2024 ANNUAL REPORT
Chronic Kidney Disease
Preventative Medicine
FDA De Novo Marketing Authorization.
Real World Evidence.
Increasing Reimbursement.
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Index
STRATEGIC REPORT
3-19
CEO’s Statement
3
Company Overview
5
Operational and Financial Highlights
6
Product Overview and Strategy
7
Financial Review
11
Risk Management Approach
13
Section 172 Statement
17
Corporate Social Responsibility Review
19
CORPORATE GOVERNANCE
20-52
Board of Directors
20
Directors’ Report
22
Corporate Governance Statement
27
Directors’ Remuneration Report and Policy
30
Audit Committee Report
46
Independent Auditors’ Report
48
FINANCIAL STATEMENTS
53-83
Consolidated Income Statement
53
Consolidated Statement of Comprehensive Income
54
Consolidated and Company’s Statements of Financial Position
55
Consolidated and Company’s Statements of Cash Flows
57
Consolidated Statement of Changes in Equity
57
Company’s Statement of Changes in Equity
58
Notes to the Financial Statements
60
Additional Financial Information
82
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STRATEGIC REPORT
CEO Statement
During the prior year we have taken considerable and painful steps to reorganize our Company and complete the transition
from a development-phase organization to a commercial growth-phase business. With substantive reductions in operating
expenses, restructuring of debt and payable obligations, and in November, the completion of a fresh institutional funding,
we now believe that the company will be able to achieve profitability in 2 years.
With the positive June Medicare coverage decision, kidneyintelX.dkd has just completed the trifecta of FDA approval,
insurance reimbursement and guidelines recommendation. kidneyintelX.dkd is now the only regulated and reimbursed
test available for early prognosis, a cornerstone in understanding who is at risk and who to treat with lifetime drug therapy
for some 14 million patients with diabetic kidney disease in the United States.
In the United States, over 80% of our $4.5 trillion national healthcare budget is spent on chronic disease. Yet the U.S. has
one of the poorest life-expectancies in the developed world – a U.S. male can expect to live 10 years less than in Japan or
Switzerland. Chronic kidney disease, the third fastest-growing cause of death globally, is one of the principal drivers of
this unsustainable dynamic.
The great news is that new drug therapies such as SGLT2 inhibitors and GLP1 agonists are now available for individuals
with diabetes and kidney disease and have dramatically changed the game. However, we simply cannot afford to blanket
prescribe these expensive drugs across such large populations at costs approaching $30,000 per year for life.1
kidneyintelX.dkd opens the door to heavily vetted prognostic risk assessment to front-line doctors making critical choices
during the short patient visit times allotted. Indeed, world experts, including in the 2024 clinical guidelines2, are now
strongly advocating prognosis to enable a personalized approach to treatment and patient identification. And to put this in
perspective, kidneyintelX.dkd prognosis can be executed for less than one month’s worth of drug therapy cost.
After a multi-year process, the decision in May 2024 by Medicare contractor National Government Services to provide
full coverage for kidneyintelX.dkd at $950 per reportable result, is now allowing for settlement of billed tests in under 30
days and an increase to our realized average sales price. Achieving Medicare insurance coverage represents a key
commercial milestone given that Medicare and its related insurance plans make up the majority of our addressable patient
market in the United States.
We are continuing to perfect the commercial implementation of kidneyintelX.dkd into doctor practice groups using the
electronic medical record system to automatically identify eligible patients for testing , accompanied by a doctor best
practice alert. Our sales team is now able to walk into this message-integrated environment with doctors already alerted to
at-risk patients with the actionable benefits of kidneyintelX.dkd. We are seeing the benefits of this integrated approach to
order generation this quarter and expect to leverage this model with additional large group practices in calendar 2025.
The Environment is Heating Up for kidneyintelX.dkd
Chronic disease and preventative medicine are now taking center stage with regard to policy on both sides of the Atlantic
to address unsustainable healthcare costs.
The return of a Trump Administration has already brought the discussion on chronic disease management policy to the
forefront. U.S. Health and Human Services Secretary nominee Robert Kennedy has pledged to “end the chronic disease
epidemic in the country”. The KidneyIntelX prognostic program benefited greatly from the previous Trump Administration’s
chronic disease regulatory and insurance policy environment. We also note a parallel policy discussion emerging in the
United Kingdom with Health Secretary, Wes Streeting’s chronic disease platform for revival of NHS. We would expect
kidneyintelX.dkd, to have renewed opportunities to support both governments’ preventative medicine goals.
1 Clinical practice is moving towards the “four pillars” of diabetic kidney disease therapeutic management which includes
combination use of ACEi/ARB, SGLT2 Inhibitors, Finerenone and GLP1 RAs. Estimated cost of SGLT2 Inhibitors,
Finerenone and GLP1 RA are $12k, $7.9K and $11.6K annually.
2 https://kdigo.org/wp-content/uploads/2024/03/KDIGO-2024-CKD-Guideline.pdf
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Also, of strategic importance to the kidneyintelX.dkd top line was New York Governor Kathy Hochul’s signing into law of
Senate Bill1196a/Assembly Bill 1673a (https://www.governor.ny.gov/news/governor-hochul-takes-action-protect-public-
health-signs- legislative-package-support-patients) which requires all insurance companies, including state Medicaid, to cover
comprehensive diagnostic biomarker testing for patients beginning January 1st, 2025. While we will remain cautious about
actual government implementation dates, this type of legislation has received broad bi-partisan support and can have a
significant positive impact on kidneyintelX.dkd adoption, average testing sales price and revenue recognition. Other states in
our commercial focus are also in process of enacting similar legislation and we will provide updates as they become available.
Reorganized for Expense Reduction and Commercial Execution
In Fiscal year 2024, we completed a substantial reorganization of our business and raised enough money to secure the run
through profitability. Our execution was painful, wholly necessary and only available to us now that we have achieved the
regulatory, outcomes data and reimbursement trifecta. The Company is now devoting the significant majority of resources to
our sales program with much less cash required to operate. Two big moves below have allowed us to target a cash burn rate
of £560,000 or less per month by the end of FY25 (June).
Debt and Payables Reduction
Post year end, we have successfully renegotiated the terms of our £8.7 million amortizing senior convertible loan notes.
We have improved our accounts payable situation and negotiated with other accounts payable creditors to reduce or write-
off their balances. The various actions that we’ve taken will substantially reduce the Company’s monthly cash burn and
we estimate that this will remove more than 80% of the total forecasted cash obligations of the Company over the next
three years (approximately £485,000 per month).
Transfer of U.S. Trading to OTCQB and Re-qualification of Foreign Private Issuer Status
Having considered the benefits versus the costs of maintaining the Nasdaq listing, we have decided to transition U.S. trading
of our ADS securities to the OTCQB ® Venture Market, which is operated by OTC Markets Group, from the NASDAQ
Global Market on October 7th. In addition, at our next testing date for Foreign Private Issuer (“FPI”) status, the Company
expects to qualify as an FPI. We anticipate that transferring the trading to OTCQB and re-acquisition of FPI status will
provide significant savings of up to £1.9 million p.a.
Financing
Post year end, the Company raised an additional £11.9 million gross with strong institutional demand that exceeded our initial
funding target. Inside management was an important investment player, and we received long-term cornerstones from both
large UK and US institutions.
Board Changes
It is with great pleasure that Renalytix has secured Julian Baines MBE as our new Executive Chairman. Julian was formerly
the Non-Executive Chairman of Renalytix from March 2018 to June 2020. I am also delighted Christopher Mills, our long-
serving Chairman will continue on the Board as a Non-Executive Director of the Company.
Thank you for your continued confidence.
James R. McCullough
Chief Executive Officer
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Company Overview
PIONEERING NEXT-GENERATION TECHNOLOGY SOLUTIONS FOR KIDNEY HEALTH
Renalytix is the global founder and leader in the new field of bioprognosis™ for kidney health. The Company has engineered
a new solution that enables early-stage chronic kidney disease progression risk assessment. The Company’s lead service,
kidneyintelX.dkd, has been granted Breakthrough Designation by the U.S. Food and Drug Administration (FDA) and is
designed to help make significant improvements in kidney disease prognosis, transplant management, clinical care, patient
stratification for drug clinical trials, and drug target discovery.
Renalytix is focused on optimizing clinical management of kidney disease to drive improved patient outcomes and lower
healthcare costs. KidneyIntelX, our first-in-class in vitro diagnostic platform, employs a proprietary algorithm that combines
diverse data inputs, including validated blood-based biomarkers, inherited genetics and personalized patient data from electronic
health record, or EHR, systems, to generate a unique patient risk score. This patient risk score enables prediction of rapid
progressive kidney function decline in chronic kidney disease, or CKD, allowing physicians and healthcare systems to optimize
the allocation of treatments and clinical resources to patients at highest risk.
ON A MISSION TO COMBAT A DEVASTATING AND COSTLY DISEASE
Kidney disease is a public health epidemic affecting over 850 million people globally. Managing a CKD population of this scale
and the associated healthcare spending presents a unique healthcare system challenge, requiring a solution that provides a clearer
understanding of clinical risk tied to specific guideline-driven clinical recommendations. The ability to predict which patients
will experience progressive kidney function decline, which includes rapid kidney function decline, or RKFD, sustained
significant decline in kidney function, kidney failure, initiation of long-term dialysis or kidney transplant, is critical to changing
patient outcomes and health economics. Current methods for risk stratification of patients with CKD lack sufficient precision
in predicting progressive kidney function decline, especially at earlier stages of the disease. This can exacerbate the occurrence
of unexpected and expensive clinical events. In fact, up to 38% of patients with CKD initiate dialysis with little or no prior
clinical specialist consultation, and up to 63% of patients with CKD initiate dialysis in an unplanned fashion with a central
venous catheter and/or during emergency hospitalization, which we refer to as “dialysis crash.” This highlights the need for an
early mechanism to identify potential instances of rapidly progressing CKD before it becomes critical to the patient’s health
and costly to healthcare providers.
We have now validated KidneyIntelX in multiple distinct studies, involving specimens from thousands of patients with DKD.
In all studies, KidneyIntelX has demonstrated the ability to more accurately identify which patients would experience rapid
progressive kidney function decline over current clinical practice. We believe early risk stratification, using advanced
technology implemented in partnership with healthcare systems and insurance payors, can help support a fundamental shift
towards optimal treatment for the over 850 million people suffering from kidney disease worldwide.
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Operational and Financial Highlights
Including post-period events
COMMERCIAL HIGHLIGHTS
Business refocused to deliver commercial sales growth
New leadership with a track record of commercial success
Revamped sales and customer service strategy and implementation of a scalable sales-force-led or “direct-to-
doctor” strategy
Now demonstrating quarter-over-quarter sales growth and repeat doctor testing
400 direct-to-doctor orders received from 125 doctors in calendar Q3 2024, with the number of ordering doctors
expected to increase to 225 in calendar Q4 2024
Significant expansion in patient blood draw options with Quest Dx and Exam One, a simplified test order
requisition form to reduce doctor workload and a market-informed Customer Services and Billing offering to
improve end-to-end user experiences
Rollout to a major New York-based physician group practice, with potential to access up to 10,000 eligible
patients and 140 new ordering doctors starting in September 2024
Target to achieve 1% US market penetration in 3-4 years
Guidance on potential revenue generation: c. US$3.2 million in FY25, $8.5 million in FY26 and $17.5 million in
FY27
FINANANCIAL & OPERATIONAL HIGHLIGHTS
Restructuring to accelerate path to profitability
Successful renegotiation of existing senior convertible loan note terms, improved accounts payable situation and
agreed with other creditors to reduce or write-off balances – removing more than 80% of cash obligations over
next three years (£485,000 per month)
Nasdaq delisting with American Depository Shares ("ADSs") now quoted on the OTCQB® Venture Market under
symbol (OTCQB: RNLXY), and anticipated move to Foreign Private Issuer (“FPI”) status to provide significant
savings of up to £1.9m annually
Over-all cash burn to be reduced to £560,000 or less per month by the end of FY25
Over-subscribed equity capital Fundraise to raise approximately £11.9 million, with strong demand exceeding our
initial funding target of £10 million that targeted along with reduction in expenses and anticipated revenue growth
are expected to allow the Company to achieve break-even in approximately two years
Board changes – Julian Baines, MBE, an experienced executive within the life science industry and former
Renalytix Non-Executive Chairman of the Company from March 2018 to June 2020 reappointed as Executive
Chairman; additionally, Daniel Levangie announced his resignation from the Board of Directors effective October
31, 2024
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Product Overview and Strategy
THE KIDNEYINTELX MODEL
At the core of our approach is an artificial intelligence-enabled algorithm capable of synthesizing a set of current and diverse
data inputs, such as biomarkers, EHR data, genomics, patient-generated digital data, environmental information, clinical utility,
and actuarial and clinical compliance information.
Proprietary blood-based biomarkers
Blood-based biomarkers are typically genes or proteins that indicate the existence and severity of certain conditions (such as
kidney disease) and can be measured from a simple blood sample. KidneyIntelX includes inputs from three specific blood-
based biomarkers that have previously been examined in several academic and clinical study settings as reported in scientific
publications. These publications support consistent associations of soluble Tumor Necrosis Factor Receptor (sTNFR) 1 and 2
and plasma Kidney Injury Molecule-1 ("KIM-1"), with reliable independent predictive signals for kidney disease progression
in DKD patients. We licensed the patented sTNFR1 and sTNFR2 biomarkers from the Joslin Diabetes Center of Harvard
University because of this evidence of their predictive capabilities. KidneyintelX.dkd measures these biomarkers using a
proprietary, analytically validated multiplex format with reliable inter- and intra-assay results. We are exploring additional
biomarkers, including both proteomic and genomic based, from blood, urine and other biological samples for subsequent
KidneyIntelX technology platform service offerings that could support enhanced predictive performance and expand indicated
uses.
Electronic health records data harmonization, adjudication and machine learning
The use of EHRs has been adopted broadly by hospital systems in the United States, the United Kingdom, the European Union
and other developed countries. EHR data are generally collected during routine clinical encounters and contain detailed
information on disease and treatment patterns. When assessed in the aggregate, EHR data can provide insights into disease
progression and clinical management strategies across diverse populations. EHR factors may include items such as current or
past therapeutic regimes, diagnostic results, weight, age, geographic location, physician visiting habits and physician
annotations. Additional data factors can be added to the KidneyIntelX technology algorithms to address different target
populations.
Through experience with our clinical study work, we have developed proprietary data processing methods that enables us to
analyze patient data collected during clinical encounters by a diverse set of physicians in different clinical environments and
still ensure that the data used by the KidneyIntelX technology platform to support product development and clinical testing is
consistent and falls within specific quality control metrics. We have tested this capability in our clinical validation studies
involving stored specimens from over 2000 patients with DKD from the Mount Sinai Health System and University of
Pennsylvania Health System biobanks.
EHR Data Harmonization. EHR data from different institutions can be entered and stored in different formats. To
overcome this significant limitation, we have developed proprietary algorithms to convert the diverse data (specifically
laboratory values and medication names) and map to a standardized template.
Clinical Adjudication. Kidney function can fluctuate over time and can vary in different clinical scenarios. In the
clinical validation studies, to ensure that the kidney disease outcomes for kidneyintelX.dkd and future service offerings
were accurately classified and did not represent random non-disease variation, all kidney function changes over time
and all clinical outcomes were adjudicated by examining the trajectory of kidney function over their longitudinal course
of treatment to the outcome. This adjudication and knowledge base has been codified into the overall workflow for
KidneyIntelX technology versioning and validation.
Machine Learning. We use a proprietary machine learning-enabled algorithm to integrate the diverse inputs from
biomarker data and harmonized EHR data to achieve increased predictive performance over the current metrics for
prediction of kidney disease progression.
In addition, the KidneyIntelX technology risk score may, at the sole discretion of the clinical user, be tied to specific clinical
guideline recommendations developed by the healthcare system, health insurance providers or practice groups. This care
pathway is expected to include elements such as targets for clinician visits and referrals, blood pressure control, diabetes control
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and prescription of specific medications, as well as patient behavior, such as appropriate diet, exercise, weight loss, medication
adherence, to provide immediate and actionable steps related to kidney health. We also plan to link reportable results to
educational modules on kidney disease for patients to improve awareness and influence lifestyle practices.
Seamless integration with electronic health record systems for test ordering and reporting results
KidneyIntelX is designed to interface with EHR systems in order to securely access the information required for each ordered
test, which is then combined with biomarker data to generate the risk score and test report. The test result is reported directly to
the ordering physician through the EHR system.
In this way, the treating physician can have all of the relevant information pertinent to the patient’s care delivered to them at
the time of the clinical encounter and can trigger care pathways directly from the EHR interface, with the goal of driving a
virtuous cycle in which patients and clinicians have increased visibility and awareness changes in care management and patient
behavior on kidney health.
All personal health information captured by the kidneyintelX.dkd application is at all times stored in secure Microsoft Azure-
supported cloud infrastructure and is encrypted using Advanced Encryption Standard. All transfers of data and reports through
firewalls of the health system are executed using secure transfer protocols in accordance with internationally accepted Transport
Layer Security versions 1.2 and 1.3. Security components also include rigid authentication and authorization of all users, a
continuous monitoring tool, intrusion detection system and periodic penetration testing to mitigate risks of cyber-attacks.
At the core of our approach is an artificial intelligence-enabled algorithm capable of synthesizing a set of current and diverse
data inputs, such as biomarkers, EHR data, genomics, patient-generated digital data, environmental information, clinical utility,
and actuarial and clinical compliance information.
Proprietary blood-based biomarkers
Blood-based biomarkers are typically genes or proteins that indicate the existence and severity of certain conditions (such as
kidney disease) and can be measured from a simple blood sample. KidneyIntelX includes inputs from three specific blood-
based biomarkers that have previously been examined in several academic and clinical study settings as reported in scientific
publications. These publications support consistent associations of soluble Tumor Necrosis Factor Receptor (sTNFR) 1 and 2
and plasma Kidney Injury Molecule-1 ("KIM-1"), with reliable independent predictive signals for kidney disease progression
in DKD patients. We licensed the patented sTNFR1 and sTNFR2 biomarkers from the Joslin Diabetes Center of Harvard
University because of this evidence of their predictive capabilities. KidneyintelX.dkd measures these biomarkers using a
proprietary, analytically validated multiplex format with reliable inter- and intra-assay results. We are exploring additional
biomarkers, including both proteomic and genomic based, from blood, urine and other biological samples for subsequent
KidneyIntelX technology platform service offerings that could support enhanced predictive performance and expand indicated
uses.
OUR STRATEGY
Our goal is to lower healthcare costs and improve patient quality of life by transforming the paradigm for kidney disease risk
assessment and clinical management through our KidneyIntelX platform technology and the now FDA authorized
kidneyintelX.dkd. Core strategy elements to achieve this goal include the following:
Continue to Build Integrated Partnerships with Healthcare Systems on a Population Health Basis. We are focused on
building partnerships with healthcare systems and the engagement and support of their clinical leadership teams, which
will enable us to efficiently initiate and deploy our solution to patient populations with DKD. A key aspect of this is
technical integration of the KidneyIntelX technology software platform with healthcare systems’ EHR systems and
clinical workflow. In September 2020, we announced the initiation of patient testing with Mount Sinai Health System.
Integrated partnerships such as this are designed to allow KidneyIntelX technology to be deployed directly to patient
populations and their treating clinicians in a cost-efficient and timely manner. We are engaging with multiple
healthcare institutions and national payors regarding additional partnership opportunities.
Further Expand Insurance Payor Coverage. We continue to successfully build pathways for payment for KidneyIntelX
technology across a range of insurance payors in multiple states including from Blue Cross Blue Shield, Medicaid,
Medicare, Medicare Advantage and other private insurance companies. We believe we are reaching critical scale of
insurance payment in several key markets including in Illinois, New York, Texas, Florida and North Carolina.
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Continue to Pursue Permanent Medicare Coverage through a National Coverage Determination (NCD), following
the Company having achieved a Local Coverage Determination (LCD), which became effective 1 August 2024. We
achieved our first payments from National Government Services (NGS), a Medicare Administrative Contractor
("MAC"), in October 2022. Along with achieving the LCD, we are pursuing additional coverage from other MACs
in other jurisdictions. We are also simultaneously pursuing a National coverage determination directly from the
Centers for Medicare & Medicaid Services ("CMS"). FDA and CMS have proposed a new Transitional Coverage
for Emerging Technologies (TCET) program to support Medicare coverage on the national level for innovative
diagnostic devices that service an urgent clinical need.
Build Substantial Repository of Kidney Disease-Related Data. We are building a repository of kidney disease-related
data for the development of progressive KidneyIntelX product versions and additional artificial intelligence-powered
clinical applications. We are designing applications to examine disease patterns in large patient populations and to
optimize clinical care navigation and management effectiveness. These developments are underpinned by the goals of
driving patient and physician behavior changes and ultimately improving patient outcomes. Access to current and
historical patient data, combined with the ability to analytically and clinically validate study results in a quality-
controlled framework, provides us with a powerful product development platform. Moreover, the depth, specificity
and quality of data is of paramount importance to developing solutions with demonstrated clinical utility across a range
of practice specialties and patient demographics, and securing access to this data is central to our strategy of
demonstrating both short- and long-term impact on patient outcomes and health economics.
Expand Our Product Portfolio. We believe there are significant opportunities to expand our platform through
incremental version releases of KidneyIntelX technology as well as through extending the KidneyIntelX platform into
new applications for CKD patients beyond those with diabetes, including repeat testing to monitor changes in risk and
therapeutic response and other CKD subtypes. We also intend to develop solutions for use in other large chronic disease
patient populations, like CKD associated cardiovascular disease. KidneyIntelX technology has been designed within
a quality controlled environment with regulatory approval process to allow us to take advantage of the dynamic nature
of machine learning to improve product performance through a sequence of controlled version releases. We believe
that our product development approach, which is based on a quality systems framework following FDA’s Quality
System Regulations and the ISO guidelines applicable to medical devices, will enable our KidneyIntelX platform to
take advantage of exponential data growth and new clinical use cases, with a clearer path to achieving additional
products and services.
Real World Evidence Program. We have invested heavily over the past several years in developing a comprehensive
portfolio of both real-world evidence outcomes and utility data. We have published and presented this data in various
formats including in peer-reviewed publications and at major medical conferences. We believe the data released to
date has largely satisfied the primary objective of demonstrating the clinical and economic impact of KidneyIntelX
technology informed care management in large populations as has been evidenced by our regulatory, reimbursement
and adoption achievements. We expect to continue to pursue real-world evidence generation in the future for
KidneyIntelX platform products over time.
Launch in Major International Markets. With FDA De Novo authorization for kidneyintelX.dkd, we have seen an
increase in in-bound inquiries for international licensing and distribution opportunities. Kidney disease poses an
increasing threat globally and we believe there will be a number of opportunities to partner with third-party entities to
carry KidneyIntelX technology internationally through license.
We believe KidneyIntelX technology produces early, actionable prognosis that can support clinical pathways to slow the
progression of kidney disease and potentially prevent the occurrence of progressive kidney function decline such as kidney
failure and the need for long-term dialysis or kidney transplant. We have built a comprehensive body of published evidence
through clinical validation studies and patient data generation to demonstrate that accurate and early identification of high-risk
patients, coupled with guidelines-driven clinical recommendations designed to maximize patient treatment and compliance, can
have a measurable positive impact on patient quality of life and significantly lower healthcare costs. By involving a broad range
of expert clinical opinions, testing a growing number of patient samples, consulting closely with clinical society and patient
advocacy organizations, partnering with healthcare systems and payors and developing a detailed understanding of the clinical
practice environment, we believe successful use of KidneyIntelX technology will help ease suffering and improve outcomes
for patients living with DKD.
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OUR COMPETITIVE STRENGTHS
The KidneyIntelX platform has the following key strengths:
Novel Bioprognostic™Platform Incorporating Biomarkers and Health Record Features Analyzed with a Machine
Learning Enabled Algorithm to Assess the Risk for Kidney Disease Progression. KidneyIntelX technology has
produced the first machine learning enabled in vitro prognostic device with the ability to identify patients at risk of
progressive kidney function decline while in the earlier stages of DKD, when costs and outcomes can be better
controlled.
Large and Growing Addressable Market. CKD affects over 850 million people worldwide, including approximately
35.5 million people in the United States. The NKF estimates that one third of adults in the United States are at risk of
developing kidney disease. Type 2 diabetes is one of the most significant risk factors for developing CKD and obesity
is believed to account for 80% to 85% of the risk of developing type 2 diabetes. It is estimated that there are
approximately 14 million adults with DKD in the United States. Published data suggests that the DKD population will
continue to grow along with the anticipated increase in the occurrence of type 2 diabetes and obesity. One study
estimates that by 2060, the number of adults in the United States diagnosed with diabetes will reach 60 million. Further,
according to a 2019 study from the Harvard T.H. Chan School of Public Health, by 2030, about half of the adult U.S.
population will be obese and about a quarter will be severely obese.
Achievements in Reimbursement and Coverage. We have received Medicare payment, Medicare national payment
rate and multiple private insurance coverage determinations to date. We believe these positive outcomes are the result
of several factors: (1) our rigorous approach to a product development and the market access process, (2) significant
changes in U.S. reimbursement law with the full implementation of the Protecting Access to Medicare Act, and (3)
global improvements in kidney disease policy management, including the U.S. Presidential Executive Order on
Advancing American Kidney Health issued in July 2019.
Economic Health Benefits. KidneyIntelX technology was designed to provide accurate, real-time, actionable results
for patients and physicians while reducing costs and promoting improved health economics for patients, physicians,
healthcare systems and payors. Health economic benefits are projected to be derived from three key areas: (1) slowing
progression to the next stage of CKD, (2) delaying or preventing progression to ESKD and the need for dialysis or
kidney transplant and (3) avoiding dialysis crashes. By deploying our proprietary artificial intelligence-enabled
algorithm in a regulated, clinically validated, in vitro diagnostic test, kidneyintelX.dkd is able to help predict which
patients will experience progressive kidney function decline from early stage disease (Stage 1-3b) within a five-year
timeframe, equipping physicians with the information they need to understand risk in their patients. According to a
study conducted by BHA, based on the Medicare price of $950 per reportable test, KidneyIntelX technology would
generate a positive return for health insurers in 12-24 months and deliver a cost savings of up to $1.3 billion over five
years per 100,000 patients with DKD. We believe successive and broad insurance coverage decisions have validated
this health economics value proposition.
Partnered Business Model at Population Health Level. We have begun to deploy KidneyIntelX technology in the form
of the KidneyIntelX laboratory developed service through partnerships with healthcare systems (including Mount Sinai
Health System, and Atrium Health/Wake Forest Baptist Health) and insurance payors that provide coverage to certain
healthcare systems’ patients. We expect to transition these deployments and new deployments to our now FDA
authorized kidneyintelX.dkd beginning early in calendar 2024. As we have demonstrated with the KidneyIntelX
laboratory developed service, we believe an EHR integrated kidneyintelX.dkd with population health support will be
able to potentially benefit significant patient populations without employing a large, traditional sales force on a
provider-level basis at those health systems. In addition, integration of the kidneyintelX.dkd software platform with
healthcare providers’ EHR systems enables seamless electronic test ordering and score reporting.
Kidney Disease Data Repository. As a result of our partnered business model at a population health level, we anticipate
that we will have the opportunity to build the most comprehensive de-identified kidney disease data repository geared
toward early identification of high-risk patients and optimization of care pathways. Further, our partnerships with
relevant insurance payors increases the visibility and the potential cost/benefit economics of KidneyIntelX technology.
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Financial Review
The results presented cover FY24. The presentational currency for Renalytix plc and its subsidiaries (together, the
“Group”) is the United States Dollar.
INCOME STATEMENT
Revenue
The Group recognized a total of $2.3 million in revenue in the financial year ended 30 June 2024 (“FY24”) (financial year
ended 30 June 2023 (“FY23”): $3.4 million) which was comprised of $2.15 million in revenue related to testing services
(FY23: $3.12 million) as well as $0.14 million related to pharmaceutical services revenue (FY23: $0.28 million).
Cost of Sales
The cost of sales associated with the services performed and commercial testing revenue was $2.1 million for FY24 (FY23:
$2.7 million).
Administrative Costs
During FY24, administrative expenses totaled $30.7 million (FY23: $43.1 million). The major items of expenditure were
general and administrative costs of which included $12.1 million in employee- related costs (FY23: $21 million), $7.1
million in subcontractors, legal, accounting, and other professional fees (FY23: $5.9 million), $5.1 million in external R&D
Services, lab supplies and lab services (FY23: $8.0 million), $1.4 million in insurance (FY23: $2.7 million), $2 million in
depreciation and amortisation (FY23: $2.1 million), $0.7 million in marketing and public relations (FY23: $1.3 million),
$1.1 million in IT related costs (FY23: $1.3million), $0.5 million in office related expenses including rent (FY23: $0.4
million), $0.2 million in stock exchange listing and filing fees (FY23: $0.1 million) and $0.5 million in other expenses
(FY23: $0.3 million).
Gain (Loss) On Financial Assets At Fair Value Through Profit Or Loss
The Group accounts for the investment in VericiDx equity securities at fair value, with changes in fair value recognized in
the income statement. During the year ended 30 June 2024, we recorded a loss of $0.5 million to adjust the VericiDx
investment to fair value. During the year ended 30 June 2023, we recorded a loss of $1.3 million to adjust the VericiDx
investment to fair value.
Fair Value Adjustment Of Convertible Debt
We elected to account for the convertible notes at fair value with qualifying changes in fair value recognized through the
income statement until the notes are settled. This excludes fair value adjustments related to instrument-specific credit risk,
which are recognized in OCI. For the year ended 30 June 2024, we recorded a loss of $3.8 million to adjust the convertible
notes to fair value. For the year ended 30 June 2023, we recorded a loss of $3.1 million to adjust the convertible notes to
fair value.
Finance Income (Expense)
During the year ended 30 June 2024, we recognized a gain of $0.2 million, which was comprised of $0.2 million of grant
income, $0.2 million interest income earned on our cash deposits, and offset by $0.5 million of foreign exchange losses and
$0.1 million of realized loss on the sale of VericiDx shares. During the year ended 30 June 2023, we recognized a gain of
$0.5 million, which was comprised of $0.2 million of income related to the dissolution of Kantaro, $0.3 million of income
for refunds from Citibank, $0.1 million interest income earned on our cash deposits, and offset by $0.1 million of foreign
exchange losses.
| Renalytix plc Annual Report and Financial Statements
12
BALANCE SHEET
Inventory
Inventory consists of consumable materials used by the labs to carry out KidneyIntelX tests. Inventory on hand at 30 June
2024 totaled $0.3 million (FY23: $0.7 million).
Fixed Assets
Property, plant, and equipment consists of laboratory equipment being used to support testing and product development
activities. At 30 June 2024, the group held $0.2 million in net property, plant, and equipment (FY23: $1.0 million).
Intangible Assets
The Group held Nil net book value of intangible assets at 30 June 2024 (FY23: $12.5 million). The Group has fully impaired
its intangible assets. The intangible assets were made of payments made to Mount Sinai for license, patent costs for the
intellectual property underlying KidneyIntelX, as well as amounts capitalized as development costs. Intangible assets also
included the value of the biomarker business purchased (in exchange for ordinary shares in the Company) from EKF
Diagnostics Holdings plc. In addition to impairment charges the intangible assets decreased over year due to amortization
and the impact of foreign exchange translation at year end.
Investment in Verici Dx
At the end of FY24 the group held 8,831,682 shares in Verici Dx, the fair value of the investment in Verici Dx was $0.7
million at 30 June 2024 (FY23: $1.5 million).
Convertible Note
In April 2022, the Company issued amortising senior convertible bonds with a principal amount of $21.2 million due in
April 2027 (the "Bonds"). The Bonds were issued at 85% par value with total net proceeds of $18.0 million. The Company
elected to account for the Bonds at fair value. As at 30 June 2024, the Bonds had a fair value of $8.5 million. At 30 June
2023, the Bonds had a fair value of $11.9 million. Post year end, the convertible note has been restructured with
approximately $3.96 million converted to equity through the issuance of 33,000,000 ordinary shares at 9 pence per share and
the balance restructured as a new unsecured convertible bond. The new convertible bond will accrue interest at a rate of 5.5
per cent. per annum, if paid in cash, or 7.5 per cent. per annum, if rolled into the principal amount, at the discretion of the
Company. The New Convertible Bond will have a maturity date of 31 July 2029 and may not be converted before 1 April
2026 except in the event that the Company undertakes a further qualifying equity issuance in the future, in which case the
New Convertible Bond may be converted at the placing price thereunder. The New Convertible Bond is callable by the
Company at any time prior to maturity.
Cash
The Group had cash on hand of $4.7 million (FY23: $24.7 million). Cash and equivalents are held in several deposit
accounts in the US ($2.4 million), UK ($2.1 million) and IRE ($0.1 million).
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Risk Management Approach
We recognize that effective risk management is essential to the successful delivery of the Group’s strategy. As we grow our
business, we believe it is important to develop and enhance our risk management processes and control environment on an
ongoing basis and ensure it is fit for purpose by identifying and managing risks across the Group in a consistent and robust
manner.
Below we describe our risk management approach, the principal risks and uncertainties faced by the Group and the controls
in place to manage them.
OVERVIEW OF RISK MANAGEMENT APPROACH
The key principles that guide the Group’s risk management approach are outlined below:
It is the employees’ responsibility to ensure they understand and comply with the Risk Management Policy and
their defined risk management roles and responsibilities.
There is a defined risk management governance structure with clear accountabilities.
A consistent risk management approach is used throughout the Group to identify and manage risks posed in the
AI and life sciences industries.
Risk management is embedded in all key processes and decision-making within the Group (including strategy
setting, budgeting, planning and day-to-day operations and activities).
A risk register is maintained and updated periodically. The register includes the risk description, risk owner,
mitigation/control description and risk profile.
PRINCIPAL RISKS AND UNCERTAINTIES
Set out below are the principal risks which we believe could materially affect the Group’s ability to achieve its financial and
operating objectives and control or mitigating activities adopted to manage them. The risks are not listed in order of
significance.
THE GROUP IS DEPENDENT UPON ITS STRATEGIC COLLABORATION WITH
THIRD PARTY PARTNERS
The Group is working to develop and commercialize its products in close collaboration with strategic partners. The Group is
dependent upon third parties for resources and revenue. Failure by these strategic partners to meet its key contractual
obligations or to purchase KidneyIntelX tests, for whatever reason, would likely have a material adverse effect on the Group
and its ability to achieve its commercial objectives, potentially including the attainment of sales volumes leading to
profitability, and may ultimately result in the Group becoming unviable.
REGULATORY RISK
There can be no guarantee that any of the Group’s products will be able to obtain or maintain the necessary regulatory
approvals in any or all of the territories in respect of which applications for such approvals are made. Where regulatory
approvals are obtained, there can be no guarantee that the conditions attached to such approvals will not be considered too
onerous by the Group or its partners in order to be able to market its products effectively.
The Group seeks to reduce this risk by seeking advice from regulatory advisers, consultations with regulatory approval
bodies and by working with experienced partners.
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REIMBURSEMENT LEVELS
There is no guarantee that the Company will be able to continue to sell its products or services profitably if the
reimbursement level from third party payers, including government and private health insurers, is limited or subsequently
withdrawn. Third party payers are increasingly attempting to contain health care costs through measures that could impact
the Company including challenging the prices charged for health care products and services, limiting both coverage and the
amount of reimbursement for new diagnostics products and services, and denying or limiting coverage for products that are
approved by the regulatory agencies but are considered experimental by third party payers.
The Company understands that due to third party dependency it is extremely difficult to eradicate this risk. However, the
Company manages this risk with constant dialogue and educating the third-party payers on the Group’s products and also
developing new technologies in order to seek additional reimbursements.
KEY EMPLOYEES
The Company’s future development and prospects depend to a significant degree on the continuing contribution of key
members of its Board, Senior Management and Scientific Advisory Board. As a small organization, the Company relies on a
core team of staff and is therefore exposed to any significant departures of key personnel. In particular, the Company’s
performance depends significantly on the continuing contribution of its CEO, James McCullough, its President, Howard
Doran, its CTO, Fergus Fleming, its Interim CFO, Joel Jung and its CMO, Michael Donovan.
The Group operates in a highly competitive field and the expertise and skills of key individuals are also applicable in a
number of other fields and industries. The high level of demand for such expertise and skills means that there is increasingly
intense competition for talent. The departure of any of the key members to pursue other opportunities or because they are no
longer able to continue to perform their roles (for whatever reason) could have a negative impact on its operations and could
affect the Group’s ability to execute the Group’s business strategy.
To seek to mitigate the potential risk of departures, the Company has adopted a competitive remuneration structure, which
includes share-based incentives. The Company has also taken out key- man insurance on James McCullough. However,
there can be no assurance that this insurance will be adequate or continue to be available on appropriate terms or at all.
OBSOLESCENCE OF GROUP’S PRODUCTS
Demand for the Group’s products could be adversely impacted by the development of alternative technology and alternative
medicines specifically intended for the identification, stratification and/ or treatment of CKD patients. There can be no
assurance that the technology and products currently being developed by the Group will not be rendered obsolete. New AI
technology may continue to emerge and develop. As a result, there is the possibility that new technology may be superior to,
or render obsolete, the technology that the Group currently is developing. Any failure of the Company to ensure that its
technology platform and products remain up to date with the latest technology may have a material adverse impact on the
Company’s competitiveness and financial performance. The Group’s success will depend, in part, on its or its partners’
ability to develop and adapt to these technological changes and industry trends.
THE GROUP IS SUBJECT TO INCREASINGLY STRINGENT PRIVACY AND DATA
SECURITY LEGISLATION
Regulatory, legislative or self-regulatory/standard developments regarding privacy and data security matters could adversely
affect the Group’s ability to conduct the Group’s business. The Group is subject to laws, rules, regulations and industry
standards related to data privacy and cyber security, and restrictions or technological requirements regarding the collection,
use, storage, protection, retention or transfer of data.
For the foreseeable future, the Group will only process data relating to patients in the US and will therefore be subject to
various rules and regulations, including those promulgated under the authority of the US Department of Health and Human
Services, the Federal Trade Commission, and state cybersecurity and breach notification laws, as well as regulator
enforcement positions and expectations.
If the Company begins processing personal data in the context of an establishment in a country that is subject to the GDPR
or if it offers products or services to residents of an EU country, it will have to comply with various robust obligations.
Globally, governments and agencies have adopted and could in the future adopt, modify, apply or enforce laws, policies,
regulations, and standards covering user privacy, data security, technologies that are used to collect, store and/or process
| Renalytix plc Annual Report and Financial Statements
15
data, marketing online, the use of data to inform marketing, the taxation of products and services, unfair and deceptive
practices, and the collection (including the collection of information), use, processing, transfer, storage and/or disclosure of
data associated with unique individual internet users. New regulation or legislative actions regarding data privacy and
security (together with applicable industry standards) may increase the costs of doing business and could have a material
adverse impact on the Group’s operations and cash flows.
Despite the Group’s ongoing efforts to ensure practices are compliant, the Group may not be successful either due to various
factors within the Group’s control, such as limited financial or human resources, or other factors outside the Group’s control.
It is also possible that local data protection authorities may have different interpretations of the GDPR, leading to potential
inconsistencies amongst various EU member states.
COMPETITION
The markets in which the Group operates, which include the markets for laboratory developed tests, clinical diagnostic
support tools and clinical AI solutions, are potentially highly competitive and rapidly changing.
Competitors may have access to considerably greater financial, technical and marketing resources. The availability and price
of the Group’s competitors’ clinical AI development services could limit the demand, and the price the Group is able to
charge, for its services. New competing products may enter the market and make the Group’s discoveries and the products
developed from those discoveries obsolete.
Alternatively, a competitor’s products may be more effective, cheaper or more effectively marketed than the products
developed by the Group, which could have a material adverse effect on the Group’s profitability and/or financial condition.
Technological competition from medical device companies, life science companies, universities and academic medical
centres is intense and can be expected to increase. Many competitors and potential competitors of the Group have
substantially greater product development capabilities and financial, scientific, marketing and human resources than the
Group. The future success of the Group depends, in part, on its ability to maintain a competitive position, including an
ability to further progress through the necessary preclinical and clinical trials to support commercialization, marketing
authorization where necessary, and coverage and reimbursement. Other companies may succeed in commercializing
products earlier than the Group or in developing products that are more effective than those which may be produced by the
Group. While the Group will seek to develop its capabilities in order to remain competitive, there can be no assurance that
research and development by others will not render the Group’s products obsolete or uncompetitive.
RESEARCH AND DEVELOPMENT RISK
The Group operates in the life sciences sector and will look to exploit opportunities within that sector. The Group is
involved in complex clinical development processes and industry experience indicates that there may be a very high
incidence of delay or failure to produce the desired results. The Group may not be able to develop new products or to
identify specific market needs that can be addressed by technology solutions developed by the Group. The ability of the
Group to develop new technology relies, in part, on the recruitment of appropriately qualified staff as the Group grows. The
Group may be unable to find a sufficient number of appropriately highly trained individuals to satisfy its growth rate, which
could affect its ability to develop as planned.
Product development timelines are at risk of delay, particularly since it is not always possible to predict the rate of patient
recruitment into clinical trials. There is a risk therefore that product development could take longer than presently expected
by the Board. If such delays occur, the Group may require further working capital. The Board shall seek to minimize the risk
of delays by careful management of projects.
In addition, research and development may be subject to various requirements, such as research subject protection for
individuals participating in clinical evaluations of new laboratory developed tests and products, institutional review board
oversight, regulatory authorizations, and design control requirements for FDA and EU-regulated products. Failure to comply
with requirements could result in penalties, delay, or prevent commercialisation of products.
FINANCIAL REPORTING AND DISCLOSURE
Due to the nature of the Group there is a requirement to report accurate financial information in compliance with accounting
standards and applicable legislation.
This risk is mitigated through the Group’s internal controls over the financial information and reporting, overseen by the
local financial heads and then reviewed by the central finance team, including the Interim Chief Financial Officer. The
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16
annual financial statements are also subject to audit by the Group’s external auditors.
CYBER SECURITY RISK
The Group uses computers extensively in its operations and has an online presence but does not trade online. It is at risk of
attack through hacking or other methods. This risk is mitigated by the use of robust security measures, staff training, and
back-up systems.
INTELLECTUAL PROPERTY RISK
The commercial success of the Group and its ability to compete effectively with other companies depends, amongst other
things, on its ability to obtain and maintain patents sufficiently broad in scope to provide protection for the Group’s
intellectual property rights against third parties and to exploit its products. The absence of any such patents may have a
material adverse effect on the Group’s ability to develop its business.
The Group mitigates this risk by developing products where legal advice indicates patent protection would be available,
seeking patent protection for the Group’s products, maintaining confidentiality agreements regarding Group know-how and
technology and monitoring technological developments and the registration of patents by other parties. The commercial
success of the Group also depends upon not infringing patents granted, now or in the future, to third parties who may have
filed applications or who have obtained, or may obtain, patents relating to business processes which might inhibit the
Group’s ability to develop and exploit its own products.
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Section 172 Statement
The Directors are required by law to act in good faith to promote the success of the Company for the benefit of the
shareholders as a whole and are also required to have regard to the following:
the likely long-term consequences of any decision;
the interests of the Company’s employees;
the need to foster the Company’s business relationships with suppliers, customers and others;
the impact of the Company’s operations on the community and the environment;
the desirability of the Company maintaining a reputation for high standards of business conduct; and
the need to act fairly as between shareholders of the Company.
Please see the Corporate Governance Statement in the Directors’ Report for an overview of the Company’s corporate
governance arrangements.
The Chief Executive Officer’s statement and the section headed “Product Overview and Strategy” in this Strategic Report
describes the Group’s activities, strategies and future prospects, including the considerations for long-term decision making.
In particular, the Group has made significant progress towards its operational, regulatory and reimbursement goals and is
now engaged in commercial roll-out of its lead product, KidneyIntelX in the United States. In addition, the Group is seeing
an increase in strategic partnering activities which will continue to build on the validation and commercial use cases for
KidneyIntelX.
The Board has a good relationship with the Group’s employees. The Board maintains constructive dialogue with employees
through the Chief Executive Officer and other members of the executive team. Appropriate remuneration and incentive
schemes are maintained to align employees’ objectives with those of the Group. See further under Employees in the section
headed “Corporate Social Responsibility” below.
The Group endeavors to maintain good relationships with its suppliers by contracting on fair business terms, paying within
agreed timeframes, and responding promptly to inquiries.
The Group’s operations have minimal environmental impact. Please see Environment in the section headed “Corporate
Social Responsibility” below for more details.
The Board recognizes the Group’s duty to be a good corporate citizen. See Social, community and human rights in the
section headed “Corporate Social Responsibility” below for more details.
The Board recognizes the importance of maintaining high standards of business conduct. The Group operates a Code of
Business Conduct and Ethics applicable to its employees, independent contractors, executive officers and directors. A
current copy of the Code of Business Conduct and Ethics is available on our website, which is located at
www.renalytix.com.
The Board endeavors to maintain good relationships with its shareholders and treat them equally. This is described in more
detail in the Corporate Governance Statement under the heading “Relations with Shareholders.”
There were a number of initiatives and strategic actions undertaken during FY24 which the Directors believe were in the
best interests of the Company and all its stakeholders as follows:
Achieved FDA De Novo marketing authorization for kidneyintelX.dkd to assess risk of progressive kidney function
decline in adults with diabetes and early-stage kidney disease
Secured additional key insurance coverage contracts for KidneyIntelX
Inclusion of KidneyIntelX in draft Kidney Disease Improving Global Outcomes (KDIGO) 2023 Clinical Practice
Guideline for Evaluation and Management of Chronic Kidney Disease (KDIGO 2023 Guideline)
Continuing to maintain contracted pricing at or over the Medicare Clinical Laboratory Fee Schedule (CLFS) of
$950 per reportable test result
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Continued receiving Medicare payments for KidneyIntelX
Executed over 40 commercial payor contracts and enrolled as a provider in 35 state Medicaid programs to date
Milestone achievement converting payment to full, long-term commercial insurance billing model at Mount Sinai
Health System
Appointed senior diagnostics executive Howard Doran to lead global commercial sales beginning with direct to
physician salesforce in New York, Illinois, North Carolina, Florida and Texas
Full Epic electronic health record system integration with Atrium / Wake Forest proceeding with launch expected
before end of calendar 2023
Core participant in consortium granted $10 million by Horizon Europe Grant to advance personalized medicine in
treating chronic kidney disease
Increasing diversity of commercially billable testing volume, particularly among primary care physician practices
ordering through the MyIntelX portal
Continued data generation and analysis presented in multiple scientific venues and publications reinforcing the
benefits of KidneyIntelX
Completed $23.6 million equity financing led by existing and new institutional investors in February 2024 and
October 2024
Reduced annual operating expenses by over $11 million versus the prior year with additional cost reduction
initiatives underway to extend cash runway while preserving revenue generating activity
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Corporate Social Responsibility
ENVIRONMENT
The Directors consider that the nature of the Group’s activities is not inherently detrimental to the environment. The Group
is committed to identifying and minimizing any effect on the environment caused by its operations. As a minimum standard,
we will fully comply with all relevant legislation and, wherever possible, look for opportunities to make a positive
contribution to the environments in which we operate.
EMPLOYEES
The Group places great value on the involvement of its employees and they are regularly briefed on the Group’s activities.
The Group closely monitors staff attrition rates which it seeks to keep at low levels and aims to structure staff compensation
levels at competitive rates in order to attract and retain high calibre personnel.
DISABLED EMPLOYEES
Applications for employment by disabled persons are always fully considered, bearing in mind the specific aptitudes of the
applicant involved. It is the policy of the Group that the training, career development and promotion of disabled persons, as
far as possible, be identical to that of other employees.
SOCIAL, COMMUNITY AND HUMAN RIGHTS
The Board recognizes that the Group has a duty to be a good corporate citizen and to respect and comply with laws,
regulations, and where appropriate the customs and culture of the territories in which it operates. The Group encourages
employees to take part in charitable activities which are related to our business areas or customers. It contributes as far as is
practicable to the local communities in which it operates and takes a responsible and positive approach to employment
practices.
GENDER DIVERSITY INFORMATION
Male
Female
Directors of the Company
5
1
Employees in other senior executive positions
2
1
Senior managers other than directors and senior executives of the company
6
6
Other employees of the group
13
14
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CORPORATE GOVERNANCE
Board of Directors
Julian Baines MBE
Executive Chairman (Aged 60)
Julian rejoined the executive team at EKF Diagnostics Holdings plc
("EKF") as Executive Chairman on a short term basis as announced in early
February 2023. Julian is also currently Non-Executive Chairman of Verici
Dx plc. Julian has significant experience in the life science industry.
He has over 20 years' experience as CEO of EKF and BBI Holdings plc.
Before joining EKF, he undertook a management buyout at BBI in 2000, a
flotation on AIM in 2004 and was responsible for selling the business to
Alere Inc. (now part of Abbott Laboratories) in 2008 for c. £85 million.
Whilst CEO at EKF he successfully completed a number of fund raisings,
acquisitions and subsequent integration of businesses in seven countries. He
oversaw the spin out of businesses from EKF including Renalytix plc which
listed on Nasdaq in 2020. In 2016 he was awarded an MBE (Member of the
British Empire) for services to the life sciences industry. Julian has
previously held the position of Non-Executive Chairman of Renalytix Plc
between 2018 and 2020.
James McCullough
Chief Executive Officer and Director (Aged 56)
James McCullough has served as Renalytix’s co-founder and Chief
Executive Officer since its inception. James has leadership experience
building emerging technology companies in both the public and private
sectors with specific expertise in the life-sciences industry. James was most
recently Chief Executive Officer of Exosome Diagnostics, a venture-backed
personalized medicine company developing non-invasive liquid biopsy
diagnostics in cancer, which was recently acquired by Bio-Techne
Corporation. James is also a managing partner of Renwick Capital, LLC, a
management consulting firm specializing in assisting emerging healthcare
technology companies with strategic planning and business execution, and
was a co-founder of PAIGE.AI, a computational pathology spin-out from
the Memorial Sloan Kettering Cancer Center. James received his B.A. from
Boston University and an M.B.A. from Columbia Business School. James is
currently Chairman of BalletNext, a performing arts company in park city
Utah.
Christopher Mills
Non-Executive Director (Aged 72)
Christopher Mills has served as a member of the Renalytix Board since its
inception. Christopher founded Harwood Capital Management in 2011, a
successor to its former parent company, J.O. Hambro Capital Management,
which he co-founded in 1993. He is Chief Executive and Investment Manager
of North Atlantic Smaller Companies Investment Trust plc and Chief
Investment Officer of Harwood Capital LLP. He is a Non-executive Director of
a number of companies, including EKF Diagnostics.
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Fergus Fleming
Chief Technical Officer and Director (Aged 57)
Fergus Fleming has served as Renalytix’s Chief Technical Officer since its
inception. Fergus has over 25 years’ experience in the life sciences sector,
including leadership positions with Baxter Healthcare, Boston Scientific,
Trinity Biotech plc, and EKF Diagnostics. Fergus has extensive experience
in the design and manufacture of interventional medical devices, digital
health solutions, in vitro diagnostics instruments and reagents, and
electromechanical devices. He has extensive experience managing global
projects, including clinical research collaborations, product development,
acquisitions, and manufacturing site transfers.
Erik Lium Ph.D.
Non-Executive Director (Aged 56)
Erik Lium, Ph.D., has served as a member of the Renalytix Board since
November 2018. Dr. Lium is the executive vice president of Mount Sinai
Innovation Partners and is responsible for advancing Mount Sinai’s
research, instruction, and public service missions through strategic research
partnerships with industry, the management, transfer and commercialisation
of technologies, and fostering the development of start- ups and joint
ventures to advance promising early-stage technologies. Dr. Lium also
serves as a director of Amathus Therapeutics and as a member of the
Investment Review Committee for the Accelerate NY Seed Fund.
Prior to joining Mount Sinai, Dr. Lium served as the assistant vice
chancellor of Innovation, Technology & Alliances at the University of
California, San Francisco (UCSF), and the UCSF Principal Investigator for
the Bay area National Science Foundation I-Corps node. He held previous
positions at UCSF, including assistant vice chancellor of Research and
director of Industry Contracts, and director of Business Development for the
Diabetes Center & Immune Tolerance Network. Dr. Lium served as
president of LabVelocity Inc., an Information Services Company focused
on accelerating research and development in the life sciences prior to its
acquisition in 2004. He pursued post-doctoral research at UCSF, and earned
a PhD with honours from the Integrated Program in Cellular, Molecular and
Biophysical Studies at Columbia University. Dr. Lium holds a BS in
Biology from Gonzaga University.
Catherine Coste
Non-Executive Director (Aged 58)
Catherine Coste has served as a member of Renalytix Board since June
2023. Ms. Coste retired from Deloitte and Touche LLP (“Deloitte”) in 2020,
where she was a Senior Partner, and served as one of Deloitte’s Life
Sciences industry executive leaders. She spent 32 years in both corporate
and professional services positions leading global finance, internal audit,
and operations teams. During her career at Deloitte, Ms. Coste was directly
involved with over 30 life science corporations, the majority of which were
large-cap and medium-cap public corporations. She also serves as a
Director at both Minerva Surgical, Inc., where she is Chair of the Audit
Committee and a Member of the Compensation Committee, and Biomerica,
Inc., where she is Chair of the Audit Committee, and serves on both the
Compensation Committee and the Nominating and Corporate Governance
Committee. Ms. Coste’s experience includes, Sarbanes-Oxley compliance,
corporate risk analysis and management, cyber risk assessment, fraud
prevention, IT systems analysis and upgrades, internal controls, and
corporate governance. She is a Certified Public Accountant, who earned her
B.A. in business administration, accounting, from California State
University, Hayward.
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Directors’ Report
The Directors present their annual report on the affairs of the Group and Parent Company, together with the consolidated
financial statements and auditor’s report for the year ended 30 June 2024. The Corporate Governance Statement set out on
pages 26 to 29 forms part of this report.
CORPORATE DETAILS
Renalytix plc is a public limited company incorporated under the laws of England & Wales (Registration Number
11257655). The address of the registered office is 2 Leman Street, London, United Kingdom, E1W 9US.
DIRECTORS
The Directors, who served in office during the year and as at the date of signing these financial statements were as follows:
Julian Baines (appointed 31 October 2024)
James McCullough
Fergus Fleming
Christopher Mills
Erik Lium
Catherine Coste
Daniel Levangie (resigned 31 October 2024)
Chirag Parikh (resigned 5 December 2023)
Timothy Scannell (resigned 18 October 2023)
Details of the Directors’ membership of committees is shown on page 28. The Company Secretary is Salim Hamir.
PRINCIPAL ACTIVITIES
The principal activity of the Group is the development of artificial intelligence-enabled clinical diagnostic solutions for
kidney disease.
GOING CONCERN
The Group and Company fund their day-to-day working capital needs through existing cash reserves. The Directors have
evaluated the use of the going concern basis in preparing these financial statements.
The Group has historically experienced recurring losses and negative cash flows. Despite this, significant strides have been
made in the commercialisation of kidneyintelX.dkd, and business objectives have been realigned for sharper focus. For the
year ended 30 June 2024, the Group recorded a loss of $45.5 million, with cash reserves of $4.7 million at year-end.
Substantial steps have been taken to refine the Company’s commercial strategy to achieve consistent, scalable results in the
coming periods. Key actions taken include:
Cost reductions: During the year, the Company significantly reduced its cost base, halving employee numbers
from over 80 to around 40 post-year-end, and cutting legal, professional, R&D expenses and other expenses which
are not necessary at this stage of the business. In Q1 2025 (quarter ending September 2024), operating expenses
were 4.2 million, down over 50% from $8.8 million in Q1 2024 (quarter ending September 2023). The Group
projects operating expenses for FY 2025 to be significantly lower than FY 2024’s total of $30.7 million.
Fundraising: A post-year-end fundraising in November 2024 raised approximately $14.9 million after expenses
and substantially restructured the outstanding liabilities on the Statement of the Financial Position. Approximately
$3.9 million in convertible notes was converted to equity along with a $750K liability converted to a mix of equity
and five year long non-amortizing loan. Additionally, the remaining balance of the convertible note was converted
to an interest-only non-amortizing loan due July 2029 with interest fixed at 5.5% p.a. if paid in cash or 7.5% p.a. if
rolled into the balance of the loan.
| Renalytix plc Annual Report and Financial Statements
23
Commercial Growth: Recent initiatives to expand kidneyintelX.dkd include the rollout of commercial testing with
a new large New York-based physician group practice, with test ordering and processing having commenced in
September 2024. Additionally, a significant expansion in patient blood draw options, a simplified test order
requisition form to reduce doctor workload, and improvements in customer service and test services billing all offer
an improved end-to-end user experience which the Company believes will support continued test volume growth.
Despite these measures, historical losses and ongoing cash needs pose a challenge to the Group’s going concern status. The
Directors recognize that continued operation may require additional capital to fund operations, support commercial growth,
and develop new products. Although there are no immediate plans for further funding via equity or debt, the Group aims to
build investor confidence through effective use of the current fundraising and strategic initiatives over the next 12 months.
The Company has incurred recurring losses and negative cash flows from operations since inception and had an accumulated
deficit in retained earnings of $145.5 million as of 30 June 2024. The Company anticipates incurring additional losses until
such time, if ever, that it can generate significant sales of kidneyintelX.dkd or KidneyIntelX technology services income.
The Company’s ability to continue as a going concern is contingent upon successful execution of management’s intended
plan over the next 24 months to improve the Company’s liquidity and profitability, which includes, without limitation:
•
The achievement of certain testing volumes in the lab;
•
Continued expansion of reimbursement policies and contracts with commercial payers; and
•
Continued management of operating and commercial expenses.
As a result of the Company's losses and its projected cash needs, along with the limited recent history of test order volume
increases, as defined in the accounting literature, substantial doubt exists about the Company’s ability to continue as a going
concern. While subsequent to 30 September 2024, the Company has successfully raised approximately $14.9 million in new
equity capital and restructured the existing long-term debt recorded on the Statement of the Financial Position, the Company
does have a history of operating losses and it has been expensive to deliver all of the milestones to commercialize the
kidneyintelX.dkd test. Should the company require additional capital it may not be available on acceptable terms, or at all,
and the Company may not be able to enter into strategic alliances or other arrangements on favorable terms, or at all. The
terms of any future financing may adversely affect the holdings or the rights of the Company’s shareholders. Should it be
necessary, if the Company is unable to obtain funding it could be required to delay, curtail or discontinue research and
development programs, product portfolio expansion or future commercialization efforts, which could adversely affect its
business prospects. As such, management has concluded that there is a going concern uncertainty. The consolidated
financial statements do not include any adjustments that may result from the outcome of this going concern uncertainty.
GREENHOUSE GAS EMISSIONS, ENERGY CONSUMPTION AND ENERGY
EFFICIENCY ACTION
The majority of the Group's employees are considered remote and primarily work from home offices therefore the Group
has determined that it is not practical to calculate the annual quantity of greenhouse gas emissions resulting from activities
for which the company is responsible in tonnes of carbon dioxide equivalent, the annual quantity of energy consumed from
activities for which the company is responsible in kWh or what proportion of that figure relates to energy consumed in the
UK and offshore area.
FUTURE DEVELOPMENTS AND RESEARCH AND DEVELOPMENT ACTIVITIES
Future developments and research and development activities are discussed in the Strategic Report on pages 3 to 19.
RESULTS AND DIVIDENDS
The Group recorded a loss for the year of $45.5 million (FY23: loss of $46.2 million). When it is commercially prudent to
do so and subject to the availability of distributable reserves, the Board may approve the payment of dividends. However, at
present, the Directors consider that it is more prudent to retain cash to fund the development of the Group and, as a result,
feel it is inappropriate to give an indication of the likely level or timing of any future dividend payment. The Directors do
not recommend payment of a dividend in respect of FY24 (FY23: nil).
FINANCIAL RISK MANAGEMENT
Financial risk management is discussed in Note 4 of the financial statements.
| Renalytix plc Annual Report and Financial Statements
24
SUBSIDIARIES OUTSIDE OF THE UK
The Group has two subsidiaries overseas, Renalytix AI Inc. (United States) and Renalytix AI Limited (Ireland).
EMPLOYEE POLICIES
Employee policies are discussed in the Strategic Report on page 19.
POLITICAL CONTRIBUTIONS AND CHARITABLE CONTRIBUTIONS
Neither the Company nor any of its subsidiaries made any political donations or incurred any political expenditure during
the year ended 30 June 2024 (FY23: nil).
DIRECTORS’ INTERESTS
The interests in the share capital of the Company of those Directors serving at 30 June 2024 and as at the date of signing of
these financial statements, all of which are beneficial, were as follows:
On 30 June 2024
Ordinary Shares
of 0.25p each
On 30 June 2023
Ordinary Shares
of 0.25p each
Christopher Mills
14,109,9460
10,072,500
James McCullough
2,746,386
2,746,386
Erik Lium
—
—
Fergus Fleming
569,481
569,481
Daniel Levangie
—
—
Catherine Coste
—
—
Christopher Mills’ shareholding includes shares held through North Atlantic Smaller Companies Investment Trust plc and
Oryx International Growth Fund Limited. Christopher Mills is a partner and Chief Investment Officer of Harwood Capital
LLP. Harwood Capital LLP is investment manager to North Atlantic Smaller Companies Investment Trust plc and
investment adviser to Oryx International Growth Fund Limited.
SUBSTANTIAL SHAREHOLDINGS
As at 20 November 2024, the following interests in 3% or more of the issued Ordinary Share capital had been notified to the
Company:
Shareholder
Number of Shares
Percentage of Issued
Share Capital
Icahn School of Medicine at Mount Sinai
37,550,977
11.3%
CVI Investments, Inc
33,000,000
10.0%
Ruffer LLP
28,500,000
8.6%
Polar Capital
27,520,016
8.3%
Jefferson River Capital LLC
19,644,777
5.9%
Unicorn Asset Management Limited
18,955,777
5.7%
Pentwater Capital Management LP
17,946,298
5.4%
Christopher Mills
14,609,946
4.4%
STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE 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 and Company financial statements in accordance with UK-adopted international
accounting standards and the parts of the Companies Act 2006 that applies to companies applying UK-adopted international
| Renalytix plc Annual Report and Financial Statements
25
accounting standards. Under company law, the Directors must not approve the financial statements unless they are satisfied
that they give a true and fair view of the state of affairs and profit or loss of the Company and Group for that period. In
preparing these financial statements, the Directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
for the Group and Company financial statements, state whether applicable UK-adopted international accounting
standards and the parts of the Companies Act 2006 that applies to companies applying UK-adopted international
accounting standards have been followed, subject to any material departures disclosed and explained in the
financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company
and Group will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company
and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for
safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
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’s auditor is aware of that information;
and
the Directors are responsible for preparing the Annual Report in accordance with applicable law and regulations.
The Directors consider the Annual Report and the financial statements, taken as a whole, provides the information
necessary to assess the Company’s performance, business model and strategy and is fair, balanced and
understandable.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the
Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
DIRECTORS’ INDEMNITIES
The Company has entered into deeds of indemnity for the benefit of each Director of the Company in respect of liabilities to
which they may become liable in their capacity as Director of the Company and of any Company in the Group. Those
indemnities are qualifying third party indemnity provisions for the purposes of section 234 of the Companies Act 2006 and
have been in force during the whole of the financial period and up to the date of approval of the financial statements.
INDEPENDENT AUDITORS
PKF Littlejohn LLP has expressed their willingness to continue in office as auditors and a resolution to reappoint them will
be proposed at the forthcoming Annual General Meeting.
CORPORATE GOVERNANCE
The Company’s statement of corporate governance can be found in the Corporate Governance Statement on pages 26 to 29
of these financial statements. The Corporate Governance Statement forms part of this Report of the Directors and is
incorporated into it by cross-reference.
ANNUAL GENERAL MEETING
The resolutions to be proposed at the forthcoming Annual General Meeting are set out in a separate notice sent to the
shareholders.
| Renalytix plc Annual Report and Financial Statements
26
RECOMMENDATION
The Board considers that the resolutions to be proposed at the Annual General Meeting are in the best interests of the
Company and it is unanimously recommended that shareholders support these proposals as the Board intends to do in
respect of their own holdings.
This report was approved by the Board on 20 November 2024 and signed on behalf of the Board by:
Salim Hamir
Company Secretary
| Renalytix plc Annual Report and Financial Statements
27
Corporate Governance Statement
COMPLIANCE
The Company recognizes the value of good corporate governance in every part of its business. The Board has adopted the
corporate governance principles of the 2018 Quoted Companies Governance Code (the “QCA Code”) and the Company has
continued to comply with the QCA Code throughout the reporting period. The Board believes that this corporate governance
framework is appropriate for the Company, having regard to its size and nature. Details of the QCA Code can be obtained
from the Quoted Companies Alliance’s website (www.theqca.com).
Details of how the Group seeks to address the principles underlying the QCA Code and how it leverages its principles to
support the long-term success of the Group can be found on the Company’s website.
BOARD COMPOSITION AND RESPONSIBILITY
The Board currently comprises three Executive Directors and three Non-Executive Directors.
It is the Board’s opinion that Catherine Coste is independent and has been independent in character and judgement and that
there were no relationships or circumstances which could materially affect or interfere with the exercise of her independent
judgement during the course of FY24.
All Directors are subject to election by Shareholders at the first Annual General Meeting after their appointment, and are
subject to re-election at least every three years. Non-Executive Directors are appointed for a specific term of office which
provides for their removal in certain circumstances, including under section 168 of the Companies Act 2006. The Board
does not automatically re-nominate Non-Executive Directors for election by Shareholders. The terms of appointment of the
Non- Executive Directors can be obtained by request to the Company Secretary.
The Board’s primary objective is to generate value for the Group by identifying and assessing business opportunities and
ensuring that potential risks are identified, monitored and controlled. Matters reserved for Board decisions include strategic
long-term objectives and the capital structure of major transactions. The implementation of Board decisions and day to day
operations of the Group are delegated to senior management.
There is a division of responsibilities between the Executive Chairman, who is responsible for the overall strategy of the
Group and running the Board, and the Chief Executive Officer, who is responsible for implementing the strategy and day to
day running of the Group. He is assisted by the Chief Technology Officer, who is a Board member, and Interim Chief
Financial Officer who is not a Board member.
BOARD MEETINGS
Twenty full Board meetings were held during the year and the attendance record during their year of office is as follows:
Christopher Mills (Non-Executive Chairman up to 30 June 2024)
17/20
James McCullough (Chief Executive Officer)
20/20
Erik Lium (Non-Executive Director)
17/20
Catherine Coste (Non-Executive Director)
19/20
Dan Levangie (Non-Executive Director)
18/20
Fergus Fleming (Chief Technology Officer)
20/20
Chirag Parikh (Non-Executive Director)
1/1
Timothy Scannell (Non-Executive Director)
1/1
During the year, the Board conducted an evaluation of the performance of the Board and that of the Chairman, as well as the
effectiveness of the Board Committees. The Board intends to develop further its evaluation of the performance of the Board
and Committees on an annual basis. The evaluation will include Board composition, experience, dynamics and the Board’s
role and responsibilities for strategy, risk review and succession planning. The evaluations will involve a detailed
questionnaire and individual discussions between the Non-Executive Chairman and the Directors.
| Renalytix plc Annual Report and Financial Statements
28
AUDIT COMMITTEE
The Audit Committee during the year comprised of Catherine Coste, who acts as chair, Dan Levangie and Erik Lium. Dan
Levangie has resigned from the Board. The Audit Committee, among other things, determines and examines matters relating
to the financial affairs of the Company including the terms of the engagement of the Company’s auditors and, in
consultation with the auditors, the scope of the audit. It receives and reviews the reports from management and the
Company’s auditors relating to the half yearly and annual forward statements and the accounting and the internal control
systems in use throughout the Company.
The committee has met formally three times during the year ended 30 June 2024. There have been no significant matters
communicated to the Committee by the auditors and no interaction with the Financial Reporting Council.
REMUNERATION COMMITTEE
The Remuneration Committee during the year comprised of Daniel Levangie, who acted as chair, and Catherine Coste. Dan
Levangie has now resigned from the Board on 31 October 2024. The Remuneration Committee reviews and makes
recommendations in respect of the Executive Directors’ remuneration and benefits packages, including share options and the
terms of their appointment. The Remuneration Committee also make recommendations to the Board concerning the
allocation of share options to employees under the intended share option schemes.
The Committee has met twice during the year ended 30 June 2024.
NOMINATION COMMITTEE
The Nomination Committee is comprised of Christopher Mills, who acts as chair, and Erik Lium. The Nomination
Committee reviews and recommends nominees as new Directors to the Board.
INTERNAL CONTROL
The Directors are responsible for ensuring that the Group maintains a system of internal control to provide them with
reasonable assurance regarding the reliability of financial information used within the business and for publication and that
the assets are safeguarded. There are inherent limitations in any system of internal control and accordingly even the most
effective system can provide only reasonable, but not absolute, assurance with respect to the preparation of financial
reporting and the safeguarding of assets.
The Group, in administering its business, has put in place strict authorization, approval and control levels within which
senior management operates. These controls reflect the Group’s organizational structure and business objectives. The control
system includes clear lines of accountability and covers all areas of the organization. The Board operates procedures which
include an appropriate control environment through the definition of the above organization structure and authority levels
and the identification of the major business risks.
INTERNAL FINANCIAL REPORTING
The Directors are responsible for establishing and maintaining the Group’s system of internal reporting and as such have put
in place a framework of controls to ensure that on-going financial performance is measured in a timely and correct manner
and that risks are identified as early as is practicably possible. There is a comprehensive budgeting system and monthly
management accounts are prepared which compare actual results against both the budget and the previous year. They are
reviewed and approved by the Board and revised forecasts are prepared on a regular basis.
RELATIONS WITH SHAREHOLDERS
The Company reports to Shareholders twice a year. The Company dispatches the notice of its Annual General Meeting,
together with a description of the items of special business, at least 21 clear days before the meeting. Each substantially
separate issue is the subject of a separate resolution and all Shareholders have the opportunity to put questions to the Board
at the Annual General Meeting.
The Chair(s) of the Audit and Remuneration Committees normally attend the Annual General Meeting and will answer
questions which may be relevant to their work. The Chairman advises the meeting of the details of proxy votes cast on each
of the individual resolutions after they have been voted on in the meeting. The Chairman and the Non- Executive Directors
intend to maintain a good and continuing understanding of the objectives and views of the Shareholders.
| Renalytix plc Annual Report and Financial Statements
29
DIVERSITY POLICY
The Company has not adopted a formal diversity policy however the employee handbook includes a policy against
harassment, discrimination and retaliation of any kind.
Shareholders May Contact the Company as Follows:
Tel: +44 (0)20 7933 8790 (from USA: +1-646-217-4999)
Email: investors@renalytix.com
CORPORATE SOCIAL RESPONSIBILITY
The Board recognizes that the Group has a duty to be a good corporate citizen and is conscious that its business processes
minimize harm to the environment, that it contributes as far as is practicable to the local communities in which it operates
and takes a responsible and positive approach to employment practices. The Group is subject to the requirements of the
Modern Slavery Act 2015 and published the required statement on its website. The directors consider that the nature of the
Group’s activities is not inherently detrimental to the environment. The Group is committed to minimizing any effect on the
environment caused by its operations.
The Corporate Governance Statement was approved by the Board on 20 November and signed on its behalf by:
Salim Hamir
Company Secretary
| Renalytix plc Annual Report and Financial Statements
30
Director’s Remuneration Report and
Policy
RENALYTIX PLC
REMUNERATION COMMITTEE REPORT
FOR THE YEAR ENDED 30 JUNE 2024
Dear shareholder,
I am pleased to present, on behalf of the board of directors (the “Board”) of Renalytix PLC (the “Company” or “Renalytix”),
the Directors’ remuneration report for the year ended 30 June 2024 (the “Directors’ Remuneration Report”).
The Company’s Annual Report and Accounts, along with the Directors’ Remuneration Report, will be subject to an advisory
vote at the forthcoming Annual General Meeting (the “AGM”). There are no other matters that the Company requires
approval for under Chapter 4A of Part 10 of the Companies Act 2006. The Directors’ Remuneration Policy (the
“Remuneration Policy”) was approved by the shareholders at the Company’s AGM on 17 December 2021. We have
included a copy of our current Remuneration Policy, which will remain in effect for the 2025 financial year.
Introduction
During the period covered by this Directors’ Remuneration Report, we maintained the remuneration programs and policies
that the Committee established during the financial year 2024 and implemented strategic compensation initiatives designed
to incentivise and retain key employees in the Company.
As we move into financial year 2025 and beyond, the Committee’s role will be to ensure that Directors and senior
executives at Renalytix are appropriately compensated and incentivised to deliver growth to shareholders in a long-term and
sustainable manner. The Committee seeks to accomplish this by establishing remuneration programs that are grounded in
market practice, are effective at driving proper management behaviors, clearly link pay and performance and are cost
efficient overall.
Corporate Governance Standards
As a public company, we are subject to corporate governance standards and regulations applicable in the United States and
the United Kingdom.
The Global Marketplace for Talent
Renalytix is a biopharmaceutical company with operations in Europe and the United States. The Company plans to expand
its operations in both geographic regions in line with the growth of its clinical and manufacturing activities and its plans to
commercialize its products in these geographies. Given that the market for experienced directors and biopharmaceutical
executive management talent, particularly in the United States, is very competitive, the Committee references the US market
as the leading indicator for remuneration levels and practices. This will help attract and retain directors and motivate the
superior executive management talent needed to successfully manage the Company’s complex global operations. Being
consistent in this market view of the United States as the primary benchmark for remuneration practices for directors and
executive directors (CEO and CTO) is key for the Company as it builds its global operations in a manner designed to deliver
sustainable long-term growth and shareholder value.
Committee decisions have been taken in light of the extensive benchmarking for director and executive director
compensation conducted in 2023, which included a review of compensation practices of comparable companies to Renalytix
in the US and Europe. In taking any actions, the Committee is mindful of the general UK compensation framework,
including investor bodies’ guidance, and the UK Corporate Governance Code, and has incorporated these into its
remuneration programs, policies and decisions where it believes they best serve the long-term interests of shareholders.
| Renalytix plc Annual Report and Financial Statements
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Remuneration Program Highlights
While I recommend that you carefully read the disclosure on our programs and policies that follows this letter to help with
the understanding of our approach to director compensation, I want to highlight the following aspects of our program below:
Pay for Performance - We believe that a significant portion of remuneration of our directors and our executive
directors (CEO & CTO) should be based on achieving objectives designed to create inherent value in the Company,
and ultimately on achieving value creation for our shareholders. In line with this belief, the compensation of our
CEO includes a significant performance-based cash bonus opportunity and a large equity incentive component.
Further, our directors receive equity incentives designed to reward long-term value creation for our shareholders.
Shareholding requirements for Executive Directors - We believe having these requirements encourages
executive directors to build meaningful shareholding positions and furthers alignment of their interests with those
of shareholders.
2024 Remuneration Outcome - As outlined above, a core principle in Renalytix’s remuneration program is the
linkage between pay and performance. In financial year 2024, the annual bonuses of James McCullough our CEO
and Fergus Fleming our CTO, our executive directors were based on a combination of corporate and personal
objectives. The Committee determined that while Management made progress in key areas in financial year 2024
growing the business, the Company did not achieve 100% of its annual corporate objectives, and therefore no
bonuses for the company executives will be paid. This outcome was based on achievements versus goals in the
following key areas: technology/innovation, healthcare/commercial partnerships, insurance reimbursement,
regulatory compliance, governance, inclusion, operations and underachievement of the revenue target.
Major Decisions and Substantial Changes regarding Directors’ Remuneration - During financial year 2024,
there were no major decisions or substantial changes on our directors’ remuneration scheme except for reduction in
the compensation agreed with the executives from the restructuring and dedication towards the goal of achieving
breakeven within two years.
Conclusion
On behalf of the Committee, I hope you will agree that our judgements set out in this report are a sensible approach to
reward and motivate our directors and our CEO to deliver sustainable growth and shareholder value over the long term and
do so in a responsible and cost efficient manner.
I hope that you find the information in this report helpful and responsive to shareholders' and other stakeholders'
expectations, and look forward to the AGM, where we hope to have your support.
Catherine Coste
Member of the Remuneration Committee
20 November 2024
| Renalytix plc Annual Report and Financial Statements
32
DIRECTORS’ REMUNERATION POLICY
This part of the Directors’ remuneration report sets out the Directors’ remuneration policy for the Company’s directors and
executive directors and has been prepared in accordance with the Large and Medium-sized Companies and Groups
(Accounts and Reports) (Amendment) Regulations 2013.
The remuneration policy was approved by shareholders in a binding vote at our AGM on 17 December 2021 and took effect
from the date of approval.
The policy applies for a maximum period of three years (or until a revised policy is approved by shareholders) and will
therefore next need to be approved in a binding vote at the AGM in 2024.
The scenario charts have been updated to reflect the intended application of the policy for the financial year 2024 and
references to prior financial years have been updated where appropriate to aid understanding. A copy of the as approved
policy (including the scenario charts set out in that Policy) is in the Annual Report and Financial Statements for the financial
year 2021 which is available at: https://investors.renalytixai.com/financials-and-filings/annual-and-half-year-reports. The
policy is unchanged this year, and as such is not subject to a shareholder vote.
Renalytix’s remuneration policy has been designed to:
align to the Company’s strategy and business model;
attract, retain and motivate high calibre individuals who have the potential to support the growth of the Company;
be competitive against appropriate market benchmarks, focusing particularly on the US bio-technology sector;
and
take account of good governance and promote the long-term success of the Company.
EXECUTIVE DIRECTOR REMUNERATION POLICY TABLE
The table below sets out, for each element of pay, a summary of how remuneration of executive directors is structured and
how it supports the Company’s strategy.
Executive Directors
Purpose and Link to
Strategy
Operation
Maximum Opportunity
Performance Metrics
BASE SALARY
To attract, retain and motivate
executive directors of the
highest calibre who are
capable of delivering the
Company’s strategic
objectives, reflecting the
individual’s experience and
role within the Company.
Base salary is designed to
provide an appropriate level of
fixed income to avoid an over-
reliance on variable pay
elements that could encourage
excessive risk taking.
Salaries are normally
reviewed annually, and
changes are generally
effective from 1 October.
The annual salary review of
the Executive Directors
takes into consideration a
number of factors, including:
• scope of the
individual’s
responsibilities;
• abilities, experience
and performance of the
individual;
• business performance;
• salary increases
awarded to the overall
employee population;
• market competitiveness
and US and UK market
practice; and
• the underlying rate of
inflation.
Executive Director level salaries
are determined considering
industry benchmarking data.
There is no prescribed
maximum annual salary or
salary increase.
Base salary increases are
awarded at the discretion of
the Committee; however, the
Committee is guided by the
general increase for the
broader employee population
but may decide to award a
lower increase for Executive
Directors or exceed this to
recognize, for example, an
increase in the scale, scope or
responsibility of the role
and/or take account relevant
market movements.
Executive Director level salary
increases are approved by the
Board in line with corporate
performance and are consistent
with positions held.
No formal metrics, although
any increases take account of
Company performance and the
individual performance of the
Executive Director.
BENEFITS
Benefits in kind offered to
Executive Directors are
provided on a market-
competitive basis, to assist with
their recruitment and retention.
The Company aims to offer
benefits that are in line with
the Executive Directors’ local
market and those offered to the
wider workforce.
There is no defined maximum
value for benefits, but the
Committee will consider the
aggregate value of any such
benefits when determining
what should be offered.
Not performance related.
| Renalytix plc Annual Report and Financial Statements
33
Executive Directors
Purpose and Link
to Strategy
Operation
Maximum Opportunity
Performance Metrics
PENSION
The Company aims to provide
a contribution towards life in
retirement.
Depending on their location
and comparable benefits
offered to local employees,
Executive Directors may be
eligible to receive employer
contributions to a defined
contribution pension scheme
or a cash supplement in lieu of
such contributions, or a
mixture of both.
The maximum employer
pension contribution or cash
in lieu amount will be a
percentage of annual base
salary aligned with that
provided to other senior
executives in the Executive
Director’s location.
Not performance related.
ANNUAL BONUS
An annual bonus rewards the
achievement of objectives that
support the Company’s
corporate goals and delivery
of the business strategy.
Bonuses are determined based
on objectives that are agreed
with the Committee, and the
Board, at the start of each
financial year although the
Committee retains the
discretion to amend objectives
during the year if it considers
that objectives are no longer
appropriate.
Different performance
measures and weightings may
be used each year, as agreed
with the Committee, to take
into account changes in the
business strategy.
Bonuses are normally paid in
cash (but may be paid in the
form of an equity award, at
the discretion of the
Committee).
Executive Director level
bonuses are approved by the
Board in line with corporate
performance and are
consistent with positions held.
Performance measures are
determined by the Committee
each year and may vary to
ensure that they promote the
Company’s business strategy
and shareholder value. The
annual bonus will be based on
corporate measures, including,
but not limited to, financial
and/or strategic measures.
Bonus measures are reviewed
at least annually and the
Committee has the discretion
to change the measures or to
introduce new measures when
it deems appropriate.
EQUITY INCENTIVE PLAN (‘EIP’)
To attract, motivate, retain
and reward for long-term,
sustainable performance
linked to corporate strategy
and provide alignment with
shareholders’ interests.
Equity awards granted to
Executive Directors may take
the form of options, restricted
shares, performance share
units, restricted share units, or
other forms of awards granted
in accordance with the
discretionary EIP that may be
in place from time to time.
The Executive Directors
received a grant under the
EIP’s predecessor plan upon
listing on AIM and it is
intended that top- up awards
shall be issued under the EIP
from time to time in the
discretion of the Committee.
There is no maximum
opportunity for equity
incentives. However, the
Committee will generally assess
the position at similar sized
comparative companies prior to
making any award to ensure that
any awards are aligned to the
market.
Vesting of equity awards is
generally subject to continued
employment and may also be
subject to the achievement of
performance conditions
aligned with the Company’s
strategic plan. Measures, their
weightings and the period
over which performance is
tested will be determined by
the Committee.
The Committee will select the
most appropriate form of EIP
for awards each year and/or
each individual grant.
Vesting of equity awards may
be accelerated in part or in
full in connection with certain
corporate events such as a
change of control.
ALL EMPLOYEE EQUITY PLANS
Encourages employee share
ownership and therefore
increases alignment of
interests with shareholders.
The Company may, from time
to time, operate tax-advantaged
share plans for which
Executive Directors would be
eligible on the same basis as all
other eligible employees.
Within the limits of the relevant
legislation.
Not performance related.
| Renalytix plc Annual Report and Financial Statements
34
Notes to the Executive Director Remuneration Policy Table
Legacy Arrangements
For the duration of this Remuneration Policy, the Company will honour any commitments made in respect of current or
former Directors before the date on which either: (i) the Remuneration Policy becomes effective; or (ii) an individual
becomes a Director, even where not consistent with the Remuneration Policy set out in this report or prevailing at the time
such commitment is fulfilled. For the avoidance of doubt, all outstanding historic awards that were granted in connection
with, or prior to, our IPO on NASDAQ remain eligible to vest based on their original or modified terms.
Clawback Provisions
The Company has adopted a Nasdaq-compliant Incentive Compensation Recoupment Policy.
Shareholding Requirements
Executive directors are not currently required to build and retain a shareholding, but the Committee will keep this under
review.
NON-EXECUTIVE DIRECTOR REMUNERATION POLICY TABLE
The table below sets out, for each element of pay, a summary of how remuneration of non-executive directors is structured
and how it supports the Company’s strategy.
Chair and Non-Executive Directors
Purpose and Link
to Strategy
Operation
Maximum Opportunity
Performance Metrics
CASH FEES AND BENEFITS
Set at a level that is sufficient
to attract and retain high
calibre non- executives who
contribute to the business.
The Chair and the Non-
Executive Directors receive
fees paid in cash.
Fees are paid and
reviewed annually.
Non-Executive Directors
ordinarily do not participate
in any pension, bonus or
performance-based share
incentive plans. Travel,
accommodation and other
business-related expenses
incurred in carrying out the
role as well as fees for tax
advice associated with
completion of international
tax returns will be paid by
the Company including, if
relevant, any gross- up for
tax and/or social security
contributions.
Tax equalization and/or
relocation benefits may be
provided to Non-Executive
Directors who are required to
relocate or become tax
resident in a new
jurisdiction.
When reviewing fee levels
and benefits, account is taken
of market movements in the
fees and benefits of Non-
Executive Directors, Board
Committee responsibilities
and ongoing time
commitments.
Actual fee levels are
disclosed in the annual
Directors’ Remuneration
Report for the relevant
financial year.
Not performance related.
| Renalytix plc Annual Report and Financial Statements
35
Chair and Non-Executive Directors
Purpose and Link to
Strategy
Operation
Maximum Opportunity
Performance Metrics
EQUITY-BASED AWARDS
To facilitate share
ownership and provide
alignment with
shareholders.
Non-Executive Directors may
receive equity awards under
any equity incentive plan
operated by the Company from
time
to time which permits their
participation with careful
consideration being given to
ensuring their independence.
Non-Executive Directors
may receive an initial equity
award upon appointment or
election. Initial equity
awards will normally vest
over a
specified period of time,
subject generally to continued
service. Vesting of equity
awards may be accelerated in
part or in
full in connection with certain
corporate events such as a
change of control.
In addition, Non-Executive
Directors may be granted an
equity award each year which
may vest in full upon grant or
over time subject to continued
service. If a new Non-Executive
Director joins the Board
following the date of grant of
this annual grant in any calendar
year, such Non-Executive
Director may be granted a pro
rata portion of the next annual
grant to reflect his or her service
during the relevant part of the
relevant year.
There is no maximum number
of equity incentive awards that
may be awarded to individuals
each year. However, when
reviewing award levels, account
is taken of market movements in
equity incentive awards, Board
committee responsibilities,
ongoing time commitments
and the general economic
environment.
Non-executive directors do not
participate in performance-based
equity incentives.
REMUNERATION FOR NEW APPOINTMENTS
Where it is necessary to appoint or replace an Executive Director, the Committee has determined that the new Executive
Director will receive a compensation package in accordance with the provisions of the approved remuneration policy in
force at the time of appointment but focusing on the objective of appointing the most appropriate person in the right
geography.
In setting base salaries for new Executive Directors, the Committee will consider the existing salary package of the new
Director, the individual’s skills, level of experience and the market rate for the role.
In setting the annual performance bonus, the Committee may wish to set different performance metrics (to those of other
Executive Directors) in the first year of appointment. Where it is appropriate to offer a below-median salary on initial
appointment, the Committee will have the discretion to allow phased salary increases over a period of time for a newly
appointed Director as the Executive gains experience in their new role, even though this may involve increases in excess of
inflation and the increases awarded to the wider workforce.
Benefits and pensions will be in line with those offered to other executive directors, taking account of local market practice
with relocation expenses provided at the discretion of the Committee if necessary. Tax equalization may also be considered
if an executive is adversely affected by taxation due to their employment with the Group. Legal fees and other costs incurred
by the individual may also be met by the Company.
The ongoing incentive opportunity offered to new recruits will be in line with that offered to existing Directors. Different
measures and targets under the bonus plan or the Company’s equity incentive arrangements may be set initially taking
account of the responsibilities of the individual and the point in the financial year at which they join. A new employee may
be granted normal annual equity awards in the first year of employment in addition to any awards made with respect to prior
employment being forfeited, which shall be excluded from any annual maximum on the size of awards.
| Renalytix plc Annual Report and Financial Statements
36
To enable the recruitment of exceptional talent, the Committee may determine that the buy-out of remuneration forfeit from
a prior employer is necessary. Where possible, any replacement remuneration will be offered on a like-for-like basis with the
forfeited awards and may be in the form of cash or shares and depending whether the award forgone has similar performance
conditions, may or may not be subject to performance conditions. The value of any buy-out will be limited to the value of
remuneration forfeit. Where appropriate, such awards will be granted under existing share plans, however, the Committee
will have discretion to make standalone awards where appropriate.
In respect of internal appointments, any commitments entered into in respect of a prior role, including variable pay elements,
may be allowed to pay out according to their prior term, adjusted as relevant to take into account the appointment.
The terms of appointment for a new Non-Executive Director would be in accordance with the remuneration policy for Non-
Executive Directors in force at that time.
EXECUTIVE DIRECTORS’ SERVICE CONTRACTS
James McCullough (Chief Executive Officer) is currently employed at-will pursuant to an employment agreement entered
into with Renalytix AI, Inc, dated 2 November 2018 but effective on 1 November 2018. His employment may be terminated
by either party at any time for any or no reason, with or without notice. Severance payments no more generous than those
described in this policy will be payable to him on termination. Upon termination of his employment agreement, our Chief
Executive Officer is required to resign from all other positions within the Company’s group. Following termination of his
employment, our Chief Executive Officer will be bound by certain post-termination covenants.
As is customary for US executives, our Chief Executive Officer’s remuneration is subject to a “best-after-tax” cutback for
excise tax calculations under section 280G of the US Internal Revenue Code of 1986, with no tax gross-up.
Fergus Fleming (Chief Technology Officer) is currently employed on an indefinite term pursuant to an employment
agreement entered into with the Company dated 1 November 2018. His employment may be terminated by either party on
12 months written notice.
At its discretion, upon receipt of his written notice, or as an alternative to providing notice, terminate the employment with
immediate effect and make a payment in lieu of notice, comprising base salary only, for the notice period (or remainder
thereof, should notice have been given). In the event of a breach of service agreement or other summary termination of
employment, no such payments will be made.
A copy of these contracts may be viewed at the Company’s head office or may be requested from the Company Secretary at
the annual general meeting.
NON-EXECUTIVE DIRECTORS’ TERMS OF ENGAGEMENT
All Non-Executive Directors, including the Chair, have specific terms of engagement which may be terminated on not less
than six months’ notice by either party.
The remuneration of Non-Executive Directors is determined by the Board within the limits set by the Company’s articles of
association and based on a review of fees and equity-based remuneration paid to Non-Executive Directors of similar
companies.
A Board evaluation has been performed and the results of this exercise confirmed that all Non-Executive Directors were
independent.
TERMINATION AND LOSS OF OFFICE PAYMENTS
Depending on market practice in the jurisdiction in which an Executive Director is employed, exit payments shall depend on
the circumstances of termination and may be made by reference to a notice period (including a payment in lieu of notice) or
employment “at-will” together with a severance payment. Where a notice period applies, this will not exceed 12 months but
may be accompanied by additional severance entitlements where applicable.
The Company’s policy on remuneration for Executive Directors who leave the Company is set out below. The Committee
will exercise its discretion when determining amounts that should be paid to leavers, taking into account the facts and
circumstances of each case.
| Renalytix plc Annual Report and Financial Statements
37
US-BASED EXECUTIVES
Termination without
cause or with Good
Reason1
Termination for cause
Termination without cause or
with Good Reason1 in connection
with change in control
Salary and benefits
Subject to the
executive executing a
release: a payment of
up to 12 months’
salary and benefits
including COBRA or
other applicable
healthcare coverage
payable in equal
monthly instalments
or as a lump sum, at
the discretion of the
Committee.
No payment.
Subject to the executive executing
a release: a payment of up to 18
months’ salary and benefits and
benefits payable in equal monthly
instalments or as a lump sum, at
the discretion of the Committee.
Annual bonus
Any earned but unpaid
bonus, a pro-rata
portion of the bonus
that would have been
due for any part year
worked, plus up to one
year’s target bonus, or
a higher bonus at the
discretion of the
Committee, payable
as a lump sum or on a
monthly basis.
No payment.
Any earned but unpaid bonus, a
pro-rata portion of the bonus that
would have been due for any part
year worked, plus up to 1.5 year’s
target bonus, or a higher bonus at
the discretion of the Committee,
payable as a lump sum or on a
monthly basis.
Equity incentive
awards
The Company may
accelerate the vesting
of the portion of equity
held on the termination
date that would have
vested over the following
one year period.
Unvested awards lapse in full.
Full vesting on termination.
1: Includes, among others, a material diminution in role, a material reduction in base salary or mandated relocation, as
defined by contract.
NON-US BASED EXECUTIVES
When calculating termination payments for Non-US based Executives, the Committee will consider a variety of factors,
including individual and Company performance, the length of service of the Executive Directors in question and, where
appropriate, the obligation for the Executive Directors to mitigate loss. In the event of a change of control and ownership,
the Committee may exercise its discretion to provide for additional remuneration and/or benefits for Executive Directors
who leave the Company in connection with such change of control, and will take into account all relevant circumstances
when making any such determination.
In the case of a ‘good leaver’ (to be determined at the discretion of the Committee) the following policy will normally apply,
although the Committee retains the discretion to make payments which are no more generous than those applicable to a US
based Executive Director (as described above), when viewed in the round with notice / payment in lieu of notice
entitlements:
notice period of twelve months or payment in lieu of notice;
statutory redundancy payments will be made, as appropriate;
Executive Directors have no entitlement to a bonus payment in the event that they cease to be employed by the
Company, however, they may be considered for a pro-rated award by the Committee in good leaver
circumstances; and
any share-based entitlements granted to an Executive Director under the Company’s share and individual share
contracts or share option plans will be determined based upon the relevant individual share option contracts or
plan rules, and performance conditions or hurdles and vesting may be accelerated in the discretion of the
Committee.
| Renalytix plc Annual Report and Financial Statements
38
ADDITIONAL PAYMENTS
The Committee will make payment of any statutory entitlements as necessary. In addition, the Committee will retain the
discretion to make additional payments in settlement of, or to compromise, an actual or potential claim in connection with a
termination of any Executive Director as necessary.
The Committee reserves the right to make reasonable legal, relocation and outplacement costs, if deemed necessary.
ILLUSTRATION OF APPLICATION OF THE POLICY
Pay-For-Performance Scenario Analysis
The charts below have been updated to reflect the intended application of the policy for the 2025 financial year. A copy of
the shareholder approved policy (including the scenario charts for the 2024 financial year) is in the Annual Report for the
year ended 30 June 2024, which is available on the Company’s website. The charts below provide an estimate of the
potential future reward opportunities for the Executive Directors, and the potential split between different elements of
remuneration under different performance scenarios:
Minimum - fixed pay only.
Target (performance in line with expectations) - fixed pay, plus bonus and equity payouts at threshold level (50%
of maximum).
Maximum (performance meets or exceeds maximum) - fixed pay, plus the maximum bonus payout and full
vesting of any equity awards, based on grant-date face value of awards to be granted in financial year 2025.
Fixed Pay Comprises:
Salaries - salary effective at 1 July 2024.
Benefits - an estimated value of all benefits receivable in the 2025 financial year.
Pension - 6% of salary for the CEO and CTO.
Amounts are shown in thousands (USD).
Values do not include the impact of any share price appreciation over the vesting period. The reporting regulations require
the disclosure of maximum total pay including the impact of a 50% increase in share price over the vesting period for equity
awards subject to multi-year performance measures which is not applicable to any of our current equity awards. The equity
award amounts shown above relate to share options vesting during the year using the Company’s AIM closing price at the
end of the quarter in which the award vested less associated exercise price.
| Renalytix plc Annual Report and Financial Statements
39
Statement Of Consideration Of Employees’ Pay and Remuneration Conditions Elsewhere In The
Group
The Company does not formally consult with employees on the matters of Executive Director remuneration. However,
the Committee is made aware of employment conditions in the wider Group. The same broad principles apply to the
remuneration policy for both Executive Directors and the wider employee population. However, the remuneration for
Executive Directors has a stronger emphasis on performance-related pay than for other employees. Salaries, benefits
and pensions are compared to appropriate market rates in the jurisdiction in which the Executive Director is employed
and is set at an appropriate level with allowance for role, responsibilities and experience.
Statement Of Consideration Of Shareholders’ Views
The Committee will consider any Shareholder feedback received at the Annual General Meeting and at meetings
throughout the year, when reviewing the overall remuneration policy each year. The guidance from relevant
shareholder representative bodies is also considered on an ongoing basis.
More specifically the Committee will consult with major Shareholders when proposing any significant changes to the
policy in the future.
ANNUAL REPORT ON REMUNERATION
This report constitutes a Directors’ Remuneration Report in accordance with the Large and Medium-sized Companies and
Groups (Accounts and Reports) (Amendment) Regulations 2013, the Companies (Miscellaneous Reporting) Regulations
2018, and the Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019 and
section 420 of the Companies Act 2006. This report sets out the Group policy on Directors’ remuneration, including
emoluments, benefits and other share-based awards made to each Director.
This section of the remuneration report provides details of how our remuneration policy was implemented during the
financial year ended 30 June 2024, and how it will be implemented during the year ending 30 June 2025.
This report splits certain information into that for Executive Directors and that for Non-Executive Directors.
REMUNERATION COMMITTEE (THE “COMMITTEE”)
Governance
In its decision-making process, the Committee takes account of information from both internal and independent sources and
Aon surveys. Aon was appointed as remuneration consultants by the Committee based on their expertise in the field via a
competitive tender process. Aon advises the Committee on all aspects of senior executive remuneration. Aon has kept the
Committee up to date on remuneration trends and corporate governance best practice. Aon does not have any other
connection with the Company and is considered to be independent and objective by the Committee. During the year ended
30 June 2024, fees charged by Aon amounted to approximately USD 31,500 and this was charged on a time spent basis.
The members of the Committee during the year were Daniel J. Levangie (Chair) and Catherine Coste.
Remuneration Committee report
The Company’s Chief of Staff provides updates to the Committee, as required, to ensure that the Committee is fully
informed about pay and performance issues throughout the Company. The Committee takes these factors into account when
determining the remuneration of the Executive Directors and senior executives.
No Executive Director or employee can participate in any discussion directly relating to their own personal conditions of
service or remuneration.
No conflicts of interest have arisen during the year and none of the members of the Committee has any personal financial
interest in the matters discussed, other than as option holders. The fees of the Non-Executive Directors are approved by the
Board on the joint recommendation of the Committee and the Chief Executive Officer.
| Renalytix plc Annual Report and Financial Statements
40
Discretions Retained By The Committee
The Committee operates under the powers it has been delegated by the Board. In addition, it complies with rules that require
certain matters to be put to either shareholder or Board approval. These rules provide the Committee with certain discretions
which serve to ensure that the implementation of the Remuneration Policy is fair, both to the individual director and to the
shareholders. The Committee operates the Company’s remuneration plans in accordance with their rules from time to time.
To maintain an efficient administrative process, the Committee retains the following discretions to apply its judgement in
setting remuneration:
the eligibility to participate in the plans;
the timing of grant of awards and any payments;
the size of awards and payments (subject to any maximum limits set out in the policy table above and the
respective plan rules);
the determination of whether the performance conditions have been met;
determining a good or bad leaver under the terms of the plan and the treatment of such leaver’s cash and equity
remuneration;
dealing with a change of control or restructuring of the Group;
adjustments required in certain capital events such as rights issues, corporate restructuring, events and special
dividends and certain other out-of-the-ordinary events;
the annual review of performance and other vesting conditions for the annual bonus plan and equity awards.
In certain circumstances, such as a material acquisition/divestment of a Group business, which mean the original
performance conditions are no longer appropriate, the Committee may adjust the targets, alter weightings or set different
measures as necessary, to ensure the conditions achieve their original purpose and are not materially less difficult to satisfy.
The Committee may make minor amendments to the Remuneration Policy (for regulatory, exchange control, tax or
administrative purposes or to take account of a change in legislation) without obtaining shareholder approval for that
amendment.
| Renalytix plc Annual Report and Financial Statements
41
Directors’ Remuneration – financial year ended 30 June 2024
The total remuneration of the individual Directors who served during the period is shown below. Total remuneration is
the sum of emoluments for the period in service as a director plus Company pension contributions, and the value of
long-term incentive awards vesting by reference to performance in the twelve months to 30 June 2024.
Directors’ Remuneration – financial year ended 30 June 2024
Year
Base
Salary
($000s)a
Benefits
($000s)b
Bonus
($000s)c
EIPd Pension
($000s)e
Total
Remuneration
($000s)
Total Fixed
Remuneration
($000s)
Total
Variable
Remuneration
($000s)
Executive Directors
James
McCullough
2024
510
54
-
-
17
580
580
-
2023
601
30
406
-
20
1,057
651
406
Fergus Fleming
2024
310
17
-
-
16
343
343
-
2023
351
16
154
-
18
539
385
154
Non-Executive Directors
Erik Lium
(Mount Sinai
representative)1
2024
-
-
-
-
-
-
-
-
2023
24
-
-
-
-
24
24
-
Christopher Mills
2024
-
-
-
-
-
-
-
-
2023
24
-
-
-
-
24
24
-
Daniel Levangie2
2024
65
-
-
-
-
65
65
-
2023
24
-
-
-
-
24
24
-
Catherine Coste
2024
68
-
-
-
-
68
68
-
2023
-
-
-
-
-
-
-
-
Chirag Parikh3
2024
11
-
-
-
-
11
11
-
2023
24
-
-
-
-
24
24
-
Timothy Scannell4
2024
14
-
-
-
-
14
14
-
2023
24
-
-
-
-
24
24
-
Notes to the remuneration table
a.
All amounts presented were earned in respect of the financial period.
b.
This is the taxable value of benefits paid or payable in respect of the financial period. For executive directors,
benefits include health, dental, vision, life and long-term disability insurance paid for by the Company
c.
The remuneration committee has concluded that executive bonuses will not be paid out for the financial year
ended 30 June 2024.
d.
The amount shown relates to the market value of the EIP and other equity awards vesting during the year using
the Company’s AIM closing price at the end of the quarter in which the award vested less associated exercise
price.
e.
The amount shown relates to Company contributions to the defined contribution scheme, plus any cash in lieu.
1.
Dr. Lium sits on our board as a representative of the Icahn School of Medicine at Mount Sinai. This fee is
invoiced annually by Mt. Sinai.
2.
Daniel Levangie resigned from the Board in October 2024.
3.
Chirag Parikh resigned from the board in December 2023.
4.
Timothy Scannell resigned from the board in October 2023.
ANNUAL PERFORMANCE BONUS – 2023/2024 financial year
In the 2024 financial year, all employees were eligible for an annual discretionary cash bonus, whereby performance
objectives were established at the beginning of the financial year by reference to suitably challenging corporate goals.
For the 2024 financial year, no annual performance bonus was paid to any employees.
| Renalytix plc Annual Report and Financial Statements
42
EXECUTIVE DIRECTORS’ SHARE AWARDS
Shareholdings as at 30 June 2024 for each director who has held office during the 2024 financial year are set out in the
table below (together with interests held by his or her connected persons):
Directors’ Interests In Shares At 30 June 2024
Director
Total shares
owned
outright plus
vested options
Shares owned
outright
Percentage
of issued
share capital
Vested but not
exercised
Unvested but
subject to
performance
Unvested and
not subjected
to
performance
Current Directors
James McCullough1
2,965,140
2,746,386
1.7%
218,754
—
656,263
Fergus Fleming
1,195,869
569,481
0.3%
626,388
—
264,675
Mount Sinai (Board
Seat)
24,184,227
23,979,726
14.5%
204,501
—
—
Christopher Mills2
14,072,500
14,072,500
8.5%
—
—
95,000
Daniel Levangie
27,500
—
—
27,500
—
107,500
Catherine Coste
—
—
—
—
—
285,000
1. James McCullough shareholding includes 2,746,386 shares held through his family trust, The McCullough 2020
Irrevocable Trust (the “Trust”).
2. Christopher Mills is partner and Chief Investment Officer of Harwood Capital LLP. Harwood Capital LLP is
Investment Manager to North Atlantic Smaller Companies Investment Trust plc and investment adviser to Oryx
International Growth Fund Limited. Christopher’s shareholding is made up of 10,458,582 ordinary shares held by
North Atlantic Smaller Companies Investment Trust PLC, 2,812,794 ordinary shares are held by Oryx
International Growth Fund Limited and 801,124 ordinary shares are held by Harwood Capital LLP.
3. Executive Directors are encouraged to build a meaningful shareholding so as to align their interests with those of
shareholders but no formal shareholders requirements apply.
4. Save as noted, no connected persons hold any interests.
| Renalytix plc Annual Report and Financial Statements
43
Performance Graph and Table
The following graph shows Renalytix’s cumulative Total Shareholder Return (“TSR”) from the Company’s November
2018 IPO on AIM relative to the FTSE AIM All Share Index and the Nasdaq Biotech Index. These two indices were
chosen due to Renalytix’s listing on both exchanges and the sector in which it operates. For the period from 6
November 2018 to 30 June 2024 Renalytix Plc data relates to AIM TSR, and from 17 July 2020 the data relates to
Nasdaq TSR (as show by the separate line).
TSR is defined as the return on investment obtained from holding a company’s shares over a period. It includes
dividends paid, the change in capital value of the shares and any other payment made to or by shareholders within the
period.
ALIGNING PAY WITH PERFORMANCE
CEO Remuneration Compared With Annual Growth In TSR:
The total remuneration figure for the CEO (James McCullough) is shown in the table below, along with the value of
bonuses, and EIP vesting, as a percentage of the maximum opportunity.
James McCullough
2024
($000s)
2023
($000s)
2022
($000s)
Total remuneration ($000s)
580
1,057
648
Actual bonus as a % of the maximum
0%
75%
0%
Actual share award vesting as % of the maximum ($000s)
242
—
—
| Renalytix plc Annual Report and Financial Statements
44
Percentage Change In Remuneration Of The Directors and Employees
Set out below is the change between the financial years 2022 to 2024 in base salary, benefits, pension and annual
performance bonus for all the directors and the Company’s employees.
Percent change FY23 -
FY24
Percent change FY22 -
FY23
Percent change FY21 -
FY22
Salary
Benefits Bonus
Salary
Benefits Bonus Salary Benefits Bonus
James McCullough
-15%
81%
-100%
0%
48%
-
3%
-68%
-100%
Fergus Fleming
-12%
5%
-100%
-7%
1%
-
3%
-8%
-100%
Mount Sinai
-100%
-
-
-9%
-
-
-
-
-
Christopher Mills
-100%
-
-
-9%
-
-
-
-
-
Chirag Parikh1
-53%
-
-
-73%
-
-
-
-
-
Daniel Levangie2
170%
-
-
-9%
-
-
-
-
-
Timothy Scannell3
-40%
-
-
262%
-
-
-
-
-
Catherine Coste4
-
-
-
-
-
-
-
-
-
1.
Chirag Parikh resigned from the board in December 2023.
2.
Daniel Levangie resigned from the Board in October 2024.
3.
Timothy Scannell resigned from the board in October 2023.
4.
Catherine Coste joined the board in June 2023 therefore she did not receive remuneration for the 2023 financial
year (or any prior year).
Relative Importance Of Spend On Pay
Total revenue and administrative expenditures have been selected as comparators for the employee costs as no dividends
have been paid and these two financial measures are strong indicators of the activity within the Company and of its
performance.
2024
2023
Change
($000’s)
Change
(%)
Total employee remuneration ($000s)
12,077
20,887
(8,810 )
-42%
Average number of employees
60
82
(22 )
-27%
Revenue ($000s)
2,289
3,403
(1,114 )
-33%
Administrative expenditures ($000s)
30,733
43,056
(12,323 )
-29%
No dividends distributions or share buyback transactions occurred
in either 2024 or 2023
—
—
—
Statement Of Implementation Of Policy In 2024/25
Base salary: For the 2023/2024 financial year, there was a reduction to James McCullough’s and Fergus Fleming’s base
salary as part of the Company's cost cutting measures. The 2024/2025 salary increases have not been determined but are
expected to be effective 1 January 2025 and are expected to be in line with market rates for all of eligible employees, being
those that had joined the business prior to 1 July 2024.
Pension and benefits: In 2024/2025, Executive Directors are eligible for the same benefits as provided to all senior
employees. The Executive Directors are each entitled to the maximum employer pension contribution of 6% of their
respective base salary which is paid into a defined contribution pension scheme / paid in cash in lieu of pension
contributions.
Annual performance bonus: For 2024/2025, the Executive Directors’ annual cash bonus target payouts are still being
determined by the Committee and will be disclosed in next year's report. The Committee considers overall corporate
performance and individual performance when determining the final bonus amount to be awarded to an Executive Director.
Performance will be tested against targets set by the Committee at the start of the year and will comprise a combination of
corporate goals and individual goals for James McCullough and Fergus Fleming.
Specific targets are commercially sensitive and therefore are not disclosed in advance. However, full details of the targets
and performance against them will be disclosed when they are no longer considered commercially sensitive.
The Chairman and non-executive directors will continue to be paid their current level of fees.
| Renalytix plc Annual Report and Financial Statements
45
Payments For Loss Of Office (Audited Information)
There were no loss of office payments in 2023/2024.
Payments To Past Directors (Audited Information)
The Company made payments of $14,000 and $11,000 to Timothy Scannell and Chirah Parikh, respectively, for their
service as directors for the financial year ended 30 June 2024. Timothy Scanell resigned from the board in October 2023
and Chirag Parikh resigned from the board in December 2023.
Clawback
The Committee has adopted a Nasdaq-compliant Incentive Compensation Recoupment Policy.
Shareholder Voting On Remuneration Matters At AGM
The table below sets out the previous votes cast at our AGM in 2023 in respect of the previous Directors’ Remuneration
Report and the votes cast at our AGM in 2021 in respect of the Remuneration Policy.
Votes For
Votes Against
Votes Withheld
%
Number
%
Number
Number
Directors' Remuneration Report
99.44%
39,959,034
0.56%
226,856
24,973
Directors' Remuneration Policy
70.34%
25,272,488
29.66%
10,658,539
26,932
Catherine Coste
Chair of the Remuneration Committee
20 November 2024
| Renalytix plc Annual Report and Financial Statements
46
Audit Committee Report
RENALYTIX PLC
AUDIT COMMITTEE REPORT
FOR THE YEAR ENDED 30 JUNE 2024
The Audit Committee reports to the Board on matters concerning the Group’s internal financial controls, financial
reporting and risk management systems, identifying any matters in respect of which it considers that action or
improvement is needed and making recommendations as to the steps to be taken.
Composition of the Audit Committee
The Audit Committee is appointed by the Board compromised Catherine Coste (Committee Chair) Dan Levangie and
Erik Lium. Catherine Coste has experience of chairing and holding non-executive position with number of Boards and
is a Certified Public Accountant in the U.S. Whilst no other non-executive member of the Board held an accounting
qualification during the 2024 financial year, Dan Levangie and Erik Lium were both deemed competent by virtue of
their relevant experience to the sector in which the Company operates.
Role of the Audit Committee
The Audit Committee operates within defined terms of reference and its main functions are:
to monitor the internal financial control and risk management systems on which the Group is reliant;
to consider whether there is a need for the Group to have its own internal audit function;
to monitor the integrity of the Group’s financial statements and formal announcements relating to the Group’s
financial performance, reviewing significant financial reporting judgements contained in them;
to review arrangements by which staff may, in confidence, raise concerns about possible improprieties in matters
of financial reporting or any other matter;
to meet the independent Auditor of the Group to review their proposed audit programme of work and the
subsequent Audit Report and to assess the effectiveness of the audit process and the levels of fees paid in respect
of both audit and non-audit work;
to make recommendations to the Board in relation to the appointment, re-appointment or removal of the Auditor,
and to negotiate their remuneration and terms of engagement on audit and non-audit work; and
to monitor and review annually the external Auditor’s independence, objectivity, effectiveness, resources and
qualification.
External audit
The Group’s external auditors are PKF Littlejohn LLP and CohnReznick LLP.
The effectiveness and independence of the external audits and auditors are reviewed annually by reference to the
auditor’s attendance at Committee meetings, their audit plan, audit fieldwork, post-audit management letter and the
judgment of the Committee having discussed the matter with the finance director.
The Board has reviewed its safeguards and policies in place for non-audit services and is satisfied that these are
sufficiently robust to ensure that both auditors maintain their audit objectivity and independence. PKF Littlejohn LLP
report to the Board annually on their independence from the Company. Non-audit services are provided only if such
services do not conflict with their statutory responsibilities and ethical guidance.
Taking all of the above into consideration, the Committee concluded the auditors were both effective and independent
during the year.
Review of financial statements and risks identified Financial statements issued by the Company need to be fair,
balanced, and understandable. The Audit Committee reviews the Annual Report as a whole and makes
| Renalytix plc Annual Report and Financial Statements
47
recommendations to the Board. The Audit Committee has advised the Board that, in its opinion, the Annual Report and
Financial Statements are fair, balanced and understandable and provides the information necessary for shareholders to
assess the Company’s position and performance, business model and strategy. The Company’s unaudited interim
results are also reviewed by the Audit Committee prior to their publication.
Key risk areas, and audit and accounting matters considered by the Committee
Generally, there is a close relationship between the Company’s income statement and its cash flows, with few
significant judgmental items or longer-term unsettled items remaining on the balance sheet.
The main accounting and audit risks identified during the year, including as also described in the auditor’s report, were:
capitalisation of intangible costs and impairment review;
recoverability of amounts due from subsidiary;
funding and going concern risk assessments; and
revenue recognition.
No significant adjustments or matters of concern were identified by the external audit.
Internal control and consideration of the need for the internal audit
The Board believes that due to the size of the business there is currently no requirement for an internal audit function.
This matter is reviewed annually.
The finance function for the Group is managed by the Interim Chief Financial Officer with use of an internal team of
accountants. Reliance with regard to internal control effectiveness is placed on the close involvement of the executive
officers and the Company Secretary in the day to day management and control of the business, with the Audit
Committee retaining oversight of financial information provided to the Board and the Group’s accounting and internal
control policies and procedures.
Recommendations for amendments or improvements are made as needed.
In connection with the preparation of our consolidated U.S. financial statements for the year ended June 30, 2024, we
concluded that there was a material weakness in the design of our internal control over financial reporting impacting
accounting for the mark-to-market adjustment for our convertible debt that had been elected under the fair value option,
which resulted in insufficient expense recognition. The deficiency arose due to the high complexity and technical nature of
the convertible debt instrument and due to the lack of internal technical expertise. This material weakness resulted in
adjustments to expense and equity which were recorded prior to the issuance of the consolidated financial statements as of
June 30, 2024.
During the three months ended September 30, 2024, we executed our remediation plan by engaging a third-party advisory
firm to help substantiate the complexity of the convertible debt. We have also implemented controls to include senior
management review of the transactions. These efforts ensure that our financial records are managed appropriately but also
help ensure that the appropriate level of review is performed. We have concluded that the applicable remediated controls are
designed, implemented and operating effectively. As a result of these remediation activities we concluded the previously
reported material weakness has been remediated as of September 30, 2024.
During the year there were no other significant matters raised by the external auditors, nor any significant matters of
concern identified with regard to internal control elsewhere that required action by the Committee.
Therefore, it is judged that the current size, financial position, complexity and risk profile of the Group does not justify
the cost of an internal audit function. This will be kept under annual review.
Catherine Coste
Chair of the Audit Committee
20 November 2024
| Renalytix plc Annual Report and Financial Statements
48
INDEPENDENT AUDITOR’S REPORT TO THE
MEMBERS OF RENALYTIX PLC
Opinion
We have audited the financial statements of Renalytix Plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the year
ended 30 June 2024 which comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive
Income, the Consolidated and Company’s Statements of Financial Position, the Consolidated and Company’s Statements of
Cash Flows, the Consolidated and Company’s Statements of Changes in Equity and notes to the financial statements, including
significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law
and UK-adopted international accounting standards and as regards the parent company financial statements, as applied in
accordance with the provisions of the Companies Act 2006.
In our opinion:
the financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at
30 June 2024 and of the group’s loss for the year then ended;
the group financial statements have been properly prepared in accordance with UK-adopted international accounting
standards;
the parent company financial statements have been properly prepared in accordance with UK-adopted international
accounting standards and as applied in accordance with the provisions of the Companies Act 2006; and,
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We are independent of the group and parent company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied
to listed 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.
Material uncertainty related to going concern
We draw attention to note 3 in the financial statements, which indicates that the group has incurred a net loss of $45.5m during
the year ended 30 June 2024. As stated in note 3, these events or conditions, along with the other matters as set forth in note 3,
indicate that a material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern.
Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the director’s use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the group and parent
company’s ability to continue to adopt the going concern basis of accounting included:
obtaining management’s base and worst-case forecasts for the period up to 31 December 2025 and testing the
mathematical accuracy of both forecasts, challenge management assumptions and inputs for the going concern period
which cover a period of 12 months from the date of approving the financial statement by the board;
reviewing management’s assessment of going concern, which included validating the receipt of the funding raised post
year end, the likelihood of achieving the required growth in revenue, and the ability to implement additional cost
reduction strategies; and
critically assessing the disclosures made within the financial statements for consistency with management’s assessment
of going concern.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections
of this report.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements.
At the planning stage, materiality is used to determine the financial statement areas that are included within the scope of our
audit.
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49
Materiality for the group financial statements as a whole was $454,000 (2023: $423,000) with performance materiality set at
$272,000 (2023: $253,000), being 60% (2023: 60%) of group materiality. Materiality for the financial statements as a whole
was based upon 1.5% of the adjusted group’s loss before tax (before adjusting for the impairment charges) (2023: 1% of group’s
gross assets).
In determining materiality, we considered loss before tax a key benchmark for the group as there has been a change in strategy
in the year. We consider loss before tax to be a key metric used by shareholders owing to a change from the historic investment
in the product technology to the drive from management reducing investment in assets and focusing on cost cutting measures.
We have also set a separate, lower materiality, for revenue to reflect the early stages of revenue generation which would not be
captured sufficiently using group materiality. We have determined materiality for revenue as $92,000 (2023: $70,000) and
performance materiality as $55,200 (2023: $42,000), calculated at 4% (2023: 2%) of revenue.
The percentages applied to these benchmarks have been selected to bring into scope all significant classes of transactions,
account balances and disclosures relevant for the shareholders, and also to ensure that matters that would have a significant
impact on the reported result were appropriately considered.
In determining performance materiality, significant judgements made were in respect to our experience with auditing the
financial statements of the group in previous year, based on the number and quantum of identified misstatements in prior period
audits.
We agreed with the audit committee that we would report all individual audit differences identified for the group during the
course of our audit in excess of $22,000 (2023: $21,000) together with any other audit misstatements below that threshold that
we believe warrant reporting on qualitative grounds.
Materiality applied to the parent company financial statements was $251,000 (2023: $235,000) with performance materiality
set at $150,000 (2022: $170,000), being 60% of the parent company materiality.
The benchmark for materiality of the parent company was a straight-line proportional allocation of group loss before tax (2023:
0.25% of gross assets). The percentage applied to this benchmark has been selected to bring into scope all significant classes of
transactions, account balances and disclosures relevant for the shareholders, and also to ensure that matters that would have a
significant impact on the reported profit or loss were appropriately considered.
In determining performance materiality, significant judgements made were in respect our experience with auditing the financial
statements of the parent company in previous years.
We agreed with the audit committee that we would report all individual audit differences identified for the parent company
during the course of our audit in excess of $12,000 (2023: $15,000) together with any other audit misstatements below that
threshold that we believe warrant reporting on qualitative grounds.
Our approach to the audit
In designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In
particular, we looked at areas involving significant accounting estimates and judgement by the directors such as the
recoverability of intangible fixed assets, as outlined in the Key Audit Matter section below, and considered events that are
inherently uncertain.
We also addressed the risk of management override of controls, including among other matters consideration of whether there
was evidence of bias that represented a risk of material misstatement due to fraud. All significant and/or material subsidiary
undertakings were audited directly by PKF Littlejohn LLP and subject to full scope audits.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in
the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
In addition to the matter described in the Material uncertainty related to going concern section we have determined the matters
described below to be the key audit matters to be communicated in our report.
| Renalytix plc Annual Report and Financial Statements
50
Key Audit Matter
How our scope addressed this matter
Recoverability of intangible fixed assets (refer notes 6 and
19) - group
Intangible assets have a carrying value of 2024: $ nil (2023:
£12,511,000) and comprise the following categories:
•
Trademarks, trade names, and licenses;
•
Trade secrets; and,
•
Product development costs
Intangible assets that are measured at cost less accumulated
amortisation and impairment are assessed at the end of each
reporting period for indicators of impairment. The group has
incurred recurring losses and negative cash flows from
operations since inception.
Where indicators of impairment under IAS 36 Impairment of
Assets are present, management estimates the recoverable
amounts using value in use calculations. These involve
significant estimation and judgement from management due
to the inherent uncertainty and subjectivity over forecasting
and discounting future cash flows. Additionally, significant
judgement is required when estimating the useful economic
lives of intangible assets.
Given the judgements and estimates involved, this was a key
focus for our audit.
Our work on this matter included:
Confirming the group held good title to the intangible
assets;
Assessing whether any indicators of impairment under
IAS 36 (including regulatory issues, progress on
obtaining milestones towards commercialisation,
development of competing technology and products
entering the market) existed at the reporting date which
required an impairment charge to be recognised in the
Income Statement.
Testing the forecasts and value in use calculations
which included:
o
Evaluating
and
challenging
the
key
assumptions and inputs used by management;
o
Performing a sensitivity analysis on the
headroom to assess the impact of potential
changes in key assumptions and inputs;
o
Checking the mathematical accuracy of the
financial model; and,
o
Comparing the accuracy of previous forecasts
against actual results.
Performing an independent assessment of impairment.
Based on the audit procedures performed, we have not
identified any indicators suggesting that the recoverable
value was inappropriately written off.
Carrying value of investments in subsidiaries and
recoverability of intercompany receivable (refer note 20)
Investments in subsidiaries have a carrying value of 2024: $
nil (2023: $118,487,000) and are carried at cost less
impairment.
The recoverability of the carrying value is ultimately
dependent on the trading performance of the subsidiary
undertakings. The subsidiaries have incurred recurring losses
and negative cash flows, therefore there is a risk that the
carrying value is impaired.
The assessment of recoverability utilises the same value in
use calculations as those used for the impairment assessment
of intangible assets described above.
Given the judgements and estimates involved, this was a key
focus for our audit.
Our work on this matter included:
Testing the forecasts and value in use calculations
which included:
o
Evaluating
and
challenging
the
key
assumptions and inputs used by management;
o
Performing a sensitivity analysis on the
headroom to assess the impact of potential
changes in key assumptions and inputs;
o
Checking the mathematical accuracy of the
financial model; and,
o
Assessing the accuracy of previous forecasts
to actual results.
Reviewing management’s impairment paper and
assessment of recoverability, providing appropriate
challenge and corroborating key assumptions.
Comparing the carrying value of the subsidiaries to the
market value of the group.
| Renalytix plc Annual Report and Financial Statements
51
Based on the audit procedures performed, we have not
identified any indicators suggesting that the carrying value
of the investments in subsidiaries was inappropriately
written off.
Other information
The other information comprises the information included in the annual report, other than the financial statements and our
auditor’s report thereon. The directors are responsible for the other information contained within the annual report. Our opinion
on the group financial statements does not cover the other information and, except to the extent otherwise explicitly stated in
our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge
obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the
financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
the information given in the strategic report and the directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the company and their environment obtained in the course of
the audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report
to you if, in our opinion:
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches
not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the statement of directors’ report, 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 and the company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is
a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
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52
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with
our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to
which our procedures are capable of detecting irregularities, including fraud is detailed below:
We obtained an understanding of the group and parent company and the sector in which they operate to identify laws
and regulations that could reasonably be expected to have a direct effect on the financial statements. We obtained our
understanding in this regard through discussions with management, and experience of the AI diagnostics sector.
We determined the principal laws and regulations relevant to the group and parent company in this regard to be those
arising from:
o
Companies Act 2006
o
AIM listing rules
o
General Data Protection Regulation
o
Quoted Companies Alliance Corporate Governance Code
o
Food and Drug Administration Agency
o
Local laws and regulations in United Kingdom and the United States of America where the group operates;
and
o
Local tax and employment law where each member of the group operates
We designed our audit procedures to ensure the audit team considered whether there were any indications of non-
compliance by the group and parent company with those laws and regulations. These procedures included, but were
not limited to:
o
Making enquiries of management
o
Reviewing Board minutes
o
Reviewing legal expenses
o
Reviewing Regulatory News Services announcements
We also identified the risks of material misstatement of the financial statements due to fraud. We considered, in
addition to the non-rebuttable presumption of a risk of fraud arising from management override of controls, the
potential for management bias was identified in relation to the recoverability of intangible fixed assets and the
recoverability of investments in subsidiaries. As noted in the key audit matters section, we addressed this by
challenging the assumptions and judgements made by management when auditing those significant accounting
estimates.
We addressed the risk of fraud arising from management override of controls by performing audit procedures which
included but were not limited to the testing of journals; reviewing accounting estimates for evidence of bias; and
evaluating the business rationale of any significant transactions that are unusual or outside the normal course of
business.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to
a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that
compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we
will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring
due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
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.
Our audit opinion is consistent with the additional report to the audit committee.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to
state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone, other than the company and the company's members as a body, for our audit work, for this report, or
for the opinions we have formed.
Wendy Liang (Senior Statutory Auditor)
15 Westferry Circus
For and on behalf of PKF Littlejohn LLP
Canary Wharf
Statutory Auditor
London E14 4HD
20 November 2024
| Renalytix plc Annual Report and Financial Statements
53
FINANCIAL STATEMENTS
Consolidated Income Statement
FOR THE YEAR ENDED 30 JUNE 2024
Notes
2024
2023
$'000
$'000
Continuing Operations
Revenue
8
2,289
3,403
Cost of Sales
(2,076)
(2,702)
Gross profit
213
701
Administrative expenses
9
(30,733)
(43,056)
Operating loss
(30,520)
(42,355)
Share of Net loss in Associate accounted for using the equity method
-
(9)
Impairment of Intangibles
19
(10,472)
-
Gain (loss) on financial assets at fair value through profit or loss
22
(505)
(1,273)
Fair value adjustment of convertible debt
29
(3,750)
(3,093)
Finance (expenses) / income - net
14
(223)
509
Loss before tax
(45,470)
(46,221)
Taxation
15
-
(2)
Loss for the Year
(45,470)
(46,223)
Earnings per Ordinary share
Basic
16
$
(0.42) $
(0.56)
Diluted
16
$
(0.42) $
(0.56)
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54
Consolidated Statement of
Comprehensive Income
FOR THE YEAR ENDED 30 JUNE 2024
2024
2023
$'000
$'000
Loss for the year
(45,470)
(46,223)
Other comprehensive income:
Items that may be subsequently reclassified to profit or loss
Changes in the fair value of the convertible notes
306
719
Currency translation differences
(270)
(337)
Other comprehensive income for the year
36
382
Total comprehensive loss for the year
(45,434)
(45,841)
Items stated above are disclosed net of tax. The income tax relating to each component of other comprehensive income is
disclosed in note 15.
| Renalytix plc Annual Report and Financial Statements
55
Consolidated and Company’s
Statements of Financial Position
AS AT 30 JUNE 2024
Notes
Group
2024
Group
2023
Company
2024
Company
2023
$'000
$'000
$'000
$'000
Assets
Non-current assets:
Property, plant and equipment
17
213
1,027
-
-
Right of use asset
18
-
194
-
-
Intangible assets
19
-
12,511
-
12,180
Investment in subsidiaries
20
-
-
-
118,487
Other long term assets
71
51
-
1
Total non-current assets
284
13,783
-
130,668
Current Assets
Inventory
21
271
718
-
-
Security Deposits
22
77
132
-
-
Financial asset at fair value through profit or loss
22
698
1,460
698
1,460
Trade and other receivables
23
722
776
-
-
Due from subsidiaries
-
-
-
4,156
Prepaid and other current assets
24
364
566
137
184
Cash and cash equivalents
25
4,680
24,682
2,149
8,574
Total current assets
6,812
28,334
2,984
14,374
Total assets
7,096
42,117
2,984
145,042
Equity attributable to owners of the parent
Share capital
26
491
299
491
299
Share premium
26
121,813
104,953
121,813
104,953
Share-based payment reserve
27
14,452
13,513
14,224
13,299
Accumulated other comprehensive income
(1,086)
(1,127)
-
(380)
Retained (deficit) / earnings
(144,654)
(99,184)
(145,452)
9,373
Total equity
(8,984)
18,454
(8,924)
127,544
Liabilities
Current liabilities:
Trade and other payables
28
7,544
11,513
2,633
1,466
Current lease liabilities
18
46
156
-
-
Note payable current
29
4,159
4,463
4,159
4,463
Current due to affiliated company
-
-
785
4,084
Total current liabilities
11,749
16,132
7,577
10,013
Non-current liabilities
Note payable non-current
29
4,331
7,485
4,331
7,485
Non-current lease liabilities
18
-
46
-
-
Total non-current liabilities
4,331
7,531
4,331
7,485
Total liabilities
16,080
23,663
11,908
17,498
Total equity and liabilities
7,096
42,117
2,984
145,042
| Renalytix plc Annual Report and Financial Statements
56
The notes on pages 60 to 81 are an integral part of these financial statements.
The Company has elected to take the exemption under section 408 of the Companies Act 2006 not to present the Parent
Company income statement. The loss for the Parent Company for the year was ($154,825,000). (Year ended 30 June 2023:
loss of $14,389,000).
The financial statements were approved and authorized for issue by the Board on 20 November 2024 and signed on its behalf
by:
James R. McCullough
Chief Executive Officer
Company number: 11257655
| Renalytix plc Annual Report and Financial Statements
57
Consolidated and Company’s
Statements of Cash Flows
FOR THE YEAR ENDED 30 JUNE 2024
Notes
Group
2024
Group
2023
Company
2024
Company
2023
$'000
$'000
$'000
$'000
Cash flows from operating activities:
Loss before income tax
(45,470)
(46,221)
(154,825)
(14,389)
Adjustments for
Depreciation
17
184
341
-
-
Amortisation
18, 19
2,255
2,151
1,978
1,906
Impairment of assets
19
10,472
-
140,606
-
Impairment of property and equipment
17
631
-
-
-
Share-based payments
27
1,083
1,560
25
49
Share of net loss of associate
-
9
-
-
Reversal of Kantaro Liability
-
(55)
-
-
Unrealized loss on financial asset at fair value through profit
or loss
505
1,273
505
1,273
Realized loss on sale of ordinary shares in VericiDx
136
-
136
-
Fair value adjustment of convertible debt
29
3,750
3,093
3,750
3,093
Foreign Exchange gain
(165)
(1,008)
(22)
-
Changes in working capital
Trade and other receivables
23
54
125
5,592
2,699
Prepaid assets and other current assets
24
202
1,298
47
121
Related party receivable
-
75
-
-
Inventory
21
447
442
-
-
Security Deposits
55
141
-
-
Trade and other payables
28
(3,969)
4,148
543
312
Deferred Revenue
-
(46)
-
-
Net cash used in operating activities
(29,830)
(32,674)
(1,665)
(4,936)
Cash flows from investing activities:
Proceeds from sale of investments
117
-
117
-
Investment in Renalytix Inc
-
-
(14,694)
(31,008)
Net cash generated by/(used in) investing activities
117
-
(14,577)
(31,008)
Cash flows from financing activities
Repayment of convertible notes
29
(1,660)
(4,288)
(1,660)
(4,288)
Issue of shares (net of issue costs)
26
11,817
19,306
11,817
19,306
Proceeds from the issuance of ordinary shares under employee
share purchase plan
26
93
261
93
261
Lease payments
18
(156)
(160)
-
-
Net cash generated from financing activities
10,094
15,119
10,250
15,279
Net decrease in cash and cash equivalents
(19,619)
(17,555)
(5,992)
(20,665)
Cash and cash equivalents at beginning of period
24,682
41,333
8,574
28,313
Effect of exchange rate changes on cash
(383)
904
(433)
926
Cash and cash equivalents at end of period
25
4,680
24,682
2,149
8,574
| Renalytix plc Annual Report and Financial Statements
58
Consolidated Statement of Changes
in Equity
FOR THE YEAR ENDED 30 JUNE 2024
Share-
based
Accumulated
other
Share
Capital
Share
Premium
payment
reserve
comprehensive
income
Retained
deficit
Total
Equity
$'000
$'000
$'000
$'000
$'000
$'000
At 30 June 2022
241
85,444
11,954
(1,509)
(52,961)
43,169
Comprehensive income
Loss for the year
-
-
-
-
(46,223)
(46,223)
Other comprehensive income
Changes in fair value of convertible notes
-
-
-
719
-
719
Currency translation differences
-
-
-
(337)
-
(337)
Total comprehensive income
-
-
-
382
(46,223)
(45,841)
Transactions with Owners
Share-based payments
-
-
1,559
-
-
1,559
Shares issues under ESPP
1
260
-
-
-
261
Shares issued under Securities Purchase Agreement
57
20,240
-
-
-
20,297
Less issue costs
-
(991)
-
-
-
(991)
Total transactions with owners of the parent,
recognized directly in equity
58
19,509
1,559
-
-
21,126
At 30 June 2023
299
104,953
13,513
(1,127)
(99,184)
18,454
Comprehensive income
Loss for the year
-
-
-
-
(45,470)
(45,470)
Other comprehensive income
Changes in fair value of convertible notes
-
-
-
306
-
306
Currency translation differences
-
(5)
-
(265)
-
(270)
Total comprehensive income
-
(5)
-
41
(45,470)
(45,434)
Transactions with Owners
Share-based payments
-
-
1,083
-
-
1,083
Shares issues under ESPP
-
93
-
-
-
93
Shares issued for repayment of convertible bond
30
4,978
-
-
-
5,008
Vesting of RSUs
1
138
(144)
(5)
Shares issued under Securities Purchase Agreement
161
13,372
-
-
-
13,533
Less issue costs
(1,716)
-
-
-
(1,716)
Total transactions with owners of the parent,
recognized directly in equity
192
16,865
939
-
-
17,996
At 30 June 2024
491
121,813
14,452
(1,086)
(144,654)
(8,984)
| Renalytix plc Annual Report and Financial Statements
59
Company’s Statement of Changes
in Equity
FOR THE YEAR ENDED 30 JUNE 2024
Share-
based
Accumulated
other
Share
Capital
Share
Premium
payment
reserve
comprehensive
income
Retained
earnings
/ (loss)
Total
Equity
$'000
$'000
$'000
$'000
$'000
$'000
At 30 June and 1 July 2022
241
85,444
11,840
(5,119)
23,763
116,169
Comprehensive income
Loss for the year
-
-
-
-
(14,390)
(14,390)
Other comprehensive income
Changes in fair value of convertible notes
-
-
-
(337)
-
(337)
Currency translation differences
-
-
-
5,076
-
5,076
Total comprehensive income
-
-
-
4,739
(14,390)
(9,651)
Transactions with Owners
Share-based payments
-
-
1,459
-
-
1,459
Shares issued under Securities Purchase Agreement
57
20,240
-
-
-
20,297
Less issue costs
-
(991)
-
-
-
(991)
Shares issued under the ESPP
1
260
-
-
-
261
Total transactions with owners of the parent,
recognized directly in equity
58
19,509
1,459
-
-
21,026
At 30 June and 1 July 2023
299
104,953
13,299
(380)
9,373
127,544
Comprehensive income
Loss for the year
-
-
-
-
(154,825)
(154,825)
Other comprehensive income
Changes in fair value of convertible notes
-
-
-
306
-
306
Currency translation differences
-
(5)
-
74
-
69
Total comprehensive income
-
(5)
-
380
(154,825)
(154,450)
Transactions with Owners
Share-based payments
-
-
1,069
-
-
1,069
Shares issued for repayment of convertible bond
30
4,978
5,008
Vesting of RSUs
1
138
(144)
(5)
Shares issued under Securities Purchase Agreement
161
13,372
-
-
-
13,533
Less issue costs
-
(1,716)
-
-
-
(1,716)
Shares issued under the ESPP
-
93
-
-
-
93
Total transactions with owners of the parent,
recognized directly in equity
192
16,865
925
-
-
17,982
At 30 June 2024
491
121,813
14,224
-
(145,452)
(8,924)
| Renalytix plc Annual Report and Financial Statements
60
Notes to the Financial Statements
1. GENERAL INFORMATION AND BASIS OF PRESENTATION
Renalytix Plc (the “Company”) is a company incorporated in the United Kingdom. The Company is a public limited
company, which is listed on the AIM market of the London Stock Exchange and Nasdaq global market. The address of the
registered office is 2 Leman Street, London, United Kingdom, E1W 9US. The Company was incorporated on 15 March
2018 and its registered number is 11257655.
The principal activity of the Company and its subsidiaries (together “the Group”) is as a developer of artificial intelligence-
enabled diagnostics for kidney disease.
The financial statements are presented in United States Dollars (“USD”) because that is the currency of the primary
economic environment in which the Group operates.
2. BASIS OF PRESENTATION
The Group and Company’s financial statements have been prepared in accordance with UK-adopted International
Accounting Standards and with the requirements of the Companies Act 2006.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It
also requires management to exercise its judgment in the process of applying the Group’s accounting policies.
New standards, amendments, and interpretations not adopted by the group
The group did not adopt any new standards, amendments or interpretations in year as they did not have a material impact on
the financial statements.
At the date of authorisation of these financial statements the following Standards and Interpretations which have not been
applied in these financial statements were in issue but not yet effective:
International Accounting Standards (amendments) Effective date*
IAS 1 - Amendments regarding the classification of liabilities1 January 2023
IAS 1, IFRS Practice Statement 2 - Amendments to IAS 1 and IFRS Practice Statement 21 January 2023
*Years beginning on or after
The Directors do not expect that the adoption of the standards listed above will have a material impact on the financial
statements of the Group or Company in future periods.
3. SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these financial statements are set out below.
Going concern
The Group and Company fund their day-to-day working capital needs through existing cash reserves. The Directors have
evaluated the use of the going concern basis in preparing these financial statements.
The Group has historically experienced recurring losses and negative cash flows. Despite this, significant strides have been
made in the commercialisation of kidneyintelX.dkd, and business objectives have been realigned for sharper focus. For the
year ending 30 June 2024, the Group recorded a loss of $45.5 million, with cash reserves of $4.7 million at year-end.
Substantial steps have been taken to refine the Company’s commercial strategy to achieve consistent, scalable results in the
coming periods. Key actions taken include:
Cost reductions: During the year, the Company significantly reduced its cost base, halving employee numbers
from over 80 to around 40 post-year-end, and cutting legal, professional, R&D expenses and other expenses which
are not necessary at this stage of the business. In Q1 2025 (quarter ending September 2024), operating expenses
were 4.2 million, down over 50% from $8.8 million in Q1 2024 (quarter ending September 2023). The Group
projects operating expenses for FY 2025 to be significantly lower than FY 2024’s total of $30.7 million.
Fundraising: A post-year-end fundraising in November 2024 raised approximately $14.9 million after expenses
and substantially restructured the outstanding liabilities on the Statement of Financial Position. Approximately $3.9
| Renalytix plc Annual Report and Financial Statements
61
million in convertible notes was converted to equity along with a $750K liability converted to a mix of equity and
five year long non-amortizing loan. Additionally, the remaining balance of the convertible note was converted to
an interest-only non-amortizing loan due July 2029 with interest fixed at 5.5% p.a. if paid in cash or 7.5% p.a. if
rolled into the balance of the loan.
Commercial Growth: Recent initiatives to expand kidneyintelX.dkd include the rollout of commercial testing with
a new large New York-based physician group practice, with test ordering and processing having commenced in
September 2024. Additionally, a significant expansion in patient blood draw options, a simplified test order
requisition form to reduce doctor workload, and improvements in customer service and test services billing all offer
an improved end-to-end user experience which the Company believes will support continued test volume growth.
Despite these measures, historical losses and ongoing cash needs pose a challenge to the Group’s going concern status. The
Directors recognize that continued operation may require additional capital to fund operations, support commercial growth,
and develop new products. Although there are no immediate plans for further funding via equity or debt, the Group aims to
build investor confidence through effective use of the current fundraising and strategic initiatives over the next 12 months.
The Company has incurred recurring losses and negative cash flows from operations since inception and had an accumulated
deficit in retained earnings of $145.5 million as of 30 June 2024. The Company anticipates incurring additional losses until
such time, if ever, that it can generate significant sales of kidneyintelX.dkd or KidneyIntelX technology services income.
The Company’s ability to continue as a going concern is contingent upon successful execution of management’s intended
plan over the next 24 months to improve the Company’s liquidity and profitability, which includes, without limitation:
•
The achievement of certain testing volumes in the lab;
•
Continued expansion of reimbursement policies and contracts with commercial payers; and
•
Continued management of operating and commercial expenses.
As a result of the Company's losses and its projected cash needs, along with the limited recent history of test order volume
increases, as defined in the accounting literature, substantial doubt exists about the Company’s ability to continue as a going
concern. While subsequent to 30 September 2024, the Company has successfully raised approximately $14.9 million in new
equity capital and restructured the existing long-term debt recorded on the Statement of the Financial Position, the Company
does have a history of operating losses and it has been expensive to deliver all of the milestones to commercialize the
kidneyintelX.dkd test. Should the company require additional capital it may not be available on acceptable terms, or at all,
and the Company may not be able to enter into strategic alliances or other arrangements on favorable terms, or at all. The
terms of any future financing may adversely affect the holdings or the rights of the Company’s shareholders. Should it be
necessary, if the Company is unable to obtain funding it could be required to delay, curtail or discontinue research and
development programs, product portfolio expansion or future commercialization efforts, which could adversely affect its
business prospects. As such, management has concluded that there is a going concern uncertainty. The consolidated
financial statements do not include any adjustments that may result from the outcome of this going concern uncertainty.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and its subsidiary undertakings.
The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the
entity and has the ability to affect those returns through its power over the entity. The existence and effect of potential voting
rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from
the date that control ceases.
All intra-group balances and transactions, including any unrealized income and expense arising from intra-group
transactions, are eliminated in full in preparing the consolidated financial statements. Unrealized gains arising from
transactions with equity accounted investees are eliminated against the investment to the extent of the Group’s interest in the
investee. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no
evidence of impairment
Foreign currency translation
Functional and presentational currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary
economic environment in which the entity operates (the functional currency). The consolidated financial statements are
presented in United States Dollars, which is the Group’s presentational currency. The functional currency of the Parent
Company is GB Pounds.
| Renalytix plc Annual Report and Financial Statements
62
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of
the transactions where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognized in the income statement within ‘administrative expenses’.
Group companies
The results and financial position of all the Group entities that have a functional currency different from the presentational
currency are translated into the presentational currency as follows:
assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that
balance sheet;
income and expenses for each income statement are translated at average exchange rates; and
all resulting exchange differences are recognized in other comprehensive income.
On consolidation, exchange differences arising from the translation of the net investment in foreign operations are taken to
other comprehensive income. When a foreign operation is partially disposed of or sold, exchange differences that were
recorded in equity are recognized in the income statement as part of the gain or loss on sale.
Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-
maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the
operating segments, has been identified as the Executive Directors who make strategic decisions. At present the Directors
consider the business to operate in a single segment.
Property, plant and equipment
Property, plant and equipment are stated at historical cost less accumulated depreciation and any provision for impairment.
Historical cost includes expenditure that is directly attributable to the acquisition of the asset and bringing the asset to its
working condition for its intended use.
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only where it
is probable that future economic benefits associated with the asset will flow to the Group and the cost of the asset can be
measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged
to the income statement during the financial period in which they are incurred.
Depreciation on assets is calculated using the straight-line method to allocate their cost to their residual values over their
estimated useful lives, as follows:
Fixtures and fittings 20%
The assets’ residual values and useful economic lives are reviewed regularly, and adjusted if appropriate, at the end of each
reporting period.
An asset’s carrying value is written down immediately to its recoverable amount if the asset’s carrying amount is greater
than its estimated recoverable amount.
Gains and losses on the disposal of assets are determined by comparing the proceeds with the carrying amount and are
recognized in administration expenses in the income statement.
Intangible assets
(a) Trademarks, trade names and licenses
Separately acquired trademarks and licenses are shown at historical cost. Trademarks and licenses acquired in a business
combination are recognized at fair value at the acquisition date. Trademarks and licenses have a finite useful life and are
carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost of
trademarks and licenses over the contractual license period of 10 to 15 years and is charged to administrative expenses in the
income statement.
| Renalytix plc Annual Report and Financial Statements
63
(b) Development costs and trade secrets
Development costs have a finite useful life and are carried at cost less accumulated amortisation.
Expenditure incurred on the development of new or substantially improved products or processes is capitalized, provided
that the related project satisfies the criteria for capitalisation, including the project’s technical feasibility and likely
commercial benefit. All other research and development costs are expensed to profit or loss as incurred.
Development costs are amortised over the estimated useful life of the products with which they are associated. Amortisation
commences when a new product is in commercial production. The amortisation is charged to administrative expenses in the
income statement. Amortisation is calculated using the straight-line method over 15 years. The estimated remaining useful
lives of development costs are reviewed at least on an annual basis.
The carrying value of capitalized development costs is reviewed for potential impairment at least annually and if a product
becomes unviable and an impairment is identified the deferred development costs are immediately charged to the income
statement.
Trade secrets, including technical know-how, operating procedures, methods and processes, are recognized at fair value at
the acquisition date. Trade secrets have a finite useful life and are carried at cost less accumulated amortisation.
Amortisation is calculated using the straight-line method over 15 years.
Impairment of non-financial assets
Assets that have an indefinite life or where amortisation has not yet commenced are tested annually for impairment. Assets
that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the carrying amount
exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have
not been adjusted.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable
cash flows. Impairment losses recognized for cash-generating units, to which goodwill has been allocated, are credited
initially to the carrying amount of goodwill. Any remaining impairment loss is charged pro rata to the other assets in the
cash-generating unit.
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the
revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount
that would have been determined had no impairment loss been recognized for the asset (cash-generating unit) in the prior
period. A reversal of an impairment loss is recognized in the income statement immediately. If goodwill is impaired,
however, no reversal of the impairment is recognized in the financial statements.
Financial assets
Classification
The Group classifies its financial assets in the following categories: loans and receivables at amortised cost and financial
assets at fair value through profit or loss. The classification depends on the purpose for which the financial assets were
acquired and management determines the classification of its financial assets at initial recognition.
(a) Loans and receivables
Financial assets are classified as at amortised cost only if both of the following criteria are met: the asset is held within a
business model whose objective is to collect contractual cash flows, and the contractual terms give rise to cash flows that are
solely payments of principal and interest. Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted on an active market. They are included in current assets, except for maturities
greater than 12 months after the balance sheet date. These are classified as non-current assets. The Group’s loans and
receivables comprise ‘trade and other receivables’ and cash and cash equivalents in the balance sheet.
| Renalytix plc Annual Report and Financial Statements
64
(b) Financial assets at fair value through profit or loss
The Group classifies the following financial assets at fair value through profit or loss (“FVPL”):
equity investments that are held for trading, and
equity investments for which the entity has not elected to recognize fair value gains and losses
through Other Comprehensive Income.
(c) Financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income comprise equity securities that are not held for trading
and which the Group has irrevocably elected at initial recognition to recognize in this category. The Group considers this
category to be more relevant for assets of this type.
(d) Financial liabilities at fair value through profit or loss
The Group classifies the following financial assets at fair value through profit or loss (“FVPL”):
Convertible debt recorded at fair value through profit or loss.
Cash and cash equivalents
Cash and short-term deposits in the balance sheet comprise cash at bank and in hand and short- term deposits with an
original maturity of three months or less.
For the purposes of the cash flow statements, cash and cash equivalents consist of cash and short-term deposits as defined
above.
Share capital and premium
Ordinary Shares are classified as equity. Proceeds in excess of the nominal value of shares issued are allocated to the share
premium account and are also classified as equity. Incremental costs directly attributable to the issue of new Ordinary Shares
or options are deducted from the share premium account.
Other reserves - equity
The share-based payment reserve is used to recognize the fair value of equity settled share-based payment transactions.
Foreign currency reserve is used to record the exchange differences on translation of entities in the Group which have a
functional currency different to the presentation currency.
Retained earnings includes all current and prior period results as disclosed in the income statement.
Trade and other payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from
suppliers. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal
operating cycle of the business if longer). If not, they are presented as non-current liabilities. Trade payables are recognized
initially at fair value and subsequently measured at amortised cost using the effective interest method.
Current and deferred income tax
Income tax comprises current and deferred tax. Tax is recognized in the income statement, except to the extent that it relates
to items recognized in other comprehensive income where the associated tax is also recognized in other comprehensive
income.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet
date in the countries where the Company and its subsidiary operate and generate taxable income. Management evaluates
positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and
establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred tax is recognized, using the liability method, on all temporary differences at the balance sheet date between the tax
| Renalytix plc Annual Report and Financial Statements
65
bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are
recognized in respect of all temporary differences except where the deferred tax liability arises from the initial recognition of
goodwill in business combinations.
Deferred tax assets are recognized for all deductible temporary differences, carry-forward of unused tax assets and tax
losses, to the extent that they are regarded as recoverable. They are regarded as recoverable where, on the basis of available
evidence, there will be sufficient taxable profits against which the future reversal of the underlying temporary differences
can be deducted.
The carrying value of the amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that
it is no longer probable that sufficient taxable profit will be available to allow all, or part, of the tax asset to be utilized.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is
realized or the liability is settled, based on the tax rates (and tax laws) that have been substantively enacted at the balance
sheet date.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the
same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the
balances on a net basis.
Leases
Leases are recognized as a right-of-use asset and a corresponding lease liability at the date on which the leased asset is
available for use by the Group.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net
present value of the following lease payments:
fixed payments (including in-substance fixed payments), less any lease incentives receivable
variable lease payment that are based on an index or a rate, initially measured using the index or
rate as at the commencement date
amounts expected to be payable by the group under residual value guarantees
the exercise price of a purchase option if the group is reasonably certain to exercise that option,
and
payments of penalties for terminating the lease, if the lease term reflects the group exercising that
option.
Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability.
The lease payments are discounted using the interest rate implicit within the lease. If that rate cannot be readily determined,
the Group’s incremental borrowing rate is used, being the rate that the Group would have to pay to borrow the funds
necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms,
security, and conditions.
Where the Group is exposed to potential future increases in variable lease payments based on an index or rate, amounts are
not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take
effect, the lease liability is reassessed and adjusted against the right-of-use asset.
Lease payments are allocated between principal and finance cost. The finance cost is charged to the income statement over
the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Right-of-use assets are measured at cost comprising the following:
the amount of the initial measurement of lease liability
any lease payments made at or before the commencement date less any lease incentives received
any initial direct costs
restoration costs
Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on straight line
basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the
| Renalytix plc Annual Report and Financial Statements
66
underlying asset’s useful life.
Revenue recognition
The Group recognizes revenue when a customer obtains control of contracted goods or services. The Group records the
amount of revenue that reflects the consideration that it expects to receive in exchange for those goods or services. The
revenue recognition will be assessed under IFRS 15 - Revenue from Contracts with Customers, to establish the principal and
agent in the relationship between the parties and with the end customer.
The Group only applies the five-step model to contracts when it is probable that it will collect the consideration to which it
is entitled in exchange for the goods or services that it transfers to the customer. The Group reviews the contract to
determine which performance obligations it must deliver and which of these performance obligations are distinct. Certain
contracts have options for the customer to acquire additional services. The Group evaluates these options to determine if a
material right exists. If, after that evaluation, it determines a material right does exist, it assigns value to the material right
based upon the renewal option approach. The Group recognizes as revenue the amount of the transaction price that is
allocated to each performance obligation when that performance obligation is satisfied or as it is satisfied. The Group uses
present right to payment and customer acceptance as indicators to determine the transfer of control to the customer occurs at
a point in time. Sales tax and other similar taxes are excluded from revenues.
Cost of revenue
Cost of revenue consists of costs directly attributable to the services rendered, including labor costs directly related to
revenue generating activities.
Employee benefits
(a) Pension obligations
The Group makes contributions to defined contribution pension plans. A defined contribution plan is a pension plan under
which the Group pays fixed contributions into a separate entity with the pension cost charged to the income statement as
incurred. The Group has no further obligations once the contributions have been paid.
(b) Share-based compensation
The Group operates an equity-settled, share-based compensation plan, under which the Group receives services from
employees and others as consideration for equity instruments of the Group. Equity-settled share-based payments are
measured at fair value at the date of grant and are expensed over the vesting period based on the number of instruments that
are expected to vest. For plans where vesting conditions are based on share price targets, the fair value at the date of grant
reflects these conditions. Where applicable the Group recognizes the impact of revisions to original estimates in the income
statement, with a corresponding adjustment to equity for equity-settled schemes. Fair values are measured using appropriate
valuation models, taking into account the terms and conditions of the awards.
When the share-based payment awards are exercised, the Company issues new shares. The proceeds received net of any
directly attributable transaction costs are credited to share capital (nominal value) and share premium.
National insurance on share options
To the extent that the share price at the balance sheet date is greater than the exercise price on options granted to UK citizens
under unapproved share-based payment compensation schemes, provision for any National Insurance Contributions has
been based on the prevailing rate of National Insurance. The provision is accrued over the performance period attaching to
the award.
Interest income
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate
applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial
asset to that asset’s net carrying amount.
Exceptional items
These are items of an unusual or non-recurring nature incurred by the Group and include transactional costs and one-off
items relating to business combinations, such as acquisition expenses.
| Renalytix plc Annual Report and Financial Statements
67
Assets classified as held for sale
Assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather
than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying value
and fair value less costs to sell. An impairment loss is recognized for any subsequent write-down of the asset to fair value
less costs to sell.
4.
FINANCIAL RISK MANAGEMENT
Financial risk factors
The Group’s activities expose it to a variety of financial risks. The Group’s Board monitors and manages the financial risks
relating to the operations of the Group.
(a) Market Risk
Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk primarily with respect to the US Dollar and the
Pounds Sterling. Foreign exchange risk arises from future commercial transactions and recognized assets and liabilities.
(b) Credit Risk
Credit risk relates mainly to cash at bank. The Group only deposits cash with major banks with high quality credit standing
and limits exposure to any one counterparty.
(c) Liquidity Risk
The Group’s continued future operations depend on its ability to raise sufficient working capital through the issue of share
capital and generate revenue.
5.
CAPITAL RISK MANAGEMENT
The Group manages its capital to ensure that it will be able to continue as a going concern while maximizing the return to
stakeholders. The Group’s capital structure primarily consists of equity attributable to the owners, comprising issued capital,
reserves and retained losses.
6.
CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
The Group makes estimates and assumptions regarding the future. Estimates and judgments are continually evaluated based
on historical experience and other factors, including expectations of future events that are believed to be reasonable under
the circumstances. In the future, actual results may differ from these estimates and assumptions. The estimates and
assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities
within the next financial year relate to:
Capitalisation and recoverability of intangible assets (note 19);
Impairment of investment of subsidiary and inter-company recoverability (note 20);
Share based payments (note 27).
Convertible debt recorded at fair value through profit or loss (note 29).
7.
SEGMENTAL REPORTING
The Group operates as a single segment.
| Renalytix plc Annual Report and Financial Statements
68
8. REVENUE
Testing services revenue
Testing services revenue is generated from the KidneyIntelX platform, which provides analytical services to customers.
Each individual test is a performance obligation that is satisfied at a point in time upon completion of the testing process
(when results are reported) which is when control passes to the customer and revenue is recognized. During the year ended
30 June 2024, the Group recognized $2.15 million of testing services revenue. Sales tax and other similar taxes are excluded
from revenues. There was $3.12 million of testing services revenue recognized in the 2023 accounting period.
Pharmaceutical services revenue
Pharmaceutical services revenue is generated from the provision of analytical services to customers. Contracts with
customers generally include an initial upfront payment and additional payments upon achieving performance milestones.
The Group uses present right to payment and customer acceptance as indicators to determine the transfer of control to the
customer which may occur at a point in time or over time depending on the individual contract terms. Sales tax and other
similar taxes are excluded from revenues. During the year ended 30 June 2024, the Group recognized $0.14 million of
pharmaceutical services revenue. There was $0.28 million of pharmaceutical services revenue recognized in the 2023
accounting period
Deferred revenue
Deferred revenue represents the allocated transaction price to the material right which will be recognized as revenue when
the renewal options are exercised, which is expected to occur over the next 24 months.
The following table summarizes the changes in deferred revenue:
2024
2023
$'000
$'000
Balance, beginning of period
-
45
Deferral of revenue
-
-
Revenue recognized
-
(45)
Balance, end of period
-
-
9. EXPENSES – ANALYSIS BY NATURE
2024
2023
$'000
$'000
Employee benefit expense
12,077
20,887
Contract labour
2,418
2,772
Depreciation and amortisation
2,030
2,061
Professional fees
9,104
10,176
Laboratory supplies
401
621
Other expenses
4,703
6,539
Total administration expenses
30,733
43,056
10.
AUDITOR’S REMUNERATION
2024
2023
$'000
$'000
Fees payable to the Company’s auditor for the audit of the parent Company and
consolidated financial statements
75
71
Total administration expenses
75
71
| Renalytix plc Annual Report and Financial Statements
69
11.
DIRECTORS’ REMUNERATION
Retirement benefits are accruing to two current executive directors under a defined contribution scheme. See further
disclosures within the Remuneration Report on page 30. The highest paid director received aggregate emoluments,
excluding the effect of the share based payments charge, totaling $580,000 (2023: $1,057,000).
2024
2023
$'000
$'000
Aggregate emoluments
979
1,638
Share based payments
330
-
Contribution to defined contribution pension scheme
103
83
Total
1,412
1,721
12.
EMPLOYEE BENEFIT EXPENSE
2024
2023
$'000
$'000
Wages, salaries and Bonus
7,731
14,529
Social security costs and Benefits
3,262
4,798
Share based payment expenses
1,084
1,560
Total
12,077
20,887
13.
MONTHLY AVERAGE NUMBER OF PEOPLE EMPLOYED
The monthly average number of people (including Executive Directors) employed was:
2024
2023
$'000
$'000
Administration
37
52
Research and development
17
23
COGS
6
7
Total
60
82
The total number of employees (FTEs) in the Group at 30 June 2024 was 45 (2023: 80).
14.
FINANCE INCOME AND COSTS
2024
2023
$'000
$'000
Finance costs:
Interest expense
(1)
(3)
Finance income:
Interest income
186
118
Gain / (Loss) on Foreign Exchange
163
(144)
Other Income (loss)
(571)
538
Net finance (loss) / income
(223)
509
15.
INCOME TAX
2024
2023
Group
$'000
$'000
Deferred tax
-
(2)
Total deferred tax
-
-
Income tax (charge)/credit
-
(2)
No deferred asset is calculated on losses in FY24 as the probability of future utilization is considered too remote.
| Renalytix plc Annual Report and Financial Statements
70
Factors affecting the future tax charge
The standard rate of corporation tax in the UK is 25%.
2024
2023
$'000
$'000
Loss before tax
45,470
46,221
Tax Calculated at domestic tax rates applicable to the UK Standard of tax at 25%
(2023: 25%)
11,368
11,555
Tax effects of:
Expenses not deductible for tax purposes
(363)
(872)
Losses on which no deferred tax asset is recognized
(94)
(85)
Tax credit for the year
10,911
10,598
Current Year Valuation Allowance
(10,911)
(10,598)
Prior year deferred tax asset
-
-
Reversal of tax asset at 30 June
-
-
Tax expense
-
(2)
Total Income Tax (Expense)/Credit
-
(2)
Net losses can be carried forward indefinitely to offset future taxable profits however management has concluded that the
realization of deferred tax assets to be less than probable and recorded a full valuation allowance. No deferred asset is
calculated on losses in the UK totaling $154,825,000 where the probability of future utilization is considered too remote.
16.
EARNINGS PER SHARE
Basic net loss per ordinary share is computed by dividing net loss by the weighted average number of ordinary shares
outstanding during each period. Diluted net loss per ordinary share includes the effect, if any, from the potential exercise or
conversion of securities, such as options which would result in the issuance of incremental ordinary shares. Potentially
dilutive securities outstanding as of 30 June 2024 have been excluded from the computation of diluted weighted average
shares outstanding as they would be anti-dilutive. Therefore, the weighted average number of shares used to calculate both
basic and diluted net loss per share are the same.
The following is a reconciliation of basic net loss per share to diluted net loss per share for the financial years ended 30 June
2024 and 2023.
2024
2023
Basic earnings per share
$
(0.42)
$
(0.56)
Average shares outstanding - basic
108,179,366
82,210,050
Convertible debt shares
-
-
Adjusted average shares outstanding - diluted
108,179,366
82,210,050
Diluted earnings per share
$
(0.42)
$
(0.56)
The following potentially dilutive securities have been excluded from the computation of diluted weighted-average shares of
ordinary shares outstanding as they would be anti-dilutive:
2024
2023
Stock options to purchase ordinary shares
7,473,866
4,968,576
Restricted stock units
7,930
40,340
Conversion of convertible note
3,264,719
5,441,199
10,746,515
10,450,115
| Renalytix plc Annual Report and Financial Statements
71
17.
PROPERTY, PLANT AND EQUIPMENT
Group
Fixtures and fittings
$’000
Cost
At 1 July 2022
1,877
Additions
-
At 30 June 2023
1,877
Depreciation
At 1 July 2022
509
Charge for the year
341
At 30 June 2023
850
Net book value at 30 June 2023
1,027
Cost
At 1 July 2023
1,877
Additions
-
Impairment
(1,364)
Foreign Translation
1
At 30 June 2024
514
Depreciation
At 1 July 2023
850
Charge for the year
184
Impairment
(733)
At 30 June 2024
301
Net book value at 30 June 2024
213
The depreciation charge of $184,000 related to Property, Plant and Equipment has been charged to administration
expenses ($132,000) and cost of goods sold ($52,000).
18.
LEASES
(i)
Amounts recognized in the statement of financial position
The balance sheet shows the following amounts relating to leases:
Group
Group
Company
Company
2024
2023
2024
2023
$'000
$'000
$'000
$'000
Right-of-use assets
Properties
-
194
-
-
Total right-of-use assets
-
194
-
-
Lease liabilities
Current
46
156
-
-
Non-current
-
46
-
-
Total lease liabilities
46
202
-
-
Right-of-use assets have been measured at the amount equal to the lease liability.
Lease liabilities were measured at the present value of the remaining lease payments, discounted using the Group’s
incremental borrowing rate.
(ii)
Amounts recognized in the Statement of Comprehensive income
The statement of profit or loss shows the following amounts relating to leases:
Group
Group
Company
Company
2024
2023
2024
2023
$'000
$'000
$'000
$'000
Amortisation charge - Right-of-use assets
Properties
194
160
-
-
Total right-of-use assets
194
160
-
-
Interest expense (included in finance cost)
1
3
-
-
| Renalytix plc Annual Report and Financial Statements
72
The total cash outflow for leases in the year to 30 June 2024 was $156,000 (2023: $160,000) for the Group and $nil
(2023: $nil) for the Company.
(iii)
The group’s leasing activities and how these are accounted for
The group leases various offices. Rental contracts for offices are made for fixed periods of between 1 and 5 years, but
may have extension options as described below.
Lease payments to be made under reasonably certain extension options are also included in the measurement of the
liability.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily
determined, which is generally the case for leases in the group, the lessee’s incremental cash rate is used, being the
rate that the individual lessee would forego to release the funds necessary to obtain an asset of similar value to the
right-of-use asset in a similar economic environment with similar terms, security and conditions.
19.
INTANGIBLE FIXED ASSETS
Group
Trademarks,
Trade
Names &
Licenses
Trade
Secrets
Development
Costs
Total
$’000
$’000
$’000
$’000
Cost
At 1 July 2022
9,279
6,275
4,055
19,609
Additions
-
-
-
-
Foreign translation
381
258
144
783
At 30 June 2023
9,660
6,533
4,199
20,392
Amortisation
At 1 July 2022
3,789
1,098
702
5,589
Charge for the year
922
624
432
1,978
Foreign Translation
199
75
40
314
At 30 June 2023
4,910
1,797
1,174
7,881
Net book value
At 30 June 2023
4,750
4,736
3,025
12,511
Cost
At 1 July 2023
9,660
6,533
4,199
20,392
Additions
-
-
-
-
Impairment
(9,687)
(6,551)
(4,209)
(20,447)
Foreign translation
27
18
10
55
At 30 June 2024
-
-
-
-
Amortisation
At 1 July 2023
4,910
1,797
1,174
7,881
Charge for the year
963
651
447
2,061
Impairment
(5,892)
(2,457)
(1,626)
(9,975)
Foreign Translation
19
9
5
33
At 30 June 2024
-
-
-
-
Net book value
At 30 June 2024
-
-
-
-
Amortisation expense of $1,936,167 has been charged to administration costs and $124,992 has been charged to cost
of goods sold. Amortisation expense of $1,978,473 was charged in the prior year ended 30 June 2023.
Licenses entail agreements with Icahn School of Medicine at Mount Sinai for rights to intellectual property and data
to support the KidneyIntelX diagnostic assay. Trade secrets refer to the Company’s acquisition of the biomarker
business from EKF, which includes intellectual property licensed from Joslin Diabetes Centre and forms a key
component of the KidneyIntelX product. Development costs include proprietary software development and diagnostic
assay design for KidneyIntelX.
Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable.
Following preparation of the latest three-year forecast, the Directors have fully impaired the intangible assets in the
parent company resulting in a $10.2m loss. Despite that the financial forecast model showed a steady growth in
| Renalytix plc Annual Report and Financial Statements
73
revenue over the next three years, and the achievement of breakeven operations after 24 months, the directors adopted
a conservative approach in recognizing the impairment of the intangible assets. The adjustment is a technical
accounting adjustment with no effect on the cashflow or cash balance of the Group. Additionally, the company has
announced the successful commitment of a substantial fundraise which is believed to support the company to
cashflow positive operations, that is now subject to shareholder approval.
The remaining average useful lives of the intangible assets is as follows:
Trademarks trade names & licenses
10-15 years
Trade secrets
15 years
Development Costs
15 years
The Company holds capitalized development costs with a cost of $278,168 and net value of $72,397. These projects
were placed into service in FY21.
20. INVESTMENTS IN SUBSIDIARIES - PARENT
2024
2023
Company
$'000
$'000
At beginning of Period
118,487
89,112
Capital Contribution relating to share based payment
1,060
1,511
Capital Contribution to Subsidiary
10,490
27,864
Impairment of Investment of subsidiary
(130,037)
-
At end of Period
-
118,487
Investments in Group undertakings are recorded at cost, which is the fair value of the consideration paid, less any
impairment. Following preparation of the latest three-year forecast, the Directors have fully impaired the investment
in subsidiaries. Despite that the financial forecast model showed a steady growth in revenue over the next three years,
and the achievement of breakeven operations after 24 months, the directors adopted a conservative approach in
recognizing the impairment of the investments in the Company. The adjustment is a technical accounting adjustment
with no effect on the cashflow or cash balance of the Group. Additionally, the company has announced the successful
commitment of a substantial fundraise which is believed to support the company to cashflow positive operations, that
is now subject to shareholder approval.
The Company had the following subsidiaries as of 30 September 2024.
Name of Company
Proportion held
Class of shareholding
Nature of business
Renalytix AI, Inc.1
100%
Ordinary
Developer of artificial
intelligence-enabled clinical
diagnostic solutions for kidney
disease
Renalytix AI Limited 2
100%
Ordinary
Developer of artificial
intelligence-enabled clinical
diagnostic solutions for kidney
disease
1.
Renalytix AI Inc. is incorporated in the United States of America and has their principal place of business at 1460
Broadway, New York, New York 10036. Renalytix AI Inc. is included in the consolidation. The proportions of
voting shares held by the parent company do not differ from the proportion of Ordinary Shares held.
2.
Renalytix AI Limited is incorporated in the Republic of Ireland and has their principal place of business at 29
Lower Patrick Street, Kilkenny, Ireland. Renalytix AI Ltd. is included in the consolidation. The proportions of
voting shares held by the parent company do not differ from the proportion of Ordinary Shares held.
21. INVENTORY
Group
Group
Company
Company
2024
2023
2024
2023
$'000
$'000
$'000
$'000
Finished Goods
271
718
-
-
The Directors are of the opinion that the replacement values of inventories are not materially different to the carrying
values stated above. The carrying values above are stated net of impairment provisions of $Nil (30 June 2023: $Nil).
| Renalytix plc Annual Report and Financial Statements
74
The cost of inventories recognized as expense and included in ‘cost of sales’ amounted to $275,000 (Year to 30 June
2023: $313,000). The Company held no inventories at 30 June 2024 and 30 June 2023.
22.
FINANCIAL INSTRUMENTS
(a) Assets at amortised cost
Group
Group
Company
Company
2024
2023
2024
2023
$'000
$'000
$'000
$'000
Assets as per balance sheet
Security deposits
77
132
-
-
Cash and cash equivalents
4,680
24,682
2,149
8,574
Total
4,757
24,814
2,149
8,574
Receivables in the analysis above are all categorized as “loans and receivables” for the Group and Company.
(b) Assets at fair value
Group
Group
Company
Company
2024
2023
2024
2023
$'000
$'000
$'000
$'000
Assets as per balance sheet
Investment in Verici Dx
698
1,460
698
1,460
Total
698
1,460
698
1,460
Fair value for the investment in Verici Dx was determined by reference to their published price quotation in an active market
(classified as level 1 in the fair value hierarchy).
(c) Liabilities at amortised cost
Group
Group
Company
Company
2024
2023
2024
2023
$'000
$'000
$'000
$'000
Liabilities as per balance sheet
Accounts payable
2,608
2,935
640
504
Accrued expenses
4,744
8,450
1,981
954
Lease Liabilities
46
202
-
-
Total
7,398
11,587
2,621
1,458
(d)Liabilities at fair value
Group
Group
Company
Company
2024
2023
2024
2023
$'000
$'000
$'000
$'000
Liabilities as per balance sheet
Note payable
8,490
11,948
8,490
11,948
Total
8,490
11,948
8,490
11,948
The note payable relates to our convertible debt instrument and is classified as Level 3 in the fair value hierarchy.
(e) Credit quality of financial assets
The Group is exposed to credit risk from its operating activities and from its financing activities, including deposits
with banks and financial institutions, foreign exchange transactions and other financial instruments.
The Group’s maximum exposure to credit risk, due to the failure of counterparties to perform their obligations as at 30
June 2024, in relation to each class of recognized financial assets, is the carrying amount of those assets as indicated in
the accompanying balance sheets.
| Renalytix plc Annual Report and Financial Statements
75
Trade Receivables
The credit quality of trade receivables that are neither past due nor impaired have been assessed based on historical
information about the counterparty default rate.
Cash at Bank
The credit quality of cash has been assessed by reference to external credit ratings, based on reputable credit agencies’
long- term issuer ratings:
Group
Group
Company
Company
2024
2023
2024
2023
$'000
$'000
$'000
$'000
AA+
4,680
24,682
2,149
8,574
Total
4,680
24,682
2,149
8,574
23. TRADE AND OTHER RECEIVABLES
Group
Group
Company
Company
2024
2023
2024
2023
$'000
$'000
$'000
$'000
Trade Receivables
722
776
-
-
Total
722
776
-
-
Due to their short term nature, the Directors consider that the carrying amount of trade and other receivables
approximates to their fair value.
24.
PREPAIDS AND OTHER CURRENT ASSETS
Group
Group
Company
Company
2024
2023
2024
2023
$'000
$'000
$'000
$'000
Prepaids
314
538
131
170
Other Current Assets
50
28
6
14
Prepaids and Other Current Assets
364
566
137
184
25.
CASH AND CASH EQUIVALENTS
Group
Group
Company
Company
2024
2023
2024
2023
$'000
$'000
$'000
$'000
Cash at Bank
4,680
24,682
2,149
8,574
Cash and cash equivalents
4,680
24,682
2,149
8,574
The Directors consider that the carrying value of cash and cash equivalents approximates to their fair value.
| Renalytix plc Annual Report and Financial Statements
76
26. SHARE CAPITAL
Group and Company
Total
Number of
Ordinary
Shares
Share
Premium
Total
Movement
Shares
$'000
$'000
$'000
15-Mar-18
Formation
50,000
50,000
66
-
66
4-May-18
100:1 subdivision
-
5,000,000
-
-
-
24-Oct-18
4:1 subdivision
-
20,000,000
-
-
-
24-Oct-18
Biomarker business acquisition
15,427,704
35,427,704
49
6,547
6,596
6-Nov-18
Placing & offer (listing on AIM)
18,388,430
53,816,134
60
27,485
27,545
At 30 June 2019
53,816,134
175
34,032
34,207
29-Jul-19
Placing & Secondary Offering (AIM)
5,600,000
59,416,134
17
16,597
16,614
15-May-20
Cancellation of Share premium
-
59,419,134
-
(50,629)
(50,629)
At 30 June 2020
59,416,134
192
-
192
17-Jul-20
Placing & Offering (Nasdaq)
12,613,500
72,029,634
40
76,094
76,134
4-Mar-21
Shares issued under the ESPP
17,652
72,047,286
-
111
111
25-Jun-21
Exercise of Stock Options
150,000
72,197,286
1
252
253
At 30 June 2021
72,197,286
233
76,457
76,690
7-Jul-21
Exercise of Stock Options
27,500
72,224,786
-
46
46
17-Jul-21
Exercise of Stock Options
5,000
72,229,786
-
40
40
31-Aug-21
Shares issued under the ESPP
10,920
72,240,706
-
121
121
1-Nov-21
Exercise of Stock Options
68,224
72,308,930
-
112
112
31-Mar-22
Shares issued under the ESPP
22,814
72,380,014
-
90
90
6-Apr-22
Private Placement
2,428,688
74,760,432
8
8,578
8,586
At 30 June 2022
74,760,432
241
85,444
85,685
12-Sep-22
Shares issues under ESPP
131,412
74,891,844
-
116
116
8-Feb-23
Private Placement
18,722,960
93,614,804
57
19,249
19,306
7-Mar-23
Shares issues under ESPP
166,674
93,781,478
1
144
145
At 30 June 2023
93,781,478
299
104,953
105,252
17-Jul-23
Shares issued for repayment of
convertible bond
1,052,422
94,833,900
3
1,673
1,676
4-Aug-23
Vesting of RSUs
185,540
95,019,440
1
138
139
6-Oct-23
Shares issues under ESPP
75,328
95,094,768
-
93
93
19-Oct-23
Shares issued for repayment of
convertible bond
2,335,388
97,430,156
7
1,338
1,345
15-Dec-23
Shares issued for repayment of
convertible bond
2,500,000
99,930,156
8
523
531
14-Mar-24
Shares issued under the Securities
Purchase Agreement
19,986,031
119,916,187
63
3,963
4,026
10-Apr-24
Shares issued for repayment of
convertible bond
3,636,162
123,552,349
13
1,442
1,455
16-Apr-24
Shares issued under the Securities
Purchase Agreement
2,666,667
126,219,016
8
989
997
22-Apr-24
Shares issued under the Securities
Purchase Agreement
1,333,334
127,552,350
4
498
502
24-Apr-24
Shares issued under the Securities
Purchase Agreement
26,815,841
154,368,191
85
6,203
6,288
At 30 June 2024
154,368,191
491
121,813
122,304
Ordinary Shares have a par value of £0.0025 each. All issued shares are fully paid.
On 15 July 2024 the company issued 11,557,322 new ordinary shares in lieu of repayment of $1.06 million of the
principal amount of the Company's convertible bond and the interest for the period. On 30 September 2024 the
company announced and it successfully issued after shareholders’ approval total of 165,280,499 new ordinary shares at
9 pence per share to raise new funds and convert the debts.
27. SHARE OPTIONS AND SHARE-BASED PAYMENTS
In November 2018, Group established the Renalytix AI plc Share Option Plan (the “Plan”) and a U.S. Sub-Plan and
Non-Employee Sub-Plan. In July 2020, the Company's board of directors adopted and the Company's shareholders
approved the 2020 Equity Incentive Plan (the “EIP”), which superseded the 2018 Share Option Plan. The equity
incentive plan provides for the Company to grant options, restricted share awards and other share-based awards to
employees, directors and consultants of the Company. As of 30 June 2024, there were 17,331,289 shares available for
future issuance under the EIP.
| Renalytix plc Annual Report and Financial Statements
77
The Plan is administered by the board of directors. The exercise prices, vesting and other restrictions are determined at
their discretion, except that all options granted have exercise prices equal to the fair value of the underlying ordinary
shares on the date of the grant and the term of stock option may not be greater than ten years from the grant date.
With respect to the options granted as of 30 June 2024:
5,289,026 options vest equally over 12 quarters following the grant date;
773,715 options vest 25% on the one year anniversary of the grant date and the remaining 75% equally over 12
quarters following the one year anniversary of the grant date;
490,000 options vest one-third on the one year anniversary of the grant date and the remaining two-thirds equally
over eight quarters following the one year anniversary of the grant date;
295,000 options vest 25% at the end of the first quarter following Vesting Commencement Date and the remaining
shares vest quarterly thereafter;
285,000 options vest 12 months after the vesting commencement date;
243,875 options vest 25% on the one year anniversary of the grant date, 50% on the two-year anniversary of the
grant date, and 25% on the three-year anniversary;
60,000 options vest 25% three months following Vesting Commencement Date and the remaining shares vest
monthly thereafter;
12,500 options vest quarterly over two years following the grant date; and
10,000 options vested on the vesting commencement date.
If options remain unexercised after the date one day before the tenth anniversary of grant, the options expire. On
termination of employment, any options that remain unexercised are either forfeited immediately or after a delayed
expiration period, depending on the circumstances of termination. Upon the exercise of awards, new ordinary shares are
issued by the Company.
Details of the share options outstanding during the period are as follows:
Number of
shares under
option plan
Weighted-
average
exercise price
per option
Weighted-
average
remaining
contractual
life (in years)
Outstanding at June 30, 2023
4,968,576
$
4.50
6.7
Granted
3,640,296
$
1.04
Exercised
—
$
-
Forfeited
(1,133,443) $
2.83
Expired
(1,563) $
6.64
Outstanding at June 30, 2024
7,473,866
$
3.06
7.0
Exercisable at June 30, 2024
5,249,671
$
3.84
6.1
Vested and expected to vest at June 30, 2024
7,473,866
$
3.06
7.0
The weighted average fair value of each share option granted has been estimated using a Black-Scholes model and is
£0.82 ($1.04). The inputs into the model are a weighted average share price of £0.97 ($1.23), exercise price of £0,
expected volatility of 75.0%, no expected dividend yield, weighted-average term of 6.3 years and weighted-average
risk-free interest rate of 4.3%. None of the granted stock options were exercised in the year ended 30 June 2024.
The aggregate intrinsic value of the outstanding options is $0. The Group recognized total expenses of $1,083,570
($781,178 within G&A expense, $294,204 within R&D expense and $8,188 within COGS expense) relating to equity-
settled share-based payment transactions during the period to 30 June 2024. The weighted average remaining
contractual term of the options is 7.0 years.
Activity for restricted stock units for the year ended 30 June 2024 is as follows:
Number of
Restricted
Stock Units
Weighted-
average
Grant Date
Fair Value
Non-vested balance at June 30, 2023
40,340
$
1.61
Granted
—
$
-
Vested
(21,290)
$
2.24
Forfeited
(11,120)
$
1.69
Non-vested balance at June 30, 2024
7,930
$
1.33
| Renalytix plc Annual Report and Financial Statements
78
The total fair value of restricted stock units vested during the year ended 30 June 2024 was $0.01 million (2023: $0.1
million). Restricted stock units vest upon the achievement of time-based service requirements.
At 30 June 2024, total unrecognized compensation expense related to non-vested restricted stock units was
approximately $0.03 million. Unrecognized compensation expense relating to restricted stock units that are deemed
probably of vesting is expected to be recognized over a weighted-average period of approximately 0.23 years.
28. TRADE AND OTHER PAYABLES
Group
Group
Company
Company
2024
2023
2024
2023
$'000
$'000
$'000
$'000
Accounts payable
2,608
2,935
640
504
Due to subsidiaries
-
-
785
4,084
Payroll taxes payable
192
128
12
8
Accrued expenses
4,744
8,450
1,981
954
Total
7,544
11,513
3,418
5,550
The carrying amount of the trade and other payables balances denominated in GBP are £506k for the Group and
Company (2023 - £399k).
29.
CONVERTIBLE DEBT
In April 2022, the Group issued amortizing senior convertible bonds with a principal amount of $21.2 million in amortizing
senior convertible bonds due in April 2027 (the "Bonds") to Heights Capital Ireland LLC (the "Convertible Bond Investor").
The Bonds were issued at 85% par value with total net proceeds of $18.0 million and accrue interest at an annual rate of 5.5%,
payable quarterly in arrears, in cash or American Depositary Shares ("ADSs") valued at the ADS Settlement Price at the
option of the Company. The principal and interest payments are due in equal quarterly installments starting in July 2022. The
Bonds contain various conversion and redemption features. The initial conversion price for the Bonds of $8.70 has been set at
a 20 percent premium to the Reference ADS Price. The Conversion Price may reset down at 12, 24 and 36 months, depending
on share price performance, and the Bonds have a hard floor in the conversion price of $7.25. As a result of the February 2023
private placement and pursuant to conditions of the bond agreement, the conversion price was adjusted to $8.2508 (previously
$8.70) and the floor price was adjusted to $6.8757 (previously $7.25). Further, pursuant to conditions of the agreement,
effective April 7, 2023, the conversion price was adjusted from $8.2508 to $7.7924. Between amortization dates, the
Convertible Bond Investor retains the right to advance future amortization payments, provided that (a) there shall be no
amortization advancements during the first 12 months, (b) no more than 2 amortization advancements may occur in any 12
month period, and (c) no more than 1 amortization advancement may occur in any 3 month period. On March 28, 2024, the
Company entered into a second amendment and restatement agreement with the Convertible Bond Investor, which amended
the terms of the Company’s existing bond agreement, dated March 31, 2022. The Bond Agreement Amendment amends the
existing bond agreement to, among other things:
implement a beneficial ownership limitation whereby each bondholder, together with its affiliates, must not at any
time own or acquire the beneficial ownership of more than 9.99% of the issued and outstanding ordinary shares of
the Company;
adjust the bondholder’s’ maximum trading volume by removing a cap on the number of ADS that can be sold each
day and reduces the length of certain non-trading periods applicable to the bondholders;
reduce certain market price observation periods to 5 days and 3 days (rather than 10 days and 5 days);
grant the holders of more than 50% of the principal amount of the bonds issued thereunder and then-outstanding
(the “Majority Bondholders”) the right to defer the amortization payment scheduled for 7 April 2024 (the “April
2024 Amortized Payment Amount”) in addition to the deferrals already permitted as well as the right to accelerate
the April 2024 Amortized Payment Amount if previously deferred in addition to the accelerations already permitted;
and
in addition to the existing right to accelerate the next scheduled amortization payment, provide the Majority
Bondholders the ability to accelerate any other future scheduled amortization payment, subject to certain
limitations.
The Group performed an analysis and determined that the financial impact was immaterial as the amended and restated
agreement was not substantially different than the previous agreement.
| Renalytix plc Annual Report and Financial Statements
79
The Convertible Bond Investor is also permitted to defer up to two amortization payments to a subsequent amortization date.
The Company retains the option to repay any deferred amortization in cash at 100 percent of the nominal amount. In July
2023, the Company made a cash amortization payment of $1.4 million, which consisted of $1.1 million of principal and $0.3
million of interest. Also in July 2023, the Convertible Bond Investor exercised its right to advance an amortization payment
and the Company made an accelerated repayment of $1.06 million through the issuance of 526,211 ADSs. In October 2023,
the Company made an amortization payment of $1.3 million, which consisted of $1.1 million of principal and $0.2 million of
interest, through the issuance of 2,335,388 ordinary shares in the form of 150,000 ordinary shares and 1,092,694 ADSs. In
December 2023, the Company made an amortization payment of $1.3 million, which consisted of $1.1 million of principal
and $0.2 million of interest, through the issuance of 2,500,000 ordinary shares and a cash payment of $0.6 million. In April
2024, the Company made an amortization payment of $1.3 million, which consisted of $1.1 million of principal and $0.2
million of interest, through the issuance of 3,636,162 ordinary shares. As of 30 June 2024 and 2023, $12.7 million and $18.0
million, respectively, of principal was outstanding.
On issuance, the Company elected to account for the Bonds at fair value in accordance with the accounting standard, with
qualifying changes in fair value being recognized through the statements of operations until the Bonds are settled. Changes in
fair value related to instrument-specific credit risk are recognized through comprehensive loss until the Bonds are settled. The
fair value of the bonds is determined using a scenario-based analysis that estimates the fair value based on the probability-
weighted present value of expected future investment returns, considering each of the possible outcomes available to the
noteholders. Significant assumptions used in the fair value analysis include the volatility rate, risk-free rate, dividend yield
and risky yield. The fair value of the Bonds was determined to be $16.9 million on issuance, which is the principal amount of
the Bonds. As of 30 June 2024, the fair value of the Bonds was determined to be $8.5 million. During the year ended 30 June
2024, the Company recognized a $0.3 million increase in fair value of the Notes related to the instrument-specific credit risk
in comprehensive loss and a decrease in fair value related to non-instrument specific credit risk of $3.8 million as loss in the
consolidated statement of operations, respectively. The Company recognized a decrease in fair value of the Notes related to
the instrument-specific credit risk of $0.3 million in the comprehensive loss and a decrease in fair value related to non-
instrument specific credit risk of $3.1 million as a loss in the consolidated statement of operations during the year ended 30
June 2023.
2024
2023
$'000
$'000
Beginning of Period
11,948
12,342
Fair value adjustments
3,750
3,093
Change due to settlement of principal and interest
(6,176 )
(4,163)
Change in credit risk
(306 )
340
FX Impact
(726 )
336
End of Period
8,490
11,948
On 30 September 2024 the company issued 36,541,666 new ordinary shares at 9 pence per share to convert the debts which
related to the convertible bond and the accounts payable. The Company successfully negotiated the convertible bond and
restructured with approximately £2.97m convertible bond capitalised via issue of new ordinary shares and the balance treated
as a new unsecured convertible bonds with interest at rate of 5.5% per annum if paid in cash or 7.5% per annum if rolled into
the principal amount, at the discretion of the company. The new convertible bond will have a maturity date of 31 July 2029
and may not be converted before 1 April 2026. The new bonds are redeemable at the Company’s election at any time prior to
maturity.
30.RELATED PARTY TRANSACTIONS
In May 2018, the Company secured its cornerstone license agreement with ISMMS for research and clinical study work
and intended commercialization by the Company. As part of the collaboration, ISMMS became a shareholder in the
Company and has subsequently made equity investments both in the Company’s IPO in November 2018 and the
subsequent sale of ordinary shares in July 2019. As of 30 June 2024 and 2023, amounts due to ISMMS totaled $2.3
million and $3.4 million, respectively. During the years ended 30 June 2024 and 2023, the Company incurred expenses
of $3.9 million and $3.3 million, respectively.
In June 2020, the Company and Mount Sinai entered into a registration rights agreement pursuant to which the
Company has granted Mount Sinai the following registration rights:
Demand Registration on Form F-3 – Mount Sinai is entitled to demand registrations on Form F-3, if
we are then eligible to register shares on Form F-3, including up to two underwritten offerings in any
12-month period.
| Renalytix plc Annual Report and Financial Statements
80
Demand Registration on Form F-1 or Form S-1 – At any time following one year after the completion
of the global offering, if we are not eligible to register shares on Form F-3 or S-3, Mount Sinai is entitled
to a maximum of one demand registration on Form F-1 or Form S-1 during any 12-month period, subject
to specified exceptions.
Piggyback Registration – Mount Sinai is entitled to certain piggyback registration rights, subject to certain
marketing and other limitations in the context of an underwritten offering.
Expenses – We will pay all registration expenses incident to the performance of our obligations under the
registration rights agreement.
Mount Sinai’s registration rights will terminate at such time as Rule 144, or another similar exception under the
Securities Act, is available for the unlimited public sale of all of Mount Sinai’s registrable securities without any
volume or manner of sale limitations, subject to specified exceptions.
On March 12, 2024, the Company entered into the Placing Agreement with Stifel, pursuant to which the Company
agreed to allot and issue the Placing Shares to the Placees in the Private Placement, up to an aggregate of 46,801,872
ordinary shares. On March 12, 2024, the Company announced that it successfully placed 46,801,872 ordinary shares
with both UK and U.S. institutional investors, at a price of £0.20 per ordinary share, raising aggregate gross proceeds
of approximately $12 million for the Company.
ISMMS subscribed for a total 9,360,374 ordinary shares at £0.20 per ordinary share in the Private Placement.
Christopher Mills, Non-Executive Chairman then, and his related parties subscribed for a total of 4,000,000 ordinary
shares at £0.20 per ordinary share in the Private Placement.
31.
CONTINGENT LIABILITIES
The Group has a contract with Icahn School of Medicine at Mount Sinai which give rise to contingent liabilities:
Mount Sinai Collaboration Agreement
The Group is subject to the following one-off milestone payment obligations:
$1.5 million once worldwide sales of Licensed Products reach $50 million; and
$7.5 million once worldwide sales of Licensed Products reach $300 million.
In addition, royalties of 4-5% are payable to Mount Sinai on net sales of KidneyIntelX™, and 15% or 25% (depending
on timing) of income from sublicensing. The Group is also subject to an annual data transfer fee of $50,000. As of 30
June 2024, the Company has accrued $0.1 million of royalties due to Mount Sinai.
Joslin Diabetes Center Agreement
The Group has a contract with Joslin Diabetes Center under which the Group is liable for the following costs and
payments:
5% royalty on net sales of Joslin Licensed Products and Joslin Licensed Processes;
25% of royalties received by the Group from sublicensing;
A one-off milestone payment of $300,000 once total net sales reach $2 million; and
A one-off milestone payment of $1 million once total net sales reach $10 million
As of 30 June 2024, the Company has accrued for the $300,000 sales milestone due to Joslin related to achievement of
the first sales milestone and accrued $0.4 million of royalties due to Joslin.
32.
ULTIMATE CONTROLLING PARTY
The Directors believe there to be no ultimate controlling party.
| Renalytix plc Annual Report and Financial Statements
81
33. SUBSEQUENT EVENTS
On July 15, 2024, the Company announced the repayment of $1.06 million of the principal amount of the Company's
convertible bond and the interest for the period through the issuance of 2,275,000 Ordinary Shares and 4,641,161
American Depositary Shares ("ADSs"). 11,557,322 new ordinary shares of £0.0025 each in the capital of the Company
will be issued to settle including conversion of 4,641,161 ADSs (9,282,322 Ordinary Shares with each ADS
representing two Ordinary Shares). After settlement of the repayment, the principal remaining under the convertible
bond will be reduced by $1.06 million to $11.66 million.
On 30 September 2024 the company announced that it had received commitments from existing and new investors to
raise £11.9m through a subscription of 128,738,833 new ordinary shares at 9 pence per share. The company also issued
36,541,666 new ordinary shares at 9 pence per share to convert part of the existing Convertible Debt to equity and
convert part of the accounts payable balance to equity. In respect to the convertible bond the company successfully
converted £2.97m of the bond to equity via the issue of 33 million new ordinary shares and the remaining balance
treated as new unsecured convertible bonds with interest at a rate of 5.5% per annum if paid in cash, or 7.5% per annum
if rolled into the principal amount of the debt, at the discretion of the company. The new convertible bond will be non-
amortizing, have a maturity date of 31 July 2029 and may not be converted before 1 April 2026. The bonds are callable
at the Company’s option at any time prior to maturity. In respect to the accounts payable balance with a professional
adviser, $750,000 has been restructured such that $425,000 of the balance has been converted into equity and $325,000
has been restructured as a long term promissory note, bearing paid-in-kind interest at 5% per annum. The new note
will be due at the earlier of 5 years from the initiation of the note, or accelerated should the Company be acquired prior
to maturity. The Company may prepay the note at any time without penalty. The equity financing commitments closed
in two tranches, the first on October 8, 2024 and the second on November 4, 2024 with all net proceeds received by
the company on the closing dates. All debt restructurings were effective with the second close of the equity financing.
| Renalytix plc Annual Report and Financial Statements
82
Additional Financial Information
RECONCILIATION OF IFRS TO US GAAP
Since Renalytix’s initial listing on Nasdaq, the Company has followed accounting principles generally accepted in the
United States of America (‘US GAAP’), both for internal as well as external purposes. The information below is
unaudited and does not form part of the statutory accounts.
Renalytix Form 10-K, which is based on US GAAP, contains differences from its Annual Report, which is based on IFRS.
The Form 10-K and Annual Report are available on the Company’s website (www.renalytix.com). In order to help
readers to understand the difference between the Group’s two sets of financial statements, Renalytix has provided, on a
voluntary basis, a reconciliation from IFRS to U.S. GAAP as follows:
BALANCE SHEET
GAAP
IFRS
GAAP vs
IFRS
As at 30
June 2024
As at 30
June 2024
Difference
$'000
$'000
$'000
Assets
Cash
4,680
4,680
-
Accounts receivable
722
722
-
Prepaid expenses and other current assets
716
712
4
(a)
Property, plant and equipment, net
216
213
3
(a)
Intangibles, net
-
-
-
(b)
Investment in Verici
698
698
-
Other assets
940
71
869
(c)
Total assets
7,972
7,096
876
Liabilities and stockholder's equity
Current Liabilities:
Note payable – current
4,159
4,159
-
Accounts payable
2,608
7,544
4,936
(d)
Accrued expenses and other current liabilities
3,354
-
(3,354) (d)
Accrued expenses – related party
1,329
-
(1,329) (d)
Current lease liability
45
46
1
(e)
Note payable – non current
4,331
4,331
-
Noncurrent lease liabilities
-
-
-
Total Liabilities
15,826
16,080
254
Stockholders’ (deficit) equity:
Ordinary shares, £0.0025 par value per share: 161,944,807 shares
authorized; 154,368,191 and 93,781,478 shares issued and
outstanding at June 30, 2024 and June 30, 2023, respectively
478
491
13
(e)
Additional paid in capital
204,893
136,265
(68,628) (f)
Accumulated other comprehensive (loss) income
(1,443)
(1,086)
357
(g)
Accumulated deficit
(211,782)
(144,654)
67,128
(h)
Total stockholders' (deficit) equity
(7,854)
(8,984)
(1,130)
Total liabilities and stockholders’ (deficit) equity
7,972
7,096
(876)
a. Represents other immaterial presentation differences between US GAAP & IFRS
b. Under IFRS, the acquisition of licenses and subsequent development efforts are capitalized and presented as intangible
assets. Under U.S. GAAP, such costs are expensed as incurred until technological feasibility has been achieved or the
assets are deemed to have future alternative use. In addition to capitalized software costs which are recorded as property
and equipment under US GAAP and Intangibles under IFRS.
c. Difference is attributable to capitalized software costs which are recorded as other assets under U.S. GAAP and
Intangibles under IFRS.
d. Accounts payable and other current liabilities are presented in the aggregate within the Annual report while broken out
| Renalytix plc Annual Report and Financial Statements
83
separately on the US GAAP 10-K. Difference represents other immaterial presentation differences and audit
adjustments.
e. Represents other immaterial audit adjustments.
f. Represents cancellation of share premium account and reduction in accumulated deficit under IFRS in anticipation of a
distribution of FractalDx net assets to the shareholders of Verici in prior year. In addition, stock based compensation is
recognized on a straight line basis under U.S. GAAP and a graded vesting basis under IFRS which creates timing
differences as to when expenses are recorded.
g. Represents the difference in weighted average foreign exchange rates and spot rates used for translation of financial
statements under IFRS and U.S. GAAP.
h. Represents cancellation of share premium and reduction in accumulated deficit under IFRS in anticipation of a
distribution of FractalDx net assets to the shareholders of Verici and differences noted within the Company’s
consolidated statement of operations and comprehensive loss.
RECONCILIATION OF NET LOSS
Year ended 30 June 2024
$'000
Net loss in accordance with IFRS
(45,470)
Stock compensation expense
(626) (i)
Amortisation and impairment of intangibles
12,352 (j)
Other adjustments
288 (k)
Net loss in accordance with US GAAP
(33,456)
i. Stock based compensation is recognized on a straight line basis under U.S. GAAP and a graded vesting basis under
IFRS which creates timing differences as to when expenses are recorded.
j. Amortisation expense is higher on the IFRS books as a result of the higher intangible asset balance. Under IFRS, the
acquisition of licenses and subsequent development efforts are capitalized and presented as intangible assets. Under
U.S. GAAP, such costs are expensed as incurred until technological feasibility has been achieved or the assets are
deemed to have future alternative use. Impairment charge has also been provided against the asset balance.
k. The remaining difference represents the aggregation of post year end audit fee accruals, other immaterial audit
adjustments and small accounting standard difference.
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