Group Strategic Report, Report of the Directors
and
Audited Consolidated Financial Statements for the
Year Ended 31 December 2019
for
ValiRx Plc
ValiRX Plc
Contents of the Consolidated Financial Statements
for the year ended 31 December 2019
Company Information
Independent Directors Report
Chief Executive’s Report
Group Strategic Report
Corporate Governance
Report of the Directors
Statement of Directors’ Responsibilities
Report of the Independent Auditors
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Consolidated Statement of Financial Position
Company Statement of Financial Position
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Page
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2
ValiRX Plc
Company Information
for the year ended 31 December 2019
DIRECTORS:
SECRETARY:
REGISTERED OFFICE:
K J Alexander
Dr K Cox
G Desler
M Lampshire
Dr S J Dilly
K J Alexander
Stonebridge House
Chelmsford Road
Hatfield Heath
Essex
CM22 7BD
REGISTERED NUMBER:
03916791 (England and Wales)
AUDITORS:
Chartered Accountants &
Statutory Auditor
Adler Shine LLP
Aston House
Cornwall Avenue
London
N3 1LF
3
ValiRX Plc
Independent Directors Report
for the year ended 31 December 2019
The period from 1 January 2019 to date has marked some profound changes in the composition of
the Company’s board.
the Chairman, Oliver
It was with great sadness that we reported that
Degiorgio-Miller, passed away suddenly in October 2019. He was a key member of the board and
is greatly missed.
In more recent times, the former Chief Executive, Dr Satu Vainikka ceased to be a director, and
Chief Operating Officer, Dr George Morris, resigned. They had both been founder-directors of ValiRx
since 2006 and had made significant contributions to the selection of the drug candidates which still
form a large part of the Company’s drug development activities. We wish them well for the future.
Dr Suzanne Dilly has been appointed to the board as Chief Executive to take the Company forward
into the future. We were fortunate to have her as an employee within the Group, and for many
years she has been a member of our Senior Management Team. She is therefore very familiar with
the Company’s operations at the time of these significant changes to the board. Her familiarity with
the Company has permitted operations to continue with minimum disruption as is indicated in her
Chief Executive’s Report.
Martin Lampshire, an experienced small cap corporate financier who also knew the Company well,
joined the board in May and will be a valuable source of advice.
Finally, we have also been fortunate to attract a well-respected biotechnology professional, Dr Kevin
Cox, as the Non-Executive Chairman of the board. We look forward to working with him following
his appointment to the board.
The departures from the board led to some financial and organisational disruption but we have
been able to stabilise the situation. Since the year end, we have completed three share issues in
February, April and May 2020, raising an aggregate of approximately £1.4m, before expenses, and
the raising of
concluded a consolidation and subdivision of
capital.
the issued share capital
to permit
We very much look forward to the continued development of
implementation of an exciting and sustainable growth strategy.
the Company and supporting the
K Alexander
Director
Date: 30 June 2020
4
ValiRX Plc
Chief Executive’s Report
for the year ended 31 December 2019
After a brief period of transition at ValiRx, I am pleased to report on our progress over the period of
2019, and to reflect on the post period changes in the first half of 2020.
With the coronavirus SARs-CoV2 pandemic dominating world events in 2020, the public spotlight is
I find it hard to believe that any
on biotech and pharmaceuticals companies as never before.
investigative scientist has been able to resist considering their own area of science to understand
the challenges and help to search for solutions.
The area of drug repurposing, where drugs developed for one disease are recycled into another,
has become of particular interest as many known drugs are being tested for beneficial effects in
infection. In ValiRx, this technique is well known, with VAL401 being
patients affected by the viral
the repurposing of an anti-psychotic treatment
into being tested for use in oncology, and our
oncology therapeutic, VAL201 also being tested in endometriosis, as well as more latterly being
evaluated for use in patients following SARS-CoV2 infection.
The ongoing pandemic presents an unpredictable economic environment, which ValiRx faces with
renewed strength by the post-period changes on the board.
In particular, we look forward to
welcoming our new chairman, Dr Kevin Cox, and the strength his presence will contribute to the
board.
The reporting period saw scientific development in both VAL201 and VAL301, with the final patients
being recruited and dosed in the VAL201 clinical trial, and the clinical development plan for VAL301
being defined and developed, leading to a clearer understanding of the steps required.
Commercial development was ongoing for VAL401, with the post-period announcement of a Letter
Intent signed with UK SME, Black Cat Bio Limited (‘Black Cat’). This development could see
of
VAL401 move from the ValiRx Joint Venture subsidiary, ValiSeek Limited,
for
development using third party private financing.
into Black Cat
The current status of
review on 19 May 2020.
the scientific programs is shown below and was published as a scientific
Clinical Programs:
VAL201 has been subject to an open label Phase 1/2 clinical trial
in patients with prostate cancer
entitled: “A Phase I/II, Dose Escalation Study to Assess the Safety and Tolerability of VAL201
in Patients with Locally Advanced or Metastatic Prostate Cancer and Other Advanced Solid
Tumours”.
Brief details of this trial are disclosed below. Details can also be found on the Clinical Trials register
identifier number: NCT02280317; when results are available,
at www.clinicaltrials.gov, using trial
these will also be available within this database.
Recruitment open
End of Trial Documentation submitted
December 2014 – January 2020
27thJanuary 2020
Patients dosed
Single Site
12
UCLH (University College London Hospital, UK)
Eligible Patients:
Adult men (over the age of 18), with incurable locally advanced or metastatic prostate cancer
who have relapsed following radiotherapy treatment, are in ‘watchful waiting’ or where a policy of
intermittent hormone therapy had been decided. Patients were expected to have no or only mild
symptoms relating to their prostate cancer.
Primary endpoint:
“To estimate the Maximum Tolerated Dose (MTD) or Maximum Administered Dose (MAD) of VAL201”
This states the principal aim of the clinical trial as assessing how high a dose can or should be
given to the patient in order to attempt to elicit a disease relevant response. As a dose escalation
5
ValiRX Plc
Chief Executive’s Report
for the year ended 31 December 2019
trial, as is typical for first in human studies, the dose level was started at a fraction of the dose
tested in Pre-clinical studies (in this case 0.5 mg/kg – so a typical 80 kg adult man received 40 mg
per dose), and gradually increased to 8 mg/kg.
As well as assessing the tolerability of the dose (MTD) the trial considers the MAD, hence which
doses are practical
to give, based primarily on pharmacokinetics (a measure of how the body
processes the drug) – considering how long the drug stays in the body, at what level, and whether
that level continues to increase with increasing dose in a predictable manner.
Secondary endpoints:
“To assess the safety and tolerability of VAL201”
This endpoint requires a listing of adverse events that occur for each patient, regardless of whether
is related to either the drug or the disease. These events are categorised by
or not
whether
the
severity of
the drug; whether it
results in the patient stopping or reducing intake of
the drug; and how many patients the event
occurs in.
is they require significant medical
is likely to be related to administration of
that
the event; whether it
intervention to resolve;
they are “serious”,
the event
As previously reported, the most common event during VAL201 administration was the occurrence
of an injection site reaction, reported varyingly as bruising, rash or pain.
No drug-related events were reported that
prematurely from the clinical trial.
resulted in the patient being removed
“To evaluate the pharmacokinetics of VAL201”
Full pharmacokinetic profiles were successfully collected and analysed in two patients, on
different doses, at multiple time points during their dosing schedule. When the data has been
verified and entered into the database, this will be fully analysed to aid understanding of how the
drug behaves in the body.
“To assess anti-tumour activity of VAL201”
Although primarily a safety and tolerability focussed trial, the patients involved undergo continuous
monitoring of
trial participation). This
includes measurement of disease markers (such as PSA),
regular CT or MRI scans and
symptom assessments to assess disease progression.
their disease throughout (as they would have regardless of
Outlook
When the datasets have been formally verified and locked against further alteration, analysis and
success against each endpoint can be assessed. Until the analyses are complete it would be
premature to remark with confidence on the achievement or the content of any of the
endpoints.
Headline data will be released on completion of the initial analysis; after which the clinical study
report will be compiled and submitted to the relevant regulatory authorities;
the clinicialtrial.gov
database will be updated according to regulatory requirements; and finally details of the results will
be assembled into research papers – authored by ValiRx and the clinical trial team for publishing in
peer-reviewed journals.
Data verification requires access to the clinic by staff on our behalf, which is currently restricted due
is anticipated that headline
to the ongoing Coronavirus pandemic. Dependent on this access,
results will be available and announced in Q3. Reporting will
then be completed in line with
regulatory requirements.
it
VAL401
VAL401 has been developed by ValiSeek Limited, a 55% owned ValiRx subsidiary. ValiSeek was
set up in 2014 as a Joint Venture between ValiRx and Tangent Reprofiling Limited (a SEEK group
company) whereby ValiRx provided funding and Tangent Reprofiling provided a licence to the
patents for VAL401.
6
ValiRX Plc
Chief Executive’s Report
for the year ended 31 December 2019
VAL401 has completed an open label, pilot phase 2 clinical trial in late stage non-small cell
lung
cancer patients. Although in a small patient group, with just 8 patients receiving VAL401, data
indicated that some patients benefited from an improved quality of life, in particular in measures
of pain and nausea; and when compared to a case-matched group of 20 patients from the same
clinic who did not participate in the trial, demonstrated statistically significant improved overall
survival from time of diagnosis.
Pharmacokinetic data was collected in all patients, and the analysis of this data published in 2019
Eur J Drug Metab Pharmacokinet 44, 557–565 (2019). https://doi.org/10.1007/s13318-018-00538-4
A randomised, placebo controlled clinical trial has been planned to test VAL401 in recently
diagnosed patients with pancreatic ductal adenocarcinoma in combination with standard of care
therapy.
ValiRx recently announced (14thJanuary 2020) an arrangement with UK SME, Black Cat, whereby
on completion of successful
the VAL401 project will be exclusively
licenced to Black Cat with the ValiSeek shareholders each holding a share in the equity of Black
Cat; and the ValiSeek shareholders having an entitlement to future royalty payments.
fund-raising by Black Cat,
Under this agreement Black Cat would be solely responsible for the funding and execution of the
next VAL401 clinical trial.
Outlook
Confirmation of funding is expected within Q2 or Q3 2020, with licensing to be completed shortly after. If
this arrangement is unsuccessful, alternative exploitation will be sought.
Pre-clinical Programs
VAL301
VAL301 uses the same active drug as VAL201 but
endometriosis.
is focussed on the treatment of women with
On 4 July 2019 it was announced that Aptus Clinical had been engaged to work with ValiRx to
develop an outline of the work required to prepare VAL301 for a clinical trial.
Endometriosis typically affects women of child-bearing potential who are otherwise healthy, therefore
different Pre-clinical toxicology requirements are considered than were required for the clinical
trial of men with prostate cancer. Aptus has helped to identify these requirements, and to outline
appropriate clinical trial designs.
Outlook
On 1 May 2020 it was announced that a Japanese pharma company has agreed a Material Transfer
Agreement with ValiRx whereby ValiRx are supplying the VAL301 drug material, and the Japanese
company will carry out a series of Pre-clinical proof of concept and efficacy studies of VAL301.
VAL201 in treatment of patients following SARS-CoV2 infection
On 2 June 2020, ValiRx announced entering into a collaboration agreement with Oncolytika Limited
(“Oncolytika”) and Black Cat Bio Limited (“Black Cat”) to evaluation the potential use of VAL201 in a
combination treatment
for patients suffering a hyperimmune response to Coronavirus SARS-CoV2
infection.
Many patients infected with Coronavirus SARS-CoV2 exhibit more severe symptoms, with significant
damage believed to be caused by an excessive response of the immune system, even after the
viral infection has reduced. This is known as a hyperimmune response.
Oncolytika, a private UK based technical consultancy, has proposed a combination therapy which
includes a selective SRC kinase inhibitor, such as VAL201 (which inhibits a potential oncogenic
pathway), alongside one or two complementary treatments to treat the excessive response of the
immune system. Oncolytika and Black Cat have filed a patent to protect the proposed use of the
combination therapy.
ValiRx’s contribution to the collaboration is to provide samples of
its proprietary SRC kinase
inhibitor, VAL201, for preclinical testing, and provide access to safety and tolerability data collected
7
ValiRX Plc
Chief Executive’s Report
for the year ended 31 December 2019
in the recently completed clinical trial in men with prostate cancer. No cash funding is committed to
the project by ValiRx under this agreement.
Under this agreement, ValiRx will receive 40% of all
licensing income generated. The collaboration
addresses an emergent and immediate unmet medical need and details the commencement of a
short-term experimental plan, with the agreement covering a maximum of two years.
Non-core Programs
GeneICE
GeneICE is a technology platform designed to control expression levels of genes that may be
over or under expressed in disease states. VAL101 is the lead candidate produced by the platform,
proposed to modulate BCl2 expression – implicated in many cancers.
At an early discovery/Pre-clinical stage of development,
the GeneICE program requires further
significant scientific development. As announced on 30thApril 2020, GeneICE was considered a
“non-core” program and as announced on 16thJune 2020 will not be further maintained by the
Company.
TRAC
TRAC is a technology acquired by ValiRx for 75,000 Euros on 5 February 2015. Announced as
conditionally sold for 800,000 Euros on 7 July 2016, 202,000 Euros was received, and, following the
failure of the purchaser to settle the balance, the technology reverted to ValiRx in 2018, as reported
in the 2018 financial statements.
TRAC is a tool to study expression characteristics of genes and has potential use in the diagnostics
arena – and has been used by a previous owner as part of a commercial service provision. As
announced on 30thApril 2020, TRAC was considered a “non-core” program and was transferred
out of the ValiRx pipeline under the patent assignment announced on 29thMay 2020.
FitBio
The Intellectual Property assets acquired from FitBiotech Oy by ValiRx for 5,000 Euros on 2 May
2019 encompass a gene transfer unit, initially envisaged to be paired with the GeneICE products to
create potential therapeutic products. As announced on 30 April 2020, FitBio was considered a
“non-core” program and was transferred out of the ValiRx pipeline under the patent assignment
announced on 29 May 2020.
Financial overview
Our financial results show the total comprehensive loss for the year ended 31 December 2019 of
£2,388,707 (2018: £4,298,822) and a loss per share of 0.26p (2018: Loss 0.94p).
Research and developments costs were £984,457 for
compared to £1,698,791 in 2018, a decrease of £714,334.
the year ended 31 December 2019 as
Administrative expenses were £1,860,379 for the year ended 31 December 2019 as compared with
£2,166,798 in 2018, a decrease of £306,419
I would like to thank the staff and Board members for all their contributions and shareholders for
their continued support during these difficult times.
Dr S J Dilly
Director
Date: 30 June 2020
8
ValiRX Plc
Group Strategic Report
for the year ended 31 December 2019
The directors present the strategic report and financial statements for the year ended 31 December
2019.
It aims to make a significant contribution in precision medicine and science, namely,
Principal activities
therapeutics and associated biomarkers for
ValiRx is a biotechnology company developing novel
cancer.
to
engineer a breakthrough in human health and well-being, through the early detection of cancer and
its therapeutic intervention.
The Company listed on the Alternative Investment Market (“AIM”) of the London Stock Exchange in
October 2006.
STRATEGY
The Group has a pipeline of
therapeutic drugs, which are currently progressing towards clinical
trials. The product focus is in the targeted analysis and treatment of cancer, but the technologies
can potentially be applied to other fields as well, such as neurology and inflammatory diseases.
It actively manages projects within its portfolio as a trading company. The ValiRx business model
life science technology development by minimising financial exposure and
spreads the risks of
running a set of projects to defined commercial endpoints. This maximises returns to shareholders
by adding value at the earlier stages of drug development where value increases per investment
unit are the greatest.
The Group operates through the following divisional companies:
1.
ValiPharma is a biopharmaceutical division of ValiRx focused on developing personalised
medicines to bring more advanced therapeutic options for the treatment of cancer.
2.
Currently, ValiPharma is primarily focused on three drug candidates in both clinical and/or in
late stage pre-clinical development – androgen independent prostate cancer
(VAL201),
(VAL201), endometriosis (VAL301) and gene activity
hormone refractory prostate cancer
regulation (VAL101).
ValiSeek is ValiRx’s joint venture company with Tangent Reprofiling Limited (a SEEK group
company), which was formed in 2014 and has progressed product VAL401 through pre-clinical
lung
development and through a pilot Phase II clinical trial for the treatment of non-small cell
cancer. VAL401 is a reformulation of risperidone which has a well-established safety record
derived from decades of clinical use in the treatment of psychosis. The reformulation enables
anti-cancer activity, and this is the subject of multiple granted patents in US and other world
territories.
Business review
A review of the development and performance of the Group, including important events, progress
during the year, and likely future developments, can be found in the Chief Executive’s Report.
THERAPEUTICS
VAL201 Prostate Cancer
The Company’s leading anti-cancer therapeutic VAL201 is currently in clinical trials for the treatment
of prostate cancer and potentially other indications of hormone induced unregulated growth including
trial at University College London Hospital (UCLH) concluded on
endometriosis. The Phase I/II
27thJanuary 2020 and this follows the Company receiving approval
from the Medicines and
Healthcare products Regulatory Agency (MHRA) to escalate VAL201 dosing.
Progressing through the dose escalation and expansion stages,
the study is then designed to
investigate further safety and tolerability aspects as well as efficacy. Particular emphasis will be
placed on evaluating the pharmacokinetics, pharmacodynamics and early assessment of anti-tumour
activity in response to VAL201.
9
ValiRX Plc
Group Strategic Report
for the year ended 31 December 2019
VAL201 is designed to selectively prevent tumour growth by specifically inhibiting the proliferation of
tumour cells. As a result, tumour growth is suppressed, and metastasis is significantly reduced. The
approach is a targeted therapeutic with pre-clinical results indicating that due to the specific nature
of this treatment, VAL201 is likely to have less side effects than many other therapeutic options.
The target for VAL201 is also associated with other cancers and there is potential for VAL201 to be
used as a treatment for other hormone-induced cancers, such as breast and ovarian cancer.
Endometriosis
Endometriosis is a gynaecological medical condition in which cells from the lining of
the uterus
(endometrium) appear and flourish outside the uterine cavity lined by endometrial cells, which are
under the influence of female hormones. These endometrial-like cells in areas outside the uterus
(endometriosis) are influenced by hormonal changes and respond in a way that
is similar to the
cells found inside the uterus. Symptoms often worsen during the menstrual cycle. The treatments
chosen will depend on symptoms, age, and lifestyle plans. In pre-clinical testing, VAL201 has been
leaving other hormone-induced activities
shown to reduce abnormal endometrial growth, whilst
working normally. ValiRx’s initial pre-clinical results show a reduction in endometrial
lesion size
directly related to dose and two generations of offspring produced by treated animals. This strongly
suggests that the peptide does not affect fertility in the same way as other treatments.
VAL 401 Lung Cancer
VAL401 is the reformulation of a generic drug that has over 20 years of clinical use for treatment of
a chronic non-oncology disease in an oral capsule. The re-formulation allows the drug to access
trial
previously unexploited anti-cancer activity. VAL401 has completed a clinical Phase II
for the
treatment of
indicating a
lung cancer with data from the completed trial
palliative effect and an improvement of quality of life in the patients treated.
late-stage non-small cell
Progress of VAL401 through its clinical trials will follow an accelerated route to Market Authorisation
through the use of prior clinical data gathered on the original generic drug. Pre-clinical efficacy data
lung, pancreatic and prostate cancers. Pre-clinical toxicology
has been collected in non-small cell
has revealed no side effects beyond those expected from the parent drug, with both pre-clinical and
clinical pharmacokinetc data allowing bridging from VAL401 to the historical
full clinical data
package on the parent. ValiSeek is currently in discussions with potential partners for starting the
next clinical trial.
SECTION 172(1) STATEMENT
Each Director is required by the Companies Act 2006 to act in the way they consider, in good faith,
would be most likely to promote the success of the Company for the benefit of its members as a
whole and in doing so are required to have regard for the following:
— the likely long-term consequences of any decision;
— the interests of the Company’s employees;
— the need to foster the Company’s business relationships with suppliers, customers and others;
— the impact of the Company’s operations on the community and the environment;
— the desirability of
conduct; and
the Company maintaining a reputation for high standards of business
— the need to act fairly as between shareholders of the Company.
In 2018, the Company adopted the Corporate Governance Code for Small and Mid-Sized Quoted
Companies from The Quoted Companies Alliance (the “QCA Code”). The QCA Code is an
appropriate code of conduct for the Company’s size and stage of development. In the Corporate
Governance Report, on page 15 are comments regarding the application of the ten principles of the
in the Corporate Governance
QCA Code. Some s.172 considerations are addressed in more detail
Report.
10
ValiRX Plc
Group Strategic Report
for the year ended 31 December 2019
The Board considers the Company’s major stakeholders to include employees, suppliers, partners
and shareholders. When making decisions, the interest of each stakeholder group individually and
collectively is considered. Certain decisions require more weight attached to some stakeholders
than others and while generally seeing the long-term interest of
the shareholders is of primary
importance, the directors consider those interests are best served by having regard to the interests
of the other key stakeholder groups and, in fact, to all the s. 172 considerations.
Long term value
The aim of all business resources allocation is to create long-term value, being the development
and commercialisation of novel drugs.
The Chief Executive’s Report on page 5 describes the Company’s activities, strategy and future
prospects. Some s. 172 considerations are also addressed in the Chief Executive’s Report,
including the considerations for long term decision making.
Our people
Given the size of the Company and the nature of its business, there are only a few employees of
which the majority are themselves directors. The Board considers the Company’s employees
essential to the success of the Company.
Business relationships
The Group endeavours to maintain good relationships with its suppliers by contracting on their
standard business terms and paying them promptly, within agreed and reasonable terms.
Community and environment
As a relatively small organisation the Group’s impact on the community and the environment
modest but
environmentally conscious manner.
is
the business acts ethically and in an
the Board endeavours to ensure that
Business conduct
The Board recognises its responsibility for setting and maintaining a high standard of behaviour and
information is
business conduct. There is no special treatment for any stakeholders and all material
disseminated though appropriate channels and is available to all through the company’s corporate
presentations, news releases and website, www.ValiRx.com. This is described in more details in the
Corporate Governance Report Principle 8.
Shareholders
its decision-making
The Directors are committed to treating all shareholders equally. As part of
process,
the Board considers the interests of shareholders as a whole. All shareholders are
provided with equivalent information through RNS announcements, circulars and the ValiRx website.
All shareholders are invited to attend the Annual General Meeting and have the opportunity to ask
questions of
the Directors. For more information see Principles 2 and 3 in the Corporate
Governance Report.
11
ValiRX Plc
Group Strategic Report
for the year ended 31 December 2019
PRINCIPAL RISKS AND UNCERTAINTIES
ValiRx is a biopharmaceutical Group and, in common with other companies operating in this field, is
to a number of risks and uncertainties. The principal risks and uncertainties identified by
subject
ValiRx for the year ended 31 December 2019 are below.
Risk
Description
Mitigation
its
clinical
The Group manages
and
regulatory risk by working closely with its
external expert scientific,
regulatory and
clinical advisors and, where appropriate,
seeking advice from regulatory authorities
on the design of key development plans for
its pre-clinical and clinical programmes.
is
to
on
and
likely
depend
Successful commercialisation of ValiRx’s
products
its
successful progress through clinical studies,
licensing and/or partnering and registration.
The Group’s
include major
competitors
companies,
pharmaceutical
multinational
biotechnology
research
companies
institutions. Many of
its competitors have
substantially greater financial, technical and
other resources, such as larger numbers of
research
staff.
Competition that may lead to third parties
discovering or developing products earlier
or more successfully than ValiRx, may also
the Company’s ability to secure
impair
funding,
trials and
to advance its clinical
have a successful
relationship with a co-
development partner.
development
and
As at 31 December 2019,
the Group had
cash resources of £nil. Following the year
end, the Company has raised approximately
three
£1.4m, before expenses, by way of
Placings.
Research
development
and
Commercial
Cash flow
of
the
and
design
The Group is at a relatively early stage of
in
development and may not be successful
its efforts to use and to build a pipeline of
product candidates and develop approved
or marketable products. The success of the
Group’s programmes depends upon the
the
quality
implementation of each programme. The
Group utilises a range of external scientific,
regulatory and clinical experts to help guide
its development programmes. The progress
of
the development programmes therefore
represents the best indicator of the Group’s
performance. Successful commercialisation
of the Group’s products is likely to depend
through clinical
on successful progress
licensing and or partnering and
studies,
registration.
product
Development
candidates involves a lengthy and complex
process and products may not meet
the
necessary requirements in terms of toxicity,
efficacy or safety, or the relevant regulators
may not agree with the conclusions of
the
Group’s research and may require further
testing or withhold approval altogether.
of
induced
hormone
ValiRx has products in clinical trials and is
dependent on successfully advancing these
to
lead candidates. They include VAL201,
and
treat
abnormal
re-
purposed compound to treat non-small cell
through the Clinical Trial
lung cancer,
pathway. The business model
is to ensure
these compounds with
future partnering of
larger co-development partners.
and VAL401,
cancers
growth
a
from
The Group has a history of operating
losses which are anticipated to continue
until the Group is able to generate sufficient
development
revenues
the Group may
programmes. However,
need to seek further capital
through equity
or debt financings in the future and if this is
not successful, the financial condition of the
Group may be adversely affected.
its
12
ValiRX Plc
Group Strategic Report
for the year ended 31 December 2019
Risk
Description
Mitigation
Clinical trials
Regulatory
its
clinical
The Group manages
and
regulatory risk by working closely with its
and, where
expert
appropriate, seeking advice from bodies on
clinical and regulatory risk relevant
to the
Group’s programmes and activities.
regulatory
advisors
through
studies
of
clinical
Development
Successful commercialisation of the Group’s
products is dependent on the successful
and
progress
product
registration.
candidates involves an expensive,
lengthy
and complex process and products may not
meet
the necessary requirements in terms
of toxicity, efficacy or safety, or the relevant
regulators may
the
not
the Group’s research and
conclusions of
may require further
testing or withhold
approval altogether.
agree with
Clinical trials could be delayed or prevented
from completion by a number of
factors,
including:
–
–
–
–
–
–
–
–
–
delays or
funding;
failures to raise additional
results of
MHRA, EMA, FDA and/or
regulatory bodies;
future meetings with the
other
a limited number of, and competition
for, suitable patients with particular
types of cancer for enrolment
in our
clinical trials;
failures
delays
or
regulatory approval
clinical trial;
in
obtaining
to commence a
delays
in
sufficient clinical materials;
failures
or
obtaining
protocol amendments;
failure of patients to complete the
clinical trial;
the need to expand the clinical trial;
unforeseen safety issues.
the Group’s clinical
Additionally,
trials may
be suspended or terminated at any time by
the MHRA, other regulatory authorities, or
by the Group itself. Any failure to complete,
or a significant delay in completing, clinical
the Group’s product candidates
trials for
could harm the commercial prospects for its
product
its
financial results.
candidates,
therefore,
and
and
The Group’s operations are subject to laws,
regulatory
certain
approvals
governmental directives,
recommendations
and guidelines relating to, amongst other
things, product health claims, occupational
safety,
the use and
handling of hazardous materials, prevention
environmental
of
protection and human clinical studies. There
can be no assurance that future legislation
government
will
laboratory practice,
impose
further
illness
injury,
and
not
13
The Group manages its regulatory risk by
working closely with its expert
regulatory
advisors and, where appropriate, seeking
risk
advice from bodies on regulatory
to the Group’s programmes and
relevant
activities.
ValiRX Plc
Group Strategic Report
for the year ended 31 December 2019
Risk
Description
Mitigation
regulation, which may adversely affect
the
business or financial condition of the Group.
Intellectual
property
Operational
Return on
investment
Environmental
matters
its
and
intellectual
The Group’s success depends,
in part, on
its ability to obtain and maintain protection
for
proprietary
information, so that it can stop others from
making, using or selling its inventions or
proprietary
patent
applications may not be granted, and its
existing patent
rights may be successfully
challenged and revoked.
rights. The Group’s
The Group’s continuing development and
future prospects depend to a significant
degree on the experience, performance and
continued service of its senior management
including the Directors. The Group
team,
has invested in its management team at all
levels. The Directors also believe that
the
senior management
team is appropriately
structured for the Group’s size and is not
overly
particular
individual. The Group has entered into
contractual
these
arrangements
individuals with the aim of securing the
them. Retention of
services of each of
the identification of
these individuals or
suitable replacements, however, cannot be
guaranteed.
dependent
upon
with
any
team and
the services of any of
the
The loss of
the senior
Directors or other members of
management
of
costs
the
recruiting replacements may have a material
adverse effect on the Group and its
commercial and financial performance and
reduce the value of an investment
in the
Ordinary Shares.
The drug development process is inherently
risky and is conducted over several years
and consequently is costly. Many drug
candidates fail
in development due to the
clinical and regulatory risks, and even in
those circumstances where drugs are sold,
licensed or partnered prior to or subsequent
to potential or actual approval, sales levels
can be disappointing due to competition,
healthcare
intellectual
property challenges. As a result, the returns
achieved may be insufficient
the
costs incurred.
regulation
to cover
and/or
The Board is committed to minimising the
Group’s impact on the environment and
environmental
ensuring
compliance with
its
legislation. The Board considers that
activities have a low environmental
impact.
to ensure that all
The Group strives
emissions
of
including
the
gaseous,
liquid and solid waste products
are controlled in accordance with applicable
disposal
14
this
property
intellectual
in maintaining and
The Group invests
to
protecting
the enforceability and
reduce risks over
the Group’s patents. The Group
validity of
works closely with its legal advisors and
obtains where necessary opinions on the
intellectual property landscape relevant
to
the Group’s programmes and activities.
The Board continually monitors these risks
and uncertainties
corrective
and
action if considered necessary.
takes
looks
to mitigate
the
The Group
risk
by
development
commercial
and
late-stage
partnering drug candidates for
development
commercialisation. By
and
partnering in this way, part of the risk profile
is reduced and the cost to the Company of
programme development is minimised.
its
The Group recognises
responsibility
towards the environment and in the way it
conducts its business. It works closely with
all its expert scientific advisors to ensure its
compliance with environmental
legislation
and to ensure that all emissions including
liquid and solid
the disposal of gaseous,
in
products
waste
controlled
are
ValiRX Plc
Group Strategic Report
for the year ended 31 December 2019
Risk
Description
Mitigation
legislation and regulations. Disposal of
hazardous waste is handled by specialist
agencies.
accordance with applicable legislation and
regulations.
of
the
the
effect
distancing
We have implemented the following to
mitigate
disruption
including: Organising for as many staff as
Improved
possible to work from home;
social
physical
limiting
by
meetings and 2expanding flexible working;
Utilising any central or regional Government
funding available to support businesses
during the pandemic; Banning international
travel
travel;
Increasing supplier contact so as to be able
to anticipate issues and react quickly;
Increasing cleaning and disinfection cycles
domestic
limiting
and
Coronavirus
(COVID-19)
Pandemic
disruption
significant
in the short
The rapid emergence of
the coronavirus
pandemic since the start of 2020 has
caused
to many
businesses and has created uncertainty in
the market
term. Government
action is having a significant effect on
economies across the world. The eventual
severity
economic
disruption is impossible to forecast. There
is a risk that we will be forced to suspend
that we
research and development, or
source
cannot
for
ship
leading to delay in completion of
analysis,
projects.
samples
length
and
and
the
of
ON BEHALF OF THE BOARD:
G Desler
Director
Date: 30 June 2020
15
ValiRX Plc
Corporate Governance
for the year ended 31 December 2019
The Board recognises that good corporate governance is essential to building a successful business that is
sustainable for the long term.
The Corporate Governance Statement that follows, explains how our governance framework works and how the
Group has applied the 10 principles of the QCA Code this year.
Corporate Governance Statement
We are again able to report full compliance with each of the 10 principles of the Quoted Companies Alliance
the
Corporate Governance Code (QCA Code) and that our governance framework continues to ensure that
Group operates effectively and with integrity. As well as ensuring compliance with the QCA Code, we also
continue to monitor any developments in the UK Corporate Governance Code to keep abreast of matters which
we feel should also be considered for an AIM company like ourselves, and this year, we have considered the
Company’s purpose, ensuring that it is aligned to our values, strategy and culture.
The Board has adopted the Quoted Companies Alliance Corporate Governance Code (QCA Code). The Board
believes that this Code provides an appropriate and suitable governance framework for a Group of our size
and complexity.
This Corporate Governance Statement addresses how the Group complies with each of the 10 principles of the
QCA Code.
Principle
How Company complies
1.
a
Establish
strategy and
business model
which promote
long-term value
for shareholders
a
is
ValiRx
focused
personalised, otherwise called precision medicines
advanced therapeutic options for the treatment of cancer.
biopharmaceutical
company
on
developing
to bring more
For many years the Company has progressively exploited its proprietary
epigenomic technology, which has led to the discovery of promising
therapeutics that may prove in clinical
trials to treat, among other
conditions, cancer safely and more effectively than currently used
chemotherapeutics, which act
indiscriminately, attacking the whole body
and causing irreparable damage to normal cellular processes.
ValiRx has four lead drug candidates at varying stages of development
for multiple indications. The Company’s business model focuses on out-
licensing therapeutic candidates early in the development process. By
aiming for early-stage value creation,
the Company reduces costs
considerably while increasing the potential for realising value. The Group
is already in licensing discussions with major players in the oncology
field. ValiRx operates through the following divisional companies:
ValiPharma: a biopharmaceutical company
focused on developing
personalised medicines to bring more advanced therapeutic options for
the treatment of cancer. Currently, ValiPharma is primarily focused on
three drug candidates in clinical and late stage pre-clinical development
for four indications – androgen independent prostate cancer (VAL201),
hormone refractory prostate cancer
(VAL201), endometriosis (VAL301),
and pancreatic cancer (VAL101); and
ValiSeek: a joint venture company with Tangent Reprofiling Limited (a
SEEK group company), which was formed in 2014 and has progressed
product VAL401 through pre-clinical development and into a Phase II
clinical trial for the treatment of non-small cell lung cancer.
ValiRx’s therapeutics have each shown potential
for meeting hitherto
unmet clinical needs by existing treatments, have worldwide patent filings
and agreed commercial rights. They originate or derive from World class
institutions, such as Cancer Research UK and Imperial College.
16
ValiRX Plc
Corporate Governance
for the year ended 31 December 2019
Principle
How Company complies
2.
Seek to
understand and
meet
shareholder
needs and
expectations
responsible for
The Board is accountable to shareholders and other stakeholders and is
ultimately
sound corporate
the Group. Our Board of Directors is
governance practices throughout
committed to ensuring that
the Group adheres to high standards of
corporate governance in the conduct of its business.
the implementation of
The Board attaches considerable importance to providing shareholders
with clear and transparent information on the Group’s activities, strategy,
and financial position. Details of all shareholder communications are
provided on the Group’s website.
Company’s
Private shareholders constitute the main body of investors in ValiRx. As
such,
the Board regards the annual general meeting as the principal
opportunity for shareholders to meet and discuss the Group’s business
with the Directors. There is an open question and answer session during
which shareholders may ask questions both about the resolutions being
proposed and the business in general. The Directors are also available
after the meeting for an informal discussion with shareholders. Moreover,
the
details
the
website:
https://
Questions@valirx.com
www.ValiRx.com/contact-us/contact/
to
communicate with the Board. Announcements on the Group’s half and
the
full-year results presenting all shareholders with an assessment of
Group’s position and prospects are found on https://www.ValiRx.com/aim-
rule-26/annual-reports/. Shareholders vote on each resolution, by way of a
poll. For each resolution we announce the number of votes received for,
against and withheld and subsequently publish them on our website.
contact
info@ValiRx.com,
shareholders
provided
should
wish
and
are
on
The Directors actively seek to build a mutual understanding of objectives
with institutional shareholders. The Chair and CEO make presentations to
institutional shareholders and analysts immediately following the release
the full-year and half-year results. We communicate with institutional
of
investors frequently through a combination of formal meetings, roadshows
and informal briefings with management.
The majority of meetings with shareholders and potential
investors are
arranged by the Company’s broker. Following meetings,
the broker
provides feedback to the Board from all fund managers met, from which
sentiments, expectations and intentions may be gleaned.
In addition, we review analysts’ notes to achieve a wide understanding of
investors’ views.
customers,
The Board recognises its prime responsibility under UK corporate law is
to promote the success of the Company for the benefit of its members as
a whole. The Board also understands that it has a responsibility towards
employees, partners,
suppliers, and the patients who
ultimately benefit
from its research and drug development programmes.
Our corporate social
these
responsibility approach continues to meet
it has a responsibility to
expectations. The Board also understands that
take into account, where practicable,
the social, environmental and
economic impact of its approach.
Responsibility for the Company’s corporate activities lies with the Senior
Management Team (“SMT”) who set the Group’s strategic approach and
develop key policies. The Company engages with stakeholders through a
number of channels, which include shareholder communications via the
17
3.
Take into
account wider
stakeholder and
social
responsibilities
and their
implications for
long-term
success
ValiRX Plc
Corporate Governance
for the year ended 31 December 2019
Principle
How Company complies
Regulatory News Service (“RNS”), the Company’s website and its Annual
Report & Accounts, results presentations and the Annual General Meeting
and via interviews in the broadcast media and attendance at
investor
shows around the country.
through these
Corporate communication and shareholder engagement
channels not only gives shareholders a deeper
into and
understanding of the Company’s activities and of its development, but it
also invites feedback, either face-to-face at such meetings or via email,
on how the Company can improve its communications with stakeholders
to better support their needs. By so doing, such engagement enables the
SMT to more effectively work with stakeholders in the future to their
mutual advantage. The Board receives formal feedback from the SMT on
a quarterly basis on the nature of interaction with the stakeholders they
meet during each period.
insight
the Chief Executive Officer and the Chief
The SMT is comprised of
Financial Officer who take leading roles in key strategic areas such as
Gender, HR, and Environmental Management. The SMT is also
responsible for ensuring global compliance with key internal and external
policies including:
–
–
–
–
Anti-human trafficking and slavery policy
Diversity policy
Anti-corruption and bribery policy
Whistleblowing policy- UK modern slavery act.
4.
Embed effective
risk
management,
considering both
opportunities
and threats,
throughout the
organisation
according
risk management
in place and
An important aspect of
consistently work
unambiguous Standard Operating
Procedures (SOPs). A SOP is a compulsory instruction to carry out a
series of operations correctly and always in the same manner, avoiding
the integrity of scientific
deviations or non-conformances to ensure that
investigations and drug manufacture are consistently maintained.
is to put
to
an
ValiRx operates
internal Quality Management System (QMS)
comprising 14 SOPs to comply with the most stringent quality standards
expected of a drug development company. Furthermore,
the Company
regularly audits its suppliers to ensure the manufacturing process, quality
process, and also the drug’s shipment process all conform to the
standard required.
18
ValiRX Plc
Corporate Governance
for the year ended 31 December 2019
SOP
Title
Description
001
002
003
004
005
006
Quality Management
SOP describes the QMS, its structure and maintenance at ValiRx.
ValiRx Organisation and
Training
SOP describes the organisation of ValiRx as a company, and the
internal training programme.
Clinical Project
Management
SOP describes the general process by which ValiRx manages and
coordinates the development programme for an Investigational
Medicinal Product (IMP).
Document Review and
Approval
SOP describes the general process by which ValiRx reviews and
approves essential documents in support of product development
activities.
Document Management,
Filing and Archiving
SOP describes the general process by which ValiRx Plc manages,
files and archives essential documents in support of product
development activities.
Selection and
Management of
Vendors/Consultants
SOP describes the process followed at ValiRx to identify, select
and manage external service providers.
007
Contracts
008
Investigational Medicinal
Product Management
009
Investigator’s Brochure
010
Safety Reporting
SOP describes the process followed at ValiRx to ensure
appropriate contracts and agreements are in place with vendors or
consultants, and that these are put in place in a timely manner.
SOP describes the general process for ValiRx to establish that a
chain of custody is maintained and documented for the supply of
Investigational Product for a clinical trial from release from the
manufacturer site, shipment, delivery and receipt at an
investigational site, accountability, and then for return or
destruction of used/unused product.
SOP describes the process for ValiRx to prepare and maintain an
Investigator’s Brochure, including review process.
SOP describes the responsibilities for reporting of safety
information from clinical trials to Competent Authorities, Ethics
Committees, Investigators and other parties as appropriate.
011
012
013
014
Clinical Trial
Transparency
SOP describes the process for ValiRx to follow when registering
clinical trials and posting trial results in order to fulfil requirements.
Medical Monitoring of
Clinical Trials
SOP describes the role of the Medical Monitor (MM) in maintaining
and documenting safety oversight and pharmacovigilance during
clinical trials.
Risk Management, Issue
Escalation and
Management of
Corrective and
Preventative Actions
(CAPA)
Management of Non-
compliance and Serious
breaches
SOP describes the processes implemented by ValiRx to manage
risk, escalate issues and ensure Corrective and Preventative
Actions (CAPA) are in place for all clinical studies where ValiRx is
the Sponsor.
SOP describes the procedures for identifying, documenting and
reporting non-compliance, misconduct and serious breaches of
the trial protocol and associated approved documents, and the
principles of Good Clinical Practice (GCP), SOPs and all
applicable regulatory requirements.
19
ValiRX Plc
Corporate Governance
for the year ended 31 December 2019
Principle
How Company complies
5. Maintain
the
board as a well-
functioning,
balanced team
led by the chair
Board Composition – The Board currently consists of
two Executive
Directors, one proposed Non-Executive Chairman, and two Non-Executive
Directors, who collectively hold scientific, financial,
legal, and business
experience necessary to advance the Company and apply corporate
governance best practices. The Board is satisfied with its composition
and the balance between Executive and Non-Executive Directors. These
are:
Dr Kevin Cox (Non-Executive Chairman – appointed 26 June 2020)
Dr Suzanne Dilly (Chief Executive Officer – appointed 8 June 2020)
Gerry Desler (Chief Financial Officer)
Kevin Alexander (Independent Non-Executive Director)
Martin Lampshire (Non-Executive Director – appointed 7 May 2020)
the Board
by meeting
the management
During the year under review, the following were also directors:
Oliver De Giorgio-Miller (Non-Executive Chairman – Died 21 October
2019)
Dr Satu Vainikka (Chief Executive Officer – Ceased to be a director
14 April 2020)
Dr George Morris (Chief Operating Officer – Resigned 14 April 2020)
Role of CEO – Leads and manages the day-to-day running of
the
Group’s business in accordance with the business plans and within the
to ensure
budgets approved by the Board;- Leads the management
effective working
or
relationships with
communicating on a regular basis to review key developments,
issues,
the Group’s
opportunities and concerns;- Develops and proposes
strategies and policies for the Board’s consideration;- Implements, with
the strategies and policies as
the support of
team,
the Group’s
approved by the Board and its committees in pursuit of
objectives;- Maintains regular dialogue with the Chairman on important
and strategic issues facing the Group, and ensures bringing these issues
to the Board’s attention;- Ensures that the management gives appropriate
priority to providing reports to the Board which contain relevant, accurate,
timely and clear information necessary for the Board to fulfil
its duties;-
Ensures that the Board is alerted to forthcoming complex, contentious or
sensitive
communication
the Group-
programme with stakeholders including shareholders;- Conducts the
the Group in accordance with the practices and procedures
affairs of
adopted by the Board and promotes the highest standards of
integrity,
probity and corporate governance within the Group
Role of the Non-Executive Directors – As members of the Board, all
Non-Executive directors have key accountabilities, which include the
following:- Provision of entrepreneurial leadership of the Company within a
framework of prudent and effective controls, which enable risk to be
assessed and managed;- Setting the Company’s strategic aims, ensure
the necessary financial and human resources are in place for the
that
Company to meet its objectives, and review management performance;-
Setting the Company’s values and standards and ensure that
its
obligations to shareholders are understood and met;- Constructively
challenge and help develop strategy, participate actively in the decision-
making process of
the Board, and scrutinise the performance of
management in meeting agreed goals and objectives; and
affecting
issues
Leads
the
20
ValiRX Plc
Corporate Governance
for the year ended 31 December 2019
Principle
How Company complies
the Director
Independence – The Board will
identify in the annual report each Non-
it considers to be independent. The Board will
Executive Director
determine whether
in character and
independent
is
judgement and whether there are relationships or circumstances which
the Director’s judgement.
are likely to affect, or could appear to affect,
is
The Board will state its reasons if
or
independent
circumstances which are relevant
the
Director:
it determines that a Director
existence
relationships
including if
to its determination,
notwithstanding
the
of
–
–
–
–
–
–
Has been an employee of the Company or Group within the last five
years;
Has, or has had within the last
relationship with the Company either directly, or as a Director or
senior employee of a body that has such a relationship with the
Company;
three years, a material business
Has received or receives additional remuneration from the Company
apart from a Director’s fee;-
Has received or receives additional remuneration from the Company
apart from a Director’s fee;- Has close family ties with any of the
Company’s advisers, directors or senior employees;- Holds cross-
directorships or has significant links with other directors through
involvement in other companies or bodies; or
Has served on the Board for more than nine years form the date of
their first election;
Has a close family tie with any of the Company’s advisers, Directors
or senior employees.
Role of Board Committees The Board has established three
committees: remuneration, audit and risk and nomination and governance.
these committees have terms of reference, which set out clearly
All of
their
or make
is
role,
recommendations to the Board of Directors. These are available on the
Company’s website:
stating whether
decisions
take
to
it
6.
that
Ensure
between them
the directors
have the
necessary up-to-
date experience,
skills and
capabilities
(https://www.ValiRx.com/aim-rule-26/corporate-governance/).
the Directors can be found on the Company
Biographical details of
website at https://www.ValiRx.com/about-us/board-directors/. ValiRx seeks
to recruit the best candidates at Board level and considers candidates on
merit and against objective criteria and with due regard for the benefits of
diversity on the Board (including gender),
taking care that appointees
have the necessary experience and time available to allocate to the
position. Each Director appointed by the Board is subject to election by
the shareholders at
their appointment. Following
advice from the Nomination and Governance Committee, the Board has
concluded that each Director is qualified for election or re-election.
the first AGM after
The current Board members are individuals with extensive industry-
specific experience as well as professionals that bring to the Board the
its strategic, operational and compliance
skill sets required to meet
objectives. Their suitability as Directors has therefore been determined
largely on the basis of their ability to deliver outcomes in accordance with
21
ValiRX Plc
Corporate Governance
for the year ended 31 December 2019
Principle
How Company complies
the Company’s short and longer-term objectives and thus add value to
shareholders.
7.
board
Evaluate
performance
based on clear
and relevant
objectives,
seeking
continuous
improvement
the Chief Executive,
ValiRx considers that assessments of the performance of the Board, the
the Company Secretary and
Board Committees,
to good
the individual Non-Executive Directors are pivotal
each of
corporate governance, bringing significant benefits and performance
improvements on three levels: organisational; board and individual
level. Establishing an effective process for board evaluation
member
to the organisation that board members are
sends a positive signal
committed to acting professionally.
Performance assessments are conducted annually across the board,
applying a matrix of key areas of focus to identify collective and individual
continuous
strengths
improvement.
and weaknesses within
the Company
for
Board Composition:
–
–
–
–
–
–
–
–
–
–
Appropriate ratio between Executive and Independent Directors;
responsibilities at
Awareness of social, professional and legal
individual, company and community level;
ability to identify independence conflicts;
applies sound professional judgement;
identifies when external counsel should be sought;
upholds Board confidentiality;
respectful in every situation;
Effective in working within defined corporate communications
policies;
makes constructive and precise contribution to the Board both
verbally and in written form;
Negotiation skills to engender stakeholder support for implementing
Board decisions; and- Experienced with the mechanisms, controls
and channels to deliver effective governance and manage risks.
Effectiveness of the Board of Directors in:
–
–
–
–
–
–
–
Monitoring financial performance against agreed financial objectives;
Monitoring the implementation of
Board;
the strategy approved by the
Appointing, removing and monitoring the performance of
Executive Officer, Chief Financial Officer and Company Secretary;
the Chief
Ensuring appropriate succession planning for Board members and
senior management via the Nomination and Governance Committee;
Approving and monitoring financial and other reporting;
Approving
management, funding, acquisitions and divestments;
and monitoring major
capital
expenditure,
capital
Overseeing risk management, control, accountability and compliance
systems;
22
ValiRX Plc
Corporate Governance
for the year ended 31 December 2019
Principle
How Company complies
–
–
–
–
–
Setting standards of behaviour
Company in the market and the community;
to enhance the reputation of
the
Ensuring proper organisation and management so as to achieve
conformity goals across all aspects of the business;
Setting appropriate delegated powers between CEO and Board of
Directors;
Ensuring quality and continuity of
members of Committees, managers and heads of control functions;
and
Setting clear strategy for the Company reflecting goals short to mid-
long term.
relations with the Group CEO,
Effectiveness of Executive Management in:
–
–
–
–
–
–
–
–
Implementing the strategic objectives set by the Board;
Operating within the risk parameters set by the Board;
Operational and business management of the Company;
Managing the Company’s reputation and operating performance in
accordance with parameters set by the Board;
The day-to-day running of the Company;
Providing the Board with accurate,
enable the Board to perform its responsibilities;
timely and clear information to
Interfacing with shareholders and stakeholders, Nomad and Broker;
and
Approving capital expenditure (except acquisitions) within delegated
authority levels.
Structure and competency of Committees to:
–
–
–
Advise the Board on the suitability of external auditors and critical
accounting policies for financial reports, in particular YE audited
accounts, and the Company’s risk management and internal control
systems;
Provide independent and transparent pay arrangements linked to
achievements over a given period; and
Lead the Board appointment and succession planning process
considering the requirements of the Company.
The Board understands the importance of setting the right culture for a
biotechnology oncology-focused Company specialising in developing novel
treatments for cancer that will provide a breakthrough into human health
and wellbeing through the early detection of cancer and its therapeutic
the Company’s strategies and
intervention. Moreover,
requirements for excellence and good governance are instilled into the
culture of our business. The Executive Directors interface regularly with all
personnel within ValiRx.
In this way we encourage them to take
responsibility for advancing their projects within parameters and controls
set by the Board. This approach creates a culture that motivates and
enables our personnel
to develop and express their talents and skills.
Moreover, in the performance of its duties the Board listens to the views
it ensures that
23
8.
Promote a
corporate
culture that is
based on ethical
values and
behaviours
ValiRX Plc
Corporate Governance
for the year ended 31 December 2019
Principle
How Company complies
9. Maintain
governance
structures and
processes that
are fit for
purpose and
support good
decision-making
by the board
10. Communicate
how the
company is
governed and is
performing by
maintaining a
dialogue with
shareholders
and other
relevant
stakeholders
of key stakeholders,
suppliers and is mindful of the potential impacts of decisions it makes.
including scientists, clinicians,
regulators and
The Board of Directors, with the support of
the Executive Management
and Committees, is ultimately responsible for establishing and maintaining
good standards of governance. This can be achieved by creating
that enhance overall Board’s and individual Directors’
conditions
effectiveness in order
that all key issues are addressed, and sound
decisions are taken in a timely manner.
Other responsibilities of the Board of Directors include:
–
–
–
–
–
Promoting effective relationships and open communication, and
creates an environment that allows constructive debates and
challenges, both inside and outside the boardroom, between Non-
Executive Directors and the management;
Ensuring that
the Board as a whole plays a full and constructive
part in the development and determination of the Group’s strategies
and policies, and that Board decisions taken are in the Group’s best
interests and fairly reflect Board’s consensus;
in consultation with the Chief Executive and Company
Setting,
Secretary, the Board meeting schedule and agenda to take full
account of the important issues facing the Group and the concerns
of all Directors, and ensures that adequate time is available for
thorough discussion of critical and strategic issues;
the strategies and policies agreed by the Board are
Ensuring that
effectively implemented by the Chief Executive and the
management; and
there is effective communication with shareholders,
Ensuring that
and that each Director develops and maintains an understanding of
the stakeholders’ views.
on
risk
and
strategy,
judgment
performance.
is assessed at
The Board recognises the importance of sound corporate governance.
The Board is satisfied with its composition. The Non-Executive Director
brings a wide range of skills and experience to the Company, as well as
The
independent
independence of each Non-Executive Director
least
annually and are considered to be independent at the date of this report.
Attendance at Board meetings – A minimum of
ten (10) Board
meetings are held each year at which it
is expected that all Directors
attend in addition to relevant Committee meetings, General Meetings and
the Annual General Meeting. Where Directors are unable to attend
meetings due to conflicts in their schedules, they will receive the papers
scheduled for discussion in the relevant meetings, giving them the
opportunity to relay any comments to board members in advance of the
meeting. Directors are required to leave the meeting where matters
relating to them, or which may constitute a conflict of
to them,
are being discussed.
The following table shows the Directors’ attendance at scheduled Board
meetings, which they were eligible to attend in the 12-month period to
December 2019:
interest
24
ValiRX Plc
Corporate Governance
for the year ended 31 December 2019
Principle
How Company complies
10. Communicate
how the
company is
governed and is
performing by
maintaining a
dialogue with
shareholders
and other
relevant
stakeholders
Oliver de Giorgio-Miller 11/11 (Died 21 October 2019)
Dr Satu Vainikka 10/11 (Ceased to be a director 14 April 2020)
Dr George Morris 9/11 (Resigned 14 April 2020)
Gerry Desler 11/11
Kevin Alexander 11/11
Matters reserved for the Board
–
–
–
–
–
–
–
–
–
Approval of
framework;
the Group vision, values and overall governance
the Company’s Annual Report and Accounts and Half
Approval of
Yearly Financial Statements;
Approval of Group financial policy;
Approval to enter into discussions with Biotech companies reference
potential joint-partnering projects or licensing of Company’s Pre-
clinical and clinical assets;
the Company’s long-term finance plan and annual
Approval of
capital budget;
Approval of any significant change in Group accounting policies or
practices;
Approval
corresponding documentation sent to shareholders;
listing particulars,
circulars,
all
of
resolutions
and
Establishing committees of
reference (including membership and financial authority), reviewing
their activities and, where appropriate, ratifying their decisions;
the Board, approving their
terms of
Approval of this schedule of Matters Reserved to the Board.
The Board is responsible to the Company’s shareholders with its main
objective to increase the value of assets and long-term sustainability of
the Company. The Board reviews business opportunities and determines
It also makes decisions on budgets,
the risks and control
day-to day
Group strategy
management of the business is delegated to the Executive Directors.
expenditure. The
and major
framework.
capital
The Board meets monthly with agendas, Committee papers and other
appropriate information distributed prior
to each meeting to allow the
Board to meet its duties. Effective procedures are in place to deal with
conflicts of interest. The Board knows other interests and commitments of
Directors and any changes to their commitments are reported.
In addition to the Executive Committee,
the Board has established a
Remuneration Committee, an Audit and Risk Committee, and a
into ValiRx’s
Nomination and Governance Committee, which also report
Board.
the Company for approval by the Board.
The Executive Committee is in charge of the daily management of the
Group and is mandated to prepare and plan the overall policies and
strategies of
It may approve
intra-group transactions, provided that
they are consistent with the
the Company, as well as specific
consolidated annual budget of
transactions with third parties provided that
the cost per transaction is
within specified spending limits. It informs the Board at its next meeting
on each such transaction. Prior to the beginning of each fiscal year, the
25
ValiRX Plc
Corporate Governance
for the year ended 31 December 2019
Principle
How Company complies
Executive Committee submits to the Board those measures that it deems
necessary to be taken in order to meet the objectives of the Company
and a consolidated budget for approval. This committee comprises:
Gerry Desler (Chief Financial Officer)
Dr Suzanne Dilly (Chief Executive Officer)
The Audit and Risk Committee meets at least twice per annum and is
responsible for assisting the Board in carrying out
its oversight
responsibilities in relation to corporate policies, risk management, internal
control, internal and external audit and financial and regulatory reporting
practices. The Committee has an oversight
function, providing a link
between the external auditors and the Board; it also determines the terms
of engagement of the Company’s auditors. The current members of the
Audit and Risk Committee are:
Gerry Desler (Executive Chief Financial Officer); and
Kevin Alexander (Non-Executive Director)
least
remuneration policies applied throughout
The Remuneration Committee meets at
twice per annum to
determine and agree with the Board the framework or broad policy for the
remuneration of executive directors of the Company and advises on the
overall
the Company. The
this committee is to attract, retain and motivate executives
objective of
capable of delivering the Company’s objectives. Agreed personal
objectives and targets including financial and non-financial metrics are set
each year
the executive directors and other personnel and
performance measured against these metrics. The committee is made up
of Non-Executive Directors, namely:
for
Kevin Alexander (Non-Executive Director)
Martin Lampshire (Non-Executive Director)
The Chief Executive Officer is consulted on remuneration packages and
policy but does not attend discussions regarding her own package. The
Board determines the remuneration and terms and conditions of
the
appointment of Non-Executive Directors.
the selection and proposal
The Nomination Committee is a sub-committee of
the whole Board
responsible for
to the Board of suitable
candidates for appointment as Executive and Non-Executive Directors
The Committee may engage external search consultants to identify
candidates for Board vacancies before recommending a preferred
candidate to the Board for consideration. The Committee comprises:
Kevin Alexander (Non-Executive Director)
Gerry Desler (Chief Financial Officer)
The Directors present
ended 31 December 2019.
their report and financial statements for the year
26
ValiRX Plc
Report of the Directors
for the year ended 31 December 2019
DIVIDENDS
No dividends will be distributed for the year ended 31 December 2019.
RESEARCH AND DEVELOPMENT
The Group will continue its policy of investment in research and development. In accordance with
International Financial Reporting Standards (IFRS), during the year
the Group expensed to the
income statement £984,457 (2018: £1,698,791) on research and development. Further details on
the Group’s research and development are included in the Chief Executive’s Report on page 7.
FUTURE DEVELOPMENTS
Details of future developments can be found in the Strategic Report on pages 12 to 15.
EVENTS SINCE THE END OF THE YEAR
Information relating to events since the end of
statements.
the year
is given in note 22 to the financial
DIRECTORS
The Directors shown below have held office during the whole of the period from 1 January 2019 to
the date of this report.
K J Alexander
G Desler
Other changes in directors holding office are as follows:
M Lampshire
Dr S J Dilly
Dr K Cox
Dr G S Morris
Dr S Vainikka
— Appointed 7 May 2020
— Appointed 8 June 2020
— Appointed 26 June 2020
— Resigned 14 April 2020
— Ceased to be a director 14 April 2020
It is with deep regret that the Board announced the passing of O De Giorgio-Miller on 21 October
2019.
DIRECTORS’ SHAREHOLDINGS
The Directors of the Company held the following beneficial
Company at the balance sheet date:
interests in the ordinary shares of the
K J Alexander
O De Giorgio-Miller (Died 21 October 2019)
G Desler
Dr G S Morris (Resigned 14 April 2020)
Dr S Vainikka (Ceased to be a director 14 April 2020)
2019
No. of
shares
2018
No. of
shares
104,278
N/A
1,875,208
1,821,620
1,958,242
104,278
1,392,888
1,875,208
1,821,620
1,958,242
27
ValiRX Plc
Report of the Directors
for the year ended 31 December 2019
DIRECTORS’ SHARE OPTIONS
The Directors of
the Company share option
scheme, as indicated below. No share options were exercised during the year. Full details of the
share options held are disclosed in note 25 to the financial statements.
the Company held share options granted under
K J Alexander
O De Giorgio-Miller (Died 21 October 2019)
G Desler
Dr G S Morris (Resigned 14 April 2020)
Dr S Vainikka (Ceased to be a director 14 April 2020).
2019
No. of
shares
2018
No. of
shares
3,041,800
N/A
3,589,760
3,716,000
4,311,000
3,045,000
3,305,000
3,592,960
3,722,000
4,319,000
COMPANY SHARE PRICE
The market value of the Company’s shares at 31 December 2019 was 0.12p and the high and low
share prices during the period were 1.13p and 0.12p respectively.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Note 26 to the financial statements gives details of
management of financial instruments.
the Group’s objectives and policies for risk
SIGNIFICANT SHAREHOLDERS
As at 2 June 2020, so far as the Directors are aware, the following shareholders held more than
3% of the Company’s issued share capital:
Nicholas Slater
Monecor (London) Limited
M J Bown
% of issued
share
capital held
9.1%
7.7%
6.6%
DIRECTORS’ INSURANCE
The Directors and officers of
them for any
wrongful act in their capacity as a Director, officer or employee of the Group, subject to the terms
and conditions of the policy.
the Company are insured against any claims against
CREDITOR PAYMENT POLICY
The company’s current policy concerning the payment of trade creditors is to:
— settle the terms of payment with suppliers when agreeing the terms of each transaction;
— ensure that suppliers are made aware of
the terms of payment by inclusion of
the relevant
terms in contracts; and
— pay in accordance with the company’s contractual and other legal obligations.
On average, trade creditors at the year-end represented 152 days’ purchases.
STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS
So far as the Directors are aware, there is no relevant audit information (as defined by Section 418
the Companies Act 2006) of which the Group’s auditors are unaware, and each Director has
of
taken all the steps that he or she ought to have taken as a Director in order to make himself or
28
ValiRX Plc
Report of the Directors
for the year ended 31 December 2019
herself aware of any relevant audit information and to establish that the Group’s auditors are aware
of that information.
AUDITORS
The auditors, Adler Shine LLP, will be proposed for
General Meeting.
ON BEHALF OF THE BOARD:
re-appointment at
the forthcoming Annual
G Desler
Director
Date: 30 June 2020
29
ValiRX Plc
Statement of Directors’ Responsibilities
for the year ended 31 December 2019
The Directors are responsible for preparing the Strategic Report, Directors’ Report, Corporate
Governance Statement and the Group and Parent Company financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare Group and Parent Company financial statements for
each financial year. The Directors are required by the AIM Rules of the London Stock Exchange to
prepare Group financial statements in accordance with International Financial Reporting Standards
(“IFRS”) as adopted by the European Union (EU) and have elected under company law to prepare
the Parent Company financial statements in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards and applicable law).
The group financial statements are required by law and IFRS adopted by the EU to present fairly
the financial position and performance of the Group; the Companies Act 2006 provides in relation to
to financial statements
such financial statements that references in the relevant part of
giving a true and fair view are references to their achieving a fair presentation.
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 Group and Parent Company
and of the profit or loss of the Group for that period. In preparing each of the Group and Parent
Company financial statements the Directors are required to:
— select suitable accounting policies and then apply them consistently;
— make judgements and estimates that are reasonable and prudent;
— for the Group financial statements, state whether they have been prepared in accordance with
IFRSs as adopted by the EU, subject to any material departures disclosed and explained in
the financial statements;
that Act
— for
the Parent Company financial statements, state whether
they have been prepared in
accordance with UK GAAP, subject to any material departure disclosed and explained in the
Parent Company financial statements; and
— prepare the financial statements on the going concern basis unless it
presume that the Group and the Parent Company will continue in business.
is inappropriate to
the Parent Company and enable them to ensure that
The Directors are responsible for keeping adequate accounting records that are sufficient to show
and explain the Parent Company’s transactions and disclose with reasonable accuracy at any time
the financial position of
the financial
statements comply with the requirements of the Companies Act 2006. They are also responsible for
safeguarding the assets of
the Group and the Parent Company and hence for taking reasonable
steps for the prevention and detection of fraud and other irregularities.
The maintenance and integrity of the Company’s website is the responsibility of the Directors. The
Directors’ responsibility also extends to the ongoing integrity of the financial statements contained
therein. The Directors are responsible for ensuring the annual report and the financial statements
are made available on a website. Financial statements are published on the Company’s website in
accordance with legislation in the United Kingdom governing the preparation and dissemination of
financial statements, which may vary from legislation in other jurisdictions.
30
ValiRX Plc
Report of the Independent Auditors
to the Members of ValiRX Plc
Opinion
We have audited the financial statements of ValiRx Plc (the ‘Parent Company') and its subsidiaries
(the ‘Group') for the year ended 31 December 2019 on pages 31 to 58. The financial reporting
framework that has been applied in the preparation of the Group financial statements is applicable
law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
The financial reporting framework that has been applied in the preparation of the Parent Company
financial statements is applicable law and United Kingdom Accounting Standards (United Kingdom
including FRS 102 “The Financial Reporting Standard
Generally Accepted Accounting Practice)
applicable in the UK and Republic of Ireland.
In our opinion:
— the financial statements give a true and fair view of the state of the Group’s and of the Parent
Company’s affairs as at 31 December 2019 and of the Group’s loss for the year then ended;
— the Group financial statements have been properly prepared in accordance with IFRSs as
adopted by the European Union;
— the Parent Company financial statements have been properly prepared in accordance with
United Kingdom Generally Accepted Accounting Practice – FRS 102; and
— the financial statements have been prepared in accordance with the requirements of
the
Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK))
and applicable law. Our responsibilities under those standards are further described in the Auditors’
responsibilities for the audit of the financial statements section of our report. We are independent of
the group 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, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Material uncertainty relating to going concern
We draw your attention to note 2 to the financial statements, which indicates that the accounts have
been prepared on the going concern basis. The Board has referred to the fact
the company is
reliant on future fund raisings to continue its activities as budgeted. Should future fund raisings be
impact on the group and company’s plans to develop its products. As stated
unsuccessful, this will
in note 2, this condition indicates that a material uncertainty exists that may cast significant doubt
on the group and company’s ability to continue as a going concern. Our opinion is not modified in
respect of this matter.
Key audit matters
judgment, were of most significance in
Key audit matters are those matters that, in our professional
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
resources in the audit; and
the greatest effect on:
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.
The key audit matters identified were:
the overall audit strategy,
the allocation of
Impairment of goodwill and intangibles
Area of focus
The Group has goodwill of £1.6m and intangible assets of £1.6m.
31
ValiRX Plc
Report of the Independent Auditors
to the Members of ValiRX Plc
indefinite-lived
IAS 36 requires at
intangible assets and intangible assets that are not yet ready for use, with more regular assessment
should an impairment trigger be identified.
impairment assessments in relation to goodwill,
least annual
The determination of recoverable amount, being the higher of value-in-use and fair value less costs
of disposal, requires judgement on the part of management in identifying and then estimating the
recoverable amount for the relevant CGUs
Recoverable amounts are based on management’s view of future cash flow forecasts and external
market conditions such as future pricing and the most appropriate discount rate.
Management engaged an expert
impairment assessment
which included the assumptions and estimates around the success of the future development and
commercialisation of its products VAL 201, VAL101 and VAL 401. Changes in these assumptions
might give rise to a change in the carrying value of intangibles and goodwill.
them in performing an annual
to assist
How our audit addressed the area of focus
We obtained the report prepared by the expert and gained an understanding of
the key
assumptions and judgements underlying the assessment. We assessed the appropriateness of the
methodology applied and tested the mathematical accuracy of the models.
We obtained an understanding of the stage of product development and management’s expected
including updates on the achievement of expected
timelines for product commercialisation,
milestones.
We determined the judgement made by the Directors that no impairment was required, and that the
disclosures made in the financial statements to be reasonable.
to note 2 of
Going concern
Area of focus
related accounting
Refer
they have a reasonable
policies,
the Group will have sufficient cash resources and cash inflows to continue its
expectation that
activities for not less than twelve months from the date of approval of these financial statements
and have therefore prepared these financial statements on a going concern basis.
judgements and estimates. The directors have concluded that
the directors’ disclosures of
the financial statements for
The Group had cash and cash equivalents of £nil at 31 December 2019. Since the year end, the
Company has raised £1.4m through the placing of new ordinary shares.
Management produces a cash flow forecast based on the board plans.
The key judgements within the cash flow forecast that we particularly focused on were:
— The continued availability of funding.
— The likely recovery of other receivables.
— Cash flows expected from research and development tax credits.
— Flexibility of development programme.
How our audit addressed the area of focus
We assessed the reasonableness and support
forecast, as well as the sensitivity of projections to these judgements.
We reviewed managements financing plans and as the Company is reliant on future fund raisings to
continue as a going concern this represents a material uncertainty as disclosed further in note 2 of
the financial statements.
the judgments underpinning management’s
for
We considered the reasonableness of
reduction actions, should future fund raisings be lower than anticipated.
Our conclusion on management’s use of the going concern basis of accounting is included in the
going concern section of the report above.
the assumptions within management’s proposed cost
32
ValiRX Plc
Report of the Independent Auditors
to the Members of ValiRX Plc
Our application of materiality
When establishing our overall audit strategy, we set certain thresholds which help us to determine
the nature, timing and extent of our audit procedures and to evaluate the effects of misstatements,
both individually and on the financial statements as a whole. During planning we determined a
the financial
magnitude of uncorrected misstatements that we judge would be material
statements as a whole (FSM). During planning FSM was calculated as £93,600, which was updated
during the course of our audit to £101,200 based on an average of 5% of adjusted loss before tax
and 3% of net assets. We agreed with the Audit Committee that we would report
to them all
unadjusted differences in excess of £5,000, as well as differences below those thresholds that, in
our view, warranted reporting on qualitative grounds.
for
the audit
An overview of the scope of our audit
team obtained sufficient and appropriate audit
The audit was scoped to ensure that
evidence in relation to significant operations of
the Group during the year ended 31 December
2019. This included the performance of full statutory audits on each of the subsidiary undertakings.
As part of our planning we assessed the risk of material misstatement including those that required
significant auditor consideration at the component and group level. Procedures were designed and
performed to address the risk identified and for the most significant assessed risks of material
misstatement, the procedures performed are outlined above in the key audit matters section of this
report.
Other information
The directors are responsible for
information comprises the
information in the Annual Report but does not include the financial statements and our Report of
the Auditors thereon.
Our opinion on the financial statements does not cover the other information and, except
to the
extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion
thereon.
information. The other
the other
the financial statements, our responsibility is to read the other
In connection with our audit of
information and, in doing so, consider whether the other information is materially inconsistent with
the financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
inconsistencies or apparent material misstatements, we are required to
If we identify such material
in the financial statements or a material
determine whether
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.
there is a material misstatement
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
— the information given in the Group Strategic Report and the Report of
the Directors for the
financial year for which the financial statements are prepared is consistent with the financial
statements; and
— the Group Strategic Report and the Report of the Directors have been prepared in accordance
with applicable legal requirements.
33
ValiRX Plc
Report of the Independent Auditors
to the Members of ValiRX Plc
Matters on which we are required to report by exception
In the light 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 Group Strategic Report or the Report of the Directors.
the knowledge and understanding of
We have nothing to report
requires us to report to you if, in our opinion:
— adequate accounting records have not been kept by the parent company, or returns adequate
the following matters where the Companies Act 2006
in respect of
for our audit have not been received from branches not visited by us; or
— the parent company financial statements are not in agreement with the accounting records and
returns; or
— certain disclosures of directors’ remuneration specified by law are not made; or
— we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the Statement of Directors’ Responsibilities set out on page 26,
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 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.
Auditors’ 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 a Report of
the Auditors 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
they could reasonably be expected to influence the
material
economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at www.frc.org.uk/auditorsresponsibilities. This description
forms part of our Report of the Auditors.
individually or in the aggregate,
if,
34
ValiRX Plc
Report of the Independent Auditors
to the Members of ValiRX Plc
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of
Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to
the company’s members those matters we are required to state to them in a Report of the Auditors
and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company and the company’s members as a body, for our
audit work, for this report, or for the opinions we have formed.
Christopher Taylor (Senior Statutory Auditor)
for and on behalf of Adler Shine LLP
Chartered Accountants & Statutory Auditor
Aston House
Cornwall Avenue
London
N3 1LF
Date: 30 June 2020
35
ValiRX Plc
Consolidated Statement of Profit or Loss and Other Comprehensive Income
for the year ended 31 December 2019
CONTINUING OPERATIONS
Other operating income
Research and developments
Administrative expenses
OPERATING LOSS
Fair value loss on derivative financial assets
Provision for bad debt
Finance costs
LOSS BEFORE INCOME TAX
Income tax credit
LOSS AFTER INCOME TAX
Non-controlling interest
Notes
2019
£
2018
£
7
6
7
8
146,517
(984,457)
(1,860,379)
(2,698,319)
—
—
(21,175)
–
(1,698,791)
(2,166,798)
(3,865,589)
(442,229)
(506,755)
(14,565)
(2,719,494)
293,738
(4,829,138)
461,296
(2,425,756)
37,049
(4,367,842)
69,020
TOTAL COMPREHENSIVE LOSS FOR THE YEAR
(2,388,707)
(4,298,822)
LOSS PER SHARE – BASIC AND DILUTED
10
(0.26p)
(0.94)p
36
ValiRx Plc (Registered number: 03916791)
Consolidated Statement of Financial Position — continued
31 December 2019
ASSETS
NON-CURRENT ASSETS
Goodwill
Intangible assets
Property, plant and equipment
Investments
CURRENT ASSETS
Trade and other receivables
Tax receivable
Cash and cash equivalents
TOTAL ASSETS
EQUITY
SHAREHOLDERS’ EQUITY
Called up share capital
Share premium
Merger reserve
Reverse acquisition reserve
Share option reserve
Retained earnings
Non-controlling interests
TOTAL EQUITY
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Bank overdraft
Borrowings
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
Notes
2019
£
2018
£
11
12
13
14
15
16
17
1,602,522
1,620,207
—
—
1,602,522
1,623,950
—
—
3,222,729
3,226,472
90,083
291,787
—
174,089
461,193
372,872
381,870
1,008,154
3,604,599
4,234,626
9,417,225
20,596,143
637,500
602,413
830,449
(29,729,817)
8,680,694
19,779,905
637,500
602,413
885,963
(27,461,771)
2,353,913
(130,813)
3,124,704
(93,764)
2,223,100
3,030,940
18
16, 19
19
1,182,084
5,634
193,781
889,987
—
313,699
1,381,499
1,203,686
3,604,599
4,234,626
The financial statements were approved by the Board of Directors on 30 June 2020 and were
signed on its behalf by:
G Desler
Director
37
ValiRx Plc (Registered number: 03916791)
Consolidated Statement of Financial Position
31 December 2019
ASSETS
NON-CURRENT ASSETS
Intangible assets
Property, plant and equipment
Investments
CURRENT ASSETS
Trade and other receivables
Tax receivable
Cash and cash equivalents
TOTAL ASSETS
EQUITY
SHAREHOLDERS’ EQUITY
Called up share capital
Share premium
Merger reserve
Share option reserve
Retained earnings
TOTAL EQUITY
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Bank overdraft
Borrowings
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
Notes
2019
£
2018
£
12
13
14
15
16
17
100,000
—
3,617,838
120,000
–
3,617,834
3,717,838
3,737,834
2,954,352
270,346
—
2,788,478
421,700
372,190
3,224,698
3,582,368
6,942,536
7,320,202
9,417,225
20,596,143
637,500
830,449
(26,119,974)
8,680,694
19,779,905
637,500
885,963
(24,111,988)
5,361,343
5,872,074
18
16, 19
19
1,381,641
5,771
193,781
1,134,429
–
313,699
1,581,193
1,448,128
6,942,536
7,320,202
The financial statements were approved by the Board of Directors on 30 June 2020 and were
signed on its behalf by:
G Desler
Director
38
ValiRx Plc
Consolidated Statement of Changes in Equity
for the year ended 31 December 2019
Notes
Share
capital
£
Share
premium
£
Merger
reserve
£
Reverse
acquisition
reserve
£
Share-
based
payment
reserve
£
Non-
controlling
interest
£
Retained
earnings
£
Total
£
Balance at
1 January 2018
Changes in equity
Loss for the year
Issue of shares
Costs of shares issued
Lapse of share options
and warrants
Movement in year
Balance at
31 December 2018
Changes in equity
Loss for the year
Issue of shares
Costs of shares issued
Lapse of share options
Movement in year
Balance at
31 December 2019
8,432,708
16,419,494
637,500
602,413
464,000
(24,744)
(23,378,744)
3,152,627
—
247,986
—
—
3,861,177
(500,766)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(69,020)
—
—
(4,298,822)
—
—
(4,367,842)
4,109,163
(500,766)
(215,795)
637,758
—
—
215,795
—
—
637,758
8,680,694
19,779,905
637,500
602,413
885,963
(93,764)
(27,461,771)
3,030,940
17
—
736,531
—
—
—
—
1,105,969
(289,731)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(120,661)
65,147
(37,049)
—
—
—
—
(2,388,707)
—
—
120,661
—
(2,425,756)
1,842,500
(289,731)
—
65,147
9,417,225
20,596,143
637,500
602,413
830,449
(130,813)
(29,729,817)
2,223,100
Merger reserve
The merger reserve of £637,500 exists as a result of the acquisition of ValiRx Bioinnovation Limited.
The merger reserve represents the difference between the nominal value of the share capital issued
by the Company and the fair value of ValiRx Bioinnovation at 3 October 22, the date of acquisition.
Reverse acquisition reserve
The reverse acquisition reserve exists as a result of the method of accounting for the acquisition of
ValiRx Bioinnovation Limited and ValiPharma Limited.
39
ValiRx Plc
Company Statement of Changes in Equity
for the year ended 31 December 2019
Notes
Share
capital
£
Share
premium
£
Merger
reserve
£
Share-
based
payment
reserve
£
Retained
earnings
£
Total
£
8,432,708
16,419,494
637,500
464,000
(20,218,087)
5,735,615
—
247,986
—
—
3,861,177
(500,766)
—
—
—
—
—
—
—
—
—
—
—
—
(4,109,696)
—
—
(4,109,696)
4,109,163
(500,766)
(215,795)
637,758
215,795
—
—
637,758
8,680,694
19,779,905
637,500
885,963
(24,111,988)
5,872,074
17
—
736,531
—
—
—
—
1,105,969
(289,731)
—
—
—
—
—
—
—
—
—
—
(120,661)
65,147
(2,128,647)
—
—
120,661
—
(2,128,647)
1,842,500
(289,731)
—
65,147
9,417,225
20,596,143
637,500
830,449
(26,119,974)
5,361,343
Balance at
1 January 2018
Changes in equity
Loss for the year
Issue of shares
Costs of shares issued
Lapse of share options
and warrants
Movement in year
Balance at
31 December 2018
Changes in equity
Loss for the year
Issue of shares
Costs of shares issued
Lapse of share options
Movement in year
Balance at
31 December 2019
Share capital
The nominal value of the issued share capital.
Share premium account
Amounts received in excess of
associated with the issue of shares.
the nominal value on the issue of share capital
less any costs
Merger reserve
The difference between the nominal value of the share capital
value of ValiRx Bioinnovation at the date of acquisition.
issued by the Company and the fair
Share option reserve
The fair value of the share-based payment, determined at the grant date, and expensed over the
vesting period.
Retained earnings
Accumulated comprehensive income for the year and prior periods.
40
Notes
1
ValiRx Plc
Consolidated Statement of Cash Flows
for the year ended 31 December 2019
Cash flows from operations
Cash outflow from operations
Interest paid
Tax credit received
Net cash outflow from operating activities
Cash flows from investing activities
Proceeds from sale of investments
Purchase of intangible fixed assets
Net cash outflow from investing activities
Cash flows from financing activities
Loan repayments
Share issue
Costs of shares issued
Net cash inflow from financing activities
Decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
2
2
2019
£
2018
£
(1,801,714)
(3,093)
463,144
(3,776,840)
(866)
424,197
(1,341,663)
(3,353,509)
146,517
(396,776)
—
(324,028)
(250,259)
(324,028)
(138,000)
1,576,000
(224,584)
(25,000)
3,720,000
(346,001)
1,213,416
3,348,999
(378,506)
372,872
(328,538)
701,410
(5,634)
372,872
41
ValiRX Plc
Notes to the Consolidated Statement of Cash Flows
for the year ended 31 December 2019
1.
RECONCILIATION OF OPERATING LOSS TO CASH GENERATED FROM OPERATIONS
Operating loss
Amortisation and impairment of intangible assets
Decrease/(increase) in trade and other receivables
Increase/(decrease) in trade and other payables
Profit on sale of investments
Other non-cash movements
Share-based payments charge
2019
£
(2,698,319)
400,519
84,006
346,097
(146,517)
—
212,500
2018
£
(3,865,589)
142,988
(31,996)
(504,279)
—
(957)
482,993
Net cash outflow from operations
(1,801,714)
(3,776,840)
2.
CASH AND CASH EQUIVALENTS
The amounts disclosed on the Statement of Cash Flows in respect of cash and cash
equivalents are in respect of these Statement of Financial Position amounts:
Cash and cash equivalents
Cash and cash equivalents
31 December
2019
£
1 January
2019
£
(5,643)
372,872
31 December
2018
£
1 January
2018
£
372,872
701,410
42
ValiRX Plc
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
1.
2.
STATUTORY INFORMATION
ValiRx Plc is a company incorporated in the United Kingdom under the Companies Act 1985,
which is listed on the AIM market of
its
registered office is Stonebridge House, Chelsmford Road, Hatfield Heath, CM22 7BD.
the London Stock Exchange Plc. The address of
The registered number of the Company is 03916791.
The principal activity of the Group is the development of oncology therapeutics and companion
diagnostics.
The presentation currency of the financial statements is the Pound Sterling (£).
ACCOUNTING POLICIES
Basis of preparation
The Group financial statements have been prepared in accordance with International Financial
Reporting Standard as adopted by the European Union ('IFRSs'),
International Financial
Reporting Interpretations Committee ('IFRIC')
interpretations and the Companies Act 2006
applicable to companies reporting under IFRS.
The Group financial statements have been prepared under the historical cost convention or fair
value where appropriate.
Going concern
As part of their going concern review the Directors have followed the guidelines published by
the Financial Reporting Council entitled “Guidance on the Going Concern Basis of Accounting
and Reporting on Solvency Risks – Guidance for directors of companies that do not apply the
UK Corporate Governance Code”.
The Group and Parent Company are subject
to a number of risks similar to those of other
development stage pharmaceutical companies. These risks include, amongst others, generation
of revenues in due course from the development portfolio and risks associated with research,
development,
its pipeline products.
the attainment of profitable operations is dependent on future uncertain events
Ultimately,
which include obtaining adequate financing to fulfil the Group’s commercial and development
activities and generating a level of revenue adequate to support the Group’s cost structure.
testing and obtaining related regulatory approvals of
The current economic environment
is challenging, and the Group has reported an operating
loss for the year. These losses will continue in the current accounting year to 31 December
2020.
there are significant uncertainties around the impact of
the COVID-19 pandemic
In addition,
including the extent and duration of social distancing measures,
the
closure of academic institutions and the impact on the economy. Management has considered
the current economic uncertainty and market volatility caused by the COVID-19 outbreak.
In
assessing whether the going concern assumption is appropriate, management has reviewed
the impact on the business to date and developed a range of downside scenarios that could
impact the business together with mitigating actions.
the inability to travel,
In the downside scenarios a liquidity shortfall would result. Accordingly, a series of cost saving
and cashflow measures have been implemented. These actions include, temporary pay cuts,
delaying non-essential capital expenditure and tightening of working capital. This is
supplemented by additional funding in respect of share placings, explained further in note 22.
The net proceeds of the placings have been used to strengthen the Group’s balance sheet,
working capital and liquidity position.
regular
fund-raising exercises in order
The company carries out
it can provide the
necessary working capital for the Group. Further funds will be required to finance the Group’s
the Group has raised
work programme. As detailed in note 22, since the year end,
approximately £1.4m before expenses through 3 issues of new ordinary shares. The board
funding as and when required to cover the Group’s
expects to continue to raise additional
development, primarily from the issue of further shares.
that
43
ValiRX Plc
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
the approval of
the Directors have made assumptions based upon their view of
forecasts and cash flows looking beyond
The Directors have prepared detailed financial
these financial statements. In developing these
12 months from the date of
forecasts,
the current and
future economic conditions that are expected to prevail over the forecast period. The Directors
estimate that the cash held by the Group together with known receivables will be sufficient to
support
level of activities into the fourth quarter of 2020. The Directors are
continuing to explore sources of finance available to the Group and based upon initial
discussions with a number of existing and potential
investors they have a reasonable
expectation that they will be able to secure sufficient cash inflows for the Group to continue its
activities for not less than 12 months from the date of approval of these financial statements;
they have therefore prepared the financial statements on a going concern basis.
the current
Basis of consolidation
The Group financial statements consolidate the financial statements of the Company and all its
subsidiaries (“the Group”). Subsidiaries include all entities over which the Group has the power
to govern financial and operating policies. The existence and effect of potential voting rights
that are currently exercisable or convertible are considered when assessing whether the Group
controls another entity. Subsidiaries are consolidated from the date on which control
commences until the date that control ceases. Intra-group balances and any unrealised gains
and losses on income or expenses arising from intra-group transactions, are eliminated in
preparing the consolidated financial statements.
the
On 3 October 2006, ValiRx Bioinnovation Limited ('Bioinnovation') acquired 60.28% of
issued share capital of ValiPharma Limited ('ValiPharma')
in exchange for shares in
Bioinnovation. Concurrently, the Company, (“ValiRx”), acquired the entire issued share capital
of Bioinnovation in a share for share transaction. As a result of these transactions, the former
shareholders of ValiPharma became the majority shareholders in ValiRx. Accordingly,
the
substance of
the transaction was that ValiPharma acquired ValiRx in a reverse acquisition.
Under IFRS 3 “Business Combinations”, the acquisition of ValiPharma has been accounted for
as a reverse acquisition.
In May 2008 the Company acquired the remaining 39.72% of
the issued share capital of
ValiPharma, which is now wholly owned by the Group. This acquisition was accounted for
using the acquisition method of accounting.
In November 2013 ValiSeek Limited was formed to enable the company to enter into a joint
venture agreement. The company has a 55.5% holding in the issued share capital of ValiSeek.
Goodwill
Goodwill on acquisition of subsidiaries represents the excess of the cost of acquisition over
the fair value of
liabilities
acquired. Identifiable assets are those which can be sold separately, or which arise from legal
rights regardless of whether those rights are separable. Goodwill on acquisition of subsidiaries
is included in intangible assets. Goodwill
is tested annually, or when
trigger events occur, for impairment and is carried at cost less accumulated impairment losses.
the identifiable net assets and contingent
the Group’s share of
is not amortised but
Other intangible assets
Acquired licences,
straight-line basis over their useful
16 – 20 years.
trademarks and patents are capitalised at cost and are amortised on a
life. Patents are amortised over 16 years and licences over
Impairment of non-current assets
At each reporting date,
the Directors review the carrying amounts of property, plant and
equipment assets, goodwill and other intangible assets to determine whether there is any
indication that those assets have suffered an impairment loss. If any such indication exists, the
recoverable amount of
the
is estimated in order
impairment loss (if any). Where the asset does not generate cash flows that are independent
to determine the extent of
the asset
44
ValiRX Plc
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
from other assets, the Directors estimate the recoverable amount of the cash-generating unit to
which the asset belongs. Recoverable amount is the higher of fair value less costs to sell and
value in use.
the estimated future cash flows are discounted to their present
In assessing value in use,
value using a pre-tax discount rate that reflects current market assessments of the time value
of money and the risks specific to the asset for which the estimates of future cash flows have
not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated
to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is
reduced to its recoverable amount. An impairment
loss is recognised as an expense
immediately.
Property, plant and equipment
Property, plant and equipment are stated at cost less depreciation.
Depreciation is provided at the following rates per annum to write off the cost of property, plant
and equipment, less estimated residual value, on a straight-line basis from the date on which
they are brought into use:
Plant and machinery
Computer equipment
33% per annum straight line
33% per annum straight line
Financial assets
The Company classifies its financial assets in the following categories:
— financial assets at fair value through profit or loss;
— loans and receivables;
— held-to-maturity investments; and
— available-for-sale financial assets.
Management determines the classification of its investments at initial recognition.
Loans and receivables
These assets are non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market. The principal financial assets of the Company are loans and
receivables. They are included in current assets, except
for maturities greater than twelve
months after the balance sheet date. These are classified as non-current assets.
The Group’s loans and receivables are recognised and carried at
their original
amount less a provision for impairment. A provision is made when collection of the full amount
is no longer considered possible.
The Group’s loans and receivables comprise trade and other receivables and cash and cash
equivalents.
the lower of
Cash and cash equivalents
Cash and cash equivalents include cash at bank and in hand and short-term deposits with an
original maturity of
three months or less. The Company considers overdrafts (repayable on
demand) to be an integral part of its cash management activities and these are included in
cash and cash equivalents for the purposes of the cash flow statement.
Derivative financial instruments
Derivative financial
contract
value recognised in the Income Statement.
instruments are initially recognised at
is entered into and are subsequently carried at
fair value on the date a derivative
fair value with the changes in fair
45
ValiRX Plc
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
Financial liabilities
The Group does not have any financial
the profit or loss. Therefore, all financial liabilities are classified as other financial liabilities.
The Group’s financial
recognised at their original amount.
liabilities that would be classified as fair value through
trade and other payables and are
liabilities include borrowings,
Leases
Leases are recognised as finance leases. The lease liability is initially recognised at
the
the lease payments which have not yet been made and subsequently
present value of
measured under
the right-of-use asset
the amortised cost method. The initial cost of
comprises the amount of the initial measurement of the lease liability, lease payments made
prior to the lease commencement date, initial direct costs and the estimated costs of removing
or dismantling the underlying asset per the conditions of the contract.
Where ownership of the right-of-use asset transfers to the lessee at the end of the lease term,
the right-of-use asset is depreciated over the asset’s remaining useful
life. If ownership of the
right-of-use asset does not transfer to the lessee at the end of the lease term, depreciation is
charged over the shorter of the useful life of the right-of-use asset and the lease term.
Finance income and finance costs
Finance income is recognised when it is probable that the economic benefits will flow to the
company and the amount of income can be measured reliably. It is accrued on a time basis
by reference to the principal outstanding and at the effective interest rate applicable.
Borrowing costs are recognised as an expense in the period in which they are incurred.
Taxation
The taxation charge represents the sum of current tax and deferred tax.
The tax currently payable is based on the taxable profit for the period using the tax rates that
have been enacted or substantially enacted by the balance sheet date. Taxable profit differs
from the net profit as reported in the income statement because it excludes items of income
or expense that are taxable or deductible in other years and it further excludes items that are
never taxable or deductible.
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 Group
financial statements. Deferred tax is determined using tax rates that have been enacted or
substantially enacted at the balance sheet date and are expected to apply when the related
deferred income tax asset is realised of the deferred tax liability is settled.
Deferred tax assets are only recognised to the extent
it
that
profit will be available against which the asset can be utilised.
is probable that future taxable
Deferred tax is charged or credited in the income statement, except when it relates to items
charged or credited to equity, in which case the deferred tax is also dealt with in equity.
Research and development
Expenditure on research activities is recognised as an expense in the period in which it
incurred.
is
is
All on-going development expenditure is currently expensed in the period in which it
the
incurred. Due to the regulatory and other uncertainties inherent
Group’s programmes,
the criteria for development costs to be recognised as an asset, as
prescribed by IAS 38, ‘Intangible assets’, are not met until the product has been submitted for
regulatory approval, such approval has been received and it is probable that future economic
benefits will flow to the Group. The Group does not currently have any such internal
development costs that qualify for capitalisation as intangible assets.
in the development of
46
ValiRX Plc
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
Development costs are capitalised when the related products meet the recognition criteria of
an internally generated intangible asset, the key criteria being as follows:
— technical feasibility of the completed intangible asset has been established;
— it can be demonstrated that the asset will generate probable future economic benefits;
— adequate technical, financial and other
resources are available to complete the
development;
— the expenditure attributable to the intangible asset can be reliably measured; and
— the Group has the ability and intention to use or sell the asset.
Expenses for
costs, depreciation on non-current assets and directly attributable overheads.
research and development
include associated wages and salaries, material
research and development costs, whether
All
licence and
development agreements or not, are included within operating expenses and classified as
such.
funded by third parties under
Foreign currencies
the primary
Items included in the Financial Statements are measured using the currency of
in which the Company and its subsidiaries operate (the functional
economic environment
currency) which is UK sterling (£). The Financial Statements are accordingly presented in UK
sterling.
Foreign currency transactions are translated into the functional currency using the exchange
rates prevailing at the dates of the transactions or at an average rate for a period if the rates
do not fluctuate significantly. Foreign exchange gains and losses resulting from the settlement
of such transactions and from the translation at year-end exchange rates of monetary assets
and liabilities denominated in foreign currencies are recognised in the Consolidated Statement
of Comprehensive income. Non-monetary items that are measured in terms of historical cost in
a foreign currency are not retranslated.
Share capital
Financial instruments issued by the Group are treated as equity only to the extent that they do
liability. The Group’s ordinary and deferred shares are
not meet
classified as equity instruments.
the definition of a financial
Share-based payments
IFRS 2 “Share-based Payments” requires that an expense for equity instruments granted is
recognised in the financial statements based on their fair values at the date of the grant. This
expense, which is in relation to employee share options, is recognised over the vesting period
the scheme. The fair value of employee services is determined by reference to the fair
of
value of the awarded grant calculated using the Black Scholes model.
At the year-end date, the Group revises its estimate of the number of share incentives that are
expected to vest. The impact of the revisions of original estimates, if any, is recognised in the
Statement of Comprehensive Income, with a corresponding adjustment
the
remaining vesting period.
to equity, over
When options expire or are cancelled the expensed value of
transferred from the share-based payment, reserve to retained earnings.
these lapsed options is
47
ValiRX Plc
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
Adoption of new and revised international financial reporting standards
With effect from 1 January 2019, the Company has adopted IFRS 16 ‘Leases’. This provides a
new model for lessee accounting in which all
leases, other than short-term and small-ticket-
item leases, will be accounted for by the recognition on the Balance Sheet of a right-to-use
asset and a lease liability, and the subsequent amortisation of the right-to-use asset over the
lease term.
The adoption of
Company only held a short
during any of the periods presented.
the standard has no impact on the Company’s financial statements as the
these financial statements and
the date of sign off of
lease at
New standards and interpretations
As at the date of approval of these financial statements, the following standards were in issue
but no yet effective. These standards have not been adopted early by the Company as they
impact on the financial statements other than requiring
are not expected to have a material
additional disclosure or alternative presentation.
IFRS 3
IFRS 7, IFRS 9, IAS 39
IFRS 17
IAS 1, IAS 8
IAS 1
Amendment – Definition of a Business
Amendment – Interest Rate Benchmark Reforms
Insurance Contracts
Amendment – Definition of Material
Amendment – Correction of Liabilities as Current
and Non-Current
Effective date
(period)
beginning on or
after
01/01/2020
01/01/2020
01/01/2021
01/01/2020
01/01/2022
The International Financial Reporting Interpretations Committee has also issued interpretations
which the Company does not consider will have a significant
impact on the financial
statements.
3.
CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
UNCERTAINTY
the financial statements in conformity with IFRS requires the use of
The preparation of
estimates and assumptions that affect the reported amounts of assets and liabilities at the date
the financial statements and the reported amounts of revenue and expenses during the
of
reporting period. Although these estimates are based on management’s best knowledge of the
amounts, events or actions, actual results ultimately may differ from these estimates. The
estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the estimate is revised. The
material areas in which estimates and judgements are applied as follows:
Goodwill and other intangible assets impairment
The Group is required to test, on an annual basis, whether goodwill and other intangible
assets have suffered any impairment. Determining whether there has been any impairment
requires an estimation of
the cash-generating units. The value in use
calculation requires the Directors to estimate the future cash flows expected to arise from the
cash-generating unit and a suitable discount rate in order to calculate the present value.
the value in use of
48
ValiRX Plc
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
Share-based payments
The estimates of share-based payments costs require that management selects an appropriate
valuation model and makes decisions on various inputs into the model, including the volatility
the options before exercise, and behavioural
of
consideration of employees. A significant element of
is therefore involved in the
calculation of the charge.
its own share price,
the probable life of
judgement
Capitalisation of development costs
the technical
feasibility and
Capitalisation of development costs requires analysis of
commercial viability of
the costs will be made only
where there is evidence that an economic benefit will accrue to the Group. To date no
development costs have been capitalised and all costs have been expensed in the income
statement as Research and Development costs.
the project concerned. Capitalisation of
Fair value measurement of financial instruments
When the fair values of financial assets and financial
liabilities recorded in the statement of
financial position cannot be measured based on quoted prices in active markets,
their fair
value is measured using valuation techniques including the Black-Scholes model. The inputs to
these models are taken from observable markets where possible, but where this is not
is required in establishing fair values. Judgements include
feasible, a degree of
considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions
relating to these factors could affect
instruments. See
Note 16 for further disclosures.
the reported fair value of financial
judgement
4.
REVENUE
Segmental reporting
the opinion that under
The Directors are of
there are no
identifiable business segments that are subject
to the core
business of drug development. The information reported to the Directors, for the purposes of
resource allocation and assessment of performance is based wholly on the overall activities of
the Group. Therefore, the Directors have determined that there is only one reportable segment
under IFRS8.
IFRS 8 – “operating segment”
to risks and returns different
5.
EMPLOYEES AND DIRECTORS
Number of employees:
The average monthly number of employees, including Directors, during the year was:
Directors
Staff
Employment costs
Wages and salaries
Social security costs
Other pension costs
Costs of share-based payments
Details of Directors’ remuneration can be found in note 25.
49
2019
Number
2018
Number
5
6
11
2019
£
708,305
66,975
65,192
—
5
6
11
2018
£
909,127
90,719
39,327
482,993
840,472
1,522,166
ValiRX Plc
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
6.
NET FINANCE COSTS
Finance costs
Bank interest
Other interest payable
Interest on overdue tax
Deferral fees on equity swap
7.
LOSS BEFORE INCOME TAX
Research and development
Share based payment (note 24)
Defined benefit pension cost
Hire of plant and machinery
Other operating leases
Patents amortisation
Impairment of patents
Auditors remuneration
Foreign exchange differences
Bad debt write off
Fair value loss of derivative financial assets
Profit on sale of investments
2019
£
122
622
2,349
18,082
21,175
2019
£
984,457
—
65,192
—
120,511
155,607
217,712
30,000
(11,421)
—
—
(146,517)
2018
£
—
—
866
13,699
14,565
2018
£
1,698,791
482,993
39,327
109
138,514
115,788
—
31,000
3,869
506,755
442,229
—
50
ValiRX Plc
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
8.
INCOME TAX
Domestic current year tax
Tax credits on research and development – current year
Tax credits on research and development – prior years
Current tax credit
2019
£
2018
£
(291,788)
(1,950)
(461,193)
(103)
(293,738)
(461,296)
Factors affecting the tax charge for the year:
Loss before income tax
(2,719,492)
(4,829,138)
Loss before income tax multiplied by effective rate of UK
corporation tax of 19.00% (2018: 19.00%)
(516,703)
(917,536)
Effects of
Non-deductible expenses
Capital allowances for the year in deficit of depreciation and
amortisation
Tax losses not utilised
Research and development expenditure
Adjustment to prior years
Profit on sale of investments
Current tax charge
45,273
273,629
3,770
327,921
(124,211)
(1,950)
(27,838)
3,763
377,395
(198,444)
(103)
—
222,965
456,240
(293,738)
(461,296)
No corporation tax arises on the results for the year ended 31 December 2019 due to the
losses incurred for tax purposes.
The deferred tax asset, arising from tax losses of £19.5 million (2018: £17.7 million) carried
forward, has not been recognised but would become recoverable against future trading profits,
subject to agreement with HM Revenue and Customs.
9.
LOSS OF PARENT COMPANY
As permitted by Section 408 of
income of
Parent Company’s loss for the financial year was £2,128,647 (2018 – £4,109,696).
the Companies Act 2006,
the parent company is not presented as part of
the statement of comprehensive
these financial statements. The
51
ValiRX Plc
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
10. LOSS PER SHARE
The loss and number of shares used in the calculation of loss per ordinary share are set out
below:
Loss for the financial period
Non-controlling interest
2019
£
2018
£
(2,425,756)
37,049
(4,367,842)
69,020
Loss attributable to owners of Parent Company
(2,388,707)
(4,298,822)
Basic:
Weighted average number of shares
Loss per share
902,637,711
(0.26p)
458,715,753
(0.94p)
The loss and the weighted average number of shares used for calculating the diluted loss per
share are identical to those for the basic loss per share. The outstanding share options and
share warrants (note 24) would have the effect of reducing the loss per share and would
therefore not be dilutive under IAS 33 ‘Earnings per Share’.
Changes to the issued share capital since the year end are detailed in note 22 below.
11. GOODWILL
Group
Cost
At 1 January 2018 and 2019 and 31 December 2019
Net book value
At 31 December 2019
At 31 December 2018
£
1,602,522
1,602,522
1,602,522
The goodwill arising on the acquisitions of ValiRx Bioinnovation Limited, ValiPharma Limited,
is reviewed on an annual
Valisrc Limited and ValiSeek Limited is not being amortised but
there are indications that goodwill might be
basis for
impaired. The impairment
the
goodwill with its recoverable amount (the higher of fair value less costs to sell and value in
use). ValiRx Plc has used the value in use method, applying a 15% discount rate.
review comprises a comparison of
impairment, or more frequently if
the carrying amount of
Goodwill per cash generating unit
ValiPharma Limited
ValiRx Bioinnovation Limited
Valisrc Limited
ValiSeek Limited
£
772,230
394,613
—
435,679
Sensitivity analysis is not required as a reasonably possible change in assumptions would not
result in an impairment.
52
ValiRX Plc
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
12.
INTANGIBLE ASSETS
Group
COST
At 1 January 2018
Additions
At 31 December 2018
Additions
Patents
£
Brands and
licences
£
1,537,060
441,655
1,978,715
396,776
375,000
—
375,000
—
Total
£
1,912,060
441,655
2,353,715
396,776
At 31 December 2019
2,375,491
375,000
2,750,491
AMORTISATION
At 1 January 2018
Amortisation for year
At 31 December 2018
Amortisation for year
Impairment
487,703
115,788
603,491
155,607
217,712
99,074
27,200
126,274
27,200
—
586,777
142,988
729,765
182,807
217,712
At 31 December 2019
976,810
153,474
1,130,284
NET BOOK VALUE
At 31 December 2019
At 31 December 2018
Company
COST
At 1 January 2018 and 2019
Additions
At 31 December 2019
AMORTISATION
At 1 January 2018
Amortisation for year
At 31 December 2018
Amortisation for year
At 31 December 2019
NET BOOK VALUE
At 31 December 2019
At 31 December 2018
53
1,398,681
221,526
1,620,207
1,375,224
248,726
1,623,950
Brands and
licences
£
200,000
—
200,000
60,000
20,000
80,000
20,000
100,000
100,000
120,000
ValiRX Plc
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
13. PROPERTY, PLANT AND EQUIPMENT
Group and Company
COST
At 1 January 2018
Disposals
At 31 December 2018 and 2019
DEPRECIATION
At 1 January 2018
Eliminated on disposal
At 31 December 2018 and 2019
NET BOOK VALUE
At 31 December 2019
At 31 December 2018
14.
INVESTMENTS
Group
COST
At 1 January 2018 and 2019
Disposals
At 31 December 2019
PROVISIONS
At 1 January 2018 and 2019
Eliminated on disposal
At 31 December 2019
NET BOOK VALUE
At 31 December 2019
At 31 December 2018
Plant and
machinery
£
35,165
(3,495)
31,670
35,165
(3,495)
31,670
—
—
Unlisted
investments
£
1,333,770
(1,333,770)
—
1,333,770
(1,333,770)
—
—
—
The Group and the Company disposed of their 5.5% shareholding in Morphogenesis Inc., a
company incorporated in USA, during the year.
54
ValiRX Plc
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
14.
INVESTMENTS – continued
Company
COST
At 1 January 2018 and 2019
Additions
Disposals
At 31 December 2019
PROVISIONS
At 1 January 2018 and 2019
Eliminated on disposal
At 31 December 2019
NET BOOK VALUE
At 31 December 2019
At 31 December 2018
Shares in
group
undertakings
£
Unlisted
investments
£
Total
£
3,617,834
4
—
3,617,838
1,333,770
—
(1,333,770)
4,951,604
4
(1,333,770)
—
3,617,838
—
—
—
3,617,838
3,617,834
1,333,770
(1,333,770)
1,333,770
(1,333,770)
—
—
—
—
3,617,838
3,617,834
55
ValiRX Plc
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
14.
INVESTMENTS – continued
The Company’s investments at the Statement of Financial Position date in the share capital of
companies include the following:
Subsidiaries
ValiRx Bioinnovation Limited
Registered office: England & Wales
Nature of business: Intermediate holding company
Class of shares:
Ordinary shares
ValiPharma Limited
Registered office: England & Wales
Nature of business: Therapeutic research & development
Class of shares:
Ordinary shares
60.28% is owned by ValiRx Bioinnovation Limited and 39.72% by the Company.
Valisrc Limited
Registered office: England & Wales
Nature of business: Dormant
Class of shares:
Ordinary shares
ValiSeek Limited
Registered office: England & Wales
Nature of business: Therapeutic research & development
Class of shares:
Ordinary shares
ValiGenx Limited
Registered office: England & Wales
Nature of business: Dormant
Class of shares:
Ordinary shares
% holding
100.00
% holding
100.00
% holding
100.00
% holding
55.55%
% holding
100.00
56
ValiRX Plc
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
15. TRADE AND OTHER RECEIVABLES
Current
Amounts owed by Group undertakings
Other receivables
Rent deposit
VAT
Prepayments and accrued income
Group
Company
2019
£
2018
£
2019
£
2018
£
—
23,252
31,807
13,033
21,991
— 2,843,650
20,953
31,807
35,951
21,991
15,354
25,926
77,814
54,995
2,609,278
13,059
25,926
85,398
54,817
90,083
174,089
2,954,352
2,788,478
In the Directors’ opinion,
approximation of fair value.
the carrying amounts of
receivables is considered a reasonable
16. CASH AND CASH EQUIVALENTS
Bank accounts
Bank overdraft
Group
Company
2019
£
2018
£
137
(5,771)
372,872
—
2019
£
—
(5,771)
2018
£
372,190
—
(5,634)
372,872
(5,771)
372,190
57
ValiRX Plc
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
17. CALLED UP SHARE CAPITAL
2019
Number
2018
Number
2019
£
2018
£
Allotted, called up and fully paid
Ordinary shares of 0.1p each
Deferred shares of 0.5p each
Deferred shares of 0.9p each
Deferred shares of 12.4p each
1,334,827,184
58,378,365
157,945,030
30,177,214
598,296,049
58,378,365
157,945,030
30,177,214
1,334,828
2,918,918
1,421,505
3,741,974
598,297
2,918,918
1,421,505
3,741,974
9,417,225
8,680,694
the Company raised £0.5 million, before expenses,
In February 2019,
through the issue of
83,333,333 new ordinary shares at a price of 0.6 pence per share. The funds were to be used
the Pre-clinical progress of other
for advancing the clinical
programmes.
trial of VAL201 and for
the Company entered into a subscription agreement (the “Agreement”) with
In April 2019,
European High Growth Opportunities SF (the “Investor”). The first Tranche of 71,000,000 new
shares were issued at a price of 0.6 pence per share in May 2019 raising £426,000 before
expenses.
the Company raised £0.3 million, before expenses,
In June 2019,
through the issue of
150,000,000 new ordinary shares at a price of 0.2 pence per share. The funds were to be
the Pre-clinical progress of other
trial of VAL201 and for
used for advancing the clinical
programmes.
In June 2019, the Company agreed to terminate the Agreement with European High Growth
Opportunities SF. The Company agreed to a final settlement of £212,500 which was settled by
the issue of 121,428,571 new shares at a price of 0.175 pence per share.
the Company raised £0.35 million, before expenses,
In October 2019,
through the issue of
269,230,769 new ordinary shares at a price of 0.13 pence per share. The funds were to be
the Pre-clinical progress of other
used for advancing the clinical
programmes.
trial of VAL201 and for
In October 2019, the Company issued 41,538,462 new shares at a price of 0.13 pence per
share to settle liabilities amounting to £54,000.
The deferred shares have no rights to vote, attend or speak at general meetings of
the
Company or to receive any dividend or other distribution and have limited rights to participate
in any return of capital on a winding-up or liquidation of the Company.
58
ValiRX Plc
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
18. TRADE AND OTHER PAYABLES
Current
Trade payables
Amounts owed to Group undertakings
Social security and other taxes
Wages and salaries
Other payables
Accruals and deferred income
Group
Company
2019
£
2018
£
2019
£
2018
£
945,854
—
119,169
6,310
23,109
87,642
772,244
—
71,742
10,001
—
36,000
723,296
447,187
107,953
5,221
23,109
74,875
724,876
300,670
68,882
10,001
—
30,000
1,182,084
889,987
1,381,641
1,134,429
In the Directors’ opinion,
approximation of fair value.
the carrying amounts of payables is considered a reasonable
19. FINANCIAL LIABILITIES – BORROWINGS
Current:
Bank overdraft
Equity swap loan
Group
Company
2019
£
2018
£
2019
£
2018
£
5,634
193,781
—
313,699
5,771
193,781
—
313,699
199,415
313,699
199,552
313,699
Swap settlement
In September 2018, Yorkville and the Company agreed a final settlement
Swap Agreement and entered into a deed to terminate that agreement. At
Company owed Yorkville £418,275 under the agreement.
in respect of
the time,
the
the
It was agreed that the Company would pay Yorkville £325,000 plus £40,000 deferral fee in full
and final settlement by quarterly instalments. At
it may settle a
quarterly instalment by issuing Ordinary Shares in the Company to Yorkville, on the basis of
the share price at the time of repayment.
Due to the deferral of the first instalment, the parties agreed a deferral
late payment fees were due by the Company to Yorkville.
the Company’s discretion,
letter whereby further
2019
£
313,699
—
(138,000)
18,082
2018
£
—
325,000
(25,000)
13,699
193,781
313,699
At 1 January
Agreed full and final settlement
Repayment
Deferral fee
At 31 December
59
ValiRX Plc
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
20. OTHER FINANCIAL COMMITMENTS
At 31 December 2019, the company was committed to making the following payments under
non-cancellable operating leases in the year to 31 December 2020:-
Operating leases which expire:
Within one year
21. RELATED PARTY DISCLOSURES
Land and buildings
2019
£
2018
£
26,163
110,906
During the year
bookkeeping services totalling £18,450 (2018: £19,219).
the Director, G Desler, provided the Company and its subsidiaries with
During the year
(2018: £49,500) for research and development work.
the Director O de Giorgio – Miller
invoiced the Company £41,250
At the year end, the amounts owed to Directors were as follows:
G Desler
O de Giorgio-Miller (Died 21 October 2019)
G Morris (Resigned 14 April 2020)
S Vainikka (Ceased to be a director 14 April 2020)
K Alexander
2019
£
7,147
5,800
—
—
—
2018
£
8,036
5,579
—
—
—
22. EVENTS AFTER THE REPORTING PERIOD
Placing and issue of share warrants
the Company raised £0.2 million of gross proceeds through the issue of
In January 2020,
200,000,000 new ordinary shares at a price of 0.1 pence per ordinary share (“Placing Shares”)
with new and existing investors. The net proceeds of the Placing were to be used to analyse
the Phase I/II clinical
trial of VAL201 to treat prostate cancer and associated metastatic
conditions and continue the development of ValiRx’s pre-clinical VAL301 and VAL101/GeneICE
programmes towards the clinic, and for general working capital purposes.
Each Placing Share carries a warrant to subscribe for one further share at a price of 0.10p
per share, exercisable at any time from Admission (10 January 2020) up to the third-year
the Company’s joint
anniversary of Admission. The funds were raised through ETX Capital,
broker. As part of their fee arrangement, the Company agreed to issue to ETX Capital with a
warrant over 20,000,000 ordinary shares in the Company, exercisable at any time from
Admission at a price of 0.10 pence per share up to the third-year anniversary of Admission.
Capital Reorganisation
At a General Meeting in February 2020, a Capital Reorganisation was approved consolidating
125 Existing Shares into 1 Consolidated Share of 12.5 pence, followed by the Sub-Division of
each Consolidated Share into 1 New Ordinary Share of 0.1 pence each and 1 New Deferred
Shares of 12.4 pence each. The New Deferred Shares have the same rights as the Existing
Deferred Shares and are therefore effectively be worthless.
60
ValiRX Plc
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
22. EVENTS AFTER THE REPORTING PERIOD – continued
Placing following approval of Capital Reorganisation
In April 2020, the Company raised £200,000 of gross proceeds through the issue of 5,714,288
new ordinary shares (post reorganisation) at a post reorganisation price of 3.5 pence per
share.
Placing and issue of Fundraise Warrants
the Company placed 16,666,667 new ordinary shares at 6 pence per share
In May 2020,
(“Placing Price”) raising gross proceeds of £1m before expenses. Attached to every share
issued pursuant to the Placing (“Fundraise Share”) is a warrant (“Fundraise Warrant”) allowing
the holder of a Fundraise Share to subscribe for an additional ordinary share in the Company
for every two Fundraise Shares held at an exercise price of 13 pence per share (the
“Fundraise Warrants” or “Warrant Exercise Price”). The Fundraise Warrants will vest
the
closing mid-market share price of the Company exceeds 15p over a 5-consecutive day period
within 12 months of the date that the Fundraise Shares are admitted to trading on AIM. The
Company may serve notice (“Notice”) on the Fundraise Warrant holder
to exercise their
Fundraise Warrant in the event that the vesting criteria is met. Such Notice will be served by
way of a regulatory notification,
the Company serves Notice, any Fundraise
Warrants remaining unexercised after 5 business days following the notification of the Notice
will be cancelled. The Fundraise Warrants are not transferable.
In the event
if
Conversion of liabilities
In May 2020, alongside the Placing,
the Company settled existing liabilities amounting to
£84,168 through the issue of 1,402,800 new ordinary shares at the Placing Price (“Conversion
Shares”).
Kevin Alexander, a Director of the Company and Suzanne Dilly, a then proposed Director of
the Company, converted existing liabilities of £10,000 each, in aggregate £20,000 into 333,333
ordinary shares at the Placing Price, included within the above figure of 1,402,800 Conversion
Shares.
The Conversion Shares have Fundraise Warrants attached – details of which are set out
above.
23. ULTIMATE CONTROLLING PARTY
The Directors consider that there is no ultimate controlling party.
61
ValiRX Plc
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
24. SHARE-BASED PAYMENT TRANSACTIONS
The number of shares and the share prices shown in this note do not take into account the
share capital re-organisation that was effected after the year end (note 22).
At 31 December 2019 outstanding awards to subscribe for ordinary shares of 0.1p each in the
Company, granted in accordance with the rules of the ValiRx share option schemes, were as
follows:
2018
Brought forward
Granted during the year
Lapsed during the year
Carried forward
2019
Brought forward
Lapsed during the year
Carried forward
Weighted
average
remaining
contractual
life (years)
Weighted
average
exercise
price (pence)
Number of
shares
3,460,960
17,300,000
(48,000)
20,712,960
8.52
Weighted
average
remaining
contractual
life (years)
Number of
shares
20,712,960
(3,325,400)
17,387,560
7.53
50.98
4.00
43.13
11.76
Weighted
average
exercise
price
(pence)
11.76
12.23
11.67
All options were exercisable at the year end. No options were exercised during the year.
The following share-based payment arrangements were in existence at the balance sheet date.
Options
Number
Expiry date
Exercise price
1
2
3
4
5
Granted 8 July 2011
Granted 19 January 2014
Granted 21 October 2014
Granted 26 June 2015
Granted 9 February 2018
268,000
792,000
872,000
905,560
14,550,000
08/07/2021
19/01/2024
21/10/2024
26/06/2025
09/02/2028
93.75p
43.13p
45.00p
51.00p
4.00p
Fair value at
grant date
12.50p
5.00p
3.75p
4.04p
2.79p
The fair value of
model. The assumptions used in the calculation of
outstanding during the year are as follows:
the remaining share options has been calculated using the Black-Scholes
the share options
the fair value of
Options
1
2
3
4
5
Granted 8 July 2011
Granted 19 January 2014
Granted 21 October 2014
Granted 26 June 2015
Granted 9 February 2018
Grant date
share price
Exercise
price
Expected
volatility
Expected
option life
(years)
Risk-free
interest rate
80.00p
43.13p
45.00p
50.50p
4.00p
93.75p
43.13p
45.00p
51.00p
4.00p
52.00%
17.00%
17.00%
16.00%
196.00%
3.00
3.00
3.00
3.00
3.00
1.24%
0.99%
1.00%
0.38%
0.88%
The fair value has been calculated assuming that there will be no dividend yield.
62
ValiRX Plc
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
24. SHARE-BASED PAYMENT TRANSACTIONS – continued
Volatility was determined by reference to the standard deviation of expected share price
returns based on a statistical analysis of daily share prices over a 3-year period to grant date.
All of the above options are equity settled.
All of the share options are equity settled and the charge for the year is £nil (2018: £482,993)
Warrants
At 31 December 2019 outstanding warrants to subscribe for ordinary shares of 0.1p each in
the Company, granted in accordance with the warrant instruments issued by ValiRx, were as
follows.
2018
Brought forward
Granted during the year
Exercised during the year
Weighted
average
remaining
contractual life
(years)
2.34
Number of
shares
85,040,011
25,413,725
(8,400,000)
Carried forward
102,053,736
1.30
Weighted
average
exercise price
(pence)
6.46
4.55
1.43
6.40
Weighted
average
remaining
contractual
life (years)
Weighted
average
exercise
price (pence)
1.30
2019
Brought forward
Granted during the year
Lapsed during the year
Number of
shares
102,053,736
42,756,410
(54,733,721)
Carried forward
90,076,425
2.11
All warrants were exercisable at the year end.
The following warrants were in existence at the balance sheet date.
Warrants
Number
Expiry date
Exercise price
1
2
3
4
5
6
7
8
9
10
11
Granted 7 April 2016
Granted 22 April 2016
Granted 12 July 2016
Granted 16 September 2016
Granted 16 September 2016
Granted 2 January 2018
Granted 14 May 2018
Granted 31 December 2018
Granted 28 February 2019
Granted 18 June 2019
Granted 11 November 2019
4,926,741
1,710,922
8,333,333
2,000,000
20,000,000
1,882,353
1,800,000
6,666,666
8,333,333
7,500,000
26,923,077
31/03/2021
31/03/2021
12/07/2021
16/09/2021
16/09/2021
02/01/2021
14/05/2021
31/12/2021
28/02/2022
18/06/2022
11/11/2022
9.00p
9.00p
9.00p
6.00p
9.00p
4.25p
2.50p
0.75p
0.60p
0.20p
0.13p
63
6.40
0.23
5.46
3.82
Fair value at
grant date
0.92p
0.67p
0.36p
0.78p
0.13p
1.95p
1.40p
0.40p
0.35p
0.14p
0.10p
ValiRX Plc
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
24. SHARE-BASED PAYMENT TRANSACTIONS – continued
The fair value of the remaining warrants has been calculated using the Black-Scholes model.
The assumptions used in the calculation of
the share options outstanding
during the year are as follows:
the fair value of
Warrants
Granted 7 April 2016
Granted 22 April 2016
Granted 12 July 2016
Granted 16 September 2016
Granted 16 September 2016
Granted 2 January 2018
Granted 14 May 2018
Granted 31 December 2018
Granted 28 February 2019
1
2
3
4
5
6
7
8
9
10 Granted 18 June 2019
11 Granted 11 November 2019
Grant date
share price
Exercise
price
Expected
volatility
Expected
option life
(years)
Risk-free
interest rate
9.30p
8.60p
7.60p
6.50p
6.50p
4.13p
2.90p
0.80p
0.61p
0.22p
0.13p
9.00p
9.00p
9.00p
6.00p
9.00p
4.25p
2.50p
0.75p
0.60p
0.20p
0.13p
17.00%
17.00%
18.00%
18.00%
18.00%
112.00%
107.60%
105.60%
133.60%
159.20%
223.40%
3.00
3.00
3.00
3.00
3.00
3.00
3.00
3.00
3.00
3.00
3.00
0.48%
0.62%
0.23%
0.14%
0.14%
0.60%
0.83%
0.78%
0.86%
0.54%
0.54%
The fair value has been calculated assuming that there will be no dividend yield.
Volatility was determined by reference to the standard deviation of expected share price
returns based on a statistical analysis of daily share prices over a 3-year period to grant date.
All of the warrants are equity settled and the charge for the year is £65,147 (2018: £213,395).
As the warrants relating to the charge were all
in consideration of shares issued during the
year, the charge has been taken directly to equity and charged against the share premium as
costs in respect of the issue of shares.
25. KEY MANAGEMENT PERSONNEL COMPENSATION
Key management personnel are those persons having authority and responsibility for planning,
directing and controlling activities of the Group, and are all Directors of the Company.
Salaries and other short-term employee benefits
Salaries and other short-term benefits – research and development
Post-employment benefits
2019
£
189,324
213,790
45,832
2018
£
343,431
209,250
32,541
448,946
585,222
S Vainikka (Ceased to be a
director 14/04/2020)
G Morris (Resigned 14/04/
2020)
K Alexander
G Desler
O de Giorgio-Miller (Died 21/
10/2019)
Salary
£
Bonus
£
Benefits in
kind
£
Post-
employment
benefits
£
2019
£
2018
£
165,280
124,025
25,625
52,890
30,000
397,820
—
—
—
—
—
—
1,813
3,481
–
–
–
25,494
192,587
213,572
20,338
—
—
—
147,844
25,625
52,890
177,491
47,968
80,566
30,000
65,625
5,294
45,832
448,946
585,222
Details of fees paid to Directors are shown in note 21 above.
The number of Directors for whom retirement benefits are accruing under money purchase
pension schemes amounted to 2 (2018: 2).
64
ValiRX Plc
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
25. KEY MANAGEMENT PERSONNEL COMPENSATION – continued
The number of shares and the share prices shown in this note do not take into account the
share capital re-organisation that was affected after the year end (note 22).
The Directors interests in share options as at 31 December 2019 are as follows. S Vainikka
ceased to be a director on 14 April 2020 and G Morris resigned on 14 April 2020. They have
12 months from resignation in order to exercise their options, failing which they will lapse.
Options at
31 December
2019
Exercise price
Date of grant
First date of
exercise
Final date of
exercise
S Vainikka
S Vainikka
S Vainikka
S Vainikka
S Vainikka
G Morris
G Morris
G Morris
G Morris
G Morris
K Alexander
K Alexander
K Alexander
K Alexander
K Alexander
G Desler
G Desler
G Desler
G Desler
G Desler
80,000
192,000
192,000
222,000
3,625,000
4,311,000
48,000
176,000
176,000
191,000
3,125,000
3,716,000
48,000
160,000
160,000
173,800
2,500,000
3,041,800
48,000
176,000
176,000
189,760
3,000,000
3,589,760
93.75p
43.13p
45.00p
54.00p
4.00p
93.75p
43.13p
45.00p
54.00p
4.00p
93.75p
43.13p
45.00p
54.00p
4.00p
93.75p
43.13p
45.00p
54.00p
4.00p
08/07/2011
19/01/2014
21/10/2014
26/06/2015
07/02/2018
08/07/2011
19/01/2014
21/10/2014
26/06/2015
07/02/2018
08/07/2011
19/01/2014
21/10/2014
26/06/2015
07/02/2018
08/07/2011
19/01/2014
21/10/2014
26/06/2015
07/02/2018
08/07/2011
19/01/2014
21/10/2014
26/06/2015
07/02/2018
08/07/2011
19/01/2014
21/10/2014
26/06/2015
07/02/2018
08/07/2011
19/01/2014
21/10/2014
26/06/2015
07/02/2018
08/07/2011
19/01/2014
21/10/2014
26/06/2015
07/02/2018
08/07/2021
19/01/2024
21/10/2024
25/06/2025
07/02/2018
08/07/2021
19/01/2024
21/10/2024
25/06/2025
07/02/2018
08/07/2021
19/01/2024
21/10/2024
25/06/2025
07/02/2018
08/07/2021
19/01/2024
21/10/2024
25/06/2025
07/02/2018
instruments used by the Group,
26. FINANCIAL INSTRUMENTS
The principal financial
arises are as follows:
— derivative financial assets;
— trade and other receivables;
— cash and cash equivalents; and
— trade and other payables.
The main purpose of these financial instruments is to finance the Group’s operations.
from which financial
instrument risk
65
ValiRX Plc
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
26. FINANCIAL INSTRUMENTS – continued
Financial assets
Loans and receivables
Trade and other receivables
Cash and cash equivalents
Total loans and receivables
Total financial assets
Financial liabilities
Trade and other payables
Cash and cash equivalents
Total financial liabilities
2019
£
90,083
—
90,083
90,083
2019
£
2018
£
174,089
372,872
546,961
546,961
2018
£
1,256,696
5,634
1,131,944
—
1,262,330
1,131,944
The Directors consider that
approximates to their fair value.
the carrying value for each class of financial asset and liability,
Financial risk management
The Group’s activities expose it to a variety of risks, including market risk (foreign currency risk
and interest rate risk), credit risk and liquidity risk. The Group manages these risks through an
effective risk management programme, and,
the Board seeks to
through this programme,
minimise potential adverse effects on the Group’s financial performance.
The Board provides written objectives, policies and procedures with regards to managing
currency and interest risk exposures, liquidity and credit risk including guidance on the use of
certain derivative and non-derivative financial instruments
fails to meet
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial
instrument
risk is primarily
attributable to its receivables and its cash deposits. It is Group policy to assess the credit risk
of new customers before entering contracts. The credit risk on liquid funds is limited because
the counterparties are banks with high credit ratings assigned by international credit-rating
agencies.
its contractual obligations. The Group’s credit
Liquidity risk and interest rate risk
Liquidity risk arises from the Group’s management of working capital.
the
Group will encounter difficulty in meeting its financial obligations as they fall due. The Board
regularly receives cash flow projections for a minimum period of twelve months, together with
information regarding cash balances monthly.
is the risk that
It
The Group is principally funded by equity and invests in short-term deposits, having access to
these funds at short notice. The Group’s policy throughout the period has been to minimise
interest rate risk by placing funds in risk free cash deposits but also to maximise the return on
funds placed on deposit.
All cash deposits attract a floating rate of interest. The benchmark rate for determining interest
receivable and floating rate assets is linked to the UK base rate.
66
ValiRX Plc
Notes to the Consolidated Financial Statements
for the year ended 31 December 2019
26. FINANCIAL INSTRUMENTS – continued
Foreign currency risk
The Group’s exposure to foreign currency risk is limited; as most of its invoicing and payments
are denominated in Sterling. Accordingly, no sensitivity analysis is presented in this area as it
is considered immaterial.
67
Black&Callow — c116706