Cambridge, UK and Indianapolis, US - 6 November 2018: Acacia Pharma Group plc ("Acacia Pharma", the "Company" or the "Group"), (EURONEXT: ACPH) announces its unaudited results for the nine months to 30 September 2018 to provide an update on current trading and its cash position.
As announced earlier today, the Group has resubmitted its New Drug Application for BARHEMSYS(TM) to the US Food and Drug Administration (FDA). FDA will classify the resubmission as either Class 1 or Class 2. The Group remains on track with its launch readiness plans and continues to expect to be ready to launch BARHEMSYS in H1 2019. Activities have been scheduled such that the Group can be launch-ready, with the timing of expenditure capable of being flexed to meet results of the decision around the FDA's classification of the NDA resubmission.
Cash and cash equivalents as at 30 September 2018 were £33.8 million (30 June 2018: £35.7 million) slightly ahead of expectations at the time of the Company's IPO in March 2018.
Contacts
| Acacia Pharma Group plc Julian Gilbert, CEO Christine Soden, CFO IR@acaciapharma.com | +44 1223 919760 |
| Citigate Dewe Rogerson Mark Swallow, Shabnam Bashir, David Dible acaciapharma@citigatedewerogerson.com | +44 20 7638 9571 |
Acacia Pharma is based in Cambridge, UK and its US operations are centred in Indianapolis, IN. The Company is listed on the Euronext Brussels exchange under the under ISIN code GB00BYWF9Y76 and ticker symbol ACPH. www.acaciapharma.com
Forward looking statements
This announcement includes forward-looking statements, which are based on current expectations and projections about future events. These statements may include, without limitation, any statements preceded by, followed by or including words such as "believe", "expect", "intend", "may", "plan", "will", "should", "could" and other words and terms of similar meaning or the negative thereof. Forward-looking statements may and often do differ materially from actual results. These forward-looking statements are subject to risks, uncertainties and assumptions about the Company and its subsidiaries and investments, including, among other things, the development of its business, trends in its operating industry, and future capital expenditures and acquisitions. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Any forward-looking statements reflect the Company's current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Group's business, results of operations, financial position, prospectus, growth or strategies and the industry in which it operates. Save as required by law or applicable regulation, the Company and its affiliates expressly disclaim any obligation or undertaking to update, review or revise any forward-looking statement contained in this announcement whether as a result of new information, future developments or otherwise. Forward-looking statements speak only as of the date they are made.
Consolidated Statement of Comprehensive Income
| Note | 9 months ended 30 Sep 2018 Unaudited £'000 | 9 months ended 30 Sep 2017 Unaudited £'000 | ||||||
| Continuing operations: | ||||||||
| Research & development expenses | (2,220) | (976) | ||||||
| Sales & marketing expenses | (3,336) | (562) | ||||||
| General & administrative expenses | (3,409) | (531) | ||||||
| ------ | ------ | |||||||
| Operating loss | (8,965) | (2,069) | ||||||
| Finance income | 2 | 128 | - | |||||
| Finance expense | 3 | (1,477) | (2,312) | |||||
| ------ | ------ | |||||||
| Loss before income tax | (10,314) | (4,381) | ||||||
| Taxation credit | 4 | 334 | 242 | |||||
| ------ | ------ | |||||||
| Loss and total comprehensive loss for the period | (9,980) | (4,139) | ||||||
| ------ | ------ | |||||||
| Basic and diluted losses per Ordinary Share | 5 | (24.2)p | (155.3)p | |||||
Consolidated Statement of Financial Position
| Note | 30 Sep 2018 Unaudited £'000 | 30 June 2018 Unaudited £'000 | 31 December 2017 Audited £'000 | ||||||||||||
| Assets | |||||||||||||||
| Current Assets | |||||||||||||||
| Other receivables | 169 | 95 | 154 | ||||||||||||
| Current income tax assets | 360 | 563 | 349 | ||||||||||||
| Cash and cash equivalents | 6 | 33,783 | 35,714 | 3,070 | |||||||||||
| ------ | ------ | ------ | |||||||||||||
| Total Current Assets | 34,312 | 36,372 | 3,573 | ||||||||||||
| ------ | ------ | ------ | |||||||||||||
| Total Assets | 34,312 | 36,372 | 3,573 | ||||||||||||
| ------ | ------ | ------ | |||||||||||||
| Equity and Liabilities | |||||||||||||||
| Equity attributable to equity holders | |||||||||||||||
| Share capital | 7 | 1,063 | 1,063 | 701 | |||||||||||
| Share premium | 54,783 | 54,783 | 4,513 | ||||||||||||
| Profit and loss account | 36,933 | 41,198 | 45,886 | ||||||||||||
| Share-based payments reserve | 686 | 506 | 253 | ||||||||||||
| Merger reserve | (69,136) | (69,136) | (69,136) | ||||||||||||
| ------ | ------ | ------ | |||||||||||||
| Total Equity | 24,329 | 28,414 | (17,783) | ||||||||||||
| ------ | ------ | ------ | |||||||||||||
| Liabilities | |||||||||||||||
| Non-current liabilities | |||||||||||||||
| Term loans, amounts payable after one year | 8 | 6,998 | 6,699 | - | |||||||||||
| ------ | ------ | ------ | |||||||||||||
| 6,998 | 6,699 | - | |||||||||||||
| ------ | ------ | ------ | |||||||||||||
| Current liabilities | |||||||||||||||
| Trade and other payables | 2,594 | 868 | 1,000 | ||||||||||||
| Liability component of convertible shares | - | - | 11,140 | ||||||||||||
| Term loans, amounts payable within one year | 8 | 391 | 391 | 5,185 | |||||||||||
| Convertible loan notes | - | - | 4,031 | ||||||||||||
| ------ | ------ | ------ | |||||||||||||
| 2,985 | 1,259 | 21,356 | |||||||||||||
| ------ | ------ | ------ | |||||||||||||
| Total Liabilities | 9,983 | 7,958 | 21,356 | ||||||||||||
| ------ | ------ | ------ | |||||||||||||
| Total Equity and Liabilities | 34,312 | 36,372 | 3,573 | ||||||||||||
| ______ | ______ | _______ | |||||||||||||
Consolidated Cash Flow Statement
| Note | 9 months ended 30 September 2018 Unaudited £'000 | 9 months ended 30 September 2017 Unaudited £'000 | ||||||||||
| Cash flows from operating activities: | ||||||||||||
| Cash used in operations | 9 | (6,526) | (5,994) | |||||||||
| Income tax credit received | 323 | 2,793 | ||||||||||
| ------ | ------ | |||||||||||
| Net cash used in operating activities | (6,203) | (3,201) | ||||||||||
| ------ | ------ | |||||||||||
| Cash flows from investing activities: | ||||||||||||
| Interest received | 3 | 128 | - | |||||||||
| ------ | ------ | |||||||||||
| Net cash generated from investing activities | 128 | - | ||||||||||
| ------ | ------ | |||||||||||
| Cash flows from financing activities: | ||||||||||||
| Proceeds of issuance of Ordinary Shares | 7 | 35,752 | - | |||||||||
| Issue costs of Ordinary Shares | 7 | (1,652) | - | |||||||||
| Amounts borrowed under term loan | 8 | 7,671 | ||||||||||
| Payment of transaction costs on term loan | 8 | (494) | - | |||||||||
| Amounts repaid under term loan | 8 | (4,500) | (1,750) | |||||||||
| Interest and fees paid on loan | (1,015) | (293) | ||||||||||
| ------ | ------ | |||||||||||
| Net cash flows from financing activities | 35,762 | (2,043) | ||||||||||
| ------ | ------ | |||||||||||
| Effect of exchange rate movements on cash held | 1,026 | (34) | ||||||||||
| ------ | ------ | |||||||||||
| Net increase/(decrease) in cash and cash equivalents | 30,713 | (5,278) | ||||||||||
| Cash and cash equivalents at beginning of the period | 3,070 | 6,884 | ||||||||||
| ------ | ------ | |||||||||||
| Cash and cash equivalents at end of the period | 33,783 | 1,606 | ||||||||||
| ------ | ------ | |||||||||||
Consolidated Statement of Changes in Equity
For the 9 months ended 30 September 2018
| Issued Share Capital | Share Premium | Profit and loss account | Merger reserve | Share based payments reserve | Total Equity | |||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |||
| Balance at 1 January 2018 | 701 | 4,513 | 45,886 | (69,136) | 253 | (17,783) | ||
| Comprehensive expense | ||||||||
| Issue of Ordinary Shares | 362 | 51,922 | - | - | - | 52,284 | ||
| Costs of issue of Ordinary Shares | (1,652) | - | - | - | (1,652) | |||
| Total comprehensive expense for the 9 month period | - | - | (9,980) | - | - | (9,980) | ||
| Exchange differences | 1,027 | 1,027 | ||||||
| Transactions with Owners | ||||||||
| Share based payments charge | - | - | - | - | 433 | 433 | ||
| ------ | ------ | ------ | ------ | ------ | ------ | |||
| Balance at 30 September 2018 | 1,063 | 54,783 | 36,933 | (69,136) | 686 | 24,329 | ||
| ------ | ------ | ------ | ------ | ------ | ------ | |||
| Issued Share Capital | Share Premium | Profit and loss account | Merger reserve | Share based payments reserve | Total Equity | |||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |||
| Balance at 1 January 2017 | 701 | 4,513 | 52,041 | (69,136) | 144 | (11,737) | ||
| Comprehensive expense | ||||||||
| Total comprehensive expense for the 9 month period | - | - | (4,139) | - | - | (4,139) | ||
| Transactions with Owners | ||||||||
| Share based payments charge | - | - | - | - | 75 | 75 | ||
| ------ | ------ | ------ | ------ | ------ | ------ | |||
| Balance at 30 September 2017 | 701 | 4,513 | 47,902 | (69,136) | 219 | (15,801) | ||
| ------ | ------ | ------ | ------ | ------ | ------ | |||
Notes to the Financial Statements
Basis of preparation
General information
Acacia Pharma Group plc is a public limited company incorporated and domiciled in England and Wales with registered number 09759376. The Company's registered office is The Officers' Mess, Royston Road, Duxford, Cambridge, CB22 4QH.
The principal activity of the Company and its subsidiaries (together "the Group") is that of a pharmaceutical group which develops and commercialises lower risk pharmaceutical product opportunities within its therapeutic areas of interest.
Statement of compliance
These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. They do not contain all of the information which International Financial Reporting Standards ("IFRS") would require for a complete set of annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2017.
These condensed unaudited consolidated interim financial statements were approved by the Board of Directors on 5th November 2018.
Comparative financial information
The comparative figures for the financial year ended 31 December 2017 do not constitute the Group's statutory accounts for that financial year. Statutory accounts for the year ended 31 December 2017, prepared in accordance with International Financial Reporting Standards as adopted by the EU ("Adopted IFRSs") and as issued by the International Accounting Standards Board, have been reported on by the Group's auditor and delivered to the Registrar of Companies. The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.
Having identified an arithmetical error in the unaudited results for the six months ended 30 June 2018 as released on 7 September 2018 impacting the consolidated statement of financial position and consolidated statement of changes in equity, corrections have been made in the statement on page 3 hereof.
Accounting policies
The accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements for the year ended 31 December 2017.
IFRS 15 'Revenue from contracts with customers', was issued by the IASB in May 2014 and has been implemented by the Group from 1 January 2018. The Standard contains a new set of principles on when and how to recognise and measure revenue as well as new requirements related to disclosures. The impact of adoption is immaterial.
IFRS 9 'Financial instruments' was issued by the IASB in July 2014, and has been implemented by the Group from 1 January 2018. The impact of adoption is immaterial.
IFRS 16 'Leases' was issued by the IASB in January 2016, and will be implemented by the Group from 1 January 2019.
IFRIC 23 'Uncertainty over income tax treatments' was issued by the IASB in July 2017 and will be implemented by the Group from 1 January 2019.
The Directors do not anticipate that the adoption of the Standards, Amendments and Interpretations where relevant, in future years will have a material impact on the Group's Financial Statements.
Going concern
The financial statements have been prepared on a going concern basis, which assumes that the Group and Company will be able to meet their liabilities as they fall due for the foreseeable future.
The directors believe that, based on existing cash and debt facilities and on their current forecasts and plans for raising additional debt or equity financing, the Group and Company will have sufficient funds to meet their cash requirements for at least the next 12 months. However, there is no guarantee that attempts to raise additional financing will be successful.
Whilst there is a material uncertainty in relation to the outcome of the matters described above which, if not resolved, may give rise to significant doubts to the going concern basis, the directors have fully considered the relevant issues and are confident that it is appropriate to prepare these financial statements on the going concern basis under the historical cost convention and the accounting policies set out below and in accordance with Companies Act 2006 and applicable International Financial Reporting Standards as adopted by the EU. These financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern.
2. Finance income
| 9 months ended 30 Sep | ||||
| 2018 Unaudited | 2017 Unaudited | |||
| £'000 | £'000 | |||
| Deposit account interest | 128 | - | ||
| ----- | ----- | |||
3. Finance expense
| 9 months ended 30 Sep | |||
| 2018 Unaudited | 2017 Unaudited | ||
| £'000 | £'000 | ||
| Finance charge on preferred shares | 209 | 1,474 | |
| Finance charges on term loans | 514 | 823 | |
| Finance charge on convertible loan | 1,152 | - | |
| Realised exchange differences | (398) | 15 | |
| ----- | ----- | ||
| 1,477 | 2,312 | ||
| ----- | ----- | ||
4. Taxation
| | |||
| 9 months ended 30 Sep | |||
| 2018 Unaudited | 2017 Unaudited | ||
| £'000 | £'000 | ||
| United Kingdom corporation tax | 360 | 242 | |
| Adjustment relating to prior period | (26) | - | |
| ----- | ----- | ||
| 334 | 242 | ||
| ----- | ----- | ||
The Group is entitled to claim tax credits in the United Kingdom for certain research and development expenditure. The amount included in the financial information represents the credit receivable by the Group for the period.
There is no current tax charge in the period as the Group has losses brought forward and is entitled to a cash tax credit in the United Kingdom for certain research and development expenditure. The unrecognised deferred tax assets relating to operating losses have not been recognised due to the uncertainty over the utilisation of the losses.
5. Losses per share
Basic and diluted losses per share is calculated by dividing the loss for the financial year/period by the weighted average number of Ordinary Shares in issue during the year. The losses and weighted average number of shares used in the calculations are set out below:
| 9 months ended 30 September | ||
| 2018 Unaudited | 2017 Unaudited | |
| £'000 | £'000 | |
| Losses per Ordinary Share | ||
| Loss for the financial period (£000) | (9,980) | (4,139) |
| Weighted average number of Ordinary Shares (basic) (thousands) | 41,207 | 2,665 |
| Losses per Ordinary Share basic (pence) | 24.2 | 155.3 |
Share option and convertible instruments are anti-dilutive in each period for the purposes of the losses per share calculation and their effect is therefore not considered.
For the avoidance of doubt, this calculation is based on Ordinary Shares only. Other classes of shares, along with preference shares have been excluded in this calculation.
6. Cash and cash equivalents
The Group retains all cash on instant access accounts in Sterling, Euros and US dollars.
| As at 30 September 2018 | As at 30 June 2018 | As at 31 December 2017 | ||
| £'000 | £'000 | £'000 | ||
| Sterling accounts | 266 | 862 | 2,876 | |
| Euro accounts | 344 | 367 | 3 | |
| Dollar accounts | 33,173 | 34,485 | 191 | |
| ------ | ------ | ------ | ||
| 33,783 | 35,714 | 3,070 | ||
| ------ | ------ | ------ |
7. Share capital
On 6 March 2018 the Company completed a Global Offer and was admitted to trading on Euronext Brussels. Immediately before the completion of the Global Offer, all of the existing S ordinary, A ordinary, B preferred, C preferred and D preferred shares were converted into Ordinary Shares on a one-for-one basis. In addition, Ordinary Shares were issued upon the conversion of the Convertible Loan Notes and in settlement of the accrued finance charges on the A, B, C and D shares and the loan notes. The P shares were converted into 270 Ordinary shares. Upon the completion of the Global Offer, 11,111,111 Ordinary Shares were issued for cash at €3.60 per share, raising gross proceeds of €40 million or £35,714k. Costs directly associated with the issue of shares of £1,652k were incurred. On 29 June 200,000 shares were issued upon the exercise of share options, resulting in proceeds of £38k.
| | Number of Shares | £'000 | |||
| Ordinary shares at 1 January 2018 | 2,664,662 | 53 | |||
| Issue of Ordinary Shares in settlement of liabilities and anti-dilution and preference rights on A, B, C & D shares | 5,171,495 | 103 | |||
| Conversion of S, A, B, C & D shares to Ordinary shares | 32,337,899 | 647 | |||
| Issue of Ordinary Shares to holders of P shares on consolidation and conversion | 270 | - | |||
| Issue of Ordinary Shares on conversion of loan notes | 1,633,624 | 33 | |||
| Issue of Ordinary Shares for cash | 11,111,111 | 222 | |||
| Issue of Ordinary Shares upon exercise of share options | 200,000 | 5 | |||
| ________ | ____ | ||||
| Ordinary shares of £0.02 in issue at period end | 53,119,061 | 1,063 | |||
| ________ | ____ | ||||
8. Term Loans and Convertible Loan Notes
| As at 30 September 2018 | As at 30 June 2018 | As at 31 December 2017 | |||
| £'000 | £'000 | £'000 | |||
| Term bank loan, amounts repayable within 12 months | 391 | 391 | 5,185 | ||
| Convertible loan notes | - | - | 4,031 | ||
| ------ | ------ | ------ | |||
| 391 | 391 | 9,216 | |||
| Term bank loan, amounts repayable after 12 months | 6,998 | 6,699 | - | ||
| ------ | ------ | ------ | |||
| 7,389 | 7,090 | 9,216 | |||
| ------ | ------ | ------ | |||
| | |||||
The term bank loan with Silicon Valley Bank was repaid in full on 27 June 2018.
A new term loan facility with Hercules Capital was drawn on 29 June 2018. The initial tranche drawn was $10 million (£7,671k) and costs of $645k (£494k) were incurred. The loan bears interest at 9.5%, bears a final payment charge of 3.95% of the principal and is interest only until January 2020. Thereafter the principal and interest on the loan will be repayable in 25 equal instalments. Warrants over 201,330 Ordinary Shares, exerciseable at €3.22 per share, were issued to Hercules Capital as part of the terms of the loan facility.
9. Cash provided by operating activities
| 9 months ended 30 Sep | ||||||||||
| 2018 Unaudited | 2017 Unaudited | |||||||||
| £'000 | £'000 | |||||||||
| Operating loss | (8,965) | (2,069) | ||||||||
| Share-based payments charges | 433 | 75 | ||||||||
| Decrease in other receivables | 15 | 396 | ||||||||
| Increase/(decrease) in trade and other payables | 1,594 | (4,396) | ||||||||
| Realised exchange differences | 397 | - | ||||||||
| ----- | ----- | |||||||||
| (6,526) | (5,994) | |||||||||
| ----- | ----- | |||||||||
10. Principal risks and uncertainties
We have considered the principal risks and uncertainties faced by the Group for the remaining six months of the year and do not consider them to have changed from those set out on pages 3, 34 and 35 of the Acacia Pharma Group plc 2017 Annual Report and Accounts, available from the Group's website at www.acaciapharma.com.
11. Capital and other commitments
The Group has committed to certain expenditure in respect of the development of a new 10mg presentation of BARHEMSYS and in respect of the manufacture of finished product. The commitments amount to €745k in 2018 and €2,634k in 2019.
On 23 August 2018 Acacia Pharma Inc entered into a lease on office premises commencing 1 October 2018 with a term of 5 years and two months, the first two months being rent-free. The annual rent for the following twelve months is $112k.
Shareholder information
Financial calendar
Announcement of annual results for year ending 31 December 2019 Feb 2019
Shareholder change of address
The Company offers the facility, in conjunction with Equiniti, our Registrars, to conduct a number of routine matters via the web including the ability to notify any change of address. If you are a shareholder and are either unable or would prefer not to use this facility, please do not send the notification to the Company's registered office. Please write direct to Equiniti, at their address shown below, where the register is held.
Relating to beneficial owners of shares with 'information rights'
Please note that beneficial owners of shares who have been nominated by the registered holder of those shares to receive information rights under section 146 of the Companies Act 2006 are required to direct all communications to the registered holder of their shares rather than to the Company's registrar, Equiniti, or to the Company directly.
Addresses for correspondence
Registered office and head office
Acacia Pharma Group plc, The Officers' Mess, Royston Road, Cambridge CB22 4QH
Tel: +44 (0)1223 919760 Email: info@acaciapharma.com
Website: www.acaciapharma.com: Registered number 09759376
Registrars
Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex BN99 8LU
Cautionary statement regarding forward-looking statements
This document contains certain projections and other forward-looking statements with respect to the financial condition, results of operations, businesses and prospects of Acacia Pharma Group plc ("Acacia Pharma"). These statements are based on current expectations and involve risk and uncertainty because they relate to events and depend upon circumstances that may or may not occur in the future. There are a number of factors which could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements. Any of the assumptions underlying these forward-looking statements could prove inaccurate or incorrect and therefore any results contemplated in the forward-looking statements may not actually be achieved. Nothing contained in this document should be construed as a profit forecast or profit estimate. Investors or other recipients are cautioned not to place undue reliance on any forward-looking statements contained herein. Acacia Pharma undertakes no obligation to update or revise (publicly or otherwise) any forward-looking statement, whether as a result of new information, future events or other circumstances.
The Acacia Pharma logo and BARHEMSYS are registered trademarks of Acacia Pharma Limited.
