A N N U A L
R E P O R T &
A C C O U N T S
T W E N T Y 2 0
G R O U P S T R AT E G I C R E P O R T,
R E P O R T O F T H E D I R E C T O R S
AND AUDITED CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED
31 DECEMBER 2020
FOR
VALIRX PLC
ValiRx Plc
Contents of the Consolidated Financial Statements
for the year ended 31 December 2020
C O M PA N Y I N F O R M AT I O N
Company Information
S T R AT E G I C R E P O R T
2020 Highlights
Chairman’s Report
Chief Executive’s Report
Group Strategic Report
S TA K E H O L D E R E N G A G E M E N T
Frequently Asked Questions
G O V E R N A N C E
Corporate Governance
Report of the Directors
Statement of Directors’ Responsibilities
Report of the Independent Auditors
F I N A N C I A L S TAT E M E N T S
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
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P a g e
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0 7
0 8
1 0
1 8
2 4
3 2
3 4
3 5
3 9
4 0
41
4 2
4 3
4 4
4 5
4 6
C O M P A N Y
I N F O R M AT I O N
ValiRx Plc
CONNECTED INNOVATION
Company Information
for the year ended 31 December 2020
D I R E C T O R S :
K J Alexander
Dr K Cox
G Desler
Dr S J Dilly
M Lampshire
S E C R E TA R Y:
K J Alexander
R E G I S T E R E D O F F I C E :
Stonebridge House
Chelmsford Road
Hatfield Heath
Essex
CM22 7BD
R E G I S T E R E D N U M B E R :
03916791 (England and Wales)
A U D I T O R S :
Adler Shine LLP
Chartered Accountants & Statutory Auditor
Aston House
Cornwall Avenue
London
N3 1LF
0 2
S T R AT E G I C
R E P O R T
ValiRx Plc
CONNECTED INNOVATION
Accelerating biomedical innovation by connecting
science, finance and commerce
Company information and highlights
ValiRx accelerates the development of treatments in cancer and women’s health to improve patient lives.
We provide the scientific, financial and commercial framework to enable the rapid translation of
innovative science into clinical development. With our extensive and proven experience in research and
drug development, we select and incubate promising novel drug candidates and guide them through an
optimised process of development, from preclinical studies to clinic and investor-ready assets.
PROJ ECTS
IN
PROJECTS
OUT
ValiRx screens and
selects promising early
stage projects from
academic or industry
ValiRx provides support
in executing validation
experiements as well
as intellectual, financial,
corporate resources
provided
Asset in SPV progressed
to a stage where it can
attract financial support
from Pharma partner
and/or external investors
Integrating science and business
We connect diverse disciplines across scientific, technical and commercial domains, with the promise
of achieving a more streamlined, less costly, drug development process. We work closely with our
selected collaborators and leverage the combined expertise required for science to advance.
Lead candidates from our portfolio are out-licensed or partnered with investors through ValiRx
subsidiary companies for further clinical development and commercialisation.
0 3
ValiRx Plc
CONNECTED INNOVATION
Accelerating biomedical innovation by connecting
science, finance and commerce
W H AT M A K E S VA L I R X U N I Q U E ?
C O M M E R C E
• Flexible corporate framework
• Extensive project management
experience
• Network or world leading
service providers
• Collaborative, nimble and
adaptable
C O M MERCE
F I N A N C E
• Seed funding for the ‘killer
experiements’
• Investment/City contacts
to help finance subsidiaries
• Access to corporate funding
• Clear routes to exit
S C I E N C E
• Oncology and
women’s health focus
• Preclinical interest
S
C
I
E
N
C
E
• Rigorous project assessment
with expert advisors
• Industrialising innovation
• Risk balanced portfolio
E
C
N
A
N
FI
ValiRx accelerates the translation of innovative science into impactful medicines
We identify, incubate and accelerate innovations that focus on the needs of those who matter most –
the patients. With a sense of urgency and determination, we select molecules with the highest potential
to improve patient lives throughout treatment.
Our therapeutic focus prioritises cancer, related conditions and women’s health. The pipeline is enriched
by robust partnerships with academia and industry, fuelled by our intellectual and financial resources.
We develop treatments derived from diverse and disruptive innovations that have the potential to
progress rapidly upstream and deliver value to all of our stakeholders. Our virtual model and industry
expertise enable us to accelerate the translation of promising new drug candidates to early clinical studies.
Strategic partnering to co-develop and fund later stage clinical trials, allows ValiRx to continue to build a
risk-balanced pipeline of novel projects.
0 4
ValiRx Plc
CONNECTED INNOVATION
Accelerating biomedical innovation by connecting
science, finance and commerce
F I N D – F O C U S –T R A N S F O R M – G R O W
Find – We identify and select innovations which fit our therapeutic interests, expertise and strategic model.
Focus – We devote intellectual and financial resources to deliver a risk balanced pipeline of projects that
are investor and industry ready.
Transform – Starting with the end in mind, we collaborate with world-leading innovators to enhance and
accelerate the translation of great science into effective treatments.
Grow – Our strategy includes building a portfolio of independent entities with a common support
framework and a shared vision. Dynamic joint ventures and end-focused partnerships will progress each
entity to commercialisation and deliver maximum value.
Business Structure
Following the required scientific and commercial preparation, projects are launched as a ValiRx Special
Purpose Vehicle (SPV), presenting an opportunity for external funding and investment from partners, to
continue progression into clinical development.
When the SPV has been established and has obtained independent financing, ValiRx will continue to
provide the commercial, financial and corporate support necessary to progress development of each asset
towards a successful out-licence or sale. The Company’s strategy is to select and incubate promising novel
drug candidates and guide them through an optimised process of development, from preclinical studies to
investor-ready assets. The income received from this is re-invested into the next generation of ValiRx
preclinical projects. SPVs are valuable commercial entities, each positioned to strategically exit from ValiRx
when the time is right.
Impact of coronavirus pandemic on company operations
Despite the profound impact of the coronavirus pandemic on society as a whole and the restrictions
placed on person-to-person interactions, ValiRx has been able to continue operations with minimal
impact on core programmes and processes. Close out of the VAL201 became a little more challenging
but was ultimately delivered on the predicted timelines. The newly constituted Board has carried out
its business entirely remotely and has driven successful implementation of the new strategy.
Disappointingly, we have not been able to meet face-to-face with shareholders. In the meantime,
we have implemented an effective Q&A process and issued a number of blogs to help understanding
of our products and the science behind them.
We very much hope to have the opportunity for in-real-life meetings in the near future.
0 5
ValiRx Plc
CONNECTED INNOVATION
Accelerating biomedical innovation by connecting
science, finance and commerce
2020 Company Highlights
• Launch of a new strategy and implemented significant structural changes to develop a risk-diversified
approach to early-stage drug development
• Providing the scientific, financial and commercial framework to enable rapid translation of
innovative science into clinical development
• New management and board appointed to deliver the strategy. Dr Suzanne Dilly was appointed to
the Board as Chief Executive and Dr Kevin Cox joined as the Non-executive Chairman of the Board
• Phase 1/2 clinical trial close out and reporting of lead asset VAL201, demonstrating good safety and
tolerability and early indications of efficacy
• Cost reductions to significantly reduce cash burn
• Successful £1.35M Placing in July 2020 to provide the runway for commercial and scientific progress
with the existing pipeline (VAL201, VAL301, VAL401, BC201) and implementation of the new strategy
• Excellent progress in identifying new collaborative pipeline projects, with KTH222 from
Kalos Therapeutics under initial evaluation
0 6
ValiRx Plc
CONNECTED INNOVATION
Chairman’s Report
for the year ended 31 December 2020
Having joined ValiRx in June 2020, I can only really comment on activity in the second half of the year
with any great insight. Nevertheless, despite all the turmoil of the coronavirus pandemic and restrictions
on the Board to meet in person, I believe that ValiRx has made excellent progress in realigning its
strategy and consolidating the position of all key projects. We also achieved a major milestone with
the close out and reporting of the VAL201 Phase I/II clinical trial, demonstrating good safety and
tolerability and early indications of efficacy.
During the latter half of 2020 the Company successfully made significant changes to the way it operates
and its strategic focus. Operational changes included:
• re-structuring the Board to ensure a breadth of skills and experience
• reducing costs and streamlining the organisation
• exiting non-core technologies that did not support the strategy
• re-locating the office outside of London and
• introducing the new shareholder engagement process
The successful fund-raise in July 2020 and completion of these changes means that we now have a period
of stability to implement the new strategy and also to make commercial and scientific progress with VAL201,
VAL301, VAL401 and BC201.
The realignment of the strategy to focus on ‘Connected Innovation’ and the development of a risk-balanced
pipeline of earlier stage projects is progressing well. The business development team is building good
relationships with a wide range of innovators and investors and we have already identified a number of
interesting technologies which have entered our rigorous evaluation process. The nature of our assessments
means that not all projects will be adopted into the pipeline, therefore being visible and accessible to scientists
developing novel technologies will be necessary to maintain a good flow of opportunities. The new website
and communications plan has been designed to ensure ValiRx is recognised as a Company that is ‘open for
business’.
Selecting a commercial partner for VAL201 remains a high priority for ValiRx and completion of the clinical
trial and study report at the end of 2020 has enabled us to actively engage with a variety of interested
parties. Due diligence of the science and clinical data, commercial negotiations and internal decision-making
processes will all be on the critical path to a successful outcome.
Effective communication with shareholders has also been high on the agenda for ValiRx throughout 2020 and
the Board is committed to implementing processes that ensure information is made available in a timely, fair
and transparent way, and meets the regulatory requirements of an AIM listed company. However, given the
nature of the biopharmaceutical industry, the uncertainties of novel scientific development and the importance
of commercial confidentiality, there are likely to be periods when news flow is slow or apparently low key.
The adoption of the new strategy, focusing on multiple programmes of earlier stage science, should increase
the frequency of scientific updates, as the need for patient confidentiality and lengthy clinical processes will
no longer be as relevant. As the Covid rules gradually relax, we are looking forward to the time when we can
meet shareholders face-to-face and the opportunity to put more colour on the business activities.
I believe the new strategy will deliver long term growth and value creation for shareholders, but we are only
at the beginning of this journey and our activities in 2021 will be focused on maintaining the momentum
initiated in 2020.
We very much value the continued commitment of our shareholders and thank you for your support and
understanding through a period of significant change for the company and during an unprecedented
world crisis.
Kevin Cox
Chairman
Date: 26 April 2021
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ValiRx Plc
CONNECTED INNOVATION
Chief Executive’s Report
for the year ended 31 December 2020
The key theme for 2020 has been creating stability. Against the backdrop of the pandemic as well
as significant management and strategy changes in the Company, I am delighted to summarise a
year of substantial progress at ValiRx.
We have fully assessed each of our development programmes and business processes to ensure that the
most efficient routes are chosen. Our new long-term strategy to develop a risk-diversified approach to
early-stage drug development has been established. By directing our internal resources more precisely,
we have been able to focus on the priority activities. This has allowed the Company to streamline resources
and continue to identify new projects to build the pipeline.
The clinical phase of the VAL201 clinical trial in men with prostate cancer completed in January 2020, with
notification being formalised on 27 January 2020, shortly before the pandemic restrictions came into
force. Due to restrictions on visits to the clinic, the normal processes for data verification, database lock
and study close down were modified to encompass remote working practices. Nevertheless, the expected
timelines were broadly achieved, with database lock and headline results released in Q3 2020 and the full
results announced on schedule in Q4 2020. The challenging logistics of achieving these timelines are a
credit to the network of partners who have supported the trial process throughout, as well as to the
dedication and persistence of our team to manage the process.
With the data now harnessed, securing full value for VAL201, both scientifically and commercially, is a priority
task for the Company. Since the close of the 2020 reporting period, we have announced the extension of the
collaboration between the Company and Physiomics PLC. This will enable additional systematic analysis of
our clinical results using their Virtual Tumour model and related software to delve deeper into the data and
enhance our scientific understanding of the data. This will benefit the scientific foundation not just of VAL201,
and the use in prostate cancer, but also for the two other programmes involving the peptide, namely VAL301
and BC201. Commercial value for VAL201 is intended to be obtained via an external partnership and the
divesting of both VAL201 and VAL401 clinical assets from our pipeline will demonstrate that our science is
conducted always with a view to the end partnership.
A major scientific development during 2020 was the establishment of the consortium between ValiRx,
OncoLyitka and Black Cat Bio to consider the use of the VAL201 peptide as the key active ingredient in a
combination product (BC201) for use in the treatment of patients suffering severe symptoms of coronavirus
infection. Preclinical proof-of-concept studies have been initiated with ValiRx providing additional scientific
and commercial support. Given the mode of action of BC201, we believe it could also have an application in
viral-induced sepsis, and potentially incorporated into future “pandemic preparedness” protocols to ensure
the world is ready for the next viral outbreak.
VAL301, our preclinical programme for the treatment of endometriosis, was announced on 1 May 2020 to
be the subject of a material transfer agreement with an undisclosed Japanese Pharma Company. In this
agreement, ValiRx provided surplus clinical trial drug to enable a preclinical study designed by the Japanese
Pharma Company as part of their evaluation of suitability for further development and commercialisation.
Although this evaluation has not yet completed, we are actively pursuing additional options to continue the
development of VAL301.
VAL401 was announced on 14 January 2020 to be the subject of an agreement with Black Cat Bio, in which
Black Cat Bio would acquire the rights to further develop VAL401 for the treatment of pancreatic cancer,
subject to a minimum fund-raise. This has allowed funding discussions to continue without diverting
resources from our core focus for 2020.
A major drive behind the change in Company processes was to open the door for greater transparency with
shareholders. We believe this has been demonstrated by our Company announcements since June 2020 and
our new Q&A protocol actively encourages shareholders to ask questions.
The launch of our new strategy has enabled us to start building connections with universities, institutions and
medical research charities. Innovators and technology transfer departments alike have been able to introduce
us to a range of fascinating projects. The wealth of high-quality academic science we have uncovered never
ceases to delight me. Although this process has started with predominantly UK based institutions, we intend
to increase our reach to assess the very best opportunities available worldwide.
Finally, I would like to thank our investors for their continuing support. I would also like to thank our team,
advisers and collaborators for their ongoing efforts to ensure that ValiRx makes progress. We are looking
forward to 2021 and are confident in the outlook for ValiRx.
0 8
ValiRx Plc
CONNECTED INNOVATION
Chief Executive’s Report
for the year ended 31 December 2020
Outlook
After a period of re-alignment and consolidation throughout 2020, we look forward to the new strategy
beginning to have the desired impact in 2021.
Over the course of the year, we are targeting up to four new projects entering the evaluation stage of
our process, with at least two of those progressing to a full license. R&D expenditure during this period
will increase to cover the initial evaluation costs and support programmes as they enter the fully licensed
period. The expected costs are budgeted and incorporated into our cash forecasts.
Where appropriate, in-licenced programmes will be positioned in a subsidiary company, or SPV (Special
Purpose Vehicle) and third-party funding and/or partners will be sought towards the end of the preclinical
development period, subject to successful outcomes of the required experiments.
Our research strategy aims to mitigate risks by two means. Firstly, by carrying out initial evaluations of
therapeutic candidates prior to incorporation into our pipeline we will be able to establish suitability with
minimal cost before making long term commitments. Secondly, we intend to evaluate multiple projects
each year across a range of technologies and applications with the aim of creating a risk balanced
portfolio and a steady flow of opportunities for further development.
Dependent on the nature and the specific requirements of each programme, additional personnel may be
required, either recruited directly into ValiRx or into the relevant SPV. The objective would be to build on the
expertise of the existing team, while maintaining the flexibility of a virtual biotech model. Team growth is
built into our financial planning over the next 2-3 years but will ultimately be determined according to the
needs and resources available to the Company.
As a result of the funds raised in 2020 and significant costs reductions, and assuming no major
perturbations, we anticipate that our current cash balance will be sufficient to progress the strategy as
described over the next period. Subject to successful outcomes, the ongoing out-licencing discussions for
the Company’s clinical assets will further extend the cash runway and potentially allow an expansion of
activities.
Financial overview
Our financial results show the total comprehensive loss for the year ended 31 December 2020 of
£1,443,248 (2019: £2,388,707) and a loss per share of 3.81p (2019: loss 33.08p).
Research and developments costs were £230,115 for the year ended 31 December 2020 as compared
to £984,457 in 2019, a decrease of £754,342.
Administrative expenses, before loss on disposal of intangible assets of £154,968, were £1,276,619 for
the year ended 31 December 2020 as compared with £1,860,379 in 2019, a decrease of £583,760.
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: 26 April 2021
0 9
ValiRx Plc
CONNECTED INNOVATION
Group Strategic Report
for the year ended 31 December 2020
The Directors present the strategic report and financial statements for the year ended 31 December 2020.
Company information and highlights
ValiRx accelerates the development of treatments in cancer and women’s health to improve patient lives.
We provide the scientific, financial and commercial framework to enable the rapid translation of innovative
science into clinical development. With our extensive and proven experience in research and drug
development, we select and incubate promising novel drug candidates and guide them through an
optimised process of development, from preclinical studies to clinic and investor-ready assets.
Integrating science and business
We connect diverse disciplines across scientific, technical and commercial domains, with the promise of
achieving a more streamlined, less costly, drug development process. We work closely with our selected
collaborators and leverage the combined expertise required for science to advance. Lead candidates from
our portfolio are out-licensed or partnered with investors through ValiRx subsidiary companies for further
clinical development and commercialisation.
Strategy and Vision
ValiRx accelerates the translation of innovative science into impactful medicines.
We identify, incubate and accelerate innovations that focus on the needs of those who matter most –
the patients. With a sense of urgency and determination, we select molecules with the highest potential
to improve patient lives throughout treatment.
Our therapeutic focus prioritises cancer, related conditions and women’s health. The pipeline is enriched
by robust partnerships with academia and industry, fuelled by our intellectual and financial resources.
We develop treatments derived from diverse and disruptive innovations that have the potential to progress
rapidly upstream and deliver value to all of our stakeholders. Our virtual model and industry expertise
enable us to accelerate the translation of promising new drug candidates to early clinical studies. Strategic
partnering to co-develop and fund later stage clinical trials, allows ValiRx to continue to build a
risk-balanced pipeline of novel projects.
Find – Focus –Transform – Grow
Find – We identify and select innovations which fit our therapeutic interests, expertise and strategic model.
Focus – We devote intellectual and financial resources to deliver a risk balanced pipeline of projects that
are investor and industry ready.
Transform – Starting with the end in mind, we collaborate with world-leading innovators to enhance and
accelerate the translation of great science into effective treatments.
Grow – Our strategy includes building a portfolio of independent entities with a common support
framework and a shared vision. Dynamic joint ventures and end-focused partnerships will progress
each entity to commercialisation and deliver maximum value.
Business Structure
ValiRx accelerates scientific development and prepares the business infrastructure to present each SPV
project as partnership ready.
With the necessary scientific and commercial preparation, projects are launched as a ValiRx Special
Purpose Vehicle (SPV), presenting an opportunity for external funding and investment from partners, to
continue progression into clinical development.
When the SPV has been established fledged and has obtained independent financing, ValiRx will continue
to provide all the support necessary to deliver success. The income received from each SPV is re-invested
into the next generation of ValiRx preclinical projects. SPVs are valuable commercial entities, each
positioned to strategically exit from ValiRx when the time is right.
1 0
ValiRx Plc
CONNECTED INNOVATION
Group Strategic Report
for the year ended 31 December 2020
The Group operates through two current 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. 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 preclinical development and
through a pilot Phase II clinical trial for the treatment of non-small cell lung 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.
The Company listed on the Alternative Investment Market (“AIM”) of the London Stock Exchange in
October 2006.
1 1
ValiRx Plc
CONNECTED INNOVATION
Group Strategic Report
for the year ended 31 December 2020
T H E R A P E U T I C A R E A S
Cancer
We are focused on finding better treatments for
difficult-to-treat types of cancer. Many cancer
treatments use traditional approaches such as
chemotherapy, which, while they extend patient
survival, also bring high side effect burdens and
complex combination treatment regimens.
Whilst individualised treatments and target therapies
have improved outcomes for some types of cancer,
many types of cancer have insufficient treatment
options and rely on drugs that have remained
unchanged for decades.
By targeting precise biological mechanisms, we aim to
improve the patient experience in terms of both
survival and quality of life.
VAL201 in prostate cancer
VAL201 is a short peptide being studied for the
treatment of prostate cancer. The peptide structure
is inspired by the structure of the naturally occurring
androgen receptor and is designed to intercept and
prevent the binding of the androgen receptor to SRC
kinase; an enzyme implicated in cancerous cell
growth pathways. By preventing the androgen
-mediated activation of SRC kinase, VAL201 can
prevent cancerous cell proliferation (or growth)
without interfering with other functions of the
androgen receptor or SRC kinase. This precision
method, mimicking a natural process, proposes a
high specificity of cancer treatment, with a lower
side effect profile.
VAL201 has recently completed a Phase 1/2 clinical
trial in the UK, investigating the effects of different
dose levels of the drug to establish the safety,
tolerability and first indications of disease impact
(see below).
1 2
VAL401 in adenocarcinoma
VAL401 is the reformulation of the established
anti-psychotic drug risperidone. Formulated into a
lipid-filled capsule for oral, once daily administration,
VAL401 enables an anti-cancer activity, via cancer
cell metabolism enzyme, Hydroxysteroid-
dehydrogenase type 10 (HSD10), not seen with
conventional risperidone.
VAL401 has completed a pilot Phase 2 clinical trial,
treating patients with end-stage non-small cell
lung cancer. These patients demonstrated a
statistically significant improvement in overall
survival from diagnosis over case-matched control
patients in the same clinics; and showed
improvements in quality of life during treatment..
Identifying quality of life improvement in nausea,
pain and appetite, has identified pancreatic
adenocarcinoma to be a preferred disease to
assess in the next clinical trial of VAL401.
W O M E N ’ S H E A LT H
Endometriosis
Endometriosis is a gynaecological medical condition
in which cells from the lining of the uterus
(endometrium) appear and grow outside the uterine
cavity. This growth fluctuates in a pattern alongside
the menstrual cycle, under the influence of female
hormones.
These misplaced endometrial-like cells are influenced
by hormonal changes and respond in a way that is
similar to the cells found inside the uterus; hence
symptoms often worsen with the menstrual cycle.
The treatments chosen will depend on symptoms, age,
and lifestyle plans, currently centring around pain
relief and hormone suppression; the latter leading to
potential infertility and bone weakening side effects.
VAL301 in endometriosis
VAL301 presents an opportunity to suppress
hormone-driven cellular growth in the absence of
outright hormone suppression. By interrupting only
the hormone driven cell growth while sparing the
other hormone activities, the infertility and related
side effects are expected to be avoided.
Currently in preclinical testing, this theoretical
benefit will be looked for in future trials.
ValiRx Plc
CONNECTED INNOVATION
Group Strategic Report
for the year ended 31 December 2020
T H E R A P E U T I C A R E A S
Covid-19
Coronavirus SARS-CoV2 is the causative pathogenic
virus of Covid-19. This highly contagious virus causes
Acute Respiratory Distress Syndrome (ARDS) in many
patients, which can lead to hospitalisation and death.
The pandemic was declared in March 2020, and
the world is now fully aware of the prevalence and
serious nature of the virus.
Patients displaying ARDS can respond well to
supportive treatment including administration of
positive pressures of oxygen, however, despite this,
a proportion still go on to experience more severe
symptoms.
These symptoms are believed to be caused
by the significant, multi-organ damage that
can be caused by an excessive response
of the immune system, even after the
viral infection has reduced.
This is known as a hyperimmune
response.
BC201 in Covid-19
BC201 is a combination of the peptide ingredient
of VAL201/VAL301 with complementary active
components to dampen this excessive immune
response and consequently improve severe
symptoms of Covid-19.
The theoretical action of the peptide is two-fold:
by blocking the Androgen Receptor mediated
activity of SRC Kinase, the peptide is postulated
to down-regulate the expression of TMPRSS2 a
transmembrane protein believed to be required
for Coronavirus cell entry; and by directly
dampening the immune response.
1 3
ValiRx Plc
CONNECTED INNOVATION
Group Strategic Report
for the year ended 31 December 2020
P I P E L I N E
Our priority areas of therapeutic focus are cancer and women’s health. We select only the most promising
preclinical projects for progression through the drug development process, to become ready for clinical trials.
Developing with the end-point in mind
Our development process for each molecule is specifically structured to minimise risk and maximise the
chances of successful clinical development and approval for clinical use.
D IS COVE RY
OPT IMISATIO N
PRECLI NI CA L
PHASE 1
PHASE 2
VAL201
PROSTATE CAN C ER
VAL301
VAL201
E N DOM ETR IOS IS
PROSTATE CAN C ER
VAL401
LUN G /PA NCR E ATI C CAN CER
BC201
COVI D-19 COMPLICATION S
KTH222
OVAR IA N CA N CER
VAL201
In November 2020, ValiRx received the full dataset to
be used for the Clinical Study Report from the
Phase 1/2 clinical trial of lead asset, VAL201, for the
treatment of locally advanced or metastatic prostate
cancer and other solid tumours and performed at
University College Hospital (UCLH), London.
The dataset provides a complete breakdown of the
full data of safety and tolerability as well as evidence
for encouraging disease impact as observed during
the clinical trial. This data has been used to formulate
the Clinical Study Report and to report the results on
the www.clinicaltrials.gov database.
Additional detailed analysis of the results will form
the basis of peer-reviewed journal publications.
About the VAL201-001 clinical trial
The clinical trial opened to recruitment in December
2014 and closed in January 2020.
Patients were scheduled for treatment of a once
weekly injection of VAL201 in 3-week cycles for a
maximum of 6 cycles. A total of 12 patients received
at least 1 dose of VAL201.
Patients were eligible if they were: Adult men (over
the age of 18) with incurable locally advanced or
metastatic prostate cancer who had 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.
1 4
In February 2021, ValiRx entered into a new
agreement with Physiomics PLC (AIM:PYC)
(“Physiomics”), an oncology consultancy using
mathematical models to support the development
of cancer treatment regimens and personalised
medicine solutions. The new agreement
supersedes the previous agreement between
Physiomics and the Group announced on
13 September 2011.
Under the terms of the new agreement, ValiRx will
benefit from Physiomics’ experience in modelling
the effects of prostate cancer treatment, as well
the use of the latest version of its Virtual Tumour™
technology, which will be applied to derive
valuable information from the additional data
generated by the completed clinical trial of
VAL201. Physiomics will also support ValiRx in
modelling the use of the VAL201 peptide in
endometriosis (VAL301) and Coronavirus (BC201).
Physiomics has developed a quantitative systems
pharmacology approach that uses preclinical
and clinical data to model the activity of a drug
candidate. This data can be used to explore the
mechanism of action, disease impact and optimal
dosing strategies.
VAL301
VAL301, the same peptide ingredient as VAL201,
is being investigated for the treatment of women
with endometriosis in the preclinical stage of
development.
ValiRx Plc
CONNECTED INNOVATION
Group Strategic Report
for the year ended 31 December 2020
P I P E L I N E
VAL301 presents an opportunity to suppress
hormone-driven cellular growth in the absence of
outright hormone suppression. By interrupting only
the hormone driven cell growth while sparing the
other hormone activities, the infertility and related
side effects are expected to be avoided. Currently
in preclinical testing, this theoretical benefit will be
looked for in future trials.
The Company announced on 1 May 2020 that a
Material Transfer Agreement was signed with an
undisclosed Japanese pharmaceutical company,
which is carrying out laboratory-based evaluations
using their own processes to determine whether to
enter a licensing agreement with ValiRx for further
development of the project. The Company will
maintain discussions with other interested parties
during the period of evaluation by the Japanese
company.
VAL401
VAL401 was originally developed for treating lung
cancer. VAL401 completed an exploratory phase 2
trial in late-stage cancer patients in 2017. The data
indicated that some patients treated with VAL401
benefited an improvement in quality of life, particularly
in measures of pain, nausea, anxiety and insomnia;
and a statistically significant improvement in overall
survival from time of diagnosis when compared to case
matched control patients from the same clinic.
Following discussions with clinical key opinion leaders,
it was suggested that patients with pancreatic cancer
could derive great benefit from a product like Val401
due to improvements to severe abdominal pain, lack
of appetite and nausea related to the disease.
Consequently, the next trial for VAL401 will include
pancreatic cancer patients with the aim to help
exemplify both the therapeutic and palliative effects
of VAL401. As VAL401 is the reformulation of a
widely used generic drug, with a well-documented
safety profile and targeting an underserved disease
with low survival rates, we expect regulators to have
a favourable view on approval.
On 14 January 2020, the Company announced that its
subsidiary, ValiSeek Limited, signed a letter of intent
with Tangent Reprofiling Limited and Black Cat Bio
Limited to enable Black Cat Bio Limited to seek funding
for the further development of VAL401. When an un-
disclosed threshold of funding is reached, the VAL401
IP license will be transferred from ValiSeek to Black Cat
Bio, and all shareholders of ValiSeek, including ValiRx,
will become shareholders of Black Cat Bio.
1 5
BC201
BC201 is a combination of the peptide ingredient
of VAL201 with complementary active components
to dampen this excessive immune response and
consequently improve severe symptoms of
Covid-19.
The theoretical action of the peptide is two-fold:
by blocking the Androgen Receptor mediated
activity of SRC Kinase, the peptide is postulated to
down-regulate the expression of TMPRSS2 a
transmembrane protein believed to be required for
Coronavirus cell entry; and by directly dampening
the immune response.
On 2 June 2020, the Company announced that it
has entered into a collaboration agreement with
Oncolytika Limited and Black Cat Bio Limited to
consider the potential for VAL201 to be used in
conjunction with other components for treatment
of patients suffering a hyperimmune response
after Coronavirus SARS-CoV2 infection.
Black Cat Bio is co-ordinating the project overall,
with project management of specific elements
contributed by ValiRx and Oncolytika. ValiRx will
provide samples of VAL201 to enable the testing
program. Subject to a successful outcome, ValiRx
will receive 40% of any licensing income generated
by the project.
Pipeline Development
ValiRx has initiated contact with a wide variety of
innovators to identify suitable candidates to enter
the development pipeline. This has already resulted
in increased visibility of the company’s objectives
and the benefit it provides in connecting science,
finance and commerce. It is expected that ca. 4-6
innovative compounds will undergo rigorous
scientific evaluation each year and approximately
50% will progress to full adoption for further
development by ValiRx.
Non-core assets
As a result of the business review notified on 19
May 2020, several projects were identified as non-
core assets and deemed not to fit with the future
strategy of the Company. Subsequent to this
review, the assets acquired from FitBiotech Oy and
the portfolio surrounding the TRAC technology
were disposed of via a patent assignment as
announced on 29 May 2020; and the licenses for
the GeneICE technology are in the process of
being terminated as announced on 29 May 2020.
ValiRx Plc
CONNECTED INNOVATION
Accelerating biomedical innovation by connecting
science, finance and commerce
Management Team and Board Team Overview
We are a multi-disciplinary team of scientists, technologists and business leaders, committed to providing
the framework required for effective and efficient drug development. Collaboration is the key to making
this happen; each member of the ValiRx team plays a vital role in the strength and success of our
programmes, which are focused on achieving the best outcomes for patients, at the lowest cost, in the
shortest timeframe.
Dr Suzanne Dilly
Chief Executive Officer (Appointed June 2020)
Suzanne is an experienced entrepreneurial scientist. After commercialising her
Chemical Biology post-doctoral research in the University of Warwick spin-out, a2sp
Limited, Suzanne was awarded a prestigious Royal Society of Edinburgh Enterprise
Fellowship, during which formal commercial and entrepreneurial training completed
her transition from lab to boardroom.
Completing commercial transactions to progress projects through multiple companies,
Suzanne has been working in small company virtual biotechs since 2006.
Dr Kevin Cox
Non-Executive Chairman (Appointed June 2020)
Kevin has over 25 years’ experience in the life science industry. Serving as CEO of high
growth biotechnology businesses, he has extensive experience in strategy, corporate
development, M&A, financing and joint ventures. With a passion for improving
translational science, Kevin has strong links to government, funding bodies and
academia, and has contributed to a number of public sector advisory committees.
Kevin currently has non-executive roles with Biorelate Limited, the British Neuroscience
Association and Biotaspheric Limited.
Mr Gerry Desler
Chief Financial Officer
Gerry is a chartered accountant, who qualified in 1968 with a City firm, before
becoming a partner (1970) and Senior Partner (1985). During his time in the City,
he has specialised in consultancy work, much of it involving funding and venture
capital.
Gerry also holds the position as Company Secretary at AIM listed company Prospex
Energy PLC.
Mr Kevin Alexander
Non-Executive Director
Kevin is a qualified solicitor in England and an attorney in New York and he was a
partner at major law firms in both London and the United States for over 25 years.
Since leaving the law he has been involved in forming and managing various
businesses, both private and public. Kevin is a director of ValiRx Plc, and joined the
Board in September 2006.
He has an MA in law from Cambridge University.
1 6
ValiRx Plc
CONNECTED INNOVATION
Accelerating biomedical innovation by connecting
science, finance and commerce
Management Team and Board Team Overview
Mr Martin Lampshire
Non-Executive Director (Appointed May 2020)
Martin started his career in Lloyds Bank’s Commercial Services division in 1989 after
completing the ACIB qualification. He has over thirty years’ experience in Corporate
Broking, assisting in a variety of equity raises including IPOs, secondary fundraisings,
vendor and private placings across a variety of sectors.
He has also worked in a number of overseas financial centres including Hong Kong,
Singapore, Kuala Lumpur and Dubai. Martin is currently an Executive Director of Global
Resources Investment Trust Plc and a Non-Executive Director of Bould Opportunities Plc.
Mr Mark Treharne
Corporate Development Manager
Mark began his career in the City in 2011 and has worked in Corporate Broking and
Equity sales working for numerous different firms including Daniel Stewart, Northland
Capital Partners and Pello Capital.
His role includes enhancing the reputation of the company within the City and
working closely with City firms to identify new therapeutic assets to incorporate into
the ValiRx portfolio.
Mr Kumar Nawani
Head of Operations
Kumar has been working over 20 years in international trade, client & vendor
management, business development, brand development, e-commerce, procurement,
IT management & compliance roles with established public and private companies
in the UK and previously in Hong Kong.
Kumar has been with the ValiRx Group since January 2008 as an active member of
the ValiRx management team.
Scientific Advisors
ValiRx retains the services of a core team of scientific advisors to provide expert opinions on all pipeline
projects in a wide range of therapeutic areas. A Science Advisory Board (SAB) has been established, which
meets quarterly to critically review all projects and identify future trends in biomedical research, in addition
to holding meetings with individual members of the ValiRx team in between.
As a virtual company, ValiRx has the flexibility to select the most appropriate experts for each project as
the need arises. In particular, the Company has sought expert input from internationally renowned clinicians
in prostate cancer to provide opinions on the optimum clinical utility of VAL201 and how best to progress
clinical and commercial development.
1 7
STAKEHOLDER
ENGAGEMENT
ValiRx Plc
CONNECTED INNOVATION
Accelerating biomedical innovation by connecting
science, finance and commerce
Frequently Asked Questions
ValiRx launched a new communication process to standardise and improve shareholders’ experience
of communicating with the Company.
The Board recognise the importance of effective and timely communication with all stakeholders,
including shareholders, investors, innovators and staff. The business and science of biomedical
development can be complex and difficult to articulate in a clear and concise way through regulated
channels. The Company understands and encourages the desire of shareholders to ask questions
about scientific or corporate progress, and is mindful of the need to ensure all shareholders have fair
and equal access to information about the Company, as required by the AIM Rules and the Market
Abuse Regulations.
As part of the new strategy, a new email address - Questions@Valirx.com - allows shareholders to
ask questions, with answers made publicly available via the ValiRx website.
VAL201
What Phase of Development is VAL201 at?
VAL201 completed a Phase 1/2 clinical trial in the treatment of patients with prostate cancer in 2020.
The results from this trial underwent an initial analysis, and readout that the treatment was seen to be safe
and well tolerated at the dose levels administered, and that 54.5% of patients “responded” to the treatment,
that is that their cancer did not progress during their period on trial.
Drugs are typically progressed through Phase 1, Phase 2 and Phase 3 clinical trials, with at least one trial
being run at each stage before being considered for authorisation for use in the general patient population.
What can we expect to happen next for VAL201?
ValiRx is currently in the process of identifying a partner to progress further scientific development of VAL201.
Such a partner would be able to fund a larger trial to look in greater detail at the activity of VAL201 in
patients, with the confidence of knowing they are building on the encouraging results we have already
gathered.
The exact nature of the partnership and of the next clinical trial will depend on the identity of that partner,
but the next stage of scientific development is expected to be a full Phase 2 clinical trial.
VAL301
What Phase of Development is VAL301 at?
VAL301 uses the same active ingredient as VAL201, but proposes the treatment of women with endometriosis.
VAL301 is in preclinical development. As it uses the same ingredient as VAL201, the safety and tolerability
data collected during the clinical trial, and preclinical safety data collected to support that trial can also be
used to support development of VAL301.
However, additional preclinical work is required to ensure that the treatment does not adversely affect
otherwise healthy women, as the prostate cancer trial only enrolled men with a terminal cancer diagnosis.
A clinical development plan has been compiled that considers several different clinical trial designs and the
level of safety data that would be needed to collect to enable them.
1 8
ValiRx Plc
CONNECTED INNOVATION
Accelerating biomedical innovation by connecting
science, finance and commerce
Frequently Asked Questions
VAL401
What can we expect to happen next for VAL401?
VAL401 completed a pilot Phase 2 clinical trial in end-stage non-small cell lung cancer patients. This trial
demonstrated an improvement in patient survival when compared to case matched patients in the same
clinics who were not enrolled on the trial. The patients also reported improvements in quality of life,
including improvements in pain, nausea and appetite.
On analysis of the results of this trial, independent oncologists recommended the next trial to be in patients
with pancreatic ductal adenocarcinoma (pancreatic cancer) who typically present with symptoms with
particular burdens of pain, nausea and anorexia.
A clinical trial has been planned to treat newly diagnosed patients with standard of care in conjunction with
VAL401, in a blinded comparison against standard of care with placebo in around 120 patients. This clinical
trial is outside the remit for direct ValiRx involvement, and external partners are being sought to further this
development.
BC201
How does BC201 work?
BC201 incorporates the VAL201 peptide as a component of a possible treatment for patients suffering
severe symptoms of Covid-19. The mechanism of action for VAL201 in this application should be considered
from several angles.
• Firstly, the link between the levels of expression of the Androgen Receptor on cells and susceptibility to
severe symptoms of Covid-19 are clear and well published. Treatment with VAL201 has the potential to
moderate activity of the Androgen Receptors and expression of the protease TMPRSS2, which is
required alongside the ACE2 receptor for the virus to enter the cell, thus reducing infectivity.
• Secondly, the role of VAL201 in blocking the hormone mediated activity of SRC kinase is proposed to
have a direct impact of the production of Neutrophil Extracellular Traps (NETs). These NETs are part of
the immune response and are initially helpful for removing virus (or bacteria) after an infection.
In severe cases of Covid-19, just as in sepsis, these NETs can cause bystander collateral damage, causing
multi-organ failure, which triggers further production of NETs and perpetuates the cycle. By breaking this
NET cycle, severe symptoms caused by the over-reaction of the immune system is moderated. It is not as
straightforward as an “anti-inflammatory effect”.
• Finally, as the virus uses the infected cell’s internal machinery to replicate, the inhibition of a key pathway
by the VAL201 peptide, may also slow the replication rate of the virus, giving additional time for the
immune system to respond appropriately. This multi-faceted approach is considered a key advantage of
the BC201 programme, and the consortium developing BC201 is investigating each benefit individually,
as well as in synergy.
What stage of development is BC201 at?
BC201 is undergoing preclinical experiments to assess whether the theoretical mechanism of action is
demonstrated in appropriate biological systems. The development is being carried out by the consortium
that has been formed between ValiRx, OncoLytika and Black Cat Bio. This consortium has commissioned
the experimental work to date, is applying for UK government grants, and actively seeking development
partners to progress the project.
What can we expect to happen next for BC201?
BC201 continues to be developed for treatment of patients in the current Coronavirus pandemic, but also
with a view to widening usage to viral-induced sepsis and other diseases with similar immune system driven
causes. The next steps will be to complete the preclinical work and to commence regulatory proceedings if a
clinical trial is planned outside of the emergency pandemic situation.
1 9
GOVERNANCE
ValiRx Plc
CONNECTED INNOVATION
Group Strategic Report
for the year ended 31 December 2020
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 the Company maintaining a reputation for high standards of business conduct; and
• 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 24 are
comments regarding the application of the ten principles of the QCA Code. Some s.172 considerations are
addressed in more detail in the Corporate Governance Report.
The Board considers the Company’s major stakeholders to include shareholders, employees, suppliers
and partners. 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 Section 172 considerations.
Long term value
The aim of all business resources allocation is to create long-term value through the management of a
balanced but dynamic portfolio of preclinical projects for development towards clinical readiness and
partnering.
The Chief Executive’s Report on page 8 describes the Company’s activities, strategy and future prospects.
Section 172 considerations are also addressed in the Chief Executive’s Report, including the considerations
for long term strategic development.
Our people
The Company strategy is to remain a virtual organisation with a small core of highly experienced employees
managing a wider portfolio of service providers and expert scientific advisors. It is imperative that the core
team has the right breadth of experience to manage all facets of early drug development, including scientific,
commercial and operational considerations. The Company has and will continue to ensure appropriate
training and engagement of employees to ensure successful delivery of the strategy. Effective project
management processes will be employed so that all employees are clearly aware of the role they play in
achieving the business objectives.
2 0
ValiRx Plc
CONNECTED INNOVATION
Group Strategic Report
for the year ended 31 December 2020
Business relationships
Given the virtual nature of ValiRx, it is essential the Company maintains good relationships with its suppliers
by taking a collaborative approach and abiding by mutually agreed and commercially acceptable business
terms that benefit all parties.
Community and environment
As a relatively small organisation, the Group’s impact on the community and the environment is modest but
the Board endeavours to ensure that the business and suppliers act in an ethically and in an environmentally
conscious manner. The Board intends to continue to minimise unnecessary travel when current restrictions are
lifted. The Company is also committed the 3R’s principles in all its preclinical studies.
Business conduct
The Board recognises its responsibility for setting and maintaining a high standard of behaviour and
business conduct. The Company operates within the QCA Code framework and complies with all relevant
regulatory requirements for developing new treatments for human use. The Company maintains a suite of
standard operating procedures (SOPs) and corporate governance policies that describe the management
system.
All employees are trained regularly on these procedures. All material information is disseminated though
appropriate channels and is available to all stakeholders through the company’s corporate presentations,
news releases and website, www.ValiRx.com. This is described in more detail in the Corporate Governance
Report Principle 8.
Shareholders
The Directors are committed to treating all shareholders equally. As part of its decision-making process,
the Board considers the interests of shareholders as a whole. All shareholders are provided with equivalent
information through RNS announcements, and the ValiRx website. The Company has also introduced a
monthly Q&A process with shareholders to help improve clarity of business activities, where possible, in a
timely and transparent manner. For more information see Principles 2 and 3 in the Corporate Governance
Report.
2 1
ValiRx Plc
CONNECTED INNOVATION
Group Strategic Report
for the year ended 31 December 2020
PRINCIPAL RISKS AND UNCERTAINTIES
ValiRx is a biopharmaceutical research and development Company and, in common with other companies
operating in this field, is subject to a number of risks and uncertainties. The principal risks and uncertainties
identified by ValiRx for the year ended 31 December 2020 are below.
Risk Area
Description
Mitigation
Research and
development
The Company is embarking on a new strategy
and may not be successful in building a
balanced pipeline of product candidates.
The success of the Company depends upon
the selection and implementation of novel,
high quality projects. The Company utilises
a range of external scientific, regulatory and
clinical experts to help guide its development
programmes. The progress of the development
programmes and identification of commercial
partners for clinical development represents
the best indicator of performance.
Development of product candidates to be
ready for clinical studies involves a lengthy
and complex process and products may not
meet the necessary requirements in terms
of toxicity, potential efficacy or safety and
therefore may need to be dropped from the
pipeline.
Commercial
(current clinical
programmes)
Failure to complete out-licencing of current
clinical projects on acceptable commercial
terms. The strategic shift towards projects
at an earlier stage means that ValiRx will no
longer lead and fund clinical studies. VAL201
and VAL401 will require out-licencing partners
for continued development.
Cash flow
Return on
investment
The cash position is currently sufficient to
make good progress with the new strategy,
but the Company may need to seek further
capital through equity or debt financings in
the future if additional time and resources
are required to progress each project to
become clinic and partnership ready.
Drug development has risks at all stages
and is conducted over several years. Many
drug candidates fail in development due to
the clinical and regulatory risks. As a result,
the returns achieved may be insufficient to
cover the costs incurred. This is exacerbated
when failures occur in later stages of clinical
development.
2 2
High levels of business development
activity to identify a range of promising
candidates. Rigorous assessment and
selection processes for any candidate
entering the development pipeline.
Effective project management processes
and stage-gates to review suitability for
further development and eventual
out-licencing
Completion of the Phase I/II clinical study
for VAL201 has provided an opportunity
to prepare a comprehensive clinical study
report and engage with expert clinicians
to identify the most appropriate
application. This has provided a robust
platform for marketing VAL201 to
prospective partners. The Company is
vigorously pursuing all business
development avenues to identify
out-licencing options.
It is expected that out-licencing of VAL201
and VAL401 will provide additional reserves
to support the new strategy. Income is also
expected to be generated through provision
of services to subsidiary companies.
The Company has significantly reduced its
underlying fixed costs to focus expenditure
on the development programmes.
The Company strategy has been shifted to
focus on developing a pipeline of earlier
stage preclinical projects with the aim of
adding value by carrying out the studies
necessary to enter clinical trials. At this
stage, partners will be sought to fund and
preferably manage clinical trials. ValiRx
will seek to generate fee income to cover
near-term working capital requirements
and will retain a stake in each project for
longer term return on investment.
ValiRx Plc
CONNECTED INNOVATION
Group Strategic Report
for the year ended 31 December 2020
Risk Area
Description
Mitigation
The Company manages its regulatory
risk by working closely with its expert
regulatory advisors and, where
appropriate, seeking advice from bodies
on regulatory risk relevant to the
Company’s programmes and activities.
The Company invests in maintaining and
protecting this intellectual property to
reduce risks over the enforceability and
validity of patents. The Company has a
retained patent agent and works closely
with its legal advisors and obtains where
necessary opinions on the intellectual
property landscape relevant to all
programmes and activities.
The Company has invested in its
management team at all levels. The
Directors also believe that the senior
management team is appropriately
structured for the Company’s size and is
not overly dependent upon any particular
individual. The Company has entered into
contractual arrangements with these
individuals with the aim of retaining their
ongoing commitment.
The Group recognises its 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
the disposal of gaseous, liquid and solid
waste products are controlled in
accordance with applicable legislation
and regulations.
Regulatory
The Company’s operations are subject to laws,
regulatory approvals and certain governmental
directives, recommendations and guidelines
relating to, amongst other things, product
health claims, occupational safety, laboratory
practice, the use and handling of hazardous
materials, prevention of illness and injury,
environmental protection and human clinical
studies. There can be no assurance that future
legislation will not impose further government
regulation, which may adversely affect the
business or financial condition of the Company
Intellectual
property
The Company’s success depends on its
ability to obtain and maintain protection for
its intellectual and proprietary information
Patent applications may not be granted, and
existing patent rights may be successfully
challenged and revoked.
Operational
Environmental
matters
The Company’s development and future
prospects depend to a significant degree on
the experience, performance and continued
service of its senior management team,
including the Directors.
The unplanned loss of the services of any of
the Directors or other members of the senior
management team and the costs of recruiting
replacements may have a material adverse
effect on the Group and its commercial and
financial performance.
The Board is committed to minimising the
Group’s impact on the environment and
ensuring compliance with environmental
legislation. The Board considers that its
activities have a low environmental impact.
The Group strives to ensure that all emissions
including the disposal of gaseous, liquid and
solid waste products are controlled in
accordance with applicable legislation and
regulations. Disposal of hazardous waste is
handled by specialist agencies.
ON BEHALF OF THE BOARD:
G Desler
Director, Chair Audit and Risk Committee
Date: 26 April 2021
2 3
ValiRx Plc
CONNECTED INNOVATION
Corporate Governance
for the year ended 31 December 2020
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 Company has applied the 10 principles of the QCA Code this year.
Corporate Governance Statement
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.
We believe the Company is in full compliance with each of the 10 principles of the Quoted Companies
Alliance Corporate Governance Code (QCA Code) and that our governance framework ensures that the
Company operates effectively and with integrity. In 2020, the Company went through a number of
organisational and strategic changes that re-defined our purpose, values and culture. All changes were
implemented in full compliance with the principles of the QCA Code
This Corporate Governance Statement addresses how the Group complies with each of the 10 principles
of the QCA Code.
Principle
How Company complies
1. Establish a strategy
and business model
which promote
long-term value for
shareholders
ValiRx is a biopharmaceutical company focused on the development of
treatments for cancer and women’s health that also help to improve a
patient’s quality of life.
Recognising the costs and inherent risks of carrying out clinical trials, ValiRx
has re-aligned its strategy to focus on developing a risk balanced portfolio
of preclinical drug candidates. The Company will add value by applying
commercial, scientific and operational experience to make each project
ready for clinical trials and external funding. A successful flow of candidates
through the pipeline and a retained financial interest will increase value to
shareholders over time.
2. Seek to understand
and meet shareholder
needs and
expectations
The Board is accountable to shareholders and other stakeholders and is
ultimately responsible for the implementation of sound corporate governance
practices throughout the Company. The Board of Directors is committed to
ensuring that the Company adheres to high standards of corporate governance
in the conduct of its business.
The Board attaches considerable importance to providing shareholders with
clear and transparent information on the Company’s activities, strategy, and
financial position. In addition to the necessary RNS releases, the Company has
implemented a monthly process to provide shareholders with a forum to ask
and receive responses to questions about the business. The Q&A is open to all
shareholders and ensures transparency, consistency and timeliness of
information sharing. All Q&A documents are published on the ValiRx website,
www.valirx.com. In addition, the CEO regularly presents podcasts on topics of
current interest, including scientific explanations and updates. The Company
website has been refreshed to reflect the new strategy and corporate
objectives.
Disappointingly, in 2020, the Covid crisis prevented any in-person meetings with
shareholders. If this situation continues into 2021, the Company intends to provide
an online opportunity for shareholders to speak directly with the Directors.
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 on regular basis.
2 4
ValiRx Plc
CONNECTED INNOVATION
Corporate Governance
for the year ended 31 December 2020
Principle
How Company complies
3. Take into account
wider stakeholder and
social responsibilities
and their implications
for long-term success
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, customers, suppliers, and the patients who ultimately benefit from its
research and development programmes. Our corporate social responsibility
approach continues to meet these expectations. The Board also understands
that it has a responsibility to take into account, where practicable, the social,
environmental and economic impact of its approach.
The new strategy of ValiRx has been adopted, in part, in recognition of the fact
that effective treatments for debilitating diseases are often not developed due
to the innovators having a lack of expertise and financial resource. The Company
intends to improve the translation of novel science into effective treatments for
patients through collaboration with innovators and providing complementary
expertise. This approach necessitates a comprehensive understanding of areas
of unmet medical need, the likely adoption of new treatments and the data
required for successful commercialisation. This can only be achieved through
effective engagement with all stakeholder groups to identify the routes
to success.
4. Embed effective
risk management,
considering both
opportunities and
threats, throughout
the organisation
The Company maintains a current risk register, which is regularly reviewed by
the Board. ValiRx also operates an internal Quality Management System (QMS)
comprising 14 SOPs to comply with the most stringent quality standards
expected of a drug development company. The Company regularly audits its
suppliers to ensure the manufacturing process, quality process, and also the
sample shipment process all conform to the standard required.
2 5
ValiRx Plc
CONNECTED INNOVATION
Corporate Governance
for the year ended 31 December 2020
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
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)
During the year under review, the following were also directors:
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 budgets approved by the
Board;- Leads the management to ensure effective working relationships with the
Board by meeting or communicating on a regular basis to review key developments,
issues, opportunities and concerns;- Develops and proposes the Group’s strategies
and policies for the Board’s consideration;- Implements, with the support of the
management team, the strategies and policies as approved by the Board and its
committees in pursuit of the Group’s 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
issues affecting the Group- Leads the communication programme with stakeholders
including shareholders;- Conducts the affairs of the Group in accordance with the
practices and procedures 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 that the necessary financial and human resources
are in place for the 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.
Independence - The Board will identify in the annual report each Non-Executive
Director it considers to be independent. The Board will determine whether the
Director is independent in character and judgement and whether there are
relationships or circumstances which are likely to affect, or could appear to affect,
the Director’s judgement. The Board will state its reasons if it determines that a
Director is independent notwithstanding the existence of relationships or
circumstances which are relevant to its determination, including if the Director:
• Has been an employee of the Company or Group within the last five years
• Has, or has had within the last three years, a material business relationship with
the Company either directly, or as a Director or senior employee of a body that
has such a relationship with the Company
• Has received or receives additional remuneration from the Company apart from
a Director’s fee
2 6
ValiRx Plc
CONNECTED INNOVATION
Corporate Governance
for the year ended 31 December 2020
Principle
How Company complies
• 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. All of these
committees have terms of reference, which set out clearly their role, stating
whether it is to take decisions or make recommendations to the Board of
Directors. These are available on the Company’s website:
(https://www.valirx.com/corporate-governance).
Biographical details of the Directors can be found on the Company website at
https://www.valirx.com/board-directors-and-management-team. 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 the first AGM after 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 current Board members are individuals with extensive industry-specific
experience as well as professionals that bring to the Board the skill sets required
to meet its strategic, operational and compliance objectives. Their suitability as
Directors has therefore been determined largely on the basis of their ability to
deliver outcomes in accordance with the Company’s short and longer-term
objectives and thus add value to shareholders.
6. Ensure that between
them the directors
have the necessary
up-to-date
experience, skills and
capabilities
7. Evaluate board
performance based
on clear and relevant
objectives, seeking
continuous
improvement
ValiRx considers that assessments of the performance of the Board, the Board
Committees, the Chief Executive, the Company Secretary and each of the
individual Non-Executive Directors are pivotal to good corporate governance,
bringing significant benefits and performance improvements on three levels:
organisational; Board and individual member level. Establishing an effective
process for Board evaluation sends a positive signal to the organisation that
board members are 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 strengths and
weaknesses within the Company for continuous improvement.
Board Composition:
• Appropriate ratio between Executive and Independent Directors
• Awareness of social, professional and legal responsibilities at 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
2 7
ValiRx Plc
CONNECTED INNOVATION
Corporate Governance
for the year ended 31 December 2020
Principle
How Company complies
Effectiveness of the Board of Directors in:
• Monitoring financial performance against agreed financial objectives
• Monitoring the implementation of the strategy approved by the Board
• Appointing, removing and monitoring the performance of the Chief Executive
Officer, Chief Financial Officer and Company Secretary
• Ensuring appropriate succession planning for Board members and senior
management via the Nomination and Governance Committee
• Approving and monitoring financial and other reporting
• Approving and monitoring major capital expenditure, capital management,
funding, acquisitions and divestments
• Overseeing risk management, control, accountability and compliance systems
• Setting standards of behaviour to enhance the reputation of the Company in
the market and the community
• 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 relations with the Group CEO, members of
Committees, managers and heads of control functions; and
• Setting clear strategy for the Company reflecting goals short to mid-long term
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, timely and clear information to enable the
Board to perform its responsibilities
• 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 benefit patients. Moreover, it ensures that the
Company’s strategies and requirements for excellence and good governance
are instilled into the culture of the business. The Executive Directors interface
regularly with all personnel within ValiRx, 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 of key stakeholders, including scientists,
clinicians, regulators and suppliers and is mindful of the potential impacts of
decisions it makes.
2 8
8. Promote a corporate
culture that is based
on ethical values and
behaviours
ValiRx Plc
CONNECTED INNOVATION
Corporate Governance
for the year ended 31 December 2020
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
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 conditions that
enhance overall Board’s and individual Directors’ 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
• Setting, in consultation with the Chief Executive and Company 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
• Ensuring that the strategies and policies agreed by the Board are effectively
implemented by the Chief Executive and the management; and
• Ensuring that there is effective communication with shareholders, and that
each Director develops and maintains an understanding of the stakeholders’
views
The Board has implemented new processes for communication with shareholders
as detailed in Principle 2 above. The Board is also in regular communication with
its advisors to ensure regulatory, legal and financial compliance.
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 interest 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 2020:
Kevin Alexander 12/12
Dr Kevin Cox 9/12 (Appointed 26 June 2020)
Gerry Desler 12/12
Dr Suzanne Dilly 9/12 (appointed 8 June 2020)
Martin Lampshire 9/12 (appointed 7 May 2020)
Dr George Morris 2/12 (Resigned 14 April 2020)
Dr Satu Vainikka 2/12 (Ceased to be a director 14 April 2020)
2 9
ValiRx Plc
CONNECTED INNOVATION
Corporate Governance
for the year ended 31 December 2020
Principle
How Company complies
10. Communicate how
the company is
governed and is
performing by
maintaining a
dialogue with
shareholders and
other relevant
stakeholders
Matters reserved for the Board
• Approval of the Group vision, values and overall governance framework
• Approval of the Company’s Annual Report and Accounts and Half 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 preclinical and clinical
assets
• Approval of the Company’s long-term finance plan and annual capital budget
• Approval of any significant change in Group accounting policies or practices
• Approval of all circulars, listing particulars, resolutions and corresponding
documentation sent to shareholders
• Establishing committees of the Board, approving their terms of reference
(including membership and financial authority), reviewing their activities and,
where appropriate, ratifying their decisions
• 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 the risks and control
framework. It also makes decisions on budgets, Group strategy and major capital
expenditure. The day-to day management of the business is delegated to the
Executive Directors.
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 Nomination and Governance
Committee, which also report into ValiRx’s 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 the
Company for approval by the Board. It may approve intra-group transactions,
provided that they are consistent with the consolidated annual budget of the
Company, as well as specific 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 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 (Chief Financial Officer)
Kevin Alexander (Non-Executive Director)
3 0
ValiRx Plc
CONNECTED INNOVATION
Corporate Governance
for the year ended 31 December 2020
Principle
How Company complies
The Remuneration Committee meets at least 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 remuneration
policies applied throughout the Company. The objective of this committee is to
attract, retain and motivate executives capable of delivering the Company’s
objectives. Agreed personal objectives and targets including financial and
non-financial metrics are set each year for the Executive Directors and other
personnel and performance measured against these metrics. The committee is
made up of Non-Executive Directors, namely:
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 Nomination Committee is a sub-committee of the whole Board responsible
for the selection and proposal 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)
3 1
ValiRx Plc
CONNECTED INNOVATION
Report of the Directors
for the year ended 31 December 2020
The Directors present their report and financial statements for the year ended 31 December 2020.
DIVIDENDS
No dividends will be distributed for the year ended 31 December 2020.
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 £230,115 (2019: £984,457) 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 10 to 23.
DIRECTORS
The Directors shown below have held office during the whole of the period from 1 January 2020 until 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
DIRECTORS’ SHAREHOLDINGS
The Directors of the Company held the following beneficial interests in the ordinary shares of the
Company at the balance sheet date:
K J Alexander
Dr K Cox (appointed 26 June 2020)
G Desler
Dr S Dilly (appointed 8 June 2020)
M Lampshire (appointed 7 May 2020)
Dr G S Morris (Resigned 14 April 2020)
Dr S Vainikka (Ceased to be a director 14 April 2020)
2020
No. of shares
167,500
250,333
81,667
233,335
-
N/A
N/A
2019
No. of shares *
834
N/A
15,001
N/A
N/A
14,572
15,665
DIRECTORS’ SHARE OPTIONS
The Directors of the Company held share options granted under 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 options for Dr Dilly were granted prior to 2020 but were
only disclosed for the period since she became a Director.
K J Alexander
Dr K Cox (appointed 26 June 2020)
G Desler
Dr S Dilly (appointed 8 June 2020)
M Lampshire (appointed 7 May 2020)
Dr G S Morris (Resigned 14 April 2020)
Dr S Vainikka (Ceased to be a director 14 April 2020)
3 2
2020
No. of shares
24,334
-
28,718
4,512
-
N/A
N/A
2019
No. of shares *
24,334
N/A
28,718
N/A
N/A
29,728
34,488
ValiRx Plc
CONNECTED INNOVATION
Report of the Directors
for the year ended 31 December 2020
DIRECTORS’ WARRANTS
The Directors of the Company held warrants to subscribe for shares in the Company. Full details of the
warrants held are disclosed in note 25 to the financial statements.
K J Alexander
Dr K Cox (appointed 26 June 2020)
G Desler
Dr S Dilly (appointed 8 June 2020)
M Lampshire (appointed 7 May 2020)
Dr G S Morris (Resigned 14 April 2020)
Dr S Vainikka (Ceased to be a director 14 April 2020)
2020
No. of shares
83,333
-
-
83,333
-
N/A
N/A
2019
No. of shares *
-
N/A
-
N/A
N/A
-
-
* The comparative number of shares for 2019 have been adjusted to take account of the share reorganisation that took place during the
year whereby 1 new ordinary share of 0.1p each was issued in exchange for 125 existing ordinary shares of 0.1p each (note 17).
COMPANY SHARE PRICE
The market value of the Company’s shares at 31 December 2020 was 19.50p and the high and low share
prices during the period were 59.50p and 3.10p respectively.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Note 26 to the financial statements gives details of the Group’s objectives and policies for risk management
of financial instruments.
SIGNIFICANT SHAREHOLDERS
As at 26th April 2021, 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
Adam Hargreaves
% of issued share capital held
6.6%
6.9%
5.0%
DIRECTORS’ INSURANCE
The Directors and officers of the Company are insured against any claims against 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.
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 30 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 of the
Companies Act 2006) of which the Group’s auditors are unaware, and each Director has taken all the steps
that he or she ought to have taken as a Director in order to make himself or 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 re-appointment at the forthcoming Annual General Meeting.
ON BEHALF OF THE BOARD:
G Desler
Director, Chair Audit and Risk Committee
Date: 26 April 2021
3 3
ValiRx Plc
CONNECTED INNOVATION
Statement of Directors’ Responsibilities
for the year ended 31 December 2020
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 Accounting Standards (“IAS”) and in comformity
with the requirements of the Companies Act 2006 and have elected under company law to prepare the
Parent Company financial statements in accordance with IAS in conformity with the requirements of the
Companies Act 2006.
The Group financial statements are required by law and IAS to present fairly the financial position and
performance of the Group; the Companies Act 2006 provides in relation to such financial statements that
references in the relevant part of that Act to financial statements 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 IAS in
conformity with the requirements of the Companies Act 2006, subject to any material departures disclosed
and explained in the financial statements
• for the Parent Company financial statements, state whether they have been prepared in accordance with
IAS in conformity with the requirements of the Comapnies Act 2006, 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 is inappropriate to presume that the
Group and the Parent Company will continue in business
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 Parent Company and enable them to ensure that 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.
3 4
ValiRx Plc
CONNECTED INNOVATION
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 2020 on pages 39 to 66. The financial reporting framework
that has been applied in the preparation of the Group financial statements is applicable law and
International accounting standards in conformity with the requirements of the Companies Act 2006.
The financial reporting framework that has been applied in the preparation of the Parent Company financial
statements is applicable law and International Accounting Standards in conformity with the requirements of
the Companies Act 2006.
In our opinion:
• the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s
affairs as at 31 December 2020 and of the Group’s loss for the year then ended
• the Group’s financial statements have been prepared in accordance with International Accounting
Standards in conformity with the requirements of the Companies Act
• the Parent Company financial statements have been properly prepared in accordance with International
Standards in conformity with the requirements of the Comapnies Act 2006
• 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.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to
report to you where:
• the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is
not appropriate; or
• the Directors’ disclosed in the financial statements any identified material uncertainties that may cast
significant doubt about the Group’s or the Parent Company’s ability to continue to adopt the going
concern basis of accounting for a period of at least twelve months from the date when the financial
statements are authorised for issue
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit
of the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on:
the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement
team. These matters were addressed in the context of our audit of the financial statements as a whole, and
in forming our opinion thereon, and we do not provide a separate opinion on these matters.
The key audit matters identified were:
Impairment of goodwill and intangibles
Area of focus
The Group has goodwill of £1.6m and intangible assets of £1.3m.
IAS 36 requires at least annual impairment assessments in relation to goodwill, indefinite-lived intangible
assets and intangible assets that are not yet ready for use, with more regular assessment should an
impairment trigger be identified.
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
3 5
ValiRx Plc
CONNECTED INNOVATION
Report of the Independent Auditors to the Members
of ValiRx Plc
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 to assist them in performing an annual 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.
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 timelines
for product commercialisation, including updates on the achievement of expected 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.
Going concern
Area of focus
Refer to note 2 of the financial statements for the Directors’ disclosures of related accounting policies,
judgements and estimates. The directors have concluded that they have a reasonable expectation that the
Group will have sufficient cash resources and cash inflows to continue its 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.
The Group had cash and cash equivalents of £1,846,901 at 31 December 2020.
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 for the judgments underpinning management’s forecast,
as well as the sensitivity of projections to these judgements.
We considered the reasonableness of the assumptions within management’s proposed cost reduction
actions, should future fund raisings be lower than anticipated.
Our conclusion of management’s use of the going concern basis of accounting is included in the going
concern section of the report above.
3 6
ValiRx Plc
CONNECTED INNOVATION
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 magnitude of uncorrected
misstatements that we judge would be material for the financial statements as a whole (FSM). During planning
FSM was calculated as £109,000 which was updated during the course of our audit to £113,000 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.
An overview of the scope of our audit
The audit was scoped to ensure that the audit team obtained sufficient and appropriate audit evidence in
relation to significant operations of the Group during the year ended 31 December 2020. 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 the other information. The other 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.
In connection with our audit of the financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material misstatements, we are required to determine
whether there is a material misstatement in the financial statements or a material misstatement of the other
information. If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact. We have nothing to report in this regard.
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
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the Parent Company and its environment
obtained in the course of the audit, we have not identified material misstatements in the Group Strategic
Report or the Report of the Directors.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to
report to you if, in our opinion:
• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit
have not been received from branches not visited by us; or
• the Parent Company financial statements are not in agreement with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit
Responsibilities of directors
As explained more fully in the Statement of Directors’ Responsibilities set out on page 34, 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.
3 7
ValiRx Plc
CONNECTED INNOVATION
Report of the Independent Auditors to the Members
of ValiRx Plc
Auditors’ responsibilities for the audit of the financial statements
We identify and assess the risks of material misstatement of the financial statements, whether due to fraud or
error, and then design and perform audit procedures responsive to those risks, including obtaining audit
evidence that is sufficient and appropriate to provide a basis for our opinion.
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and
non-compliance with laws and regulations, we have:
• considered the nature of the industry and sectors, control environment and business performance including
the design of the Group’s remuneration policies, key drivers for director’s remuneration, bonus levels and
performance targets
• made enquires of management about their own identification and assessment of the risk of irregularities;
performed audit work over the risk of management override of controls, including testing of journal entries
and other adjustments for appropriateness and reviewing accounting estimates for bias
• reviewed minutes of meetings of those charged with governance
• undertaken appropriate sample-based testing of bank transactions
• assessed whether judgements made in making accounting estimates are indicative of potential bias
• identified and evaluated compliance with relevant laws and regulations and made enquiries of any
instances of non-compliance
• discussed matters among the audit engagement team regarding how and where fraud might occur in the
financial statements and potential indicators of fraud
Due to the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including
those leading to a material misstatement in the financial statements or non-compliance with regulation.
This risk increases the more that compliance with a law or regulation is removed from the events and
transactions reflected in the financial statements, as we will be less likely to become aware of instances of
non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as
fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our
Report of the Auditors.
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: 26 April 2021
3 8
FINANCIAL
STATEMENTS
ValiRx Plc (Registered number: 03916791)
CONNECTED INNOVATION
Consolidated Statement of Profit or Loss and Other Comprehensive
Income for the year ended 31 December 2020
Continuing Operations
Other operating income
Research and development
Administrative expenses
Operating Loss
Discount on settlement of financial liability
Finance costs
Loss Before Income Tax
Income tax credit
Loss After Income Tax
Non-controlling interest
Notes
2020
£
2019
£
7
19
6
7
8
11,077
(230,115)
(1,431,587)
146,517
(984,457)
(1,860,379)
(1,650,625)
(2,698,319)
122,000
(14,880)
-
(21,175)
(1,543,505)
(2,719,494)
75,182
293,738
(1,468,323)
(2,425,756)
25,075
37,049
Total Comprehensive Loss For The Year
(1,443,248)
(2,388,707)
Loss Per Share - Basic And Diluted
10
(3.81p)
(33.08p)
3 9
ValiRx Plc (Registered number: 03916791)
CONNECTED INNOVATION
Consolidated Statement of Financial Position
31 December 2020
ASSETS
ASSETS
NON-CURRENT ASSETS
NON-CURRENT ASSETS
Goodwill
Goodwill
Intangible assets
Intangible assets
Property, plant and equipment
Property, plant and equipment
Right-of-use assets
Right-of-use assets
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
NON-CURRENT LIABILITIES
Borrowings
Lease liabilities
CURRENT LIABILITIES
Trade and other payables
Bank overdraft
Borrowings
Lease liabilities
TOTAL LIABILITIES
Notes
11
12
13
20
15
16
17
19
20
18
16,19
19
20
2020
£
1,602,522
1,329,188
-
20,995
2019
2019
£
£
1,602,522
1,602,522
1,620,207
1,620,207
-
-
-
-
2,952,705
3,222,729
3,222,729
66,735
71,346
1,846,901
90,083
291,787
-
1,984,982
381,870
4,937,687
3,604,599
9,669,828
24,380,356
637,500
602,413
540,803
(30,919,728)
4,911,172
(155,888)
9,417,225
20,596,143
637,500
602,413
830,449
(29,729,817)
2,353,913
(130,813)
4,755,284
2,223,100
44,486
13,439
57,925
111,342
-
5,514
7,622
124,478
182,403
-
-
-
1,182,084
5,634
193,781
-
1,381,499
1,381,499
TOTAL EQUITY AND LIABILITIES
4,937,687
3,604,599
The financial statements were approved by the Board of Directors on 26th April 2021 and were signed on its behalf by:
G Desler - Director
4 0
ValiRx Plc (Registered number: 03916791)
CONNECTED INNOVATION
Company Statement of Financial Position
31 December 2020
ASSETS
NON-CURRENT ASSETS
Intangible assets
Property, plant and equipment
Right-of-use assets
Investments
CURRENT ASSETS
Trade and other receivables
Tax receivable
Cash and cash equivalents
Notes
12
13
20
14
2020
£
80,000
-
20,995
3,617,838
2019
£
100,000
-
-
3,617,838
3,718,833
3,717,838
15
16
3,263,551
62,151
1,846,288
2,954,352
270,346
-
5,171,990
3,224,698
TOTAL ASSETS
8,890,823
6,942,536
EQUITY
SHAREHOLDERS’ EQUITY
Called up share capital
Share premium
Merger reserve
Share option reserve
Retained earnings
TOTAL EQUITY
LIABILITIES
NON-CURRENT LIABILITIES
Borrowings
Lease liabilities
CURRENT LIABILITIES
Trade and other payables
Bank overdraft
Borrowings
Lease liabilities
TOTAL LIABILITIES
17
19
20
18
16,19
19
20
9,669,828
24,380,356
637,500
540,803
(26,931,101)
9,417,225
20,596,143
637,500
830,449
(26,119,974)
8,297,386
5,361,343
44,486
13,439
57,925
-
-
-
522,376
-
5,514
7,622
535,512
593,437
1,381,641
5,771
193,781
-
1,581,193
1,581,193
TOTAL EQUITY AND LIABILITIES
8,890,823
6,942,536
The financial statements were approved by the Board of Directors on 26th April 2021 and were signed on its behalf by:
G Desler - Director
4 1
ValiRx Plc
CONNECTED INNOVATION
Consolidated Statement of Changes in Equity
for the year ended 31 December 2020
Share capital
£
Share premium
£
Notes
Merger
reserve
£
Reserve
acquisition
reserve
£
Balance at 1 January 2019
Changes in equity
Loss for the year
Issue of shares
Costs of shares issued
Lapse of share options and warrants
Movement in year
8,680,694
19,779,905
637,500
602,413
-
736,531
-
-
-
-
1,105,969
(289,731)
-
-
-
-
-
-
-
-
-
-
-
-
Balance at 31 December 2019
9,417,225
20,596,143
637,500
602,413
Changes in equity
Loss for the year
Issue of shares
Costs of shares issued
Exercise of warrants
Lapse of share options and warrants
Movement in year
17
-
252,603
-
-
-
-
-
3,993,579
(245,675)
50,447
-
(14,138)
-
-
-
-
-
-
-
-
-
-
-
-
Balance at 31 December 2020
9,669,828
24,380,356
637,500
602,413
Balance at 1 January 2019
Changes in equity
Loss for the year
Issue of shares
Costs of shares issued
Lapse of share options and warrants
Movement in year
Share based
payment
reserve
£
Non-
controlling
interest
£
Retained
earnings
£
Total
£
885,963
(93,764)
(27,461,771)
3,030,940
-
-
-
(120,661)
65,147
(37,049)
-
-
-
-
(2,388,707)
-
-
120,661
-
(2,425,756)
1,842,500
(289,731)
-
65,147
Balance at 31 December 2019
830,449
(130,813)
(29,729,817)
2,223,100
Changes in equity
Loss for the year
Issue of shares
Costs of shares issued
Exercise of warrants
Lapse of share options and warrants
Movement in year
-
-
-
(50,447)
(253,337)
14,138
(25,075)
-
-
-
-
-
(1,443,248)
-
-
-
253,337
-
(1,468,323)
4,246,182
(245,675)
-
-
-
Balance at 31 December 2020
540,803
(155,888)
(30,919,728)
4,755,284
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 2006, 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.
4 2
ValiRx Plc
CONNECTED INNOVATION
Company Statement of Changes in Equity
for the year ended 31 December 2020
Balance at 1 January 2019
Changes in equity
Loss for the year
Issue of shares
Costs of shares issued
Lapse of share options
Movement in year
Notes
Share capital
£
Share premium
£
Merger
reserve
£
8,680,694
19,779,905
637,500
-
736,531
-
-
-
-
1,105,969
(289,731)
-
-
-
-
-
-
-
Balance at 31 December 2019
9,417,225
20,596,143
637,500
Changes in equity
Loss for the year
Issue of shares
Costs of shares issued
Exercise of warrants
Lapse of share options and warrants
Movement in year
17
-
252,603
-
-
-
-
-
3,993,579
(245,675)
50,447
-
(14,138)
-
-
-
-
-
-
Balance at 31 December 2020
9,669,828
24,380,356
637,500
Balance at 1 January 2019
Changes in equity
Loss for the year
Issue of shares
Costs of shares issued
Lapse of share options and warrants
Movement in year
Share based
payment
reserve
£
Retained
earnings
£
Total
£
885,963
(24,111,988)
5,872,074
-
-
-
(120,661)
65,147
(2,128,647)
-
-
120,661
-
(2,128,647)
1,842,500
(289,731)
-
65,147
Balance at 31 December 2019
830,449
(26,119,974)
5,361,343
Changes in equity
Loss for the year
Issue of shares
Costs of shares issued
Exercise of warrants
Lapse of share options and warrants
Movement in year
-
-
-
(50,447)
(253,337)
14,138
(1,064,464)
-
-
-
253,337
-
(1,064,464)
4,246,182
(245,675)
-
-
-
Balance at 31 December 2020
540,803
(26,931,101)
8,297,386
Share capital
The nominal value of the issued share capital.
Share premium account
Amounts received in excess of the nominal value on the issue of share capital less any costs associated with the issue of shares.
Merger reserve
The difference between the nominal value of the share capital issued by the Company and the fair value of ValiRx
Bioinnovation at the date of acquisition.
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.
4 3
CONNECTED INNOVATION
Consolidated Statement of Cash Flows
for the year ended 31 December 2020
Cash flows from operations
Cash outflow from operations
Interest paid
Tax credit received
Net cash outflow from operating activities
Notes
1
2020
£
2019
£
(2,200,088)
(6,252)
295,623
(1,801,714)
(3,093)
463,144
(1,910,717)
(1,341,663)
Cash flows from investing activities
Proceeds from sale of investments
Proceeds from sale of intangible fixed assets
Purchase of intangible fixed assets
-
2,000
(93,287)
146,517
-
(396,776)
Net cash outflow from investing activities
(91,287)
(250,259)
Cash flows from financing activities
Loan repayments
Bank loan
Repayment of lease liabilities
Share issue
Costs of shares issued
(80,000)
50,000
(2,500)
4,132,714
(245,675)
(138,000)
-
-
1,576,000
(224,584)
Net cash inflow from financing activities
3,854,539
1,213,416
Increase/(decrease) in cash and cash equivalents
1,852,535
(378,506)
Cash and cash equivalents at beginning of year
Cash an cash equivalents at end of year
2
2
(5,634)
372,872
1,846,901
(5,634)
4 4
ValiRx Plc
CONNECTED INNOVATION
Notes to the Consolidated Statement of Cash Flows
for the year ended 31 December 2020
1. Reconciliation Of Operating Loss To Cash Generated From Operations
Operating loss
Amortisation and impairment of intangible assets
Depreciation of right-of-use assets
Decrease in trade and other receivables
(Decrease)/increase in trade and other payables
Loss on disposal of intangible fixed assets
Profit on sale of investments
Share-based payments charge
2020
£
2019
£
(1,650,625)
227,338
2,157
23,348
(957,274)
154,968
-
-
(2,698,319)
400,519
84,006
346,097
-
(146,517)
212,500
Net cash outflow from operations
(2,200,088)
(1,801,714)
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
1,846,901
(5,634)
31 December
2020
£
1 January
2020
£
Cash and cash equivalents
(5,634)
372,872
31 December
2019
£
1 January
2019
£
4 5
ValiRx Plc
CONNECTED INNOVATION
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
Opinion
1. 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 the London Stock Exchange Plc. The address of its registered office is Stonebridge
House, Chelsmford Road, Hatfield Heath, CM22 7BD.
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 (£).
2. ACCOUNTING POLICIES
Basis of preparation
The Group’s financial statements have been prepared in accordance with International Accounting
Standards in conformity with the requirements of the Companies Act 2006 as they apply to the financial
statements of the Group for the year ended 31 December 2020. The Company’s financial statements have
been prepared in accordance with International Accounting Standards in conformity with the requirements
of the Companies Act 2006 as they apply to the financial statements of the Company for the year ended
31 December 2020 and as applied in accordance with the provisions of the Companies Act 2006. The
principal accounting policies adopted by the Group and by the Company are set out in note 2.
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, testing and
obtaining related regulatory approvals of its pipeline products. Ultimately, the attainment of profitable
operations is dependent on future uncertain events 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.
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 2021.
The Company carries out regular fund-raising exercises in order that it can provide the necessary working
capital for the Group. Further funds will be required to finance the Group’s work programme. The Board
expects to continue to raise additional funding as and when required to cover the Group’s development,
primarily from the issue of further shares.
In addition, there are significant uncertainties around the continuing impact of the COVID-19 pandemic
including the extent and duration of social distancing measures, the inability to travel, 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 Directors have prepared detailed financial forecasts and cash flows looking beyond 12 months from
the date of the approval of these financial statements. In developing these forecasts, the Directors have
made assumptions based upon their view of the current and future economic conditions that are expected
to prevail over the forecast period. The Directors estimate that the cash of £1,846,901 held by the Group
as at 31 December 2020 together with known receivables will be sufficient to support the current level of
activities for at least the next 12 months.
4 6
ValiRx Plc
CONNECTED INNOVATION
Notes to the Consolidated Financial Statements
for the year ended 31 December 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 beyond the
12 months from the date of approval of these financial statements.
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.
On 3 October 2006, ValiRx Bioinnovation Limited (‘Bioinnovation’) acquired 60.28% of the 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 the Group’s share of the identifiable net assets and contingent 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 not
amortised but is tested annually, or when trigger events occur, for impairment and is carried at cost less
accumulated impairment losses.
Other intangible assets
Acquired licences, trademarks and patents are capitalised at cost and are amortised on a straight-line
basis over their useful life. Patents are amortised over 11 years and licences over 10 - 20 years.
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 asset is estimated
in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash
flows that are independent 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.
In assessing value in use, the estimated future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset for which the estimates of future cash flows have not been adjusted. 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.
4 7
ValiRx Plc
CONNECTED INNOVATION
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
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
Leases and right-of-use assets
The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group
recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements
in which it is the lessee, except for short-term leases (leases with a lease term of 12 months or less) and
leases of low value assets (e.g. tablets and personal computers, small items of office furniture). For these
leases, the Group recognises the lease payments as an operating expense on a straight-line basis over
the term of the lease.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily
determined, the Group uses its incremental borrowing rate. The lease liability is subsequently measured by
increasing the carrying amount to reflect interest on the lease liability (using the effective interest method)
and by reducing the carrying amount to reflect the lease payments made.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease
payments made at or before the commencement day, less any lease incentives received, initial direct costs
and the estimated costs of removing or dismantling the underlying asset per the conditions of the contract.
They are subsequently measured at cost less accumulated depreciation and impairment losses. Right-of-use
assets are depreciated over the shorter period of lease term and useful life of the right-of-use asset.
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 the lower of 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.
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 instruments are initially recognised at fair value on the date a derivative contract is
entered into and are subsequently carried at fair value with the changes in fair value recognised in the
Income Statement.
4 8
ValiRx Plc
CONNECTED INNOVATION
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
Financial liabilities
The Group does not have any financial liabilities that would be classified as fair value through the profit
or loss. Therefore, all financial liabilities are classified as other financial liabilities.
The Group’s financial liabilities include borrowings, trade and other payables and are recognised at their
original amount.
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 that it is probable that future taxable profit will be
available against which the asset can be utilised.
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 is incurred.
All on-going development expenditure is currently expensed in the period in which it is incurred. Due to the
regulatory and other uncertainties inherent in the development of the 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.
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 research and development include associated wages and salaries, material costs,
depreciation on non-current assets and directly attributable overheads.
All research and development costs, whether funded by third parties under licence and development
agreements or not, are included within operating expenses and classified as such.
Share capital
Financial instruments issued by the Group are treated as equity only to the extent that they do not meet
the definition of a financial liability. The Group’s ordinary and deferred shares are classified as equity
instruments.
4 9
ValiRx Plc
CONNECTED INNOVATION
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
Foreign currencies
Items included in the Financial Statements are measured using the currency of the primary economic
environment in which the Company and its subsidiaries operate (the functional 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-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 of the scheme. The fair value of
employee services is determined by reference to the fair 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 to equity, over the remaining vesting period.
When options expire or are cancelled the expensed value of these lapsed options is transferred from the
share-based payment, reserve to retained earnings.
New and amended 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 are not expected
to have a material impact on the financial statements other than requiring additional disclosure or
alternative presentation.
IFRS 9, IAS 39, IFRS 7,
IFRS 4 and IFRS 16
AMENDMENTS - INTEREST RATE BENCHMARK REFORM - PHASE 2
1 JAN 2021
Effective date
(period beginning
on or after)
IFRS 1
IFRS 9
IFRS 16
IFRS 41
IFRS 16
IFRS 3
IFRS 37
IFRS 27
IFRS 4
IFRS 1
AMENDMENTS - FIRST-TIME ADOPTION OF INTERNATIONAL FINANCIAL
REPORTING STANDARDS - SUBSIDIARY AS A FIRST-TIME ADOPTER
AMENDMENT - FINANCIAL INSTRUMENTS - FEES IN THE ‘10 PER CENT’ TEST FOR
DERECOGNITION OF FINANCIAL LIABILITIES
LEASES - LEASE INCENTIVES
AGRICULTURE - TAXATION IN FAIR VALUE MEASUREMENTS
AMENDMENTS - PROPERTY, PLANT AND EQUIPMENT - PROCEEDS BEFORE
INTENDED USE
AMENDMENTS - REFERENCE TO THE CONCEPTUAL FRAMEWORK
ONEROUS CONTRACTS - COST OF FULFILLING A CONTRACT
INSURANCE CONTRACTS
AMENDMENTS - APPLYING IFRS 9 ‘FINANCIAL INSTRUMENTS’ WITH IFRS 4 ‘INSUR-
ANCE CONTRACTS’
1 JAN 2022
1 JAN 2022
1 JAN 2022
1 JAN 2022
1 JAN 2022
1 JAN 2022
1 JAN 2022
1 JAN 2023
1 JAN 2023
AMENDMENT - CORRECTION OF LIABILITIES AS CURRENT AND NON-CURRENT
1 JAN 20232
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.
5 0
ValiRx Plc
CONNECTED INNOVATION
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
The preparation of the financial statements in conformity with International Accounting Standards in
conformity with the requirements of the Companies Act 2006 requires the use of estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the 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 value in use 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.
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 of its own share price,
the probable life of the options before exercise, and behavioural consideration of employees. A significant
element of judgement is therefore involved in the calculation of the charge.
Capitalisation of development costs
Capitalisation of development costs requires analysis of the technical feasibility and commercial viability
of the project concerned. Capitalisation 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.
4. REVENUE
Segmental reporting
The Directors are of the opinion that under IFRS 8 - “operating segment” there are no identifiable business
segments that are subject to risks and returns different 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.
5 1
ValiRx Plc
CONNECTED INNOVATION
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
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
Compensation for loss of office
Details of Directors’ remuneration can be found in note 25.
6. FINANCE COSTS
Bank interest
Interest on lease liability
Other interest payable
Interest on overdue tax
Deferral fees on equity swap
7. LOSS BEFORE INCOME TAX
After charging:
Research and development
Other operating leases
Amortisation - intangible fixed assets
Depreciation – right-of-use assets
Impairment - intangible fixed assets
Loss on disposal of intangible fixed assets
Auditors remuneration
Foreign exchange differences
After crediting:
Profit on sale of investments
Rates grant
Discount of settlement of financial liability
5 2
2020
Number
7
3
10
2020
£
2019
Number
5
6
11
2019
£
407,710
36,240
15,275
72,000
708,305
66,975
65,192
-
531,225
840,472
2020
£
2019
£
719
409
-
5,533
8,219
122
-
622
2,349
18,082
14,880
21,175
2020
£
2019
£
230,115
29,637
227,338
2,157
-
154,968
30,000
14,569
984,457
120,511
182,807
-
217,712
-
30,000
(11,421)
-
(10,000)
(122,000)
(146,517)
-
-
ValiRx Plc
CONNECTED INNOVATION
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
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
Factors affecting the tax charge for the year:
2020
£
2019
£
(71,346)
(3,836)
(291,788)
(1,950)
(75,182)
(293,738)
Loss before income tax
(1,543,505)
(2,719,492)
Loss before income tax multiplied by effective rate of
UK corporation tax of 19.00% (2019: 19.00%)
(293,266)
(516,703)
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
Discount on settlement of financial liability
Loss on disposal of intangible fixed assets
Profit on sale of investments
Current tax charge
2,702
3,775
238,448
(29,649)
(3,836)
(23,180)
29,824
-
45,273
3,770
327,921
(124,211)
(1,950)
-
-
(27,838)
218,084
222,965
(75,182)
(293,738)
No corporation tax arises on the results for the year ended 31 December 2020 due to the losses incurred
for tax purposes.
The deferred tax asset, arising from tax losses of £20.7 million (2019: £19.5 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 the Companies Act 2006, the statement of comprehensive income of the
Parent Company is not presented as part of these financial statements. The Parent Company’s loss for
the financial year was £1,064,464 (2019 - £2,128,647).
5 3
ValiRx Plc
CONNECTED INNOVATION
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
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
2020
£
2019
£
(1,468,323)
25,075
(2,425,756)
37,049
Loss attributable to owners of Parent Company
(1,443,248)
(2,388,707)
Basic:
Weighted average number of shares
Loss per share
37,898,019
(3.81p)
7,221,102
(33.08p)
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 19)
would have the effect of reducing the loss per share and would therefore not be dilutive under IAS 33 ‘Earnings
per Share’.
The comparative weighted average number of shares has been adjusted to account of the share capital
reorganisation which took place during 2020 whereby 1 new ordinary share of 0.1p each was issued in
exchange for 125 existing ordinary shares of 0.1p each (note 17).
11. GOODWILL
Group
COST
At 1 January 2019 and 2020 and 31 December 2020
Net book value
At 31 December 2020
At 31 December 2019
£
1,602,522
1,602,522
1,602,522
The goodwill arising on the acquisitions of ValiRx Bioinnovation Limited, ValiPharma Limited,
Valisrc Limited and ValiSeek Limited is not being amortised but is reviewed on an annual basis for
impairment, or more frequently if there are indications that goodwill might be impaired. The impairment
review comprises a comparison of the carrying amount of 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.
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
5 4
ValiRx Plc
CONNECTED INNOVATION
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
12. INTANGIBLE ASSETS
Group
COST
At 1 January 2019
Additions
At 31 December 2019
Additions
Disposals
Patents
£
Brands and
licences
£
Total
£
1,978,715
396,776
375,000
-
2,353,715
396,776
2,375,491
93,287
(179,225)
375,000
-
-
2,750,491
93,287
(179,225)
At 31 December 2020
2,289,553
375,000
2,664,553
AMORTISATION
At 1 January 2019
Amortisation for year
Impairment
At 31 December 2019
Amortisation for year
Eliminated on disposal
603,491
155,607
217,712
126,274
27,200
-
729,765
182,807
217,712
976,810
200,138
(22,257)
153,474
27,200
-
1,130,284
227,338
(22,257)
At 31 December 2020
1,154,691
180,674
1,335,365
NET BOOK VALUE
At 31 December 2020
1,134,862
194,326
1,329,188
At 31 December 2019
1,398,681
221,526
1,620,207
Company
COST
At 1 January 2019, 31 December
2019 and 2020
AMORTISATION
At 1 January 2019
Amortisation for year
At 31 December 2019
Amortisation for year
At 31 December 2020
NET BOOK VALUE
At 31 December 2020
At 31 December 2019
5 5
Brands and
licences
£
Total
£
200,000
200,000
80,000
20,000
80,000
20,000
100,000
20,000
100,000
20,000
120,000
120,000
80,000
80,000
100,000
100,000
ValiRx Plc
CONNECTED INNOVATION
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
13. PROPERTY, PLANT AND EQUIPMENT
Group and Company
COST
Plant and
machinery
£
Total
£
At 1 January 2019 and 2020
31,670
31,670
DEPRECIATION
At 1 January 2019 and 2020 and 31 December 2020
31,670
31,670
NET BOOK VALUE
At 31 December 2020
At 31 December 2019
14.INVESTMENTS
Company
COST
At 1 January 2019
Disposals
-
-
-
-
Shares in group
undertakings
£
Unlisted
investments
£
Total
£
3,617,838
-
1,333,770
(1,333,770)
4,951,608
(1,333,770)
At 31 December 2019 & 2020
3,617,838
-
3,617,838
PROVISIONS
At 1 January 2019
Eliminated on disposal
At 31 December 2019 and 2020
NET BOOK VALUE
-
-
1,333,770
(1,333,770)
1,333,770
(1,333,770)
-
-
-
At 31 December 2020
3,617,838
-
3,617,838
At 31 December 2019
3,617,838
-
3,617,838
5 6
ValiRx Plc
CONNECTED INNOVATION
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
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
5 7
ValiRx Plc
CONNECTED INNOVATION
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
15. TRADE AND OTHER RECEIVABLES
GROUP
COMPANY
Current
2020
£
2019
£
2020
£
2019
£
Amounts owed by Group under-takings
Other debtors
Rent deposit
VAT
Prepayments and accrued income
-
21,600
1,500
11,079
32,556
-
23,252
31,807
13,033
21,991
3,174,627
19,553
1,500
35,315
32,556
2,843,650
20,953
31,807
35,951
21,991
66,735
90,083
3,263,551
2,954,352
In the Directors’ opinion, the carrying amounts of receivables is considered a reasonable approximation
of fair value.
16. CASH AND CASH EQUIVALENTS
GROUP
COMPANY
2020
£
2019
£
2020
£
2019
£
Bank accounts
Bank overdraft
1,846,901
-
137
(5,771)
1,846,288
-
-
(5,771)
1,846,901
(5,634)
1,846,288
(5,771)
17. CALLED UP SHARE CAPITAL
GROUP
COMPANY
Allotted, called up and fully paid
New ordinary shares of 0.1p each
Ordinary shares of 0.1p each
Deferred shares of 0.5p each
Deferred shares of 0.9p each
Deferred shares of 12.4p each
2020
Number
2019
Number
2020
£
2019
£
64,882,490
N/A
58,378,365
157,945,030
42,455,832
N/A
1,334,827,184
58,378,365
157,945,030
30,177,214
64,882
-
2,918,918
1,421,505
5,264,523
-
1,334,828
2,918,918
1,421,505
3,741,974
9,669,828
9,417,225
In January 2020, the Company raised £0.2 million, before expenses, through the issue of 200,000,000 new
ordinary shares at a price of 0.1 pence per share. The funds were to be used for advancing the clinical trial
of VAL201, for the preclinical progress of other programmes and for general working capital.
At a General Meeting in February 2020, a Capital Reorganisation was approved which comprised a
Consolidation and Sub-Division of shares. This was achieved by consolidating 125 Existing Shares into
1 Con solidated 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 Share of 12.4 pence each.
In April 2020, the Company raised £0.2 million before expenses, through the issue of 5,714,288 new
ordinary shares at a post reorganisation price of 3.5 pence per share.
In May 2020, the Company raised £1 million, before expenses, through the issue of 16,666,667 new
ordinary shares at a price of 6 pence per share. The funds were to be used for advancing the clinical trial
of VAL201, for the preclinical progress of other programmes and for general working capital.
In May 2020, the Company settled existing liabilities amounting to £84,168 through the issue of 1,402,800
new shares at a price of 6 pence per share.
5 8
ValiRx Plc
CONNECTED INNOVATION
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
17. CALLED UP SHARE CAPITAL - continued
In July 2020, the Company raised £1.35 million, before expenses, through the issue of 18,000,000 new
ordinary shares at a price of 7.5 pence per share. The funds were to be used to accelerate the
implementation of the Company’s strategy to incubate early stage clinical candidates, to advance the
current clinical programmes and for general working capital purposes.
Between August 2020 and December 2020, the Company raised £1.41 million through the issue of shares
to warrant holders, who exercised their warrants over 10,820,117 shares, at prices between 12.5 pence and
25.0 pence per share.
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.
18. TRADE AND OTHER PAYABLES
GROUP
COMPANY
Current
Trade creditors
Amounts owed to Group under-takings
Social security and other taxes
Wages and salaries
Other payables
Accruals and deferred income
2020
£
2019
£
2020
£
2019
£
72,356
-
6,107
-
2,879
30,000
945,854
-
119,169
6,310
23,109
87,642
39,082
447,187
6,107
-
-
30,000
723,296
447,187
107,953
5,221
23,109
74,875
111,342
1,182,084
522,376
1,381,641
In the Directors’ opinion, the carrying amounts of payables is considered a reasonable approximation of
fair value.
19. FINANCIAL LIABILITIES - BORROWINGS
GROUP
COMPANY
Current:
Bank overdraft
Bank loan
Equity swap loan
2020
£
2019
£
2020
£
2019
£
-
5,514
-
5,634
-
193,781
-
5,514
-
5,771
-
193,781
5,514
199,415
5,514
199,552
Swap settlement
In August 2020, the Company agreed with Yorkville to make a full and final settlement payment of £80,000
with the balance of the liability to be written off.
At 1 January
Repayment
Deferral fee
Balance agreed to be written off
At 31 December
5 9
2020
£
2019
£
193,781
(80,000)
8,219
(122,000)
313,699
(138,000)
18,082
-
-
193,781
ValiRx Plc
CONNECTED INNOVATION
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
19. FINANCIAL LIABILITIES - BORROWINGS - continued
Non-current:
Bank loan:
1-2 years
2-5 years
More than 5 years
Total bank loan
Current
Non-current
20.LEASES
Right-of-use assets
Group and Company
COST
At 1 January 2019 and 2020
Additions
GROUP
COMPANY
2020
£
2019
£
2020
£
2019
£
9,647
30,429
4,410
-
-
-
-
9,647
30,429
4,410
-
-
-
-
44,486
-
44,486
-
GROUP
2020
£
2019
£
COMPANY
2020
£
2019
£
5,514
44,486
-
-
5,514
44,486
-
-
50,000
-
50,000
-
Leasehold
property
£
-
23,152
Total
£
-
23,152
At 31 December 2020
23,152
23,152
DEPRECIATION
At 1 January 2019 and 2020
Depreciation for the year
At 31 December 2020
NET BOOK VALUE
At 31 December 2020
At 31 December 2019
-
2,157
2,157
-
2,157
2,157
20,995
20,995
-
-
The Company and the Group entered into a new property lease in the current financial year with a lease
term of 3 years.
6 0
ValiRx Plc
CONNECTED INNOVATION
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
20. LEASES - continued
Lease Liabilities
Group and Company
Set out below is the movement in lease liabilities during the period.
At 1 January 2019 and 2020
Addition
Interest expense
Repayments
At 31 December 2020
Current
Non-current
At 31 December 2020
Non-current:
Lease liability
1-2 years
2-5 years
£
-
23,152
409
(2,500)
21,061
7,622
13,439
21,061
2019
£
-
-
-
2020
£
7,758
5,681
13,439
21. OTHER FINANCIAL COMMITMENTS
At 31 December 2020, the Company was committed to making the following payments under
non-cancellable operating leases in the year to 31 December 2021:-
Operating leases which expire:
Within one year
2-5 years
22.RELATED PARTY DISCLOSURES
LAND AND BUILDINGS
2020
£
2019
£
-
9,000
26,163
-
During the year the Director, G Desler, provided the Company and its subsidiaries with bookkeeping
services totalling £18,450 (2019: £18,450).
At the year end, the amounts owed to Directors were as follows:
K Alexander
Dr K Cox (appointed 26/06/20)
G Desler
Dr S Dilly (appointed 08/06/20)
M Lampshire (appointed 07/05/20)
G Morris (Resigned 14/04/20)
S Vainikka (Ceased to be director 14/04/20)
O de Giorgio-Miller (died 21/10/19)
6 1
2020
£
-
-
-
2,879
-
-
-
-
2019
£
-
-
7,147
-
-
-
-
5,800
ValiRx Plc
CONNECTED INNOVATION
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
23. ULTIMATE CONTROLLING PARTY
The Directors consider that there is no ultimate controlling party.
24.SHARE-BASED PAYMENT TRANSACTIONS
The number of shares and the share prices shown in this note take into account the share capital
re-organisation that was effected during 2020 (note 17). As a consequence, the comparative number of
shares for 2019, together with the attached exercise price, fair value and grant date share price, have
been amended whereby 1 new ordinary share of 0.1p each was issued for 125 existing ordinary shares of
0.1p each.
Share option
At 31 December 2020 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:
2019
Brought forward
Lapsed during the year
Carried forward
Number of
shares
Weighted average
remaining contractual
life (years)
Weighted average
exercise price (pence)
165,703
(26,603)
139,100
-
-
7.53
1,470.00
1,528.75
1,458.71
2020
Number of
shares
Weighted average
remaining contractual
life (years)
Weighted average
exercise price (pence)
Brought forward
Lapsed during the year
Carried forward
139,100
(64,216)
74,884
-
-
6.51
1,458.71
1,440.37
1,474.44
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
Fair value at
grant date
1 Granted 8 July 2011
2 Granted 19 January 2014
3 Granted 21 October 2014
4 Granted 26 June 2015
5 Granted 9 February 2018
1,120
3,392
4,032
3,940
62,400
08/07/2021
19/01/2024
21/10/2024
26/06/2025
09/02/2028
11,718.75p
5,391.25p
5,625.00p
6,375.00p
500.00p
1,562.50p
625.00p
468.75p
505.00p
348.75p
6 2
ValiRx Plc
CONNECTED INNOVATION
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
24.SHARE-BASED PAYMENT TRANSACTIONS - continued
The fair value of the remaining share options has been calculated using the Black-Scholes model.
The assumptions used in the calculation of the fair value of the share options outstanding during the year
are as follows:
Options
1 Granted 8 July 2011
2 Granted 19 January 2014
3 Granted 21 October 2014
4 Granted 26 June 2015
5 Granted 9 February 2018
Grant date
share price
Exercise
price
Expected
volatility
Expected
option life
(years)
Risk-free
interest rate
10,000.00p
5,391.25p
5,625.00p
6,312.50p
500.00p
11,718.75p
5,391.25p
5,625.00p
6,375.00p
500.00p
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.
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 (2019: £nil)
Warrants
At 31 December 2020 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.
2019
Number of
shares
Weighted average
remaining contractual
life (years)
Weighted average
exercise price (pence)
Brought forward
Granted during the year
Lapsed during the year
816,425
342,051
(437,869)
1.30
-
-
800.08
29.24
705.60
Carried forward
720,607
2.11
491.58
2020
Number of
shares
Weighted average
remaining contractual
life (years)
Weighted average
exercise price (pence)
Brought forward
Granted during the year
Lapsed during the year
720,607
10,794,733
(10,820,117)
2.11
-
-
491.58
12.92
13.05
Carried forward
695,223
0.59
507.01
All warrants were exercisable at the year end.
6 3
ValiRx Plc
CONNECTED INNOVATION
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
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
Compensation for loss of office
Post-employment benefits
2020
£
2019
£
238,162
-
72,000
7,076
189,324
213,790
-
45,832
317,238
448,946
C
o
m
p
e
n
s
a
t
i
o
n
f
o
r
£
l
o
s
s
o
f
o
f
f
i
c
e
B
e
n
e
f
i
t
s
i
n
£
i
k
n
d
b
e
n
e
f
i
t
s
Salary
£
P
o
s
t
-
e
m
p
o
y
m
e
n
t
l
£
-
-
-
2020
£
2019
£
65,625
25,625
21,000
-
65,037
52,890
2,917
22,917
-
16,667
-
-
K Alexander
65,625
-
Dr K Cox (appointed 26/06/2020)
G Desler
Dr S Dilly (appointed 08/06/20)
M Lampshire (appointed 07/05/20)
21,000
65,037
20,000
16,667
-
-
-
-
-
-
-
-
-
G Morris (Resigned 14/04/20)
21,271
36,000
278
420
57,969
147,844
S Vainikka (Ceased to be director 14/04/20)
28,147
36,000
137
3,739
68,023
192,587
O de Giorgio-Miller (died 21/10/19)
-
-
-
-
-
30,000
237,747
72,000
415
7,076
317,238
448,946
Details of fees paid to Directors are shown in note 22 above.
The number of Directors for whom retirement benefits are accruing under money purchase pension
schemes amounted to 3 (2019: 2).
6 4
ValiRx Plc
CONNECTED INNOVATION
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
25.KEY MANAGEMENT PERSONNEL COMPENSATION - continued
The number of shares and the share prices shown in this note take into account the share capital
re-organisation that was effected during the year (note 17).
The Directors interests in share options as at 31 December 2020 are as follows
Number of
options
Exercise
price
Date of
grant
First date of
exercise
Final date of
exercise
K Alexander
K Alexander
K Alexander
K Alexander
K Alexander
G Desler
G Desler
G Desler
G Desler
G Desler
Dr S Dilly
Dr S Dilly
384
1,280
1,280
1,390
20,000
24,334
384
1,408
1,408
1,518
24,000
28,718
512
4,000
4,512
11,718.75p
5,390.63p
5,625.00p
6,750.00p
500.00p
08/07/2011
19/01/2014
21/10/2014
26/06/2015
07/02/2018
08/07/2011
19/01/2014
21/10/2014
25/06/2015
07/02/2018
08/07/2021
19/01/2024
21/10/2024
25/06/2025
07/02/2028
11,718.75p
5,390.63p
5,625.00p
6,750.00p
500.00p
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
08/07/2021
19/01/2024
21/10/2024
25/06/2025
07/02/2028
5,625.00p
500.00p
21/10/2014
07/02/2018
21/10/2014
07/02/2018
21/10/2024
07/02/2028
The Directors interests in warrants as at 31 December 2020 are as follows:
K Alexander
Dr S Dilly
83,333
83,333
13.00p
13.00p
26/05/2020
26/05/2020
26/05/2021
26/05/2021
Number of
warrants
Exercise
price
Date of
grant
Expiry
date
26.FINANCIAL INSTRUMENTS
The principal financial instruments used by the Group, from which financial instrument risk 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.
6 5
ValiRx Plc
CONNECTED INNOVATION
Notes to the Consolidated Financial Statements
for the year ended 31 December 2020
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
Lease liabilities
Cash and cash equivalents
Total financial liabilities
2020
£
2019
£
66,735
90,083
1,846,901
-
1,913,636
90,083
1,913,636
90,083
2020
£
2019
£
105,235
21,061
50,000
1,256,696
-
5,634
176,296
1,262,330
The Directors consider that the carrying value for each class of financial asset and liability, approximates to
their fair value.
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, through this programme, the Board seeks to 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
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument
fails to meet its contractual obligations. The Group’s credit 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.
Liquidity risk and interest rate risk
Liquidity risk arises from the Group’s management of working capital. It is the risk that 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.
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.
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.
6 6
ValiRx Plc
Eliot Park Innovation Centre
4 Barling Way Nuneaton,
CV10 7RH UK
Tel: +44 (0)2476 79649
Email: info@valirx.com
www.valirx.com