Annual Report and Accounts
for the year ended 31 December 2022
Verici Dx plc
Annual report and financial statements
for the year ended 31 December 2022
Contents
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11
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29
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34
39
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71
Company information
Chair’s statement
Chief Executive Officer’s report
Board of directors
Strategic report
Directors' report
Corporate governance report
Report of the remuneration committee
Report of the audit committee
Report of the audit of the financial statements
Consolidated statement of profit or loss and other comprehensive income
Consolidated statement of financial position
Company statement of financial position
Consolidated statement of cash flows
Company statement of cash flows
Consolidated statement of changes in equity
Company statement of changes in equity
Notes forming part of the consolidated financial statements
Notice of Annual General Meeting
Verici Dx plc
Company information
for the year ended 31 December 2022
Directors
Julian Baines, MBE (Non-Executive Chairman)
Sara Barrington (Chief Executive Officer)
Sir Ian Carruthers, OBE (Senior Independent Non-Executive Director)
Dr Erik Lium (Non-Executive Director)
James McCullough (Non-Executive Director)
Dr Lorenzo Gallon (Non-Executive Director)
Company Secretary
Salim Hamir
Registered Office
Avon House
19 Stanwell Road
Penarth
Cardiff, CF64 2EZ
Company Number
Registered in England and Wales Number 12567827
Nominated Adviser
and Broker
Legal Adviser to the Company
Auditors
Registrar
Financial PR
Singer Advisory
1 Bartholomew Lane
London, EC2N 2AX
Shoosmiths LLP
No 1 Bow Churchyard
London, EC4M 9DQ
Crowe U.K. LLP
55 Ludgate Hill
London EC4M 7JW
Link Group
The Registry
29 Wellington Street
Leeds
LS1 4DL
Walbrook PR Limited
75 King William Street
London, EC4N 7BE
Website
www.VericiDx.com
1
Verici Dx plc
Chair’s statement
for the year ended 31 December 2022
I am pleased to report on the twelve months ended 31 December 2022 for Verici Dx plc. In what has been a very
difficult macroeconomic environment, the team has successfully executed the Company’s planned strategy in
transitioning to a commercial-stage company following the initial launch of Tutivia™. This progress reflects the
Company’s clear product differentiation and competitive advantages.
The validation data for Tutivia™, the Company’s post-transplant blood test focused on acute rejection including
borderline and sub-clinical rejection, was presented to the clinical community at the American Transplant Congress
(ATC) in June 2022. The results showed Tutivia’s™ ability to provide actionable data to clinicians for the care
management of their patients as early as the first week post-transplant, enabling them to react proactively to rejection
events. Tutivia’s™ significantly higher positive predictive value (“PPV”) than currently available single kidney
transplant blood tests, as well as the study design, was very well received by the scientific community and illustrated
the significant potential of Tutivia™ to address the urgent clinical need for early intervention to minimise rejection
post-kidney transplantation.
Tutivia™ was fully launched in January 2023. Whilst Verici Dx is still in the early phases of this commercial rollout,
the Company is working closely with a number of leading US transplant centres, to support the integration of the test
into their workflows and help the Verici Dx team better understand how they can encourage consistent and recurring
utilisation going forwards as they look to accelerate the rollout in the coming months.
In addition, following the positive initial data announced in September 2022 on Clarava™, the Company’s pre-
transplant prognostic test, the Company chose to expand its validation trial in order to strengthen the publication
appeal and demonstrate a statistically robust and clinically compelling case to support the commercial rollout and
adoption of the test. The data read-out from this extended trial remains on track to be announced by the end of June,
in line with previous guidance.
Patient enrolment for the multi-centre clinical validation study of our third product, Protega™, completed in the first
quarter of 2023, assessing long-term outcomes for kidney transplant patients. The end points of the Protega™
validation study is expected to be reached in two years. Fibrosis develops after a patient has had acute rejection that
may have caused antibodies to attack the kidney. Currently histology from biopsy is used to risk stratify the degree
of fibrosis. Protega™ will utilize RNA gene signatures to more accurately risk stratify the potential outcome from
fibrosis in a transplant patient. This can help clinicians determine the appropriate treatment to delay or reduce fibrosis
progression.
The Company received CPT® Proprietary Laboratory Analyses (“PLA”) codes for Tutivia™ and Clarava™ during the
year, representing the first milestone towards commercial reimbursement for the two tests. Post year end the
Company announced that a gapfill median rate of $2,650 has been proposed for Tutivia™ for kidney transplant
rejection by the Centers for Medicare & Medicaid Services (“CMS”). Confirmation is expected in November 2023 and
the finalised rate will apply for 3 years from 1 January 2024. The Company is currently applying for insurance
reimbursement coverage for Tutivia™ under a Local Coverage Determination, issued by MolDx on behalf of
Medicare, the US federal health insurance program, upon publication of the trial results.
In January 2022, the Company secured a collaboration with Illumina, Inc. (NASDAQ: ILMN), a leading developer,
manufacturer and marketer of life science tools and integrated systems for large scale analysis of genetic variation
and function, whereby Verici Dx I integrated both its clinical and research products within Illumina Connected
Analytics (ICA), Illumina’s state-of-the-art software platform and strategic focus area. Verici Dx continues to work with
Illumina, to further develop its research data into a collaborative asset within the ICA environment for future strategic
opportunities.
2
Verici Dx plc
Chair’s statement
for the year ended 31 December 2022 (continued)
In March 2022, Verici Dx successfully completed a fundraise, which raised gross proceeds of £10.0 million (c.$13.0
million), a significant achievement in a difficult fundraising environment, particularly for AIM-listed healthcare
companies. This is testament to the potential of the platform in meeting the urgent clinical need to improve outcomes
for kidney transplant patients. Verici Dx’s year-end cash position of $9.81 million provides a cash runway until mid-
2024, following recent steps taken by management to control costs and reduce cash burn. A further commercial and
operational update will be provided alongside the Clarava™ data readout and strategic update.
On behalf of the Board, I would like to thank our employees, investors and partners for their continued support
throughout the year, and we look forward to providing further updates on our progress over the course of 2023, as
we scale up the Tutivia™ commercial rollout, and provide the data read-out from the extended Clarava trial later this
month.
Julian Baines
Non-Executive Chair
2 June 2023
3
Verici Dx plc
Chief Executive Officer’s Report
for the year ended 31 December 2022
2022 and the post year end period has been a time of exceptional progress for Verici Dx as the Company achieved
the key strategic goal of moving from a research-only company to commerciality following the full launch of Tutivia™
in January 2023. In addition, we are on track to announce the data read-out from the extended Clarava™ trial by the
end of June and completed enrolment for Protega.
The Company also achieved several other key operational milestones, particularly in reimbursement, achieving a
code, a recommended price, and submitting the publication that will complete the application for coverage under the
Local Coverage Determination (“LCD”) from MolDx. CMS issued a clarification on reimbursement to limit coverage
to a single biomarker test per patient encounter which strengthens the value of TutiviaTM as a single test
demonstrating balanced accuracy in its clinical performance. We also made significant progress in promoting our
research data for future strategic collaborations with our development work with Illumina, Inc. (NASDAQ: ILMN)
utilizing their ICA environment.
This progress has continued as we moved into 2023 with the achievement of CLIA Certification of Compliance for
our commercial clinical operations in Nashville, Tennessee, enabling us to test samples from 45 US states,
applications for the remaining states are in progress and the intellectual property was further secured by the issuance
of two key US patents.
Strong progress on commercial rollout
In June 2022, the data from our international, multi-centre validation study for Tutivia™ was presented, which
demonstrated a significantly higher Positive Predictive Value (“PPV”) than currently available kidney transplant single
genetic expression blood tests, in order for the test to provide clinicians with an appropriate, reliable call to action to
improve patient outcomes post-transplant. The trial also demonstrated that the test can be used as soon as the first
week post-transplant and was not confounded by other common conditions such as BK nephropathy. The test’s
sensitivity when compared with clinically indicated biopsies in the first 60 days was 83% and overall patients were
six times more likely to reject if they had a high-risk score from TutiviaTM than those with a low-risk score. Early
reliable data from a single test gives TutiviaTM a well validated competitive advantage.
We commercially launched Tutivia™ in January 2023, with a number of US transplant centres under an early adopter
program. This is in line with our strategic plan, and in these initial months we have been supporting these centres
with the adoption and integration of Tutivia™ into their clinical pathways to encourage a consistent and recurring
utilisation. This is providing valuable information for us to make Tutivia™ as simple as possible for clinicians to use
and interpret.
In addition, following the positive initial data announced in September 2022 on Clarava™, the Company’s pre-
transplant prognostic test, the Company chose to expand its validation trial for this lead product to strengthen the
publication appeal and demonstrate a statistically robust and clinically compelling case to support the commercial
rollout and adoption of the test. The data read-out from this extended trial remains on track to be announced by the
end of June 2023, in line with previous guidance.
Protega™ enrolment was completed in the first quarter of 2023, an important milestone achieved in the completion
of our platform offering end to end transplant testing, from pre-transplant to long-term damage. We expect that the
final validation point will be completed after follow-up at the 24-month point for the last patient tested, which is
expected to be in Q1 2025. The Company expects to be able to review interim data before that date.
4
Verici Dx plc
Chief Executive Officer’s Report
for the year ended 31 December 2022 (continued)
Clear product differentiation and competitive advantages
Our portfolio of innovative kidney transplant tests use advanced next-generation sequencing to define a personalised
risk profile for each patient using RNA signatures. This allows for the early prognosis of transplant rejection,
deciphering the body’s early genetic messages that are specific to acute rejection. This is a significant advantage
over currently available tests, which detect evidence of damage already occurred and may be confounded by other
conditions.
Our tests enable doctors to make accurate, data-driven clinical decisions, to assist their care decision-making for
patients including choices made about immunosuppressive therapy protocols and may also inform other aspects of
the post-transplant care pathway over time. This has not only near-term scope to reduce the unnecessary and serious
consequences from over- or under-dosing for immunosuppression in conjunction with kidney transplant, but also to
improve the longevity of transplanted kidneys and, by reducing the risk and rate of transplant failure, much broader
potential to deliver huge health economic benefits by improving transplant outcomes.
Tutivia™ has a number of important differentiators from current biomarker tests. One is the ability to return results
as early as the first week post-transplant for all types of patients. This enables clinicians to act proactively, rather
than reactively, to rejection events. Tutivia™ is also able to detect sub-acute rejection (before there are other clinical
signs) and is also able to distinguish between rejection and other confounding factors such as the BK virus.
Currently available single blood tests that look for signs of transplant damage typically have a high Negative
Predictive Value (“NPV”) but are non-specific. This means that if the blood test returns a negative result, clinicians
can be confident that there is no current rejection occurring but uncertain whether a positive result is from a rejection
or an infection, or physical trauma.
Consequently, these tests function primarily as a ‘rule out’ tool, but this is limiting for clinicians, who may need to
know with some degree of confidence whether their patient requires further interventions.
Crucially, our validation study was a blinded ‘all-comers’ patient population across 13 international transplant centres.
This means that we were able to test the power of Tutivia™ within a clinically realistic context that included all types
of rejection. We believe that Tutivia™ is the only product currently on the market to have been validated so
comprehensively.
Turning to the Company’s second lead product, Clarava™, its initial validation results were announced in September
2022, and indicated that the test was able to identify pre-transplant patients most likely to experience a future kidney
rejection event, which has broad implications for treatment planning and monitoring. The data read-out from the
extended trial for Clarava remains on track to be announced by the end of June 2023.
Delivery of significant operational milestones
In January 2022, we received CPT® Proprietary Laboratory Analyses (“PLA”) codes for Clarava™ and Tutivia™,
from the American Medical Association, an important first step towards commercial reimbursement. CPT® codes
offer health care professionals a uniform language for coding medical services and procedures and allow clinical
laboratories to more specifically identify their tests when billing Medicare and commercial insurers.
In February 2022, we successfully completed analytical validation for Clarava™ and Tutivia™, an essential element
of defining the performance characteristics and platform capabilities of in vitro diagnostic assays. Analytical validation
is an important step towards reimbursement coverage assessment.
5
Verici Dx plc
Chief Executive Officer’s Report
for the year ended 31 December 2022 (continued)
We announced in March 2023 that we had successfully progressed our laboratory registration status to Compliance
Certification by the Centers for Medicare & Medicaid (“CMS’), allowing our commercial clinical operations to process
samples from 45 US states. This followed an inspection by CMS of our clinical laboratory in Franklin, Tennessee,
and represents a major milestone toward US Medicare reimbursement. The Company is now preparing its
submission for Medicare insurance reimbursement coverage, which will be key to driving adoption. Eligibility for
Medicaid has been approved in 14 states and submitted in a further 11 states. Eligibility has also been approved with
BlueCross Blue Shield of Tennessee, the largest health benefit plan company in Tennessee, where the Company’s
clinical laboratory is located.
Also in March 2023, the Company announced it has been granted two key patents in the United States that support
and protect the Company's core technologies in RNA signature biomarker tests used for assessment of the
prognostic risk pre-transplant (Clarava™) and post-transplant (Tutivia™) of acute kidney transplant rejection. The
protection of the Company's intellectual property is fundamental to our strategy of amassing full transcriptomic data
from the biological systems and interactions associated with transplant rejection and, over the longer term, informing
transplant analysis in other organs and in the broader field of immune-mediated diseases.
In May 2023, the price recommendation from MolDx was issued in line with Company expectations and highly
indicative for the national listing at the end of the year following a period of public consultation, with a listed price then
being valid for 3 years from January 2024.
Completion of partnerships and agreements
In January 2022 we entered into a collaboration with Illumina, granting us early access to Illumina Connected
Analytics (ICA), Illumina’s new software platform, which provides us with the ability to process large datasets in a
streamlined manner. This supports our leading-edge technology approach and provides a foundation for future data
science discovery, expansion and collaboration opportunities.
Collaborating with such a high-quality partner as Illumina is an indicator of the strength of our platform, and access
to the ICA platform has materially enhanced our data processing capabilities, as well as boosted our ability to develop
highly predictive products in the future. This partnership supports our wider goal of improving patient outcomes within
organ transplantation, where there remains an urgent clinical need.
Management and staff
As of 31 December 2022, the Company had 15 Full Time Equivalents (“FTE”) employees.
Financials
Statement of Comprehensive Income
The adjusted EBITDA loss, being the loss for the year, before the deduction of interest, taxation, amortisation and
depreciation, and excluding the share-based payments charge, was US$10,497,000 (2021: US$7,151,000) The
increase arises from the significant increase in clinical trial and associated costs, including the hiring of 6 new
members of the team in the year, of which 3 were hired to commence the commercial launch of TutiviaTM.. The
largest items of expenditure remain staff costs of US$2,889,000 (2021: US$2,392,000) and research and
development costs of US$4,832,000 (2021: US$3,344,000). All research and development costs arise from third
parties, this does not include any allocation of internal costs. We started the year with 10 full time employees and
ended the year with 15 full time employees, both numbers excluding our non-executive directors.
Statement of Financial Position and Cash Flows
Cash balance at year end was US$9,805,000 (2021 - US$10,340,000). Cash outflow from operations was
US$10,068,000 (2021 - US$6,336,000) with cash outflow on additions to tangible and intangible assets of
US$1,308,000 (2021 - US$966,000). The biggest constituent of spend on capital expenditure being the construction
of our CLIA laboratory in Tennessee. In March 2022 we concluded a share issue raising gross proceeds of
GBP10.0m, which after costs generated a cash inflow of US$12,629,000.
6
Verici Dx plc
Chief Executive Officer’s Report
for the year ended 31 December 2022 (continued)
Within current and non-current liabilities, we entered a financing transaction in December 2022 to secure favourable
terms on a new sequencer. At 31 December 2022 the liability was US$239,000 (2021 - US$Nil). We also entered
into a five-year lease on our new CLIA laboratory in Tennessee in September 2022 resulting in the recognition of a
right of use asset and corresponding liability. At 31 December 2022 the liability was US$461,000 (2021 - US$Nil).
The largest balance within our accruals continues to be our accruals for costs incurred at the clinical trial sites not
yet invoiced being US$912,000 (2021 – US$851,000).
As of 31 December 2022, the Company had a cash balance of $9.81m. The Company has closed the New York
Laboratory, taken headcount reduction and clinical trial cost containment steps in recent months and, as a result, has
extended the current cash runway to last until mid-2024. The Company is focused on early revenue generation during the
first half of this year and will seek to extend and broaden its revenue streams from additional centres in the second half of
2023.
Outlook
Over the course of 2023, we will look to gradually accelerate the Tutivia™ commercial rollout with more leading US
centres and expect to expand our first revenues. We expect to secure both Medicare and private payor pricing and
coverage for Tutivia™ this year, which will be a key catalyst in enabling a more widespread adoption of the test.
Following our receipt of the CLIA Certificate of Compliance, we will also look to receive full accreditation in the
remaining five states that are not covered under the CLIA certification, including New York.
As announced on 31 May, the data read-out from the extended Clarava™ trial remains on track to be announced by
the end of June 2023.
We are also looking to extend and broaden our revenue streams this year, which could include potential
collaborations with pharmaceutical and medtech/data companies that could benefit from the application of the
Company’s transcriptomic analysis technology in different settings.
We are developing a health economics model to aid our commercialisation efforts, which we expect to submit for
publication by the end of the year. We are also expected to engage in clinical utility and real-world evidence studies
to further support adoption of our products both later this year and into next year.
On behalf of the Board, I would like to thank the shareholders for their support in this transformational year for the
Company and we look forward to delivering further commercial progress over the course of 2023 as we continue to
deliver on our strategy of transforming kidney transplant outcomes.
Sara Barrington
Chief Executive Officer
2 June 2023
7
Verici Dx plc
Board of Directors
for the year ended 31 December 2022
The Directors of the Company during the period were:
Julian Baines, MBE – Non-Executive Chair
Julian is the Company’s Non-Executive Chair and member of the remuneration committee.
Julian is Acting CEO of EKF Diagnostics Holdings plc. During his tenure at EKF, he has successfully completed multiple
fundraisings and the acquisition and subsequent integration of eight businesses in seven countries, building revenue from
zero to over £40,000,000. Prior to joining EKF, Julian was group chief executive officer of BBI Holdings plc, where he
undertook a management buyout in 2000, its AIM flotation in 2004 and was responsible for selling the business to Alere,
Inc. (now part of Abbott Laboratories) in 2008 for c. £85,000,000.
In 2016, Julian was awarded an MBE for services to the life sciences industry. Julian was appointed a Non-Executive
Director of the Company on 22 April 2020.
Sir Ian Carruthers, OBE – Senior Independent Non-Executive Director and chair of the audit committee and
nomination committee.
Sir Ian Carruthers holds a number of chair and non-executive board and advisory roles in the public and private sectors. He
was previously Chief Executive of NHS South of England, comprising three health bodies: South West, South Central and
South East and his career in the National Health Service spans over 40 years. He was awarded the OBE for services to
health in 1997 and a Knighthood in 2003 for services to the NHS. In 2006 he took over as Interim Chief Executive of NHS
England, amongst the largest organisations in the world with over 1.3 million employees and a budget in excess of £100
billion. He has been the lead author on several papers on reviewing and improving the NHS and is seen as an international
expert on healthcare systems and service delivery.
He is currently Chancellor of the University of the West of England, and was formerly Chair of Healthcare UK, Chair
of the Innovation Health and Wealth Implementation Board, Co-Chair of the Prime Minister’s Challenge on Dementia
and Non-Executive Director of Bioquell plc.
Sir Ian Carruthers was appointed as a Non-Executive Director of the Company on 19 August 2020.
James McCullough – Non-Executive Director and member of the remuneration committee and the nomination
committee
James is a Non-Executive Director and the CEO of Renalytix plc.
James has experience building emerging technology companies in both the public and private sectors with specific
expertise in the life-sciences industry. His skills include equity and debt capital formation, strategic development and
partnerships, executive team structuring, regulatory issues and marketing. The Renalytix IPO was completed in November
2018, raising over £22,000,000 for the company. Following successful progress in validatory development, regulatory
discussions, reimbursement, pricing and insurance coverage determinations, a follow-on fundraise was arranged in July
2019 at over double the IPO price, enabling expansion of the team and acceleration of key workstreams. In July 2020,
Renalytix successfully dual-listed on Nasdaq with a market capitalisation of £378,130,000 after raising a further
$85,000,000 (approximately £68,000,000).
8
Verici Dx plc
Board of Directors
for the year ended 31 December 2022 (continued)
James McCullough – Non-Executive Director and member of the remuneration committee and the nomination
committee (continued)
Prior to his role at Renalytix, James was Chief Executive Officer of Exosome Diagnostics, a venture backed personalised
medicine company developing non-invasive liquid biopsy diagnostics in cancer. Exosome Diagnostics was acquired by
Bio-Techne Corporation (NASDAQ: TECH) in 2018. James is also a managing partner of Renwick Capital, LLC, a
management consulting firm specialising in assisting emerging healthcare technology companies with strategic planning
and business execution.
James received his B.A. from Boston University and an M.B.A. from Columbia Business School. James is currently
Chairman of BalletNext, a performing arts company in New York City. He currently holds Series 79 and Series 63 securities
licenses from the Financial Industry Regulatory Authority in the US.
James was appointed a Non-Executive Director of the Company on 22 April 2020.
Sara Barrington – Chief Executive Officer
Sara is an Executive Director.
Sara has leadership experience both financially and operationally with a focus upon developing and commercialising life
science products. She was the CEO of LungLife AI a diagnostic company for early-stage lung cancer. Prior to that she
was with Bruin Biometrics, a LA-based medical device company as EVP Business Operations and previously CFO. In her
role at Exosome Diagnostics, a venture-backed personalised medicine company the focus was upon the development of
non-invasive liquid biopsy diagnostics in cancer. The company was successfully sold to Bio-Techne Corporation in 2018.
She was previously CFO at AusAm Biotechnologies developing diagnostics in kidney disease. Sara is also CCO of
Kantaro Biosciences, a joint venture between Renalytix and Mount Sinai for the commercialisation of COVID-19 antibody
testing. Prior to working in the US, she worked for British Telecom in London in business development and strategy.
Sara is qualified as a Chartered Accountant with the Institute of Chartered Accountants in England and Wales. She
has also qualified with Chartered Institute of Marketing.
Sara was appointed a Director of the Company on 19 August 2020.
Dr. Erik Lium – Non-Executive Director and chair of the remuneration committee.
Dr Lium in his capacity as Non-Executive Director will represent Mount Sinai on the Board as part of the ongoing
relationship between the Company and Mount Sinai.
Dr Lium is President of Mount Sinai Innovation Partners (MSIP) and Executive Vice President and Chief Commercial
Innovation Officer, Mount Sinai Health System. He is also Non-Executive Director of Renalytix. Dr Lium represents Mount
Sinai on several private company boards and previously served as a member of the investment review committee for the
Accelerate NY Seed Fund. Dr Lium also serves as chairman of the board of managers of Kantaro.
Prior to joining Mount Sinai, Dr. Lium served as the Assistant Vice Chancellor of Innovation, Technology & Alliances at the
University of California, San Francisco (UCSF), and the UCSF Principal Investigator for the Bay area National Science
Foundation I-Corps node and Assistant Vice Chancellor of. Dr. Lium served as President of LabVelocity Inc. prior to its
acquisition in 2004. He pursued post-doctoral research at UCSF in the laboratory of J. Michael Bishop, MD, and earned a
PhD with honours from the Integrated Program in Cellular, Molecular and Biophysical Studies at Columbia University in
the laboratory of Dr. Saul J. Silverstein. Dr. Lium holds a BS in Biology from Gonzaga University.
Dr Lium was appointed a Non-Executive Director of the Company on the 19 August 2020.
9
Verici Dx plc
Board of Directors
for the year ended 31 December 2022 (continued)
Dr. Lorenzo Gallon – Non-Executive Director and member of the audit committee
A Professor of Medicine (Nephrology and Hypertension) and Surgery (Organ Transplantation), Dr. Gallon is currently
the Medical Director of the Translational Medicine Programme, the Director of International Relations and the Director
of the Renal Transplant Fellowship at Northwestern University. He is an alumnus of the University of Padua Medical
School, Italy and Harvard Medical School.
An expert in nephrology and hypertension as well as organ transplantation, Dr. Gallon’s primary research interests
include:
• The role of immunosuppressive medications in modulating the immune system,
• Genomics of chronic renal allograft rejection,
• Prednisone-free and calcineurin inhibitors-free immunosuppressive protocols,
• New immunosuppressive strategies,
• Focal segmental glomerulosclerosis (FSGS), and
• Aging and impact of physical exercise after kidney transplantation.
With nearly 20 years’ experience in the life sciences industry, focusing largely on nephrology and organ
transplantation, Dr. Gallon is excellently placed to provide insight and guidance in the development of Verici’s two
lead products, Clarava™ and Tutivia™. He was a collaborator and co-author with Verici’s previous SAB Chair, Dr.
Barbara Murphy, in the GoCar study which was foundational in the development of Verici’s products. He has also
been a member of the Editorial Board at the journal Nephron since 2019.
10
Verici Dx plc
Strategic report
for the year ended 31 December 2022
Our Strategy and Business Model
Verici Dx is developing a complementary suite of proprietary, leading-edge tests forming a kidney transplant platform for
personalised patient and organ response risk to assist clinicians in medical management for improved patient outcomes.
The underlying technology is based upon artificial intelligence assisted transcriptomic analysis to provide RNA signatures
focused upon the immune response and other biological pathway signals critical for transplant prognosis of risk of injury,
rejection and graft failure from pre-transplant to late stage.
During 2022 and through the first half of 2023, the Company made significant progress against its strategic goals, critically,
this included moving from a research only company to commerciality following the full launch of TutiviaTM in January 2023.
The Company is working with leading US transplant centres in the Tutivia™ commercial launch and is supporting them
with the integration of the test into their workflows to help us better understand how they can encourage consistent and
recurring utilisation going forward. This is providing a valuable foundation for Verici Dx to make Tutivia™ as simple as
possible for clinicians to use and interpret.
Turning to the Company’s second product, Clarava™, following the positive initial data announced in September 2022,
the Company chose to expand its validation trial for this lead product for a further six months. This decision was taken to
strengthen the publication appeal of the trial and demonstrate a statistically robust and clinically compelling case in support
of the commercial rollout and adoption of the test. The data read-out from the extended trial remains on track to be
announced by the end of June 2023.
Enrolment for Protega™ was completed in the first quarter of 2023 and the final validation point will be completed at 24
months, i.e. Q1 2025, although interim results will be reviewed before then.
The Company also made significant operational progress securing two additional key patents and achieving full CLIA
certification allowing the Company to test samples from45 states.
Following admission to trading on AIM, a market operated by the London Stock Exchange on 3 November 2020, raising
gross proceeds of US$18.8m, in March 2022, the Company completed a fundraise which raised gross proceeds of £10.0
million (c.$13.0 million). As of 31 December 2022, the Company had a cash balance of $9.81m. The Company has closed
the New York Laboratory, taken headcount reduction and clinical trial cost containment steps in recent months and, as a
result, has extended the current cash runway to last until mid-2024.
Addressing a critical need for personalised diagnostics
End stage kidney disease (“ESKD”) is the final permanent stage of chronic kidney disease, where a patient’s kidneys are
unable to function on their own and they need either dialysis or a kidney transplant in order to survive. Per the National
Institute of Health, it is estimated there are 786,000 ESKD patients in the US 71% currently on dialysis and 29% with a
kidney transplant. In 2022 there were over 25,000 kidney transplants completed in the US. It is estimated that 37 to 50 per
cent. of transplant recipients have evidence of a rejection event, these can be sub-divided into:
• Clinical Acute Rejection (“cAR”), which occur in approximately 10 per cent. to 15 per cent. of kidney
transplant recipients in the first-year post-transplant. This is usually indicated by a rise in serum creatinine
over baseline and determined by a for-cause biopsy. It is usually alleviated with a change in
immunosuppressive therapy.
11
Verici Dx plc
Strategic report
for the year ended 31 December 2022 (continued)
• Subclinical Acute Rejection (“subAR”) occurring in 27 to 40 per cent. of patients with stable serum creatine
in the first 1-year post- transplant. It can be referred to as silent rejection because it often goes undetected.
The only way to identify subAR is through a surveillance biopsy. However only 17 per cent. of transplant
centres in the U.S. employ a surveillance biopsy program.
It is now well established that the recipient’s immune response directed toward the transplanted kidney drives acute
rejection, leading to chronic injury and failure of the transplant, thus necessitating lifelong immunosuppression drug therapy.
One of the major issues with current immunosuppressive protocols is that they are not tailored to the individual patient’s
needs. In clinical practice, immunosuppressive therapy is often decided based on broad clinical criteria including anti-HLA
antibodies, race, prior transplantations and recipient age. However, these indicators perform poorly in predicting individual
risk for development of acute rejection. As a result, most patients receive a standardised immunosuppressive protocol
resulting in a significant proportion of individuals being exposed to either insufficient or excessive immunosuppression,
leading to acute rejection and/or complications associated with over-immunosuppression. These complications include
infections, malignancy, diabetes, hypertension and heart disease. The number of patients receiving higher doses of
immunosuppression around the time of a transplant continues to increase in an attempt to minimise rejection and protect
the transplanted kidney.
Current standard of care
There is no current pre-transplant mechanism to determine the optimal approach to immunosuppressive therapy for a
given patient beyond the presence of recipient antibodies directed toward the donor tissue, which can be found in only
approx. 10 per cent. of patients. Early identification of individuals at high risk of acute rejection could allow targeted
therapies aimed at improving long-term outcomes. Evidence exists that the phenotype and function of the immune system
in patients before kidney transplantation affects the risk for subsequent acute rejection after transplantation, but no
biomarker has been identified to quantify or otherwise assess this risk. Following transplant, clinicians use a standardised
approach to managing immunosuppression, slowly reducing drug levels to a maintenance level over the first three to six
months. There are currently no biomarkers available to indicate if a patient is under or over immunosuppressed.
Manifestation of clinical injury via measurement of serum creatinine is the standard of care as well as tests that use dd
cfDNA to rule out that a patient is experiencing rejection, by measuring evidence of the effects of damage to the kiidney
after it has happened.
Furthermore, there is no clinically available mechanism to identify a patient that is at risk of developing graft injury, either
inflammation or fibrosis or both, and therefore at risk of long-term graft failure.
12
Verici Dx plc
Strategic report
for the year ended 31 December 2022 (continued)
Verici’s proposed solution
To address this “one size fits all approach” the Company is developing tests to understand how a patient is likely and may
be responding to organ transplant. There are many biological systems that are important in assessing rejection. One is
the recipient’s immune system which poses a threat to the grafted organ. Patients’ immune and other biological systems
such as cell repair and metabolism vary in their response to the presence of the transplanted organ. The Company’s
products and solutions are underpinned by extensive scientific research into how the recipient’s biological systems are
likely to respond to the transplanted organ and how that response further influences acute rejection, chronic injury and,
ultimately, failure of the transplant. These RNA signatures may also assist clinicians in their assessment of the optimal
strategy for immunosuppressive and other therapies to enable successful graft acceptance at the lowest compatible level
of treatment-induced side effects.
The research underpinning our technology is driven by a deep understanding of cell-mediated immunity and is facilitated
by access to expertly curated, collaborative studies in highly informative cohorts in organ transplant. The Company has an
exclusive worldwide patent and a non-exclusive technical information licence with Mount Sinai derived from the work of
the late Professor Barbara Murphy’s and collaborators in transplant immunology, focusing on the use of high throughput
genomic technologies to better understand molecular biomarkers of immune system mechanisms that lead to graft injury
and loss. The Company’s current and planned clinical development programmes are not only directed by an extensive
Science Advisory Board of key opinion leaders in the fields of clinical transplant and transplant immunology, but also has
been conducted at key transplant centres in the US, Europe and Australia for the multi-centre validation trial for the three
products.
Verici Dx’s two lead products are:
• TutiviaTM, a post-transplant test focused upon acute rejection (“AR”), including sub-clinical rejection, which
was commercially launched in January 2023 and;
• ClaravaTM, which is a pre-transplant prognosis test for the risk of early acute rejection (“EAR”), for which the data
read-out on the extended trial will be announced by end of June 2023.
The Company is also working on a third product, ProtegaTM, a peripheral blood-based test that aims to predict the
risk of fibrosis and long-term graft failure, which completed enrolment in the first quarter of 2023. Together with
ClaravaTM and TutiviaTM, this suite of products will allow Verici Dx to offer end-to-end testing for kidney transplant
patients and their clinicians, enabling the Company to improve outcomes for patients and also establish a strong
competitive advantage.
These products are planned to be offered as laboratory developed tests (“LDT”) in the US, taking advantage of the lighter
regulatory burden of authorisation under the CLIA regime, which is administered by CMS, in partnership with state health
departments, rather than seeking clearance from the FDA. In Europe, the Company will be seeking CE marking. CE marking
issued by an EEA Notified Body will remain valid in the UK market until 30 June 2023. To address the UK market post-Brexit,
the Company will be seeking for UKCA (UK Conformity Assessed) mark as well. In addition to obtaining CE and UKCA
markings, the products (medical devices) will be registered with MHRA (as required by MHRA since 1 January 2021).
In June 2022, the data from Verici Dx’s international, multi-centre validation study for Tutivia™ was published, which
demonstrated a significantly higher Positive Predictive Value (“PPV”) than currently available kidney transplant single genomic
expression blood tests, demonstrating that the test was able to provide clinicians with valuable patient centric data to improve
patient outcomes post-transplant. This set the foundation for Tutivia’s™ commercial launch in January 2023.
13
Verici Dx plc
Strategic report
for the year ended 31 December 2022 (continued)
The Company is planning on complementing this commercial path with an efficient route through reimbursement coding,
pricing and coverage determinations in the US.
Market opportunity
Globally there are approximately 95,000 transplants currently performed each year of which about 24,000 are performed
in the US and 25,000 in Europe. In the US the comparatively low number of procedures compared to the numbers of
individuals on the waiting list was recognised as an issue for patients waiting for a transplant for on average 3 to 5 years,
and even longer in some geographical locations. It also formed part of the policy in the 2019 US Executive Order,
Advancing American Kidney Health whereby transplant organisations were required to improve efficiencies in the
transplant network and expand support for living donors with the further goal of doubling the number of available
transplants by 2030. The Company’s portfolio is likely to support the confidence for living donors from the increased
success of transplantation.
14
Verici Dx plc
Strategic report
for the year ended 31 December 2022 (continued)
Group and Company History
The Company was incorporated in England and Wales on 22 April 2020 as a wholly owned subsidiary of Renalytix
AI plc (“Renalytix”).
On 4 May 2020 the Company purchased the assets attached to the Fractal DX portfolio of patents previously licensed to
Renalytix by Mount Sinai, for a consideration of $2,000,000. The consideration was satisfied by the issuance of a non-
interest-bearing Convertible Loan Notes (“CLNs”) from the Company to Renalytix. The CLN instrument provided for a
total of up to $3,000,000 of borrowing to be made available to the Company.
On 17 January 2020, ResolveDx Inc was incorporated in the state of Delaware, USA as a wholly owned subsidiary
of Renalytix. On 14 August 2020, ownership of ResolveDx Inc was transferred to the Company and, on 21 August
2020 ResolveDx Inc changed its name to Verici Dx Inc.
Risks and uncertainties
Set out below are the risks which the Directors believe could materially affect the Group’s ability to achieve its financial
and operating objectives and control or mitigating activities adopted to manage them. The risks are not listed in order
of significance.
a) The Company does not yet have all collaborations in place with institutions that it needs for its utility
studies and there is no guarantee that the Company will be able to demonstrate clinical utility of Clarava™
and Protega™
Following the validation study for its Clarava™ and Protega™ products, the Company intends to run clinical utility studies
to support applications for reimbursement, which is necessary for successful commercialisation and to provide further
evidence to support marketing claims.
The Company has identified some initial institutions which will carry out the utility studies in a real-world setting and has
not yet entered into the relevant agreements with these institutions. There is a risk that the Company will not be able to
secure these collaborations, which would impact the Company’s ability to proceed to the utility study stage. Whilst the
utility study is not a source of continuing revenue, it is a short-term revenue stream from sales of the ClaravaTM and
Protega™ tests following the validation study.
If such reimbursement is not achieved, it will make commercialisation of the ClaravaTM and ProtegaTM tests significantly
more challenging and would impact the Company’s ability to generate revenue.
b) The Company has not received the approval of the coverage under the Local Coverage Determination
from the Palmetto region of MolDx for Tutivia™ and may not qualify or there may be delay in approval.
The Company intends to submit a Technical Assessment file application in Q2 2023 applying for approval for Tutivia™ to
be covered for reimbursement by CMS for Medicare claims under the Local Coverage Determination. If approval is not
given or there are delays the Company will need to seek reimbursement under the appeals process or other pathways
such as Individual Claims Review. This will take longer than the standard payment period offered under the Local
Coverage Determination and may lead to less than 100% of each claim being obtained.
c) The Company is dependent on other third parties who provide certain resources and services to the
Company as the Company has limited resources in the short-term
The Company relies in part on external resources to conduct the research, development, supply of supplies and clinical
testing of its ClaravaTM and TutiviaTM products, including in relation to the Company’s laboratory and data management
systems which rely on software developed by external manufacturers. The future development of the ClaravaTM and
TutiviaTM products and other products will partly depend upon the performance of these
15
Verici Dx plc
Strategic report
for the year ended 31 December 2022 (continued)
Risks and uncertainties (continued
third parties. The Company cannot guarantee that the relevant third parties will be able to carry out their obligations
under the relevant arrangements.
(d) The Company is reliant upon the expertise and continued service of a small number of key
individuals of its management, board of directors and scientific advisors
The Company relies on the expertise and experience of a small number of key individuals. The retention of their services
cannot be guaranteed. Accordingly, the departure of these key individuals could have a negative impact on the Company’s
operations, financial conditions, its ability to execute the Company’s business strategy and future prospects.
Going forwards, the Company will rely, in part, on the recruitment of appropriately qualified personnel, including personnel
with a high level of scientific and technical expertise in the industry. The Company may be unable to find a sufficient number
of appropriately highly trained individuals to satisfy its growth rate which could affects its ability to develop products as
planned.
In addition, if the Company fails to succeed in pre-clinical or clinical studies, it may make it more challenging to recruit and
retain appropriately qualified personnel. The Company’s inability to recruit key personnel or the loss of the services of key
personnel or consultants may impede the progress of the Company’s research and development objectives as well as the
commercialisation of its lead and other products.
(e)The Company will need to raise additional funding to take advantage of future opportunities
The Company may need to raise additional funding to take advantage of future opportunities. No assurance can be
given that any such additional funding will be available or, if available, that it will be on terms that are favourable to
the Company or shareholders. If the Company is unable to obtain additional funding as required, it may be required
to reduce the scope of its operations or anticipated expansion.
(f) The Company’s strategy involves generating additional commercially valuable IP that can be protected
The Company intends to build further its intellectual property portfolio. No assurance can be given that any future patent
applications will result in granted patents, that the scope of any patent protection will exclude competitors or provide
competitive advantages to the Company, that any of the Company’s patents will be held valid if challenged or that third
parties will not claim rights in or ownership of the patents and other proprietary rights held by the Company.
16
Verici Dx plc
Strategic report
for the year ended 31 December 2022 (continued)
Risks and uncertainties (continued)
(g) Positive results from pilot trials and early clinical studies are not necessarily predictive of the results of later
clinical studies. If the Company cannot replicate the positive results from earlier tests or studies in its later-
stage clinical studies, it may be unable to successfully develop, obtain regulatory approval for, and
commercialise its products
Positive results from early-stage clinical studies may not necessarily be predictive of the results from later-stage clinical
studies. Many companies in the pharmaceutical biotechnology and medical device industries have suffered significant
setbacks in later-stage clinical trials after achieving positive results in early-stage development, and the Company cannot
be certain that it will not face similar setbacks. These setbacks have been caused, among other things, by pre-clinical
findings made while clinical trials were underway. Moreover, pre-clinical and clinical data is often susceptible to varying
interpretations and analyses, and many companies that believed their product candidates performed satisfactorily in pre-
clinical studies and clinical trials nonetheless failed to obtain regulatory approval.
(h) The Company is subject to research and product development risk
The Company may not be able to develop new products or to identify specific market needs that can be addressed by
tests or solutions developed by the Company. Product development will be a key ongoing activity in the Company.
However, there can be no guarantee that further products will be developed, successfully launched, or accepted by the
market. All new product development has an inherent level of risk and can be a lengthy process and suffer unforeseen
delays, cost overruns and setbacks, such as difficultly recruiting patients into further studies. The nature of the diagnostics
industry may mean new products may become obsolete as a result of competition or regulatory changes which could
have a material adverse effect on the Company’s business, results of operations and financial condition.
In addition, research and development may subject to various requirements, such as research subject protection for
individuals participating in clinical evaluations of new products, institutional review board oversight, regulatory
authorisations, and design control requirements. Failure to comply with requirements could result in penalties, delay, or
prevent commercialisation of products.
(i) The Company is subject to risks associated with medical and technological change and
obsolescence
Demand for the Company’s products could be adversely impacted by the development of alternative technology and
alternative medicines with similar applications. There can be no assurance that the technology and products currently
being developed by the Company will not be rendered obsolete. As a result, there is the possibility that new technology or
products may be superior to, or render obsolete, the technology and products that the Company is currently developing.
Any failure of the Company to ensure that its products remain up to date with the latest advances may have a material
adverse impact on the Company’s competitiveness and financial performance. The Company’s success will depend, in
part, on its ability to develop and adapt to these technological changes and industry trends.
(j) The Company’s failure to maintain compliance of its clinical laboratory operations with applicable laws
could result in substantial civil or criminal penalties
The operation of a clinical laboratory by the Company will be in a highly regulated environment which, among other things,
will require maintaining compliance with CLIA certification and state clinical laboratory licensing requirements. Failure to
maintain compliance with these requirements may result in a range of enforcement actions, including certificate or licence
suspension, limitation, or revocation, directed plan of action, onsite monitoring, civil monetary penalties and criminal
sanctions. Such failure may also result in significant adverse publicity. Any of these consequences could limit or entirely
prevent continued operation of the Company and therefore impact its financial performance.
17
Verici Dx plc
Strategic report
for the year ended 31 December 2022 (continued)
Risks and uncertainties (continued)
(k) The Company is subject to various health regulatory laws pertaining to fraud and abuse and related
matters, and any failure to comply with such laws could result in substantial civil or criminal penalties
The Company’s employees, independent contractors, consultants, and collaborators may engage in misconduct or
other improper activities, including non-compliance with regulatory standards and requirements, which could cause
significant liability for the Company and harm the Company’s operations and reputation.
The Company is exposed to the risk that the Company’s employees, independent contractors, consultants, and
collaborators may engage in fraud or other misconduct to comply with manufacturing standards the Company has
established, to comply with federal and state healthcare fraud and abuse laws and regulations and similar laws and
regulations established and enforced by comparable non-US regulatory authorities, to report financial information or data
accurately or to disclose unauthorised activities to the Company. Such misconduct could also involve the improper use of
information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to the
Company’s reputation. It is not always possible to identify and deter misconduct, and the precautions the Company will
take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in
protecting the Company from governmental investigations or other actions or lawsuits stemming from a failure to comply
with such laws, standards or regulations. If any such actions are instituted against the Company, or the Company’s key
employees, independent contractors, consultants, or collaborators, and the Company is not successful in defending itself
or asserting the Company’s rights, those actions could have a significant impact on the Company’s business and results
of operations, including the imposition of significant criminal, civil and administrative sanctions including monetary
penalties, damages, fines, disgorgement, individual imprisonment, additional reporting requirements and oversight if the
Company becomes subject to a corporate integrity agreement or similar agreement to resolve allegations of non-
compliance with these laws, reputational harm, and the Company may be required to curtail or restructure the Company’s
operations.
(l) The Company’s failure to prevent a data breach would result in serious reputational damage to the Company
and may result in civil or criminal lawsuits and associated penalties
The Company takes its responsibility to maintain patient confidentiality and protect patient data extremely seriously. By its
nature, the de-identified data that is being processed is highly sensitive and includes genetic and demographic information,
the processing of which is subject to the most onerous obligations of applicable data protection legislation. If, due to a
technical oversight, human error or malicious action by an employee or third party, the privacy, security or integrity of the
data were compromised, the Company may be obliged to report such breach once it became aware of under applicable
laws and regulations such as Health Insurance Portability and Accountability Act 1996 (“HIPAA”), EU General Data
Protection Regulation (EU) 2016/679 (“GDPR”), Data Protection Act 2018 (“DPA”) or other US state or EU member state
specific laws as well as the data privacy laws of other countries such as Japan, Singapore, Hong Kong and China.
Depending on the nature and extent of the breach, the Company may become subject to a regulatory investigation, which
would divert time and financial resources from the day-to-day operation of the business and may result in civil or criminal
lawsuits and financial fines and penalties as well as adverse publicity. If third parties and/or customers of the Company
become aware of such breaches, they may opt to cancel existing contracts or not enter new contracts with the Company,
reducing revenue. The Company may also be required to personally inform the patients whose data was released or
accessed as a result of a data breach, which may increase the severity of the reputational damage and may lead to patients
revoking their consent for the data to be used by the Company. In addition, patients may have the right to bring claims for
compensation for such breaches which might be brought by way of class or representative actions and claim significant
sums as damages. To mitigate the risk of a data breach or related issue, the Company will employ technical security
measures to protect data and work closely with its data providers to ensure that each party understands its obligations to
protect personal data.
18
Verici Dx plc
Strategic report
for the year ended 31 December 2022 (continued)
Section 172 Statement
The Directors, in line with their duties under s172 of the Companies Act 2006, act in a 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 have regard to a range of matters when making decisions for the long term. Key decisions and matters that
are of strategic importance to the Company are appropriately informed by s172 factors.
Section 172(1)(a) to (f) requires each Director to act in the way he or she considers would be most likely to promote
the success of the company for the benefit of its members as a whole, with regard to the following matters:
(a) the likely consequences of any decision in the long term
(b) the interests of the Company’s employees
(c) the need to foster the Company’s business relationships with suppliers, customers and others.
(d) the impact of the Company’s operations on the community and the environment
(e) the desirability of the Company maintaining a reputation for high standards of business conduct; and
(f)
the need to act fairly between members of the Company.
This section serves as our section 172 statement and should be read in conjunction with the Strategic Report and
the Company’s Corporate Governance Statement. The table below acts as our s172(1) statement by setting out the
key stakeholder groups, their interests and how the Company has engaged with them over the reporting period.
19
Verici Dx plc
Strategic report
for the year ended 31 December 2022 (continued)
Stakeholder
Their interests
How we engage
2022 highlights
• Held an annual company
retreat at Nashville
laboratory with tour of
new build out and
communication
workshop.
• Adopted Monday.com as
company wide project
management software.
• Both in person and
virtual meetings in the
year.
Our employees
• Training, development
and career prospects
• Health and Safety
• Working conditions
• Diversity and Inclusion
• Human Rights and
modern slavery
• Fair pay, employee
benefits
Our suppliers
• Terms and conditions of
contracts
• Working conditions
• Human rights and
modern slavery
• Diversity and inclusion
•
Information on the future
direction of the business
Our Investors
• Capital growth and
dividends.
• Comprehensive review
of financial performance
of the business
• Business sustainability
• High standard of
governance
• Success of the business
• Ethical behaviour
• Director experience
• Awareness of long-term
•
strategy and direction
Improving market
perception of the
business
• Weekly updates call with
the entire team
reviewing each week’s
activities.
• Bimonthly meetings with
the entire team to review
progress against
milestones.
• Periodic updates on
Company progress and
overall strategy
• Quarterly development
plan meetings
•
•
•
•
Prompt payment
Early communication
with management team
in situations requiring
resolution.
Sub-contractor
assessment approval
chain
Supplier contracts
•
Annual Report
• Company website
•
•
•
Shareholder circulars
AGM
Stock exchange
announcements
• Communications
through briefings with
management
Investor Roadshows
•
20
Verici Dx plc
Strategic report
for the year ended 31 December 2022 (continued)
Stakeholder
Their interests
How we engage
2022 highlights
Regulatory
bodies
Community and
Environment
• Compliance with
regulations
• Workers’ pay and
conditions
• Gender Pay
• Health and Safety
• Brand reputation
• Waste and environment
•
Insurance
• Sustainability
• Human rights
• Energy usage
• Recycling
• Waste Management
• Community outreach
and CSR
• Company website
•
Stock exchange
announcements
•
Annual Report
• Direct contact with
regulators
• Compliance updates at
Board Meetings
• Consistent risk, health
and safety review
• Philanthropy
• Volunteering
• Corporate social
responsibility
• Workplace recycling
• Sponsored endowed
lectureship for AST.
• Attended ATC and AST
conferences with exhibit
space at AST
policies and processes
• Sponsored Tennessee
Kidney Fund 5k
This report was approved by the Board of Directors on 2 June 2023 and signed on its behalf by:
Julian Baines
Non-executive Chair
21
Verici Dx plc
Directors' report
for the year ended 31 December 2022
The Directors present their report on the affairs of Verici Dx plc (the "Company") and its subsidiary, referred to as the
Group, together with the audited Financial Statements and Independent Auditors’ Report for the year ended 31
December 2022.
Principal activities
The main activity of the Group is the development of a prognostic and diagnostic tests for kidney transplant patients.
Results and dividends
During the year ended 31 December 2022 the Group recorded a loss after tax of US$11,407,000 (2021 - US$8,329,000)
and a net cash outflow from operating activities of US$10,068,000(2021 - US$6,336,000).
The Directors do not recommend the payment of a dividend.
Going concern
The Group is in the development phase of its business and has not generated any revenues. At 31 December 2022
the Group has available cash resources of US$9,805,000 (2021 – US$10,340,000).
In considering the appropriateness of this basis of preparation, the Directors have reviewed the Company and Group
working capital forecasts for a minimum of 12 months from the date of the approval of this financial information. The
Company’s projections, including expected levels of revenue generation, indicate sufficient funds through to mid-
2024. Thus, the adoption of the going concern basis of accounting in preparing this financial information is considered
appropriate. However, the directors consider that it is reasonably possible that the Company and Group will require
additional funding during, or shortly after the end of that period. Further details are set out in note 2 to the financial
statements.
Political donations
The Group made no political donations in the period.
Future developments
The Group’s future developments are outlined in the Strategic Report on pages 11 to 21.
Financial risk management
Financial risk management policies and objectives for capital management are outlined in the principal risks and
uncertainties section of the Strategic Report on pages 11 to 21 and in note 4 to the financial statements.
Directors’ indemnities
The Group has made qualifying third-party indemnity provisions for the benefit of its Directors, which were made
during the period and remain in force at the date of this report.
Events after the reporting period
Details of significant events since the reporting period are contained in note 22 of the financial statements.
22
Verici Dx plc
Directors' report
for the year ended 31 December 2022 (continued)
Directors
The Directors of the company throughout the year and to the date of this report were:
Julian Baines MBE
Sir Ian Carruthers OBE
James McCullough
Sara Barrington
Dr Erik Lium
Dr Lorenzo Gallon
Directors’ shareholdings
The holdings in the share capital of the Company of those Directors serving at 31 December 2022 and as at the date
of signing of these financial statement, all of which are beneficial, were as follows:
Julian Baines
Sir Ian Carruthers
James McCullough
Sara Barrington
Dr Erik Lium
Dr Lorenzo Gallon
Substantial shareholdings
On 31 December 2022 and 2021
Ordinary Shares of £0.001 each
1,351,713
100,000
2,870,110
-
-
-
As of 31 March 2023, the following interests in 3% or more of the issued Ordinary Share capital, after taking account
of the issue of new shares post year end pursuant to the funding, had been notified to the Company:
Shareholder
Harwood Capital
Icahn School of Medicine at Mount Sinai
Renalytix plc
Unicorn Asset Management Limited
Hargreaves Lansdown Asset Management
Canaccord Genuity Wealth Management
Number of shares
33,059,186
19,501,330
9,831,681
9,239,660
9,092,750
8,239,314
Percentage of issued
share capital
19.4%
11.4%
5.8%
5.4%
5.1%
4.8%
23
Verici Dx plc
Directors' report
for the year ended 31 December 2022 (continued)
Corporate Social Responsibility
The Board recognises its employment, environmental and health and safety responsibilities. It devotes appropriate
resources towards monitoring and improving compliance with existing standards. The Executive Directors are
responsible for these areas at Board level, ensuring that the Group’s policies are upheld and providing the necessary
resources.
The Directors consider that the nature of the Group’s activities is not inherently detrimental to the environment. The
Group is committed to identifying and minimising any effect on the environment caused by its operations and the
Board recognises that the Group has a duty to be a good corporate citizen and to respect and comply with the laws,
regulations, and where appropriate the customs and culture of the territories in which it operates.
Employees
The Group is committed to achieving equal opportunities and to complying with relevant anti-discrimination legislation.
It is established Group policy to offer employees and job applicants the opportunity to benefit from fair employment,
without regard to their sex, sexual orientation, marital status, race, religion or belief, age or disability. Employees are
encouraged to train and develop their careers.
The Group has continued its policy of informing all employees of matters of concern to them as employees, both in
their immediate work situation and in the wider context of the Group's well-being. Communication with employees is
affected through the Board, the Group’s management briefings structure, formal and informal meetings and through
the Group’s information systems.
Directors Responsibilities
The Directors are responsible for preparing the Strategic Report, the Directors’ Report and the Financial Statements
in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the
directors have elected to prepare the financial statements in accordance with UK adopted International Accounting
Standards (“UK IFRS”) and applicable law.
Under company law the Directors must not approve the financial statements unless they are satisfied that they give
a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that
period. In preparing these financial statements, the Directors are required to:
• Select suitable accounting policies and then apply them consistently.
• Make judgements and accounting estimates that are reasonable and prudent.
• State whether applicable accounting standards have been followed, subject to any material departures disclosed
and explained in the financial statements; and
• Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
Company and Group will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company
and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the Group and the Company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
24
Verici Dx plc
Directors' report
for the year ended 31 December 2022 (continued)
Directors Responsibilities (continued)
They are further responsible for ensuring that the Strategic Report and the Directors’ Report and other information
included in the Annual Report and Financial Statements is prepared in accordance with applicable law in the United
Kingdom.
The maintenance and integrity of the Verici Dx plc website is the responsibility of the directors. Legislation in the
United Kingdom governing the preparation and dissemination of the accounts and the other information included in
annual reports may differ from legislation in other jurisdictions.
Auditors
Each of the persons who are directors at the time when this Directors’ report is approved has confirmed that:
•
•
so far as that Director is aware, there is no relevant audit information of which the Group and the Group’s auditor
is unaware; and
that Director has taken all the steps that ought to have been taken as a Director in order to be aware of any
relevant audit information and to establish that the Company and the Group’s auditor is aware of that information.
Crowe U.K. LLP has expressed its willingness to continue in office and a resolution to reappoint the firm as Auditor
and authorising the Directors to set their remuneration will be proposed at the forthcoming Annual General Meeting
This report was approved by the Board of Directors on 2 June 2023 and signed on its behalf by:
Julian Baines
Non-executive Chair
25
Verici Dx plc
Corporate governance report
for the year ended 31 December 2022
Compliance
The Company recognises the value of good corporate governance in every part of its business. The Board has
adopted the corporate governance principles of the 2018 Quoted Companies Governance Code. Details of the Code
can be obtained from the Quoted Companies Alliance’s website (www.theqca.com).
The following statement describes how the Group seeks to address the principles underlying the Code.
Board composition and responsibility
The Board currently comprises one Executive Director and five Non-Executive Directors. Julian Baines has been
appointed as Non-Executive Chair.
It is the Board’s opinion that Julian Baines, Sir Ian Carruthers, James McCullough, Dr Erik Lium, and Dr Lorenzo
Gallon are independent in character and judgement and that there are no relationships or circumstances which could
materially affect or interfere with the exercise of their independent judgement.
All Directors are subject to election by Shareholders at the first Annual General Meeting after their appointment and
are subject to re-election at least every three years. Non-Executive Directors are appointed for a specific term of
office which provides for their removal in certain circumstances, including under section 168 of the Companies Act
2006. The Board does not automatically re-nominate Non-Executive Directors for election by Shareholders. The
terms of appointment of the Non-Executive Directors can be obtained by request to the Company Secretary.
The Board’s primary objective is to focus on adding value to the assets of the Group by identifying and assessing
business opportunities and ensuring that potential risks are identified, monitored and controlled. Matters reserved for
Board decisions include strategic long-term objectives and capital structure of major transactions. The
implementation of Board decisions and day to day operations of the Group are delegated to Management.
There is a division of responsibilities between the Non-Executive Chair, who is responsible for the overall strategy of
the Group and running the Board, and the CEO, who is responsible for implementing the strategy and day to day
running of the Group.
Board meetings
Three Board meetings were held during the period. The Directors’ attendance record during their period of office was
as follows:
Board
(9 meetings held)
Audit Committee
(2 meetings held)
9/9
Julian Baines
9/9
Sara Barrington
Sir Ian Carruthers
9/9
James McCullough 8/9
9/9
Dr Erik Lium
9/2
Dr Lorenzo Gallon
N/A
N/A
2/2
N/A
N/A
2/2
Remuneration
Committee
(1 meeting held)
1/1
N/A
N/A
1/1
1/1
N/A
During the year, the Board has not performed an evaluation of their performance and that of the Chair, as well as the
effectiveness of the Board committees.
26
Verici Dx plc
Corporate governance report
for the year ended 31 December 2022 (continued)
Audit Committee
The Audit Committee comprises Sir Ian Carruthers, who acts as chair, and Dr Lorenzo Gallon. The Audit Committee
will, among other things, determine and examine matters relating to the financial affairs of the Company including
the terms of the engagement of the Company’s auditors and, in consultation with the auditors, the scope of the audit.
It will receive and review the reports from management and the Company’s auditors relating to the half yearly and
annual accounts and the accounting and the internal control systems in use throughout the Company.
The committee has met twice during the year ended 31 December 2022. There have been no significant matters
communicated to the Committee by the auditors and no interaction with the Financial Reporting Council. The report
of the Audit Committee is set out on pages 32 to 33.
Remuneration Committee
The Remuneration Committee comprises Dr Erik Lium, who acts as chair, and Julian Baines and James McCullough.
The Remuneration Committee review and makes recommendations in respect of the Executive Directors’
remuneration and benefits packages, including share options and the terms of their appointment. The Remuneration
Committee also make recommendations to the Board concerning the allocation of share options to employees under
the intended share option schemes.
The Committee has met once during the year ended 31 December 2022. The report of the Remuneration Committee
is set out on pages 29 to 31.
Nomination Committee
The Nomination Committee comprises Sir Ian Carruthers, who acts as chair, and James McCullough. The
Nomination Committee will review and recommend nominees as new Directors to the Board. The Committee has
not met during year ended 31 December 2022.
Internal control
The Directors are responsible for ensuring that the Group maintains a system of internal control to provide them with
reasonable assurance regarding the reliability of financial information used within the business and for publication
and that the assets are safeguarded. There are inherent limitations in any system of internal control and accordingly
even the most effective system can provide only reasonable, but not absolute, assurance with respect to the
preparation of financial reporting and the safeguarding of assets.
The Group, in administering its business, has put in place strict authorisation, approval and control levels within which
senior management operates. These controls reflect the Group’s organisational structure and business objectives.
The control system includes clear lines of accountability and covers all areas of the organisation. The Board operates
procedures which include an appropriate control environment through the definition of the above organisation
structure and authority levels and the identification of the major business risks.
Internal financial reporting
The Directors are responsible for establishing and maintaining the Group’s system of internal reporting and as such
have put in place a framework of controls to ensure that on-going financial performance is measured in a timely and
correct manner and that risks are identified as early as is practicably possible. There is a comprehensive budgeting
system and monthly management accounts are prepared which compare actual results against both the budget and
the previous year. They are reviewed and approved by the Board and revised forecasts are prepared on a regular
basis.
27
Verici Dx plc
Corporate governance report
for the year ended 31 December 2022 (continued)
Relations with shareholders
The Company will report to Shareholders twice a year. The Company dispatches the notice of its Annual General
Meeting, together with a description of the items of special business, at least 21 clear days before the meeting. Each
substantially separate issue is the subject of a separate resolution, and all Shareholders have the opportunity to put
questions to the Board at the Annual General Meeting.
The Chair(s) of the Audit and Remuneration Committees normally attend the Annual General Meeting and will answer
questions which may be relevant to their work. The Chairman advises the meeting of the details of proxy votes cast
on each of the individual resolutions after they have been voted on in the meeting. The Chairman and the Non-
Executive Directors intend to maintain a good and continuing understanding of the objectives and views of the
Shareholders.
Shareholders may contact the Company as follows:
Tel: +44 (0)20 7933 8780
Email: investors@vericidx.com
Corporate social responsibility
The Board recognises that the Group has a duty to be a good corporate citizen and is conscious that its business
processes minimise harm to the environment, that it contributes as far as is practicable to the local communities in
which it operates and takes a responsible and positive approach to employment practices.
The Corporate Governance Statement was approved by the Board on 2 June 2023 and signed on its behalf by:
Salim Hamir
Company Secretary
28
Verici Dx plc
Report of the remuneration committee
for the year ended 31 December 2022
Statement of compliance
This report does not constitute a Directors’ Remuneration Report in accordance with the Directors’ Remuneration
Regulations 2007 which do not apply to the Company as it is not fully listed. This report sets out the Group policy on
Directors’ remuneration, including emoluments, benefits and other share-based awards made to each Director.
Policy on Executive Directors’ remuneration
Remuneration packages are designed to motivate and retain the Executive Director to ensure the continued
development of the Group and to reward them for enhancing value to shareholders. The main elements of the
remuneration package for the Executive Director are basic salary, performance-related bonuses, benefits and share
based incentives.
Directors’ remuneration - Audited
The remuneration of the Directors for the year ended 31 December 2022 is shown below:
Executive Director
Sara Barrington
Non-Executive Directors
Julian Baines
Sir Ian Carruthers
Dr Erik Lium
James McCullough
Dr Lorenzo Gallon
Base
Salary and
fees
US$
Pension
US$
Benefits
US$
Bonus
US$
331,771
5,251
18,783
331,771
5,251
18,783
37,119
30,932
30,932
30,932
30,932
160,847
-
-
-
-
-
-
-
-
-
-
-
-
Total fees and emoluments
492,618
5,251
18,783
Year to
31
December
2022
US$
355,805
355,805
37,119
30,932
30,932
30,932
30,932
160,847
516,652
-
-
-
-
-
-
-
-
-
Dr Erik Lium is not entitled to receive remuneration as he sits on the Board as a representative of the Icahn School
of Medicine at Mount Sinai and his fees are paid to Mount Sinai.
29
Verici Dx plc
Report of the remuneration committee
for the year ended 31 December 2022 (continued)
The remuneration of the Directors for the period ended 31 December 2021 is shown below:
Executive Director
Sara Barrington
Base
Salary and
fees
US$
Pension
US$
Benefits
US$
Bonus
US$
Year to
31
December
2021
US$
288,113
10,487
19,681
97,500
415,781
288,113
10,487
19,681
97,500
415,781
Non-Executive Directors
Julian Baines
Sir Ian Carruthers
Dr Erik Lium
James McCullough
Dr Lorenzo Gallon (appointed 18
August 2021)
Dr Barbara Murphy (deceased 29
June 2021)
41,277
34,397
34,397
34,397
12,760
17,199
174,427
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
41,277
34,397
34,397
34,397
12,760
17,199
174,427
Total fees and emoluments
462,540
10,487
19,681
97,500
590,208
Dr Erik Lium is not entitled to receive remuneration as he sits on the Board as a representative of the Icahn School
of Medicine at Mount Sinai and his fees are paid to Mount Sinai.
30
Verici Dx plc
Report of the remuneration committee
for the year ended 31 December 2022 (continued)
Share option plan
On 28 October 2020 share options were granted to a number of directors and other parties under the Company’s
unapproved share-option scheme. The options held by Directors as of 31 December 2022 were as follows:
Option holder
Option price per
ordinary share
Number of Ordinary
Shares under option
Exercise period
Icahn School of Medicine
at Mount Sinai
Sara Barrington
£0.20
£0.20
708,739
28 October 2020 – 27 October 2030
5,669,913
28 October 2020 – 27 October 2030
Directors’ interests in the share capital of the Company are disclosed in the Directors’ Report on pages 20 to 23.
Approved by the Board on 2 June 2023 and signed on its behalf by:
Dr Erik Lium
Chair of Remuneration Committee
31
Verici Dx plc
Audit Committee Report
for the year ended 31 December 2022
The Audit Committee reports to the Board on matters concerning the Group’s internal financial controls, financial
reporting and risk management systems, identifying any matters in respect of which it considers that action or
improvement is needed and making recommendations as to the steps to be taken.
Composition of the Audit Committee
The Audit Committee is appointed by the Board compromised Sir Ian Carruthers (Committee Chair) and Dr Lorenzo
Gallon. Sir Ian Carruthers has experience of chairing and holding non-executive position with number of Boards.
Whilst no non-executive member of the Board held an accounting qualification during the 2022 financial year, Sir Ian
Carruthers and Dr Lorenzo Gallon were both deemed competent by virtue of their experience and relevant experience
to the sector in which the Company operates.
Role of the Audit Committee
The Audit Committee operates within defined terms of reference and its main functions are:
● to monitor the internal financial control and risk management systems on which the Group is reliant;
● to consider whether there is a need for the Group to have its own internal audit function;
● to monitor the integrity of the Group’s financial statements and formal announcements relating to the Group’s
financial performance, reviewing significant financial reporting judgements contained in them;
● to review arrangements by which staff may, in confidence, raise concerns about possible improprieties in matters
of financial reporting or any other matter;
● to meet the independent Auditor of the Group to review their proposed audit programme of work and the subsequent
Audit Report and to assess the effectiveness of the audit process and the levels of fees paid in respect of both audit
and non-audit work;
● to make recommendations to the Board in relation to the appointment, re-appointment or removal of the Auditor,
and to negotiate their remuneration and terms of engagement on audit and non-audit work; and
● to monitor and review annually the external Auditor’s independence, objectivity, effectiveness, resources and
qualification
.
External audit
The Group’s external auditor is Crowe U.K. LLP.
The effectiveness and independence of the external audit and auditor is reviewed annually by reference to the
auditor’s attendance at Committee meetings, their audit plan, audit fieldwork, post-audit management letter and the
judgment of the Committee having discussed the matter with the finance director.
The external auditor also provides certain non-audit services including annual tax compliance. The Board has
reviewed its safeguards and policies in place for nonaudit services and is satisfied that these are sufficiently robust
to ensure that Crow U.K. LLP maintain their audit objectivity and independence. Crowe U.K. LLP report to the Board
annually on their independence from the company. Non-audit services are provided only if such services do not
conflict with their statutory responsibilities and ethical guidance.
Taking all of the above into consideration, the Committee concluded the auditors were both effective and
independent during the year.
Review of financial statements and risks identified financial statements issued by the Company need to be fair,
balanced, and understandable. The Audit Committee reviews the Annual Report as a whole and makes
recommendations to the Board. The Audit Committee has advised the Board that, in its opinion, the Annual Report
and Financial Statements are fair, balanced, and understandable and provides the information necessary for
shareholders to assess the Company’s position and performance, business model and strategy. The Company’s
unaudited interim results are also reviewed by the Audit Committee prior to their publication.
32
Verici Dx plc
Audit Committee Report
for the year ended 31 December 2022 (continued)
Key risk areas, and audit and accounting matters considered by the Committee
Generally, there is a close relationship between the company’s income statement and its cash flows, with few
significant judgmental items or longer-term unsettled items remaining on the balance sheet.
The main accounting and audit risks identified during the year, including as also described in the audit findings report,
were:
• funding and going concern risk assessments.
• revenue recognition (principally year end cut-off).
• capitalisation of intangible costs and impairment review; and
• share based payments.
No significant adjustments or matters of concern were identified by the external audit.
Internal control and consideration of the need for the internal audit
The Board believes that due to the size of the business there is currently no requirement for an internal audit function.
This matter is reviewed annually.
The finance function for the Group is managed by the Finance Director with use of outsourcing facilities. Reliance
with regard to internal control effectiveness is placed on the close involvement of the Chief Executive Officer, the
Finance Director and the Company Secretary in the day-to-day management and control of the business, with the
Audit Committee retaining oversight of financial information provided to the Board and the Group’s accounting and
internal control policies and procedures. Recommendations for amendments or improvements are made as needed.
During the year there were no significant matters raised by the external auditors, nor any significant matters of
concern identified with regard to internal control elsewhere that required action by the Committee.
Therefore, it is judged that the current size, financial position, complexity and risk profile of the Group does not justify
the cost of an internal audit function. This will be kept under annual review.
Sir Ian Carruthers
Chair of the Audit Committee
2 June 2023
33
Verici Dx plc
Report of the audit of the financial statements
for the year ended 31 December 2022
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF VERICI DX PLC
Opinion
We have audited the financial statements of Verici Dx plc (the “parent company”) and its subsidiary (the “group”) for
the year ended 31 December 2022 which comprise the Statement of Consolidated Profit or Loss and Other
Comprehensive Income, the Consolidated and Company Statements of Financial Position, the Consolidated and
Company Statements of Cash Flows in Equity, the Consolidated and Company Statement of Changes in Equity and
notes to the financial statements, including a summary of significant accounting policies. The financial reporting
framework that has been applied in the preparation of the group financial statements is applicable law and UK
adopted International Accounting Standards (IFRSs). The financial reporting framework that has been applied in the
preparation of the parent company financial statements is applicable law and United Kingdom Accounting Standards,
including Financial Reporting Standard 101 Reduced Disclosures Framework (United Kingdom Generally Accepted
Accounting Practice).
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 2022 and of the group’s loss for the year then ended;
the group financial statements have been properly prepared in accordance with UK adopted International
Accounting Standards;
the parent company financial statements have been properly prepared in accordance with Financial
Reporting Standard 101 Reduced Disclosures Framework (United Kingdom Generally Accepted
Accounting Practice); and
the financial statements have been prepared in accordance with the requirements of the Companies Act
2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable
law.
Our responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the
financial statements section of our report. We are independent of the group and the company in accordance with the
ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical
Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these
requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Material uncertainty relating to going concern (Key Audit Matter)
We draw attention to the section headed Going Concern on page 49 of the financial statements, which details the
factors the directors have considered when assessing the going concern position. As detailed in the relevant note on
page 49, although the directors’ projections, including expected levels of revenue generation, indicate sufficient funds
through to the second half of 2024 it is reasonably possible that the group will require additional funding during, or
shortly after a period of 12 months from the date of approval of these financial statements. The directors will seek to
put in place funding arrangements which may from time to time be required but such arrangements are not presently
committed. This represents a material uncertainty in relation to the group’s funding arrangements that may cast
significant doubt on the group’s ability to continue as a going concern. Our opinion is not modified in respect of this
matter.
34
Verici Dx plc
Report of the audit of the financial statements
for the year ended 31 December 2022 (continued)
Material uncertainty relating to going concern (Key Audit Matter) (continued)
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate.
The going concern assessment period used by the Directors was at least 12 months from the date of the approval of
the financial statements. Our evaluation of the Director’s assessment of the group and parent company’s ability to
continue to adopt the going concern basis of accounting included:
• obtaining management’s assessment of going concern and the underlying financial projections which support
that assessment.
testing to ensure the mathematical accuracy of the model presented.
reviewing the assumptions used about future cash flows and timings.
challenging the basis of management’s estimates and assumptions in relation to cash flows for the business
and available cost mitigations
confirming the existence of cash balances which we relied on
considering a range of sensitivities to assess reasonably likely changes to key inputs; and
reviewing the appropriateness of the disclosures in the financial statements
•
•
•
•
•
•
Further details of the Directors’ assessment of going concern is provided in Note 2.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant
sections of this report.
Overview of our audit approach
Materiality
In planning and performing our audit we applied the concept of materiality. An item is considered material if it could
reasonably be expected to change the economic decisions of a user of the financial statements. We used the concept
of materiality to both focus our testing and to evaluate the impact of misstatements identified.
• $480,000 (2021: $350,000) is the group level of materiality determined for the financial statements as a whole.
This was determined based on approximately 5% of the consolidated loss at the planning stage and we did not
consider it necessary to revise it. As the Group is constituted with a view to making profits, we determined that a
results based metric was the most appropriate to use for determining materiality.
• $336,000 (2021: $245,000) is the group level of performance materiality. Performance materiality is used to
determine the extent of our testing for the audit of the financial statements. Performance materiality is set based
on the audit materiality as adjusted for the judgements made as to the entity risk and our evaluation of the specific
risk of each audit area having regard to the internal control environment. Where considered appropriate
performance materiality may be reduced to a lower level, such as, for related party transactions and directors’
remuneration.
• $24,000 (2021: $17,500) is the group level of triviality agreed with the Audit Committee. Errors above this
threshold are reported to the Audit Committee, errors below this threshold would also be reported to the Audit
Committee if, in our opinion as auditor, disclosure was required on qualitative grounds.
The parent company materiality was assessed as $350,000 (2021: $240,000) based on approximately 1% of total
assets at the planning stage. Performance materiality was set at $245,000 (2021: $168,000). Parent company
triviality was $17,500 (2021: $12,000).
Overview of the scope of our audit
The company’s operations are based in the UK and the USA. In view of the early stage of development of the group’s
business activities the audit team performed a full scope audit on the group from the UK as a single component.
35
Verici Dx plc
Report of the audit of the financial statements
for the year ended 31 December 2022 (continued)
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.
We identified going concern as the only key audit matter. This is dealt with in “Material uncertainty relating to going
concern” above.
Other information
The Directors are responsible for the other information contained within the annual report. The other information
comprises the information included in the Annual Report, other than the financial statements and our auditor’s report
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.
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 this gives rise to a material misstatement in the financial statements themselves. If, based on
the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
•
•
the information given in the strategic report and the Directors’ report for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
the strategic report and the Directors’ report have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In light of the knowledge and understanding of the company and its environment obtained in the course of the audit,
we have not identified material misstatements in the strategic report or the Directors’ report.
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 company, or returns adequate for our audit have not
been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
•
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
36
Verici Dx plc
Report of the audit of the financial statements
for the year ended 31 December 2022 (continued)
Responsibilities of the Directors for the financial statements
As explained more fully in the Directors’ responsibilities statement, the Directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as
the Directors determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the group and 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 company or to cease operations, or have no
realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in
line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including
fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.
We obtained an understanding of the legal and regulatory frameworks within which the company operates, focusing
on those laws and regulations that have a direct effect on the determination of material amounts and disclosures in
the financial statements. The laws and regulations we considered in this context were the Companies Act 2006 and
taxation legislation. Technical, clinical or regulatory laws and regulations which are inherent risks in drug development
are mitigated and managed by the Board and management in conjunction with expert regulatory consultants in order
to monitor the latest regulations and planned changes to the regulatory environment.
We identified the greatest risk of material impact on the financial statements from irregularities, including fraud, to be
the override of controls by management. Our audit procedures to respond to these risks included enquiries of
management about their own identification and assessment of the risks of irregularities, sample testing on the posting
of journals and reviewing accounting estimates for biases.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some
material misstatements in the financial statements, even though we have properly planned and performed our audit
in accordance with auditing standards. We are not responsible for preventing non-compliance and cannot be
expected to detect non-compliance with all laws and regulations.
These inherent limitations are particularly significant in the case of misstatement resulting from fraud as this may
involve sophisticated schemes designed to avoid detection, including deliberate failure to record transactions,
collusion or the provision of intentional misrepresentations.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s
report.
37
Verici Dx plc
Report of the audit of the financial statements
for the year ended 31 December 2022 (continued)
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the company and the company’s members
as a body, for our audit work, for this report, or for the opinions we have formed.
Stephen Bullock
(Senior Statutory Auditor)
for and on behalf of Crowe U.K. LLP Statutory Auditor, London
2 June 2023
38
Verici Dx plc
Consolidated statement of profit or loss and other comprehensive income
for the year ended 31 December 2022
Administrative expenses
Depreciation and amortisation
Exceptional expense – share based payments
Loss from operations
Finance income
Finance expense
Loss before tax
Tax expense
Loss from continuing operations
Other comprehensive income:
Note
5
20
Year to
31 December
2022
US$’000
Year to
31 December
2021
US$’000
(10,497)
(640)
(318)
(7,151)
(438)
(740)
_________
_________
(11,455)
(8,329)
9
9
53
(5)
_________
-
-
_________
(11,407)
(8,329)
10
-
_________
-
_________
(11,407)
(8,329)
Exchange (losses) / gains arising on translation of foreign operations
Total comprehensive income
(2,016)
_________
(13,423)
_________
(50)
_________
(8,379)
_________
Earnings per share attributable to the
ordinary equity holders of the parent
11
Loss per share
Basic and diluted (US$)
The results reflected above relate to continuing operations.
The notes on pages 48 to 70 form part of these financial statements.
($0.069)
_________
($0.059)
_________
39
Verici Dx plc
Consolidated statement of financial position
as at 31 December 2022
Assets
Current assets
Trade and other receivables
Cash and cash equivalents
Non-current assets
Property, plant and equipment
Intangible assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Lease liabilities
Non-current liabilities
NET ASSETS
Issued capital and reserves attributable to
owners of the parent
Share capital
Share premium reserve
Share-based payments reserve
Foreign exchange reserve
Retained earnings
TOTAL EQUITY
Note
2022
US$’000
2021
US$’000
15
12
13
16
17
17
18
19
19
520
9,805
_________
656
10,340
_________
10,325
_________
10,996
_________
2,010
1,970
_________
786
2,007
_________
3,980
_________
2,793
_________
14,305
_________
13,789
_________
(2,096)
(156)
(544)
_________
(1,804)
-
-
_________
11,509
_________
11,985
_________
219
32,946
3,853
(1,037)
(24,472)
_________
182
20,354
3,535
979
(13,065)
_________
11,509
_________
11,985
_________
The financial statements on pages 39 to 70 were approved and authorised for issue by the Board of Directors on 2
June and were signed on its behalf by:
Julian Baines - Director
Sara Barrington - Director
Company Number 12567827
The notes on pages 48 to 70 form part of these financial statements.
40
Verici Dx plc
Company statement of financial position
as at 31 December 2022
Assets
Current assets
Trade and other receivables
Cash and cash equivalents
Non-current assets
Property, plant and equipment
Intangible assets
Investment in subsidiary undertaking
Total assets
Liabilities
Current liabilities
Trade and other payables
NET ASSETS
Issued capital and reserves attributable to
owners of the parent
Share capital
Share premium reserve
Share-based payments reserve
Foreign exchange reserve
Retained earnings
TOTAL EQUITY
Note
2022
US$’000
2021
US$’000
15
12
13
14
18,200
9,345
_________
8,344
10,024
_________
27,545
_________
18,368
_________
56
1,315
-
_________
250
1,566
-
_________
1,371
_________
1,816
_________
28,916
_________
20,184
_________
16
(105)
_________
(181)
_________
28,811
_________
20,003
_________
18
19
19
219
32,946
297
(2,194)
(2,457)
_________
182
20,354
247
868
(1,648)
_________
28,811
_________
20,003
_________
The Company has taken advantage of the exemptions under section 408 of the Companies Act 2006 not to present
the Company profit or loss statement. The loss of the Company for the year ended 31 December 2022 was
US$809,000. The financial statements on pages 39 to 70 were approved and authorised for issue by the Board of
Directors 2 June 2023 and were signed on its behalf by:
Julian Baines - Director
Sara Barrington - Director
Company Number 12567827
The notes on pages 46 to 70 form part of these financial statements.
41
Verici Dx plc
Consolidated statement of cash flows
for the year ended 31 December 2022
Cash flows from operating activities
Loss from operations
Adjustments for:
Depreciation of property, plant and equipment
Amortisation of intangible fixed assets
Finance income
Finance expense
Share-based payment expense
Decrease / (increase) in trade and other receivables
Increase in trade and other payables
Income taxes paid
Net cash outflow from operating activities
Cash flows from investing activities
Purchases of property, plant and equipment
Purchase of intangibles
Net cash used in investing activities
Cash flows from financing activities
Issue of ordinary shares
Expenses of share issue
Interest received
Interest paid
Repayment of lease liabilities
Loan repayments
Note
Year to
31 December
2022
US$’000
Year to
31 December
2021
US$’000
(11,407)
(8,329)
497
143
(53)
5
318
_________
295
143
-
740
_________
(10,497)
(7,151)
136
293
-
_________
(331)
1,146
-
_________
(10,068)
_________
(6,336)
_________
(1,040)
(268)
_________
(618)
(348)
_________
(1,308)
(966)
13,070
(441)
53
(5)
(3)
-
_________
-
-
-
-
-
(74)
_________
Net cash inflow / (outflow) from financing activities
12,674
(74)
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Exchange (losses) / gains on cash and cash equivalents
Cash and cash equivalents at end of year
1,298
10,340
(1,833)
_________
(7,376)
17,751
(35)
_________
4
9,805
_________
10,340
_________
The notes on pages 48 to 70 form part of these financial statements.
42
Verici Dx plc
Company statement of cash flows
for the year ended 31 December 2022
Cash flows from operating activities
Loss for the period
Adjustments for:
Depreciation of property, plant and equipment
Amortisation of intangible fixed assets
Finance expense
Share-based payment expense
Increase in trade and other receivables
(Decrease) / increase in trade and other payables
Income taxes paid
Net cash outflow from operating activities
Cash flows from investing activities
Advances to wholly owned subsidiary undertaking
Purchase of intangibles
Net cash used in investing activities
Cash flows from financing activities
Issue of ordinary shares
Expenses of share issue
Loan repayments
Note
Year to
31 December
2022
US$’000
Year to
31 December
2021
US$’000
(809)
(597)
172
104
-
50
_________
191
124
-
58
_________
(483)
(224)
(1,005)
(76)
-
_________
(37)
18
-
_________
(1,564)
_________
(243)
_________
(9,896)
(15)
_________
(7,199)
(4)
_________
(9,911)
(7,203)
13,070
(441)
-
_________
-
-
(74)
_________
Net (outflow) / inflow from financing activities
12,629
(74)
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Exchange (losses) / gains on cash and cash equivalents
Cash and cash equivalents at end of year
1,154
10,024
(1,833)
_________
(7,520)
17,579
(35)
_________
4
9,345
_________
10,024
_________
The notes on pages 48 to 70 form part of these financial statements.
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4
Verici Dx plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2022
1 General information
The principal activity of Verici Dx plc (the “Company”) is the development of prognostic and diagnostic tests for
kidney transplant patients.
The Company is a public limited company incorporated in England and Wales and domiciled in the UK. The
address of the registered office is Avon House, 19 Stanwell Road, Penarth, Cardiff CF64 2EZ and the company
number is 12567827.
The Company was incorporated as Verici Dx Limited on 22 April 2020 as a private company and on 9 September
2020 the Company was re-registered as a public company and changed its name to Verici Dx plc.
2
Summary of significant accounting policies
The principal accounting policies adopted in the preparation of the historical financial information of the
Company, which have been applied consistently to the period presented, are set out below:
Basis of preparation
The financial statements have been prepared in accordance with UK adopted International Accounting
Standards (“UK IFRS”). The financial statements of the Company for the year ended 31 December 2022 are
prepared in accordance with applicable law and UK Accounting Practice. Including FRS 101 “Reduced
Disclosure Framework” although no disclosure exemptions have been taken.
The functional currency and the presentational currency of the Company is United States dollars (“USD” or
“US$”) as this is the currency of the primary economic environment that the Company operates in.
New standards are not expected to impact the Company or Group as they are either not relevant to the
Company's or Group’s activities or require accounting which is consistent with the Company's and Group’s
current accounting policies. The Directors have considered those standards and interpretations which have not
been applied in these financial statements, but which are relevant to the Company's or Group’s operations that
are in issue but not yet effective and do not consider that they will have a material effect on the future results of
the Company or Group.
Other
The Group does not expect any other standards issued by the IASB, but not yet effective, to have a material
impact on the group.
Measurement convention
The financial information has been prepared under the historical cost convention. Historical cost is generally
based on the fair value of the consideration given in exchange for assets.
The preparation of the financial information in compliance with IFRS requires the use of certain critical
accounting estimates and management judgements in applying the accounting policies. The significant
estimates and judgements that have been made and their effect is disclosed in note 3.
Basis of consolidation
Where the Company has control over an investee, it is classified as a subsidiary. The Company controls an
investee if all three of the following elements are present: power over the investee, exposure to variable returns
from the investee, and the ability of the investor to use its power to affect those variable returns. Control is
reassessed whenever facts and circumstances indicate that there may be a change in any of these elements
of control.
48
Verici Dx Plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2022 (continued)
2
Summary of significant accounting policies (continued)
Basis of consolidation (continued)
The consolidated financial statements present the results of the Company and its subsidiaries ("the Group") as
if they formed a single entity. Intercompany transactions and balances between group companies are therefore
eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the acquisition
method. In the statement of financial position, the acquiree's identifiable assets, liabilities and contingent
liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations
are included in the consolidated statement of profit or loss and other comprehensive income from the date on
which control is obtained. They are deconsolidated from the date on which control ceases.
Going concern
In view of the early stage of its commercial development the Group funds its activities from existing cash
resources, the generation of cash receipts from commercial revenues in future periods and, if required,
additional equity or debt funding for future working capital needs.
The Group did not generate any commercial revenue in the period but continues to execute the commercial
introduction of Tutivia™, the first product for kidney transplant rejection. The Group will only expand its sales
headcount if revenue demand exceeds current expectation and can also explore other strategic options to
increase sales distribution of Tutivia and launch its second lead product, Clarava™ by the end of 2023. The
Company retains sufficient funding to achieve further key milestones in 2023 and mid 2024, which will support
commercial adoption including the publication of additional data and obtaining both Medicare and private payor
pricing and coverage.
At 31 December 2022 the Group had available cash resources of $9.8 million (2021 - $10.3 million). The Group
is focused on early revenue generation and first revenue is expected during 2023. The Group will seek to extend
and broaden its revenue streams from additional medical centres in the second half of 2023. There are,
however, uncertainties in relation to the quantum and timing of cash receipts from revenue. The Group has
therefore taken headcount reduction and clinical trial cost containment steps in recent months and, as a result,
has extended the current cash runway.
The Directors have prepared cash flow forecasts for the Group for a period of at least 12 months from the date
of approval of these financial statements. Those forecasts include estimates of cash receipts from commercial
revenues at levels in line with market expectations. The Directors have also prepared a number of reasonably
possible sensitivity scenarios including reduced levels of cash receipts from revenues, and a scenario in which
the Group receives no cash at all from commercial revenues in the going concern period, even though that is
not considered to be a reasonably possible outcome.
Having considered the cash flow forecasts and sensitivity scenarios above and taken into account the
information and estimates available at the date of approving these financial statements, the directors consider
it is appropriate to adopt the going concern basis in preparing the financial statements for the group. Although
the company’s projections, including expected levels of revenue generation, indicate sufficient funds through to
mid-2024, it is reasonably possible that the group will require additional funding during, or shortly after a period
of 12 months from the date of approval of these financial statements. The directors will seek to put in place
funding arrangements which may from time to time be required but such arrangements are not presently
committed. This represents a material uncertainty in relation to the group’s funding arrangements.
49
Verici Dx Plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2022 (continued)
2
Summary of significant accounting policies (continued)
Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
Current tax payable is based on taxable profit for the year. Taxable profit differs from net profits 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. The Company’s liability for current tax
is calculated using tax rates that have been enacted or substantially enacted by the reporting end date.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on temporary differences between the carrying
amounts of assets and liabilities in the historical financial information and the corresponding tax bases used in
the computation of taxable profit and is accounted for using the balance sheet liability method. Deferred tax
liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised
to the extent that it is probable that taxable profits will be available against which deductible temporary
differences can be utilised. Such assets and liabilities are not recognised if the temporary differences arise from
goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax
profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent
that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be
recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability
is settled, or the asset is realised. Deferred tax is charged or credited in the income statement, except when it
relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current
tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax
authority.
Share-based payments
Where equity settled share options are awarded to employees, the fair value of the options at the date of grant
is charged to the consolidated statement of comprehensive income over the vesting period. Non-market vesting
conditions are taken into account by adjusting the number of equity instruments expected to vest at each
reporting date so that, ultimately, the cumulative amount recognised over the vesting period is based on the
number of options that eventually vest. Non-vesting conditions and market vesting conditions are factored into
the fair value of the options granted. As long as all other vesting conditions are satisfied, a charge is made
irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for
failure to achieve a market vesting condition or where a non-vesting condition is not satisfied.
Where equity instruments are granted to persons other than employees, the consolidated statement of
comprehensive income is charged with the fair value of goods and services received.
Foreign currency translation
a) Function and presentational currency
Items included in the financial statements of the Group are measured using USD, the currency of the primary
economic environment in which the entity operates (‘the functional currency’), which is also the Company’s
presentation currency.
50
Verici Dx Plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2022 (continued)
2
Summary of significant accounting policies (continued)
Foreign currency translation (continued)
b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at
the dates of the transactions. 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 to USD, are recognised in the income statement.
Intangible assets
Intangible assets are measured at cost less accumulated amortisation and any accumulated impairment losses.
Patents are recognised at fair value at the acquisition date. Patents have a finite useful life and are subsequently
carried at cost less accumulated amortisation and impairment losses.
The Company amortises intangible assets with a limited useful life on a straight-line basis. The following rates
are applied:
Licence and patents - the shorter of the remaining life of the license and 15 years
Tangible assets
Tangible fixed assets are stated at cost net of accumulated depreciation and accumulated impairment losses.
Costs comprise purchase costs together with any incidental costs of acquisition.
Depreciation is provided to write down the cost less the estimated residual value of all tangible fixed assets by
equal instalments over their estimated useful economic lives on a straight-line basis. The following rates are
applied:
Plant and machinery – 3 years
The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if
appropriate, if there is an indication of a significant change since the last reporting date. Low value equipment
including computers is expensed as incurred.
Impairment of tangible and intangible assets
At each reporting end date, the Company reviews the carrying amounts of its tangible and 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 it is not possible to estimate the recoverable amount of an individual asset, the
Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
The 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 (or cash-generating unit) is reduced to its recoverable amount. An impairment
loss is recognised immediately in profit and loss, unless the relevant asset is carried at a revalued amount, in
which case the impairment loss is treated as a revaluation decrease.
51
Verici Dx Plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2022 (continued)
2
Summary of significant accounting policies (continued)
Impairment of tangible and intangible assets (continued)
Where an impairment subsequently reverses, the carrying amount of the asset (or cash-generating unit) is
increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does
not exceed the carrying amount that would have been determined had no impairment loss been recognised
for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised
immediately in profit and loss.
Leases
All leases are accounted for by recognising a right-of-use asset and a lease liability except for:
• Leases of low value assets; and
• Leases with a duration of 12 months or less.
Lease liabilities are measured at the present value of the contractual payments due to the lessor over the
lease term, with the discount rate determined by reference to the rate inherent in the lease unless (as is
typically the case) this is not readily determinable, in which case the Company’s incremental borrowing rate
on commencement of the lease is used. Variable lease payments are only included in the measurement of the
lease liability if they depend on an index or rate. In such cases, the initial measurement of the lease liability
assumes the variable element will remain unchanged throughout the lease term. Other variable lease
payments are expensed in the period to which they relate.
On initial recognition, the carrying value of the lease liability also includes:
• amounts expected to be payable under any residual value guarantee
•
the exercise price of any purchase option granted in favour of the Company if it is reasonably certain
to assess that option
• any penalties payable for terminating the lease, if the term of the lease has been estimated on the
basis of termination option being exercised.
Right of use assets are initially measured at the amount of the lease liability, reduced for any lease incentives
received, and increased for:
•
•
•
lease payments made at or before commencement of the lease
initial direct costs incurred; and
the amount of any provision recognised where the Company is contractually required to dismantle,
remove or restore the leased asset (typically leasehold dilapidations – see note 19).
Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate
on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on
a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if,
rarely, this is judged to be shorter than the lease term.
52
Verici Dx Plc
Notes forming part of the financial statements
for the year ended 31 December 2022 (continued)
2
Summary of significant accounting policies (continued)
Leases (continued)
When the company revises its estimate of the term of any lease (because, for example, it re-assesses the
probability of a lessee extension or termination option being exercised) it adjusts the carrying amount of the
lease liability to reflect the payments to make over the revised term, which are discounted using a revised
discount rate. The carrying value of lease liabilities is similarly revised when the variable element of future
lease payments dependent on a rate or index is revised, except the discount rate remains unchanged. In
both cases an equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised
carrying amount being amortised over the remaining (revised) lease term. If the carrying amount of the right-
of-use asset is adjusted to zero, any further reduction is recognised in profit or loss.
Financial instruments
The Company classifies financial instruments, or their component parts, on initial recognition as a financial
asset, a financial liability or an equity instrument in accordance with the substance of the contractual
arrangement. Financial assets and financial liabilities are recognised on the statement of financial position when
the Company becomes a party to the contractual provisions of the instrument.
a) Financial assets
Financial assets are classified, at initial recognition, at amortised cost or carrying value. The classification of
financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and
the Company’s business model for managing them.
The classification depends on the purpose for which the financial assets were acquired. Management
determines the classification of its financial assets at initial recognition and re-evaluates this classification at
every reporting date.
As at the reporting date, the Company did not have any financial assets subsequently measured at fair value.
b) Financial liabilities
All financial liabilities are initially measured at fair value and, in the case of loans and borrowings, net of directly
attributable transaction costs. They are subsequently measured at amortised cost, where applicable, using the
effective interest method, with interest expense recognised on an effective yield basis.
c) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and deposits with a maturity of less than three months at
balance sheet date.
Financing expenses
Financing expenses comprise interest payable. Foreign exchange gains and losses arising on foreign currency
transactions are reported within administrative expenses in the statement of comprehensive income.
Interest payable is recognised in the statement of comprehensive income as it accrues, using the effective
interest method.
Exceptional items
Items considered of such significance to enable the reader to better understand the results for the year are
presented separately as exceptional items on the face of the statement of comprehensive income.
53
Verici Dx Plc
Notes forming part of the financial statements
for the year ended 31 December 2022 (continued)
2
Summary of significant accounting policies (continued)
Research and development costs
Development costs and expenditure on pure and applied research and the clinical trials are charged to the
Income Statement in the year in which they are incurred. Expenditure incurred on the development of internally
generated products will be capitalised based on the recognition criteria set aside in IAS 38 “Intangible Assets”.
Operating segments
The directors are of the opinion that the business of the Group comprises a single activity, that of the
development of prognostic and diagnostic tests for kidney transplant patients. Consequently, all activities relate
to this segment. All the non-current assets of the Company are located in, or primarily relate to, the USA.
3
Judgements and key sources of estimation uncertainty
The preparation of the Company’s historical financial information under UK IFRS requires the Directors to
make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure
of contingent assets and liabilities. Estimates and judgements are continually evaluated and are based on
historical experience and other factors including expectations of future events that are believed to be
reasonable under the circumstances. Actual results may differ from these estimates. The Directors consider
that the following estimates and judgements are likely to have the most significant effect on the amounts
recognised in the financial information.
Carrying value of intangible assets, property, plant and equipment
In determining whether there are indicators of impairment of the Company’s intangible assets, the Directors
take into consideration various factors including the economic viability and expected future financial
performance of the asset and when it relates to the intangible assets arising on a business combination, the
expected future performance of the business acquired.
Carrying value of amounts owed by subsidiary undertaking
The operations of the wholly owned subsidiary, Verici Dx Inc, are funded by the parent company, Verici Dx
Plc. As such a receivable balance arises reflecting the funds advanced. The recoverability of this balance is
dependent upon the economic viability and expected performance of the Group’s developed products.
Going concern
The preparation of cash flow forecasts for the Group requires estimates to be made of the quantum and timing
of cash receipts from future commercial revenues and the timing of future expenditure, all of which are subject
to uncertainty.
4
Financial instruments - Risk Management
The Group is exposed through its operations to the following financial risks:
- Credit risk
- Foreign exchange risk
-
Liquidity risk and
- Capital disclosures
The Group is exposed to risks that arise from its use of financial instruments. This note describes the Group's
objectives, policies and processes for managing those risks and the methods used to measure them. Further
quantitative information in respect of these risks is presented throughout these financial statements.
(i) Principal financial instruments
The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:
54
Verici Dx Plc
Notes forming part of the financial statements
for the year ended 31 December 2022 (continued)
4
Financial instruments - Risk Management (continued)
(i) Principal financial instruments (continued)
- Cash and cash equivalents
- Trade and other payables
(ii) Financial instruments by category
Financial asset
Cash and cash equivalents
Trade and other receivables
Amounts due from subsidiary
Total financial assets
Financial liabilities
Trade and other payables
Leases
Total financial liabilities
Group
Amortised
cost
2022
US$’000
9,805
177
-
_________
Company
Amortised
cost
2022
US$’000
9,345
18
18,122
_________
Group
Amortised
cost
2021
US$’000
10,340
250
-
_________
Company
Amortised
cost
2021
US$’000
10,024
17
8,226
_________
9,982
_________
9,363
_________
10,590
_________
10,041
_________
Group
Amortised
cost
2022
US$’000
2,096
700
_________
Company
Amortised
cost
2022
US$’000
105
-
_________
Group
Amortised
cost
2021
US$’000
1,754
-
_________
Company
Amortised
cost
2021
US$’000
131
-
_________
2,796
_________
105
_________
1,754
_________
131
_________
(iii) Financial instruments not measured at fair value
Financial instruments not measured at fair value includes cash and cash equivalents, trade and other
receivables, and trade and other payables.
Due to their short-term nature, the carrying value of cash and cash equivalents, trade and other receivables,
and trade and other payables approximates their fair value.
55
Verici Dx plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2022 (continued)
4
Financial instruments - Risk Management (continued)
(iv) Financial instruments measured at fair value
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group's risk management objectives and
policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and
operating processes that ensure the effective implementation of the objectives and policies to the Group's
finance function.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly
affecting the Group's competitiveness and flexibility. Further details regarding these policies are set out below:
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. Due to the absence of revenue, the Group’s exposure to credit risk is on cash
at bank. The Company only deposits cash with major banks with high quality credit standing for amounts in
excess of US$500,000.
Cash in bank and short-term deposits
The credit quality of cash has been assessed by reference to external credit rating, based on Standard and
Poor’s long-term / senior issuer rating:
Bank A
Bank B
Bank C
Bank A
Bank B
Group
2022
Cash
at bank
US$’000
9,345
260
200
_________
9,805
_________
Group
2021
Cash
at bank
US$’000
10,024
316
_________
10,340
_________
Company
2022
Rating
A+
Company
2021
Rating
A+
Company
2022
Cash
at bank
US$’000
9,345
-
-
_________
9,345
_________
Company
2021
Cash
at bank
US$’000
10,024
-
_________
10,024
_________
Group
2022
Rating
A+
A+
Group
2021
Rating
A+
56
Verici Dx plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2022 (continued)
4
Financial instruments - Risk Management (continued)
Foreign exchange risk
Foreign exchange risk arises when individual Group entities enter into transactions denominated in a currency
other than their functional currency. The Group's policy is, where possible, to allow group entities to settle
liabilities denominated in their functional currency. In the period before commercial revenues US dollars are
transferred from the Company to its US subsidiary to enable it to meet its local obligations. Currently the Group’s
liabilities are either US dollar or UK sterling. No forward contracts or other financial instruments are entered
into to hedge foreign exchange movements, with funds being transferred from the Company to its US subsidiary
using spot rates.
As at 31 December 2022 assets held in Sterling amounted to US$270,000 (2021 - US$3,538,000) and liabilities
held in Sterling amounted to US$105,000 (2021 - US$131,000).
The effect of a 5% strengthening of the Sterling against US dollar at the reporting date on the Sterling
denominated net assets carried at that date would, all other variables held constant, have resulted in a decrease
in post-tax loss for the period and increase of net assets of US$8,000 (2021 – US$170,000). A 5% weakening
in the exchange rate would, on the same basis, have increased post-tax loss and decreased net assets by
US$8,000 (2021 – US$170,000).
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due.
This risk is managed by the production of rolling cash flow projections. The Group’s continued future operations
depend on its ability to raise sufficient working capital through the issue of share capital and generating revenue.
The following table sets out the contractual maturities (representing undiscounted contractual cash-flows) of
financial liabilities which can all be met from the cash resources currently available:
Group
At 31 December 2022
Trade and other payables
Leases
Total
Company
At 31 December 2022
Trade and other payables
Total
Up to 3
months
US$’000
Between
3 and 12
months
US$’000
Between
1 and 2
years
US$’000
Between
2 and 5
years
US$’000
960
45
_________
-
111
________
-
167
________
-
377
________
1,005
_________
111
________
167
________
377
________
Up to 3
months
US$’000
Between
3 and 12
Months
US$’000
19
-
_________ _________
19
-
_________ _________
57
Verici Dx plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2022 (continued)
4
Financial instruments - Risk Management (continued)
Group
At 31 December 2021
Trade and other payables
Leases
Total
Company
At 31 December 2021
Trade and other payables
Total
Capital Disclosures
Up to 3
Months
US$’000
Between
3 and 12
months
US$’000
159
-
_________
-
-
_________
159
_________
-
_________
Up to 3
Months
US$’000
Between
3 and 12
Months
US$’000
16
_________
-
_________
16
_________
-
_________
The Group monitors capital which comprises all components of equity (i.e. share capital, share premium, and
accumulated losses).
The Group's objectives when maintaining capital are to safeguard the entity's ability to continue as a going
concern.
5
Expenses by nature
Year to
31 December
2022
US$’000
Year to
31 December
2021
US$’000
2,889
497
143
4,832
550
1,325
129
36
964
90
2,392
295
143
3,344
250
921
309
(182)
857
-
Employee benefit expenses (see note 7)
Depreciation of property, plant and equipment
Amortisation of intangible assets
Research and development costs
Licenses
Professional costs
Share-based payment expense for non-employees
Foreign exchange loss / (gain)
Other costs
Costs of share issue
58
Verici Dx plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2022 (continued)
6
Auditors’ remuneration
During the year the Group obtained the following services from the Company’s auditor:
Fees payable to the Company’s auditor for the audit of the parent
Company and consolidated financial statements
Fees payable to the Company’s auditor for other services:
Tax advisory and compliance services
Total
7
Employee benefit expenses
Employee benefit expenses (including directors) comprise:
Wages and salaries
Benefits
Share-based payment expense (note 20)
Social security contributions and similar taxes
Pension contributions
Year to
31 December
2022
US$’000
Year to
31 December
2021
US$’000
48
43
-
_________
1
_________
48
_________
44
_________
Year to
31 December
2022
US$’000
Year to
31 December
2021
US$’000
2,279
191
189
146
84
_________
1,658
143
431
104
56
_________
2,889
_________
2,392
_________
Key management personnel compensation
Key management personnel are those persons having authority and responsibility for planning, directing and
controlling the activities of the Group, including the Directors of the Company.
Salary
Share based payment expense
Year to
31 December
2022
US$’000
Year to
31 December
2021
US$’000
493
7
_________
560
-
_________
500
_________
560
_________
The average number of employees (including Directors) in the Group in the year was 17 (2021 – 13).
59
Verici Dx plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2022 (continued)
8
Segment information
The Group has one division being the development of prognostic and diagnostic tests for kidney transplant
patients.
9
Finance income and expense
Finance income
Bank interest
Total finance income
Finance expense
Interest on lease liabilities
Total finance expense
10 Tax expense
Current tax expense
Current tax on loss for the year
Total current tax
Deferred tax asset
On losses generated in the year
Year to
31 December
2022
US$’000
Year to
31 December
2021
US$’000
53
_________
-
_________
53
_________
-
_________
-
5
_________
-
-
_________
5
_________
-
_________
Year to
31 December
2022
US$’000
Year to
31 December
2021
US$’000
-
_________
-
_________
-
-
-
_________
-
_________
-
_________
-
_________
60
Verici Dx plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2022 (continued)
10 Tax expense (continued)
The reasons for the difference between the actual tax charge for the year and the standard rate of corporation
tax in the United Kingdom applied to profits for the year are as follows:
Loss for the period
Tax using the Company’s domestic tax rate of 19%
Expenses not deductible for tax purposes
Accelerated capital allowances
Unrecognised deferred tax assets
Different tax rates applied in overseas jurisdictions
Total tax expense
Year to
31 December
2022
US$’000
Year to
31 December
2021
US$’000
(11,407)
_________
(8,329)
_________
(2,167)
79
(251)
3,240
(901)
_________
(1,583)
58
(143)
2,328
(660)
_________
-
_________
-
_________
The unrecognised deferred tax relates to two elements: the unrecognised deferred tax arising on share-based
payments of US$85,000 (2021 - US$199,000) and unrecognised deferred tax on taxable losses of
US$3,155,000 (2021 - US$2,129,000). Total taxable losses carried forward comprise of Federal US losses of
$6,334,000 (US$4,848,000) which do not expire but can only offset against 80% of taxable profits from the
same trade. In addition, US tax losses of $13,316,000 (US$3,708,000) are carried forward as research and
development taxable asset to be used against future profits from the same trade. Tax losses in the UK at
US$1,449,000 (US$897,000). No deferred tax asset is recognised for these losses due to early stage in the
development of the Group’s activities.
11 Earnings per share
Numerator
Year to
31 December
2022
Total
US$
Year to
31 December
2021
Total
US$
Loss for the period used in basic EPS
(11,407,527)
(8,329,829)
Denominator
Weighted average number of ordinary shares used in basic EPS
164,667,754
141,747,816
Resulting loss per share
(US$0.069)
(US$0.059)
The Company has one category of dilutive potential ordinary share, being share options (see note 19). The
potential shares were not dilutive in the period as the Group made a loss per share in line with IAS 33.
61
Verici Dx plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2022 (continued)
12 Tangible assets
Group
Cost or valuation
At 1 January 2021
Additions
Foreign exchange movements
At 31 December 2021
Additions
Foreign exchange movements
At 31 December 2022
Accumulated depreciation and impairment
At 1 January 2021
Depreciation
Foreign exchange movements
At 31 December 2021
Depreciation
Foreign exchange movements
At 31 December 2022
Net book value
At 31 December 2022
At 31 December 2021
Leasehold
property
US$’000
Plant &
machinery
US$’000
-
-
-
_________
-
1,288
-
_________
594
618
(6)
_________
1,206
455
(59)
_________
Total
US$’000
594
618
(6)
_________
1,206
1,743
(59)
_________
1,288
_________
1,602
_________
2,890
_________
-
-
-
_________
-
(76)
-
_________
(130)
(295)
5
_________
(420)
(421)
37
_________
(130)
(295)
5
_________
(420)
(497)
37
_________
(76)
_________
(804)
_________
(880)
_________
1,212
_________
798
_________
-
_________
786
_________
2,010
_________
786
_________
Included in leasehold property at 31 December 2022 are right of use assets with a cost of US$465,000 and
accumulated depreciation of $28,000 relating to the lease of the Company’s laboratory in Tennessee. Included within
plant and machinery is an asset financed under a leasing contract with a cost of US$238,000. The liability is secured
against the asset.
62
Verici Dx plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2022 (continued)
12 Tangible assets (continued)
Company
Cost or valuation
At 1 January 2021
Additions
Foreign exchange movements
At 31 December 2021
Additions
Foreign exchange movements
At 31 December 2022
Accumulated depreciation and impairment
At 1 January 2021
Depreciation
Foreign exchange movements
At 31 December 2021
Depreciation
Foreign exchange movements
At 31 December 2022
Net book value
At 31 December 2022
At 31 December 2021
Plant &
machinery
US$’000
568
-
(6)
_________
562
-
(59)
_________
Total
US$’000
568
-
(6)
_________
562
-
(59)
_________
503
_________
503
_________
(126)
(191)
5
_________
(312)
(172)
37
_________
(126)
(191)
5
_________
(312)
(172)
37
_________
(447)
_________
(447)
_________
56
_________
56
_________
250
_________
250
_________
63
Verici Dx plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2022 (continued)
13
Intangible assets
Group
Cost
At 1 January 2021
Additions
Foreign exchange movements
At 31 December 2021
Additions
Foreign exchange movements
At 31 December 2022
Accumulated amortisation and impairment
At 1 January 2021
Amortisation charge
Foreign exchange movements
At 31 December 2021
Amortisation charge
Foreign exchange movements
At 31 December 2022
Net book value
At 31 December 2022
At 31 December 2021
License and
patents
US$’000
Total
US$’000
1,839
398
(18)
_________
2,219
268
(185)
_________
1,839
398
(18)
_________
2,219
268
(185)
_________
2,302
_________
2,302
_________
(72)
(143)
3
_________
(212)
(143)
23
_________
(72)
(143)
3
_________
(212)
(143)
23
_________
332
_________
332
_________
1,970
_________
1,970
_________
2,007
_________
2,007
_________
64
Verici Dx plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2022 (continued)
13
Intangible assets (continued)
Company
Cost
At 1 January 2021
Additions
Foreign currency movements
At 31 December 2021
Additions
Foreign currency movements
At 31 December 2022
Accumulated amortisation and impairment
At 1 January 2021
Amortisation charge
Foreign exchange movements
At 31 December 2021
Amortisation charge
Foreign exchange movements
At 31 December 2022
Net book value
At 31 December 2022
At 31 December 2021
License and
patents
US$’000
Total
US$’000
1,722
54
(18)
_________
1,758
15
(185)
_________
1,722
54
(18)
_________
1,758
15
(185)
_________
1,588
_________
1,588
_________
(71)
(124)
3
_________
(192)
(104)
23
_________
(71)
(124)
3
_________
(192)
(104)
23
_________
(273)
_________
(273)
_________
1,315
_________
1,315
_________
1,566
_________
1,566
_________
The licence was acquired from Renalytix AI Plc on 4 May 2020 pursuant to a purchase of business assets. This
license in turn was granted to Renaltix AI Plc by the Icahn School of Medicine at Mount Sinai for rights to
intellectual property and data to support the FractalDx families of diagnostic assays. In addition, amounts are
spent on the prosecution and protection of patent applications.
The Group has tested the carrying value for impairment at 31 December 2022. The recoverable amount was
assessed in the basis of value in use. The assessed value exceeded the carrying value and no impairment loss
was recognised. The key assumptions in the calculation to assess value in use are future revenues and costs
and the ability to generate future cash flows. Recent working capital projections approved by the Board were
used as well as forecasts for a further four years, followed by an extrapolation of expected cash flows and the
calculation of a terminal value.
65
Verici Dx plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2022 (continued)
14 Subsidiary
The principal subsidiary of Verici Dx plc, which has been included in these consolidated financial statements at
a cost of US$10, is as follows:
Name
Country of incorporation and
principal place of business
Proportion of ownership
interest at 31 December
2021 and 2022
Verici Dx Inc
United States of America
100%
15 Trade and other receivables
Prepayments
Other debtors
Amount due from wholly owned
subsidiary undertaking
16 Trade and other payables
Trade payables
Accruals
Group
2022
US$’000
Company
2022
US$’000
Group
2021
US$’000
Company
2021
US$’000
343
177
60
18
406
250
101
17
-
_________
18,122
_________
-
_________
8,226
_________
520
_________
18,200
_________
656
_________
8,344
_________
Group
2022
US$’000
960
1,136
Company
2022
US$’000
19
86
Group
2021
US$’000
160
1,644
Company
2021
US$’000
16
165
_________
_________
_________
_________
Total trade and other payables
2,096
_________
105
_________
1,804
_________
181
_________
The carrying value of trade and other payables classified as financial liabilities measured at amortised cost
approximates fair value.
The only movements within financial liabilities relate to payments for payable and leases within the Financial
Instruments note.
66
Verici Dx plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2022 (continued)
17 Lease liabilities
Group
At 1 January 2021
Interest expense
Repayments
At 31 December 2021
Additions
Repayments
Interest expense
At 31 December 2022
Land and
buildings
US$’000
-
-
-
________
-
________
465
(8)
4
________
461
________
Plant and
machinery
US$’000
-
-
-
________
-
________
238
-
1
________
239
________
Total
US$’000
-
-
-
________
-
________
703
(8)
5
________
700
________
The Company acquired an asset under capital lease financing arrangements.
The Company operates from one office which is rented under a lease agreement ending on 1 November 2027
under which rent is payable monthly.
Maturity of lease liabilities
Within 3 months
Between 3 – 12 months
Between 1 – 2 years
Between 2 – 5 years
2022
US$’000
2021
US$’000
45
111
167
377
-
-
-
-
________
________
700
________
-
________
67
Verici Dx plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2022 (continued)
18 Share capital
Ordinary shares of £1 each
On incorporation
Ordinary shares of £0.001 each
Sub-division of existing shares into 1,000 ordinary shares
Issue of new shares
Issue of shares on conversion of Convertible Loan Notes
Placing and offer of shares on admission to AIM
At 31 December 2021
Issue of new shares
At 31 December 2022
Issued and fully paid
2022
Number
2022
US$
1
__________
1
__________
1,000
59,415,135
9,831,681
72,500,000
__________
1
74,864
12,771
93,978
__________
141,747,816
181,614
28,571,429
__________
37,342
__________
170,319,245
__________
218,956
__________
On 7 July 2020 the entire issued share capital of the Company was sub divided to create 1,000 ordinary shares of
£0.001 each and 59,415,135 ordinary shares of £0.001 each were allotted pursuant to a dividend in specie by the then
parent company, Renalytix AI Plc. Those 59,416,135 shares were then immediately reclassified as 59,416,134 A
shares and one Golden Share and all A shares and the Golden Share converted into ordinary shares at the time of the
Company’s admission to AIM on 3 November 2020.
On 28 October 2020 pursuant to the conversion of the Convertible Loan Notes is issue at that time of $2,500,000, a
further 9,831,681 new ordinary shares were issued.
On 3 November 2020 pursuant to the Company’s shares being admitted to AIM, a market operated by the London
Stock Exchange, 72,500,000 new ordinary shares were issued at an issue price of £0.20 per share raising gross
proceeds of US$18,795,500 (£14,500,000).
On 11 March 2022 the Company issued 28,571,429 ordinary shares of £0.001 at an issue price of £0.35 per share
raising gross proceeds of US$13,070,000 ((£10,000,000).
19 Reserves
The following describes the nature and purpose of each reserve within equity:
Reserve
Description and purpose
Share premium
Amount subscribed for share capital in excess of nominal value.
Foreign exchange reserve
Gains/losses arising on retranslating the net assets of parent
company operations into US dollars.
Retained earnings
All other net gains and losses and transactions with owners (e.g.
dividends) not recognised elsewhere.
68
Verici Dx plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2022 (continued)
20 Share-based payment
On 28 October 2020, the Board adopted the Share Option Plan to incentivise certain of the Group’s employees and
Directors. The Share Option Plan provides for the grant of both EMI Options and non-tax favoured options. Options
granted under the Share Option Plan are subject to exercise conditions as summarised below.
The Share Option Plan has a non-employee sub-plan for the grant of Options to the Company’s advisors,
consultants, non-executive directors, and entities providing, through an individual, such advisory, consultancy,
or office holder services and a US sub-plan for the grant of Options to eligible participants in the Share Option
Plan and the Non-Employee Sub-Plan who are US residents and US taxpayers.
With the exception of options over 10,631,086 shares, which vested immediately on grant in 2020, the options
vest equally over twelve quarters from the grant date. If options remain unexercised after the date one day
before the tenth anniversary of grant such options expire. The Options are subject to exercise conditions such
that they shall, subject to certain exceptions, vest in equal quarterly instalments over the three years immediately
following the date of grant, which vesting shall accelerate in full in the event of a change of control of the
Company.
Outstanding at 22 April 2020
Granted during the period
Exercised during the period
Weighted
average
exercise
price (p)
-
32
20
________
Number
-
14,574,782
(10,631,086)
_________
Outstanding at 31 December 2020
32
3,943,696
Granted during the year
Exercisable at 31 December 2021
Cancelled in the year
Granted in the year
Exercisable at 31 December 2022
62.61
_________
990,000
_________
26.03
________
4,933,696
_________
________
23.86
________
(120,000)
1,564,370
________
6,378,066
________
The exercise price of options outstanding at 31 December 2022 ranged between 20p and 69.5p and their
weighted average contractual life was 3.85 years.
The weighted average fair value of each option granted during the year was 25.98p. The weighted average fair
value of the options outstanding at 31 December 2022 was 23.86p.
The fair value of each share option granted has been estimated using a Black-Scholes model and ranges from
10p to 23p. The inputs into the model are a share prices of 20p, 40p,45.5p, 50p and 69.5p and exercise prices
of 20p, 40p,45.5p, 50p and 69.5p and expected volatility of 52.34%, no expected dividend yield, contractual life
of between 2.9 and 1.9 years and a risk-free interest rate of 0.925%. As of 31 December 2022, none of the
granted stock options have been exercised.
69
_________
_________
Verici Dx plc
Notes forming part of the consolidated financial statements
for the year ended 31 December 2022 (continued)
20 Share-based payment (continued)
The Group recognised total expenses of $318,000 (2021 - $741,000) within administrative expenses relating to
equity-settled share-based payment transactions during the period.
21 Related party transactions
In the year to 31 December 2022 an amount of US$51,000 (2021 – US$352,000) was invoiced by Renalytix Plc
as full reimbursement for expenses incurred on behalf of the Company as a cost sharing arrangement for a
quality management software product. As of 31 December 2022, the amount owed to Renalytix Plc was
US$22,000 (2021 – US$22,000).
In the year to 31 December 2022 an amount of US$750,000 (2021 – US$35,000) was invoiced by Icahn School
of Medicine at Mount Sinai for milestone fees due under the license agreement described in the Admission
Document. As of 31 December 2022, the amount owed to Icahn School at Medicine at Mount Sinai was US$Nil
(2021 – US$Nil).
In the year to 31 December 2022 an amount of US$17,000 (2021 – US$Nil) was invoiced by EKF Diagnostic
Holdings Plc for services rendered in the year. As of 31 December 2022, the amount owed to EKF Diagnostic
Holdings Plc was US$Nil (2021 – US$Nil).
22 Events after the reporting date
There have been no events subsequent to the year-end that require disclosure in these financial statements.
70
Verici Dx plc
NOTICE OF ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN that the Annual General Meeting (“AGM”) of Verici Dx plc (“Company”) will be held at
Avon House, 19 Stanwell Road, Penarth, Cardiff, CF64 2EZ on 29 June 2023 at 2.00 p.m.
Introduction
The Company has decided to hold this year’s AGM as a physical meeting of the shareholders of the Company.
Shareholders wishing to vote on any of the matters of business are strongly advised to appoint the chairman of the
AGM as their proxy. Shareholders must appoint a proxy through completion of a form of proxy. Shareholders can
appoint a proxy by logging on to www.signalshares.com and following the instructions, lodging a proxy appointment
by using the CREST Proxy Voting Service or requesting a hard copy proxy form by contacting our registrars, Link
Group, on 0371 664 0300 from the UK (calls are charged at the standard geographic rate and will vary by provider.
Calls outside the United Kingdom will be charged at the applicable international rate) and returning it to the address
shown on the form.
If you are an institutional investor you may also be able to appoint a proxy electronically via the Proxymity platform,
a process which has been agreed by the Company and approved by the Registrar. For further information regarding
Proxymity, please go to www.proxymity.io.
AGM
The AGM is being held to consider the following resolutions, of which resolutions 1 to 3 will be proposed as ordinary
resolutions and resolution 4 as a special resolution (together the “Resolutions” and each a “Resolution”):
Ordinary Resolutions
1.
2
3.
To receive and adopt
together with the reports of the Directors of the Company (“Directors”) and the auditors thereon.
the statement of accounts
the year ended 31 December 2022
for
To re-appoint Messrs Crowe U.K. LLP as auditors to act as such until the conclusion of the
next general meeting of the Company at which the requirements of section 437 of the Companies Act 2006
(“2006 Act”) are complied with and to authorise the Directors of the Company to fix their remuneration.
in substitution
and
That,
generally
Act
capital of the Company:
unconditionally
to allot equity securities
for any such existing authority,
authorised
(as defined
pursuant
in section 560 of
the Directors be and are hereby
2006
to
the
the 2006 Act)
section
551
the
of
in
(i)
(ii)
up to a maximum nominal amount of £17,500 (in pursuance of the exercise of outstanding share
options and other potential shares granted by the Company but for no other purpose); and
up to an aggregate nominal amount of £34,063.85 (in addition to the authority conferred in sub-
paragraph (i) above) representing approximately 20% of the Company’s issued share capital,
such authorities (unless previously renewed, revoked or varied) to expire at the conclusion of the next annual
general meeting of the Company to be held in 2024, save that the Company may, before such expiry, make
an offer or agreement which would or might require equity securities (as defined in section 560 of the 2006
Act) to be allotted after such expiry and the Directors may allot such equity securities in pursuance of such
an offer or agreement as if the authority conferred hereby had not expired.
71
Verici Dx plc
NOTICE OF ANNUAL GENERAL MEETING (continued)
Special Resolution
4.
to
the passing of Resolution 3 above,
the general
That, subject
power to allot equity securities (as defined in section 560 of the 2006 Act) pursuant to the
authority conferred by Resolution 3 above as
the 2006 Act did not
apply to any such allotments provided that this power shall be limited to:
the Directors be given
if section 561(1) of
(i)
(ii)
(iii)
the allotment of equity securities on the exercise of the share options granted by the
Company and other potential shares granted by the Company up to a maximum nominal amount of
£17,500;
the allotment of equity securities (otherwise than pursuant to sub-paragraph (i) above) for cash in
connection with any rights issue or pre-emptive offer in favour of holders of equity securities
generally; and
the allotment (otherwise than pursuant to sub-paragraphs (i) and (ii) above) of equity
securities for cash up to an aggregate nominal amount of £34,063.85 representing
approximately 20% of the Company’s issued share capital,
provided that such power (unless previously renewed, revoked or varied) shall expire at the conclusion of
the annual general meeting of the Company to be held in 2024, save that the Company may, before such
power expires, make an offer or enter into an agreement which would or might require equity securities to be
allotted after such power expires and the Directors may allot equity securities in pursuance of any such offer
or agreement notwithstanding that the power conferred by this Resolution has expired.
BY ORDER OF THE BOARD
Salim Hamir
Company Secretary
Registered Office:
Avon House
19 Stanwell Road Penarth
CF64 2EZ
2 June 2023
72
Verici Dx plc
NOTICE OF ANNUAL GENERAL MEETING (continued)
Additional information
Notes:
Every eligible shareholder is entitled to appoint a proxy to exercise all or any of their rights to attend and to
1.
speak and vote on their behalf at the AGM.
Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, only those members registered
2.
on the Company’s register of members at close of business on 27 June 2023, or, if this general meeting is adjourned,
members on the Company’s register of members not later than 48 hours before the fixed time for the adjourned
meeting, shall be entitled to attend and vote at the AGM.
If you are a shareholder of the Company at the time set out in note 2 above, you are entitled to appoint a
3.
proxy to exercise all or any of your rights to attend, speak and vote at the meeting. A proxy does not need to be a
shareholder of the Company but must attend the meeting to represent you. You can only appoint a proxy using the
procedures set out in these notes and the notes to the proxy form.
4.
In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the
appointment submitted by the most senior holder will be accepted. Seniority is determined by the order in which the
names of the joint holders appear in the Company’s register of members in respect of the joint holding (the first-
named being the most senior).
5.
A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes
for or against the Resolutions. If no voting indication is given, your proxy will vote or abstain from voting at his or her
discretion. Your proxy will vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is
put before the AGM.
6.
You may appoint more than one proxy provided each proxy is appointed to exercise the rights attached to a
different share or shares held by that shareholder. To appoint more than one proxy, please contact the registrars,
Link Group at shareholderenquiries@linkgroup.co.uk or on Tel: 0371 664 0300. Calls outside the United Kingdom
will be charged at the applicable international rate. Lines are open between 09:00 – 17:30, Monday to Friday
excluding public holidays in England and Wales. You will need to state clearly on each proxy form the number of
shares in relation to which the proxy is appointed. When two or more valid but differing appointments of proxy are
received for the same meeting, the one which is last validly delivered or received (regardless of its date or the date
of its execution) shall be treated as replacing and revoking the other or others as regards that share. If the Company
is unable to determine which appointment was last validly delivered or received, none of them shall be treated as
valid in respect of that share.
You will not receive a hard copy form of proxy with this document. Instead, you will be able to vote
7.
electronically using the link www.signalshares.com. You will need to log into your Signal Shares account or register
if you have not previously done so. To register you will need your investor code, this is detailed on your share
certificate or available from our registrar, Link Group. Votes submitted electronically must be submitted by no later
than 2.00 p.m. on 27 June 2023.
8. Link Group, the company’s registrar, has launched a shareholder app: LinkVote+. It’s free to download and
use and gives shareholders the ability to access their shareholding record at any time and allows users to submit a
proxy appointment quickly and easily online rather than through the post. The app is available to download on both
the Apple App Store and Google Play, or by scanning the relevant QR code below.
Apple App Store
GooglePlay
73
Verici Dx plc
NOTICE OF ANNUAL GENERAL MEETING (continued)
from
form of proxy directly
You may request a hard copy
9.
the registrars, Link Group at
shareholderenquiries@linkgroup.co.uk or on Tel: 0371 664 0300. Calls are charged at the standard geographic rate
and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. Lines
are open between 09:00 - 17:30, Monday to Friday excluding public holidays in England and Wales.
10.
If you return more than one proxy appointment, either by paper or electronic communication, the appointment
received last by the registrar before the latest time for the receipt of proxies will take precedence. You are advised
to read the terms and conditions of use carefully. Electronic communication facilities are open to all shareholders and
those who use them will not be disadvantaged.
11.
CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment
service may do so for the AGM (and any adjournment of the AGM) by using the procedures described in the CREST
Manual (available from www.euroclear.com). CREST personal members or other CREST sponsored members, and
those CREST members who have appointed a service provider(s), should refer to their CREST sponsor or voting
service provider(s), who will be able to take the appropriate action on their behalf.
12.
In order for a proxy appointment or instruction made by means of CREST to be valid, the appropriate CREST
message (“CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear UK &
International Limited’s specifications and must contain the information required for such instructions, as described in
the CREST Manual. The message must be transmitted so as to be received by the issuer’s agent (ID RA10) by 2.00
p.m. on 27 June 2023, or, in the event of an adjournment of the AGM, 48 hours before the adjourned AGM. For this
purpose, the time of receipt will be taken to mean the time (as determined by the timestamp applied to the message
by the CREST application host) from which the issuer’s agent is able to retrieve the message by enquiry to CREST
in the manner prescribed by CREST. After this time, any change of instructions to proxies appointed through CREST
should be communicated to the appointee through other means.
13.
CREST members and, where applicable, their CREST sponsors or voting service providers should note that
Euroclear UK & International Limited does not make available special procedures in CREST for any particular
message. Normal system timings and limitations will, therefore, apply in relation to the input of CREST Proxy
Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST
personal member, or sponsored member, or has appointed a voting service provider(s), to procure that his CREST
sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is
transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where
applicable, their CREST sponsors or voting system providers are referred, in particular, to those sections of the
CREST Manual concerning practical limitations of the CREST system and timings. The Company may treat as invalid
a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities
Regulations 2001.
14. If you are an institutional investor you may also be able to appoint a proxy electronically via the Proxymity
platform, a process which has been agreed by the Company and approved by the Registrar. For further information
regarding Proxymity, please go to www.proxymity.io. Your proxy must be lodged by 2.00 p.m. on 27 June 2023 in
order to be considered valid or, if the meeting is adjourned, by the time which is 48 hours before the time of the
adjourned meeting. Before you can appoint a proxy via this process you will need to have agreed to Proxymity’s
associated terms and conditions. It is important that you read these carefully as you will be bound by them and they
will govern the electronic appointment of your proxy. An electronic proxy appointment via the Proxymity platform may
be revoked completely by sending an authenticated message via the platform instructing the removal of your proxy
vote.
15.
To change your proxy instructions simply submit a new proxy appointment using the methods set out above.
Note that the cut-off time for receipt of proxy appointments (see above) also apply in relation to amended instructions;
any amended proxy appointment received after the relevant cut-off time will be disregarded. Where you have
appointed a proxy using the hard-copy proxy form and would like to change the instructions using another hard-copy
proxy form, please contact Link Group at the address noted in note 6 above.
74
Verici Dx plc
NOTICE OF ANNUAL GENERAL MEETING (continued)
16.
In order to revoke a proxy instruction, you will need to inform the Company by contacting Link Group on 0371
664 0300. In the case of a member which is a company, the revocation notice must be executed under its common
seal or signed on its behalf by an officer of the company or an attorney for the company. Any power of attorney or
any other authority under which the revocation notice is signed (or a duly certified copy of such power or authority)
must be included with the revocation notice. The revocation notice must be received by Link Group no later than 2.00
p.m. on 27 June 2023. If you attempt to revoke your proxy appointment but the revocation is received after the time
specified then, subject to the paragraph directly below, your proxy appointment will remain valid.
17.
Appointment of a proxy does not preclude you from attending the general meeting and voting in person. If
you have appointed a proxy and attend the general meeting in person, your proxy appointment will automatically be
terminated.
18. Unless otherwise indicated on the Form of Proxy, CREST, Proxymity or any other electronic voting instruction,
the proxy will vote as they think fit or, at their discretion withhold from voting.
19.
A corporation which is a member can appoint one or more corporate representatives who may exercise, on
its behalf, all its powers as a member provided that no more than one corporate representative exercises power over
the same share.
Voting on the Resolutions will be conducted by way of a poll vote.
20.
21.
As at the close of business on the day immediately before the date of this notice of the AGM, the Company’s
issued share capital comprised 170,319,245 ordinary shares of nominal value £0.001 each. Each ordinary share
carries the right to one vote at a general meeting of the Company and, therefore, the total number of voting rights in
the Company as at close of business, on the day immediately before the date of this notice of the AGM is
170,319,245.
22.
Under Section 527 of the 2006 Act, shareholders meeting the threshold requirements set out in that section
have the right to require the Company to publish on a website a statement setting out any matter relating to: (i) the
audit of the Company’s financial statements (including the auditor’s report and the conduct of the audit) that are to
be laid before the AGM; or (ii) any circumstances connected with an auditor of the Company ceasing to hold office
since the previous meeting at which annual financial statements and reports were laid in accordance with Section
437 of the 2006 Act (in each case) that the shareholders propose to raise at the relevant meeting. The Company
may not require the shareholders requesting any such website publication to pay its expenses in complying with
Sections 527 or 528 of the 2006 Act. Where the Company is required to place a statement on a website under Section
527 of the 2006 Act, it must forward the statement to the Company’s auditor not later than the time when it makes
the statement available on the website. The business which may be dealt with at the AGM for the relevant financial
year includes any statement that the Company has been required under Section 527 of the 2006 Act to publish on a
website.
Any shareholder attending the AGM has the right to ask questions.
23.
24.
You may not use any electronic address (within the meaning of Section 333(4) of the 2006 Act) provided in
either this notice or any related documents (including the form of proxy) to communicate with the Company for any
purposes other than those expressly stated.
25.
Company’s website at www.vericidx.com.
A copy of this notice, and other information required by Section 311A of the 2006 Act, can be found on the
75
Perivan.com
Verici Dx
Avon House
19 Stanwell Road
Penarth
Cardiff, CF64 2EZ
vericidx.com