TIDMCIZ
RNS Number : 6087X
Cizzle Biotechnology Holdings PLC
27 April 2023
27 April 2023
Cizzle Biotechnology Holdings Plc
("Cizzle Biotechnology", "Cizzle", the "Company" or the
"Group")
Results for the year ended 31 December 2022
Cizzle Biotechnology, the UK-based diagnostics developer, is
pleased to announce its audited results for the year ended 31
December 2022.
Chair's Statement
The Group has continued throughout 2022 in developing a blood
test for the early detection of lung cancer. Its proof-of-concept
protype test is based on the ability to measure a stable blood
plasma biomarker, a variant of CIZ1. CIZ1 is a naturally occurring
cell nuclear protein involved in DNA replication, and the targeted
CIZ1B variant is highly correlated with early-stage lung
cancer.
Published research led by Professor Coverley previously
demonstrated that CIZ1B can be measured with high sensitivity via
an ELISA process, which should allow for testing in a
high-throughput, hospital-friendly format. The Directors believe
that this development overcomes an important barrier to further
clinical development and the application of this blood test for the
early detection of lung cancer, which is essential to improve a
patient's chance of survival.
In addition to implementing a strategy to develop a regulatory
approved commercial, diagnostic laboratory immunoassay for
early-stage lung cancer, the Group has broadened its interests to
include the detection of a range of other early-stage cancers. It
has also expanded its potential customer base to include the
pharmaceutical industry through a contract to develop a diagnostic
test that can help in the development of personalised medicines, so
called "companion diagnostics", and has secured royalty bearing
rights to the sale of such medicines in the longer term.
The Board intends for the Group's initial product to be a
diagnostic immunoassay that can be readily performed by hospitals
and reference laboratories, but a potential follow-on product could
be a point of care test provided by a primary health care
provider.
Research and Development
Throughout 2022, the Company continued to work with external
expert partners and suppliers to develop and supply of proprietary
key monoclonal antibodies and other detector proteins for its assay
platform, and in July 2022 the Company provided an update on the
progress of this work. A key milestone was the characterisation of
a mouse monoclonal antibody that specifically detects CIZ1B. Assay
conditions for its use are being optimised, as well as further work
to broaden access to other antibodies that can be used in its
proprietary early lung cancer tests, and potentially for a range of
other early-stage cancers.
On 11 April 2022 a new 12 month research agreement was signed
with the University of York, a member of the Russell Group of
research-intensive universities and one of the world's premier
institutions for inspirational and life-changing research, for the
development of potential applications in cancer diagnosis and
therapy. The agreement, commenced on 25 June 2022 for a period of
12 months, following the successful previous programme announced on
17 September 2021 for the development and validation of molecular
tools with potential application in cancer diagnosis or therapy,
and their configuration into assays for Cizzle's proprietary cancer
biomarker variants. On 24 April 2023, the Company announced that
this research programme had met some critical milestones,
especially in optimising the platform and antibodies required to
scale up and bring to market our diagnostic tests for earlystage
cancer detection. As such a further new agreement has been signed
with the University lasting until 25 September 2024. This programme
will continue development of its CIZ 1B biomarker technology for
early-stage cancer diagnosis and with potential applications in
cancer therapy. This includes the evaluation of the biomarker for
detecting a range of other cancers in addition to the existing
assay for early lung cancer detection.
A s in previous agreements, Cizzle Biotechnology will own all
intellectual property rights arising from the work which
strengthens the Company's position in creating new solutions for
early cancer diagnostics and therapeutic tools.
Development of new future revenue stream
On 14 February 2022 the Group announced a royalty acquisition
agreement with Conduit and SGSC to acquire a 5% economic interest
in the commercialisation of the AZD1656 asset or such other assets
being developed by Conduit or SGSC to treat inflammatory pulmonary
and cardiovascular disease, for a total consideration of GBP1.88m.
The initial consideration of GBP1m was settled through the issue of
25,000,000 new ordinary shares at a price of 4.0p per share, with
the remaining consideration of GBP0.88m settled in September 2022
through the issue of 22,000,000 new ordinary shares at 4.0p per
share. Prior to this, in September 2021, the Group entered into a
royalty sharing agreement with SGSC to grant the Group potential
royalty payments from the commercialisation of SGSC's therapeutic
asset AZD1656 of up to GBP5m, plus potentially further payments
from the use of a companion diagnostic.
In December 2022 the Company announced that it had agreed a put
option to sell: (i) its 5% economic interest in the
commercialisation of the AZD 1656 asset to treat inflammatory
pulmonary and cardiovascular disease (the "Economic Interest"); and
(ii) its royalty sharing agreement with St George Street Capital
("SGSC"), the UK-based biomedical charity (the "Royalty Sharing
Agreement') to Conduit Pharmaceuticals Limited, a pharmaceutical
company established to fund the development of successful
deprioritized clinical assets licensed from large pharmaceutical
companies ("Conduit") for a total consideration of GBP3.25 million
to be satisfied through the issuance of new shares in Conduit (the
"Option").
On 9 November 2022, it was announced that Conduit entered into a
definitive business combination agreement with Murphy Canyon
Acquisition Corp. (NASDAQ:MURF) ("Murphy"), a blank-check special
purpose acquisition company. The combined company's common stock is
anticipated to be listed on NASDAQ under the ticker symbol "CDT".
The combined company is anticipated to have an estimated pro forma
enterprise valuation of approximately $700.49 million with cash
proceeds from the transactions expected to be the balance of
$136.04 million of cash held in Murphy's trust account less any
redemptions by Murphy's public stockholders and the payment of
certain expenses, and approximately $27.00 million attributable to
a private investment anchored by new and existing investors of
Conduit (the "PIPE Investment").
The Economic Interest and Royalty Sharing Agreements are valued
at cost, totalling GBP2,080,000, as at 31 December 2022. No profits
or revenues were attributable to the assets subject to the Option.
The Option is exercisable solely at the discretion of Cizzle and
Cizzle has agreed to pay Conduit GBP120,000 in cash as the premium
for the Option, which has a nine-month term.
Reaching Global Markets
During 2022 the Company extended its global reach of the Group's
technology to both China and the USA, where there is much need for
the use of the early detection of lung cancer tests:
-- China On 1 February 2022 a full commercial agreement with
International Co-Innovation Center for Advanced Medical
Technology ("iCCAMT") and Shenzen Intelliphecy Life
Technologies Co. Ltd was executed to develop and market
early lung cancer diagnostic tests in China. This agreement
will generate future revenues for the Group via a 10%
royalty on the sales of all products and services using
its proprietary CIZ1B technology and from payment for
monoclonal antibodies and reagents.
-- USA On 6 May 2022 the Group announced that it had signed
a heads of terms to partner with CorePath Laboratories
("CorePath"), a full service cancer reference laboratory,
to develop and offer its proprietary early-stage lung
cancer test throughout the USA. The proposal is that
the Group would receive a 15% royalty and royalty sharing
arrangements on the direct offering of products and
services using CIZ1B via CorePath in the USA. On 16
June 2022 a marketing agreement was signed with Behnke
Group, USA, to promote, identify and facilitate partnerships
for Cizzle with healthcare providers and businesses
in the USA.
Funding
In September 2022 the Company completed a fund raising providing
gross proceeds of GBP500,000 by way of a subscription for its
shares and secured a GBP500,000 facility to draw down on further
funds for a term of 18 months, if required. The funds will be used
to provide working capital for the Company and to continue
development of a laboratory-developed test ("LDT") accredited
service for the early detection of lung cancer and taking the
Company's proprietary CIZ1B biomarker blood test through to UKCA,
CE marking and/or FDA 510(k) clearance.
In December 2022 the Company raised net proceeds, before
expenses, of GBP115,000 (gross proceeds: GBP118,000) to fund the
purchase of an option (cost GBP120,000) to sell its AZD1656 assets
as explained above.
Financial overview
The financial results for the year ended 31 December 2022 are
summarized below:
- Corporate expenses, before share option charge and exceptional
items: GBP823,000 (2021: GBP552,000);
- Share option charge: GBP140,000 (2021: GBP299,000)
- Exceptional corporate expenses relating to the acquisition:
GBPNil (2021: GBP3,107,000) which include transaction
costs of GBPNil (2021: GBP303,000) and a non-cash share-based
expense of GBPNil (2021: GBP2,804,000) (explained in
Notes 3 and 5);
- Total comprehensive loss: GBP912,000 (2021 Loss GBP3,921,000);
and
- Loss per share 0.3 p (2021: Loss 2.4 p).
Allan Syms
Executive Chair
26 April 2023
Enquiries:
Cizzle Biotechnology Holdings Via IFC Advisory
plc
Allan Syms (Executive Chairman)
Allenby Capital Limited
John Depasquale
Alex Brearley +44(0) 20 33285656
Novum Securities Limited
Colin Rowbury
Jon Bellis +44(0) 20 7399 9400
IFC Advisory Limited
Tim Metcalfe
Florence Chandler +44(0) 20 3934 6630
About the Company
Cizzle Biotechnology is developing a blood test for the early
detection of lung cancer. Cizzle Biotechnology is a spin- out from
the University of York, founded in 2006 around the work of
Professor Coverley and colleagues. Its proof-of-concept prototype
test is based on the ability to detect a stable plasma biomarker, a
variant of CIZ1 known as CIZ1B. CIZ1 is a naturally occurring cell
nuclear protein involved in DNA replication, and the targeted CIZ1B
variant is highly correlated with early-stage lung cancer.
For more information please see
https://cizzlebiotechnology.com
You can also follow the Company through its twitter account
@CizzlePlc and on LinkedIn.
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2022
Notes Group Group
Year ended Year ended
31 December 31 December
2022 2021
GBP'000 GBP'000
------------------------------------------- ------ --------------- ---------------
Revenue - -
Cost of sales - -
------------------------------------------- ------ --------------- ---------------
Gross profit - -
Administrative expenses
* on-going administrative costs 6 (823) (552)
* share option charge 6 (140) (299)
* transaction costs 6 - (303)
* reverse acquisition expenses 6 - (2,804)
------------------------------------------- ------ --------------- ---------------
Total administrative expenses (963) (3,958)
Operating loss and loss before
income tax (963) (3,958)
Income tax 9 51 37
------------------------------------------- ------ -------------------- ----------
Loss and total comprehensive income
for the year
attributable to the equity shareholders
of the parent (912) (3,921)
------------------------------------------- ----------- --------------- ----------
Earnings per ordinary share (pence)
attributable to the equity shareholders:
Continued operations basic and diluted 10 (0.3p) (2.4p)
Earnings per ordinary share (pence)
attributable to
the equity shareholders of the
parent 10 (0.3p) (2.4p)
The Company has elected to take the exemption provided under
section 408, Companies Act 2006 from presenting the Company
statement of comprehensive income.
The notes are an integral part of these financial
statements.
Consolidated Statement of Financial Position
As at 31 December 2022
Notes Group Group
2022 2021
GBP'000 GBP'000
---------------------------------- ----- -------- --------
Non-current assets
Intangible asset 11 2,080 200
2,080 200
Current assets
Trade and other receivables 12 227 80
Cash and cash equivalents 13 478 875
---------------------------------- ----- -------- --------
705 955
---------------------------------- ----- -------- --------
Total assets 2,785 1,155
---------------------------------- ----- -------- --------
Equity
Capital and reserves attributable
to equity holders of the Company
Ordinary shares 14 3,502 3,493
Share premium 34,917 32,566
Shares to be issued 115 -
Reverse acquisition reserve (40,021) (40,021)
Share capital reduction reserve 10,081 10,081
Share option reserve 199 335
Retained losses (6,153) (5,517)
---------------------------------- ----- -------- --------
Total equity 2,640 937
---------------------------------- ----- -------- --------
Liabilities
Current liabilities
Trade and other payables 15 145 218
Total liabilities 145 218
---------------------------------- ----- -------- --------
Total equity and liabilities 2,785 1,155
---------------------------------- ----- -------- --------
The notes are an integral part of these financial
statements.
The financial statements were approved and authorised for issue
by the board on 26 April 2023 and were signed on its behalf by:
Nigel Lee
Director
Company Statement of Financial Position
As at 31 December 2022
Notes 2022 2021
GBP'000 GBP'000
---------------------------------- ----- -------- --------
Non-current assets
Intangible asset 11 2,080 200
Investments 11 21,803 21,803
23,883 22,003
Current assets
Trade and other receivables 12 726 241
Cash and cash equivalents 13 464 848
1,190 1,089
---------------------------------- ----- -------- --------
Total assets 25,073 23,092
---------------------------------- ----- -------- --------
Equity
Capital and reserves attributable
to equity holders of the company
Ordinary shares 14 3,502 3,493
Share premium 34,917 32,566
Share capital to be issued 115 -
Share capital reduction reserve 10,081 10,081
Share option reserve 199 335
Accumulated losses (23,867) (23,516)
---------------------------------- ----- -------- --------
Total equity 24,947 22,959
---------------------------------- ----- -------- --------
Liabilities
Current liabilities
Trade and other payables 15 126 133
Total liabilities 126 133
---------------------------------- ----- -------- --------
Total equity and liabilities 25,073 23,092
---------------------------------- ----- -------- --------
The notes are an integral part of these financial statements.
The loss for the year of the Company was GBP627,000 (2021: loss of
GBP1,145,000).
The financial statements were approved and authorised for issue
by the board on 26 April 2023 and were signed on its behalf by:
Nigel Lee
Director
Consolidated Statement of Cash Flows for the year ended 31
December 2022
Notes Group Group
2022 2021
GBP'000 GBP'000
-------------------------------------------- ------ -------- --------
Cash flows from operating activities
Operating (loss) before tax (963) (3,958)
Adjustment for:
Reverse acquisition expense 3,6 - 2,804
Share option charge 140 299
Transaction costs settled through
share issue - 32
Share based adjustment/payment to
former director 8 11
-------------------------------------------- ------ -------- --------
Operating cash flow before working
capital movements (815) (812)
Decrease in trade and other receivables 12 16 7
Decrease in trade and other payables 15 (73) (204)
-------------------------------------------- ------ -------- --------
Net cash used in operating activities (872) (1,009)
-------------------------------------------- ------ -------- --------
Cash flows from investing activities
Cash acquired on acquisition of subsidiary - 46
Purchase of investment in intangible
assets 11 - (200)
Purchase of a Put Option 12 (120) -
-------------------------------------------- ------ -------- --------
Net cash used in investing activities (120) (154)
-------------------------------------------- ------ -------- --------
Cash flows from financing activities
Proceeds from the issue of ordinary
shares (net of issue costs) 14 480 2,041
Proceeds from shares to be issued 115 -
Borrowings repaid - (10)
Net cash generated from financing
activities 595 2,031
-------------------------------------------- ------ -------- --------
Net increase / (decrease) in cash
and cash equivalents (397) 868
Cash and cash equivalents at the
start of the year 13 875 7
-------------------------------------------- ------ -------- --------
Cash and cash equivalents at the
end of the year 13 478 875
-------------------------------------------- ------ -------- --------
The notes are an integral part of these financial
statements.
Company Statement of Cash Flows for the year ended 31 December
2022
Notes 2022 2021
GBP'000 GBP'000
--------------------------------------- ------ -------- --------
Cash flows from operating activities
Loss before tax (627) (1,145)
Share option charge 140 299
Transaction costs settled through
share issue - 32
--------------------------------------- ------ -------- --------
Operating cash flow before working
capital movements (487) (814)
Change in trade and other receivables 12 10 (19)
Change in trade and other payables 15 (8) 75
--------------------------------------- ------ -------- --------
Net cash used in operating activities (485) (758)
--------------------------------------- ------ -------- --------
Cash flows from investing activities
Purchase of investment in intangible
assets 11 - (200)
Purchase of Put Option 12 (120) -
Investment in subsidiary company 11 - (103)
Change in intra group funding (374) (216)
--------------------------------------- ------ -------- --------
Net cash used in investing activities (494) (519)
--------------------------------------- ------ -------- --------
Cash flows from financing activities
Proceeds from the issue of ordinary
shares (net of issue costs) 14 480 2,041
Proceeds from shares to be issued 115 -
Net cash generated from financing
activities 595 2,041
--------------------------------------- ------ -------- --------
Net (decrease) /increase in cash and
cash equivalents (384) 764
Cash and cash equivalents at the
start of the year 13 848 84
--------------------------------------- ------ -------- --------
Cash and cash equivalents at the
end of the year 13 464 848
--------------------------------------- ------ -------- --------
The notes are an integral part of these financial
statements.
Group statement of Changes in Equity
for the year ended 31 December 2022
Ordinary Shares Capital Share Reverse
Share Share to be Redemption Option Acquisition Retained
Group Capital Premium issued Reserve Reserve Reserve Losses Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2021 3 1,585 - - - - (1,596) (8)
Issue of shares - 11 - - - - - 11
Transfer to reverse
acquisition reserve (3) (1,596) - - - 1,599 - -
Recognition of plc
equity at acquisition
date 3,470 8,852 - 10,081 - (22,621) - (218)
Issue of shares for
acquisition of
subsidiary 21 21,679 - - - (21,803) - (103)
Reverse acquisition
expense - - - - - 2,804 - 2,804
Issue of shares for
cash 2 2,198 - - - - - 2,200
Issue of shares in
settlement of fees - 32 - - - - - 32
Issue of warrants - (36) - - 36 - - -
Cost of share issue - (159) - - - - - (159)
Share option charge - - - - 299 - - 299
-------- -------- --------- ------------ -------- -------------------- --------- --------
3,493 32,566 - 10,081 335 (40,021) (1,596) 4,858
Comprehensive Loss
for the year - - - - - - (3,921) (3,921)
At 31 December 2021 3,493 32,566 - 10,081 335 (40,021) (5,517) 937
-------- -------- --------- ------------ -------- -------------------- --------- --------
Issue of shares for
acquisition of AZD
1656 intangible asset 5 1,875 - - - - - 1,880
Issue of shares for
cash 4 500 - - - - - 504
Costs of share issue - (80) - - - - - (80)
Share options
exercised - 56 - - (276) - 276 56
Shares to be issued - - 115 - - - - 115
Share option charge - - - - 140 - - 140
3,502 34,917 115 10,081 199 (40,021) (5,241) 3,552
Comprehensive Loss
for the year - - - - - - (912) (912)
At 31 December 2022 3,502 34,917 115 10,081 199 (40,021) (6,153) 2,640
-------- -------- --------- ------------ -------- -------------------- --------- --------
The notes are an integral part of these financial
statements.
Company statement of Changes in Equity
for the year ended 31 December 2022
Shares Share
Ordinary Share to be capital Share
Share premium issued reduction option Retained
Capital GBP'000 reserve reserve Losses Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2021 3,470 8,852 - 10,081 - (22,371) 32
Issue of shares for
acquisition of subsidiary 21 21,679 - - - - 21,700
Issue of shares for
cash 2 2,198 - - - - 2,200
Issue of shares in
settlement of fees - 32 - - - - 32
Cost of share issue - (159) - - - - (159)
Issue of warrants - (36) - - 36 - -
Share option charge - - - - 299 - 299
--------- --------- --------- ----------- --------- --------- ---------
3,493 32,566 - 10,081 335 (22,371) 24,104
Comprehensive Loss
for the year - - - - (1,145) (1,145)
At 31 December 2021 3,493 32,566 10,081 335 (23,516) 22,959
--------- --------- --------- ----------- --------- --------- ---------
Issue of shares for
acquisition of AZD
1656 intangible asset 5 1,875 - - - - 1,880
Issue of shares cash
(net of expenses) 4 500 - - - - 504
Costs of share issue - (80) - - - - (80)
Share options exercised - 56 - - (276) 276 56
Shares to be issued - - 115 - - - 115
Share option charge
for year - - - - 140 - 140
3,502 34,917 115 10,081 199 (23,240) 25,574
Comprehensive Loss
for the year - - - - - (627) (627)
At 31 December 2021 3,502 34,917 115 10,081 199 (23,867) 24,947
--------- --------- --------- ----------- --------- --------- ---------
The notes are an integral part of these financial
statements.
Notes to the financial statements for the year ended 31 December
2022
1 General information
Cizzle Biotechnology Holdings PLC ("the Company" of "the Group")
(formerly Bould Opportunities PLC) is a public limited company with
its shares traded on the Standard Listing of the London Stock
Exchange. On 14 May 2021 the Company acquired through a share for
share exchange the entire share capital of Cizzle Biotechnology
Limited. The Company is a holding company of a group of companies
("the Group") whose principal activity is the early detection of
lung cancer via the development of an immunoassay test for the
CIZ1B biomarker.
The directors consider there to be no ultimate controlling
shareholder of the Company.
The address of the registered office is 6(th) Floor, 60
Gracechurch Street, London, EC3V 0HR and the registered number of
the Company is 06133765.
2 Accounting policies
The principal accounting policies applied in the preparation of
these financial statements are set out below. These policies have
been consistently applied to all the years presented, unless
otherwise stated.
2.1 Basis of preparation
The financial statements of Cizzle Biotechnology Holdings PLC
("the Company") including subsidiary undertakings (together
referred to as "the Group") have been prepared in accordance with
UK-adopted international accounting standards and the Companies Act
2006 on a historical cost basis.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the Company's accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the financial
statements are disclosed in Note 5.
The results for the year ended 31 December 2022 are the Group
results. The results for the comparative period to 31 December 2021
are the results of the Group following the acquisition of Cizzle
Biotechnology Limited ("CBL") on 14 May 2021.
(a) New standards and interpretations
The IASB and IFRS Interpretations Committee have issued the
following standards and interpretations with an effective date of
implementation of 1 January 2022.
i) New standards and amendments - applicable 1 January 2022
The following standard and interpretations apply for the first
time to financial reporting periods commencing on or after 1
January 2022:
Effective for accounting Impact
periods beginning
on or after
Proceeds before Intended Use - Amendments 1 January 2022 None
to IAS 16 "Property, Plant and Equipment"
------------------------- -------
Reference to the Conceptual Framework 1 January 2022 None
- Amendments to IFRS 3 "Business Combinations"
------------------------- -------
Onerous contracts and costs of fulfilling 1 January 2022 None
a contract - Amendments to IAS 37 - "Provisions,
Contingent Liabilities and Contingent
Assets"
------------------------- -------
ii) Forthcoming requirements
As at 31 December 2022, the following standards and
interpretations had been issued but were not mandatory for annual
reporting periods ending on 31 December 2022 and not early
adopted.
Effective for accounting Impact
periods beginning
on or after
Definition of accounting estimates - 1 January 2023 None
Amendments to IAS 8 "Changes in Accounting
Estimates and Errors"
------------------------- -------
Disclosure of Accounting Policies - Amendments 1 January 2023 None
to IAS 1 "Presentation of Financial Statements"
and IFRS Practice Statement 2
------------------------- -------
Deferred Tax relates to Assets and Liabilities 1 January 2023 None
arising from a Single Transaction - Amendments
to IAS 12 "Income Taxes"
------------------------- -------
2.2 Going concern
The Directors have adopted the going concern basis in preparing
the financial statements for the year ended 31 December 2022. In
reaching this conclusion, the Directors have considered current
trading and the current and projected funding position for the
period of just over 12 months from the date of approval of the
financial statements through to 30 April 2024. The Company, as
anticipated in the Company's Prospectus announced on 22 September
2022, will need to raise additional funding should it wish to
undertake development of additional future products beyond the core
offering that is mentioned in this Prospectus and to further fund
the corporate and operational overhead of the business. The
forecasts have been prepared using two scenarios - a realistic one
that assumes expected levels of income and a pessimistic one that
assumes a reduced level of income and delays in accelerated
research and development expenditure. Both forecasting scenarios
show that the Group continues to be a going concern.
Current funding
The Group's cash balance as at 31 December 2022 was GBP478,000
and there were no borrowing facilities at that date. On 26
September 2022 the Company raised GBP535,000, before share issue
costs, through the placing of new ordinary shares. Also a further
facility of GBP500,000, which is available until 19 March 2024, was
announced that is available to the Company, to provide further
funds at a fixed price of 1.8p per ordinary share. On 19 December
2022 the Company raised GBP115,000, net of share issue costs,
(gross proceeds:GBP118,000) and the ordinary shares relating to
this subscription were admitted to trading on the London Stock
Exchange in January 2023.
Conclusion
After taking account of the Company's current funding position,
its cash flow projections and the risks and uncertainties
associated with these, the directors have a reasonable expectation
that the Company has access to adequate resources to continue in
operational existence for the foreseeable future. For these reasons
they continue to prepare the financial statements on a going
concern basis. These financial statements do not include any
adjustments that would result from the going concern basis of
preparation being inappropriate.
2.3 Segmental reporting
IFRS 8 requires that segmental information be disclosed on the
basis of information reported to the chief operating decision
maker. The Company considers that the role of chief operating
decision maker is performed by the Company's Board of Directors.
The Group's only business activity and single segment is the
development of tests for the early detection of lung cancer.
2.4 Foreign currency translation
The functional currency of the Company is Sterling which is also
the presentational currency of the financial statements. Foreign
currency assets and liabilities are converted into Sterling at the
rates of exchange ruling at the end of the financial year. 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 are recognised in the statement of
comprehensive income.
2.5 Non-Current assets
Investments in intangible assets and subsidiaries are stated at
cost less accumulated impairment. Plant and equipment are stated at
costs less accumulated depreciation and any accumulated impairment
losses. Depreciation is charged to write off costs less estimated
residual values on a straight-line basis over their estimated
useful lives. Estimated useful lives are reviewed each year and
amended if necessary. The Group's and Company's investment in
intangible assets ( currently AZD 1656) are considered to have
indefinite lives due to the infancy of the assets and the fact that
they are not yet revenue generating.
2.6 Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at
call with banks and other short-term highly liquid investments,
with original maturities of three months or less.
2.7 Share capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
2.8 Current and deferred income tax
Current income tax is calculated on the basis of the tax laws
enacted or substantively enacted at the statement of financial
position date in the countries where the Company's subsidiaries and
associates operate and generate taxable income. Management
periodically evaluates positions taken in tax returns with respect
to situations in which applicable tax regulation is subject to
interpretation and establishes provisions where appropriate on the
basis of amounts expected to be paid to the tax authorities.
Research and Development tax credits are accounted for on an
accruals basis.
Deferred income tax is provided in full, using the liability
method, on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the financial
statements. However, deferred income tax is not accounted for if it
arises from initial recognition of an asset or liability in a
transaction other than a business combination that at the time of
the transaction affects neither accounting nor taxable profit nor
loss. Deferred income tax is determined using tax rates (and laws)
that have been enacted or substantively enacted by the statement of
financial position date and are expected to apply when the related
deferred income tax asset is realised or the deferred income tax
liability is settled. Deferred income tax assets are recognised to
the extent that it is probable that future taxable profit will be
available against which the temporary differences can be
utilised.
2.9 Share based payments
The Company operates an equity-settled, share-based compensation
plan. The fair value of the employee services received in exchange
for the grant of the options is recognised as an expense and
credited to the share option reserve within equity. The total
amount to be expensed over the vesting period is determined by
reference to the fair value of the options granted, excluding the
impact of any non-market vesting conditions (for example,
profitability and sales growth targets). Options that lapse before
vesting are credited back to income. The proceeds received net of
any directly attributable transaction costs are credited to share
capital (nominal value) and, if applicable, share premium when the
options are exercised.
2.10 Financial instruments
i) Financial assets
The Company classifies its financial assets in the following
measurement categories:
-- those to be measured subsequently at fair value through
profit or loss; and
-- those to be measured at amortised cost.
The classification depends on the business model for managing
the financial assets and the contracted terms of the cash flows.
Financial assets are classified as at amortised cost only if both
of the following criteria are met:
-- the asset is held within a business model whose objective
is to collect contracted cash flows; and
-- the contractual terms give rise to cash flows that
are solely payments of principal and interest.
Financial assets, including trade and other receivables and cash
and bank balances, are initially recognised at transaction price,
unless the arrangement constitutes a financing transaction, where
the transaction is measured at the present value of the future
receipts discounted at a market rate of interest.
Such assets are subsequently carried at amortised cost using the
effective interest method.
At the end of each reporting period financial assets measured at
amortised cost are assessed for objective evidence of impairment.
If an asset is impaired the impairment loss is the difference
between the carrying amount and the present value of the estimated
cash flows discounted at the asset's original effective interest
rate. The impairment loss is recognised in the consolidated income
statement.
The Company applies the simplified approach in calculating the
expected credit losses (ECLs) as permitted by IFRS 9. Changes in
credit risk is not tracked but instead a loss allowance is
recognised at each reporting date based on the financial asset's
lifetime ECL.
If there is a decrease in the impairment loss arising from an
event occurring after the impairment was recognised the impairment
is reversed. The reversal is such that the current carrying amount
does not exceed what the carrying amount would have been had the
impairment not previously been recognised. The impairment reversal
is recognised in the consolidated income statement.
Financial assets are derecognised when (a) the contractual
rights to the cash flows from the asset expire or are settled, or
(b) substantially all the risks and rewards of the ownership of the
asset are transferred to another party or (c) despite having
retained some significant risks and rewards of ownership, control
of the asset has been transferred to another party who has the
practical ability to unilaterally sell the asset to an unrelated
third party without imposing additional restrictions
ii) Financial liabilities
Basic financial liabilities, being trade and other payables, are
initially recognised at transaction price, unless the arrangement
constitutes a financing transaction, where the debt instrument is
measured at the present value of the future receipts discounted at
a market rate of interest.
Trade payables are obligations to pay for goods or services that
have been acquired in the ordinary course of business from
suppliers. Accounts payable are classified as current liabilities
if payment is due within one year or less. If not, they are
presented as non-current liabilities. Trade payables are recognised
initially at transaction price and subsequently measured at
amortised cost using the effective interest method.
Financial liabilities are derecognised when the liability is
extinguished, that is when the contractual obligation is
discharged, cancelled or expires. The Company does not hold or
issue derivative financial instruments.
iii) Offsetting
Financial assets and liabilities are offset and the net amounts
presented in the financial statements when there is an enforceable
right to set off the recognised amounts and there is an intention
to settle on a net basis or to realise the asset and settle to
liability simultaneously.
2.11 Pensions
For defined contribution schemes the amount charged to the
statement of comprehensive income is the contribution payable in
the year. Differences between the contributions payable in the year
and contributions actually paid are shown either as accruals or
prepayments.
3 Reverse acquisition
On 14 May 2021 the Company acquired through a share for share
exchange the entire share capital of CBL whose principal activity
is the early detection of lung cancer through the development of
tests to detect CIZ1B variant protein.
Although the transaction resulted in CBL becoming a wholly owned
subsidiary of the Company, the transaction constitutes a reverse
acquisition as the previous shareholders of CBL own a substantial
majority of the shares of the Company.
In substance the shareholders of CBL acquired a controlling
interest in the Company and the transaction has therefore been
accounted for as a reverse acquisition. As the Company's activities
prior to the acquisition were purely the maintenance of the AIM
listing, acquiring CBL and raising equity finance to provide the
required funding for the operations of the acquisition means it did
not meet the definition of a business combination in accordance
with IFRS 3.
Accordingly, this reverse acquisition does not constitute a
business combination and was accounted for in accordance with IFRS
2 "Share-based Payments" and associated IFRIC guidance. Although
the reverse acquisition is not a business combination, the Company
has become a legal parent and is required to apply IFRS 10 and
prepare consolidated financial statements. The directors have
prepared these financial statements using the reverse acquisition
methodology, but rather than recognise goodwill, the difference
between the equity value given up by the CBL shareholders is
charged to the statement of comprehensive income as a share-based
payment on reverse acquisition, and represents in substance the
cost of acquiring a quoted company.
In accordance with the reverse acquisition principles, these
consolidated financial statements represent a continuation of the
consolidated statements of Cizzle Biotechnology Holdings Plc and
its subsidiaries and include:
- The assets and liabilities of CBL at their pre-acquisition
carrying value amounts and the results for all periods reported;
and
- The assets and liabilities of the Company as at 14 May 2021
and its results from the date of reverse acquisition (14 May 2021
to 31 December 2021).
On 14 May 2021 the Company issued 206,310,903 ordinary shares to
acquire the 313,932 ordinary shares of CBL Limited. At 14 May 2021
the valuation of the investment in CBL was GBP21,700,000.
Because the legal subsidiary, CBL, was treated on consolidation
as the accounting acquirer and the legal parent company, Cizzle
Biotechnology Holdings Plc, was treated as an accounting
subsidiary, the fair value of the shares deemed to be issued by CBL
was calculated at GBP2,587,000 based on an assessment of the
purchase consideration for a 100% holding of Cizzle Biotechnology
Holdings plc.
The fair value of the net liabilities of Cizzle Biotechnology
Holdings Plc at acquisition was as follows:
GBP'000
Cash and cash equivalents 46
Other assets 47
Liabilities (310)
--------
Net (Liabilities) (217)
--------
The difference between the deemed cost of GBP2,587,000 and the
fair value of the net liabilities noted above of GBP(217,000)
resulted in GBP2,804,000 being expensed as "reverse acquisition
expenses" in accordance with IFRS2, Share- based Payments,
reflecting the economic cost to CBL shareholders of acquiring a
quoted entity.
The reverse acquisition reserve which arose from the reverse
takeover is made up as follows:
GBP'000
Pre-acquisition equity(1) (22,621)
CBL share capital at acquisition(2) 1,599
Investment in CBL(3) (21,803)
Reverse acquisition expense(4) 2,804
---------
(40,021)
---------
1. Pre-acquisition equity of Cizzle Biotechnology Holdings
PLC at 14 May 2021.
2. CBL had issued share capital and share premium of GBP1,599,000.
As these financial statements represent the capital structure
of the legal parent entity, the equity of CBL is eliminated.
3. The value of the shares issued by the Company in exchange
for the entire share capital of CBL plus stamp duty expenses.
4. The reverse acquisition expense represents the difference
between the value of the equity issued by the Company, and
the deemed consideration given by CBL to the Group.
4 Financial risk
The Group's principal risk factors are as follows:
4.1 Capital risk management
The Company monitors capital which comprises all components of
equity (i.e. share capital, share premium, capital reduction
reserve, share option reserve, and retained earnings/losses). Note
22 describes how capital is managed in respect of the debt to
equity ratio.
4.2 Financial risk factors
The Group's operations exposed it to a variety of financial
risks that had included the effects of credit risk, liquidity risk
and interest rate risk. The Company had in place a risk management
programme that attempted to limit the adverse effects on the
financial performance of the Company by monitoring levels of debt
finance and the related finance costs. The Company did not use
derivative financial instruments to manage interest rate costs and
as such, no hedge accounting was applied.
Given the size of the Company, the directors did not delegate
the responsibility of monitoring financial risk management to a
sub-committee of the Board. The policies set by the board of
directors were implemented by the Company's finance department.
(a) Credit risk
The Company's credit risk was primarily attributable to its
trade receivables balance. The amounts presented in the statement
of financial position are net of allowances for impairment.
(b) Liquidity risk
L iquidity risk is the risk that an entity will encounter
difficulty in meeting obligations associated with financial
liabilities. The Company's financial liabilities included its trade
and other payables shown in Note 15. The Group manages this risk
through the preparation of cash flow forecasts which are regularly
reviewed by the directors.
5 Critical accounting estimates and judgements
In the preparation of the financial statements the directors
must make estimates and assumptions that affect the asset and
liability items and revenue and expense amounts recorded in the
financial statements. These estimates are based on historical
experience and various other assumptions that the Board believes
are reasonable under the circumstances. The results of this form
the basis for making judgements about the carrying value of assets
and liabilities that are not readily available from other
sources.
a) Accounting judgement
The Group's principal judgements relate to its impairment review
of its's intangible assets (AZD 1656), the Company's investment in
its subsidiary company, CBL. Following the review of these assets
at 31 December 2022 the directors considered that no impairments of
these assets had arisen. The directors also consider that the
Group's intangible assets currently have an indefinite life, as
mentioned in Note 2.5.
b) Accounting estimate
Share based payments
See Note 14 which explains the methods used to estimate the fair
value of share options granted.
6 Operating expenses
Group Group
2022 2021
GBP'000 GBP'000
Research and development 280 161
Professional advisers 180 89
Staff costs 154 88
Intellectual property renewal fees 38 57
Regulatory fees 68 53
Share based payment 8 37
Audit fees (Note 7) 31 27
Other expenditure 64 40
On-going administrative costs 823 552
Share option charge 140 299
Reverse acquisition expense - 2,804
Transaction costs - IPO and reverse
acquisition - 303
------------------------------------- --------- ---------
Total administrative expenses 963 3,958
------------------------------------- --------- ---------
7 Auditor's remuneration
Group Group
2022 2021
GBP'000 GBP'000
------------------------------------------------- --------- ---------
Fees payable to the Company's auditor for
the audit of the Group, Company and subsidiary
financial statements 31 27
Non-audit services - reporting accountant
for IPO - 38
------------------------------------------------- --------- ---------
31 65
------------------------------------------------- --------- ---------
8 Directors' emoluments
Group Group Company Company
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
----------------------- --------- --------- --------- ---------
Wages and salaries 300 125 143 105
Social Security Costs 39 10 17 11
Pension Contributions 5 3 3 2
Share based payments 140 299 140 299
----------------------- --------- --------- --------- ---------
484 437 303 417
----------------------- --------- --------- --------- ---------
The Group does not have any employees other than the directors.
The average number of directors during the year was 4 (2021:
4).
9 Income tax credit
The tax credit for the year was as follows:
Group Group
2022 2021
GBP'000 GBP'000
-------------------------------------- --------- ---------
Research and development tax credits
* Current year (47) (37)
(4) -
* Prior year
-------------------------------------- --------- ---------
(51) (37)
-------------------------------------- --------- ---------
Research and Development tax credits are accounted for on an
accruals basis.
The tax on the Group's loss before tax differs from the
theoretical amount that would arise using the tax rate applicable
to the losses of the Group as follows:
Group Group
2022 2021
GBP'000 GBP'000
------------------------------------------------ --------- ---------
Loss before tax on continuing operations (963) (3,958)
------------------------------------------------ --------- ---------
Tax calculated at the domestic rate applicable
of 19% (2021: 19%) (183) (752)
Expenses not deductible for tax purposes 27 590
Tax losses for which no deferred tax credit
was recognised 156 162
Research and development tax credit (51) (37)
------------------------------------------------ --------- ---------
Total income tax credit (51) (37)
------------------------------------------------ --------- ---------
10 Earnings per share
Basic loss per share
Group Group
2022 2021
-------------------------------------------- ------------ ---------------
Loss for the year (912,000) (GBP3,921,000)
-------------------------------------------- ------------ ---------------
Weighted average number of ordinary shares 291,322,970 160,516,450
-------------------------------------------- ------------ ---------------
Basic loss per share (0.3p) (2.4p)
-------------------------------------------- ------------ ---------------
The basic loss per share is derived by dividing the loss for the
period attributable to ordinary shareholders by the weighted
average number of shares in issue. In 2021 the weighted average
number of shares is adjusted for the impact of the reverse
acquisition as follows:
- Prior to the reverse acquisition, the number of shares is
based on CBL, adjusted using the share exchange ratio arising
on the reverse acquisition; and
- From the date of the reverse acquisition, the number of
share is based on the Company.
Diluted earnings per share is calculated by dividing the loss
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding after adjusting these amounts
for the effects of dilutive potential ordinary shares. As the
results for the years ended 31 December 2022 and 31 December 2021
are a loss, any exercise of share options would have an
anti-dilutive effect on earnings per share. Consequently, earnings
per share and diluted earnings per share are the same and the
calculation has not been included.
As at 31 December 2022, there were share options outstanding
over 19,742,945 shares (2021: 23,432,041 shares), which could
potentially have a dilutive impact in the future.
11 Non- Current assets
Group Group Company Company
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------- --------- --------- --------- ---------
Investment in subsidiary undertakings - - 21,803 21,803
Intangible assets 2,080 200 2,080 200
Total investments 2,080 200 23,883 22,003
--------------------------------------- --------- --------- --------- ---------
a. Investments in subsidiary undertakings - Company
2022 2021
GBP'000 GBP'000
----------------------------- --------- ---------
Opening balance 21,803 -
Acquisition during the year - 21,803
----------------------------- --------- ---------
Closing balance 21,803 21,803
----------------------------- --------- ---------
The investment in subsidiary undertakings is in the following
companies:
Name Country of incorporation Proportion of ownership Principal activities/status
interest
Cizzle Biotechnology Limited England and Wales 100% interest in ordinary Early detection of lung cancer
share capital
----------------------------- ------------------------ ----------------------------- ------------------------------
Cizzle Biotech Limited England and Wales 100% interest in ordinary Dormant
(formerly Enfis Limited) share capital
----------------------------- ------------------------ ----------------------------- ------------------------------
The registered address for ongoing subsidiaries is 6(th) floor,
60 Gracechurch Street, London, EC3V 0HR.
Cizzle Biotechnology Limited - as mentioned in Note 3, this
investment represents the value of the shares issued by the Company
in exchange for the entire share capital of CBL (GBP21,700,000 plus
stamp duty expenses of GBP103,000).
b. Intangible assets - Group and Company
2022 2021
GBP'000 GBP'000
----------------------------- --------- ---------
Opening balance 200 -
Acquisition during the year 1,880 200
----------------------------- --------- ---------
Closing balance 2,080 200
----------------------------- --------- ---------
At 1 January 2022, Intangible assets represents the fair value
of an investment in a royalty sharing arrangement with St George
Street Capital ("SGSC"), a UK-based medical charity. This agreement
grants the Company potential future royalty payments from the
commercialisation of St George Street's therapeutic asset AZD1656
of up to GBP5m, plus potentially further payments from the use of a
companion diagnostic.
On 14 February 2022, the Company entered into a definitive
agreement (the "Agreement") with Conduit Pharmaceuticals Limited
("Conduit") and St George Street Capital Limited ("SGSC") to
acquire a 5% economic interest in the commercialisation of the AZD
1656 asset or other such assets being developed by Conduit or SGSC
to treat inflammatory pulmonary and cardiovascular disease (the
"Economic Interest").
Highlights of the Agreement are as follows:
- Agreement with Conduit and SGSC to acquire a 5% economic
interest for a total consideration of GBP1.88 million,
to be settled in new Cizzle ordinary shares at a price
of 4.0p per share, a 56.9% premium to the closing mid-market
price on 11 February 2022;
- The Agreement is in addition to the Company's existing
interest in AZD 1656 as announced on 20 September 2021:
- SGSC recently reported the successful completion of the
AZD 1656 ARCADIA clinical trial in Covid-19 and SGSC
and Conduit are in discussions with multiple pharmaceutical
companies about licensing opportunities for AZD 1656
for Covid-19 and potentially for further indications;
and
- The Agreement supports the Company's ambitions to expand
its target customer base into the pharmaceutical industry
and is in line with its strategy of building a portfolio
of early cancer detection tests, companion diagnostics
and royalty bearing stakes in significant drug assets.
Consideration for the Agreement (GBP1.88m) - non cash
acquisition
Under the terms of the Agreement, Cizzle will pay consideration
of GBP1.88 million to SGS for the Economic Interest. Of the
consideration payable, GBP1.0 million (the "Initial Consideration")
was satisfied by the issue of 25,000,000 new ordinary shares in the
Company (the "Consideration Shares"), at a price of 4.0 pence per
Consideration Share, being a premium of 56.9 per cent. to the
Company's closing mid-market price of 2.55 pence on 11 February
2022. The remaining consideration of GBP880,000 was settled in new
ordinary shares in the Company issued at 4.0 pence per share, on 29
September 2022.
Consideration for Put Options (GBP0.12m)
On 19 December 2022 the Company agreed a put option to sell: (i)
its 5% economic interest in the commercialisation of the AZD 1656
asset to treat inflammatory pulmonary and cardiovascular disease
(the "Economic Interest"); and (ii) its royalty sharing agreement
with St George Street Capital ("SGSC"), the UK-based biomedical
charity (the "Royalty Sharing Agreement') to Conduit
Pharmaceuticals Limited ("Conduit") for a total consideration of
GBP3.25 million to be satisfied through the issuance of new shares
in Conduit (the "Option"). The Economic Interest and Royalty
Sharing Agreement are valued at cost, totalling GBP2,080,000. No
profits or revenues were attributable to the assets subject to the
Option. The Option is exercisable solely at the discretion of
Cizzle and Cizzle has agreed to pay Conduit GBP120,000 in cash as
the premium for the Option, which has a nine-month term. The
Company also raised proceeds of GBP115,586, net of expenses, by way
of a subscription for 7,371,557 new ordinary shares in the Company
("Ordinary Shares") at 1.6p per share (the "Issue Price") with
existing investors (the "Subscription"), in order to provide funds
to be put towards satisfying the Option premium.
This Put Option was paid for in cash and is accounted for under
prepayments ( see Note 12).
12 Trade and other receivables
Group Group Company Company
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- --------- --------- --------- ---------
Trade receivables - - - -
Less: provision for impairment - - - -
----------------------------------- --------- --------- --------- ---------
Trade receivables (net) - - - -
Amounts due from subsidiaries - - 590 216
Social security and other taxes 7 14 7 7
Corporation tax recoverable 88 37 - -
Prepayments and other receivables 132 29 128 18
----------------------------------- --------- --------- --------- ---------
227 80 725 241
----------------------------------- --------- --------- --------- ---------
Trade and other receivables are non-derivative financial assets
with fixed or determinable payments that are not quoted in an
active market. They are classified as 'trade and other receivables'
in the statement of financial position and are included in current
assets, except for maturities greater than 12 months after the
statement of financial position date. These are classified as
non-current assets. The value of trade receivables shown above, in
addition to the value of cash balances on deposit with
counterparties (see Note 16), represents the Company's maximum
exposure to credit risk. No collateral is held as security.
Prepayments include GBP120,000 (2021: GBPnil) for a Put Option
that was acquired during the year and paid in cash. See Note 11 for
further details.
Amounts due from subsidiary undertakings at 31 December 2022
represented net amounts provided to the Company's wholly owned
subsidiary, Cizzle Biotechnology Limited.
The fair value of trade and other receivables approximate to the
net book values stated above.
As of 31 December 2022, trade and other receivables of GBPNil
(2021: GBPNil) were impaired.
13 Cash and cash equivalents
Group Group Company Company
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- --------- --------- --------- ---------
Cash on hand and balances with
banks 478 875 464 848
478 875 464 848
-------------------------------- --------- --------- --------- ---------
14 Share capital
Numbers in 000s
New Deferred Deferred
Ordinary 'A' shares 'A' shares
Shares
Nominal value per share 0.01p 0.01p 0.99p
At 1 January 2022 253,448 225,158 12,383,626
Issued 86,356 - -
---------------------------- ---------------- -------------- ----------------
At 31 December 2022 339,804 225,158 12,383,626
---------------------------- ---------------- -------------- ----------------
The above table reflects the full authorised shares of the
Company at 31 December 2022. In addition to this the directors had
authorised the issue of 7,371,557 new ordinary shares of 0.01p each
but these shares were not issued until 5 January 2023 when they had
been approved by the London Stock Exchange for issue.
The following table reconciles the
total nominal value of the shares
in issue:
New Deferred
Ordinary GBP0.01p Deferred
shares 'A' shares 'A' shares
Nominal value per share 0.01p 0.01p 0.99p Total
GBP000 GBP'000 GBP000 GBP000
At 1 January 2022 26 1,238 2,229 3,493
Issued during the year 9 - - 9
At 31 December 2022 35 1,238 2,229 3,502
-------------------------------------- ---------- ------------ ------------ ----------
During the year ended 31 December 2022, the following shares
were issued:
No of shares Issue price
issued per share
000s Pence
------------------------------------------------- ------------- ------------
17 Feb 2022 - Acquisition of AZD1656 Intangible
Asset 25,000 4.0p
26 Sept 2022 -Placing (cash) 35,667 1.5p
29 Sept 2022 - balance of acquisition of
AZD1656 Intangible asset 22,000 4.0p
29 Sept 2022 - exercise of share options 3,689 1.53393p
Total issued 86,356
-------------
On 14 May 2021 the Company issued investor warrants to subscribe
for 11,000,000 Ordinary Shares at a fixed price of 15p per share
valid for three years until 13 May 2024.
On 14 May 2021 the Company issued broker and adviser warrants to
subscribe for 1,350,000 Ordinary Shares at a fixed price of 10p per
share valid for three years until 13 May 2024. 250,000 of these
broker warrants are automatically exercisable upon the Company's
share price equalling 20p per share. The fair value of these
warrants at 31 December 2021 was GBP36,000 and has been accounted
for as a cost to the Company and a reduction of the share premium
account ( see statement of changes in equity on pages 42 to
43).
Employee share scheme
The Company has an Executive Share Option Scheme.
The exercise terms of all granted options as at 31 December 2022
are summarised below:
Date of grant Number of Exercise Exercise
options price (pence dates from
per share)
--------------- ------------ -------------- -----------------------------
2015 300 5.02 2017
2016 800 1.85 2017
2017 500 1.00 2018
2021 3,689,096 1.53 2021
2021 19,741,345 10.00 2021 (based on performance)
--------------- ------------ -------------- -----------------------------
The number and weighted average exercise price of the options
that were exercisable at 31 December 2022 were 19,741,345 and 10.0p
respectively.
Movements in the number of share options outstanding and their
related weighted average exercise prices are as follows:
Average
exercise Options
price
(pence per number
share)
----------------------- ----------- ------------
At 31 December 2021 8.67 23,432,041
Exercised during year 1.53 (3,689,096)
At 31 December 2022 10.00 19,742,945
----------------------- ----------- ------------
Share options outstanding at the end of the year have the
following expiry dates and exercise prices:
Exercise Options
Expiry date price 2022
(pence per
share)
--------------- ------------ -----------
2025 5.02 300
2026 1.85 800
2027 1.00 500
2031 10.00 19,741,345
--------------- ------------ -----------
19,742,945
--------------- ------------ -----------
The Company determines the fair value of its share option
contracts on the grant date, adjusts this to reflect its
expectation of the options that will ultimately vest, and then
expenses the calculated balance on a straight-line basis through
its statement of comprehensive income over the expected vesting
period with a corresponding credit to its share option reserve.
Subsequent changes to the expectation of number of options that
will ultimately vest are dealt with prospectively such that the
cumulative amount charged to the statement of comprehensive income
is consistent with latest expectations. Subsequent changes in
market conditions do not impact the amount charged to the statement
of comprehensive income.
The Company determines the fair value of its share option
contracts using a model based on the Black-Scholes-Merton
methodology. In determining the fair value of its share option
contracts, the Company made the following assumptions (ranges are
provided where values differ across tranches). Expected volatility
was determined by reference to historical volatility of the
Company's share price.
Grant Share Exercise Expected Expected Risk Fair
date Price Price Option Expected Dividend free Value
Pence Pence Life Volatility Yield Interest At date
Years % % Rate of
% Grant
Pence
2021 9.38p 1.53p 10 years 68% 0% 0.83% 1.60p
------- --------- --------- ------------- ---------- ---------- ---------
2021 4.40p 10.00p 10 years 32% 0% 0.83% 3.00p
------- --------- --------- ------------- ---------- ---------- ---------
15 Trade and other payables
Group Group Company Company
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- --------- --------- --------- ---------
Trade payables 41 111 40 73
Social security and other taxes 8 43 8 6
Accruals and other payables 96 64 78 54
--------------------------------- --------- --------- --------- ---------
145 218 126 133
--------------------------------- --------- --------- --------- ---------
Group Group Company Company
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- --------- --------- --------- ---------
Due or due in less than one
month 16 75 15 37
Due between one and three months 25 4 25 4
Due in more than three months - 32 - 32
41 111 40 73
---------------------------------- --------- --------- --------- ---------
16 Financial assets and liabilities
The tables below analyse the carrying value of financial assets
and financial liabilities in the Group's and Company's statements
of financial position. Further information on the classes that make
up each category is provided in the notes indicated. The carrying
value of each category is considered a reasonable approximation of
its fair value. All amounts are due within one year.
Group Group Company Company
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- --------- --------- --------- ---------
Trade receivables (Note 12) - - - -
Amounts due from subsidiaries
(Note 12) - - 590 216
Prepayments and other receivables
(Note 12) 132 29 128 18
Cash and cash equivalents (Note
13) 478 875 464 848
----------------------------------- --------- --------- --------- ---------
Financial assets at amortised
cost 610 904 1,182 1,082
----------------------------------- --------- --------- --------- ---------
Group Group Company Company
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ --------- --------- --------- ---------
Trade payables (Note 15) 41 111 40 73
Accruals and other payables
(Note 15) 96 64 78 54
Borrowings (Note 16) - - - -
------------------------------------ --------- --------- --------- ---------
Financial liabilities at amortised
cost 137 175 118 127
------------------------------------ --------- --------- --------- ---------
17 Deferred income tax
There is an un-provided deferred tax asset arising on taxable
losses of GBP0.64m (2021: GBP0.47m). In accordance with accounting
standards, the deferred tax asset has not been recognised in the
financial statements due to uncertainty over the availability of
sufficient future profits against which it could be recovered.
At 31 December 2022 there was no deferred tax liability (2021:
GBPNil).
18 Commitments
The Group has no commitments as at 31 December 2022 (2021:
GBPNil).
19 Related party transactions
Transactions with directors
At 31 December 2022 there was a balance owed to the Company by
Professor Dawn Coverley, a director of the Company, of GBP680 in
respect of PAYE/NI arising on the exercise of share options. This
amount was fully settled in January 2023. The maximum liability
owed to the Company during the year was GBP2,582.
20 Controlling party
The directors consider there to be no ultimate controlling
party.
21 Capital management
In managing its capital structure, the Company's objective is to
safeguard the Company's ability to continue as a going concern,
managing cash flows so that it can continue to provide returns for
shareholders.
The Company makes adjustments to its capital structure in the
light of changes in economic conditions and the requirements of the
Company's businesses. The Board has sought to maintain low levels
of borrowing to reflect the development stage of the Company's
businesses. Over time as the Company's businesses mature and become
profitable the Board is likely to make increased use of borrowing
facilities to fund working capital. In order to maintain or adjust
the capital structure, the Company may issue new shares or seek
additional borrowing facilities. The Company monitors capital on
several bases including the debt to equity ratio. This ratio is
calculated as debt ÷ equity. Debt is calculated as total borrowings
as shown in the consolidated statement of financial position.
Equity comprises all components of equity as shown in the
consolidated statement of financial position. The debt-to-equity
ratio at 31 December 2022 and 31 December 2021 was as follows:
Group Group Company Company
2022 2021 2022 2021
GBP'000 GBP'000 GBP'000 GBP'000
---------------------- --------- --------- --------- ---------
Total debt - - - -
Total equity 2,640 937 24,947 22,959
Debt-to-equity ratio 0.0% 0.0% 0.0% 0.0%
---------------------- --------- --------- --------- ---------
22 Reserves
The following reserves describe the nature and purpose of each
reserve within equity:
a. Capital reduction reserve
The capital reduction reserve set out in the Statement of
Changes in Equity arose in 2014 when the nominal value of each
share was reduced from 10p to 1p.
b. Share premium
The amount subscribed for each share in excess of nominal
value.
c. Reverse acquisition reserve
The reverse acquisition reserve is explained in Note 3.
d. Share option
The accumulated expense arising during their vesting period of
share options granted to directors and employees and warrants
granted to third parties.
e. Accumulated losses
All other net losses and gains not recognised elsewhere.
23 Subsequent events
a) Issue of equity
On 5 January 2023 the Company issued 7,371,557 ordinary shares
of 0.01p each for a price of 1.6p per share to fund the purchase of
a Put Option to dispose of AZD1656 assets referred to in Note 11.
At 31 December 2022 the Company had received GBP115,000 ( net of
share issue costs) in relation to this share issue (gross proceeds:
GBP118,000).
b) Issue of options in lieu of salary increases
In conducting a review of director remuneration, the Company's
remuneration committee was of the view that the Company's
directors' salaries are currently below market comparables.
However, even in a period of high inflation, the directors remain
fully committed to maintaining low overheads and maximising the
funds available to the Company for the development of its CIZ1B
early lung cancer test.
The directors have therefore agreed to waive any increase in
basic salary for a period of two years from 3 March 2023. In
compensation, and subject to shareholder approval at the next
Annual General Meeting of the Company, the Company has
conditionally granted share options over new ordinary shares in the
Company (the "Options") to the directors, with an exercise price
equivalent to the volume weighted average price of the Company's
ordinary shares for the month of February 2023 at 2.19376p per
share. 50% of the Options will vest and become exercisable after
the 12-month anniversary of grant; the remaining 50% shall vest and
become exercisable on the 24-month anniversary of grant. The
Options will have a 10 year life from the date of grant and are
subject to good and bad leaver provisions. The Options are
unapproved for the purposes of the enterprise management incentive
and have been granted outside of, and in addition to, grants made
under the Company's existing share option schemes. Following the
grant of the Options, the total number of ordinary shares under
option is 48,685,443 ordinary shares representing 14.02% of the
Company's current issued ordinary share capital.
The Options have been granted to the directors as follows:
Director Number of Existing options Total number Total number
Options held of options of options
granted now held now held as
% of current
issued share
capital
Allan Syms 8,868,096 5,068,956 13,937,052 4.01%
---------- ----------------- ------------- --------------
Nigel Lee 6,224,233 2,000,000 8,224,233 2.37%
---------- ----------------- ------------- --------------
Dawn Coverley 7,614,540 12,672,389 20,286,929 5.84%
---------- ----------------- ------------- --------------
John Treacy 6,235,629 - 6,235,629 1.80%
---------- ----------------- ------------- --------------
c) Research and development contract
On 24 April 2023 the Group announced a further extension of its
research and development contract with the University of York until
25 September 2024.
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END
FR SESFWMEDSEIL
(END) Dow Jones Newswires
April 27, 2023 02:00 ET (06:00 GMT)
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