ImmuPharma plcReport and Consolidated Financial StatementsFor the Year Ended 31 December 2020 ImmuPharma plc Report and Consolidated Financial Statements December 2020
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Contents PageChairman’s Report2 – 8Financial Review9 – 10Strategic Report11 – 26Business Overview and Prospects12 – 13Business Strategy and Objectives14Product Pipeline16 – 19Review of Group Activity20 – 22Principal Risks and Uncertainties23 – 25Forward-Looking Statements26Board of Directors27 – 30Scientific Collaborators31 – 32Officers and Professional Advisers34Corporate Governance Report35 – 38Directors’ Report39 – 42Statement of Directors’ Responsibilities43Independent Auditor’s Report44 – 49Consolidated Income Statement50Consolidated Statement of Comprehensive Income51Consolidated Statement of Financial Position52Consolidated Statement of Changes in Equity53Consolidated Statement of Cash Flows54Company Statement of Comprehensive Income55Company Statement of Financial Position56Company Statement of Changes in Equity57Company Statement of Cash Flows58Notes to the Consolidated Financial Statements59 – 88Glossary of Technical Terms89 Chairman’s Report
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ImmuPharma plc Report and Consolidated Financial Statements December 2020
ImmuPharma plc Report and Consolidated Financial Statements December 2020 Chairman’s Report
The first half of 2020 saw a number of key developments
for ImmuPharma, despite the disruptions caused by the
Covid-19 global pandemic. These included progress
within our flagship Lupuzor™ program, expansion of the
R&D pipeline, particularly within our peptide platform
technologies and securing strategic investments.
During the second half of 2020, ImmuPharma successfully
raised, in response to investor demand, additional
funding of £6.5m (gross), bringing the total funds raised
for the year to £10.2m (gross). Additionally, ImmuPharma
obtained further clarity regarding the Phase III clinical
trial for Lupuzor™, working alongside its partner,
Avion Pharmaceuticals. In parallel, outside of the US,
ImmuPharma continued to explore opportunities with
other potential commercial partners for Lupuzor™ and
also within the Company’s extended pipeline.
Lupuzor™ – Opportunity and next steps
There are an estimated five million people globally
suffering from lupus, with approximately 1.5 million
patients in the US, Europe and Japan (Source: Lupus
Foundation of America). Current ‘standard of care’
treatments, including steroids and immunosuppressants,
can potentially have either serious side effects for patients
or limited efficacy, with over 60 per cent of patients not
adequately treated.
ImmuPharma believes Lupuzor™ has the potential to be
a novel specific drug therapy for the treatment of Lupus
by specifically modulating the immune system and halting
disease progression in a substantial proportion of patients.
Lupuzor™ has a unique mechanism of action that
modulates the activity of CD4 T-cells which are involved
in the cell-mediated immune response which leads to the
lupus disease. Lupuzor™, taken over the long term, as
indicated in earlier stage clinical trials, has the potential to
prevent the progression of lupus rather than just treating
its symptoms, with the rest of the immune system retaining
the ability to work normally.
The Board is confident that there are a number of
routes to market for Lupuzor™, including corporate
collaborations. Such a collaboration was successfully
completed at the end of November 2019, resulting in a
signed exclusive Trademark, License and Development
Agreement with Avion Pharmaceuticals LLC (“Avion”) in
the US. Positive discussions with a number of potential
commercial partners for Lupuzor™ in key territories
outside of the US are continuing.
Lupuzor™ and Avion Pharmaceuticals
On 28 November 2019, ImmuPharma and Avion
Pharmaceuticals (“Avion”) signed an exclusive Trademark,
License and Development Agreement for Lupuzor™, with
Avion agreeing to fund a new international Phase III trial
and commercialising Lupuzor™ in the US. Since then,
both companies have been working closely on the clinical
trial design and strategy, bolstered by consultation with an
eminent group of key opinion leaders. This tripartite Phase
III protocol development approach provided thorough
and detailed support for developing the most relevant
clinical trial for Lupuzor™ in systemic lupus erythematosus
(“SLE”) patients. Data and results from the first Phase III
clinical study were analysed and considered in detail and,
as a result, a new optimised international Phase III study
protocol has been finalised.
Regulatory progress was announced in November
2020, whereby the FDA offered to accept submission
for a Type ‘A’ Meeting Request, following which Avion
submitted a full dossier on 6 November 2020 through the
FDA Type ‘A’ route.
On 9 February 2021 ImmuPharma provided a progress
update to the market in respect to the feedback post the
‘Type A’ meeting between the FDA and Avion. Based
on the positive guidance and feedback from FDA, it was
confirmed that there is now a clear regulatory pathway to
commence the Phase III trial in H2 2021, fully funded by
Avion, estimated to be around $25 million investment. As
part of this feedback, Avion and ImmuPharma will develop
and validate a bioanalytical assay in order to confirm the
unique pharmacokinetic profile of Lupuzor™, prior to
the commencement of the Phase III study. This will be
presented at the final guidance meeting between Avion
and the FDA currently scheduled for Q2 2021 as well as
confirming the previously submitted data on study design,
clinical end points and the pathway to approval.
Meanwhile, ImmuPharma has initiated the production of
a new batch of Lupuzor™ clinical trial material specifically
for the Phase III trial and it can be confirmed that this will
be ready for the start of the trial.
Centre National de la Recherche
Scientifique (CNRS)
ImmuPharma continues to have important collaboration
arrangements with the Centre National de la Recherche
Scientifique (“CNRS”), the French National Council
for Scientific Research and the largest basic research
organisation in Europe. This is where Lupuzor™ was
invented by Prof. Sylviane Muller, former Research Director
at the CNRS. Through this partnership, the CNRS will be
entitled to receive from ImmuPharma, low double-digit
royalty payments of funds received by ImmuPharma from
Avion through the Licence and Development Agreement.
ImmuPharma plc Report and Consolidated Financial Statements December 2020
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Annual Review Chairman’s Report (continued)
Pipeline Overview
ImmuPharma’s pipeline includes novel peptide-based
therapeutics within four therapy areas: Autoimmunity;
Anti-Infectives; Metabolism and Cancer.
Autoimmunity / Lupuzor™ / Forigerimod / P140 Platform
Lupuzor™, is also known by its chemical name
‘Forigerimod’ or ‘P140’. Outside of Lupuzor™ for lupus,
ImmuPharma is exploring opportunities of expanding
into other autoimmune indications that are directly linked
to Lupuzor’s™' unique mechanism of action, chaperone
mediated autophagy (CMA). The first example of CMA
action has been demonstrated in lupus with an excellent
safety profile.
Certain autoimmune indications, outside of lupus, have the
potential for Orphan Drug designation. One disease of key
interest to ImmuPharma's team is Chronic Inflammatory
Demyelinating Polyneuropathy ("CIDP"). CIDP is a
neurological disorder targeting the body’s nerves. Further
assessment continues with the objective of moving CIDP
forward into a Proof of Concept study, based on the strong
data already gained within ImmuPharma’s lupus dossier.
Elro and Ureka combined to form Ureka Pharma SAS
On 1 January 2020, the Company combined its two
subsidiaries, Ureka Pharma SAS (‘Ureka’) and Elro Pharma
SARL (‘Elro’) into one entity Ureka Pharma SAS (“Ureka
Pharma”). The intention was to maximise value from
the combined entity through scale and synergies, whilst
retaining an interest in any future commercial success.
There are three therapy areas within Ureka: Anti-Infectives,
Metabolism and Cancer.
Anti-Infectives
ImmuPharma has started exploring opportunities in research
and development of anti-fungal and anti-viral programs.
Within anti-fungal, ImmuPharma has developed BioAMB,
a novel peptide-based drug that offers a potential
improvement on Amphotericin-B (“AMB”). AMB is one of
the few effective treatments for many serious and life-
threatening fungal infections (aspergillosis) caused by the
aspergillus family of fungi.
Although highly effective against aspergillus, the existing
AMB products are reserved for use after the azole (synthetic)
class of drugs due to their poor safety and tolerability profile.
The leading AMB, ‘Ambisome’ is known to cause serious
kidney toxicity in 14-15% of patients. ImmuPharma’s BioAMB
target profile is to achieve a superior safety and tolerability
profile compared to Ambisome.
Sales of Ambisome in 2020 were $436 million. The next
step for ImmuPharma is to progress the lead optimised
candidate through the relevant pre-clinical safety and
efficacy studies in animals in comparison to existing
AMB products. Following this, there is potential to go
immediately into a bioequivalence study in humans
and submission for marketing approval. Discussions for
potential partnering opportunities continue.
Within anti-viral, we have been investigating the application
of the Ureka peptide technologies, which suggests the
potential to create effective anti-fusion peptides with the
goal to prevent virus entry into the host cells, which may
lead to novel peptide based anti-viral therapies. Further
exploratory work continues on this program.
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ImmuPharma plc Report and Consolidated Financial Statements December 2020
Annual Review Chairman’s Report (continued)
Metabolism | ‘BioGlucagon’
BioGlucagon, is a potential new rescue therapy for low
sugar events in diabetes. Existing glucagon products
have poor solubility and are inconvenient with variable
dosing due to poor solubility creating risks for patients.
BioGlucagon has 100% solubility, can be formulated in
pre-filled syringe pens and could be used in insulin pumps.
The next step is opening up partnering discussions.
Metabolism & Urelix™ technology
This therapy area has been developing lead compounds
from its novel and patented peptide technology platform
Urelix™. The laboratories are based at the Institut
Europeen de Chimie et Biologie (IECB) in Bordeaux,
France, which is under the joint authority of the CNRS,
Inserm and the University of Bordeaux.
Urelix™ is focusing on oligourea foldamers as a tool to
improve the pharmaceutical properties of peptides. One
of the first focus areas has been GLP-1 analogues for the
treatment of Type II diabetes and NASH (Non- Alcoholic-
Steato-Hepatitis) as proof of concept for its technology.
This proof of technical capability was published in Nature
Communications in 2019.
Further applications of the Urelix™ technology include
protein/protein interactions, notably in cancer, and
improvement of marketed efficacious peptides allowing
additional long lasting patent protection, paving the way
for a life cycle management franchise.
Cancer
ImmuPharma’s Nucant cancer program, IPP-204106, is
focused on combination cancer therapy approaches.
The molecule has also shown promising results in
ophthalmology (age-related macular degeneration)
models. Partnering discussions will be explored.
Capital Subscription
On 30 March 2020 ImmuPharma announced subscriptions
to raise £1.5 million (the "Subscriptions") through the
issue of 15,000,000 new ordinary shares of 10 pence each
in ImmuPharma ("Ordinary Shares") (the "Subscription
Shares") at a price of 10p per Ordinary Share
("Issue Price").
The Subscriptions comprised a £200,000 subscription from
Dr Robert Zimmer, (Director, President & Chief Scientific
Officer of ImmuPharma) through Luca and Associates
AG ("Luca") ( a company to which he is connected) and
a further £1.3 million subscription with Lanstead Capital
Investors LP (“Lanstead"), an institutional investor
and substantial shareholder, together with a related
Sharing Agreement, to raise in aggregate £1.5 million
before expenses.
The £1.3 million gross proceeds of the Lanstead
subscription was followed by the sharing agreement with
Lanstead (the “Sharing Agreement”) for 100% of these
shares with a reference price of 13.33p per share. The
Sharing Agreement is for a 24 month period. The actual
consideration is variable depending upon ImmuPharma's
share price and provides the opportunity for ImmuPharma
to benefit from a positive future share price performance.
The Company also agreed to issue Lanstead 650,000
ordinary shares in connection with entering into the
Sharing Agreement.
The new subscription from Lanstead followed the
£2.66 million investment from Lanstead secured in
June 2019.
ImmuPharma plc Report and Consolidated Financial Statements December 2020
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Annual Review Chairman’s Report (continued)
On 8 September 2020, as a consequence of the convertible
security deeds and option deeds with L1 Capital Global
Opportunities Master Fund (“L1”) and Lind Global Macro
Fund LP (“Lind”), the benchmark price referred to in the
two Lanstead sharing agreements has increased from
13.33p to 20p. The varied benchmark price of 20p applied
to 13 monthly settlements remaining under the sharing
agreement dated 26 June 2019 and 22 monthly settlements
under the sharing agreement dated 30 March 2020.
Investment from US healthcare investors
On 10 June 2020 ImmuPharma entered into agreements
with two specialist US healthcare investors for a total
investment of up to $6.30 million (£4.94 million) comprising
an issue of unsecured convertible securities (“Securities”)
and associated options to purchase shares in ImmuPharma
Plc in the future. ImmuPharma issued $3 million (£2.35
million) in face value of Securities to L1 and Lind, managed
by The Lind Partners, LLC (“the Investors”) with a maturity
period of 18 months. The Securities were issued for the
gross proceeds of $2.7 million (£2.15 million).
According to the agreement, at any time, during the
maturity period, the Investors may convert their Securities
(in whole or in part) to 13,086,619 ordinary shares in the
Company, in aggregate, at a price of 17.96p (“Conversion
Price”), which is equivalent to 120% of the Volume
Weighted Average Price (“VWAP”) of the ordinary
shares for 9 June 2020. During the maturity period, the
Company may require the investors to convert their
securities to ordinary shares, if the VWAP on each of at
least 20 consecutive trading days shall be equal to or have
exceeded 35.92p (200% of the Conversion Price).
Should ImmuPharma raise additional funds, the Investors
may require the Company to repurchase any unconverted
Securities, to the value of up to 25% of the gross proceeds
of the financing, at 105% of face value.
Should any securities remain unconverted on 10 December
2021 the Company will repurchase, from the Investors, the
outstanding face value of the unconverted Securities.
In addition, the Investors have been granted 15,703,942
Options in the Company, which may be exercised at any
time up to 3 years, with an exercise price the same as the
Conversion Price, which, if all exercised, would amount to
$3.60 million (£2.82 million).
On 2 September 2020, as a consequence of the placement
of new ordinary shares of £6.5 million (before expenses),
pursuant to the terms of the convertible security deeds
(“CSD”) dated 10 June 2020 with each of Lind and L1:
(i) the conversion price stated in the CSD (previously
17.96p) has been adjusted downwards to the placing price
of 11p, meaning that, upon conversion in full of the CSD,
21,369,354 new ordinary shares (subject to adjustment
at the time of conversion by reference to the sterling –
US dollar exchange rate at the time) would be issued
in aggregate to L1 and Lind (compared to 13,086,619
previously); and (ii) under the terms of the option deeds,
both the option exercise price and the number of shares
subject to the options will vary. In aggregate, following
the placing, 25,640,254 ordinary shares (compared to
15,703,942 previously) will be subject to the option deeds
at an option exercise price of 11p per share.
On 3 September 2020 L1 converted in total $150,000 (plus
accrued but unpaid interest) of the convertible security.
The conversion price was 11p per share resulting in the
issue by the Company of 1,045,046 new ordinary shares of
10p each in the Company.
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ImmuPharma plc Report and Consolidated Financial Statements December 2020
Annual Review Chairman’s Report (continued)
On 9 September 2020 L1 converted in total $200,000 (plus
accrued but unpaid interest) of the convertible security.
The conversion price was 11p per share resulting in the
issue by the Company of 1,429,938 new ordinary shares of
10p each in the Company.
Interest in Incanthera plc
In September 2018, ImmuPharma signed a Heads of Terms
agreement with Incanthera Ltd (“Incanthera”) regarding
a potential collaboration on the Nucant program.
Discussions were ultimately terminated.
On 10 September 2020, Lind Global Macro Fund, LP
converted $150,000 of the convertible security issued
pursuant to the convertible security deed dated 10 June
2020. The conversion price is 11p per share resulting in the
issue by the Company of 1,026,750 new ordinary shares of
10p each in the Company.
At the same time, ImmuPharma invested £2 million to
purchase 363,637 shares at £5.50 per share in Incanthera
and received warrants for a further 363,637 shares at £5.50.
This investment represented a holding of approximately
15% in Incanthera in 2018.
On 22 September 2020, following the share placing by
ImmuPharma plc on 2 September 2020, in accordance
with the terms of the convertible security deed, Lind has
requested repayment of part of its convertible security.
The amount repaid amounted to $1,068,762.
On 23 November 2020, L1 converted in total $200,000
(plus accrued but unpaid interest) of the convertible
security. The conversion price was 11p per share resulting
in the issue by the Company of 1,430,510 new ordinary
shares of 10p each in the Company.
On 24 November 2020, Lind converted in total $355,112.50
(plus accrued but unpaid interest) of the convertible
security. The conversion price was 11p per share resulting
in the issue by the Company of 2,504,982 new ordinary
shares of 10p each in the Company. All of the convertible
security issued to Lind has now been repaid or converted.
Placement of £6.5m
On 2 September 2020 the Company announced that due
to investor demand, it had successfully raised £6.5 million,
(before expenses) via an oversubscribed placing of
59,090,909 new ordinary shares of 10p each in the
Company at a price of 11p per share.
On 26 February 2020 Incanthera entered into a Share
Exchange Agreement with its shareholders, whereby
each shareholder in Incanthera agreed to exchange
their original shares for shares in the new Company –
Incanthera Plc, resulting in the allotment of 48,564,280
ordinary shares.
On 28 February 2020, Incanthera’s shares were admitted
to trading on Aquis Stock Exchange (“AQSE”, formerly
NEX Exchange) under the ticker (TIDM: INC). Following
Admission to trading, ImmuPharma retained 7,272,740
(from 363,637 held previously, subject of 1:20 sub-division)
ordinary shares in Incanthera, representing 15% of
Incanthera’s enlarged issued ordinary share capital.
ImmuPharma also has 7,272,740 warrants options in
Incanthera plc at an exercise price of 9.5p pence, being
the price at which new shares have been issued in the
Placing accompanying Incanthera’s listing (“Issue Price”).
In addition, ImmuPharma entered into a Subscription
Agreement with Incanthera. Under the Subscription
Agreement, ImmuPharma subscribed £250,000 for
2,631,579 new Ordinary Shares in Incanthera. Following
the execution of the subscription, announced on
ImmuPharma plc Report and Consolidated Financial Statements December 2020
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Annual Review Chairman’s Report (continued)
29 September 2020, ImmuPharma held 9,904,319, new
Ordinary Shares, equating to 15.35% of Incanthera’s
enlarged share capital of 64,544,121 ordinary shares.
On the 23 March 2021 Incanthera raised £1,144,650
through the issue of 9,538,750 new placing shares. As a
result, ImmuPharma’s shareholding in Incanthera currently
stands at 13.37%. As a major shareholder ImmuPharma
remains supportive of Incanthera and its diverse
oncology pipeline.
Incanthera recently announced that a new refined
formulation of Sol, its lead product for skin cancer and
other topical indications, demonstrated statistically
significant greater dermal delivery compared with four
known oral delivery comparator products.
Grant of Share Options and Warrants
On 25 November 2020, ImmuPharma approved the grant
of options over a total of 9,625,000 ordinary shares of 10p
each in the Company (“Ordinary Shares”) to Directors,
employees and consultants representing 3.8% of
ImmuPharma’s Ordinary Shares and total voting rights.
Upon the recommendation of the Company’s
remuneration committee, the Company has granted the
Options pursuant to the Company’s Share Option Plan
which was adopted on 30 March 2017.
Current Activities and Outlook
Despite the continuing disruption of the Covid -19
pandemic, we remain focused, (in collaboration with
our partner Avion) on expediting Lupuzor™ into a new
optimised, international Phase III study in Lupus patients in
H2 2021. The most recent positive feedback from the FDA
confirms our envisaged roadmap forward.
In parallel, we continue to progress our other R&D
programs which includes our anti-fungal BioAMB therapy,
which has the potential of progressing quickly through
initial bio-equivalence trials. Discussions for potential
partnering opportunities are continuing. These initiatives
create further opportunities in the medium to long term.
In response to strong investor interest last year, we were
delighted to welcome new and returning institutional
and private investors as part of three successful capital
raisings. This has created a robust financial position with
an anticipated cash runway until the end of 2023.
As we move our key asset, Lupuzor™ into a new
international optimised Phase III trial and continue to
progress our development pipeline, the investment
thesis of ImmuPharma continues to strengthen and
we look forward to providing further value enhancing
progress updates over the next period to create long term
shareholder value for our shareholders.
The exercise price for the Options is 20p being a 54%
premium to the closing middle market share price of 13p
on 25 November 2020. The Options will vest after three
years and are exercisable between three and ten years
from the date of grant.
Finally, the Board would like to take this opportunity
to thank its shareholders, new and longstanding, for
their continued support as well as its staff, corporate
and scientific advisers and our partners including CNRS
and Avion.
On 30 March 2020, in connection with its services in
relation to the Lanstead subscription, the Company has
issued warrants over 915,205 Ordinary Shares with an
exercise price of 10 pence per share to Stanford Capital
Partners Limited (“SCP”), the Company’s broker. These
warrants have an exercise period of 10 years.
On 2 September 2020, in connection to the services
related to £6.5m placing, each of Company’s brokers;
SCP and SI Capital Limited (“SI”) received warrants over
1,213,920 of ImmuPharma’s Ordinary Shares with an
exercise price of 11p per share. These warrants have an
exercise period of 10 years.
Tim McCarthy
Non-Executive Chairman
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ImmuPharma plc Report and Consolidated Financial Statements December 2020
Annual Review Financial Review
ImmuPharma plc Report and Consolidated Financial Statements December 2020
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Financial Review
The financial results of the ImmuPharma Group in this
report cover the year ended 31 December 2020. The Group
principal activity is that of research and development of
novel drugs to treat serious medical conditions.
Income Statement
The operating loss for the year ended 31 December
2020 was £5.6 million, down from £6.3 million for the year
ended 31 December 2019. The research and development
expenditure was £2.4 million, down from £2.7 million in
2019. Covid-19 disruption to laboratory work was the
main reason for this reduction. Administrative expenses
were £1.8 million (2019: £1.8 million). The total fair value
gain of £1.5 million (2019: fair value loss of £1.3 million)
comprises of the following components: fair value gain
on Incanthera’s shares of £852k (2019: fair value loss of
£1,309k) and fair value gain on Incanthera’s warrants of
£626k (2019: £nil). This has been charged to Statement of
Comprehensive Income. Finance income has decreased
from £64k in 2019 to £41k in 2020. Finance costs amounted
to £1.7 million, up from £527k in 2019, caused largely
by the loss on the Lanstead derivative financial asset.
Total comprehensive loss for the year was £5.3 million, a
decrease from £7.0 million in 2019.
Statement of Financial Position
The Group cash and cash equivalents at 31 December
2020 amounted to £5.9 million with the increase related
to successful fundraising activities in 2020 (2019: £1.4
million). The convertible loan notes amounted to £635k
(2019: £nil), following the issue of two convertible loans
as discussed on pages 6-7. The total value of the financial
asset equated to £2.4 million, comprising of shares in
Incanthera of £1.8 million (2019: £0.7 million) and warrants
in Incanthera of £0.6 million (2019: £nil). At 31 December
2020 the Lanstead derivative financial asset amounted to
£1.2 million (2019: £2.3 million). The decrease was caused
by the increase to the share benchmark price from 13.33p
to 20p and only 9 months remaining of the June 2019
Lanstead (“the Sharing Agreement”) term.
Results
The Group recorded a loss for the year of £6.9 million
(2019: £6.1 million). Basic and diluted loss per share was
3.43p (2019: 3.99p). In accordance with the Group’s loss
making position, no dividend is proposed.
Total Voting Rights
The Company had a total of 250,221,297 ordinary shares
in issue at 31 December 2020 with each share carrying the
right of one vote.
Treasury Policy
The policy continues to be that surplus funds of the
Group are held in interest-bearing bank accounts on
short or medium maturities, until commitments to future
expenditure are made, when adequate funds are released
to enable future expenditure to be incurred. The Group’s
Treasury Policy and controls are straightforward and
approved by the Board.
Financial Strategy
The overall strategy is to maintain a tight control over
cash resources whilst enabling continued progress of the
Company’s development assets.
On behalf of the Board
Dimitri Dimitriou
Director
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ImmuPharma plc Report and Consolidated Financial Statements December 2020
Annual Review Strategic Report
ImmuPharma plc Report and Consolidated Financial Statements December 2020
11
Strategic Report
The Board of ImmuPharma present their Strategic Report
for the Group for the year ended 31 December 2020.
Vision and Values
ImmuPharma is an ethical organisation with the vision to
develop novel drugs to treat serious medical conditions,
delivering value to patients, medical professionals,
healthcare payers and our shareholders.
Business Overview and Prospects
ImmuPharma plc is a specialty biopharmaceutical
company that discovers and develops peptide-based
therapeutics, headquartered in London and listed on
both the AIM market of the London Stock Exchange
(IMM) and Euronext Growth Brussels (ALIMM). Its research
operations are in France. ImmuPharma is dedicated to the
development of novel drugs, largely based on peptide
therapeutics, to treat serious medical conditions such as
autoimmune diseases characterised by:
• high unmet medical need;
• low marketing costs; and
• relatively low development costs.
Founded first in Basel, Switzerland in 1999 and led by
an experienced management team, ImmuPharma now
has important research and development collaboration
arrangements with highly respected health and medical
research laboratories in Europe.
ImmuPharma’s strategy and risk-averse business model is
different from many of its peers, and its management team
has extensive experience in senior positions in some of the
world’s leading pharmaceutical companies.
ImmuPharma has adopted an outsourcing model
where development activities are assigned to contract
research organisations (“CROs“), maintaining low costs.
ImmuPharma continues to manage the development of
its own assets up to commercialisation, but will also seek
collaborative agreements with larger pharmaceutical
companies at an earlier stage, where viable.
ImmuPharma’s portfolio includes novel peptide
therapeutics within autoimmunity, metabolism, anti-
infectives and cancer. The lead program, Lupuzor™,
is a first-in class autophagy immunomodulator which
is in Phase III development for the treatment of lupus.
Preclinical analysis suggests therapeutic activity for
many other autoimmune diseases that share the same
autophagy mechanism of action. ImmuPharma and Avion
Pharmaceuticals LLC (“Avion“) signed on 28 November
2019, an exclusive Licence and Development Agreement
and Trademark Agreement for Lupuzor™ to fund a new
optimised international Phase III trial for Lupuzor™ and
commercialise it in the United States.
Collaboration with Centre National de la
Recherche Scientifique (CNRS)
ImmuPharma has important collaboration arrangements
with the Centre National de la Recherche Scientifique,
the French National Council for Scientific Research
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ImmuPharma plc Report and Consolidated Financial Statements December 2020
Annual Review Strategic Report (continued)
and the largest basic research organisation in Europe.
ImmuPharma also has links with the Institut National de
la Santé et de la Recherche Médicale (INSERM), France’s
national institute for health and medical research.
As part of the collaboration arrangements, ImmuPharma
has entered into a research agreement with the CNRS
which relates to the therapeutic use of peptides and
peptide derivatives. ImmuPharma has been granted the
worldwide exclusive rights to exploit all discoveries made
pursuant to this agreement and will co-own the relevant
intellectual property with the CNRS.
The CNRS has granted additional exclusive worldwide
licences to ImmuPharma covering rights to discoveries
made prior to this agreement but related to it.
Applications for additional patents, to be jointly owned by
the CNRS and ImmuPharma, have already been and are
being filed. The CNRS is entitled to a share of the revenue
generated by ImmuPharma from the exploitation of the
CNRS’ licensed and co-owned rights.
ImmuPharma plc Report and Consolidated Financial Statements December 2020
13
Annual Review Strategic Report (continued)
Business Strategy and Objectives
ImmuPharma focuses on developing pioneering and
novel drugs in specialist therapeutic areas where
there is a distinct lack of existing treatments, avoiding
primary care (diseases treated by GPs) where many
treatments exist. This is consistent with the trends in the
pharmaceutical industry.
Since our foundation, our research strategy has been
to work closely with the largest fundamental research
organisation in Europe, the CNRS in France. This
collaboration enables us to access innovative research
with substantial embedded value at a relatively low cost,
and to work with many leading scientists and doctors.
Our market strategy is to develop drug candidates to
a point where further value can be added by licensing
our assets to partners (primarily major pharmaceutical
corporations) that are well placed to further develop
and/or commercialise them. Our corporate deal with
Cephalon Pharmaceuticals in 2009 and most recently with
Avion Pharmaceuticals signed in 2019, encompassing
an exclusive Agreement for Lupuzor™, our lead drug
candidate for the treatment of lupus, to fund a new
international Phase III trial and commercialise in the US,
are successful examples of this strategy in action.
ImmuPharma’s principal business objective is to
enhance shareholder value through the development
and commercialisation of novel drugs. Its strategies for
achieving this objective include:
• pursuing a low cost model of accessing world class
research through our collaboration with the CNRS in
France;
• selecting specialist therapeutic areas where there are
high unmet needs;
• managing the clinical development of novel drug
candidates;
• seeking collaborative agreements with partner
companies to further the development and
commercialisation of novel drug candidates; and
• maintaining a small corporate infrastructure to
minimise costs.
14
ImmuPharma plc Report and Consolidated Financial Statements December 2020
Annual Review Strategic Report (continued)
Pipeline Overview
ImmuPharma currently has four therapy areas covering:
• Autoimmunity
• Metabolism
• Anti-Infectives
• Cancer
Each of these programs and respective drug candidates,
many being novel peptide therapeutics, are proprietary
and represent a novel approach to therapy. The Company
believes each has significant commercial potential if
successfully developed.
ImmuPharma plc Report and Consolidated Financial Statements December 2020
15
Annual Review Strategic Report (continued)
Product Pipeline
Autoimmunity / Lupuzor™ for Lupus and CIDP
ImmuPharma’s lead product candidate, Lupuzor™,
also known by its scientific name Forigerimod / ’P140’,
targets lupus, an autoimmune disease for which there is
currently no cure or specific treatment. Lupuzor™ was
successfully licensed to US Cephalon Pharmaceuticals in
February 2009, in which ImmuPharma received upfront
payments totalling US$45 million, with a US$500 million
cash milestone payment structure plus high royalties
on future sales. In late 2011, following the acquisition
of Cephalon by Teva Pharmaceuticals, ImmuPharma
regained all product rights to Lupuzor™. On 28 November
2019, ImmuPharma and Avion Pharmaceuticals signed an
exclusive trademark, licence and development agreement
for Lupuzor™ to fund a new optimised international
Phase III trial for Lupuzor™ and commercialise in the US.
Avion will fund the Phase III trial and pay ImmuPharma
milestones and tiered double-digit royalties. Current
guidance is that the Phase III trial will commence in
H2 2021.
Lupus (frequently manifested as Systemic Lupus
Erythematosus or SLE) is a chronic, life-threatening
autoimmune, inflammatory disease with a pattern of
flares and remission. Lupus can affect multiple organs
such as skin, joints, kidneys, blood cells, heart and lungs.
It can appear in a multitude of forms, making diagnosis
difficult with patients presenting to several different
specialists (mainly dermatologists, rheumatologists and
nephrologists). Awareness of the disease has steadily
increased in recent years and should continue to do so
due to well-organised patient groups and increased
research and development activity into new treatments.
New diagnostic tools are now in place and are increasingly
used by physicians, which coupled with greater awareness,
should lead to an increase in diagnosis rates.
There are an estimated five million people globally
suffering from lupus, with approximately 1.5 million
patients in the US, Europe and Japan (source: Lupus
Foundation of America). Current ’standard of care’
treatments, including steroids and immunosuppressants,
can potentially have either serious side effects for patients
or limited effectiveness, with over 60% of patients not
adequately treated. GlaxoSmithKline’s Benlysta is the
first lupus drug approved in over 50 years and paves the
path to market for Lupuzor™. Based on conservative
estimates, and taking into account that Benlysta is priced
currently at approximately US$35k per patient per year,
Lupuzor™ would be entering a market with the potential
for multi-billion sales. Most recently, on 22 January 2021
FDA approved Aurinia Pharmaceutical’s Voclosporin
(Lupkynis™). According to Aurinia’s predictions,
Voclosporin expected average annualised net revenue per
patient is US$65k, with potential peak annual U.S. net sales
of greater than $1 billion.
ImmuPharma believes that Lupuzor™, which was invented
by Professor Sylviane Muller, previous Chair of Therapeutic
Immunology at the CNRS, has the potential to be a novel
specific first-line drug therapy for the treatment of lupus
16
ImmuPharma plc Report and Consolidated Financial Statements December 2020
Annual Review Strategic Report (continued)
Strategic Report (continued)
Product Pipeline (continued)
Product Pipeline
by specifically modulating the immune system and halting
disease progression in a substantial proportion of patients.
Lupuzor™, taken over the long term, is intended to
prevent the progression of lupus rather than just treating
its symptoms. Lupuzor™ has a unique mechanism of
action that modulates the activity of CD4 T cells which
are involved in the cell-mediated immune response
which leads to the lupus disease. The Company has
demonstrated that Lupuzor™ could leave the rest of the
immune system working normally.
Lupuzor™ successfully completed Phase IIb clinical trials
demonstrating a response rate of 65% after 3 months
treatment and has also completed a Phase III clinical
trial. Lupuzor™ was given a Special Protocol Assessment
(SPA) from the US Food and Drug Administration (FDA)
to conduct Phase III trials with Fast Track Designation. In
2015, ImmuPharma signed an agreement with Simbec-
Orion to complete a pivotal Phase III clinical study of
Lupuzor™. Simbec-Orion is a full service international
Clinical Research Organisation (CRO) specialising in rare
and orphan conditions and has previous direct experience
of lupus trials.
The Phase III trial was a double-blind, randomised,
placebo-controlled trial. The study involved patients being
dosed for one year, receiving 0.2mg once every month
subcutaneously. 293 patients were screened illustrating
the demand from physicians for a new, safe and effective
treatment for lupus. Of these, the required 202 patients
were successfully recruited and randomised (dosed).
Patients participated in the trial in seven countries across
28 sites. The dosing of patients was completed in January
2018 and top line results announced in April 2018.
Chronic Inflammatory Demyelinating
Polyneuropathy (“CIDP“)
Outside of lupus the unique mechanism of action of
Lupuzor™ (also known as Forigerimod or P140) has
demonstrated in a number of pre-clinical trials that
it has the potential to also be effective within other
auto-immune diseases. One disease of key interest
to ImmuPharma’s team is Chronic Inflammatory
Demyelinating Polyneuropathy (“CIDP“) where compelling
pre-clinical data* has been generated. CIDP could
potentially be granted ’Orphan Drug Designation’ due
to the unmet clinical need and with around 50,000 to
100,000 confirmed cases in the US and Europe, which
would provide a fast approval process. The sales potential
however could be greater than $500 million annually, with
currently no effective approved drug on the market.
ImmuPharma is planning to commence a Proof of Concept
study in CIDP patients based on the strong data already
gained within the Company’s lupus dossier.
*Results were published in 2018 in the ’Journal of
Autoimmunity’ entitled: “An autophagy-targeting
peptide to treat chronic inflammatory demyelinating
polyneuropathies“.
ImmuPharma plc Report and Consolidated Financial Statements December 2020
17
Annual Review Strategic Report (continued)
Strategic Report (continued)
Product Pipeline (continued)
Product Pipeline
Anti-Infectives
There is growing resistance to antibiotics and antifungal
agents, and more recently, the Covid-19 outbreak has
highlighted mankind’s unpreparedness and susceptibility
to more aggressive infectious microorganisms, not only
from a health perspective but also from an economic and
social impact. Surviving cancer and other fatal diseases
is undoubtedly vital but without sufficient ammunition
against bugs (viral, fungal or bacterial) we survive to face a
bigger problem.
The World Health Organisation has stated that resistance
to antibiotics is one of the biggest threats to global health,
costs and mortality. Pandemic disease events could cost
the global economy over $6 trillion in the 21st century
(National Academy of Medicine: 2016).
It is worth to note that clinical trials within anti-infectives
therapy area are generally much shorter than for chronic
diseases, so this is an attractive therapy area for speed to
market and lower cost of trials.
Antiviral opportunity
Within anti-viral, we have been investigating the
application of the Ureka peptide technologies, which
suggests the potential to create effective anti-fusion
peptides with the goal to prevent virus entry into the host
cells, which may lead to novel peptide based anti-viral
therapies. Further exploratory work continues on this
program.
Anti-fungal opportunity / ’BioAMB’
ImmuPharma has developed BioAMB, a novel peptide-
based drug that offers a potential improvement on
Amphotericin-B (“AMB“). AMB is one of the few effective
treatments for many serious and life threatening fungal
infections such as aspergillosis (lung infection). However,
the leading AMB, ’Ambisome’ is known to cause serious
kidney toxicity in 14-15% of patients. ImmuPharma’s
BioAMB’s target profile has a superior safety aand
tolerability profile to Ambisome. Sales of Ambisome in
2020 were $436 million. The next step is lead candidate
optimisation.
Metabolism & Urelix™ technology
ImmuPharma continues the development of its novel and
innovative peptide technology platform ’UrelixTM’, through
its collaboration with the CNRS, thereby gaining access
to pioneering research centred on novel peptide drugs at
the University of Bordeaux and the Institut Européen de
Chimie et Biologie (IECB).
The peptide technology platform ’Urelix™’ has the ability
to mimic protein structures, allowing for the preservation
(or enhancement) of function while significantly increasing
protein stability. Jointly, ImmuPharma and the CNRS have
filed a new co-owned patent controlling this breakthrough
peptide technology.
18
ImmuPharma plc Report and Consolidated Financial Statements December 2020
Annual Review Strategic Report (continued)
Strategic Report (continued)
Product Pipeline (continued)
Product Pipeline
The first therapeutic area being targeted is diabetes
with glucagon-like peptide -1 agonists, a class of drugs
for the treatment of diabetes, as well as initiating the
development of novel peptides as glucagon antagonists
- one of the novel approaches to treat Type I and Type
II diabetes. ImmuPharma has received a non-refundable
grant of approximately €400,000 to develop this
technology.
Metabolism | ’BioGlucagon’
ImmuPharma has developed a new product, BioGlucagon,
as a potential new rescue therapy for low sugar events in
diabetes. Existing glucagon products have poor solubility
and are inconvenient with variable dosing due to poor
solubility creating risks for patients. BioGlucagon has 100%
solubility, can be formulated in pre-filled syringe pens and
could be used in insulin pumps. Partnering discussions will
now progress.
Cancer | (IPP-204106)
The Nucant cancer platform (IPP-204106) is a specific
family of peptides designed to modulate angiogenesis
with application in cancer (modifying the blood supply to
the tumour) and ophthalmology (promising results were
shown in models of age-related macular degeneration).
The rights for this compound have been obtained through
the Group’s ongoing research collaboration with the
CNRS.
Our cancer Nucant program, IPP-204106, is focused on
combination therapy approaches and seems to act as
a potentiating agent increasing the efficacy of cancer
drugs such as cytotoxics by normalising the abnormal and
protective vasculature of the tumour and thereby enabling
the entry of cancer agents.
In November 2016, ImmuPharma announced that Cancer
Research, the prestigious medical journal of the American
Association for Cancer Research (“AACR“), published
a fundamental scientific paper highlighting the unique
mechanism of action of IPP-204106. The publication was
entitled “Nucleolin targeting impairs the progression
of pancreatic cancer and promotes the normalisation of
tumour vasculature“ and was authored by a number of
researchers working with ImmuPharma. The key findings
of the study for this compound (referred to in the paper as
N6L) were:
• Nucleolin inhibition is a new anti-cancer therapeutic
strategy that has been shown to dually normalise
tumour vasculature and reduce its volume.
• As a result, it has the potential to dramatically improve
the delivery and efficacy of existing chemotherapeutic
drugs, in particular those for difficult-to-treat tumours
such as pancreatic cancer.
The Group has also been awarded grants to investigate
its use in age-related macular degeneration, diabetic
retinopathy and other ophthalmological indications.
ImmuPharma plc Report and Consolidated Financial Statements December 2020
19
Annual Review Strategic Report (continued)
Review of Group Activity
As a drug development company, ImmuPharma does
not currently have steady revenues. Its primary focus is to
develop drug candidates sufficiently to attract a license
partner to further develop and commercialise them.
Therefore, at present ImmuPharma is still incurring a loss
and for the year ended 31 December 2020 the overall loss
equated to £6.9 million (2019: £6.1 million). During 2020,
research and development expenditure was £2.4 million
(2019: £2.7 million). The R&D decrease was in line with
expectation, caused by Covid -19 disruptions.
For the year ended 31 December 2020, ImmuPharma
recorded the fair value gain of £1.5 million, which has been
recognised through Other Comprehensive Income (2019:
Fair value loss of £1.3 million). The fair value of gain related
to the investment in Incanthera plc, which equated to £2.4
million at the year end (2019: £0.7 million), comprising of
£1.8 million (2019: £0.7 million) Incanthera plc shares value
and £0.6 million (2019: £nil) of warrants value.
At 31 December 2020, the Group’s cash reserves have
increased to £5.9 million (2019: £1.4 million). This was
primarily due to the successful placements and convertible
loan notes receipts. Two convertible loans as discussed
on pages 6-7, resulted in the Convertible loan liability
amounting to £0.6 million at the year end (2019: £Nil).
Key Performance Indicators
ImmuPharma is a drug discovery and development
group. In keeping with organisations at a similar stage of
development in the pharmaceutical and biotechnology
sector, ImmuPharma’s main activity involves incurring
research and development expenditure. The overall
strategy is to maintain a tight control over cash resources
whilst enabling controlled development of the potential
product portfolio.
Going Concern
The Company and Group do not generate any cash
revenues as its pipeline products are currently at research
and development stage and therefore are reliant on
external finance in order to fund its operation. As set out
in the Chairman’s Report, in 2020 the Company secured a
total of £8 million gross proceeds from issue of new share
capital and $2.7 million (c. £2.15 million) gross proceeds
from issue of convertible loan notes.
The directors have prepared cashflow forecasts covering
a period of more than 12 months from the date of
approval of these financial statements. These forecasts
include several assumptions, including expected variable
cash receipts under the Lanstead Sharing Agreement
and repayment of the convertible loan notes. Sensitivity
analysis have been performed on the key uncertainties
(future share price and repayment of the convertible loan)
indicating that both the Company and Group will have
sufficient funds to meet their liabilities as they fall due.
As a result, the directors have prepared these financial
statements on the going concern basis.
20
ImmuPharma plc Report and Consolidated Financial Statements December 2020
Annual Review Strategic Report (continued)
Review of Group Activity (continued)
Key objectives and performance
Objective
Key progress during the period
Successfully find a suitable partner(s) for
and/or sufficient funding for the clinical
development of Lupuzor™
• Exclusive US license and commercial partnership with “Avion“ to fund a new
optimised Phase III clinical trial for Lupuzor™ for up to $25 million with up
to $70 million milestone payments and tiered double - digit royalties on US
sales.
• ImmuPharma’s partner, Avion has had a number of progressive discussions
with the FDA over 2020 culminating in a Type ’A’ meeting on 4 December
2020.
• Based on the positive guidance and feedback from FDA, it was confirmed
that there is now a clear regulatory pathway to commence the Phase III trial in
H2 2021. As part of this feedback, Avion and ImmuPharma will develop and
validate a bioanalytical assay in order to confirm the unique pharmacokinetic
profile of Lupuzor™, prior to the commencement of the Phase III study.
Develop potential product portfolio
• Collaboration with the European Institute of Chemistry and Biology at the
University of Bordeaux continues to develop the Group’s peptide technology
platform.
• Merger of Elro (Nucant) and Ureka (Peptide Platform) into a stronger
combined company, Ureka Pharma SAS, overseeing development of 3
programs: metabolism, anti-infectives (including anti-viral and anti-fungal)
and cancer.
Maintain strong cash position
• Consolidated cash balance at 31 December 2020 was £5.9 million.
• Ongoing subscriptions agreement with “Lanstead“. First in June 2019
securing approximately £2.66 million over 24 months. Second subscription in
March 2020 securing approximately £1.3 million over 24 months.
• £200k subscription from Dr Robert Zimmer, (Director) through “Luca
Associates“.
• Convertible loan proceeds of £2.15 million (gross)
• Shares placement of £6.5 million (gross)
• Continued tight financial control to ensure effective overall expenditure.
ImmuPharma plc Report and Consolidated Financial Statements December 2020
21
Annual Review Strategic Report (continued)
Review of Group Activity (continued)
Directors duties in relation to s172 Companies
Act 2006
The directors consider, that they have acted in the way
they believe, in good faith, to promote the success of the
Company for the benefit of its members as a whole and, in
doing so, have regard (amongst other matters) to:
• the likely consequences of any decisions in the long-
term,
• the interests of the Company’s employees,
• the need to foster the Company’s business
relationships with suppliers, customers and others,
• the impact of the Company’s operations on the
community and environment,
• the desirability of the Company maintaining a
reputation for high standards of business conduct, and
• the need to act fairly between the shareholders of the
Company.
Long term value
The aim of all business resources allocation is to
create a long-term value, being a development and
commercialisation of novel drugs.
Our people
Being a small group with only on average 18 employees
(including Executive Directors), there is a high level of
visibility between Board and employees. For further
details, please see pages 28-30.
Business relationships
The Board is aware of the importance of maintaining good
relationship with its key suppliers whilst safeguarding its
resources. For further details, please see pages 40-41 for
stakeholder engagement.
Community and environment
The Board seeks to support as many interactions with
research and development community as possible through
regular meetings and continuous collaborations. For further
details, please see pages 40-41 for stakeholder engagement.
Shareholders
One of our major Shareholders is represented on our
Board, providing regular feedback on Shareholder views
on events and decisions. Shareholder communication
is conducted via press releases or annual and interim
reports on a timely manner. For further details, please see
pages 40-41 for stakeholder engagement.
Principal Risks and Uncertainties
ImmuPharma operates within a complex business
environment and an industry that is fundamentally driven
by regulatory processes. A robust understanding of the
risks and uncertainties involved in a pharmaceutical drug
development business is fundamental to ImmuPharma’s
success. The Board regularly considers these principal risks
and uncertainties and reviews its strategies for minimising
any adverse impact to the Company or its investors.
The principal risks and uncertainties have been grouped
into three categories: pharmaceutical environment,
financial and operational. The table below does not
illustrate the list of all risks faced by ImmuPharma.
22
ImmuPharma plc Report and Consolidated Financial Statements December 2020
Annual Review Strategic Report (continued)
Principal Risks and Uncertainties
Pharmaceutical Environment Risks
Drug Development
Mitigating factors
Change in year
If the clinical trials of any of ImmuPharma’s drug candidates
fail, that drug candidate will not be marketed, which would
result in a complete absence of revenue from the failed
product. The drug development process and achievement of
regulatory approvals is complex and uncertain. Because of the
cost and duration of clinical trials, the directors may decide to
discontinue development of drug candidates that are either
unlikely to show good results in the trials or unlikely to help
advance a product to the point of a meaningful collaboration.
Positive results from pre-clinical studies and early clinical trials
do not ensure positive results in clinical trials designed to permit
application for regulatory approval.
ImmuPharma’s management team
have many years of experience in
drug development and a robust
understanding of the clinical trial
design process. This experience
should help ensure that such
risks are minimised. In addition,
ImmuPharma has established
scientific advisors and an advisory
board in the case of LupuzorTM.
Failure to Protect Products
Mitigating factors
Change in year
Since its inception, ImmuPharma
has developed a significant patent
portfolio. By utilising reputable
external advisers, the Company
mitigates the risk of patent
infringement.
The commercial success of ImmuPharma depends upon its
ability to obtain patent protection for its products globally. No
assurance is given that ImmuPharma will develop products
that are patentable, or that patents will be sufficiently broad
in their scope to provide protection for ImmuPharma’s
intellectual property rights and exclude competitors with similar
technology. Competitors may obtain patents that may relate to
products competitive with those of ImmuPharma. If this is the
case then ImmuPharma may have to obtain appropriate licences
under these patents or cease and/or alter certain activities
or processes, or develop or obtain alternative technology.
There can be no assurance that, if any licences are required,
ImmuPharma will be able to obtain any of them on commercially
favourable terms, if at all.
Regulatory Framework
Mitigating factors
Change in year
Changes in government regulations or enforcement policies
could impose more stringent requirements on ImmuPharma,
compliance with which could adversely affect its business.
Failure to comply with applicable regulatory requirements could
result in enforcement action, including withdrawal of marketing
authorisation, injunction, seizure of products and liability for civil
and/or criminal penalties.
It is essential that ImmuPharma
complies with all regulatory
requirements and it continually
monitors regulatory developments
to ensure that any issues are
factored into decision making
and projected timelines. External
advice is sought after for new
legislation or where resources are
not available internally.
Environmental Hazards
Mitigating factors
Change in year
ImmuPharma and its third party contractors are subject to
laws, regulations and policies relating to environmental
protection, disposal of hazardous or potentially hazardous
substances, healthy and safe working conditions, manufacturing
practices and fire hazard control. There can be no assurance
that ImmuPharma or its collaborators will not be required to
incur significant costs to comply with future laws, regulations
and policies relating to these or similar matters. The risk of
accidental contamination or injury from certain materials cannot
be eliminated. In the event of such an accident, ImmuPharma
could be held liable for any damage that results and any such
liability could exceed its resources.
ImmuPharma works with reputable
third party organisations that
provide assurance regarding their
working practices and conditions.
In addition, the Group maintains
corporate insurance to mitigate
this risk.
ImmuPharma plc Report and Consolidated Financial Statements December 2020
23
Annual Review Strategic Report (continued)
Principal Risks and Uncertainties (continued)
Financial Risks
Availibility of Finance
As ImmuPharma is not yet at the stage of generating profit, it
relies on external funding to develop its programs. It could be
several years, if ever, before ImmuPharma receives royalties from
any future licence agreements or revenues directly from product
sales. If ImmuPharma fails to obtain additional financing, it may
be unable to complete the development and commercialisation
of its drug candidates or continue its research and development
programmes.
Operational Risks
Political and Economic Disruption
ImmuPharma faces risk of a change in a political and economic
landscape. Despite the favourable prospects of funding within
industry after the outbreak of COVID-19, there is a global
economic recession as the aftermath of it.
Mitigating factors
Change in year
The Board remains focus
on ensuring it has sufficient
capital funds to progress its
product portfolio. ImmuPharma
successfully completed a number
of equity raisings during the year,
the most significant being the
£6.5m (gross) raised in September
2020. Additionally, it has a good
oversight on all major cash
expenditures, including internal
cash forecasting and quarterly
reporting.
Mitigating factors
Change in year
ImmuPharma manages the risk
of global unfavourable events
by proactive monitoring of its
impact on the strategy. With Brexit
process now being implemented,
the Board is continuously
assessing its implications.
Reliance on Third Parties
Mitigating factors
Change in year
ImmuPharma relies heavily upon other parties (including clinical
research organisations) for many important stages of its drug
development programmes, including execution of some pre-
clinical studies and later-stage development for its compounds
and drug candidates, management of its clinical trials, including
medical monitoring and data management, management of its
regulatory function, and manufacturing, sales, marketing and
distribution of its drug candidates. Underperformance by any
of these other parties could adversely impact the Company’s
ability to operate effectively.
ImmuPharma works with
respected third party
organisations and regularly
monitors their performance.
Reliance on Key Personnel
Mitigating factors
Change in year
ImmuPharma is dependent on the principal members of its
management and scientific staff. Recruiting and retaining
qualified personnel, consultants and advisers will be important
to its success. There can be no assurance that ImmuPharma
will be able to recruit the new staff or retain its personnel on
acceptable terms given the competition for such personnel
from competing businesses. The loss of service of any of
ImmuPharma’s personnel could impede the achievement of its
objectives.
The Board actively considers
succession planning for its key
roles. The share option scheme
available to ImmuPharma’s
employees alongside with training
and development opportunities
strengthen staff retention. The
Group’s virtual organisation
structure has gained an increased
popularity and as a consequence
it made an attractive employment
proposition.
24
ImmuPharma plc Report and Consolidated Financial Statements December 2020
Annual Review Strategic Report (continued)
Principal Risks and Uncertainties (continued)
Competition
Mitigating factors
Change in year
ImmuPharma’s competitors include amongst others, major
pharmaceutical, biotechnology and healthcare companies with
substantially greater resources than those of the Group. The
areas in which ImmuPharma has chosen to conduct its research
and development are attractive areas to all its competitors.
There is no assurance that competitors will not succeed in
developing products that are more effective or economical than
those being developed by ImmuPharma or which would render
its products obsolete and/or otherwise uncompetitive.
The Group remains aware of the
continually evolving competitive
landscape of the therapeutic areas
in which it operates. It’s expected
that the level of competitive risk
will continue to be significant.
This awareness is factored into its
decision making for its pipeline
programs.
Furthermore, there is no guarantee that the drug candidates
being developed by ImmuPharma have either a better safety
profile, dosing profile and/or efficacy profile than products that
are already marketed by its competitors and this may adversely
affect the sales of any new products.
Covid-19
Mitigating factors
Change in year
The COVID-19 outbreak has impacted ImmuPharma’s
operations throughout the financial year. As other organisations
within life science sector, we are prone to experience the
following disruptions:
• delays in the timing of any action by the FDA;
• delays of regulatory review process, due to staffing issues;
• delays or difficulties in enrolling patients in our clinical trials;
• difficulties in recruiting clinical site staff;
• diversion of healthcare resources and hospitals serving as our
clinical trial sites;
• limitations in employee resources that would otherwise
be focused on the conduct of our clinical trials, because
of sickness of employees / their families or the desire of
employees to avoid contact with large groups of people;
• interruption of key clinical trial activities, such as clinical trial
site monitoring, because of limitations of travel.
The Group actively assesses its
contingency planning, including
securing cash reserves to cover
potential delays of clinical trials
up to a period of c. 3 years,
expanding its product pipeline
into anti-infective therapies, where
there are potential partnering
opportunities and remote working
of administrative personnel.
It is also important to note that the
Phase III trial for ImmuPharma’s
lead program, Lupuzor™ is
being fully funded, up to $25
million, by its US partner, Avion
Pharmaceuticals.
ImmuPharma plc Report and Consolidated Financial Statements December 2020
25
Annual Review Strategic Report (continued)
Forward-Looking Statements
This document contains certain statements that are not
historical facts and may be forward-looking statements
that are subject to a variety of risks and uncertainties.
There are a number of important factors that could cause
actual results to differ materially from those projected or
suggested in any forward-looking statement made herein.
These factors include, but are not limited to: (i)
ImmuPharma’s and/or ImmuPharma’s partners’
ability to successfully complete product research
and development, including pre-clinical and clinical
studies and commercialisation; (ii) ImmuPharma’s
and/or ImmuPharma’s partners’ ability to obtain
required governmental approvals, including product
and patent approvals, the impact of pharmaceutical
industry regulation, the difficulty of predicting FDA and
other regulatory authority approvals, the regulatory
environment and changes in the health policies and
structure of various countries; (iii) the acceptance and
demand for new pharmaceutical products and new
discovery-enabling technologies such as the use of cells
and (iv) ImmuPharma’s ability to attract and/or maintain
manufacturing, sales, distribution and marketing partners;
and (v) ImmuPharma’s and/or ImmuPharma’s partners’
ability to develop and commercialise products before its
competitors and the impact of competitive products and
pricing, the availability and pricing of ingredients used
in the manufacture of products, uncertainties regarding
market acceptance of innovative products newly launched,
currently being sold or in development. In addition,
significant fluctuations in financial results may occur as a
result of the timing of milestone payments and the timing
of costs and expenses related to ImmuPharma’s research
and development programme.
Without limiting the generality of the foregoing, no
assurance is given as to when ImmuPharma’s products
will be launched or licensed, or whether that launch or
licensing will be commercially successful, and words
such as “may“, “will“, “to“, “expect“, “plan“, “believe“,
“anticipate“, “intend“, “could“, “would“, “estimate“ or
“continue“ or the negative or other variations thereof or
comparable terminology is intended to identify forward-
looking statements.
If one or more of these risks or uncertainties materialises,
or if underlying assumptions prove incorrect, the
Group’s actual results may vary materially from those
expected, estimated or projected. Given these risks and
uncertainties, potential investors should not place any
reliance on forward-looking statements.
Neither the directors nor the Company undertake any
obligation to update forward-looking statements or
risk factors other than as required by AIM and Euronext
Growth Brussels Rules or by applicable law, whether as a
result of new information, future events or otherwise.
Tim McCarthy
Signed on behalf of the Board of ImmuPharma Plc
28 April 2021
26
ImmuPharma plc Report and Consolidated Financial Statements December 2020
Annual Review Board of Directors
ImmuPharma plc Report and Consolidated Financial Statements December 2020
27
Board of Directors
Tim McCarthy, FCCA, MBA
Non-Executive Chairman
Dr Robert Zimmer, MD, PhD
President and Chief Scientific Officer
Mr McCarthy has over 40 years’ international experience
in high growth biotech, healthcare and technology
companies. He is also Chairman of Incanthera plc and
4basebio UK Societas. Mr McCarthy is also the former
Chief Executive Officer and Finance Director of a number
UK listed public and private companies, including Alizyme
plc and Peptide Therapeutics Group plc, and has a core
understanding of AIM and its regulatory processes.
Co-founding a number of healthcare and biotechnology
companies, Mr McCarthy has raised substantial amounts of
equity capital and also advised and worked at Board level
for a diverse range of companies internationally, in areas
such as business strategy, mergers & acquisitions, due
diligence and licensing.
Dr Robert Zimmer was the CEO and founder of
ImmuPharma’s operations in Switzerland and France. He
is a physician and obtained his MD at Strasbourg Medical
School and his PhD at the University of Aix-Marseille.
He became a department director at the “Fondation de
Recherche en Hormonologie” in Paris. He began his career
in the industry in 1985 in Roche’s headquarters in Basel,
Switzerland responsible for numerous clinical studies. He
was a director and head of R&D at SkyePharma plc. He was
instrumental in the development of a substantial number of
products for companies including Roche, GlaxoSmithKline,
Abbott, Searle, Sanofi -Aventis and Lilly; some of which
reached the market, such as Paxil CR (GSK), Xatral LP
(Sanofi) and Madopar CR (Roche).
Dimitri Dimitriou, MSc
Chief Executive Officer
Dr Franco Di Muzio
Non-Executive Director
Mr Dimitriou has over 30 years’ experience in the
pharmaceutical and biotech industry. He was Senior
Director, Worldwide Business Development at
GlaxoSmithKline, where his responsibilities included
corporate deals with pharmaceutical and biotech
companies on a worldwide basis. He is also the founder
and CEO of DyoDelta Biosciences Ltd, a company
specialising in transactions between pharma and biotech
companies. His other past positions included Senior
Director of Business Development in Europe for Bristol-
Myers Squibb, and a number of managerial positions in the
pharmaceutical division of Procter & Gamble and marketing
at Novartis. He received his first degree in Biochemistry
from King’s College prior to graduating in Pathology &
Toxicology from the Royal Postgraduate Medical School
(now Imperial College Medical School) in London in 1984.
Dr Di Muzio has over 40 years’ experience in the
pharmaceutical and other industries, encompassing
international management experience in business
development, strategic marketing, international finance,
M&A and re-engineering businesses. After graduating
in Economics and Business in 1963, Dr Di Muzio worked
for Colgate Palmolive and Nestle before joining Squibb
(now Bristol Myers Squibb) for 18 years. He then became
Executive Vice President of BMS’ medical equipment and
products division, Weck International Inc., in charge of
Europe, Asia, Middle East and Africa. In 1990, he joined
Glaxo Wellcome plc (now GlaxoSmithKline plc) in London
as Area Managing Director and Head of all GW’s business
in the Middle East, Africa and Turkey. Following early
retirement from GW, in the beginning of 1998, he joined
Alza International, the then world leader in drug delivery
systems, as Managing Director, based in London, in charge
of the Company’s business expansion in all markets outside
of the US and remained there until the end of 2000.
28
ImmuPharma plc Report and Consolidated Financial Statements December 2020
Annual Review Board of Directors (continued)
ImmuPharma plc Report and Consolidated Financial Statements December 2020
29
Board of Directors (continued)
Board of Directors
Dr Stephane Mery, DVM, MBA
Non-Executive Director
Dr Stéphane Méry has extensive experience in the
Healthcare industry. He is currently CEO of Contronics
Ltd, which designs and sells laboratory monitoring
equipment, and until recently he was Partner at Beringea
LLP, a US$400m US/UK venture capital fund, where he
was responsible for healthcare investments in Europe.
Previously, he was the Fund Manager/CEO of the
Bloomsbury Bioseed Fund, a Biotech and Medtech
investment fund, which was behind the birth of successful
companies such as Spirogen (sold to MedImmune),
Abzema (listed on AIM), and Canbex, (recently sold to
Ipsen). Prior to this, Stéphane was Associate Director,
Worldwide Business Development, for GlaxoSmithKline
(GSK) where he was responsible for the negotiation of
several major in-license deals and acquisitions. Before
GSK, he was involved in the start-up of Double Helix
Development, a successful strategic consultancy company
specialising in R&D for the biotech and healthcare industry
and recently sold to McCann. Before this he worked as
a management consultant at the American consultancy
firm, ZS Associates, specialising on sales and marketing
within the pharmaceutical industry. Stéphane is a Doctor
in Veterinary Medicine, a trained Veterinary Pathologist,
specialising in Nasal Toxicology at the Chemical Industry
Institute of Toxicology (CIIT) in North Carolina, and holds an
MBA from INSEAD (Fontainebleau).
Management Team
Dr Tim Franklin, PhD, MBA
Chief Operating Officer
Dr Franklin has 30 years’ experience in the
biopharmaceutical industry. He worked in clinical research,
sales & marketing, and global strategic marketing for
Warner Lambert, Wellcome and SmithKline Beecham.
He later moved to the capital markets where he became
a top-ranked pharmaceuticals analyst at Dresdner
Kleinwort investment bank. He applied his experience to
stock selection at hedge funds and advised several small
biotechnology companies on corporate and commercial
strategy and access to capital. He holds a BSc in Medicinal
Chemistry and a PhD in Pharmacology from Loughborough
University and an MBA from Warwick Business School.
Company Secretary
Tracy Weimar, BA, MBA
Vice President, Operations and Finance
Ms. Weimar stepped down from her roles in April 2020.
Orana Corporate LLP “Orana”
On 29 April 2020 ImmuPharma appointed “Orana” as
a Company Secretary. “Orana” is a boutique corporate
advisory and service practice. Their team consists
of Chartered Accountants and Corporate Finance
professionals (FINSIA), all of whom have extensive
experience dealing with quoted and private companies
operating in variety sectors and jurisdictions. Orana
stepped down from its role in January 2021.
Ewa Flynn, FCCA
Financial Controller
Ewa Flynn held several lead financial positions in various
listed and private companies, including online retailers,
notably within the Amazon Group. Ewa has been an ACCA
qualified Chartered Accountant since 2015 and holds an
M.A. in International Relations from Jagiellonian University
in Cracow. She was appointed as Company Secretary on 15
January 2021.
Lisa Baderoon
Head of Investor Relations
Lisa has spent over 25 years working within the City of
London being involved with a diverse portfolio of clients
from a variety of sectors but with a leaning towards
emerging, high growth businesses advising both private
and public companies on their financial and corporate
strategies aligned to stakeholder and investor interests, as
well as a strong acumen in media communication. During
this time, she has been involved in a multitude of client
transactions spanning private fund raisings, Initial Public
Offerings (IPOs), secondary high profile capital raisings and
mergers and acquisitions both in the UK and internationally.
30
ImmuPharma plc Report and Consolidated Financial Statements December 2020
Annual Review Scientific Collaborators
ImmuPharma plc Report and Consolidated Financial Statements December 2020
31
Scientific Collaborators
Dr Gilles Guichard, PhD
Co-founder of ImmuPharma France SA
Dr Jean-Paul Briand, PhD
Co-founder of ImmuPharma France SA
Dr Guichard is senior researcher in the chimie et
immunologie des peptides-medicaments unit of the Centre
National de la Recherche Scientifique, France’s scientific
research institution and is co-inventor of the heterocyclic
ureas and oligoureas chemistry. He leads various research
groups in the field of chemistry and peptide mimicry
including one dedicated to the development and process
improvement of the heterocyclic urea library. He received
the CNRS bronze award for the excellence of his research
activities and has made eight patented discoveries.
Dr Briand is Research Director of the immunologie et chimie
therapeutiques unit of the Centre National de la Recherche
Scientifique, France’s scientific research institution, and
co-inventor of the heterocyclic ureas and oligoureas
chemistry. He has extensive industry experience in peptide
chemistry and synthesis in Peninsula, USA and was also a
founder of NeoMPS, a leading peptide development and
manufacturing company.
32
ImmuPharma plc Report and Consolidated Financial Statements December 2020
Annual Review Financial and Corporate Information
ImmuPharma plc Report and Consolidated Financial Statements December 2020
33
Officers and Professional Advisers
Directors
Mr Tim McCarthy – Non-Executive Chairman
Mr Dimitri Dimitriou – Chief Executive Officer
Dr Robert Henri Zimmer – President and
Chief Scientific Officer
Dr Franco Di Muzio – Senior Non-Executive Director
Dr Stephane Mery - Non-Executive Director
Secretary
Ewa Flynn
Investor Relations
Lisa Baderoon
Registered Office
1 Bartholomew Close
London EC1A 7BL
Nominated Adviser
SPARK Advisory Partners Limited
5 St John’s Lane
London EC1M 4BH
Joint Broker
Stanford Capital Partners
15-17 Eldon Street
London EC2M 7LD
Joint Broker
SI Capital
46 Bridge Street
Godalming
Surrey GU7 1HL
Auditors
Nexia Smith & Williamson
Chartered Accountants
25 Moorgate
London EC2R 6AY
Solicitors
BDB Pitmans
50 Broadway
London SW1H 0BL
Principal Bankers
Royal Bank of Scotland plc
62/63 Threadneedle Street
London EC2R 8LA
Registrars
Computershare Investor Services Plc
PO Box 82,
The Pavilions
Bridgwater Road,
Bristol BS99 7NH
34
ImmuPharma plc Report and Consolidated Financial Statements December 2020
Annual Review Financial and Corporate Information
Corporate Governance Report
The Group’s directors recognise the importance of sound
corporate governance. As such the Board has adopted the
Quoted Companies Alliance Corporate Governance Code
(“the QCA Code”).
Tim McCarthy, non-executive Chairman, has assumed
responsibility for ensuring that the Group has appropriate
corporate governance standards and that these standards
are applied throughout the Group.
The Board, through its adoption of the QCA Code,
believes in the value of putting the necessary systems
and processes in place to support the medium to long-
term delivery of the Company’s strategic objectives. The
Board is aware of the importance of communicating these
strategic objectives to stakeholders and in reporting
performance in a manner that encourages constructive
dialogue to support the production of sustainable
value in the long term. The Board recognise their role
in setting the strategic direction of the business as
well as in establishing the organisation’s risk appetite.
This is supported with a strong belief in appropriate
accountability and performance measures. Further, the
Board is cognisant of the key role it plays in setting the
tone and culture of the entire Group.
The Board currently consists of 5 directors, 2 of which are
executive and 3 are non-executive.
The Board has considered each of the 10 principles
contained within the QCA Code and where the Group
does not fully comply with each principle an explanation is
provided as to why it does not currently do so.
In addition, the Company has implemented a code of
conduct for dealing in the shares of the Company by
directors and employees (see Principle 9, page 37 for
more information).
Principle 1 – Establish a strategy and business
model which promote long-term value for
shareholders
ImmuPharma is an ethical organisation with the vision to
develop novel drugs to treat serious medical conditions,
delivering value to patients, medical professionals,
healthcare payers and its shareholders.
ImmuPharma’s principal business objective is to
enhance shareholder value through the development
and commercialisation of novel drugs. Its strategies for
achieving this objective include:
• Pursuing a low cost model of accessing world class
research through collaboration with the CNRS in
France;
• Selecting specialist therapeutic areas where there are
high unmet needs;
• Managing clinical development of novel drug
candidates;
• Seeking collaborative agreements with partner
companies to further the development and
commercialisation of novel drug candidates; and
• Maintaining a small corporate infrastructure to
minimise costs.
Key activities and discussions in 2020, in relation to
strategy and performance were revolving around product
pipeline (see Strategic Report on pages 15-19 for more
information), Lupuzor regulatory progress towards phase
III clinical trials (see Chairman Statement on pages 3-4
for further details), capital subscriptions and investments
opportunities (see Chairman Statement on pages 5-7 for
more information).
Principle 2 – Seek to understand and meet
shareholder needs and expectations
ImmuPharma strives to engage in active dialogue with
shareholders through regular communication including
investor events, participation in conferences, the
Company’s Annual General Meeting, any meetings that
are held throughout the year and one-on-one discussions.
Over the past 12 months, ImmuPharma’s shareholder
communications have included participation at investor
events, regular announcements regarding the Company’s
clinical trial progress, the Annual General Meeting and
numerous one-on-one meetings. These meetings seek to
foster a mutual understanding of both the Company’s and
shareholders’ objectives. Such meetings are conducted
in a format to protect price sensitive information that
has not already been made generally available to all the
Company’s shareholders. Similar guidelines also apply to
other communications between the Company and other
parties, such as financial analysts, brokers and the media.
In addition, the Board is provided with market summary
reports which detail share price and share register
movements.
All members of the Board are scheduled to attend
the Annual General Meeting. Notice of the Meeting
is dispatched to shareholders at least 21 working days
before the Meeting. The information sent to shareholders
includes a summary of the business to be covered, with
a separate resolution prepared for each substantive
matter. When a vote is taken on a show of hands, the
level of proxies received for and against the resolution
and any abstentions are disclosed at the Meeting. The
results of votes lodged for and against each resolution
are announced to the London Stock Exchange, Euronext
Growth Brussels and displayed on the Company’s website.
At the Meeting there will be an opportunity, following the
formal business, for informal communications between
shareholders and directors.
ImmuPharma plc Report and Consolidated Financial Statements December 2020
35
Corporate Governance Report (continued)
Principle 3 – Take into account wider
stakeholder and social responsibilities and
their implications for long-term success.
The Board recognises the importance of its wider
stakeholders – employees, contractors, suppliers,
regulators and advisors – to its long-term success. The
Board has established expectations that these key
resources and relationships are valued and monitored. In
particular, the Company’s business model of outsourcing
clinical trials requires reliable dialogue with contractors
to ensure the success pursuit of long-term strategic
objectives. Furthermore, the Board actively seek to
engage regularly with our corporate advisers to ensure
proactive communication regarding the Company’s
activities. In doing so, the Company is able to take any
feedback into account and adjust its actions accordingly to
ensure it stays focused on long-term performance.
The Board recognises that the Company operates within
the wider pharmaceutical industry and strives to remain
alert to developments in a wider industry/society context.
See stakeholder engagement within Strategic Report for
further details on the pages 40-41.
Principle 4 – Embed effective risk
management, considering both opportunities
and threats, throughout the organisation
ImmuPharma operates within a complex business
environment and an industry that is fundamentally
driven by regulatory processes. The Board has set out its
understanding of the principal risks and uncertainties in
its Strategic Report and regularly reviews its strategies
for minimising any adverse impact to the Company or its
investors.
Risk assessment is a priority for the Board. The major risks
to the business are laid out in detail in the Company’s
Strategic Report on pages 22-25. They concern mainly
the control and timely progress of clinical trials and
the obtaining of regulatory approval and profitable
agreements with other parties, with adequate financial
resources to achieve these objectives.
Where a material new risk or opportunity is identified, or
an existing risk escalates, the Board will communicate and
meet outside of the regular Board meetings to ensure the
required actions are taken and are effective.
Principle 5 – Maintain the board as a well-
functioning, balanced team led by the
Chairman
The Board members have a collective responsibility and
legal obligation to promote the interests of the company.
In the table below, details of the Board of Directors are
summarised:
Name
Mr Tim
McCarthy
Mr Dimitri
Dimitriou
Dr Robert
Zimmer
Dr Franco di
Muzio
Dr Stephane
Mery
Title
Non-
Executive
Chairman
Chief
Executive
Officer
President
and Chief
Scientific
Officer
Senior
Non-
Executive
Director
Non-
Executive
Director
Committee
Memberships
Independent
X
X
X
Audit,
Remuneration
Audit,
Remuneration
Brief biographies of each Director are set out on
pages 28-30. The Company believes that the skills and
experience of each Director are of the appropriate mix
to provide effective governance and management of the
business. The Board was supported in its governance and
finance responsibilities by Ewa Flynn, Company Secretary
and Financial Controller who is not a Director (Appointed
as a Company Secretary in January 2021).
The Board is supported by a team of Scientific
Collaborators, further details of which can be found on
page 32.
The Board considers the non-executive directors
to be independent and to represent the interests
of shareholders. The independent directors have
considerable relevant experience to sufficiently question
and hold the executive directors to account. The Board
continues to consider Franco di Muzio as the Senior
independent non-executive director given his limited
ties to the Company, extensive experience and ability to
exercise independent judgement.
Each Director is required to devote as much time is
required to carry out the roles and responsibilities
required.
The Company has adopted the practice of requiring all
directors to be subject to re-election every three years.
The executive directors are employed under service
agreements requiring 12 months’ notice by either party.
Non-executive directors and the Chairman receive
payments under appointment letters which are terminable
by six months’ notice by either party.
36
ImmuPharma plc Report and Consolidated Financial Statements December 2020
Financial and Corporate Information Corporate Governance Report (continued)
The Board meets regularly throughout the year with
all decisions concerning the direction and control of
the business made by a quorum of the Board. As of
31 December 2020, the Board met 15 times with the
attendance records of the directors as follows:
Mr Tim McCarthy, Non-Executive Chairman – 15/15
Mr Dimitri Dimitriou, Chief Executive Officer – 15/15
Dr Robert Zimmer, President and Chief Scientific Officer –
10/15
Dr Franco di Muzio, Senior Non-Executive Director – 10/15
Dr Stephane Mery, Non-Executive Director – 10/15
Principle 6 – Ensure that between them the
directors have the necessary up-to-date
experience, skills and capabilities
The Board has extensive mixture of skills and experience,
which enable the delivery of Group’s strategy for the
shareholders over the medium to long-term. These
include scientific expertise, public market requirements,
business acumen and financial knowledge. Please refer to
Director biographies on pages 28-30.
Principle 7 – Evaluate board performance
based on clear and relevant objectives,
seeking continuous improvement
Internal evaluation of the Board, the Audit Committee and
Remuneration Committee as well as individual directors
is undertaken on an informal basis at present. The review
takes the form of peer appraisal, questionnaires and
discussions to determine the overall effectiveness of
individual directors and the Board as a whole. Specific
consideration will be given to evaluating the continued
independence of the Group’s non-executive directors.
Senior management appointments are discussed at the
Board Meetings and are managed by the Chief Executive
Officer and Chief Science Officer with additional support
from the Chairman and non-executive directors where
appropriate.
Principle 8 – Promote a corporate culture that
is based on ethical values and behaviours
The Board recognises its role in establishing and
monitoring not only the strategic direction and risk
appetite but also the tone and culture of the organisation.
As a pharmaceutical drug development company, an
ethical approach is essential. As such, the Board places
great importance on the serious pursuit of therapeutic
innovation and making effective use of limited resources. It
applies to the directors as well as all group employees and
consultants. It is a key belief of the Company and helps to
define its competitive advantage in relation to its peers.
Upon joining the Company, employee has an induction
meeting in relation to the Company’s code of conduct
and ethics. This includes example behaviours that are
considered unacceptable by the Group.
Principle 9 – Maintain governance structures
and processes that are fit for purpose and
support good decision-making by the Board
The Board is responsible for long-term success of the
Company. There is a schedule of matters reserved for the
Board that guides the Board’s activities.
An Audit Committee and a Remuneration Committee
have been established with formally delegated duties
and responsibilities. As summarised under Principle 5,
the members of both committees are the Non-Executive
Directors.
Audit Committee
The Audit Committee, which determines the engagement
of the Company’s auditors and, in consultation with them,
the scope of their audit. The Audit Committee meets a
minimum of two times per year. The Audit Committee
receives and reviews reports from management and
the auditors relating to the interim and annual financial
statements and the accounting and internal control
systems in use by the Company. It has unrestricted access
to the auditors.
The Board and the Audit Committee review the need for
an internal audit function on an annual basis and currently
do not consider it necessary at this stage in the Company’s
development.
The directors acknowledge their responsibilities for the
Group’s system of internal financial controls. They have
not, during the year ended 31 December 2020, carried
out a formal review of internal financial controls in view of
the small size of the Board and employees. The Group’s
financial reporting arrangements are designed to provide
the directors with reasonable assurance that problems are
identified on a timely basis and dealt with appropriately.
In 2020 Audit Committee has deliberated two times. At
these meetings the main point of discussion were annual
and interim financial statements and working capital, the
presentation of the annual report, audit report from Nexia
Smith & Williamson, the audit fees and audit plan, updates
on cash position, financial instruments and overall function
of the committee and its members. Audit Committee
members also assisted the Board in risk management
activities.
Remuneration Committee
The Remuneration Committee reviews the scale and
structure of the executive directors’ remuneration and
benefits and the terms of their service contracts. The
remuneration of the non-executive directors is determined
by the Board as a whole.
The Committee has formal terms of reference and meets
at least twice a year. It is the duty of the Committee, inter
alia, to determine and agree with the Board the framework
ImmuPharma plc Report and Consolidated Financial Statements December 2020
37
Financial and Corporate Information Corporate Governance Report (continued)
or broad policy for the remuneration of the Company’s
executive Board members. The remuneration packages
are designed to motivate and retain executive directors to
ensure the continuing development of the Company and
to reward them for enhancing value to shareholders.
In 2020 the Remuneration Committee met twice. Amongst
others, it approved the implementation of the share
option grant.
Nominations committee
The directors consider that the Company is not currently
of a size to warrant the need for a separate nominations
committee and any decisions which would usually be
taken by the nomination committee will be taken by the
Board as a whole.
Share Dealing Code
The Company has adopted a Share Dealing Code given
the importance of having a clear and effective policy that
sets out the rules and procedures for share dealings by the
directors and other applicable employees.
Principle 10 – Communicate how the company
is governed and is performing by maintaining
a dialogue with shareholders and other
relevant stakeholders.
The Board is committed to maintaining good
communication with its shareholders and in promoting
effective dialogue regarding the Company’s strategic
objectives and performance. Institutional shareholders
and analysts have the opportunity to discuss issues and
provide feedback via meetings with the Company. The
Annual General Meeting and any other General Meetings
that are held throughout the year are for shareholders
to attend and question the directors on the Company’s
performance. The results of any general meetings are
released through LSE AIM RNS and Euronext Growth
Brussels news as soon as practically possible. The Annual
Reports and notice of all general meetings are available
on the Group’s website.
The directors also periodically promote ImmuPharma’s
activities, following the publication of regulatory
announcements, through various media platforms such as
Proactive Investors.
38
ImmuPharma plc Report and Consolidated Financial Statements December 2020
Financial and Corporate Information Financial and Corporate Information
Directors’ Report
Company Number: 03929567
The directors present their report and the audited financial statements of ImmuPharma plc (the “Company”, and
collectively with the subsidiary companies, the “Group”) for the year ended 31 December 2020.
Principal Activities
The principal activity of the Group and Company in the year under review was that of pharmaceutical research and development.
Results and Dividends
The Consolidated Income Statement is set out on page 50.
The directors do not recommend the payment of a dividend.
Business Review, Research and Development and Future Developments
The Strategic Report includes a review of the business, as well as a commentary regarding research and development,
and future developments. The principal risks and uncertainties facing the Group are considered on pages 22 to 25.
Subsequent Events
There were no subsequent events.
Directors
The following directors of the Company have held office since 1 January 2020:
Mr Tim McCarthy
Mr Dimitri Dimitriou
Dr Robert Henri Zimmer
Dr Franco Di Muzio
Dr Stephane Mery
ImmuPharma plc Report and Consolidated Financial Statements December 2020
39
Directors’ Report (continued)
Stakeholder engagement
The Board seeks to understand and consider the views of the Group’s key stakeholders in Board discussions and
decision making.
Key Stakeholders and concerns
Board Considerations
Key Outcomes
Employees
Our present and future employees
are key for the future success of
the business.
Executive directors update the
Board with details of employee
changes, concerns and recruitment
prospects. An open, collaborative
working environment with attractive
remuneration packages aligns
employees’ with shareholders’ goals.
Shareholders
Our Shareholders have been
highly supportive. We are actively
encouraging retention of their
investment whilst trying to secure new
Shareholders and funding.
The Board is in regular communication
with its Shareholders via press
releases, Annual and Interim Report.
The Board receives updates on
the views of shareholders through
the feedbacks from brokers and
other advisors.
Business Partners
We have worked closely with our
suppliers to set up new commercial
and development agreements.
Research and Development
Community
The collaboration with the CNRS,
University of Bordeaux, Simbec
Orion and others is at the heart of
our business
The Board is aware of the importance
of maintaining good relationships
with key suppliers, remaining
trustworthy, while safeguarding the
Group’s assets. It receives regular
updates on main supply agreements
and maintain long-term mutually
beneficial co-operations.
The Board seeks to support as
many interactions with research and
development community as possible
through regular meetings and
continuous collaborations.
40
ImmuPharma plc Report and Consolidated Financial Statements December 2020
• Continuing to focus on open
culture creation, which motivates
all employees.
• In line with previous years, staff
turnover has been very low.
• All our employees participate in
share based incentives.
• In light of Covid-19, Company
supported full employment, with
no employees furloughed and
flexibility to those with caring
responsibilities.
• Training and development
opportunities.
The Company meets periodically with
its Shareholders. Summary of these
events are below:
• AGM, June 2020
• Investor conferences;
• EBD Biotech Showcase, San
Francisco USA, January 2020
• VFB (Vlaamse Federatie
van Beleggers), the Flemish
Federation of Investors,
September 2020
• Genesis Conference,
December 2020
• Interviews: audio, print and TV
with Proactive Investor, Directors
and Investor meet Company.
New supplier agreements with
material threshold need to be
approved by two directors.
With the budgets, the Board
supported the research and
development community in France
and beyond to meet these objectives.
Financial and Corporate Information Directors’ Report (continued)
Key Stakeholders and concerns
Board Considerations
Key Outcomes
Environment
The Group is conscious of the need
to protect the environment
Reputation
Maintaining a strong reputation and
acting within laws and regulations
impacts the Group’s relationships with
all stakeholders
ImmuPharma’s operations are
relatively low in their impact on the
environment. The Board is committed
to reduce further the environmental
footprint.
Policies and procedures approved
by the Board are concentrated on
maintaining the strong reputation
of the Group within its employees,
Shareholders, suppliers, regulators
and other key stakeholders.
During the year, employees reduced
their domestic and international travel
substantially, using digital technology
enabled conferencing instead.
ImmuPharma continuously monitors
and assesses all regulatory
developments to ensure that any
issues are being addressed in
decision making.
Directors Remuneration
The following amounts were payable to the directors of ImmuPharma plc across the Group in relation to the year ended
31 December 2020:
Director
Robert Zimmer
Dimitri Dimitriou
Tim McCarthy
Franco di Muzio
Stephane Mery
Total
Salary/Fees
Cash Benefits
285,109
292,302
260,000
54,600
46,666
938,677
71,278
28,000
-
-
-
99,278
Total
remuneration
2020
£
Total
remuneration
2019
£
356,387
320,302
260,000
54,600
46,666
498,185
309,790
260,000
55,328
45,000
1,037,955
1,168,303
The Company does not operate a health plan or company car plan and the directors do not receive pension contributions.
There were no bonus payments to directors in 2020. As referred to in note 22, the £180,302 received by D Dimitriou, and
the £260,000 received by T McCarthy in lieu of directors’ fees for the year ended 31 December 2020 are included in the
table above.
The following share options were outstanding to the directors of ImmuPharma plc as at 31 December 2020 (see note 20
for more detail):
Director
Tim McCarthy
Dimitri Dimitriou
Robert Zimmer
Franco di Muzio
Stephane Mery
Options
granted
2 June
2016
Options
granted
30 March
2017
Options
granted
12 July
2017
Options
granted
24 November
2017
Options
granted
25 November
2020
Share
options
outstanding
2020
Share
options
outstanding
2019
500,000
-
-
100,000
100,000
-
1,000,000
1,000,000
-
-
1,000,000
-
-
200,000
200,000
1,500,000
1,500,000
1,500,000
300,000
300,000
1,500,000
1,500,000
1,500,000
300,000
300,000
4,500,000
4,000,000
4,000,000
900,000
900,000
3,000,000
2,500,000
2,500,000
600,000
600,000
Total
700,000
2,000,000
1,400,000
5,100,000
5,100,000
14,300,000
9,200,000
Third Party Indemnity Provision for Directors
Qualifying third party indemnity provision for the benefit for 5 directors was in force during the financial year and as at
the date this report is approved.
Financial Instruments and Financial Risk Management
Information regarding the use of financial instruments and the approach to financial risk management is detailed in
notes 1 and 2 of the financial statements.
ImmuPharma plc Report and Consolidated Financial Statements December 2020
41
Financial and Corporate Information Directors’ Report (continued)
Disclosure of information to the Auditors
In the case of each person who was a director at the time this report was approved they have:
• taken all the necessary steps to make themselves aware of any information relevant to the audit and to establish that
the auditors are aware of that information; and
• so far as they are aware, there is no relevant audit information of which the auditors have not been made aware.
This confirmation is given and should be interpreted in accordance with the provisions of s418 of the Companies Act 2006.
Auditors
A resolution to reappoint the auditors, Nexia Smith & Williamson, will be proposed at the next Annual General Meeting.
On behalf of the Board
Dimitri Dimitriou
Director
28 April 2021
42
ImmuPharma plc Report and Consolidated Financial Statements December 2020
Financial and Corporate Information Financial and Corporate Information
Statement of Director's Responsibilities
The directors are responsible for preparing the Strategic Report, the Directors’ 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 parent company financial statements in accordance with applicable law and
International Accounting Standards in conformity with the requirements of the Companies Act 2006. Under company law,
the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the
state of affairs of the Company and of the Group and of the profit or loss of the Group for that period. 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 that the financial statements comply with IFRSs as adopted by the European Union 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
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and
the Group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The directors are also responsible for ensuring that they meet their responsibilities under the AIM Rules and Euronext
Growth Brussels rules.
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 financial
statements may differ from legislation in other jurisdictions.
ImmuPharma plc Report and Consolidated Financial Statements December 2020
43
Independent auditor’s report
To the members of ImmuPharma plc
Opinion
We have audited the financial statements of ImmuPharma plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’)
for the year ended 31 December 2020 which comprise the Consolidated Income Statement, the Consolidated and
Company Statements 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 the notes to the financial statements, including significant accounting policies. The financial reporting
framework that has been applied in their preparation is applicable law and international accounting standards in
conformity with the requirements of the Companies Act 2006.
In our opinion, the financial statements:
• give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 December 2020 and
of the Group’s loss for the year then ended;
• have been properly prepared in accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006; and
• 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 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:
• Reviewing the future cash flow forecast prepared by management and challenging the inputs and assumptions
included in the forecast. Where appropriate, we corroborated the inputs and assumptions to supporting information.
• Reviewing the current cash reserves and comparing these to the cash outflows forecast over the period to
December 2022.
• Reviewing sensitivity analysis prepared by management to assess the impact of changing key assumptions and
performing additional stress testing of the forecast.
The most sensitive assumptions are the future share price and whether the remaining convertible loan notes will
be converted or redeemed, and we requested management to perform further sensitivity analysis in these areas by
considering different scenarios.
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 and Parent Company’s ability to continue as a
going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
Emphasis of matter – Valuation of the Parent Company’s receivables and investments in subsidiaries
We draw attention to the disclosures made in note 13 to the Parent Company financial statements concerning the
carrying values of investments in subsidiaries and to the disclosures made in note 15 to the Parent Company financial
statements concerning the carrying value of the receivables due from group undertakings.
The carrying value of £41.1 million investments in subsidiaries and £11.8 million receivables due from group undertakings
is dependent on future pharmaceutical sales within the Group, which are dependent on obtaining regulatory approval
and being taken to market, including their successful commercialisation.
44
ImmuPharma plc Report and Consolidated Financial Statements December 2020
The ultimate outcome of these matters cannot presently be determined, and the Group and Parent Company financial
statements do not reflect any provision that may be required if the £41.1 million investments in subsidiaries and
£11.8 million receivables due from group undertakings cannot be recovered in full. Our opinion is not modified in respect
of these matters.
Key audit matters
We identified the key audit matters described below as those that were of most significance in the audit of the financial
statements of the current period. Key audit matters include the most significant assessed risks of material misstatement,
including those risks that had the greatest effect on our overall audit strategy, the allocation of resources in the audit and
the direction of the efforts of the audit team.
In addressing these matters, we have performed the procedures below which were designed to address the matters in
the context of the financial statements as a whole and in forming our opinion thereon. Consequently, we do not provide
a separate opinion on these individual matters.
Key audit matter
Description of risk
Carrying value of the Parent
Company’s investment in subsidiaries
and receivables due from group
companies (note 13 and note 15)
The Parent Company has significant
balances relating to investments in
subsidiaries and receivables due from
group companies.
The investments are largely
represented by the ownership of
ImmuPharma (France) SA and Ureka
Pharma SAS and amounts owed by
those companies. The carrying value
of the investments in and receivables
due from those companies is
underpinned by the future financial
viability of those companies.
How the matter was addressed in
the audit
We reviewed management’s assessment
of impairment of investments in
subsidiaries and the recoverability of
receivables due from group companies.
We challenged assumptions and
assertions made by management in their
assessment and considered whether the
presence of impairment indicators should
result in an impairment charge.
As part of our procedures we:
• Discussed with management
the underlying future planned
activities, including research and
development programmes, for
ImmuPharma (France) SA and
Ureka Pharma SAS.
• Considered the implications of
the level of market capitalisation
of the Parent Company for the
valuation of these balances.
• Reviewed any third party reports
such as investor analysis.
• Reviewed the discounted cash flow
model for valuation purposes.
The assumptions to which
the model was most sensitive
were the discount rate, growth
rates, exchange rates, tax rate
and probability weighting of
successful product launches. As
part of this work we corroborated
management’s assumptions with
reference to historical data and
external data.
• Reviewed sensitivity analysis
performed by management.
• Performed sensitivity analysis on the
key assumptions used in the model.
ImmuPharma plc Report and Consolidated Financial Statements December 2020
45
Independent auditor’s report To the members of ImmuPharma plc (continued) Key audit matter
Description of risk
Convertible loan notes (note 24)
The Parent Company issued material
convertible loan notes during the
year, which have been assessed as a
compound instrument under IAS 32.
The value of liability component and
the equity conversion component
were determined at the date the
instrument was issued, as is required
for compound instruments under
IAS 32. The fair value of the liability
was calculated based on future
interest payments and final face value
repayment, using a discount rate
being a rate of interest for similar
debt without the conversion option
of 19.90%, as required under IAS 32.
This discount rate is an estimate
requiring judgment.
Since the initial issue of these
loans, there have been conversions
and a redemption and the liability
requires remeasurement after these
transactions.
How the matter was addressed in
the audit
As part of our procedures we:
• Reviewed the terms set out
in the convertible loan notes
agreements.
• Reviewed and corroborated
management’s calculations
of the fair value of the liability
component, including key
assumptions used in the valuation.
• Performed substantive based
audit procedures over the
amounts received, repayments
made and the conversions into
shares, and the remeasurement of
the resulting liability.
• Used our internal valuations team
to review the appropriateness
of the interest rate used in the
valuation.
• Reviewed the disclosures to
ensure these were compliant
with relevant financial reporting
standards.
Our application of materiality
The materiality for the Group financial statements as a whole (“group FS materiality”) was set at £570,000. This has been
determined with reference to the benchmark of the Group’s gross expenditure, which we consider to be one of the
principal considerations for members of the Parent Company in assessing the performance of the Group. Materiality
represents 10% of the Group’s gross expenditure as presented on the face of the Consolidated Income Statement.
The materiality for the Parent Company financial statements as a whole (“parent FS materiality”) was set at £456,000. This
has been determined with reference to the benchmark of the Parent Company’s total assets, which we consider to be an
appropriate measure as the Parent Company exists primarily as a holding company for the Group. This has been capped
at Group performance materiality.
46
ImmuPharma plc Report and Consolidated Financial Statements December 2020
Independent auditor’s report To the members of ImmuPharma plc (continued) Performance materiality for the Group financial statements was set at £456,000, being 80% of group FS materiality, for
purposes of assessing the risks of material misstatement and determining the nature, timing and extent of further audit
procedures. We have set it at this amount to reduce to an appropriately low level the probability that the aggregate of
uncorrected and undetected misstatements exceeds group FS materiality.
We judged this level to be appropriate based on our understanding of the Group and its financial statements, as
updated by our risk assessment procedures and our expectation regarding current period misstatements including
considering experience from previous audits. It was set at 80% to reflect the fact that in our historical experience
management are keen to process adjustments and there are few areas of judgement and estimation in the Group
financial statements.
Performance materiality for the Parent Company financial statements was set at £364,800, being 80% of parent FS
materiality. It was set at 80% to reflect the fact that in our historical experience management are keen to process
adjustments and there some areas of judgement and estimation in the Parent Company financial statements.
An overview of the scope of the audit
The Group has four reporting components. The Parent Company financial statements were audited by us.
Two out of the three components subject to audit were based in France and their audits were carried out by a
component auditor in France. We held a telephone meeting with the component auditor in France as part of planning
and discussed the component auditor’s risk assessments and directed their planned audit approach. In addition to this
meeting, we sent detailed instructions to the component audit teams and reviewed their key audit working papers.
For the remaining component, we performed analysis at a Group level to re-examine our assessment that there were no
significant risks of material misstatement within it.
The three audited components covered: 83% of Group revenue, 100% of Group loss before tax and 100% of Group net assets.
Other information
The other information comprises the information included in the Report and Consolidated financial statements, other
than the financial statements and our auditor’s report thereon. The directors are responsible for the other information
contained within Report and Consolidated financial statements. Our opinion on the financial statements does not cover
the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form
of assurance conclusion thereon. 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, based on the work undertaken in the course of the audit:
• the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
• the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the Parent Company and their environment obtained
in the course of the audit, we have not identified material misstatements in the Strategic Report or the Directors’ Report.
ImmuPharma plc Report and Consolidated Financial Statements December 2020
47
Independent auditor’s report To the members of ImmuPharma plc (continued) We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to
report to you if, in our opinion:
• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not
been received from branches not visited by us; or
• the Parent Company financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 43, the directors are responsible for
the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal
control as the directors determine is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the Parent Company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Group or the Parent Company or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
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 a general understanding of the Parent Company and Group’s legal and regulatory framework through
enquiry of management concerning: their understanding of relevant laws and regulations; the policies and procedures
regarding compliance; and how they identify, evaluate and account for litigation claims. We also drew on our existing
understanding of the Parent Company and Group’s industry and regulation.
We understand that the Parent Company and Group comply with the framework through:
• Outsourcing payroll and the accounting function to external experts.
• Subscribing to relevant updates from external experts and making changes to internal procedures and controls as
necessary.
• The directors’ close involvement in the day-to-day running of the business, meaning that any litigation or claims
would come to their attention directly.
• The directors’ relevant knowledge and expertise of the pharmaceutical industry, and related laws and regulations.
In the context of the audit, we considered those laws and regulations: which determine the form and content of the
financial statements; which are central to the Parent Company and Group’s ability to conduct its business; and where
failure to comply could result in material penalties. We identified the following laws and regulations as being of
significance in the context of the Parent Company and Group:
• The Companies Act 2006 and IFRS in respect of the preparation and presentation of the financial statements;
• AIM regulations and Market Abuse Regulations;
• Health and safety and associated environmental regulation in respect of pre-clinical trials; and
• FDA and EMA regulations in respect of clinical trials.
48
ImmuPharma plc Report and Consolidated Financial Statements December 2020
Independent auditor’s report To the members of ImmuPharma plc (continued) We performed the following specific procedures to gain evidence about compliance with the significant laws and
regulations identified above:
• Made enquiries of management;
• Inspected correspondence with regulators;
• Reviewed board meeting minutes held during the year and post year-end; and
• Obtained written management representations regarding the adequacy of procedures in place.
The senior statutory auditor led a discussion with senior members of the engagement team regarding the susceptibility
of the Parent Company and Group’s financial statements to material misstatement, including how fraud might occur.
The key area identified in this discussion was with regard to the manipulation of the financial statements through manual
journal entries.
These areas were communicated to the other members of the engagement team who were not present at the
discussion.
The procedures we carried out to gain evidence in the above areas included:
• Testing of manual journal entries, selected based on specific risk assessments applied based on the group and parent
company’s processes and controls surrounding manual journal entries.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the Parent 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 parent 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 Parent Company and the Parent
Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Sancho Simmonds
Senior Statutory Auditor, for and on behalf of
Nexia Smith & Williamson
Statutory Auditor
Chartered Accountants
25 Moorgate
London
EC2R 6AY
Date:_28 April 2021
ImmuPharma plc Report and Consolidated Financial Statements December 2020
49
Independent auditor’s report To the members of ImmuPharma plc (continued) Consolidated Income Statement
for the year ended 31 December 2020
Continuing operations
Revenue
Other operating income
Research and development expenses
Administrative expenses
Share based expense
Operating loss
Finance costs
Finance income
Loss before taxation
Tax
Loss for the year
Attributable to:
Equity holders of the parent company
Loss per ordinary share
Basic and diluted
Notes
1 & 3
5
6
7
8
9
Year
ended
31 December
2020
£
Year
ended
31 December
2019
£
126,667
-
(2,372,834)
(1,764,897)
(1,578,368)
77,925
119,901
(2,664,550)
(1,831,395)
(1,983,525)
(5,589,432)
(6,281,644)
(1,697,832)
41,089
(526,734)
64,014
(7,246,175)
(6,744,364)
386,248
620,774
(6,859,927)
(6,123,590)
(6,859,927)
(6,123,590)
(3.43)p
(3.99)p
50
Financial and Corporate InformationImmuPharma plc Report and Consolidated Financial Statements December 2020 Consolidated Statement of Comprehensive Income
for the year ended 31 December 2020
Loss for the financial period
Other comprehensive income
Items that will not be reclassified subsequently to profit
or loss:
Fair value gain/(loss) on investment
Fair value gain on warrants
Total items that will not be reclassified subsequently to
profit or loss
Items that may be reclassified subsequently to profit or loss:
Year
ended
31 December
2020
£
Year
ended
31 December
2019
£
(6,859,927)
(6,123,590)
Notes
12
12
851,772
625,576
(1,309,090)
-
1,477,348
(1,309,090)
Exchange differences on translation of foreign operations
42,207
438,810
Total items that may be reclassified subsequently to profit
or loss
Other comprehensive income/(loss) for the period
Total comprehensive loss for the period
42,207
1,519,555
438,810
(870,280)
(5,340,372)
(6,993,870)
ImmuPharma plc Report and Consolidated Financial Statements December 2020
51
Financial and Corporate Information Consolidated Statement of Financial Position
as ar 31 December 2020
Notes
31 December
2020
£
31 December
2019
£
Non-current assets
Intangible assets
Property, plant and equipment
Derivative financial asset
Financial assets
Total non-current assets
Current assets
Trade and other receivables
Derivative financial asset
Cash and cash equivalents
Current tax asset
Total current assets
Current liabilities
Financial liabilities - borrowings
Trade and other payables
Convertible loan notes
Total current liabilities
Net current assets
Net assets
EQUITY
Ordinary shares
Share premium
Merger reserve
Other reserves
Retained earnings
Total equity
10
11
14
12
15
14
16
17
18
24
19
484,042
411,606
174,488
2,418,258
3,488,394
161,998
1,016,635
5,862,057
386,590
7,427,280
(6,939)
(619,037)
(634,902)
478,960
206,744
843,147
690,910
2,219,761
153,609
1,456,714
1,364,840
606,157
3,581,320
(26,778)
(505,089)
-
(1,260,878)
(531,867)
6,166,402
3,049,453
9,654,796
5,269,214
25,022,130
27,237,329
106,148
3,255,536
16,736,093
27,187,316
106,148
1,430,337
(45,966,347)
(40,190,680)
9,654,796
5,269,214
The financial statements were approved by the Board of Directors and authorised for issue on 28 April 2021
They were signed on its behalf by:
Robert Zimmer
Director
Dimitri Dimitriou
Director
52
Financial and Corporate InformationImmuPharma plc Report and Consolidated Financial Statements December 2020 Consolidated Statement of Changes in Equity
for the year ended 31 December 2020
Share
capital
£
Share
premium
£
Merger
reserve
£
Other
reserves -
Acquisition
reserve
£
Other
reserves -
Translation
reserve
£
Other
reserves -
Equity shares
to be issued
£
Other
reserves -
Convertible
option reserve
£
Retained
earnings
£
Total
equity
£
At 1 January 2019
13,946,744 27,320,145 106,148
(3,541,203)
(1,789,497)
4,338,702
-
(32,758,000) 7,623,039
Loss for the financial
year
Exchange differences
on translation
of foreign operation
Transactions with
owners:
Share based payments
New issue of
equity capital
Costs of new issue
of equity capital
Fair value loss on
investments
-
-
-
2,789,349
-
-
-
-
-
-
(132,829)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
438,840
-
-
-
-
-
-
1,983,525
-
-
-
At 31 December 2019
16,736,093 27,187,316 106,148
(3,541,203)
(1,350,687)
6,322,227
-
42,207
-
-
1,751,369
Loss for the financial
year
Exchange differences
on translation
of foreign operations
Transactions with
owners:
Share based payments
Equity component of
convertible loan notes
New issue of equity
capital
Costs of new issue of
equity capital
Fair value gain on
investments
Fair value gain on share
warrants
-
-
-
-
-
-
-
-
8,286,037
665,281
-
-
-
(615,268)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(6,123,590) (6,123,590)
-
-
-
-
-
-
-
-
-
-
438,810
- 1,983,525
- 2,789,349
-
(132,829)
(1,309,090) (1,309,090)
(40,190,680) 5,269,214
(6,859,927) (6,859,927)
-
42,207
- 1,751,369
-
-
-
-
-
31,623
-
31,623
-
-
-
-
- 8,951,318
(393,088) (1,008,356)
851,772
851,772
625,576
625,576
At 31 December 2020
25,022,130 27,237,329 106,148
(3,541,203)
(1,308,480)
8,073,596
31,623 (45,966,347) 9,654,796
Attributable to:-
Equity holders of the
parent company
25,022,130 27,237,329 106,148
(3,541,203)
(1,308,480)
8,073,596
31,623 (45,966,347) 9,654,796
ImmuPharma plc Report and Consolidated Financial Statements December 2020
53
Financial and Corporate Information Consolidated Statement of Cash Flows
for the year ended 31 December 2020
Cash flows from operating activities
Cash used in operations
Tax received
Interest paid
Net cash used in operating activities
Investing activities
Purchase of property, plant and equipment
Interest received
Purchase of investments
Net cash used in investing activities
Financing activities
Decrease in bank overdraft
Loan repayments
Settlements from Sharing Agreement
Gross proceeds from issue of new share capital
Share capital issue costs
Funds deferred per Sharing Agreement
Gross proceeds from issue of convertible loan notes
Convertible loan notes issue costs
Convertible loan notes repaid
Net cash generated from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effects of exchange rates on cash and cash equivalents
Cash and cash equivalents at end of year
Notes
21
6
7
12
16
16
Year
ended
31 December
2020
£
Year
ended
31 December
2019
£
(3,879,936)
(4,963,710)
606,157
(55,622)
746,369
(4,045)
(3,329,401)
(4,221,386)
(360,290)
41,089
(250,000)
(569,201)
(184)
(21,256)
1,292,393
8,000,000
(702,133)
(107,111)
5,743
-
(101,368)
(14)
(89,205)
414,930
2,656,520
-
(1,300,000)
(2,656,520)
2,152,252
(235,552)
(815,166)
8,370,354
4,471,752
1,364,840
25,465
-
-
-
325,711
(3,997,043)
4,911,448
450,435
5,862,057
1,364,840
54
Financial and Corporate InformationImmuPharma plc Report and Consolidated Financial Statements December 2020 Company Statement of Comprehensive Income
for the year ended 31 December 2020
Loss for the financial period
Other comprehensive income
Items that will not be reclassified subsequently to profit or
loss:
Fair value gain/(loss) on investment
Fair value gain on warrants
Total items that will not be reclassified subsequently to
profit or loss
Other comprehensive income/(loss) for the period
Total comprehensive loss for the period
Year
ended
31 December
2020
£
Year
ended
31 December
2019
£
(4,630,114)
(4,036,897)
Notes
12
12
851,772
625,576
(1,309,090)
-
1,477,348
(1,309,090)
1,477,348
(1,309,090)
(3,152,766)
(5,345,987)
ImmuPharma plc Report and Consolidated Financial Statements December 2020
55
Financial and Corporate Information Company Statement of Financial Position
as at 31 December 2020
Notes
31 December
2020
£
31 December
2019
£
11
12
14
13
15
14
16
18
24
19
Non-current assets
Property, plant and equipment
Financial assets
Derivative financial asset
Investment in subsidiaries
Total non-current assets
Current assets
Trade and other receivables
Derivative financial asset
Cash and cash equivalents
Total current assets
Current liabilities
Trade and other payables
Convertible loan notes
Total current liabilities
Net current assets
Net assets
EQUITY
Ordinary shares
Share premium
Merger reserve
Equity shares to be issued
Convertible option reserve
Retained earnings
Total equity
11,607
2,418,258
174,488
11,215
690,910
843,147
41,063,122
40,872,730
43,667,475
42,418,002
11,900,943
10,031,037
1,016,635
5,375,364
1,456,714
834,464
18,292,942
12,322,215
(253,181)
(634,902)
(241,071)
-
(888,083)
(241,071)
17,404,859
12,081,144
61,072,334
54,499,146
25,022,130
27,237,329
19,093,750
8,073,596
31,623
16,736,093
27,187,316
19,093,750
6,322,227
-
(18,386,094)
(14,840,240)
61,072,334
54,499,146
The Company’s loss for the year ended 31 December 2020 was £4,630,114 (2019: loss of £4,036,897).
The financial statements were approved by the Board of Directors and authorised for issue on 28 April 2021.
They were signed on its behalf by:
Robert Zimmer
Director
Dimitri Dimitriou
Director
56
ImmuPharma plc Report and Consolidated Financial Statements December 2020
Financial and Corporate Information Company Statement of Changes in Equity
for the year ended 31 December 2020
Share
capital
£
Share
premium
£
Merger
reserve
£
Equity
shares to be
issued
£
Convertible
option
reserve
£
At 1 January 2019
13,946,744 27,320,145 19,093,750
4,338,702
Loss for the financial year
Transactions with owners:
Share based payments
Fair value loss on investments
-
-
-
New issue of equity capital
2,789,349
-
-
-
-
Cost of new issue of
equity capital
-
(132,829)
-
-
-
-
-
-
1,983,525
-
-
-
At 31 December 2019
16,736,093 27,187,316 19,093,750
6,322,227
Loss for the financial year
Transactions with owners:
Share based payments
Fair value gain on investments
-
-
-
-
-
New issue of equity capital
8,286,037
665,281
Costs of new issue of
equity capital
Fair value gain on share
warrants
Equity component of
convertible
loan notes
-
-
-
(615,268)
-
-
-
-
-
-
-
-
-
-
1,751,369
-
-
-
-
-
Retained
earnings
£
Total
equity
£
(9,494,253) 55,205,088
(4,036,897)
(4,036,897)
-
1,983,525
(1,309,090)
(1,309,090)
-
-
2,789,349
(132,829)
(14,840,240) 54,499,146
(4,630,114)
(4,630,114)
-
1,751,369
851,772
851,772
-
8,951,318
(393,088)
(1,008,356)
625,576
625,576
-
-
-
-
-
-
-
-
-
-
-
-
-
31,623
-
31,623
At 31 December 2020
25,022,130 27,237,329 19,093,750
8,073,596
31,623 (18,386,094) 61,072,334
ImmuPharma plc Report and Consolidated Financial Statements December 2020
57
Financial and Corporate Information Company Statement of Cash Flows
for the year ended 31 December 2020
Cash flows from operating activities
Cash used in operations
Interest paid
Net cash used in operating activities
Investing activities
Purchase of property, plant and equipment
Purchase of investments
Finance income
Loans issued to subsidiary undertakings
Net cash used in investing activities
Notes
21
12
Financing activities
Settlements from Sharing Agreement
Gross proceeds from issue of new share capital
Share capital issue costs
Funds deferred per Sharing Agreement
Gross proceeds from issue of convertible loan notes
Convertible loan notes issue costs
Convertible loan notes repaid
Net cash generated from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effects of exchange rates on cash and cash equivalents
Cash and cash equivalents at end of year
16
16
Year
ended
31 December
2020
£
Year
ended
31 December
2019
£
(2,308,524)
(55,470)
(2,363,994)
(5,520)
(250,000)
494
(1,243,292)
(1,498,318)
1,292,393
8,000,000
(702,133)
(1,300,000)
2,152,252
(235,552)
(815,166)
8,391,794
4,529,482
834,464
11,418
5,375,364
(2,308,227)
(3,935)
(2,312,162)
(1,932)
-
5,303
(1,651,020)
(1,647,649)
414,930
2,656,520
-
(2,656,520)
-
-
-
414,930
(3,554,881)
4,379,345
-
834,464
58
Financial and Corporate InformationImmuPharma plc Report and Consolidated Financial Statements December 2020 Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
ImmuPharma plc (the “Company”) is a public limited company registered in England and Wales (company number
03929567). The Company is limited by shares and the registered office of the Company is located at 1 Bartholomew
Close, EC1A 7BL, London. ImmuPharma plc and its subsidiaries focus on the research, development and
commercialisation of pioneering and novel drugs in specialist therapeutic areas within the pharmaceutical industry.
1
Accounting policies
The principal accounting policies are summarised below. They have all been applied consistently throughout the
financial years contained in these financial statements.
Basis of preparation
The financial statements have been prepared in accordance with International Accounting Standards in
conformity with the requirements of the Companies Act 2006.
The financial statements have been prepared under the historical cost convention and on a going concern basis.
Further commentary on the Group’s plan for the continuing funding of activities is provided in the Strategic
Report. The Company has taken advantage of the exemption provided under section 408 of the Companies Act
2006 not to publish its individual Income Statement and related notes.
Going concern
The Company and Group do not generate any cash revenues as its pipeline products are currently at research
and development stage and therefore are reliant on external finance in order to fund its operation. As set out in
the Chairman’s Report, in 2020 the Company secured a total of £8 million gross proceeds from issue of new share
capital and $2.7 million (c. £2.15 million) gross proceeds from issue of convertible loan notes.
The directors have prepared cashflow forecasts covering a period of more than 12 months from the date of
approval of these financial statements. These forecasts include several assumptions, including expected variable
cash receipts under the Lanstead Sharing Agreement and repayment of the convertible loan notes. Sensitivity
analysis have been performed on the key uncertainties (future share price and repayment of the convertible loan)
indicating that both the Company and Group will have sufficient funds to meet their liabilities as they fall due. As
a result, the directors have prepared these financial statements on the going concern basis.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of financial statements in conformity with generally accepted accounting practice requires
management to make estimates and judgements that affect the reported amounts of assets and liabilities as
well as the disclosure of contingent assets and liabilities at the Statement of financial position date and the
reported amounts of revenues and expenses during the reporting year. 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.
Management have had to make judgements in the following areas:
• Financial instruments – fair value measurement
A number of assets and liabilities included in the Group’s financial statements require measurement at,
and/or disclosure of, fair value. The fair value measurement of the Group’s financial and non-financial
assets and liabilities utilises market observable inputs and data as far as possible. Inputs used in
determining fair value measurements are categorised into different levels based on how observable the
inputs used in the valuation technique utilised are (the ‘fair value hierarchy’):
- Level 1: Quoted prices in active markets for identical items (unadjusted)
- Level 2: Observable direct or indirect inputs other than Level 1 inputs
- Level 3: Unobservable inputs (i.e. not derived from market data).
The classification of an item into the above levels is based on the lowest level of the inputs used that
has a significant effect on the fair value measurement of the item. Transfers of items between levels are
recognised in the period they occur.
ImmuPharma plc Report and Consolidated Financial Statements December 2020
59
Financial and Corporate Information
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2020
1
Accounting policies (continued)
Critical accounting judgements and key sources of estimation uncertainty (continued)
• Financial asset – Other investments
The Group and the Company hold 15.35% of the issued share capital in Incanthera plc. Incanthera plc
investment is held at fair value through other comprehensive income. The investment included above
represents investments in quoted equity securities. Under IFRS 7 Financial instruments: Disclosures and
IFRS 13 Fair value measurement this is classified under the fair value hierarchy as level 2. This strategic
investment is classified as fair value through other comprehensive income. The fair value has been
assessed at 31 December 2020 and is based on the share price and holding at 31 December 2020 on
the ImmuPharma plc shareholding of Incanthera plc. The value of ImmuPharma’s retained 9,904,319
shares at an exercise price of 9.5p pence, amounted to £1,792,682 being the fair value of the investment
in Incanthera plc as of 31 December 2020. Fair value gain of £851,771 has been recorded in Other
Comprehensive Income.
• Derivative financial asset
The Group and the Company has placed shares with Lanstead and at the same time entered into a
Sharing Agreement. The amount receivable under the Sharing Agreement each month, over a 24
month period will be dependent on the Company’s share price performance. The nature of the Sharing
Agreement with Lanstead requires the calculation of the fair value as at the end of the accounting
period and it is based on the estimation of the Company’s share price and discount rate. Under IFRS 7
Financial instruments: Disclosures and IFRS 13 Fair value measurement, the Company’s share price has
been assessed under the fair value hierarchy as Level 2 input. At each period end the amount receivable
is restated to fair value. Any change in the fair value of the derivative financial asset is reflected in the
Income Statement. The derivative was initially recognised at the date the Sharing Agreement was
entered into and was subsequently re-measured to its fair value at the reporting date. The resulting gain
or loss was recognised in finance income within profit and loss. As at 31 December 2020, the Company
completed a calculation of fair value of the derivative financial asset that resulted in a finance loss of
£1,116,345. At the reporting date, the derivative had a positive fair value and therefore is recognised as
a financial asset, whereas if it had a negative fair value it would be recognised as a financial liability. The
derivative is presented as both current asset and non current asset.
• Warrants financial asset
The Group and the Company has been issued warrants for 7,272,740 shares at 9.5p in Incanthera Plc.
These warrants represent financial asset, measured at fair value through Other Comprehensive Income.
At the reporting date, warrants financial asset was revalued to its fair value amounted to £625,576.
Fair value gain of £625,576 has been recorded in Other Comprehensive Income. The fair value was
measured using the “Black – Scholes” valuation model, in which there were several inputs, based
on details specified in warrant agreement and estimations described further in Note 12. The IFRS 13
classifies those inputs as Level 2.
• Share options
The Group and the Company operates share option incentive scheme. The fair value of options granted
is recognised as an expense in the income statement with a corresponding increase in equity. The fair
value is measured at grant date, spread over the period which the employees become unconditionally
entitled to the options. The fair value of the options is measured using the “Black – Scholes” valuation
model, in which there are several inputs, most of which are based on available market information or
details specified within the share options agreements.
• Convertible loan notes
In June 2020 the Group and the Company issued $3 million (£2.35 million) in face value of Convertible
loan to L1 and Lind, with maturity period of 18 months. This convertible loan represents a compound
instrument, having characteristics of both equity and financial liability.
60
Financial and Corporate InformationImmuPharma plc Report and Consolidated Financial Statements December 2020 Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2020
1
Accounting policies (continued)
Critical accounting judgements and key sources of estimation uncertainty (continued)
IAS 32 requires liability component of the convertible loan notes to be assessed by measuring the fair
value of similar liability that does not have an associated equity component. The carrying amount of
the equity instrument represented by the option to convert the instrument into ordinary shares is then
determined by deducting the fair value of the financial liability from the fair value of the compound
financial instrument as a whole. The management estimated (taken into account Company’s risk profile
and the development stage) that the interest rate of a similar liability that did not have an associated
equity component was 19.9%. The effective interest rate based on the above rate equated to 26.19%.
The IFRS 13 classifies these inputs as level 2.
Management have applied estimates in the following areas:
• Investment in Subsidiaries
For the Company Statement of Financial Position, management has considered whether there has been
any impairment to the carrying value and has applied estimates including taking account of various
factors and available evidence in assessing the recoverable amounts in arriving at the conclusion.
At 31 December 2020, the Company’s investment in its subsidiaries, ImmuPharma (France) SA and
Ureka Pharma (SAS) was £30,400,645 and £10,616,769 respectively. The directors have assessed the
carrying value of the Company’s investment in subsidiaries taking into account the various factors and
available evidence as at that date and concluded that no impairment is required against this investment
at the year-end date.
• Amounts owed by group undertakings
For the Company Statement of Financial Position, management needs to consider whether these
balances are recoverable or an impairment is required and applies estimates including taking account
of various factors and available evidence in arriving at the conclusion.
At 31 December 2020, ImmuPharma Plc was due £9,663,806 and £2,121,596 from its subsidiaries
ImmuPharma (France) SA and Ureka Pharma (SAS) respectively. At that date, ImmuPharma (France)
SA and Ureka Pharma (SAS) had net liabilities of £9,514,662 and £274,884 respectively and are not in a
position to repay this balance without realising value from its intangible assets.
Following the announcement of the results of the LupuzorTM clinical trial in April 2018 and Avion
agreement in November 2019, the directors have reviewed the future prospects of ImmuPharma
(France) SA. Using the information which would have been available at 31 December 2020 and believe
that going forward, there is sufficient value in ImmuPharma (France) SA’s underlying activities, the
directors are confident that the subsidiary will generate sufficient cash to enable this balance to be
repaid. As a result, no impairment of this debt is considered necessary at the year-end date. Similarly,
using the information available at 31 December 2020 and the future possibilities of Ureka Pharma (SAS)
underlying activities, the directors believe that the subsidiary will generate sufficient cash to enable this
balance to be repaid. As a result, no impairment has been charged in 2020.
• Derivative Financial Asset – the nature of the Sharing Agreement with Lanstead requires the calculation
of the fair value at the end of the accounting period and it is based on the estimation of the Company’s
share price and discount rate.
• Convertible loan notes – the market rate of interest for a similar instrument without conversion rights
requires management estimation.
ImmuPharma plc Report and Consolidated Financial Statements December 2020
61
Financial and Corporate Information
Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2020
1
Accounting policies (continued)
Changes in accounting policies and disclosures
(a) New and amended Standards and Interpretations adopted by the Group and Company
There are no changes to accounting standards adopted by the Group in the year ended 31 December 2020.
(b) New and amended Standards and Interpretations issued but not effective for the financial year beginning
1 January 2020
Amendments to IFRS 16 addressing Covid-19 related rent concessions became effective for annual reporting
periods beginning on or after 1 June 2020. This is not expected to have a material impact on the Group.
Basis of consolidation
Both the consolidated and the Company’s financial statements are for the year ended 31 December 2020 and
present comparative information for the year ended 31 December 2019. All intra-group transactions, balances,
income and expenditure are eliminated upon consolidation.
The Group’s financial statements incorporate the financial statements of ImmuPharma plc and other entities
controlled by the Company (‘the subsidiaries’). The control principle in IFRS 10 sets out the following three
elements of control: power over the investee; exposure, or rights, to variable returns from involvement with the
investee; and. the ability to use power over the investee to affect the amount of those returns. The financial
statements of these other entities cease to be included in the Group financial statements from the date that
control ceases.
Revenue
Grant income
Revenue is recognised under IAS 20 and relates to grants received by Ureka Pharma SAS. In respect of certain
grants, the proportion of the grant received recognised as revenue in the year is based upon the proportion of
the relevant project costs actually incurred as at the year-end, compared with the projected total costs over the
life of that project. For other grants, the amount of grant receivable is based upon the costs of specific research
staff and in respect of these grants, the amount recognised as revenue is matched to the cost incurred.
Foreign currency
i) Income statement
The presentational and functional currency of ImmuPharma plc is sterling (£). Transactions in foreign currency are
recorded at the rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary
assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the
reporting date. Any gains or losses arising on translation are taken to the Income Statement as finance income
or costs.
Taxation
The tax expense or credit represents the sum of the tax currently payable and any deferred tax less tax credits
recognised in relation to research and development tax incentives.
The tax currently receivable is based on tax credits for the year. Taxable loss differs from net loss as reported in
the Income Statement as it excludes items of income or expense that are taxable or deductible in other years
and it further excludes items that are never taxable or deductible. The Company’s receivable for current tax is
calculated using tax rates that have been enacted or substantively enacted by the year-end date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of
assets and liabilities in the financial statements and the corresponding tax bases used in the computation of
taxable profit and is accounted for using the Statement of Financial Position liability method. Deferred tax assets
are recognised to the extent that it is probable that taxable profits will be available against which deductible
temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is
no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
62
Financial and Corporate InformationImmuPharma plc Report and Consolidated Financial Statements December 2020 Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2020
1
Accounting policies (continued)
Investments in subsidiaries
Investments in subsidiaries are stated at cost less any provision for impairment.
Whenever events or changes in circumstances indicate that the carrying amount of an investment in a subsidiary
undertaking may not be recoverable the investment is reviewed for impairment. An investment’s carrying value is
written down to its estimated recoverable amount if that is less than the investment’s carrying amount.
Intangible assets
Research and development expenditure is charged to the Income Statement in the period in which it is incurred.
Development expenditure is capitalised when the criteria for recognising an asset are met, usually when a
regulatory filing has been made in a major market and approval is considered highly probable. Property, plant
and equipment used for research and development is capitalised and depreciated in accordance with the
Group’s policy.
In process research and development acquired as part of a business combination is recognised separately
from goodwill where the associated project meets the definition of an intangible asset and its fair value can be
measured reliably. In process, research and development assets arising because of a business combination are
amortised on a straight-line basis over their useful lives from the point in time at which the asset is available
for use.
Patents are stated at purchase cost and are amortised on a straight-line basis over their estimated useful lives of
15 years from the date of patent registration.
Property, plant and equipment
Tangible fixed assets are stated at cost, net of depreciation and provision for any impairment. Depreciation is
calculated to write off the cost of all tangible fixed assets to estimated residual value by equal annual instalments
over their expected useful lives as follows:
- Fixtures, fittings and equipment: 2 – 5 years
Impairment of tangible and intangible assets
At each year-end date, the Group reviews the carrying amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
An impairment loss is immediately recognised as an expense, in the Income Statement.
Share based payments
The Company issues equity-settled share based payments to certain employees and third parties. These are
measured at fair value (excluding the effect of non-market based vesting conditions) at the date of grant. The
fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based
on the Group’s estimate of shares that will eventually vest and adjusted for the effect of non market-based
vesting conditions.
Fair value is measured by use of the Black Scholes model. The expected life used in the model has been
adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and
behavioural considerations.
Warrants
The Company issues equity-settled warrants to certain third parties in connection to equity placing services
provided. These warrants were measured based on the estimation of cost of the service provided by the third
parties. The total cost has been recognised in 2020 and has been charged to the equity reserves.
ImmuPharma plc Report and Consolidated Financial Statements December 2020
63
Financial and Corporate Information Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2020
1
Accounting policies (continued)
Provisions
In respect of National Insurance contributions on share option gains, the Company provides in full for all vested
options and on a pro-rata basis over the vesting period for options that have not yet vested for the employer’s
National Insurance liability estimated to arise on the future exercise of the unapproved share options granted.
The amount of National Insurance payable will depend on the number of employees who remain with the
Company and exercise their options, the market price of the Company’s Ordinary shares at the time of exercise
and the prevailing National Insurance rate at that time.
Equity
Share capital is determined using the nominal value of shares that have been issued.
The Share premium account includes any premiums received on the initial issuing of the share capital. Any
transaction costs associated with the issuing of shares are deducted from the Share premium account.
The Merger reserve represents the difference between the nominal value and the market value at the date of
issue of shares issued in connection with the acquisition by the Group of an interest in over 90% of the share
capital of another company.
The Acquisition reserve includes those adjustments arising on reverse acquisition of the Company by
ImmuPharma (UK) Limited.
Foreign currency differences arising on the retranslation of overseas subsidiaries are included in the
translation reserve.
Equity-settled share-based payments are credited to the Equity shares to be issued reserve as a component of
equity until related options or warrants are exercised.
Convertible option reserve represents equity portion of convertible loan notes.
Retained earnings includes all current and prior period results as disclosed in the Income Statement.
Financial instruments
Financial assets and financial liabilities are recognised on the Statement of Financial Position when the Group
becomes a party to the contractual provisions of the instrument. An equity instrument is any contract that
evidences a residual interest in the assets of the group after deducting all of its liabilities and when issued by the
Group is recorded at the proceeds received, net of direct issue costs. The convertible loan notes issued in 2020
represent a compound instrument, having characteristics of both equity and financial liability. On redemption,
the expected cash outflow was determined based on NPV calculation, using an estimated discount rate. As per
IAS 32, the issuer of a bond convertible into ordinary shares first determines the carrying amount of the liability
component by measuring the fair value of a similar liability that does not have an associated equity component.
Subsequently, the liability is accounted for as a financial liability measured at amortised cost until extinguished
on conversion at maturity. The carrying amount of the equity instrument represented by the option to convert the
instrument into ordinary shares is then determined by deducting the fair value of the financial liability from the fair
value of the compound financial instrument as a whole.
Warrants financial asset of Incanthera shares is a derivative financial instrument, initially and subsequently
measured at fair value through other comprehensive income.
Investments other than investments in subsidiaries are classified as either held-for-trading or not at initial
recognition. Those investments and financial assets are initially measured at fair value less transaction costs and
are subsequently measured at fair value. At the year-end date all investments are classified as not held for trading.
An irrevocable election has been made to recognise changes in fair value in other Comprehensive Income.
64
Financial and Corporate InformationImmuPharma plc Report and Consolidated Financial Statements December 2020 Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2020
1
Accounting policies (continued)
Financial instruments (continued)
Trade and other receivables are measured at initial recognition at fair value and are subsequently measured at
amortised cost using the effective interest method. A provision for impairment is established based on lifetime
expected credit losses. The amount of any provision is recognised in profit or loss.
Cash and cash equivalents comprise cash held by the Group and short-term bank deposits with an original
maturity of three months or less.
Trade and other payables are initially measured at fair value, and are subsequently measured at amortised cost,
using the effective interest rate method.
Non-interest bearing loans and overdrafts are initially recorded at fair value and are subsequently measured at
amortised cost using the effective interest rate method.
Derivative financial assets are initially measured at fair value less transaction costs and are subsequently measured
at fair value.
2
Financial risk management
The Group uses a limited number of financial instruments, cash, short-term deposits, loans, overdrafts, and
various items such as trade receivables and payables, which arise directly from operations. The Group does not
trade in financial instruments.
Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, and interest rate
risk), credit risk, liquidity risk and cash flow interest rate risk. The Group’s overall risk management programme
focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the
Group’s financial performance.
a) Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency
exposures, primarily with respect to Sterling, the Euro, the Swiss Franc and the US Dollar. Foreign exchange
risk arises from future commercial transactions, recognised assets, liabilities, and net investments in
foreign operations.
Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are
denominated in a currency that is not the entity’s functional currency.
The Group has certain investments in foreign operations, whose net assets are exposed to foreign
exchange risks.
The Group did not enter into any arrangements to hedge this risk, as the directors did not consider this risk
significant. The directors will review this policy as appropriate in the future.
b) Credit risk
The Group has no significant concentrations of credit risk because the majority of the debtors are
government bodies.
c) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and available funding through an
adequate amount of committed facilities. The Group ensures it has adequate cover through the availability of
funding and facilities.
d) Cash flow and interest rate
The Group finances its operations through a mix of equity finance and borrowings. Borrowings are both non-
interest bearing and interest bearing. Material borrowings, including the convertible loan notes, generally
attract fixed interest rates.
ImmuPharma plc Report and Consolidated Financial Statements December 2020
65
Financial and Corporate Information Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2020
2
Financial risk management (continued)
Financial risk factors (continued)
e) Equity price risk
The Group is exposed to equity price risk due to the possibility that the value of the Company’s shares will
fluctuate. This can affect the amount of any proceeds in any fundraise the Company might undertake. In
addition, any adverse share price change will negatively affect the amount of proceeds the Company will
receive under both current Lanstead “Sharing Agreements”.
f) Exposure to equity investments
The Group’s exposure to equity securities price risk arises from investments held by the Group and classified
in the Statement of Financial Position at fair value.
3
Segment information
- Group
IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the
Group that are regularly reviewed by the chief operating decision maker to allocate resources to the segments
and to assess their performance. In accordance with IFRS 8, the chief operating decision maker has been identified
as the Board of Directors. They review the Group’s internal reporting in order to assess performance and allocate
resources. The Board of Directors consider that the business comprises a single activity, being the development and
commercialisation of pharmaceutical products. Therefore, the Group is organised into one operating segment and
there is one primary reporting segment. The segment information is the same as that set out in the Consolidated
Income Statement, Consolidated Statement of Comprehensive Income, Consolidated Statement of Financial
Position, Consolidated Statement of Changes in Equity and Consolidated Statement of Cash Flows.
Revenue of £105,142 (2019: £54,749) originates in France and £21,525 (2019: £23,176) originates in Switzerland. Of the
loss before taxation, £1,922,938 (2019: £1,738,750) originates in France, with loss before taxation of £5,332,972 (2019:
£5,004,410) and profit of £9,734 (2019: loss of £1,203) originating in the United Kingdom and Switzerland respectively.
Of the total non-current assets, £884,037 (2019: £674,486) originates in France and £2,604,358 (2019: £1,734,529) from
the United Kingdom.
4
Staff costs
The average monthly number of employees across the Group and the Company (including executive directors) was:
Group
Year ended
31 December
2020
No.
Group
Year ended
31 December
2019
No.
Company
Year ended
31 December
2020
No.
Company
Year ended
31 December
2019
No.
14
4
18
14
3
17
2
4
6
1
3
4
Group
Year ended
31 December
2020
£
Group
Year ended
31 December
2019
£
Company
Year ended
31 December
2020
£
Company
Year ended
31 December
2019
£
1,619,125
195,216
1,095
1,681,159
173,801
-
1,065,434
43,361
1,095
1,133,456
40,773
-
1,578,368
1,983,525
1,387,974
1,736,937
3,393,804
3,838,485
2,497,864
2,911,166
Drug research and development, and
commercial operations
Administration and management
The aggregate remuneration
comprised:
Wages and salaries
Social security costs
Pension costs
Share-based payment
66
Financial and Corporate InformationImmuPharma plc Report and Consolidated Financial Statements December 2020 Notes to the Consolidated Financial Statements (continued)
for the year ended 31 December 2020
4
Staff costs (continued)
Directors’ emoluments
The following disclosures are in respect of emoluments payable to the directors of ImmuPharma plc across the
Group and the Company:
Fees
Salaries and benefits
Group
Year ended
31 December
2020
£
Group
Year ended
31 December
2019
£
Company
Year ended
31 December
2020
£
Company
Year ended
31 December
2019
£
541,567
496,388
530,118
638,185
541,567
496,388
530,118
638,185
1,037,955
1,168,303
1,037,955
1,168,303
Please refer to information in the Directors Report on page 41 in respect for amounts paid to individual directors.
Refer to note 22 for details of amounts paid to related parties in lieu of directors’ fees and bonus payments.
The emoluments of the highest paid director, amounts included above are:
Salaries and benefits
Group
Year ended
31 December
2020
£
Group
Year ended
31 December
2019
£
Company
Year ended
31 December
2020
£
Company
Year ended
31 December
2019
£
356,387
356,387
498,185
498,185
356,387
356,387
498,185
498,185
Key management are those persons having authority and responsibility for planning, directing and controlling the
activities of the entity. In the opinion of the Board, the key management of the Group and the Company comprises the
Executive and Non-executive Directors of ImmuPharma plc. Information regarding their emoluments is set out below.
The following disclosures are in respect of employee benefits, including National Insurance, payable to the
directors of ImmuPharma plc across the Group and the Company and are stated in accordance with IFRS:
Group
Year ended
31 December
2020
£
Group
Year ended
31 December
2019
£
Company
Year ended
31 December
2020
£
Company
Year ended
31 December
2019
£
1,037,955
1,186,432
1,037,955
1,186,432
879,489
1,143,207
879,489
1,143,207
1,917,444
2,329,639
1,914,444
2,329,639
Short-term employee benefits
(salaries and benefits)
Share based payments
Directors’ emoluments
ImmuPharma plc Report and Consolidated Financial Statements December 2020
67
Financial and Corporate Information 5
Operating loss
- Group
Operating loss is stated after charging/(crediting):
Share based payments charge
Depreciation of property, plant and equipment
- owned
Amortisation of intangible assets
- patents
Services provided by Company auditors:
- Audit services
- Other services relating to tax compliance services
- Audit services – interim review
Audit services provided by other auditors
6
Finance costs
- Group
Interest payable on loans and overdraft
Interest payable on convertible loan notes
Loss on foreign exchange
Loss on derivative financial asset
Loss on revaluation of convertible loan notes
7
Finance income
- Group
Bank interest receivable
Gain on derivative financial asset
Year ended
31 December
2020
£
Year ended
31 December
2019
£
1,578,368
1,983,525
136,844
34,111
73,900
7,025
20,600
23,726
61,091
29,227
72,500
3,500
14,650
23,086
Year ended
31 December
2020
£
Year ended
31 December
2019
£
31,638
199,190
145,373
1,116,345
205,286
1,697,832
4,045
-
522,689
-
-
526,734
Year ended
31 December
2020
£
41,089
-
41,089
Year ended
31 December
2019
£
5,743
58,271
64,014
68
ImmuPharma plc Report and Consolidated Financial Statements December 2020
Financial and Corporate InformationNotes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020 8
Taxation
- Group
The difference between the total current tax shown above and the amount calculated by applying the standard
rate of UK corporation tax to the loss before tax is as follows:
Current tax:
Corporation tax
Total current tax credit for the year
Loss before taxation
Tax on loss (at the average rate 19%)
(2019: 19%)
Effects of:
Expenses not allowable for tax purposes
Depreciation in excess of capital allowances
Rate differences
Research and development tax credit
Current year losses carried forward
Current tax credit for year
Year ended
31 December
2020
£
(386,248)
(386,248)
Year ended
31 December
2020
£
Year ended
31 December
2019
£
(620,774)
(620,774)
Year ended
31 December
2019
£
(7,246,175)
(6,744,364)
(1,376,773)
(1,281,429)
2,074
35,107
(1,849)
(386,248)
1,341,441
(386,248)
4,463
19,364
229
(620,774)
1,257,373
(620,774)
As at 31 December 2020, the Group has unused tax losses of £46,606,533 (2019: £39,360,358) available for offset
against future profits in the jurisdiction in which the loss arises. No deferred tax asset has been recognised due to
the unpredictability of future profit streams in the relevant jurisdictions.
ImmuPharma plc Report and Consolidated Financial Statements December 2020
69
Financial and Corporate InformationNotes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020 9
Loss per share
- Group
Year ended
31 December
2020
£
Year ended
31 December
2019
£
Loss
Loss for the purposes of basic loss per share being net loss after
tax attributable to equity shareholders
(6,859,927)
(6,123,590)
Number of shares
Weighted average number of ordinary shares for the purposes of
basic earnings per share
Basic loss per share
Diluted loss per share
200,176,156
153,452,385
(3.43)p
(3.43)p
(3.99)p
(3.99)p
The Group has granted share options in respect of equity shares to be issued, the details of which are disclosed in
note 20.
There is no difference between basic loss per share and diluted loss per share as the share options and warrants
are anti-dilutive.
10
Intangible assets
- Group
Cost
At 1 January 2019
Exchange rate movements
At 1 January 2020
Exchange rate movements
At 31 December 2020
Amortisation
At 1 January 2019
Exchange rate movements
Charge for the period
At 1 January 2020
Exchange rate movements
Charge for the period
At 31 December 2020
Net book amount
At 31 December 2020
At 31 December 2019
Research and
development
£
404,095
-
404,095
-
404,095
-
-
-
-
-
-
-
404,095
404,095
Patents
£
482,991
(24,660)
458,331
27,903
486,234
404,047
(49,807)
29,227
383,466
(11,290)
34,111
406,287
79,947
74,865
Total
£
887,086
(24,660)
862,426
27,903
890,329
404,047
(49,807)
29,227
383,466
(11,290)
34,111
406,287
484,042
478,960
70
ImmuPharma plc Report and Consolidated Financial Statements December 2020
Financial and Corporate InformationNotes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020 11
Property, plant and equipment
- Group
Cost
At 1 January 2019
Exchange rate movements
Additions
Disposals
At 1 January 2020
Exchange rate movements
Additions
At 31 December 2020
Depreciation
At 1 January 2019
Exchange rate movements
Charge for the period
Depreciation eliminated on disposals
At 1 January 2020
Exchange rate movements
Charge for the period
At 31 December 2020
Net book amount
At 31 December 2020
At 31 December 2019
Fixtures, fittings
and equipment
£
761,701
(34,323)
110,580
(3,468)
834,490
(72,207)
360,290
1,122,573
597,040
(28,105)
61,091
(2,280)
627,746
(53,623)
136,844
710,967
411,606
206,744
ImmuPharma plc Report and Consolidated Financial Statements December 2020
71
Financial and Corporate InformationNotes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020 11
Property, plant and equipment (continued)
- Company
Cost
At 1 January 2019
Additions
Disposals
At 1 January 2020
Additions
At 31 December 2020
Depreciation
At 1 January 2019
Charge for the period
Eliminated on disposal
At 1 January 2020
Charge for the period
At 31 December 2020
Net book amount
At 31 December 2020
At 31 December 2019
Fixtures, fittings
and equipment
£
60,211
3,476
(1,543)
62,144
5,520
67,664
43,621
7,617
(309)
50,929
5,128
56,057
11,607
11,215
72
ImmuPharma plc Report and Consolidated Financial Statements December 2020
Financial and Corporate InformationNotes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020 12
Financial assets
- Group and Company
Valuation
At 31 December 2019
Additions
Fair value movement
At 31 December 2020
Shares in
listed entity
£
Warrants in
listed entity
£
Total
£
690,910
250,000
851,772
-
-
690,910
250,000
625,576
1,477,348
1,792,682
625,576
2,418,258
In September 2018 ImmuPharma purchased 363,637 shares in Incanthera Limited representing a 15%
shareholding for £2 million. This investment was initially recorded at cost (when purchased and at the 2018 year
end, which was the fair value of the consideration paid). On 28 February 2020, following the admission to trading
on AQSE ImmuPharma exchanged these 363,637 shares for 7,272,740 ordinary shares in Incanthera Plc in a share-
for-share exchange, representing 15% of Incanthera Plc’s enlarged issued ordinary share capital. On 29 September
2020 ImmuPharma has executed its subscription agreement to subscribe £250,000 for 2,631,579 ordinary shares of
2p each at a subscription price 9.5p each.
Following this subscription, ImmuPharma held 9,904,319 shares in Incanthera representing a 15.35% position in
the enlarged share capital of Incanthera.
Under IFRS 7 Financial instruments: Disclosures and IFRS 13 Fair value measurement this is classified under the
fair value hierarchy as level 2. The fair value of ImmuPharma’s 9,904,319 shares held in Incanthera Plc equated to
£1,792,682 as at 31 December 2020 (2019: £690,910), which has resulted in a fair value gain of £851,772 recognised
through other comprehensive income.
Warrants in Incanthera Plc
In September 2018, ImmuPharma had been issued warrants for 363,637 shares at £5.50 per share of Incanthera ltd.
At the year ended 31 December 2019, the warrants were revalued to its fair value, no amounts were recognised
in 2019 as the valuation was deemed immaterial. In February 2020, following the admission to trading on AQSE
by Incanthera plc, these warrants had been replaced by new warrants for 7,272,740 shares at 9.5p per share of
Incanthera plc. These warrants represent a financial asset, measured at fair value through Other Comprehensive
Income. At 31 December 2020, the fair value amounting to £625,576 was calculated using the “Black – Scholes”
valuation model, in which there were several inputs, based on the contractual details and estimations. The inputs
below have been taken into account in 2020
- Expected volatility of share price – 18.30%
- Risk free rate – 0.083% (2019: 0.605%)
- Market value of share price at issue 18.1p
ImmuPharma plc Report and Consolidated Financial Statements December 2020
73
Financial and Corporate InformationNotes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020 13
Investment in subsidiaries
- Company
Cost and fair value
At 31 December 2019
Additions
At 31 December 2020
Shares in
subsidiary
undertakings
£
40,872,730
190,392
41,063,122
Details of the Company’s subsidiaries as at 31 December 2020 are as follows:
Name of company
ImmuPharma (France) SA
Holding
Ordinary
% voting rights
and shares held
100
ImmuPharma AG
Ordinary
100
Ureka Pharma SAS (formerly
Ureka SARL)
Ordinary
99.97
Nature of business &
country of incorporation
Pharmaceutical research
and development –
France
Pharmaceutical research
and development –
Switzerland
Registered Office
Address
5 rue du Rhone
68100 Mulhouse
France
Poststrasse 10
CH-6060
Sarnen OW
Switzerland
Pharmaceutical research
and development –
France
5 rue du Rhone
68100 Mulhouse
France
Investments are recorded at cost, which is the fair value of the consideration paid.
The Company assessed the fair value of its Investment in Subsidiaries as at 31 December 2020 and has concluded
that there has been no impairment to their value and that the carrying value remains as stated above. In order to
reach this conclusion, the directors considered several points. Central to this assessment was a discounted cash
flow analysis of the Group’s lead program that supported this conclusion. Key assumptions included the discount
rate, growth rate, exchange rate, tax rate as well as probability weighting. These assumptions were tested for
sensitivity, which supported the conclusion of no impairment. Sensitivity analysis of the key assumptions showed
that an adverse 10% change to any of these factors did not change this conclusion.
74
ImmuPharma plc Report and Consolidated Financial Statements December 2020
Financial and Corporate InformationNotes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020 14 Derivative financial asset
Group
31 December
2020
£
Group
31 December
2019
£
Company
31 December
2020
£
Company
31 December
2019
£
Balance brought forward
Value of derivative at inception
2,299,861
1,300,000
-
2,656,520
2,299,861
1,300,000
Settlements received
(1,292,393)
(414,930)
(1,292,393)
-
2,656,520
(414,930)
(Loss)/gains recognised through
income statement
(1,116,345)
58,271
(1,116,345)
58,271
1,191,123
2,299,861
1,191,123
2,299,861
Due within one year
Due after one year
At 31 December
31 December
2020
£
31 December
2019
£
1,016,635
174,488
1,456,714
843,147
1,191,123
2,299,861
As part of the placement completed in June 2019, the Company issued 26,565,200 new ordinary shares to
Lanstead Capital Investors L.P. (“Lanstead”) at a price of 10p per share for an aggregate subscription price
of £2.66 million before expenses. In an additional placement completed in March 2020, the Company issued
13,000,000 new ordinary shares to Lanstead Capital Investors L.P. (“Lanstead”) at a price of 10p per share for an
aggregate subscription price of £1.3 million before expenses. The Subscription proceeds were pledged under a
Sharing Agreement under which Lanstead made and will continue to make, subject to the terms and conditions
of that Sharing Agreement, monthly settlements to the Company that are subject to adjustment upwards or
downwards depending on the Company’s share price performance.
The Company also issued, in aggregate, a further 1,328,290 new ordinary shares in July 2019 and 650,000 new
ordinary shares in March 2020 to Lanstead as value payments in connection with the Share Subscription and
the Sharing Agreement. Monthly settlements under the Sharing Agreement will continue in 2021 and 2022
completing in September 2021 and June 2022 respectively.
At the end of the accounting period the amount receivable has been adjusted to fair value based upon the share
price of the Company at that date. Any change in the fair value of the derivative financial asset is reflected in the
income statement. As at 31 December 2020, the Company completed a calculation of fair value of the derivative
financial asset that resulted in a finance loss of £1,116,345, which was recorded in the income statement. The
restatement to fair value will be calculated at the end of each accounting period during the course of the Sharing
Agreement and will vary according to the Company’s share price performance.
ImmuPharma plc Report and Consolidated Financial Statements December 2020
75
Financial and Corporate InformationNotes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020 15
Trade and other receivables
Amounts owed by group undertakings
Other debtors
Prepayments
Group
31 December
2020
£
Group
31 December
2019
£
Company
31 December
2020
£
Company
31 December
2019
£
-
95,339
66,659
-
11,779,540
9,950,510
102,924
50,685
56,583
64,820
42,327
38,200
161,998
153,609
11,900,943
10,031,037
The Group’s credit risk is primarily attributable to its other debtors. The Company’s credit risk is primarily
attributable to the intercompany loan balances due from French subsidiaries. Based on prior experience and an
assessment of the current economic environment, the directors did not consider any provision for irrecoverable
amounts was required and consider that the carrying value of these assets approximates to their fair value.
The Company’s receivables due from Group undertakings are intercompany loan balances due from its three
French subsidiaries. As of 31 December 2020, the directors believe that there has been no impairment to these
values. This assessment is based on the Company’s oversight of the subsidiaries’ financial position as well as an
assessment of the future prospects of the subsidiaries’ underlying development programs.
The Company considers that the amounts included in receivables due from group companies will prove
recoverable. However, the timing of and the ultimate repayment of these amounts will depend primarily on the
growth of revenues for the relevant group companies. Currently, the Company expects the amounts to be repaid
over a number of years.
The total carrying amount of financial assets for the Group is £9,566,777 (2019: £4,458,535), consisting of trade and
other receivables of £95,339 (2019: £102,924), investment in Incanthera Plc £2,418,258 (2019: £690,910), derivative
financial asset £1,191,123 (2019: £2,299,861) and cash and cash equivalents of £5,862,057 (2019: £1,364,840).
The total carrying amount of financial assets for the Company is £20,885,688 (2019: £13,818,072), consisting of
trade and other receivables of £11,900,943 (2019: £9,992,837), investment in shares in Incanthera Plc £1,792,682
(2019: £690,910), investment in warrants in Incanthera Plc £625,576 (2019: £nil), derivative financial asset £1,191,123
(2019: £2,299,861) and cash and cash equivalents of £5,375,364 (2019: £834,464).
16 Cash and cash equivalents
Group
31 December
2020
£
Group
31 December
2019
£
Company
31 December
2020
£
Company
31 December
2019
£
Cash and cash equivalents
5,862,057
1,364,840
5,375,364
834,464
Cash and cash equivalents comprise cash held by the Group and short-term bank deposits with an original
maturity of three months or less at varying rates of interest over the period between 0.0% and 0.5%.
The directors consider that the carrying value of these assets approximates to their fair value.
The credit risk on liquid funds is limited because the counter-party is a bank with a high credit rating.
Included within the above is £50,000 held separately in a Royal Bank of Scotland bank account in respect of a
charge held over cash balances with reference to the Company’s credit card facility.
76
ImmuPharma plc Report and Consolidated Financial Statements December 2020
Financial and Corporate InformationNotes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020 17
Financial liabilities – borrowings
- Group
Total borrowings within one year comprises:
Bank overdraft
Other loans
Convertible loan notes (note 24)
Please refer to note 23for details of maturity.
31 December
2020
£
31 December
2019
£
316
6,623
634,902
641,841
471
26,307
-
26,778
Bank overdraft and other loans are non-interest bearing. Convertible loan notes are interest bearing with a fixed
interest rate. The directors consider that the carrying amount of short and long-term liabilities approximates to
their fair value.
18
Trade and other payables
Trade payables
Other taxes and social security
Accruals and other creditors
Group
31 December
2020
£
Group
31 December
2019
£
Company
31 December
2020
£
Company
31 December
2019
£
418,072
90,267
110,698
619,037
329,701
71,133
104,255
505,089
142,483
136,816
-
110,698
253,181
-
104,255
241,071
The directors consider that the carrying amount of trade and other payables approximates to their fair value.
19
Share capital
At 31 December 2020, the Company had no limit on its authorised share capital.
Allotted, called up and fully paid
2020 No.
2019 No.
2020 £
2019 £
At start of year:
Ordinary shares of £0.10 each
Movements during year:
Shares issued on 30 March 2020
Shares issued on 30 March 2020
Shares issued on 2 September 2020
Shares issued on 2 September 2020
Shares issued on 3 September 2020
Shares issued on 9 September 2020
Shares issued on 10 September 2020
Shares issued on 23 November 2020
Shares issued on 24 November 2020
167,360,920
167,360,920
16,736,093
16,736,093
13,650,000
2,000,000
59,090,909
682,242
1,045,046
1,429,938
1,026,750
1,430,510
2,504,982
-
-
-
-
-
-
-
-
-
1,365,000
200,000
5,909,091
68,224
104,505
142,994
102,675
143,051
250,498
-
-
-
-
-
-
-
-
-
At end of year
250,221,297
167,360,920
25,022,130
16,736,093
ImmuPharma plc Report and Consolidated Financial Statements December 2020
77
Financial and Corporate InformationNotes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020 19
Share capital (continued)
During the financial year, the Company issued in total 82,860,377 new ordinary shares.
Details of new shares issued during the financial year 2020 are summarised as follows:
On 30 March 2020 the Company issued 13,650,000 new ordinary shares with nominal amount of £1,365,000, with
£65,000 deducted from reserves in relation to value payment shares. The gross proceeds amounted to £1,300,000
and were deferred under the Sharing Agreement.
On 30 March 2020 the Company issued 2,000,000 new ordinary shares with nominal amount of £200,000 and gross
proceeds amounted to £200,000.
On 2 September 2020 the Company issued 59,090,909 new ordinary shares with nominal amount of £5,909,091
and gross proceeds of £6,500,000, with share premium of £590,909.
On 2 September 2020 the Company issued 682,242 new ordinary shares with nominal amount of £68,224, with
£68,224 deducted from reserves in relation to value payment shares.
On 3 September 2020 the Company issued 1,045,046 new ordinary shares with nominal amount of £104,505, with share
premium of £10,451. The new ordinary shares were issued in relation to the conversion of the convertible loan notes.
On 9 September 2020 the Company issued 1,429,938 new ordinary shares with nominal amount of £142,994, with share
premium of £14,299. The new ordinary shares were issued in relation to the conversion of the convertible loan notes.
On 10 September 2020 the Company issued 1,026,750 new ordinary shares with nominal amount of £102,675, with share
premium of £10,268. The new ordinary shares were issued in relation to the conversion of the convertible loan notes.
On 23 November 2020 the Company issued 1,430,510 new ordinary shares with nominal amount of £143,051, with share
premium of £14,305. The new ordinary shares were issued in relation to the conversion of the convertible loan notes.
On 24 November 2020 the Company issued 2,504,982 new ordinary shares with nominal amount of £250,498 with share
premium of £25,050. The new ordinary shares were issued in relation to the conversion of the convertible loan notes.
The total costs incurred in relation to the issue of new equity capital amounted to £1,008,356 of which £615,268
was debited against share premium and the remaining £393,088 against retained earnings as there was not
sufficient share premium credit for that new equity capital raised.
20
Share based payments
Equity-settled and warrants
The Company adopted a new share option plan in March 2017 to replace the previous scheme, which had expired.
Details of the share options and warrants outstanding during the period are as follows:
Number
of share
options
Outstanding as at 31 December 2019
16,215,000
Expired during the year
Granted during 2020
640,000
9,625,000
Weighted
average
exercise
price (£)
of share
options
0.811
0.865
Weighted
average
exercise
price (£) of
warrants
options
Total number
of options
(Share
options and
Warrants
options)
Number of
warrants
options
153,850
0.52
16,368,850
0.20
28,983,299
640,000
38,608,299
54,337,149
0.11
0.11
Outstanding as at 31 December 2020
25,200,000
0.58
29,137,149
Exercisable as at 31 December 2019
1,093,850
0.785
-
-
1,093,850
Became exercisable during the year 2020
14,481,150
Granted and exercisable during 2020
-
153,850
28,983,299
14,635,000
28,983,299
Exercisable as at 31 December 2020
15,575,000
0.50
29,137,149
0.11
44,712,149
78
ImmuPharma plc Report and Consolidated Financial Statements December 2020
Financial and Corporate InformationNotes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020 The options and warrants outstanding as at 31 December 2020 had a weighted average remaining contractual life of 5 years.
20
Share based payments (continued)
Equity-settled and warrants (continued)
Number of share options and warrants issued in 2020 had a contractual life between 3 to 10 years.
The options and warrants outstanding as at 31 December 2020 had exercise prices between £0.10 and £1.530
(2019: £0.439 and £1.530).
Equity-settled share option scheme
The total value of options granted during 2017 and 2020 was calculated using the Economic Research Institute’s
Black-Scholes pricing model. The inputs into the pricing model were as follows:-
Option grant date
Option value
Share price at grant date
Exercise price
Volatility
Vesting period
Expected life
Expected dividend yield
Risk free interest rate
30 March
2017
£833,000
£0.5025
£0.5025
47%
3 years
7 years
0%
0.382%
13 July
2017
24 November
2017
1 December
2017
25 November
2020
£400,950
£3,928,838
£707,760
£913,958
£0.5675
£0.5675
47%
3 years
7 years
0%
0.382%
£0.9862
£0.9862
51%
3 years
7 years
0%
0.382%
£1.5300
£1.5300
52%
3 years
7 years
0%
0.382%
£0.129
£0.20
144%
3 years
7 years
0%
-0.024%
Expected volatility was determined by calculating the historical volatility of the Company’s share price to the
date of the grant over a 3 year period. Expected life was determined by examining the exercise history of the
Company’s option holders. No market-based conditions were used as inputs into the pricing model.
The total value of options granted during 2020 was calculated as above at £913,958. Of this amount, £25,388 has
been charged in the financial statements for the year ended 31 December 2020. The remaining amount £888,570
will be charged over the next 3 financial years ending 31 December 2023.
The total value of options granted during 2017 was calculated as above at £5,870,548. Of this amount, £1,552,980
has been charged in the financial statements for the year ended 31 December 2020. The total charged to date is
£5,870,548 and there is no remaining amount to be charged in the year ending 31 December 2021.
The total value of options granted during the year ended 31 December 2016 was calculated as £301,280. As at 31
December 2020 there was no remaining balance to be charged in the financial statements. (2019: £26,676).
The total value of all other options granted in previous years has been fully charged in the financial statements in
prior years.
Warrants
Warrant holder/grant date
01/04/20 Stanford Capital
10/06/20 L1 Capital
10/06/20 Lind Capital
02/09/20 SI Capital
02/09/20 Stanford Capital
Exercise price
No of warrants
Expected life
£0.10
£0.11
£0.11
£0.11
£0.11
915,205
12,820,127
12,820,127
1,213,920
1,213,920
10 years
3 years
3 years
10 years
10 years
The above warrants have been granted in connection to the funding raised in 2020. They have been valued based
on estimated cost of service. The total value of warrants granted during 2020 was calculated at £173,000. All of this
amount, £173,000 has been charged to equity reserves for the year ended 31 December 2020.
ImmuPharma plc Report and Consolidated Financial Statements December 2020
79
Financial and Corporate InformationNotes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020 21 Cash used in operations
Group
31 December
2020
£
Group
31 December
2019
£
Company
31 December
2020
£
Company
31 December
2019
£
Operating loss
(5,589,432)
(6,281,644)
(3,537,507)
(3,575,225)
Depreciation and amortisation
Share-based payments
(Increase)/decrease in trade and
other receivables
Increase/(decrease) in trade and
other payables
(Gain)/loss on foreign exchange
170,954
1,578,368
88,038
5,128
7,310
1,983,525
1,387,974
1,736,938
(8,380)
177,878
(40,876)
32,530
113,926
(145,372)
(408,818)
(522,689)
12,111
(135,354)
11,533
(521,313)
Cash used in operations
(3,879,936)
(4,963,710)
(2,308,524)
(2,308,227)
22 Related party transactions
a) Group
D Dimitriou receives part of his remuneration through a consultancy company owned by him, Dragon Finance
AG. During the year ImmuPharma AG was charged £180,302 (2019: £169,790) for the provision of management
services by Dragon Finance AG. D Dimitriou is a director of ImmuPharma (France) SA and ImmuPharma plc.
All amounts received by D Dimitriou via Dragon Finance AG are incorporated in the remuneration table in the
Directors Report on page 41.
T McCarthy receives his remuneration through a service company owned by him, Unnamed Ltd. During the year
ImmuPharma plc was charged £260,000 (2019: £260,000) for the provision of Chairman’s fees by Unnamed Ltd. All
amounts received by T McCarthy via Unnamed Ltd are incorporated in the remuneration table in the Directors
Report on page 41.
During the year, an amount of £119,369 (2019: £117,361) was paid to the wife of Dr R Zimmer in respect of services
provided to ImmuPharma plc, ImmuPharma (France) SA and Ureka Pharma SAS. During the year ImmuPharma
AG was charged £129,995 (2019: £nil) for the provision of consultancy services by Luca and Associates AG, a
company which Dr R Zimmer is connected to. An amount of £40,191 (2019: £nil) was also paid to the daughter of
Dr R Zimmer in respect of services provided to ImmuPharma (France). Dr R Zimmer issued loans to ImmuPharma
(France) SA and Ureka Pharma SAS of £2,929 (2019: £nil) and £4,105 (2019: £nil) respectively.
b) Company
During the year ended 31 December 2020, management charges of £568,562 (2019: £610,644) were rendered
by ImmuPharma plc to ImmuPharma (France) SA. This amount was due to the Company at 31 December 2020.
The Company also loaned the sum of £nil (2019: £684,135) to ImmuPharma (France) SA during the year ended
31 December 2020. The total balance due to the Company from ImmuPharma (France) SA at 31 December 2020
was £9,663,806 (2019: £8,597,241).
During the year ended 31 December 2020, management charges of £142,141 (2019: £152,661) were rendered
by ImmuPharma plc to Ureka Pharma SAS. This amount was due to the Company at the 31 December 2020.
The Company also loaned the sum of £539,522 (2019: £528,930) to Ureka Pharma SAS during the year ended
31 December 2020. The total balance due to the Company from Ureka Pharma SAS at 31 December 2020 was
£2,121,596 (2019: £1,353,270).
During the year ended 31 December 2020, management charges of £326,675 (2019: £169,901) were rendered by
ImmuPharma AG to ImmuPharma plc of which no balance was owed at the year end (2019: £nil).
80
ImmuPharma plc Report and Consolidated Financial Statements December 2020
Financial and Corporate InformationNotes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020 23
Financial instruments
The Group’s financial instruments comprise of cash and cash equivalents, investment in Incanthera plc, derivative
financial asset, borrowings and items such as trade payables, which arise directly from its operations. The main
purpose of these financial instruments is to provide finance for the Group’s operations.
The Group’s operations expose it to a variety of financial risks including liquidity risk, interest rate risk, equity
price risk and foreign exchange rate risk. Given the size of the Group, the directors have not delegated the
responsibility of monitoring financial risk management to a sub-committee of the Board. The Company’s finance
department implements the policies set by the Board of Directors.
The principal financial instruments used by the Group from which financial instrument risk arises are as follows:-
Trade and other receivables
Shares in listed entity
Warrants in listed entity
Derivative financial asset
Cash and cash equivalents
Total financial assets
Financial liabilities – borrowings due within 1 year
Trade and other payables
Convertible loan notes
Total financial liabilities
Year ended
31 December
2020
£
Year ended
31 December
2019
£
95,339
1,792,682
625,576
1,191,123
5,862,057
9,566,777
6,939
528,770
634,902
1,170,611
102,924
690,910
-
2,299,861
1,364,840
4,458,535
26,778
433,956
-
460,734
ImmuPharma plc Report and Consolidated Financial Statements December 2020
81
Financial and Corporate InformationNotes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020 23
Financial instruments (continued)
Liquidity risk
Group
The Group actively maintains a mixture of long term and short-term debt finance that is designed to ensure it has
sufficient available funds for operations and planned expansions. The Group monitors its levels of working capital
to ensure that it can meet its debt repayments as they fall due.
The following table shows the contractual maturities of the Group’s financial liabilities, all of which are measured
at amortised cost:
At 31 December 2020
6 months or less
6 – 12 months
1 – 2 years
2 – 5 years
Trade and
other payables
£
Borrowings
£
Convertible
liability
£
528,770
6,939
-
-
-
-
-
-
-
634,902
-
-
Total
£
535,709
634,902
-
-
Total contractual cash flows
528,770
6,939
634,902
1,170,611
Carrying amount of financial
liabilities measured at amortised cost
528,770
6,939
634,902
1,170,611
Trade and
other payables
£
Borrowings
£
Convertible
liability
£
At 31 December 2019
6 months or less
6 – 12 months
1 – 2 years
2 – 5 years
433,956
26,778
-
-
-
-
-
-
Total contractual cash flows
433,956
26,778
Carrying amount of financial
liabilities measured at amortised cost
433,956
26,778
-
-
-
-
-
-
Total
£
460,734
-
-
-
460,734
460,734
Company
The Company’s financial liabilities comprise trade and other payables with a carrying amount equal to gross cash
flows payable of £142,483 (2019: £136,816), accrued purchases with a carrying amount of £110,698 (2019: £104,255)
and convertible loan notes of £634,902 (2019: £nil), all of which are payable within 6-12 months.
Interest rate risk
Group
The Group has both interest bearing assets and interest bearing liabilities. Interest bearing assets comprise cash
and cash equivalents denominated in Sterling, the Euro, the Swiss Franc and the US Dollar which earn interest at
a variable rate. The directors will revisit the appropriateness of this policy should the Group’s operations change
in size or nature. Interest bearing liabilities comprise of convertible loan notes denominated in US Dollar which
are carried at amortised cost. The interest element is based on effective interest rate of 26% compared to coupon
rate of 10%.
During the year, the Group’s cash and cash equivalents earned interest at a variable rate between 0.0% and 0.5%
(2019: 0.0% and 0.5%).
82
ImmuPharma plc Report and Consolidated Financial Statements December 2020
Financial and Corporate InformationNotes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020 23
Financial instruments (continued)
Interest rate risk (continued)
Group (continued)
As at 31 December 2020, if LIBOR had increased by 0.5% with all other variables held constant, the post-tax profit
and equity would have been higher by £27,985 (2019: £13,170). Conversely, if LIBOR had fallen by 0.5% with all
other variables held constant, the post-tax profit and equity would have been lower by £27,985 (2019: £13,170).
Details of the terms of the Group’s borrowings are disclosed in note 17.
The Group also has non-interest bearing borrowings, which are carried at amortised cost, and therefore the risk
is the change in the fair value of the borrowings. Changes in the market interest rates of these liabilities do not
affect loss or equity and therefore no sensitivity analysis is required under IFRS 7.
Company
The Company has both interest bearing assets and interest bearing liabilities. Interest bearing assets comprise
of cash and cash equivalents denominated in Sterling, which earn interest at a variable rate. Interest bearing
liabilities comprise of convertible loan notes denominated in US Dollar which are carried at amortised cost. The
interest element is based on effective interest rate of 26% compared to coupon rate of 10%.
During the year, the Company’s cash and cash equivalents earned interest at a variable rate between 0.0% and
0.5% (2019: 0.0% and 0.5%).
As at 31 December 2020, if LIBOR had increased by 0.5% with all other variables held constant, the post-tax loss
would have been lower and equity would have been higher by £18,631 (2019: £11,000). Conversely, if LIBOR had
fallen by 0.5% with all other variables held constant, the post-tax loss would have been higher and equity would
have been lower by £18,631 (2019: £11,000).
Foreign exchange rate risk
Group
The Group is exposed to foreign exchange rate risk as a result of having cash balances in Euros, Swiss Francs
and US Dollars and a convertible loan notes in US Dollars. During the year, the Group did not enter into any
arrangements to hedge this risk, as the directors did not consider the exposure significant given the short-term
nature of the balances. The Group will review this policy as appropriate in the future.
As at 31 December 2020, if the Euro had weakened 10% against Sterling with all other variables held constant,
the post-tax profit and equity would have been lower by £32,500 (2019: £43,000). Conversely, if the Euro had
strengthened 10% against Sterling with all other variables held constant, the post-tax profit and equity would
have been higher by £32,500 (2019: £43,000).
As at 31 December 2020, if the US Dollar had weakened 10% against Sterling with all other variables held
constant, the post-tax profit and equity would have been lower by £25,700 (2019: £15,000). Conversely, if the US
Dollar had strengthened 10% against Sterling with all other variables held constant, the post-tax profit and equity
would have been higher by £25,700 (2019: £15,000).
As at 31 December 2020, if the Swiss Franc had weakened 10% against Sterling with all other variables held
constant, the post-tax profit and equity would have been lower by £16,500 (2019: £7,500). Conversely, if the Swiss
Franc had strengthened 10% against Sterling with all other variables held constant, the post-tax profit and equity
would have been higher by £16,500 (2019: £7,500).
Company
The Company is exposed to foreign exchange rate risk through the payment of non-Sterling amounts,
intercompany balances in Euros and Swiss Francs and as a result of having cash balances in Euros and US Dollars.
The Company’s convertible loan notes are also held in US Dollars. During the year, the Company did not enter
into any arrangements to hedge this risk, as the directors did not consider the exposure significant. The Company
will review this policy as appropriate in the future.
As at 31 December 2020, if the Euro had weakened 10% against Sterling with all other variables held constant,
the post-tax profit and equity would have been lower by £3,000 (2019: £1,500). Conversely, if the Euro had
strengthened 10% against Sterling with all other variables held constant, the post-tax profit and equity would
have been higher by £3,000 (2019: £1,500).
ImmuPharma plc Report and Consolidated Financial Statements December 2020
83
Financial and Corporate InformationNotes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020 23
Financial instruments (continued)
Foreign exchange rate risk (continued)
Company (continued)
As at 31 December 2020, if the US Dollar had weakened 10% against Sterling with all other variables held
constant, the post-tax profit and equity would have been lower by £25,700 (2019: £15,000). Conversely, if the US
Dollar had strengthened 10% against Sterling with all other variables held constant, the post-tax profit and equity
would have been higher by £25,700 (2019: £15,000).
Equity price risk
Group and Company
The Group holds the investment in shares in Incanthera, trading on AQSE, described in further detail in Note 12.
The Group and Company are exposed to equity price risk as the sale of any Incanthera plc shares will fluctuate
depending on the future share price. If ImmuPharma sold their shares in Incanthera for 10% less than the issue
price of 9.5p, this would indicate a reduction in investment value of £179,268 which would increase the Group’s
and Company’s loss by £179,268. If ImmuPharma sold their shares for 10% more than the issue price of 9.5p, this
would indicate an increase in fair value of £179,268 which would decrease the Group’s and Company’s loss by
£179,268.
The Group has also entered into a derivative transaction during the year 2020, details of which can be found at
note 14. The risk associated with this transaction is the variable consideration receivable, which depends on the
Company’s share price. During the year, the Group did not enter into any arrangements to hedge this risk, as the
directors did not consider the exposure significant given the short term nature of the balance. The Group will
review this policy as appropriate in the future.
If the Company’s share price had weakened 10% with all other variables held constant, the post-tax loss would
have been higher and equity would have been lower by £129,239. Conversely, if the Company’s share price had
strengthened by 10% with all other variables held constant, the post-tax loss would have been lower and equity
would have been higher by £129,239.
The following is a comparison by category of the carrying amounts and fair values of the Group’s financial assets
and liabilities at 31 December 2020. Set out below the table is a summary of the methods and assumptions used
for each category of instrument.
Trade and other receivables at
amortised cost
Derivative financial asset
Shares in listed entity
Warrants in listed entity
Carrying
amount
2020
£
95,339
1,191,123
1,792,682
625,576
Fair
Value
2020
£
95,339
1,191,123
1,792,682
625,576
Carrying
amount
2019
£
102,924
2,299,861
690,910
-
Fair
Value
2019
£
102,924
2,299,861
690,910
-
Financial liabilities at amortised cost
1,170,611
1,170,611
460,734
460,734
4,875,331
4,875,331
3,554,429
3,554,429
84
ImmuPharma plc Report and Consolidated Financial Statements December 2020
Financial and Corporate InformationNotes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020 23
Financial instruments (continued)
Equity price risk (continued)
Group and Company (continued)
Trade and other receivables at amortised cost
The fair value approximates to the carrying amount because of the short maturity of these instruments.
Derivative financial asset
The asset is recorded at fair value and is calculated based on ImmuPharma’s share price at the year end.
Financial liabilities at amortised cost
The fair value approximates to the carrying amount because the majority are associated with variable-rate interest
payments that are re-aligned to market rates at intervals of less than one year.
Shares in listed entity
The balances are recorded at fair value and are determined by using published price quotations in an active
market or using a valuation technique based on the price of recent investment methodology.
Warrants in listed entity
The balances are recorded at fair value and are determined by using published price quotations in an active
market or using a valuation technique based on the price of recent investment methodology.
Fair value measurement
The Group measures the fair value of its financial assets and liabilities in the Statement of Financial Position in
accordance with the fair value hierarchy. The hierarchy groups financial assets and liabilities into three levels
based on the significance of inputs used in measuring the fair value of the financial assets and liabilities. The fair
value hierarchy has the following levels:
Level 1 fair value measurements are those derived from unadjusted quoted prices in active markets for identical
assets and liabilities;
Level 2 fair value measurements are those derived from inputs, other than quoted prices included within level 1,
that are observable either directly (i.e. as prices) or indirectly (i.e. derived from prices);
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.
ImmuPharma plc Report and Consolidated Financial Statements December 2020
85
Financial and Corporate InformationNotes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020 23
Financial instruments (continued)
Equity price risk (continued)
Fair value measurement (continued)
The following table presents the Group’s financial assets that are measured at fair value at 31 December 2020:
Shares in listed entity
Warrants in listed entity
Derivative financial asset
As at 31 December 2020
Level 1
£
-
-
-
Level 2
£
1,792,682
625,576
1,191,123
3,609,381
Level 3
£
-
-
-
Summary of financial assets held at level 2 fair value:
Warrants in
listed entity
£
Shares in
listed entity
£
Total
£
1,792,682
625,576
1,191,123
3,609,381
Total
£
690,910
250,000
20,488
As at 1 January 2020
Additions
Initial recognition value on inception
Revaluation at fair value
As at 31 December 2020
-
-
20,488
605,088
625,576
690,910
250,000
-
851,772
1,456,860
1,792,682
2,418,258
The fair value has been assessed at 31 December 2020 and is based on the ImmuPharma Plc shareholding of
15.35% of Incanthera plc.
Fair value brought forward
Fair value at inception
Payments received under Sharing Agreement
Net losses recognised in Income Statement
As at 31 December 2020
Derivative financial asset
£
2,299,861
1,300,000
(1,292,393)
(1,116,345)
1,191,123
The consideration receivable is variable depending on the Company’s share price and the derivative financial
asset is revalued through the Income Statement with reference to the Company’s closing share price. The
valuation methodology and inputs are detailed in note 14.
Capital Risk
Group and Company
The Group and Company considers its capital under management to be its cash and cash equivalents and
share capital and reserves. The Group and Company’s overall objective in managing its capital is to support
the strategic objectives of the business: the development of potential new drugs. Decisions regarding the
management of capital are taken by the Board in conjunction with regular strategic planning and budget reviews.
86
ImmuPharma plc Report and Consolidated Financial Statements December 2020
Financial and Corporate InformationNotes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020 24 Convertible Loan Notes
Group
31 December
2020
£
Group
31 December
2019
£
Company
31 December
2020
£
Company
31 December
2019
£
Value of loan at inception
Issue costs
Equity component
Value of shares converted
Repurchased during the year
Exchange differences on revaluation
Interest expense
Loss on revaluation
2,153,824
(232,263)
(31,623)
(799,846)
(815,166)
(44,500)
199,190
205,286
634,902
-
-
-
-
-
-
2,153,824
(232,263)
(31,623)
(799,846)
(815,166)
(44,500)
199,190
205,286
634,902
-
-
-
-
-
-
On 10 June 2020, the Company issued £2.4 million/$3.0 million (face value) convertible loan notes. The proceeds
received equated to £2.15 million/$2.7 million (before expenses of £0.3 million/$0.3 million).
The value of liability component and the equity conversion component were determined at the date the
instrument was issued. The fair value of the liability was calculated at the rate of interest for similar debt without
the conversion option of 19.90%.
On initial recognition the value of the equity amounted to £56k and the liability amounted to £1,835k.
At the year end the liability had a fair value of £635k.
ImmuPharma plc Report and Consolidated Financial Statements December 2020
87
Financial and Corporate InformationNotes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020 24 Convertible Loan Notes (continued)
The summary of the key terms of the loan notes is as follows.
Term
Conversion price
Conversion by the Company
18 months
17.96p, which is equivalent to 120% of the
Volume Weighted Average Price (“VWAP”) of the
ordinary shares for 09 June 2020.
On 2 September 2020, (as the result of additional
placing) the conversion price has been adjusted
downwards to 11p.
During the maturity period, if the VWAP on each
of at least 20 consecutive trading days shall be
equal to or have exceeded 35.92p (200% of the
Conversion Price)
Conversion by the Investors
At any time during the maturity period.
Security
Coupon & Payment
Redemption
25
Subsequent events
There were no subsequent events.
All amounts falling due under the Convertible Loan
Notes will be secured by debenture constituting a
first-ranking fixed and floating charge over all the
assets of the Company (the “Debenture”)
10% per annum, payable quarterly in arrears
The Convertible Loan Notes can be redeemed:
-in the event of additional funds receipt by the
Company, Investors have rights to repurchase any
unconverted securities to the value of up to 25%
of the gross proceeds of financing, at 105% of
face value;
-upon Nasdaq listing ImmuPharma can offer to
redeem all or part of the unsecured convertible
notes at 105% of face value plus accrued interest;
-otherwise, automatically at the end of the term.
88
ImmuPharma plc Report and Consolidated Financial Statements December 2020
Financial and Corporate InformationNotes to the Consolidated Financial Statements (continued)for the year ended 31 December 2020 ‘biomarkers’
measurable biological responses used as predictors of clinical effects.
‘CRO’
‘drug-like’
‘Lupus’
‘PDCT’
‘peptide’
‘Pharma’
‘Phase 0’
‘Phase I’
‘Phase II’
‘Phase III’
contract research organisation.
having the potential to become a drug product candidate due to its physical and
chemical characteristics.
an autoimmune inflammatory disease of unknown etiology.
peptide to drug converting technology.
a molecule comprised of a series of amino acids (or a small subpart of a protein).
abbreviation for “Pharmaceutical”; sometimes in the industry “pharma” also denotes
a pharmaceutical company.
the stage of development of a drug candidate before the first administration to man,
during which all mandatory data required by regulatory bodies such as the FDA or the
EMEA is generated and filed.
the stage of development of a drug candidate during which it is administered to man
(usually healthy volunteers) for the first time. Phase I studies are designed to assess
primarily the safety and tolerability of the drug candidate and gather information on
its ADME. This phase is also used whenever possible to evaluate surrogate markers
which are indicative of the clinical efficacy of the drug candidate.
the stage of development of a drug candidate during which therapeutic studies are
conducted in limited numbers of patients using data generated in Phase I studies to
determine dose regimen and primary efficacy, and to examine therapeutic outcomes
and monitor safety in patients.
the stage of development of a drug candidate during which it is tested in large
scale pivotal trials on, typically, between 200 to 4000 patients to demonstrate overall
efficacy, tolerability and safety with a dose regimen as determined in Phase II. The
drug candidate must generally prove to be statistically better than placebo or the
current best therapy in terms of efficacy, safety or quality of life.
ImmuPharma plc Report and Consolidated Financial Statements December 2020
89
Financial and Corporate InformationGlossary of Technical Terms Portrait photography: Johnny Haddock / www.johnnyhaddock.co.uk
Produced by: Diversified Global Graphics Group - DG3 / www.dg3.com
ImmuPharma plc1 Bartholomew CloseLondonEC1A 7BLUKTel: +44 20 7152 4080Fax: +44 20 7152 4001investors@immupharma.comwww.immupharma.com