Registered Number: 08401609
England and Wales
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for
the Year Ended 31 December 2022
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
Contents
Company Information
Chairman’s Statement
Board of Directors and Senior Management
Directors’ 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
Page
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Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
Company Information
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
6th Floor
60 Gracechurch Street
London
EC3V 0HR
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
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Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
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
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Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
Chairman’s Statement
I am pleased to announce the Company’s results for the year ended 31 December 2022. During the year
we focussed heavily on bringing our major development project, the key HEMO-CAR-T product
candidate, towards its Investigational New Drug (“IND”) application to enable us to move into clinical
trials. At the same time, we also advanced the development of our other main pipeline assets, our CD3-
FLT3 CDX antibody and the Chimeric Bait Receptor (“CBR”) platform.
After the year end, in January, we successfully raised £4,056,250 in new equity capital at 2.5p per share
which will give us the funds to take the Company through the IND process and into the beginning of
clinical trials for HEMO-CAR-T and enable us to further advance the CBR project.
HEMO-CAR-T
Our work during the period under review has primarily focussed on bringing our lead product, HEMO-
CAR-T, through the preparatory process to clinical trials, a process which has been more complex and
hence longer and more intensive than we had anticipated but which has now reached an advanced stage.
We have continued to move other projects forward, in particular our CBR technology, but our main object
has been to take HEMO-CAR-T, and with it the Company, to the next critical level of being a clinical-
stage company. We have been particularly concerned to cover all aspects in preparing the IND
documentation so as to minimise any possible delays and questions that may arise from its review by the
US Food and Drug Administration (“FDA”). The IND submission process is very detailed, as it should
be to ensure the safety of this key potential treatment for patients suffering from advanced stage relapsed
or refractory (“R/R”) acute myeloid leukaemia (“AML”). We received constructive early feedback and
guidance from a “pre-IND submission” to the FDA which have helped to shape the final submission,
along with advice from our Medical Director and a committee of “Key Opinion Leaders” who are experts
in the treatment of leukaemias, as well as the design and conduct of clinical trials. We expect to submit
the IND application in the very near future.
During the last quarter of 2022 and the early months of the current year we successfully carried out the
final processes and underwent the internal and third-party tests necessary to complete the detailed IND
submission pack. These included Process Development runs of the end-to-end process for the
manufacture of HEMO-CAR-T cells and exhaustively documented engineering, or Process Qualification,
runs under real-world conditions.
These cell manufacturing dry runs were followed by analytical release tests that were conducted both by
the Company and a third party to ensure that the manufactured HEMO-CAR-T cells comply with a set of
required quality attributes. Among these are the viability, potency and sterility of the resulting cells.
CDX
CDX, our CD3-FLT3 bispecific antibody, will provide an alternative means of treating AML and of
conditioning patients for bone marrow transplants when fully developed. While concentrating our efforts
on HEMO-CAR-T as the asset most ready to take the Company to the important clinical trial stage of its
maturity, we have taken further steps to develop this important asset during the year. In January 2022,
we entered into a service agreement to develop a “master cell line” that will be used to produce CDX
antibodies for future clinical trials and patient treatments. We are utilising Selexis’ SUREtechnology
Platform™, a suite of cell line development tools and technologies that reduces the time, effort and cost
in developing high-performance mammalian cell lines. The platform facilitates the rapid, stable, and
importantly cost-effective production of recombinant proteins and vaccines, providing seamless
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Annual Report & Financial Statements for the
Year Ended 31 December 2022
integration of the development continuum from discovery to commercialisation. This is an important step
in moving CDX towards clinical trials.
The Company’s existing intellectual property protection for CDX was further strengthened by the China
National Intellectual Property Administration granting a patent to it, which joins patents previously
granted in the US for CDX and monoclonal antibodies used for the development of both CDX and
HEMO-CAR-T.
Exploration of ways to finance and further the pre-clinical and clinical testing of CDX continued with
early-stage conversations with potential development partners.
CBR
Work has also continued in an encouraging manner on the development of our CBR platform. As
shareholders are aware, the essence of the CBR-based approach is programming immune cells using a
novel type of modifiable synthetic receptor to destroy viral pathogens and potentially to programme
immune cells to destroy certain malignant cancer cells. The Company has also developed an associated
derivative technology, the Bait Macrophage Engager (“BME”), whose constructs act like antibodies,
directing immune cells to neutralise them. We believe this novel approach holds great promise and the
invention is the subject of a seminal provisional patent application that was filed in March 2022.
This project was initiated prior to the COVID-19 pandemic as a new way to combat emerging viral
diseases and potentially as-yet unknown infections (referred to as “Disease X”). The platform has been
successfully tested in the laboratory against variants of the SARS-CoV-2 virus that causes COVID-19 as
they have emerged. Detailed subsequent work suggests that its use could be expanded to certain cancers,
and has provided evidence that the CBR platform is applicable in principle to almost any known form of
virus.
The Company has successfully demonstrated in vitro that immune cells programmed with a CBR-based
construct against SARS-CoV-2 selectively consume a live synthetic virus. Importantly, the function of
the CBR construct was not affected by known mutations of the spike protein that endows the virus with
the ability to infect cells. The Company has now begun in vivo tests with a partner in a biosafety level 3
(“BSL3”) facility to demonstrate that CBR could be used against infectious replicating SARS-CoV-2
virus. Work also continues in relation to CBR’s applicability to certain cancers.
In recent months, further progress has been made. As announced in January 2023, our scientists have
identified a target protein that can be incorporated into a single multipurpose CBR-based therapeutic
capable of treating multiple viruses that belong to different viral families, instead of having to make a
separate CBR construct for every virus. Among them are Dengue, Ebola, Marburg, Zika and
Chikungunya. These viruses are among the most dangerous to humans, causing serious and often fatal
diseases, and for which few effective treatment options exist.
The Company’s technology utilises synthetic biology and artificial intelligence approaches to advance
medicine to protect society from future pandemics that may challenge the global economy, health, and
national defence. When fully developed, we would be able to create front-line treatments that may prevent
the development of the next pandemic. Moreover, these new therapeutic tools can be used to protect
against bio-terrorism, potentially rendering a universe of viral bio-weapons ineffective.
We continue to believe that this platform has the capacity to be extremely valuable.
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New Custom R&D Facility
In July 2022, we officially opened our new custom-designed laboratory in the Mink Building in the
Manhattanville area of New York City, a state-of-the-art research facility of some 10,000 square feet that
includes two clean rooms for cell therapy manufacturing. We can now manufacture cells in-house,
accelerating and simplifying the commercialisation of our cell therapy product candidates. The facility is
near to world-class educational institutions that play a leading role in the rich local life sciences
ecosystem, including Columbia University and City College.
New Appointments
We made two important appointments during the year: Dr Koen van Besien was appointed as our Medical
Director, and we also welcomed a Director of Quality, Stuart Tinch.
Dr van Besien, who is Chief of the Division of Hematology and head of the Wesley Center for
Immunotherapy at University Hospitals Seidman Cancer Center, has been associated with the Company
since its founding as a member of our Scientific Advisory Board. Now that we are moving closer to
clinical trials, he has stepped up to a position in which he is engaged in refining the protocol for those
trials and their implementation.
Stuart Tinch brings over seven years of Good Manufacturing Practice (“GMP”) expertise to Hemogenyx
Pharmaceuticals. He will be instrumental in creating a culture and system of quality to ensure that the
Company’s therapies are held to the standards of current GMP regulations.
Financial Results
Overall, the Group made a loss of £3,986,982 (2021: £5,108,310 loss) during the period under review.
The increased operating loss of £3,997,548 (31 December 2021: £2,702,754) marks the increasing
volume of work and need to engage external service providers as our assets are taken towards the crucial
clinical trial stage of their development.
It only remains for me to thank our CEO Dr Vladislav Sandler and his scientific team for their excellent
and highly productive work under a tight budget, as well as my fellow directors, and to look forward with
confidence to the achievement of important milestones during the present financial year.
Prof Sir Marc Feldmann AC, FRS
MB BS, PhD, FRCP, FRCPath, FAA, F Med Sci
Chairman
27 April 2023
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Annual Report & Financial Statements for the
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Board of Directors and Senior Management
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.
His work in London led to the generation of a new hypothesis for 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 2022
sales exceeding US$42 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.
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 into
functional and engraftable hematopoietic stem cells, as well as developing novel sources of pluri- and
multi-potent cells.
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
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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.
Alexis Sandler – 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 over 20
years of experience representing a range companies and institutions.
Ms Sandler is the General Counsel of The Frick Collection. 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 – Non-Executive Director – appointed 4 October 2017
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.
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Annual Report & Financial Statements for the
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Directors’ Strategic Report for the year ended 31 December 2022
The Directors present their Strategic Report of Hemogenyx Pharmaceuticals plc for the year ended 31
December 2022.
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 on page
24.
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 on page 3.
Financial Review
The Group incurred a loss for the year to 31 December 2022 of £3,986,982 (31 December 2021:
£5,108,310 loss).
In the year to 31 December 2022 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 in 2021 and prior years.
Cash flow and cash position
Cash used in operations totalled £2,910,604 (31 December 2021: £2,627,298).
As at 31 December 2022, the Group had a cash balance of £2,532,758 (31 December 2021: £6,840,969).
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Annual Report & Financial Statements for the
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Key Performance Indicators
The Directors have identified the KPIs below that they feel are the most vital measurements for the Group
to monitor given its current stage of development. KPIs are monitored on an annual basis to ensure that
the remain the most important and relevant measure of performance and progress.
Cash management
In 2021 the Group settled all of its outstanding loans and remained debt-free through 2022. In 2021, the
Group supplemented its funding with net proceeds of £10,400,000 resulting from the issuance of
convertible loans that were subsequently converted into equity. Much of this funding remained available
to the Group through 2022. As at 31 December 2022 the cash position was £2,532,758 (31 December
2021: £6,840,969).
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.
As detailed in the Future Developments and Events Subsequent to the Year End note on page 21, the
Company successfully raised £4,056,250 (before expenses) in furtherance of its research and
development strategy.
Intellectual property
The Group is focused 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
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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 4 April 2017, an international 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. A patent was granted in China in July 2022
covering both transplant conditioning and AML treatment applications. An additional composition of
matter patent application titled Bispecific Anti-FLT3/CD3 Antibodies and Methods of Use (covering novel
sequences of the antibodies discovered and validated by the Company in collaboration with Eli Lilly &
Company) was filed following completion of the Lilly collaboration agreement and was published by the
World Intellectual Property Organization on 23 February 2023 as publication number WO/2023/023489.
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 leukaemia (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.
HEMO-CAR-T
A PCT patent application titled Anti-FLT3 Antibodies, CARs, CAR T Cells and Methods of Use was
published by the World Intellectual Property Organization on 23 February 2023 under number
WO/2023/023491, detailing the Company’s Chimeric Antigen Receptor sequences including anti-FLT3
antibodies.
Hu-PHEC cell therapy
The patent relating to Hu-PHEC was filed by Cornell University ("Cornell Patent") in several
jurisdictions on 13 November 2014. The patent was approved and issued in the United States of America
on 25 February 2020 and published by the European Patent Office on 13 May 2020. The invention
summarises a method of isolation and identification of post-natal hemogenic endothelial cells, as well as
the provision of substantially purified populations of post-natal hemogenic endothelial cells,
compositions of post-natal endothelial cells and methods to utilise post-natal hemogenic endothelial cells
to regenerate the hematopoietic system in a patient.
Advanced Hematopoietic Chimeras
The provisional patent application relating to the Group’s proprietary humanised mouse model, the
Advanced Hematopoietic Chimera, is an application filed by Dr Sandler and Dr Rita Simone in the USA
on 20 February 2018 ("AHC Patent"). The invention summarised in the patent application is mice whose
hematopoietic system is at least 40% humanised and methods for preparing the same. The patent was
assigned to the Group’s subsidiary Immugenyx LLC on 24 May 2018. In June 2019 the Group announced
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Year Ended 31 December 2022
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 its CBR platform technology, a new paradigm for treating viral infections
from which constructs targeting viral pathogens and potentially malignancies may be derived.
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 has been the
subject of collaborations with other pharmaceutical companies to evaluate AHCs’ effectiveness as
platforms for disease modelling and drug discovery, and is being used by the company currently for its
own product development.
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 notable demonstrations of both CDX’s and HEMO-CAR-T’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, and in vivo tests against live replicating virus are ongoing.
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:
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Men
Women
Organisation as a whole
Executive management team
Board
8
2
3
8
-
1
Board of Advisors
The Group engages the services of a Board of Advisors who are highly experienced in both the clinical
development of treatments and regulatory processes to commercialisation. In addition to Professor Sir
Marc Feldmann, who runs the Board of Advisors in addition to his role as Chairman, the advisors are:
Dr H. Michael Shepard, Ph.D.
SCIENTIFIC ADVISOR
▪ Led
the discovery
and development of many
successful
cancer
treatments
including Herceptin/trastuzumab – annual sales exceed $6.5 billion worldwide
▪ Received Harvard Medical School's prestigious Warren Alpert Prize
in recognition
of contributions to the field of cancer treatment research
▪ Founded NewBiotics, Inc., acquired by Kiadis Pharma
▪ Founded BioLogix, acquired by Symphogen
Dr Koen van Besien M.D.
CLINICAL ADVISOR
▪ Hematology Chief and Director of the Wesley Center for Immunotherapy at University Hospitals
Seidman Cancer Center
▪ Professor of Medicine 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.
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.
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Climate-related Financial Disclosures
The Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD)
recommendations serve as a global foundation for effective reporting on the operational and financial
implications of the interrelationship between climate change and business, and set out recommended
disclosures structured under four core elements:
• Governance – The organisation’s governance around climate-related risks and opportunities
• Strategy – The actual and potential impacts of climate-related risks and opportunities for an
organisation’s businesses, strategy, and financial planning
• Risk Management – The processes used by the organisation to identify, assess, and manage
climate-related risks; and
• Metrics and Targets – The metrics and targets used to assess and manage relevant climate-related
risks and opportunities.
These are supported by recommended disclosures that build on the framework with information intended
to help investors and others understand how reporting companies assess climate-related risks and
opportunities.
The table below shows our current progress against the TCFD recommendations.
TCFD Pillar
Recommended Disclosure
Hemogenyx Pharmaceuticals Summary
Governance
• Board’s oversight of
climate-related risks and
opportunities
• Management’s role in
assessing and managing
climate-related risks and
opportunities
As a development stage biopharmaceutical
business, the Group’s operations are at a
relatively small scale and so therefore is its
environmental impact. Nevertheless, the
Board recognises its responsibility to
protect the environment (particularly as the
business scales up).
risks
(which
include
The Board has oversight of climate-related
and
matters
opportunities). The board is supported by
the Audit Committee, which is responsible
for keeping under review the adequacy and
internal
effectiveness of
control and risk management systems,
which consider climate-related risks.
the Group’s
13 13
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
TCFD Pillar
Recommended Disclosure
Hemogenyx Pharmaceuticals Summary
Strategy
• Climate-related risks and
opportunities
identification
• Climate-related risks and
opportunities impacts
• Resilience of the
organisation’s strategy
Hemogenyx Pharmaceuticals is committed
to a net zero and healthier planet, and this
is part of the Group’s strategic long-term
priorities.
and
striving
resources
The Board is committed to conserving
natural
for
environmental sustainability, by ensuring
that its facilities (and the facilities of
academic and contracted collaborators) are
to optimise energy usage;
operated
minimising waste
and
protecting nature and people.
production;
As Hemogenyx Pharmaceuticals enters the
next stage of its development, clinical
trials, ESG will be at the heart of the Board
and management’s vision and strategy to
enable
and
opportunities to be identified and suitably
mitigated/actioned.
climate-related
risks
Risk Management
•
Identifying and
assessing climate-related
risks
• Managing climate-
related risks
Integration into overall
risk management
•
The information collected will allow the
Board to challenge the Group’s strategy to
ensure it is as resilient as possible.
Given the small scale of its current
operations, Hemogenyx Pharmaceuticals
has the ability to embed climate-related
risk management systems into its overall
internal control systems from an early
stage of
thus almost
journey,
eliminating the occurrence of transition
risk.
its
As operations scale up in the coming years,
the identification, assessment and effective
management of climate-related risks and
opportunities will be actively discussed
during Board and management meetings.
14 14
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
TCFD Pillar
Recommended Disclosure
Hemogenyx Pharmaceuticals Summary
Metrics and
Targets
• Climate-related metrics
• Scope 1, Scope 2, and
Scope 3 emissions.
• Climate-related targets
As the Group’s operations scale up, it will
continue to monitor its energy use. The
Group will seek to collect, structure, and
effectively disclose related performance
data for the material climate-related risks
and
identified where
relevant.
opportunities
The Board will also look to adopt SASB
recommended disclosures in the next 2-3
years once clinical trials commence.
The Group already minimises business
travel, and therefore energy use and
emissions, through the use of Internet-
based communications tools. It has a
policy of preferring devices with low
energy consumption where a choice is
available, and switching them off when not
in use.
Principal Risks and Uncertainties
The Group operates in an uncertain environment and is subject to a number of risk factors. The Directors
have carried out a robust assessment of the principal risks facing the Group, including those that threaten
its business model, future performance, solvency or liquidity. They consider the following risk factors
are of particular relevance to the Group’s activities and to any investment in the Group. It should be noted
that the list is not exhaustive and that other risk factors not presently known or currently deemed
immaterial may apply.
The risk factors are summarised below:
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.
15 15
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
Staffing and key personnel
The Group is reliant on a number of the key personnel, in particular Dr Vladislav Sandler who is the
founder of Hemogenyx Pharmaceuticals (refer to Corporate Governance Report for further detail). Whilst
the Group has endeavoured to ensure that it has contractual arrangements which include non-compete
restrictions in place with such persons to lessen the risk of them ceasing to be involved with the Group,
in the event that the Group was to lose the services of such individuals, its results could be adversely
affected.
Costs of commercialisation
The ability of the Group to bring its products to first commercial sale will be dependent in part on the
overall costs of manufacturing and the costs involved could be significant and there is no guarantee that
the sale prices achievable for its products will be viable and sustainable.
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 Placings and Subscriptions, as
well as the net proceeds of converting the Mint Capital loans in 2021, 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 ethics committee, or institutional review
board 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.
16 16
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
Research and development risk
The Group operates in the biotechnology and bio-pharmaceutical development sectors and carries out
complex scientific research. If the research or preclinical testing or clinical trials of any of Hemogenyx
Pharmaceuticals’ product candidates fail, meaning that these candidates will not be licensed or marketed,
this would result in a complete absence of revenue from these failed candidates. Positive results from
preclinical and early clinical studies do not guarantee positive results from clinical trials required to
permit application for regulatory approval. Furthermore, the Group may discontinue the development
of candidates if results are not positive or unlikely to further its progress towards a meaningful outcome
or collaboration.
Intellectual property (IP) infringement
The Group may be subject to future litigation concerning its own IP and the IP of others. Adverse
judgements in relation to its IP would likely have negative outcomes for its results of operations.
Intellectual property (IP) control
The Group is partially reliant on an exclusive, world-wide licence of a patent from Cornell University for
its Hu-PHEC line of business. The exclusivity and exploitable territory for this licence depend on the Group
meeting various developmental milestones.
Environmental and other regulatory requirements
The event of a breach with any environmental or regulatory requirements may give rise to reputational,
financial or other sanctions against the Group, and therefore the Board considers these risks seriously and
designs, maintains and reviews its policies and processes 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 products through to commercial sales 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
Market conditions, 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.
17 17
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
Political and country risk
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. The Company has not experienced and does not
anticipate that there will be any impact, including on its personnel or supply chain, as a result of the on-
going war in Ukraine save for a general increase in inflation such as of the cost of energy.
Approved by the Board on 27 April 2023
Dr Vladislav Sandler
CEO
18 18
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
Directors’ Report for the year ended 31 December 2022
The Directors present their report with the audited financial statements of the Group for the year ended
31 December 2022.
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
leading
to change
technologies aim
The Group’s principal activity is the discovery, 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 bone marrow, or hematopoietic stem cell, transplants, and with viral
infections. The company's
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 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 has two platform
technologies: its Advanced peripheral blood Hematopoietic Chimeras, a form of humanised mouse used
to model diseases including autoimmune conditions and to test multi-specific antibody treatments; and
Chimeric Bait Receptors or CBR, a novel way to create constructs potentially capable of programming
immune cells to attract and destroy a wide range of viruses and malignant (cancer-causing) cells.
the way
The Group has three companies that are located outside of the UK. The principal laboratory of the Group
is located in Brooklyn, New York, USA. The Group also 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 44 shows a loss for the year
amounting to £3,986,982 (2021: £5,108,310). The Directors do not propose a dividend in respect of the
year ended 31 December 2022 (31 December 2021: nil).
Directors and Directors’ Interests
The Directors who held office during the year and up to the date of this report were as follows:
Professor Sir Marc Feldmann
Dr Vladislav Sandler
Alexis Sandler
Peter Redmond
Date Appointed
9 April 2018
4 October 2017
4 October 2017
29 July 2015
19 19
Date Resigned
-
-
-
-
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
The Directors of the Company who held office at 31 December 2022 had the following beneficial interests
in the Ordinary shares of the Company at 31 December 2022 according to the register of directors’
interests:
Director
Professor Sir Marc Feldmann
Peter Redmond*
Dr Vladislav Sandler
Alexis Sandler
At 31 December 2022
At 31 December 2021
-
5,596,270
41,544,677
75,090,685
-
5,596,270
41,544,677
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):
Date of grant
Professor Sir
Marc Feldmann
9 Apr 2018
Dr Vladislav Sandler
20 August 2020
Peter Redmond
13 July 2020
Options
Number of
options at start
of year
Options granted
or acquired
during year
Options lapsed
during year
Number of
options at end of
year
18,002,568
18,002,568
5,000,000
5,000,000
2,200,000
2,200,000
-
-
-
-
-
-
-
-
-
-
-
-
18,002,568
18,002,568
5,000,000
5,000,000
2,200,000
2,200,000
Qualifying Third Party Indemnity Provision
At the date of this report, the Company has a third-party indemnity policy in place for all Directors.
20 20
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
Substantial Shareholders
As at 31 December 2022, the total number of issued Ordinary Shares with voting rights in the Company
was 979,749,321 (now: 1,141,999,321). The Company has been notified of the following interests of 3 per
cent or more in its issued share capital as at the date of approval of this report:
Party Name
Alexis Sandler
Vladislav Sandler
Share Capital
Number of Ordinary Shares
75,090,685
41,544,677
% of Share Capital
6.58
3.64
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.
Financial Instruments
Details of the use of the Company’s financial risk management objectives and policies as well as exposure
to financial risk are contained in the Accounting policies and Note 25 of the financial statements.
Future Developments and Events Subsequent to the Year End
On 26 January 2023 the Company announced that it issued and allotted 162,250,000 new ordinary shares
at 2.5 pence per share.
The net proceeds from the Placing will be used to facilitate progression of the Company’s HEMO-CAR-
T product candidate into clinical trials and to enable the Company to continue development of product
candidates for the treatment of viral infections based on its CBR platform.
Further details of the Group’s future developments and events subsequent to the year end are set out in
the Chairman’s Statement and Directors’ Strategic Report on pages 3 and 8 respectively.
Corporate Governance
The Corporate Governance report is disclosed on page 24.
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 on pages 3
and 8 respectively. 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 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 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.
21 21
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
Political Donations
The Group made no political donations during the year (2021: £nil).
Charitable Donations
There were no charitable donations made by the Group in the current or prior year.
Greenhouse gas emissions
The Company used less than 40,000kWh of energy in the United Kingdom during 2022 and therefore
does not report on energy consumption and emissions under the Companies (Directors’ Report) and
Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018.
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 Company and of the profit or loss of the Company
for that year.
In preparing these financial statements, the Directors are required to:
• Select suitable accounting policies and then apply them consistently;
• Make judgments and accounting estimates that are reasonable and prudent;
• State whether applicable 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 Company will continue in business.
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.
22 22
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
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 1, confirms that, to the best of their
knowledge and belief:
•
•
the group and company financial statements have been prepared in accordance with UK-
adopted 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.
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 27 April 2023
Dr Vladislav Sandler
CEO
23 23
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
Governance Report
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 https://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 2022 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 2022.
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
24 24
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
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 eight 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.
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 2023 Annual
General Meeting.
During the year to 31 December 2022 the Audit Committee considered the following key issues in
relation to the Financial Statements:
Issue
• Accounting policies
• Carrying value of investment in
Hemogenyx Pharmaceuticals
LLC
• Carrying value of
intangible assets
licensed
• Going concern review
• Review of audit and non-audit
services and fees
Action
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.
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 no impairment to
the value of the investment in Hemogenyx Pharmaceuticals
LLC was required as at 31 December 2022.
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 no impairment to
the value of licensed intangible assets, being rights to certain
intellectual property of Cornell University and Eli Lilly and
Company, was required as at 31 December 2022.
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.
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
25 25
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
Issue
Remuneration Committee
Action
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.
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 formally on 9 occasions.
26 26
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
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.
Attendance at Board meetings
Dr Vladislav Sandler
Professor Sir Marc Feldmann
Alexis Sandler
Peter Redmond
Number held and
entitled to attend
9
9
9
9
Number
attended
8
7
7
9
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 to challenge independently and
constructively the performance of the Executive management (where appointed) and to monitor the
performance of the management team in the delivery of the agreed objectives and targets.
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.
27 27
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
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
page 6 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
performance annually. Having reviewed various 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 Directors’ 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 or will have
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
28 28
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
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.
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 2022 include:
• Attended the 2022 AGM and prepared to answer any questions raised by shareholders;
• Arranged meetings with certain stakeholders to provide them with updates on the Company’s
research and development activities and other general corporate updates;
• Made presentations at conferences and published recordings and slide decks on the Company’s
29 29
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
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 employees on efforts to continuously improve
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.
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 page 8 of this report.
Dr Vladislav Sandler
CEO
30 30
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
Directors’ Remuneration Report
The Company has an established remuneration committee. The Committee reviews the scale and structure
of the Directors’ fees, taking into account the interests of shareholders and the performance of the
Company and directors.
The items included in this report are unaudited unless otherwise stated.
Statement of Hemogenyx Pharmaceutical plc’s Policy on Directors’ Remuneration by the
Chairman of the Remuneration Committee
As Chairman of the Remuneration Committee I am pleased to introduce our Directors’ Remuneration
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 page 31 of this report, will be submitted to
shareholders for approval at our Annual General Meeting.
A key focus of the Directors’ Remuneration Policy is to align the interests of the Directors to the long-
term interests of the shareholders and aims to support a high-performance culture with appropriate reward
for superior performance, without creating incentives that will encourage excessive risk taking or
unsustainable company performance. This is underpinned through the implementation and operation of
incentive plans.
Key Activities of the Remuneration Committee
The key activities of the Remuneration Committee are:
▪
▪
to determine and agree with the Board the framework or broad policy for the remuneration of the
Company’s chairman, chief executive, the executive directors, the company secretary and such
other members of the executive management as it is designated to consider;
in determining such policy, take into account all factors which it deems necessary including
relevant legal and regulatory requirements, the provisions and recommendations of the UK
Corporate Governance Code (the “Code”) and associated guidance. The objective of such policy
shall be to ensure that members of the executive management of the 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 for establishing the selection criteria, selecting, appointing and setting
the terms of reference for any remuneration consultants who advise the Committee;
▪ 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
31 31
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
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.
Members
The Remuneration Committee comprises the following independent Non-Executive Directors:
Name
Peter Redmond
Alexis Sandler
Remuneration Components
Position
Chairman
Member
Date of
appointment
5 October 2017
5 October 2017
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 $275,000 in 2022 (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 noncompete and non-interference covenants in the event of its termination as his
contract with Hemogenyx Pharmaceuticals LLC.
32 32
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
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 makes
matching contributions to a 401(k) pension plan for employees in the US of up to 4%. The Company has
not paid out any excess retirement benefits to any Directors or past Directors. The Company has not paid
any compensation to past Directors.
Recruitment Policy
Base salary levels will take into account market data for the relevant role, internal relativities, their
individual experience and their current base salary. Where an individual is recruited at below market
norms, they may be re-aligned over time (e.g. two to three years), subject to performance in the role.
Benefits will generally be in accordance with the approved policy.
For external and internal appointments, the Board may agree that the Company will meet certain
relocation and/or incidental expenses as appropriate.
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
Dr Vladislav Sandler
Date of service
agreement
4 October 2017
Notice period by
Company (months)
6
Notice period by
Director (months)
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.
33 33
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
The terms of the Non-Executive Directors’ appointments are subject to their re-election by the
Company’s shareholders at any Annual General Meeting at which the Non-Executive Directors stand for
re-election.
The details of each Non-Executive Director’s current term are set out below:
Name
Alexis Sandler
Peter Redmond
Professor Sir Marc Feldmann 9 April 2018
Date of service
agreement
4 October 2017
4 October 2017
Current
term
(years)
1
1
-*
Notice
period by
Company
(months)
3
3
3
Notice
period by
Director
(months)
3
3
3
Date of
resignation
-
-
-
* 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.
Executive Directors’ Remuneration (audited)
The table below sets out the remuneration received by each Executive Director for the years ended 31
December 2022 and 2021. Dr Vladislav Sandler was the highest paid Director:
Executive Directors
Dr Vladislav Sandler
Basic salary
2022
£’000
276
Pension
2022
£’000
6
Total
276
6
Executive Directors
Dr Vladislav Sandler
Basic salary
2021
£’000
206
Pension
2021
£’000
7
Total
206
7
Total
2022
£’000
282
282
Total
2021
£’000
213
213
34 34
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
Non-Executive Directors’ Remuneration (audited)
The table below sets out the remuneration received by each Non-Executive Director during the years
ended 31 December 2022 and 2021:
Basic salary
2022
£’000
57
Alexis Sandler
Peter Redmond
50
Professor Sir Marc Feldmann 15
122
Total
Basic salary
2021
£’000
45
Alexis Sandler
50
Peter Redmond
Professor Sir Marc Feldmann 15
110
Total
Relative importance of spend on pay
Total
2022
£’000
57
50
15
122
Total
2021
£’000
45
50
15
110
The table below illustrates the year-on-year change in total remuneration compared to distributions to
shareholders and loss before tax for the financial years ended 31 December 2022 and 2021:
Distributions to
shareholders
£
Year ended 31 December 2022
Year ended 31 December 2021
Percentage change
-
-
N/A
Total employee
pay (including
stock based
compensation)
£
1,424,301
1,007,817
41.3%
Operational cash
outflow
£
2,910,604
2,627,298
10.8%
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.
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
35 35
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
period November 2015 to December 2022 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:
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
27 April 2023
36 36
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
Independent Auditor’s Report to the Members of Hemogenyx Pharmaceuticals plc
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 2022 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 2022 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 cash flow forecasts for the twelve months following the reporting date. We have reviewed
all the key inputs into the cash flow forecasts, 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 and parent company 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
37 37
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
company’s ability to continue as a going concern for a period of at least twelve months from when the
financial statements are authorised for issue.
In relation to the entities reporting on how they have applied the UK Corporate Governance Code, we
have nothing material to add or draw attention to in relation to the directors’ statement in the financial
statements about whether the director’s considered it appropriate to adopt the going concern basis of
accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described
in the relevant sections of this report.
Our application of materiality
For the purposes of determining whether the financial statements are free from material misstatement, we
define materiality as the magnitude or nature 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 £115,000 (2021: £54,000). 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 £10,000 (2021: £20,000)
based on 2% of total expenses. We have determined this level of materiality for the parent company to
gain sufficient coverage of expenses.
Performance materiality for the group financial statements was set at £80,500 (2021: £37,000) and the
parent company was set at £7,000 (2021: £14,000), 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 £5,750 for the group financial statements and £500
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.
Our approach to the audit
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 Pharmaceuticals LLC and Immugenyx 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 at component
level.
38 38
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
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 than 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.
Key Audit Matter
How our scope addressed this matter
Carrying value of the intangible assets (Group
– Note 2 and Note 14)
The carrying value of intangible assets in the
Group Statement of Financial Position was
£441k as at 31 December 2022. 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.
The directors concluded that no impairment
was required, and amortisation will commence
once these products are ready for marketing.
We performed the following procedures to
address this identified risk:
• Confirmed that the cost of intangibles is
correctly recorded by agreeing price to the
supporting documentation;
• Reviewed
the
directors’
annual
assessment for indicators of impairment
and
underlying
assumptions used; and
challenging
the
• Reviewed the events after the year-end for
indicators of impairment; and
• Evaluated product development progress
and ensured the Directors’ judgments are
reasonable.
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.
Carrying value of investments in, and loans to,
subsidiary undertakings (Parent company –
Note 2, Note 16 and Note 15 )
Investments held by the parent company in
subsidiaries, as at 31 December 2022, totalled
£8.0m in the Company Statement of Financial
Position. Loans to those subsidiaries, as at 31
December 2022, are reported as £14.5m.
We performed the following procedures to
address this identified risk:
• Reviewed the directors’ assessment of the
carrying value of investments and loans
39 39
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
If
company.
These are significant balances due to the
parent
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.
the
subsidiary
conclusions thereof;
undertakings,
and
their
• 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
and
commercial progress of the products
under development;
scientific
• Reviewed board minutes
any
indications of changes in investments held
by the parent company;
for
• Agreed ownership documents of all the
subsidiaries in the group; and
• Reviewed the market capitalisation of the
group to provide further assurance of the
carrying value of the investments and
loans
undertakings
subsidiary
subsequent to the year end.
to
Through the performance of the above testing, we
obtained sufficient assurance that the carrying
value of investments in, and loans to, subsidiary
undertakings are reasonable.
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:
40 40
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
•
•
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’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Corporate governance statement
We have reviewed the director’' statement in relation to going concern, longer-term viability and that part
of the Corporate Governance Statement relating to the group’s and parent compan’'s compliance with the
provisions of the UK Corporate Governance Code 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 or our
knowledge obtained during the audit:
• Directors’ statement with regards the appropriateness of adopting the going concern basis of
accounting and any material uncertainties identified set out on page 28;
• Directors’ explanation as to their assessment of the group’s prospects, the period this assessment
covers and why the period is appropriate set out on page 30;
• Directors’ statement on whether they have a reasonable expectation that the group will be able to
continue in operation and meet its liabilities set out on page 55;
• 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 22;
• Board’s confirmation that it has carried out a robust assessment of the emerging and principal
risks set out on page 15;
• The section of the annual report that describes the review of effectiveness of risk management
and internal control systems set out on page 28; and
• The section describing the work of the audit committee set out on page 24.
Responsibilities of directors
As explained more fully in the statement of directors’ responsibilities, the directors are responsible for
the preparation of the group and parent company financial statements and for being satisfied that they
41 41
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
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, FCA Listing Rules, the Disclosure
Guidance and Transparency Rules Sourcebook, the UK Corporate Governance Code and US Food
and Drug Administration.
• We designed our audit procedures to ensure the audit team considered whether there were any
indications of non-compliance by the group and parent company with those laws and regulations.
These procedures included, but were not limited to:
o Enquiries of management;
o Review of board and audit committee minutes; and
o Review of RNS publications.
• As in all of our audits, we addressed the risk of fraud arising from management override of
controls by performing audit procedures which included, but were not limited to: the testing of
journals; reviewing accounting estimates for evidence of bias; and evaluating the business
rationale of any significant transactions that are unusual or outside the normal course of business.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities,
including those leading to a material misstatement in the financial statements or non-compliance with
regulation. This risk increases the more that compliance with a law or regulation is removed from the
events and transactions reflected in the financial statements, as we will be less likely to become aware of
instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather
than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
42 42
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 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 29 April 2022 to audit the financial statements for the
period ending 31 December 2022 and subsequent financial periods. Our total uninterrupted period of
engagement is 8 years, covering the periods ending 31 December 2015 to 31 December 2022.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the group or the
parent company and we remain independent of the group and the parent company in conducting our audit.
Our audit opinion is consistent with the additional report to the audit committee.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16
of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s
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
27 April 2023
15 Westferry Circus
Canary Wharf
London E14 4HD
43 43
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
Consolidated Statement of Comprehensive Income
Group - Continuing Operations
Note
Year Ended 31
December 2022
Year Ended 31
December 2021
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 may be reclassified subsequently to profit or loss:
Translation of foreign operations
Other comprehensive income for the year
£
£
-
-
6
12, 13
(3,433,476)
(564,072)
(2,576,414)
(126,340)
7
10
(3,997,548)
(2,702,754)
-
10,599
(33)
171,875
17,958
(2,595,389)
(3,986,982)
(5,108,310)
-
-
(3,986,982)
(5,108,310)
(3,979,314)
(7,668)
(3,986,982)
(5,099,228)
(9,082)
(5,108,310)
(954,642)
(954,642)
(18,025)
(18,025)
Total comprehensive loss for the year
(4,941,624)
(5,126,335)
Attributable to:
Owners of Hemogenyx Pharmaceuticals plc
Non-controlling interests
Total comprehensive loss for the year
(4,933,956)
(7,668)
(4,941,624)
(5,117,253)
(9,082)
(5,126,335)
Basic and diluted earnings loss per share attributable to
the equity owners of the Company
11
(0.005)
(0.007)
The Notes to the Financial Statements form an integral part of these Financial Statements.
44 44
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
Consolidated Statement of Financial Position
Group
Assets
Non-current assets
Property, plant and equipment
Right of use asset
Security deposit
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 2022
31 December 2021
£
£
12
13
26
14
17
18
19
20
4
13
22
23
13
1,023,252
2,892,261
140,821
441,493
4,497,827
62,024
2,532,758
2,594,782
7,092,609
9,797,493
16,808,647
921,801
(6,157,894)
(980,563)
(17,114,056)
3,275,428
(31,908)
3,243,520
3,100,678
3,100,678
426,254
-
322,157
748,411
787,887
9,242
142,599
441,493
1,381,221
298,220
6,840,969
7,139,189
8,520,410
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
3,849,089
352,841
7,092,609
8,520,410
This report was approved by the Board and authorised for issue on 27 April 2023 and signed on its
behalf by:
______________________
Dr Vladislav Sandler
CEO
The Notes to the Financial Statements form an integral part of these Financial Statements.
45 45
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
Company Statement of Financial Position
Company
Assets
Non-current assets
Loan to subsidiaries
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
Foreign currency translation reserve
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
Note
31 December
2022
31 December
2021
£
£
15
16
17
18
19
20
22
14,451,733
8,000,000
22,451,733
13,214,507
8,000,000
21,214,507
20,405
88,909
109,314
15,478
111,245
126,723
22,561,047
21,341,230
9,797,493
16,808,647
920,697
(5,100,447)
22,246,390
9,797,493
16,808,647
903,122
(6,302,461)
21,206,801
134,657
134,657
134,429
134,429
134,657
134,429
22,561,047
21,341,230
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
gain/(loss) attributable to Hemogenyx Pharmaceuticals plc for the year ended 31 December 2022 was
£1,202,014 (2021: (£3,166,171)).
This report was approved by the Board and authorised for issue on 27 April 2023 and signed on its
behalf by:
________________________
Dr Vladislav Sandler
CEO
The Notes to the Financial Statements form an integral part of these Financial Statements.
46 46
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
Consolidated Statement of Changes in Equity
Group
Called up
Share
Capital
£
Share
Premium
£
Other
reserves
£
Reverse
acquisition
reserve
£
Foreign
currency
translation
reserve
£
Retained
earnings
£
Non-
Controlling
interests Total Equity
£
£
4,336,363
9,990,965
764,815
(6,157,894)
(7,896)
(8,035,514)
(15,158)
875,681
-
-
-
-
-
-
5,373,710
5,026,290
77,420
522,580
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
-
-
-
-
-
-
-
-
-
-
-
17,575
-
-
-
-
-
(3,979,314)
(7,668)
(3,986,982)
(954,642)
-
-
(954,642)
(954,642)
(3,979,314)
(7,668)
(4,941,625)
-
-
-
17,575
9,797,493
16,808,647
921,801
(6,157,894)
(980,563)
(17,114,056)
(31,908)
3,243,520
As at 1 January
2021
Loss in year
Other
Comprehensive
Income
Total
comprehensive
income for the year
Conversion of debt
to equity
Shares issued to
arrangers of debt
facility
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
Loss in year
Other
Comprehensive
Income
Total
comprehensive
income for the
year
Extension of
options
As at 31 December
2022
The notes to the financial statements form an integral part of these financial statements.
47 47
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
Company Statement of Changes in Equity
Company
Called up
Share
Capital
£
Share
Premium
£
Foreign
currency
translation
reserve
£
As at 31 December 2020
4,336,363
9,990,965
Loss in year
Other Comprehensive
Income
Total comprehensive income
for the year
Conversion of debt to equity
Shares issued to arrangers of
debt facility
Shares issued to consultant
Charge recognised upon
conversion of debt
Issue of options
-
-
-
-
-
5,373,710
-
5,026,290
77,420
10,000
522,580
56,337
-
-
1,212,475
-
As at 31 December 2021
9,797,493
16,808,647
Income in year
Other Comprehensive
Income
Total comprehensive
income for the year
Extension of stock options
-
-
-
-
-
-
-
-
As at 31 December 2022
9,797,493 16,808,647
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Other
reserves
£
Retained
earnings
£
Total
Equity
£
749,767
(3,136,290)
11,940,805
-
-
-
-
-
-
153,355
(3,166,171)
(3,166,171)
-
-
(3,166,171)
(3,166,171)
10,400,000
600,000
66,337
1,212,475
153,355
-
-
-
903,122
(6,302,461)
21,206,801
-
-
1,202,014
1,202,014
-
-
-
17,575
1,202,014
-
1,202,014
17,575
920,697
(5,100,447)
22,426,390
The notes to the financial statements form an integral part of these financial statements.
48 48
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
Consolidated Statement of Cash Flows
Group
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
Changes in right of use asset and lease liability, net
Foreign exchange gain
(Decrease)/Increase in trade and other payables
Increase in trade and other receivables
Decrease in prepaid and deposits
Year Ended
31 December
2022
Year Ended
31 December
2021
Note
£
£
12
23
20
(3,986,982)
195,246
81
(10,599)
33
-
17,575
627,515
12,937
(27,120)
(2,109)
271,819
(5,108,310)
126,340
77
(17,958)
923,361
1,212,475
153,355
-
(18,025)
298,070
(196,683)
-
Net cash outflow used in operating activities
(2,910,604)
(2,627,298)
Cash flows generated from financing activities
Proceeds from issuance of debt and equity securities
Repayment of loans and borrowings
Payment of lease liabilities
23
-
-
(110,144)
12,000,000
(3,183,281)
(39,079)
Net cash flow (used in)/generated from financing activities
(110,144)
8,777,640
Cash flows generated from investing activities
Interest income
Payment of security deposit for lease
Payment for intangible assets
Purchase of property & equipment
10,599
(1,908)
-
(428,945)
17,958
(138,913)
(181,743)
(636,255)
Net cash flow generated from/(used in) investing activities
(420,254)
(938,953)
Net (decrease)/increase in cash and cash equivalents
(3,432,002)
5,211,389
Effect of exchange rates on cash
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
(876,209)
(182,719)
6,840,969
2,532,758
1,812,299
6,840,969
The notes to the financial statements form an integral part of these financial statements.
49 49
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
Company Statement of Cash Flows
Company
Cash flows generated from operating activities
Gain/(loss) before income tax
Foreign exchange gain
Interest expense
Beneficial conversion charge related to convertible debt
Share based payments
(Increase)/decrease in trade and other receivables
Increase in trade and other payables
Adjustments to net loss for cash items
Note
Year Ended 31
December 2022
Year Ended 31
December 2021
£
£
1,202,014
(3,166,171)
(1,539,778)
(184,759)
-
-
17,575
(4,927)
228
-
883,692
1,212,475
153,356
45,970
-
(5,822)
20
Net cash outflow used in operating activities
(324,888)
(1,061,259)
Cash flows generated from financing activities
Proceeds from issuance of debt and equity securities
Repayment of loans and borrowings
Net cash flow generated from financing activities
Cash flows generated from/(used in) investing activities
Loan from/(to) related parties
-
-
12,000,000
(1,600,000)
-
10,400,000
301,421
(10,263,778)
Net cash flow generated from/(used in) investing activities
301,421
(10,263,778)
Net decrease in cash and cash equivalents
Effect of exchange rates on cash
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
(23,467)
(925,037)
1,131
68
111,245
88,909
1,036,214
111,245
The Notes to the Financial Statements form an integral part of these Financial Statements.
50 50
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
Notes to the Financial Statements
1. General information
The Group’s business is preclinical-stage biotechnology focused on the discovery, development and
commercialisation of innovative treatments relating to bone marrow/hematopoietic (blood-forming)
stem cell (BM/HSC) transplants for blood diseases, including leukaemia, lymphoma and bone
marrow failure, 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.
The Company’s registered office is located at 6th floor, 60 Gracechurch Street, London, EC3V 0HR,
and the Company’s shares are listed on the main market of the London Stock Exchange.
2. Summary of significant accounting policies
The principal accounting policies applied in the preparation of these financial statements are set out
below. These policies have been consistently applied to all the years presented, unless otherwise
stated.
Basis of preparation
The financial statements have been prepared in accordance with UK-adopted international
accounting standards and with requirements of the Companies Act 2006. 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 2022. The financial statements of the
subsidiaries are prepared for the same reporting period as the parent company, using consistent
accounting policies.
All intra-group balances, transactions, 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 2022 was
£1,202,024 (2021: £3,166,171).
On 30 March 2022, the Company formally dissolved its Belgian subsidiary Hemogenyx-Cell SPRL.
51 51
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
Research and development expenditure
Research and development
(i)
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.
Clinical trial expenses
(ii)
Clinical trial-related expenses are a component of the Company's research and development costs.
These expenses include fees paid to contract research organisations, clinical sites, and other
organisations who conduct development activities on the Company's behalf. The amount of clinical
trial expenses recognised in the period related to clinical agreements is based on estimates of the
work performed using an accrual basis of accounting. These estimates incorporate factors such as
patient enrolment, services provided, contractual terms, and prior experience with similar contracts.
Government grants
(iii)
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 that the grant will be
received. Government grants relating to research and development are off-set against the relevant
costs.
Intangibles
Research and development
Research expenditure is written off as incurred. 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.
52 52
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
Internally generated IP costs are written off as incurred except where IAS 38 criteria, as described in
research and development above, would require such costs to be capitalised.
The Group’s view is that capitalised IP assets have a finite useful life and to that extent they should
be amortised over their respective unexpired periods with provision made for impairment when
required. Capitalised IP assets are not amortised until the Group is generating an economic return
from the underlying asset and as such no amortisation has been incurred to date as the products to
which they relate are not ready to be sold on the open market. When the trials are completed and the
products attain the necessary accreditation and clearance from the regulators, the Group will assess
the estimated useful economic like and the IP will be amortised using the straight-line method over
their estimated useful economic lives.
Fixed assets
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
Property & equipment
Impairment of non-financial assets
33%
12.5%
20% - 50%
Straight-line
Straight-line
Straight-line
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.
53 53
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
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
The preparation of financial statements requires an assessment on the validity of the going concern
assumption.
The Company did not raise any outside funding during the year ended 31 December 2022. The
Company had cash and cash equivalents totalling £2,532,758 as at 31 December 2022. On 26 January
2023 the Company raised gross placing proceeds of £4,056,250, which will be used to facilitate
progression of the Company's HEMO-CAR-T product candidate into clinical trials and to enable the
Company to continue development of product candidates for the treatment of viral infections based
on its CBR platform.
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.
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.
Other liabilities measured at amortised cost are obligations to pay for goods or services that have
been acquired in the ordinary course of business from suppliers. The liabilities are classified as
current liabilities if payment is due within one year or less (or in the normal operating cycle of the
business if longer). If not, they are presented as non-current liabilities.
54 54
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
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 Pound Sterling in accordance with IAS 21 The Effects of
Changes in Foreign Exchange Rates. This standard requires that assets and liabilities be translated
using the exchange rate at period end, and income, expenses and cash flow items are translated using
the rate that approximates the exchange rates at the dates of the transactions (i.e. the average rate for
the period). The foreign exchange differences on translation of Hemogenyx Pharmaceuticals LLC,
Immugenyx LLC and Hemogenyx-Cell SPRL are recognised in other comprehensive income (loss).
Foreign currency transactions
Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing on the dates of the transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at period-end exchange rates of monetary
assets and liabilities denominated in foreign currencies are recognised in profit and loss.
Share capital
Ordinary Shares are classified as equity. Equity instruments issued by the Hemogenyx
Pharmaceuticals Group are recorded at the proceeds received, net of direct issue costs.
Cash
Cash consists of cash bank deposit balances.
Deferred Financing Costs
Deferred financing costs represent direct expenditures made by the Company for the financing
transaction completed in January 2021. These costs 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
55 55
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
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, which was approved by the Company’s shareholders at the
2022 AGM. Equity-settled share-based payments are measured at fair value at the date of grant for
Employee Share Options and the date of service for Non-employee Share Options. The fair value
determined at the grant date or service date, as applicable, of the equity-settled share-based payments
is expensed, with a corresponding credit to equity, on a straight-line basis over the vesting period,
based on the Group’s estimate of shares that will eventually vest. At each subsequent reporting date,
the Group calculates the estimated cumulative charge for each award having regard to any change in
the number of options that are expected to vest and the expired portion of the vesting period. The
change in this cumulative charge since the last reporting date is expensed with a corresponding credit
being made to equity. Once an option vests, no further adjustment is 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.
56 56
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
The carrying amount of deferred income tax assets is reviewed at each statement of financial position
date. Deferred income tax assets and liabilities are offset, only if a legally enforcement right exists
to set off current tax assets against current tax liabilities, the deferred income taxes related to the
same taxation authority and that authority permits the Company to make a single net payment.
Income tax is charged or credited directly to equity if it relates to items that are credited or charged to
equity. Otherwise income tax is recognised in the statement of comprehensive income.
Financial Assets and Liabilities
Financial assets and liabilities are recognised in the Company’s statement of financial position when
the Company becomes a party to the contractual provisions of the instrument. The Company
currently does not use derivative financial instruments to manage or hedge financial exposures or
liabilities.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that
are not quoted in an active market. They are included in current assets, except for maturities greater
than 12 months after the end of the reporting period. These are classified as non-current assets. The
Company’s loans and receivables comprise Trade and Other Receivables and Cash and Cash
Equivalents in the Statement of Financial Position.
Impairment of Financial Assets
The Company and Group 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
The Company follows 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.
Historically, the majority of the Group’s revenue has been derived from fees related to collaboration
agreements.
57 57
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
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 with the head office located in the United
Kingdom. The main assets of the Group, cash and cash equivalents, are held primarily in the United
Kingdom and the United States, while the fixed assets and right of use assets are held in the United
States. The Board ensures that adequate amounts are transferred internally to allow all companies to
carry out their operations on a timely basis.
The Group currently has one reportable segment – a biotechnology company focused on the
discovery, development and commercialisation of innovative treatments relating to blood and
immune system disorders and viral infections.
New Accounting Standards and Interpretations issued and applied in the Financial Statements
(a) New and amended standards mandatory for the first time for the financial periods beginning on
or after 1 January 2022
The International Accounting Standards Board (IASB) issued various amendments and revisions to
International Financial Reporting Standards and IFRIC interpretations. The amendments and
revisions were applicable for the year ended 31 December 2022 but did not result in any material
changes to the financial statements of the Group or Company.
58 58
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
b) New standards, amendments and interpretations in issue but not yet effective or not yet endorsed
and not early adopted
Standards, amendments and interpretations that are not yet effective and have not been early adopted
are as follows:
Impact on initial application
Standard
IFRS 16 (Amendments) Property, plant, and equipment
IAS 1 (Amendments)
Classification of Liabilities as Current or
Non-Current.
Accounting estimates
Insurance
IAS 8 (Amendments)
IAS 17 (Amendments)
* Subject to endorsement
Effective date
*1 January 2024
1 January 2023
1 January 2023
1 January 2023
The Group is evaluating the impact of the new and amended standards above which are not expected
to have a material impact on future Group financial statements.
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:
Valuation of stock options
Management uses the Black Scholes model to value the share options. The model requires use of
assumptions regarding volatility, risk free interest rate and a calculation of the value of the option at
the time of the grant. Please see Note 20 for details.
Intangible assets impairment
When there is an indicator of a significant and permanent reduction in the value of intangible assets,
an impairment review is carried out. The impairment analysis 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 activity,
probability of technical and regulatory success, amount and timing of projected future cash flow or
changes in market conditions. Any changes in key assumptions could materially affect whether an
impairment exists. See Note 14 for further details.
59 59
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
4. Reverse acquisition and LSE listing
On 4 October 2017, the Company acquired the entire issued share capital of Hemogenyx
Pharmaceuticals LLC, a private company incorporated in the United States, by way of a share for
share exchange. In substance, the shareholders of Hemogenyx Pharmaceuticals LLC acquired a
controlling interest in the Company and the transaction has therefore been accounted for as a reverse
acquisition. Following the completion of the transaction the Company changed its name to
Hemogenyx Pharmaceuticals plc.
The reverse acquisition reserve that arose from the reverse takeover is $6,157,894 at December 31,
2022 and 2021 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 December 31, 2022 and 2021
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.
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 2022 and 2021:
60 60
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
SEGMENT ASSETS
United Kingdom
- Non-current
- Current
United States
- Non-current
- Current
Belgium (Discontinued operation)
- Non-current
- Current
Total
- Non-current
- Current
CAPITAL EXPENDITURE
United Kingdom
United States
Belgium (Discontinued operation)
Year Ended
31 December
2022
£
Year Ended
31 December
2021
£
-
109,314
-
126,723
4,497,827 1,381,221
2,464,581 6,992,630
-
20,887
-
19,836
4,497,827 1,381,221
2,594,782 7,139,189
-
430,611
-
430,611
-
636,255
-
636,255
Capital expenditure consists of the purchase of property, plant and equipment.
The Group also had a subsidiary in Liège, Belgium that was dissolved on 30 March 2022.
The loss arising from this discontinued operation was: £5,706.
6. Expenses by nature
Group
Group
Year Ended 31
December 2022
Year Ended 31
December 2021
£
£
402,940
2,196,822
290,688
44,057
1,424,301
77,652
167,621
362,334
(1,532,939)
3,433,476
37,583
283,647
468,505
10,603
1,023,783
56,363
285,844
537,954
(127,868)
2,576,414
Laboratory expenses
Consumable equipment and supplies
Contractors & consultants
Travel
Staff Costs
Insurance
Other
Legal and professional fees
Foreign exchange loss / (gain)
Total Administrative Expenses
61 61
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
7. Other income
Other income during the period ended 31 December 2022 consists of £0 (2021: £171,875,
comprising £71,932 arising from the forgiveness of a US governmental loan programme (the
Payroll Protection Program) and £99,943 received from a third party under a research collaboration
programme relating to humanised mice).
8. Employees
Group
Year Ended 31
December 2022
Group
Year Ended 31
December 2021
Company
Year Ended 31
December 2022
Company
Year Ended 31
December 2021
Wages and salaries
Social security
Share based
payments
Pension
contributions
£
£
£
£
1,288,215
90,220
17,575
28,291
1,424,301
810,851
41,377
153,356
18,199
1,023,783
115,000
1,542
17,575
-
134,117
115,000
1,408
137,390
-
253,798
Average number of people (including Executive Directors) employed:
Group
Group
Company
Year Ended
31 December
2022
Year Ended
31 December
2021
Year Ended
31 December
2022
Company
Year
Ended 31
December
2021
Research &
development
Administration
9. Auditor’s remuneration
9
5
14
7
3
10
-
2
2
-
2
2
Fees payable to the Company auditor:
Audit of the financial statements of the Group and
Company
62 62
Group
Year Ended
31 December
2022
Group
Year Ended
31 December
2021
£
£
50,000
50,000
46,700
46,700
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
10. Income tax
Current Tax:
Tax on loss on ordinary activities
Loss on ordinary activities before
tax
Analysis of charge in the year:
Loss on ordinary activities multiplied
by weighted average tax rate for the
group of 27.36% (2020: 22.40%)
Disallowed items
US R&D credit and timing differences
Tax losses carried forward
Current tax credit
Group
Year Ended 31 December
2022
Group
Year Ended 31
December 2021
£
£
-
-
-
-
(3,986,982)
(5,108,310)
(1,090,838)
(1,145,371)
330,370
(323,215)
1,083,683
-
405,711
(136,371)
1,200,007
-
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 2022 are 19% and 28% in the UK and the USA
respectively.
The Group has accumulated tax losses arising in the UK of approximately £3,225,000 (Dec 2021:
£4,450,000) 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 $11,377,000 (Dec 2021:
$6,700,000) available under current rules until 2037. Of the total Federal net operating losses, the
amounts incurred after 2017 of approximately $9,000,000 will carry forward indefinitely. 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 £3,979,314 (2021:
63 63
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
£5,099,228) by the weighted average number of ordinary shares in issue during the year of
979,749,321 (2021: 773,952,166).
Dilutive loss per Ordinary Share equals basic loss per Ordinary Share as, due to the losses incurred
in 2022 and 2021, there is no dilutive effect from the subsisting share options. See Note 20 for
details of stock options and warrants outstanding.
12. Property and equipment
Group
Cost
31 December 2020
Additions
Foreign exchange movement
31 December 2021
Additions
Foreign exchange movement
Disposals
31 December 2022
Accumulated depreciation and
impairment losses
31 December 2020
Depreciation
Foreign exchange movement
31 December 2021
Depreciation
Foreign exchange movement
31 December 2022
Carrying amounts
31 December 2020
31 December 2021
31 December 2022
13. Leases
Property,
plant &
equipment
£
425,108
-
5,063
430,171
417,897
26,011
(1,666)
872,413
Computer
equipment
Leasehold
Improvements
Total
£
£
£
10,957
8,508
263
19,728
11,161
2,065
-
32,954
-
627,747
16,408
644,155
1,553
76,463
-
722,171
436,065
636,255
21,734
1,094,054
430,611
104,539
(1,666)
1,627,538
209,783
84,645
2,881
297,309
116,493
54,693
468,495
3,424
5,322
112
8,858
8,129
677
17,664
-
-
-
-
75,226
42,900
118,127
213,207
89,967
2,993
306,167
199,848
98,270
604,285
215,325
132,862
403,918
7,533
10,870
15,290
-
644,155
604,044
222,858
787,887
1,023,252
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.
64 64
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
The key impacts on the Statement of Comprehensive Income and the Statement of Financial Position
are as follows:
Group & Company
Right of use
asset
£
Lease liability
£
Income
statement
£
45,885
(48,754)
(40,531)
(36,373)
-
-
(270)
-
(1,560)
39,167
995
(36,373)
(1,560)
-
-
9,242
(10,152)
(37,932)
3,249,244
(366,302)
-
-
77
(3,249,244)
-
(274,802)
106,321
5,042
-
(366,302)
(274,802)
-
(4,965)
2,892,261
(3,422,835)
(539,748)
Carrying value at 31
December 2020
Depreciation
Interest
Lease payments
Foreign exchange
movements
Carrying value at 31
December 2021
Additions
Depreciation
Interest
Lease payments
Foreign exchange
Movements
Carrying value at 31
December 2022
14. Intangible assets
On 15 January 2015, the Company entered into an Exclusive License Agreement with Cornell
University to grant to the Company patent rights to patent PCT/US14/65469 entitled Post-Natal
Hematopoietic Endothelial Cells and Their Isolation and Use and rights to any product or method
deriving therefrom. The Company paid Cornell University USD $347,500 for such licence rights.
In October 2021, the Company entered into a licence with Eli Lilly & Company to use a patented
product derived from jointly-developed intellectual property in 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
December 31, 2022, the Company has not incurred any development or sales-based payment
65 65
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
obligations to the licensor.
Cost
31 December 2020
Additions
Exchange movements
31 December 2021
Additions
Exchange movements
31 December 2022
Intellectual
Property
£
254,955
181,743
4,795
441,493
-
-
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
Hemogenyx Pharmaceuticals
LLC
Immugenyx LLC
Company
Year Ended 31
December 2022
£
Company
Year Ended 31
December 2021
£
14,451,112
621
14,451,733
13,213,951
556
13,214,507
Hemogenyx Pharmaceuticals plc has made cumulative loans to Hemogenyx Pharmaceuticals LLC
of US$17,883,274 (£14,4551,112) as at 31 December 2022 (Dec 2021: US$17,883,274
(£13,213,951)) and Immugenyx LLC of US$752 (£621) as at 31 December 2022 (Dec 2021: US$752
(£556)). 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 2022
and has determined that that there was no impairment required due to continued progress of the
product candidates. The interest rate and impairment assessment are reviewed on an annual basis.
66 66
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
16. Investment in subsidiary
Name
Hemogenyx UK
Limited
Address of the registered
office
Nature of
business
6th Floor, 60 Gracechurch
Street, London, EC3V
0HR
Holding
Company
Hemogenyx
Pharmaceuticals
LLC
9 East Lookerman Street,
Suite 3A, Dover, Kent,
Delaware, USA, 19901
Biomedical
sciences
Immugenyx LLC
c/o Corporation Service
Company
251 Little Falls Drive,
Wilmington, Delaware,
USA, 19808
Biomedical
sciences
Hemogenyx-Cell
SPRL (dissolved in
2022)
Avenue du Parc Industriel
89, 4041 Milmort,
Belgique
Biomedical
sciences
Proportion of
ordinary
shares held
directly by
parent (%)
Proportion of
ordinary
shares held
ultimately by
parent (%)
100
-
-
-
-
100
92.2
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 2022, Hemogenyx
Pharmaceuticals LLC, Dr Sandler, and Ms Sirochinsky each own 500,000, 40,000, and 2,500 shares
in Immugenyx LLC, respectively.
17. Trade and other receivables
Group
Year Ended
31 December
2022
Group
Year Ended
31 December
2021
Company
Year Ended
31 December
2022
Company
Year Ended
31 December
2021
£
9,664
146
52,214
£
6,127
1,386
290,707
£
9,664
-
10,741
£
6,127
-
9,351
VAT receivable
Trade and other receivables
Prepayments
Total trade and other receivables
62,024
298,220
20,405
15,478
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.
67 67
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
18. Called up share capital
Group & Company
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
Conversion of debt to issue of shares – placement 18 May 2021
Shares issued as arrangement fees for debt issuance
As at 31 December 2021
No shares issued during 2022
As at 31 December 2022
Number of shares
433,636,255
13,131,313
14,285,714
24,547,803
29,850,746
22,222,222
433,333,333
8,741,935
979,749,321
-
979,749,321
£
4,336,363
131,313
142,857
245,478
298,508
222,222
4,333,333
87,419
9,797,493
-
9,797,493
During 2021, the Company issued 546,113,066 ordinary shares upon conversion of debt – See Note 23.
During 2022, the Company did not issue any ordinary shares.
19. Share premium
Group & Company £
As at 31 December 2020
Issue of shares – placement
Issues of shares – consultant
Charge recognised upon conversion of debt
As at 31 December 2021
As at 31 December 2022
20. Other reserves
Group:
As at start of year
Charge for the year - employees
Convertible Note embedded derivative
As at end of year
9,990,965
5,548,969
66,337
1,212,475
16,808,647
16,808,647
Year Ended 31
December 2022
Year Ended 31
December 2021
£
£
904,226
17,575
-
764,815
153,355
(13,944)
921,801
904,226
68 68
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
Company:
As at start of year
Charge for the year - employees
As at end of year
Year Ended 31
December 2022
Year Ended 31
December 2021
£
£
903,122
17,575
749,767
153,355
920,697
903,122
The expense recognised for employee and non-employee services during the year is shown in the
following table:
Group and Company:
Year Ended 31
December 2022
Year Ended 31
December 2021
£
£
Expense arising from equity-settled share-based payment
transactions
17,575
153,355
Total expense arising from share-based payment transactions
17,575
153,355
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)
(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
Admission to the LSE (“Admission”);
On the provision that the option holder remains an employee of the Group.
Options granted to most other option holders from 4 January 2018 onwards vest in equal tranches of
12.5% every three months from the date of grant, until fully vested.
The fair value of the options is determined using the Black Scholes method as stated in Note 2. The
contractual life of each option granted is between two and five years. There are no cash settlement
alternatives.
Options are settled when the Company receives a notice of exercise and cash proceeds from the
option holder equal to the aggregate exercise price of the options being exercised.
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
69 69
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
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.
A schedule of options granted since inception for all plans is below:
Employees, including directors*
Members of the Scientific Advisory Board
Total
Number options
47,227,020
12,481,912
59,708,931
* Details of options held by individual directors are disclosed in the Directors’ Report.
In October 2022, the expiration date of options to acquire 4,806,577 ordinary shares (which were
scheduled to expire in October 2022) was extended by two years by the Board of Directors of the
Company. The Company recognised this transaction as a modification of a share based instrument
for financial reporting purposes. The change in the fair value of the stock option before and after the
modification amounted to approximately $5,400, which was recorded as part of expense related to
share-based payment transactions. The fair value was determined using the Black Scholes model
using the assumptions noted below.
Group & Company:
2022
Number
2021
Number
2022
Weighted
Average
Exercise
Price pence
2021
Weighted
Average
Exercise
Price pence
Outstanding at the beginning of the year
Granted during the year
Lapsed during the year
Extended during the year
45,081,506
-
(14,588,497)
4,806,577
4.4 42,465,787
- 3,090,441
(474,722)
-
3.5
3.5
Outstanding at end of year
35,299,586
4.6 45,081,506
Exercisable at end of year
35,299,586
4.6 43,278,749
4.6
2.1
9.0
-
4.4
3.5
The weighted average remaining contractual life for the share options outstanding as at 31 December
2021 is 2.93 years (2021: 2.08 years). The weighted average fair value of options granted during the
year was nil (2021: 0.7 pence).
70 70
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
The following table lists the inputs to the models used for the two plans for the years ended 31
December 2021 and 31 December 2022:
July
2021
(EMP)
October 2022
modification
(EMP)
65
0.17
3
68-424
0.64-1.87
2
2.1
-
Black Scholes
3.5
-
Black Scholes
Expected volatility %
Risk-free interest rate %
Expected life of options
(years)
WAEP – pence
Expected dividend yield
Model used
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
Group
Year Ended 31
December
2022
Group
Year Ended 31
December
2021
Company
Year Ended 31
December
2022
Company
Year Ended 31
December
2021
£
374,342
51,912
426,254
£
295,829
46,860
342,689
£
82,745
51,912
134,657
£
87,569
46,860
134,429
Trade and other payables
Accruals and deferred income
Total
Current liabilities
426,254
342,689
134,657
134,429
71 71
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
23. Borrowings
Borrowings may be comprised of borrowings and convertible notes. The Group follows IFRS 9, and
as a result, where instruments contain liability classified embedded derivatives, an election is taken
to fair value the entire financial instrument through profit or loss rather than split out the embedded
derivative. At 31 December 2022 and 2021, there were no borrowings outstanding. The notes payable
consisted of the following:
Group & Company
Year Ended 31
December 2022
£
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
A summary of the prior debt facilities is as follows:
Mint Transactions
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Year Ended 31
December 2021
£
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)
-
-
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.
72 72
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
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 ability to redeem the convertible loan under certain circumstances at
114% of the principal amount of the convertible loan.
• Subject to limited exceptions, the Convertible Loan Notes 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
73 73
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
reported on Bloomberg from the three closing bid prices immediately preceding a conversion.
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 recognized £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 £1,409,582 of
financing related costs related to the costs incurred, including fair value of the shares issued to
arrangers to obtain the credit facility from Mint. During the year ended 31 December, 2021, the
Company recognized £1,208,592 of financing related costs representing the fair value of shares
issued in excess of the outstanding principle 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 has an existing collaboration agreement. The loan amount
was for not less than US$1,000,000 with the proceeds of the loan to be used solely for the
development of the cell therapy technology in accordance with the plan of the collaboration
totalling US$1,000,000 had been made with Hemogenyx
agreement. Drawdowns
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”) is a
wholly owned Belgian entity and was incorporated in April 2019 at which point this loan facility
was treated as a borrowing in accordance with the provisions of IAS39. 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 has an
existing collaboration agreement. The loan amount was for not less than US$1,000,000 with the
proceeds of the loan to be used solely for the development of the cell therapy technology in
accordance with the plan of the collaboration agreement. 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.
74 74
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
The loan was repaid in full in November 2021.
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 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.
25. Financial instruments
The Group’s financial instruments consist of cash, amounts receivable, accounts payable and accrued
liabilities.
Fair value of financial assets and liabilities
Fair values have been determined for measurement and/or disclosure purposes based on the following
methods. When applicable, further information about the assumptions made in determining fair
values is disclosed in the notes specific to that asset or liability.
The carrying amount for cash, accounts receivable, and accounts payable and accrued liabilities on
the statement of financial position approximate their fair value because of the limited term of these
instruments. The fair value of deferred payment approximates its fair value. The investment is carried
at cost as it is not traded on an active market.
Fair value hierarchy
Financial instruments that are measured subsequent to initial recognition at fair value are grouped in
Levels 1 to 3 based on the degree to which the fair value is observable:
• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active
markets for identical assets or liabilities; and
• Level 2 fair value measurements are those derived from inputs other than quoted prices included
within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or
75 75
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
indirectly (i.e. derived from prices); and
• Level 3 fair value measurements are those derived from valuation techniques that include inputs
for the asset or liability that are not based on observable market data (unobservable inputs).
The Group did not have any financial instruments in Level 1, 2 and 3.
Financial risk management objectives and policies
The Company has exposure to the following risks from its use of financial instruments:
• Credit risk
• Liquidity and funding risk
• Market risk
The following table sets out the amortised costs categories of financial instruments held by the Company
as at the year ended 31 December 2022 and year ended 31 December 2021:
Assets
Trade and other receivables,
except prepayments
Cash and cash equivalents
Liabilities
Trade and other payables
Lease liabilities
Group
Year Ended
31 December
2022
Group
Year Ended 31
December
2021
Company
Year Ended
31 December
2022
Company
Year Ended 31
December
2021
£
£
£
£
9,810
2,532,758
2,542,568
1,696
6,840,969
6,842,665
-
88,909
88,909
310
111,245
111,555
(374,343)
(3,422,835)
(295,829)
(10,152)
(82,746)
-
(87,569)
-
(3,797,178)
(305,981)
(82,746)
(87,569)
Group
1 January
2021
Cash flows
Non-cash changes
Adjustment to reserve
PPP Loan
Forgiveness
Foreign
exchange
movements
Interest
charge
Short-term
borrowings (1)
Long-term
borrowings
Total
1,579,378 (1,583,281)
13,944
(71,932)
33,237
28,654
-
-
-
-
-
-
1,579,378 (1,583,281)
13,944
(71,932)
33,237
28,654
31
December
2021
-
-
-
(1) At December 31, 2021 the principal and interest on borrowings was paid in full.
76 76
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
a)
Credit risk
The Group had receivables of £0 owing from customers (31 December 2021: £0). All bank deposits
are held with Financial Institutions with a minimum credit rating of B.
b)
Liquidity and funding risk
The Group regularly reviews its major funding positions to ensure that it has adequate financial
resources in meeting its financial obligations. The Group takes liquidity risk into consideration when
deciding its sources of funds. The principle liquidity risk facing the business is the risk of going
concern which has been discussed in Note 2.
c)
Market risk
Interest rate risk
Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in
market interest rates. The Group's income and operating cash flows are substantially independent of
changes in market interest rates as the Group has no significant interest-bearing assets. The
borrowings issued at fixed 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.
The Company has floating rate financial assets in the form of deposit accounts with major banking
institutions; however, it is not currently subjected to any other interest rate risk.
Based on cash balances as above as at the statement of financial position date, a rise in interest rates
of 1% would not have a material impact on the profit and loss of the Company and such is not
disclosed.
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
Year Ended
31 December
2022
£
Group
Year Ended
31 December
2021
£
Company
Year Ended
31 December
2022
£
Company
Year Ended
31 December
2021
£
2,532,758
6,840,969
88,909
111,245
Financial Assets
Cash and cash equivalents
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.
77 77
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
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 2022 and 31 December 2021:
31 December 2022
Functional Currency
Currency of net
monetary
assets/(liabilities)
Pound
Sterling
£
US Dollars
Euro
Total
£
£
£
Pounds Sterling
US Dollars
Euros
Total
75,358
13,551
-
88,909
-
2,422,962
-
2,422,962
-
-
20,887
20,887
75,358
2,436,513
20,887
2,532,758
31 December 2021
Functional Currency
Currency of net
monetary
assets/(liabilities)
Pounds Sterling
US Dollars
Euros
Total
Pound
Sterling
£
99,050
12,197
-
111,245
US Dollars
Euro
£
-
6,709,888
-
6,709,888
£
-
-
19,834
19,834
Total
£
99,050
6,722,085
19,834
6,840,969
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.
78 78
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
Fair value of financial assets and liabilities
There are no material differences between the fair value of the Group’s financial assets and liabilities
and their carrying values in the financial statements.
26. Commitments
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 £855,301 ($1,035,000) plus £413,189 ($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. Through 31 December 2022, none of the requirements to make
such payments have been met. In addition, the Group pays an annual licence maintenance fee of up
to £61,978 ($75,000) until 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 1 April 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 £156,114 ($188,005) during the year ended 31 December 2021 for such facility
lease.
Service agreements
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. From 31 December 2021 through 31 December 2022, Hemogenyx
Pharmaceuticals LLC has paid £199.956 (CHF 214,063) under this agreement. Under the terms of
the agreement, Hemogenyx Pharmaceuticals LLC may pay up to CHF 590,000 at its discretion in
aggregate, inclusive of the amounts already paid.
79 79
Hemogenyx Pharmaceuticals plc
Annual Report & Financial Statements for the
Year Ended 31 December 2022
In December 2021, Hemogenyx Pharmaceuticals LLC entered into service agreements with another
party 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 £1,970,911 ($2,109,957) in
milestone payments during the term of production. From 31 December 2021 through 31 December
2022, Hemogenyx Pharmaceuticals LLC has paid £862,670 ($1,134,059) under these agreements.
27. Ultimate controlling party
The Directors have determined that there is no controlling party as no individual shareholder holds a
controlling interest in the Company.
28. Subsequent events
In January 2023, the Company successfully completed its second and third Process Qualification
(“PQ”) runs of the end-to-end process for the manufacture of HEMO-CAR-T cells. At least three
identical manufacturing runs are required for the submission of an Investigational New Drug (“IND”)
application to the US Food and Drug Administration (“FDA”). The IND is needed to obtain
authorisation from the FDA to commence Phase I clinical trials of HEMO-CAR-T. The process was
carried out in the Company’s current Good Manufacturing Practice (“cGMP”) compliant clean
rooms. This was followed by analytical release tests conducted by the Company required to verify
the quality of the manufactured HEMO-CAR-T cells and by tests by a third party to ensure they
comply with a set of required quality attributes. These tests were completed in March 2023.
Following completion of all tests, data are being compiled for inclusion in the IND submission pack.
On 23 January 2023 the Company successfully raised £4,056,250 (before expenses) through the
allotment and issue of 162,250,000 new ordinary shares at 2.5 pence per share (the “Placing”). The
Placing was conducted by Peterhouse Capital Limited and SP Angel Corporate Finance LLP as joint
placing agents for the Company.
The Company has entered into a preliminary agreement with a service provider that it is anticipated
will project manage and supervise the running of Phase I clinical trials for its HEMO-CAR-T cell
therapy, subject to negotiation of a Master Services Agreement.
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, 6th floor, 60 Gracechurch Street, London, EC3V 0HR.
80 80