Leading the way in Immuno-Diagnostics
A year of foundational partnerships, accelerating commercial
rollout and continued delivery on growth strategy
Annual Report 2020
For the year ended 31 May 2020
“We have made strong progress in our first full year
of trading since the launch of our three-year strategy
in September 2018, which has delivered a step-
change in revenue growth over the year led by the
ImmunoINSIGHTS service business. Despite the
impact of COVID-19, further positive news flow post
year end has sustained the Group’s growth trajectory
throughout H1 2021.”
“Following the successful turnaround, Oncimmune
now has a solid platform business underpinned by its
core technology and expertise, that is validated by an
expanding stable of commercial contracts and a full
pipeline of pharma service opportunities. This underpins
our expectation of delivering substantial further growth
in the re-focused business throughout FY 2021 and
beyond, about which the Company looks forward to
providing further progress updates.”
Dr Adam M Hill, Chief Executive
Contents
Strategic report
Business highlights
Chairman and Chief Executive Officer’s review
Chief Financial Officer’s review
Governance
Board of Directors
Principal risks and uncertainties
Directors’ report
Financial statements
Independent auditor's report
Consolidated Statement of Comprehensive Income
Consolidated Statement of Finanacial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the consolidated financial statements
Company Statement of Financial Position
Company Statement of Changes in Equity
Notes to the Company financial statements
Company information
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Oncimmune Annual Report 2020 Financials at a glance
Income on target, costs controlled, continued R&D investment
“To payers, diagnostics are often the least expensive part of the health
care pathway, and arguably the most cost effective; the NHS spends less
than 4% of its budget on diagnostics and yet over 70% of health care
decisions are dependent upon them.”
Chief Executive, Dr Adam M Hill's journal entry on why diagnostics are now getting
the attention they deserve, Medium, 11th May 2020
Invoiced income for the year
£1.2M
(2019: £220k)
R&D costs for the year were
£1.7M
(2019: £1.5M)
Administrative expenses for the year were
£8.2M
(2019: £5.9M)
Loss for the financial year was
£8.5M
(2019: £8.0M)
Cash balance at the year end of
£4.2M
(2019: £5.4M)
Net debt of £4.0M including lease liabilities
Net debt of £3.0M excluding lease liabilities
(2019: net cash of £5.4M)
Our intimate understanding of the human immune system enables us to harness its sophisticated
response to disease to detect cancer earlier and to support the development of better therapies.
The key to improving cancer survival is early detection and better selection for therapy. As a
company, we are driven by our passion to improve cancer survival and to give people extra time.
Oncimmune is a leading immunodiagnostics developer, primarily focused on the growing fields
of immuno-oncology, autoimmune disease and infectious diseases. Oncimmune has a diversified
and growing revenue from its portfolio of diagnostic products to detect early-stage cancer and a
contract discovery and development service-based platform, delivering actionable insights into
therapies to its pharmaceutical and biotech partners.
Oncimmune’s ImmunoINSIGHTS platform enables life-science organisations to optimise drug
development and delivery, leading to more effective targeted as well as safer treatments for
patients. Oncimmune's immunodiagnostic technology, EarlyCDT, can detect and help identify
cancer on average four years earlier than standard clinical diagnosis1. Our lead diagnostic test,
EarlyCDT Lung, targets a vast market estimated to grow to £3.8bn by 2024. With over 200,000
tests already performed for patients worldwide and its use being supported by peer reviewed data
in over 12,000 patients2, we are poised to become an integral component of future lung cancer
detection programmes, globally.
1 Jett J, Healey G, Macdonald I, Parsy-Kowalska C, Peek L, Murray A. Determination of the detection lead time for autoantibody
biomarkers in early stage lung cancer using the UKCTOCS cohort. J Thorac Oncol. 2017;12(11):S2170. doi:10.1016/j.jtho.2017.09.1360
2 Sullivan et al, Earlier diagnosis of lung cancer in a randomised trial of an autoantibody blood test followed by imaging, ERJ, 2020
4
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Oncimmune Annual Report 2020 The science behind our tests
and service offering
ImmunoINSIGHTS
Oncimmune’s new service offering
The human immune system produces autoantibodies targeting cancer cells, which we use to
diagnose cancer early and develop new therapeutic targets.
Historic
focus
Oncimmune’s
novel focus
Measurable in low
volumes of blood
Launched in 2020, ImmunoINSIGHTS is Oncimmune’s service to the life science industry, built
off our proprietary autoantibody profiling technology. The unique combination of our core
technology and understanding of the immune system enables life-science organisations to
optimise drug development and delivery, leading to more effective, targeted as well as safer
treatments for patients.
ImmunoINSIGHTS is underpinned by Oncimmune’s proprietary high throughput immunogenic
protein library of over eight thousand proteins, one of the largest in the world, allowing for
more than 95% of human antigens to be utilised for profiling autoantibodies in patients
receiving or about to receive treatment.
With a partnership led approach, Oncimmune is evolving and leveraging its technology with
global pharmaceutical and biotechnology companies, early stage start-ups, leading academic
groups, and not-for-profit companies.
The autoantibody biomarker class is increasingly being recognised as a powerful tool and
critical biological mediator including in cancer and autoimmune disease.
“In July, Roche Diagnostics USA extended a contract with Oncimmune
to profile autoantibodies in patients undergoing immunotherapy
trials. The expanded project will explore the baseline and on-treatment
autoantibody profiles as biomarkers in patients that received cancer
immunotherapy using Oncimmune's SeroTag biomarker discovery
platform. The company expects to see the initial results from the
project by November 2020.”
MedTech Insight, 4th September 2020
Oncimmune’s ELISA-based EarlyCDT blood tests can
detect autoantibodies raised in response to cancer
leading to earlier diagnosis.
6
Leveraging our proprietary technology platform and
methodologies, to offer therapy developers actionable
insights regarding target and in-market therapies
across the development lifecycle and beyond.
7
Oncimmune Annual Report 2020Antigen-presenting B cellActivated CD8+ T cellExpansion of CD8+ T cellsTumour cellCD4+ T-helper cell(cid:18)MHC class IIActivated CD4+ T cellCytokinesB-cell activationPlasma B cellAutoantibodiesCD8+cytotoxic T cellMHC class I
How ImmunoINSIGHTS creates
value for our partners
The Early detection of Cancer of the Lung Scotland
(ECLS) trial
8k markers
1.5k-2k
60-90
60-90
8-12
Offering
Enabled by
Outcome
Over 8,000 antigens to
support discovery
SeroTagTM
Discovery engine
Discovery of clinically
relevant biomarkers
Marker panel optimisation,
design and delivery
NavigAIDTM
Design, disease specific arrays
Creation disease-specific
biomarker arrays/panels
Algorithmic stratification
of immune-response
Machine
learning
Immune-response insights
and analytics powered by
machine learning
Diagnostics development
and production
*
Diagnostics for use in early
detection and stratification
*Industry leading diagnostic capabilities
Publication in the European Respiratory Journal
• With over 12,000 participants, it is believed to be the largest ever randomised study of a
biomarker for the detection of lung cancer
• Evaluation of whether EarlyCDT Lung reduced the incidence of patients with stage III/IV lung
cancer
• Compared the use of EarlyCDT Lung followed by low dose computerised tomography (CT)
scanning to standard clinical practice
• Demonstrated a 36% reduction in late stage diagnoses of lung cancer
•
•
Lower rate of deaths among people in the intervention arm after two years
Lower rate of lung cancer-specific deaths in the intervention arm after two years
• This suggests that EarlyCDT Lung followed by CT imaging could produce a mortality benefit:
the three-year follow up data will be valuable in substantiating this
The paper concludes that blood-based biomarker panels, such as EarlyCDT Lung, followed by low
dose CT, can detect early stage I/II lung cancers earlier than standard clinical practice. Earlier
diagnosis means that more patients should benefit from newer, more effective, chemotherapy,
surgery and radiotherapy, and in doing, so reduce the impact of this disease.3
“We are a small company which makes us agile and flexible, but we
do need to hold hands with others if we are going to unlock the latent
potential of this platform, so we need to be a good partner.”
Chief Executive, Dr Adam M Hill speaks with MedTech Insight, 4th September 2020
“Simple blood test that could spot deadly lung cancer is saving lives
by detecting disease years before symptoms show”
The Daily Mail, 3rd March 2020.
3 https://erj.ersjournals.com/contentearly/2020/07/09/13993003.00670-2020
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Oncimmune Annual Report 2020 Highlights
Commercial progress
• Strategic commercialisation agreement signed with Biodesix in the US for the rights to
commercialise EarlyCDT Lung in nodules alongside the disposal of the Group's US CLIA
laboratory to Biodesix, materially reducing ongoing operating costs in the US.
• EarlyCDT Lung cancer detection technology to be used in research contract signed with one
of the world’s largest pharmaceutical companies to detect lung cancer cases in a screening
setting; initial project completed and expectation that this will develop into a long-term
partnership in 2021.
• EarlyCDT Lung now has 19 commercial distribution and partnership agreements covering
24 countries with a significant order book of minimum sales commitments from distributors
secured.
• Medtech Innovation Briefing published by NICE supporting the potential for EarlyCDT Lung
to aid early diagnosis of lung cancer in high risk patients while providing wider benefits by
saving other NHS resources (CT scanning and radiologists) and reducing waiting times; cost-
effectiveness of EarlyCDT Lung blood test demonstrated in health economics evaluation by
Leeds University.
•
Further technical validation of the EarlyCDT Lung blood test achieved with publication of
positive results from the Early detection of Cancer of the Lung Scotland (ECLS) trial in the
European Respiratory Journal.
•
Launch of ImmunoINSIGHTS, following acquisition of Protagen Diagnostics AG, leading to the
establishment of a contract discovery and development business, further diversifying revenue
across the Group – now includes services across immuno-oncology, autoimmune disease and
recently, infectious diseases.
• Strong relationships built with large pharmaceutical and leading biotech companies, generating
material ImmunoINSIGHTS contracts signed post year end, with both Roche and Genentech,
a well-funded and innovative US biotech and other leading and innovative biopharmaceutical
companies.
• Expansion of ImmunoINSIGHTS capabilities into infectious diseases, including COVID-19,
following award of funding from the UK Government announced post year end to profile
severity of immune responses to COVID-19 and predict therapeutic outcome.
• Early validation of infectious disease capabilities via initial partnership with Cedars-Sinai Medical
Center, California, and further ongoing commercial discussions expected to be contracted this
financial year and beyond.
Organisational highlights
• Refocused the Board from nine to six Directors, comprising one Executive Director and five
Non-Executive Directors (of which two are Independent Non-Executive Directors), to provide
a more agile and focused Board to oversee the Group’s scale-up whilst capitalising on the
multiple opportunities for rapid growth.
Financial highlights
•
Income for the year of £715k (2019: £220k) excluded additional contract income of £511k signed
and invoiced immediately before year end, and paid in July, bringing total invoiced income to
£1.2M. The FY 2020 H1 to H2 growth in commercial activity in the first full year of the Group’s
strategic plan demonstrates its continued and successful implementation.
• Successful implementation of a cost reduction programme which continued post year end,
reducing monthly operating costs in H2 2020 compared to H1 2020, has positioned the Group to
capitalise on scalable and profitable growth over the medium term.
•
Loss for the financial year was £8.5M (2019: £8.0M); includes £850k of one-off costs associated
with acquiring and integrating Protagen Diagnostics, Biodesix commercialisation agreement and
the disposal of the Group’s US CLIA laboratory.
• Cash balance at year end of £4.2M (2019: £5.4M) and net debt of £4.0M including lease liabilities,
and net debt of £3.0m excluding lease liabilities (2019: net cash of £5.4M).
• €8.5M credit facility with IPF Management fully drawn down during the year to meet increased
business development and working capital needs. Facility extended by €6.0M post year end,
with a €3.0M tranche drawn down in October 2020 to ensure the Group has sufficient capital
to support outsourcing due diligence by pharmaceutical companies, and to provide additional
working capital to facilitate near-term growth from pharma service opportunities.
Outlook
• A growing pipeline of commercial opportunities for both EarlyCDT Lung and ImmunoINSIGHTS
has materialised throughout 2020, resulting in active and late-stage discussions with a number
of national health systems and pharmaceutical partners, globally.
• Additional further opportunities for ImmunoINSIGHTS created as a result of the Group’s
agreement to support the UK Government’s COVID-19 programme with the development of an
infectious disease NavigAID™ panel.
• Negotiations with the NHS to adopt EarlyCDT Lung are approaching a conclusion with
announcement expected soon of first contract to sell EarlyCDT Lung to the NHS.
• Actively evaluating opportunities to accelerate growth across the Group through both organic
programmes and inorganic acquisitions and the Board continuing to consider the optimal
capital base from which to deliver these opportunities and to maximise returns to stakeholders.
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Oncimmune Annual Report 2020 Extra Time
Portraits of hope and survival from early cancer detection
The Early detection of Cancer of the Lung Scotland (ECLS) study demonstrated how the
technology of a simple blood test, EarlyCDT Lung can save lives.
Behind the science of the ECLS study were human stories. 'Extra Time' highlighted the stories
of the medical professionals who worked relentlessly to identify people who met the criteria
for the study, invited them to take part, undertook tests as well as monitoring their progress.
But most importantly, ‘Extra Time’ shone a light on the stories of the people themselves who
took part, as well as their families, friends and support networks. These stories came alive in a
powerful photography exhibition first shown at London’s Proud Central Gallery in February, and
subsequently posted online (www.extratime.gallery).
Oncimmune was proud to launch ‘Extra Time. Portraits of hope and survival from early cancer
detection'. This was the first time a diagnostics company was able to show positive trial data
through real human stories. These stories illustrate the unmet patient need for diagnosing lung
cancer in its early stages.
“It is a great honour to have the opportunity to host survivors of lung
cancer, all of whom were detected with our simple EarlyCDT Lung
blood test. It is rare for a diagnostic company to have the chance to
meet those that have benefited from its tests, let alone learn from their
stories of hope and courage.”
Chief Executive, Dr Adam M Hill at the Extra Time Exhibition, February 2020.
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Oncimmune Annual Report 2020 Looking ahead
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Platform technology
(Co)Discovery
C
(Co)Design
B
(Co)Development
A
(Co)Market
E
D
F
The business model in action
A
Early detection in lung cancer the biggest
cancer killer to improve survival.
Products marketed or co-marketed by
Oncimmune or licensed for distribution (cid:2)
with upfront payments and royalties.
D
Response prediction for treatment with
immunotherapy – partnering with world
leading pharma company.
R&D fee for service & downstream
royalties on resulting IP.
B
Characterisation and detection of
aggressive prostate cancers requiring
intervention.
Products marketed or co-marketed by
Oncimmune or licensed for distribution (cid:2)
with upfront payments and royalties.
E
Measuring immune activity before, during
and after treatment to monitor
and inform treatment decisions including
dosage adjustment and relapse prediction.
R&D fee for service & downstream
royalties on resulting IP.
C
Intercepting incident lung cancers –
partnering with multi-billion-dollar
global pharma company.
F
Finding candidate molecules for antibody
therapy – partnering with US west coast
biotech company.
R&D fee for service & downstream
royalties on resulting IP.
R&D fee for service & downstream
royalties on resulting IP.
“Our approach is to profile the immune system and
understand when it has seen a cancer. That approach
can not only be used in detecting the disease early, but
it can also be used to help clinicians and pharmaceutical
companies understand when a patient is going to
respond positively to a drug or not.”
Chief Executive, Dr Adam M Hill speaks with Doc Holiday on
total-market-solutions.com, 11th June 2020.
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Oncimmune Annual Report 2020
15
How we create value for our stakeholders
In September 2018, Oncimmune launched a three-year strategic plan to unlock value for
stakeholders. The strategy focused on:
1. Accelerating the product development pipeline of indications for which Oncimmune has a
marketable diagnostic test;
2. Building a service offering to biopharmaceutical companies, unlocking the latent potential
of autoantibodies in patient stratification, with a strong sales pipeline of contracts; and
3. Partnering like-minded organisations with synergistic competencies, capabilities, and
channels to act as a force multiplier, minimising time to market
Oncimmune is a leader in immune biomarkers; our vision is to enable personalised, data-driven
clinical decisions across the cancer care continuum, whose technology platform profiles the
body's natural response to cancer, thereby enabling detection on average four years before
standard clinical diagnosis.
Oncimmune has over 8,000 proteins in its proprietary immunogenic protein library. This library
is key to supporting our partners to predict response to therapy, adverse events and identifying
therapeutic drug targets, by profiling the immune response to cancer. The Group has carried
out collaborations with seven of the ten largest pharmaceutical companies, receiving 70%
repeat business over the last five years.
The positive results from the ECLS trial, the most recent in a number of publications, further
validates Oncimmune’s technology platform, and its utility in detecting cancer early. Today,
Oncimmune is one of the few diagnostic companies in history to demonstrate the direct link
between its products and lives saved.
Since Oncimmune’s inception in 2002, over 100 peer-reviewed conference abstracts have
been published validating our technology and products. Oncimmune’s platform technology
is protected by an extensive patent portfolio of over 200 granted and pending patents in 47
territories.
During the 2020 financial year, Oncimmune successfully launched its ImmunoINSIGHTS service
business, and announced the first of its biopharmaceutical partnerships. The company granted
exclusive sales rights to Biodesix in the US and achieved a positive MedTech Innovation Briefing
from the UK's National Institute for Health and Care Excellence (NICE).
“I wasn’t even going to take the EarlyCDT Lung test, but I did and two
weeks later I had a phone call to say the blood test was positive. I had a
scan – nothing. Another scan – nothing. It was only on the fourth scan
they found a five centimetre tumour. I was fast tracked through the
NHS. And all this time I felt perfectly well.”
Rebecca, Glasgow
Photographed in Tarbet on Loch Lomond where Rebecca frequently visits with her husband and family.
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Oncimmune Annual Report 2020 “If it wasn’t for the EarlyCDT Lung test
finding my cancer six years ago, I would
be getting symptoms about now – and it
would be too late. The pandemic has been
such a difficult time for people with cancer
– I hope we can find a way to help those
people today with undiagnosed cancers get
tested quickly so they are given the best
chance at surviving it, like I was.”
Shirley, Dundee
Photographed by the Tay Bridge in Dundee where Shirley
often walks her son’s dog Pedro.
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Oncimmune Annual Report 2020 Chairman and Chief Executive Officer's review
We are pleased to report the Group's audited full year
results for the year ended 31 May 2020 and provide an
update on the further operational and strategic progress
since year end.
Oncimmune is a leader in the analysis, development and
application of immune biomarkers, using our proprietary
technology platform and growing data sets, to solve
human healthcare problems. Our vision is to enable
personalised, data-driven clinical decisions across the
cancer care continuum and now in other fields including
autoimmune disease and infectious diseases. Cancer is
responsible for one in six deaths worldwide and the World
Health Organisation predicts there will be 16.4 million
annual deaths from cancer globally by 2040, up from 9.6
million in 2018. We recognise that earlier detection of
disease, and the stratification of patients for treatment,
are the two most significant levers in managing the burden
of cancer. As such, since our inception, Oncimmune has
been working to improve the early detection of cancer and
its subsequent treatment by harnessing the sophisticated
disease detecting capabilities of the immune system
to identify cancer in its earliest stages, when it is more
amenable to treatment. We do this through our proprietary
simple diagnostic test, EarlyCDT®, and our immune service
offering, ImmunoINSIGHTS, which can also enable the
improvement and development of autoimmune and
infectious disease treatments as well as those for cancer.
Business update
In September 2018 we announced a three-year strategic
plan to deliver both the Company’s mission and longer term
growth and value in the business. In short, the strategy
was implemented to unlock the latent potential of the
Group’s proprietary technology platform by broadening
its applications and extending its use through commercial
partnerships.
The 2020 financial year has been pivotal for Oncimmune,
with the Company delivering its first full year of trading
against its three-year strategic plan. Core to this strategy
was the identification of commercial opportunities using
our autoantibody-based technology platform and the
building of scale and diversity across the business. That in
turn has enabled the Company to grow in the short term
whilst also supporting medium and longer term accretion
for all stakeholders.
Today, both of our differentiated product offerings, the
EarlyCDT product portfolio and the ImmunoINSIGHTS
service offering, are starting to release the latent value
of our technology, through the formation of long term
strategic partnerships giving access to our platform,
products, services and our
in-house expertise. The
foundations created in the last financial year have enabled
Oncimmune to deliver strong commercial traction across
its businesses and demonstrate that this growth, which
has accelerated since year end, is sustainable throughout
the current financial year and beyond.
implemented by the UK Government
As a result of the COVID-19 pandemic and subsequent
in
restrictions
March 2020, the Company successfully transitioned to
remote working for our office based staff and established
contingency plans to support business continuity going
forward. Within our Nottingham and Dortmund laboratory
facilities, we organised our staff’s working arrangements to
minimise the potential operational impact to the business
and are pleased to report that COVID-19 has not materially
affected our laboratory output. We would like to take this
opportunity to thank all our staff for their hard work and
dedication, especially throughout this ongoing COVID-19
period, and for their help in making the progress that we
have in delivering the Group’s strategy.
Product - EarlyCDT
Validation
In June 2019, positive results were announced from the
Early detection of Cancer of the Lung Scotland (ECLS)
study demonstrating that in a randomised controlled trial
of 12,208 people in Scotland at high risk of developing lung
cancer, more people were diagnosed at an early stage of
the disease in the two years after taking the EarlyCDT Lung
test than those in the control arm who received standard
clinical care. Following these results, in September 2019,
the ECLS study results were presented to the 2019 World
Conference on Lung Cancer in Barcelona by Professor
Frank Sullivan. The academic and clinical reach of this
important data was expanded further in July 2020 with
the publication of the ECLS study in the peer-reviewed
European Respiratory Journal, providing validation of the
potential to use the platform technology as a screening
modality, which can detect cancer on average four years
before standard clinical diagnosis.
Further validating the EarlyCDT Lung blood test as an
option in the early diagnosis of lung cancer, a study led
by Leeds University Academic Unit of Health Economics
showed that using the EarlyCDT Lung blood test in the
cancer risk assessment of
indeterminate pulmonary
nodules (IPNs) is highly cost effective and could accelerate
the time to diagnosis. The study was supported by the
National Institute for Health Research (NIHR) Leeds In Vitro
Diagnostics Co-operative and was funded by the NIHR’s
SBRI programme.
In March 2020 the UK's National Institute for Health and
Care Excellence (NICE) completed a review of EarlyCDT
Lung for cancer risk stratification of IPNs and published
a Medtech Innovation Briefing (MIB) concluding that
the EarlyCDT Lung blood test can successfully aid early
diagnosis of lung cancer in high risk patients while
providing wider benefits by saving other NHS resources
(CT scanning and radiologists) and reducing waiting times.
a
June
signed
2019, Oncimmune
Commercialisation
strategic
In
commercialisation agreement for EarlyCDT Lung in the
US with Biodesix, Inc. (Biodesix). Under the agreement,
Biodesix was granted the rights to commercialise EarlyCDT
Lung in IPNs in return for minimum royalty payments
and the supply of product by Oncimmune, and was also
granted an option, for a separate payment to Oncimmune,
to extend its addressable market into screening in the
US. In order to deliver its commercial strategy, Biodesix
acquired Oncimmune’s US CLIA laboratory and operations
for $1.0M in cash, the sale of which has materially reduced
the Group’s ongoing operating costs.
Biodesix launched the EarlyCDT Lung test in March 2020
under its Nodify LungTM brand. The launch date, however,
coincided with the onset of COVID-19 in the US, which
hampered the attainment of early sales forecasts. The
effect of the pandemic has also led Biodesix to notify
Oncimmune that it will not be exercising rights under the
screening option. Despite this, Biodesix is forecasting for
sales of Nodify Lung to begin to recover in early 2021 to
meet contracted requirements and the Company has
opened a dialogue with potential other interested parties
to take up the rights to screening in the US.
EarlyCDT Lung is now the subject of 19 commercial
distribution and partnership agreements covering 24
countries. During the year, we signed a commercialisation
agreement with R-Pharm in Russia, a partnership which
has a minimum value of £5.0M over the initial term of
five years, and our distributor in Spain, Sabartech S.L.,
successfully signed an agreement with Vithas Group to
sell the EarlyCDT Lung blood test in Spain. A number of
our other distributors have successfully gained marketing
authorisations in their countries.
Our three-year strategic plan outlined Oncimmune’s
ambition to leverage this technology into other commercial
partnerships and in May 2020 we announced the signing
of an initial project with one of the world’s largest
pharmaceutical companies, to utilise the EarlyCDT Lung
panel to detect incident lung cancer cases in a screening
setting. We have now completed this initial project and
our expectation is that this is the first step towards a long
term partnership to generate widespread availability of the
EarlyCDT Lung blood test in screening for early disease.
While COVID-19 has impacted the timing of potential
sales of the EarlyCDT Lung blood test during the year, the
need to identify lung cancer earlier remains a key priority
for national health systems and clinicians. This need was
highlighted in August 2020 by a national ITV News feature4
which reported that Oncimmune’s EarlyCDT Lung blood
test has a valuable role to play in identifying the disease to
enable earlier treatment thereby saving patient lives.
Since announcing the positive results of the ECLS study
in June 2019, and particularly since the year end, we have
been in dialogue with national health systems globally,
including the NHS in the UK, over the adoption of EarlyCDT
Lung for
IPNs and screening through both Cancer
Alliances and Clinical Commissioning Groups. Our overall
engagement with the NHS has intensified since March
2020 and we hope that we will soon be in a position to
announce the Group’s first contract to sell EarlyCDT Lung
blood test into the NHS.
Given the significant progress we have made over the past
financial year and post-year end, we remain confident in
the commercial future for EarlyCDT Lung, which has the
highest level of clinical validation for a test of its kind
following the successful ECLS study.
Services - ImmunoINSIGHTS
the acquisition
Overview
Since
in March 2019 of Protagen
Diagnostics AG (now renamed as Oncimmune Germany
GmbH) and the subsequent launch of ImmunoINSIGHTS,
Oncimmune's contract discovery and development
service-based platform, the pipeline of signed and
potential commercial projects with major pharmaceutical
and biotechnology companies has increased substantially.
The
leverages
Oncimmune's technology platform and methodologies
across multiple diseases, to offer life-science organisations
actionable insights for therapies across the development
and product lifecycle.
service business
ImmunoINSIGHTS
ImmunoINSIGHTS utilises
discovery platform technology tools:
two proprietary biomarker
•
•
SeroTag - drawing from our library of over eight
thousand immunogenic proteins, one of the largest of
its kind, to discover and validate biomarkers which can
help stratify patients in multiple cancer indications,
infectious diseases and with different autoimmune
diseases. SeroTag acts as the primary discovery
engine that feeds into the creation of Oncimmune’s
NavigAID panels.
NavigAID - disease-specific stratification panels
e.g. the COVID-19 panel under development and the
existing Systemic Lupus Erythematosus (SLE) panel,
are thoroughly validated and containing well defined
antigens of interest for each of the disease types
being investigated.
20
21
4 https://www.itv.com/news/2020-08-08/new-blood-test-provides-breakthrough-in-lung-cancer-detection-rates
Oncimmune Annual Report 2020 potential
scientific
that data
commercial
Scientific presentations and publications
of
and
The
ImmunoINSIGHTS has also been highlighted in a recent
high profile scientific presentation and publication. In May
2020, a featured presentation at the American Society
of Clinical Oncology 2020 (ASCO) Virtual Scientific
from profiling
Programme demonstrated
tumour associated antibodies
in melanoma patients
receiving checkpoint inhibitors, analysed on SeroTag, had
identified that autoantibodies have a role in predicting
clinical outcomes or immune-related events. This further
demonstrates the potential of our
ImmunoINSIGHTS
service. Then in July 2020, the research publication
titled 'Profiling IgG antibodies targeting unmodified and
corresponding citrullinated autoantigens in a multicentre
national cohort of early arthritis
in Germany' was
published in Arthritis Research & Therapy5 demonstrating
the potential of our ImmunoINSIGHTS service.
Commercial momentum building
Roche and Genentech
In February 2020, we signed an initial ImmunoINSIGHTS
contract with Roche to profile autoantibodies in patient
samples collected during cancer immunotherapy trials.
Following completion and delivery of the project on time,
we secured a second and more substantial contract with
Roche in May 2020 (Roche 2), also to profile autoantibodies
in patients undergoing immunotherapy trials. In July 2020,
we signed a substantial extension to the Roche 2 contract,
increasing the number of autoantibody samples to be
profiled within the agreed time period. We remain on track
to deliver initial results on this project by November 2020.
In late September 2020, we signed a collaboration with
Genentech, a member of the Roche Group, to characterise
the autoantibody profiles of patients in clinical trials
for rheumatological diseases,
including SLE. As with
previous contracts with Roche and other international
pharmaceutical groups, the contract with Genentech
has the potential to significantly expand with additional
samples being profiled in the future.
Drug development collaboration agreement
In May 2020 we announced a drug development collaboration
innovative US biotech
agreement with a well-funded,
company. This was the first partnership agreement signed
under the ImmunoINSIGHTS service offering, which granted
Oncimmune the rights to develop companion diagnostic
tests for each new medicine candidate successfully validated.
In the event of a third party developing such companion
diagnostics, this agreement will secure future revenue
generation from a series of milestone payments from the use
of Oncimmune’s proprietary technology.
“We are trying to pick up tiny little things. In fact one of the tumours we
picked up in Lanarkshire was a tiny, tiny spot and in between scans we
saw just tiny, tiny bits of growth. Obviously, a five centimetre cancerous
tumour is much easier to spot than one that is two millimetre across,
because all the changes are infinitesimally small and shrunk right down.”
Cindy, Glasgow
Cindy was the lead radiologist for the ECLS trial in Lanarkshire, responsible with her colleagues for
examining the chest X-rays and scans of every patient in the study who had generated a positive EarlyCDT
Lung blood test result.
Photographed in the Kibble Palace greenhouse at the Glasgow Botanic Gardens where Cindy frequently
visits with her nine year-old son.
Other commercial contracts
Since the financial year end, we have continued to sign
a growing number of commercial autoantibody profiling
contracts. These include a pilot programme, signed in early
September 2020, with a leading global biopharmaceutical
company, to identify tumour associated antibody markers
that are predictive of response and immune-related adverse
events. It is anticipated that this project will lead in time
to the signing of a significantly larger agreement to profile
patients from a range of immuno-oncology clinical trials.
the world’s
innovative biotechs, validates
We believe that our success to date in winning contracts
leading pharmaceutical companies
with
and
the commercial
and scientific value of ImmunoINSIGHTS, including its
proprietary discovery and profiling tools, SeroTag and
NavigAID, and the potential further downstream revenue
generation from products licensed to use our proprietary
intellectual property and technology.
Services – COVID-19
Post year end, in October 2020, Oncimmune was awarded
funding from the 'UK Research and Innovation (UKRI)
Ideas to Address COVID-19' programme, to support a
joint collaboration between Oncimmune and Medicines
Discovery Catapult (MDC) to deliver the IMmunity Profiling
of pAtients with COVID-19 for Therapy and Triage (IMPACTT)
programme.
Oncimmune currently has over 800 SARS-CoV-2 related
antigens and peptides for profiling COVID-19 patients and
predicting their response to vaccines and therapeutics
against the virus. This important collaboration with the MDC
leverages the strengths of both organisations to rapidly
develop a profiling tool to optimise novel therapeutics
in patients with differing COVID-19 susceptibility and
severity. Once completed, this dedicated
Infectious
Disease NavigAID panel will be a critical resource for
biopharmaceutical companies in their development of
biologic medicines and vaccines against COVID-19.
The Group anticipates having an
infectious disease
NavigAID panel delivering results within two months,
and within six months to be in a position to support
commercial projects for its biopharmaceutical customers
with a validated COVID-19 panel. Soon after announcing
this COVID-19 programme, the Group announced in mid-
October 2020 a commercial agreement with Cedars-Sinai
Medical Center, California, to profile COVID-19 samples as
biomarkers for this disease, thereby providing evidence of
the future commercial potential for the Group’s infectious
diseases programme.
We hope to be in a position to announce further developments
regarding collaborations and contracts over the coming
months and for more significant contracts to follow the
validation of the COVID-19 panel, expected by the current
financial year end.
22
23
5 Vordenbäumen, S., Brinks, R., Schriek, P. et al. Profiling of IgG antibodies targeting unmodified and corresponding citrullinated autoantigens
in a multicenter national cohort of early arthritis in Germany. Arthritis Res Ther 22, 167 (2020). https://doi.org/10.1186/s13075-020-02252-6
Oncimmune Annual Report 2020 Summary and outlook
The year to 31 May 2020 and the period post year end
has seen significant operational and commercial progress
for the Company. In addition to securing EarlyCDT Lung
partnerships with Biodesix in the US and R-Pharm in
Russia, we have also launched our ImmunoINSIGHTS
service business and validated its potential within our
growth plans by building a growing stable of partnerships
with leading biopharmaceutical and biotech companies.
The progress that has been made is in line with our three-
year strategic plan. These full year results and the increasing
pipeline of commercial opportunities that we have for
our EarlyCDT product and the ImmunoINSIGHTS service
business indicate significant and continuing momentum.
The Directors have confidence in Oncimmune’s evolving
technology platform, its market positioning and prospects,
which together support further expansion of the business
in the current financial year and beyond.
The performance and progress made over the year and
post year end, despite the disruption and challenges
created by COVID-19, is a testament to the hard work and
commitment of all our employees. We are confident that
our colleagues have the skills and commitment required
to adapt to whatever the remainder of 2020 and 2021 has
in store, enabling us to continue to deliver long-term value
for stakeholders.
On behalf of the Board and the rest of the staff, we
would like to thank our shareholders for their continued
support, and we look forward to updating the market on
Oncimmune’s continuing progress.
Meinhard Schmidt Chairman
Dr Adam M Hill Chief Executive Officer
6th November 2020
Management and Board changes
In April 2020, Ron Kirschner joined Oncimmune’s Senior
Leadership Team as General Counsel and Company Secretary
to the Board of Directors.
In May 2020, Richard Sharp stepped down as a Non-
Executive Director of the Company, having taken up a
role as senior strategic adviser to the UK Government in
connection with the COVID-19 pandemic and in view of the
demands of the new role. As a consequence of this new
role, Mr Sharp transferred his entire holding of 4,280,749
ordinary shares of 1p in the Company into a blind trust of
which he remains the sole beneficiary but over which he
has no control.
At the end of the financial year ended 31 May 2020,
Oncimmune’s Board of Directors believed it was the right
time to restructure the Board in order to be as agile, lean
and as focused as possible. As such, the Directors agreed
that the size and composition of the current Board would
be updated to comprise Meinhard Schmidt, Non-Executive
Chairman; Dr Adam M Hill, Chief Executive Officer; Dr
Annalisa Jenkins, Senior
Independent Non-Executive
Independent Non-Executive
Director; Andrew Unitt,
Director; Tim Bunting, Non-Executive Director; and Dr
Cheung To, Non-Executive Director.
Accordingly, Geoffrey Hamilton-Fairley, Non-Executive Vice
Chairman; Julian Hirst, Independent Non-Executive Director;
and Carsten Schroeder,
Independent Non-Executive
Director, stepped down from the Board on 4 June 2020.
Following these changes, the Board has decreased from
nine members to six members and now comprises one
Executive Director and five Non-Executive Directors, two
of which are Independent Non-Executive Directors.
Corporate social responsibility and sustainability
Oncimmune’s commitment to providing simple and
affordable tests to detect the earliest signs of cancer in
order to help improve outcomes has defined and framed
the Company’s ethos and culture since its creation.
Oncimmune’s commitment to diversity and a culture
of equal opportunities and respect for the individual,
underpinned by compliant and ethical behaviour, defines
its core, the
Oncimmune’s business operations. At
successful delivery of the Company’s forward strategy
is bolstered by this culture, its work environment and
the lasting relationships that it has forged with all its
stakeholders.
approach
Oncimmune’s
to product development,
subsequent launches, and delivery of its long-term growth
is underpinned by a clear set of economic values aimed at
protecting the Company from risk and securing its long-
term future.
The Board’s vision going forward is to further develop and
formalise a comprehensive Corporate Social Responsibility
and Sustainability strategy and to incorporate this within
our risk and control framework.
“I saw a notice in the doctors’ surgery inviting people to come forward
for the ECLS trial, and I came home and told my husband we should
do it because we both smoked for a long, long time. My attitude was if
there is anything to find, it’s better to find it early.”
Irene, Chapelton
Photographed at the East Kilbride Indoor Bowling Club where Irene and John play bowls regularly.
24
25
Oncimmune Annual Report 2020
Chief Financial Officer’s review
A summary of the financial highlights of the year ended 31 May
2020, including post year end, is as follows:
•
•
•
•
•
Income for the year of £715k (2019: £220k); an
additional £511k contract income signed and invoiced
immediately before year end, and paid in July, bringing
total invoiced income for the year to £1.2M
R&D costs for the year were £1.7M (2019: £1.5M)
Administrative expenses for the year were £8.2M
(2019: £5.9M)
Loss for the financial year was £8.5M (2019: £8.0M)
Cash balance at year end of £4.2M (2019: £5.4M) and
net debt of £4.0M including lease liabilities, and net
debt of £3.0m excluding lease liabilities (2019: net
cash of £5.4M).
The Group made substantial progress in the implementation
of its three-year strategic plan during the year. Income for
the year of £715k (2019: £220k) excluded an additional
contract revenue of £511k signed and invoiced immediately
before year end, and paid in July, bringing total invoiced
income to £1.2M. With FY 2020 H1 revenues of £308k, the
growth in commercial activity in FY 2020 H2 demonstrated
the increased delivery against the strategic plan as the year
progressed.
Revenues during the year from Protagen Diagnostics AG
(now renamed Oncimmune Germany GmbH) acquisition in
March 2019 were particularly encouraging and the Group
has continued to see strong and increasing demand for
its proprietary autoantibody profiling technology service
business post year end. Revenues from the Group’s EarlyCDT
products business progressed, with kits sold to numerous
distributors globally, although the emergence of COVID-19
in January 2020 did have an impact on our distributors’
ability to market EarlyCDT Lung effectively. Notwithstanding
this, several distributors continued to make satisfactory
progress with commercial sales in their territories.
In the UK, the Group progressed its commercial discussions
with the NHS for the adoption of EarlyCDT Lung in
indeterminate pulmonary nodules (IPNs) as well as in
screening. Since the year end, the impact of COVID-19 on
the NHS has intensified efforts to identify cancers, including
lung cancer, and we are hopeful that we will soon be
announcing the Group’s first contract to sell EarlyCDT Lung
into the NHS.
In the US, the Group’s partner, Biodesix, launched EarlyCDT
Lung in March 2020, branded in the US as Nodify CDTTM.
This launch has been affected by the onset of COVID-19.
However, based on our regular updates with Biodesix, it
expects sales will begin to recover from early 2021.
The Group remains focused on its developing pipeline of
cancer diagnostic products with an overall increase in
research and development (R&D) activity and expenditure.
R&D spend in the year was £1.7M (2019: £1.5M).
Administrative expenses were £8.2M (2019: £5.9M), an overall
increase on the previous year, reflecting the previously
explained increase in H1 FY 2020 which included a number
of non-recurring transaction-related costs, such as those
associated with the acquisition of our German business, the
arrangement of the IPF credit facility (described below) and
the agreement with Biodesix. Furthermore, the Protagen
Diagnostic acquisition added to the patent estate and
associated annual IP cost. During the year we continued to
reshape the business with a number of staff appointments
to drive increased commercial activity and to support our
broadening commercial business. To offset this increase
in costs, a cost reduction programme was implemented in
December 2019 which successfully reduced the Group’s
monthly operating costs in H2 2020 compared to H1 2020.
This focus on cost reduction and lower monthly operating
costs has continued post year end.
Loss for the financial year was £8.5M (2019: £8.0M). The
Group received £853k (2019: £536k) of R&D tax credit
payment in the year, reflecting the Group’s continued
focus on new and innovative cancer diagnostic projects,
building the library of immunogenic proteins, and validating
additional NavigAID panels to facilitate the investigation of
more disease types.
Cash balance at year end of £4.2M (2019: £5.4M) and net
debt of £4.0M including lease liabilities, and net debt of
£3.0m excluding lease liabilities (2019: net cash of £5.4M).
The Company entered into a €8.5M credit facility with IPF
Management SA in September 2019 and at year end this
facility was fully drawn down. Since the year end, this credit
facility has been extended by €6.0M with the first €3.0M
tranche being drawn down in October 2020. The remaining
€3.0M is available for draw down until 30 June 2021 subject
to the attainment of certain commercial milestones. Each
tranche of the total loan is repayable over a four-year
term, interest-only for the first 12 months, with principal
repayments commencing thereafter. The cash covenant
over the whole loan has been increased from six to nine
months as part of the extension. In connection with the first
€3.0M tranche the Company also issued to IPF a warrant
on the same terms and basis as the warrant issued for the
initial credit facility. The warrant, which is exercisable for
seven year, is to subscribe for 434,435 new ordinary shares
of £0.01 in the Company at 146.85p, being a 5% discount to
the 30-day average closing share price immediately prior
to the date of the drawdown. A warrant on the same basis
will be issued to IPF should the further €3.0M tranche be
drawn down. The loan can be repaid early. The additional
debt facility will be used to meet the increased business
development costs, working capital and capital expenditure
needs of the ImmunoINSIGHTS business in Germany,
which is experiencing strong growth as well as driving
commercial adoption of the EarlyCDT Lung blood test. The
additional funds will also be used to ensure the Group has
sufficient capital to support outsourcing due diligence by
pharmaceutical companies.
Financial outlook
The Group remains a leading developer of applied immunodiagnostics
for the early detection of disease and drug discovery and
development, with over 18 years as a leader in autoantibody-enabled
immunodiagnostics. Oncimmune’s proprietary platform technology
includes a substantial immunogenic protein library, over 200 patents
granted and pending in 47 countries and over 160 peer-reviewed
materials.
Within our EarlyCDT product business, our flagship product, EarlyCDT
Lung, was recently the subject of the largest successful prospective
randomised study of a blood biomarker for cancer detection. The
Group has 19 commercial distribution and partnership agreements
covering 24 countries. Whilst COVID-19 has undoubtedly impacted
potential sales globally, the need to identify lung cancer early remains
a priority for national health services and clinicians worldwide, and
the provision of healthcare is already being better partitioned to
enable continuing care provision, with a heighted focus on healthcare
economics to which our products and services are well-aligned.
The Group’s ImmunoINSIGHTS business continues to benefit from
increasing levels of contracted projects and has a substantial and
growing pipeline of potential projects. To emphasise the growing
demand for the ImmunoINSIGHTS service, prior to the year end the
Group announced it had signed its second contract with Roche and
since the year end this contract has been further expanded. Following
the year end, the Group has also entered into a number of further
projects with major biopharmaceutical and biotech companies
including signing a contract with Genentech, a member of the Roche
Group, in September 2020.
As such, the Directors are confident that its current cash and other
available financial resources are sufficient to deliver the current
three-year strategic plan. Opportunities are under active evaluation
to accelerate current and prospective growth across the Group’s
differentiated product offerings through organic programmes and
acquisitions. The Board continues to consider the most appropriate
capital base from which to optimise this growth at the same time
maximise returns to stakeholders.
Matthew Hall Chief Financial Officer
6th November 2020
26
27
Oncimmune Annual Report 2020
“I didn’t have a cough. I could walk for
miles. I had none of the signs. The test
showed I had cancer and I was offered an
operation. They removed the cancer and a
bit of my left lung. It saved my life.”
Jim, Glasgow
Photographed in Jim’s home where he lives with his dog Cleo
and his parrot Jackie.
28
29
Oncimmune Annual Report 2020 Board of Directors
Meinhard Schmidt
Non-Executive Chairman
Mr Schmidt is an executive and entrepreneur 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 held various
global senior leadership roles in Diabetes Care, Laboratory-
and PoC-Diagnostics. From 2008 to 2011 he worked as an
executive and CEO at Straumann Institute/Switzerland,
responsible for the world-wide “Digitalisation” of the
dental industry. He is currently active as an Independent
Healthcare Professional providing board engagement as
Chairman and NED in public and private MedTech and
Life Science companies; consulting to top management
teams to improve industrialisation, commercialisation and
digitalisation processes; and consulting investors (Private
Equity/Venture Capital) on identification of new investment
and acquisition targets in the global healthcare industries. He
has held positions in Germany, Netherlands, USA, Canada,
UK, Sweden, Ireland and Switzerland.
Dr Adam M Hill
Chief Executive Officer
Dr Adam M Hill MB PhD is a dual-qualified Clinician and
Mechanical Engineer with a career built at the interface
of industry, academia and health systems. Over the last
two decades he has trained in 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 of the
British Government; led the global medical function of a
multinational, publicly-listed health IT company; and pivoted
a Formula One team into a developer of health technology.
Currently, Adam is a Visiting Professor in Global Health
Innovation at Imperial College London, and Non-Executive
Director of both Imperial College Health Partners and
Myrecovery.ai.
Adam graduated from Imperial College London as a Medical
Doctor whilst also earning a PhD in Engineering, attending
Imperial College Business School and the Royal Military
Academy Sandhurst. He received his postgraduate clinical
training from the Royal College of Surgeons of England, and
professional engineering qualification from the Institution of
Mechanical Engineers.
Dr Annalisa Jenkins
Senior Independent Non-Executive Director
Dr Annalisa Jenkins, M.B.B.S., F.R.C.P. is a biopharma thought
leader with over 25 years of industry experience. Dr Jenkins
has extensive recent experience in building and financing
biotech companies pursuing cures for the most challenging
rare diseases to address important medical issues globally.
She has consistently built and led teams advancing programs
from scientific research through clinical development,
regulatory approval, and into healthcare systems globally.
In addition, she is an advocate for diversity and inclusion,
particularly for women in science. Dr Jenkins served as
president and CEO of Dimension Therapeutics, a leading
gene therapy company that she took public on the NASDAQ
and subsequently sold to Ultragenyx. Prior leadership roles
have included the head of global research and development
and executive vice president global development and
medical at Merck Serono, and several senior positions at
Bristol Myers-Squibb over 15 years - including serving as
senior vice president and head of global medical affairs.
Earlier in her career, Dr Jenkins was a medical officer in
the British Royal Navy during the Gulf Conflict, achieving
the rank of surgeon lieutenant commander. Dr Jenkins is a
board member of several growing companies, including
Oncimmune, AVROBIO, COMPASS Pathways, AOBiome,
AgeX, ADOR Diagnostics, MedCity, DMNoMore, Conduit
Connect, Affimed, Cocoon Biotech Inc. (Non-Executive
Chair), and Kuur Therapeutics (Non-Executive Chair). She
also is a committee member of the Science Board to the U.S.
Food & Drug Administration, which advises FDA leadership
on complex scientific and technical issues, board member at
Faster Cures a centre of The Milken Institute and Chair of The
Court The London School of Hygiene and Tropical Medicine.
Timothy Bunting
Non-Executive Director
Mr Bunting is a corporate finance professional with over 25
years of experience in the banking sector. Mr Bunting joined
Balderton as a General Partner in 2007. He was previously
a partner 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 International (2005 to 2006). Tim started
to work with Balderton and its portfolio of companies in 2005.
In 2006 Tim spent a period as non-executive chairman of
Betfair. Tim is also a Trustee of the Rainbow Trust Children's
Charity, the Royal Opera House, The Sutton Trust and the
Paul Hamlyn Foundation. Tim is a graduate of the University
of Cambridge.
Dr Cheung To
in biotechnology
Non-Executive Director
Dr Cheung To is an entrepreneur with over 25 years of
research and
extensive experience
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 providers 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, haematology and molecular genetics;
Ebiotrade, 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.
Andrew Unitt
Independent Non-Executive Director
Mr Unitt was Chief Financial Officer at the University of
Nottingham, a major shareholder in Oncimmune, until July
2016. Prior to working in higher education at the university,
Andrew was a 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 four years
of Boots Healthcare International, its over the counter
medicines business. He has also held several non-executive
directorships in the NHS and private sector.
“I don’t understand why this isn’t a routine test – it’s a lifesaver.”
Maxine, Glasgow
Maxine was the lead nurse who managed the ECLS trial and coordinated it for NHS Lanarkshire. All the
nursing staff involved in the ECLS trial were essential to the success of the trial, but Maxine’s came up
again and again when talking to patients and doctors.
Photographed at Hutcheson’s Grill in Glasgow, one of Maxine’s favourite restaurants, where she enjoys
dining with friends and family.
30
31
Oncimmune Annual Report 2020
Principal risks and uncertainties
The Group’s products may not be a commercial
success
The commercial success of EarlyCDT Lung, as well as other
new products that the Group may launch in the future, will
depend on their approval and acceptance by physicians,
payers and other key decision-makers, as well as the receipt
of regulatory approvals in different countries, the time taken
to obtain such approvals, reimbursement at commercially
sustainable prices in those countries where price and
reimbursement is negotiated, and cost-effectiveness of
the product as compared to competitive products. The
Group seeks to manage these risks by ensuring clear,
open and prompt communications with government and
other stakeholders, investing in the generation of clinical
evidence, supporting its distributor network and investing in
the generation of economic evidence of the potential cost
savings its products can generate for healthcare systems.
Manufacturing
The Group manufactures protein antigens to coat
its
diagnostic test plates and is reliant on third party contract
manufacturers to manufacture finished products. Any
disruption to the supply chain for EarlyCDT Lung or EarlyCDT
Liver may result in the Group being unable to continue
marketing or developing its products for some period of time.
The Group is progressing the dual sourcing of components
for its products, but this remains an ongoing project. Until
completed, any disruption in the Group’s internal or external
manufacturing processes may impact the Group’s ability
to develop or commercialise its products. The Group is
managing these risks by maintaining stringent safety and
access procedures to internal manufacturing sites, assessing
dual sourcing of third-party manufacturers and, wherever
possible, dual sourcing of components, and assessing a
second Group laboratory site as a manufacturing site.
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
for career growth, coupled with
with opportunities
appropriate remuneration and share option incentives to
align its employees with the long-term success of the Group’s
business.
Research and development
The Group has had success developing cutting 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’s activities comprise the manufacture and
commercialisation of its EarlyCDT products and, since the
acquisition of Protagen Diagnostics AG (now renamed
Oncimmune Germany GmbH), the delivery of a service-based
offering to the life science industry. On the product side of its
business, the Group has entered into a number of distribution
agreements in various geographical markets and is working
with its partners to progress the commercial success of its
products. These distribution agreements typically give the
distributor the exclusive rights of distribution of EarlyCDT
Lung within certain geographical boundaries for a period of
time, in consideration for minimum order requirements. The
Group remains at risk of the failure of any of its distributors in
its key markets. To mitigate this risk, the Group has dedicated
business development staff focused on monitoring
its
distributor network to optimise the success of its products.
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 its intellectual property
portfolio and in continued research and development, as
well as through improving its manufacturing process in order
to enable it to reduce costs, which could allow it to reduce
prices in a highly competitive environment.
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
an investment in the Group. The Group mitigates this as
far as possible by ensuring a continuous awareness of the
legislative environment and by expanding it regulatory team
to meet increasing regulatory demands.
Foreign exchange
The Group conducts its operations principally in Sterling,
EUROs and US Dollars and is consequently subject to
currency risk due to fluctuations in exchange rates. As well
as the 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. As far as possible, any
foreign exchange risk is managed by maintaining sufficient
foreign currencies to avoid, as far as possible the need to
purchase these currencies to satisfy operating expenditure.
The Group continues to monitor potential foreign exchange
exposure by maintaining relationships with organisations
who provide forecasts of foreign currency prices and by
matching demand for foreign currencies with cash receipts
in those same foreign currencies.
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
Revenue and profit indicators
• Management of cash resources
Matthew Hall Chief Financial Officer
6th November 2020
“It’s like breast cancer screening – everyone should do it if they are
offered – and it’s far less intrusive than some of the other screening
that women have to go through.”
Janet, Dundee
Photographed at the Caledonia Alpacas Orchard Farm in Falkirk where Janet’s alpaca Cristal lives.
32
33
Oncimmune Annual Report 2020 Directors’ report
The Directors present their report and audited consolidated financial statements for the year ended 31 May 2020.
Results and dividends
The consolidated statement of comprehensive income is set out on page 52 and shows contracted income for the year of £715k
(2019: £220k) The loss for the financial year was £8.5M (2019: loss of £8.0M). No dividend will be paid in respect of the financial
year (2019: £Nil).
Corporate governance
The Directors comply with the requirements of the Quoted Companies Alliance (QCA) Corporate Governance Code to the extent
that they consider it appropriate and having regard to the Company’s size, board structure, stage of development and resources.
The Board considers that all Non-Executive Directors exercise independent judgement. During the year ended 31 May 2020 the
Board consisted of ten directors, four of which were considered independent Non-Executive Directors under the QCA guidelines.
In June 2020 the Directors agreed that the size and composition of the Board should be updated, in order for the Board to be
as agile, lean and focused as possible for the delivery of the Group’s second 18 months of its three-year forward strategy. As a
result of the changes in June 2020, the Board currently consists of six directors, two of which are considered independent Non-
Executive Directors under the QCA guidelines.
The roles of Chairman and Chief Executive are held by separate directors with a clear division of responsibilities between them.
The Chairman has primary responsibility for leading the Board and ensuring its effectiveness. He sets the Board’s agenda and
ensures that all directors can make an effective contribution. The Senior Independent Non-Executive Director has the power
to add items to the agenda of full Board meetings. The Chief Executive has responsibility for all operational matters and the
development and implementation of Group strategy approved by the Board. The Company Secretary is responsible for advising
the Board, through the Chairman, on all corporate governance matters.
The Company holds regular Board meetings. The Directors are responsible for formulating, reviewing and approving the
Company’s strategy, budget and major items of capital expenditure. The Directors have established the Audit Committee and the
Remuneration Committee with formally delegated rules and responsibilities. During the year ended 31 May 2020 the Board also
delegated certain matters to an AIM Compliance Committee, though this committee was dissolved in June 2020 as a result of
the reduced size of the Board.
The Board believes that good governance and a positive culture are crucial to the successful delivery of the Group’s strategic
objectives. Good standards of behaviour start with the Board and the Directors are committed to leading by example. The
Directors are also conscious of achieving a more balanced, representative and diverse board.
Ensuring that the Board is as effective as it can be has been a priority and this will continue. The Company expects members of
the Board to bring with them appropriate skills, behaviours and values to enable the Board to operate in a positive and effective
manner. The Company does not have a formal system of training for the Directors for their on-going roles, but each Director is
expected to keep up-to-date with matters relevant to their own position and role within the Company through memberships
of relevant professional societies, regular briefings from professional advisers (such as lawyers and accountants) as well as
through regular interactions with the Company's NOMAD. The Board is conscious of the need to assess the performance of the
Board, ensuring it is operating effectively and for the benefit of all stakeholders. Although no externally mediated performance
evaluation took place during the financial year, the Chairman monitors the input of each Director and provides feedback during
the course of the year to individuals on their contribution and behaviours. Externally mediated performance evaluations will be
undertaken periodically taking account of responsible use of the Group's financial resources.
The Board believes in setting the right tone for the Group and seeks to promote a culture that aligns itself with its strategy,
stakeholder needs and good governance.
The Board had intended for the Non-Executive Directors to visit some of the Group’s sites and meet with staff, though due to
restrictions imposed as a result of COVID-19 such visits have had to be postponed.
Audit Committee
The Audit Committee determines and examines matters relating to the financial affairs of the Company including the terms of
engagement of the Company’s auditors and, in consultation with the auditors, the scope of the audit. It receives and reviews
reports from management and the Company’s auditors relating to the half yearly (if subject to audit) and annual accounts and
the accounting and internal control systems in use throughout the Company. The Audit Committee meets at least twice a year. At
the beginning of the financial year ended 31 May 2020 the Audit Committee was comprised of Andrew Unitt (Chair), Dr Annalisa
Jenkins, Julian Hirst and Tim Bunting. On 12 September 2019, Tim Bunting stepped down from the Audit Committee and in June
2020, following the changes made to the Board, the composition of the Audit Committee was amended to consist of Andrew
Unitt (Chair) and Dr Annalisa Jenkins.
34
Remuneration Committee
The Remuneration Committee reviews and makes recommendations in respect of the Directors’ remuneration and benefits
packages, including share options, and the terms of their appointment. The Remuneration Committee also makes recommendations
to the Board concerning the allocation of share options to employees. The Remuneration Committee meets at least twice a year
and otherwise as and when necessary. At the beginning of the financial year ended 31 May 2020 the Remuneration Committee
was comprised of Tim Bunting (Chair), Andrew Unitt, Carsten Schroeder and Meinhard Schmidt. On 12 September 2019 the
composition of the Renumeration Committee was amended to consist of Dr Annalisa Jenkins (Chair), Carsten Schroeder and
Meinhard Schmidt. Following the changes made to the Board in June 2020, the composition of the Remuneration Committee was
amended to consist of Dr Annalisa Jenkins (Chair), Tim Bunting and Meinhard Schmidt. In connection with the implementation
of the new share incentive scheme for senior management (as described in the "Directors' remuneration" section below) the
Remuneration Committee sought legal advice from Brown Rudnick LLP and advice on remuneration structuring from FIT
Remuneration Consultants LLP in order to assist the Committee with structuring an appropriate scheme.
AIM Compliance Committee
The AIM Compliance Committee was comprised of Richard Sharp (Chair), Meinhard Schmidt and Andrew Unitt. The AIM Compliance
Committee was responsible for reviewing the procedures, resources and controls in place to ensure compliance with the AIM Rules.
The AIM Compliance Committee did not meet during the financial year ended 31 May 2020 as matters relating to compliance with
the AIM Rules were dealt with by the Board as a whole. Following the changes to the Board made in June 2020, the Board decided
that the Company no longer required an AIM Compliance Committee and that the matters considered by such committee can
continue to be dealt with by the Board as a whole.
The Board typically meets once every month or every two months to review and discuss the operations and financial performance
of the Group. The Board also meets on an ad hoc basis, sometimes at short notice, to discuss specific transactions or material
items requiring the attention of the Directors. With the onset of COVID-19 the Board considered it appropriate to hold more
regular meetings in order to more rapidly assess the impact of COVID-19 on the business and the actions required to be taken.
Directors can formally attend meetings either in person or by conference call or video conferencing. Directors can also make
decisions by considering papers circulated to them and recording their decision to the matters contained in such papers. Since
the advent of COVID-19, all meetings have been held remotely by telephone or video conference. Dr Adam M Hill is an Executive
Director and is employed on a full-time basis.
Directors’ meeting attendance 2019/20
Board
Audit Committee
Remuneration Committee
Meinhard Schmidt
Geoffrey Hamilton-Fairley
Dr Adam M Hill
Timothy Bunting
Richard Sharp
Andrew Unitt
Julian Hirst
Carsten Schroeder
Dr Annalisa Jenkins
Dr Cheung To
17/17
17/17
17/17
15/17
11/17
14/17
17/17
15/17
11/17
9/17
-
-
-
-
-
2/2
2/2
-
1/2
-
* Attended by invitation of the Chair of the Remuneration Committee
** Ceased to be a member of the Remuneration Committee on 12 September 2019
*** Became a member of the Remuneration Committee on 12 September 2019
Directors’ indemnity provisions
The Company has maintained throughout the financial year Directors’ and officers’ liability insurance.
Political donations
The Company has not made any political donations during the year (FY 2019: £Nil).
9/9
-
1/9*
2/9**
-
1/9**
-
7/9
7/9***
-
35
Oncimmune Annual Report 2020 Going concern
The Group’s business activities, together with the factors likely to affect its future development, performance and position are
set out in the Strategic Report on pages 4 to 27, Financial Review section on pages 44 to 80 describes the financial position of
the Group, its cash flows and liquidity position. In addition, note 28 to the financial statements includes the Group’s objectives,
policies and processes for managing its capital, its financial risk management objectives, details of its financial instruments and
hedging activities, borrowing facilities, and its exposure to credit risk and liquidity risk.
In respect of the Group’s funding position the €8.5M credit facility with IPF Management SA, which the Group entered into in
September 2019, remains in place. In October 2020, this facility has been extended by €6.0M with the first €3.0M tranche being
drawn down in October 2020. The remaining €3.0M is available for draw down until 30 June 2021 subject to the attainment of
certain commercial milestones. This facility is a four-year term, interest-only for the first 12 months, with principal repayments
commencing thereafter. Following its extension, the facility includes a financial covenant obligation which requires the Group (on
a quarterly basis for the term of the facility) to be able to demonstrate that it holds a minimum amount of cash equal to the next
nine months of operating cash flow, including the amounts required to service the credit facility. In order to monitor compliance
with this financial covenant, the Board prepares monthly financial accounts including a calculation of covenant compliance for
the following 12 months.
The Group has prepared the 2020 financial statements on a going concern basis. In preparing the accounts on a going concern
basis the Directors have prepared forecasts and budgets for the period to 31 December 2021. These forecasts and budgets
model a range of scenarios, including taking into consideration the impact of Covid-19. The base case scenario assumes cash
from contracts with customers for the forecast period being a mix of contracted amounts, contracts currently under negotiation,
repeat business from already contracted work together with contracts from as yet unidentified opportunities. The base case
scenario also assumes the commercial milestones under the IPF Management SA facility are met and the second tranche is
available to draw down. The base case scenario shows the Group is able to meet its financial obligations as and when they fall
due for the forecast period.
The Directors have also considered downside scenarios that reflect the current unprecedented uncertainty in the UK economy
and which the Directors consider to be severe but plausible. The first downside scenario took the base case scenario and removed
a total of 17% of forecast cash from contracts with an appropriate reduction in cost of sales. The results of this scenario show
that the Group has sufficient resources to meet its obligations for the forecast period and will be capable of drawing down the
additional €3M of the IPF and will not be in breach of its covenant under the IPF Management SA facility.
In addition to the above the Directors have performed a more severe reverse stress test whereby almost all revenues from the as
yet unconfirmed opportunities under the base case have been removed, which equates to a 32% reduction in forecast revenues,
together with a reduction in associated cost of sales. However, under the reverse stress test, the Directors identified costs within
the business which could be reduced within a relatively short time period in order to ensure the Group’s ongoing compliance
with the IPF Management SA facility covenant. Under this reverse stress test, the group remains within the IPF covenant, albeit
without the ability to draw down the remaining €3m and consequently with very limited headroom against the covenant by the
end of the forecast period in December 2021.
After considering the above and after making appropriate enquiries, 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 statements is appropriate.
Risk management
The Company maintains a register of risks, which the executive management team presents to the Directors on a regular basis.
Details of the Group’s financial risk management objectives and policies, and exposure to price risk, credit risk, liquidity risk and
foreign exchange risk are set out in note 28.
Events after the end of the reporting period
Details of post balance sheet events can be found in note 30 to the consolidated financial statements.
Future developments
The future developments of the Group can be found in the Strategic report.
Research and development
The Group's research and development activities are set out in the Strategic report.
Directors
The Directors of the Company who served during the year were:
Meinhard Schmidt
Non-Executive Chairman
Geoffrey Hamilton-Fairley
Non-Executive Vice-Chairman
(resigned 4 June 2020)
Dr Adam M Hill
Chief Executive Officer
Timothy Bunting
Non-Executive Director
Richard Sharp
Non-Executive Director
(resigned 4 May 2020)
Andrew Unitt
Julian Hirst
Independent Non-Executive Director
Independent Non-Executive Director
(resigned 4 June 2020)
Carsten Schroeder
Independent Non-Executive Director
(resigned 4 June 2020)
Dr Annalisa Jenkins
Senior Independent Non-Executive Director
Dr Cheung To
Non-Executive Director
At the end of FY 2020, Oncimmune’s Board of Directors believed it was the right time to restructure the Board in order to be as agile,
lean and focused as possible. As such, the Directors agreed that the size and composition of the current Board would be updated. On
4 June 2020, Geoffrey Hamilton-Fairley, Non-Executive Vice Chairman; Julian Hirst, Independent Non-Executive Director; and Carsten
Schroeder, Independent Non-Executive Director stepped down from the Board.
Directors' interests
At 31 May 2020, the Directors and their families had the following interests in the Company’s ordinary shares and options to subscribe
for shares:
Meinhard Schmidt
31 May 2020
31 May 2019
Shares
18,000
Options
420,370
Shares
-
Geoffrey Hamilton-Fairley (resigned 4 June 2020)
3,238,070
798,148
3,238,070
32,432
396,825
-
Dr Adam M Hill
Timothy Bunting
Richard Sharp (resigned 4 May 2020)
Andrew Unitt
Julian Hirst (resigned 4 June 2020)
2,806,717
4,515,302
-
-
Carsten Schroeder (resigned 4 June 2020)
27,000
Dr Annalisa Jenkins
Dr Cheung To
-
-
-
-
-
-
-
-
-
2,806,717
4,515,302
-
-
-
-
-
Options
420,370
798,148
396,825
-
-
-
-
-
-
-
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.
Timothy Bunting is a partner of Balderton Capital (UK) LLP, the investment adviser to Balderton Capital Partners III, LP 2
Genostics Company Ltd, a private company incorporated in Hong Kong, controlled by Dr Cheung To, who holds 6,410,256 shares in
the Company.
36
37
Oncimmune Annual Report 2020
Directors' remuneration
Introduction
As explained on page 35, remuneration of the Executive Directors and most senior employees is overseen by the Remuneration
Committee, which is chaired by Dr Annalisa Jenkins.
The Board takes the issue of remuneration extremely seriously and endeavours to ensure that remuneration is appropriate and
supports the Group’s strategy and is accordingly designed in a way to promote the best interests of shareholders.
Shareholder engagement regarding remuneration is also important and therefore, as a voluntary best practice matter, shareholders
will get the opportunity to once again vote on this Directors’ remuneration report at Oncimmune’s 2020 Annual General Meeting
(AGM). At the 2019 AGM, the equivalent vote was passed by 99.46% of shareholders voting.
This section of the Annual Report sets out:
•
•
the required table detailing all payments made to Directors in FY 2020; and
a description of the new share incentive scheme which was established for Oncimmune’s most senior leaders in September
2020.
With regards to the new share incentive scheme, establishing this was an important step for Oncimmune as it is designed to build on
the progress made recently and which the Group would like to see continue into the future. Back in 2018, Oncimmune brought on
board a new, world class, senior management team to take the Group into its new phase. The team is successfully executing on the
strategic plan to great effect, and as such, the awards which have been made under the new share incentive scheme more closely
align their interests with those of shareholders.
The Board believes that the new share incentive scheme promotes a fair and appropriate balance where the participants in the new
arrangements now have a very meaningful incentive, but one which requires significant shareholder value to be created and also
requires long-term holding of shares by the leadership team.
Directors’ remuneration for 2020
The remuneration paid to or receivable by each person who served as a Director during the year to 31 May 2020 was as follows:
Salary/
fees
Other
Bonus
Pension Benefits
31 May
2020
Total
31 May
2019
Total
£000
£000
£000
£000
£000
£000
£000
Meinhard Schmidt
Geoffrey Hamilton-Fairley (resigned 4 June 2020)
Dr Adam M Hill
Andrew Millet (resigned 9 December 2018)
Timothy Bunting
Richard Sharp (resigned 4 May 2020)
Andrew Unitt
Julian Hirst (resigned 4 June 2020)
Carsten Schroeder (resigned 4 June 2020)
Dr Annalisa Jenkins
Dr Cheung To
Total
75
65
253
-
-
-
18
36
36
36
-
519
-
-
-
-
-
-
-
-
-
-
-
-
-
-
125
-
-
-
-
-
-
-
-
125
-
-
7
-
-
-
-
-
-
-
-
7
-
-
-
-
-
-
-
-
-
-
-
-
75
65
385
-
-
-
18
36
36
36
-
75
146
258
140
-
-
18
36
41
36
-
651
750
New share incentive scheme
As announced on 11 September 2020, Oncimmune has established a new share incentive scheme (the New Scheme) under which
options (Options) to subscribe for an aggregate of up to 4,510,509 ordinary shares of £0.01 each in the Company (Ordinary Shares)
were granted on 10 September 2020 to each of Meinhard Schmidt, Chairman, Dr Adam M Hill, Chief Executive Officer, Matthew Hall,
Chief Financial Officer and Ron Kirschner, General Counsel and Company Secretary (the Senior Management).
The Options granted pursuant to the New Scheme each have an exercise price of £0.01 and will vest based on the Company’s share
price during the course of three years, between £2.00 and £3.50 (Target Share Price) (as set out below), which aligns directly with
shareholder value. Once vested, Options (or resulting shares) must be held for a further two years, subject to certain exceptions and
acceleration events. The Target Share Prices, allocations and vesting for the Senior Management are as follows:
Target share price*
£2.00
£2.50
£2.75
£3.00
£3.50
Vesting
25%
50%
62.50%
75%
100%
Total number of options vested
741,187
1,482,374
1,852,968
2,223,562
2,964,749
164,083
328,167
410,209
492,251
656,335
148,237
296,475
370,593
444,712
592,950
71,808**
148,237
185,296
222,356
296,475
1,125,315
2,255,253
2,819,066
3,382,881
4,510,509
Dr Adam M Hill
Meinhard Schmidt
Matthew Hall
Ron Kirschner
Total
Percentage of issued share capital***
1.7%
3.4%
4.3%
5.1%
6.6%
* Based upon the maximum average share price of Ordinary Shares for any 20 consecutive business days throughout the period to the vesting
date, being the later of (a) the third anniversary of the date of grant and (b) the date falling 20 business days after the announcement of the
Company’s results for the financial year ended 31 May 2023. Prorated on a straight-line basis between the thresholds shown.
** Amount accounting for some options being taxed under an Enterprise Management Incentive scheme.
*** Based on current issued share capital assuming all options under the New Scheme at each Target Share Price are vested and exercised.
A further performance condition applies such that the Board may reduce the vesting in the event that it determines that the
Company’s overall performance (including financial performance and shareholder experience) does not warrant the level of vesting.
The New Scheme is designed to incentivise Senior Management to continue the execution of the Company’s strategy over the next
three years. The final measurement date will be at the end of the scheme, being after three years from grant or 20 business days
following the publication of the Company’s results for the financial year ending 31 May 2023 (whichever is later) or may be measured
at any accelerating event. No member of the Senior Management will be entitled to receive any further Options as part of the
Company’s employee incentivisation scheme until the end of FY 24.
The Options have been granted under the rules of the Company’s 2016 Share Option Plan (the Rules), though subject to additional
terms which include the ability for the Company to clawback the Options (or any shares resulting from exercise) in the event that
malus by the relevant option holder is discovered within three years of the Option having vested. In accordance with the Rules, the
Senior Management team will be responsible for all taxes arising from the vesting and exercise of the Options, including any National
Insurance Contributions due to be paid by the Company (and such liabilities for employers’ NICs have been reflected in the numbers
of options granted to individuals to the extent they have this obligation).
38
39
Oncimmune Annual Report 2020 Significant shareholdings
As at 31 May 2020, 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 Sharp* (resigned 4 May 2020)
Ruffer LLP
Credit Suisse
Timothy Bunting #*
Premier Milton Investors
6,813,196
6,410,256
4,447,000
3,000,000
2,958,000
2,956,717
2,070,457
10.7
10.1
7.0
4.7
4.7
4.7
3.3
* Board of directors
#Timothy Bunting is a partner of Balderton Capital (UK) LLP, the investment adviser to Balderton Capital Partners III, LP 2
**Dr Cheung To is a shareholder and director of Genostics Company Ltd.
Statement of Directors’ responsibilities under
S172(1) Companies Act 2006
Corporate Governance
In accordance with Section 172 of the Companies Act
2006, the Directors recognise the importance of our wider
stakeholders to the sustainability of our business. The Directors
behave and carry out their activities to promote the long-
term success of the Group for the benefit of the Company’s
shareholders, employees, partners, customers, suppliers and
other stakeholders such as regulatory authorities. The Group
engages with stakeholders to reflect their insights and views
when making decisions on strategy, delivering operational
effectiveness, driving initiatives and delivering outcomes.
The culture and values promoted by the Directors create a
focus across the Group on observing and maintaining high
standards of regulatory compliance, quality control and
business conduct whilst promoting the long-term success of
the Company. The impact of the Group’s operations on the
environment and community and how these enhance social
value are described above.
The Group has built and maintained relationships with
shareholders, advisers and suppliers. The Directors have
taken steps to develop and strengthen them through dialogue
and engagement. These relationships are regularly monitored
at Board level.
The Chairman ensures that he is available to discuss issues
with key shareholders outside of the shareholder meetings
which are held. The Company complies with its disclosure
obligations as set out in the AIM Rules for Companies,
published by London Stock Exchange to ensure that
shareholders are updated on key developments on a timely
basis.
For more detail on the corporate governance of the Group,
see Corporate Governance section in the Directors’ Report.
Meeting shareholder needs
The Company seeks to maintain and enhance good relations
with its shareholders and analysts. The Group’s Interim and
Annual Reports are supplemented by regular updates to
investors on commercial progress. Institutional shareholders,
private client brokers, retail investors and analysts are in
contact with the Directors through a regular programme
of briefing presentations and meetings to discuss issues
and give feedback. The Board also uses and receives
formal feedback through the Company’s joint stockbrokers,
financial public relations advisor and other advisors. Investor
forums and presentation seminars and shows provide other
channels of communication to shareholders, analysts and
potential investors. Individual shareholders are welcome to
and regularly make contact with the Company via email or
telephone.
Managing our responsibilities to wider stakeholders
The Board recognises its prime responsibility under UK
corporate law is to promote the success of the Group for
the benefit of its members and other stakeholders as a
whole. We conduct business in an ethical way and take
seriously our responsibilities to our employees, clinical study
partners, contractors, key opinion leaders, trading partners,
research and laboratory customers, suppliers and regulatory
authorities.
The Group’s employees are critical to the delivery of the
Group’s strategic plan. The Directors ensure that the Group
complies with all UK employment laws and have implemented
appropriate standards and systems to monitor and to ensure
the welfare of those employees.
The complex nature of our products and product development
process means that we have built close working relationships
with a number of key suppliers are essential to ensure we
receive the highest quality products and services.
regulators
We operate in a highly regulated area of business. National
governments and
(Competent Authorities)
implement highly structured product certification regimes
to national, supra-national and international standards. Such
certifications are necessary by law to manufacture and market
research and clinical devices.
Notified Bodies are designated by Competent Authorities
to perform assessments to agreed standards. The Group
is subject to those assessments where appropriate to the
products manufactured and marketed by the Company.
“We're not just an early detection company but our proprietary technology
has value to clinicians and pharmaceutical companies in the management
of cancer patients whether they know they have cancer or not.”
Dr Adam M Hill speaks with Justin Waite on the Vox Markets podcast about the difference
between EarlyCDT & ImmunoINSIGHTS, the enormous potential within the immuno oncology
market and the key reasons why people should invest in Oncimmune. 17th June 2020.
40
41
Oncimmune Annual Report 2020 Directors’ responsibilities statement
financial statements
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable
law and regulations. Company law requires the Directors to
prepare financial statements for each financial year. Under
that law the Directors have elected to prepare the Group
consolidated
in accordance with
International Financial Reporting Standards as adopted by
the European Union (IFRSs) and elected to prepare the Parent
Company's financial statements under the United Kingdom
Generally Accepted Accounting Practice (United Kingdom
Accounting Standards and applicable laws including FRS 101
Reduced Disclosure Framework). Under company law the
Directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state
of affairs and of the profit or loss of the Group and the Parent
Company for that period. In preparing each of the Group
and Parent Company financial statements, the Directors are
required to:
Provision of information to the auditor
The Directors confirm that:
•
•
So far as each Director is aware, there is no relevant audit
information of which the Company's auditor is unaware;
and
The Directors have taken all the steps that they ought
to have taken as Directors in order to make themselves
aware of any relevant audit information and to establish
that the Company auditor is aware of that information.
Auditor
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.
•
Select suitable accounting policies and then apply them
consistently;
On behalf of the Board
• 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
Dr Adam M Hill
Director and Chief Executive Officer
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.
6th November 2020
Company registration number: 09818395
(England and Wales)
responsible
for keeping adequate
The Directors are
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) safeguard the assets of the
Group and (ii) prevent and detect fraud and other irregularities.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the Company's website. Information published on the
website is accessible in many countries and legislation in the
UK governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
“A better characterisation of the B-cell antibody repertoire “has potential”
to provide biomarkers for predicting irAEs as well as clinical responses
in metastasised melanoma.”
Professor Jessica C. Hassel of University Hospital in Heidelberg, Germany at ASCO 2020
“I would like to see lung cancer detected at an earlier, treatable stage.
The EarlyCDT Lung test may be a good way to achieve that goal. Like
with bowel cancer screening, we could send out a home test kit for those
who are willing to put a blood spot on a piece of cardboard and post it
back – others can have a nurse at their GP’s practice do it.”
Frank, St Andrews.
A GP for 37 years, Frank was the Chief Investigator on the ECLS trial.
Photographed in Craigtoun Park in St Andrews where Frank frequently jogs and cycles.
42
43
Oncimmune Annual Report 2020 Independent auditor’s report to the members of
Oncimmune Holdings plc
Opinion
Our opinion on the financial statements is
unmodified
the
We have audited
financial statements of
Oncimmune Holdings plc (the ‘parent company’) and
its subsidiaries (the ‘group’) for the year ended 31
May 2020 which comprise Consolidated Statement
of Comprehensive Income, the Consolidated and
Company Statements of Financial Position, the
Consolidated and Company Statements of Changes
in Equity, the Consolidated Statement of Cash Flows
and notes to the financial statements, including a
summary of significant accounting policies. The
financial reporting framework that has been applied
in 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 Disclosure 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 2020 and of the
group’s loss for the year then ended;
financial statements have been
the group
properly prepared in accordance with IFRSs as
adopted by the European Union;
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.
The impact of macro-economic uncertainties on
our audit
Our audit of the financial statements requires us to obtain
an understanding of all relevant uncertainties, including
those arising as a consequence of the effects of macro-
economic uncertainties such as Covid-19 and Brexit. All
audits assess and challenge the reasonableness of estimates
made by the directors and the related disclosures and the
appropriateness of the going concern basis of preparation of
the financial statements. All of these depend on assessments
of the future economic environment and the group’s and the
parent company’s future prospects and performance.
Covid-19 and Brexit are amongst the most significant
economic events for the UK, and at the date of this report
their effects are subject to unprecedented
levels of
uncertainty, with the full range of possible outcomes and
their impacts unknown. We applied a standardised firm-wide
approach in response to these uncertainties when assessing
the group’s and the parent company’s future prospects
and performance. However, no audit should be expected
to predict the unknowable factors or all possible future
implications for a group and a parent company associated
with these particular events.
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.
In our evaluation of the directors’ conclusions, we considered
the risks associated with the group’s and the parent
company’s business model, including effects arising from
macro-economic uncertainties such as Covid-19 and Brexit,
and analysed how those risks might affect the group’s and the
parent company’s financial resources or ability to continue
operations over the period of at least twelve months from the
date when the financial statements are authorised for issue.
In accordance with the above, we have nothing to report in
these respects.
However, as we cannot predict all future events or conditions
and as subsequent events may result in outcomes that are
inconsistent with judgements that were reasonable at the
time they were made, the absence of reference to a material
uncertainty in this auditor's report is not a guarantee that the
group or the parent company will continue in operation.
Overview of our audit approach
•
•
Overall materiality: £350,000, which represents
4% of the group’s preliminary loss before taxation;
Key audit matters were identified as:
• Going concern – group and parent company;
•
Impairment of goodwill and intangible assets
– group;
• Revenue recognition – group; and
•
Intragroup loans impairment – expected
credit losses– parent company
• We performed full scope audit procedures on the
financial statements of Oncimmune Holdings plc
and its three subsidiary undertakings.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the
financial statements of the current period and include the
most significant assessed risks of material misstatement
(whether or not due to fraud) 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.
Key Audit Matter – Group
How the matter was addressed in the audit – Group
Going concern
As stated in the ‘The impact of macro-
economic uncertainties on our audit’
section of our report, Covid-19 is amongst
the most significant economic events
currently faced by the UK, and at the
date of this report its effects are subject
to unprecedented levels of uncertainty.
This event could adversely impact the
future trading performance of the group
and the parent company and as such
increases the extent of judgement and
estimation uncertainty associated with
management’s decision to adopt the
going concern basis of accounting in the
preparation of the financial statements.
We therefore identified going concern
as a significant risk, which was one of
the most significant assessed risks of
material misstatement.
Our audit work included, but was not restricted to:
• obtaining management’s base case cash flow forecasts covering the period from 1 June
2020 to 31 December 2021, assessing how these cash flow forecasts were compiled
and assessing their appropriateness by applying relevant sensitivities to the underlying
assumptions, and challenging those assumptions;
• assessing the accuracy of management’s past forecasting by comparing management’s
forecasts for last year to the actual results for last year and considering the impact on the
base case cash flow forecast;
• obtaining management’s reverse stress test prepared to assess the potential impact
of Covid-19 on the business. We evaluated management’s assumptions regarding the
impact of a reduction to cash from contracts with customers. We considered whether the
assumptions are consistent with our understanding of the business derived from other
detailed audit work undertaken;
• assessing the impact of the mitigating factors available to management in respect of the
ability to reduce forecast costs; and
• assessing the adequacy of related disclosures within the annual report.
The group’s accounting policy and related disclosures on going concern are shown in note 2.
Key observations
We have nothing to report in addition to that stated in the ‘Conclusions relating to going
concern’ section of our report.
In
Impairment of goodwill and
intangible assets
The group has goodwill and intangible
assets of £1,578,000 and £1,138,000
respectively.
accordance with
International Accounting Standard (IAS)
36
‘Impairment of Assets’, goodwill
is tested annually for impairment by
reference to the value in use of the
relevant cash-generating units. There
is also a risk that the carrying value of
goodwill and intangible assets may be
impaired given the group is currently
loss making.
assessment of
Management’s
the
potential impairment of goodwill and
intangibles
significant
incorporates
judgements and assumptions, such
as rate of discount, timing, extent and
probability of future cash flows.
We therefore identified the impairment
goodwill and intangible assets as a key
audit matter, which was one of the most
significant assessed risks of material
misstatement.
Our audit work included, but was not restricted to:
• considering the appropriateness of the methodology applied by management in their
assessment of impairment and the judgements applied;
• assessing the accounting policy to check it is in accordance with the financial reporting
framework, including IAS 36;
• checking of the mathematical accuracy of the impairment models;
• challenged the appropriateness of the forecast growth rates by comparison to available
market data;
• assessing the appropriateness of the discount rate applied to future cash flows by
comparison to available market data;
• comparing the carrying value of the cash generating unit to management’s value in use
calculations;
• performing sensitivity analysis on key assumptions made in calculations;
• cross-checking the carrying value of goodwill and intangible assets against the market
value of the group; and
• evaluating the information included in management’s impairment models through our
knowledge of the business, discussions with management and validating the inputs
come from underlying records.
The group’s accounting policy on impairment of goodwill and intellectual property is shown in
note 2 to the financial statements and related disclosures are included in notes 11 and 12.
Key observations
Our testing did not identify any material impairment of goodwill and intangible assets within
the financial statements and we found no errors in the calculations completed.
44
45
Oncimmune Annual Report 2020 Key Audit Matter – Group
How the matter was addressed in the audit – Group
Revenue recognition
The group has revenue from, the sale of
goods and the delivery of services to its
customers. The sale of goods has a distinct
performance obligation and is measured
at a point in time. Service revenue from
many of the group’s contracts comprise
performance obligations that are satisfied
over time.
Management apply significant judgement
to:
•
identify the separate performance
obligations in an arrangement based
on the terms of the contract and the
group’s customary business practices;
• determine whether the performance
obligation is satisfied over time or at a
point in time; and
•
select an appropriate method
for measuring progress of that
performance obligation if it is satisfied
over time.
Our audit work included, but was not restricted to:
• assessing whether the revenue recognition accounting policies adopted are in
accordance with the financial reporting framework, including IFRS 15 ‘Revenue from
Contracts with Customers’, and checking whether management has accounted for
revenue in accordance with the accounting policies;
• assessing the application of IFRS 15 for each revenue stream and in particular whether the
performance obligations are distinct, whether they should be recognised separately and
whether they were recognised at an appropriate stand-alone selling price;
•
for a sample of contracts, we:
• checked that the performance obligations have been appropriately identified in
accordance with the group’s accounting policy by reading and understanding the
underlying contract terms;
• checked that revenue recognised in the year relates to amounts allocated to
performance obligations that were satisfied in the year;
inspected evidence of delivery of products or rendering of services;
•
• evaluated significant judgements made by management in identifying the separate
performance obligations and selecting an appropriate method for measuring
progress.
•
testing signed contracts near the year end to ensure revenue has been correctly
recognised.
•
testing of revenue journals to highlight and corroborate any postings that were outside of
our expectations and therefore at a higher risk of being fraudulent.
is
recognition
therefore
Revenue
dependent upon identifying the relevant
distinct performance obligation, ensuring
the revenue allocated to the performance
obligation is based on standalone pricing
and ensuring that revenue is appropriately
the
recognised
delivery of the performance obligation.
in accordance with
We therefore identified the risk of fraud in
revenue recognition as a significant risk,
which was one of the most significant
assessed risks of material misstatement.
The group’s accounting policy on revenue recognition is shown in note 2 to the financial
statements and related disclosures are included in note 4.
Key observations
Whilst our audit work did not identify any material misstatements in respect of revenue
recognised as a result of improper revenue recognition due to fraud, our audit testing did
identify a material overstatement of revenue as a result of error, which was subsequently
corrected by management.
Key Audit Matter – Parent
How the matter was addressed in the audit – Parent
Intragroup loans impairment –
expected credit losses
from
The company has
subsidiary companies of £11,297,000
(as restated 2019: £24,109,000). There
is a risk that
loans may
be impaired as a result of subsidiary
companies incurring losses.
loans due
intragroup
assessment of
Management’s
the
expected credit loss 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 a key audit matter,
which was one of the most significant
assessed risks of material misstatement.
Our audit work included, but was not restricted to:
• assessing of the appropriateness of the methodology applied by management in their
assessment of the expected credit loss of intragroup loans by comparing it to the parent
company’s accounting policy and relevant accounting standards;
• obtaining and assessing management’s evaluation of the expected credit loss of
intragroup loans including checking the impairment provisions and net asset values of
components that have intragroup debt;
• checking management’s expected credit loss model applied to intragroup loans is
mathematically accurate;
• assessing the key assumptions made within the calculations are appropriate, such as the
discount rate applied and assumptions regarding recoverability and timing of cashflows
are appropriate, by cross reference to available data.
The group’s accounting policy on intragroup loans is shown in note 2 to the financial
statements and related disclosures are included in note 4 to the parent company’s financial
statements.
Key observations
Our testing identified a material misstatement in respect the application of the applicable
accounting standard when assessing the impairment of intragroup loans. Management
subsequently amended the financial statements in respect of this. A prior period error also
arose because of this issue which has been accounted for and disclosed appropriately by
management. See note 10 of the parent company financial statements for further detail.
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 whole
£350,000 which is 4% of the group’s preliminary
loss before tax. This benchmark is considered
the most appropriate as the group is currently
loss making and does not generate significant
revenues.
£250,000 which is 1% of the parent company’s
preliminary total assets. This benchmark is
considered the most appropriate as the entity is
a holding company with no revenue and bears
group related expenses.
Performance materiality
used to drive the extent
of our testing
Specific materiality
Materiality for the current year is higher than the
level that we determined for the year ended 31
May 2019 to reflect an increase in the group’s
loss before tax.
Materiality for the current year is lower than the
level that we determined for the year ended 31
May 2019 as materiality was based on 1% of the
parent company’s net assets at 31 May 2019.
70% of financial statement materiality.
70% of financial statement materiality.
We also determine a lower level of specific
materiality for certain areas such as directors’
remuneration and related party transactions.
We also determine a lower level of specific
materiality for certain areas such as directors’
remuneration and related party transactions.
Communication of
misstatements to the
audit committee
£17,500 and misstatements below
that
threshold that, in our view, warrant reporting on
qualitative grounds.
£12,500 and misstatements below
that
threshold that, in our view, warrant reporting on
qualitative grounds.
The graph below illustrates how performance materiality
interacts with our overall materiality and the tolerance for
potential uncorrected misstatements.
Overall materiality – Group
Overall materiality – Parent
30%
30%
70%
70%
Performance materiality
Tolerance for potential uncorrected
mis-statements
46
47
Oncimmune Annual Report 2020 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:
•
•
•
•
•
•
to assess
an evaluation by the group audit team of identified
that
components
component and to determine the planned audit response
based on a measure of materiality. Significance of each
component was determined as a percentage of the
group’s total assets, revenues and loss before taxation;
the significance of
the group comprises of four components, Oncimmune
Holdings plc, Oncimmune Limited, Oncimmune LLC
(based in the USA) and Oncimmune Germany GmbH
(based in Germany), all assessed to be significant
components based on
their
contributions to the group loss before taxation;
the materiality of
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;
we performed
full-scope audit procedures on
Oncimmune Holdings plc, Oncimmune Limited and
Oncimmune LLC; audit work on Oncimmune Germany
GmbH was performed by a component auditor. The four
components audited accounted for 100% of the group’s
total revenue and assets;
we directed the work performed by the component
auditors of Oncimmune Germany GmbH and performed
a review of their working papers;
our audit approach in the current year for all financial
statement line items was consistent with the prior year
in that it was substantive in nature.
Other information
The directors are responsible for the other information. The
other information comprises the information included in
the annual report, other than 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.
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.
Use of our report
This report is made solely to the company’s members,
as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken
so that we might state to the company’s members those
matters we are required to state to them in an auditor’s report
and for no other purpose. To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone
other than the company and the company’s members as a
body, for our audit work, for this report, or for the opinions
we have formed.
Nick Jones
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Leicester
6th November 2020
Our opinion on other matters prescribed by the
Companies Act 2006 are 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.
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 set out on page 43, the directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to
enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group’s and the parent
company’s ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors
either intend to liquidate the group or the parent company
or to cease operations, or have no realistic alternative but to
do so.
48
49
Oncimmune Annual Report 2020 “I couldn’t believe it when they told me I
had lung cancer, and I couldn’t believe it
when I was out of hospital just a week after
the operation.”
Wilma, Wishaw
Photographed outside Wilma and her husband Stanley’s
tower block where they run a soup kitchen.
50
51
Oncimmune Annual Report 2020 Consolidated statement of comprehensive income
Consolidated statement of financial position
Revenue
Cost of sales
Gross loss
Research and development expenses
Administrative expenses
Share-based payment
Gain on disposal of assets
Total administrative expenses
Other income
Operating loss
Finance income
Finance costs
Finance (costs) / income - net
Loss before income tax
Income tax credit
Year to 31 May
2020
Year to 31 May
2019
£’000
Total
509
(537)
£’000
Total
171
(1,030)
(28)
(859)
(1,677)
(8,174)
(174)
579
(1,500)
(5,873)
(406)
-
(9,446)
(7,779)
206
49
(9,268)
(8,589)
111
(626)
(515)
(9,783)
1,324
52
(11)
41
(8,548)
536
Notes
4
5
8
9
9
5
10
Loss for the financial year
(8,459)
(8,012)
Other comprehensive income
Items that may be subsequently reclassified to profit or loss,
net of tax
Currency translation differences
84
(51)
Loss after tax and total comprehensive income for the year
attributable to equity holders
(8,375)
(8,063)
Basic and diluted loss per share
27
(13.36p)
(12.97p)
The accompanying notes form an integral part of these consolidated financial statements.
Assets
Non-current assets
Goodwill
Intangible assets
Property, plant and equipment
Right-of-use assets
Current assets
Inventories
Trade and other receivables
Contract assets
Cash and cash equivalents
Total assets
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 liabilities
Deferred tax
Lease liability
Borrowings
Current liabilities
Trade and other payables
Contract liabilities
Other statutory liabilities
Lease liability
Other liabilities
Borrowings
Total liabilities
Total equity and liabilities
Notes
31 May
2020
£’000
31 May
2019
£’000
11
12
13
14
16
15
17
22
19
29
21
20
18
21
19
20
1,578
1,138
390
982
4,088
174
1,716
97
4,240
6,227
10,315
635
31,459
3,048
31,882
179
(1,926)
(65,471)
(194)
-
133
762
6,147
7,042
1,037
570
65
227
428
1,140
3,467
10,509
10,315
1,578
1,432
422
-
3,432
292
349
-
5,358
5,999
9,431
633
31,382
3,295
31,736
95
(1,926)
(57,350)
7,865
350
156
-
-
506
1,011
-
49
-
-
-
1,060
1,566
9,431
52
Oncimmune Annual Report 2020
53
The accompanying notes form an integral part of the consolidated financial statements.
The financial statements were approved by the board on 6th November 2020.
Dr Adam M Hill
Director and Chief Executive Officer Company registration number: 09818395 (England and Wales)
Consolidated financial statements
Consolidated statement of changes in equity
Consolidated statement of cash flows
Share
capital
Share
premium
Other
reserves
Merger
reserve
Foreign
currency
translation
reserve
Own
Shares
Retained
earnings
Total
£'000
£'000
£'000
£'000
£'000
£'000
£'000
£'000
Cash flows from operating activities
As at 1 June 2018
616
30,952
2,325
30,787
146
(1,926)
(49,338)
13,562
Loss for the year
Other comprehensive income:
Currency translation
differences
Total comprehensive income
Transactions with owners:
Shares issued during the
year
Shares issued on acquisition
Share option charge
-
-
-
6
11
-
-
-
-
-
-
-
430
-
-
195
369
406
-
-
-
-
949
-
-
(51)
(51)
-
-
-
-
-
-
-
-
-
(8,012)
(8,012)
-
(51)
(8,012)
(8,063)
-
-
-
631
1,329
406
Loss before income tax
Adjusted by:
Depreciation and amortisation
Share based payment charge
Interest received
Interest expense
Exchange rate movement
Gain on disposal of assets
Fair value movement on contingent consideration and liabilities
Changes in working capital:
Decrease in inventories
Increase in trade and other receivables
Increase / (decrease) in trade and other payables
As at 31 May 2019
633
31,382
3,295
31,736
95
(1,926)
(57,350)
7,865
Cash used by operations
Loss for the year
Other comprehensive income:
Currency translation
differences
Total comprehensive income
Transactions with owners:
Share warrants issued
Shares issued in relation to
prior year acquisition
Share option charge
-
-
-
-
2
-
-
-
-
-
-
-
-
142
-
-
-
-
77
(563)
146
-
174
-
-
84
84
-
-
-
-
-
-
-
-
-
(8,459)
(8,459)
-
84
(8,459)
(8,375)
-
142
338
-
-
174
Interest paid
Interest received
Income tax received
Net cash used by operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Development expenditure capitalised
Cash received from obtaining subsidiary
Proceeds from sale of assets
Net cash generated from / (used in) investing activities
Cash flows from financing activities
Cost of share issue during the year
Loans
As at 31 May 2020
635
31,459
3,048
31,882
179
(1,926)
(65,471)
(194)
Principal lease repayments
Year to 31 May
2020
Year to 31 May
2019
Notes
£’000
£’000
(9,783)
(8,548)
12,13,14
9
9
500
174
(111)
626
-
(579)
78
107
(807)
591
(9,204)
(663)
111
853
239
406
(52)
11
(53)
-
-
120
(11)
(48)
(7,936)
(11)
52
536
(8,903)
(7,359)
(236)
-
-
583
347
-
7,598
(138)
7,460
(22)
(1,118)
5,358
4,240
(183)
(10)
30
-
(163)
(70)
-
-
(70)
(3)
(7,595)
12,953
5,358
The accompanying notes form an integral part of the consolidated financial statements.
Net cash generated from / (used in) financing activities
Movement in cash attributable to foreign exchange
Net decrease 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
17
The accompanying notes form an integral part of the consolidated financial statements.
54
Oncimmune Annual Report 2020
55
Consolidated financial statements “Everyone at risk should find out: don’t put
it off because you’re scared, because you
might come back and find out it’s negative –
but if you get a positive result you can deal
with it, far better – just look at me.”
Maureen, Dumbarton
Photographed by Dumbarton Castle where Maureen walks
her dog Maya each day.
56
Oncimmune Annual Report 2020
57
Notes to the consolidated financial statements
General information
1.
Oncimmune Holdings plc (the ‘Company’) is a limited company incorporated and domiciled in England and Wales. The registered office of the company
is MediCity – D6 Building, 1 Thane Road, Nottingham, NG90 6BH. The registered company number is 09818395.
After considering the above and after making appropriate enquiries, 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 statements is appropriate.
The Group’s principal activity is the development and commercialisation of technologies that enable cancer diagnosis.
The Directors of Oncimmune Holdings plc are responsible for the financial information and contents of the financial information.
Accounting policies
2.
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 financial statements have been prepared on a historical cost basis.
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 been prepared as if Oncimmune Limited and its subsidiaries had been held by Oncimmune Holdings plc from inception and
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.
The consolidated financial statements are presented in sterling and have been rounded to the nearest thousand (£’000).
Standards, amendments and interpretations to existing standards adopted by the Group in these financial statements
During the year, the Group adopted the following standards effective from 1 June 2019;
IFRS 16
The adoption of this new Standard has resulted in the Group recognising a right of use asset and related lease liability in connection with all former
operating leases except for those identified as low-value or having a short life of less than 12 months from the date of initial application. At the transition
date all leases held by the Group had a non cancellable term of less than 12 months and therefore no assets or liabilities were recognised on transition.
The new Standard has been applied using the modified retrospective approach, with the cumulative effect of adopting IFRS 16 being recognised as
an adjustment to the opening balance of property, plant and equipment and lease liabilities for the current period. Prior periods are not required to be
restated.
Further information on the impact of the new policy is disclosed in note 21. On transition to IFRS 16, the Group elected to account for short-term leases
and leases of low-value assets using the practical expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to
these are recognised as an expense in profit or loss on a straight-line basis over the lease term.
IFRIC 23
The adoption of this new treatment (Interpreatation 23 Uncertainty over Income Tax treatments has resulted in the Group recognising an estimated
amount due for R&D tax credit for the year ended 31 May 2020.
New and amended standards not adopted by the Group
Prepayment Features with Negative Compensation – Amendments to IFRS 9
Long-term Interests in Associates and Joint Ventures – Amendments to IAS 28
Annual Improvements to IFRS Standards 2015 – 2017 Cycle
Plan Amendment, Curtailment or Settlement – Amendments to IAS 19
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
Going concern
The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in the Strategic
Report on pages 4 to 27. Financial Review section on pages 44 to 80 describes the financial position of the Group, its cash flows and liquidity position.
In addition, note 28 to the financial statements includes the Group’s objectives, policies and processes for managing its capital, its financial risk
management objectives, details of its financial instruments and hedging activities, borrowing facilities, and its exposure to credit risk and liquidity risk.
IFRS 3
IAS 1, IAS8
Amendment to References to Conceptual Framework in
IFRS Standards
Definition of a Business (Amendments)
Definition of Material (Amendments)
1 January 2020
1 January 2020
1 January 2020
IIn respect of the Group’s funding position the €8.5M credit facility with IPF Management SA, which the Group entered into in September 2019, remains
in place. In October 2020, this facility has been extended by €6.0M with the first €3.0M tranche being drawn down in October 2020. The remaining
€3.0M is available for draw down until 30 June 2021 subject to the attainment of certain commercial milestones. This facility is a four-year term,
interest-only for the first 12 months, with principal repayments commencing thereafter. Following its extension, the facility includes a financial covenant
obligation which requires the Group (on a quarterly basis for the term of the facility) to be able to demonstrate that it holds a minimum amount of cash
equal to the next nine months of operating cashflow, including the amounts required to service the credit facility. In order to monitor compliance with
this financial covenant, the Board prepares monthly financial accounts including a calculation of covenant compliance for the following 12 months.
The Group has prepared the 2020 financial statements on a going concern basis. In preparing the accounts on a going concern basis the Directors
have prepared forecasts and budgets for the period to 31 December 2021. These forecasts and budgets model a range of scenarios, including taking
into consideration the impact of Covid-19. The base case scenario assumes cash from contracts with customers for the forecast period being a mix
of contracted amounts, contracts currently under negotiation, repeat business from already contracted work together with contracts from as yet
unidentified opportunities. The base case scenario also assumes the commercial milestones under the IPF Management SA facility are met and the
second tranche is available to draw down. The base case scenario shows the Group is able to meet its financial obligations as and when they fall due
for the forecast period.
The Directors have also considered downside scenarios that reflect the current unprecedented uncertainty in the UK economy and which the Directors
consider to be severe but plausible. The first downside scenario took the base case scenario and removed a total of 17% of forecast cash from contracts
with an appropriate reduction in cost of sales. The results of this scenario show that the Group has sufficient resources to meet its obligations for the
forecast period and will be capable of drawing down the additional €3m of the IPF and will not be in breach of its covenant under the IPF Management
SA facility.
In addition to the above the Directors have performed a more severe reverse stress test whereby almost all revenues from the as yet unconfirmed
opportunities under the base case have been removed, which equates to a 32% reduction in forecast revenues, together with a reduction in associated
cost of sales. However, under the reverse stress test, the Directors identified costs within the business which could be reduced within a relatively short
time period in order to ensure the Group’s ongoing compliance with the IPF Management SA facility covenant. Under this reverse stress test, the group
remains within the IPF covenant, albeit without the ability to draw down the remaining €3M and consequently with very limited headroom against the
covenant by the end of the forecast period in December 2021.
The Directors expect that the adoption of the standards listed above will not have a material impact on the financial information of the Group in future
reporting periods.
Revenue
IFRS 15 provides a single, principles based five-step model to be applied to all sales contracts based on the transfer of control of goods and services
to customers.
The amount shown as revenue in the statement of comprehensive income comprises royalties and the provision and distribution of medical testing
services and equipment, in the US and other markets, including the UK.
Revenue is recognised at a point in time or over time, when (or as) the Group satisfies performance obligations by transferring the goods to its
customers and excludes intra-group sales, value added tax and trade discounts.
Royalty income is recognised at the point in time 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 at the point in time when the tests are performed.
The Group has a number of agreements in place with distributors with annual contracted minimum numbers for tests and services. The transaction
price is fixed in the agreements. The consideration due is based on looking at the volume of tests performed to date and the likelihood of the
minimum number being performed over the time of the agreement. Where the minimum tests are not performed by the distributer minimum revenues
contracted are recognised over time.
In the case of fixed price contracts, the customer pays a fixed minimum annually upfront. Where the services rendered by the Group exceed the
payment, a contract asset is recognised. If the payments exceed the services rendered, a contract liability is recognised.
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Oncimmune Annual Report 2020
59
Consolidated financial statements
Notes to the consolidated financial statements
Some contracts include multiple deliverables. Where the contracts include multiple performance obligations, the transaction price will be allocated to
each performance obligation based on the milestones in the agreement. Where the payment exceeds the performance obligation a contract liability
is recognised. If the services rendered by the group exceeds the payment, a contract asset is recognised. The performance obligations as set out as
milestones in the contract refer to purchasing materials, completing analysis of samples, transfer of raw data, submission and acceptance of the QC
report, and delivery of the final report.
Goodwill
Goodwill represents the excess of the fair value of the consideration over the fair values of the identifiable net tangible and intangible assets acquired
and is allocated to cash generating units.
Under IFRS 3 “Business Combinations”, goodwill arising on acquisitions is not subject to amortisation but is subject to annual impairment testing. Any
impairment is recognised immediately in the statement of comprehensive income and is not subsequently reversed. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are separately idenfiable cash inflows from other assets or groups of assets (cash
generating units).
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, the 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 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. No such expenditure has been capitalised (2019: £10,000).
Intangible assets
Intangible assets are stated at historic cost, less accumulated amortisation and impairment losses. Amortisation 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 amortised on a straight line basis over
the following periods:
Internal developments
Technology platform
5 years
5 years
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:
Computer equipment
3 – 4 years
Office equipment
3 – 7 years
Laboratory equipment
3 – 7 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.
the availability of adequate technical, financial and other resources to complete the development and to use of sell the intangible asset;and
Borrowings
the ability to measure reliably the expenditure attributable to the intangible asset during its development.
Impairment testing of non-financial 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. 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.
Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting
period. The reversal would be limited to the carrying amounts of the non-financial assets had no impairment been recognised.
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.
Trade receivables
Trade receivables are recognized at the amount of consideration that is unconditional. Trade receivables for sale of inventory and the provision of tests
are subject to the expected credit loss model. Trade receivables are written off where there is no expectation of recovery. Indicators that there is no
reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the Group, and a failure to make
contractual payments for a significant period past the due date. Impairment losses on trade recevables are presented as net impairment losses within
operating loss. Subsequent recoveries of amounts previously written off are credited against the same line item.
Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year which are unpaid. The amounts
are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current liabilities unless payment is not
due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the
effective interest method.
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any
difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit and loss over the period of the borrowings
using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that
its probable that some or all of the facility will be drawn down.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired.
Provisions
Provisions for legal claims and make good obligations are recognised when the Group has a present legal or constructive obligation as a result of past
events, it is probable that as outflow of resources will be required to settle the obligation, and the amount can be reliably estimated.
Provisions are not recognised for future operating losses.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the end of
the reporting period.
Leased assets
For any new contracts entered into on or after 1 June 2019, the Group considers whether a contract is, or contains a lease. A lease is defined as ‘a
contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration’.
At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the statement of financial position. The right-of-use
asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, an estimate
of any costs to dismantle and remove the asset, or restore a property, at the end of the lease, and any lease payments made in advance of the lease
commencement date (net of any incentives received).
The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of
the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset for impairment when such indicators exist.
At the commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using
the interest rate implicit in the lease if that rate is readily available or the Group’s incremental borrowing rate.
Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance fixed), variable payments
based on an index or rate, amounts expected to be payable under a residual value guarantee and payments arising from options reasonably certain
to be exercised.
Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It will also be remeasured to reflect any
reassessment or modification, or if there are changes in the in-substance fixed payments.
When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the right-of-use asset is
already reduced to zero.
The Group has elected to account for short-term leases and leases of low-value assets using the practical expedients. Instead of recognising a right-of-
use asset and lease liability, the payments in relation to these are recognised as an expense in profit or loss on a straight-line basis over the lease term.
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Oncimmune Annual Report 2020
61
Consolidated financial statements Notes to the consolidated financial statements
Taxation
Financial liabilities
Income tax on the profit or loss for the year comprises current and deferred tax.
The Group’s financial liabilities comprise contingent consideration and trade and other payables.
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.
Financial liabilities are initially recognised at the fair value of the consideration received net of issue costs. After initial recognition contingent
considerations are measured at fair value. 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.
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 statement of financial position 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.
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.
Employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave, and accumulating sick leave that are expected to be settled wholly
within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees’ services up to
the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled.
Employee benefit trust
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. The differences arise from the
translation of foreign operations’ results and financial positions from their respective functional currencies to the Group’s presentation currency.
• 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. The merger reserve includes (i) amounts that arose on a Group reconstruction in 2015 as described in the basis
of preparation and (ii) amounts arising from merger relief applied on the acquisition of Protagen Diagnostics AG in 2019.
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 average rate of exchange ruling during the year of report. Exchange differences are
taken into account in arriving at the operating loss.
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 go through the statement of comprehensive income. Where
exchange differences result from the translation of foreign currency contingent considerations raised to acquire foreign assets (including equity
investments) they are treated as monetary items. All other exchange differences are dealt with through the statement of comprehensive income.
Earnings per share
Basic earnings per share is calculated by dividing:
Assets, other than shares, held by the Oncimmune Limited's Employee Benefit Trust (EBT) are included in the Group's statement of financial position
under the appropriate heading. Shares in the company held by the EBT are disclosed as a deduction from shareholders’ funds. 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.
•
•
The profit attributable to owners of the company
By the weighted average number of ordinary shares outstanding during the financial year.
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 Director and CFO. The Executive Director and CFO are responsible for allocating the resources and assessing the
performance of the operating segments.
Accounting estimates and judgements
3.
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.
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.
Sources of estimation uncertainty
Government grants
Government grants receivable are recognised at their fair value and are recognised when the group will comply with all attached conditions. The grants
relate to expenditure and are therefore recognised at the point at which the expenditure is incurred that they are intended to compensate. Government
grants received in advance of expenditure are treated as deferred income.
Financial assets
The Group’s financial assets comprise trade and certain other receivables as well as cash and cash equivalents.
Financial assets are recognised when the Group becomes a party to the contractual provisions of the instrument and are recognised at fair value, except
trade receivables which are initially measured at transaction price, and subsequently measured at amortised cost using the effective interest method
less any provision for expected credit losses, 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 expected credit losses is undertaken at least at each statement of financial
position date.
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:
•
Estimated goodwill impairment
Goodwill is tested for impairment at least annually. 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. Goodwill is subsequently reassessed for indications that an impairment loss
previously recognised may no longer exist. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are
separately idenfiable cash inflows from other assets or groups of assets (cash generating units).
•
Impairment of financial assets
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.
62
Oncimmune Annual Report 2020
63
Consolidated financial statements
Notes to the consolidated financial statements
Judgements in applying in accounting policies
•
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.
Segmental information
4.
Management has determined the operating segments based on the reports reviewed by the chief operating 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 additional statement of financial position information is provided on a segmental basis in the
following tables:
Revenue
Class of business
Distribution of testing products
Total revenues
Geographical analysis by destination
United Kingdom
Europe
North America
Rest of the world
Total revenues
Geographical analysis by origin
United Kingdom
Europe
North America
Rest of the world
Total revenues
31 May 2020
31 May 2019
£’000
£’000
509
509
44
201
163
101
509
270
97
142
-
509
171
171
20
6
132
13
171
-
-
171
-
171
Operating segments
As at 31 May 2020
Revenue
Cost of sales
Gross (loss) / profit
Operating loss
Finance (costs) / income - net
Loss before tax
Income tax credit
Loss for the financial year
Operating segments
As at 31 May 2019
Revenue
Cost of sales
Gross loss
Operating loss
Finance (costs) / income - net
Loss before tax
Taxation
Loss for the financial year
EarlyCDT
ImmunoINSIGHTS
Holdings
Consolidated
£’000
397
(498)
(101)
(5,113)
£’000
112
(39)
(73)
(1,174)
£’000
£’000
-
-
-
(2,981)
509
(537)
(28)
(9,268)
(515)
(9,783)
1,324
(8,459)
EarlyCDT
ImmunoINSIGHTS
Holdings
Consolidated
£’000
171
(1,030)
(859)
(6,361)
£’000
£’000
-
-
-
-
-
-
(274)
(1,954)
£’000
171
(1,030)
(859)
(8,589)
41
(8,548)
536
(8,012)
Assets are not reported by business segment.
In the year to 31 May 2020, the Group had one customer (2019: two) who contributed more than 10% of Group revenue individually this customer
contributed 12.8% (2019: 26.6%) of Group revenue.
During the year the company had the following revenue from contracts with customers and other revenue:
The Group derives revenue from the transfer of goods and services over time and at a point in time.
Revenue from contracts with customers
Timing of revenue recognition
At a point in time
Over time
Total revenues
31 May 2020
31 May 2019
£’000
509
362
147
509
£’000
171
171
-
171
64
Oncimmune Annual Report 2020
65
Consolidated financial statements May 2020
May 2019
Note
£’000
£’000
7.
The average number of employees (including Directors) during the year was as follows:
Employees
Notes to the consolidated financial statements
5.
Loss before income tax
Loss before income tax has been arrived at after charging:
Depreciation of property, plant and equipment and right-of-use assets
Amortisation of intangible assets
Research and development
Share based payment expense
Administration expenses
Employee costs (note 7)
Audit and non-audit services:
Fee payable to the company's auditor:
Fee for the audit of the parent company
Fee payable for audit of the subsidiary
Fee payable for audit-related assurance services
Fees payable to the Company’s auditor for other services:
Tax compliance services
Tax advisory services
13,14
12
206
294
1,677
174
8,174
3,858
40
40
6
-
-
70
169
1,500
406
5,873
3,745
69
30
6
6
4
Directors
Lab staff
Sales and administration
The cost of these employees (including directors) during the year was made up as follows:
Wages and salaries
Social security costs
Pension cost
Share based payments
May 2020
May 2019
£’000
£’000
9
38
25
72
10
46
20
76
May 2020
May 2019
£’000
2,969
370
85
174
3,598
£’000
3,133
146
60
406
3,745
Gain on disposal of assets
8.
During the year, the Group sold the US subsidiary’s laboratory assets to Biodesix for a consideration of $1M (£798,000). The gain has been treated as
an exceptional item in the statement of comprehensive income and as such is shown separately within administrative expenses.
The gain recognised on disposal of assets was determined as follows:
Remuneration of key personnel
6.
The Group consider that the Directors of Oncimmune Holdings Plc and Frank Matthew Sunderland Hall, Andrea Murray and Andrew Stewart who are
directors of Oncimmune Ltd and Ron Kirschner to be key personnel.
Salary, fees, bonuses and other short term emoluments
Social security costs
Share based payments expense
Details of Director’s remuneration are disclosed in the Directors’ report.
May 2020
May 2019
£’000
1,052
115
101
1,268
£’000
1,005
27
274
1,306
Selling price
Inventory
Fixed assets
Construction in progress
Deposits
9.
Net finance costs
Interest receivable
Interest and finance charges payable on debt
May 2020
£’000
798
(11)
(128)
(75)
(5)
579
May 2020
May 2019
£’000
111
(626)
(515)
£’000
52
(11)
41
66
Oncimmune Annual Report 2020
67
Consolidated financial statements
Notes to the consolidated financial statements
10.
Income tax credit
Current tax:
Tax received and receivable
Total current tax credit
Deferred income tax
Decrease in deferred tax liabilities
Total deferred tax credit
Tax credit in the period
Factors affecting current tax credit:
May 2020
May 2019
£’000
£’000
1,301
1,301
23
23
1,324
536
536
-
-
536
Goodwill of £1.58M was recognised on the acquisition of Oncimmune Germany GmbH, being the excess of the purchase consideration over the
fair value of net assets acquired and represents key customer relationships, employee knowledge and skills and the acceleration of bringing the
technology to our platform rather than building in-house.
Goodwill arising on business combinations is not amortised but is reviewed for impairment on an annual basis, or more frequently if there are indications
that goodwill may be impaired. Goodwill acquired in a business combination is allocated, at acquisition, to cash generating units (CGUs) that are
expected to benefit from that business combination.
The carrying amount of goodwill relates to the Oncimmune Germany GmbH’s trading activities. This has been tested for impairment during the current
period by comparison with the recoverable amounts of the CGU. Recoverable amounts for the CGU is based on the higher of value in use and fair value
less costs to sell. The recoverable amounts of the CGU have been determined from value in use calculations. These calculations use post-tax cash flow
projections based on financial budgets approved by management covering a five-year period. These cash flows are discounted using a discount rate
of 20% post-tax per annum, calculated by reference to year end data on equity values and interest, dividend and tax rates. The long-term growth of 2%
and discount rate are consistent for all segments on the basis that the business operates in similar markets and are exposed to similar risks. Changes
in income and expenditure are based on past experience and expectations of the future changes in the market. The directors have considered the
sensitivity of the key assumptions, including the discount rate and long-term growth rate, and have concluded that any possible changes they may
be reasonably contemplated in these key assumptions would not result in the value falling below the carrying value of goodwill, given the amount of
headroom available.
The tax assessed on the loss for the period is different to the standard rate of corporation tax in the UK. The differences are explained below:
May 2020
May 2019
12.
Intangible assets
Loss before income tax
Loss for the year multiplied by the standard rate of corporation tax 19% (2019 19%)
Expenses not deductible for tax purposes
Research and development tax credit
Losses carried forward
£’000
(9,783)
(1,859)
337
1,301
1,545
1,324
£’000
(8,548)
(1,624)
32
536
1,592
536
The Group has unrelieved UK tax losses with no expiry date of £23,179,000 (2019: £17,340,000) and unrelieved overseas tax losses with no expiry
date of £54,800,000 (2019: £51,344,800). Deferred tax has not been provided given the uncertainty over the timing of a future reversal. At year end
management have recognised an estimated research and development tax credit of £447,500 as calculated in line with IFRIC 23.
11.
Goodwill
Cost
At 1 June 2019
Additions
At 31 May 2020
Impairment
At 1 June 2019
Impairment
At 31 May 2020
Net book values
At 31 May 2020
At 31 May 2019
68
Goodwill
£’000
1,578
-
1,578
-
-
-
1,578
1,578
Cost
At 31 May 2019
At 31 May 2020
Accumulated amortisation
At 1 June 2019
Charge for the year
At 31 May 2020
Net book values
At 31 May 2020
At 31 May 2019
Internal developments relate to capitalised research and development expenditure.
Internal
developments
Technology
platform
£’000
£’000
849
849
337
156
493
356
512
920
920
-
138
138
782
920
Total
£’000
1,769
1,769
337
294
631
1,138
1,432
Oncimmune Annual Report 2020
69
Consolidated financial statements
Notes to the consolidated financial statements
13.
Property, plant and equipment
15.
Trade and other receivables
Trade receivables
Other debtors
Prepayments
May 2020
May 2019
£’000
£’000
871
822
23
1,716
214
111
24
349
Trade receivables represents amounts due from contracts with customers. At 31 May 2020 trade receivables were stated net of provisions of £1,000
(2019 - £12,000). The remaining balances were considered recoverable on normal trade terms. There is no material difference between the fair value
and the carrying value of these assets. The maximum credit risk exposure at the reporting date equated to the carrying value of trade receivables as
stated net of provisions. Standard payment terms are 30 days net.
16.
Inventories
Diagnostic testing materials
May 2020
May 2019
£’000
174
174
£’000
292
292
No provision was made for inventory at the year end (2019: £nil). During the year, no inventory was written off due to obsolescence. Inventories
expenses through cost of sales during the year were £269,000 (2019: £100,000).
Cash and cash equivalents
17.
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
May 2020
May 2019
£’000
4,240
4,240
£’000
5,358
5,358
Cost
At 1 June 2019
Additions
Disposal of subsidiary assets
Foreign exchange movement
At 31 May 2020
Accumulated depreciation
At 31 May 2019
Charge for the year
Disposal of subsidiary assets
Foreign exchange movement
At 31 May 2020
Net book values
At 31 May 2020
At 31 May 2019
14.
Right-of-use assets
Cost
At 1 June 2019
Additions
At 31 May 2020
Accumulated depreciation
At 1 June 2019
Charge for the year
At 31 May 2020
Net book values
At 31 May 2020
At 31 May 2019
Laboratory
equipment
Computer
equipment
Office
equipment
£’000
£’000
£’000
1,298
186
(415)
21
1,090
908
64
(212)
8
768
322
390
40
36
-
-
76
25
8
-
-
33
43
15
49
14
-
-
63
32
6
-
-
38
25
17
Office
equipment
Land and
buildings
£’000
£’000
-
97
97
-
10
10
87
-
-
1,013
1,013
-
118
118
895
-
Total
£’000
1,387
236
(415)
21
1,229
965
78
(212)
8
839
390
422
Total
£’000
-
1,110
1,110
-
128
128
982
-
70
Oncimmune Annual Report 2020
71
Consolidated financial statements
Notes to the consolidated financial statements
18.
Trade and other payables
Trade payables
Other creditors
Accruals
19.
Other liabilties
Contingent consideration – current
Other contingent liabilities – current
Contingent consideration – non current
Other contingent liabilities – non current
May 2020
May 2019
£’000
420
54
563
1,037
£’000
572
96
343
1,011
May 2020
May 2019
£’000
£’000
181
247
428
-
-
-
-
-
-
148
202
350
The remaining settlement to the former shareholders of Oncimmune Germany GmbH (formerly Protagen AG) is due to be settled in March 2021 via the
issue of shares, until then it is available to offset any warranty and indemnity claims under the acquisition agreement.The Directors have assessed that
this criteria and accordingly consideration due with a fair value of £181,000 has been recognised as a liability. In addition the Group agreed to settle
certain pre-existing debt of Oncimmune Germany GmbH (formerly Protagen AG), subject to the same criteria, these debts with a fair value of £95,000
has been recognised within other contingent liabilities.
In addition the Company agreed to settle a liability to two former directors, subject to the criteria above, with a fair value of £152,000 payable via the
issue of Ordinary shares due to the partners of Protogen AG recognised on acquisition.
20.
Borrowings
Loan payable – current
Loan payable – non current
May 2020
May 2019
£’000
1,140
6,147
7,287
£’000
-
-
-
During the year, the Group entered into a €8,500,000 credit facility with IPF Management SA. This facility is a four-year term repayable on 30 June
2023, interest-only for the first 12 months, with principal repayments commencing thereafter. The facility includes a financial covenant obligation
which requires the Group (on a quarterly basis for the term of the facility) to be able to demonstrate that it holds a minimum amount of cash equal
to the next six months’ of operating cash flow, including the amounts required to service the credit facility. In order to monitor compliance with this
financial covenant, the Board prepares monthly financial accounts including a calculation of covenant compliance for the following 12 months. In the
event that there is a delay or a reduction in forecast revenues or cash receipts, the Group has also identified costs within the business which could be
reduced within a relatively short time period in order to ensure the Group’s ongoing compliance with the covenant. £626,000 has been recognised in
the statement of comprehensive income in relation to finance expenses. The facility includes a floating charge over the assets of Oncimmune Holding
plc and Oncimmune Ltd.
Leases
21.
Amounts recognised in the statement of financial position
Right-of-use assets
Details of the Right-of-use assets held at the year end can be found in note 14, the land and building additions relate to leased properties that do not
meet the definition of investment property.
Lease liabilities
Current
Non-current
Future minimum lease payments as at 31 May 2020 are as follows:
Not later than one year
Later than one year and not later than five years
Later than five years
Total gross payments
Impact of finance expenses
Carrying amount of liability
31 May 2020
1 Jun 2019
£’000
£’000
227
762
989
234
832
-
1,066
(77)
989
-
-
-
-
-
-
-
-
-
Lease liabilities have been recognised on the incremental borrowing rate for property and rate implicit in lease for equipment. Property and equipment
are leased and enable the business to perform its activities.
Amounts recognised in the statement of comprehensive income
2020 – Leases under IFRS 16
Depreciation charge
Interest on lease liabilities
Rental payments with less than 12 months
2019 – Operating leases under IAS 17
Rental expense
Amounts recognised in the statement of cash flows
2020 – Leases under IFRS 16
Principal elements of lease payments
Interest on lease liabilities
Rental payments with less than 12 months
2019 – Operating leases under IAS 17
Rental expense
Total
£’000
(128)
(23)
(483)
(383)
Total
£’000
(144)
(23)
(483)
(383)
72
Oncimmune Annual Report 2020
73
Consolidated financial statements Notes to the consolidated financial statements
22.
Share capital
Authorised:
Ordinary shares of £0.01 each
Allotted, and fully paid:
Ordinary shares of £0.01 each
May 2020
May 2019
Shares
£
Shares
£
64,102,560
-
63,500,047
63,500,047
641,025
641,025
635,000
635,000
64,102,560
-
63,250,217
63,250,217
641,025
641,025
632,502
632,502
23.
The Group has granted options to certain directors and employees in respect of Ordinary shares.
Share based payments
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.
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.
•
•
•
74
In November 2015, the two existing option schemes were rolled over into the 2015 Oncimmune Holdings Scheme on the terms set out above.
May 2020
May 2019
Number of options
Number of options*
Options in grant
4,090,934
4,855,171
Weighted average exercise price
£0.82
£0.91
Weighted average life remaining in years
4
5
*Share options issued by Oncimmune Limited
The fair value of options granted by the Company has been arrived at using the Black-Scholes model. The assumptions inherent in the use of this
model are as follows:
Volatility
Dividend yield
Risk free rate
Discount factors
May 2020
Average
28.5%
0%
0.8%
15%
May 2019
Average
20%
0%
3%
10%
•
•
•
•
•
The option life is assumed to be at the end of the allowed period of exercise
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 after reviewing the history of the Company’s share price.
At the year end the Group had the following options at the weighted average exercise prices (WAEP) shown:
Expiry date
Outstanding at 1 June (2019, 2018)
Granted
Lapsed
Modified
Exercised
WAEP
May 2020
WAEP
0.91
0.76
1.29
Number
4,855,171
553,552
(1,317,789)
-
-
0.86
1.16
1.29
May 2019
Number
4,391,765
581,695
(118,289)
-
-
Outstanding at 31 May (2020, 2019)
0.82
4,090,934
0.91
4,855,171
Weighted average remaining contractual life in years
4
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 £174,000 (2019: £406,000) related to equity-settled share based
payment transactions during the year.
Exercise prices for share options range between £0.0002 - £2.6546 per option. During the year the share price ranged from £03.550 - £1.1050.
Oncimmune Annual Report 2020
75
Consolidated financial statements Notes to the consolidated financial statements
The Group has warrants outstanding as follows, over the £0.01 Ordinary Shares:
Outstanding at 1 June 2019:
Directors
Harbert European Growth Fund
Zeus Capital Investment Ltd
Granted in the year – IPF Investco II Sarl
Outstanding at 31 May 2020:
Grant date
Number
Subscription price
November 2015
May 2016
May 2016
September 2019
988,750
282,515
1,041,314
2,036,015
4,348,594
£0.01
£0.66368
£1.30
£0.87091
Related party transactions
24.
During the year ended 31 May 2020, the University of Nottingham - a shareholder, provided facilities and services to enable the Company to undertake
research. Geoffrey Hamilton-Fairley – a director, provided consultancy services. Wisteria provided services in the year but are no longer a related party
as Andrew Millet ceased to be a director.
Geoffrey Hamilton-Fairley
Wisteria
University of Nottingham
May 2020
May 2019
May 2020
May 2019
May 2020
May 2019
£’000
£’000
£’000
£’000
£’000
£’000
Non-current financial liabilities
At fair value - Other contingent liabilities
At fair value - Contingent consideration
At amortised cost - Borrowings
Total non-current financial liabilities
Non-financial liabilities
Total non-current liabilities
May 2020
May 2019
Note
£’000
£’000
19
20
-
-
6,147
6,147
895
7,042
202
148
-
350
156
506
Liabilities recognised at fair value relate to amounts due to be issued in the company’s shares which do meet the classification of equity. These amounts
are valued based on the Company’s share price.
26.
This sets out an analysis of net debt and the movements in net debt for each of the years presented.
Net debt reconciliation
Costs incurred
Outstanding at year end
117
-
144
-
25.
Categories of financial instruments
Current financial assets
At amortised cost - Trade and other receivables
At amortised cost - Cash and cash equivalents
Total financial assets
Non-financial assets
Total
Current financial liabilities
At amortised cost - Payables
At fair value - Other contingent liabilities
At fair value - Contingent consideration
At amortised cost - Borrowings
Total current financial liabilities
Non-financial current liabilities
Total current liabilities
-
-
Note
15
17
18
19
20
51
4
182
2
195
2
Net debt
Cash and cash equivalents
Borrowings – non-current liability (fixed interest rates)
Borrowings – current liability (fixed interest rates)
May 2020
May 2019
Lease liability – non-current liability
£’000
£’000
Lease liability – current liability
May 2020
May 2019
4,240
(6,147)
(1,140)
(762)
(227)
5,358
-
-
-
-
Net debt
(4,036)
5,358
Loss per share
27.
The basic earnings 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 as the entity is loss making.
Earnings
Loss on ordinary activities for the purposes of basic and fully diluted loss per share (£'000)
(8,459)
(8,012)
Number of shares
Weighted average number of shares for calculating basic and fully diluted earnings per share
63,300,183
61,782,266
May 2020
May 2019
Loss per share
Basic and fully diluted loss per share
13.36p
12.97p
1,693
4,240
5,933
4,382
10,315
1,037
247
181
1,140
2,605
855
3,460
325
5,358
5,683
4,021
9,704
1,060
-
-
-
1,060
-
1,060
76
Oncimmune Annual Report 2020
77
Consolidated financial statements Notes to the consolidated financial statements
28.
The Group’s activities expose it to a variety of financial risks: market risk (foreign exchange rate and interest rate risk), credit risk and liquidity risk.
Financial risk management
Market risk - Foreign exchange risk
The Group has exposure to market risk – foreign exchange risk arising from future commercial transactions and recognised financial assets and
liabilities not denominated in Sterling. In the years to 31 May 2020 and 31 May 2019 over 64% of the Group's income by destination was into the North
American and European markets and denominated in US dollars and Euros respectively. The Group's income stream is exposed to fluctuations in the
US dollar exchange rate and the Euro exchange rate against Sterling and this is measured via cash flow forecasting and sensitivity analysis.
In addition borrowings are denominated in Euros and the Group therefore is exposed to foreign exchange risk on the interest, which is at a fixed rate
and also the repayments.
These risks are measured via cash flow forecasting and sensitivity analysis. The risk management is predominantly controlled by policies approved
by the board of directors. Market risks are identified and evaluated in close co-operation with the Group’s operating units. The board provides written
pinciples for overall risk management as well as policies covering specific areas.
In addition the Group carries contingent consideration classified within other liabiltities, this arises from the remaining settlement to the former
shareholders of Oncimmune Germany GmbH (formerly Protagen AG) denominated in Euros. This contingent consideration is payable in a tiered and
capped number of shares and therefore the directors consider that no risk arises in respect of future cash flows.
Market risk - Interest rate risk
Borrowings are denominated in Euros and the Group interest is at a fixed rate and therefore the directors consider 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 arises from cash and cash equivalents, and 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 banks with a minimum rating of ‘A’. The credit value of customers
is assessed, taking into account its financial position, past experience and other factors. The compliance with credit limits by customers is regularly
monitored by line management. and the aggregate financial exposure continuously monitored. The maximum exposure to credit risk is the value of
the outstanding amount of trade receivables and cash and cash equivalents The management do not consider that there is any concentration of risk
within either cash and cash equivalents, trade or other receivables.
Liquidity risk
Prudent liquidity risk management implies management maintaining sufficient cash and the availability of funding through committed credit facilitities
to meet obligations when due. At the year end the group had net debt of £4,036,000 (2019: Net cash £5,358,000). During the year the Group arranged
a €8.5M credit facility with IPF Management SA. In October 2020, this facility has been extended by €6.0M with the first €3.0M tranche being drawn
down in October 2020. The remaining €3.0M is available for draw down until 30 June 2021 subject to the attainment of certain commercial milestones.
Each tranche of the total loan is repayable over a four-year term, interest-only for the first 12 months, with principal repayments commencing thereafter.
The loan can be repaid early. The facility includes a financial covenant obligation which requires the Group (on a quarterly basis for the term of the
facility to be able to demonstrate that it holds a minimum amount of cash equal to the next nine months of operating cash flow, including the amounts
required to service the credit facility. In order to monitor compliance with this financial covenant, the Board prepares monthly financial accounts
including a calculation of covenant compliance for the following 12 months.
Trade and other payables are monitored as part of normal management routine.
Contingent consideration and other liabilities mature according to the following schedule:
2020
Trade payables
Other statutory liabilities
Other creditors
Accruals
Contract liabilities
Other loans
Contingent consideration
Lease liability
Borrowings
Less than
six months
Within six to
twelve months
£’000
£’000
Within
one year
£’000
Two to five years
£’000
420
65
54
563
570
-
-
57
375
-
-
-
-
-
247
181
57
765
-
-
-
-
-
-
-
-
-
-
-
-
-
-
113
2,219
762
3,928
2019
Trade payables
Other creditors
Accruals
Other loans
Contingent consideration
Capital risk management
The Group’s capital management objectives are:
Within
one year
£’000
572
96
343
-
125
Two to five years
£’000
-
-
-
202
147
•
•
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.
Total equity
Cash and cash equivalents
Capital
Total financing
Other contingent liabilities
Contingent consideration
Borrowings
Overall financing
May 2020
May 2019
£’000
194
4,240
4,406
247
181
7,287
7,715
£’000
7,865
5,358
13,223
202
148
-
350
Capital to overall financing ratio
57.1%
3,778.0%
29.
Deferred tax
As at 1 June
Movement on recognition of intangibles on acquisition
As at 31 May
May 2020
May 2019
£’000
£’000
156
(23)
133
-
156
156
Deferred tax relates to the tax charge in movement in the value of the intangible asset arising on the purchase of Protagen diagnostics in the year.
78
Oncimmune Annual Report 2020
79
Consolidated financial statements Events after the end of the reporting period
30.
An extension to the IPF debt of €6M has been agreed in October 2020. €3M has been drawn down. The remaining €3M is free to be drawn before 30
June 2021 subject to two conditions.
• Management accounts for the 12 months to 31 May 2021 showing minimum revenues of £5M; and
•
The Company issuing an announcement that it has commenced EarlyCDT Lung tests into the NHS.
The extension to the loan has no financial impact on the statement of financial position as at 31 May 2020.
Subsidiaries consolidated
31.
The subsidiaries included in the consolidated financial statements of the Group are detailed below. No subsidiary undertakings have been excluded
from the consolidation.
Company
Holding
Country of
incorporation
Class of share
capital held
Direct
%
Indirect
%
Oncimmune Limited
Medicity – D6 Building, 1 Thane Road, Nottingham, UK NG90 6BH
United Kingdom
Ordinary
100
Oncimmune (USA) LLC
112 SW 7th Street Suite 3C, Topeka, KS 66603
United States of
America
Ordinary
-
-
100
Oncimmune Germany GmbH
Otto-Hahn-Str 15, 44227 Dortmund Germany
Germany
Ordinary
100
-
Ultimate controlling party
32.
There is no ultimate controlling party of the Company.
“I’m really proud to have been a part of the future of what is hopefully
going to be a national lung cancer screening programme.”
Pauline, Perth.
Pauline’s role as Clinical Trials Manager was to coordinate over one hundred staff involved in the ECLS
trial: doctors, nurses, data managers, statisticians, administrators and lab technicians.
Photographed in Dunkeld where Pauline frequently visits with her family on the weekends.
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Oncimmune Annual Report 2020
81
Consolidated financial statements Financial statements of the Company
Company statement of financial position
For the year ended 31 May 2020
Notes
3
4
5
6
6
8
Fixed assets
Investment
Current assets
Debtors
Cash
Creditors: amounts falling due within one year
Net current assets
Total assets less current liabilities
Creditors: amounts falling due after one year
Total assets less total liabilities
Capital and reserves
Called up share capital
Share premium account
Other reserves
Merger reserve
Profit and loss reserve
Shareholders’ funds
Company statement of changes in equity
For the year ended 31 May 2020
Share
capital
Share
premium
Other
reserves
Merger
reserve
Retained
earnings
Total
31 May
2020
£’000
2,449
2,449
11,458
6
11,464
31 May
2019
Restated
£’000
2,797
2,797
24,254
53
24,307
As at 1 June 2018 (restated)
Loss for the year (restated)
Total comprehensive income (restated)
Transactions with owners:
Shares issued on debt settlement
Shares issued during the year
Share option charge
£'000
£'000
616
30,952
£'000
1,151
-
-
6
11
-
-
-
430
-
-
(1,217)
(561)
As at 31 May 2019 (restated)
633
31,382
10,247
23,746
12,696
26,543
Loss for the year
Total comprehensive income
Transactions with owners:
(70)
(350_
Shares issued in relation to prior year acquisition
12,626
26,193
Share warrants issued
Share option charge
-
-
2
-
-
-
-
77
-
-
£'000
£'000
£'000
-
-
-
-
949
-
949
-
-
(6,709)
26,010
(2,183)
(2,183)
(2,183)
(2,183)
-
-
-
631
1,329
406
(8,892)
26,193
(13,883)
(13,883)
(13,883)
(13,883)
-
-
195
369
406
2,121
-
-
(563)
146
338
142
174
-
-
-
-
-
142
174
As at 31 May 2020
635
31,459
1,874
1,095
(22,437)
12,626
The accompanying notes on pages 84 to 90 form an integral part of the company financial statements.
635
31,459
1,874
1,095
(22,437)
633
31,382
2,121
949
(8,892)
12,626
26,193
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 2020 was £13,883,000 (2019: £2,183,000).
The accompanying notes on pages 84 to 90 form an integral part of the company financial statements.
The parent company financial statements were approved by the board on 6th November 2020.
Dr Adam M Hill
Director and Chief Executive Officer
82
Oncimmune Annual Report 2020
83
Parent Company financial statements
Notes to the Company financial statements
1.
The principal accounting policies applied in the preparation of the Company’s financial statements are set out below.
Accounting policies
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
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 statement of financial position 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.
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:
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.
•
•
•
•
•
•
•
•
•
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; and
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.
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).
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. 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.
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 there 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 at this point in time.
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 comprise trade and certain other receivables as well as cash and cash equivalents.
Financial assets are recognised when the Company 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 statement of financial position date
whether or not there is objective evidence that a financial asset or a group of financial assets is impaired.
Financial liabilities
The Company’s financial liabilities comprise contingent consideration 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 contingent considerations
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. The contingent consideration and
the contingent liability are measured on the fair value of the shares that are contingent.
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.
84
Oncimmune Annual Report 2020
85
Parent Company financial statements Notes to the Company financial statements
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).
3.
Investments
At 31 May 2019
Impairment
At 31 May 2020
Investments in subsidiary
£’000
2,797
(348)
2,449
Accounting estimates and judgements
2.
The preparation of financial statements under FRS101 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
As at 31 May 2020, the Company has gross amount due from its subsidiary Oncimmune Limited totalling £22,523,000 (2019: £26,282,000). This
amount is repayable on demand and does not incur interest. Management have assessed the recoverability of this loan as at 31 May 2020 and found
that given the resources available to Oncimmune Limited it would be unable to repay the full amount on demand.
In accordance with the requirements of IFRS 9 “Financial Instruments”, management have assessed the credit risk of the loans to subsidiary undertakings
and have evaluated how this has changed since the prior year. In arriving at an expected credit loss on loans to subsidiary undertakings, management
have performed an unbiased probability-weighted calculation, evaluating a range of possible outcomes and incorporating the time value of money.
Management estimated four scenarios, a base case scenario based on the discounted cashflows of the business to determine a recoverable amount
and three further scenarios, two upside and one downside. Each scenario was based on assumptions at the year-end date, taking into account forward-
looking information and the macroeconomic environment. Each scenario was given a probability weighting percentage in determining the overall
recoverable amount. The change in the expected credit loss at the year end reflects a more cautious approach to forecasting in light of the current
economic outlook.
Details of subsidiary undertakings as at 31 May 2020 are as follows:
Company
Holding
Country of
incorporation
Class of share
capital held
Direct
%
Indirect
%
Oncimmune Limited
Medicity – D6 Building, 1 Thane Road, Nottingham, UK NG90 6BH
United Kingdom
Ordinary
100
Oncimmune (USA) LLC
112 SW 7th Street Suite 3C, Topeka, KS 66603
United States
of America
Ordinary
-
Oncimmune Germany GmbH
Otto-Hahn-Str 15, 44227 Dortmund Germany
Germany
Ordinary
100
-
100
-
Loss allowance as at 1 June 2019
Changes in models / risk parameters
Loss allowance as at 31 May 2020
Gross carrying amount as at 1 June 2019
Other changes
Gross carrying amount as at 31 May 2020
Credit-impaired financial assets
(lifetime expected credit losses)
£’000
2,173
10,244
12,417
4.
Trade and other receivables
Loan to subsidiary undertakings
Other debtors
May 2020
As restated
May 2019
£’000
11,297
161
11,458
£’000
24,109
145
24,254
Credit-impaired financial assets
(lifetime expected credit losses)
An impairment of £10,244,000 has been recognised on the balance due from Oncimmune Ltd. At 31 May 2020 there are no further expected credit
losses. There is no material difference between the fair value and the carrrying value of these assets. The nature of the loan to the subsidiary undertaking
is considered to be part of the investment in that subsidiary. The assessment of impairment has been carried out under IFRS 9 using the expected credit
loss model. There are no specific terms relating to the loan to subsidiary undertakings.
£’000
26,282
(2,568)
23,714
5.
Cash and cash equivalents
Cash
May 2020
May 2019
£’000
6
£’000
53
86
Oncimmune Annual Report 2020
87
Parent Company financial statements Notes to the Company financial statements
6.
Trade and other payables
Creditors: amounts falling due within one year
Trade payables
Amounts owed to group undertakings
Other creditors
Accruals
Contingent consideration – current
Other contingent liabilities – current
Right of use lease liability (see note 8)
Creditors: amounts falling due after more than one year
Contingent consideration – non current
Other contingent liabilities – non current
Right of use lease liability (see note 8)
May 2020
£’000
May 2019
£’000
Leases
7.
Amounts recognised in the statement of financial position
Right-of-use assets
The asset additions associated with the following leases are recognised within the subsidiary Oncimmune Limited.
The lease is for equipment for use by the subsidiary in its business activities.
177
455
43
97
181
247
17
1,217
-
-
70
70
225
267
61
8
-
-
-
561
148
202
-
350
Lease liabilities
Current
Non-current
Future minimum lease payments as at 31 May 2020 are as follows:
Not later than one year
Later than one year and not later than five years
The amounts owed to group undetakings is expenses incurred for Oncimmune Holdings Plc by Oncimmune (USA) LLC. There are no specific terms
relating to this loan.
The contingent liabilities arose as a result of a business combination. The remaining settlement on the acquisition of Protagen AG is dependent on
certain conditions and performance targets being met. The Directors have assessed that these criteria will be met and the remaining amount with a
fair value of £181,000 has been recognised as a liability . In addition the Company agreed to settle certain pre-existing debt of Protagen AG with a fair
value of £95,000 this has been recognised within other contingent liabilities.
Later than five years
Total gross payments
Impact of finance expenses
In addition the Company agreed to settle a liability to two former directors with a fair value of £152,000 payable via the issue of Ordinary shares due to
the partners of Protagen AG recognised on acquisition. This amount is contingent on certain conditions being met.
Carrying amount of liability
Amounts recognised in the statement of comprehensive income
2020 – Leases under IFRS 16
Interest on lease liabilities
2019 – Operating leases under IAS 17
Rental expense
31 May 2020
1 Jun 2019
£’000
£’000
17
70
87
24
80
-
104
(17)
87
-
-
-
-
-
-
-
-
-
Total
£’000
(6)
-
88
Oncimmune Annual Report 2020
89
Parent Company financial statements
Notes to the Company financial statements
8.
Share capital
Authorised:
May 2020
May 2019
Shares
£
Shares
£
Ordinary shares of £0.01 each
64,102,560
641,025
64,102,560
641,025
Allotted, and fully paid:
Ordinary shares of £0.01 each
63,500,047
635,000
63,250,217
632,502
9.
Employee remuneration
Share based payments expense
Salary, fees, bonuses and other short term emoluments
Social security costs
May 2020
May 2019
£’000
174
1,052
115
1,341
£’000
338
975
21
1,334
Prior period restatement
10.
The prior period restatement of Loans to subsidiary undertakings is in relation to the application of an expected credit loss model to the interest-free,
repayable on demand loan from one of the company’s trading subsidiaries. The 31 May 2019 Loans to subsidiary undertakings has therefore reduced
by £2,173,000 to £24,109,000 and the prior year loss for the parent company has increased by £229,000 to £2,183,000. A debit has been recognised
to the 1 June 2018 profit and loss reserves of £1,945,000, resulting in a restated balance of £6,709,000. A debit to the 31 May 2019 closing profit and
loss reserves has been recorded resulting in a change of £2,173,000 to £8,892,000.
“Lung cancer has such a horrible stigma about it, and that was probably
our biggest obstacle. Some people think, ‘oh, if I’ve got it, I deserve it.’
But I think people make all sorts of mistakes in life and with smoking
they probably made the mistake very young, taking up the habit because
it looked cool, or because they weren’t aware of the dangers and then
they got hooked. So we had to work hard to remove that guilt. At the
start of the trial, many of the participants were still smoking and by the
end, the majority were saying they were trying to give up.”
Anita, Kingennie.
Anita was the lead nurse who managed the ECLS trial and co-ordinated it for NHS Tayside. She was a key
part of the recruitment drive in shopping centres, supermarket car parks and even at football matches.
Photographed in Anita’s home where she lives with her husband, two children and her puppy Milly.
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Oncimmune Annual Report 2020
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Parent Company financial statements Company information
Company registration number
09818395
Registered office
MediCity – D6 Building
1 Thane Road
Nottingham NG90 6BH
Website
www.oncimmune.com
Directors
Meinhard Schmidt – Non-Executive Chairman
Geoffrey Hamilton-Fairley – Non-Executive Vice Chairman
(resigned 4 June 2020)
Dr Adam M Hill – Chief Executive Officer
Timothy Bunting – Non-Executive Director
Richard Sharp – Non-Executive Director
(resigned 4 May 2020)
Dr Cheung To – Non-Executive Director
Andrew Unitt – Non-Executive Director
Julian Hirst – Non-Executive Director
(resigned 4 June 2020)
Carsten Schroeder – Non-Executive Director
(resigned 4 June 2020)
Dr Annalisa Jenkins – Non-Executive Director
Company Secretary
Ron Kirschner (appointed 20 April 2020)
Andrew Stewart (resigned 20 April 2020)
Nominated adviser
Zeus Capital Limited
10 Old Burlington Street, London W1S 3AG
Joint Brokers
Zeus Capital Limited
10 Old Burlington Street, London W1S 3AG
N+1 Singer
1 Bartholomew Lane, London EC2N 2AX
WG Partners
85 Gresham Street, London EC2V 7NQ
Financial PR
FTI Consulting
200 Aldersgate, Aldersgate Street, London EC1A 4HD
Registrars
Link Asset Services
65 Gresham Street, London EC2V 7NQ
Auditor
Grant Thornton UK LLP
Chartered Accountants
Statutory Auditor
Regent House, 80 Regent Road, Leicester LE1 7NH
92
www.oncimmune.com
www.extratime.gallery
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Oncimmune Annual Report 2020