COMPANY NUMBER 03508592
TIZIANA LIFE SCIENCES PLC
ANNUAL REPORT & FINANCIAL STATEMENTS
YEAR ENDED 31 DECEMBER 2020
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31ST DECEMBER 2020
CONTENTS
PAGE
STATUTORY AND OTHER INFORMATION
STRATEGIC REPORT
DIRECTORS’ REPORT
DIRECTORS’ REMUNERATION 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 AND COMPANY FINANCIAL STATEMENTS
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STATUTORY AND OTHER INFORMATION
Directors:
Secretary:
Registered Office:
Principal Bankers:
Auditors:
Nominated Advisors:
Nominated Brokers:
Solicitors:
Registrars:
Mr G. M. A. Cerrone
Dr K. Shailubhai
Mr W. Simon
Mr J. Brancaccio
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TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
STRATEGIC REPORT: EXECUTIVE CHAIRMAN’S STATEMENT
I am pleased to report on the Company (Tiziana Life Sciences PLC) and its subsidiaries, together the ‘Group’,
results for the year ended 31 December 2020.
Tiziana Life Sciences is a dual-listed (NASDAQ: TLSA, LSE:TILS) clinical stage biotechnology company that
specializes in the developing transformative therapies for autoimmune and inflammatory diseases, degenerative
diseases and cancer related to the liver. Our clinical pipeline includes drug assets for Crohn’s Disease, COVID-
19, Secondary Progressive Multiple Sclerosis and Hepatocellular Carcinoma. Tiziana is led by a team of highly
qualified executives with extensive drug development and commercialization experience.
Background
The Group is focused on the discovery and development of novel molecules and related diagnostics to treat high
unmet medical needs in oncology and immunology. Our mission is to design and deliver next generation
therapeutics and diagnostics for oncology and immune diseases of high unmet medical need by combining deep
understanding of disease biology with clinical development expertise. We have a drug discovery pipeline of small
molecule new chemical entities, or NCEs, and biologics. We employ a lean and virtual research and development,
or R&D, model using highly experienced teams of experts for each business function to maximize value accretion
by focusing resources on the drug discovery and development processes.
Development Pipeline
Foralumab (TZLS-401 / NI-0401)
Our lead product candidate in immunology is Foralumab (TZLS-401), which we believe is the only fully human anti-
CD3 monoclonal antibody, or mAb, in clinical development. MAbs represent a single pure antibody produced by
single clones and are an important class of human therapeutics for treating cancers and autoimmune diseases. We
are developing Foralumab, for which we in-licensed the intellectual property from Novimmune, SA, a Swiss
biotechnology company, or Novimmune, as a potential treatment for neurodegenerative diseases such as
progressive Multiple Sclerosis, or MS, and Crohn’s disease. As the only fully human engineered human anti-CD3
mAb in clinical development, Foralumab has significant potential advantages such as a shorter treatment duration
and reduced immunogenicity. We believe that oral or intranasal administration of Foralumab has the potential to
reduce inflammation while minimizing the toxicity and related side effects.
To date, Foralumab has been studied in one Phase 1 and two Phase 2a clinical trials conducted by Novimmune in
68 patients dosed by the intravenous route of administration. In these trials, Foralumab was observed to be safe
and well-tolerated and produced immunologic effects consistent with potential clinical benefit while demonstrating
mild to moderate infusion related reactions. With completion of the intravenous dosing for Phase 2a trial in Crohn’s
Disease, Foralumab’s ability to modulate T-cell response enables potential extension into a wide range of other
autoimmune and inflammatory diseases, such as graft versus host disease, ulcerative colitis, MS, type-1 diabetes,
inflammatory bowel disease, psoriasis and rheumatoid arthritis.
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TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2018
STRATEGIC REPORT: EXECUTIVE CHAIRMAN’S STATEMENT
Foralumab is being developed as both an immunosuppressive and immunomodulatory agent, with therapeutic
benefits of rendering T-cells unable to orchestrate an immune response and induction of immune tolerance via
maintenance of regulatory T-cells. There is further potential for Foralumab to be combined with our TZLS-501, a
fully human anti-IL-6R mAB in development to target autoimmune and inflammatory diseases. In November 2016,
we announced new data for oral efficacy in humanized mouse models with Foralumab, a major milestone and a
potential breakthrough for the treatment of nonalcoholic steatohepatitis and autoimmune disease. This unique oral
technology stimulates the natural gut immune system and potentially provides a therapeutic effect in inflammatory
and autoimmune diseases with greatly reduced toxicity. Positive therapeutic effects with Foralumab were
consistently demonstrated in animal studies conducted by Prof. Kevan Herold (Yale University) and Prof. Howard
Weiner (Harvard University).
In April 2018, we entered into an exclusive license agreement with The Brigham and Women’s Hospital, Inc. relating
to a novel formulation of Foralumab dosed in a medical device for nasal administration. An investigational new drug
application, or IND, for the first-in-human evaluation of the nasal administration of Foralumab in healthy volunteers
for progressive MS indication was filed in the second quarter of 2018. Subsequent to IND approval, a single-site,
double-blind, placebo-controlled, dose-ranging Phase 1 trial with nasally administered Foralumab at 10, 50 and 250
µg per day, consecutively for 5 days to evaluate biomarkers of immunomodulation of clinical responses was initiated
in November 2018. The trial was conducted at the Brigham and Women’s Hospital, Harvard Medical School, Boston,
MA, in healthy volunteers in which 18 subjects received Foralumab treatment and 9 patients received placebo. The
study was completed in September 2019, and data demonstrated that nasally administered Foralumab was well-
tolerated and no drug-related safety issues were reported at any of the doses. No drug-related changes were
observed in vital signs among subjects at predose during treatment and at discharge. Nasally administered
Foralumab at the 50 µg dose suppressed cytotoxic CD8+ as well as perforin-secreting CD8+ cells, which have been
implicated in neurodegeneration in MS. Treatment at 50 µg stimulated production of anti-inflammatory cytokine IL-
10 and suppressed production of pro-inflammatory cytokine interferon-gamma (IFN-γ). Taken together, the
treatment showed significant positive effects on the biomarkers for activation of mucosal immunity, which are
capable of inducing site-targeted immunomodulation to elicit anti-inflammatory effects. Based on the results we
intend to conduct a Phase 2 trial in progressive MS patients starting in the third quarter of 2021.
On July 31, 2020, we announced that we had submitted a patent application for the potential use of nasally
administered Foralumab, a fully human anti-CD3 mAb, for the treatment of COVID-19 either alone or in combination
with other anti-viral drugs. Recent clinical studies implied that a combination of anti-inflammatory and anti-viral drugs
may be more effective to treat patients at different stages of COVID-19 disease.
A collaborative clinical study was initiated on November 2, 2020, investigating nasally administered Foralumab
either alone or in combination with orally administered dexamethasone in COVID-19 patients in Brazil. In view of
the importance and urgency, scientific teams at the Harvard Medical School, Santa Casa de Misericórdia de Santos
Hospital (Jabaquara, Santos, Brazil) and at our company closely collaborated to facilitate initiation of this study in
expedited time frames. The clinical trial was coordinated by the team at INTRIALS, a leading, full-service Latin
America Clinical Research Organization, (CRO) based in Sao Paulo City, Brazil. The trial was completed in January
2021, and the clinical data from this trial is expected to be available by the first quarter of 2021. This trial, the first-
ever trial on nasal administration of Foralumab for treatment of COVID-19, is of enormous significance given the
underlying scientific approach is to modulate the immune system, which is dysregulated and crippled to protect
against the virus. If successful, we believe this approach could be good for treatment of all COVID-19 variants and
potentially other viruses.
An enteric-coated capsule formulation using a proprietary and novel technology has been developed for oral
administration of Foralumab. cGMP manufacturing of clinical trial materials for a Phase 1 study has been completed
and an IND was submitted in March 2019.
On September 9, 2019, the U.S. Food and Drug Administration, or FDA, granted approval to initiate the Phase 1
clinical trials to evaluate the safety and pharmacokinetics of oral Foralumab at 1.25, 2.5 and 5.0 mg/day as a single
ascending dose study. The study was completed in December 2019 at the Brigham and Women’s Hospital.
Formulated Foralumab powder encapsulated in enteric-coated capsule was well-tolerated at all doses tested and
there were no drug-related safety issues observed even at the highest dose of 5 mg in this trial. Based on successful
Phase 1 data, we intend to conduct a Phase 2 study using Crohn’s Disease patients starting in the third quarter of
2021.
In addition, on August 18, 2020 the United States Patent and Trademark Office, or USPTO, granted us a patent on
use and methods of treatment of Crohn’s disease with Foralumab, its proprietary fully human monoclonal antibody,
and all other anti-CD3 mAbs. The CD3 (cluster of differentiation 3) is a protein complex on T-cells, which is important
for the regulation of the immune system. The patent was published by the USPTO on September 1, 2020 as Patent
No. 10,759,858. Recently, we also announced the issuance of the first-ever patent on oral administration of anti-
CD3 mAbs for treatment of human diseases (Patent No. 10,688,186). We believe the grant of this additional
composition-of-matter and use patent further strengthens our intellectual property, consisting of proprietary
technologies on oral and nasal administration of Foralumab and other anti-CD3 mAbs for the treatment of human
diseases.
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TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
STRATEGIC REPORT: EXECUTIVE CHAIRMAN’S STATEMENT
On July 16, 2020, we announced that we had submitted a patent application on the potential use of Foralumab, a
fully human anti-CD3 mAbs, to improve success of chimeric antigen receptor T-cell, or CAR-T, therapy for cancer
and other human diseases. The patent application claims inventions related to lymphodepletion to improving CAR-
T expansion and/or survival using anti-CD-3 mAbs administered either alone or in combination with other co-
stimulatory molecules, such as an anti-IL-6R mAb, an anti-CD28 mAb or specific inhibitors of signaling pathways
of phosphatidylinositol 3-kinase (PI3K), protein kinase B (AKT), or mammalian target of rapamycin (mTOR).
Milciclib (TZLS-201)
We are developing Milciclib, for which we in-licensed the intellectual property from Nerviano Medical Sciences S.r.l.
in 2015, as a potential treatment for hepatocellular carcinoma, or HCC. A novel feature of Milciclib is its ability to
reduce levels of microRNAs, miR-221 and miR-222. MicroRNAs are small RNA molecules that play a significant
role in the regulation of gene expression. miR-221 and miR-222 are believed to be linked to the development of
blood supply (angiogenesis) in cancer tumors. Levels of these microRNAs are consistently elevated in HCC patients
and may contribute towards resistance to treatment with Sorafenib, a multikinase inhibitor (a drug which may inhibit
the cellular division and proliferation associated with certain cancers) often prescribed to HCC patients as the
Standard of Care.
To date, Milciclib has been studied in a total of eight completed Phase 1 and 2 clinical trials in 316 patients. In these
trials, Milciclib was observed to be well-tolerated and showed initial signals of anti-tumor action. Prior to in-licensing,
Milciclib was granted orphan designation by the European Commission and by the FDA for the treatment of
malignant thymoma and an aggressive form of thymic carcinoma in patients previously treated with chemotherapy.
In two Phase 2a trials, CDKO-125a-006 and CDKO125a-007, Milciclib showed signs of slowing disease progression
and acceptable safety. We initiated a Phase 2a trial (CDKO-125a-010) of Milciclib safety and tolerability as a single
therapy in Sorafenib-resistant patients with HCC in the first half of 2017. Typically, this population of patients have
an advanced form of the disease with poor prognosis and an average overall survival expectancy of three to five
months. In May 2018, the Independent Data Monitor committee, or IDMC, completed an interim analysis of
tolerability data from the first eleven treated patients and recommended expansion of the initial cohort to an
additional 20 patients to complete the trial enrolment, which was completed in December 2018. In March 2019, the
IDMC reviewed safety data from patients as of February 26, 2019 and concluded that the administration of Milciclib
to patients with advanced HCC was not associated with unexpected signs or signals of toxicity. 28 out of 31 treated
patients were evaluable, 14 completed the 6-month duration study. The most frequent adverse events such as
diarrhoea, ascites, nausea, fatigue, asthenia, fever, ataxia, headache, and rash were manageable. No drug-
related deaths were recorded.
The Phase 2a trial was completed in June 2019 with clinical safety result reported in July 2019 and efficacy results
reported in September 2019. The clinical activity assessment in evaluable patients was based on the independent
radiological review using the modified Response Evaluation Criteria in Solid Tumors.
·14 out of 28 (50%) evaluable patients completed 6-month duration of the trial.
··Both median TTP and PFS were 5.9 months (95% Confidence Interval ("CI") 1.5-6.7 months) out of the 6-
months duration of the trial.
·16 of 28 (57.1%) evaluable patients showed 'Stable Disease'
·One patient (3.6%) showed unconfirmed 'Partial Response' (PR).
·17 of 28 (60.7%) evaluable patients showed 'Clinical Benefit Rate' defined as CBR=CR+PR+SD (with CR
representing Complete Remission).
Since overexpression of cyclin-dependent kinases, or CDKs, and dysregulation in pRB pathway (regulates
transcription factors critical for cell cycle progression) are prominently associated with tumor cell resistance to
certain chemotherapeutic drugs, inhibition of multiple CDKs is an appealing approach to improve clinical responses
in cancer patient’s refractory to existing treatment options. A Phase 1 dose-escalation study of Milciclib in
combination with gemcitabine in patients with refractory solid tumors exhibited clinical activity in patients, including
those who were refractory to gemcitabine. We plan to explore a combination treatment of Milciclib and a tyrosine
kinase inhibitor (either Sorafenib or Regorafenib) in patients with HCC in the third quarter of 2021.
On August 21, 2020 we announced that the USPTO had granted us a patent on use of Milciclib in combination with
tyrosine kinase inhibitors, or TKIs, such as Sorafenib (Nexavar®), Regorafenib (Stivarga®) and Lenvatinib
(Lenvima®) for the treatment of hepatocellular carcinoma, or HCC, and other cancers in humans. This patent was
published by the USPTO on September 1, 2020 as Patent No. 10,758,541. Like most human cancers, HCC is a
complex multi-factorial cancer with multiple underlying mechanisms causing enormous heterogeneity in patient
populations. Consequently, patients with HCC often develop resistance towards the monotherapies of existing
therapeutics. Thus, there is an urgent need for combination drug treatment approaches targeting different
mechanisms to achieve better clinical outcomes. We are planning to conduct a Phase 2b trial with Milciclib in
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TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
STRATEGIC REPORT: EXECUTIVE CHAIRMAN’S STATEMENT
combination with a TKI or immunotherapy in sorafenib-resistant HCC patients. We also successfully completed a
Phase 1 trial in patients with refractory solid cancers. The patients enrolled in this trial had demonstrated resistance
to the mainstream chemotherapies for refractory solid cancer. The trial data showed that Milciclib in combination
with gemcitabine provided 36% clinical response to these patients who had shown no response to gemcitabine
when administered alone. These data suggest that Milciclib may be able to overcome drug-resistance. This novel
attribute of Milciclib may have application as an adjuvant therapy in combination with chemotherapies for treatment
of refractory, malignant and advanced cases of cancers. The data from this trial also showed that the combination
treatment delayed onset in a patient with non-small cell lung carcinoma (NSCLC). The preclinical data from an
animal study also suggest that orally administered Milciclib might also be effective in Kras+ (G12C) mutants of
NSCLC cancer. We are further exploring the use of Milciclib in combination with other drugs for treatment of Kras+
(G12C) NSCLC, which is an unmet medical need.
Anti-IL6R (TZLS-501)
TZLS-501 is a fully human engineered mAb targeting the interleukin-6 receptor (IL-6R). Tiziana Life Sciences
licensed the intellectual property from Novimmune in January 2017. This fully human mAb has a unique mechanism
of action that binds to both the membrane-bound and soluble forms of the IL-6R resulting in lowering of circulating
levels of IL-6 in the blood. Excessive production of IL-6 is regarded as a key driver of chronic inflammation,
associated with autoimmune diseases such as multiple myeloma, oncology indications and rheumatoid arthritis,
and the Group believes that TZLS-501 may have potential therapeutic value for these indications.
In preclinical studies, TZLS-501 demonstrated the potential to overcome limitations of other IL-6 blocking pathway
drugs. Compared to Tocilizumab and Sarilumab, while binding to the membrane-bound IL-6R complex TZLS-501
has shown a higher affinity for the soluble IL-6 receptor as seen from the antibody binding studies conducted in cell
culture. TZLS-501 also demonstrated the potential to block or reduce IL-6 signaling in mouse models of
inflammation. The soluble form of IL-6 has been implicated to have a larger role in disease progression compared
to the membrane-bound form. (Kallen, K.J. (2002). “The role of trans signaling via the agonistic soluble IL-6 receptor
in human diseases”. Biochimica et Biophysica Acta. 1592 (3): 323–343.).
Recently, chronic inflammation is believed to be associated with severe lung damage observed with COVID-19
infections and acute respiratory illness. China’s National Health Commission has recommended the use of anti-IL6-
R mAbs for treatment of inflammation and elevated cytokine levels (“cytokine storm”) in COVID-19 patients.
On April 9, 2020 The Company announced that it had developed investigational new technology to treat COVID-19
infections, consisting of direct delivery of anti-IL-6 receptor (anti-IL-6R) monoclonal antibodies (mAbs) into the lungs
using a handheld inhaler or nebulizer for treatment of patients infected with COVID-19 (SARS-CoV-
2) coronavirus. On June 29, 2020 the Company announced that it was advancing GMP manufacturing of TZLS-501
with STC Biologics concurrently with the development of inhalation technology using a hand-held nebulizer with
Sciarra Laboratories and safety toxicology studies in Cynomolgus monkeys with ITR Canada Laboratories. GMP
batches were initiated in January 2021 and completed in March 2021. Safety inhalation toxicology studies were
initiated in November 2020 and completed in March 2021. Technological assessment of nebulizers for inhalation
treatment of patients was initiated in September 2020 and completed in February 2021.
StemPrintER
StemPrintER is a multi-gene signature assay intended for use in patients diagnosed with estrogen-receptor positive
ER+/HER2 negative breast cancers. The Group believes this in-vitro prognostic test will be used in conjunction with
clinical evaluation to identify those patients at increased risk for early and/or late metastasis. StemPrintER is
designed to help physicians distinguish ER+/HER2 negative patients:
■ with an elevated risk of early recurrence (<5 years) who could benefit from chemotherapy in addition
to hormonal therapy
■ with a high risk of late recurrence who could benefit from prolonged endocrine treatment up to 10
years
■ with a low risk of early recurrence who might be spared chemotherapy or be eligible for less
aggressive treatments
The diagnostic has a unique biological basis, being based on the detection of cancer stem cell markers, uses a
reliable platform (qRT- PCR, FFPE), and has been evaluated in an initial retrospective validation study using a
consecutive cohort of approximately 2,400 patients with breast cancer. The development team is preparing for a
retrospective validation study using an independent cohort and has conducted a pre- submission meeting with the
FDA.
Recently, StemPrintER results were announced, from a poster selected for discussion session at the American
Society of Clinical Oncology (ASCO) Virtual Conference, demonstrating the favourable performance of the
StemPrintER stem cell based genomic prognostic tool versus the market leader, Oncotype DX, in predicting
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TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
STRATEGIC REPORT: EXECUTIVE CHAIRMAN’S STATEMENT
recurrence in ER+/HER2- postmenopausal breast cancer patients
Tiziana has during this year demerged the StemPrintER technology by the transfer of the Intellectual Property rights
and patents to its wholly owned subsidiary, Stemprinter Sciences Ltd, which was then sold to Accustem Sciences
Ltd. The process was effected by way of a Court sanctioned capital reduction and statutory demerger. Accustem
will develop and commercialise the StemPrintER diagnostic tester.
Financial summary
Consolidated Statement of Comprehensive Income
The Group has made a loss for the year of £20,162k (2019: £7,177k). The loss is detailed in the consolidated
statement of comprehensive income on page 39.
Research and development costs were £4.7 million for the year ended December 31, 2020 as compared to £2.9
million for the year ended December 31, 2019, an increase of £1.8 million. The increase in cost is a result of the
development of anti-IL-6R monoclonal antibodies (mAbs) compounds.
Operating expenses were £19.01 million for the year ended December 31, 2020 as compared to £4.9 million for the
year ended December 31, 2019, an increase of £14.11 million. The increase in cost is a result of a realisation bonus
that became payable for £10.29m, additional fair value charges of £2.7m relating to modification of existing options
and the issuance of additional options, plus additional compliance, professional fees and legal costs of £1.12m due
to increased activity in the Company.
Consolidated Statement of Financial Position
At the end of the year the Group cash balance amounted to £48,217k (2019: £153k) and the total assets of the
Group amounted to £51,766k (2019: £1,808k). To bolster our cash reserves, the Group raised £52.1m via a public
offering of American Depositary Shares (“ADSs”) on the NASDAQ Global Market during 2020.
Fund raising
In the year, the Group successfully raised funds to further progress its on-going clinical and pre-clinical pipeline.
During the year to 31 December 2020, Tiziana raised £62.1m funds: £52.1m was raised through a public offering
on the NASDAQ Global Market, £6.2m through an ‘At the market’ sales agreement, £0.1m through the issuance of
a Convertible Loan Note and £3.7m through the exercise of warrants and options. 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 license agreements, and for general working capital purposes.
Going Concern
The Group has experienced net losses and significant cash outflows from cash used in operating activities over the
past years, and as of December 31, 2020, had an accumulated loss of £62,313k, a net loss for the year ended
December 31, 2020 of £20,348k and net cash used in operating activities of £9,297k.
Based upon the current forecasts prepared by Management, the potential use of cash flows from operations for the
next 20 months is £38.6 million. When compared to the current cash balance at April 30, 2021 including the
anticipated receipts for R&D tax credits for 2020, the Group has enough cash to sustain operations to December
2022. The Group noted that included in its cash projections to December 2022 was £21.8m of uncommitted
expenditure, which Management could repurpose or delay the expenditure as required.
Appointments
Non-Executive Directors
On 21 January 2020, the Group announced the appointment of Mr. Gregor MacRae to its Board as a Non-executive
Director.
On 20 July 2020, the Group announced the appointment of Mr. John Brancaccio to its Board as a Non-executive
Director. Mr Brancaccio will Chair the Audit, Risk and Disclosure Committee.
Mr. Brancaccio, retired CPA, is a financial executive with extensive international and domestic experience in
pharmaceutical and biotechnology for privately and publicly held companies. From 2000 to 2002, Mr. Brancaccio
was the Chief Financial Officer/Chief Operating Officer of Eline Group, an entertainment and media company. From
May 2002 until March 2004, Mr. Brancaccio was the Chief Financial Officer of Memory Pharmaceuticals Corp., a
biotechnology company. From April 2004 until May 2017, Mr. Brancaccio was the Chief Financial Officer of
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TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
STRATEGIC REPORT: EXECUTIVE CHAIRMAN’S STATEMENT
Accelerated Technologies, Inc., an incubator for medical device companies. Mr. Brancaccio is currently a director
of Cardiff Oncology, Inc.,Rasna Therapeutics, Inc., OKYO Pharma LTD and Hepion Pharmaceuticals, Inc.
Resignations
Non-Executive Directors
On 18 June 2020, the Group announced that Mr. Gregor MacRae was standing down as a director of the Company
with immediate effect to concentrate on his other business interests and activities; Mr MacRae felt his position was
better filled by an individual with a background and greater experience in life sciences sector.
COVID-19
We remain cognisant of the potential impact of coronavirus (COVID-19) on our operations and have taken the steps
necessary to maintain the integrity of the Company's assets and the health and wellbeing of our employees. The
Company is well financed, resilient and well positioned to weather any financial downturn occurring as a result of
the outbreak. Indeed, the Company has raised additional funds through an "At the Market" or "ATM" Sales
Agreement with Think Equity (a division of Fordham Financial Management, Inc.) which raised $7.7m from the sale
of ADSs.
We are also aware of the responsibility we have as a member of the global healthcare community to develop
investigational new technologies to treat COVID-19 infections.
Outlook and strategy
We have continued to progress our pipeline of drugs to treat rare cancers and autoimmune and inflammatory
diseases.
We are developing investigational new technology to treat COVID-19 infections, which consists of direct delivery of
anti-IL-6 receptor (anti-IL-6R) monoclonal antibodies (mAbs) into the lungs using a nasal delivery system. Preclinical
studies are ongoing and we hope to commence a trial investigating the direct delivery of an anti-IL-6R mAb to the
lungs using a portable nasal delivery system. This treatment could be useful for different variants of COVID-19 and
we are exploring these in an upcoming preclinical study.
The Company also plans to develop subcutaneous delivery of anti_IL-6R mAb for treatment of ARDS and other
inflammatory conditions.
We have outlined our clinical development plan for Foralumab and anticipate to commence Phase 1b and 2 trials
for oral administered Foralumab in Crohn’s disease patients and nasally administered Foralumab in multiple
sclerosis patients.
For Milciclib, we are planning to initiate a Phase 2b clinical trial in HCC patients with Milciclib in combination with a
Tyrosine kinase inhibitors such as Regorafenib or Sorafenib. The Company also intends to evaluate milciclib in
combination with standard of care treatments for other solid tumour indications.
We recently announced an agreement we have entered into with Takanawa Japan K.K, Pharma Team, (Takanawa)
for a strategic business development plan to Identify a clinical partner in Japan and other Asian countries for further
clinical development of Milciclib for treatment in advanced hepatocellular carcinoma (HCC) patients. We believe the
positive clinical activity in advanced HCC and other cancers warrant immediate further development in Japan and
other Asian countries where the prevalence of this cancer is relatively high, and the current available therapies are
not entirely satisfactory.
Looking ahead, Tiziana is confident that it is well positioned to advance these programs to their next respective
value inflection points.
Gabriele Cerrone
Gabriele Cerrone
Executive Chairman
May 17, 2021
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TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
STRATEGIC REPORT
Business review
A review of the business, its results and strategic outlook is included in the Executive Chairman’s Statement on
page 2.
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 company concerned
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. These relate to reviewing, on a regular basis, the scientific and technical progress of the research
and development programmes and protection of the intellectual property arising from them together with monitoring
the progress being made with the Group’s upcoming clinical trials which are discussed in the Chairman’s statement
from page 2.
At this stage of Group development significant sources of revenue generation are unlikely and the Group is cash
consuming. The Group 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 Group.
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 2020 the main use of the Group’s funds was
for developing investigational new technology to treat COVID-19 infections, consisting of direct delivery of anti-IL-6
receptor (anti-IL-6R) monoclonal antibodies (mAbs) into the lungs using a handheld inhaler or nebulizer and the
formulation and manufacturing of nasally and orally administered Foralumab to be used in clinical trials commencing
in 2021. Management monitors its cash consumption on a monthly basis and a cash projection is presented at
every quarterly board meeting.
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 successfully raised additional cash during 2020 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.
Non-financial KPIs achieved during 2020
Completion of Various Phase 1 Clinical Trials for Nasally and Orally Administered Foralumab.
• Completion of a Phase 1 clinical trial for progressive multiple sclerosis indication for nasally administered
Foralumab.
• Completion of Phase I clinical trials to evaluate the safety and pharmacokinetics of oral Foralumab at
1.25, 2.5 and 5.0 mg/day as a single ascending dose study
• Completion of Phase 1 clinical trial for COVID-19 patients in Brazil with demonstration of clinical benefit
and safety
Non-financial KPIs for 2021:
The group intends to monitor its progress during 2021 with reference to the objectives set out below:
• Orally administered Foralumab for the treatment of Crohn’s disease milestone delivery
•
Intranasal administration of Foralumab milestone delivery (including COVID 19 inpatients and outpatients)
• Progress the clinical development for our lead oncology candidate Milciclib in combination with other
therapeutics for KRAS+ NSCLC.
Other Considerations
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
8
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2018
STRATEGIC REPORT
• 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 2020.
Principal risks and uncertainties
The Group operates in an uncertain environment and is subject to a number of risk factors. The Directors have
carried out a robust assessment of the principal risks facing the Group, including those that threaten its business
model, future performance, solvency or liquidity. They consider the following risk factors are of particular relevance
to the Group’s activities and to any investment in the Group. It should be noted that the list is not exhaustive and
that other risk factors not presently known or currently deemed immaterial may apply.
The risk factors are summarised below:
Risks relating to the Group’s business strategy.
The Group’s business is relatively undeveloped.
The operations of Tiziana are at a relatively early stage and, to date, no commercial sales of its products have been
made. The ability of the Group to achieve commercialisation is dependent on a number of factors, many of which
are outside of the Group’s control. Examples of factors outside of the Group’s control are the impact of Brexit, capital
market conditions, FDA approval and competition.
Business strategy of the Group
The development of clinical products for new medical treatments is inherently uncertain, with high failure rates in
clinical studies for both early and late stage development products and such clinical studies can be expensive, time-
consuming and complicated and there is no certainty as to the outcome of such studies. Even once clinical studies
have been successfully carried out, later phase trials may not successfully replicate or improve on such outcomes.
Staffing and key personnel
The Group is reliant on a number of the key personnel. Whilst the Group has endeavoured to ensure that it has
contractual arrangements which include non-compete restrictions in place with such persons to lessen the risk of
them ceasing to be involved with the Group, in the event that the Group was to lose the services of such individuals,
its results could be adversely affected.
Costs of commercialisation
The ability of the Group to bring its products to first commercial sale will be dependent in part on the overall costs
of manufacturing and the costs involved could be significant and there is no guarantee that the sale prices
achievable for its products will be viable and sustainable.
Clinical studies and timelines risk
Tiziana is currently progressing its product candidates through preclinical development. Although encouraging
results have been achieved so far, there can be no certainty that these results can be reproduced in clinical trials.
The development of clinical products for new medical treatments is inherently uncertain, with high failure rates in
clinical studies for both early- and late-stage development products. Furthermore, such clinical studies (Phase 1,
Phase 2a/2b, Phase 3) are typically expensive, complex, can take considerable time to complete and have uncertain
outcomes. Furthermore, as a result of adverse, undesirable, unintended or inconclusive results from any testing or
clinical trials (which have yet to be designed), the future progress, planning and potential treatment outcome of the
products and clinical programmes may be affected and may potentially prevent or limit the commercial use of one,
many or all of the Company's products. In addition, later phase clinical trials may fail to show the desired safety and
efficacy obtained in earlier studies, and a successful completion of one stage of clinical development of an
investigational clinical product does not ensure that subsequent stages of clinical development will be successful.
Failure can occur at any stage of clinical development and, as a result, enforced delays to the clinical development
plan could delay or prevent commercialisation of the Company's product candidates. Various factors associated
with the potential failure or delay in completing a clinical programme include, but are not limited to:
9
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
STRATEGIC REPORT
• Delays in securing clinical investigators or clinical study sites;
• Delays in securing any regulatory authority, hospital ethics committee, or institutional review board approval or
approvals necessary to commence a clinical study;
• Delays or failure to recruit a sufficient number of clinical study participants in accordance with the clinical study
protocol;
• Difficulty or inability to monitor subjects adequately during or after treatment;
• Inability to replicate in Phase 3 controlled studies any safety and efficacy data obtained from controlled Phase
2a/2b clinical studies;
• Difficulty or inability to secure clinical investigator compliance to follow the approved clinical study protocol; and
• Unexpected adverse events or any other safety or related issues.
Research and development risk
The Group operates in the biotechnology and bio-pharmaceutical development sectors and carries out complex
scientific research. If the research or preclinical testing or clinical trials of any of Tiziana’ product candidates fail,
meaning that these candidates will not be licensed or marketed, this would result in a complete absence of revenue
from these failed candidates. Positive results from preclinical and early clinical studies do not guarantee positive
results from clinical trials required to permit application for regulatory approval. Furthermore, the Group may
discontinue the development of candidates if results are not positive or unlikely to further its progress towards a
meaningful outcome or collaboration.
Intellectual property (IP) infringement
The Group may be subject to future litigation concerning its own IP and the IP of others. Adverse judgements in
relation to its IP would likely have negative outcomes for its results of operations. Intellectual property (IP) control
The Group is partially reliant on an exclusive, world-wide licence of a patents from [ ] and [ ].
Environmental and other regulatory requirements
The event of a breach with any environmental or regulatory requirements may give rise to reputational, financial or
other sanctions against the Group, and therefore the Board considers these risks seriously and designs, maintains
and reviews its policies and processes so as to mitigate or avoid these risks. Whilst the Board has a good record
of compliance, there is no assurance that the Group’s activities will always be compliant.
Financing
The Group’s ability to develop its product through to commercial sale will depend upon the Group’s ability to obtain
financing primarily through a further raising of new equity capital. Although the Group has been successful in raising
new equity capital, there can be no guarantee that it will be able to do so in the future. The Group may not be
successful in procuring the requisite funds on terms which are acceptable to it (or at all) and, if such funding is
unavailable, would raise questions over its ability to further develop its products through to commercialisation.
Further, Shareholders’ holdings of Ordinary Shares may be materially diluted if debt financing is not available.
Market conditions
Market conditions, including general economic conditions and their effect on exchange rates, interest rates and
inflations rates, may impact the ultimate value of the Group regardless of its operating performance. The Group
also faces competition from other organisations, some of which may have greater resources or be more established
in a particular territory. The Board considers and reviews all market conditions to try and mitigate any risks that may
arise from these.
Political and country risk – UK departure from the EU
The Company is quoted in the United Kingdom (UK) and operates in the UK, in addition to other territories. Since
a significant proportion of the regulatory framework in the UK applicable to the Group’s business and its product
candidates is derived from EU directives and regulations, Brexit and any ultimate trade deals struck between the
UK and EU could materially impact the regulatory regime with respect to the development, manufacture,
importation, approval and commercialisation of the Group’s product candidates in the UK or the EU. For example,
as a result of the uncertainty surrounding Brexit, the EMA relocated to Amsterdam from London. Following the
Transition Period, the UK is no longer covered by the centralised procedures for obtaining EU-wide marketing
authorisation from the EMA and, unless a specific agreement is entered into, a separate process for authorisation
of drug products, including the Company’s drug candidates, will be required in the UK, the potential process for
10
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
STRATEGIC REPORT
which is currently unclear. Moreover, in the US, tariffs on certain US imports have recently been imposed, and the
EU and other countries have responded with retaliatory tariffs on certain US exports. In addition, the Group may be
required to pay taxes or duties or be subjected to other hurdles in connection with the importation of the Group’s
candidates into the EU, or the Group may incur expenses in establishing a manufacturing facility in the EU in order
to circumvent such hurdles. Any further changes in international trade, tariff and import/export regulations as a
result of Brexit or otherwise may impose unexpected duty costs or other non-tariff barriers on the Group. As a result,
given the ongoing uncertainty surrounding the situation, the Company is monitoring matters and seeking advice as
to how to mitigate the risks arising.
Pandemic and business disruption risk
The Company may be affected by disruptions to its operations in one or more locations, particularly in the near
future in light of responses to the novel coronavirus or other potential pandemics. The Company’s US operations
are classed as an essential business and have not been subject to closure, and work has continued to date with
prudent hygiene and distancing measures in place including limited work in the laboratory on rota and work from
home. [All laboratory staff have been fully vaccinated.] The Company is allowing for extended delivery times for
some supplies, and for slower progress with collaboration partners. The Board and UK management continue to
operate remotely, as usual. At present the Company believes that there should be no significant material disruption
to its work, but the Board continues to monitor these risks and the Company’s business continuity plans.
Gender of Directors and employees
We recruit individuals who have the skills, experience and integrity needed to perform the roles to make Tiziana
Life Sciences PLC a successful company. There are currently no women on the board, although we note that among
our senior management team our finance director is female. We are committed and continue to recruit without
regard to sex or ethnic origin, appointing and thereafter promoting staff based upon merit.
The profile of the Group’s employees and directors at December 31, 2020, was as follows:
December 31, 2020
Male
Female
Total
Number or persons who were Directors or
officers of the Company
Number of persons who were other employees
of the Company
Total employees at December 31,2020
4
2
6
1
4
5
5
6
11
Directors' duties in relation to s172 Companies Act 2006
The directors consider, that they have acted in the way they believe, in good faith, to promote the success of the
Company for the benefit of its members as a whole and, in doing so, have regard (amongst other matters) to:
• the likely consequences of any decisions in the long-term,
• the interests of the Company’s employees,
• the need to foster the Company’s business relationships with suppliers, customers and others,
• the impact of the Company’s operations on the community and environment,
• the desirability of the Company maintaining a reputation for high standards of business conduct, and
• the need to act fairly between the shareholders of the Company.
Key Stakeholders and concerns
Board Considerations
Key Outcomes
Employees
Our employees are based on three sites
in London, New York and Pennsylvania.
Investors and shareholders
Tiziana is a pre-revenue Company and is
dependent upon existing and future
Ensuring all sites view themselves as
one Company; communicating
performance of the Company;
motivating staff
Regular Company meetings with all
sites; weekly meetings at individual
sites;
to Executive
access
Directors; granting of share options
easy
Use of PR consultants; interviews with
Proactive investors the release of
11
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
STRATEGIC REPORT
to
investors
development products
fund
its research and
Suppliers
Tiziana has a wide range of suppliers
for consumable items and a few key
suppliers who are key to our
manufacturing of product
Contract Research Organisations
Business Strategy clearly setting out the
progress with projects in development and
cash requirement
information through the Group’s
website; the Regulatory News Service
of the London Stock Exchange;
meeting individual shareholders at
AGM
Management of
relationships
ensuring consumable and other items are
delivered on time and at right price
supplier
Key suppliers are managed in-house
with regular meetings being held with
Tiziana management
CROs are key to managing Tiziana’s
clinical trial programmes
Management of clinical trials and recruitment
of patients; Regulatory and pre-clinical
services
Rigorous selection process before
engaging CRO and
regular
project meetings
then
Environment
The Group is conscious of the need to
protect the environment
Tiziana’s operations are relatively low in
their impact on the environment.
During the year, employees reduced
their travel wherever reasonably
practical, phone - conferencing instead
Reputation
Maintaining a strong reputation and
acting within laws and regulations
impacts the Group’s relationships with
all stakeholder
Policies and procedures approved by the
Board are concentrated on maintaining
the strong reputation of the Group within
its employees, Shareholders, suppliers,
regulators and other key stakeholders.
Tiziana continuously monitors and
assesses all regulatory developments
to ensure that any issues are being
addressed in decision making.
Principal decisions in 2020
We have considered the decisions taken by the Board which will have an impact on the longer-term performance
and prospects for the Group. The Board believes that the following decisions taken during the year and since the
year end fall into this category and were made with full consideration of both internal and external stakeholders.
The Group’s aim is to meet the needs of the key stakeholders who ultimately wish for us to progress our pipeline of
drugs to treat rare cancers and autoimmune and inflammatory diseases to commercial deployment.
Significant events/decisions
investors,
demerged
independently
Raised £62m of investment from
existing and new
to
enable Group to progress its clinical
trials
Successfully
its
StemPrintER asset into a separate
and
listed public
company, Accustem Sciences
Limited which will focus exclusively
on
of
the
StemPrintER
Agreement with STC Biologics for
GMP Manufacturing of an anti-
Interleukin-6-Receptor Monoclonal
Antibody for Clinical Studies in
Patients with COVID-19.
commercialization
Key s172 matter(s)
affected
Shareholders
Shareholders
Staff
Employees, Local Research and
Medical Organisations
Clinical Study with Nasally
Administered Foralumab, a Fully
Human Anti-CD3 Monoclonal
Antibody, for Treatment of COVID-
19 Patients in Brazil
Environmental Matters
Actions and impact
Consultation
shareholder and approval
shareholders at General Meeting
major
from
with
Consultation
shareholder and approval
shareholders at General Meeting
major
from
with
after
Board
Decisions were made by
the
executive team in consultation with
the
carefully
considering impact upon existing
resources and available
staff
funding.
with
employee
Consulted
development
teams and Local
Organisations in Brazil to initiate
the clinical study
We currently outsource our research, development, testing and manufacturing activities. These activities are
subject to various environmental, health and safety laws and regulations, which govern, among other things, the
12
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
STRATEGIC REPORT
controlled use, handling, release and disposal of and the maintenance of a registry for, hazardous materials and
biological materials. If we or our partners fail to comply with such laws and regulations, we could be subject to
fines or other sanctions.
As with other companies engaged in activities similar to ours, we face a risk of environmental liability inherent in
our current and historical activities, including liability relating to releases of or exposure to hazardous or biological
materials. Environmental, health and safety laws and regulations are becoming more stringent. We may be
required to incur substantial expenses in connection with future environmental compliance or remediation
activities, in which case, our production and development efforts may be interrupted or delayed.
Willy Simon
By order of the Board
Mr Willy Simon
May 17, 2021
3rd Floor, 11-12 St James’s Square, London, SW1Y 4LB
13
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
DIRECTORS REPORT
The Directors present their report and the financial statements of the Group and its Company for the year ended
31st December 2020.
Results and dividend
The results of the Group for the year are set out on page 39. No dividends were declared or paid in the year (2019:
nil).
Directors
The directors of the Company who were in office during the year and to the date of these financial statements were:
Executive Chairman
Mr Gabriele Cerrone
Dr Kunwar Shailubhai Chief Executive Officer
Non-Executive Director,
Mr Willy Simon
Non-Executive Director (appointed 21 January 2020, resigned 18 June 2020)
Mr Gregor MacRae
Mr John Brancaccio
Non-Executive Director (appointed 20 July 2020)
Dr Thomas Adams Executive Director (appointed 5 February 2021)
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 as at 31st December 2020:
Ordinary shares
Number
Percentage
63,297,647 32.52%
Planwise Group Limited*
10,153,770 5.22%
Empery Asset Master, Ltd
Laura Fonda 7,971,966 4.10%
Morris Silverman 7,944,457 4.08%
6,296,221 3.24%
Howard Freedberg
* Mr Gabriele Cerrone, a director, is the ultimate beneficial owner of the entire issued share capital of Planwise
Group Limited.
Pensions
The Group operates a defined contribution pension scheme open to all salaried Executive Directors, Non-Executive
Directors and employees. There is currently one director participating in the Defined Contribution Scheme.
Political and charitable contributions
There were no political or charitable contributions made by the Company during the year ended December 31, 2020
(2019: £nil).
Staff policy
The Group 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 Group’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 Group is firmly committed to business integrity, high ethical values, and professionalism in its activities and
operations. The Board is committed to maintaining the highest standards of corporate governance and is
accountable to the Company’s shareholders. The role of the Board is to provide strategic leadership to the Group
within a framework of sensible and effective controls, which enables risk to be assessed and managed. The Board
sets the Group’s strategic aims, ensures that the necessary financial and human resources are in place for the
Group to meet its objectives, and reviews executives’ performance. The Board make certain that its obligations to
its shareholders and others are understood and met.
14
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2018
DIRECTORS REPORT
As a company listed on the Main Market of the Standard Segment of the London Stock Exchange, Tiziana Life
Sciences plc is required to adopt a corporate governance code. The Board of Directors of Tiziana Life Sciences plc
has adopted the Quoted Companies Alliance Corporate Governance Code which they believe is the code that is
most suitable for the Company, its subsidiaries and subsidiary undertakings having regard to its strategy, size,
stage of development and resources. The code can be found at www.theqca.com. The Company’s corporate
governance is reviewed on a regular basis by the Directors of the company. 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.
How does the Board apply the ten principles set out in the QCA Code?
1. Establish a strategy and business model which promote long-term value for shareholders
The Board has a clear strategy, which is set out in the Chairman’s statement on page 2. To support the execution
of this strategy, the Board performs the following key tasks:
•
•
•
•
•
setting the Company’s values and standards;
approval of long-term objectives and strategy;
approval of revenue, expense and capital budgets and plans; a
approval for therapeutic candidate progression through key development and clinical stages;
oversight of operations ensuring that adequate systems of internal controls and risk management are in
place, ensuring maintenance of accounting and other records, and compliance with statutory and
regulatory obligations;
2. Seek to understand and meet shareholder needs and expectations
Contact with major shareholders has been principally maintained by the CEO and the Chairman during the reporting
period, and they have ensured that their views are communicated to the Board as a whole. The Board believes that
appropriate steps have been taken during the reporting period to ensure that the members of the Board, and in
particular the Non-Executive Directors, develop an understanding of the views of major shareholders about the
Company. We are holding our Annual General Meeting in June 2021. A Notice of Annual General Meeting will be
issued in due course and will be available on our website. Separate resolutions will be provided on each issue so
that they can be given proper consideration. Proxy votes are counted and the level of proxies lodged on each
resolution reported after it has been dealt with by a show of hands.
3. Take into account wider stakeholder and social responsibilities and their implications for long-term success
Tiziana is committed to engaging with and maintaining good relations with all of our stakeholders (employees,
investors, participants in clinical trials, collaboration partners and suppliers).
Tiziana is also compliant with safety and other regulations in its laboratories and in treating patients on Clinical
Trials.
Tiziana has annual appraisals for all staff and regular meetings between staff and senior management to discuss
business related issues.
4. Embed effective risk management, considering both opportunities and threats, throughout the organisation
A Risk Register is maintained for regular review by the Audit and Risk Committee and the Board. Principal risks are
set out on page 9 where mitigating activities are also explained.
Audit, Risk and Disclosure Committee
The Audit Committee of the Board comprises of John Brancaccio and Willy Simon. It is chaired by John Brancaccio,
and is responsible for:
i.
ii.
iii.
iv.
Monitoring the quality of internal controls and ensuring the financial performance of the Group is properly
measured and reported on;
Consideration of the Directors’ risk assessment and suggesting items for discussion at the full Board;
Receipt and review of reports from the Company's management and external audtiors 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
15
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
DIRECTORS REPORT
v.
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.
5. Maintain the Board as a well-functioning, balanced team led by the Chairman
The Board is currently comprised of five directors, the Executive Chairman, two Executive directors and two Non-
Executive Directors. The directors of the Company have all been selected for their extensive experience in their
specialised fields, making the Board well rounded and balanced. The composition of the Board is regularly reviewed
through the Nomination committee. The wide range of skills among the directors helps to further the business and
strategic development of the Company as well as address any anticipated issued in the foreseeable future. To
ensure the Company’s future growth, all directors are subject to re-election at least once every three years,
confirming the current directors all have the necessary experience and skills. The skills of each director complement
one another guaranteeing a well-functioning balanced board, led by the Executive Chairman. The Company
maintains its governance structure through the Nomination Committee, Audit, Risk and Disclosure Committee and
the Remuneration Committee. These Committees also support the Board in making the best decisions in the interest
of the Company, shareholders and employees. The Board follow a formal schedule of matters and meet quarterly
every year. All Directors are expected to provide a sufficient amount of time to the Company to fully exhibit and fulfil
their duties. Each Directors time spent is reviewed annually prior to recommending their re-election to the
shareholders.
The board is responsible to the shareholders and to ensure acceptable management to the group.
The roles of the directors differ between Executive and Non-Executive directors, while both have fiduciary duties
towards the group. The board is made up of Executive Chairman, Gabriele Cerrone, who has extensive experience
in the financing and restructuring of micro-cap biotechnology companies and has successfully taken several
companies to the NASDAQ, AIM and LSE markets, Kunwar Shailubhai who has many years of scientific and
research development experience and Thomas Adams who also has many years of scientific and research
development experience. The Executive directors are responsible for the operation and business development of
the company. The Non-Executive officers, Willy Simon and John Brancaccio, have many years of experience in the
finance industry, who act as independent directors providing objective judgment and constructively challenge the
management to ensure all strategies are completely considered.
For the Board to carry out their duties in their entirety, they have full and timely access to all the relevant information
they need. Directors, if necessary, are also permitted to take independent professional advice to further their roles
at the expense of the Group. All Board members have access to the advice of the Company Secretary.
The Code requires that a smaller company should have at least two Independent Non-Executive Directors. As at
31 December 2020 the Board consisted of two Executive Directors and two Non-Executive Directors. The Non-
Executive Directors are interested in either ordinary shares in the Company, options over ordinary shares in the
Company, or both, and cannot therefore be considered fully independent under the Code. The remuneration of the
Non-Executive Directors includes options and this is contrary to best practice, and thus the Company is not in full
compliance. However, the Directors consider the present structure and arrangements to be adequate given the size
and stage of development of the Company, and all are considered to be independent in character and judgement.
The Company does not have an independent Chairman given the substantial shareholding of the Chairman. It is
the Board’s opinion that the current arrangements are appropriate to the Company at this stage of development
and that there are sufficient compliance structures within the Company to ensure that the governance functions that
would be part of an independent Chairman’s responsibility are met. The Board is satisfied with the balance between
Executive and Non-Executive Directors which allows it to exercise objectivity in decision making and proper control
of the Company’s business. The Board considers its composition appropriate in view of the size and requirements
of the Company’s business and the need to maintain a practical and efficient balance between Executive and Non-
Executive Directors.
6. Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities
The Board has delegated the tasks of reviewing Board composition, searching for appropriate candidates and
making recommendations to the Board on candidates to be appointed as Directors, to the Nomination Committee.
The Nomination Committee of the Board comprises of Gabriele Cerrone and Willy Simon. It is chaired by Gabriele
Cerrone, and is responsible for:
i.
drawing up selection criteria and appointment procedures for directors;
16
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
DIRECTORS REPORT
ii.
recommending nominees for election to our board of directors and its corresponding committees;
iii.
assessing the functioning of individual members of our board of directors and executive officers and
reporting the results of such assessment to the board of directors; and
iv.
developing corporate governance guidelines.
With regard to the re-election of Directors, the Company is governed by its Articles of Association (the Articles).
Under the Articles, the Board has the power to appoint a Director during the year, but any person so appointed
must stand for election at the next Annual General Meeting, along with the rest of the Board.
The Board understands the value in having directors of diverse gender, race and ethnicity, along with varied skills,
perspectives and experiences. We are constantly looking for opportunities to improve our diversity and inclusion
practices.
7. Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement
The Tiziana Life Sciences plc Board remains mindful that it needs to continually monitor and identify ways in which
it might improve its performance and recognises that board evaluation is a useful tool for enhancing a board’s
effectiveness.
The Remuneration Committee of the Board comprises of Willy Simon and John Brancaccio. It is chaired by Willy
Simon, 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.
8. Promote a corporate culture that is based on ethical values and behaviours
The Company is fully committed to the elimination of unlawful and unfair discrimination and values the differences
that a diverse workforce brings to the organisation. The Company endeavours to not discriminate because of age,
disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race (which includes
colour, nationality and ethnic or national origins), religion or belief, sex, or sexual orientation. The Company will
undertake an annual review of its policies and procedures to establish its position about compliance and best
practice and monitor and promote a healthy corporate culture.
9. Maintain governance structures and processes that are fit for purpose and support good decision-making by the
Board
The Board is supported by the Committees, explained above, in the task of maintaining governance processes and
structures. Furthermore, the following governance matters support good decision-making by the Board.
The Directors are responsible for the Company’s internal control and reviewing its effectiveness. The Directors
confirm that the Board has acknowledged this responsibility. The Directors confirm that there is an ongoing process
for reviewing internal controls and effectiveness as well as identifying, evaluating, and managing the significant
risks facing the Group and its subsidiaries. This process has been in place from 1 January 2017 and continues to
be in place, the internal controls are reviewed on a regular basis.
The Group’s system of internal control is designed to provide the Directors with reasonable assurance that the
Group’s assets are safeguarded, that transactions are authorised and properly recorded, and that material errors
and irregularities are either prevented or would be detected within a timely period. However, no system of internal
control can eliminate the risk of failure to achieve business objectives or provide absolute assurance against
material misstatement or loss.
The key elements of the internal control system in operation are:
•
The Board meets regularly with an agenda of matters reserved for their decision and has put in place an
organisational structure with clear lines of responsibility defined and with appropriate delegation of
authority. The Board receives periodic updates from both the Audit and Remuneration Committees.
17
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
DIRECTORS REPORT
•
The Management team is responsible for the identification and evaluation of significant risks and for the
design, implementation and monitoring of appropriate internal controls, including, but not limited to,
financial and computer systems, business operations, and compliance.
• Management regularly reports to the Board on the key risks inherent in the business and on the way in
•
which these risks are managed.
There are established procedures for planning, approving, and monitoring large expenditures, including
capital expenditures, as well as processes for monitoring the Group’s financial perform.
• A comprehensive forecasting process is completed four times a year, prior to each board meeting, which
is reviewed and approved by the Board. Detailed management accounts are produced on a monthly basis,
with all significant variances investigated promptly. The management accounts are reviewed and
commented on a monthly basis by the management team.
The Group maintains appropriate insurance cover, including in respect of actions taken against the
Directors because of their roles, as well as against material loss or claims against the Group. The insured
values and type of cover are comprehensively reviewed on an annual basis.
•
10. Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders
and other relevant stakeholders
Contact with major shareholders is principally maintained by the Chairman and CEO, and additionally the Senior
Independent Non-Executive Directors are available to discuss governance and other matters directly with major
shareholders, both private and institutional.
The Company uses its corporate website (www.tizianalifesciences.com) to communicate with institutional
shareholders and private investors, and the website also contains the latest announcements, press releases,
published financial information, current projects and other information about the Company. The annual report which
includes the financial statements is a key communication document and is available on the Company’s website.
Whistleblowing
The company has formal arrangements in place to facilitate ‘whistle-blowing’ by employees. If a complaint is made,
the content is sent anonymously by email to the Company’s Compliance Officer, so that appropriate action can be
taken.
Employment
The company endeavours to appoint employees with appropriate skills, knowledge and experience for the roles
they undertake and thereafter to develop, incentivise and retain staff. The Board recognises its legal
responsibility to ensure the well-being, safety and welfare of the company's employees and maintain a safe and
healthy working environment for them and our visitors. If an employee has a concern about unsafe conditions or
tasks, they are encouraged to report their concerns immediately to their manager.
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 Rules of the London Stock Exchange to prepare group financial statements
in accordance with international accounting standards in conformity with the requirements of the Companies Act
2006.
Under Company Law the Directors must not approve the financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the Company and of the Group and 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 and Company financial statements the Group and Company has
conformed with the requirements of the Companies Act 2006;
prepare the accounts on the going concern basis unless it is inappropriate to presume that the company
will continue in business.
•
18
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
DIRECTORS REPORT
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.
Statement of Directors' responsibilities pursuant to Disclosure and Transparency Rules
Each of the Directors, whose names and functions are listed on page 2 confirm that, to the best of their knowledge
and belief:
•
the financial statements prepared in accordance with IFRS as adopted by the European Union, give a true
and fair view of the assets, liabilities, financial position and loss of the Company; and
the Annual Report and financial statements, including the Strategic Report, includes a fair review of the
development and performance of the business and the position of the Company, together with a
description of the principal risks and uncertainties that they face.
•
Directors indemnity
The Company’s Articles of Association provide, subject to the provisions of UK legislation, an indemnity for directors
and officers of the Company in respect of liabilities they may incur in the discharge of their duties or in the exercise
of their powers, including any liabilities relating to the defence of any proceedings brought against them which relate
to anything done or omitted, or alleged to have been done or omitted, by them as officers or employees of the
Company.
Appropriate directors and officer’s liability insurance cover is in place in respect of all Company directors.
DISCLOSURES REQUIRED BY PUBLICLY TRADED COMPANIES UNDER RULE 7.2.6R OF THE UK LISTING
AUTHORITY’S DISCLOSURE GUIDANCE AND TRANSPARENCY RULES
The following disclosures are made pursuant to Rule 7.2.6.R of the UK Listing Authority’s Disclosure Guidance and
Transparency Rules (DTR). As at 31 December 2020:
Details of significant direct or indirect holdings of securities of the Company are set out in the Directors
a)
Report outlined in this document. The Company is not aware of any agreements between shareholders which may
result in restrictions on the transfer of securities or on voting rights.
b)
c)
There are no persons who hold securities carrying special rights regarding control of the Company.
All ordinary shares carry one vote per share without restriction.
d)
The Company’s rules about the appointment and replacement of Directors are contained in the Company’s
constitution and accord with the Companies Act 2006. Amendments to the Company’s constitution must be
approved by the Company’s shareholders by passing a special resolution.
e)
The Company may exercise in any manner permitted by the Companies Act 2006 any power which a
public company limited by shares may exercise under the Companies Act 2006. The business of the Company is
managed by or under the direction of the Directors. The Directors may exercise all the powers of the Company
except any powers that the Companies Act 2006 or the constitution requires the Company to exercise.
f)
Subject to any rights and restrictions attached to a class of shares and in compliance with the Companies
Act 2006, the Company may allot and issue unissued shares and grant options over unissued shares, on any terms,
at any time and for any consideration, as the Directors resolve. This power of the Company can only be exercised
by the Directors. The Company may reduce its share capital and buy-back shares in itself on any terms and at any
time. However, the Companies Act 2006 sets out certain procedures which must be followed in relation to reductions
in share capital and the buy-back of shares.
19
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
DIRECTORS REPORT
Assessment of the impact of COVID-19
The COVID-19 virus has swept the globe and has claimed many thousands of lives. It is clear that the pandemic
has had a far more severe impact on markets than previous virus outbreaks, with governments having taken strict
measures to contain the virus.
Despite the risks of a global recession with associated volatility in world stock markets, the Company believes that
healthcare as a defensive sector should fare better than other parts of the economy and it does not believe that the
recent outbreak of COVID-19 pandemic will have an adverse effect on the Company’ operations. Indeed, the
Company has raised substantial funds during the pandemic to enable it to expedite development of TZLS-501 as
well as other initiatives within its project pipeline.
Disclosure of information to auditor
So far as the Directors are aware, there is no relevant audit information of which the Company’s auditor is 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.
Auditor
Mazars LLP have indicated their willingness to continue in office as auditor for another year. In accordance with
section 489 of the Companies Act 2006, a resolution proposing that Mazars 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 7 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 to 7.
Greenhouse Gas Emissions
The Companies Act 2006 (Strategic Report and Directors’ Reports) Regulations 2013 require companies listed on
the Main Market of the London Stock Exchange to report on the greenhouse gas emissions for which they are
responsible.
We are a company with a small number of employees. We have serviced offices and we currently outsource our
research, development, testing and manufacturing activities. As a result, we do not emit greenhouse gases from
our own activities, nor do we purchase electricity, heat or steam for our own use. (Scope 1 and scope 2
disclosures).
Accordingly, there are no greenhouse gas emissions to report from the Company’s operations, nor does it have
responsibility for any other emissions. Further, for the same reason, the Company considers that it is a ‘low energy
user’ under the Streamlined Energy & Carbon Reporting regulations and therefore a disclosure on energy and
carbon emissions is not required.
Post balance sheet events
On 4 January 2021, the Company announced that it had completed f its clinical study in Brazil investigating nasally
administered Foralumab, its proprietary human monoclonal antibody, either alone or in combination with orally
administered dexamethasone in COVID-19 patients.
On 13 January 2021, the Company announced the appointment of Dr Neil Graham MBBS, MD, MPH as Chief
Medical Officer.
On 20 January 2021, the Company announced the cancellation of admission of its Ordinary Shares to trading on
AIM and admission to listing of its ordinary shares on the standard listing segment of the Official List of the Financial
Conduct Authority and admission to trading on the main market for listed securities of London Stock Exchange plc.
The last day of trading of the Company's Ordinary Shares on AIM was 20 January 2021 and the AIM Delisting was
20
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
DIRECTORS REPORT
effective from 7.00 am 21 January 2021. Admission of shares to the Official List and commencement of dealing in
the Ordinary Shares of the Company on the Main Market was effective from 8.00 am on 21 January 2021.
On 5 February 2021, the Company announced the appointment of Dr Thomas Adams, Ph.D. as an executive
director. Dr Adams assumed the position of Head of Drug Development with immediate effect and his executive
role is to manage and oversee all matters relating to the Company's pre-clinical and clinical drug development
programs and associated intellectual property.
On 30 March 2021, the Company announced that the U.S. Food and Drug Administration (FDA) has allowed
evaluation of nasal administration with Foralumab, a fully human anti-CD3 monoclonal antibody, in a secondary
progressive multiple sclerosis (SPMS) patient at the Brigham and Women’s Hospital (BWH), Harvard University,
Boston, MA. This patient will be treated under an Individual Patient Expanded Access IND. This is the first time a
nasally administered antibody will be administered to a patient with SPMS. The treatment is planned to start in the
third quarter of 2021 and will continue for six months. Investigators at BWH will follow this patient with detailed
routine safety, neurological, imaging and PET studies to evaluate microglial imaging. Modification of immunological
and neurodegenerative markers is part of standard investigations that will be conducted at the BWH.
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 9 to 11, and at note 2 to the financial statements.
Willy Simon
By order of the Board
Mr Willy Simon
May 17 2021
3rd Floor, 11-12 St James’s Square, London, SW1Y 4L
21
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
DIRECTORS REMUNERATION REPORT
Letter from the Chair of the Remuneration Committee
Dear Shareholders,
On behalf of the Remuneration Committee, I am pleased to present our Directors’ Remuneration Report for the
year ended December 31, 2020 which will be subject to an advisory vote under a resolution to be proposed at the
2021 Annual General Meeting (“AGM”). Shareholders approved the Remuneration Policy at the 2018 AGM.
I hope that you will be supportive of our remuneration approach and will vote in favour of the Directors'
Remuneration Report.
Key activities and decisions in the year ended December 31, 2020
Since January 1, 2020, the Committee has undertaken the following key decisions and activities.
•
The Committee reviewed the compensation paid to the Executive Chairman which had not been reviewed
since it was fixed in June 2016. Looking at various reports regarding compensation for the role of Executive
Chairman across both Europe and the US, it was considered appropriate that the compensation for this
role was revised.
The Committee acknowledged that a realisation bonus due to the Executive Chairman had become
payable due to the fundraise that took place on August 5, 2020 and satisfied the cash bonus with a non -
cash award payable in shares.
• Resolved that Dr Howard Weiner, a key partner, be awarded an additional option award, in addition to
having amendments made to existing performance conditions on an existing award, in order to further
promote the success of the Company.
The Company has made significant progress during 2020 in the clinical development on Foralumab, with the
completion of Phase I clinical trials for the first in-human evaluation of the nasal and oral administration of Foralumab
and the completion of Phase 2a trials in Milciclib, along with the strengthening of the financial position of the
Company through fundraising.
I hope that you remain supportive of our remuneration approach and will vote in favour of the Directors'
Remuneration Report.
Yours faithfully,
Willy Simon
Willy Simon
Chair of the Remuneration Committee
May 17 2021
22
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
DIRECTORS REMUNERATION REPORT
Annual report on Remuneration
Single total figure of remuneration of each Director (Audited)
The Directors received the following remuneration for the years ended December 31, 2020 and December 31, 2019:
Year Ended
December 31,
2020 £’000
Executive
Gabriele
Cerrone
Kunwar
Shailubhai (5)
Non - Executive
Willy Simon
Gregor MacRae
(1)
John Brancaccio
(2)
Base
Salary
Bonus
Share-
based
payment (3)
Other (4)
133
468
38
21
17
10,357 (5)
121
164
1,611
-
-
-
24
-
24
-
14
2
-
-
2020
Total
10,601
2,257
64
21
41
Total fixed
renumeration
Total variable
renumeration
133
482
40
21
17
10,468
1,775
24
-
24
Total
677
10,521
1,780
16
12,994
693
12,301
Year Ended
December 31,
2019 £’000
Executive
Gabriele
Cerrone
Kunwar
Shailubhai (7)
Non - Executive
Willy Simon
Leopoldo
Zambeletti (8)
Riccardo Dalla
Favera (9)
Base
Salary
Bonus
Share-based
payment (3)
Other (4)
2019 Total
Total fixed
renumeration
Total
variable
renumeration
80
470
38
-
2
143(6)
159
-
-
-
296
695
-
-
-
-
32
-
-
-
519
1,356
38
-
2
80
502
38
-
2
439
854
-
-
-
Total
590
302
991
32
1,915
622
1,293
(1) Resigned 18th June 2020
(2) Appointed 20th July 2020
(3) Shares based payments represent the fair value of options that vested during the years ended December
31, 2020 and December 31, 2019.
(4) Other benefits represent healthcare benefits and pension contributions.
(5) This bonus includes a £10.29m realisation bonus which became payable on 5th August 2020
(6) Bonus covers the period June 9, 2016 to December 31, 2019
(7) Kunwar Shailubhai’s base salary is $600,000. Any variation is due to exchange rates
(8) Resigned 20th November 2019
(9) Resigned 7th February 2019
No payments were made towards a pension plan for our executive directors, £2,800 was made for our salaried non-
executive directors, who receives the same pension benefit as the UK based employees, namely a matching
contribution of 6% of salary, if a 3% minimum contribution is made.
23
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
DIRECTORS REMUNERATION REPORT
Statement of Directors’ Shareholding and Share Interests (Audited)
The table below details the total number of shares owned (including their beneficial interests), the total number of
share options held and the number of share options vested but not yet exercised as at December 31, 2020:
Year Ended December
31, 2020
Executive
Gabriele Cerrone
Kunwar Shailubhai
Non - Executive
Willy Simon
John Brancaccio
Shares
Options – not yet
vested
Options – vested
not yet exercised
Total (Shares and
options)
66,304,893
405,000
3,259,403
4,700,000
16,500
-
-
-
1,830,775
3,900,000
250,000
250,000
71,395,071
9,005,000
266,500
250,000
Total
66,726,393
7,959,403
6,230,775
80,916,571
The interests of the Directors in the Company’s share options are as follows:
Director
Granted
Gabriele Cerrone
1,830,775
3,259,403*
of
Date
grant
26 January
2016
6 May 2020
Price per share
£
0.35
0.35
Vesting Criteria
Expiry Date
Immediate
weighted average of an
ordinary share must be greater
than £3 (or ADS price exceeds
consecutive
$6)
dealing days
for 120
25 June 2024
5 May 2028
Kunwar Shailubhai
2,500,000*
6 May 2020
0.35
Fully vested
1,400,000*
6 May 2020
0.35
Fully vested as performance
criteria met
4,700,000*
6 May 2020
0.35
Willy Simon
250,000
20 August
2020
1.475
John Brancaccio
250,000
August
1.475
20
2020
on
25 per cent. will vest on each
of 6 May 2021, 2022, 2023 and
2024
5% of the options vest each
year PROVIDED THAT total
shareholder return (as set out
in the annual report) is equal to
or greater than 10%.If the total
shareholder return target is not
met in any single year but, in
any subsequent year or years,
the total shareholder return
criteria
an
is met
aggregated basis, the vesting
condition for those aggregated
periods shall be deemed
satisfied.
5% of the options vest each
year PROVIDED THAT total
shareholder return (as set out
in the annual report) is equal to
or greater than 10%. If the total
shareholder return target is not
met in any single year but, in
any subsequent year or years,
the total shareholder return
criteria
an
is met
aggregated basis, the vesting
condition for those aggregated
on
24
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
5 May 2028
5 May 2030
5 May 2030
19 August 2030
19 August 2030
DIRECTORS REMUNERATION REPORT
periods shall be deemed
satisfied.
• A resolution was passed at a General Meeting of shareholders on May 6, 2020 to favourably reprice these
options to £0. 35.
Annual performance bonus – 2020
In 2020, all employees were eligible for an annual discretionary cash bonus, whereby performance objectives are
established at the beginning of the financial year by reference to suitably challenging corporate goals.
In relation to the Directors, Kunwar Shailubhai’s bonus was fixed at 35% of salary for 2020. Gabriele Cerrone’s on-
target bonus for 2020 was 50% of salary.
In addition to the target bonus mentioned above, Gabriele Cerrone also had a realisation bonus in his contract
whereby he was entitled to a realisation bonus amount equal to the Enterprise Value multiplied by 2.5% in the event
of a new equity capital raise in excess of £20,000,000. This bonus became payable upon a £44m fundraise carried
out on August 5, 2020. The Company equated its market capitalisation on this date to the enterprise value, resulting
in a bonus payment of £10,290,230. Gabriele Cerrone agreed to receive this bonus in the form of equity, amounting
to 4,763,995 shares. The number of shares to be issued is fixed.
For all other staff (other than the Executive Directors and Non-Executive Directors) the maximum bonus
opportunities ranged from 10% to 20% of salary. Bonus payments are not pensionable.
For 2020 for all staff (other than the Executive Directors and Non-Executive Directors) 100% of the annual bonus
was by reference to individual goals, which are based on corporate goals.
Gabriele Cerrone is also eligible to receive an additional realisation bonuses as follows:
In the event that, during this Agreement, either: (i) there is a sale, in one or a series of transactions, of all
or substantially all of the assets ( calculated on the basis of book values) of the Group ( or a licence of the
same on an exclusive or non-exclusive basis ), where the Enterprise Value equals or exceeds
£300,000,000; or (ii) there is either a change of control where the Enterprise Value equals or exceeds
£300,000,000, the Chairman will be entitled to receive an additional Realisation Bonus in the amount
equal to the Enterprise Value multiplied by three and a half (3.5) per cent.
The Enterprise Value means: (i) in the case of a change of control resulting in consideration payable to
the Group (for example, on a sale of its assets or licensing transaction), the total cash and non-cash
consideration received by the Group; or (ii) in the case of a change of control resulting in consideration
payable to the shareholders of the ordinary shares in the issued share capital of the Group from time to
time, the total cash and non-cash consideration payable to the Shareholders.
Total Shareholder Return
The graph below shows the Company’s performance, measured by total shareholder return, for UK ordinary
shares listed on AIM: TILS) against the AIM All Share Index. The AIM All Share Index has been selected for this
comparison because Tiziana Life Sciences PLC has been trading on this exchange for five years and the AIM All
Share is considered to be the most suitable comparator index.
Total Shareholder Return
(Source: Investing.com)
25
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
DIRECTORS REMUNERATION REPORT
500%
400%
300%
200%
100%
0%
Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20 Dec-20
AIM All Share TSR
TILS TSR
Percentage change in remuneration of the Directors and employees
Set out below is the change over the prior period in base salary, benefits, pension and annual performance bonus
for the CEO, for all the directors and the Company’s employees. Only directors in office during any part of the 2020
year have been included below.
Kunwar Shailubhai (CEO)
Gabriele Cerrone (Chairman)
Willy Simon
John Brancaccio
Salary % change
2019 vs 2020
Benefits % change
2019 vs 2020
Bonus % change
2019 vs 2020
0%
67%
0%
0%
0%
See note 2
67% (see note 1)
0%
0%
See note 3
See note 2
See note 3
Gregor MacRae
See note 3
See note 2
See note 3
All employees excluding directors
16%
See note 4
16%
(1) For comparison purposes, Gabriele Cerrone’s realisation bonus has been excluded
(2) John Brancaccio and Gregor MacRae did not receive any benefits in 2020. Gabriele Cerrone and Willy
Simon did not receive any benefits in 2020 or 2019.
(3) John Brancaccio and Gregor MacRae did not receive any salary or bonus in 2019.
(4) All average employees did not receive taxable benefits, so a comparison is not possible.
The following table sets out the Company’s performance objectives for 2021.
Objective Weighting
Weighting
Orally administered Foralumab for the treatment of Crohn’s disease milestone
delivery
Intranasal administration of Foralumab milestone delivery (including COVID 19
inpatients and outpatients)
Progress the clinical development for our lead oncology candidate Milciclib in
combination with other therapeutics for KRAS+ NSCLC.
26
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
30%
30%
15%
DIRECTORS REMUNERATION REPORT
Achievement of financial targets
New business development deals
Secure additional funding
10%
5%
10%
100%
Specific targets are commercially sensitive and therefore are not disclosed in advance. However, full details of the
targets and performance against them will be disclosed when they are no longer considered commercially sensitive.
Payments to past directors (audited)
In the period there were no payments to past Directors.
Payments for loss of office (audited).
No payments were made to Directors for loss of office in the period.
Relative Importance of spend on pay
The Committee considers the company’s research and development expenditure relative to salary expenditure for
all employees, to be the most appropriate metric for assessing overall spend on pay due to the nature and stage of
the company’s business. Dividend distribution and share buy-back comparators have not been included as the
company has no history of such transactions. The graph below illustrates the gross pay to all employees per year
as compared to research and development expenditure and illustrates the year-on-year change.
£000
6,000
5,000
4,000
3,000
2,000
1,000
0
Research and Development
Labour costs
2020
2019
27
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
DIRECTORS REMUNERATION REPORT
Employment conditions across the Group
The Committee is kept regularly updated on pay and conditions across the Group, although when setting the
Directors’ remuneration policy, the wider employee group is not formally consulted. In determining any adjustments
to the pay of the Executive Directors and the senior executive salaries, the Committee considers the increases to
pay levels across the broader employee population.
Consideration of shareholder views
The Committee considers shareholder feedback received in relation to the Annual General Meeting each year at
its first meeting following the Annual General Meeting. This feedback, as well as any additional feedback received
during other meetings with shareholders and representative bodies, is then considered when reviewing
remuneration policy. When any material changes are proposed by the Group to the remuneration policy, the
Committee will consult major shareholders.
Illustration of application of remuneration policy
The charts below set out the minimum (i.e. ‘fixed’) remuneration receivable by each Executive Director as at the
date of this Annual Report, as well as the potential remuneration for ‘on-target’ and ‘maximum’ performance, as a
result of the remuneration paid in or awarded for the year ending December 31, 2021.
28
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
DIRECTORS REMUNERATION REPORT
The scenarios set out in the above charts reflect or assume the following:
•
‘Fixed’ remuneration comprises:
base salary and
the estimated value of taxable benefits to be provided in 2021
o
o
A base salary of £120,000 for the Chairman for the full 2021 financial year (although such salary will be effective
from 1 August 2020).
•
•
The ‘on-target’ remuneration assumes an annual bonus payment of 50% of the maximum opportunity.
The ‘maximum’ remuneration assumes maximum performance is achieved and therefore awards under
the annual bonus pay out at their maximum levels.
Structure and role of Remuneration Committee
The Remuneration Committee of the Board comprises of John Brancaccio and Willy Simon. It is chaired by Willy
Simon, 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.
Directors' remuneration policy
The Policy was approved (with no significant vote against) by the Company’s shareholders at the 2019 AGM and
will remain in force for three years from that date (until the AGM in 2022), or until a revised Remuneration Policy is
approved by shareholders.
The Company's policy is to maintain levels of remuneration sufficient to attract, motivate and retain senior
executives of the highest calibre who can deliver growth in shareholder value. Executive Director's remuneration
currently consists of basic salary and benefits. An annual bonus, and long-term incentives will be introduced in line
with the Company's expansion. The Company will seek to strike an appropriate balance between fixed and
performance-related reward so that the total remuneration package is structured to align a significant proportion to
the achievement of performance targets, reinforcing a clear link between pay and performance. The performance
targets for staff, senior executives and the Executive Directors will be aligned to the key drivers of the business
strategy, thereby creating a strong alignment of interest between staff, Executive Directors and shareholders.
The Remuneration Committee will continue to review the Company's remuneration policy and make amendments,
as and when necessary, to ensure it remains fit for purpose and continues to drive high levels of executive
performance and remains both affordable and competitive in the market.
Policy Table
Element of reward - Base Salary
Purpose and Link to
Strategy
To provide fixed remuneration to
■
■
help recruit and retain key individuals;
reflect the individual's experience, role and contribution within the Company.
Operation
The Remuneration Committee considers a number of factors when setting salaries,
including:
■
■
■
■
scope and complexity of the role
the skills and experience of the individual
salary levels for similar roles within the industry
pay elsewhere in the Company
Salaries are reviewed, but not necessarily increased, annually.
29
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
DIRECTORS REMUNERATION REPORT
Performance
conditions
None.
Maximum opportunity Salary increases are normally made with reference to the average increase for the
wider Company. The Board retains discretion to make higher increases in certain
circumstances, for example, following an increase in the scope and/or responsibility
of the role or the development of the individual in the role or by benchmarking.
Element of reward- Other benefits
Purpose and Link to
Strategy
To provide a basic benefits package.
Operation
The Company provides Executive Directors with medical insurance for themselves and
their family.
Performance conditions None.
Maximum opportunity Maximum opportunity will be whatever it costs to provide the benefit.
Element of reward - Annual Bonus
Purpose and Link to
Strategy
To incentivise and reward the achievement of annual financial, operational and individual
objectives which are key to the delivery of the Company's short-term strategy.
Operation
• Executive Directors and staff are eligible to participate in a discretionary bonus
plan.
• The Remuneration Committee will determine on an annual basis the level of
deferral, if any, of the bonus payment into Company shares.
• Maximum bonus levels and the proportion payable for on target performance are
considered in the light of market bonus levels for similar roles among the
industry sector.
• Bonuses are not pensionable.
• The Remuneration Committee sets targets which require appropriate levels of
performance, considering internal and external expectations of performance.
• As soon as practicable after the year-end, the Remuneration Committee meets
to review performance against objectives and determines payout levels.
• From 2019 in terms of bonus targets a balanced scorecard approach will be
operated which focuses on a mixture of strategic, operational, financial and
non-financial metrics.
Performance conditions
• At least 50% of the award will be assessed against Company metrics including
operational, financial and non-financial performance. The remainder of the award
will be based on performance against individual objectives.
• A scale between 0% and 100% of the maximum award is paid dependent on the
level of performance.
Maximum opportunity The maximum potential bonus entitlement for Executive Directors under the plan will be
equal to 50% of the base salary.
30
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
DIRECTORS REMUNERATION REPORT
Element of reward - Long Term Incentive Plan (LTIP)
Purpose and Link to
Strategy
•
•
To incentivise and reward the creation of long-term shareholder value.
To align the interests of the Executive and Non- Executive Directors with those of
shareholders.
Operation
•
Under the terms of the non-tax advantaged share option plan (the "Share Option Plan"),
the Remuneration Committee may issue options over shares up to 15% of the issued share
capital of the Company from time to time. Directors and employees are eligible for awards.
The exercise of options may be subject to the satisfaction of such performance
conditions, if any, as may be specified and subsequently varied and/or waived by the
Remuneration Committee.
The Remuneration Committee determines on an annual basis, and from time to time
as needed (i.e., new employee or promotion), the type of awards to be granted to
executives and other employees under the plan.
•
Performance conditions Vesting of the awards is dependent on financial, operational and/or share price measures,
as set by the Remuneration Committee, which are aligned with the long-term strategic
objectives of the Company. The relevant performance conditions will be set by the
Remuneration Committee on the award of each grant but will include a mixture of strategic,
operational, financial and non-financial metrics.
Notes on Table
The Remuneration Committee may make minor amendments to the Policy set out above for regulatory, exchange
control, tax or administrative purposes or to take account of a change in legislation without obtaining shareholder
approval for that amendment. Any major changes will be put to a shareholder vote at the next AGM or an EGM.
The Policy was approved by a Shareholder vote at the 2019 AGM and, i remains in force until the AGM in 2022
with no requirement to vote again on the Policy in the intervening years provided that no changes are proposed.
Policy on payment for loss of office
In the event that the employment of an Executive Director is terminated, any compensation payable will be
determined in accordance with the terms of the service contract between the Company and the employee, as well
as the rules of any incentive plans. Notice periods are set at up to a maximum of twelve months by either party.
The Company considers a variety of factors when considering leaving arrangements for an Executive Director,
including individual and business performance, the obligation for the Director to mitigate loss (for example by gaining
new employment) and other relevant circumstances (e.g. ill health).
If the Executive Director's employment is terminated by the Company, the Executive Director may receive a time
pro-rated bonus to the period worked subject to performance in that period, subject to the Remuneration
Committee's discretion.
The treatment of outstanding share awards is governed by the relevant share plan rules. The following table
summarises the leaver provisions of share plans under which Executive Directors may currently hold awards.
Leaving Event
Time period
Conditions
Injury, disability, ill-health,
redundancy
Option may be exercised within
3 months of leaving.
Exercise and time vesting provisions per the
option certificate.
Death
Option may be exercised by
personal representatives within
12 months of death.
Board can waive if satisfied that such waiver
is not rewarding failure.
Exercise and time vesting provisions per the
option certificate.
Board can waive if satisfied that such waiver
is not rewarding failure.
31
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
DIRECTORS REMUNERATION REPORT
Resignation or any other
reason
not mentioned
above.
Lapse of option unless
If allowed to exercise;
Board exercises discretion to
allow exercise of option in which
case within 3 months of
leaving/notice.
Exercise and time vesting provisions per the
option certificate.
Board can waive if satisfied that such waiver
is not rewarding failure.
Annual report on approach to remuneration on recruitment
In determining remuneration for new appointments to the Board, the Board will consider all relevant factors
including, but not limited to, the calibre of the individual and their existing package, the external market and the
existing arrangements for the Company's current Executive Directors, with a view that any arrangements offered
are in the best interests of the Company and shareholders and without paying any more than is necessary.
Where the new appointment is replacing a previous Executive Director, salaries and total remuneration opportunity
may be higher or lower than the previous incumbent. If the appointee is expected to develop into the role, the Board
may decide to appoint the new Executive Director to the Board at a lower than typical salary. Larger increases
(above those of the wider company) may be awarded over time to move closer to the market level as their
experience develops.
Benefits and other elements of remuneration will normally be limited to those outlined in the remuneration policy
table above. However, additional benefits may be provided by the Company where the Board considers it
reasonable and necessary to do so.
It is expected that the structure and various pay elements would reflect those set out in the policy table above.
However, the Board recognises that, as an independent life sciences company, it is competing with global firms for
its talent. As a result, the Board considers it important that the recruitment policy has sufficient flexibility in order to
attract the calibre of individual that the Company requires to grow a successful business. The Company recognises
that in many cases, an external appointee may forfeit significant cash bonuses and/or share awards from a prior
employer. The Board believes that it needs the ability to compensate new hires for bonuses and/ or incentive awards
lost on joining the Company. The Board will use its discretion in settling any such compensation, which will be
decided on a case-by-case basis, provided that in no event shall such compensation exceed the value of
compensation forfeited by the external appointee, as confirmed by the appointee in a written agreement with the
Company.
32
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF TIZIANA LIFE SCIENCES PLC
Opinion
We have audited the financial statements of Tiziana Life Sciences Plc (the ‘Parent Company’) and its subsidiaries
(the ‘Group’) for the year ended 31 December 2020 which comprise the Consolidated Statement of Comprehensive
Income; the Consolidated and Company Statements of Financial Position; the Consolidated and Company
Statements of Cash Flows; the Consolidated and Company Statements of Changes In Equity and notes to the
financial statements, including a summary of significant accounting policies. The financial reporting framework that
has been applied in their preparation is applicable law and international accounting standards in conformity with the
requirements of the Companies Act 2006 and, as regards the parent company financial statements, as applied in
accordance with the provisions of the Companies Act 2006 and, as regards the Group financial statements,
international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the
European Union.
In our opinion, the financial statements have been prepared in accordance with the requirements of the Companies
Act 2006 and:
•
•
give a true and fair view of the state of the Group’s and of the parent company’s affairs as at 31 December
2020 and of the Group’s loss for the year then ended; and
have been properly prepared in accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006 and, as regards the Group financial statements, international
financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the
European Union.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of
the financial statements section of our report. We are independent of the Group and the parent company in
accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK,
including the FRC’s Ethical Standard, as applied to public interest entities and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate.
In addition to those matters set out in the “Key audit matters” section below, we identified going concern of the
Group and of the parent company as a key audit matter. As detailed in the financial statements and the Strategic
Report, the Group and Parent Company are pre-revenue and its business model requires significant ongoing
expenditure on research and development. For the year ended 31 December 2020, the Group incurred losses after
taxation of £20,348,000. Although the net assets of the Group at 31 December 2020 are £35,419,000, with a cash
position of £48,217,000, the forecast prepared by management indicate that further funds will be required by the
end of 2022, in order to support the ongoing researches.
Our audit procedures to evaluate the directors’ assessment of the Group’s and the parent company's ability to
continue to adopt the going concern basis of accounting included but were not limited to:
• Undertaking an initial assessment at the planning stage of the audit to identify events or conditions that may
cast significant doubt on the Group’s and the parent company’s ability to continue as a going concern;
• Obtaining an understanding of the relevant controls relating to the directors’ going concern assessment;
• Making enquiries of the directors to understand the period of assessment considered by them, the
assumptions they considered and the implication of those when assessing the Group’s future financial
performance;
33
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2018
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF TIZIANA LIFE SCIENCES PLC
• Challenging the appropriateness of the directors’ key assumptions in their cash flow forecasts, as described
in Note 2, by reviewing supporting and contradictory evidence in relation to these key assumptions and
assessing the directors’ consideration of severe but plausible scenarios;
• Testing the accuracy and functionality of the model used to prepare the directors’ forecasts;
• Engaging in regular discussions with the directors regarding the status of negotiations in respect of new
financing options;
• Assessing and evaluating key assumptions and mitigating actions put in place in response to COVID-19; and
• Evaluating the appropriateness of the directors’ disclosures in the financial statements on going concern
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the Group’s and the parent company’s
ability to continue as a going concern for a period of at least twelve months from when the financial statements are
authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the
relevant sections of this report.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
We summarise below the key audit matters in forming our audit opinion above, together with an overview of the
principal audit procedures performed to address each matter and key observations arising from those procedures.
The matters set out below are in addition to going concern which, as set out in the “Conclusions relating to going
concern” section above, was also identified as a key audit matter.
These matters, together with our findings, were communicated to those charged with governance through our Audit
Completion Report.
Key Audit Matter
Valuation and accounting of options, warrants,
and convertible loan notes
How our scope addressed this matter
Our audit procedures over options, warrants, and
convertible loan notes included but were not restricted
to:
to
remunerate
share-based payments
The Group operates
arrangements
and
employees in the form of share options. Additionally
warrants were granted as part of incentives attached
to the convertible loans notes issued in 2019. These
warrants are exercisable over a five year period.
directors
With regards to the convertible loan notes, IAS 32
to be
liability and equity components
requires
presented separately in the Statement of Financial
Position. As a result, particular attention is required
when reviewing the contractual obligations of the
notes in order to conclude as to their accounting as
debt or equity classified.
The nature of certain of the Group’s options, warrants
and convertible loan notes are complex requiring both
judgement and probability analysis to determine their
valuation and accounting.
• Obtaining management’s valuation of
options and warrants, evaluating the
appropriateness of management’s model
and reviewing for completeness and
accuracy of information used;
• Obtaining and reviewing the option and
warrant agreements for all current year
issuances and determined whether or not
they were to be accounted for under IFRS 2
Share-Base Payments;
• Examining the contractual obligations of the
convertible loan note to ensure that
management’s accounting for the
aforementioned notes under IAS 32
Financial Instruments as debt classified
was appropriate;
• Reviewing the calculation for convertible
debt instruments and ensured the loan note
principal and accrued interest are recorded
appropriately on the financial statements;
and
34
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF TIZIANA LIFE SCIENCES PLC
• Reviewing the disclosure in the financial
statements to ensure disclosure is sufficient
and appropriate.
In performing the work above where appropriate we
used internal valuation and technical experts.
Our observations
The audit team have not identified any material issue
to be reported.
Our application of materiality and an overview of the scope of our audit
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the
nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures
and in evaluating the effect of misstatements, both individually and on the financial statements as a whole. Based
on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall materiality
How we determined it
Rationale for benchmark applied
Performance materiality
Reporting threshold
Group: £698,000
Parent: £335,000
Materiality is based on 6.0% of the Group’s and the Parent
Company’s losses for the year, before the impact of a realisation
bonus payable to one of the directors as this is an unusual one-
off expense.
We believe that the benchmark of losses is most appropriate for
both Group & Parent Company as the users of the accounts are
likely to be most concerned with the annual and accumulated
losses of the Group and Parent Company and the Group’s and
Parent Company’s ability to continue as a going concern. Losses
are also representative of the Group’s investment into research
and development to deliver its objectives. Having considered
factors such as the Group’s LSE and NASDAQ listings, we
determined materiality at 6.0% of Group and Parent Company’s
losses for the year to be appropriate.
Performance materiality is set to reduce to an appropriately low
level the probability that the aggregate of uncorrected and
undetected misstatements in the financial statements exceeds
materiality for the financial statements as a whole.
Performance materiality was set at £454,000 (£218,000 for the
parent company), being 65% of overall materiality.
We agreed with the directors that we would report to them
identified during our audit above £20,000
misstatements
(£10,000 for the parent company) as well as misstatements
below that amount that, in our view, warranted reporting for
qualitative reasons.
As part of designing our audit, we assessed the risk of material misstatement in the financial statements, whether
due to fraud or error, and then designed and performed audit procedures responsive to those risks. In particular,
we looked at where the directors made subjective judgements such as making assumptions on significant
accounting estimates.
35
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF TIZIANA LIFE SCIENCES PLC
We tailored the scope of our audit to ensure that we performed sufficient work to be able to give an opinion on the
financial statements as a whole. We used the outputs of a risk assessment, our understanding of the Group and
the parent company, its environment, controls and critical business processes, to consider qualitative factors in
order to ensure that we obtained sufficient coverage across all financial statement line items.
Our Group audit scope included an audit of the Group and parent financial statements of Tiziana Life Sciences plc.
Based on our risk assessment, only the parent company within the Group was subject to full scope audit which was
performed by the Group audit team. For the Group’s subsidiaries review procedures were performed by the Group
audit team as deemed necessary based on Group materiality.
At the parent level we also tested the consolidation process and carried out analytical procedures to confirm our
conclusion that there were no significant risks of material misstatement of the aggregated financial information.
Other information
The other information comprises the information included in the annual report other than the financial statements
and our auditor’s report thereon. The directors are responsible for the other information. Our opinion on the financial
statements does not cover the other information and, except to the extent otherwise explicitly stated in our report,
we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the course of audit or otherwise appears to be materially misstated. If we identify such
material inconsistencies or apparent material misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material misstatement of the other information. If, based on
the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the directors’ remuneration report to be audited has been properly prepared in accordance
with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
•
•
•
the information given in the Strategic Report and the Directors’ Report for the financial year for which the
financial statements are prepared is consistent with the financial statements and those reports have been
prepared in accordance with applicable legal requirements;
the information about internal control and risk management systems in relation to financial reporting
processes and about share capital structures, given in compliance with rules 7.2.5 and 7.2.6 in the
Disclosure Guidance and Transparency Rules sourcebook made by the Financial Conduct Authority (the
FCA Rules), is consistent with the financial statements and has been prepared in accordance with
applicable legal requirements; and
information about the parent company’s corporate governance code and practices and about its
administrative, management and supervisory bodies and their committees complies with rules 7.2.2, 7.2.3
and 7.2.7 of the FCA rules.
Matters on which we are required to report by exception
In light of the knowledge and understanding of the Group and the parent company and its environment obtained in
the course of the audit, we have not identified material misstatements in;
•
•
the Strategic Report or the Directors’ Report; or
the information about internal control and risk management systems in relation to financial reporting
processes and about share capital structures, given in compliance with rules 7.2.5 and 7.2.6 of the FCA
Rules
36
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF TIZIANA LIFE SCIENCES PLC
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires
us to report to you if, in our opinion:
•
•
adequate accounting records have not been kept by the parent company, or returns adequate for our audit
have not been received from branches not visited by us; or
the parent company financial statements and the part of the directors’ remuneration report to be audited
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; or
•
a corporate governance statement has not been prepared by the parent company
Responsibilities of Directors
As explained more fully in the directors’ responsibilities statement set out on pages 18 and 19, the directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view,
and for such internal control as the directors determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the parent
company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either intend to liquidate the Group or the parent
company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in
line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including
fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
Based on our understanding of the Group and the parent company and its industry, we identified that the principal
risks of non-compliance with laws and regulations related to the UK tax legislation, employment regulation and
health and safety regulation, anti-bribery, corruption and fraud, money laundering, Listing rules, Disclosure
Guidance and Transparency Rules, and we considered the extent to which non-compliance might have a material
effect on the financial statements.
In identifying and assessing risks of material misstatement in respect to irregularities including non-compliance with
laws and regulations, our procedures included but were not limited to:
• At the planning stage of our audit, gaining an understanding of the legal and regulatory framework applicable
to the Group and parent company, the structure of the Group, the industry in which they operate and considered
the risk of acts by the Group and the parent company which were contrary to the applicable laws and
regulations;
• Discussing with the directors and management the policies and procedures in place regarding compliance with
laws and regulations;
• Discussing amongst the engagement team the identified laws and regulations, and remaining alert to any
indications of non-compliance; and
• During the audit, focusing on areas of laws and regulations that could reasonably be expected to have a
material effect on the financial statements from our general commercial and sector experience and through
discussions with the directors (as required by auditing standards), from inspection of the company’s and
Group’s regulatory and legal correspondence and review of minutes of directors’ meetings in the year. We also
37
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF TIZIANA LIFE SCIENCES PLC
considered those other laws and regulations that have a direct impact on the preparation of financial
statements, such as the Companies Act 2006 and UK tax legislation.
Our procedures in relation to fraud included but were not limited to:
• Making enquiries of the directors and management on whether they had knowledge of any actual, suspected
or alleged fraud;
• Gaining an understanding of the internal controls established to mitigate risks related to fraud;
• Discussing amongst the engagement team the risks of fraud such as opportunities for fraudulent manipulation
of financial statements, and determined that the principal risks were related to posting manual journal entries
to manipulate financial performance, management bias through judgements and assumptions in significant
accounting estimates; and
• Addressing the risks of fraud through management override of controls by performing journal entry testing.
The primary responsibility for the prevention and detection of irregularities including fraud rests with both those
charged with governance and management. As with any audit, there remained a risk of non-detection of
irregularities, as these may involve collusion, forgery, intentional omissions, misrepresentations or the override of
internal controls.
As a result of our procedures, we did not identify any key audit matters relating to irregularities. The risks of material
misstatement that had the greatest effect on our audit, including fraud, are discussed under “Key audit matters”
within this report.
A further description of our responsibilities is available on the Financial Reporting Council’s website at
www.frc.org.uk/auditorsresponsibilities.
Other matters which we are required to address
Following the recommendation of the audit committee, we were appointed by the directors on 22 June 2020 to audit
the financial statements for the year ending 31 December 2020 and subsequent financial periods. The period of
total uninterrupted engagement is 5 years, covering the year ending 31 December 2020.
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group or the parent
company and we remain independent of the Group and the parent company in conducting our audit.
Our audit opinion is consistent with the additional report to the audit committee.
Use of the audit report
This report is made solely to the parent company’s members as a body in accordance with Chapter 3 of Part 16 of
the Companies Act 2006. Our audit work has been undertaken so that we might state to the parent company’s
members those matters we are required to state to them in an auditor’s report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the parent company
and the parent company’s members as a body for our audit work, for this report, or for the opinions we have formed.
Robert Neate
Robert Neate (Senior Statutory Auditor) for and on behalf of Mazars LLP
Chartered Accountants and Statutory Auditor
Tower Bridge House
St Katharine’s Way
London
E1W 1DD
17 May 2021
38
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2020
Continuing Operations
Note
Research and development costs
Operating expenses
Realisation bonus
Impairment of asset
Gain on disposal of Intellectual Property
Operating loss
Finance costs
Loss before taxation
Taxation
5
17
4
5
10
11
2020
£’000
(4,667)
(8,724)
(10,290)
(217)
2,074
(21,824)
(243)
(22,067)
1,719
2019
£’000
(2,910)
(4,864)
-
-
-
(7,774)
(72)
(7,846)
540
Loss for the year attributable to equity owners
(20,348)
(7,306)
Other comprehensive income that may be classified to
profit and loss in subsequent periods
Exchange differences on translation of foreign operations
Total comprehensive loss for the year attributable to
equity owners
186
129
(20,162)
(7,177)
Loss per share
Basic and diluted (loss) per share on continuing operations
12
(12.0p)
(5.4p)
39
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2020
Note
2020
£’000
2019
£’000
ASSETS
Non-Current assets
Property, plant and equipment
Finance lease receivable
Intangible asset
Right of use asset
Other non-current assets
Total non-current assets
Current assets
Finance lease receivable
Related party receivable
Other receivables
Taxation receivable
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
Capital reduction reserve
Shares to be issued reserve (convertible notes)
Share based payment reserve (options)
Share based payment reserve (warrants)
Shares to be issued
Other reserve
Translation reserve
Retained earnings
Total equity
Liabilities
Non-Current liabilities
Lease Liability
Current liabilities
Trade and other payables
Lease liability
Related party payable
Other liabilities
Total current and non-current liabilities
TOTAL EQUITY AND LIABILITIES
13
16
14
28
17
16
27
15
11
19
22
21
19,22
19,22
5,22
22
22
27
26
28
27
1
-
97
262
-
360
111
270
576
2,232
48,217
51,406
51,766
5,838
81,227
31,958
-
6,319
475
10,290
(28,286)
201
(62,313)
45,709
5
113
-
329
217
664
109
245
124
513
153
1,144
1,808
4,099
25,194
31,183
1,099
3,850
1,812
-
(28,286)
15
(43,146)
(4,180)
212
411
4,095
195
1,493
62
6,057
51,766
4,851
212
451
63
5,988
1,808
The financial statements were approved by the Board of directors and authorised for issue on May 17 2021.
Willy Simon
Mr W Simon
Director
Company Number: 03508592 (England and Wales)
40
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2020
Notes
16
26
15
18
23
22
20,23
20,23
5,22
23
23
26
27
ASSETS
Non-current assets
Intangible asset
Other non- current assets
Current assets
Related party receivable
Other receivables
Taxation receivable
Intercompany receivable
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 (convertible
notes)
Share based payment reserve (options)
Share based payment reserve (warrants)
Shares to be issued
Capital reduction reserve
Retained earnings
Total equity
Liabilities
Current liabilities
Trade and other payables
Related party payable
TOTAL EQUITY AND LIABILITIES
2020
£’000
97
-
244
434
1,674
39,945
5,944
48,338
5,838
81,227
-
6,384
537
10,290
31,958
(91,624)
2019
£’000
-
217
243
9
53
-
116
638
4,099
25,194
1,099
3,915
1,875
-
31,183
(69,070)
44,610
(1,705)
2,235
1,494
3,728
48,338
2,091
252
2,343
638
The Company reported a loss for the financial year ended 31 December 2020 of £23,735k (2019: £26,683k).
The financial statements were approved by the Board of directors and authorised for issue on May 17 2021.
Willy Simon
Mr W Simon
Director
Company Number: 03508592 (England and Wales)
41
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2020
Cash flows from operating activities
Loss for the year before taxation
Adjustments for:
Convertible loan interest accrued
Shares issued in lieu of fees
Share based payment – options
Share based payment – warrants
Options forfeited/cancelled in the year
Bonus to be settled in equity
Net (increase) in related party receivables
Net increase in related party payables
Net decrease/(increase) in other receivables
Net (decrease)/increase in trade and other payables
Depreciation of property, plant and equipment
Depreciation of right-of-use asset
(Gain)/Loss on foreign exchange
Loss on disposal of right of use asset
Impairment of SharDNA Spa
Gain from disposal of intellectual property
CASH USED IN OPERATING ACTIVITIES
Cash inflow from taxation
NET CASH USED IN OPERATING ACTIVITIES
Cash flows from investing activities
Acquisition of property, plant and equipment
Acquisition of intangible asset
NET CASH GENERATED FROM INVESTING
ACTIVITIES
Cash flows from financing activities
Proceeds from issuance of ordinary shares
Fundraising costs
Proceeds from issuance of convertible loan notes
Proceeds from exercise of warrants
Proceeds from conversion of options
Repayment of leasing liabilities
NET CASH GENERATED FROM FINANCING
ACTIVITIES
2020
£’000
2019
£’000
(22,067)
(7,846)
216
360
3,740
20
(26)
10,290
(24)
892
(340)
(757)
4
67
185
-
217
(2,074)
(9,297)
-
(9,297)
(2)
(97)
(99)
57,283
(3,136)
120
2,682
727
(216)
57,460
39
82
992
-
-
-
(225)
342
125
(17)
4
194
129
56
-
-
(6,125)
800
(5,325)
(3)
-
(3)
-
-
1,473
-
-
(157)
1,316
NET INCREASE/(DECREASE) IN CASH AND CASH
EQUIVALENTS
Cash and cash equivalents at beginning of year
CASH AND CASH EQUIVALENTS AT END OF YEAR
48,064
(4,012)
153
48,217
4,165
153
42
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2020
Cash flows from operating activities
Loss for the year before taxation
Adjustments for:
Convertible loan interest accrued
Shares issued in lieu of fees
Share based payment - options
Share based payment - warrants
Options forfeited/cancelled in the year
Bonus to be settled in equity
Net (increase) in related party receivables
Net increase in related party payables
Net decrease/(increase) in operating assets/other receivables
Net increase in trade and other payables
Impairment of investment
Impairment of SharDNA Spa
Gain from disposal of intellectual property
CASH USED IN OPERATING ACTIVITIES
Cash inflow from taxation
2020
£’000
2019
£’000
(25,356)
(26,683)
216
360
3,739
20
(26)
10,290
(1)
(424)
1,233
-
216
(2,074)
(11,806)
-
39
82
992
-
-
-
(243)
-
24
234
21,966
-
-
(3,589)
300
NET CASH GENERATED (USED IN)/ GENERATED FROM
OPERATING ACTIVITIES
(11,806)
(3,289)
Cash flows from investing activities
Acquisition of intangible asset
Capital contribution to subsidiaries
NET CASH USED IN INVESTING ACTIVITIES
Cash flows from financing activities
Proceeds from issuance of ordinary shares
Fundraising costs
Proceeds from exercise of warrants
Proceeds from issuance of convertible loan notes
Proceeds from conversion of options
NET CASH GENERATED FROM FINANCING ACTIVITIES
NET INCREASE/(DECREASE) IN CASH AND CASH
EQUIVALENTS
Cash and cash equivalents at beginning of year
CASH AND CASH EQUIVALENTS AT END OF YEAR
(97)
-
(97)
17,338
(3,136)
2,682
120
727
17,731
5,828
116
5,944
-
(1,661)
(1,661)
-
-
-
1,473
-
1,473
(3,477)
3,593
116
43
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
Convertible
Loan Note
Reserve
Other
Reserve
Shares to be
issued
Reserve
Translation
Reserve
Retained
Earnings
Total
Equity
£’000
£’000
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020
Share
Capital
Share
Premium
Capital
Reduction
Reserve
£’000
£’000
£’000
Share
Based
Payment
Reserve
(options)
£’000
Share
Based
Payment
Reserve
(warrants)
£’000
Balance at 1 January 2019
4,094
25,117
31,183
2,857
1,399
Issue of share capital (private placement and
IPO)
Warrants issued with CLN
Share based payment (options)
Convertible loan notes issued
Convertible loan note interest
Total
Comprehensive income
Exchange differences on translating foreign
operations
Comprehensive loss for the year
Total comprehensive income
5
-
-
-
-
5
-
77
-
-
-
-
77
-
-
-
-
-
-
-
-
-
-
993
-
-
993
-
413
-
-
-
413
£’000
-
-
(413)
-
1,472
39
1,099
£’000
(28,286)
-
-
-
-
-
-
-
-
-
-
Balance as at 31 December 2019
4,099
25,194
31,183
3,850
1,812
1,099
(28,286)
Issue of share capital (Fundraise & ATM)
Issue of share capital (Warrants)
Issue of share capital (in lieu of fees)
Issue of share capital (exercise of options)
Issue of share capital (Loan conversion)
Cost of fundraise
Convertible loan notes issued
Convertible loan note interest
Share based payments charge (warrants)
Share based payment charge (options)
Options forfeited/cancelled in the year
Exercise of options
Exercise of warrants
Shares issued in lieu of cash for
realisation bonus
Reduction in share capital
Capital distribution
Total
Comprehensive loss (Items that will be
reclassified to the Statement of Income in
future periods)
Exchange differences on translating foreign
operations
1,319
191
9
88
132
-
-
-
-
-
-
-
-
-
56,964
2,491
351
640
1,716
(3,136)
-
-
-
-
-
64
943
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,740
(26)
(1,245)
-
-
-
-
-
-
-
-
259
-
-
-
(1,596)
-
-
-
-
-
-
(1,848)
-
120
216
(240)
-
-
-
653
-
-
-
1,739
(4,000)
56,033
4,000
(3,225)
775
-
-
2,469
-
-
(1,337)
-
-
(1,099)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
44
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,290
-
-
10,290
(113)
-
-
-
-
-
-
128
128
£’000
(35,840)
-
-
-
-
-
-
(7,306)
(7,306)
15
(43,146)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,181
-
-
-
-
1,181
£’000
411
82
-
992
1,473
39
2,586
129
(7,306)
(7,177)
(4,180)
58,283
2,682
360
728
-
(3,136)
120
216
19
3,740
(26)
-
-
10,290
-
(3,225)
70,051
-
186
-
186
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020
Net loss for the year
Total Comprehensive loss for the year
Balance as at 31 December 2020
-
-
5,838
-
-
81,227
-
-
31,958
-
6,319
-
-
475
-
-
-
-
-
(28,286)
-
-
10,290
-
186
201
(20,348)
(20,348)
(62,313)
(20,348)
(20,162)
45,709
45
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2020
Share
Capital
Share
Premium
Capital
Reduction
Reserve
£’000
£’000
£’000
Share
Based
Payment
Reserve
(options)
£’000
Share Based
Payment
Reserve
(warrants)
Convertible
Loan Note
Reserve
Shares to be
issued
Reserve
Retained
Earnings
Total Equity
£’000
£’000
£’000
£’000
£’000
4,094
25,117
31,183
2,922
1,462
(42,387)
Balance at 1 January 2019
Transactions with owners
Issue of share capital
Share based payment (options)
Convertible loan notes issued
Convertible loan note interest
Warrants issued with CLN
Total transactions with owners
Comprehensive income
Comprehensive loss for the year
Total comprehensive income
Balance as at 31 December 2019
Transactions with owners
Issue of share capital (Fundraise & ATM)
Issue of share capital (In lieu of fees)
Cost of fundraise
Issue of share capital (Warrants)
Issue of share capital (Loan conversion)
Issue of share capital (Options)
Convertible loan notes issued
Convertible loan note interest
Share based payments charge (warrants)
Share based payment charge (options)
Options forfeited/cancelled in the year
Exercise of options
Exercise of warrants
Shares issued in lieu of cash for realisation
bonus
Reduction in share capital
Capital Distribution
Total transactions with owners
-
Comprehensive loss
Net loss for the year
Total comprehensive loss
5
-
-
-
-
5
77
-
-
-
-
77
-
-
-
-
-
-
-
993
-
-
-
993
-
-
-
413
413
-
4,099
-
25,194
-
31,183
-
3,915
-
1,874
1,319
9
-
191
132
88
-
-
-
-
-
-
-
-
-
-
1,739
-
-
-
-
-
-
-
-
-
-
-
3,740
(26)
(1,245)
-
-
-
-
-
-
-
-
-
-
259
-
-
-
(1,596)
-
56,964
351
(3,136)
2,491
1,716
640
-
-
-
-
1,245
943
-
(4,000)
57,214
-
-
-
-
-
-
-
-
-
-
-
-
-
4,000
(3,225)
775
2,469
(1,337)
(1,099)
-
-
-
-
-
-
-
-
537
-
-
-
-
-
1,473
39
(413)
1,099
-
1,099
-
-
-
-
(1,848)
-
120
216
(240)
-
-
-
653
-
22,391
-
82
993
1,473
39
-
2,587
-
-
-
-
-
-
(26,683)
(69,070)
(26,683)
(1,706)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
58,283
360
(3,136)
2,682
-
728
120
216
19
3,740
(26)
-
-
10,290
(3,225)
70,051
(23,735)
(23,735)
(23,735)
(23,735)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,290
-
-
-
Balance as at 31 December 2020
5,838
82,408
31,958
6,384
46
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
10,290
(92,805)
44,610
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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) and on the NASDAQ Capital Market
(NDAQ: TLSA). The Company delisted from AIM on 21st January 2021 and is now trading on the main market of
the London Stock Exchange (LSE: 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 thousands of pounds sterling (£’000) which is the functional currency
of the primary economic environment in which the Company operates.
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 Group and Company have been prepared in accordance with
international accounting standards in conformity with the requirements of the Companies Act 2006. These accounts
have been prepared under the historical cost convention.
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.
Going Concern
The Group and Company incurred losses during the year and has net assets at the year end.
As discussed in the Strategic Report, the Group and Company is in the early stages of developing its business
focusing on the discovery and development of novel molecules that treat human disease in oncology and
immunology. The Directors expect the Group and Company to incur further losses and to require significant capital
expenditure in continuing to develop clinical stage development therapeutic candidates in both oncology and
immunology. The Group and Company has successfully funded clinical trials to date and will seek to secure
additional investment for purposes of continuing to fund their clinical trials moving forward.
The Directors have prepared cash flow projections that include the costs associated with the continued clinical trials
and additional investment to fund that operation. On the basis of those projections, the directors conclude that the
company will be able to meet its liabilities as they fall due a period beyond the next 12 months from the date when
these financial statements are issued and accordingly the Directors have prepared the financial statements on a
going concern basis.
The directors do not believe that Brexit will have an impact on the Group’s ability to raise funds as it has access to
the US market due to its listing on the Nasdaq.
New and Revised Standards
Standards in effect in 2020
An amendment to IFRS 3 ‘Definition of a business’ has come into effect from January 1, 2020. The Company has
applied the new definition to any relevant transactions.
IFRS in issue but not applied in the current financial statements
The directors do not expect that the adoption of new IFRS Standards, Interpretations and Amendments that have
been issued but are not yet effective will have a material impact on the financial statements of the Group in future
periods.
Several 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.
47
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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 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
on the London Stock Exchange.
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.
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 bases
of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred tax is
determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date
and expected to apply when the related deferred tax is realized, or the deferred liability is settled. Deferred tax
assets are recognized to the extent that it is probable that the future taxable profit will be available against which
the temporary differences can be utilized.
Research and Development tax credits are provided for in the year that the costs are incurred. These are estimated
based on eligible research and development expenditure. Any difference rebated are recognized in the following
year, when the cash is received from the UK tax authorities.
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.
On consolidation, the assets and liabilities of foreign subsidiaries are translated into Pound Sterling at the rate of
exchange prevailing at the reporting date and their statements of comprehensive income are translated at exchange
rates prevailing at the dates of the transactions. The exchange differences arising on translation for consolidation
are recognised in other comprehensive income. On disposal of a foreign subsidiary, the component of other
comprehensive income relating to that particular foreign subsidiary is recognised in profit or loss.
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. Licence fees expenses are recognised as incurred.
48
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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
granted regulatory approval and it is probable that future economic benefit will flow to the Group. The Group
currently has no qualifying expenditure.
Financial instruments
The Group classifies a financial instrument, or its component parts, as a financial liability, a financial asset or an
equity instrument in accordance with the substance of the contractual arrangement and the definitions of a
financial liability, a financial asset and an equity instrument.
The Group evaluates the terms of the financial instrument to determine whether it contains an asset, a liability or
an equity component. Such components shall be classified separately as financial assets, financial liabilities or
equity instruments.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or
equity instrument of another entity.
(a) Financial assets, initial recognition and measurement and subsequent measurement
All financial assets not recorded at fair value through profit or loss, such as receivables and deposits, are
recognized initially at fair value plus transaction costs. Financial assets carried at fair value through profit or loss
(FVTPL) are initially recognized at fair value, and transaction costs are expensed in the income statement.
The measurement of financial assets depends on their classification. Financial assets such as receivables and
deposits are subsequently measured at amortized cost using the effective interest method, less loss allowance.
The Group does not hold any financial assets at fair value through profit or loss or fair value through other
comprehensive income.
(b) Financial liabilities, initial recognition and measurement and subsequent measurement
Financial liabilities are classified as measured at amortized cost or FVTPL.
A financial liability is classified as at FVTPL if it is a derivative. Financial liabilities at FVTPL are measured at fair
value and net gains and losses, including any interest expense, are recognized in profit or loss. Other financial
liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and
foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on
derecognition is also recognized in profit or loss.
The Group's financial liabilities include trade and other payables.
The Company has an intercompany receivable balance with its subsidiaries which is impaired in full on an annual
basis as there is no expectation of recoverability. As at the year end, there was an intercompany receivable balance
of £39.9m which was not impaired as it related to the cash proceeds from the August 2020 fundraise which were
received by the US entity. These funds have been transferred to the Company post the year end balance sheet
date.
Warrants
Warrants are issued by the Group in return for services and as part of a financing transaction.
Warrants issued in return for services.
Warrants issued in return for services fall within scope of IFRS 2. The financial liability component is measured at
fair value and charged to the Consolidated Statement of Income. There is no remeasurement of fair value.
Warrants issued as part of a financing transaction.
Warrants issued as part of a financing transaction fall outside the scope of IFRS 2. These are classified as equity
instruments because a fixed amount of cash is exchanged for a fixed amount of equity. The fair value is recognised
within equity and is not remeasured.
Investments
Investments are held as non-current assets and comprise investments in subsidiary undertakings and are stated at
cost less provision for any impairment.
49
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Share capital
Ordinary shares of the Company are classified as equity.
Property, plant and equipment
(i)
Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated
impairment losses. Costs include expenditures that are directly attributable to the acquisition of the asset.
Purchased software that is integral to the functionality of the related equipment is capitalised as part of that
equipment.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as
separate items (major components) of property, plant and equipment.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the
proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised in profit or
loss.
(ii)
Depreciation
Depreciation is calculated on the depreciable amount, which is the cost of an asset, or other amount substituted for
cost, less its residual value.
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful life of each part of an
item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their
useful lives unless it is reasonably certain that the Company will obtain ownership by the end of the lease term.
The estimated useful lives for the current period and the comparative period are as follows.
Fixtures and fittings
IT and equipment
5 years
3 years
Right of use assets Economic life of contractual relationship
Depreciation methods, useful lives and residual values are reviewed at each reporting date. Depreciation is
allocated to the operating expenses line of the income statement.
Impairment
Impairment of financial assets measured at amortised cost
At each reporting date the Group recognises a loss allowance for expected credit losses on financial assets
measured at amortised cost.
In establishing the appropriate amount of loss allowance to be recognised, the Group applies either the general
approach or the simplified approach, depending on the nature of the underlying group of financial assets.
General approach
The general approach is applied to the impairment assessment of refundable lease deposits and other refundable
lease contributions, restricted cash and cash and cash equivalents.
Under the general approach the Group recognises a loss allowance for a financial asset at an amount equal to the
12-month expected credit losses, unless the credit risk on the financial asset has increased significantly since initial
recognition, in which case a loss allowance is recognised at an amount equal to the lifetime expected credit losses.
Simplified approach
The simplified approach is applied to the impairment assessment of trade receivables.
Under the simplified approach the Group always recognises a loss allowance for a financial asset at an amount
equal to the lifetime expected credit losses.
The Company assesses for impairment in its investment in its subsidiaries on an annual basis.
Impairment of non-financial assets
50
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Non-financial assets are tested for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable.
Non-financial assets are impaired when its carrying amount exceed its recoverable amount. The recoverable
amount is measured as the higher of fair value less cost of disposal and value in use. The value in use is calculated
as being net projected cash flows based on financial forecasts discounted back to present value at a pre-tax
discount rate.
Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated
impairment losses.
Leases
All leases are accounted for by recognising a right-of-use asset and a lease liability except for:
•
•
Leases of low value assets; and
Leases with a duration of 12 months or less.
The Group has leases for its offices. Each lease is reflected on the balance sheet as a right-of-use asset and a
lease liability. The Group does not have any short-term leases or leases of low value assets. Variable lease
payments which do not depend on an index or a rate (such as lease payments based on a percentage of Group
sales) are excluded from the initial measurement of the lease liability and asset. The Group classifies its right-of-
use assets in a consistent manner to its property, plant and equipment (see Note 12).
For leases over office buildings and factory premises the Group must keep those properties in a good state of
repair and return the properties in their original condition at the end of the lease.
Measurement and recognition of leases as a lessee
At lease commencement date, the Group recognises a right-of-use asset and a lease liability in its consolidated
statement of financial position. The right-of-use asset is measured at cost, which is made up of the initial
measurement of the lease liability, any initial direct costs incurred by the Group, an estimate of any costs to
dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease
commencement date (net of any incentives received).
The Group depreciates the right-of-use asset on a straight-line basis from the lease commencement date to
the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also
assesses the right-of-use asset for impairment when such indicators exist.
At the commencement date, the Group measures the lease liability at the present value of the lease payments
unpaid at that date, discounted using the Group’s incremental borrowing rate because as the lease contracts
are negotiated with third parties it is not possible to determine the interest rate that is implicit in the lease. The
incremental borrowing rate is the estimated rate that the Group would have to pay to borrow the same amount
over a similar term, and with similar security to obtain an asset of equivalent value. This rate is adjusted should
the lessee entity have a different risk profile to that of the Group.
Lease payments included in the measurement of the lease liability are made up of fixed payments (including
in substance fixed), variable payments based on an index or rate, amounts expected to be payable under a
residual value guarantee and payments arising from options reasonably certain to be exercised.
Subsequent to initial measurement, the liability will be reduced by lease payments that are allocated between
repayments of principal and finance costs. The finance cost is the amount that produces a constant periodic
rate of interest on the remaining balance of the lease liability.
The Group as a lessor
As a lessor the Group classifies its leases as either operating or finance leases. A lease is classified as a finance
lease if it transfers substantially all the risks and rewards incidental to ownership of the underlying asset and
classified as an operating lease if it does not.
During the course of 2020, the Group sublet one of its office spaces. This has been recognised as a writeback of
the associated right of use asset and the recognition of a finance lease receivable for the value of the sublease
(see note 16).
51
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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 and directors 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.
Where advisers are rewarded using share based payments, the fair value of the advisers' services are determined
by reference to the fair value of the share options/warrants awarded, unless it can be measured based on their
services. 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)..
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 - options, in the case of options/warrants awarded to employees, directors,
advisers and other consultants.
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.
Where share options are forfeited prior to the completion of the vesting or service period to which they relate, the
forfeiture results in the reversal of the previously recognised share-based payment cost.
Where share options are modified, the fair value of the option immediately prior to modification and upon
modification is calculated. Where the modification increases the fair value of the option, the incremental fair value
is recognised over the remaining modified vesting period, whereas the balance of the original grant-date fair value
is recognised over the remaining original vesting period. The ‘incremental fair value’ is the difference between the
fair value of the modified share-based payment and that of the original share-based payment, both measured at
the date of the modification – i.e. the fair values as measured immediately before and after the modification.
Modifications that decrease the fair value of the option are generally ignored. The original grant-date fair value of
the equity instruments granted is recognised over the original vesting period.
All goods and services received in exchange for the grant of any share-based payment are measured at their fair
value.
52
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Other non-current assets
Other non- current assets are currently measured at cost less accumulated impairment. The asset is not yet being
amortised since it is not yet in the condition necessary for it to be capable of operating in the manner intended by
management.
Convertible loan notes
Where there is no option to repay in cash or the Company has the choice of settlement, 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 in a Convertible loan note reserve. The accrued interest on the principal amount, for which there is no
obligation to settle in cash, is also recorded in the Convertible loan note reserve. Upon redemption of the instrument
and the issue of share capital, the amount is reclassified from the convertible loan note reserve to share capital and
share premium.
Where the above conditions are not met
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 statement of financial position. 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.
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.
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.
The following are considered to be critical accounting estimates:
Share-based payments
The Group accounts for share-based payment transactions for employees in accordance with IFRS 2 Share-based
Payment, which requires the measurement of the cost of employee services received in exchange for the options
on our ordinary shares, based on the fair value of the award on the grant date.
The Directors selected the Black-Scholes-Merton option pricing model as the most appropriate method for
determining the estimated fair value of our share-based awards without market conditions. For performance-based
options that include vesting conditions relating to the market performance of our ordinary shares, a Monte Carlo
pricing model was used in order to reflect the valuation impact of price hurdles that have to be met as conditions to
vesting.
The resulting cost of an equity incentive award is recognised as expense over the requisite service period of the
award, which is usually the vesting period. Compensation expense is recognised over the vesting period using the
straight-line method and classified in the consolidated statements of comprehensive income.
The assumptions used for estimating fair value for share-based payment transactions are disclosed in note 27 to
our consolidated financial statements.
The following are considered to be critical accounting judgments:
Income taxes
Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be
available against which the losses can be utilised. Significant management judgment is required to determine the
amount of deferred tax assets that can be recognised based upon the likely timing and the level of future taxable
profits together with future tax planning strategies.
53
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Research and development costs
Research and development costs are charged to expense as incurred and are typically made up of clinical and
preclinical activities, drug development and manufacturing costs, and third-party service fees, including for clinical
research organizations and investigative sites. When entering into agreements with third parties which provide the
rights to conduct research into specific biological processes the Group accounts 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.
Leases
IFRS 16 defines the lease term as the non-cancellable period of a lease together with the options to extend or
terminate a lease, if the lessee were reasonably certain to exercise that option. This will take into account the length
of time remaining before the option is exercisable, current trading, future trading forecasts as to the ongoing
profitability of the organisation and the level and type of planned future capital investment. The judgement
is reassessed at each reporting period. A reassessment of the remaining life of the lease could result in a
recalculation of the lease liability and a material adjustment to the associated balances.
4. DEMERGER OF A SUBSIDIARY
The Company’s demerger of its subsidiary Stemprinter Sciences Limited to allow for the creation of a separate
business occurred by way of a demerger under English law. It happened in two distinct steps. In the first step, in
September 2020, Tiziana transferred all the ownership rights and intellectual property relating to the
StemPrintER project, in the form of patents and a license, to a newly formed Tiziana subsidiary, Stemprinter
Sciences Limited. In the second step, on October 5, 2020, the Company sold Stemprinter Sciences Limited to
Accustem Sciences Ltd.
In September 2020, the Company transferred all the ownership rights and intellectual property relating to
StemPrintER™ along with £1.0 million in cash to its newly formed wholly owned subsidiary, StemPrinter
Sciences Limited. This was the first step in the creation of the separate business by way of a demerger under
English law.In this first step, the transfer of all the ownership rights and intellectual property was treated as an
asset transfer (acquired IPR&D). The treatment as a separate asset acquisition at this stage reflected the fact
that, immediately prior to transfer, the Company carried out only limited maintenance type activity on the
StemPrintER project and the concentration of fair value was in the StemPrintER intellectual property asset.
Stemprinter Sciences Limited recorded the ownership rights and intellectual property a separately acquired
intangible asset in its books at cost under IAS 38, with cost (as defined in the IFRS Glossary), including the fair
value of the other consideration given (i.e., shares issued in exchange for intellectual property). Stemprinter
Sciences Limited therefore was also required to record the equity capital issued for the StemPrintER asset
acquired at fair value as set out in IFRS 13. Prior to the transfer, the intellectual property was an internal project
within the Company and was not classified as an asset on the Company’s balance sheet or a separate line of
business.
The Company tracked the expenses incurred in maintaining this project in the form of patent maintenance fees,
CRO fees and project consultancy fees, the total amounts for which between 2014 and the transfer date were
£2,073,930. The Company used the aggregate amount of these expenses as its determination of fair value (as
further discussed below) to credit an account in the books of Stemprinter Sciences Limited by £2,073,930.
Tiziana received 3,070,000 shares in Stemprinter Sciences Limited as consideration for the asset transfer.
Tiziana also contributed capital and resources, consisting of £1.0 million in cash.
In the second step of the transaction, on October 5, 2020, Accustem Sciences Ltd entered into an agreement
with the Company to acquire Stemprinter Sciences Limited, including the ownership rights and intellectual
property relating to StemPrintER™ and cash of £1.0 million contained within the entity. In exchange for the
transfer of ownership (shares in Stemprinter Sciences Limited), Accustem Sciences Ltd allotted 194,612,288
ordinary shares of £0.01 par value to Tiziana shareholders on a one for one basis based on the Tiziana
ownership as at October 30, 2020.
The Demerger was effected by Tiziana declaring a special dividend on the Tiziana Shares which was satisfied
by the transfer to Accustem of the entire issued share capital of Stemprinter Sciences Limited, the company to
which all the relevant assets relating to StemPrintER had been transferred.
In order for the Demerger to be effective, the Company cancelled £4,000,000 from its Share Premium account
in order to create a distributable reserve in the Company to facilitate the special dividend to shareholders. This
was approved by the High Court on October 26, 2020.
54
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
5. OPERATING LOSS
The Group and Company’s operating loss for the year is stated after charging the following:
License fees
Realisation bonus
Depreciation of Property, Plant and Equipment
Depreciation (Right-of-use asset)
Foreign exchange (gains)/losses
2020
£’000
550
10,290
4
66
186
11,096
2019
£’000
433
-
4
192
129
758
The realisation bonus refers to a bonus that became payable to the Executive Chairman in August 2020 upon the
raising of funds totalling £44m.
6. SEGMENTAL REPORTING
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.
7. 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 for other assurance
services
8. EMPLOYEES
Group
Staff costs comprised:
Directors’ salaries including bonus
Employees, wages, salaries and bonus
Social security costs
Recruitment fees
Share based payment charge
The average monthly number of employees, including directors, employed by
the Group during the year was:
Research and Development
Corporate and administration
A charge for share based payments totalling £3,506k (2019: £586k) was made in the year.
2020
£’000
2019
£’000
48
78
56
82
2020
£’000
11,198
824
151
13
3,506
2019
£’000
892
554
477
-
992
15,692
2,912
3
8
11
5
4
9
55
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Company
Staff costs comprised:
Directors’ salaries
Recharge of US Salaries (including social security costs)
Share based payment charge
2020
£’000
11,198
706
3,506
15,410
2019
£’000
892
745
992
2,629
Directors’ salaries include a realisation bonus which became payable due to the £44m fundraise that took place
in August 2020.
9. REMUNERATION OF KEY MANAGEMENT PERSONNEL
2020
2019
Directors'
fee
£’000
Bonus
£’000
Salary
£’000
38
133 10,357
-
-
17
-
-
164
-
-
468
Share
based
payments
£’000
24
121
-
24
1,611
Directors'
fee
£’000
Bonus
£’000
38
80
2
-
-
-
143
-
-
159
Salary
£’000
-
-
-
-
470
Share
based
payments
£’000
-
296
-
-
695
Director
W Simon
G. Cerrone (1)
R. Dalla-Favera
J Brancaccio
K. Shailubhai
(2)
188
10,521
468
1,780
120
302
470
991
(1) Gabriele Cerrone’s bonus in 2020 includes his realisation bonus of £10.29m; his 2019 bonus covers the
period June 9, 2016 to December 31, 2019
(2) Kunwar Shailubhai became an employee of the Company on 24th May 2017, at which point he ceased
to be a non-executive director.
The following share options were granted to directors in the year:
Director
K Shailubhai
G. Cerrone
W. Simon
J Brancaccio
R. Dalla-Favera
2020
Number of options
1,800,000
-
250,000
250,000
2,300,000
2019
Number of options
-
-
-
-
The key management personnel of the Group are considered to be represented by the directors and officers of the
Company.
No director has yet benefitted from any increase in the value of share capital since issuance of the options.
2,319,225 share options were exercised by directors in the year for an intrinsic gain of £3.2m.
The Company made £7k (2019: £12k) of payments to a defined contribution pension schemes on behalf of directors
or employees.
56
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
10. FINANCE INCOME AND COSTS
Group
Finance Income
Finance income received on net investment in lease
Total finance income
Finance Expenses
Finance charge accrued on convertible loan notes
Interest expense on lease liabilities
Total finance expenses
Net finance expense recognised in Statement of Comprehensive Income
11. TAXATION
Group
Current year tax (credit)
Adjustments in respect of prior periods
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 19%. The
difference can be reconciled as follows:
2020
£’000
2019
£’000
6
6
236
13
249
243
1
1
49
24
73
72
2020
£’000
2019
£’000
(1,204)
(515)
(518)
(22)
Nil
Nil
(1,719)
(540)
Loss before taxation
(22,067)
(7,846)
Loss charged at standard rate of corporation tax 19%
(4,193)
(1,491)
Movement in unrecognised deferred tax
Expenses not deductible for taxation
Adjustments due to prior periods
Research and development claim
Income not taxable for tax purposes
Consolidation adjustment in relation to foreign exchange
movements
1,025
3,883
(515)
(518)
(1,356)
(189)
1,353
(22)
(223)
-
(45)
32
(1,719)
(540)
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.
The amount of tax losses for which no deferred tax assets has been recognised is £4,814k (2019: £2,756k).
57
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
12. LOSS PER SHARE
Basic loss per share is calculated by dividing the loss 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 (£)
(20,348,519)
(7,306,423)
Weighted average number of ordinary shares in issue
169,065,390
136,482,627
2020
2019
Basic loss per share (pence per share)
(12.0)
(5.4)
As the Group is reporting a loss from continuing operations for the year then, 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.
13. PROPERTY, PLANT AND EQUIPMENT
Details of the Groups property, plant and equipment are as follows:
Group
Cost
At 1 January 2020
Additions
Disposals
At 31 December 2020
Depreciation
At 1 January 2020
Charge in year
At 31 December 2020
Net book value as at 31 December 2020
Cost
At 1 January 2019
Additions
Disposals
At 31 December 2019
Depreciation
At 1 January 2019
Charge in year
At 31 December 2019
Net book value as at 31 December 2019
Furniture
and fixtures
£’000
IT
equipment
£’000
Total
£’000
12
-
12
9
2
11
1
12
-
-
12
7
2
9
3
28
-
28
26
2
28
-
25
3
-
28
24
2
26
2
40
-
40
35
4
39
1
37
3
-
40
31
4
35
5
58
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
14. PURCHASE OF AN INTANGIBLE ASSET
In April 2020, the Company acquired all of the intellectual property relating to a nanoparticle-based formulation of
Actinomycin D (Act D), from Rasna Therapeutics, Inc. to expand its pipeline for a consideration of an initial $120,000
upfront payment (approximately £97,000).
15. OTHER RECEIVABLES
Group
VAT Receivable
Funds due for options exercised
Security deposits receivable
Prepayments
2020
£’000
61
140
99
276
576
2019
£’000
16
-
87
21
124
There are no differences between the carrying amount and fair value of any of the trade and other receivables
above.
Company
Funds due for options exercised
VAT Receivable
Prepayments
16. FINANCE LEASE RECEIVABLES
2020
£000
140
52
242
434
2019
£000
-
4
5
9
In November 2019, the Group subleased one of its leased office spaces. The sublease has been classified as a
finance lease receivable.
Finance lease receivable
Current
Non-current
31 Dec 2020
£000
111
-
1 Jan 2020
£000
109
113
111
222
The undiscounted lease payments to be received over the next 5 years are as follows:
1 Year
£000
2 years
3 or more years
£000
£000
Undiscounted lease payments receivable
111
111
-
-
-
-
The undiscounted lease payments do not include a discount factor charge of £1k.
During the year ending December 31, 2020, the Group received £111k of income from its subleasing activities.
59
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Finance Lease Receivable
Finance Lease receivable as at 1 Jan 2020
Sublease income
31 December
2020
£000
222
(111)
111
17. OTHER NON-CURRENT ASSETS
In June 2016, the Board approved the purchase of the data repository of DNA samples from SharDNA (an Italian
entity in liquidation) for EUR 258k, approximately £217k.
Management recognize that the transaction is not the purchase of a business, but the purchase of key assets owned
by SharDNA. These assets are owned by Tiziana Life Sciences PLC.
The validity to the sale of the assets has been confirmed by the Italian judicial system however the Company is still
unable to utilise these assets until the resolution of the outstanding data protection legal action. This action is
unlikely to be resolved for another 2 years so the Company has decided to impair the asset on the basis that it is
not available for use for another 2 years, resulting in an impairment charge of £217k.
18. INVESTMENTS IN SUBSIDIARIES
Company
Cost
At 1 January 2020
Additions
Disposals
At 31 December 2020
Impairment
At 1 January 2020
Charge in year
At 31 December 2020
Net book value as at 31 December 2020
Net book value as at 31 December 2019
Shares in group
undertakings
Capital
Contribution
£’000
£’000
Total
£’000
7,509
3,225
(3,225)
7,509
(7,509)
-
(7,509)
-
-
12,796
4,915
-
17,711
(12,796)
(4,915)
(17,711)
-
-
21,966
8,140
(3,225)
25,220
(21,966)
(4,915)
(25,220)
-
-
The capital contribution represents the funding of operations of the subsidiaries by the parent, with the Company
acting as the Group’s holding company.
The Company’s interest in subsidiary undertakings is as follows:
60
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Name
Principal activity Registered Address
Tiziana Pharma Limited
Tiziana Therapeutics Inc
Longevia Genomics SRL
Stemprinter Sciences Ltd
Clinical stage
biotechnology
company
Clinical stage
biotechnology
company
Biotech
Discovery
Company
Specialist
medical practice
activities
3rd Floor, 11-12 St
James’s Square,
London, SW1Y 4LB
420 Lexington Avenue
Suite 2525
New York, NY 10170
Via Constantinopoli 42
09100- Cagliari (CA)
9th Floor, 107
Cheapside, London,
UK EC2V 6DN
Percentage
shareholding
100%
Country of
incorporation
England &
Wales
100%
USA
100%
Italy
100%
England &
Wales
Tiziana Therapeutics Inc was incorporated on 28 October 2015. This entity was set up to house the Company’s US
operations.
Longevia Genomics SRL was incorporated on 4 July 2016. This entity was established to enable the Company to
carry out R&D activities in Sardinia and acting as the European legal representative of the Group, as per EU
regulatory (AIFA) requirements.
Stemprinter Sciences Ltd was incorporated on 3 September 2020. This entity was established to enable the transfer
of the ownership rights and intellectual property relating to StemPrintER™. The subsidiary was sold to Accustem
Sciences Ltd on 30 October 2020.
During the year, the Company undertook an impairment review of its investments in subsidiaries. The Company
has been funding its subsidiary operations from funds raised by the Company for the development of its project
portfolio. The subsidiary’s activities have all been to support the Company in achieving its goals for progression of
the project portfolio. The funding provided to the subsidiaries to date has been recognized in the Company as
Investment in its subsidiaries, and the Company does not expect the amounts to be repaid. The IP relating to the
project portfolio belongs to the Company and hence any future benefits will also belong to the Company. It is highly
unlikely that these benefits will be distributed to the subsidiaries. The Company therefore determined that the
investment should be impaired on an annual basis.
19. SHARE CAPITAL
Company and Group
2020
2019
Ordinary Shares
In issue at 1 January
136,654,516
136,463,818
Issued for cash
Issued in lieu of consultancy
fees
Conversion of warrants
Conversion of Loan
Exercise of options
Commission and Interest
43,979,245
-
281,250
190,698
6,365,428
4,406,125
2,925,725
-
-
-
-
2020
£000
4,099
1,319
9
191
132
88
2019
£000
4,094
-
5
-
-
-
-
In issue at 31 December
194,612,289
136,654,516
5,838
4,099
Ordinary Shares
Ordinary shares have a par value of £0.03. Every holder of ordinary shares is entitled to one vote, to participate in
dividends, and to share in the proceeds of winding up the company in proportion to the number of and amounts
paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by
proxy, is entitled to one vote, and upon a poll each share is entitled to one vote. The Company does not have a
limited amount of authorised capital.
61
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Issuance of ordinary shares
In March 2020, 16,666,665 new ordinary shares were issued as part of a fundraise of American Depositary Shares
on the Nasdaq Global Market.
In April 2020, 420,000 new ordinary shares were issued in relation to an exercise of options; 1,712,672 new ordinary
shares were issued in relation to an exercise of warrants; 4,406,125 new ordinary shares were issued in relation to
the conversion of convertible loan notes and 906,905 new ordinary shares were issued in relation to an ‘At the
market’ fundraise of American Depositary Shares.
In May 2020, 264,286 new ordinary shares were issued in relation to an exercise of warrants and 1,568,445 new
ordinary shares were issued in relation to an ‘At the market’ fundraise of American Depositary Shares.
In June 2020, 3,034,399 new ordinary shares were issued in relation to an exercise of warrants and 852,500 new
ordinary shares were issued in relation to an ‘At the market’ fundraise of American Depositary Shares.
In July 2020, 88,580 new ordinary shares were issued in relation to an exercise of warrants and 1,965,500 new
ordinary shares were issued in relation to an ‘At the market’ fundraise of American Depositary Shares.
In August 2020, 22,019,230 new ordinary shares were issued as part of a fundraise of American Depositary Shares
on the Nasdaq Global Market and 600,000 new ordinary shares were issued in relation to an exercise of warrants.
In September 2020, 281,250 new ordinary shares were issued in lieu of a consultancy fees of £360,000.
In October 2020, 2,505,725 new ordinary shares were issued in relation to an exercise of options and 665,491 new
ordinary shares were issued in relation to an exercise of warrants.
20. SHARE BASED PAYMENTS
Group and Company
Options
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.
Options (‘000)
2020
Weighted
Average
exercise price
(pence)
Options (‘000)
2019
Weighted
Average
exercise price
(pence)
Outstanding at 1 January
Granted
Forfeited
Exercised
Cancelled
Outstanding at 31
December
Exercisable at 31
December
16,379
3,870
(300)
(2,925)
17,024
6,249
86
81
(38)
(18)
49
41
18,617
-
(2,238)
-
-
16,379
5,521
84
-
(115)
-
-
86
51
During the year ending 31 December 2020, 2,925,725 options were exercised. No options were exercised in the
year to 31 December 2019.
The total outstanding fair value charge of the share option instruments is deemed to be approximately £5,161k
(2019: £3,800k).
Share options outstanding at the end of the year have the following expiry dates and exercise prices:
62
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Grant Date
Expiry Date
Exercise Price
26 June 2014
30 April 2018
6 May 2020
23 July 2020
25 August 2020
Total
Fair value of options granted
26 June 2024
30 April 2028
5 May 2028
26 July 2030
24 August 2030
£0.35
£0.8175
£0.35
£1.575
£1.475
Share Options as
at 31 December
2020 (‘000)
1,831
1,300
12,393
1,000
500
17,024
The Directors have used the Black-Scholes option pricing model to estimate the fair value of most of the options
granted during the year to December 31, 2020 applying the assumptions below.
Historical volatility is based on the historical volatility of the Company itself.
The Company has not paid any dividends on common stock since its inception and does not anticipate paying
dividends on its common stock in the foreseeable future.
The Company has estimated a forfeiture rate of zero.
The model inputs for options granted during the year ended 31 December 2020 valued under the Black Scholes
Valuation model included:
Grant date share price
Exercise share price
Risk free rate
Expected volatility
Option life
6 May 2020
23 July 2020
£0.625
£0.350
0.04% to 0.05%
92% to 117%
10 years
£1.600
£1.575
0.04% to 0.05%
92% to 117%
10 years
Weighted average share price
Weighted average fair value per
share option
£0.625
£0.350
£1.600
£1.575
For the options issued in August 2020 with a market condition attached, the Directors have used the Monte Carlo
simulation to estimate the fair value of these options. The Company uses the following methods to determine its
underlying assumptions:
•
•
•
expected volatilities are based on the historical volatilities of the market;
the expected term of the award is 4 years and is based on managements’ assessment of when the market
condition is likely to be achieved; and
a range of fair value’s per share were produced and management have determined the most appropriate
value based on their knowledge of the market and vesting conditions being fulfilled.
Modification of share based payments.
In May 2020, the Company reduced the exercise price for options issued to employees and directors to £0.35. This
was approved by shareholders at a General Meeting held on May 6, 2020.
The fair value of the modified options at the date of modification was determined using the option pricing models
as described above. The incremental fair value was recognised as an expense over the period from the modification
date to the end of the vesting period. The expense for the original option grant will continue to be recognised as if
the terms had not been modified.
The fair value of the modified options was determined using the same models and principles as described above.
63
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Warrants
Warrants issued in lieu of fees
On June 1 2020, warrants were granted over 35,714 shares at an exercise price of £0.70 per share in lieu of broker
fees. The warrants are exercisable until 1 June 2023.
Warrants issued as incentive
In January 2020, additional warrants were granted over 2,037,350 shares at an exercise price of £0.42 per share
in conjunction with Convertible Loan Note’s that were issued in 2019. The warrants are exercisable until 31 October
2024 and were exercised during April and June 2020.
On January 21, 2020, warrants were granted over 285,714 shares at an exercise price of £0.35 per share in
conjunction with a Convertible Loan Note. The warrants are exercisable until January 21, 2023 and were exercised
in October 2020.
The Directors have estimated the fair value of the warrants using the Black-Scholes valuation model and
assumptions below:
Grant date share price
Exercise share price
Risk free rate
Expected volatility
January 2020
21 January
2020
1 June 2020
£0 .43
£0.42
0.64%
61.7%
£0 .43
£0.35
0.40%
84.7%
£1.15
£0.70
0.04%
111%
For each set of warrants, the charge has been expensed over the service period. A share-based payment charge
for the year of £20k (year to December 2019 £nil) has been expensed in the statement of comprehensive income.
2020
£000
2019
£000
Outstanding at 1 January
1,812
1,399
Granted
Transfer to share premium on exercise of warrants
259
(1,597)
413
-
Outstanding at 31 December
474
1,812
21. CONVERTIBLE DEBT INSTRUMENT
Group and Company
Planwise Convertible Loan Notes 2016
From the date of the reverse acquisition a convertible loan note of £200k 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 as a result of the fact that the Company is obligated to repay
the capital amount and the interest of the loan, and Planwise has the right to request the settlement of the obligation
via a cash settlement and is not limited to settlement of the obligation in shares in the Company.
64
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
Accounting for the convertible debt instrument
The net proceeds received from the issue of the Planwise Convertible Loan Note has been recorded as a debt
liability in the balance sheet and the accrued interest charged to the income statement. The liability for the
convertible debt instrument at 31 December is:
Convertible loan notes issued
Accrued interest
2020
£000
252
8
260
2019
£000
243
9
252
22. CONVERTIBLE INSTRUMENTS CLASSIFIED AS EQUITY
On 31st October 2019, the Company decided to raise convertible equity finance, with warrants attached, from
supportive existing shareholders. £1,473,000 was raised from the issuance of Convertible Loan Notes. The Loan
Notes are short term instruments and carry a coupon of 16% per annum and are convertible (together with all
accrued interest) into ordinary shares of nominal value £0.03 each in the capital of the Company at a conversion
price of 42p,they are not convertible into cash. The Loan Notes are convertible on the third anniversary of the date
of issue of the Notes, or at the election of the noteholder on completion of the next non-qualifying equity financing
or on the making of a takeover offer for the Company (as defined in the City Code on Takeovers and Mergers), and
such election may be made on an immediate basis or conditional on any such takeover offer being declared, or
becoming, unconditional.
The warrants issued in connection with the Loan Notes entitle the holders to subscribe for one additional share per
conversion share at the same price of 42p. The warrants may be exercised for a period of up to 5 years from their
date of issue.
The principal amount of the Convertible Equity Instrument that was recorded as in the convertible loan note reserve
prior to conversion is as follows:
Par value of Convertible loan notes issued
Less: Fair value of warrants issued to note holders
Less convertible loan note conversion Exercise
Accrued interest
Less: convertible loan note conversion
Exercise of Warrants
2020
£000
1,593
(484)
1,109
255
(1,848)
484
-
2019
£000
1,473
(413)
1,060
39
-
-
1,099
23. RESERVES
The share-based payment reserve for warrants represent the value of equity shares which could be issued in future
accounting periods if the warrants in issue are exercised.
The share-based payment reserve for options 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 convertible loan note reserve represents the value of equity shares which could be issued in future accounting
periods if the convertible loan notes are converted into equity.
65
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
The other reserve was created as a result of the reverse acquisition of Alexander David Investments Plc, 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. This reserve has been credited as part of the capital reduction exercise described below.
The shares to be issued reserve represents the equity shares that are to be issued to the Chairman in lieu of his
realisation bonus, which became payable during the course of the year.
On the 14 of September 2016 the High Court granted the Company permission to cancel its share premium account
and its capital redemption reserve. The order had previously been ratified at the AGM held on 30 June 2016. The
£31.1m of distributable reserves arising from this transaction were taken to the capital reduction reserve. The
Company also decided to cancel its merger relief reserve as part of this capital reduction exercise.
On October 26, 2020 the High Court granted the Company permission to reduce its share premium account by £4m
in order to distribute a dividend to effect the demerger of its subsidiary, Stemprinter Sciences Ltd. The order had
previously been ratified at a General Meeting held on October 2, 2020. The £4m of distributable reserves arising
from this transaction were taken to the capital reduction reserve. A capital distribution was then made to Tiziana
shareholders by way of shares in Accustem of £3,225,314.
The translation reserve represents the unrealised gains or losses from the foreign currency translation of
Companies within the Group.
24. 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.
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 by private and public offerings of equity and debt securities.
The table below summarises the maturity profile of the Group’s financial liabilities based on contractual
undiscounted payments:
£000
Trade and other payables
Related party payables
Less than 3
months
1,920
-
1,920
2020
3 to 12
months
546
997
1,543
Total
2,466
997
3,463
66
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
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 Pounds Sterling. It therefore is exposed to foreign exchange risk
arising from exposure to various currencies primarily the Euro and US Dollar.
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.
Sensitivity analysis
A reasonably possible strengthening (weakening) of the Euro, US dollar, or Sterling against all other currencies at
31 December 2020 would have affected the measurement of the financial instruments denominated in a foreign
currency and affected equity and profit and loss by the amounts shown below. This analysis assumes that all other
variables remain constant.
December 31, 2020
EUR (5% movement)
USD (5% movement)
Interest rate risk
Profit or loss and equity
Strengthening
Weakening
44
70
(44)
(70)
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 Barclays 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
2020 or 31 December 2019.
25. CAPITAL RISK MANAGEMENT
For the purpose of the Group’s capital management, capital includes called up share capital, share premium, share
based payments for options, share based payments for warrants, convertible loan note reserve, capital reduction
reserve and all other equity reserves attributable to the equity holders of the parent as reflected in the statement of
financial position.
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 adjusts its capital structure in light of changes in economic conditions and expected business demands
on capital. In order to maintain or adjust its capital structure, the Group considers whether or not to pay dividends
and adjusts the amount of any dividend payments to shareholders. The Group may also return capital to
shareholders or issue additional shares.
67
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
26. TRADE AND OTHER PAYABLES
Group
Trade payables
Accruals
Company
Trade payables
Accruals
2020
£000
2,466
1,629
2019
£000
3,178
1,673
4,095
4,851
2020
£000
847
1,387
2,234
2019
£000
970
1,121
2,091
27. RELATED PARTY TRANSACTIONS
Rasna Therapeutics Inc is a related party as Keeren Shah, Finance Director of Tiziana, is also Finance Director
of Rasna and John Brancaccio and Willy Simon, directors of our Company, are also directors of Rasna. Rasna is
also party to a Shared Services agreement with Tiziana whereby the Company is charged for shared services
such as the payroll and rent. During 2020, Tiziana extended a loan to Rasna for $72,000 at an interest rate of 8%
per annum. As of December 31, 2020, £58k (2019: £4k) was owed to Tiziana Life Sciences PLC in respect of the
lean and shares services agreement.
In addition to the above, Tiziana also acquired all of the intellectual property relating to a nanoparticle-based
formulation of Actinomycin D (Act D; a.k.a. Dactinomycin), from Rasna to expand its pipeline for a consideration
of an initial £97k ($120k) upfront payment and milestone payments of up to an additional aggregate $630k.
OKYO Pharma Ltd is a related party as Kunwar Shailubhai, director of our Company, is also a director of OKYO.
In addition, Keeren Shah, Finance Director of Tiziana, is also Finance Director of OKYO. OKYO is also party to a
Shared Services agreement with Tiziana whereby the Company is charged for shared services such as the
payroll and rent. As of December 31, 2020, £20k (2019: £21k) was owed to Tiziana Life Sciences PLC in respect
of this agreement.
Gensignia Lifesciences Inc is a related party as Kunwar Shailubhai, director of our Company, is also a director
of Gensignia. As of December 31, 2020, £258k (2019: £241k) was owed to Tiziana Life Sciences PLC.
Accustem Sciences Ltd is a related party as Kunwar Shailubhai, director of our Company, is also a director
of Accustem. In addition, Keeren Shah, Finance Director of Tiziana, is also Finance Director of Accustem. As of
December 31, 2020, £1,148k was owed to Accustem, made up of cash payable of £1,151k offset by £3k worth of
costs paid by Tiziana on Accustem’s behalf.
As at December 31, 2020, Kunwar Shailubhai owed the Company £140,000 for the exercise of his options.
68
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
28. LEASES
Right-of-use assets
At 1 January
Additions
Depreciation
Finance lease receivable
Loss on disposal
Foreign exchange movements
Lease Liabilities
At 1 January 2020
Additions
Interest expense
Lease payments
Foreign exchange movement
Lease liabilities are presented in the statement of financial; position as follows:
Current
Non-current
31 Dec
2020
£000
329
-
(67)
-
-
31 Dec 2019
£000
833
-
(194)
(249)
(56)
(5)
262
329
31 Dec 2020
£000
623
-
13
(235)
31 Dec 2019
£000
833
-
24
(234)
6
407
-
623
31 Dec 2020
£000
195
212
1 Jan 2020
£000
212
411
407
623
The lease liabilities are secured by the related underlying assets. Future minimum lease payments as at 31
December 2020 were as follows:
Within 1 year
1-2 years
2-5 years
Over 5 years
Total
Minimum lease payment due
31 December 2020
Lease payments
Finance Charges
Net Present Values
205
(10)
195
74
(6)
68
148
(4)
144
-
-
427
(20)
407
The total net cash outflow for leases in the year to 31 December 2020 was £155,549.
29. POST BALANCE SHEET EVENTS
On 4 January 2021, the Company announced that it had completed its clinical study in Brazil investigating nasally
administered Foralumab, its proprietary human monoclonal antibody, either alone or in combination with orally
administered dexamethasone in COVID-19 patients.
On 13 January 2021, the Company announced the appointment of Dr Neil Graham MBBS, MD, MPH as Chief
Medical Officer.
69
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2020
On 20 January 2021, the Company announced the cancellation of admission of its Ordinary Shares to trading on
AIM and admission to listing of its ordinary shares on the standard listing segment of the Official List of the Financial
Conduct Authority and admission to trading on the main market for listed securities of London Stock Exchange plc.
The last day of trading of the Company's Ordinary Shares on AIM was 20 January 2021 and the AIM Delisting was
effective from 7.00 am 21 January 2021. Admission of shares to the Official List and commencement of dealing in
the Ordinary Shares of the Company on the Main Market was effective from 8.00 am on 21 January 2021.
On 5 February 2021, the Company announced the appointment of Dr Thomas Adams, Ph.D. as an executive
director. Dr Adams assumed the position of Head of Drug Development with immediate effect and his executive
role is to manage and oversee all matters relating to the Company's pre-clinical and clinical drug development
programs and associated intellectual property.
On 30 March 2021, the Company announced that the U.S. Food and Drug Administration (FDA) has allowed
evaluation of nasal administration with Foralumab, a fully human anti-CD3 monoclonal antibody, in a secondary
progressive multiple sclerosis (SPMS) patient at the Brigham and Women’s Hospital (BWH), Harvard University,
Boston, MA. This patient will be treated under an Individual Patient Expanded Access IND. This is the first time a
nasally administered antibody will be administered to a patient with SPMS. The treatment is planned to start in the
third quarter of 2021 and will continue for six months. Investigators at BWH will follow this patient with detailed
routine safety, neurological, imaging and PET studies to evaluate microglial imaging. Modification of immunological
and neurodegenerative markers is part of standard investigations that will be conducted at the BWH.
The Company does not believe that the recent outbreak of COVID-19 pandemic will have an adverse effect on the
Company’ operations. Indeed, the Company has raised substantial funds during the pandemic to enable it to
expedite development of TZLS-501 as well as other initiatives within its project pipeline.
30. 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.
Milciclib project research future payments relate to the achievement of clinical milestones or the payment
of royalties. We are obligated to pay Nerviano the following additional amounts in respect of the first licensed
product or service which achieves the stated development milestones:
(a) $100,000 upon initiation, first patient dosed, or FPD, of the first Phase 3 registration trial in thymic
carcinoma.
(b) $4,000,000 upon FPD of the first Phase 3 registration trial in HCC.
(c) $6,000,000 upon FPD of the first Phase 3 registration trial in breast cancer.
(d) Upon the first NDA equivalent in: thymic carcinoma, $900,000; HCC, $9,000,000; breast cancer,
$15,000,000.
•
•
Foralumab project – Future payments relate to the achievement of clinical milestones or the payment of
royalties. Diligence obligations are payable to BMS/Medarex should the project continue to
commercialisation. $1,500,000 has been accrued in respect of diligence obligations due to Medarex.
• ACT D - Tiziana will need to make milestone payments of up to $630k depending on the issuance of a
US patent from any US patent application in Transferred IP relating to nanoparticle formulations of Act D
and upon the successful completion of a Phase II clinical efficacy trial.
70
TIZIANA LIFE SCIENCES PLC FINANCIAL STATEMENTS 2020