Oncolytics Biotech Inc.
Annual Report 2018

Plain-text annual report

Oncimmune Holdings Plc For the year ended 31 May 2018 Nottingham Clinical Sciences Building, City Hospital Hucknall Road, Nottingham, NG5 1PB United Kingdom London 184 Shepherds Bush Road London, W6 7NL United Kingdom Kansas 8960 Commerce Drive, Building #6 De Soto, KS 66018 United States Shanghai c/o Gene Tech Company Ltd. No. 505, Ziyue Rd, Zizhu, National High-Tech Zone Shanghai 200241 P.R. China United Kingdom Email: contact@oncimmune.co.uk Phone: +44 (0)115 82 31869 United States Email: clientservices@oncimmune.com Phone: +1 913 583 9000 Contents 1 2 3 4 Overview Highlights Business Overview Board of Directors Strategic Report Chairman and Chief Executive’s Review Chief Financial Officer’s Review Principal Risks and Uncertainties and Key Performance Indicators Directors' Report Directors’ Report Statement of Directors’ Responsibilities Consolidated Financial Statements Independent Auditors’ Report Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Consolidated Financial Statements 5 Parent Company Financial Statements Company Statement of Financial Position Company Statement of Changes in Equity Notes to the Company Financial Statements 01 03 10 14 20 21 23 28 29 35 36 37 38 40 63 64 65 Financial Highlights £5m raised from new and existing investors £10m equity investment from Genostics £240k Revenue for the year (2017: £215k) £5.56m Operating expenses before share based charges and exceptional items (2017: £4.88m) £6.34m Net loss for the year (2017: £5.0m) £12.95m Cash balance at the period end (2017: £5.1m) Overview Financial Highlights 1 1 Oncimmune� / Annual Report 2018 Overview Corporate and Operational Highlights Corporate and Operational Highlights (including post-period end) EarlyCDT® commercial progress • Exclusive licence agreement signed with Genostics Company Limited ("Genostics") for the distribution, manufacturing and future development of all products related to the EarlyCDT platform in China • New distribution agreements signed for EarlyCDT®—Lung test making a total of 15 agreements with total minimum sales commitments of £29.5m over their initial periods • EarlyCDT®—Liver test for hepatocellular cancer launched in May 2018 in the US • Continued progress on long term plan of supporting its distributors deliver high quality sales for EarlyCDT®—Lung in the US R&D and Trials • NHS ECLS trial continued to monitor its cohort of over 12,000 patients for occurrence of lung cancer. Final results expected in early 2019 • Data published in the Journal of Cancer Therapy and in PloS One in support of the role of EarlyCDT—Lung in the management of indeterminate pulmonary nodules Board and Management • Dr. Adam Hill, MB PhD, was appointed as new Chief Executive Officer having been appointed to the board as Chief Medical Officer and Strategy Officer in April 2018 • Geoffrey Hamilton-Fairley appointed to new role as Vice Chairman of the Board • Appointment of Dr. Cheung To and Dr. Annalisa Jenkins to the Board as Non- Executive Directors Annual Report 2018 / Oncimmune� 2 Oncimmune is a leader in the development, manufacture and commercialisation of personalised immunodiagnostics for the screening, detection and care of cancer. Changing how clinicians, researchers and patients view, diagnose and treat cancer, our technology detects evidence of the body’s natural response to cancer, enabling detection 4 years or more before standard clinical diagnosis. Our tests facilitate clinical decision-making and are complementary to diagnostic technologies, making them valuable additions to established and new care pathways. We partner with leading developers and distributors to make our technology available globally. Oncimmune was founded in 2002 and launched its platform technology in 2009, followed by its first commercial tests, EarlyCDT—Lung and EarlyCDT— Liver. To date, over 155,000 tests have been performed for patients worldwide and EarlyCDT—Lung is being used in the largest-ever randomised trial for the early detection of lung cancer using biomarkers, the National Health Service (NHS) ECLS study of 12,210 high-risk smokers in Scotland. Oncimmune is headquartered in Nottingham, UK with a CLIA lab in Kansas, US and offices in London, UK and Shanghai, China. The Company joined the Alternative Investment Market (AIM) of the London Stock Exchange in May 2016 under the ticker ONC.L Overview Our Science and Platform Technology Our Science and Platform Technology Our platform technology • The Oncimmune® platform is based on a cancer-detection methodology that combines autoantibody detection science with robust antibody capture technology • Our patent-protected immunogenic protein library is composed of 175 distinct tumour antigens (and 435 variants) • This library is deployed commercially as multi-analyte panels using ELISA techniques to carry out tests for specific indications (cancers) • In addition to the existing EarlyCDT product portfolio, our biomarker-based methodology has high-potential applicability across the cancer care continuum, particularly in assisting clinical intervention decisions, therapy choice and drug development. Core Scientific Principle Normal Cell Tumour Cell Normal host protein Abnormal ‘tumour associated’ antigen Autoantibodies specific for TAA Annual Report 2018 / Oncimmune� 4 Overview Current and Future Tests 1 Current and Future Tests Over 155,000 commercial tests sold to date, currently being sold in 15 countries around the world EarlyCDT—Lung EarlyCDT—Liver for screening use (outside the US) for indeterminate lesions for pulmonary nodule risk assessment - as a complement to ultrasound - as a complement to CT scanning for screening use (in Asia) Potential future EarlyCDT indications: our pipeline covers 60% percent of all new cancer cases, which contribute to 66% of deaths attributed to cancer worldwide EarlyCDT—Colorectal EarlyCDT—Gastro-Oesophageal EarlyCDT—Pancreas 1.85m 1.61m At 8.5%, Pancreatic Cancer new cases in 2018 new cases in 2018 has the lowest 5yr survival rate (3rd highest incidence by cancer type) (4th highest incidence by cancer type) of any cancer EarlyCDT—Breast EarlyCDT—Ovary EarlyCDT—Prostate 2.09m new cases in 2018 47.4% 5yr survival 1.28m new cases in 2018 (2nd highest incidence by cancer type and most common cancer in women) (19.5% lower than overall cancer survival rate) (2nd highest incidence by cancer type) set to grow by 80% by 2040 5 Oncimmune� / Annual Report 2018 Overview Business Overview Scientific, Operational & Commercial Objectives Scientific • Continue to build scientific leadership in early cancer detection • Drive ongoing clinical validation of the EarlyCDT product portfolio • Work with NHS Scotland to conclude, review and distribute the ECLS clinical study • Develop commercial tests for other solid tumour cancers • Support studies and evidence-gathering for existing and new partnerships Operational • Deliver EarlyCDT—Lung Kits efficiently and on time to existing and new distribution partners • Launch EarlyCDT—Liver Kit in 2019 • Develop partnership execution capabilities Commercial • Drive sales momentum of EarlyCDT—Lung across the Americas, Europe and Asia • Work towards registration of EarlyCDT—Liver in Europe and Asia • Work with partners to build the case for new commercial propositions Annual Report 2018 / Oncimmune� 6 Overview Forward Strategy 1 Forward Strategy Measurement Decision Actuation Development & Innovation People & Culture Partnerships 7 Oncimmune� / Annual Report 2018 EarlyCDT Continue to develop and commercialise single cancer panels for early detection Profile Example Motivation Content Integrate EarlyCDT into a 3rd party ecosystem to access an established customer base • Incorporate immunogenic • Partner with a diagnostic • No additional development protein library and panels into a third-party ecosystem software solution provider with a large installed base of EarlyCDT—Lung required • Creates a new distribution • The ecosystem might be, for example, a testing of hospitals • Integrate EarlyCDT—Lung equipment or EMR software into clinical decision installed base support tools channel • Content is a natural adjacency to the core testing business Combined Diagnostics Work with other groups to develop test including our markers • Combine EarlyCDT—Lung (or • Develop a breast another indication) with the diagnostic tools of another provider cancer-specific panel and combine it with the tools of a mammography imaging • Principle is that combined diagnostics could deliver greater insight than the individual constituent tools supplier • Improve the performance of both case selection and diagnosis • The right partnership could deliver an industry-leading diagnostic framework for a particular cancer • Enhancement of partner’s diagnostic capability could enhance its market share with Oncimmune sharing in the upside Risk Stratification Partner to deliver discrete or non-specific cancer risk stratification as a service Complementary Diagnostics Patient stratification tool to improve therapy selection • Assist an insurer (or reinsurer) to either reduce claims cost and/or change pricing structures by stratifying insured risk • Incorporate EarlyCDT into the insurance onboarding process (possibly for high-risk individuals only in the first instance) • Develop panels against specific immunoncology biomarkers (such as PDL1 and CTLA4) rather than a specific indication • Improve therapy selection and identify cost-effective interventions • Apply EarlyCDT(—Lung) to • Commercial benefit to enhance the risk models of repricing risk and managing major life insurer with an additional input parameter at the point of onboarding or as an annual adjustment to the risk profile down claims is significant given costs of cancer treatment • Additional R&D would be required, however, to tailor panel performance to the population at risk • Work with a ‘Big Pharma’ • Value to be realised by Big partner operating in immunotherapy • Develop a panel to enhance performance of (e.g.) PDL1 (currently predicts only a 25% response to immunotherapy) Pharma in building the evidence for 1st or 2nd line-therapy for their assets cannot be underestimated • Stratification of response is critical to the future positioning and economics of a therapeutic asset Antigen Targeting Work with therapy makers to identify and tailor treatment to best drug targets • Tumour autoantibodies (TAAs) present druggable targets for therapeutic intervention, e.g. therapy phasing in early cancer • Oncimmune’s TAA-optimised panels are particularly suitable given high levels of specificity and minimal cross-talk • Use Oncimmune’s immunogenic protein library to support ‘Big • Whilst speculative and early stage, repeat validation of the immunogenic protein Pharma’ in the development library developed by of a polyclonal Antibody-Drug Candidate (ADC) for use in a specific indication, or immune profile Oncimmune suggests that the science is robust and has considerable utility and value in this use case Overview Forward Strategy EarlyCDT Continue to develop and commercialise single cancer panels for early detection Profile Example Motivation Content Integrate EarlyCDT into a 3rd party ecosystem to access an established customer base • Incorporate immunogenic protein library and panels into a third-party ecosystem • The ecosystem might be, for example, a testing equipment or EMR software installed base • Partner with a diagnostic software solution provider with a large installed base of hospitals • Integrate EarlyCDT—Lung into clinical decision support tools • No additional development of EarlyCDT—Lung required • Creates a new distribution channel • Content is a natural adjacency to the core testing business Combined Diagnostics Work with other groups to develop test including our markers • Combine EarlyCDT—Lung (or another indication) with the diagnostic tools of another provider • Principle is that combined diagnostics could deliver greater insight than the individual constituent tools • Develop a breast cancer-specific panel and combine it with the tools of a mammography imaging supplier • Improve the performance of both case selection and diagnosis Risk Stratification Partner to deliver discrete or non-specific cancer risk stratification as a service • Assist an insurer (or reinsurer) to either reduce claims cost and/or change pricing structures by stratifying insured risk • Incorporate EarlyCDT into the insurance onboarding process (possibly for high-risk individuals only in the first instance) • Apply EarlyCDT(—Lung) to enhance the risk models of major life insurer with an additional input parameter at the point of onboarding or as an annual adjustment to the risk profile Complementary Diagnostics Patient stratification tool to improve therapy selection • Develop panels against specific immunoncology biomarkers (such as PDL1 and CTLA4) rather than a specific indication • Improve therapy selection and identify cost-effective interventions • Work with a ‘Big Pharma’ partner operating in immunotherapy • Develop a panel to enhance performance of (e.g.) PDL1 (currently predicts only a 25% response to immunotherapy) Antigen Targeting Work with therapy makers to identify and tailor treatment to best drug targets • Tumour autoantibodies • Use Oncimmune’s (TAAs) present druggable targets for therapeutic intervention, e.g. therapy phasing in early cancer • Oncimmune’s TAA-optimised panels are particularly suitable given high levels of specificity and minimal cross-talk immunogenic protein library to support ‘Big Pharma’ in the development of a polyclonal Antibody-Drug Candidate (ADC) for use in a specific indication, or immune profile • The right partnership could deliver an industry-leading diagnostic framework for a particular cancer • Enhancement of partner’s diagnostic capability could enhance its market share with Oncimmune sharing in the upside • Commercial benefit to repricing risk and managing down claims is significant given costs of cancer treatment • Additional R&D would be required, however, to tailor panel performance to the population at risk • Value to be realised by Big Pharma in building the evidence for 1st or 2nd line-therapy for their assets cannot be underestimated • Stratification of response is critical to the future positioning and economics of a therapeutic asset • Whilst speculative and early stage, repeat validation of the immunogenic protein library developed by Oncimmune suggests that the science is robust and has considerable utility and value in this use case Annual Report 2018 / Oncimmune� 8 Measurement Decision Actuation Development & Innovation People & Culture Partnerships Overview Q&A with new Chief Executive Dr. Adam Hill 1 Q&A with new Chief Executive Dr. Adam Hill What were your reasons for joining the Company? Throughout my clinical training, the requirement for a simple and affordable test to detect the earliest signs of cancer in order to improve survival was always clear; late diagnosis has significantly worse outcomes, and can often cost substantially more to manage. The role of the immune response in identifying early mutant, or aberrant cells, has long been understood, and so harnessing the body’s humoral response – the autoantibodies which recognise cancer cells - is ideal for this task. However, the challenge has always been in synthesising the proteins which can ‘capture’ autoantibodies at scale, used to produce diagnostic panels with reproducible performance. It is this problem that Oncimmune has solved. The growing family of EarlyCDT products, developed from its proprietary immunogenic protein library, have been demonstrated time and again to have In addition, with early experience of our lead product in the market, a well-developed and proprietary innovation engine at the core of our competitive positioning, and a critical mass of evidence to support valuable product claims addressing clinical unmet needs, I am confident in this foundation for faster value creation. What are your immediate priorities? I have three clear objectives over the remainder of the financial year. Firstly, to provide the organisation with the focus and leadership that it needs to execute our current and future commitments. Secondly, I will be working with the team to ensure that we are maximising the latent value of our immunogenic protein platform technology. And finally, I am focused on laying the groundwork so that seminal results – such as with our imminent ECLS read out – have the right platform for distribution to maximise the reach and impact of our science. reproducible performance, presenting robust What is your vision for the future? I believe in the role our biomarker platform technology can play in supporting clinical decisions across the care continuum, from case selection and early detection through to patient stratification to complement existing and emerging therapies. Through partnership in what is a fragmented healthcare and life sciences market, I am confident we will beat cancer, one test at a time. supporting evidence in clinical decision making; EarlyCDT—Lung, as our lead asset, has been tried and tested in multiple regions with excellent results. But early detection is only the tip of the iceberg; the utility of profiling an immune response to cancer across the care continuum has only recently been recognised. This potential, the latent value inherent within the Oncimmune platform, and the opportunity to have significant clinical impact all led me to jump at the chance to join Oncimmune. What are your first impressions? I initially joined Oncimmune as Chief Medical & Strategy Officer, and immediately had the opportunity to work with our science teams in the UK and USA. Not only was I impressed with the quality of the product, the depth of its underpinning science, but also the professionalism of our scientists, many of whom have been with the company over a decade. As we look to build strong and enduring partnerships with those able to co- develop solutions and co-market our technology, I believe the strength and breadth of our science base lays the foundation for success. 9 Oncimmune� / Annual Report 2018 Overview Board of Directors Board of Directors Meinhard Folkert Schmidt Non-Executive Chairman the Royal College of Surgeons of England, and professional engineering qualification from the Mr. Schmidt is an executive and entrepreneur Institution of Mechanical Engineers. with more than 25 years of international experience in the healthcare, diagnostics and medical devices industries. Between 1998 and 2008 he was at Roche Diagnostics where he Andrew Millet Chief Financial Officer held various global senior leadership roles in Andrew is a Chartered Accountant and registered Diabetes Care, Laboratory- and PoC-Diagnostics. auditor. Andrew qualified as a chartered accountant From 2008 till 2011 he worked as an executive with Stoy Hayward (now BDO), following which he and CEO at Straumann Institute/Switzerland, gained an MBA from Henley Management College. responsible for the world-wide “Digitalization” of Andrew has spent many years at executive level the Dental industry. He is currently active as an involved with the growth and success of early stage Independent Healthcare Professional providing technology businesses. Andrew is a director of active board engagement as Chairman a/o NED Wisteria Chartered Accountants, a firm he founded in public and private MedTech and LifeScience in 2002 and he has, since 2003, been involved in a companies; consulting to top management teams variety of capacities with Oncimmune including as to improve industrialization, commercialization accountant, company secretary and shareholder. and digitalisation processes; consulting investors Andrew is also a director of PinkNews Media Group (Private Equity/Venture Capital) on identification and a Governor of The Mill Hill School Foundation. of new investment and acquisition targets in the global healthcare industries. He held positions in Germany, Netherlands, USA, Canada, UK, Sweden, Ireland and Switzerland and is currently active as Timothy Brian Bunting Non-Executive Director Chairman, Board Director and Adviser at several Tim joined Balderton Capital (UK) LLP as a General companies in Europe, Asia and USA. Partner in 2007. He was previously a partner Dr. Adam Mark Hill Chief Executive Officier of Goldman Sachs where he spent 18 years. At Goldman Sachs, Tim held various roles including Global Head of Equity Capital Markets (2002 to 2005) and Vice-Chairman of Goldman Sachs Dr. Adam M Hill MB PhD is a dual-qualified Clinician International (2005 to 2006). Tim is also a Trustee and Mechanical Engineer with a career built at of the Rainbow Trust Children's Charity ; the Paul the interface of industry, academia and health Hamlyn Foundation and the Royal Opera House. systems. Over the last 2 decades he has trained in Tim is a graduate of the University of Cambridge. surgery in the British Army; founded a successful applied research centre at Imperial College London; provided growth strategy and investment advice to global life science companies on behalf Geoffrey Neil Hamilton-Fairley Non-Executive Vice Chairman of the British Government; led the global medical Mr. Hamilton-Fairley has an entrepreneurial function of a multinational, publicly-listed health career that started in 1982 when Geoffrey IT company; and pivoted a Formula One team founded a number of companies in the media into a developer of health technology. Currently, sector backed by The Abingdon Management Adam is both a Visiting Professor in Global Health Company Limited (Abingdon). In 1988, he joined Innovation at Imperial College London, and sits on the board of Abingdon as CEO to manage the the Value Creation Committee of Imperial College Company’s portfolio of media and technology Health Partners, and is Non Executive Director to investments, and subsequently became sole Myrecovery.ai. owner having acquired Abingdon from its institutional shareholders. Abingdon had a number Adam graduated from Imperial College London of quoted and unquoted investments. In 1998 he as a Medical Doctor whilst also earning a PhD in launched Premium TV (PTV) securing a contractual Engineering, attending Imperial College Business joint venture with Eurosport to create “British School and the Royal Military Academy Sandhurst. Eurosport”. Later that year PTV was acquired by He received his postgraduate clinical training from NTL (now Virgin Media). As CEO of PTV Geoffrey Annual Report 2018 / Oncimmune� 10 Overview Board of Directors 1 developed the largest integrated broadband and Inc., iOX Therapeutics Limited, Thrombolytic internet sports broadcasting platform in the world Strategies Incorporated, PhESi, Oncimmune, at that time. Over the past ten years Geoffrey has Cocoon Biotech Inc. (Non Executive Chair), developed Oncimmune Limited, serving as its Cellmedica (Non-Executive Chair), Vium, Inc. Executive Chairman, CEO and now Vice Chairman. (Executive Chair), and Silence Therapeutics (Non- Geoffrey is also a senior research fellow at the Executive Chair). She also is a committee member International Prevention Research Institute. His of the Science Board to the U.S. Food & Drug personal commitment to cancer detection can be Administration (FDA), and serves on the board traced to his father, the first medical oncologist in of the Center for Talent Innovation in the U.K. Dr. the United Kingdom. Julian Clement Hirst Independent Non-Executive Director Julian is a seasoned finance executive with experience across a broad range of corporate finance transactions including equity private Jenkins graduated with a degree in medicine from St. Bartholomew’s Hospital in the University of London and subsequently trained in cardiovascular medicine in the U.K. National Health Service. Dr. Carsten Schroeder Independent Non-Executive Director placements, initial public offerings, public debt Dr. Schroeder has 25 years of senior leadership and equity issues, mergers and acquisitions, trade experience in the life sciences industry covering sales, strategic partnerships and restructurings. pharmaceuticals, medical device and in vitro Julian is currently the Corporate Finance Director of diagnostic. Since 2014 he has been President of Immunocore Limited, a leading UK biotechnology the Diagnostic Division at Grifols, S.A. where he is company specialising in immuno-oncology. On responsible for global commercial operations and a part-time basis, he is also the Joint Head of overall strategy, including leading its growth and Technikos, a partnership which manages stakes in innovation in Transfusion Medicine and Clincial biomedical engineering spin-out companies from Diagnostic. Prior to that, and before its acquisition Oxford University. Prior to this, Julian held senior by Grifols, Carsten was President of Novartis corporate finance positions spanning a period Diagnostics. Carsten joined Novartis Diagnostics in of over 25 years at several of the leading global 2010 as Vice President of Commercial Operations investment banks including UBS Warburg, Morgan for the EMEA region where he oversaw expansion Stanley and Lehman Brothers. into new markets. During his time at Novartis Dr. Annalisa Jenkins Senior Independent Non-Executive Director he was a member of the Vaccines & Diagnostic Division Executive Committee and served as Site Head for its Emeryville campus in California. Carsten has also held executive positions with Dr. Annalisa Jenkins is a life sciences thought Boston Scientific, Mallinckrodt (now Covidien) leader with over 20 years of biopharmaceutical and Boehringer Ingelheim. Mr. Schroeder holds an industry experience. Prior to joining PlaqueTec MBA from the European School of Management in as CEO in November 2017, Dr. Jenkins served as Paris (ESCP) and a Bachelor of Arts in Economics president and CEO of Dimension Therapeutics, a from the University of Cologne in Germany. leading gene therapy company that was acquired by Ultragenyx in November 2017. Prior leadership roles have included the head of global research and development and executive vice president Richard Simon Sharp Non-Executive Director global development and medical at Merck Serono, Richard graduated from Oxford University and and several senior positions at Bristol Myers- began his professional career in 1978 working Squibb over 15 years – including serving as senior for JPMorgan in UK Banking, then in Investment vice president and head of global medical affairs. Banking and Derivatives. In 1985, Richard joined Earlier in her career, Dr. Jenkins was a medical Goldman Sachs in London and variously served as officer in the British Royal Navy during the Gulf Head of Capital Markets, Head of UK investment Conflict, achieving the rank of surgeon lieutenant Banking and Head of European Private Equity commander. Dr. Jenkins is a board member of and Mezzanine Investing. Richard left Goldman several growing companies, including Ardelyx, in 2007 to found and run DII Capital LLP. Richard 11 Oncimmune� / Annual Report 2018 Annual Report 2018 / Oncimmune� 11 Overview Board of Directors has been separately a trustee of the Royal Marsden Capital Fund and a trustee of the Institute of Andrew Unitt Independent Non-Executive Director Cancer Research. In the summer of 2013, Richard Andrew was Chief Financial Officer at the became an External Appointee of HM Treasury University of Nottingham, a major shareholder in on the Financial Policy Committee of the Bank of Oncimmune, until July 2016. Prior to working in England which is responsible for Macro-Prudential higher education at the university, Andrew was a Supervision in the UK. Dr. Cheung To Non-Executive Director finance director for 20 years in a wide range of industries. His more recent background includes 11 years at Boots plc, where he was Finance Director for 4 years of Boots Healthcare International, its over the counter medicines business. He has also Dr. Cheung To is an entrepreneur with over 25 held a number of non executive directorships in years’ of extensive experience in biotechnology the NHS and private sector. research and instinctive knowledge of the development of the world’s, and China’s, biotechnology markets. He co-founded and is Chairman of Gene Group Co. Ltd., a group that now includes several major companies including: Gene Co. Ltd., one of the largest professional service and distribution provider for the medical, life science, pharmaceutical and biotech research sectors in China; Ecotek Co. Ltd., a professional services company to the agricultural and environmental research sectors in China; Genetech (Shanghai) Co. Ltd., a business focused on R&D, manufacturing, marketing & distribution of molecular and cellular diagnostic products in the fields of pathology, oncology, heamatology and molecular genetics; Ebiotrade.com, a Biotech portal and e-commerce provider; and Baygene Co. Ltd., a company focused on R&D, manufacturing and distribution of life-science research products. Dr. Cheung To obtained his Ph.D from the University of Hong Kong, Medical Faculty, Dept. of Biochemistry in 1996, and he was awarded one of the experts in the prestige China’s National “Recruitment Program of Global Experts” (known as “the Thousand Talents Program”) in 2010, in recognition of his contribution towards the industries and society. Annual Report 2018 / Oncimmune� 12 Strategic Report Subtitle 2 13 Oncimmune� Oncimmune� / Annual Report 2018 / Annual Report 2018 13 Chairman and Chief Executive’s Review Strategic Report Chairman and Chief Executive’s Review Oncimmune has pursued the goal to be a leader might benefit from a specific therapy, and those in early cancer detection since inception and, that might not. in so doing, enhances the clinical outcomes of cancer patients. The benefits of early Underpinning this growth is a phased approach detection of cancer are both clear and well to product development and launch with Board understood: early stage cancer diagnosis leads oversight which ensures the delivery of long to significantly improved five-year survival over term growth is underpinned by a clear set late stage cancer diagnosis. of economic values aimed at protecting the Company from unnecessary risk and securing its In May 2016, the Company completed an IPO long-term future. on AIM. At that time, the Company laid out its strategy to deliver both its mission and value to shareholders. On behalf of the Board, we are Business Update pleased to present the third Annual Report & Accounts since IPO for the year ended 31 May 2018, and to provide a progress update on the plan detailed at the time of admission to AIM. We continue to be well positioned to deliver on that plan and on the wider potential of our autoantibody-based platform. Strategy and Business Model At IPO, the directors believed the Group had reached a point of inflexion having proven and protected the EarlyCDT platform technology for the early detection of cancer and demonstrated clinical utility and commercial sales of its lead product. The next phase of growth for the Group was the execution of its commercial plans through a three-year growth strategy. The Group has focused on exploiting the the EarlyCDT platform technology for multiple cancers across commercial opportunity for the continuum of care; from early detection, to risk assessment for intervention, to stratification of patients for therapy. The business model is two-fold; to deliver EarlyCDT testing as a service through the Group’s CLIA-approved laboratory in De Soto, Kansas, and to sell EarlyCDT units for other laboratories to provide their own testing service. The different marketing channels attracted distinctly different unit economics. The Company has continued to deliver on its commercialisation plans during the year. After completing recruitment of senior staff to support the delivery of commercialisation plans in the US, Europe and Asia last year, the Company has seen the increase in revenue anticipated as a result of its phased roll-out across 15 geographies, securing in excess of £29.5m in minimum commitments over the next five years. The Company has made good progress in R&D with the launch of the EarlyCDT—Liver panel as a Laboratory Delivered Test (LDT) in the US, proving the viability of the EarlyCDT platform technology to discover, validate and launch a number of solid cancer biomarker panels, and further demonstrating the potential of the Company to execute on its portfolio revenue proposition with multiple products, generating revenues in different regions and with different partners. Furthermore, the Company has invested in early research to provide evidence that the EarlyCDT platform technology can be used to stratify patients into those likely to respond to specific therapy regimens. In Q3, the Company completed a £10m fund- raise with a strategic investor, Genostics Company Ltd, which provides access to the China market. The initial phase of growth for the Group was focused on completing the development of the EarlyCDT—Lung Kit to increase sales and open up additional markets, as well as broaden Oncimmune’s product offering with EarlyCDT— Liver. The Group has also focused on developing stratification panels to identify patients who EarlyCDT Platform Technology In the US, the Company has continued with the previously outlined plan of supporting its distributors in order to deliver high quality, and long-term, sales. The Company has continued relationships with distributors for EarlyCDT— Lung in the US throughout the 2017/2018 Annual Report 2018 / Oncimmune� 14 Strategic Report Chairman and Chief Executive’s Review 2 financial year, supplementing this with the addition these new markets. The first of which are now being of Valentech in Brazil and Columbia, providing reach secured so that sales can begin to build. into South America. The company has secured agreements for EarlyCDT—Lung with several Private Payer Organizations (PPO’s) covering 140m US The Company anticipates signing further distribution contracts in Asia and Europe during 2018/2019, insured members. The company has also recently with a number of these arrangements also likely to signed a non-exclusive distribution agreement for include guaranteed minimum payments that add to the sale of tests covering Argentina, Uruguay and the confidence in our chosen distributors and enhance Dominican Republic. revenue forecasting. As set out in our interim results announcement issued on 13 February 2018, our pilot distribution project with a major US pulmonology sales force was completed in February 2018, and the Company has been in negotiation regarding the terms of a full distribution In addition to the commercialisation of the Company’s lead asset, EarlyCDT—Lung, the Company launched EarlyCDT—Liver in May 2018 as an LDT in the US. EarlyCDT—Liver will initially be available through Oncimmune's existing distribution network in the contract since this time. These discussions have US, whilst the Company looks for further specialist failed to reach a satisfactory conclusion and it has distribution partners in the US and other global been agreed that discussions will cease until a markets who target hepatologists. It is intended that firm timetable for agreement and implementation the test builds traction whilst building evidence on can be committed to by both parties. Whilst this clinical utility. is disappointing, this arrangement now unlocks Oncimmune to focus more time on developing The primary commercial focus for the liver test discussions with other US pulmonary salesforces with will be China and the Asia Pacific region where the goal of reaching an agreement that fully realises the value of EarlyCDT—Lung in this indication. The Company remains cautious with regards to its near hepatocellular cancer incidence is four times that found in the US. It is anticipated that in these regions the test will be used as a front-line screening test for term revenue growth in the US; positioning of the high-risk patients who have Hepatitis B or C. Work has test is critical to long-term success, as is distribution commenced with our Chinese partner to validate its through partnership to achieve scale. use as a screening test on a Chinese population, and to gain CFDA clearance. Outside of the US, the Company continues to make good progress. The Company’s Asia Pacific business has eight distribution agreements in place for EarlyCDT—Lung Kits throughout the region, supplementing those in Israel, South Korea, Taiwan Research, development and trials Based upon the early discovery work published at the International Liver Cancer Association meeting and Singapore with agreements in Brazil, Columbia, in 2017, showing that a panel of 10 autoantibodies Iran, India and China which provide over £26.7m in could detect hepatocellular carcinoma (HCC) with minimum payment guarantees over the next five years. high sensitivity and specificity, our research and In Europe, the Company has also announced further distribution agreements for its EarlyCDT—Lung Kit with agreements for Spain, Moldova and Turkey development effort throughout the financial year has been dominated by validation of EarlyCDT—Liver for HCC. Liver cancer is the second most common cause of death from cancer worldwide and is particularly adding to the agreements in Denmark, Norway, prevalent in Eastern and South-Eastern Asia with Sweden and Poland completed in 2017/2018 with China accounting for approximately 50% of cases the aggregate minimum sales commitments of globally. The prognosis for liver cancer is very poor and approximately £2.8m. there is a clear clinical need for improved diagnostic testing; globally 700,000 new cases are diagnosed A number of our partnered territories have required each year and the annual death rate is in excess of additional regulatory clearances, beyond the 600,000. The Company’s test has high specificity product's CE Mark and ISO certification, which at 97%, complementing current imaging detection can take 12 months to obtain. Progress is being methods as well as the stand-alone biomarker alpha made towards obtaining the necessary product fetoprotein (AFP) used in Asia. registrations to allow wider commercialisation in 15 Oncimmune� / Annual Report 2018 Strategic Report Chairman and Chief Executive’s Review paper published by Massion and colleagues in 2016, further data was published in the Journal of Cancer Therapy in support of the role of EarlyCDT—Lung in the management of indeterminate pulmonary nodules. Fundraising Beyond EarlyCDT—Liver, development programme has delivered early research and the progress on the development of a higher sensitivity version of EarlyCDT—Lung (EarlyCDT®—Lung Plus) that utilises some new and proprietary biomarkers. EarlyCDT—Lung Plus aims to improve sensitivity in the lung nodule setting, where differentiating benign and malignant tumours is key. The addition of later stage markers should add value ensuring we detect In January, the Company announced it had signed a as many cancers as possible without affecting the framework agreement for an exclusive licence with false positive rate. This test enhancement should Genostics Company Limited for the distribution, help drive adoption. This improved version of Oncimmune’s lead product has undergone beta site testing and validation in the pathology labs at manufacturing and future development of all products related to Oncimmune's EarlyCDT platform for the People's Republic of China. As part of the Leeds Teaching Hospitals NHS Trust. In addition, framework agreement, Genostics Company Limited blood collected by fingerstick has been proven to be acceptable for testing on all existing EarlyCDT platform products. This removes barriers to adoption agreed to invest £10m in Oncimmune by way of subscription for 6,410,256 new ordinary shares at a price of £1.56 per ordinary share, a 49% premium of the tests that the Company experienced due to the share price. The agreement strengthened the to unavailability of phlebotomy services or the Company’s balance sheet to pursue its three year reluctance of the patient to have venous blood plan for commercial growth. draw. Finally, feasibility has been demonstrated for the development of EarlyCDT products on a new multiplex platform. This platform provides increased The Company also raised £5m (£4.78m net of expenses) via a placement in September and analytical sensitivity while allowing all biomarkers to November 2017, with the bulk of shares admitted in be measured in a single reaction thereby saving on October 2017. reagent cos Data derived from the collaboration with Scancell and supporting Oncimmune’s claims as a companion diagnostics platform were presented at Management and Board Changes the Immuno-Oncology Summit in Boston. In September 2018 the Company announced the appointment of Dr. Adam Hill as new Chief Executive From a clinical trial perspective, the NHS ECLS trial Officer, having joined the Company as Chief Medical continued to monitor its cohort of over 12,000 Officer and Chief Strategy Officer in April 2018. With patients for occurrence of lung cancer. The follow- this appointment, Geoffrey Hamilton-Fairley moved up period ended in June 2018 and it is expected that into a new role as Vice Chairman of the Board of the major findings of the trial will be published early in 2019. Meanwhile, results on effects of EarlyCDT— Lung testing on patient emotional outcomes and smoking behaviour were presented at the World Directors. In January 2018, the Company further strengthened its Board with the addition of Dr. Annalisa Jenkins as Non-Executive Director and again with the addition of Dr. Cheung To in September 2018. conference on Lung Cancer in Yokohama, Japan. At the same meeting, results of a collaboration between Oncimmune, Abcodia and UCLS utilising samples Stakeholder and Social Responsibility from the UKCTOCS study were presented that The Company recognises the value of strong demonstrated, unequivocally, for the first time that relationships with a range of different external and autoantibodies can be used to detect lung cancer internal stakeholders to maximise shareholder value. earlier than current diagnostic methods. This study These stakeholders have been mapped and the clearly demonstrated a median cancer detection lead Company understands their needs, interests and time of four years. A paper describing modelling of the health economic impact of EarlyCDT—Lung testing of patients with pulmonary nodules was published expectations. Immunodiagnostics has significant potential to in PLoS One and concluded that using the test for impact health outcomes from a cancer diagnosis this application was likely to be cost effective in the and, as such, the Company recognises the societal US healthcare system. Finally, following on from the impact of its products in the geographies that it Annual Report 2018 / Oncimmune� 16 Strategic Report Chairman and Chief Executive’s Review 2 operates. The Company is working on defining this impact and measuring this societal impact; however, like many in this industry, both the intended, and unintended consequences of products in the market are challenging to capture. To date, the Company has obtained informal feedback from its staff, suppliers, distributors, shareholders, regulators and other stakeholders. Going forward this feedback will be formalised and the Company • Stratifying risk for underwriters of life and critical illness risk by incorporating EarlyCDT—Lung, and other products, to reduce claims cost, • Partnering with pharmaceutical companies to develop complementary diagnostics against immuno-oncology biomarkers such as PDL1 to improve therapy selection, or enhance therapy targeting. intends that this feedback will form an essential part In the coming three years, Oncimmune intends to of the control mechanism to direct the future strategy continue delivering its core strategy, which is focused and business model. Strategy and Outlook on early detection, including exploiting the potential in screening following the upcoming results from the NHS ECLS study. In addition to this, the Company will seek to enhance revenues from clinical tests Following the appointment of Dr. Adam Hill in March by accelerating value creation through partnering 2018 as Chief Medical Officer and Chief Strategy across a range of applications to generate scale and Officer, the Board, with management support, reach wider end markets. have undertaken a review to identify and capitalise on the wide range of opportunities presented by Oncimmune’s proprietary autoantibody-based In the core EarlyCDT business we expect to begin to see additional registrations in partner territories platform that are additional to continuing to build scale and momentum in the core business. during 2019. Achieving an appropriate value for the US market opportunity for EarlyCDT—Lung is key to the generating value for shareholders. As described This review has confirmed the utility of Oncimmune’s earlier, the inability to reach agreement with the immunogenic protein library, the ability to rapidly original distribution partner and the subsequent develop in-vitro diagnostic panels to detect cancer decision to engage with additional potential early, and the potential of this technology to have an partners will affect the timing of revenue related impact across the cancer care pathway – presenting to such partnerships. As a result, the Company’s multiple paths to value. revenue expectations for the current financial year are materially reduced by these events. The ECLS In addition to maintaining focus on the core business study results are also expected in the first half of of developing and commercialising clinical tests 2019 following encouraging interim results. In 2019 for the early detection of single cancer types, the we will also take the first steps in developing the Board believes latent value can be unlocked from aforementioned strategic partnerships. Oncimmune’s platform through strategic partnerships across a breadth of applications, and with a range of Progress across these opportunities will, of course, partner companies. These opportunities are designed depend on the degree of adjacency to the core to be capital light in nature, leveraging the investment business but we aim to initiate revenue generation in Oncimmune’s platform to date, whilst maximising with at least one partner and be either study-design optionality, and include: ready or laying the groundwork for more substantial studies with other partners towards the end of 2019. • Integrating Oncimmune’s tests into third-party established ecosystems (established installed base of testing equipment, for example, to gain access to a new and proprietary distribution channel), • Combining EarlyCDT products with another provider’s diagnostic tools to improve clinical decision making, and enhance market share (with Dr. Adam Hill Meinhard Schmidt Chief Executive Officer Chairman another in-vitro diagnostic, or diagnostic imaging 30 October 2018 modality, for example), 17 Oncimmune� / Annual Report 2018 “With the fundraise in early 2018 with Genostics Company Ltd, providing access to the China market, the foundations are laid for our forward strategy." Annual Report 2018 / Oncimmune� 1818 Annual Report 2018 / Oncimmune� Strategic ReportSubtitle Strategic Report Subtitle 2 19 Oncimmune� / Annual Report 2018 Annual Report 2018 / Oncimmune� 19 Strategic Report Chief Financial Officer’s Review Chief Financial Officer’s Review Revenue in the year ended 31 May 2018 was £240k (2017: £215k). In the current year, this revenue represented the sale of commercial tests that were performed from our own CLIA laboratory in Kansas, US. The Group now has numerous revenue channels that it is focusing on, albeit these revenue streams are at a very early stage: • EarlyCDT—Lung central lung tests performed in the US • EarlyCDT—Lung Kits sold to our distributors • EarlyCDT—Liver central lung tests performed in the US • Partnership diagnostic revenues Operating expenses before share based charges and exceptional items in the year ended 31 May 2018 were £5.56m (2017: £4.88m). The increase of costs largely reflects the additional employment costs incurred as the company has expanded its research and development capabilities, commercial efforts and new starts to put in place additional management to cope with this scaling up. The loss before tax for the year was £6.34m (2017: £5.32m) and the net loss for the year was £6.34m (2017: £5.0m). £281k (2017: £415k) of research and development costs have been capitalised in the year. The decision to capitalise these costs was made on the basis that these were the direct costs relating to the work that went in to the development of the EarlyCDT—Liver test, which went live during 2018. The Company raised a further £5m (£4.78m net of expenses) via a placement in September and November 2017 issuing 4.167 million shares. In February and March 2018, the Company raised £10m equity investment as part of a license, distribution, manufacturing and future development agreement for the Peoples’ Republic of China with Genostics Company Limited. The cash balance at the end of the year was £12.953m (2017: £5.075m). Financial Outlook The Company’s cash position continues to be strong. At present the company has contracted minimum revenues from distributors totalling over £29.5m from 15 separate distributors across the world. The expectation is to enter into new distribution agreements in new geographies in the future. The cash burn continues to be managed very carefully. Focus continues to be on: • Creating value through research and development • Increasing the distribution channel and sales of EarlyCDT—Lung tests • Increasing the distribution channel and sales of EarlyCDT—Liver tests • Partnership diagnostic revenues As such, the management are confident that its cash resources are sufficient for the foreseeable future. Andrew Millet Chief Financial Officer 30 October 2018 Annual Report 2018 / Oncimmune� 20 2 Strategic Report Principal Risks and Uncertainties and Key Performance Indicators Principal Risks and Uncertainties and Key Performance Indicators Reliance on the retention of key employees The future success of the business is dependent on its senior management and key personnel and there is always a challenge to maintain back-up support in respect of key roles or replace key staff should they leave our organisation. The Group seeks to provide a positive work environment with opportunities for career growth coupled with appropriate remuneration and share option incentives. Research and development The Group has had success developing leading edge science that produces life changing benefits. By its very nature research and development can never be certain in terms of its cost, its impact, regulatory requirements, and when it will be ready for commercialisation. The Group mitigates these inherent risks by employing leading scientists, training, strict methodologies, and working with its Scientific Advisory Boards and other stakeholders. New markets The Group has entered into a number of distribution agreements in new geographical markets and expects to continue to do so, for the foreseeable future. These distribution agreements typically give the distributor the exclusive rights of distribution of the EarlyCDT—Lung CLIA test and the Kit within certain geographical boundaries for a period of time, in consideration for minimum order requirements. Failure from any one distributor will not be material, however, failure from many distributors could be material, though. The group will do what it can to support the distributors, as best it can, to optimise success. Risks from competitors The Group operates in a competitive market and faces competitors who may develop more advanced or alternative tests for early detection of cancer. The group mitigates this through investing significantly in research and development. The group also continues to invest heavily in patent protection across the world. Legislation and regulatory change Any change in legislation, and in particular the regulations relating to the testing of human blood or serum as part of a diagnostic test of disease, may have an adverse effect on the Group’s operations and the returns available on investment in the Group. The Group mitigates this as far as possible by ensuring a continuous awareness of the legislative environment. Foreign exchange The Group conducts its operations principally in US Dollars and Sterling and is consequently subject to currency risk due to fluctuations in exchange rates. As well as direct risk arising from transaction or translation risks, foreign exchange movements may make products or materials more expensive which may adversely affect the Group’s revenues and expenditure and as a result could have a material adverse effect on the Group’s business, results of operations and financial condition. The Group continue to monitor potential foreign exchange exposure. The Group maintains a Risk Register which is constantly monitored by the Executive directors; and shared with the Board. Key Performance Indicators The Group measures its performance according to a wide range of key performance indicators. The main key performance indicators for the Group are as follows and the Group’s performance against these indicators have been discussed in the Chairman and Chief Executive’s report and the Chief Financial Officer’s report: • Development milestones • Management of cash resources • Revenue and profit indicators • Number of partnerships/distribution agreements Andrew Millet Chief Financial Officer 30 October 2018 21 Oncimmune� / Annual Report 2018 Strategic Report Subtitle “Unlocking latent value in Oncimmune’s immunogenic protein library over the next three years, designed to layer on revenue to our existing clinical testing business, will open up applications to generate scale and reach wider end markets across the cancer care continuum.” 2 Strategic ReportSubtitle3 Directors' Report Directors' Report Directors' Report The Directors present their report and audited The Company holds regular board meetings. consolidated financial statements for the year The Directors are responsible for formulating, ended 31 May 2018. Results and dividends reviewing and approving the Company’s strategy, budget and major items of capital expenditure. The directors have established the AIM Compliance Committee, the Audit Committee and the The consolidated statement of comprehensive Remuneration Committee with formally delegated income is set out on page 19 and shows the loss for rules and responsibilities. the year. The loss for the year ended 31 May 2018 was £6.3m (2017: loss of £5.32m). No dividend will The Chairman and Chief Executive together with be paid in respect of the financial year. the Remuneration Committee work throughout the Corporate governance year with external consultants assessing the skills of the Board with a view of whether this produces optimal value and benefit for all stakeholders. The directors comply with the requirements of the As such the board has been strengthened in key UK Corporate Governance Code of the Quoted functional areas since last year. The board are Companies Alliance (QCA) to the extent that also conscious of achieving a more balanced, they consider it appropriate and having regard representative and diverse board. This area will to the Company’s size, board structure, stage of continue to be monitored. development and resources. A new code is in place for accounting periods beginning on or after The Board believe that good governance and 1 January 2019. The board has adopted most of new a positive culture are crucial to the successful code and will ensure that by the deadline the entire delivery of our strategic objectives. Good code is fully adopted. The Board considers that standards of behaviour start with the Board and all Non-Executive Directors exercise independent we are committed to leading by example. judgement. The Board currently consists of ten directors, four of which are independent Non- Ensuring that the Board are as effective as they Executive Directors under the QCA guidelines. can be, has been a priority and this will continue. The Board expect members to bring with them the The roles of Chairman and Chief Executive are right behaviours and values to enable the Board to held by separate directors with a clear division operate in a positive and effective manner. of responsibilities between them. The Chairman has primary responsibility for leading the Board Until now the Board have not specifically had and ensuring its effectiveness. He sets the Board’s a cultural agenda, however, informally it has agenda and ensures that all directors can make an sought to promote a culture that aligns itself effective contribution. The Senior Non-Executive with its strategy, stakeholder needs and good director has the power to add items to the agenda governance. The Board are committed to focus of full board meetings. The Chief Executive has on strengthening its culture as it sees this as a key responsibility for all operational matters and attribute of success. the development and implementation of Group strategy approved by the Board. The Company During the year, the Chairman and Non-Executive Secretary is responsible for advising the Board directors have met with staff and visited our through the Chairman on all corporate governance laboratories which provided them an opportunity to matters. hear our colleagues’ views on a variety of matters. These visits continue to play an invaluable part in Where indicated below the Non-Executive understanding how the culture is developing and directors are independent in accordance with the changing throughout the organisation. Code. Going forward the Board will be setting the agenda to measure and monitor against criteria. 23 Oncimmune� / Annual Report 2018 Directors' Report Directors' Report Evaluation of the Board’s performance Audit Committee The Non-Executive directors have been meeting The Audit Committee is comprised of Julian Hirst, regularly to discuss the effectiveness and Tim Bunting, Dr. Annalisa Jenkins and chaired by performance of the Board, the Executive directors, Andrew Unitt. The Audit Committee determine and the Non-Executives, committees and individuals; examine matters relating to the financial affairs of as well as succession planning. Recently the Board the Company including the terms of engagement appointed a Senior Independent Non-Executive of the Company’s auditors and, in consultation Director who will chair these meetings. with the auditors, the scope of the audit. It receives It is the intention of the Company within the Company’s auditors relating to the half yearly (if current year to formalise this more and: subject to audit) and annual accounts and the and reviews reports from management and the • Measure performance of the board, committees and individuals against criteria. The criteria will include: • quality of board papers • ability to debate • suitable skills and experiences • learning and development • succession • promoting a strong culture accounting and internal control systems in use throughout the Company. The Audit Committee meet at least twice a year. Remuneration Committee The Remuneration Committee is comprised of Andrew Unitt, Meinhard Schmidt, Dr. Carsten Schroeder and chaired by Tim Bunting. The Remuneration Committee review and make recommendations in respect of the Directors’ remuneration and benefits packages, including share options and the terms of their appointment. • listening to stakeholders and where The remuneration committee also make appropriately taking action recommendations to the Board concerning the • The Company anticipate that the evaluation procedure will improve in time. The expectation is that the Non-Executive Directors will continue to regularly discuss the effectiveness and performance of the Executive allocation of share options to employees. The Remuneration Committee meet at least once a year and otherwise as and when necessary. AIM Compliance Committee directors regularly and during the year. In addition, The AIM Compliance Committee comprise of a formal review will occur at least once a year. Meinhard Schmidt, Andrew Unitt and chaired by Richard Sharp. The AIM Compliance Committee ensures, inter alia, that procedures, resources and controls are in place to ensure AIM Rules for Companies compliance within the Company are operating effectively from time to time. The AIM Compliance Committee meet at least twice a year and at such other times as the members of the committee shall agree. Annual Report 2018 / Oncimmune� 24 Directors' Report Directors' Report 3 Directors The Directors of the Company who served during the year and up to the date of this report were: Meinhard Folkert Schmidt Non-Executive Chairman (appointed 9 October 2015) Dr. Adam Mark Hill Chief Executive Officer (appointed 9 April 2018) Andrew Millet Chief Financial Officer (appointed 26 August 2016) Timothy Brian Bunting Non-Executive Director (appointed 9 October 2015) Geoffrey Neil Hamilton-Fairley Non-Executive Vice Chairman (appointed 9 October 2015) Julian Clement Hirst Dr. Annalisa Mary Jenkins Dr. Carsten Schroeder Independent Non-Executive Director Senior Independent Non-Executive Director Independent Non-Executive Director (appointed 23 June 2016) (appointed 9 January 2018) (appointed 11 October 2016) Richard Simon Sharp Non-Executive Director (appointed 9 October 2015) Dr. Cheung To Non-Executive Director (appointed 28 September 2018) Andrew Vaughan Unitt Independent Non-Executive Director (appointed 9 October 2015) Directors' interests At 31 May 2018, the Directors and family had the following interests in the Company’s ordinary shares and options to subscribe for shares: Meinhard Folkert Schmidt Dr. Adam Hill Andrew Millet 31 May 2018 31 May 2017 Shares Options Shares Options - - 420,370 396,825 - - 120,370 - 134,954 122,593 134,954 92,593 Timothy Brian Bunting 2,806,717 - 2,806,717 - Geoffrey Neil Hamilton-Fairley 3,238,070 798,148 3,238,070 798,148 Julian Clement Hirst Dr. Annalisa Mary Jenkins Dr. Carsten Schroeder Richard Simon Sharp Dr. Cheung To Andrew Vaughan Unitt - - - 4,515,302 6,410,256 - - - - - - - - - - 4,515,302 - - - - - - - - 25 Oncimmune� / Annual Report 2018 Directors' Report Directors' Report The company also issued warrants on 26 November 2015 to Geoffrey Hamilton-Fairley to subscribe for 762,500 Ordinary Shares at a subscription price of 1p per Ordinary Share and to Meinhard Schmidt to subscribe for 226,250 Ordinary Shares at 1p. These warrants had not been exercised at the year end. Genostics Company Ltd, a private company incorporated in The Peoples’ Republic of China, controlled by Dr. Cheung To acquired 6,410,256 shares in the company. Directors' remuneration The remuneration paid to or receivable by each person from who served as a Director during the year to 31 May 2018 was as follows: Salary/ Other Bonus Pension Benefits 31 May 2018 31 May 2017 fees Total Total £000 £000 £000 £000 £000 £000 £000 Meinhard Schmidt Dr. Adam Hill (joined April 2018) Andrew Millet Timothy Brian Bunting Geoffrey Neil Hamilton-Fairley Julian Clement Hirst Dr. Annalisa Jenkins (joined January 2018) Dr. Carsten Schroeder Richard Simon Sharp Andrew Vaughan Unitt 69 36 100 - 200 36 15 - - 18 - - - - 100 - - - - - - - - - - - - - - - 1 3 - 5 - - - - - Total 474 - 100 9 - - - - - - - - - - - 69 - 100 - 63 - 97 - 305 200 36 15 - - 34 - - - 18 15 583 409 Annual Report 2018 / Oncimmune� 26 Directors' Report Directors' Report 3 Significant shareholdings As at the 31 May 2018, the Company has been notified (or is otherwise aware) of the following interests in 3% or more of the issued Ordinary Share capital of the Company: No. of Ordinary Shares Percentage of share capital Balderton Capital III, LP 2 Genostics Company Limited ** Richard Simon Sharp * Ruffer LLP Geoffrey Neil Hamilton-Fairley * Timothy Brian Bunting #* Andrew Black University of Nottingham Professor John Robinson Aviva Investors Global Services Limited Fidelity Worldwide Investments 6,813,196 6,410,256 4,515,302 3,334,239 3,238,070 2,806,717 2,379,310 2,244,527 2,236,923 2,217,013 2,106,983 11.06 10.40 7.33 5.41 5.25 4.55 3.86 3.64 3.63 3.60 3.42 * Board directors # Tim Bunting is a partner if Balderton Capital (UK) LLP the investment adviser to Balderton Capital Partners 111, LP ** Dr. Cheung To a director of Genostics Company Ltd joined the Board after the year end Going concern Having regard to the available cash resources, tight financial control, budgets and forecasts for 2019 and beyond, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the Group financial statements. Risk management Details of the Group’s financial risk management objectives and policies, and exposure to price risk, credit risk and liquidity risk are set out in note 23. 27 Oncimmune� / Annual Report 2018 Directors' Report Directors’ Responsibilities Statement Directors’ Responsibilities Statement safeguard the assets of the Group and (ii) prevent and detect fraud and other irregularities. The Directors are responsible for preparing the and integrity of the corporate and financial Annual Report and the financial statements in information included on the Company's website. accordance with applicable law and regulations. Information published on the website is accessible The Directors are responsible for the maintenance Company law requires the Directors to prepare Kingdom governing the preparation and financial statements for each financial year. Under dissemination of financial statements may differ that law the Directors have elected to prepare from legislation in other jurisdictions. in many countries and legislation in the United the Group consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union Provision of information to the auditor (IFRSs) and elected to prepare the parent company The Directors confirm that: financial statements under United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable laws including FRS 101 Reduced Disclosure • so far as each Director is aware, there is no relevant audit information of which the Company's auditor is unaware; and Framework). Under company law the Directors • the Directors have taken all the steps that must not approve the financial statements unless they ought to have taken as Directors in order they are satisfied that they give a true and fair view to make themselves aware of any relevant of the state of affairs and of the profit or loss of audit information and to establish that the the Group and the parent company for that period. Company auditor is aware of that information. In preparing each of the Group and parent Auditor company financial statements, the Directors are required to: • select suitable accounting policies and then apply them consistently; • make judgements and accounting estimates in the financial statements that are reasonable and prudent; • state whether applicable IFRSs or UK Accounting Standards have been followed, subject to any material departures disclosed and explained; and • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the parent company will continue in business. The auditor, Grant Thornton UK LLP, has expressed willingness to continue in office. In accordance with section 489(4) of the Companies Act 2006, a resolution to reappoint Grant Thornton UK LLP will be proposed at the Annual General Meeting. On behalf of the Board Andrew Millet Chief Financial Officer 30 October 2018 Company registration number: The Directors are responsible for keeping adequate 09818395 (England and Wales) accounting records that are sufficient to show and explain the parent company’s transactions and disclose with reasonable accuracy at any time the financial position of the parent company and the Group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also generally responsible for taking steps as are reasonably open to them to (i) Annual Report 2018 / Oncimmune� 28 Consolidated Financial Statements Independent Auditors’ Report Independent Auditors’ Report Company registration number: 09818395 (England and Wales) Independent Auditor’s Opinion To The Members Of Oncimmune Holdings Plc Opinion Our opinion on the financial statements is unmodified We have audited the financial statements of Oncimmune Holdings plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended 31 May 2018 which comprise the Consolidated Statement of Comprehensive Income, Consolidated Statement of Financial Position, Consolidated Statement of Changes in Equity, Consolidated Statement of Cash Flows, Company Statement of Financial Position, Company Statement of Changes in Equity and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in the preparation of the group financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. The financial reporting framework that has been applied in the preparation of the parent company financial statements is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 101 ‘Reduced Disclosures Framework’ (United Kingdom Generally Accepted Accounting Practice). 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 May 2018 and of the group’s loss for the year then ended; • the group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union; 4 • the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and • the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the group and the 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. Who we are reporting to This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed. 29 Oncimmune� / Annual Report 2018 Consolidated Financial Statements Independent Auditors’ Report Conclusions relating to going concern We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where: • the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or • the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the group’s or the parent company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue. Overview of our audit approach • Overall materiality: £316,000 which represents 5% of the group's preliminary loss before taxation; • Key audit matters were identified as; • Risk of impairment of intellectual property in the group and • Risk of impairment of intragroup loans in the parent company We performed full scope audit procedures at Oncimmune Holdings plc, and the two subsidiary undertakings. Key audit matters The graph below depicts the audit risks identified and their relative significance based on the extent of the financial statement impact and the extent of management judgement. Low Extent of management judgement High Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those that had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Annual Report 2018 / Oncimmune� 30 Consolidated Financial Statements Independent Auditors’ Report Group Key Audit Matter Impairment of intellectual property There is a risk that intellectual property may be impaired given the group’s financial performance. Management’s assessment of the recoverability of the intellectual property incorporated significant judgements and assumptions, such as rate of discount, timing, extent and probability of future cash flows. We therefore identified the impairment of intellectual property as a significant risk, which was one of the most significant assessed risks of material misstatement. How the matter was addressed in the audit Our audit work included, but was not restricted to: • consideration of the appropriateness of the methodology applied by management in their assessment of the recoverable amount of intellectual property by comparing it to the group’s accounting policy and our understanding of the business; • obtaining management’s calculation of recoverable amounts of intellectual property and evaluating the information therein including performing arithmetic checks for accuracy; • understanding key assumptions made in the model and challenging these through consideration of the impact of alternative assumptions and comparison against results of prior years; and • assessing the accounting policy shown in note 2 and the related disclosures in note 11 to check they are in accordance with the financial reporting framework. Key observations Our testing did not identify material misstatements in the recoverable amounts of intellectual property. 4 Parent Key Audit Matter Impairment of intragroup loans There is a risk that intragroup loans may not be recoverable as a result of subsidiary companies incurring losses. Management’s assessment of the recoverability of intragroup loans incorporated significant judgements and assumptions, such as timing, extent and probability of future cash flows. We therefore identified the impairment of intragroup loans as significant risk which was one of the most significant assessed risks of material misstatement. How the matter was addressed in the audit Our audit work included, but was not restricted to: • consideration of the appropriateness of the methodology applied by management in their assessment of the recoverable amount of intragroup loans by comparing it to the group’s accounting policy and our understanding of the business; • obtaining and challenging management’s assessment of the recoverable amounts of intragroup loans including checking the impairment provisions and net asset values of components that have group debt; • checking that intragroup loans have been reconciled and that there are no material differences in intragroup confirmations; • assessing the accounting policy shown in note 2 and the related disclosures in note 5 of the parent company financial statements to check they are in accordance with the financial reporting framework. Key observations Our testing did not identify material misstatements in the recoverable amounts of intragroup loans. 31 Oncimmune� / Annual Report 2018 Consolidated Financial Statements Independent Auditors’ Report Our application of materiality We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality in determining the nature, timing and extent of our audit work and in evaluating the results of that work. Materiality was determined as follows: Materiality measure Group Parent Financial statements as a £316,000 which is 5% of group’s £75,000 which is 5% of the whole preliminary loss before tax. This company’s preliminary loss before benchmark is considered the tax. This benchmark is considered most appropriate as this is a key the most appropriate as this is a performance indicator of the group. key performance indicator of the parent company. Materiality for the current year is higher than the level that we Materiality for the current year determined for the year ended 31 is higher than the level that we May 2017 to reflect an increase in the determined for the year ended 31 group’s loss before tax. May 2017 to reflect an increase in the parent company’s loss before tax. Performance materiality 75% of financial statement materiality. 75% of financial statement used to drive the extent of our testing materiality. Specific materiality We also determine a lower level of We also determine a lower specific materiality for certain areas level of specific materiality for such as directors’ remuneration and certain areas such as directors’ related party transactions. remuneration and related party transactions. Communication of £16,000 and misstatements below £4,000 and misstatements below misstatements to the that threshold that, in our view, that threshold that, in our view, audit committee warrant reporting on qualitative warrant reporting on qualitative grounds. grounds. The graph below illustrates how performance materiality interacts with our overall materiality and the tolerance for potential uncorrected misstatements. Group And Parent Company - Overall Materiality Key Tolerance for potential uncorrected mistatements Performance materiality 25% Annual Report 2018 / Oncimmune� 32 Consolidated Financial Statements Independent Auditors’ Report An overview of the scope of our audit Our audit approach was a risk-based approach founded on a thorough understanding of the business and its operations. We took into account the size and risk profile of the group and each component, any changes in the business and other factors when determining the level of work to be performed at each entity, which in particular included the following considerations: • the group comprises of three components, Oncimmune Holdings plc, Oncimmune Limited and Oncimmune LLC (based in the USA), all assessed to be significant components based on the materiality of their contributions to the group loss before taxation; • we undertook substantive testing on significant transactions, balances and disclosures, the extent of which was based on various factors such as our overall assessment of risks, knowledge of the business and overall assessment of the control environment. Our audit approach is consistent with that for the prior year; • 100% of revenues and assets were included within the population we tested through full-scope audit procedures; and • we performed a site visit to the Oncimmune LLC premises in the USA. Other information The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the information on pages 19 to 49 of the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Our opinion on other matters prescribed by the Companies Act 2006 is unmodified 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 under the Companies Act 2006 In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors’ report. 4 33 Oncimmune� / Annual Report 2018 Consolidated Financial Statements Independent Auditors’ Report Matters on which we are required to report by exception 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 for the financial statements As explained more fully in the directors’ responsibilities statement on page 12, 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. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. Giles Mullins Senior Statutory Auditor for and on behalf of Grant Thornton UK LLP Statutory Auditor, Chartered Accountants Milton Keynes 30 October 2018 Annual Report 2018 / Oncimmune� 34 Consolidated Financial Statements Consolidated Statement of Comprehensive Income Consolidated Statement of Comprehensive Income Year to 31 May 2018 Year to 31 May 2017 Revenue Cost of sales Gross loss Administrative expenses Research and development expenses Share based payment charges Operating loss Finance income Finance expense Loss before income tax Income tax Loss for the financial year Notes 4 5 8 8 9 £’000 Total 240 (917) (677) (4,759) (800) (138) (5,697) (6,374) 48 (16) (6,342) - (6,342) £’000 Total 215 (532) (317) (3,857) (1,025) (74) (4,956) (5,273) 26 (69) (5,316) 293 (5,023) Other comprehensive income 4 Items that may be subsequently reclassified to profit or loss, net of tax Currency translation differences (23) 222 Loss after tax and total comprehensive income for the year attributable to equity holders Basic and diluted loss per share 22 (6,365) (11.41p) (4,801) (9.84p) The accompanying notes form an integral part of these consolidated financial statements. 35 Oncimmune� / Annual Report 2018 Consolidated Statement of Financial Position Consolidated Financial Statements Consolidated Statement of Financial Position 31 May 2018 31 May 2017 Notes £’000 £’000 ASSETS Non-current assets Intangible assets Property, plant and equipment Current assets Inventories Trade and other receivables Cash and cash equivalents EQUITY AND LIABILITIES Equity Capital and reserves attributable to the equity holders Share capital Share premium Other reserves Merger reserve Foreign currency translation reserve Own shares Retained earnings Total equity Non-current liabilities Other Loans Current liabilities Trade and other payables Other statutory liabilities Other loans Total liabilities Total equity and liabilities 11 10 13 12 14 18 16 15 16 671 201 872 295 291 12,953 13,539 14,411 616 30,952 2,325 30,787 146 (1,926) (49,338) 13,562 - - 808 41 - 849 849 14,411 518 230 748 323 261 5,075 5,659 6,407 510 16,273 2,187 30,787 169 (1,926) (42,996) 5,004 - - 847 54 502 1,403 1,403 6,407 The accompanying notes form an integral part of the consolidated financial statements. The financial statements were approved by the board on 30 October 2018. Andrew Millet Director Annual Report 2018 / Oncimmune� 36 Consolidated Financial Statements Consolidated Statement of Changes in Equity Consolidated Statement of Changes in Equity Share capital Share premium Other reserves Merger reserve Foreign currency translation reserve Own Shares Retained earnings £'000 £'000 £'000 £'000 £'000 £'000 £'000 As at 1 June 2016 510 16,273 2,113 30,787 (53) (1,926) (37,973) Total £'000 9,731 Loss for the year Other comprehensive income: Currency translation differences Total comprehensive income Transactions with owners: Share option charge - - - - - - - - - - - 74 - - - - - 222 222 - - - - - (5,023) (5,023) - 222 (5,023) (4,801) - 74 As at 31 May 2017 510 16,273 2,187 30,787 169 (1,926) (42,996) 5,004 4 Loss for the year Other comprehensive income: Currency translation differences Total comprehensive income Transactions with owners: Shares issued during the year - - - - - - 106 14,679 - - - - Share option charge - - 138 - - - - - - (23) (23) - - - - - - - (6,342) (6,342) - (23) (6,342) (6,365) - - 14,785 138 As at 31 May 2018 616 30,952 2,325 30,787 146 (1,926) (49,338) 13,562 The accompanying notes form an integral part of the consolidated financial statements. 37 Oncimmune� / Annual Report 2018  Consolidated Statement of Cash Flows Consolidated Financial Statements Consolidated Statement of Cash Flows Cash flows from operating activities Loss after income tax Adjusted by: Depreciation and amortisation Share based payment charge Interest received Interest expense Inventory Trade and other receivables Trade and other payables Taxes credit Exchange movement Cash used by operations Interest paid Interest received Income tax received Notes Year to 31 May 2018 £’000 Year to 31 May 2017 £’000 (6,342) (5,023) 180 138 (48) 16 28 (30) (52) - (23) 91 74 26 (69) (135) 177 315 (293) 222 (6,133) (4,615) (16) 48 - 69 (26) 293 Net cash used by operating activities (6,101) (4,279) Cash flows from investing activities Purchase of property, plant and equipment Development expenditure capitalised Net cash used in investing activities Cash flows from financing activities Proceeds from share issue Repayment of long term borrowings Net cash(used in)/generated from financing activities Movement in cash attributable to foreign exchange Net (decrease) / increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year 14 The accompanying notes form an integral part of the consolidated financial statements. (31) (281) (312) 14,785 (502) 14,283 8 7,878 5,075 12,953 (7) (415) (422) - (388) (388) (33) (5,089) 10,197 5,075 Annual Report 2018 / Oncimmune� 38 Notes to the Consolidated Financial Statements Consolidated Financial Statements Notes to the Consolidated Financial Statements 1. General information Oncimmune Holdings Plc (the ‘Company’) is a limited company incorporated and domiciled in England and Wales. The registered office of the company is Clinical Sciences Building, City Hospital, Hucknall Road, Nottingham, NG5 1PB. The registered company number is 09818395. The Group’s principal activity is that of cancer diagnosis. The Directors of Oncimmune Holdings Plc are responsible for the financial information and contents of the financial information. 2. Accounting policies The principal accounting policies applied in the preparation of the consolidated financial information are set out below. These policies have been consistently applied to all years presented, unless otherwise stated. Basis of preparation The Group has prepared its consolidated financial statements in accordance with International Financial Reporting Standards ("IFRSs") as adopted in the European Union, IFRIC Interpretations and the Companies Act 2006 applicable to companies reporting under IFRS. The Company was incorporated on 9 October 2015 and was re-registered as a public limited company on 14 December 2015. On 23 November 2015, a group re-organisation was completed, by means of a share for share exchange, as result of which the newly incorporated company, Oncimmune Holdings Plc, became the parent company of the Group. The companies involved in the above share for share exchange have not previously been presented in the consolidated financial statements of a single legal entity. However, the underlying business was ultimately controlled and managed by the same parties before and after the share for share exchange and that control was not transitory. The transactions outlined above, therefore, meet the definition of a common control transaction in accordance with IFRS 3 Business Combinations. IFRS does not provide any specific guidance on accounting for common control transactions and IFRS 3 excludes common control transactions from its scope; therefore the Directors have selected an accounting policy in accordance with paragraphs 10-12 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. The consolidated entity meets the definition of a group reconstruction under FRS 102 19,27 and has therefore been accounted for under the principals of merger accounting as outlined in FRS 102, paragraphs 19.29 – 19.33, merger accounting. The consolidated financial statements have therefore been prepared as if Oncimmune Limited and its subsidiaries had been held by Oncimmune Holdings Plc from inception and therefore the results and position of Oncimmune Limited have been reflected in the comparatives. The preparation of financial statements in accordance with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a high degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in note 3. Going concern The consolidated financial statements have been prepared on a going concern basis and under the historical cost convention. After considering the year end cash position, making appropriate enquiries and reviewing budgets and profit and cash flow forecasts for the foreseeable future (and in any event for a period of at least 12 months from the approval date of these financial statements), the Directors have formed a judgement at the time of approving the financial statements that there is a reasonable expectation that the Group has sufficient resources to continue in operational existence for the foreseeable future. For this reason the Directors consider the adoption of the going concern basis in preparing the Consolidated financial Annual Report 2018 / Oncimmune� 40 Consolidated Financial Statements Notes to the Consolidated Financial Statements statements is appropriate. The future prospects of the business has been further detailed in the Strategic Report. The consolidated financial statements presented in sterling and has been rounded to the nearest thousand (£’000). Standards, amendments and interpretations to existing standards Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Group in these financial statements. At the date of authorisation of the financial statements, certain new standards, amendments and interpretations to existing standards have been published but are not yet effective. The Group has not early adopted any of these pronouncements. The new standards, amendments and interpretations that are expected to be relevant to the Group’s financial statements in the future are as follows: Standard/interpretation Content Applicable for financial years beginning on/after IFRS 9 IFRS 15 IFRS 16 IFRS 1 IFRS 2 IFRS 4 IAS 28 IAS 39 IAS 40 IFRIC 22 IFRS 9 IFRIC 23 4 Amendments to IAS 28 Financial Instruments 1 January 2018* Revenue from Contracts with Customers 1 January 2018* Leases First time adoption (amendments) Share based payments (amendments) Insurance contracts (amendments) Investments in Associates and Joint Ventures (amendments) Financial Instruments: Recognition and measurement (amendments) Investment Property (amendments) Foreign Currency transactions and advance consideration (amendments) 1 January 2019* 1 January 2018* 1 January 2018* 1 January 2018* 1 January 2018* 1 January 2018* 1 January 2018* 1 January 2019* Prepayment Features with Negative Compensation (amendments) 1 January 2019 Uncertainty over Income Tax Treatments 1 January 2019 Long-term Interest in Associates and Joint Ventures 1 January 2019 Amendments to IAS 19 Plan Amendment, Curtailment or Settlement 1 January 2019 Amendment to References to Conceptual Framework in IFRS Standards IFRS 17 Insurance Contracts 1 January 2020 1 January 2021 Amendment to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or joint Venture Deferred until further notice Annual Improvements to IFRS Standards 2014 – 2016 Cycle • Amendments to IFRS 1 First-time Adoption of IFRS • Amendments to IAS 28 Investment in Associate and Joint Venture 1 January 2018 1 January 2018 Annual Improvements to IFRS Standards 2015 – 2017 Cycle – Various standards 1 January 2019 • Amendment to IFRS 3 • Amendment to IFRS 11 • Amendment to IAS 12 • Amendment to IAS 23 *Not yet adopted by the EU. 41 Oncimmune� / Annual Report 2018 1 January 2019 1 January 2019 1 January 2019 1 January 2019 Consolidated Financial Statements Notes to the Consolidated Financial Statement The effective dates stated above are those given in the original IASB/IFRIC standards and interpretations. As the Group prepares its financial statements in accordance with IFRS as adopted by the European Union (EU), the application of new standards and interpretations will be subject to their having been endorsed for use in the EU via the EU endorsement mechanism. IFRS 15 IFRS 15 Revenue from contracts with customers deals with revenue recognition and establishes principles for reporting useful information to users of financial statements. The standard replaces IAS 18 Revenue and IAS 11 Construction contracts and related interpretations. The standard is effective for annual periods beginning on or after 1 January 2018 and earlier application is permitted subject to EU endorsement. The impact that IFRS 15 will have on the financial statements is yet to be quantified. The group are in the process of completing this assessment and at this stage are unable to conclude on the impact on the accounts. The Group has different contractual arrangements with each of its clients which requires a detailed review in order to assess the changes the Group will need to make to its revenue recognition policies once the standard is implemented. Revenue The amount shown as revenue in the statement of comprehensive income comprises royalties received and receivable and, in addition, amounts received and receivable in respect of the provision of medical testing services, in the US and other markets, including the UK. Revenue is recognised at the fair value of the consideration received or receivable and excludes intra-group sales, value added tax and trade discounts. Revenue is recognised when the amount can be reliably measured and it is probable that future economic benefits associated with the transaction will flow to the entity. Royalty income is recognised when the tests to which the royalty licences relate are completed by third parties. Amounts receivable in respect of the provision of medical testing services are recognised when these services are delivered. Research and development Expenditure on research activities is recognised as an expense in the period in which it is incurred. Development expenditure, where it meets certain criteria (given below), is capitalised and amortised on a straight- line basis over its useful life which is currently five years. Asset lives are subject to regular review and an impairment exercise carried out at least once a year. Where no internally-generated intangible asset can be recognised, development expenditure is written-off in the period in which it is incurred. An intangible asset arising from development is recognised if, and only if, the group can demonstrate the following: • the technical feasibility of completing the intangible asset so that it will be available for use or sale; • the intention to complete the intangible asset and use or sell it; • the ability to sell or use the intangible asset • how the intangible asset will generate probable future economic benefits. Among other things, the group can demonstrate the existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used internally, the usefulness of the intangible asset. • the availability of adequate technical, financial and other resources to complete the development and to use of sell the intangible asset. • the ability to measure reliabily the expenditure attributable to the intangible asset during its development. Annual Report 2018 / Oncimmune� 42 Consolidated Financial Statements Notes to the Consolidated Financial Statements The Group has reviewed research and development expenditure, to determine whether any of that spend could qualify as development expenditure which satisfies the requirements for capitalisation set out above. As a result, £281,240 (2017: £415,000) of development expenditure has been capitalised. Property, plant and equipment Property, plant and equipment is stated at historic cost, including expenditure that is directly attributable to the acquired item, less accumulated depreciation and impairment losses. Depreciation is calculated on a straight line basis over the deemed useful life of an asset and is applied to the cost less any residual value. The asset classes are depreciated on a straight line basis over the following periods: Laboratory equipment Office equipment Computer equipment 3 – 7 years 3 – 7 years 3 – 4 years The carrying value of the property, plant and equipment is compared to the higher of value in use and the fair value less costs to sell. If the carrying value exceeds the higher of the value in use and fair value less the costs to sell the asset then the asset is impaired and its value reduced by recognising an impairment in profit or loss. Impairment testing of non-current assets 4 For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level. Those intangible assets not yet available for use and goodwill are tested for impairment at least annually. All other individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's or cash-generating unit's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of fair value, reflecting market conditions less costs to sell, and value in use based on an internal discounted cash flow evaluation. All assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist. Inventories Inventory is carried at the lower of cost or net realisable value after making due allowance for obsolete and slow moving stock. Net realisable value is calculated based on the revenue from sale in the normal course of business less any costs to sell. 43 Oncimmune� / Annual Report 2018 Consolidated Financial Statements Notes to the Consolidated Financial Statements Leased assets In accordance with IAS 17 Leases, the economic ownership of a leased asset is transferred to the lessee if the lessee bears substantially all the risks and rewards related to the ownership of the leased asset. The related asset is then recognised at the inception of the lease at the fair value of the leased asset or, if lower, the present value of the minimum lease payments plus incidental payments, if any. All other leases are treated as operating leases. Payments on operating lease agreements are recognised as an expense on a straight-line basis. Associated costs, such as maintenance and insurance, are expensed as incurred. Lease incentives received are recognised in the consolidated statement of comprehensive income on a straight-line basis over the lease term. Taxation Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expected tax payable on the taxable income for the year, using current rates, and any adjustments to the tax payable in respect of previous years. In so far as group companies are entitled to UK tax credits on qualifying research and development expenditure, such amounts are recognised when received. Deferred taxation is provided on all temporary differences between the carrying amount of the assets and liabilities in the financial statements and the tax base. Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets and liabilities are not discounted. Deferred tax is determined using the tax rates that have been enacted or substantially enacted by the balance sheet date, and are expected to apply when the deferred tax liability is settled or the deferred tax asset is realised. Deferred tax is provided on temporary differences arising on investments in subsidiaries except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Tax is recognised in profit or loss, except where it relates to items recognised directly in equity, in which case it is recognised in equity. Annual Report 2018 / Oncimmune� 44 Consolidated Financial Statements Notes to the Consolidated Financial Statements Share based compensation Equity-settled share-based payments are recognised as an expense in profit or loss, based on the fair value of the option at the date of grant. Such costs are spread over the vesting period, adjusted for the best available estimate of the number of share options expected to vest, with a corresponding credit to equity, net of deferred tax where applicable. Such adjustments are only made in respect of non-market performance vesting conditions. No adjustment is made to the expense recognised in prior periods if fewer share options ultimately are exercised than originally estimated. Vesting conditions relate to continuing employment. On the re-organisation in November 2015 the existing Oncimmune Limited schemes were rolled over into the 2015 Oncimmune Holdings Plc scheme with Oncimmune Holdings Plc taking on the obligation for the exercise of the options. Modification accounting was performed resulting in the incremental fair value at the date of the modification being calculated. The incremental fair value is the excess of the fair value of the award immediately after the modification over the fair value immediately before the modificiation. Where the was an incremental fair value this was charged over the remainder of the vesting period, together with the original charge relating to the grant date of the original reward. Recognition of a cost of investment in Oncimmune Holdings Plc and a corresponding reserve in respect of the fair value of the options rolled over was considered, however no investment was recognised as the amount was not considered material. Where the granting of share options has coincided with the issue of shares, for cash, to third party investors, the fair value of such options is based on the issue price for those shares which is considered to be an arm's length value. Employee benefit trust Assets, other than shares, held by the Oncimmune Limited's Employee Benefit Trust (EBT) are included in the group's balance sheet under the appropriate heading. Shares in the company held by the EBT are disclosed as a deduction 4 from shareholder's funds and dividend income is excluded in arriving at profit before tax and deducted from aggregate dividends paid and proposed. Reflecting the substance of these arrangements any amounts which the trustees of the EBT may resolve, pursuant to their discretionary powers, to pay to any beneficiaries of the EBT are charged to the profit or loss account only when paid, subject to statutory deductions. Segmental reporting Operating segments are reported in a manner consistent with the internal reporting provided to the main decision- making body of the Group, which collectively comprises the Executive Directors. The Executive Directors are responsible for allocating the resources and assessing the performance of the operating segments. Exceptional items Exceptional items are treated as such if the matters are non-recurring, material and fall outside of the operating activities of the Group. Government grants Government grants receivable are recognised on receipts of cash. Related expenditure is recognised as it occurs. 45 Oncimmune� / Annual Report 2018 Consolidated Financial Statements Notes to the Consolidated Financial Statements Financial instruments Financial instruments are assigned to their different categories by management on initial recognition, depending on the contractual arrangements. Financial assets The Group’s financial assets fall within the heading of ‘Loans and receivables’. Loans and receivables comprise trade and certain other receivables as well as cash and cash equivalents. Loan and receivables are recognised when the Group becomes a party to the contractual provisions of the instrument and are recognised at fair value and subsequently measured at amortised cost using the effective interest method less any provision for impairment, based on the receivable ageing, previous experience with the debtor and known market intelligence. Any change in their value is recognised in the statement of comprehensive income. Derecognition of financial assets occurs when the rights to receive cash flows from the investments expire or are transferred and substantially all of the risks and rewards of ownership have been transferred. An assessment for impairment is undertaken at least at each balance sheet date whether or not there is objective evidence that a financial asset or a group of financial assets is impaired. Financial liabilities The Group’s financial liabilities comprise borrowings and trade and other payables. Financial liabilities are initially recognised at the fair value of the consideration received net of issue costs. After initial recognition borrowings are measured at amortised cost using the effective interest method. All interest-related charges are included in the statement of comprehensive income line item “finance expense”. Financial liabilities are derecognised when the obligation to settle the amount is removed. Warrants to purchase shares Warrants to purchase shares that do not meet the definition of equity instruments are accounted for as derivative liabilities. The valuation is performed at inception and at each subsequent reporting with movements recognised in the profit or loss. Cash and cash equivalents Cash and cash equivalents include cash in hand and deposits held on call, together with other short term highly liquid investments which are not subject to significant changes in value and have original maturities of less than three months. Equity Equity comprises the following: • Share capital: the nominal value of equity shares. • Share premium: includes any premium received on the sale of shares. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any income tax benefits. • Own shares and other reserves • Profit and loss account: retained profits • Foreign currency translation reserve: differences arising from translation of investments in overseas subsidiaries • Merger reserve: The merger reserve represents the difference between the parent company’s cost of investment and a subsidiary's share capital and share premium. The merger reserve in these accounts has arisen from a group reconstruction upon the incorporation and listing of the parent company that was accounted for as a common control transaction. Common control transactions are accounted for using merger accounting rather than the acquisition method. Annual Report 2018 / Oncimmune� 46 Consolidated Financial Statements Notes to the Consolidated Financial Statements Foreign currencies Monetary assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the statement of financial position date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of the transaction. Exchange differences are taken into account in arriving at the operating profit. The functional currency of the group and parent company is £’000. The financial statements of foreign subsidiaries are translated at the rate of exchange ruling at the statement of financial position date. The exchange differences arising from the retranslation of the opening net investment in subsidiaries are taken directly to reserves. Where exchange differences result from the translation of foreign currency borrowings raised to acquire foreign assets (including equity investments) they are taken to reserves and offset against differences arising from the translation of those assets. All other exchange differences are dealt with through the statement of comprehensive income. 3. Accounting estimates and judgements The preparation of financial statements under IFRS requires the Group to make estimates and judgements that affect the application of policies and reported amounts. Estimates and judgements are based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. The estimates and judgements which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are discussed below: • Useful lives of depreciable assets Management reviews the useful lives of depreciable assets at each reporting date. At the reporting date management assesses that the useful lives represent the expected utility of the assets to the Group. Actual results, however, may vary due to unforeseen events. 4 • Inventory provision Inventory provisions are based on an estimate of the realisable value of the inventory items. • Impairment An impairment loss is recognised for the amount by which the asset's or cash generating unit's carrying amount exceeds its recoverable amount. To determine the recoverable amount, management estimates expected future cash flows from each cash-generating unit and determines a suitable discount rate in order to calculate the present value of those cash flows. In the process of measuring expected future cash flows management makes assumptions about future operating results. These assumptions relate to future events and circumstances. In most cases, determining the applicable discount rate involves estimating the appropriate adjustment to market risk and the appropriate adjustment to asset-specific risk factors. • Capitalisation of development costs Development expenditure, where it meets certain criteria per IAS 38 Intangible Assets, is capitalised and amortised on a straight-line basis over its useful life. Asset lives are subject to regular review and an impairment exercise carried out at least once a year. Where no internally-generated intangible asset can be recognised, development expenditure is written-off in the period in which it is incurred. Development expenditure is only recognised when all of the criteria set out in IAS 38 are met. Management applies judgement in making this assessment and in determining attributable costs for each project. • Deferred tax Judgement has been applied in respect of the non recognition of deferred tax on losses as detailed in note 9 on the basis of uncertainty over the timing of future reversal. 47 Oncimmune� / Annual Report 2018 Consolidated Financial Statements Notes to the Consolidated Financial Statements 4. Segmental information Management has determined the operating segments based on the reports reviewed by the strategic decision maker comprising the Board of Executive Directors. The segmental information is split on the basis of geographical analysis however, management report only the contents of the statement of comprehensive income and therefore no statement of financial position information is provided on a segmental basis in the following tables: Revenue Class of business Distribution of testing products Royalties Total revenues Geographical analysis by destination United Kingdom North America Rest of the world Total revenues Geographical analysis by origin United Kingdom North America Rest of the world Total revenues 31 May 2018 31 May 2017 £’000 £’000 240 - 240 104 136 - 240 - 240 - 240 215 - 215 80 135 - 215 - 215 - 215 Annual Report 2018 / Oncimmune� 48 Consolidated Financial Statements Notes to the Consolidated Financial Statements Operating segments As at 31 May 2018 Revenue Cost of sales Gross margin Operating loss Net finance and other costs Loss before tax Taxation As at 31 May 2017 Revenue Cost of sales Gross margin Operating loss Net finance and other costs Loss before tax Taxation 4 UK £’000 104 (258) (154) (3,167) UK £’000 80 (247) (167) (3,279) USA £’000 136 (659) (523) (1,744) USA £’000 135 (284) (149) (1,171) Holdings Consolidated £’000 - - - (1,463) £’000 240 (917) (677) (6,374) 32 (6,342) - (6,342) Holdings Consolidated £’000 - - - (823) £’000 215 (531) (316) (5,273) (43) (5,316) 293 (5,023) Assets are not reported by business segment to the Chief Operating Decision Maker. Information about major customers In the year to 31 May 2018, the group had two customers who contributed more than 10% of group revenue individually. These two customers contributed approximately 60% of group revenue. 49 49 Oncimmune� Oncimmune� / Annual Report 2018 / Annual Report 2018 5. Loss before income tax Loss before taxation has been arrived at after charging: Depreciation of owned property, plant and equipment Amortisation of intangible assets Research and development Share based payment expense Employee costs (Note 7) Operating lease rentals Other operating leases Audit and non-audit services: Fee payable to the company's auditor: Fee for the audit of the parent company Fees payable to the Company’s auditor for other services: The audit of the Company’s subsidiaries pursuant to legislation Tax compliance services Tax advisory services Audit related assurance services All other assurance services 6. Remuneration of key personnel The Group consider that the Directors are the key personnel: Share based payments expense Salary, fees, bonuses and other short term emoluments Social security costs Details of Director’s remuneration are disclosed in the Directors’ report. Consolidated Financial Statements Notes to the Consolidated Financial Statements May 2018 May 2017 £’000 £’000 52 128 800 138 3,094 63 28 1,025 74 2,202 225 116 20 25 6 4 - - 15 24 6 6 4 1 May 2018 May 2017 £’000 £’000 138 731 82 951 74 409 44 527 Annual Report 2018 / Oncimmune� 50 Consolidated Financial Statements Notes to the Consolidated Financial Statements 7. Employees The average number of employees (including Directors) during the period was as follows: Directors Lab staff Sales and administration The cost of employees (including directors) during the period was made up as follows: Wages and salaries Social security costs Pension cost Share based payments 8. Net finance costs 4 Finance revenue Finance costs May 2018 May 2017 11 31 10 52 10 33 4 47 May 2018 May 2017 £’000 2,659 257 40 138 £’000 2,021 106 1 74 3,094 2,202 May 2018 May 2017 £’000 £’000 48 (16) 32 26 (69) (43) 51 Oncimmune� / Annual Report 2018 Consolidated Financial Statements Notes to the Consolidated Financial Statements May 2018 May 2017 £’000 £’000 - - - - (293) - (293) (293) 9. Income tax credit Current tax: UK corporation tax credit at rates: 2018 – 19 % 2017 -19.83% Prior period adjustment Tax recoverable for the period Factors affecting current tax charge: The tax assessed on the profit for the period is different to the standard rate of corporation tax in the UK. The differences are explained below: Loss before income tax Loss for the year multiplied by the standard rate of corporation tax Expenses not deductible for tax purposes Adjustment in respect of prior periods Income not assessable for tax Tax uplift in R&D expenditure Losses surrendered for R&D claims Losses carried forward May 2018 May 2017 £’000 (6,342) £’000 (5,316) (1,205) (1,054) 54 - - (220) 194 1,177 - 6 - - (295) 228 822 (293) The group has unrelieved UK tax losses of £15,212,000 (2017: £12,247,000) and unrelieved overseas tax losses of £19,789,000 (2017: £17,917,000). Deferred tax of £5,950,000 has not been provided given the uncertainty over the timing of a future reversal. At year end management have not recognised research and deferred tax credit as there is uncertainty over the timing and amount that will be received from the taxation authorities. Annual Report 2018 / Oncimmune� 52 Consolidated Financial Statements Notes to the Consolidated Financial Statements 10. Property, plant and equipment Cost At 31 May 2017 Additions Foreign exchange movement At 31 May 2018 Depreciation At 31 May 2017 Charge for the year Foreign exchange movement At 31 May 2018 Net book values At 31 May 2018 At 31 May 2017 Laboratory Equipment Computer Equipment Office Equipment Total £’000 £’000 £’000 £’000 1,018 31 (11) 1,038 795 50 (3) 842 196 223 25 - - 25 18 2 - 20 5 7 30 - - 30 30 - - 30 - - 1,073 31 (11) 1,093 843 52 (3) 892 201 230 4 There were no assets held under finance leases during 2018 or 2017. The amount of depreciation expense charged to the statement of comprehensive income in respect of such assets was £nil in 2018 and 2017. 53 Oncimmune� / Annual Report 2018 11. Intangible Assets Cost At 31 May 2017 Additions Disposals At 31 May 2018 Depreciation At 31 May 2017 Charge for the year At 31 May 2018 Net book values At 31 May 2018 At 31 May 2017 All intangible assets are from internal development. 12. Trade and other receivables Trade receivables Other debtors Prepayments and accrued income Consolidated Financial Statements Notes to the Consolidated Financial Statements Intangible Assets £’000 558 281 - 839 40 128 168 671 518 May 2018 May 2018 £’000 £’000 162 89 40 291 50 191 20 261 At 31 May 2018 trade receivables were stated net of provisions of £nil (2017 - £nil). The remaining balances were considered recoverable on normal trade terms. There is no material difference between the fair value and the varying value of these assets. The maximum credit risk exposure at the reporting date equated to the fair value of trade receivables as stated net of provisions. Standard payment terms are 30 days net. 13. Inventories Diagnostic testing materials May 2018 May 2017 £’000 £’000 295 295 323 323 Inventory is stated net of a £193,000 provision (2017: £501,000). During the year inventory with a gross value and impairment provision of £308,000 was written off in full due to obsolescence. Annual Report 2018 / Oncimmune� 54 Consolidated Financial Statements Notes to the Consolidated Financial Statements 14. Cash and cash equivalents Cash balances at the end of each year are as follows: Cash and cash equivalents per statement of financial position Cash per statement of cash flows 15. Trade and other payables Trade payables Other creditors Accruals and deferred income 16. Borrowing May 2018 May 2017 £’000 12,953 12,953 £’000 5,075 5,075 May 2018 May 2017 £’000 £’000 402 181 225 808 590 122 135 847 The Group uses bank overdrafts, bank and other loans to finance acquisitions; the following balances remain outstanding as shown: 4 Current Other loans May 2018 May 2017 £’000 £’000 - - 502 502 The Company had taken out a venture loan facility originally of €1,862,649 (approximately £1.5m), from Harbert European Speciality Lending Company Limited ('Harbert'), repayable in equal instalment over the period to 31 January 2018 at an interest rate of 10%, plus a further 3% to be paid with the final instalment. The facility was secured by a fixed and floating charge over the company's assets and undertaking. As at the year end £nil was falling due within one year and £nil was falling due after one year (2017: £502,281 and £nil respectively). The loan was repaid in full during the financial year. 17. Lease commitments At the end of each period the Group had total minimum annual payment commitments under non-cancellable operating lease agreements as set out below: Land and buildings Operating leases which expire: Within one year In two to five years In over five years 55 Oncimmune� / Annual Report 2018 May 2018 May 2017 £’000 £’000 257 234 - 491 21 - - 21 Consolidated Financial Statements Notes to the Consolidated Financial Statements 18. Share capital Authorised: May 2018 May 2017 Shares £ Shares £ Ordinary shares of £0.01 each 64,102,560 641,025 57,115,594 Allotted, called up and fully paid: Ordinary shares of £0.01 each - 641,025 61,626,327 616,263 51,024,404 61,626,327 616,263 51,024,404 571,155 571,155 510,244 510,244 19. Share based payments The Group has granted options to certain directors and employees in respect of Ordinary shares The Group has the following share options schemes in place: The 2005 Share Option Scheme The 2005 Share Option Scheme has the following principal terms: • the scheme is limited to eligible persons, being employees, officers, SAB members and consultants of the Group; • the scheme provides for options to be granted to eligible persons to subscribe for ordinary shares of 0.01p each in the capital of Oncimmune Holdings Plc; • the scheme was limited to options over 14,500 ordinary shares in Oncimmune Limited (now 725,000 options over Ordinary shares of Oncimmune Holdings Plc), all of which have been granted and options may be issued under the Enterprise Management Incentive (EMI) rules or as unapproved options; • no option may be exercised later than the tenth anniversary of the date of grant, extended to 20 years for certain option holders; • each option issued under the scheme had a vesting period commencing for employees, officers and consultants on the first anniversary of the date of the grant and expiring on the fourth anniversary of the date of grant and for SAB members commencing on the second anniversary and expiring on the fourth anniversary of the date of grant; • options issued under the scheme are non-transferable; • vested options must be exercised (i) within 24 months of an option holder's death; (ii) within 3 months of an option holder ceasing to hold office for reasons of disability, redundancy or retirement (unless otherwise agreed by the Directors); and (iii) within 6 months of an option holder’s resignation (if an employee, officer or consultant of the Operating Group) and within 24 months of an option holder’s resignation (if an SAB member), or in each case the options shall lapse • If an option holder shall leave the Operating Group for any reason, options granted to that option holder shall only be exercisable in the Directors' discretion; • on 'takeover' of Oncimmune Holdings Plc where a general offer is made to acquire the whole of the issued share capital of Oncimmune Holdings Plc (or any class of share capital of Oncimmune Holdings Plc), the acquiring company may make a 'rollover' offer to the option holders, which the option holders shall be deemed to accept, such that their options shall rollover into options in the acquiring company upon the same terms; and • Oncimmune Holdings Plc may at any time add to or vary the scheme rules provided that this does not affect the liabilities of any option holder. Annual Report 2018 / Oncimmune� 56 Consolidated Financial Statements Notes to the Consolidated Financial Statements The 2007 Share Option Scheme The 2007 Share Option Scheme is on the same principal terms as the 2005 Share Option Scheme save that: • the scheme was limited to an additional 25,029 (increased to 68,056 options over ordinary shares in Oncimmune Limited and which rolled over 3,402,800 options over Ordinary Shares), of which 23,511 options over ordinary shares in Oncimmune Limited (rolled over into 1,175,550 options over Ordinary Shares of Oncimmune Holdings Plc) have been granted; • the vesting period for all options issued under the scheme commenced on the first anniversary of the date of grant and expired on the third anniversary of the date of grant, and; • vested options must be exercised (i) within 12 months of an option holders death; (ii) within 3 months of an option holder ceasing to hold office for reasons of disability, redundancy or retirement (unless otherwise agreed by the Directors) and (iii) on or before an option holders resignation, or in each case the options shall lapse. In November 2015, the two existing option schemes were rolled over into the 2015 Oncimmune Holdings Scheme on the terms set out above. Options in grant Weighted average exercise price Weighted average life remaining in years *Share options issued by Oncimmune Limited May 2018 May 2017 Number of options Number of options* 4,391,765 3,650,550 £0.86 £0.77 6 5 The fair value of options granted by the Company has been arrived at using the Black-Scholes model. The assumptions 4 inherent in the use of this model are as follows: Volatility Dividend yield Risk free rate Discount factors May 2018 May 2017 20% 0% 3% 10% 20% 0% 3% 10% • The option life is assumed to be at the end of the allowed period • Historical staff turnover is taken into account when determining the proportion of granted options that are likely to vest by the end of the period • Following the application of the vesting probability assumptions, there are no further vesting conditions other than remaining in employment with the Company during the vesting period • No variables change during the life of the option (e.g. dividend yield) • Volatility has been estimated as there is no history of the Company’s share price. 57 Oncimmune� / Annual Report 2018 Consolidated Financial Statements Notes to the Consolidated Financial Statements At the period end each year the Group had the following options at the weighted average exercise prices (WAEP) shown: Expiry date Outstanding at 1 June (2017, 2016) Granted Lapsed Modified Exercised WAEP 0.83 May 2017 Number 1,825,550 - 1,825,000 WAEP 0.77 - May 2018 Number 3,650,550 913,531 (147,315) (25,000) Outstanding at 31 May(2018, 2017) 0.86 4,391,765 0.77 3,650,550 Weighted average remaining contractual life in years 6 5 The options are subject to the rules of 2016 Share Option plan (an amalgamation of the Company’s 2005 and 2007 Share option Plans). The Group recognised total expenses in respect of the option schemes above of £138,065 (2017: £74,435) related to equity-settled share based payment transactions during the year. Warrants The group has warrants outstanding as follows, over the £0.01 Ordinary Shares: Expiry date Outstanding at 1 June 2016: Directors Harberts European Growth Fund Zeus Capital Granted in the year Outstanding at 31 May 2017: Grant date Number Subscription price November 2015 May 2016 May 2016 988,750 £0.01 282,515 £0.66368 1,041,314 £1.30 Nil 2,322,579 20. Related party transactions During the year ended 31 May 2018, the University of Nottingham - a shareholder, and Wisteria - where the CFO is a director, provided services to the group as shown below. University of Nottingham provided facilities and services to enable the Company to undertake research whilst Wisteria provided bookkeeping services. Costs incurred Outstanding at year end Wisteria University of Nottingham May 2018 May 2017 May 2018 May 2017 £’000 £’000 £’000 £’000 39 4 44 8 163 64 174 39 Also, at year end £806 (2017: £243), £4,805 (2017: £6,703) and £1,241 (2017: £9,035) was outstanding to Andrea Murray, Andrew Millet and Geoffrey Hamilton-Fairley respectively. Annual Report 2018 / Oncimmune� 58 Consolidated Financial Statements Notes to the Consolidated Financial Statements 21. Categories of financial instruments Current financial assets Loans and receivables Cash and cash equivalents Total financial assets Non-financial assets Total Non-current financial liabilities At amortised cost - borrowings Current financial liabilities At amortised cost - borrowings At amortised cost - payables Total current financial liabilities Non financial liabilities Total current liabilities 22. Loss per share May 2018 May 2017 £’000 £’000 291 12,953 13,244 - 13,244 - - 849 849 - 849 261 5,075 5,336 - 5,336 - 502 901 1,403 - 1,403 The basic per share is calculated by dividing the loss attributable to the owners of Oncimmune Holdings Plc by the weighted average number of ordinary shares in issue during the year. Diluted earnings per share has not been calculated 4 as the entity is loss making. Earnings May 2018 May 2017 Loss on ordinary activities for the purposes of basic and fully diluted loss per share (£'000) (6,342) (5,023) Loss on ordinary activities for the purposes of basic and fully diluted loss per share (£'000) (before highlighted items) - - Number of shares Weighted average number of shares for calculating basic and fully diluted earnings per share 55,558,178 51,024,404 Loss per share Basic and fully diluted loss per share Basic and fully diluted loss per share (before exceptional items) 11.41p 11.41p 9.84p 9.84p 59 Oncimmune� / Annual Report 2018 Consolidated Financial Statements Notes to the Consolidated Financial Statements 23. Financial risk management The Group’s activities expose it to a variety of financial risks: market risk (interest rate risk), credit risk and liquidity risk. Market risk - Foreign exchange risk As disclosed in note 4 in the years to 31 May 2018 and 31 May 2017 over 43% of the Group's income by destination was into the North American market and denominated in US dollars. The Group's income stream is exposed to fluctuations in the US dollar exchange rate against Sterling. Market risk - Interest rate risk The Group carries borrowings in the form of other loans as all borrowings are on fixed interest terms, the directors consider that no risk arises in respect of future cash flows. Market risk - Price risk The Group is not exposed to either commodity or equity securities price risk. Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. In order to minimise this risk the Group endeavours only to deal with companies which are demonstrably creditworthy. In addition, a significant proportion of revenue results from cash transactions. The aggregate financial exposure is continuously monitored. The maximum exposure to credit risk is the value of the outstanding amount of trade receivables. The management do not consider that there is any concentration of risk within either trade or other receivables. Annual Report 2018 / Oncimmune� 60 Consolidated Financial Statements Notes to the Consolidated Financial Statements Liquidity risk The Group currently holds cash balances to provide funding for normal trading activity. The Group also has access to both short term and long term borrowings . Trade and other payables are monitored as part of normal management routine. Borrowings and other liabilities mature according to the following schedule: 2018 Trade payables Other taxation and social security Other creditors Accruals and deferred income 2017 Trade payables Other taxation and social security Other creditors Accruals and deferred income Other loans Within 1 year One to five years £’000 £’000 402 41 181 225 - - - - Within 1 year One to five years £’000 £’000 590 57 122 135 502 - - - - - 4 Capital risk management The Group' s capital management objectives are: • to ensure the Group's ability to continue as a going concern; and • to provide an adequate return to shareholders • by pricing products and services commensurate with the level of risk. The Group monitors capital on the basis of the carrying amount of equity less cash and cash equivalents as presented on the face of the statement of financial position. 61 Oncimmune� / Annual Report 2018 Consolidated financial statements Subtitle May 2018 May 2017 £’000 13,562 12,953 26,515 - - £’000 5,064 5,075 10,139 502 502 Total equity Cash and cash equivalents Capital Total financing Borrowings Overall financing Capital to overall financing ratio N/A 2,019.7% 24. Events after the balance sheet date There were no events after the balance sheet date. 25. Subsidiaries consolidated The subsidiaries included in the consolidated financial statements of the Group are detailed below. No subsidiary undertakings have been excluded from the consolidation. Company Country of incorporation Class of share capital held Oncimmune Limited United Kingdom Ordinary Oncimmune (USA) LLC United States of America Ordinary Holding Direct Indirect % 100 % 100 26. Ultimate controlling party There is no ultimate controlling party of the Company. Annual Report 2018 / Oncimmune� 62 Parent Company Financial Statements Company Statement of Financial Position | For The Year Ended 31 May 2018 Company Statement of Financial Position For The Year Ended 31 May 2018 Fixed Assets Investment Current assets Cash Debtors Creditors: amounts falling due within one year Net current assets Total assets less current liabilities Capital and reserves Called up share capital Share premium account Profit and loss reserve Other reserves Shareholders’ funds Notes 3 4 5 6 7 31 May 2018 £’000 31 May 2017 £’000 348 348 4,364 23,636 28,000 393 27,607 27,955 616 30,952 (4,764) 1,151 27,955 25 14,298 14,323 184 14,139 14,487 510 16,273 (3,309) 1,013 14,487 In accordance with the exemptions permitted by section 408 of the Companies Act 2006, the profit and loss account of the parent company has not been presented. The parent company loss for the year ended 31 May 2018 was £1,455,000 (2017: £823,000). The accompanying notes on pages 65 to 70 form an integral part of the company financial statements. The parent company financial statements were approved by the board on 30 October 2018. Andrew Millet Director 5 5 63 Oncimmune� / Annual Report 2018 Parent Company Financial Statements Company Statement of Changes in Equity | For The Year Ended 31 May 2018 Company Statement of Changes in Equity For The Year Ended 31 May 2018 As at 1 June 2016 Loss for the year Total comprehensive income Transactions with owners: Share option charge As at 31 May 2017 Loss for the year Total comprehensive income Transactions with owners: Shares issued during the year Share option charge As at 31 May 2018 Share Share capital premium £'000 510 £'000 16,273 - - - - - - 510 16,273 106 - 616 14,679 - 30,952 Other reserves Retained earnings £'000 939 - - 74 1,013 - 138 1,151 £'000 (2,486) (823) (823) - (3,309) (1,455) (1,455) - - (4,764) Total £'000 15,236 (823) (823) 74 14,487 (1,455) (1,455) 14,785 138 27,955 The accompanying notes on pages 65 to 70 form an integral part of the company financial statements. Annual Report 2018 / Oncimmune� 64 Parent Company Financial Statements Notes to the Company Financial Statements Notes to the Company Financial Statements 1. Accounting policies The principal accounting policies applied in the preparation of the Company's financial statements are set out below. Statement of compliance The separate financial statements of the Company are presented in accordance with Financial Reporting Standard 101 – ‘The Reduced Disclosure Framework’. They have been prepared under the historical cost convention. Adoption of FRS 101 The Company financial statements were prepared in accordance with United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including FRS 101 Reduced Disclosure Framework. There were no material amendments for all periods presented on the adoption of FRS 101, following the transition from IFRS to FRS 101. Disclosure exemptions adopted In preparing these financial statements the Company has taken advantage of all disclosure exemptions available under FRS 101. Therefore these financial statements do not include: • The requirements of IFRS 7 Financial Instruments: Disclosures, as equivalent disclosures are included in the consolidated financial statements of the group in which the entity is consolidated • The requirement in paragraph 38 of IAS 1 Presentation of Financial Statements to present comparative information in respect of: • paragraph 73 of IAS 16 Property, Plant and Equipment; • paragraph 118 of IAS 38 Intangible Assets; • The requirements of paragraphs 10(d) and 111 (statement of cash flows), 134 to 136 (managing capital), and 16 (statement of compliance with IFRS) of IAS 1 Presentation of Financial Statements. • The requirements of IAS 7 Statement of Cash Flows and related notes. • The requirements of paragraph 17 of IAS 24 Related Party Disclosures. • The requirements in IAS 24 Related Party Disclosures to disclose related party transactions entered into between two or more members of a group, provided that any subsidiary which is a party to the transaction is wholly owned by such a member. 5 • The requirements of paragraphs 130(f)(ii), 130(f)(iii), 134(d) to 134(f) and 135(c) to 135(e) of IAS 36 Impairment of Assets, provided that equivalent disclosures are included in the consolidated financial statements of the group in which the entity is consolidated. • The requirements of paragraphs 45(b) and 46 to 52 of IFRS 2 Share Based Payments, provided that equivalent disclosures are included in the consolidated financial statements of the group in which the entity is consolidated. The effects of future accounting standards not adopted. The preparation of financial statements in accordance with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a high degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in note 2. The financial statements of the Company have been prepared on a going concern basis and under the historical cost convention. The financial statements are presented in sterling and have been rounded to the nearest thousand (£’000). 65 Oncimmune� / Annual Report 2018 Parent Company Financial Statements Notes to the Company Financial Statements Investments Investments in subsidiaries are valued at cost less impairment. Impairment testing of non-current assets For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level. All other individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's or cash-generating unit's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of fair value, reflecting market conditions less costs to sell, and value in use based on an internal discounted cash flow evaluation. All assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist. Taxation Income tax on the profit or loss for the year comprises current and deferred tax. Current tax is the expected tax payable on the taxable income for the year, using current rates, and any adjustments to the tax payable in respect of previous years. In so far as group companies are entitled to UK tax credits on qualifying research and development expenditure, such amounts are recognised when received. Deferred taxation is provided on all temporary differences between the carrying amount of the assets and liabilities in the financial statements and the tax base. Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets and liabilities are not discounted. Deferred tax is determined using the tax rates that have been enacted or substantially enacted by the balance sheet date, and are expected to apply when the deferred tax liability is settled or the deferred tax asset is realised. Deferred tax is provided on temporary differences arising on investments in subsidiaries except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Tax is recognised in the statement of comprehensive income, except where it relates to items recognised directly in equity, in which case it is recognised in equity. Annual Report 2018 / Oncimmune� 66 Parent Company Financial Statements Notes to the Company Financial Statements Share based compensation Equity-settled share-based payments are recognised as an expense in profit or loss, based on the fair value of the option at the date of grant. Such costs are spread over the vesting period, adjusted for the best available estimate of the number of share options expected to vest, with a corresponding credit to equity, net of deferred tax where applicable. Such adjustments are only made in respect of non-market performance vesting conditions. No adjustment is made to the expense recognised in prior periods if fewer share options ultimately are exercised than originally estimated. Vesting conditions relate to continuing employment. On the re-organisation in November 2015 the existing Oncimmune Limited schemes were rolled over into the 2015 Oncimmune Holdings Plc scheme with Oncimmune Holdings Plc taking on the obligation for the exercise of the options. Modification accounting was performed resulting in the incremental fair value at the date of the modification being calculated. The incremental fair value is the excess of the fair value of the award immediately after the modification over the fair value immediately before the modification. Where the was an incremental fair value this was charged over the remainder of the vesting period, together with the original charge relating to the grant date of the original reward. Recognition of a cost of investment in Oncimmune Holdings Plc and a corresponding reserve in respect of the fair value of the options rolled over was considered, however no investment was recognised as the amount was not considered material. Where the granting of share options has coincided with the issue of shares, for cash, to third party investors, the fair value of such options is based on the issue price for those shares which is considered to be an arm's length value. Financial instruments Financial instruments are assigned to their different categories by management on initial recognition, depending on the contractual arrangements. Financial assets The Company’s financial assets fall within the heading of ‘Loans and receivables’. Loans and receivables comprise trade and certain other receivables as well as cash and cash equivalents. Loan and receivables are recognised when the Group becomes a party to the contractual provisions of the instrument and are recognised at fair value and subsequently measured at amortised cost using the effective interest method less any provision for impairment, based on the receivable ageing, previous experience with the debtor and known market intelligence. Any change in their value is recognised in the statement of comprehensive income. Derecognition of financial assets occurs when the rights to receive cash flows from the investments expire or are transferred and substantially all of the risks and rewards of ownership have been transferred. An assessment for impairment is undertaken at least at each balance sheet date whether or not there is objective evidence that a financial asset or a group of financial assets is impaired. 5 Financial liabilities The Company’s financial liabilities comprise borrowings, a convertible loan and trade and other payables. Financial liabilities are initially recognised at the fair value of the consideration received net of issue costs. After initial recognition borrowings are measured at amortised cost using the effective interest method. All interest-related charges are included in the statement of comprehensive income line item “finance expense”. Financial liabilities are derecognised when the obligation to settle the amount is removed. 67 Oncimmune� / Annual Report 2018 Parent Company Financial Statements Notes to the Company Financial Statements Convertible loan notes Convertible loan notes where the conversion option does not meet the definition of equity are accounted for as financial liabilities. The instruments are split between: • the "host" debt instrument being a non-convertible debt. The host contract is recognised at fair value and subsequently measured at amortised cost using the effective interest rate; • an embedded derivative representing the conversion feature. The valuation of the embedded derivative is performed at inception of the loan and at the end of each reporting period. The residual value is then allocated to the host debt instrument. Warrants to purchase shares Warrants to purchase shares that do not meet the definition of equity instruments are accounted for as derivative liabilities. The valuation is performed at inception and at each subsequent reporting with movements recognised in profit or loss. Cash and cash equivalents Cash and cash equivalents include cash in hand and deposits held on call, together with other short term highly liquid investments which are not subject to significant changes in value and have original maturities of less than three months. Equity Equity comprises the following: • Share capital: the nominal value of equity shares. • Share premium: includes any premium received on the sale of shares. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any income tax benefits. • Other reserves – accumulated share based payment expense • Profit and loss account: retained profits The company has applied S612 merger relief by treating the cost of investment arising from the reorganisation as equal to the nominal value of shares issued (thus disregarding any premium arising). 2. Accounting estimates and judgements The preparation of financial statements under IFRS requires the Company to make estimates and judgements that affect the application of policies and reported amounts. Estimates and judgements are based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. The key estimate and judgements which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities is discussed below: Impairment An impairment loss is recognised for the amount by which the asset's or cash generating unit's carrying amount exceeds its recoverable amount. To determine the recoverable amount, management estimates expected future cash flows from each cash-generating unit and determines a suitable discount rate in order to calculate the present value of those cash flows. In the process of measuring expected future cash flows management makes assumptions about future operating results. These assumptions relate to future events and circumstances. In most cases, determining the applicable discount rate involves estimating the appropriate adjustment to market risk and the appropriate adjustment to asset-specific risk factors. Annual Report 2018 / Oncimmune� 68 Parent Company Financial Statements Notes to the Company Financial Statements 3. Investments At 31 May 2017 Additions At 31 May 2018 Investments in subsidiary £’000 348 - 348 Details of subsidiary undertakings as at 31 May 2018 are as follows: Company Country of incorporation Class of share capital held Oncimmune Limited United Kingdom Ordinary Oncimmune (USA) LLC United States of America Ordinary Holding Direct Indirect % 100 % 100 4. Cash and cash equivalents Cash 5. Trade and other receivables Loan to subsidiary undertakings Other debtors 5 May 2018 May 2017 £’000 4,364 4,364 £’000 25 25 May 2018 May 2017 £’000 23,551 85 23,636 £’000 14,192 106 14,298 At 31 May 2018 receivables were stated net of provisions of £nil. There is no material difference between the fair value and the varying value of these assets. The maximum credit risk exposure at the reporting date equated to the fair value of trade receivables as stated net of provisions. 69 Oncimmune� / Annual Report 2018 Parent Company Financial Statements Notes to the Company Financial Statements May 2018 May 2017 £’000 111 111 87 8 76 393 £’000 106 37 33 8 - 184 May 2018 May 2017 Shares £ Shares £ 64,102,560 - 641,025 641,025 57,115,594 57,115,594 61,626,327 61,626,327 616,263 51,024,404 616,263 51,024,404 571,115 571,115 510,244 510,244 6. Trade and other payables Trade payables Amounts owed to group undertakings Other creditors Accruals Current tax 7. Share capital Authorised: Ordinary shares of £0.01 each Allotted, called up and fully paid: Ordinary shares of £0.01 each 8. Employee remuneration Share based payments expense Salary, fees, bonuses and other short term emoluments Social security costs May 2018 May 2017 £’000 £’000 138 693 9 840 74 436 44 554 Annual Report 2018 / Oncimmune� 70 Company Information Company registration number 09818395 Registered office Clinical Sciences Building City Hospital Hucknall Road Nottingham NG5 1PB Website www.oncimmune.com Directors Meinhard Folkert Schmidt Non-Executive Chairman Dr. Adam Mark Hill Chief Executive Officer Andrew Millet Chief Financial Office Timothy Brian Bunting Non-Executive Director Geoffrey Neil Hamilton-Fairley Non-Executive Vice Chairman Julian Clement Hirst Non-Executive Director Dr. Annalisa Mary Jenkins Non-Executive Director Dr. Carsten Schroeder Non-Executive Director Richard Simon Sharp Non-Executive Director Dr. Cheung To Non-Executive Director Andrew Vaughan Unitt Non-Executive Director Secretary Andrew Millet Nominated Adviser and Broker Zeus Capital Limited 10 Old Burlington Street London W1S 3AG Joint Brokers Berenberg 60 Threadneedle Street London EC2R 8HP Bryan Garnier & Co Beaufort House, 15 St Botolph Street London EC3A 7BB Zeus Capital Limited 10 Old Burlington Street London W1S 3AG Legal adviser Peachey & Co LLP 95 Aldwych London WC2B 4JF Auditor Grant Thornton UK LLP Chartered Accountants Statutory Auditor Victoria House, 4th Floor 199 Avebury Boulevard Milton Keynes MK9 1AU Financial PR Consilium Strategic Communications 41 Lothbury London EC2R 7HG Registrars Link Asset Services 65 Gresham Street London EC2V 7NQ n g i s e D M A y b d e n g i s e D . m o c e e k c a m a n n a . w w w Oncimmune Holdings Plc Company registration number 09818395 Phone +44 (0)115 8231869 Email contact@oncimmune.co.uk Registered Address Clinical Sciences Building, City Hospital Hucknall Road, Nottingham, NG5 1PB Fax +44 (0)115 8231958 Website www.oncimmune.co.uk 

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