TIDMMTFB
RNS Number : 5301X
Motif Bio PLC
01 September 2020
Motif Bio plc
("Motif Bio" or the "Company")
Final Results
Motif Bio plc (AIM: MTFB) announces its final results for the
year ended 31 December 2019.
Posting of Annual Report & Notice of AGM
Motif Bio confirms that the Annual Report and Accounts, Notice
of Annual General Meeting ('AGM') and Proxy Form will be posted to
shareholders today, with both available for download from the
Company's website at www.motifbio.com
The Company's AGM is to be held at 11am BST on 30 September 2020
at 201 Temple Chambers, 3-7 Temple Avenue, London, EC4Y 0DT, United
Kingdom.
The health of our shareholders, employees and stakeholders is
extremely important to us and, accordingly, in light of the
Covid-19 pandemic, the Board has arranged for a quorum to be
present at the Meeting and no other shareholders, advisers or other
guests will be allowed to attend the Meeting in person. Anyone
seeking to attend the Meeting who has not been specifically invited
by the Board for the purposes of forming a quorum will be refused
entry.
Shareholders are requested to therefore submit their votes, in
respect of the business to be discussed, via proxy as early as
possible. Shareholders should appoint the Chair of the Meeting as
their proxy. If a shareholder appoints someone else as their proxy,
that proxy will not be able to attend the Meeting in person or cast
the shareholder's vote.
Shareholders can return their proxy vote by post, online or (for
CREST members) through CREST.
Notice of Interim Results
The Company expect to release its Interim Results, for the six
months ended 30 June 2020 no later than end of October 2020.
Bruce Williams, Chairman of Motif Bio, said: "On behalf of the
Board I wish to express our appreciation for the valued support and
patience of Motif's various stakeholders as we endeavor to execute
a reverse takeover to generate long term shareholder value."
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) 596/2014.
For further information please contact:
Motif Bio plc ir@motifbio.com
Jonathan Gold (President and Chief
Business Officer)
SP Angel Corporate Finance LLP (NOMAD
& BROKER) +44 (0) 20 3470 0470
David Hignell/Caroline Rowe (Corporate
Finance)
Vadim Alexandre/Abigail Wayne (Sales
& Broking)
Walbrook PR Ltd. (UK FINANCIAL PR
& IR) +44 (0) 20 7933 8780
Paul McManus/ Lianne Cawthorne motifbio@walbrookpr.com
Forward-Looking Statements
When used in this Press Release, the words or phrases "intends,"
"anticipates," "expected to be" or similar expressions are intended
to identify "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements
are subject to certain risks and uncertainties including, but not
limited to, changes in economic conditions in the Company's market
area, changes in policies by regulatory agencies, fluctuations in
interest rates, competition that could cause actual results to
differ materially from historical earnings and those presently
anticipated or projected, and other risks described in the
Company's filings with the Securities and Exchange Commission. The
Company cautions readers not to place undue reliance on any such
forward-looking statements, which speak only as of the date made.
The Company advises readers that the factors listed above could
affect the Company's financial performance and could cause the
Company's actual results for future periods to differ materially
from any opinions or statements expressed with respect to future
periods in any current statements. The Company does not undertake,
and specifically disclaims any obligation, to publicly release the
result of any revision which may be made to any forward-looking
statements to reflect events or circumstances after the date of
such statements or to reflect the occurrence of anticipated or
unanticipated events.
Chairman ' s Statement
2019 wa s a challenging year for Motif Bio plc and its
wholly-owned operating subsidiary Motif BioSciences, Inc.
(collectively, the ' Group ' ). I n the face of a challenging
commercial market for approved anti biotics, t he capital markets
were not willing to support the significant costs of generating
additional data to advance iclaprim to approval and with the
additional complication s of having senior debt that coul d not be
serviced under its original terms, the Group determined that the
best way to deliver value for shareholders was to undertake a
restructuring.
In November 2019, shareholders approved the restructuring, which
was designed to provide value to shareholders if the iclaprim asset
is monetised at a value above the funds owed to the Group's senior
lender. Further, the restructuring led to the discontinuance of
operations of Motif BioSciences, Inc. and released the Company from
obligations under the subsidiary's loan agreement. The
restructuring led the Company to be classified as an AIM Rule 15
Cash Shell and to explore the potential of a Reverse Takeover
('RTO') Transaction. The Board has been actively exploring RTO
transactions and engaging with potential RTO candidates. The Board
is continuing to work towards completing an RTO transaction before
January 2021, when the Company's shares will be de-listed absent an
RTO or other qualifying transaction.
On behalf of the Board I wish to express our appreciation for
the valued support and patience of Motif's various stakeholders as
we endeavor to secure a suitable RTO to generate long term
shareholder value. In addition, I would like to express my
appreciation for the dedicated Motif team and to my fellow current
and former Board members for their support.
Bruce Williams
Chairman
1 September 2020
Strategic Report
The Directors present their Strategic Report for the year ended
31 December 2019.
In 2019, the strategy for the Group changed as a result of an
unfavorable regulatory outcome with the Group's antibiotic product
candidate, iclaprim, along with challenging equity capital markets
for companies with antibiotic products. In 2019 and early 2020, a
number of the Company's larger peer companies filed for Bankruptcy
including Achaogen (formerly NASDAQ: AKAO), Aradigm (formerly
NASDAQ: ARDM), and Melinta (formerly NASADAQ: MLTA). On the back of
iclaprim's regulatory setback in Q1 2019, and in the face of the
regulatory and capital market challenges for Motif and its peers,
Motif was able to execute a lender and shareholder supported
restructuring.
We believe the restructuring optimized value for shareholders in
what was a difficult environment. Under the restructuring, in any
monetization of iclaprim, the Company's subsidiary is entitled to
any proceeds above the balance owed to Hercules, the subsidiary's
lender, at the time of the monetisation. Further, shareholders can
benefit from the possibility that the Company, now unencumbered by
its previous guarantee of the subsidiary's loan, may be able to
complete an RTO and deliver additional value to shareholders. While
the Board continues to advance discussions with RTO candidates,
there is no assurance that the Company will be able to complete an
RTO or other qualifying transaction before the end of January
2021.
AIM Rule 15 Cash Shell Status
Pursuant to the successful completion of the restructuring, as
announced on 28 January 2020 and described in the financial
statements in Notes 1, the Company was reclassified as an AIM Rule
15 cash shell. As such, the Company is required to make an
acquisition, or acquisitions, which constitutes a reverse takeover
under AIM Rule 14 to continue to be listed on the AIM Market of the
London Stock Exchange. In July 2020, the London Stock Exchange
suspended trading in the Company's AIM securities pursuant to AIM
Rule 40.
The AIM rules provide that the Company will have an additional
six months from the suspension date to complete a qualifying
transaction. If the Company does not complete a qualifying
transaction by 28 January 2021, the Company's shares will be
delisted from the AIM market.
NASDAQ Capital Market
From November 2016 until December 2019, Motif had American
Depository Shares (ADS's) and ADS warrants that were traded on the
NASDAQ Capital Market. After review and careful consideration of
the administrative burden and costs and benefits of being a
Nasdaq-listed, reporting company, as well as the uncertainties of
the Company being able to re-gain and maintain compliance with the
Nasdaq requirements for continued listing, the Company made the
decision to voluntarily delist, its ADS' and ADS warrants from the
NASDAQ Capital Market, effective December 2019.
Financial Overview
The Company's wholly-owned subsidiary, Motif BioSciences Inc.,
has been reported as discontinued operations in the consolidated
statements of comprehensive loss and the related assets and
liabilities have been presented as held-for-sale in the
consolidated balance sheet as of 31 December 2019. These changes
have been made for all periods presented. In January 2020, the
Company determined that it no longer has control of Motif
BioSciences Inc. in accordance with IFRS 10 Consolidated Financial
Statements. As a result, the Company will not consolidate Motif
BioSciences Inc. in future financial periods.
Discontinued Operations
The net loss from discontinued operations for the year ended 31
December 2019 was US $10.4 million (2018: loss of US $18.8
million).
The discontinued operations had total liabilities of US $11.6
million (2018: US $21.7 million) and total assets of a nominal
value (2018: US $11.8 million). The liabilities are comprised of US
$7.7 million owed to Hercules, including end of term fee, and US
$3.9 million of vendor and related obligations.
Continuing Operations
The net gain from continuing operations for the year ended 31
December 2019 was US $4.2 million (2018: gain of US $4.8
million).
The continuing operations had total liabilities of US $0.4
million (2018: US $6.0 million) and total assets of US $0.8 million
(2018: US $0.7 million). The liabilities are comprised of US $0.2
million of vendor and related obligations and US $0.2 million in
derivative warrant obligations.
Going Concern
As of 31 December 2019, the Company had US $0.7 million in cash.
As of 31 July 2020, the Company had US $0.8 million of cash. The
Company may require additional capital in the future. To the extent
that the company raises additional funds by issuing equity
securities, its existing stockholders may experience significant
dilution.
The Company's wholly owned subsidiary, Motif BioSciences, Inc.,
is reported as discontinued operations and had US $7.3 million owed
under its loan facility with Hercules as of 31 December 2019. The
Company was relieved from its obligation to guarantee the loan
effective January 2020 (Note 14).
As an AIM Rule 15 cash shell, the Company's ability to continue
as a going concern is dependent on its ability to secure additional
capital to fund it in conjunction with an RTO or other suitable
transaction. The Company's shares were suspended from trading on
AIM on 29 July 2020 pursuant to AIM Rule 40. If the Company is
unable to identify a suitable reverse takeover transaction for
re-admission of trading on AIM by January 2021, the listing of the
Company's common shares would be cancelled on or about 28 January
2021.
These financial statements have been prepared under the
assumption that the Group and Company will continue as a going
concern. However, as of the date these financial statements were
approved, the Company can provide no assurance that a RTO
transaction or additional capital will be available when required
and/or on acceptable terms. Due to the Group's and Company's
recurring and expected continuing operating losses, the Directors
have concluded there is a material uncertainty which may cast
significant doubt on the Group's and Company's ability to continue
as a going concern for at least one year from the date of issuance
of these financial statements. The financial statements do not
include any adjustments that might result from this
uncertainty.
Section 172 statement
The Company's Section 172 statement is set out in the Corporate
Governance Report on pages 10 to 11.
Jonathan E. Gold
Executive Director, President & Chief Business Officer
1 September 2020
Motif Bio plc
Consolidated statements of comprehensive loss
For the years ended 31 December 2019 and 2018
(in thousands, except share and per share data)
Year Year
ended ended
31 December 31 December
2019 2018
Note US $ (000's) US $ (000's)
---- ------------ ------------
Restated
Continuing operations
General and administrative
expenses............................................... 5 (1,246) (1,747)
Research and development - -
expenses...............................................
------------ ------------
Operating loss
.....................................................................
............... (1,246) (1,747)
Interest
income...............................................................
................... 5 5 3
Net foreign exchange gains
(losses)................................................. 49 (64)
Gain (loss) from revaluation of derivative
liabilities........................ 15 5,427 6,654
------------ ------------
Gain (loss) before income
taxes....................................................... 4,235 4,846
Income tax
expense..............................................................
............. 8 - -
------------ ------------
Net gain (loss) from continuing operations
...................................... 4,235 4,846
------------ ------------
Comprehensive gain (loss) from continuing operations
................... 4,235 4,846
============ ============
Comprehensive loss from discontinued
operations.......................... 3 (10,378) (18,831)
------------ ------------
Total comprehensive loss for the year
............................................. (6,143) (13,985)
============ ============
Net earnings (loss) per share - basic
................................................ 9
Continuing
operations...........................................................
............. 0.01 0.02
Discontinued
operations...........................................................
......... (0.03) (0.07)
============ ============
Net earnings (loss) per share - diluted
............................................. 9
Continuing
operations...........................................................
............. 0.01 -
Discontinued
operations...........................................................
......... (0.03) (0.07)
============ ============
Weighted average number of ordinary shares
.................................
Basic................................................................
................................... 350,993,002 284,530,534
Diluted..............................................................
.................................. 350,993,002 287,131,688
============ ============
The notes are an integral part of the consolidated financial
statements.
Motif Bio plc
Consolidated statements of financial position
As at 31 December 2019 and 2018
(in thousands)
31 December 2019 31 December 2018
Note US $ (000's) US $ (000's)
---- ---------------- ----------------
ASSETS
Non-current assets
Intangible
assets.............................................................
................... 10 - 6,196
Other
non-current........................................................
...................... - 18
---------------- ----------------
Total non-current
assets.............................................................
....... - 6,214
---------------- ----------------
Current assets
Cash and cash
equivalents........................................................
......... 12 663 12,279
Prepaid expenses and other
receivables........................................... 11 145 231
---------------- ----------------
Total current
assets.............................................................
.............. 808 12,510
---------------- ----------------
Held-for-sale
Non-current and current assets held for
sale................................... 3 37 -
Total
assets.............................................................
........................... 845 18,724
================ ================
LIABILITIES
Non-current liabilities
Term loan, net of current
portion...................................................... 14 - 10,131
Other non-current
liabilities........................................................
...... 14 - 196
---------------- ----------------
Total non-current
liabilities........................................................
....... - 10,327
---------------- ----------------
Current liabilities
Trade payables and accrued
liabilities.............................................. 13 214 7,207
Derivative
liabilities........................................................
................... 15 227 5,789
Term loan, current
portion............................................................
.... 14 - 4,327
---------------- ----------------
Total current
liabilities........................................................
.............. 441 17,323
---------------- ----------------
Held-for-sale
Non-current and current liabilities held for
sale............................... 3 11,605 -
Total liabilities
..................................................................
................. 12,046 27,650
================ ================
Net asset (liabilities)
...................................................................
...... (11,201) (8,926)
================ ================
EQUITY
Share
capital............................................................
.......................... 17 4,777 4,032
Share
premium............................................................
...................... 97,003 93,456
Group reorganization
reserve............................................................ 9,938 9,938
Accumulated
deficit............................................................
............... (122,919) (116,352)
---------------- ----------------
Total deficit
...................................................................
.................... (11,201) (8,926)
================ ================
The financial statements were approved by the Board of Directors
and authorized for issue on
1 September 2020 . They were signed on its behalf by:
Director
Bruce Williams
Motif Bio plc
Consolidated statements of changes in equity
For the years ended 31 December 2019 and 2018
(in thousands)
Group
Share Share reorganization Accumulated
capital premium reserve deficit Total
Note US $ (000's) US $ (000's) US $ (000's) US $ (000's) US $ (000's)
---- ------------ ------------ -------------- ------------ ------------
Balance at 31 December 2017
........................... 3,589 80,873 9,938 (103,308) (8,908)
============ ============ ============== ============ ============
Loss for the
year........................
......................... - - - (13,985) (13,985)
------------ ------------ -------------- ------------ ------------
Total comprehensive loss for
the year............... - - (13,985) (13,985)
Issue of share
capital.....................
..................... 17 433 12,989 - - 13,422
Cost of
issuance....................
............................
.. 17 - (749) - - (749)
Exercise of share options and
warrants............. 15 10 343 - - 353
Share-based
payments....................
................... 16 - - - 941 941
------------ ------------ -------------- ------------ ------------
Balance at 31 December 2018
........................... 4,032 93,456 9,938 (116,352) (8,926)
============ ============ ============== ============ ============
Loss for the
year........................
......................... - - - (6,143) (6,143)
------------ ------------ -------------- ------------ ------------
Total comprehensive loss for
the year............... - - (6,143) (6,143)
Issue of share
capital.....................
..................... 17 738 3,569 - - 4,307
Cost of
issuance....................
............................
.. 17 - (317) - - (317)
Exercise of share options and
warrants............. 15 7 295 - - 302
Share-based
payments....................
................... 16 - - - (424) (424)
------------ ------------ -------------- ------------ ------------
Balance at 31 December 2019
........................... 4,777 97,003 9,938 (122,919) (11,201)
============ ============ ============== ============ ============
(A) The amounts related to discontinued operations have not been
segregated and remain included in the major equity. Accordingly,
the Consolidated Statements of Changes in Equity include the
results of continuing and discontinued operations.
Motif Bio plc
Consolidated statements of cash flows
For the years ended 31 December 2019 and 2018
(in thousands)
Year ended Year ended
31 December 31 December
2019 (A) 2018 (A)
Note US $ (000's) US $ (000's)
---- ------------ ------------
Operating activities
Operating loss for the
year................................................................... (9,778) (18,623)
Adjustments to reconcile net loss to net cash used in activities:
Share-based
payments.................................................................
........ 16 (424) 941
Warrant issued for services
performed............................................... 15 - -
Loss on
impairment...............................................................
............... 10 6,196 -
Interest
received.................................................................
.................. 45 97
Changes in operating assets and liabilities:
Prepaid expenses and other
receivables.......................................... 97 91
Trade payables and accrued
liabilities............................................. (3,119) (3,952)
------------ ------------
Net cash used in operating
activities................................................... (6,983) (21,446)
Financing activities
.........................................................................
......
Proceeds from issue of share
capital................................................... 17 4,307 13,422
Costs of issuance of share
capital........................................................ 17 (317) (749)
Proceeds from exercise of warrants and
options................................ 15 244 145
Proceeds from issuance of term
loan.................................................. 14 - -
Costs of issuance of term
loan............................................................. 14 - -
Principal payments under term
loan.................................................... 14 (8,134) -
Interest
paid.....................................................................
..................... 14 (785) (1,585)
------------ ------------
Net cash provided by financing
activities............................................. (4,685) 11,233
------------ ------------
Net change in
cash.....................................................................
.......... (11,668) (10,213)
Cash, beginning of the
year.................................................................. 12,279 22,651
Effect of foreign exchange rate
changes............................................. 84 (159)
------------ ------------
Cash, end of the year
.........................................................................
... 695 12,279
============ ============
(A) The cash flows related to discontinued operations have not
been segregated and remain included in the major classes of assets
and liabilities. Accordingly, the Consolidated Statements of Cash
Flows include the results of continuing and discontinued
operations.
1. General information
Motif Bio plc is domiciled in England and Wales having
originally been incorporated on November 20, 2014 as Motif Bio
Limited, a private company, with company registration number
09320890. On 1 April 2015, the Company was re-registered as a
public company limited by shares and changed its name to Motif Bio
plc. The Company's registered office is at: 201 Temple Chambers,
3-7 Temple Avenue, London EC4Y 0DT, U.K.
The Company's ordinary shares are listed on the AIM Market
("AIM") of the London Stock Exchange plc. On 28 January 2020, the
Company announced that it was reclassified as an AIM Rule 15 Cash
Shell and, as such, was required to make an acquisition or
acquisitions which constitute(s) a reverse takeover under AIM Rule
14 within six months to continue to have its shares traded on the
AIM market. On 29 July 29 2020, the London Stock Exchange suspended
the trading in the Company's AIM listed ordinary shares pursuant to
AIM Rule 40. The AIM rules provide that the Company has an
additional six months from the suspension date to complete a
qualifying transaction. If the Company does not complete a
qualifying transaction by 28 January 2021, the Company's shares
will be delisted from the AIM market.
From November 2016 until December 2019, the Company had American
Depository Shares ("ADS's") and ADS warrants that were traded on
the NASDAQ Capital Market. Effective December 2019 following a
voluntary delisting, the Company's ADS's and ADS warrants are no
longer traded on the NASDAQ Capital Market.
Motif BioSciences Inc. was incorporated in the US State of
Delaware on 2 December 2003 and has its registered office at 251
Little Falls Drive, Wilmington, Delaware, 19808. On 1 April 2015,
Motif BioSciences Inc. became a wholly owned subsidiary of the
Company by way of a group reorganization by plan of merger. Motif
BioSciences Inc. was the operating subsidiary of the Group and was
shut down as part of the corporate restructuring approved by the
Company's Shareholders in November 2019. As a result, Motif
BioSciences Inc. has been reported as discontinued operations in
the consolidated statements of comprehensive loss and the related
assets and liabilities have been presented as held-for-sale in the
consolidated balance sheet as of 31 December 2019. These changes
have been applied for all periods presented.
The consolidated financial statements include the accounts of
Motif Bio plc and its wholly owned subsidiary, Motif BioSciences
Inc. (together, the "Group"). Motif BioSciences Inc. is reported as
discontinued operations as at 31 December 2019. Unless otherwise
noted, information contained within these notes to the consolidated
financial statements relates to continuing operations. As of the
date these financial statements are issued, the Company is not
certain as to the manner and timing of disposal. Refer to Note 3
for additional information on discontinued operations.
The financial statements were approved by the Board of Directors
on 1 September 2020.
Going concern
The Company had US $0.7 million and US $0.6 million in cash as
of 31 December 2019 and 2018, respectively. The Company may require
additional capital in the future. To the extent that the company
raises additional funds by issuing equity securities, its existing
stockholders may experience significant dilution.
The Company's wholly owned subsidiary, Motif BioSciences, Inc.,
is reported as discontinued operations and had US $7.3 million owed
under its loan facility with Hercules Capital Inc. (Hercules) as of
31 December 2019. Effective 27 January 2020, the Company was
relieved from a loan guarantee that it had originally provided at
the origination of the Hercules the loan (Note 14).
The Company's Directors are focused on sourcing an appropriate
reverse takeover candidate for the Company. There is no assurance
that the effort will be successful to source and/or complete a
reverse takeover transaction. In addition, as of the date these
financial statements were approved, the Company can provide no
assurance that additional capital will be available if/when
required and/or on acceptable terms.
The Directors have concluded that these conditions, including
recurring and expected continuing operating losses, indicate a
material uncertainty that may cast a significant doubt about the
Company's ability to continue as a going concern and, therefore,
that it may be unable to realize its assets and discharge its
liabilities in the normal course of business.
The financial statements have been prepared on the basis that
the Company is a going concern, which contemplates the continuity
of normal business activity, realization of assets and settlement
of liabilities in the normal course of business. Should the entity
not be able to continue as a going concern, it may be required to
realize its assets and discharge its liabilities other than in the
ordinary course of business, and at amounts that differ from those
stated in the financial statements. The financial statements do not
include any adjustments relating to the recoverability and
classification of recorded asset amounts or liabilities that might
be necessary should the Company not continue as a going
concern.
Significant and recent events
On 27 January 2020, the Company and its wholly owned subsidiary,
Motif BioSciences Inc. completed the conditions and actions
described below. The actions were detailed in a circular dated 25
October 2019 and approved by the Company's Shareholders at a
general meeting held on 14 November 2019.
The Company and its wholly owned subsidiary, Motif BioSciences
Inc. amended the existing credit agreement with the subsidiary's
lender Hercules Capital, Inc. (or Hercules) by entering into an
Amendment and Release agreement.
Pursuant to the terms of the Amendment and Release
agreement:
-- Hercules relinquished the loan guarantee provided by the
Company and relieved Motif Bio plc of obligations to Hercules
related to the November 2017 Hercules Loan to Motif BioSciences
Inc.;
-- Motif BioSciences Inc. granted Hercules a perfected security
interest in all its intellectual property related to the iclaprim
asset; and
-- Hercules agreed with Motif BioSciences Inc. to certain
forbearance provisions under the Loan Agreement through to June
2020.
The agreement specified that Hercules claim is only for the
amount due to them including accrued interest and fees, and that
this applies in all circumstances including if Hercules forecloses
on the iclaprim asset.
The Company also granted to Hercules warrants over an aggregate
of 121,337,041 ordinary shares of 0.01 pence ("Ordinary Shares"),
representing a total of 25 per cent of the Company's then
outstanding share capital. These warrants will expire on 27 January
2025 and have an exercise price of 0.42 pence per share.
The Company separately granted SP Angel Corporate Finance LLP
warrants over 7,142,857 Ordinary Shares in connection with its
service as placing agent on a conditional placing initially
announced on 2 October 2019. The conditional placing and the
issuance of these warrants was subject to shareholder approval and
was approved on 14 November 2019. These warrants will expire on 27
January 2025 and have an exercise price of 0.68 pence per
share.
Motif BioSciences, Inc. ceased all operations in 2019 and had
engaged Tamarack Associates in 2019 to facilitate the sale of
iclaprim and other assets of Motif BioSciences Inc.
In January 2020, John Palmer of Tamarack Associates was
appointed as the sole Executive Officer of Motif BioSciences Inc.
and Bernadette Barron of Barron Business Consultants was appointed
as the sole, independent non-executive officer of Motif BioSciences
Inc. Concurrent with these appointments, Graham Lumsden, Jonathan
Gold, and David Huang resigned as officers of Motif BioSciences
Inc. and Graham Lumsden resigned as director of the Company.
Former directors of Motif Bio plc, Dr. Craig Albanese, Charlotta
Ginman, Zaki Hosny, Dr. Mary Lake Polan, and Andrew Powell
forfeited all previously outstanding vested and non-vested options
and outstanding Board fees in 2019 when they stood down from the
Board of Directors. In exchange for their forfeiture, the Company
issued to each of the above named former directors a warrant option
to purchase up to 1,200,000 ordinary shares at an exercise price of
0.24 pence per share that will expire on 27 January 2025. The
remaining continuing directors also forfeited all outstanding
vested and non-vested options in 2019.
On 4 May 2020, the Company made the following directorate
changes:
-- Chris Wardhaugh was appointed as a Non-Executive Director;
-- Jonathan Gold, the Company's then Chief Financial Officer,
was appointed as President and Chief Business Officer; and
-- Graham Lumsden, the Company's then Chief Executive Officer,
stepped down from his role as CEO and become a Non-Executive
Director.
On 5 May 2020, the Company announced the placement of
162,500,000 new ordinary shares at 0.4 pence per share for net
proceeds of $0.76 million.
On 29 July 2020, the London Stock Exchange suspended trading in
the Company's AIM listed ordinary shares pursuant to AIM Rule 40.
The AIM rules provide that the Company has an additional six months
from the suspension date to complete a qualifying transaction. If
the Company does not complete a qualifying transaction by 28
January 2021, the Company's shares will be delisted from the AIM
market.
Significant events during and prior to 2019
On 14 November 2019, the Company's shareholders approved a
corporate restructuring, including the underlying tenets of the
amendment to the loan agreement with Hercules Capital Inc. (or
Hercules) described above. Additional details of the corporate
restructure are listed below.
-- Each of the Company's Ordinary Shares of 1 penny par value
were divided into one New Ordinary Share of 0.01 pence par value
and one deferred share of 0.99 pence. The deferred shares have no
rights and the Company did not issue any share certificates or
credit CREST accounts in respect of them. The deferred shares are
not admitted to trading on AIM and have no rights to participate in
the profits of the Company. In the event of a wind-down or
dissolution of the Company, the deferred shares shall be entitled
to participate in the dissolution of the Company's assets that are
in excess of GBP GBP 1 trillion.
-- The number of New Ordinary Shares in issue and held by each
Shareholder, was equal to the number of existing Ordinary Shares in
issue immediately prior to the Share Capital Reorganisation. Only
the nominal value changed with respect to the New Ordinary Share.
The New Ordinary Shares will continue to carry the same rights as
those attached in the previously existing Ordinary Shares, save for
the reduction in nominal value.
-- The outstanding conditions relating to the conditional
Placing to raise GBP600,000 (US $0.73 million), before expenses by
way of the issue of 142,857,143 Placing Shares (as first announced
by the Company on 2 October 2019) were satisfied. As previously
described, the Company also agreed to grant SP Angel Corporate
Finance LLP warrants over 7,142,857 Ordinary Shares in connection
with its service as placing agent for this raise.
On 14 February 2019, the Group receive a Complete Response
Letter (CRL) from the U.S. Food & Drug Administration (FDA)
regarding the New Drug Application (NDA) for iclaprim for the
treatment of Acute Bacterial Skin and Skin Structure Infections.
Following the receipt of the CRL, the Group evaluated potential
options to address the deficiencies and met with the FDA on 3 May
2019 and 19 September 2019. The Group continues to believe that a
regulatory pathway may be available for the iclaprim asset.
However, a path forward will likely require a partner with a lower
cost of capital and/or other strategic synergies to be viable.
On 25 March 2019, the Group placed 45,000,000 new ordinary
shares at 0.06 pence per share and received US $3.3 million of net
proceeds.
On 17 May 2018, the Group placed 32,258,064 new ordinary shares
at 0.31 pence per share and received US $12.7 million of net
proceeds.
On 19 January 2018, the Group filed a "universal" shelf
registration statement on Form F-3 with the SEC, which was declared
effective by the SEC on 31 January 2018. The Company filed to
withdraw the shelf registration on 23 December 2019.
2. Significant accounting policies
a. Basis of preparation
The accounting policies set out below have been applied
consistently to all periods presented in this financial
information. The accounting policies have been applied consistently
across the Group.
The financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") as adopted by
the European Union and with the Companies Act 2006 applicable to
companies reporting under IFRS. This basis of preparation describes
how the financial statements have been prepared in accordance with
IFRS. The financial statements have been prepared under the
historical cost convention as modified for financial instruments
(including derivative instruments) at fair value through the
statement of comprehensive loss. A summary of the significant Group
accounting policies is set out below.
The preparation of financial statements in conformity with IFRS
requires the use of estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the
financial information and the reported amounts of revenue and
expenses during the period. Although these estimates are based on
management's best knowledge of the amount, event or actions, actual
results ultimately may differ from those estimates.
The Company has taken advantage of the exemption in Section 408
of the Companies Act 2006 to not present its own Statement of
Comprehensive Loss.
a. New and amended standards effective from 1 January 2019
IFRS 16, Leases - Effective date - 1 1 January 2019 - IFRS 16
replaces IAS 17. It eliminates the distinction between
classification of leases as finance or operating leases for
lessees. The adoption of IFRS 16 did not have a significant impact
on the Group's net results or net assets and any future impact
would be primarily dependent on future leasing transactions, if
any.
b. New and amended standards effective from 1 January 2018
IFRS 2, Share-based Payments (as amended) was adopted with an
effective date of 1 January 2018. IFRS 2 related to the
classification and measurement of share-based payment transactions.
The amendments were intended to eliminate diversity in practice
regarding (i) accounting for cash-settled share-based payment
transactions that include a performance condition, (ii) share-based
payments in which the manner of settlement is contingent on future
events, (iii) share-based payments settled net of tax withholdings,
and (iv) modification of share-based payment transactions from
cash-settled to equity-settled. The impact of the adoption of this
guidance did not have a material impact on the Group's 2018 and
2019 consolidated financial statements and any future impact would
be primarily dependent on future modifications to share-base
payment awards, if any.
IFRS 9, Financial Instruments (as revised in 2014) was adopted
with an effective date of 1 January 2018. IFRS 9 includes revised
guidance on the classification and measurement of financial
instruments, a new expected credit loss model for calculating
impairment on financial assets, and new general hedge accounting
requirements. The adoption of this guidance did not have an impact
on the Group's 2018 and 2019 consolidated financial statements and
any future impact would be primarily dependent on future financial
instrument transactions, if any. In particular, the Group has
evaluated the impact of the new accounting standard on the
intercompany receivable position within the Company's statement of
financial position and determined that there is no expected credit
loss to be recorded.
IFRS 15, Revenue from Contracts with Customers was adopted with
an effective date of 1 January 2018. IFRS 15 establishes a
comprehensive guideline for determining when to recognize revenue
and how much revenue to recognize. The Group currently has no
revenues. However, all applicable revenues generated by the Group
prospectively will be accounted for in accordance with IFRS 15, or,
where applicable, other relevant guidance.
On 1 January 2017, the Group adopted amendments to IAS 7,
Disclosure Initiative. The amendments require disclosures that
enable users of financial statements to evaluate changes in
liabilities arising from financing activities, including both
changes arising from cash flow and non-cash changes. The only
balance sheet liability for which cash flows are classified as
financing activities is the term loan, as amended, with Hercules
Capital Inc. The net movement in period end balances are further
detailed in Note 14.
c. New standard and interpretation not yet effective.
The new standards that are potentially relevant to the group are
discussed below.
IFRS 3- Business Combination. The amendments confirm that a
business must include inputs and a process, and clarified that the
process must be substantive and the inputs and process must
together significantly contribute to creating outputs. The
amendment also narrowed the definition of a business and included
tests that make it easier to conclude whether a business or group
of assets was acquired. Any future impact of adopting the amendment
would be primarily dependent on future acquisition transactions, if
any.
Principles of consolidation
Subsidiaries are all entities (including structured entities)
over which the Group has control. The Group controls an entity when
the Group is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those
returns through its power to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on which control
is transferred to the Group. They are deconsolidated from the date
that control ceases. All intercompany transactions, balances, and
unrealized gains on transactions between Group companies are
eliminated.
The Company's wholly-owned subsidiary, Motif BioSciences Inc.,
has been reported as discontinued operations in the consolidated
statements of comprehensive loss and the related assets and
liabilities have been presented as held-for-sale in the
consolidated balance sheet as of 31 December 2019. These changes
have been made for all periods presented. Based on the subsequent
event on 27 January 2017, and other operational changes that
occurred in 2019 and early 2020, the Company determined that as at
27 January 2017 it no longer had an ability to direct the
activities of Motif BioSciences Inc. Based on its assessment the
Company determined that it no longer has control of Motif
BioSciences Inc. in accordance with IFRS 10 Consolidated Financial
Statements in May 2020. As a result, the Company will not
consolidate Motif BioSciences Inc. in reportable financial periods
commencing in 2020.
When the Group ceases to consolidate because of a loss of
control, any retained interest in the entity is remeasured to its
fair value with the change in carrying value recognized in profit
or loss. The fair value becomes the initially carrying amount for
the purposes of subsequently accounting for the retained interest
as an associate, joint venture, or financial asset.
The consolidated financial statements as of and for the periods
presented include the accounts of Motif Bio plc and its wholly
owned subsidiary, Motif BioSciences Inc. (the Group). Unless
otherwise noted, information contained within these notes to the
consolidated financial statements relates to continuing operations.
Refer to Note 2 and Note 3 for additional information on
discontinued operations.
b. Segment reporting
The chief operating decision-maker is considered to be the Board
of Directors of Motif Bio plc. The chief operating decision-maker
allocates resources and assesses performance of the business and
other activities at the operating segment level. In addition, they
review the IFRS consolidated financial statements.
The chief operating decision-maker had determined that the
Company currently has one segment-to support its strategy as an AIM
15 cash shell entity focused on sourcing a reverse-take-over
candidate. In 2019 prior to the wind-down of Motif BioSciences
Inc., the Company had one segment to support the development and
commercialization of pharmaceutical formulations.
c. Foreign currency translation
(a) Functional and Presentation Currency
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates ("the functional
currency"). The consolidated financial statements are presented in
United States Dollars (US $), which is Motif Bio plc's functional
and presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of
such transactions and from the translation of monetary assets and
liabilities denominated in foreign currencies at year-end exchange
rates are generally recognized in the statement of comprehensive
loss. They are deferred in equity if they relate to qualifying cash
flow hedges and qualifying net investment hedges or are
attributable to part of the net investment in a foreign
operation.
Foreign exchange gains and losses that relate to borrowings are
presented in the statement of profit or loss, within finance costs.
All other foreign exchange gains and losses are presented in the
statement of comprehensive loss on a net basis within other income
or other expenses.
Non-monetary items that are measured at fair value in a foreign
currency are translated using the exchange rates at the date when
the fair value was determined. Translation differences on assets
and liabilities carried at fair value are reported as part of the
fair value gain or loss. For example, translation differences on
non-monetary assets and liabilities such as equities held at fair
value are recognized in profit or loss as part of the fair value
gain or loss and translation differences on non-monetary assets
such as equities classified as available-for-sale financial assets
are recognized in other comprehensive income.
d. Research and development costs
Expenditure on drug development activities are expensed. No
activities met the requirements for capitalization. The Group and
Company do not expect to incur any research and development costs
in the foreseeable future.
The Group's past preclinical studies and clinical trials have
been performed utilizing third-party contract research
organizations ("CROs") and other vendors. For preclinical studies,
the significant factors used in estimating accruals include the
percentage of work completed to date and contract milestones
achieved. For clinical trial expenses, the significant factors used
in estimating accruals include the number of patients enrolled,
duration of enrollment, percentage of work completed to date and
contract milestones achieved.
e. Intangible assets
Intangible assets acquired separately from a business are
initially stated at cost, net of any amortization and any provision
for impairment. Where a finite useful life of the acquired
intangible asset cannot be determined, the asset is not subject to
amortization but is tested for impairment annually or more
frequently whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable.
f. Impairment of non-financial assets
Assets that have an indefinite useful life are not subject to
amortization and are tested annually in the second half of each
fiscal year for impairment, or more frequently if events or changes
in circumstances indicate that they might be impaired. Other assets
are tested for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognized for the amount by
which the asset's carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset's fair value less
costs of disposal and value in use. For the purposes of
assessing
impairment, assets are grouped at the lowest levels for which
there are separately identifiable cash inflows which are largely
independent of the cash inflows from other assets or groups of
assets (cash-generating units). Non-financial assets other than
goodwill that suffered an impairment are reviewed for possible
reversal of the impairment at the end of each reporting period.
g. Financial instruments-initial recognition and subsequent measurement
A financial instrument is any contract that gives rise to a
financial asset of one entity and a financial liability or equity
instrument of another entity.
a) Financial assets, initial recognition and measurement
All financial assets are recognized initially at fair value
plus, in the case of financial assets not recorded at fair value
through profit or loss, transaction costs that are attributable to
the acquisition of the financial asset. The Group includes
intercompany asset and investment accounts as financial assets.
Transaction costs of financial assets carried at fair value
reported in profits and loss (FVPL) are expensed in profit or
loss.
The group's financial assets include the intercompany receivable
balance in the Company balance sheet.
b) Financial liabilities, initial recognition and
measurement
Financial liabilities are classified, at initial recognition, as
financial liabilities at fair value through profit or loss. All
financial liabilities are recognized initially at fair value and,
in the case of loans and borrowings and payables, net of directly
attributable transaction costs.
The Group's financial liabilities include trade and other
payables, loans and borrowings and warrants classified as
liabilities. The Group includes intercompany liability accounts as
financial liabilities.
c) Subsequent measurement
The measurement of financial liabilities depends on their
classification. Financial liabilities at fair value through profit
or loss include financial liabilities held for trading and
financial liabilities designated upon initial recognition as at
fair value through profit or loss.
Financial assets at fair value through profit or loss are
subsequently carried at amortized cost as the Group's and Company's
assets are held within a business model whose objective is to
collect the contractual cash flows and the contractual terms give
rise to cash flows that are solely payments of principal and
interest.
h. Financial assets and liabilities
Financial assets and financial liabilities are included in the
Group's and Company's balance sheet when the Group becomes a party
to the contractual provisions of the instrument. Financial assets
are derecognized when the rights to receive cash flows from the
investments have expired or have been transferred and the Group has
transferred substantially all risks and rewards of ownership.
Fair value disclosures
The Group's cash, prepaid expenses and other current assets and
trade and other payables are stated at their respective historical
carrying amounts, which approximates fair value due to their
short-term nature. These are measured at fair value using Level 1
inputs. The Group's derivative liabilities are measured at fair
value using Level 1 or 2 inputs. See discussion in Note 15 on the
inputs utilized in the Black-Scholes option pricing model and for a
roll-forward of the derivative liability from 31 December 2018 to
31 December 2019. The Group determined that the book value of the
Hercules Loan Agreement (Note 14) approximates its fair value as of
31 December 2019 due the proximity of the transaction date and the
interest being tied to the U.S. Prime Rate. There were no transfers
between fair value levels during the years ended 31 December 2019
or 2018.
There were no non-recurring fair value measurements for the
years ended 31 December 2019 or 2018.
When measuring the fair value of an asset or a liability, the
Group uses observable market data as far as possible. Fair values
are categorized into different levels in a fair value hierarchy
based on the inputs used in the valuation techniques as
follows:
-- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
-- Level 2: inputs other than quoted prices included in Level 1
that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices).
-- Level 3: inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
Non-derivative financial instruments
Cash and cash equivalents
Cash and cash equivalents include bank balances, demand
deposits, and other short-term, highly liquid investments (with
less than three months to maturity) that are readily convertible
into a known amount of cash and are subject to an insignificant
risk of fluctuations in value.
Financial liabilities and equity
The Group classifies an instrument, or its component parts, on
initial recognition as a financial liability or an equity
instrument in accordance with the substance of the contractual
arrangement and the definitions of a financial liability and an
equity instrument.
An instrument is classified as a financial liability when it is
either (i) a contractual obligation to deliver cash or another
financial asset to another entity; or (ii) a contract that will or
may be settled in the Group's own equity instruments and is a
non-derivative for which the Group is, or may be, obliged to
deliver a variable number of the Group's own equity instruments or
a derivative that will, or may be, settled other than by the
exchange of a fixed amount of cash or another financial asset for a
fixed number of the Group's own equity instruments. Incremental
costs directly attributable to the issue of new ordinary shares or
options are shown in equity as a deduction, net of tax, from the
proceeds.
An equity instrument is defined as any contract that evidences a
residual interest in the assets of an entity after deducting all
its liabilities. An instrument is an equity instrument only if the
issuer has an unconditional right to avoid settlement in cash or
another financial asset.
Trade payables and accrued liabilities
Trade payables and accrued liabilities are obligations to pay
for goods or services that have been acquired in the ordinary
course of business from or rendered by suppliers. All are
classified as current liabilities if payment is due within one year
or less (or in the normal operating cycle of the business if
longer). If not, they are presented as non-current liabilities.
Trade payables and accrued liabilities are initially measured at
fair value, and, where applicable, are subsequently measured at
amortized cost, using the effective interest rate method.
Equity instruments
Equity instruments issued by the Company are recorded at the
proceeds received. Direct issuance costs are processed as a
deduction on equity.
Derivative financial instruments
The Group does not have a policy of engaging in speculative
transactions, nor does it issue or hold financial instruments for
trading purposes.
The Group has entered into financing arrangements that include
the issuance of warrants. These warrants may be considered
derivative financial instruments based on the terms of the
agreements.
Derivatives are initially recognized at fair value on the date a
derivative contract is entered into and are subsequently
re-measured at their fair value. The resulting gain or loss is
recognized in the consolidated statement of comprehensive loss, as
the Group currently does not apply hedge accounting.
Impairment of financial assets
Starting 1 January 2018, the Group assesses on a forward looking
basis the expected credit losses associated with its debt
instruments carried at amortized cost. The impairment methodology
applied depends on whether there has been a significant increase in
credit risk. An expected credit losses model replaces the incurred
loss impairment model used in IAS 39.
The accounting policy applied under IAS 39 in previous
accounting periods is described below.
The Group assessed at the end of each reporting period whether
there was objective evidence that a financial asset or group of
financial assets is impaired. A financial asset or a group of
financial assets is impaired and impairment losses are incurred
only if there is objective evidence of impairment as a result of
one or more events that occurred after the initial recognition of
the asset (a "loss event") and that loss event (or events) has an
impact on the estimated future cash flows of the financial asset or
group of financial assets that can be reliably estimated.
j. Share-based payment transactions
The fair value of options and warrants granted to employees,
Directors, and consultants is recognized as an expense, with a
corresponding increase in equity, over the period in which the
option and warrant holders become unconditionally entitled to the
options and warrants unless incremental and directly attributable
to an equity transaction in which case it is deducted from equity.
The fair value of the options and warrants granted is measured
using an option valuation model, taking into account the terms and
conditions upon which the options were granted.
k . Financial income and expenses
Financial income comprises interest receivable on funds
invested. Financial expenses comprise interest payable.
Interest income and interest payable are recognized in the
statement of comprehensive loss as they accrue, using the effective
interest method.
l . Taxation
Tax on the profit or loss for the year comprises current and
deferred tax. Tax is recognized in the consolidated statement of
comprehensive loss except to the extent that it relates to items
recognized directly in equity, in which case it is recognized in
equity.
Current tax is the expected tax payable on the taxable income
for the period, using tax rates enacted or substantively enacted at
the balance sheet date and any adjustment to tax payable in respect
of previous years.
Deferred tax is provided on temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. The following
temporary differences are not provided for: the initial recognition
of goodwill; the initial recognition of assets or liabilities that
affect neither accounting nor taxable profit other than in a
business combination; and differences relating to investments in
subsidiaries to the extent that they will probably not reverse in
the foreseeable future. The amount of deferred tax provided is
based on the expected manner of realization or settlement of the
carrying amount of assets and liabilities, using tax rates enacted
or substantively enacted at the balance sheet date.
A deferred tax asset is recognized only to the extent that it is
probable that future taxable profits will be available against
which the temporary difference can be utilized.
m. Earnings per share
The Company presents basic and diluted earnings per share (EPS)
data for its shares. Basic EPS is calculated by dividing the profit
or loss attributable to shares of the Company by the weighted
average number of shares outstanding during the period. Diluted EPS
is determined by adjusting the profit or loss attributable to
shareholders and the weighted average number of shares outstanding
for the effects of all dilutive potential shares, which comprise
share options and warrants granted to employees and non-employees.
Refer to Note 9 for calculation of EPS for all periods
presented.
n. Non-current assets or disposal groups held-for-sale and
discontinued operations
Non-current assets or disposal groups are classified as
held-for-sale if their carrying amount will be recoverable
principally through a sale transaction, not through continuing use.
The condition is regarded as met only when the sale is highly
probable and the asset is available for immediate sale in its
present condition.
These assets may be a component of an entity, a disposal group
or an individual non-current asset. Upon initial classification as
held-for sale, non-current assets and disposal groups are
recognised at the lower of carrying amount and fair values less
cost to sell.
A discontinued operation is a significant distinguishable
component of the Group's business that is available for sale in its
immediate condition pursuant to a single formal plan, and which
represents a separate major line of business or geographical area
of operation. Classification as a discontinued operation occurs
upon disposal or when the operation meets the criteria to be
classified as held-for-sale.
The profit or loss on sale of a discontinued operation is
determined from the formalized discontinuance date. Discontinued
operations are separately recognised in the financial statements
once management has made a commitment to discontinue the operation
without a realistic possibility of withdrawal which should be
expected to qualify for recognition as a completed sale within one
year of classification.
o. Borrowings
Borrowings are recognized initially at fair value, net of
transaction costs incurred. Borrowings are subsequently measured at
amortized cost. Any difference between the proceeds (net of
transaction costs) and the redemption amount is recognized in
profit or loss over the period of the borrowings using the
effective interest method.
p. Equity
The Company classifies an instrument, or its component parts, on
initial recognition as a financial liability or an equity
instrument in accordance with the substance of the contractual
arrangement and the definitions of a financial liability and an
equity instrument.
An instrument is classified as a financial liability when it is
either (i) a contractual obligation to deliver cash or another
financial asset to another entity; or (ii) a contract that will, or
may be, settled in the Company's own equity instruments and is a
non-derivative for which the Company is, or may be, obliged to
deliver a variable number of the Company's own equity instruments
or a derivative that will or may be settled other than by the
exchange of a fixed amount of cash or another financial asset for a
fixed number of the Company's own equity instruments.
Incremental costs directly attributable to the issue of new
ordinary shares or options are shown in equity as a deduction, net
of tax, from the proceeds.
An equity instrument is defined as any contract that evidences a
residual interest in the assets of an entity after deducting all of
its liabilities. An instrument is an equity instrument only if the
issuer has an unconditional right to avoid settlement in cash or
another financial asset.
Ordinary Shares
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 from the proceeds
q. Critical accounting estimates and judgments
In preparing the financial information, the Directors make
judgments on how to apply the Group's accounting policies and make
estimates about the future. The critical judgments that have been
made in arriving at the amounts recognized in the financial
information and the key sources of estimation uncertainty that have
a significant risk of causing a material adjustment to the carrying
value of assets and liabilities in the next financial year, are
discussed below:
Discontinued Operations
The Directors used judgement to determine whether Motif
BioSciences Inc. met the criteria as held-for-sale and classified
as discontinued operations. Considerations included in the
Directors' assessment include, but are not limited to, the publicly
communicated wind-down of the entity and the Company's subsequent
loss of control of the entity.
Subsequent Events
The Directors evaluate all events occurring after the reporting
period dated to evaluate whether evidence of conditions existed or
rose after the reporting period date. The Directors determined that
27 January 2017 events (Note 1) had substantial evidence that that
conditions existed prior to reporting period date, including, but
not exclusively, the results of the November General Meeting where
Shareholders approved the proposed corporate restructuring and
wind-down of Motif BioSciences Inc. The financial impact of the 27
January 2017 events was considered adjusting events as of 31
December 2019.
Valuation of the iclaprim assets (Judgement and Estimate)
The Directors use their judgment to determine a fair value of
the iclaprim intangible asset based upon the consideration paid,
the nature of the asset, industry statistics, future potential, and
other relevant factors. An asset's acquisition cost or the
consideration transferred by the acquiring entity is assumed to be
equal to the fair value of the net assets acquired unless contrary
evidence exists. These fair values are tested for impairment on an
annual basis or when a triggering event has occurred. The
assessment includes multiple quantitative and qualitative factors
and estimates regarding future cash flows. The projected future
cash flows are also used to support the carrying value of the
investment and intercompany receivable balances recognised on the
Company's Statement of Financial Position. Refer to Note 10 for
discussion on the Company's assessment and impairment charge
recorded.
Research and development expenditures (Judgement)
Research and development expenditures were not capitalized
because the criteria for capitalization are not met. At each
balance sheet date, the Group estimates the level of service
performed by the vendors and the associated costs incurred for the
services performed.
Share based payments and fair value of warrants (Estimate)
The Directors have to make judgments when deciding on the
variables to apply in arriving at an appropriate valuation of share
based compensation and warrants, including appropriate factors for
volatility, risk-free interest rate, and applicable future
performance conditions and exercise patterns.
3. Discontinued operations
The Company's wholly-owned subsidiary Motif BioSciences Inc. has
been reported as discontinued operations in the consolidated
statements of comprehensive loss and the related assets and
liabilities have been presented as held-for-sale in the
consolidated balance sheet as of 31 December 2019 (Note 1). As set
out in note 1, on 14 November 2019 the Company's Shareholders
approved the actions detailed in a circular dated 25 October 2019
which had the effect that Motif BioSciences, Inc. ceased all
operations and engaged Tamarack Associates to facilitate the sale
of iclaprim and other assets of Motif BioSciences Inc for the
benefit of the subsidiary's lender, Hercules Capital, Inc. (or
Hercules). The consequent amendments to the existing credit
agreement with Hercules and the Amendment and Release agreement
were completed on 27 January 2020. Effective 27 January 2017, the
Company was relieved from a loan guarantee that it had originally
provided at the origination of the Hercules loan. Based on the
subsequent event on 27 January 2017, and other operational changes
that occurred in 2019 and early 2020 described in note 1, the
directors consider that it is unlikely that significant changes to
the disposal plan will be made or that the plan will be withdrawn
even if Hercules forecloses on the iclaprim asset. The directors
also consider that the Company, as at 27 January 2017, no longer
had an ability to direct the activities of Motif BioSciences Inc.
Based on its assessment the Company determined that it no longer
has control of Motif BioSciences Inc. in accordance with IFRS 10
Consolidated Financial Statements. As a result, the Company will
not consolidate Motif BioSciences Inc. in reportable financial
periods commencing in 2020.
The information presented in this footnote summarizes the
financial information for Motif BioSciences Inc.
a. Operating activity (discontinued operations)
The following table summarizes the major line items that are
included in the consolidated statements of comprehensive loss for
the years ending 31 December 2019 and 2018.
Year ended Year ended
31 Dec 2019 31 Dec 2018
(in thousands) US $ (000's) US $ (000's)
------------ ------------
Gain on settlement of contract disputes (1) .............................. 2,418 -
General and administrative expenses...................................... (2,738) (5,889)
Research and development expenses..................................... (2,016) (10,988)
Loss on impairment (2)
.................................................................. (6,196) -
Interest
income...........................................................................
. 40 110
Interest
expense.......................................................................... (1,905) (2,160)
Net foreign exchange gains (losses).......................................... 19 104
Income tax
expenses................................................................... - (9)
------------ ------------
Net loss from discontinued operations (10,378) (18,831)
------------ ------------
Comprehensive loss from discontinued operations (10,378) (18,831)
------------ ------------
(1) The gain resulted from the Group's settlement of disputed
obligations billed by its contract research organization.
(2) Loss on impairment reflects the write-down of the iclaprim
intangible asset (Note 10).
b. Breakdown of expenses by nature (discontinued operations)
The following table details the nature of expenses for the years
ending 31 December 2019 and 2018.
Year ended Year ended
31 Dec 2019 31 Dec 2018
(in thousands) US $ (000's) US $ (000's)
------------ ------------
General and administrative expenses
Employee salary and benefits expenses, including share-based
payments....................................................................... 1,385 2,677
Legal and professional
fees........................................................ 597 2,217
Investor and public relations and related fees ...................... 315 628
Other
expenses.........................................................................
... 441 367
------------ ------------
2,738 5,889
Research and development costs
Employee salary and benefits expenses, including share-based
payments....................................................................... 765 1,154
Contract research organization expenses............................... - -
Chemistry and manufacturing development and other non-clinical development
.............................................................. 274 3,444
Other research and development costs (1) ............................... 986 6,391
------------ ------------
2,016 10,988
(1) Other research and development costs incurred during 2018
were primarily comprised of regulatory and related preparatory
activities for the iclaprim product candidate.
c. Finance income and costs (discontinued operations)
The following table details the nature of expenses for the years
ending 31 December 2019 and 2018.
Year ended Year ended
31 Dec 2019 31 Dec 2018
(in thousands) US $ (000's) US $ (000's)
------------ ------------
Finance income
Interest from financial
assets..................................................... 40 110
------------ ------------
40 110
------------ ------------
Finance costs
Interest expense (Note 14)........................................................ (1,079) (1,585)
Accretion of end of term payment (Note 14)......................... (234) (174)
Amortization of deferred financing costs (Note 14).............. (592) (401)
------------ ------------
(1,905) (2,160)
------------ ------------
Net finance
costs.......................................................................... (1,865) (2,050)
------------ ------------
d. Financial position (discontinued operations)
The following table summarizes the carrying amounts of major
classes of assets and liabilities of discontinued operations for
each of the periods presented on the consolidated statements of
financial position.
As at As at
31 Dec 2019 31 Dec 2018
(in thousands) US $ (000's) US $ (000's)
------------ ------------
Assets
Prepaid expenses and other receivables................................ 5 77
Cash and cash
equivalents.......................................................... 32 11,719
------------ ------------
Total current assets 37 11,796
Intangible assets - 6,196
Intangible assets (Note
10)......................................................... - 18
Other
non-current......................................................................
. - 6,214
------------ ------------
Total assets 37 18,010
------------ ------------
Liabilities
Trade payable and accrued liabilities....................................... 3,874 7,029
Term loan, current
portion......................................................... 3,536 4,327
------------ ------------
Total current liabilities 7,410 11,356
Term loan, net of current portion............................................. 3,765 10,131
Other non-current
liabilities...................................................... 430 196
------------ ------------
Total non-current liabilities 4,195 10,327
------------ ------------
Total liabilities 11,605 21,683
------------ ------------
e. Cash flows (discontinued operations)
The following table summarizes the cash flows carrying amounts
of major classes of assets and liabilities of discontinued
operations for each of the periods presented on the consolidated
statements of financial position.
Year ended Year ended
31 Dec 2019 31 Dec 2018
(in thousands) US $ (000's) US $ (000's)
--------------------------------------------------------------------------------- ------------ ------------
Net cash used in
operations....................................................................... (5,736) (20,043)
Net cash provided by investing activities (from parent)........................ 2,880 11,322
Net cash used in by financing
activities.................................................... (8,919) (1,585)
------------ ------------
Net change in
cash.............................................................................
.......... (11,775) (10,306)
Cash, beginning of the
year........................................................................ 11,719 22,022
------------ ------------
Effect of foreign exchange rate
changes.................................................. 88 3
------------ ------------
Cash at the end of the
year......................................................................... 32 11,719
------------ ------------
f. Contractual maturities of financial liabilities (discontinued operations)
Between 1 Between 2
< 1 year and 2 years and 5 years Over 5 years Total
US $ US $ US $ US $ US $
----------------------------------------------- -------- ----------- ----------- ------------ ------
At 31 December 2019
Trade payables and accrued liabilities(1)
........... 3,874 - - - 3,874
Term Loan and other non-current (Note 14) 3,830 3,901 - - 7,731
-------- ----------- ----------- ------------ ------
7,704 3,901 - - 11,605
-------- ----------- ----------- ------------ ------
At 31 December 2018
----------------------------------------------- -------- ----------- ----------- ------------ ------
Trade payables and accrued
liabilities............ 7,029 - - - 7,029
Term Loan and other non-current (Note 14) 4,655 5,642 5,133 - 15,430
-------- ----------- ----------- ------------ ------
11,684 5,642 5,133 - 22,459
-------- ----------- ----------- ------------ ------
(1) Trade payables at 31 December 2019 include $2.2 million
invoiced outside of terms by Motif BioSciences Inc.'s supplier of
active pharmaceutical ingredient.
4. Financial risk management (Group and Company)
This note explains the Group's exposure to financial risks and
how these risks could affect the Group's future financial
performance.
a. Credit risk
Credit risk arises from cash and cash equivalents, deposits with
banks and financial institutions, and if a counterparty will
default on its contractual obligations resulting in financial loss
to the Group.
The credit risk on liquid funds is limited because cash balances
are held with bank and financial institutions with credit-ratings
assigned by international credit-rating agencies. All deposits are
held with banks that have a minimum S&P rating of A or A-3 for
short term deposits.
At 31 December 2019, no current asset receivables were aged over
three months. No receivables were impaired.
b. Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they become due. The principal
risk to which the Group is exposed is liquidity risk. See
discussion in Note 1 as it relates to the Group's and Company's
ability to continue as a going concern.
The Group has financed its operations to date using cash raised
through the issuance of debt and equity. The Directors acknowledge
that uncertainty remains over the ability of the Group to have the
resources to fully support the Company's foreseeable operating
needs as an AIM Rule 15 cash shell. To fund these activities and
maintain business operations, the Group may need additional
funding. An inability to obtain additional funding could have a
negative impact on the Company's prospects (Note 1).
c. Market risk
Foreign currency risk
The Group undertakes certain transactions denominated in foreign
currencies. Hence, exposures to exchange rate fluctuations arise.
Exchange rate exposures are managed by minimizing the balance of
foreign currencies to cover expected cash flows during periods
where there is strengthening in the value of the foreign currency.
The Group holds part of its cash resources in US dollars and
British pounds sterling. The valuation of the cash fluctuates along
with the US dollar/sterling exchange rate. No hedging of this risk
is undertaken.
The carrying amounts of foreign currency denominated monetary
net assets at the reporting date are as follows:
31 December 2019 31 December 2018
(in thousands) US $ US $
---------------- ----------------
Sterling - Cash.................................................... 655 491
The exchange rate between British Pound and the United States
Dollar at 31 December 2019 and 2018 was 1.33 and 1.28,
respectively. A change in foreign currency exchange rates may have
a significant impact on the profit or losses of the Group.
Interest rate risk (Continuing Operations)
The Company's exposure to interest rate risk is limited to
interest earned on the cash and cash equivalent balances which were
US $0.7 million at 31 December 2019.
Interest rate risk (Discontinued Operations)
Motif BioSciences Inc.'s exposure to interest rate risk is
limited to and its financing vulnerabilities on the Hercules loan,
which has an interest rate tied to a margin the US prime rate over
4.5% (with a floor of 10%), equating to 10.75% as of 31 December
2019. The interest rate at 31 December 2019 was 10.75%. A change in
interest rates may have a significant impact on the profit or
losses of Motif BioSciences Inc. The Hercules loan and associated
interest rate risk are presented as part of discontinued operations
for all periods presented. (Note 3 and Note 14).
d. Capital risk management
The Directors define capital as the total equity of the Group.
The Directors' objectives when managing capital are to safeguard
the Group's ability to continue as a going concern in order to
provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal structure to reduce the
cost of capital. In order to maintain an optimal capital structure,
the Directors may adjust the amount of dividends paid to
shareholders, return capital to shareholders and issue new shares
to reduce debt.
5. Other income and expense items (Company)
This note provides a breakdown of the items included in other
income, finance income and expenses by nature for the years ended
31 December 2019 and 2018.
a. Breakdown of expenses by nature (Company)
Year ended Year ended
31 Dec 2019 31 Dec 2018
(in thousands) US $ (000's) US $ (000's)
--------------------------------------------------------------------------------- ------------ ------------
General and administrative expenses
Employee salary and benefits expenses, including share-based
payments....................................................................... 11 387
Director
fees.............................................................................
.... 247 562
Director, legal and professional fees........................................ 586 398
Investor and public relations and related fees ...................... 32 549
Other
expenses.........................................................................
... 370 121
------------ ------------
1,246 1,747
------------ ------------
Auditors' Remuneration (Group (1) and Company)
2019 2018
(in thousands) US $ (000's) US $ (000's)
--------------------------------------------------------------------------------- ------------ ------------
Fees paid/payable to the company's auditors and its associates for the audit of
the parent
company and consolidated financial
statements........................................... 47 70
* Audit of the Group's overseas filings (1)
.................................... - 254
* Audit related assurance services (1)
........................................... - 113
------------ ------------
47 437
------------ ------------
(1) Fees incurred by the Group to support overseas filings and
related services are not expected to be part of continuing
operations.
c. Finance income and cost (Company)
Year ended Year ended
31 Dec 2019 31 Dec 2018
(in thousands) US $ (000's) US $ (000's)
------------ ------------
Finance income
Interest from financial
assets..................................................... 5 3
------------ ------------
5 3
------------ ------------
Finance costs
Interest
expense.......................................................................... - -
------------ ------------
- -
------------ ------------
Net finance
income...................................................................... 5 3
------------ ------------
6. Employee numbers and costs (Group and discontinued operations)
The monthly average number of persons employed by the Group
(including Executive Directors but excluding Non-Executive
Directors) and key management personnel during the year, analyzed
by category, was as follows:
Year ended Year ended
31 Dec 2019 31 Dec 2018
------------ ------------
Executive
Directors.................................................................... 2 2
------------ ------------
Key management personnel.................................................... 4 5
------------ ------------
Total(1) 6 7
------------ ------------
(1) The Company had no employees in 2019 and 2018 and only one
employee in 2017.
The aggregate payroll costs of Executive Directors and key
management personnel were as follows:
Year ended Year ended
31 Dec 2019 31 Dec 2018
(in thousands) US $ (000's) US $ (000's)
------------ ------------
Short-term benefits:
Wages and salaries(1)
.................................................................. 2,528 3,040
Social security and other employer costs.............................. 144 234
Share-based payments(2) (3)
........................................................ (424) 941
------------ ------------
2,248 4,215
------------ ------------
(1) Wages and salaries presented are that of the Group. It is
expected that a portion will be part of continuing operations.
(2) The total share-based payments recorded in 2019 reflect the
benefit received from the forfeitures of outstanding and unvested
options (Note 16).
(3) The total share-based payments do not reflect the
out-of-period adjustment recorded in 2017 (Note 16).
7. Directors' remuneration (Group)
On 14 November 2019, the Company's shareholders approved the
Group's proposed corporate restructuring (Note 1). As part of the
restructuring directors Dr. Craig Albanese, Charlotta Ginman, Zaki
Hosny, Dr. Mary Lake Polan, and Andrew Powell resigned from the
board and all directors forfeited all previously outstanding vested
and non-vested option and waived accrued cash fees owed at that
time.
The table below summarizes the director's cash remuneration for
the periods presented.
Salaries Social 2019 2018
and fees Bonuses Security Total Total
US $ (000's) US $ (000's) US $ (000's) US $ (000's) US $(000's)
------------ ------------ ------------ ------------ -----------
Executive
Graham Lumsden(2)
.................................. 446,250 - 17,813 464,063 726,639
Jonathan Gold(1)(2)
..................................
... 600,000 - 18,388 618,388 881,517
Non-executive.....................
......................
Robert Bertoldi(3)
..................................
.... - - - - 134,563
Richard Morgan(4)
..................................
... 56,750 - - 56,750 113,500
Charlotta Ginman(5)
.................................. 43,472 - - 43,472 69,680
Zaki Hosny(5)
..................................
............ 32,625 - - 32,625 62,500
Mary Lake Polan(5)
..................................
.. 30,000 - - 30,000 60,000
Bruce Williams(4)
..................................
..... 48,625 - - 48,625 64,000
Craig T. Albanese(5)
..................................
. 35,000 - - 35,000 57,500
------------ ------------ ------------ ------------ -----------
1,292,722 - 36,201 1,328,923 2,169,899
------------ ------------ ------------ ------------ -----------
(1) The compensation listed above is for Mr. Gold's services as
Executive Director and Chief Financial Officer in 2018 and 2019.
Mr. Gold assumed the executive role of Chief Financial Officer on 2
February 2018.
(2) The compensation for Dr. Lumsden and Mr. Gold excludes US
$8,400 and US $8,400 in employer provided 401k pension contribution
during 2019 and US $8,100 and US $8,100 during 2018.
(3) Effective 16 July 2018, Mr. Bertoldi resigned from the Board
of Directors. Mr. Bertoldi continued to provide consultancy
services under the terms of the consultancy agreement with Amphion
Innovation plc until 31 December 2018. Mr. Bertoldi received no
compensation is 2019.
(4) Effective 18 March 2019, Richard Morgan resigned from the
Board of Directors and his role as Chairman. Bruce Williams was
appointed interim Chairman of the Board at that time.
(5) Members' resignation effective 15 November 2019 (Note
1).
The compensation for Board members continuing in 2020 is
outlined below by individual.
Bruce Williams is to receive a monthly salary of US $2,500 and
is entitled to receive an additional monthly salary of US $2,500
that is deferred and payable only upon the occurrence of a reverse
takeover transaction. or similar transaction.
Graham Lumsden, in his capacity as Non-Executive Director, is to
receive a monthly salary of US $1,250 and is entitled to receive an
additional monthly salary of US $2,500 that is deferred and payable
only upon the occurrence of a reverse takeover transaction or
similar transaction. Further, as a result of his executive service
earlier to May 2020, Dr. Lumsden is entitled to an additional US
$100,000 that is deferred and payable only upon the occurrence of a
reverse takeover transaction or similar transaction.
Chris Wardhaugh, appointed as a Non-Executive Director on 4 May
2020, is to receive a monthly salary of GBP1,000 (GBP) and is
entitled to receive an additional monthly salary of GBP2,000 (GBP)
that is deferred and payable only upon the occurrence of a reverse
takeover transaction or similar transaction.
Jonathan Gold, in his capacity as Chief Financial Officer,
President and Chief Business Officer and Executive Director is to
receive a monthly salary of US $25,000 and is entitled to receive
an additional monthly salary of US $25,000 that is deferred and
payable only upon the occurrence of a reverse takeover transaction
or similar transaction.
8. Income tax expense (Group and Company)
Recognized in the consolidated statement of comprehensive
loss:
Year ended Year ended
Dec 31, Dec 31,
(in thousands) 2019 2018
Current tax expense US $ (000's) US $ (000's)
------------------------------------------------------------------------- ------------ ------------
U.K. corporation
taxes....................................................................
........... - -
Overseas taxes (1)
.............................................................................
........... - 9
------------ ------------
- 9
------------ ------------
(1) The overseas taxes are not expected to be incurred as part
of continuing operations.
The main rate of U.K. corporation tax was reduced from 21% to
19% from 1 April 2015 and has been reflected in these consolidated
financial statements.
The tax expense recognized for the years ended 31 December 2019
and 2018 is lower than the standard rate of corporation tax in the
U.K. of 19%. The differences are reconciled below:
(in thousands) 2019 2018
Reconciliation of effective tax rate: US $ (000's) US $ (000's)
------------------------------------------------------------------------ ---------------- ------------
Loss on ordinary activities before
taxation.......................................... (6,144) (13,976)
------------ ------------
U.K. Corporation tax at
19%.................................................................... 720 921
Overseas tax at higher
rate..................................................................... (2,179) (3,953)
Effects of:
Unrecognized
losses......................................................................
........... (1,375) (3,032)
Other adjustments-overseas
taxes........................................................ - 9
------------ ------------
Total tax charge
............................................................................
............. - 9
------------ ------------
The Company has a net deferred tax asset of US $18 million
related to net cumulative operating losses of US $106 million,
which includes the impairment charges relating to the Company's
operating receivable from and investment in its discontinued
subsidiary Motif BioSciences, Inc. The Group has US $ 128.9 million
of cumulative net operating losses generated as of 31 December
2019. Net operating loss are subject to review and possible
adjustment by taxing authorities and may become subject to an
annual limitation, which could limit the amount of tax attributes
that can be utilized annually to offset future taxable income or
tax liabilities. There is no assurance as to the extent and timing
of the Company's or Group's ability to realize the possible tax
benefits derived from cumulative net operating losses.
9. Loss per share (Group)
Basic loss per share is calculated by dividing the loss
attributable to equity holders of the Group by the weighted average
number of shares in issue during the year. Diluted EPS is computed
by dividing net income (loss) by the weighted average of all
potentially diluted share of common stock that were outstanding
during the periods presented.
The treasury stock method is used in the calculation of diluted
EPS for potentially dilutive liability classified options and
warrants, which assumes that any proceeds received from the
exercise of in-the-money options and warrants, would be used to
purchase common shares at the average market prices for the
period.
The following table shows the derivation of loss per share for
continuing operations.
Year ended Year ended
Dec 31, Dec 31,
2019 2018
(in thousands, except share and per share data) US $ US $
----------- -----------
Basic - continuing operations
Net
gain...............................................................................
........................... 4,235 4,846
Basic weighted average shares in
issue................................................... 350,993,002 284,530,534
----------- -----------
Basic earnings per
share............................................................................. 0.01 0.02
Basic - discontinued operations
Net
loss...............................................................................
........................... (10,378) (18,831)
Basic weighted average shares in
issue................................................... 350,993,002 284,530,534
----------- -----------
Basic loss per
share..............................................................................
....... (0.03) (0.07)
----------- -----------
Diluted - continuing operations
Net
gain.............................................................................
............................. 4,235 4,846
Effect of dilutive securities: liability-classified
warrants....................... - (6,654)
----------- -----------
Diluted net
gain/(loss)......................................................................
........... 4,235 (1,808)
----------- -----------
Weighted average shares in issue -
basic................................................ 350,993,002 284,530,534
Incremental dilutive shares from liability-classified warrants (treasury stock
method)......................................................................... - 2,601,154
----------- -----------
Weighted average shares in issue - diluted
........................................... 350,993,002 287,131,688
----------- -----------
Diluted net
loss.............................................................................
................ 0.01 -
----------- -----------
Diluted - discontinued operations
Net
loss.............................................................................
............................. (10,378) (18,831)
Weighted average shares in issue - diluted
........................................... 350,993,002 287,131,688
----------- -----------
Diluted net
loss.............................................................................
................ (0.03) (0.07)
----------- -----------
The following potentially dilutive securities outstanding at 31
December 2019 and 2018 have been excluded from the computation of
diluted weighted average shares outstanding, as they would be
antidilutive.
2019 2018
---------- ----------
Warrants.............................................................................
............. 54,154,709 12,878,944
Share
options..............................................................................
.... 3,778,563 18,387,038
---------- ----------
57,933,272 31,265,982
---------- ----------
10. Intangible assets (Group and Discontinued Operations)
(in thousands)
As of 31 December 2017
Cost....................................................................................................
.................................................. 6,196
Accumulated amortization and
impairment.................................................................................. -
-------
Net book amount at 31 December
2017....................................................................................... 6,196
Additions...............................................................................................
.............................................. -
Amortization
charge..................................................................................................
........................ -
-------
Net book amount at 31 December 2018
..................................................................................... 6,196
-------
As of 31 December 2018
Cost....................................................................................................
.................................................. 6,196
Accumulated amortization and
impairment.................................................................................. -
-------
Net book amount at 31 December
2018....................................................................................... 6,196
Additions...............................................................................................
.............................................. -
Impairment
charge..................................................................................................
.......................... (6,196)
-------
Net book amount at 31 December 2019
..................................................................................... -
-------
In connection with the group restructuring in 2015, Motif
BioSciences Inc. acquired the assets owned by Nuprim Inc. a
Maryland corporation, related to iclaprim. Group recorded an
intangible asset of US $6.2 million, or the estimated fair value of
the net assets acquired. The intangible asset was considered an
in-process research and development asset that was not yet
available for commercial use. As such, no amortization was
previously recorded.
The Group performs an impairment test over the indefinite lived
asset on an annual basis or when a triggering event has occurred.
As the result of receipt of a Complete Response Letter from U.S.
Food & Drug Administration ("FDA") and the Type A meeting held
with the FDA on 3 May 2019 and subsequent FDA meetings, the Group
concluded a triggering event occurred and as a result conducted an
interim impairment test for iclaprim as of 30 June 2019. In
performing the test, the Group developed a discounted cash flow
model, which utilized assumptions including, but not limited to,
probability of success, market size and related growth assumptions,
market share and related growth assumptions, expected period of
treatment, pricing, patent life, operating costs, and a discount
rate reflective of market conditions and Group specific risk. Our
approach to assigning values to each of our assumptions used within
the impairment test, are consistent with external sources of data,
further adjusted for specific considerations given the uncertainty
described below. The aforementioned discounted cash flow model and
related assumptions took into account the conditions that existed
at 30 June 2019 including the concerns raised by the FDA included
in the minutes of the 3 May 2019 meeting, the uncertainty regarding
the results of the Type B meeting held on 19 September 2019, which
were not be fully known until the minutes to the meeting were
available, and whether it would result in a reasonable path
forward, as well as the uncertainty surrounding the Groups ability
to find a strategic partner on acceptable terms to support the
continued clinical advancement for iclaprim. The assessment also
analyzed the impact of changes to the discount rate and probability
of success. The sensitivity analysis evaluated favorable and
unfavorable changes with a minimum range of 10%. The sensitivity
did not have a meaningful impact to the Group's assessment. The
Group estimated that the net present value of the cash flows of the
Group's indefinite lived intangible asset was a nominal amount. As
a result of the interim impairment assessment, the Group recorded a
non-cash impairment charge equal to the full net carrying value as
of 30 June 2019. The Group reassessed the impairment test as of 31
December 2019, including the evaluation of potential events and
circumstances through the issuance date of these financial
statements, and determined that intangible asset continues to be
impaired.
11. Prepaid expenses and other receivables (Company)
Year end Year end
31 Dec 2019 31 Dec 2018
Amounts due within one year US $ (000's) US $ (000's)
------------- -------------
Prepayments and other receivables..................................... 145 154
-------------
145 154
------------- -------------
The maximum exposure to credit risk at the end of each reporting
period is the fair value of each class of receivables set out
above. The Company held no collateral as security. The Directors
estimate that the carrying value of receivables approximated their
fair value.
12. Cash and cash equivalents (Company)
Year end Year end
31 Dec 2019 31 Dec 2018
US $ (000's) US $ (000's)
------------- -------------
Cash and cash equivalents at bank........................................ 663 560
-------------
663 560
------------- -------------
13. Financial liabilities (Company)
Year end Year end
31 Dec 2019 31 Dec 2018
Amounts due within one year US $ (000's) US $ (000's)
------------- -------------
Trade
payables.........................................................................
. 119 -
Accrued
expenses................................................................... 95 178
Derivative liabilities (Note 15)................................................ 227 5,789
------------- -------------
441 5,967
------------- -------------
The Directors estimate that the carrying value of trade and
accrued expenses approximated their fair value. Trade payables are
generally payable on normal trade terms, usually 30 days.
14. Interest bearing loans and borrowings (Discontinued operations)
31 Dec 2019 31 Dec 2018
US $ (000's) US $ (000's)
------------ ------------
Term loan, non-current .................................................... 3,541 10,345
Unamortized deferred financing costs........................... - (214)
Payment-in-kind interest.................................................. 24 -
------------ ------------
Net non-current............................................................ 3,765 10,131
------------ ------------
Term loan, current portion............................................... 3,325 4,655
Unamortized deferred financing costs........................... - (328)
Payment-in-kind interest.................................................. 211 -
Net current portion...................................................... 3,536 4,327
------------ ------------
Total term loan obligation................................................. 7,301 14,458
------------ ------------
On 15 November 2017, the Group entered into a credit agreement
(the "Hercules Loan Agreement") for up to US $20 million in debt
financing with Hercules Capital, Inc. ("Hercules"). Pursuant to the
credit agreement, Hercules agreed to loan the Group up to US $20.0
million in two tranches. The first tranche of US $15.0 million was
drawn down at closing. The milestones for the second tranche of US
$5.0 million were not achieved and no further funds were drawn
down.
The original terms included an initial interest-only period of
15 months; a 30-month capital and interest repayment period
thereafter; an interest rate tied to a margin the US prime rate
over 4.5% (with a floor of 10%), equating to 10.75% as of 31
December 2019, and customary security over all assets of the Group,
except for intellectual property where there is a negative pledge.
Under the credit agreement, the Group issued Hercules warrants to
purchase up to 73,452 of its ADS (each representing 20 ordinary
shares) at an exercise price of US $9.53 per ADS, representing 3.5%
warrant coverage of the total loan facility. In connection with the
Hercules Loan Agreement closing, the Group incurred US $0.5 million
in fees and issued warrants with a fair value of approximately $0.4
million. Both items are classified as a direct reduction from the
Hercules Loan Agreement balance and were previously being amortized
over the life of the Loan using the effective interest rate method.
In connection with the Amended and Release Agreement dated 27
January 2017, the remaining balance of capitalized fees and
warrants issued at origination was fully amortized as of 31
December 2019. The Group is also subject to an end of term charge
equal to 2.15% of the total loan capacity, or US $0.43 million. The
end of term charge is payable upon loan maturity or the date that
the Group prepays the outstanding loan balance. The entire amount
of the end of term charge was fully accrued for at 31 December
2019.
The Hercules Loan Agreement was amended effective on 17
February, 22 March, 31 July, and 30 August 2019. Pursuant to the
amendments, the Group made early repayments of US $7.5 million and
received an interest-only period on the remaining loan balance for
the period from March 2019 through June 2019 and the months of
August 2019 and September 2019. All prepayment charges for the
remaining term of the loan were waived. In connection with the
amendments to the Hercules Loan Agreement, the Group incurred US
$0.05 in fees and recorded a US $0.06 million modification loss.
The fees were classified as a direct reduction from the Loan
balance and will be amortized over the life of the loan and the
modification loss was recorded as interest expense with a
corresponding adjustment to the Loan balance. As of 31 December
2019, all unamortized financing costs and modification loss were
fully amortized.
On 30 September 2019, the Company announced that it reached an
agreement in principle to amend the Hercules Loan Agreement in a
manner that may allow the shareholders of Motif Bio plc to benefit
from the monetization of the iclaprim asset, while relieving the
Company of its guarantee of the loan. The proposed restructuring
and amendment were approved by shareholder vote on 14 November
2019. The Amendment and Release Agreement was signed on 27 January
2017 and is treated as an adjusting subsequent event (Note 1).
Pursuant to the terms of the Amendment and Release agreement:
-- Hercules relinquished the loan guarantee provided by the
Company and agreed to relieve Motif Bio plc of obligations to
Hercules related to the November 2017 Hercules Loan to Motif
BioSciences Inc.;
-- Motif BioSciences Inc. granted Hercules a perfected security
interest in all its intellectual property;
-- Interest payable for the period October 2019 to May 2020
accrued as paid-in-kind and added to the outstanding principal
balance on each interest date; and
-- Hercules provided a forbearance provision regarding
compliance certificates and default provisions to June 2020.
The Company granted to Hercules warrants over an aggregate of
121,337,041 ordinary shares of 0.01 pence par value ("Ordinary
Shares"), representing a total of 25 per cent of the Company's then
outstanding share capital. These warrants will expire on 27 January
2025 and have an exercise price of 0.42 pence per share. The
warrants previously issued to Hercules on 14 November 2017 to
purchase 73,452 American Depositary Shares were cancelled as a
result of the amendment. All outstanding discounts and modification
loss were amortized to a nil value and the end of term fee was
fully accrued for as of 31 December 2019 as a result of the
amendment.
The Hercules Loan Agreement, as amended, subjects the Group's
formerly controlled subsidiary Motif Biosciences, Inc. to various
affirmative and restrictive covenants, including a perfected pledge
on intellectual property.
15. Warrants (Group and Company)
Warrant activity
The Group has issued warrants for services performed and in
conjunction with various equity financings. The Group's warrants
represent ordinary shares or ADS and have either a Pounds Sterling
or US Dollar exercise price. The ADS warrants are exercisable to
purchase ADS's, which each represent 20 ordinary shares. Depending
on the terms of the warrant agreements, the ordinary share or ADS
warrants are classified as either equity or a liability. Liability
classified warrants are remeasured each reporting period, with
changes in fair value recorded in the statements of comprehensive
loss. The following is a summary of the Group's warrant activity
during the year ended 31 December 2019:
Weighted Average
Number of Warrants Exercise Price
-------------------------- ------------------------
Ordinary shares ADS Ordinary shares ADS
--------------- --------- ----------------- -----
Outstanding as of 1 January 2019 21,915,552 1,336,354 GBP 0.273 $8.08
Granted 127,337,041 - GBP 0.004 -
Cancelled - (123,425) - $8.61
Exercised (830,780) - GBP 0.228 -
--------------- --------- --------- ----
Outstanding as of 31 December 2019 21,915,552 1,336,354 GBP 0.273 $8.02
--------------- --------- --------- ----
The Group's warrants outstanding and exercisable as of 31
December 2019 were as follows:
Type of Warrant Outstanding Number Outstanding and Exercisable Exercise Price Expiration Date
---------------------------- ---------------------------------- ---------------- ----------------
Ordinary shares (1) 724,705 GBP GBP 0.20 April 2, 2020
Ordinary shares (1) 1,082,384 GBP GBP 0.50 July 21, 2020
Ordinary shares (2) 10,317,252 GBP GBP 0.322 23 November 2021
ADS (2)(3) 1,202,902 US $ 8.03 23 November 2021
Ordinary shares (1) 8,960,431 GBP GBP 0.20 April 2, 2025
ADS (2)(3) 10,000 US $ 7.26 July 31, 2022
Ordinary shares (1)(4) 7,142,857 GBP GBP 0.007 27 January 2025
Ordinary shares (2)(4) 121,337,047 GBP GBP 0.004 27 January 2025
Ordinary shares (2)(4) 6,000,000 GBP GBP 0.002 27 January 2025
(1) Warrants totalling 17,910,377 of ordinary shares are equity
classified.
(2) Warrants totalling 137,654,293 of ordinary shares and
1,212,902 of ADS are liability classified.
(3) Each ADS represents 20 ordinary shares.
(4) Warrants totalling 134,479,904 of ordinary shares were
issued on 27 January 2017. The accounting treatment thereof was
recorded as of December31, 2019 as an adjusting subsequent event
(Note 1).
Liability classified warrants
ADS warrants
On 23 November 2016, the Group closed an initial U.S. offering
of 2,438,491 ADS and 1,219,246 ADS warrants at a price of US $6.98
per ADS/Warrant combination. Each ADS represents 20 ordinary
shares. The warrants have an exercise price of US $8.03 per ADS and
expire on 23 November 2021. In the event the Group failed to
maintain the effectiveness of its Registration Statement and a
Restrictive Legend Event has occurred, the warrant shall only be
exercisable on a cashless basis. This would result in variability
in the number of shares issued and therefore, the warrants were
designated as a financial liability carried at fair value through
profit and loss. On issuance of the ADS warrants, the Group
recorded a derivative liability of US $3.8 million using the
Black-Scholes model. The Group develops its own assumptions for use
in the Black-Scholes option pricing model that do not have
observable inputs or available market data to support the fair
value. This method of valuation involves using inputs such as the
fair value of the Group's common stock, stock price volatility of
comparable companies, the contractual term of the warrants, risk
free interest rates and dividend yields. November 26, 2019, the
Company notified NASDAQ Capital Market of its intention to delist
the ADS shares and ADS warrants from trading. The ADS shares and
ADS warrants were voluntarily delisted from trading in December
2019. Due to the nature of these inputs, the valuation of the
warrants is considered Level 1 and 2 measurements.
On 1 August 2017, the Group issued to a third party a warrant to
purchase up to 60,000 ADSs at an exercise price of US $7.26 per
ADS. The warrant vested 5,000 ADSs at issuance, with the remaining
55,000 ADSs vesting upon satisfaction of various performance
conditions related to the Group's stock price and trading volumes.
A total of 10,000 ADSs were vested and outstanding as of 30 June
2019. The performance conditions related to remaining 50,000 ADSs
were not achieved. The vested warrants may be exercised on a
cashless basis and expire on 31 July 2022. Exercising on a cashless
basis would result in variability in the number of shares issued
and therefore, the warrants were designated as a financial
liability carried at fair value through profit and loss. On
issuance of the ADS warrants, the Group recorded a derivative
liability of $0.1 million using the Black-Scholes model.
At issuance, the following assumptions were used in the
Black-Scholes model.
On 14 November 2017, in conjunction with the Hercules Loan
Agreement, the Group issued to Hercules a warrant to purchase up to
73,452 ADSs at an exercise price of US $9.53 per ADS, representing
3.5% warrant coverage of the total loan facility. The warrant may
be exercised on a cashless basis, and is immediately exercisable
through 14 November 2022. Exercising on a cashless basis would
result in variability in the number of shares issued and therefore,
the warrants were designated as a financial liability carried at
fair value through profit and loss. On issuance of the ADS
warrants, the Group recorded a derivative liability of US $0.4
million using the Black-Scholes model. These warrants were
cancelled in connection with the 27 January 2017 amendment to the
Hercules Loan Agreement (Note 14).
At 31 December 2019 and 2018, the liability classified ADS
warrants had a fair value of US $ nil and $3.9 million using the
following weighted-average assumptions in the Black-Scholes
model:
31 December 31 December
2019 2018
----------- -----------
Share price (US $)(1)
.......................................................................................
.... 0.10 6.59
Exercise price (US
$).....................................................................................
.... 8.08 8.08
Expected
volatility.............................................................................
................ 92 % 75 %
Number of periods to
exercise....................................................................... 1.90 2.98
Risk-free
rate...................................................................................
................... 1.58 % 2.46 %
Expected
dividends..............................................................................
............. - -
(1) Effective December 2019 following a voluntary delisting, the
Company's ADS shares are no longer traded on the NASDAQ Capital
Market. The share price utilized represent the Company's ordinary
share price at 31 December 2019 adjusted to reflect the conversion
to ADS equivalents and conversion to the U.S. dollar.
Ordinary warrants
On 23 November 2016, the Group placed 22,863,428 ordinary shares
together with 11,431,714 warrants over ordinary shares at a price
of GBP0.28 per share/warrant combination. The warrants have an
exercise price of GBP0.322 per warrant and expire on 23 November
2021. As the Group has not maintained an effective Registration
Statement, the warrant is now only exercisable on a cashless basis.
This results in variability in the number of shares issued and
therefore, the warrants were designated as a financial liability
carried at fair value through profit and loss. On issuance of the
warrants, the Group recorded a derivative liability of US $1.8
million using the Black-Scholes model.
On 27 January 2017, the Company granted to Hercules Capital Inc.
warrants over an aggregate of 121,337,041 ordinary shares. These
warrants will expire on 27 January 2025 and have an exercise price
of 0.42 pence per share. The Company also granted warrants over
6,000,000 ordinary shares to certain former board members at an
exercise price of 0.24 pence per share that will expire on 27
January 2025. This issuance of these warrants is presented as an
adjusting subsequent event (Note 2 and Note 20).
At 31 December 2019 and 2018, the liability classified ordinary
warrants had a fair value of US $0.2 million and $2.0 million using
the following weighted-average assumption in the Black-Scholes
model:
31 December 31 December
2019 2018
----------- -----------
Share price
(GBP)..................................................................................
............ 0.002 0.31
Weighted exercise price
(GBP)....................................................................... 0.028 0.322
Expected
volatility.............................................................................
................ 85 % 74 %
Number of periods to
exercise....................................................................... 4.77 2.90
Risk-free
rate...................................................................................
................... 1.68 % 2.46 %
Expected
dividends..............................................................................
............. - -
The following is a summary of the Group's liability classified
warrant activity, including both ADS and Ordinary warrants, during
the years ended 31 December 2019 and 2018:
(in thousands) Fair value
Liability classified warrants US $
----------------------------------------------------------------------------------------------------- ----------
Balance at 1 January 2018......................................................................... 12,626
Issued during the
year................................................................................ -
Exercised during the year.......................................................................... (84)
Impact of foreign exchange....................................................................... (99)
Gain from revaluation of derivative liabilities........................................ (6,654)
----------
Balance at 31 December 2018................................................................. 5,789
Issued during the
year................................................................................ -
Exercised during the year.......................................................................... (55)
Impact of foreign exchange....................................................................... (80)
Gain from revaluation of derivative liabilities........................................ (5,427)
----------
Balance at 31 December 2019 ................................................................. 227
----------
16. Share based payments (Group and Company)
Motif Bio plc adopted a Share Option Plan (the "New Plan") on 1
April 2015. The exercise price for each option will be established
at the discretion of the Board provided that the exercise price for
each option shall not be less than the nominal value of the
relevant shares if the options are to be satisfied by a new issue
of shares by the Group and provided that the exercise price per
share for an option shall not be less than the fair market value of
a share on the effective date of grant of the option. Options will
be exercisable at such times or upon such events and subject to
such terms, conditions and restrictions as determined by the Board
on grant date. However, no option shall be exercisable after the
expiration of ten years after the effective date of grant of the
option.
Weighted average
Number of exercise price
share options US $
------------- ----------------
Outstanding at 31 December 2017
........................................................................... 17,065,534 0.32
Granted during the
year..........................................................................
..................... 5,050,000 0.49
Forfeited during the
year..........................................................................
................... (2,656,116) 0.34
Cancelled during the
year..........................................................................
....................... (946,644) 0.56
Exercised during the year
..............................................................................
............. (125,736) 0.14
-------------
Outstanding at 31 December 2018
........................................................................... 18,387,038 0.34
Granted during the
year..........................................................................
..................... 100,000 0.11
Forfeited during the year(1)
..............................................................................
............ (14,549,544) 0.34
Cancelled during the
year..........................................................................
....................... (158,931) 0.56
Exercised during the year -
..............................................................................
............. -
Expired during the -
year..........................................................................
...................... -
-------------
Outstanding at 31 December 2019
........................................................................... 3,778,563 0.50
-------------
Exercisable at 31 December 2019
............................................................................. 3,778,563 0.50
-------------
(1) The options forfeited during 2019 were related to the
corporate restructuring approved by the Company's shareholders at a
general meeting held on 14 November 2019.
The range of exercise prices of the options at 31 December 2019
was US $0.14 - $0.91. The weighted remaining average contractual
term of options outstanding at 31 December 2019 and 2018 was 3.5
years and 6.7 years, respectively. Subsequent to 31 December 2019,
options for 3,024,138 ordinary shares were forfeited. As of the
date these financial statements, options for 745,425 ordinary
shares are outstanding.
The total expense recognized for the years arising from
stock-based payments are as follows:
Year ended Year ended
31 Dec 2019 31 Dec 2018
(in thousands) US $ (000's) US $ (000's)
------------ ------------
General and administrative
expense...................................................... (309) 750
Research and development
expense..................................................... (115) 191
------------ ------------
Total share-based payment (gain)
expense........................................... (424) 941
------------ ------------
For the year ended 31 December 2019, the Company recorded a net
gain of $0.4 million due to the forfeitures that occurred during
the period.
17. Share capital (Company)
On 14 November 2019, each of the Company's ordinary shares of 1
pence par value were divided into one New Ordinary Share of 0.01
pence par value and one deferred share of 0.99 pence stated value.
The deferred shares have no rights and the Company did not issue
any share certificates or credit CREST accounts in respect of them.
The deferred shares are not admitted to trading on AIM and have no
rights to participate in the profits of the Company. In the event
of a wind-down or dissolution of the Company, the deferred shares
shall be entitled to participate pari-passu in the dissolution of
the Company's assets that are in excess of GBP GBP 1 trillion.
The number of New Ordinary Shares in issue and held by each
Shareholder at the time of the Share Capital Reorganisation, was
equal to the number of existing Ordinary Shares in issue
immediately prior to the Share Capital Reorganisation. Only the
nominal value changed with respect to the New Ordinary Share. The
New Ordinary Shares will continue to carry the same rights as those
attached in the previously existing Ordinary Shares, save for the
reduction in nominal value.
The net effect is that the par value for the Company's ordinary
shares changed to 0.01 pence as a result of this sub-division.
Allotted, called up and fully paid: Number US $ (000's)
------------------------------------------------------------------------------------ ----------- ------------
(in thousands, except share data)
Ordinary shares in issue at 31 December
2017....................................................................... 263,519,128 3,589
Issued:
Ordinary shares of 1p
each.........................................................................
....................... 757,315 9
Ordinary shares of 1p
each.........................................................................
....................... 32,258,064 433
Ordinary shares of 1p
each.........................................................................
....................... 125,736 1
Ordinary shares in issue at 31 December 2018(1)
..................................................................... 296,660,243 4,032
----------- ------------
Issued:
Ordinary shares of 1p each(1)
.............................................................................
................. 830,780 7
Ordinary shares of 1p each(1)
.............................................................................
................. 45,000,000 594
Ordinary shares of .01p
each.........................................................................
................... 142,857,143 144
Ordinary shares in issue at 31 December
2019....................................................................... 485,348,166 4,777
----------- ------------
Deferred shares at 31 December 2019(1)
................................................................................... 342,491,023 -
----------- ------------
(1) On 14 November 2019, each ordinary share of 1 pence were
divided into one New Ordinary Share of 0.01 pence par value and one
deferred share of 0.99 pence stated value, as previously described
.
D uring 2019, 830,780 ordinary shares were issued upon the
exercise of warrants.
On 25 March 2019, the Group placed 45,000,000 new ordinary
shares at 6 pence per share and received US $3.3 million of net
proceeds.
On 18 November 2019, the Group 142,857,143 new ordinary shares
at 0.42 pence per share and received US $0.7 million of net
proceeds.
During 2018, 757,315 ordinary shares were issued upon the
exercise of warrants.
On 17 May 2018, the Group placed 32,258,064 new ordinary shares
at GBP0.31 per share. The Company raised US $13.4 million in gross
proceeds and incurred US $0.7 milling of issuance costs in
connection with this offering. These issuance costs, which include
placement fees, are recorded as a reduction in equity.
In June 2018, 125,736 ordinary shares were issued upon the
exercise of a stock option.
Share premium represents the excess over nominal value of the
fair value consideration received for equity shares net of expenses
of the share issue
The Deferred shares were issued pursuant to a corporate
restructuring and consequent capital reorganisation approved by the
Company's shareholders on 14 November 2019 in accordance with which
each Ordinary Share of 1 penny was subdivided into one new ordinary
share of 0.01 pence and one deferred share of 0.99 pence. The
deferred shares have no rights to participate in the profits of the
company and the Company has not issued any share certificates or
credited CREST accounts in respect of them. The deferred shares
were not admitted to trading on AIM.
Retained deficit represents accumulated losses.
The group re-organization reserve arose when Motif Bio plc
became the parent of the Group in 2015. Being a common control
transaction and, therefore, outside the scope of IFRS 3, it was
accounted for as a group re-organization and not a business
combination. The re-organization reserve can be derived by
calculating the difference between the nominal value of the shares
in Motif Bio plc issued to the former shareholders in Motif
BioSciences Inc. and the share capital and share premium of Motif
BioSciences Inc. at the date of the merger. The nominal value of
the Company shares was used in the calculation of the
reorganization reserve.
18. Subsidiaries
Method used
Country of Percentage Percentage to account for
Company name incorporation shareholding voting power investment
---------------------------------- -------------- ------------ ------------ --------------------------
Motif BioSciences Consolidation
Inc................ Delaware, USA 100% 100% (discontinued operations)
The principal activity of Motif BioSciences, Inc. was
proprietary drug discovery research and development. Motif
BioSciences Inc. was incorporated in the US State of Delaware on 2
December 2003 and has its registered office at 251 Little Falls
Drive, Wilmington, Delaware, 19808. Motif BioSciences Inc. has been
reported as discontinued operations in the consolidated statements
of comprehensive loss and the related assets and liabilities have
been presented as held-for-sale in the consolidated balance sheet
as of 31 December 2019. These changes have been applied for all
periods presented. Based on the subsequent event on 27 January
2017, the Company determined at that time that it no longer had the
ability to direct the activities of Motif BioSciences Inc. Based on
its assessment the Company determined that it no longer has control
of Motif BioSciences Inc. in accordance with IFRS 10 Consolidated
Financial Statements. As a result, the Company will not consolidate
Motif BioSciences Inc. in future financial periods.
The Company evaluated the investment and intercompany receivable
balances for impairment as of the 31 December 2019. Based on the
Group's iclaprim intangible asset in 2019 and the operations of
Motif BioSciences Inc. being discontinued, the Company determined
that the probability of recovering both balances was unlikely. As a
result, the Company recorded an impairment charge equal to the full
amount of the respective balances as of 31 December 2019.
19. Related party transactions
Transactions with Amphion Innovations plc and Amphion
Innovations US, Inc.
At 31 December 2018, Amphion Innovations plc and its wholly
owned subsidiary, Amphion Innovations US, Inc., or collectively,
the Amphion Group, owned 8.51% of the issued ordinary shares in
Motif Bio plc. In addition, the Amphion Group previously provided
funding for the activities of Motif BioSciences Inc. through the
issue of convertible interest bearing loan notes, which were
converted to shares in December 2016. Richard Morgan and Robert
Bertoldi were Directors of both the Company and Amphion Innovations
plc in the period. Transactions between the Group and the Amphion
Group are disclosed below:
Advisory and Consultancy Agreement with Amphion Innovations US,
Inc.
On 1 April 2015, the Group entered into an Advisory and
Consultancy Agreement with Amphion Innovations US, Inc. The
consideration for the services is US $120,000 per annum. The
agreement was amended in December 2016 so that either party may
terminate the agreement at any time, for any reason, upon giving
the other party ninety-days advance written notice. The Group paid
$120,000 to Amphion Innovations US, Inc. during each year ending 31
December 2018, 2017 and 2016 in accordance with the terms of the
agreement. The agreement was terminated as of 31 December 2018.
Consultancy Agreement with Amphion Innovations plc
On 1 April 2015, the Group entered into a Consultancy Agreement
with Amphion Innovations plc for the services of Robert Bertoldi,
an employee of Amphion Innovations plc. The consideration for his
services was US $5,000 per month. On 1 November 2015, the
consideration was increased to US $180,000 per annum. On 1 July
2016, the consideration decreased to US $75,000 per annum. The
agreement was for an initial period of 12 months and would
automatically renew each year on the anniversary date unless either
party notifies the other by giving 90-days written notice prior to
expiration. The agreement was amended in December 2016 so that
either party may terminate the agreement at any time, for any
reason, upon giving the other party ninety-days advance written
notice. In July 2017, the Group amended the consulting agreement
with Amphion Innovations plc to increase the annual consideration
to $125,000 to better reflect Robert Bertoldi's time commitment to
the Group with and effective date of 1 January 2017. The Group paid
Robert Bertoldi US $125,000 during the years ended 31 December 2018
and 2017 in accordance with the terms of the agreement. The
agreement was terminated as of 31 December 2018.
20. Subsequent events
On 27 January 2017, the Company and its wholly owned subsidiary,
Motif BioSciences Inc. completed the conditions and actions
described in Note 1 as approved by the Company's Shareholders at a
general meeting held on 14 November 2019, the circular of which was
dated 25 October 2019. Refer to Note 1 for a description of the
completed conditions and actions. The Board evaluated these events
and determined that sufficient conditions existed at the end of the
reporting period and recorded the event as if occurred as of 31
December 2019. Refer to Note 1 for further details.
On 4 May 2020, the Company made the following directorate
changes:
-- Chris Wardhaugh was appointed as a Non-Executive Director;
-- Jonathan Gold, the Company's Chief Financial Officer, was
appointed as President and Chief Business Officer; and
-- Graham Lumsden, the Company's Chief Executive Officer,
stepped down from his role as CEO and become a Non-Executive
Director.
On 5 May 2020, the Company placed 162,500,000 new ordinary
shares at GBP0.004 per share and received US $0.76 million of net
proceeds.
On 29 July 2020, the London Stock Exchange suspended the trading
in the Company's AIM securities pursuant to AIM Rule 40. The AIM
rules provide that the Company will have an additional six months
from the suspension date to complete a qualifying transaction. If
the Company does not complete a qualifying transaction by 28
January 2021, the Company's shares will be delisted from the AIM
market.
On 7 August 2020, Motif BioSciences, Inc. received a notice from
its lender Hercules Capital Inc. ('Hercules') as to their intention
to foreclose on the collateral, of intellectual property of
iclaprim. Under the terms and condition of the Amended and Restated
Loan Agreement (Note 14), Hercules claim is to be only for the
amount due to them including accrued interest and fees, and that
this applies even in circumstances where Hercules forecloses on the
iclaprim asset.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR BGGDICSXDGGG
(END) Dow Jones Newswires
September 01, 2020 02:00 ET (06:00 GMT)
Grafico Azioni Motif Bio (LSE:MTFB)
Storico
Da Dic 2024 a Gen 2025
Grafico Azioni Motif Bio (LSE:MTFB)
Storico
Da Gen 2024 a Gen 2025
