COMPANY NUMBER 03508592
TIZIANA LIFE SCIENCES PLC
FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2015
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST DECEMBER 2015
CONTENTS
PAGE
STATUTORY AND OTHER INFORMATION
EXECUTIVE CHAIRMAN’S STATEMENT
STRATEGIC REPORT
DIRECTORS’ REPORT
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF TIZIANA LIFE
SCIENCES PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
COMPANY STATEMENT OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF CASH FLOWS
COMPANY STATEMENT OF CASH FLOWS
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
COMPANY STATEMENT OF CHANGES IN EQUITY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1
2
6
9
12
13
14
15
16
17
18
19
20
STATUTORY AND OTHER INFORMATION
Directors:
Secretary:
Registered Office:
Principal Bankers:
Auditors:
Nominated Advisors:
Nominated Brokers:
Solicitors:
Registrars:
Mr G. M. A. Cerrone
Dr R. Dalla-Favera
Dr K. Shailubhai
Mr W. Simon
Mr P. Cooper FCA
18 South Street, Mayfair, London, W1K 1DG
Allied Irish Bank, Ealing Cross, 85 Uxbridge Road,
London, W5 5TH
Grant Thornton UK LLP, Grant Thornton House, Melton
Street, Euston Square, London, NW1 2EP
Cairn Financial Advisers LLP, 61 Cheapside, London,
EC2V 6AX
Beaufort Securities Limited, 131 Finsbury Pavement,
London, EC2A 1NT
Cooley (UK) LLP, Dashwood, 69 Old Broad Street,
London, EC2M 1QS.
Capita Asset Services, The Registry, 34 Beckenham
Road, Beckenham, Kent BR3 4TU
1
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2015
EXECUTIVE CHAIRMAN’S STATEMENT
I am pleased to report on the Group’s results for the year ended 31st December 2015.
Background
Tiziana Life Sciences plc’s focus is the development of novel therapeutics for cancer with a focus on late stage
metastases and complementary diagnostic tools, based on gene expression signature, with the capability of
predicting disease aggressiveness and prognosis in breast cancer patients.
The Group also has interests, beyond pure oncology, in the discovery and development of monoclonal antibody-
based biologics used to benefit patients with inflammatory and auto-immune disorders.
Material Licensing Agreements concluded during the year
During the 2015 financial year the Group has signed two additional license agreements. It concluded negotiations
with Nerviano, an Italian Group dedicated to the discovery and development of breakthrough treatments for
cancer, to exclusively license milciclib to the Group. Milciclib blocks the action of specific enzymes called cyclin-
dependent kinases (“CDKs”), which are involved in cell division (metastasis) as well as a number of other protein
kinases. Milciclib is currently in phase II clinical trials for thymic carcinoma in patients previously treated with
chemotherapy. Milciclib has demonstrated that it is well tolerated in over 263 patients in phase I and II clinical
trials and has been granted orphan designation by the European Commission and by the U.S. Food and Drug
Administration (“FDA”) for the treatment of malignant thymoma / thymic epithelial tumours. Subject to successful
completion of the ongoing thymoma trials, Tiziana is committed to initiate a phase Ib/IIa study in hepatic cellular
carcinoma (HCC) in 2016, to be followed by a study in triple negative breast cancer (TNBC).
On 7th May 2015, the Company signed an agreement with the University of Cardiff to license their anti-cancer
stem cell technology. The novel agent, known as OH14, is an inhibitor of c-FLIP (cellular FLICE (FADD-like IL-
1β-converting enzyme)-inhibitory protein), a known suppressor of apoptosis (programmed cell death). c-FLIP acts
inside the cell by preventing the instructive cell death that occurs when a signal protein produced by neighbouring
cells attaches to the target cell’s surface. c-FLIP blocks this death signal from entering the cell. Suppression of
apoptosis is a recognised driver of cancer cell proliferation, thus by inhibiting this suppression it should be
possible for cell death to occur and proliferation of cancer to be thwarted. Under the terms of the agreement,
Tiziana will fund a research project at the University focused on building the structure activity relationships (SARs)
around OH14 and to improve the activity of this series of compounds.
We now have a total of two research projects and two clinical programmes together with research into a cancer
stem cell diagnostic as a solid foundation for the Group’s growth.
Financial summary
Consolidated Statement of Comprehensive Income
The Group has made a loss for the year of £8,632,000 (2014: £3,327,000 – as adjusted see note 2). The loss is
detailed in the consolidated statement of comprehensive income on page 13.
Consolidated Statement of Financial Position
At the end of the year the Group cash balance amounted to £8,903,000 (2014: £2,266,000) and the total assets of
the Group amounted to £9,250,000 (2014: £2,460,000).
Fund raising
In the period, the Group successfully raised funds to further progress its on-going clinical trials and give the Group
the resources to expand its presence internationally.
On 31st March 2015, Tiziana raised £2.55m through the issue of 3.4m ordinary shares through a placing to new
investors at a price of £0.75 per share.
On 21st April 2015, the Group entered into an agreement to issue £6.14m of Investor Convertible Loan Notes:
Tranche C. The notes, plus accrued interest are redeemable by the holders any time after 25th June 2016, and
2
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2015
will be redeemed at the election of the Company in cash, or by conversion into new ordinary shares at a
conversion price of £0.70 per share at the election of the note holders.
On 16th December 2015, Tiziana Life Sciences raised £3.8m through the issue of 2,554,472 unsecured
convertible loan notes to investors (Tranche E).
Post year end on 13st January 2016, Tiziana entered into an agreement to issue £709,406 of Investor Convertible
Loan Notes: Tranche F through the issue of 472,938 unsecured convertible loan notes. The notes are
redeemable by the holders at any time after 31 December 2016 and will be redeemed, at the election of the
Company, in cash or by conversion into new ordinary shares in the Company at a conversion price of £1.50 per
share. Further details of the post year end fund raising can be found at Note 24 Post Balance Sheet Events.
Funds raised by Tiziana will be used to fund the development of the Group's clinical stage assets milciclib and
foralumab, to meet the Group's ongoing liabilities in respect of licence agreements, and for general working
capital purposes.
Pre-clinical progress
Post period on 8th January 2016, the Company announced that its research agreement with Cardiff University,
focused on pioneering the development of Bcl-3 inhibitors as potential drugs to treat cancer, has led to the
identification of a first-in-class lead clinical candidate, CB1, with potent anti-metastatic activity, and with an
impressive in vivo efficacy and safety profile. Tiziana intends to file an Investigational New Drug (IND) application
on CB1 in 2016, and expects to move this drug candidate into clinical trials before the end of the year.
Also post period on 11th January 2016, Tiziana outlined its clinical development plan for foralumab with initial
plans to evaluate foralumab in two clinical indications; namely, graft vs host disease, and ulcerative colitis, an
inflammatory bowel disease.
Appointments
Board of Directors
Dr Kunwar Shailubhai – Director, Non-Executive
On 23rd January 2015 the Company appointed Dr. Kunwar Shailubhai to the Board, as a non-executive director.
Dr. Shailubhai is a Co-Founder and Chief Scientific Officer of Synergy Pharmaceuticals, Inc. (previously senior
vice president), a NASDAQ-listed biotechnology company focusing on innovative therapeutics for treatment of
gastrointestinal disorders and diseases, and colon cancer. Dr. Shailubhai has held leadership positions at
Monsanto Life Sciences Company (St. Louis, MO), where he worked on a number of projects in inflammatory
diseases, and Callisto Pharmaceuticals. Dr. Shailubhai previously served as a Senior Staff Fellow at the National
Institutes of Health and as an Assistant Professor at the University of Maryland. Dr. Shailubhai has 17 issued
patents, several pending patent applications and 40 research publications in journals of international repute.
Willy Jules Simon – Director, Non-Executive
On 24th November 2015 the Company appointed Willy Jules Simon to the Board, as a non-executive director.
Willy Simon is a banker and worked at Kredietbank N.V. and Citibank London before serving as an executive
member of the Board of Generale Bank NL from 1997 to 1999 and as the chief executive of Fortis Investment
Management from 1999 to 2002. He acted as chairman of Bank Oyens & van Eeghen from 2002 to 2004. From
2004 until 2012, he served as a non-executive director of Redi & Partners Ltd., a fund of funds. He was
previously chairman of AIM-traded Velox3 plc (formerly 24/7 Gaming Group Holdings plc) until 2015 and had
been a director of Playlogic Entertainment Inc., a NASDAQ OTC listed company.
Post period on 11th March 2016 the Company noted the passing of Professor Chris McGuigan. Professor
McGuigan was a co-founder of Tiziana Life Sciences and was appointed as a non-executive director in January
2015.
Management team
On 9th December 2015, James (Jim) Tripp was appointed as Chief Operating Officer (COO) and Head of Global
Clinical Operations.
Mr Tripp has over twenty years’ experience in biopharmaceutical operations and has been involved in all phases
of drug development from discovery through commercialisation. He started his career in pharmaceuticals while
attending Harvard School of Public Health and at Massachusetts General Hospital in Boston, MA. Before joining
3
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2015
the Company he was Director, Clinical Management at Novo Nordisk, A/S, where he managed the U.S. team
overseeing the oral insulin/GLP-1 portfolio, expanding the Victoza® label, and completing confirmatory studies
required for Saxenda® which was recently approved to treat obese patients. Prior to Novo Nordisk, Mr Tripp was
employed at Regeneron Pharmaceuticals (REGN:Nasdaq) where he started as a Therapeutic Area Project
Manager for inflammation programs, focusing on developing IL-1 Trap (now Arcalyst®) and then creating and
heading up the Clinical Compliance & Training group for the Clinical & Project Management Office.
Post period end on 4th April 2016, Tiziano Lazzaretti was appointed as Chief Financial Officer, taking over from
Phil Boyd, who tendered his resignation on 7th May 2015 in order to focus on other opportunities.
Mr Lazzaretti has extensive experience in the healthcare and pharmaceutical industry and joins Tiziana from
Pharmentis Srl, an Italian pharmaceutical business, where he served as Group Finance Director since 2011.
Prior to this, Mr Lazzaretti held senior roles at Alliance Boots Healthcare, Accenture and other listed companies
such as SNIA Spa and Fiat Group. He has a Bachelor of Science (BSc hons) in Accounting and Finance from the
University of Turin, Italy and was awarded a Master in Business Administration (MBA) from Bocconi University,
Milan.
Also post period on 4th May 2016, Tiziana expanded its clinical development team with the appointment of Robert
Evans, PharmD. as Vice President of Clinical Sciences. Dr. Evans joined Tiziana Life Sciences in April 2016 as
Vice President of Clinical Sciences. Prior to joining the Company, Dr. Evans served as Vice President of Clinical
Development at Glenmark Pharmaceuticals, Inc. and was responsible for providing project and clinical leadership
across multiple programs focused on the treatment of oncology, respiratory and dermatology disorders. Prior to
Glenmark, Dr. Evans served in scientific leadership roles in the Immunology and Inflammation Group at
Regeneron Pharmaceutical.
Scientific Advisory Board
Post period on 11th January 2016, the Company announced the addition of two key members to the Scientific
Advisory Board: Professors Kevan Herold, MD and Howard Weiner, MD.
Dr. Kevan Herold
Dr. Kevan Herold is Professor of Immunobiology and of Medicine (Endocrinology) as well as Deputy Director,
Yale Center for Clinical Investigation, Director of the Yale Diabetes Center and Director of the TrialNet Center at
Yale. His investigative work has focused on developing new ways to prevent and treat autoimmune diseases,
using novel translational immunologic and metabolic approaches to prevent progression, in particular anti-CD3
monoclonal antibody therapy. His clinical interests are in the management of endocrine diseases, and he is
involved in a number of national and international clinical studies of new treatments.
Dr Howard Weiner
Dr. Howard Weiner is the Robert L. Kroc Professor of Neurology at the Harvard Medical School, Director and
Founder of the Partners Multiple Sclerosis (MS) Center and Co-Director of the Ann Romney Center for Neurologic
Diseases at Brigham & Women's Hospital in Boston. The Partners MS Center is the first integrated MS Center
that combines clinical care, MRI imaging and immune monitoring to the MS patient as part of the 2000 patient
CLIMB cohort study. He has pioneered immunotherapy in MS and has investigated immune mechanisms in
nervous system diseases including MS, Alzheimer’s disease, amyotrophic lateral sclerosis, stroke and brain
tumours. He has also pioneered the investigation of the mucosal immune system for the treatment of
autoimmune and other diseases and the use of anti-CD3 to induce regulatory T cells for the treatment of these
diseases.
U.S. National Academy of Sciences
On 7th May 2015, Board member Riccardo Dalla-Favera was elected to the U.S. National Academy of Sciences.
Riccardo Dalla-Favera
Riccardo Dalla-Favera, MD, is the Joanne and Percy Uris Professor of Clinical Medicine and professor of
pathology and cell biology in the department of genetics and development, and director, Institute for Cancer
Genetics at Columbia University, New York City. He has been a leader in the field of molecular oncology and has
made fundamental contributions to the field of cancer, especially in the study of the molecular genetics of B cell
malignancies. As a researcher, he has contributed much of the current knowledge on the genetic lesions
responsible for human B cell lymphoma, which have led to the development of diagnostic tests and are being
tested as targets in clinical trials with lymphoma patients.
4
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2015
Outlook
The Group’s focused portfolio address areas of significant unmet medical need; either as a potential new
approach to metastatic cancer with our Bcl-3 inhibitor and through stratification of breast cancer patients to
provide more personalised treatment with the use of 20 defined stem cell markers (the “TOP 20”), to new
molecules that will treat sufferers of thymic and other rare or difficult to treat cancers (milciclib), or a fully human
monoclonal antibody with potential application in a number of autoimmune and inflammatory diseases
(foralumab). The Company is on-track to take CB1, the lead Bcl-3 candidate, into the clinic stage in late 2016 or
early 2017, complete the milciclib thymoma recruitment in 2016, and move forward with the antibody foralumab
into other indications. Finally, with the latest in-licensing of anti-cancer stem cell technology from the University of
Cardiff (c-FLIP) the Company has an innovative research portfolio with two clinical assets. These programmes
will use the funds raised in the March, April and December 2015 and January 2016 fundraisings to reach the
individual programme’s inflection points.
The past year was a very exciting period of further portfolio growth within Tiziana, focusing in two distinct disease
areas: rare to treat cancers and difficult to treat autoimmune inflammatory diseases. Furthermore, the addition of
these core compounds provides a strong foundation for our company to remain attractive to investors, to add
value for our shareholders and to ensure that Tiziana Life Sciences continue to pursue a bright future.
Gabriele Cerrone
Executive Chairman
5
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2015
STRATEGIC REPORT
Business review
A review of the business, its results and outlook is included in the Executive Chairman’s Statement on pages 2-5.
Key performance indicators
The Board monitors the Key Performance Indicators (KPIs) that it considers appropriate for the industry and stage
of development of the Group. The Group is a research and development based Biotechnology concern with a
number of pre-clinical and clinical assets. These assets require sufficient investment to reach defined milestones
by which the Group and its investors can judge the chances of ultimate success and thereby the value of the
Group. At this stage of company development significant sources of revenue generation are unlikely and the
Group is cash consuming. The KPIs are therefore chosen to monitor the progress of the individual scientific
programmes, the external market environment for the potential drugs being developed and the cash requirements
of the company.
Financial KPIs
Cash consumption
The cash position of the business is measured on a continual basis with reference both to the general and
administrative expenses required to run the Group, and more particularly to the cash required for ongoing
research, development and acquisition of the Group’s scientific assets. During 2015 the Bcl-3i project licensed
from Cardiff University was the main focus of direct funding, along with the two major clinical programmes in-
licensed from Novimmune and Nerviano.
The Group monitors current and projected cash consumption to ensure that there are sufficient funds available to
develop the Group’s scientific assets. The Group raised additional cash in April, May and December 2015 to fund
research and development, to meet the Group's ongoing liabilities in respect of licence agreements, and for
general working capital purposes. The Group maintains a virtual operating model resulting in low cash
consumption for general and administrative expenses during the period.
Share price
The Company monitors its share price to determine whether the market view of the Company’s position and
prospects is aligned with the view of management, and to consider the most appropriate time to raise further
capital in the interest of the Company and current shareholders. The Company re-listed on the AIM Market on
24th April 2014 at a share price of 12p per share and ended the financial period at 217.5p per share. As at 23rd
May 2016 the Company’s share price was 143.8p per share. The Board considers the appreciation of the share
price during the period, and subsequently, to reflect the market’s understanding of the future value of the licensed
programmes and research and clinical development undertaken by the Company.
Non-financial KPIs
External (life sciences) market environment
The Group monitors the life sciences market for a number of factors;
• New developments in drug research and development
• New medical treatment paradigms
• Patent filings by third parties pertinent to the Group’s programmes
• Existing and novel drugs in development by third parties
• Healthcare regulation and policy in the major territories
• Private and public financings of life science companies to indicate investor appetite for life science risk
The Group is developing its scientific assets within the European and US territories, but for potential global
application. The environment for life science companies was positive throughout the 2015 but with first signs of
weaknesses fully impacting form early 2016. Despite this, the Group succeeded in its fund raising activity based
on the progress made by the business in line with their plans to develop a cross section of projects.
Principal risks and uncertainties
The Group assesses and monitors the inherent risks in the life sciences industry, as well as other micro and
macro-economic factors that may present risk to the Group’s progression. The Group also considers Group-
specific risks such as research progress, personnel and operational facilities and collaborations.
There are significant risks associated with any life science business. The Board believes that the following risks
are the most significant, however, the risks listed do not necessarily comprise all those associated with an
investment in the Company. In particular, the Company’s performance may be affected by changes in market or
economic conditions and in legal, regulatory and / or tax requirements. The risks listed are not set out in any
particular order of priority and this is not an exhaustive list of risks.
6
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2015
STRATEGIC REPORT
If any of the following risks were to materialise, the Company’s business, financial condition, results or future
operations could be materially and adversely affected. In such cases, the Company’s share price may decline and
an investor may lose part or all of his investment.
Business risks
Dependence on key personnel
The success of the Group, in common with other businesses of a similar size, is dependent on the expertise and
experience of the Directors, management and key collaborators. However, the retention of such key personnel
cannot be guaranteed. Should key personnel leave, the Group’s business, prospects, financial condition or
results of operations may be materially adversely affected.
Early stage of operations
The Group’s operations are at an early stage of development and there can be no guarantee that the Group will
be able to, or that it will be commercially advantageous for the Group to, develop its proprietary technology and
acquired scientific assets. Further, the Group has no positive operating cash flow and its ultimate success will
depend on the Board’s’ ability to implement the Group’s strategy, generate cash flow and access equity markets.
Whilst the Board is optimistic about the Group’s prospects, there is no certainty that anticipated outcomes and
sustainable revenue streams will be achieved. The Group will not generate any material income until
commercialisation or licensing of its scientific assets has successfully commenced and in the meantime the Group
will continue to expend its cash reserves. There can be no assurance that the Group’s proposed operations will
be profitable or produce a reasonable return, if any, on investment.
Technology and products
The Group is a drug discovery and development Group. The development and commercialisation of its scientific
assets, will require research progress and positive results from multiple clinical trials, which by their very nature
are inherently uncertain. There is a risk that safety issues may arise when the products are tested. This risk is
common to all new classes of drugs and, as with all other drug companies, there is a risk that trials may not be
successful.
Research and development risk
The Group will be operating in the life sciences and biopharmaceutical development sector and will look to exploit
opportunities within that sector. The Group will therefore be involved in complex scientific research, and industry
experience indicates that there may be a very high incidence of delay or failure to produce 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, or to identify and collaborate with high
quality scientific teams and investigators. 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
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; if such delays occur the Group may require further working capital. The Group will seek to
minimise the risk of delays by careful management of projects.
Uncertainty related to regulatory approvals
The Group will need to obtain various regulatory approvals and otherwise comply with extensive regulations
regarding safety, quality and efficacy standards in order to market its future products. These regulations,
including the time required for regulatory review, vary from country to country and can be lengthy, expensive and
uncertain. While efforts will be made to ensure compliance with government standards, there is no guarantee that
any products will be able to achieve the necessary regulatory approvals to promote that product in any of the
targeted markets and any such regulatory approval may include significant restrictions for which the Group's
products can be used. In addition, the Group may be required to incur significant costs in obtaining or maintaining
its regulatory approvals. Delays or failure in obtaining regulatory approval for products would be likely to have a
serious adverse effect on the value of the Group and have a consequent impact on its financial performance.
Competition
Technological competition from pharmaceutical companies, biotechnology companies and universities 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 pre-clinical and clinical trials towards regulatory
approval for sale and commercialisation. Other companies may succeed in commercialising 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
7
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2015
STRATEGIC REPORT
that research and development by others will not render the Group’s intellectual property obsolete or
uncompetitive.
Patents
The field of pharmaceutical development is highly litigious. The Group’s priorities are to protect its intellectual
property and seek to avoid infringing other companies’ intellectual property. The Group engages reputable legal
advisers to mitigate the risk of patent infringement and to assist with the protection of the Group’s intellectual
property. However, there remains the risk that the Group may face opposition from other companies to patents
that it seeks to have granted. The value of the Group's intellectual property is vulnerable to challenge both after
and, in some jurisdictions, before a patent is granted. As a patent cannot be enforced until it has been granted,
the Group will be unable to take action against third parties who infringe its intellectual property unless and until
patents are granted. There is a risk that, if granted, the Group’s patents may subsequently be revoked and, if
revoked after details of the Group’s intellectual property have been made public as part of the patent registration
process, there would be serious and adverse implications for the value of the Group’s intellectual property.
Future funding requirements
The Group will need to raise additional funding in the future to undertake work beyond that being funded by the
Group’s current cash reserves. There is no certainty that this will be possible at all or on acceptable terms. In
addition, the terms of any such financing may be dilutive to, or otherwise adversely affect, existing shareholders.
General legal and regulatory issues
The Group’s operations are subject to laws, regulatory restrictions and certain governmental directives,
recommendations and guidelines relating to, amongst other things, occupational safety, laboratory practice, the
use and handling of hazardous materials, prevention of illness and injury, environmental protection and animal
and human testing. There can be no assurance that future legislation will not impose further government
regulation, which may adversely affect the business or financial condition of the Group.
Currency risk
The Group holds its cash reserves in UK Sterling. As is the nature of international life science companies, the
Group has purchases and licensing agreement obligations denominated in Euro and US Dollar. There is a risk
that adverse movements in exchange rates may increase the currency liability in UK Sterling. The Group
monitors currency exchange rates and makes judgments as to whether to enter into currency hedging contracts.
Currently no such hedging contracts are in place.
Interest rate risk
The only significant interest-bearing asset within the Group are the cash reserves, and the only interest bearing
liability is the convertible loan notes. In the current low interest rate environment the Board does not consider
interest rate risk to be significant. Should the interest rate environment change or the Group seek to take on
interest bearing debt the interest rate risk may increase.
By order of the Board
Mr G. M. A. Cerrone
6th June 2016
18 South Street, Mayfair, London, W1K 1DG
8
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2015
DIRECTORS’ REPORT
The Directors present their report and the financial statements of the Company and its Group for the year ended
31st December 2015.
Results and dividend
The results of the group for the year are set out on page 12. No dividends were declared or paid in the year
(2014: nil).
Directors
The directors of the company who were in office during the year and to the date of these financial statements
were:
Mr Gabriele Cerrone
Executive Chairman
Dr Riccardo Dalla-Favera
Prof Christopher McGuigan
Dr Kunwar Shailubhai
Dr Philip Boyd
Mr Andrew Gutmann
Mr Willy Simon
Non-Executive Director
Non-Executive Director, Appointed 22nd January 2015 to 11th March 2016. (§)
Non-Executive Director, Appointed 22nd January 2015
Director, resigned 7th May 2015
Non-Executive Director, Resigned 22nd January 2015
Non-Executive Director, Appointed 24th November 2015
(§) as noted in the Executive Chairman’s Statement, Prof Christopher McGuigan passed away on 11th March
2016.
Significant shareholdings
The directors have been notified or are aware of the following interests in 3% or more of the ordinary share capital
of the company at 26th May 2016:
Planwise Group Limited*
Nerviano Medical Sciences Srl
The Estate of the late Chris McGuigan**
Ordinary shares
Number
Percentage
55,822,565 60.46%
4,233,616 4.53%
3.33%
3,114,618
*Mr Gabriele Cerrone, a director, is the ultimate beneficial owner of the entire issued share capital of Planwise
Group Limited.
** Prof Chris McGuigan was a non-executive director of Tiziana Life Sciences PLC until his passing on 11th March
2016.
Staff policy
The company is committed to a policy of recruitment and promotion on the basis of aptitude and ability.
Applications for employment by disabled persons are given full and fair consideration having regard to their
particular aptitudes and abilities. Where existing employees become disabled, it is the company’s policy,
wherever possible, to provide continuing employment under normal terms and conditions and to provide training,
career development and promotion wherever appropriate.
Corporate governance
The Board of Directors is committed to maintaining high standards of corporate governance and is accountable to
the shareholders for the proper corporate governance of the group. The UK Corporate Governance Code does
not apply to AIM companies, and Tiziana Life Sciences plc instead aspires to the principles of corporate
governance set out in the QCA Guidelines Tiziana Life Sciences plc operates within the life science sector in an
effective and efficient way, with integrity and due regard for the interests of shareholders, and applies principles of
general governance applicable to the size and stage of development of the Group.
Audit Committee
The Audit Committee of the Board comprises Riccardo Dalla-Favera and Willy Simon. It is chaired by Mr Simon,
and is responsible for:
i.
Monitoring the quality of internal controls and ensuring the financial performance of the Group is properly
measured and reported on;
9
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2015
DIRECTORS’ REPORT
ii.
iii.
iv.
v.
Consideration of the Directors’ risk assessment and suggest items for discussion at the full Board;
Receipt and review of reports from the Company's management and auditors relating to the interim and
annual accounts, including a review of accounting policies, accounting treatment and disclosures in the
financial reports;
Consideration of the accounting and internal control systems in use throughout the Company and its
subsidiaries; and
Overseeing the Company’s relationship with external auditors, including making recommendations to the
Board as to the appointment or re-appointment of the external auditors, reviewing their terms of
engagement, and monitoring the external auditors’ independence, objectivity and effectiveness.
The audit committee meets not less than twice in each financial year and has unrestricted access to the
Company's auditors.
Remuneration Committee
The Remuneration Committee of the Board comprises Riccardo Dalla-Favera and Kunwar Shailubhai. It is
chaired by Mr Dalla-Favera, and is responsible for:
i.
ii.
iii.
The review of the performance of the executive directors;
Recommendations to the Board on matters relating to the remuneration and terms of service of the
executive directors; and
Recommendations to the Board on proposals for the granting of share options and other equity
incentives pursuant to any share option scheme or equity incentive scheme in operation from time to
time.
In making their recommendations the Remuneration Committee will have due regard to the interests of the
Shareholders and the performance of the Company.
Statement of directors’ responsibilities
The Directors are responsible for preparing the Directors’ Report and the financial statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare group and company financial statements for each financial year.
The directors are required by the AIM Rules of the London Stock Exchange to prepare group financial statements
in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union
(“EU”) and have elected to prepare the Company financial statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law) in
accordance with IFRS as adopted by the EU.
Under company law the Directors must not approve the financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the Company and of the Group and the financial performance
and cash flows of the Group for that year. 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;
•
state whether in preparation of the Group financial statements the Group has complied with IFRS as
adopted by the European Union, subject to any material departures disclosed and explained in the group
financial statements;
state whether in preparation of the parent company financial statements applicable UK accounting
standards have been followed, subject to any material departures disclosed and explained in the
financial statements; and
prepare the accounts on the going concern basis unless it is inappropriate to presume that the company
will continue in business.
•
•
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Group’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and
enable them to ensure that the financial statements comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included
on the company's website. Legislation in the United Kingdom governing the preparation and dissemination of the
financial statements may differ from legislation in other jurisdictions.
10
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2015
DIRECTORS’ REPORT
Disclosure of Information to Auditors
So far as the Directors are aware, there is no relevant audit information of which the company’s auditors are
unaware, and they have taken all 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 auditors are aware of that information.
Auditors
Grant Thornton UK LLP were appointed as auditors in the year and have indicated their willingness to continue in
office. In accordance with section 489 of the Companies Act 2006, a resolution proposing that Grant Thornton UK
LLP be reappointed as auditors of the company will be put to the Annual General Meeting.
Future developments
The Executive Chairman’s Statement on pages 2 to 4 provides a summary of future developments of the Group.
Research and development activities
The research and development activities of the Group are described in the Executive Chairman’s Statement on
page 2.
Post balance sheet events
The Group successfully raised finance for the Group subsequent to the period end. Details of the events can be
found in the Executive Chairman’s Statement on pages 2 to 5 and at Note 24 to the financial statements.
Financial instruments
The use of financial instruments is considered by the Board and the exposure of the Group to price, credit,
liquidity and cash flow risks are considered. Details of the risks and mitigation can be found in the Strategic
Report on pages 6 to 8, and at note 21 to the financial statements.
By order of the Board
Mr Gabriele Cerrone
6th June 2016
18 South Street, Mayfair, London, W1K 1DG
11
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2015
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF TIZIANA LIFE SCIENCES PLC
We have audited the financial statements of Tiziana Life Sciences plc for the year ended 31 December 2015
which comprise the consolidated statement of comprehensive income, the consolidated and company statements
of financial position, the consolidated and company statements of cash flow, the consolidated and company
statements of changes in equity, and the related notes. The financial reporting framework that has been applied
in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the
European Union and, as regards the parent company financial statements, as applied in accordance with the
provisions of the Companies Act 2006.
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.
Respective responsibilities of directors and auditor
As explained more fully in the Directors' Responsibilities Statement set out in the Directors’ Report on page 10,
the directors are responsible for the preparation of the financial statements and for being satisfied that they give a
true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance
with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to
comply with the Auditing Practices Board’s Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the Financial Reporting Council's
website at www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the group's and of the parent company's
affairs as at 31 December 2015 and of the group's loss for the year then ended;
the group financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union;
the parent company financial statements have been properly prepared in accordance with IFRSs as
adopted by the European Union 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.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Strategic Report and Directors' Report for the financial year for which
the financial statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report
to you if, in our opinion:
•
•
•
•
adequate accounting records have not been kept by the parent company, or returns adequate for our
audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns;
or
certain disclosures of directors' remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Marc Summers
Senior Statutory, FCA Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
London
6th June 2016
12
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2015
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2015
Research and development costs
Operating expenses
Cost of listing
Operating loss
Finance costs
Loss before taxation
Taxation
Notes
2015
£’000
2014#
£’000
(6,287)
(2,327)
-
(8,614)
(18)
(8,632)
-
(794)
(1,786)
(755)
(3,335)
(52)
(3,387)
60
4
9
10
Loss for the year attributable to equity owners
(8,632)
(3,327)
Other comprehensive income
-
-
Total comprehensive loss for the year attributable to
equity owners
(8,632)
(3,327)
Loss per share
Basic and diluted (loss) per share on continuing operations
11
(9.5p)
(14.6p)
# restated - note 2
13
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2015
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 31 DECEMBER 2015
ASSETS
Current assets
Other receivables
Cash and cash equivalents
Total current assets
TOTAL ASSETS
EQUITY AND LIABILITIES
Equity
Capital and reserves attributable to equity holders of the
company
Called up share capital
Share premium
Share based payment reserve
Shares to be issued reserve (warrants)
Shares to be issued reserve
Merger relief reserve
Other reserve
Retained earnings
Total equity
Liabilities
Current liabilities
Trade and other payables
TOTAL EQUITY AND LIABILITIES
# restated - note 2
Notes
2015
£’000
2014#
£’000
12
14
18
15, 19
15, 19
17
19
19
19
347
8,903
9,250
9,250
9,375
20,632
1,008
102
12,287
5,625
(28,286)
(12,239)
8,504
194
2,266
2,460
2,460
9,144
16,294
146
-
2,259
5,625
(28,286)
(3,405)
1,777
22
746
683
746
9,250
683
2,460
The financial statements were approved by the board of directors and authorised for issue on 6th June 2016
Mr Gabriele Cerrone
Director
Company Number: 03508592 (England and Wales)
14
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2015
COMPANY STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 31 DECEMBER 2015
ASSETS
Non-current assets
Investment in subsidiaries
Current assets
Other receivables
Cash and cash equivalents
TOTAL ASSETS
EQUITY AND LIABILITIES
Equity Capital and reserves attributable to equity
holders of the company
Called up share capital
Share premium
Shares to be issued reserve
Merger relief reserve
Share based payment reserve
Shares to be issued reserve (warrants)
Retained earnings
Total equity
Liabilities
Current liabilities
Trade and other payables
31 December
2015
£’000
31 December
2014#
£’000
Notes
13
7,500
7,500
12
2,645
8,871
923
2,241
19,016
10,664
14
18
17
19
15, 19
15, 19
19
9,375
20,632
12,287
5,625
1,073
165
(30,641)
9,144
16,294
2,259
5,625
211
63
(23,549)
18,516
10,047
22
500
500
617
617
TOTAL EQUITY AND LIABILITIES
19,016
10,664
# restated - note 2
The financial statements were approved by the board of directors and authorised for issue 6th June 2016.
Mr Gabriele Cerrone
Director
Company Number: 03508592 (England and Wales)
15
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2015
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2015
Cash flows from operating activities
Total comprehensive loss for the period before taxation
Convertible loan interest accrued
Convertible loan interest paid as equity
Share based payment - options
Share based payment - warrants
Net (increase)/decrease in operating assets/other receivables
Net increase/(decrease) in operating liabilities /other liabilities
Cost of listing
Other share based payments
Loss on foreign exchange
Write off of investments
NET CASH USED IN OPERATING ACTIVITIES
Cash flows from financing activities
Proceeds from issuance of ordinary shares
Proceeds from issuance of convertible loan notes
Interest on convertible instruments
Fundraising costs
NET CASH GENERATED FROM FINANCING ACTIVITIES
Cash flows from investing activities
Cash acquired at acquisition
NET CASH GENERATED FROM INVESTING ACTIVITIES
NET INCREASE IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at beginning of year
CASH AND CASH EQUIVALENTS AT END OF YEAR
2015
£’000
2014#
£’000
(8,632)
-
-
972
102
(153)
63
-
2,138
-
-
(5,510)
2,638
10,235
-
(726)
12,147
-
-
6,637
2,266
8,903
(3,570)
84
7
146
182
(91)
291
755
-
2
15
(2,179)
2,004
2,454
(77)
4,381
64
64
2,266
-
2,266
16
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2015
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2015
Cash flows from operating activities
Total comprehensive loss for the period before taxation
Convertible loan interest accrued
Convertible loan interest paid as equity
Share based payment - options
Share based payment - warrants
Net(increase)/decrease in operating assets/other receivables
Net increase/(decrease) in operating liabilities/other liabilities
Loss on foreign exchange
Write off of investments
Other share based payments
Interest receivable
2015
£’000
2014
£’000
(6,890)
-
-
972
102
(1,722)
(117)
-
-
2,138
-
(2,228)
84
7
146
182
(754)
345
2
15
-
-
NET CASH USED IN OPERATING ACTIVITIES
(5,517)
(2,201)
Cash flows from financing activities
Proceeds from issuance of ordinary shares
Proceeds from issuance of convertible loan notes
Interest on convertible instruments
NET CASH GENERATED FROM FINANCING ACTIVITIES
Cash flows from investing activities
2,638
10,235
-
(726)
12,147
2,004
2,454
(77)
-
4,381
NET CASH GENERATED FROM INVESTMENT ACTIVITIES
-
-
NET INCREASE IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at beginning of year
CASH AND CASH EQUIVALENTS AT END OF YEAR
6,630
2,241
8,871
2,180
61
2,241
17
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2015
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2015
Share
Capital
Share
Premium
Merger
Relief
Reserve
Share Based
Payment
Reserve
£’000
£’000
£’000
£’000
Restated
Shares To Be
Issued
Reserve
£’000
Convertible
Loan Note
Reserve
Other
Reserve
Retained
Earnings
Total
Equity
£’000
£’000
£’000
£’000
Balance at 1 January 2014
Transactions with owners
Acquisition of Tiziana Pharma Ltd
Issue of shares
Reverse acquisition adjustment
Share placing
Redemption of convertible loan note
Issue of share capital under share-based
payment scheme
Share based payment (options)
Share based payment (warrants)
Convertible loan note – equity component
Total transactions with owners
Comprehensive income
Loss for the year
Total comprehensive income
Balance as at 31 December 2014
as previously stated
Income restatement – note 2
Balance as at 31 December 2014
restated
Transactions with owners
Issue of share capita (net of issuance
costs)
Share based payment (options)
Share based payment (warrants)
Convertible loan note – equity component
Options cancelled in the year
6,663
14,489
-
1,875
-
500
102
4
-
-
-
2,481
-
-
9,144
-
-
1,500
305
-
-
-
-
1,805
-
-
16,294
5,625
-
-
-
-
-
-
-
5,625
-
-
5,625
9,144
16,294
5,625
231
4,338
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
146
-
-
146
-
-
146
146
-
972
-
-
(110)
862
-
-
-
-
-
-
-
-
-
182
-
182
-
-
182
(182)
-
-
-
102
-
-
102
-
-
-
-
-
-
-
-
-
-
2,259
2,259
-
-
2,259
(21,152)
-
(7,134)
-
-
-
-
-
-
(7,134)
-
-
(28,286)
2,259
(28,286)
-
-
-
10,028
-
10,028
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(77)
(77)
(3,510)
(3,510)
(3,587)
182
(3,405)
-
-
-
(312)
110
(202)
-
-
7,500
(7,134)
2,000
407
4
146
182
2,182
5,287
(3,510)
(3,510)
1,777
(182)
1,777
4,569
972
102
9,716
-
15,359
(8,632)
(8,632)
(8,632)
(8,632)
Total transactions with owners
231
4,338
Comprehensive income
Comprehensive loss for the year
Total comprehensive income
-
-
-
-
18
Balance as at 31 December 2015
9,375
20,632
5,625
1,008
102
12,287
(28,286)
(12,239)
8,504
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2015
Share
Capital
£’000
Share
Premium
£’000
Share Based
Payment
Reserve
£’000
Shares To
Be Issued
Reserve
£’000
Convertible
Loan Note
Reserve
£’000
Merger
Relief
Reserve
£’000
6,663
14,489
606
1,875
-
-
-
2,481
-
-
1,805
-
-
-
-
1,805
-
-
9,144
16,294
9,144
16,294
231
4,338
-
-
-
-
-
-
-
-
231
4,338
-
-
-
-
65
-
-
146
-
-
146
-
-
211
211
-
972
-
-
(110)
862
-
-
63
-
-
-
182
-
182
-
-
245
(182)
63
-
-
102
-
-
102
-
-
Retained
Earnings
£’000
(21,426)
-
-
-
-
(77)
(77)
Total
Equity
£’000
(146)
2,411
7,500
146
182
2,182
12,275
(2,228)
(2,228)
(2,228)
(2,228)
-
-
-
-
-
-
2,259
2,259
-
-
-
-
5,625
-
-
-
5,625
-
-
2,259
5,625
(23,731)
2,259
5,625
182
(23,549)
10,047
-
10,047
-
-
-
10,028
-
10,028
-
-
-
-
-
-
-
-
-
-
-
4,569
-
-
(312)
110
(202)
(6,890)
(6,890)
972
102
9,716
-
15,359
(6,890)
(6,890)
9,375
20,632
1,073
165
12,287
5,625
(30,641)
18,516
Balance at 1 January 2014
Transactions with owners
Issue of share capital
Acquisition of Tiziana Pharma Ltd
Issue of shares
Share based payment (options)
Share based payment (warrants)
Convertible loan note – equity component
Total transactions with owners
Comprehensive income
Loss for the year
Total comprehensive income
Balance as at 31 December 2014 as
previously stated
Income restatement – note 2
Balance as at 31 December 2014
restated
Transactions with owners
Issue of share capital (net of issuance
costs)
Share based payment (options)
Share based payment (warrants)
Convertible loan note – equity component
Options cancelled in the year
Total transactions with owners
Comprehensive income
Loss for the year
Total comprehensive income
Balance as at 31 December 2015
19
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2015
1. GENERAL INFORMATION
Tiziana Life Sciences PLC is a public limited company incorporated in the United Kingdom under the Companies
Act and quoted on the AIM market of the London Stock Exchange (AIM: TILS). The address of its registered office
is given on page 1. The principal activities of the Company and its subsidiaries (the Group) are that of a clinical
stage biotechnology company focussed on targeted drugs to treat diseases in oncology and immunology.
These financial statements are presented in pounds sterling because that is the functional currency of the primary
economic environment in which the Company operates.
The ultimate parent of the group is Planwise Group Limited, incorporated in the British Virgin Islands. Gabriele
Cerrone is the ultimate beneficial owner of the entire issued share capital of Planwise Group Limited.
2. ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these consolidated financial statements are set out
below. These policies have been applied consistently to all the years presented unless otherwise stated.
Basis of preparation
The consolidated financial statements of the company have been prepared in accordance with International
Financial Reporting Standards (IFRS) as adopted by the European Union, IFRIC interpretations and the
Companies Act 2006 as applicable to companies reporting under IFRS. These accounts have been prepared
under the historical cost convention, as modified by the revaluation of land and buildings and certain financial
instruments.
As permitted by section 408 of the Companies Act 2006, a separate profit and loss account for the Company has
not been presented in these financial statements. The parent company had a loss of £6.890m for the year ended
31 December 2015 (2014: £2.228m).
Going concern
The financial statements have been prepared on the going concern basis, which contemplates continuity of
normal business activities and the realisation of assets and discharge of liabilities in the normal course of
business.
The directors believe that there are reasonable grounds to believe that the company and consolidated entity will
be able to continue as going concerns, after consideration of the following factors:
•
•
Cash and cash equivalents totalling £8.9m at 31 December2015
Issue of Convertible Loan Notes on 13th January 2016 raising £709,000 before expenses
Accordingly, the directors believe that the company and consolidated entity will be able to continue as going
concerns and that it is appropriate to adopt the going concern basis in the preparation of the financial report. The
financial report does not include any adjustment relating to the amounts or classification of recorded assets or
liabilities that might be necessary if the company and consolidated entity do not continue as going concerns.
New and Revised Standards
Standards in effect in 2015
There were no new standards, amendments and interpretations issued that would be expected to have a material
effect on the group.
IFRS in issue but not applied in the current financial statements
The following IFRS and IFRIC Interpretations have been issued but have not been applied by the Group in
preparing these financial statements as they are not as yet effective. The Group intends to adopt these Standards
and Interpretations when they become effective, rather than adopt them early.
•
IFRS 9, ‘Financial instruments’, effective date 1 January 2018
The directors do not anticipate that adoption of any of the above standards will have a material impact on the
financial statements in the future.
20
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2015
A number of IFRS and IFRIC interpretations are also currently in issue which are not relevant for the Group’s
activities and which have not therefore been adopted in preparing these financial statements.
Basis of consolidation
Subsidiary undertakings are all entities over which the Group has the power to govern the financial and operating
policies of the subsidiary and therefore exercises control. The existence and effect of both current voting rights
and potential voting rights that are currently exercisable or convertible are considered when assessing whether
control of an entity is exercised. Subsidiaries are consolidated from the date at which the Group obtains the
relevant level of control and are de-consolidated from the date at which control ceases.
Business combination
The consolidated position of the Group is as a result of the reverse acquisition of Alexander David Investments
plc by Tiziana Pharma Ltd and the subsequent listing of the Company as Tiziana Life Sciences plc on 24 April
2014. Reverse acquisition for the business combination in the year as detailed below:
On 24th April 2014, the Company (Alexander David Investments plc, (ADI)) acquired via a share for share
exchange the entire issued share capital of Tiziana Pharma Limited, whose principal activity is that of a clinical
stage biotechnology company focussed on targeted drugs to treat diseases in oncology and immunology.
Due to the relative values of the companies, the former Tiziana Pharma Limited shareholders became majority
shareholders with 96.1% of the enlarged share capital in ADI which was renamed Tiziana Life Sciences plc, and
hence hold the majority of the voting rights. Furthermore, the executive management of Tiziana Pharma Limited
became the executive management of Tiziana Life Sciences plc. A qualitative and quantitative analysis of these
factors led the Directors to conclude that in this transaction Tiziana Pharma Limited has the controlling interest
and should be treated as the accounting acquirer.
In determining the appropriate accounting treatment for the reverse acquisition, the Directors considered the
Application Supplement to IFRS 3, Business combinations. However, they concluded that this transaction fell
outside the scope of IFRS 3 since Tiziana Life Sciences plc, whose activity prior to the acquisition was purely the
maintenance of the AIM listing, did not constitute a business. It was therefore determined that the transaction
should be accounted for in a manner that was similar to the reverse acquisition accounting as described in IFRS
3, but without recognising goodwill.
The following accounting treatment has been applied in respect of the reverse acquisition;
•
•
•
•
•
The assets and liabilities of the legal subsidiary, Tiziana Pharma Limited are recognised and
measured in the consolidated financial statements at their pre-combination carrying amounts,
without restatement to their fair value.
The retained reserves recognised in the consolidated financial statements reflect the retained
reserves of Tiziana Pharma Limited to the date of acquisition.
In applying IFRS 3 by analogy, the equity structure appearing in the consolidated financial
statements reflects the equity structure of the legal parent Tiziana Life Sciences plc, including the
equity instruments issued under the share exchange to effect the business combination.
A reverse acquisition reserve has been created to enable the presentation of a consolidated balance
sheet which combines the equity structure of the legal parent with the non-statutory reserves of the
legal subsidiary.
Comparative numbers are based upon the consolidated financial statements of the legal subsidiary,
Tiziana Pharma Limited for the year ended 31 December 2013 apart from the equity structure which
reflects that of the parent.
Tiziana Pharma Limited was incorporated on 4th November 2013 and prepared its first set of financial statements
to 31 December 2014. Therefore, the parent and subsidiary had the same reporting date but Tiziana Pharma
Limited had a long period of account. No adjustment was made in the consolidated financial statements for the
difference in length of reporting period because the only transaction in Tiziana Pharma Limited at 31 December
2013 was the issue of ordinary share capital of £1.
Inter-company transactions, balances and unrealised gains on transactions between group companies are
eliminated upon consolidation. Unrealised losses are also eliminated. Accounting policies of subsidiaries have
been changed where necessary to ensure consistency with the policies adopted by the group.
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Board. The
Board allocates resources to and assess the performance of the segments. The Board considers there to be only
one operating segment being the research and development of biotechnological and pharmaceutical products.
21
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2015
22
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2015
Taxation
The tax expense for the year represents the total of current taxation and deferred taxation. The charge in respect
of current taxation is based on the estimated taxable profit for the year. Taxable profit for the year is based on the
profit as shown in the income statement, as adjusted for items of income or expenditure which are not deductible
or chargeable for tax purposes. The current tax liability for the year is calculated using tax rates which have either
been enacted or substantively enacted at the balance sheet date.
Deferred tax is provided in full, using the liability method on temporary differences arising between the tax base of
assets and liabilities and their carrying values in the financial statements. The deferred tax is not accounted for if it
arises from initial recognition of an asset or liability in a transaction other than a business combination that at the
time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is determined using tax
rates which have been enacted or substantively enacted at the balance sheet date and are expected to apply
when the related deferred tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available
against which the temporary differences can be utilised.
Deferred tax is provided on temporary differences arising on investments in subsidiaries and associates, except
where the timing of the reversal of the temporary difference is controlled by the group and it is probable that the
temporary difference will not reverse in the foreseeable future.
Foreign currency translation
Foreign currency transactions are translated using the rate of exchange applicable at the date of the transaction.
Foreign exchange gains and losses resulting from the settlement of such transactions and from the re-translation
at the year end of monetary assets and liabilities denominated in foreign currencies are recognised in the income
statement.
License fees
Payments related to the acquisition of rights to a product or technology are capitalised as intangible assets if it is
probable that future economic benefits from the asset will flow to the entity and the cost of the asset can be
reliably measured.
Payments made which provide the right to perform research are carefully evaluated to determine whether such
payments are to fund research or acquire an asset. Where fees related to research and development projects are
recognised as an expense in the income statement, due to the uncertainty in the length of time that the Group will
hold them the expense is recognised fully at the point of recognition.
Research and development
All on-going research and development expenditure is currently expensed in the period in which it is incurred. Due
to the regulatory environment inherent in the development of the Group’s products, the criteria for development
costs to be recognised as an asset, as set out in IAS 38 ‘Intangible Assets’, are not met until a product has been
submitted for regulatory approval and it is probable that future economic benefit will flow to the Group. The Group
currently has no qualifying expenditure.
Financial instruments
Financial assets
The Group classifies its financial assets into one of the categories discussed below, depending on the purpose for
which the asset was acquired.
Other receivables
Other receivables are stated at their original invoiced value, less any appropriate allowance for estimated
irrecoverable amounts.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and other short term highly liquid deposits with
original maturities of three months or less. Bank overdrafts are shown within borrowings in current liabilities on the
balance sheet.
23
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2015
Investments
Investments are held as non-current assets and comprise investments in subsidiary undertakings and are stated
at cost less provision for any impairment.
Financial liabilities
The Group classifies its financial liabilities into one of the categories discussed below, depending on the purpose
for which the liability was committed.
Trade and other payables
Trade and other payables are recognised initially at fair value and are subsequently measured at amortised cost
using the effective interest method. As the payment period of trade payables is short future cash payments are
not discounted as the effect is not material.
Share capital
Ordinary shares of the company are classified as equity. Mandatorily redeemable preference shares and other
classes of share where an obligation exists to transfer economic benefits are classified as liabilities.
Fair Value Measurement
Management have assessed the categorisation of the fair value measurements using the IFRS 13 fair value
hierarchy. Categorisation within the hierarchy has been determined on the basis of the lowest level of input that is
significant to the fair value measurement of the relevant asset as follows;
•
•
•
Level 1 - valued using quoted prices in active markets for identical assets
Level 2 - valued by reference to valuation techniques using observable inputs other than quoted prices
included within Level 1;
Level 3 - valued by reference to valuation techniques using inputs that are not based on observable
market data.
Share based payments
The calculation of the fair value of equity-settled share based awards and the resulting charge to the statement of
comprehensive income requires assumptions to be made regarding future events and market conditions. These
assumptions include the future volatility of the Company's share price. These assumptions are then applied to a
recognised valuation model in order to calculate the fair value of the awards
Where employees, directors or advisers are rewarded using share based payments, the fair value of the
employees', directors' or advisers' services are determined by reference to the fair value of the share options /
warrants awarded. Their value is appraised at the date of grant and excludes the impact of any nonmarket vesting
conditions (for example, profitability and sales growth targets). Warrants issued in association with the issue of
Convertible Loan Notes are also considered as share based payments and a share based payment charge is
calculated for these too.
In accordance with IFRS 2, a charge is made to the Statement of Comprehensive Income for all share-based
payments including share options based upon the fair value of the instrument used. A corresponding credit is
made to a Share Based Payment Reserve, in the case of options / warrants awarded to employees, directors or
advisers, and Shares To Be Issued Reserve in the case of warrants issued in association with the issue of
Convertible Loan Notes, net of deferred tax where applicable.
If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the
best available estimate of the number of share options / warrants expected to vest. Non market vesting conditions
are included in assumptions about the number of options / warrants that are expected to become exercisable.
Estimates are subsequently revised, if there is any indication that the number of share options / warrants
expected to vest differs from previous estimates. No adjustment is made to the expense or share issue cost
recognised in prior periods if fewer share options ultimately are exercised than originally estimated.
Upon exercise of share options / warrants, the proceeds received are allocated to share capital with any excess
being recorded as share premium.
Where share options are cancelled, this is treated as an acceleration of the vesting period of the options. The
amount that otherwise would have been recognised for services received over the remainder of the vesting period
is recognised immediately within the Statement of Comprehensive Income.
24
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2015
All goods and services received in exchange for the grant of any share based payment are measured at their fair
value.
Convertible loan notes
Under IAS 32 the liability and equity components of convertible loan notes must be presented separately on the
Statement of Financial Position. The Group has examined the terms of each issue of convertible loan notes and
determined their accounting treatment accordingly. Convertible loan notes are treated differently depending upon
a number of factors.
Where there is no option to repay as cash and the interest rate is fixed
The Group considers these to be Convertible Equity Instruments and records the principal of the loan note as an
equity liability in a shares to be issued reserve. The accrued interest on the principal amount is also recorded in
the shares to be issued reserve. Upon redemption of the instrument and the issue of share capital, the amount is
reclassified from shares to be issued reserve to share capital and share premium.
Where there is no option to repay as cash and the interest rate is variable
The Group considers these to be Convertible Debt Instruments and records the principal of the loan note as a
debt liability in the liabilities section of the balance sheet. The accrued interest on the principal amount is
recorded in the income statement and as an increase in the debt liability. Upon redemption of the instrument and
the issue of share capital, the amount is reclassified from the debt liability to share capital and share premium.
Restatement of comparatives
During 2015 it was identified that warrants in issue should have be treated purely as equity and that there should
be no finance charge to the Profit and Loss Account. The effect of this is that the charge of £182,000 made in the
2014 Financial Statements has been adjusted and the consolidated retained loss for 2014 has reduced to
£3,328,000. Accordingly the comparatives for 2014 have been restated to reflect this.
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of financial information in accordance with generally accepted accounting practice, in the case of
the Group being International Financial Reporting Standards as adopted by the European Union, requires the
directors to make estimates and judgements that affect the reported amount of assets, liabilities, income and
expenditure and the disclosures made in the financial statements. Such estimates and judgements must be
continually evaluated based on historical experience and other factors, including expectations of future events.
When entering into agreements with third parties which provide the rights to conduct research into specific
biological processes the group account for these agreements as an expense if the agreements are 'milestone' in
nature and relate to the Group's own research and development costs. Such agreements involve periodic
payments and are evaluated as representing payments made to fund research.
Other critical accounting estimates and judgements in the preparation of the financial statements were:
•
Fair value estimates used in the calculation of share based payments which has been detailed above in
note 2, accounting policies, and note 15, share based payments, to the accounts.
• Where warrants are issued to investors these amounts are treated as equity. Where warrants are issued
•
in lieu of services rendered to the group then these are accounted for as share based payments.
The cost of those instruments considered to represent share based payments under IFRS 2 is estimated
by means of Black Scholes models. These fair value calculations include several inputs that are subject
to management’s judgement. These include the use of peer group enterprises historic market value of
shares to estimate the volatility of future share price movements. These inputs are reviewed on a regular
basis to determine that the values used in the calculation are consistent with current economic and
historical events.
• Where loan notes are issued with terms such that the company considers that it has the discretion to
settle either by way of cash or equity with a fixed number of equity shares then the company is of the
opinion that the loan notes should be classified as equity instruments due to their passing the ‘fixed’ test
under IAS 32.
25
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2015
4. OPERATING LOSS
The Group and Company’s operating loss for the year is stated after charging the following:
Foreign exchange (Gain)/losses
5. SEGMENTAL REPORTING
2015
£’000
2014
£’000
(21)
(21)
2
2
During the year under review Management identified the Group’s only operating segment as the research and
development of biotechnological and pharmaceutical products. This one segment is monitored and strategic
decisions are made based upon it and other non-financial data collated from industry intelligence. The form of
financial reporting reported to the Board is consistent with those presented in the annual financial statements.
6. AUDITOR’S REMUNERATION
Remuneration receivable by the Company’s auditor for the audit of the
consolidated and Company financial statements
Remuneration receivable by the Company’s auditor and its associates for the
supply of other services to the Company and its associates, including
remuneration for the audit of the financial statements of the Company’s
subsidiaries:
The audit of the Company’s subsidiaries
•
• Reporting accountant services
•
Taxation compliance services
• Other taxation advisory services
2015
£’000
2014
£’000
41
18
6
-
8
13
27
6
126
5
-
137
Fees payable to Grant Thornton UK LLP for non-audit services to the Company are not disclosed above because
such fees are required to be disclosed only on a consolidated basis.
7. EMPLOYEES
Group
Staff costs comprised:
Directors’ salaries
Wages and salaries
Social security costs
Share based payment charge
The average monthly number of employees, including directors, employed
by the group during the year was:
Corporate and administration
2015
£’000
2014
£’000
199
19
20
301
539
5
5
157
12
25
328
522
3
3
26
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2015
A charge for share based payments and warrants charge totalling £1,074,876 (2014: £145,983) was made in the
year.
Company
Staff costs comprised:
Directors’ salaries
Share based payment charge
8. REMUNERATION OF KEY MANAGEMENT PERSONNEL
2015
£’000
2014
£’000
24
328
352
94
301
395
2014
Director
P. Boyd
A. Guttmann
G. Cerrone
R. Dalla-Favera
K. Shailubhai
C. McGuigan
2015
Directors' fee
-
-
-
-
-
-
-
Salary
56,913
-
80,000
35,000
13,678
13,678
Directors' fee
Salary
-
51,250
9,000
-
-
93,103
15,000
-
-
-
-
-
199,269
24,000
144,353
The following share options were granted to directors in the year:
Director
R. Dalla Favera
P. Boyd
A Gutmann
G. Cerrone
K. Shailubhai
2015
Number of
options
2014
Number of
options
100,000
370,000
300,000
937,500
-
80,000
2,000,000
1,200,000
300,000
-
2,700,000
2,587,500
The key management personnel of the Group are considered to be entirely represented by the directors.
The options granted to P Boyd were cancelled upon his resignation and subsequently a further 150,000 options
were granted to him. A termination payment of £12,564 gross was paid to P Boyd during the year.
No director has yet benefitted from any increase in the value of share capital since issuance of the options.
No director exercised share options in the year. The company has not made any payments to defined benefit or
defined contribution pension schemes on behalf of directors or employees.
9. FINANCE COSTS
27
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2015
Group and Company
Loan interest paid on convertible loan notes
Finance charge accrued on convertible loan notes
Stamp duty paid on the reverse acquisition
# restated - note 2
10. TAXATION
Group
Current tax (credit)
Deferred tax
Origination and reversal of timing differences
Total tax (credit) for period
The tax charge for the year is different from the standard rate of
corporation tax in the United Kingdom of 21.49%. The difference can be
reconciled as follows:
Loss before taxation
Loss charged at standard rate of corporation tax 21.49%
Tax calculated at the applicable rate based on loss for the year
Income not subject to taxation
Additional deduction for R&D expenditure
Expenses not deductible for taxation
Utilisation of tax losses
2015
£’000
2014#
£’000
9
9
-
18
7
7
38
52
2015
£’000
2014#
£’000
-
(60)
Nil
Nil
-
(60)
(8,632)
(3,327)
(1,748)
1,529
-
-
219
-
(767)
449
261
(118)
33
82
-
(60)
No deferred tax asset has been recognised in respect of trading losses carried forward because of uncertainty as
to when these losses will be recoverable.
11. LOSS PER SHARE
28
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2015
Basic loss per share is calculated by dividing the profit attributable to equity holders of the company by the
weighted average number of ordinary shares in issue during the year.
(Loss) attributable to equity holders of the company (£)
(8,632,226)
(3,327,292)
Weighted average number of ordinary shares in issue
91,242,884
22,866,387
2015
2014#
Basic loss per share (pence per share)
(9.5)
(14.6)
As the Group is reporting a loss from continuing operations, in accordance with IAS 33, the share options are not
considered dilutive because the exercise of the share options would have an anti-dilutive effect. The basic and
diluted earnings per share as presented on the face of the income statement are therefore identical. All earnings
per share figures presented above arise from continuing and total operations and therefore no earnings per share
for discontinued operations are presented.
# restated - note 2
12. OTHER RECEIVABLES
Group
Other receivables
Prepayments and accrued income
2015
£’000
2014
£000
273
74
347
103
91
194
There are no differences between the carrying amount and fair value of any of the trade and other receivables
above.
Company
Intercompany receivables
Taxation receivable
Prepayments and accrued income
2015
£000
2014
£000
2,612
15
18
2,645
905
-
18
923
13. INVESTMENTS
29
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2015
Company
Cost
At 1 January 2015
Additions
Disposals
At 31 December 2015
Provisions
At 1 January 2015
Charge in year
At 31 December 2015
Net book value as at 31 December 2015
Net book value as at 31 December 2014
Net book value as at 1 January 2014
Shares in
group
undertakings
£’000
Other
investments
Total
£’000
£’000
7,500
-
-
7,500
-
-
-
7,500
7,500
7,500
15
-
-
15
-
15
15
-
15
15
7,515
-
-
7,515
-
15
15
7,500
7,515
7,515
Other investments consist of listed equity instruments in other companies over which the company does not
exercise significant influence or control.
The company’s interest in subsidiary undertakings is as follows:
Name
Tiziana Pharma Limited
Principal activity
Clinical stage
biotechnology
company
Percentage
shareholding
100%
Country of
incorporation
England &
Wales
14. SHARE CAPITAL
Company and Group
In issue 1 January 2014:
Ordinary shares at 0.01 pence
Deferred A shares at 4.9 pence
Deferred B shares at 9.99 pence
Transactions in the year:
Consolidation of 0.01 pence shares to 3
pence shares
Ordinary shares issued at 12 pence
Ordinary shares issued at 3 pence
Ordinary shares issued at 3 pence
In issue 31 December 2014
In issue 1 January 2015:
Number of shares
£000
598,284,189
108,121,391
13,068,521
(596,289,908)
82,562,032
84,666
31,333
205,862,224
9,144
30
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2015
Ordinary shares issued at 0.03 pence
84,672,312
2,540
Deferred A shares at 4.9 pence
Deferred B shares at 9.99 pence
Transactions in the year:
Ordinary shares issued at 50.5 pence
Ordinary shares issued at 3 pence
Ordinary shares issued at 75 pence
Ordinary shares issued at 150 pence
In issue 31 December 2015
108,121,391
5,298
13,068,521
1,306
9,144
4,233,616
28,000
3,400,000
58,222
127
1
102
1
213,582,062
231
On 23rd April 2014 the company consolidated 598,284,189 shares of 0.01 pence to 1,994,281 shares of 3 pence.
On 24th April 2014 the company issued 82,562,032 ordinary shares at 12 pence each in order to finance the
reverse acquisition of Tiziana Pharma Limited.
On 18th June 2014 the company issued a further 84,666 ordinary shares at 3 pence each in order to satisfy the
exercise of options held by former directors of ADI.
On 29th July 2014 the company issued a further 31,333 ordinary shares at 3 pence each in order to satisfy the
exercise of options held by former directors of ADI.
On 22nd January 2015 the company issued a further 4,233,616 ordinary shares at 3 pence each in order to satisfy
the Licence requirements with Nerviano.
On 25th March 2015 the company issued a further 28,000 ordinary shares at 3 pence each in order to satisfy the
exercise of options.
On 31st March 2015 the company issued a further 3,400,000 ordinary shares at 3 pence each by way of a further
placing of ordinary shares to raise finance.
On 5th November 2015 the company issued a further 58,222 ordinary shares at 3 pence each in order to satisfy
the exercise of warrants.
15. SHARE BASED PAYMENTS
Group and Company
The company operates share-based payment arrangements to remunerate directors and key employees in the
form of a share option scheme. The exercise price of the option is normally equal to the market price of an
ordinary share in the company at the date of grant. The options may be exercised over periods ranging from three
to five years from the date of grant and lapse if not exercised by that date.
2015
Options
(‘000)
Average
exercise
price
(pence)
2014
Options
(‘000)
Average
exercise
price
(pence)
At 1 January
Granted
Cancelled
16
41
(15)
5,222
4,000
(1,237)
At 31 December
28
7,985
-
16
-
16
-
5,222
-
5,222
On 24 April 2014, 4,787,500 share options were granted at an exercise price of £0.15 per share and are
exercisable for a period of 10 years from the date of vesting. On 25 June 2014, a total of 385,000 share options
31
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2015
were granted at range of exercise prices from £0.28 to £0.33 per share and are exercisable for a period of 10
years from the date of vesting. On 7 July 2014 50,000 share options were granted at an exercise price of £0.35
per share and are exercisable for a period of 10 years from the date of vesting. On 23rd January 2015 2,350,000
options were granted at an exercise price of £0.35 per share and are exercisable for a period of 10 years from the
date of vesting. On 23rd January 2015 600,000 options were granted at an exercise price of £0.50 per share and
are exercisable for a period of 10 years from the date of vesting. On 23rd January 2015 300,000 options were
granted at an exercise price of £0.57 per share and are exercisable for a period of 10 years from the date of
vesting. On 2nd March 2015 600,000 options were granted at an exercise price of £0.55 per share and are
exercisable for a period of 10 years from the date of vesting. On 7th May 2015 1,237,500 options were cancelled
at exercise prices of £0.15 and £0.35 per share and would have been exercisable for a period of 10 years from
the date of vesting. On 7th May 2015 150,000 options were granted at an exercise price of £0.15 per share and
are exercisable before 31st January 2018. No options were exercisable during the year to 31 December 2014.
28,000 options were exercised during the year to 31st December 2015.
Share options outstanding at the end of the year have the following expiry date and exercise prices:
Date of issue
Number at 31
December 2015
Exercise
price
Date from which
exercisable
Expiry Date
24 April 2014
24 April 2014
24 April 2014
24 April 2014
25 June 2014
25 June 2014
25 June 2014
25 June 2014
25 June 2014
25 June 2014
25 June 2014
25 June 2014
07 July 2014
07 July 2014
07 July 2014
07 July 2014
23 January 2015
23 January 2015
23 January 2015
23 January 2015
23 January 2015
23 January 2015
23 January 2015
23 January 2015
23 January 2015
2 March 2015
2 March 2015
2 March 2015
2 March 2015
7 May 2015
962,500
962,500
962,500
962,500
90,000
90,000
90,000
90,000
6,250
6,250
6,250
6,250
12,500
12,500
12,500
12,500
2,050,000
150,000
150,000
150,000
150,000
75,000
75,000
75,000
75,000
150,000
150,000
150,000
150,000
150,000
0.15
0.15
0.15
0.15
0.28
0.28
0.28
0.28
0.33
0.33
0.33
0.33
0.35
0.35
0.35
0.35
0.35
0.50
0.50
0.50
0.50
0.57
0.57
0.57
0.57
0.55
0.55
0.55
0.55
0.15
24 April 2015
24 April 2016
24 April 2017
24 April 2018
17 May 2015
17 May 2016
17 May 2017
17 May 2018
24 April 2015
24 April 2016
24 April 2017
24 April 2018
18 June 2015
18 June 2016
18 June 2017
18 June 2018
23 January 2015
1 October 2015
1 October 2016
1 October 2017
1 October 2018
12 September 2015
12 September 2016
12 September 2017
12 September 2018
2 March 2015
2 March 2016
2 March 2017
2 March 2018
24 April 2015
24 April 2025
24 April 2026
24 April 2027
24 April 2028
17 May 2025
17 May 2026
17 May 2027
17 May 2028
24 April 2025
24 April 2026
24 April 2027
24 April 2028
18 June 2025
18 June 2026
18 June 2027
18 June 2028
23 January 2025
1 October 2025
1 October 2026
1 October 2027
1 October 2028
12 September 2025
12 September 2026
12 September 2027
12 September 2028
2 March 2025
2 March 2026
2 March 2027
2 March 2028
31 January 2018
The Directors have used the Black-Scholes option pricing model to estimate the fair value of the options applying
the assumptions below. The total fair value of the share option instruments is deemed to be approximately
£972,000 (2014 £510,000).
24 April 2014
25 June 2014
7 July 2014
32
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2015
Grant date share price
Exercise share price
Vesting periods
Risk free rate
Expected volatility
Option life
£0.12
£0.15
25% each
Yr 1, Yr 2, Yr 3, Yr 4
0.55% to 1.54%
99% to 197%
10 years
£0.39
£0.28 to £0.33
25% each
Yr 1, Yr 2, Yr 3, Yr 4
0.55% to 1.54%
99% to 197%
10 years
£0.44
£0.35
25% each
Yr 1, Yr 2, Yr 3, Yr 4
0.55% to 1.54%
99% to 197%
10 years
Grant date share price
Exercise share price
Vesting periods
Risk free rate
Expected volatility
Option life
23 January 2015
2 March 2015
7 May 2015
£0.575
£0.35 to £0.57
900,000 25% each
Yr 1, Yr 2, Yr 3, Yr 4
2.05m immediate
0.55% to 1.54%
99% to 197%
10 years
£0.615
£0.28 to £0.33
25% each
Yr 1, Yr 2, Yr 3, Yr 4
£0.465
£0.15
immediate
0.55% to 1.54%
99% to 197%
10 years
0.55% to 1.54%
99% to 197%
2 years 9 months
At the date of the reverse acquisition warrants over 388,148 shares existed at an exercise price of £1.50 per
share. The warrant is exercisable until 18 February 2016.
On 24th April 2014, warrants were granted over 1,095,000 shares at an exercise price of £0.20 per share by way
of an arrangement fee for the convertible note holders agreeing to subscribe for convertible loan notes. The
warrant is exercisable until 24 April 2016.
On 16th June 2014, warrants were granted over 1,995,774 shares at an exercise price of £0.32 per share by way
of an arrangement fee for the convertible note holders agreeing to subscribe for convertible loan notes. The
warrant is exercisable until 28 March 2017.
On 2nd March 2015, warrants were granted over 600,000 shares at an exercise price of £0.50 per share in lieu of
the issue of options. The warrants are exercisable in 25% portions until 22 January 2016, 22 January 2017, 22
January 2018, and 22 January 2019.
On 20th April 2015, warrants were granted over 1,756,185 shares at an exercise price of £2.50 per share by way
of an arrangement fee for the convertible note holders agreeing to subscribe for convertible loan notes. The
warrant is exercisable until 31 December 2020.
On 31st May 2015, warrants were granted over 292,500 shares at an exercise price of £0.66 per share in lieu of
fundraising fees. The warrants are exercisable until 31 May 2022.
On 11th May 2015, warrants were granted over 71,430 shares at an exercise price of £1.05 per share by way of
an arrangement fee for the convertible note holders agreeing to subscribe for convertible loan notes. The warrant
is exercisable until 31 December 2020.
On 16th December 2015, warrants were granted over 1,021,792 shares at an exercise price of £2.50 per share by
way of an arrangement fee for the convertible note holders agreeing to subscribe for convertible loan notes. The
warrant is exercisable until 31 December 2020.
The Directors have estimated the fair value of the warrants in services provided using an appropriate valuation
model. The total fair value of the warrant instruments is deemed to be approximately £336,000. For each set of
warrants, the charge has been expensed over the vesting period. A share based payment charge for the year of
£102,345 (year to December 2014: nil, as restated) has been expensed in the statement of comprehensive
income.
16. CONVERTIBLE LOAN NOTES
33
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2015
Group and Company
Planwise Convertible Loan Notes 2016
From the date of the reverse acquisition a convertible loan note of £200,000 was in existence as detailed in the
Admission Document dated 31 March 2014. Proceeds of the subscriptions for the notes are to be used
exclusively to finance the Company's on-going working capital requirements. The terms of the loan note are that
the loan notes, plus accrued interest at a rate of 4 per cent above Bank of England base rate per annum, will
convert into ordinary shares in the Company at a price of £0.10 per share at the election of Planwise any time
after the second anniversary of the readmission to AIM on 24 April 2014. The Company considers this to be a
Convertible Debt Instrument as detailed in the policy described at note 2.
Accounting for the convertible debt instrument
The net proceeds received from the issue of the Planwise Convertible Loan Note 2016 has been recorded as a
debt liability in the balance sheet and the accrued interest charged to the income statement and the debt liability.
The liability for the convertible debt instrument at 31 December 2015 is;
Convertible loan notes issued
Accrued interest - 2014
Accrued interest - 2015
17. CONVERTIBLE EQUITY INSTRUMENTS
Investor Convertible Loan Notes: Tranche A
Planwise
Convertible Loan
Note 2016
£000
200
7
9
216
From the date of the reverse acquisition a Convertible Equity Instrument of £730,000 was in existence as detailed
in the Admission Document dated 31 March 2014. Proceeds of the subscriptions for the instruments are to be
used to finance the Company's on-going working capital requirements. The terms of the equity instrument are that
the instrument, plus accrued interest at a rate of 6 per cent per annum, will convert into ordinary shares in the
Company at a price of £0.16 per share at the election of the note holders any time after the date that is 180 days
after the readmission to AIM on 24 April 2014. There is no option to repay in cash.
By way of an arrangement fee for the note holders agreeing to subscribe £730,000 for the Investor Convertible
Loan Notes: Tranche A, the Company agreed to grant to the holders warrants to subscribe for up to 1,095,000
Shares at an exercise price of £0.20 per share.
Investor Convertible Loan Notes: Tranche B
On 16 June 2014 the Company entered into an agreement to issue £1,451,472 of Convertible Equity Instruments.
Proceeds of the subscriptions for the instruments are to be used to finance the Company's on-going working
capital requirements. The terms of the equity instrument are that the instrument, plus accrued interest at a rate of
6 per cent per annum, will convert into ordinary shares in the Company at a price of £0.24 per share at the
election of the note holders any time after 28 March 2015. There is no option to repay in cash.
By way of an arrangement fee for the equity instrument holders agreeing to subscribe £1,451,472 for the Investor
Convertible Loan Notes: Tranche B, the Company agreed to grant to the holders warrants to subscribe for up to
1,995,774 Shares at an exercise price of £0.32 per share.
In respect of Tranche A and B the notes are therefore redeemable for a fixed number of shares and as such the
Directors of the Group consider these instruments to meet the criteria of the ‘fixed-for-fixed’ test under IAS 32. As
a result of this the Directors have concluded that these instruments are equity in nature and have accounted for
them as such.
Investor Convertible Loan Notes: Tranche C
34
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2015
On 20 April 2015 the Company entered into an agreement to issue £6,146,634 of Convertible Equity Instruments.
Proceeds of the subscriptions for the instruments are to be used to finance the Company's on-going working
capital requirements. The terms of the equity instrument are that the instrument, plus accrued interest at a rate of
4 per cent per annum, will convert into ordinary shares in the Company at a price of £0.70 per share at the
election of the note holders any time after 25 June 2016.
By way of an arrangement fee for the equity instrument holders agreeing to subscribe £6,846,633 for the Investor
Convertible Loan Notes: Tranche C, the Company agreed to grant to the holders warrants to subscribe for up to
1,756,185 Shares at an exercise price of £1.05 per share.
Investor Convertible Loan Notes: Tranche D
On 11 May 2015 the Company entered into an agreement to issue £250,000 of Convertible Equity Instruments.
Proceeds of the subscriptions for the instruments are to be used to finance the Company's on-going working
capital requirements. The terms of the equity instrument are that the instrument, plus accrued interest at a rate of
4 per cent per annum, will convert into ordinary shares in the Company at a price of £0.24 per share at the
election of the note holders any time after 28 March 2015.
By way of an arrangement fee for the equity instrument holders agreeing to subscribe £250,000 for the Investor
Convertible Loan Notes: Tranche D, the Company agreed to grant to the holders warrants to subscribe for up to
71,430 Shares at an exercise price of £1.05 per share.
In respect of Tranche C and D the notes are redeemable in either cash or shares in the company. The redemption
option is at the discretion of the company. As the manner of the redemption is at the discretion of the company
the Directors consider these instruments to meet the ‘fixed-for-fixed’ test under IAS 32. As a result of this the
Directors have concluded that these instruments are equity in nature and have accounted for them as such.
Investor Convertible Loan Notes: Tranche E
On 16 December 2015 the Company entered into an agreement to issue £3,831,708 of Convertible Equity
Instruments. Proceeds of the subscriptions for the instruments are to be used to finance the Company's on-going
working capital requirements. The terms of the equity instrument are that the instrument, plus accrued interest at
a rate of 6 per cent per annum, will convert into ordinary shares in the Company at a price of £1.50 per share at
the election of the note holders any time after 31 December 2016.
By way of an arrangement fee for the equity instrument holders agreeing to subscribe £3,831,708 for the Investor
Convertible Loan Notes: Tranche E, the Company agreed to grant to the holders warrants to subscribe for up to
1,021,792 Shares at an exercise price of £2.50 per share.
In respect of Tranche E, if the note was to be redeemed prior to June 2017 then an anti-dilutive clause would be
triggered which means the loan notes fail the ‘fixed-for-fixed’ test under IAS 32. The Directors however consider
that the triggering of this anti-dilutive clause is at the discretion of the company and as such the company
continues to have the discretion to settle for a fixed number of shares. This means that the instrument passes the
‘fixed’ test under IAS 32 and as this is the case the Directors consider that this instrument should be classified as
equity.
The principal amount of the Convertible Equity Instrument for Tranches A to E are recorded as shares to be
issued reserve and the accrued interest also charged to the same reserve.
A
B
C
D
E
Total
Convertible equity instruments issued
730
1,452
6,147
250
3,832
12,411
Addition to equity
Fundraising costs
129
79
166
-
-
(513)
6
-
9
-
859
1,531
5,800
256 3,841
389
(513)
12,287
35
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2015
18. SHARE PREMIUM
Group and Company
Balance at 1 January
Premium on issue of shares (net of issuance costs)
2015
£000
16,294
4,338
2014
£000
-
16,294
Balance at 31 December
20,632
16,294
19. RESERVES
Merger relief reserve
Balance at 1 January
Merger relief on reverse acquisition
Balance at 31 December
Share based payment reserve
Balance at 1 January
Share option expense
Options cancelled in the year
2015
2014#
Group
Company
Group
Company
£
£
£
£
5,625
-
5,625
5,625
-
- -
5,625
5,625
5,625
5,625
5,625
146
972
(110)
211
972
-
146
(110)
-
65
146
-
Balance at 31 December
1,008
1,073
146
211
Shares to be issued reserve
Balance at 1 January
Share based payment (warrants)
Balance at 31 December
Convertible loan note reserve
Balance at 1 January
-
102
63
102
-
-
-
63
63
102 165
2,259
2,259
- -
Shares to be issued
10,028
10,028
2,259
2,259
Balance at 31 December
12,287
12,287
2,259
2,259
Other reserve
Balance at 1 January
Other reserve arising on reverse acquisition
Balance at 31 December
Retained earnings
Balance at 1 January
Net loss for the year
Interest on convertible equity instruments
Options cancelled in the year
Balance at 31 December
# restated - note 2
28,286
-
28,286
(3,405)
(8,632)
(312)
110
(12,239)
-
21,152 -
7,134 -
28,286 -
-
-
(23,549)
(6,890)
(312)
110
(30,641)
-
(3,328)
(77)
-
(3,405)
(21,426)
( 2,046)
(77)
-
(23,549)
36
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2015
The shares to be issued reserve represent the value of equity shares which could be issued in future accounting
periods if the warrants in issue and / or the loan notes are exercised.
The share based payment reserve represents the value of equity shares which could be issued in future
accounting periods if the share based payment options in issue are exercised.
The merger relief reserve was created as a result of the reverse merger reverse acquisition of Alexander David
Investments plc in the year. The reserve represents the difference between the fair value of the consideration
transferred and the nominal value of the shares.
The other reserve was created as a result of the reverse acquisition of Alexander David Investments plc in the
year and the accounting treatment required, which is described in Note 2. The reserve is required due to the fact
that the reverse acquisition accounting requires the legal parent's equity structure to be shown.
Retained earnings represent the cumulative profits / (losses) of the entity which have not been distributed to
shareholders.
20. FINANCIAL INSTRUMENTS
The main risks arising from the Group’s financial instruments are liquidity risk, foreign currency risk and credit risk.
The directors regularly review and agree policies for managing each of these risks which are summarised below.
Market risk
Market risk encompasses three types of risk, being foreign currency exchange risk, price risk and fair value
interest rate risk. The Group policies for managing fair value interest rate risk are considered along with those for
managing cash flow interest rate risk and are set out in the subsection entitled ‘‘interest rate risk’’ below. The
directors do not consider the Group’s exposure to price risk to be significant. The Group’s risk management is
coordinated by the directors, and focuses on actively securing the Group’s short to medium term cash flows by
minimising the exposure to financial markets. The Group does not engage in the trading of financial assets for
speculative purposes nor does it write options.
Credit risk
Credit risk is managed on a group basis. Credit risk arises principally from cash and cash equivalents and
deposits with banks and financial institutions as well as credit exposure to customers including committed
transactions and outstanding receivables. The group reviews its banking arrangements carefully to minimise such
risks and currently has no customers and therefore this risk is viewed as minimal. Management monitor loans
between members of the group as part of their internal reporting and assess outstanding receivables for ability to
be repaid.
Liquidity risk
The group’s policy is to regularly monitor current and expected liquidity requirements to ensure that it maintains
sufficient reserves of cash to meet its liquidity requirements in the short and long term. The Group ordinarily
finances its activities through cash generated from operating activities and private and public offerings of equity
and debt securities.
Foreign currency risks
The group operates internationally although the majority of its operations are based in the United Kingdom and
the majority of assets and liabilities denominated in British Pounds. It therefore is exposed to foreign exchange
risk arising from exposure to various currencies primarily the Euro and US Dollar.
Given the limited exposure to the risk, due to the majority of assets being denominated in British Pounds the
group has no formal policies for managing foreign currency risks.
Interest rate risk
The Group has limited exposure to interest-rate risk arising from its bank deposits. These deposit accounts are
held at variable interest rates based on Allied Irish Bank base rate.
The directors do not consider the impact of possible interest rate changes based on current market conditions to
be material to the net result for the year or the equity position at the year-end for either the year ended 31
December 2014 or 31 December 2015.
37
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2015
21. CAPITAL RISK MANAGEMENT
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going
concern and to maximise shareholder value through the optimisation of the debt and equity balance.
The Group monitors its capital structure and makes adjustments, as and when it is deemed necessary and
appropriate to do so, using such methods as the issuing of new shares. The capital structure of the Group has
come from equity issues and the issue of convertible loan notes in the form of convertible equity instruments or
convertible debt instruments.
The Company currently does not have any specific policies and processes for managing capital and is not subject
to any externally imposed capital requirement other than requirements of the Companies Act 2006.
22. TRADE AND OTHER PAYABLES
Group
Trade payables
Accruals
Convertible loan note liability
Company
Trade payables
Accruals
Convertible loan note liability
2015
£000
314
216
216
2014
£000
41
436
206
746
683
2015
£000
191
93
216
2014
£000
29
382
206
500
617
23. RELATED PARTY TRANSACTIONS
Tiziana Pharma Limited is a wholly owned subsidiary of Tiziana Life Sciences plc. At year end, Tiziana Life
Sciences plc had loaned £1,970,841 in total and had recharged costs of £473,074 to Tiziana Pharma Limited
during the year. Included within other debtors of Tiziana Life Sciences plc’s company financial statements at the
balance sheet date is £2,443,915 owed by Tiziana Pharma Limited.
Tiziana Therapeutics Inc. is a wholly owned subsidiary of Tiziana Life Sciences plc. During the year, Tiziana Life
Sciences plc loaned £167,918 to Tiziana Therapeutics Inc.
The ultimate parent entity is Planwise Group Limited, incorporated in the British Virgin Islands.
24. POST BALANCE SHEET EVENTS
On 8th January 2016, the Company announced that within its research agreement with Cardiff University, focused
on pioneering the development of Bcl-3 inhibitors as potential drugs to treat cancer, has led to the identification of
a first-in-class lead clinical candidate, CB1, with relevant anti-metastatic activity, and a significant in vivo efficacy
and safety profile. The Company intends to file an Investigational New Drug (IND) application on CB1 in 2016,
and expects to move this drug candidate into clinical trials before the end of the year.
The original research agreement between the Company and Cardiff University, focused on pioneering the
development of Bcl-3 inhibitors as potential drugs to treat cancer, has been expanded to include an additional
research program focused on eradication of breast cancer stem cells through inhibition of a protein known as c-
FLIP, which is also being supported by the Company.
On 11th January 2016, the Company announced its plan for further development of foralumab, the company's fully
human anti-CD3 antibody, along with the addition of two key members: Professors Kevan Herold, MD and
Howard Weiner, MD who joined the Scientific Advisory Board and focusing on pioneering a unique clinical
38
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2015
development plan for foralumab. The Company is proposing to develop and evaluate foralumab in two clinical
indications: both graft vs host disease, and ulcerative colitis, an inflammatory bowel disease.
On 13th January 2016 the Company raised £709,406 through the issue of 472,938 unsecured convertible loan
notes, redeemable by the holders at any time after 31 December 2016 and which may be redeemed, at the
election of the Company, in cash or by conversion into new ordinary shares in the Company at a conversion price
of £1.50 per share. Interest accrues quarterly on the notes at a rate of six per cent per annum. The convertible
loan notes contain anti-dilution provisions which adjust the conversion price that the notes convert into ordinary
shares in the event of a fund raising by the Company at a price below £1.50 within 18 months of the date of the
issue. By way of an arrangement fee for the noteholders agreeing to subscribe for the loan notes, the Company
granted to the noteholders warrants to subscribe for up to 189,176 new ordinary shares in the Company at an
exercise price of £2.50 per share. The warrants will be exercisable during the period from and including 31
December 2016 to 31 December 2020. Funds raised will be used to fund the development of the Company's
clinical stage assets milciclib and foralumab, to meet the Company's ongoing liabilities in respect of licence
agreements, and for general working capital purposes.
On 28th April 2016 The Company received a notification from warrant holders to exercise warrants over 1,095,000
ordinary shares in the Company at an exercise price of 20p per share, providing the Company with gross
proceeds of £219,000. Following the issue of shares the enlarged issued share capital of the Company comprises
93,487,150 ordinary shares of 3p each.
25. FINANCIAL COMMITMENTS
The Group’s main financial commitments relate to the contractual payments in respect of its licensing
agreements. Due to the uncertain nature of scientific research and development and the length of time required
to reach commercialisation of the products of this research and development, pre-clinical, clinical and commercial
milestone obligations are not detailed until there is a reasonable certainty that the obligation will become payable.
Contractual commitments are detailed where amounts are known and certain.
• Bcl-3 project – funding for Cardiff University of £239,640 during 2015 for a research associate and a
technician, and £18,583 in 2016 to fund a PhD student.
•
•
Top 20 project – sponsored research funding of €150,000 per year in 2015, 2016, 2017 subject to
suitable progress of research (automatically renewed for up to 4 years if research milestones are
achieved). Other payments relate to the achievement of clinical milestones or the payment of royalties.
Foralumab project – license fees payable for the continued development of foralumab of $250,000 in
each of 2016, 2017 and 2018 for a total annual fee payment of $750,000. Diligence obligations are
payable to BMS / Medarex should the project continue and no Phase III clinical trial has been initiated by
15 December 2017. Other payments relate to the achievement of clinical milestones or the payment of
royalties.
• Milciclib project – license fee payable for a total of $3,500,000 for the continued development of milciclib.
The second instalment of the upfront payment amounting to $2,000,000 was paid on 22nd June 2015.
Other payments relate to the achievement of clinical milestones or the payment of royalties.
•
c-FLIP project – funding for Cardiff University of £50,000 for 2015 and 2016. Other payments relate to
the achievement of pre-clinical and clinical milestones or the payment of royalties.
39
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2015