QCA Code
Compliance Statement

Realm Therapeutics plc (the “Company” or “Realm”) is firmly committed to business integrity, high ethical values, and professionalism in its activities and operations. As an essential part of this commitment, the Company’s board of directors (the “Directors” and “Board”) endorses the highest standards of corporate governance and is accountable to the Company’s shareholders.

The Board has adopted the Quoted Companies Alliance Corporate Governance Code (the “QCA Code”), which it believes is the code that is most suitable for the Company, its subsidiaries and subsidiary undertakings (together, the “Group”), having regard to its strategy as well as its size, nature and resources.

The following is a high-level summary of the Group’s compliance with the QCA Code principles as at the date of this statement. The Board will provide annual updates on the Group’s compliance with the QCA Code in its annual report and accounts and on its website.

Principle 1: Establish a strategy and business model which promote long-term value for shareholders

The Company is dedicated to the discovery and development of novel therapeutics that improve the health of adults and children. The Company has a proprietary technology platform of stabilized high concentration hypochlorous acid (HOCl), including an FDA 510(k)-cleared anti-itch hydrogel, previously marketed as Aurstat™, and indicated for the management and relief of pain, burning and itching experienced with various dermatoses, including atopic dermatitis, allergic contact dermatitis and radiation dermatitis and a royalty stream from the Vashe® Wound care portfolio of products out-licensed to a third party. 

Realm announced on September 17, 2018, that following an analysis of the results of its study of its product candidate PR022 in Atopic Dermatitis, the Company has decided to discontinue all of our drug development programs, which are all based on the Company’s proprietary technology .The Company further announced that is currently exploring strategic alternatives, which may include: an acquisition of another company; acquisitions or in-licensing of products, product candidates, technologies or other assets; the licensing or sale of all, or substantially all of the assets of the Company; a strategic merger or other business combination; or another transaction between Realm and a third party.

Further information on the Group’s strategy and business model can be found on the Company’s web site under Press Releases, under Financial Reporting, SEC Filings.

The key challenges to the business are detailed on the Company’s web site under Press Releases, under Financial Reporting, SEC Filings.

Principle 2: Seek to understand and meet shareholder needs and expectations

The Group values its dialogue with both institutional and private investors.

Effective two-way communication with fund managers, institutional investors, and analysts is actively pursued and encompasses issues such as performance, policy and strategy. The Group maintains regular contact with institutional shareholders through one-to-one visits and briefings. Contact with major shareholders is principally maintained by the Chief Executive Officer, Chief Financial Officer, Non-Executive Chair and Senior Independent Director who ensure that shareholder views are communicated to the Board as a whole. The principal point of contact for shareholders is the Senior Independent Director.

Private investors are encouraged to participate in the Company’s Annual General Meeting (“AGM”), at which Directors, including the Non-Executive Chair and the chairs of the Audit and Remuneration Committees are available to review the results, comment on current business activity and to answer questions. Results of our latest AGM, held on 14 June 2018, can be found here.

Further information on our shareholder engagement strategy can be found on page 29 of the 2017 Annual Report and the Corporate Governance section of our website, available here.

Shareholders can request further information or a meeting here.

Principle 3: Take into account wider stakeholder and social responsibilities and their implications for long-term success

Our commitment is a promise to employees, communities, and other stakeholders that the Group will strive to make a positive contribution to the world . The Group strives to be a business that suppliers respect as a strategic partner, that employees are proud to work for, that communities recognize as a contributor, and that investors value.

Our core values can be found here.

The Group recognizes the value of communication in fostering teamwork, promoting employee morale, and managing the business. The Group strives for a culture of open communication, free exchange of ideas, and innovation through thought and dialogue. The Group regularly and actively engages its team members through timely communication of Group news and information in a variety of formats. Management solicits and encourages feedback from all team members and actively engages in dialogue across all management levels. The Group maintains a policy of accessibility of senior management to all staff.

The Group supports its local communities by maintaining sound business practices and by acting as a good corporate citizen and a valued employer. The Group is a responsible member of its local business communities and an active member of business organizations that advance human health. Additionally, the Group provides corporate support for certain local charitable causes such as food drives, and support for needy families during the holiday season, and encourages all team members to actively participate in and support charitable causes of their choice.

Throughout its business activities, the Group is committed to the basic tenets of conservation: reduce, reuse, and recycle. Details of the Groups conservation and recycling program can be found here.

Human rights
The Group does not use any form of forced, compulsory, or child labor. The Group supports the Universal Declaration of Human Rights of the United Nations and respects human rights, the dignity and privacy of the individual, the right of employees to freedom of association, freedom of expression, and the right to be heard.

Principle 4: Embed effective risk management, considering both opportunities and threats, throughout the organisation

The role of the Board is to provide strategic leadership to the Group within a framework of prudent and effective controls, which enables risk to be assessed and managed. The Directors are responsible for the Group’s system of internal control and reviewing its effectiveness and confirm that the Board has acknowledged this responsibility. The Directors further confirm that there is an ongoing process for evaluating internal controls and effectiveness as well as identifying, evaluating, and managing the significant risks facing the Group.

The Board considers risk to the business at every Board meeting (at least four meetings are held each calendar year with five held in 2017) and risks asssessment are considered at each meeting. The Board receives periodic reports from both the Audit and Remuneration Committees. The Group formally reviews and documents the principal risks to the business at least annually.

Both the Board and management are responsible for reviewing and evaluating risk. Management regularly reports to the Board on the key risks inherent in the business and on the way in which these risks are mitigated.

Further information on the Group’s internal control systems and risk management can be found on pages 28 and 29 of the 2017 Annual Report.

Principle 5: Maintain the board as a well-functioning, balanced team led by the chair

The Group is currently led and controlled by a Board comprising seven Directors: the Non-Executive Chair, the two Executive Directors, the Senior Independent Non-Executive Director, and three Independent Non-Executive Directors. All Directors are subject to re-election at least once every three years.

As the Non-Executive Chair, I, Charles Spicer, am responsible for ensuring the efficient and effective working of the Board as well as for implementing the strategy of the Group and ensuring the effectiveness of executive functions. He leads the Board in the determination of the Group’s long-term strategy and the achievement of its objectives. The Senior Independent Director, Joseph Willisam Birkett, is responsible for assisting the Chair with Board meeting processes, setting agendas, as needed, presiding at meetings of the Non-Executive Directors at least once per year and meeting with shareholders and understanding their issues and concerns, as needed.

The Board is responsible for overall Group strategy, approval of major expenditures and consideration of significant financing and corporate structure matters. To enable the Board to discharge its duties, all Directors have full and timely access to all relevant information and there is a procedure for all Directors, in furtherance of their duties, to take independent professional advice, if necessary, at the expense of the Group. All Board members have access to advice from the Company Secretary.

The Group has effective procedures in place to monitor and address conflicts of interests. The Board is aware of the commitments and interests of its Directors and changes to these commitments and interests are reported to and, where appropriate, agreed with the rest of the Board.

Principle 6: Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities

The Board is satisfied that, between the Directors, it has an effective and appropriate balance of skills and experience required to execute the Group’s strategy. Full biographical details of the Directors are available here and on pages 23 and 24 of the 2017 Annual Report.

The Directors are provided with regular updates on regulatory and industry-specific developments by way of meetings with Management and, where appropriate, external parties. All directors attend various corporate events which have relevance to the business.  Appropriate training is also available to all Directors to develop their knowledge and ensure they stay up-to-date on matters for which they have responsibility as a Board member.

Principle 7: Evaluate board performance based on clear and relevant objectives, seeking continuous improvement

The Board carries out an evaluation of its performance annually. The performance of Executive Directors is evaluated by the Remuneration Committee. Each year the Executive Directors agree personal objectives and targets, including financial and non-financial metrics, against which their performance is measured. These may include clinical trial achievement milestones, completion of regulatory filings, new business development, and execution against Board approved budgets.

The Board gives on-going consideration to the suitability, contributions and commitment of the Directors, based on their attendance, engagement and contributions to Board and Committee meetings.  Further the Board continuously evaluates the skills or experiences of the Board as a whole and makes changes in board composition as needed.

Principle 8: Promote a corporate culture that is based on ethical values and behaviours

Throughout the organization and in business dealings, the Group is driven by its passionate commitment to improving the health of adults and children (the “Core Purpose”).

The driving forces behind the Group and the achievement of the Core Purpose are the people and how they conduct business. The Company is committed to creating a culture that values individual and collective energy, spirit, leadership, and innovation. To realize the Core Purpose and to facilitate such a culture, the Group has developed the Core Values (the “Core Values”). The Group's Core Values are the foundation of its human capital force and organizational culture. Each employee makes a commitment to adhere to the Core Values statement .  All employees have committed themselves to adhere to the Realm Therapeutics Code of Conduct, , which can be found here.

The Group recognizes that it is stronger and more effective as a team than as individuals. The Group supports an open, communicative culture in which individuals are encouraged to offer suggestions for improvement. The Group recognizes that diversity is a source of strength and listens to differing viewpoints so management can constructively solve problems. Fostering strong teamwork allows an opportunity for each individual's suggestions to be heard, empowering employees and encouraging necessary risk-taking.

Principle 9: Maintain governance structures and processes that are fit for purpose and support good decision-making by the board

The Board endorses the highest standards of corporate governance. The Board’s ability to make decisions that support its strategy and benefit stakeholders is a function of, among other things, its composition and competence (see Principles 5 and 6, above), its committees (described below), its internal controls (see Principle 4, above) and engagement with stakeholders, including shareholders and employees (see Principle 3, above).

The Board is supported by the Audit and Remuneration Committees, which report periodically to the Board.

The Audit Committee is responsible for monitoring the controls that are in force to ensure the integrity of the information reported to the shareholders. The Audit Committee acts as a forum for discussion of internal control issues, including review of the enterprise risk management programme, and contributes to the Board’s review of the effectiveness of the Group’s internal control and risk management systems and processes. The Audit Committee advises the Board on the appointment of external auditors and their remuneration for both audit and non-audit work. The Audit Committee’s charter is available here.

The Remuneration Committee is responsible for making recommendations to the Board on the Group’s framework of executive remuneration. The Remuneration Committee determines the contract terms, remuneration, and other benefits for Executive Directors including performance related cash and equity bonus schemes and performance targets, retirement plan rights, and other compensation. The Board determines the remuneration of the Non-Executive Directors. The Remuneration Committee’s terms of reference are available here.

The composition of the Board is of fundamental importance to the Group’s success. Taking into account the Group’s size, stage of development and the value added by its Directors, the Board considers that any new appointments should be reviewed and approved by the Board as a whole. The Group therefore departs from the QCA Code in not having a separate Nomination Committee.

Please see our Corporate Governance Statement on pages 28 to 30 of the 2017 Annual report for further information about the Board and its committees.

Principle 10: Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders

The Group communicates with shareholders through the annual report and accounts, at the AGM and individual meetings with large potential or existing shareholders, where requested. A significant volume of corporate information (including all of the Group’s announcements and presentations) is available to shareholders, investors and the public on our website, available here.

Please see Principles 2 and 3 (above) for further information on how the Group maintains dialogue with shareholders and other stakeholders

The Corporate Governance Statement on pages 28 to 30 of the 2017 Annual Report contains a detailed description of the way in which the Group is governed. Our next annual report and accounts will include an independent Audit Committee report (in addition to the independent auditor’s report) and a Remuneration Committee report, each outlining their specific work throughout the year.


Charles Spicer
Non-Executive Chair

27 September 2018

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