fair value was not significant in 2021 and
2020. No convertible notes remained outstanding at 31
December 2021.
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, expected term
and a calculation of the value of the option at the time
of the grant. The assumptions are based upon current
trends and market factors. Please see Note 20 for details.
Intangible assets impairment
impairment analysis
is carried out. The
When there is an indicator of a significant and permanent
reduction in the value of intangible assets, an impairment
review
is
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
regulatory
activity, probability of
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.
technical and
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 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
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 31 December 2021 and 2020 and
is made up of the following:
Pre-acquisition losses of Hemogenyx Pharmaceuticals plc1
Hemogenyx Pharmaceuticals LLC issued capital at acquisition2
Investment in Hemogenyx Pharmaceuticals LLC3
Reverse acquisition expense4
As at 31 December 2021 and 2020
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 2021 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
5. Segment Information
The Group has one reportable segment, the discovery, development and commercialisation of innovative treatments
relating to blood and immune system disorders and viral infections, 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 2021 and 2020:
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 2021
£
-
126,723
1,381,221
6,992,630
-
19,834
1,381,221
7,139,187
-
636,255
-
636,255
Year Ended
31 December 2020
£
213,472
1,097,662
533,841
798,515
-
21,094
747,313
1,917,271
-
173,047
-
173,047
Capital expenditure consists of the purchase of property and equipment.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 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
65
Group
Year Ended
31 December 2021
Group
Year Ended
31 December 2020
£
37,583
283,647
468,505
10,603
1,023,783
56,363
285,844
537,954
(127,868)
2,576,414
£
83,662
267,057
(1,459)
4,218
1,130,764
39,303
80,187
505,812
(65,910)
2,043,633
Laboratory expenses
Consumable equipment and supplies
Contractors & consultants
Travel
Staff Costs
Insurance
Other
Legal and professional fees
Foreign exchange loss/(gain)
Total Administrative Expenses
7. Other income
Other income during the period ended 31 December 2021 totals £171,875 (2020: £85,537) comprising £71,932 arising
from the forgiveness of a US governmental loan programme (the Payroll Protection Program) in 2021 and £99,943
received from a third party under a research collaboration programme relating to humanised mice.
8. Employees
Wages and salaries
Social security
Share based Payments
Pension contributions
Group
Group
Company
Company
Year Ended
31 December 2021
Year Ended
31 December 2020
Year Ended
31 December 2021
Year Ended
31 December 2020
£
810,851
41,377
153,356
18,199
£
713,790
37,732
363,104
16,138
£
115,000
1,408
137,390
-
1,023,783
1,130,764
253,798
£
208,750
2,506
363,104
250
574,610
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 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
Average number of people (including Executive Directors) employed:
Group
Group
Company
Company
Year Ended
31 December 2021
Year Ended
31 December 2020
Year Ended
31 December 2020
Year Ended
31 December 2020
7
3
10
5
3
8
-
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
Other services
10. Income tax
Current Tax:
Tax on loss on ordinary activities
Company
Year Ended
31 December 2021
Company
Year Ended
31 December 2020
£
£
45,000
3,500
48,500
45,090
-
45,090
Company
Year Ended
31 December 2021
Company
Year Ended
31 December 2020
£
-
£
-
Loss on ordinary activities before tax
(5,108,310)
(2,095,023)
Analysis of charge in the year:
Loss on ordinary activities multiplied by
weighted average tax rate for the group of
22.40% (2020: 23.10%)
Disallowed items
US R&D credit and timing differences
Tax losses carried forward
Current Tax charge
(1,145,371)
81,735
(136,371)
(1,200,007)
-
(483,950)
116
68,990
(414,844)
-
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 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
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 2021 are 19%, 28% and 28% in the UK, the USA and Belgium respectively.
The Group has accumulated tax losses arising in the UK of approximately £4,450,000 (2020: £1,447,000) 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 US$6,700,000
available under current rules until 2037. No deferred tax asset has been recognised against these losses.
Sections 382 and 383 of the US Internal Revenue Code, and similar state regulations, contain provisions that may limit
the tax loss carried forward available to be used to offset income in any given year upon the occurrence of certain
events, including changes in the ownership interests of significant stockholders. In the event of a cumulative change
in ownership in excess of 50% over a three-year period, the amount of the NOL carry forwards that the Company may
utilise in any one year may be limited.
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 £(5,099,228) (2020: £(2,082,220)) by the weighted
average number of ordinary shares in issue during the year of 773,952,166 (2020: 414,833,093).
Dilutive loss per Ordinary Share equals basic loss per Ordinary Share as, due to the losses incurred in 2021 and 2020,
there is no dilutive effect from the subsisting share options. See Note 20 for details of stock options and warrants
outstanding.
Property &
equipment
Computer
equipment
Leasehold
Improvements
12. Property and equipment
Group
Cost
31 December 2019
Additions
Foreign exchange movement
31 December 2020
Additions
Foreign exchange movement
31 December 2021
Accumulated depreciation and impairment losses
31 December 2019
Depreciation
Foreign exchange movement
31 December 2020
Depreciation
Foreign exchange movement
31 December 2021
Carrying amounts
31 December 2019
31 December 2020
31 December 2021
£
£
270,114
167,007
(12,013)
425,108
-
5,063
430,171
5,379
6,040
(462)
10,957
8,508
263
19,728
150,336
1,235
67,499
2,360
(8,052)
209,783
84,645
2,881
297,309
119,778
215,325
132,862
(171)
3,424
5,322
112
8,858
4,144
7,533
10,870
Total
£
275,493
173,047
(12,475)
436,065
£
-
-
-
-
627,747 636,255
16,408
21,734
644,155
1,094,054
-
151,571
-
-
-
69,859
(8,223)
213,207
-
-
-
-
-
644,155
89,967
2,993
306,167
123,922
222,858
787,887
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 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
13. Leases
The Group follows IFRS 16 with respect to its leases, whereby 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
Carrying value at 31 December 2019
Depreciation
Revaluation
Interest
Lease payments
Foreign exchange movements
Carrying value at 31 December 2020
Depreciation
Interest
Lease payments
Foreign exchange movements
Carrying value at 31 December 2021
14. Intangible assets
Right of
use asset
£
109,442
(36,894)
(23,777)
-
-
(2,886)
45,885
(36,373)
-
-
(270)
9,242
Lease
liability
£
(113,088)
-
32,031
(3,637)
39,431
(3,491)
(48,754)
-
(1,560)
39,079
1,083
(10,152)
Income
statement
£
(44,808)
(36,894)
-
(3,637)
-
-
(40,531)
(36,373)
(1,560)
-
-
(37,932)
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.
In October 2021, the Company entered into a licence with Eli Lilly and Company to use a patented product relating to
the CDX antibody for a term ending on the latest of (a) the twelfth (12th) anniversary of the date of First Commercial
Sale of a particular Licensed Product in a particular country; (b) the first day on which there is not at least one Licensed
Patent having a Valid Claim Covering the manufacture, use, or sale of such Licensed Product in such country; or (c)
the expiration of the last-to-expire Data Exclusivity Period for such Licensed Product in such country. The Company
paid £181,743 GBP or $250,000 USD as an up-front payment and will make milestone payments of up to $1 million
through to Phase II clinical trials. Lilly is also eligible to receive substantial additional milestone payments based on the
achievement of prespecified milestones, as well as tiered single-digit royalties on sales and a percentage of any cash
payments received in respect of any sublicence of the licensed intellectual property. Through 31 December 2021, the
Company has not incurred any development or sales-based payment obligations to the licensor.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 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
Cost
31 December 2019
Exchange movements
31 December 2020
Additions
Exchange movements
31 December 2021
69
Intellectual Property
£
262,050
(7,095)
254,955
181,743
4,795
441,493
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
Loan to Immugenyx LLC
Company
Year Ended
31 December 2021
Company
Year Ended
31 December 2020
£
13,213,951
556
13,214,507
£
2,765,500
551
2,766,051
Hemogenyx Pharmaceuticals plc has made cumulative loans to Hemogenyx Pharmaceuticals LLC of US$17,883,274
(£13,213,951) as at 31 December 2021 (Dec 2020: (US$3,769,332 (£2,765,500)) and Immugenyx LLC of US$17,883,274
(£13,213,951) as at 31 December 2021 (Dec 2020: (US$752 (£551). 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 2021 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 2021 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
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
-
93.9
Hemogenyx-Cell
SPRL (dissolved
in 2022)
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 a prior employee, Carina Sirochinsky,
as part of their compensation under their respective roles as CEO and Director of Operations. Ms Sirochinsky’s role
as Director of Operations ended on the termination of her employment on 1 July 2021. Dr Sandler and Ms Sirochinsky
receive(d) 10,000 and 1,000 shares respectively for each year of employment from January 2019. At 31 December 2021,
Hemogenyx Pharmaceuticals LLC, Dr Sandler and Ms Sirochinsky each owns 500,000, 30,000 and 2,500 shares in
Immugenyx LLC, respectively.
17. Trade and other receivables
Group
Group
Company
Company
Year Ended
31 December 2021
Year Ended
31 December 2020
Year Ended
31 December 2021
Year Ended
31 December 2020
VAT receivable
Trade & other receivables
£
6,127
1,386
Prepayments
290,707
£
50,971
5,297
48,704
£
6,127
-
9,351
£
50,971
-
10,477
Total trade and other
receivables
298,220
104,972
15,478
61,448
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 2021 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
18. Called up share capital
Company
As at 31 December 2019
Issue of shares – placement
Issue of shares – warrant exercise
As at 31 December 2020
Conversion of debt to issue of shares – placement 25 Feb 2021
Conversion of debt to issue of shares – placement 26 Mar 2021
Conversion of debt to issue of shares – placement 16 Apr 2021
Conversion of debt to issue of shares – placement 26 Apr 2021
Conversion of debt to issue of shares – placement 5 May 2021
Number of shares
£
361,242,853
3,612,429
71,725,402
668,000
717,254
6,680
433,636,255
4,336,363
13,131,313
14,285,714
24,547,803
29,850,746
22,222,222
131,313
142,857
245,478
298,508
222,222
Conversion of debt to issue of shares – placement 18 May 2021
433,333,333
4,333,333
Shares issued as arrangement fees for debt issuance
Shares issued to consultant
As at 31 December 2021
7,741,935
1,000,000
77,419
10,000
979,749,321
9,797,493
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.
During 2021, the Company issued 546,113,066 ordinary shares upon conversion of debt – See Note 20.
19. Share premium
Group & Company
As at 31 December 2019
Issue of shares – placement
Share issuance costs
Issue of share – warrant exercise
As at 31 December 2020
Issue of shares – placement
Issues of shares – consultant
Charge recognised upon conversion of debt
As at 31 December 2021
£
7,699,789
2,430,946
(168,160)
28,390
9,990,965
5,548,969
66,337
1,212,475
16,808,647
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 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
20. Other reserves
Group
As at start of year
Charge for the year - employees
Convertible Note embedded derivative
As at end of year
Company
As at start of year
Charge for the year - employees
As at end of year
Year Ended
31 December 2021
Year Ended
31 December 2020
£
764,815
153,355
(13,944)
904,226
£
399,229
363,104
2,482
764,815
Year Ended
31 December 2021
Year Ended
31 December 2020
£
749,767
153,355
903,122
£
386,663
363,104
749,767
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 2021
Year Ended
31 December 2020
£
153,355
153,355
£
363,104
363,104
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.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 73
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
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.
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.
2021 Equity Incentive Plan with Non-Employee Sub-Plan
Under the 2021 Equity Incentive Plan with Non-Employee Sub-Plan (the “EIP”) share options, restricted shares, and
restricted share units may be granted to employees, directors and consultants of the Company and its subsidiaries at
the discretion of the Company in an aggregate amount up to 30,000,000 shares. The fair value of awards made under
this plan is determined in the same way as for the EMP and NEMP described above.
Employees, including directors*
Members of the Scientific Advisory Board
Total
*Details of options held by individual directors are disclosed in the Directors’ Report.
Number options
30,844,314
14,237,192
45,081,506
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 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
Group & Company
2021
Number
2021
Weighted
Average Exercise
Price pence
2020
Number
2020
Weighted
Average Exercise
Price pence
Outstanding at the beginning
of the year
Granted during the year
Lapsed during the year
Cancelled during the year
Outstanding at end of year
Exercisable at end of year
42,465,787
3,090,441
(474,722)
-
45,081,506
43,278,749
4.6
2.1
9.0
-
4.4
3.5
30,553,076
11,912,711
-
-
42,465,787
36,812,610
3.5
7.4
-
-
4.6
4.5
The weighted average remaining contractual life for the share options outstanding as at 31 December 2021 is 2.08
years (2020: 2.52 years). The weighted average fair value of options granted during the year was 0.7 pence (2020: 4.2
pence).
The following table lists the inputs to the models used for the two plans for the years ended 31 December 2021 and 31
December 2020:
Expected volatility %
Risk-free interest rate %
Expected life of options (years)
WAEP – pence
Expected dividend yield
Model used
Warrants
July 2021
(EMP)
July-Aug 2020
(EMP)
65
0.17
3
2.1
-
64-75
0.52-1.0
5
7.4
-
Black Scholes
Black Scholes
In connection with the share placement that completed on 4 October 2017, 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 2021 and no warrants remain outstanding as at 31 December 2021.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021
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
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
Group
Group
Company
Company
Year Ended 31
December 2021
Year Ended 31
December 2020
Year Ended 31
December 2021
Year Ended 31
December 2020
£
295,829
46,860
342,689
342,689
£
113,241
47,530
160,771
160,771
£
87,569
46,860
134,429
134,429
£
88,853
47,527
136,380
136,380
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 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
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 2020, all
borrowings were classified as current due to their maturity being less than 12 months from the balance sheet date. At
31 December 2021, there were no borrowings outstanding. Costs incurred in 2020 related to procuring the Mint facility
in 2021 were classified as deferred financing costs on the consolidated statement of financial position at 31 December
2020. The notes payable consist of the following:
Group & Company
Borrowings
Balance at 1 January
Drawdowns
Paydowns
Interest expense
Value of embedded derivative transferred to Other Reserves
Foreign exchange movement
Balance at 31 December
Convertible Notes
Balance at 1 January
Drawdowns
Paydowns
Interest expense
Value of embedded derivative transferred to Other Reserves
Foreign exchange movement
Balance at 31 December
Balance at 1 January
Payroll Protection Loan borrowing
Payroll Protection Loan forgiveness
Foreign exchange movement
Balance at 31 December
Total Borrowings at 31 December
Year Ended
31 December 2020
Year Ended
31 December 2019
£
£
753,717
-
(791,641)
14,354
6,972
16,598
-
753,065
-
(791,641)
14,300
6,972
17,304
-
72,596
-
(71,932)
(664)
-
-
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
1,579,378
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 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
77
A summary of the debt facilities is as follows:
Mint Transactions
In November 2020, Mint Capital Limited (“Mint”) and the
Company entered into a Financing Facility agreement
(“Financing Facility”) whereby Mint 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 included:
• A principal amount of up to £60,000,000, split into
denominations of £50,000 per Convertible Loan Note.
The Convertible Loan Notes were to be subscribed
for at par.
• The Convertible Loan Notes were to be issued in
up to nine tranches. A tranche of £12,000,000 in
principal amount was issued on 3 February 2021. The
subsequent eight tranches were to be 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 was
limited to £60,000,000.
• No interest was payable on the Convertible Loan
Notes.
• The Convertible Loan Notes were unsecured.
• Each tranche of Convertible Loan Notes issued was to
be redeemable at par on the date falling 36 months
after the relevant Issue Date (the “Maturity Date”).
• Each of the Convertible Loan Notes was 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”) was 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 was
served after 4.35pm on any such date, then the three
consecutive trading days ending on the day such
conversion notice was served. In no event was the
Conversion Price to be less than the nominal value of
an Ordinary Share.
• A holder was not 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 were to commit 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 had
the
convertible loan under certain circumstances at 114%
of the principal amount of the convertible loan.
to redeem
the ability
• Subject to limited exceptions, the Convertible Loan
Notes were not transferable.
• Prior to conversion, the Convertible Loan Notes
did 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”). The
company issued 7,741,935 shares in February 2021 as an
arrangement fee to the arranger of the Financing Facility.
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, was 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.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 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
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. Further conversion
notices were received from Mint in respect of £900,000
and £500,000 in principal amount of Convertible Loan
Notes. The Company issued a further 29,850,746 shares
to Mint in April 2021, and 22,222,222 shares in May
2021; both of these allotments of shares were admitted
to trading on the London Stock Exchange’s main market
in May 2021.
The Company located a new investor to purchase the
remaining position of Mint and received a conversion
notice from the new investor in respect of £6,500,000 in
principal amount of Convertible Loan Notes and issued
433,333,333 shares to such investor in May 2021. The
Company repaid the remaining £1,600,000 under the
facility and the facility was terminated.
During the year ended 31 December, 2021, the Company
recognised £3,883 of financing related costs related to
the stated interest rate on the convertible debt through
the date of conversion or repayment. During the year
ended 31 December, 2021, the Company recognized
£1,343,245 of financing related costs, including the fair
value of the shares issued to arrangers to obtain the credit
facility from Mint. During the year ended 31 December,
2021, the Company also recognised £1,208,592 of non-
cash financing related costs representing the fair value
of shares issued in excess of the outstanding principal
and accrued interest at the date of the conversion.
Convertible Loan Facilities
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 had a 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. Drawdowns totalling US$1,000,000 had
been made with Hemogenyx Pharmaceuticals LLC
receiving the funds. The loan carried an interest rate
of 2% and had a term of three years. Orgenesis had
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”) was a wholly owned Belgian entity (dissolved
in 2022) and was incorporated in April 2019 at which
point this loan facility was treated as a borrowing in
accordance with the provisions of IAS39. The loan
was repaid in full in November 2021.
2. On 7 November 2018 the Group entered into a loan
agreement, through its wholly owned subsidiary
Immugenyx LLC, with Orgenesis Inc., an organisation
with which the Group had a 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. Drawdowns totalling US$1,000,000 had
been made. The loan carried an interest rate of 2%
and had a term of three years. Orgenesis had 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 the provisions of IAS39. The loan was repaid in
full in November 2021.
In November 2021 the Company repaid a total of
US$2,110,761 (£1,583,281) in principal and interest to
settle the convertible loan facilities from Orgenesis Inc.
Paycheck Protection Program Loan
On 1 May 2020, the Company received loan proceeds in
the amount of $98,947 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
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 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
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.
The loan was forgiven in April 2021 by being converted
into a grant at the election of the Company. The Company
qualified for this conversion as at least 60% of the amount
of the loan was applied to payroll expenditure and there
was no reduction in employee headcount, and it was
therefore included in other income.
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.
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.
25. Financial instruments
The Group’s financial instruments consist of cash,
amounts receivable, accounts payable and accrued
liabilities and deferred payment.
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
• Market risk
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.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021
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 2021 and year ended 31 December 2020:
Group
Group
Company
Company
Year Ended
31 December 2021
Year Ended
31 December 2020
Year Ended
31 December 2021
Year Ended
31 December 2020
£
£
1,696
6,840,969
6,842,665
(295,829)
(10,152)
-
(305,981)
5,296
1,812,299
1,817,595
(113,241)
(48,754)
(1,579,378)
(1,707,741)
£
310
£
-
111,245
1,036,214
111,555
1,036,214
(87,569)
(88,853)
-
-
-
-
(87,569)
(88,853)
Assets
Trade and other
receivables, except
prepayments and VAT
Cash and cash equivalents
Liabilities
Trade and other payables
Lease liabilities
Borrowings
Group
1 January
2021
Cash flows
Non-cash changes
31 December
2021
Adjustment
to reserve
PPP Loan
Forgiveness
Foreign
exchange
movements
Interest
charge
Short-term
borrowings (1)
Long-term
borrowings
1,579,378
(1,583,281)
13,944
(71,932)
33,237
24,498
-
-
-
-
-
-
Total
1,579,378
(1,583,281)
13,944
(71,932)
33,237
24,498
-
-
-
Group
1 January
2020
Cash flows
Non-cash changes
31 December
2020
Reclassification
to reserve
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 2021 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, 2020.
At December 31, 2021 the principal and interest on
borrowings was paid in full.
market interest rates as the Group has no significant
interest-bearing assets. The borrowings issued at fixed
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 £0 owing from customers
(31 December 2020: £3,668). All bank deposits are held
with Financial Institutions with a minimum credit rating
of B+.
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.
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
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
as 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 2021
Year Ended
31 December 2020
Year Ended
31 December 2021
Year Ended
31 December 2020
£
£
£
£
Financial Assets
Cash and cash equivalents
Financial Liabilities
Borrowings
6,840,969
1,812,299
111,245
1,036,214
-
(1, 579,378)
-
-
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 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
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 2021 and 31 December 2020:
31 December 2021
Functional Currency
Pounds
£
99,050
12,197
-
US Dollars
$
-
6,709,888
-
111,245
6,709,888
31 December 2020
Functional Currency
Pounds
£
1,024,010
12,204
-
US Dollars
$
-
(70,670)
-
1,036,214
(70,670)
Euro
€
-
-
19,834
19,834
Euro
€
-
-
(753,623)
(732,623)
Total
£
99,050
6,722,085
19,834
6,840,969
Total
£
1,024,010
(58,466)
(753,623)
232,920
Currency of net monetary
assets/(liabilities)
Pounds
US Dollars
Euros
Total
Currency of net monetary
assets/(liabilities)
Pounds
US Dollars
Euros
Total
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.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021
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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
26. Commitments
Licences
Milestone and royalty payments that may become due
under licence agreements are dependent on, among
other factors, clinical trials, regulatory approvals and
ultimately the successful development of new drugs, the
outcomes and timings of which are uncertain.
For the licence from Cornell University to the patent of
the Hu-PHEC technology, the Group’s minimum future
payments contingent upon meeting certain development,
regulatory and commercialisation milestones
total
£764,762 ($1,035,000) plus £369,450 ($500,000) on
receipt 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 £55,418 ($75,000) until
the commercial sales are achieved.
For the licence to Eli Lilly and Company’s (“Lilly”)
contributions to the intellectual property in the CDX
bispecific antibody, future payments will be contingent
upon meeting certain similar development, regulatory
and commercialisation milestones and so do not meet the
definition of commitments pending further developments.
This licence is subject to an up-front payment to Lilly of
$250,000 and milestone payments of up to $1 million
through to Phase II clinical trials. Lilly is also eligible to
receive substantial additional milestone payments based
on the achievement of prespecified milestones, as well
as tiered single-digit royalties on sales. In addition,
the Company will pay Lilly a percentage of any cash
payments received in respect of any sublicence of the
licensed intellectual property.
Leases
In August 2021, Hemogenyx LLC entered into a lease
for a 9,357 square foot purpose-built laboratory for eight
years beginning on January 15, 2022. The lease contains
escalating monthly payments ranging from approximately
$64,300 to $76,500 per month over the lease term. The
Group paid a security deposit of £138,913 ($188,005)
during the year ended 31 December 2021 for such facility
lease.
Service agreements
the
In December 2021, Hemogenyx Pharmaceuticals LLC
entered into a service agreement to establish Research
Cell Banks (RCBs) for production of the Company’s
proprietary recombinant protein(s) encoded by cDNAs.
the agreement, Hemogenyx
Under
terms of
(in Swiss Francs)
Pharmaceuticals LLC must pay
CHF 590,000 in aggregate. After 31 December 2021
through 29 April 2022, which is the date the financial
statements were available to be issued, Hemogenyx
Pharmaceuticals LLC has paid £91,046 (CHF 112,500)
under this agreement.
In December 2021, Hemogenyx Pharmaceuticals LLC
entered into service agreements to produce components
of the Company’s CAR-T product candidate. Under the
terms of the agreement, Hemogenyx Pharmaceuticals
LLC must pay an aggregate of £1,559,005 ($2,109,957)
in milestone payments during the term of production
anticipated to be made by the end of 2022. After 31
December 2021 through to 29 April 2022, which is the
date the financial statements were available to be issued,
Hemogenyx Pharmaceuticals LLC has paid £628,927
($851,190) under these agreements.
Capital equipment
The Company has taken delivery for evaluation purposes
of equipment to the value of £428,425 ($579,830). This
equipment primarily comprises a bioreactor, an automated
cell processing system, and a cell manufacturing system.
This would enable the Company to manufacture its
cell therapy products in-house with full control over
processes and timing, using the clean rooms in its new
purpose-built laboratory. Based on service fee estimates
provided to the Company, having this capability could
save the Company at least $2 million for the cells
required for clinical trials of the CAR-T product candidate
alone, when compared with outsourcing this work to third
parties. It could additionally give the Company a source
of revenue by providing cell manufacturing services to
other biotechnology companies.
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021 8484
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
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
the Company and Selexis SA
In January 2022,
signed a service agreement to develop the cell line
for the Company’s CDX bispecific antibody for the
treatment of acute myeloid leukemia (AML). Under
the agreement, the Company will leverage Selexis’
proprietary SUREtechnology Platform™, a suite of cell line
development tools and technologies that significantly
reduces the time, effort, and costs associated with
developing high-performance mammalian cell lines.
In February 2022, the Company received notification
from the Food and Drugs Administration (“FDA”) that
the proposed pre-Investigational New Drug
(“pre-
IND”) meeting relating to the Company’s lead product
candidate Chimeric Antigen Receptor (“CAR”) T-cells
(“HEMO-CAR-T”) is to be deferred until May 2022 as
a result of a general FDA policy prioritising work on
COVID-19. The deferment of the meeting is not causing
any delay in the development of the product candidate.
In March 2022, the Company announced that it has
achieved proof of concept (“POC”) for its Chimeric Bait
Receptor (“CBR”) platform technology and filed a seminal
provisional patent application protecting its rights to the
intellectual property (“IP”) covering CBR.
On 30 March 2022, the Company dissolved Hemogenyx-
Cell SPRL. This dissolution will not have any effect on the
financial statements.
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 plcAnnual Report & Financial Statements for the Year Ended 31 December 2021
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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
H E M O G E N Y X . C O M
Hemogenyx Pharmaceuticals plcAnnual Report & Financial Statements for the Year Ended 31 December 2021