Realm Therapeutics - Final Results

May 2, 2018
RNS Number : 8258M
Realm Therapeutics PLC
02 May 2018
 

THIS ANNOUNCEMENT IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO OR FROM THE UNITED STATES OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE OR DISTRIBUTION WOULD BE UNLAWFUL. THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE AN OFFER OR AN INVITATION TO ACQUIRE OR DISPOSE OF ANY SECURITIES. ATTENTION IS ALSO DRAWN TO THE IMPORTANT NOTICE AT THE END OF THIS ANNOUNCEMENT.

 

Realm Therapeutics plc

("Realm Therapeutics", "Realm" or the "Company") 

Final Results for the Year Ended December 31, 2017 and Business Update

 

Year of progress with two IND applications submitted, two clinical trials commenced

and private placement completed 

 

2 May 2018 - Realm Therapeutics plc (AIM: RLM), a clinical stage biopharmaceutical company focused on developing novel therapeutics for immune-mediated diseases, today announces its final results for the year ended December 31, 2017 and provides an update on its progress and clinical programs.

 

Alex Martin, Chief Executive Officer of Realm Therapeutics, said:

 

"In 2017, we successfully established Realm as a clinical stage biopharmaceutical company with the submission and clearance of two INDs that enabled us to begin two Phase 2 studies during the year.  We also successfully completed a private placement raising gross proceeds of £19.3 million and attracting several leading US and UK specialist healthcare investors to the Company.

 

"We look forward in 2018 to reporting results in our Atopic Dermatitis Phase 2 study and to continuing to deliver on established milestones in our AD and Acne programs.  We believe our proprietary immunomodulatory technology has potential application in other immune mediated diseases.  I would like to thank our shareholders, employees, directors and advisors who all contributed to a successful year in 2017."

 

 

2017 BUSINESS HIGHLIGHTS

 

·      Submitted an Investigational New Drug (IND) application for PR022, a topical gel, for the treatment of Atopic Dermatitis and received clearance from the US Food and Drug Administration (FDA) to move directly into a Phase 2 clinical study which was initiated in December 2017.

·      Submitted an IND application for PR013, a topical ophthalmic solution, for the treatment of Allergic Conjunctivitis and received clearance from the FDA to move directly into a Phase 2 clinical study which was initiated in December 2017.

·     Completed a private placement, raising gross of £19.3 million, or $25.4 million, in October 2017 and attracting several leading specialist healthcare investors, including OrbiMed, BVF, RA Capital, Abingworth and Polar Capital, to the Company.

·      In November 2017, the peer review journal Clinical & Experimental Allergy, published an article demonstrating PR022's ability to prevent the development of Atopic Dermatitis-like lesions, reduce existing lesions and associated scratching, and reduce the inflammatory response. PR022 demonstrated immunomodulatory effects without the immunosuppressive impact commonly associated with steroids, the current standard of care. 

 

2017 FINANCIAL HIGHLIGHTS

 

·      Cash, cash equivalents and short-term investments available for sale of $33.9 million as at 31 December 2017 (2016: $21.4m)

·      Gross proceeds from the completion of a private placement in October 2017 of £19.3 million ($25.4 million)

·      Loss from continuing operations* of $10.5 million (2016: $7.3m loss) reflecting higher R&D investments

 

* Continuing operations comprise the Group's drug development activities, the out-licensing of the Wound Care business, and the operations of Realm Therapeutics plc.

 

POST-PERIOD EVENTS

 

·      In March 2018, ceased clinical development of PR013 for Allergic Conjunctivitis, which has a different immunologic pathology to Atopic Dermatitis, following results of the Phase 2 clinical trial which did not demonstrate efficacy.

·      Today the Company announced the confidential submission of a registration statement to the US Securities and Exchange Commission (SEC) in connection with a proposed listing of American Depositary Shares (ADSs) representing the Company's ordinary shares on the Nasdaq Global Market (Nasdaq). The registration statement was submitted to facilitate the creation of a trading market in the US for ADSs representing the Company's ordinary shares and in satisfaction of Realm's obligations under a registration rights agreement entered into with investors who participated in the Company's October 2017 private placement. The Company is not proposing to register any new issuance of securities.  The registration statement is subject to ongoing review by the SEC, and the proposed listing of ADSs representing the Company's ordinary shares is subject to approval by Nasdaq.  The Company expects that its ordinary shares will continue to be admitted to trading on the AIM market of the London Stock Exchange.

 

 

DRUG DEVELOPMENT PIPELINE UPDATE

 

PR022 for Atopic Dermatitis

 

Our lead product candidate, PR022, is currently undergoing a Phase 2 clinical trial, from which we expect to report top-line data in the third quarter of 2018.  PR022 is topical gel containing the active ingredient hypochlorous acid (HOCl) that offers a differentiated mechanism of action for the treatment of Atopic Dermatitis. PR022 is a topical IL-4/IL-13 inhibitor. Atopic Dermatitis affects an estimated 20 million people in the US, including up to 20% of children and up to 3% of adults. Analysts project the US market for Atopic Dermatitis treatments, excluding steroids, to grow to $5 billion by 2022 and we estimate that PR022 has the potential to be a $1 billion product in the US alone.

 

Additional Indications

 

We are developing a new product candidate, RLM023, a topical formulation of HOCl for Acne Vulgaris, or common Acne. We plan to file an IND application for Acne Vulgaris in the fourth quarter of 2018 and, pending FDA clearance, to initiate a Phase 2 proof of concept study in the first quarter of 2019. We may use the PR022 formulation for the initial proof of concept study in Acne to expedite entry into the clinic.  

 

Acne is the most common chronic skin condition affecting approximately 45 million people in the US, or 14% of the population.  Analysts valued the prescription market for Acne at close to $5 billion in the US in 2017, with expectations of continued growth.

 

In addition, we are currently evaluating our formulations for the potential treatment of Psoriasis.  Psoriasis is the largest indication in dermatology with analysts estimating nearly $6 billion in sales in the US in 2017, primarily attributable to biologics. We believe a topical alternative would be attractive to patients. Our ongoing in vitro pre-clinical studies and research coupled with the results of our Atopic Dermatitis study will inform the next steps in our development of a potential treatment of Psoriasis.

 

2017 Results and Business Update Conference Call and Audio Webcast

 

Realm will review 2017 results and provide a general update in a conference call and audio webcast today, 2 May 2018, at 9 am ET, 6 am PT, and 2 pm BSTTo participate, please dial 855-857-0686 or 631-913-1422 from the US or 08003589473 or +44 3333000804 from the UK and in either case enter the pin code 26292059#. A live audio webcast will be available on the Events & Presentations page of Realm's Investor Relations website: www.realmtx.com.

 

2017 Annual Report Availability

 

Realm Therapeutics' 2017 Annual Report and Accounts will be available in due course on the Company's website at www.realmtx.com and subsequently will be posted to those shareholders who have not elected to receive the document electronically.

 

2018 Notice of Annual General Meeting and Form of Proxy Availability

 

Realm Therapeutics' 2018 Annual General Meeting will be held at the offices of CMS Cameron McKenna Nabarro Olswang, LLP, Cannon Place, 78 Cannon Street, London EC4N 6AF on 14 June 2018 at 10 am BST. The 2018 Notice of Annual General Meeting and Form of Proxy will be available in due course on the Company's website at www.realmtx.com and subsequently will be posted to shareholders.

 

2017 Passive Foreign Investment Company (PFIC) Annual Information Statement

 

Realm's 2017 PFIC Annual Information Statement will be posted today to the Investor Relations section of the Company's website at www.realmtx.com under the Investor Resources tab.  US shareholders are advised to consult with their tax advisors with respect to the 2017 PFIC Annual Information Statement.

 

About Realm Therapeutics

 

Realm Therapeutics is a clinical-stage biopharmaceutical company developing novel therapeutics that target the interplay between innate and adaptive immunity. The Company's programs seek to influence immune signaling and change the course of immune-mediated diseases in adults and children. Realm's lead drug development program utilizes the Company's proprietary immunomodulatory technology for the treatment of Atopic Dermatitis, and the Company is exploring its efficacy in other dermatology indications which include Acne Vulgaris and Psoriasis, as well as other therapeutic areas. For more information on Realm Therapeutics please visit www.realmtx.com.

 

Forward Looking Statements

 

Certain statements made in this announcement are forward-looking statements, including with respect to the Company's clinical trials and product candidate development plans. These forward-looking statements are not historical facts but rather are based on the Company's current expectations, estimates, and projections about its industry; its beliefs; and assumptions.  Words such as 'anticipates,' 'expects,' 'intends,' 'plans,' 'believes,' 'seeks,' 'estimates,' and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and other factors, some of which are beyond the Company's control, are difficult to predict, and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including clinical developments and regulatory review of product candidates. The Company cautions shareholders and prospective shareholders not to place undue reliance on these forward-looking statements, which reflect the view of the Company only as of the date of this announcement. The forward-looking statements made in this announcement relate only to events as of the date on which the statements are made. The Company will not undertake any obligation to release publicly any revisions or updates to these forward-looking statements to reflect events, circumstances, or unanticipated events occurring after the date of this announcement except as required by law or by any appropriate regulatory authority.

 

Contacts:

Realm Therapeutics plc

Alex Martin, Chief Executive Officer

Marella Thorell, Chief Financial Officer and Chief Operating Officer

Outside US:  +44 (0) 20 3727 1000

US:  +1 212 600 1902

 

Argot Partners

Stephanie Marks/Susan Kim

+1 212 600 1902

 

FTI Consulting

Simon Conway / Mo Noonan

+44 (0) 20 3727 1000

 

N+1 Singer (Nominated Adviser and Broker) 

Aubrey Powell / Jen Boorer

+44 (0) 20 7496 3000

 

 

Chief Executive Officer's Report

2017 was an excellent year for Realm as we successfully established ourselves as a biopharmaceutical company executing on our key milestones.

 

Proprietary Immunomodulatory Platform Technology

 

We continue to enhance our proprietary technology which is centered around stabilizing high concentrations of hyphochlorous acid (HOCl). Realm's strategic focus is to develop novel prescription medicines for immune-mediated diseases, and our proprietary formulations have demonstrated broad-spectrum immunomodulatory properties that impact both the innate and adaptive immune systems. With evidence of anti-inflammatory and anti-pruritic effects, as well as the ability to modulate key cytokines, we believe our proprietary technology has application in dermatology as well as potentially other inflammatory diseases.

 

PR022 for Atopic Dermatitis

 

Our lead product candidate, PR022, is a topical gel currently being developed for the treatment of Atopic Dermatitis. Atopic Dermatitis, commonly known as eczema, is a chronic, relapsing, inflammatory disease characterized by itchy, inflamed skin.  Patients with Atopic Dermatitis are at an increased risk for secondary infections, due to the impaired function of their skin barrier, and further skin damage caused by intense itching and scratching.

In 2017, we submitted an Investigational New Drug (IND) application for PR022, and as a result of the robust data package we provided, the US Food & Drug Administration (FDA) allowed us to proceed directly into a Phase 2 clinical trial.  We subsequently initiated the Company's first clinical study and are on track to report top-line results in the third quarter of 2018.

 

We believe PR022 has the potential to offer patients suffering from Atopic Dermatitis an alternative treatment to steroids, the current standard of care, which can have significant side effects. In November 2017, Clinical & Experimental Allergy published data demonstrating PR022's ability to prevent the development of Atopic Dermatitis-like lesions, reduce existing lesions and associated scratching, and reduce the inflammatory response. PR022 demonstrated immunomodulatory effects, reducing key cytokines, including IL-4 and IL-13 which are associated with Atopic Dermatitis, and reducing itch, without the immunosuppressive impact, such as weight loss and skin thinning often associated with steroids. We believe that the potentially advantageous safety profile of PR022 is particularly attractive for the treatment of Atopic Dermatitis, which has a large pediatric patient population.

 

Atopic Dermatitis represents a large market opportunity, with growing prevalence and an unmet need, affecting an estimated 20 million people in the US, including up to 20% of children and up to 3% of adults. Analysts project the US market for Atopic Dermatitis treatments, excluding steroids, to grow to $5 billion by 2022 and we estimate that PR022 has the potential to be a $1 billion product in the US alone.

 

Additional Indications

 

We believe the anti-inflammatory and immunomodulatory properties of Realm's proprietary technology provide scientific rationale for exploring other indications.

 

We are developing RLM023 for Acne Vulgaris (common Acne), which is the most common chronic skin condition affecting approximately 45 million people in the US, or 14% of the population. Analysts valued the prescription market for Acne at close to $5 billion in the US in 2017, with expectations of continued growth. Current topical treatment options for Acne have safety drawbacks, and we believe a treatment for Acne with potent antimicrobial and anti-inflammatory properties, as well as a potentially advantageous safety profile, would be welcomed by patients. We plan to file an IND application for Acne Vulgaris in the fourth quarter of 2018 and, pending FDA clearance, to initiate a Phase 2 proof of concept study in the first quarter of 2019.

  

In addition, we are currently evaluating our formulations for the potential treatment of Psoriasis. Psoriasis is a common chronic autoimmune disorder of the skin characterized by focal formation of inflamed, raised plaques that constantly shed scales derived from excessive growth of skin epithelial cells. Psoriasis is the largest indication in dermatology with analysts estimating nearly $6 billion in sales in the US in 2017, primarily attributable to biologics. We believe that a topical alternative would be attractive to patients.

 

PR013 for Allergic Conjunctivitis

 

In March 2018, we announced that in a Phase 2 clinical trial for Allergic Conjunctivitis, an ophthalmic disease, our product candidate PR013, a topical solution, did not demonstrate efficacy.  As a result, we are no longer pursuing the clinical development of PR013 in Allergic Conjunctivitis. Although these results were disappointing, Allergic Conjunctivitis has a different immunologic pathology Atopic Dermatitis.  We remain confident in our technology's potential to deliver immunomodulatory and anti-inflammatory benefits in dermatology, and continue to believe that it has potential for application in other disease areas as well.

 

Planning for Realm's Future

 

In October 2017, we completed a private placement of £19.3 million, or $25.4 million, gross proceeds, comprising the issuance of 66.4 million ordinary shares (and warrants to subscribe for an additional 26.6 million ordinary shares) to US and UK healthcare specialist funds including OrbiMed, BVF Partners, RA Capital, Abingworth and Polar Capital, as well as certain other new and existing investors. We are extremely pleased to have the support of these leading specialist investors who believe in the potential of our proprietary technology. We have transformed Realm into a clinical stage biopharmaceutical company and are confident in our ability to continue delivering on the milestones we have set for ourselves. We are excited about the progress we are making as well as by the opportunities we see to expand our pipeline by leveraging our existing technology and through in-licensing complementary novel therapies.

 

Thank you to our shareholders, employees, board members, and advisors - your support has been and remains critical to Realm's accomplishments. We look forward to continued success together. 

 

Alex Martin

Chief Executive Officer

2 May 2018

 

Chief Financial Officer's Report

 

Realm Therapeutics is the Company and the Group represents the Company and its subsidiaries.

2017 results and 2016 continuing operations comprise the Group's drug development activities, the out-licensing of the Wound Care business, corporate costs of operating Realm Therapeutics, Inc. and costs of operating Realm Therapeutics plc. Group results described in this report reflect continuing operations, unless otherwise noted.

The Supermarket Retail (SR) business was sold in October 2016; therefore, the SR business results presented for 2016 in the Statement of Comprehensive Income are reflected as discontinued operations. The Cash Flow Statement for the period ended 31 December 2016 reflects SR results and the disposal accounting within operating and investing activities.

 

Financial Focus

Realm Therapeutics is a clinical stage biopharmaceutical company.  The Group's financial results for the continuing operations reflect investment in pre-clinical and clinical development activities and general research and development (R&D), together with investment in business infrastructure to support these activities and the operations of Realm Therapeutics plc.

 

Financing

In October 2017, the Group completed a private placement with existing and new investors and issued 66.4 million units (consisting of one ordinary share and one warrant to subscribe to 0.4 ordinary shares) for net proceeds of $23.2 million after deal costs.

 

The Group expects its cash resources (comprising cash, cash equivalents and short-term investments), which were $33.9 million as at 31 December 2017 and $29.0 million as at 31 March 2018, to fund the current Phase 2 clinical trial for Atopic Dermatitis, the work necessary to support the filing of an Investigational New Drug (IND) application in Acne Vulgaris, an Acne Phase 2 proof of concept study and other research and development efforts.  The Board is considering a variety of options to finance the development and advancement of our pipeline candidates beyond these milestones and to evaluate other potential therapeutic areas.

 

Revenues

Revenues in 2017, comprising Wound Care royalties, were $1.1 million (2016: $0.9m primarily royalties), reflecting contract minimums.

 

Operating Expenses

Operating expenses from continuing operations increased to $11.8 million (2016: $8.1m) reflecting advancement of two of the Group's candidates into clinical development. Investment in R&D increased to $8.2 million (2016: $5.0m) primarily due to pre-clinical and clinical development cost, toxicology studies and regulatory support as two IND applications were filed and thereafter two Phase 2 clinical trials (for PR022 and PR013) were initiated during the year. G&A spending increased to $3.6 million (2016: $3.0m) primarily due to the fact that $1.0 million of overhead costs, were allocated to the discontinued operations in 2016 with none being allocated in 2017.

 

Loss from Continuing Operations

Loss from continuing operations was $10.5 million (2016: $7.3m), primarily due to greater investment in R&D as noted above.

 

Cash Flow

Cash, cash equivalents and short term investments available for sale as at 31 December 2017 were $33.9 million (as at 31 December 2016: $21.4m). Net cash used in operating activities of continuing operations was $9.5 million (2016: $4.9m for continuing and discontinued operations) primarily attributable to loss from continuing operations offset by non-cash charges and changes in working capital.

 

In 2017, net cash proceeds of $23.2 million (after deal costs), were realized from the issuance of ordinary shares and warrants to subscribe for ordinary shares in the private placement.

 

In 2016, net cash proceeds of $11.8 million were realized from the sale of the Supermarket Retail business (after accounting for deal costs paid), and $1.1 million was used in 2017 for the payment of disposal costs accrued at 31 December 2016. The Group used $0.2 million in 2017 (2016: $0.8m for continuing and discontinued operations) to purchase fixed assets. The Group had no outstanding debt as at 31 December 2017 or 2016.

 

Marella Thorell

Chief Financial Officer and Chief Operating Officer

2 May 2018

 

Consolidated Statement of Comprehensive Income

For the Years Ended 31 December

 

 

2017

$

2016

$

CONTINUING OPERATIONS *

 

 

 

Revenue

 

1,120,840

 866,937

Cost of sales

 

-

 (120,906)‌‌

 

 

 

 

Gross Profit

 

1,120,840

 746,031

 

 

 

 

Research and development expenses

 

(8,189,196)

(5,049,043)‌‌

General and administrative expenses

 

 (3,622,796)

(3,003,910)‌‌

 

 

 

 

Total operating expenses

 

(11,811,992)

(8,052,953)‌‌

 

 

 

 

Loss from Continuing Operations before Interest and Tax

 

 

(10,691,152)

 

(7,306,922)‌‌

 

 

 

 

Finance income

 

58,082

 2,875

Total Finance income

 

58,082

 2,875

 

 

 

 

Loss from Continuing Operations before Taxation

 

(10,633,070)

(7,304,047)‌‌

Taxation benefit / (expense) on Continuing Operations

 

107,687

(26,612)

 

 

 

 

Loss from Continuing Operations

 

(10,525,383)

(7,330,659)‌‌

 

 

 

 

DISCONTINUED OPERATIONS

 

 

 

Profit from Discontinued Operations including Gain on Sale

 

 

 -

 

 6,823,418

 

 

 

 

Loss for the Year Attributable to Equity Holders of the Parent

 

 

(10,525,383)

 

 (507,241)‌‌

 

 

 

 

Other Comprehensive Income / (Loss):

 

 

 

Items that Are or May Be Reclassified to Profit and Loss:

 

 

 

Unrealized gain on investments

 

13,748

-

Foreign currency translation differences for foreign operations

 

 

(21,899)

 

 (11,155)‌‌

 

 

 

 

Total Comprehensive Loss for the Period Attributable to Equity Holders of the Parent

 

 

(10,533,534)

 

 (518,396)‌‌

 

 

 

 

Loss per Share, Basic and Diluted

 

(0.16)

 (0.01)‌‌

 

 

 

 

Loss per Share, Continuing Operations, Basic and Diluted

 

 

(0.16)

 (0.15)‌‌

* Continuing Operations comprise the Group's drug development activities, out-licensed Wound Care business and costs associated with operating Realm Therapeutics plc

 

Consolidated Statement of Changes in Equity

For the Years Ended 31 December

 

Share capital

 

 

$

Share premium

 

 

$

Other reserves

 

 

$

Retained earnings

 

 

$

Other Comprehensive Income / (Loss)

$

Total

 

 

 

$

At 31

December 2015

 

8,515,641

 

 81,414,651

 

 103,692,891

 

(174,296,004)

 

8,042

 

19,335,221

 

 

 

 

 

 

 

Loss for the year

 -

 -

 -

 (507,241)‌‌

 -

(507,241)

 

Other comprehensive loss

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 (11,155)‌‌

 

 

 

 (11,155)‌‌

 

 

 

 

 

 

 

Total comprehensive loss

 

 

 -

 

 

 -

 

 

 -

 

 

 (507,241)‌‌

 

 

 (11,155)‌‌

 

 

 (518,396)‌‌

 

 

 

 

 

 

 

Issuance of shares upon option exercise

 

3,750

 

2,906

 

-

 

-

 

 -

 

6,656

 

Reclassification following lapse of share options

 

 

 

  -

 

 

 

-

 

 

 

(710,249)‌‌

 

 

 

710,249

 

 

 

-

 

 

 

  -

 

Share based payment movement

 

 

 

            -

 

 

 

              -

 

 

 

        224,633

 

 

 

               -

 

 

 

               -

 

 

 

       224,633

 

Transactions with owners

 

 

3,750

 

 

2,906

 

 

(485,616)

 

 

710,249

 

 

 -

 

 

231,289

 

 

 

 

 

 

 

At 31 December 2016

 

8,519,391

 

81,417,557

 

103,207,275

 

(174,092,996)‌‌

 

 (3,113)‌‌

 

19,048,114

 

 

 

 

 

 

 

Loss for the year

 

 -

 

 -

 

 -

 

(10,525,383)

 

 -

 

(10,525,383)

 

Unrealized gain on investments

 

 

-

 

 

-

 

 

-

 

 

-

 

 

13,748

 

 

13,748

 

Other comprehensive loss

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

 -

 

 

 

(21,899)‌‌

 

 

 

(21,899)‌‌

 

 

 

 

 

 

 

Total comprehensive loss

 

 

 -

 

 

 -

 

 

 -

 

 

(10,525,383)

 

 

 (8,151)‌‌

 

 

(10,533,534)

 

 

 

 

 

 

 

New share and warrant capital issued

 

8,743,685

 

13,857,926

 

624,177

 

-

 

-

 

23,225,788

 

Reclassification following lapse of share options

 

 

 

 -

 

 

 

 -

 

 

 

 (183,113)‌‌

 

 

 

183,113

 

 

 

 -

 

 

 

 -

 

 

 

 

 

 

 

Share-based payment movement

 

 

 -

 

 

 -

 

 

455,470

 

 

 -

 

 

 -

 

 

455,470

 

 

 

 

 

 

 

Transactions with owners

 

8,743,685

 

13,857,926

 

896,534

 

183,113

 

 -

 

23,681,258

At 31 December 2017

 

17,263,076

 

95,275,483

 

104,103,809

 

(184,435,266)‌‌

 

 (11,264)‌‌

 

32,195,838

 

 

 

 

 

 

 

Other reserves includes share-based payments and warrant expense. Reclassification of Other Reserves to Retained Earnings in 2017 related to costs associated with share-based payment expense for share options which lapsed in the year. Reclassification of Other Reserves to Retained Earnings in 2016 related to costs associated with share-based payment expense for share options and the Value Creation Plan which lapsed in the year.

 

Consolidated Statement of Financial Position

As at 31 December

 

 

 

2017

$

2016

$

ASSETS

 

 

 

Non-Current Assets

 

 

 

Property, plant, and equipment

 

245,550

 138,888

Non-current other assets

 

320,000

 323,013

 

 

 

 

Total Non-Current Assets

 

565,550

 461,901

 

 

 

 

Current Assets

 

 

 

Inventories

 

-

 2,902

Other receivables and other current assets

 

688,076

 352,315

Short-term investments: available for sale

 

24,345,346

-

Cash and cash equivalents

 

9,507,804

 21,429,871

 

 

 

 

Total Current Assets

 

34,541,226

 21,785,088

 

 

 

 

Total Assets

 

35,106,776

 22,246,989

 

 

 

 

LIABILITIES

 

 

 

Current Liabilities

 

 

 

Trade payables and other accruals

 

(2,910,938)

 (3,198,875)‌‌

 

 

 

 

Total Liabilities

 

(2,910,938)

 (3,198,875)‌‌

 

 

 

 

Net Assets

 

32,195,838

 19,048,114

 

 

 

 

EQUITY

 

 

 

Share capital

 

17,263,076

 8,519,391

Share premium

 

95,275,483

 81,417,557

Other reserves

 

104,103,809

 103,207,275

Retained earnings

 

(184,435,266)

(174,092,996)‌‌

Accumulated other comprehensive loss

 

(11,264)

 (3,113)‌‌

 

 

 

 

Issued Capital and Reserves Attributable to Equity Holders of the Parent

 

 

32,195,838

 

19,048,114

 

 

 

 

Total Equity

 

32,195,838

19,048,114

 

Consolidated Statement of Cash Flows

For the Years Ended 31 December

 

2017

$

2016 *

$

Cash Flows from Operating Activities

 

 

Loss for the year

(10,525,383)

 (507,241)‌‌

Adjustments for non-cash:

 

 

Share-based payment expense

455,470

 224,633

Depreciation and amortisation

85,787

 772,205

Write off of property, plant, and equipment

10,380

 312,480

Finance income

(58,082)

 (176,572)‌‌

Taxation (benefit) / expense

(107,687)

26,612

Gain on sale of Supermarket Retail

-

(5,418,534)‌‌

 

 

 

Operating Loss before Movement in Working Capital

(10,139,515)

(4,766,417)‌‌

 

 

 

(Increase) / Decrease in other receivables and other current assets

(329,821)

 488,506

Increase / (Decrease) in trade payables and other accruals

912,904

(1,413,771)‌‌

Decrease in inventories

-

 575,694

 

 

 

Cash Used in Operations

(9,556,432)

(5,115,988)‌‌

Finance income (2016 includes Continuing and Discontinued Operations)

       58,082

 176,572

Net Cash Flows from Operating Activities

(9,498,350)

(4,939,416)‌‌

 

 

 

Cash Flows from Investing Activities

 

 

Purchases of short-term investments

(29,331,620)

-

Proceeds from sale of short-term investments

5,000,000

-

Purchases of property, plant, and equipment

(207,682)

 (844,885)‌‌

Proceeds from sale of plant, property and equipment

4,850

-

Payment of Supermarket Retail disposal costs  

(1,093,154)

-

Proceeds from sale of Supermarket Retail, net of costs paid

-

11,790,217

 

 

 

Net Cash Flows from Investing Activities

(25,627,606)

 10,945,332

 

 

 

Cash Flows from Financing Activities

 

 

Proceeds from sale of placing units, net of costs paid

23,225,788

-

Proceeds from exercise of share options

-

6,656

 

 

 

Net Cash Flows from Financing Activities

23,225,788

6,656

 

 

 

Net (Decrease) / Increase in Cash and Cash Equivalents

(11,900,168)

 6,012,572

Cash and Cash Equivalents at Beginning of Year

 21,429,871

 15,456,624

Effect of Foreign Exchange Rate Changes on Cash Held

(21,899)

 (39,325)‌‌

 

 

 

Total Cash and Cash Equivalents Held at End of Year

9,507,804

 21,429,871

Total Short-term Investments Available for Sale at End of Year

24,345,346

-

 

Total Cash, Cash Equivalents and Short-term Investments

 

33,853,150

 

21,429,871

 

 

* Includes Continuing and Discontinued Operations. The 2016 Statement of Cash Flows has been restated to correct an error in the presentation of certain Supermarket Retail (SR) discontinued operations amounts. The effect is: to replace the SR net assets disposed of $5,278,528 with gain on sale of SR business of $5,418,534; to adjust the write off of property, plant and equipment to $312,480 (previously $171,739); to adjust the decrease in trade payables and other accruals to $1,413,77 (previously $319,882) and to remove the $1,093,154 of disposal costs payable previously shown separately.

 

Select Notes to the Financial Statements

For the Years Ended 31 December 2017 and 2016

 

BASIS OF PREPARATION

 

Realm Therapeutics plc (the Company) is a public company incorporated, domiciled and registered in the United Kingdom (UK). The registered number is 5789798 and the registered address is c/o CMS Cameron McKenna Nabarro Olswang, LLP, Cannon Place, 78 Cannon Street, London EC4N 6AF, UK. Realm Therapeutics, Inc. (a United States (US) subsidiary), is incorporated under the laws of Delaware in the US. Realm Therapeutics, Inc.'s address, which is the Company's operating address, is 267 Great Valley Parkway, Malvern, Pennsylvania, US. The Group represents the Company and all its subsidiaries including Realm Therapeutics, Inc., PuriCore Europe Limited and PuriCore Scientific Limited. The Group consolidated financial statements were authorised for issue by the Board of Directors on 2 May 2018. European Union law (EULAW) (IAS Regulation EC 1606/2002) requires the financial statements of the Group be prepared in accordance with International Financial Reporting Standards as adopted by the EU (Adopted IFRSs). The financial statements have been prepared on the basis of the recognition and measurement requirements of Adopted IFRSs that are endorsed by the EU and effective as at 31 December 2017.

The financial information presented within this document does not comprise the statutory accounts of Realm Therapeutics plc for the financial years ended 31 December 2017 and 2016 but represents extracts from them. These extracts do not provide as full an understanding of the financial performance and position, or financial and investing activities, of the company as the complete Annual Report. The statutory accounts for those years have been reported on by the company's auditor and delivered to the registrar of companies. The reports of the auditor were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006. The Annual Report, including the auditor's report, can be obtained free of charge on request to the Company at IR@realmtx.com or, alternatively, can be downloaded at www.realmtx.com.

The Company has chosen to present its own results under Adopted IFRSs and by publishing the Company financial statements here with the Group financial statements the Company is taking advantage of the exemption in section 408 of the Companies Act 2006 not to present its individual statements of comprehensive income and related notes.

The Group is a clinical-stage biopharmaceutical company focused on developing novel therapeutics for immune-mediated diseases in adults and children. The Group's lead drug candidate, PR022, utilizes its proprietary immunomodulatory technology, and is in a Phase 2 clinical trial for the treatment of Atopic Dermatitis. The Group is also exploring potential efficacy of its technology in other dermatology indications, including Acne Vulgaris and Psoriasis, as well as other therapeutic areas.

In March 2018, the Company announced that in its Phase 2 clinical trial for Allergic Conjunctivitis, its product candidate PR013, did not demonstrate efficacy.  As a result, the Company is no longer pursing the clinical development of PR013 and other than the costs of completing the trial in 2018 and closing out the program, the Company does not intend to make any additional investments in this program.

On 7 October 2016, the Group sold its Supermarket Retail business for gross proceeds of $13.5 million. Accordingly, the Supermarket Retail business' operational results for the period through 7 October 2016 presented in the Consolidated Statement of Comprehensive Income are reflected as discontinued operations. The Consolidated Statement of Cash Flows for the period ended 31 December 2016 reflects the Supermarket Retail business results and the sale within operating and investing activities. A discontinued operation is a component of the Group's business that represents a separate major line of business that has been disposed. Classification as a discontinued operation occurred upon disposal.

The financial statements are presented in US dollars (USD), rounded to the nearest dollar. The USD has been chosen as the presentational currency as most of the Group's revenue and expenses are denominated in USD. The accounting policies set out below have, unless otherwise stated, been applied consistently throughout the year.

 

NOTE 1 - Segmental Analysis

The Group is a clinical-stage biopharmaceutical company focused on developing novel therapeutics for immune-mediated diseases in adults and children. Segmental information is provided having regard to the operations being conducted. The Group's Drug Development and Wound Care (WC) segment represents costs associated with the development of potential drug products and royalty revenue from the out-licensing of the Group's Wound Care product (medical device). Discontinued operations represent the Group's Supermarket Retail business which was sold on 7 October 2016.

An analysis of the Group's business segments for the years ended 31 December is as follows.

 

2017

 

Drug Development and WC (1)

$

Company & Corporate (2)

$

Total

$

Revenue

1,120,840

-

1,120,840

Gross Profit

1,120,840

-

1,120,840

Loss before Interest, Tax, Depreciation & Amortisation, Fixed Asset write-off, and Share-Based Payment Expense

 

(6,812,712)‌‌

 

 (3,326,803)‌‌

 

(10,139,515)‌‌

Finance income

 -

58,082

58,082

Depreciation and amortisation

 (46,344)‌‌

 (39,443)‌‌

 (85,787)‌‌

Write-off of capital assets

(10,380)

-

(10,380)

Share-based payment expense

 (209,300)

 (246,170)‌‌

(455,470)‌‌

Loss before Tax

 (7,078,736)‌‌

 (3,554,334)‌‌

 (10,633,070)‌‌

Taxation benefit

 -

107,687

107,687

Loss after Tax

 (7,078,736)‌‌

 (3,446,647)‌‌

 (10,525,383)‌‌

Segment Assets

 

 

 

Non-current assets

 84,632

480,918

565,550

Current assets

 514,225

 173,852

688,077

Total assets excluding cash, cash equivalents and short-term investments

 

598,857

 

 654,770

 

 1,253,627

 

Segment Liabilities

 

 

 

Current liabilities

 (1,990,826)‌‌

 (920,112)‌‌

 (2,910,938)‌‌

Total liabilities

 (1,990,826)‌‌

 (920,112)‌‌

 (2,910,938)‌‌

Other Segment Items:

 

 

 

Capital expenditure: property, plant, and equipment

 

 103,228

 

 104,454

 

207,682

 

 

 

2016

 

Drug Development and WC (1)

$

Company & Corporate (2)

$

Total

$

Discontinued Operations: Supermarket Retail

$

Revenue

 866,937

-

866,937

 14,759,521

Gross Profit

746,031

-

746,031

 6,028,975

(Loss) / Profit before Interest, Tax, Depreciation & Amortisation, Fixed Asset write-off, and Share-Based Payment Expense

 

 

(5,955,383)‌‌

 

 

 (1,000,778)‌‌

 

 

 (6,956,161)‌‌

 

 

 2,018,005

Finance income

 -

 2,875

 2,875

 173,697

Depreciation and amortisation

 (59,345)‌‌

 (66,783)‌‌

 (126,128)‌‌

 (646,077)‌‌

Write-off of capital assets (3)

 -

 -

 -

 (140,741)‌‌

Share-based payment expense

 -

 (224,633)‌‌

 (224,633)‌‌

 -

(Loss) / Profit before Tax

 (6,014,728)‌‌

 (1,289,319)‌‌

 (7,304,047)‌‌

 1,404,884

Taxation expense

 -

(26,612)

(26,612)

-

(Loss) / Profit after Tax

 (6,014,728)‌‌

 (1,315,931)‌‌

(7,330,659)

1,404,884

Segment Assets

 

 

 

 

Non-current assets

 100,859

 361,042

 461,901

 -

Current assets

 312,249

42,968

 355,217

 -

Total assets excluding cash and cash equivalents

 413,108

404,010

 817,118

 -

Segment Liabilities

 

 

 

 

Current liabilities

 (1,121,102)‌‌

 (2,077,773)‌‌

 (3,198,875)‌‌

 -

Total liabilities

 (1,121,102)‌‌

 (2,077,773)‌‌

 (3,198,875)‌‌

 -

Other Segment Items:

 

 

 

 

Capital expenditure: property, plant, and equipment

 67,197

 6,652

 73,849

 771,036

 

 

(1)  In 2017 and 2016, Drug Development and WC includes costs associated with the development of products and royalty revenue from out-licensing of the Group's Wound Care product. In 2016, Drug Development (previously included within Health Sciences) also includes revenues and costs associated with other health-science related businesses which ceased after 2016.

(2)  Company and Corporate includes costs associated with operating Realm Therapeutics plc and corporate costs associated with operating Realm Therapeutics, Inc.

(3)  Represents the write off of certain concentrate delivery system assets no longer in use, as customers purchased alternate capital equipment (generators).

 

Information about Geographical Areas

An analysis of the Group's revenue by geographic location of its customers, segment assets (excluding cash, cash equivalents and short-term investments) and capital expenditures are as follows.

 

Revenue For the Years Ended 31 December

Segment Assets At 31 December

Capital Expenditures For the Years Ended 31 December

 

2017

$

2016

$

2017

$

2016

$

2017

$

2016

$

North America

 1,120,840

817,479

 1,199,732

786,953

 207,682

73,849

United Kingdom

-

 49,458

 53,894

30,165

-

-

Continuing Operations

 

1,120,840

 

 866,937

 

 1,253,626

 

 817,118

 

 207,682

 

 73,849

Discontinued Operations, North America

 

 

14,759,521

 

 

-

 

 

 771,036

 

 

NOTE 2 - Earnings / (Loss) per Share

The Company's issued share capital at 31 December 2017 consisted of 116,561,917 10 pence ordinary shares. The calculation of the Group's basic and diluted earnings or (loss) per share for the years ended 31 December is based on the following data.

 

2017

$

2016

$

Loss for the Year Attributable to Equity Holders of the Parent

 (10,525,382)‌‌

 (507,241)‌‌

Profit from Discontinued Operations including Gain on Sale

-

6,823,418

Loss from Continuing Operations for the purpose of Adjusted basic and diluted loss per share

 

 (10,525,382)‌‌

 

(7,330,659)‌‌

 

 

 

 

As at 31 December

Number of Shares

2017

2016

Weighted average number of ordinary shares for the purpose of basic and diluted profit or (loss) per share, Continuing and Discontinued Operations

 65,081,903

 50,139,141

 

 

 

Earnings / (Loss) Per Share

2017

$

2016

$

Basic and diluted from Continuing Operations (1)

 (0.16)‌‌‌‌

 (0.15)‌‌‌‌

Basic and diluted from Discontinued Operations

-

 0.14‌‌‌‌

Total basic and diluted

 (0.16)‌‌‌‌

 (0.01)‌‌‌‌

 

 

 

(1) The calculation for diluted loss per share is identical to that used for basic loss per share. The exercise of share options would have the effect of reducing the loss per share and are therefore excluded since not dilutive under the terms of IAS 33 'Earnings per share'.

 

NOTE 3 - Cash, Cash Equivalents and Short-Term Investments Available for Sale

An analysis of the Group's and Company's cash, cash equivalents and short-term investments available for sale as at 31 December is as follows.

 

Group

Company

 

2017

$

2016

$

2017

$

2016

$

Cash at bank

530,097

 1,107,950

169,636

 62,682

Cash equivalents (1)

8,977,707

20,321,921

 -

 -

Total Cash and Cash Equivalents

9,507,804

21,429,871

169,636

 62,682

Short-term investments available for sale measured at fair value:

 

 

 

 

US government agency

20,871,541

-

-

-

Certificates of deposit

3,473,805

-

-

-

Total Short-term Investments (2)

24,345,346

-

-

-

Total Cash, Cash Equivalents and Short-term Investments

 

33,853,150

 

21,429,871

 

169,636

 

62,682

(1) Includes cash sweep accounts, US Treasury money market fund, bank certificates of deposit and US Treasury bills that have a maturity of three months or less from the original acquisition date.

(2) Includes US government agency securities and bank certificates of deposit that have a maturity of more than three months from original acquisition date.

An analysis of the Group's short-term investments as at 31 December 2017 is as follows.

 

As at 31 December 2017

 

Original Cost

$

Gross Unrealized Gains

$

Gross Unrealized Losses

$

Total Carrying Value (1)

$

US government agency

20,856,588

14,953

-

20,871,541

Certificates of deposit

3,475,011

-

(1,206)

3,473,805

Total Short-term Investments

24,331,599

14,953

(1,206)

24,345,346

(1) Represents quoted prices in active markets

 

Fair Values of Financial Assets

The guidance requires fair value measurements to be classified and disclosed in one of the following three categories:

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly

Level 3 - Inputs for the asset or liability that are not based on observable market data, which require the Group to develop its own assumptions

This hierarchy requires the use of observable market data when available and to minimize the use of

unobservable inputs when determining fair value.

The Group has classified assets measured at fair value on a recurring basis as follows.

 

As at 31 December 2017

 

 

Fair Value Measurement Based on

 

Carrying

Amount

$

Fair Value

$

Quoted Prices in Active Markets (Level 1)

$

Significant other Observable Inputs (Level 2)

$

Significant Unobservable Inputs (Level 3)

$

Available for Sale Financial Assets

 

 

 

 

Cash equivalents(1)

8,977,707

8,977,707

8,977,707

-

-

U.S. government agency

20,871,541

20,871,541

-

20,871,541

-

Certificates of deposit

3,473,805

3,473,805

3,473,805

-

-

 

33,323,053

33,323,053

12,451,512

20,871,541

-

 

 

 

 

 

 

 

 

(1) Includes cash sweep accounts, US Treasury money market mutual fund, bank certificates of deposit and US Treasury bills that have a maturity of three months or less from the original acquisition date.

 

 

As at 31 December 2016

 

 

 

Fair Value Measurement Based on

 

Carrying Amount

$

Fair Value

$

Quoted Prices in Active Markets (Level 1)

$

Significant other Observable Inputs (Level 2)

$

Significant Unobservable Inputs (Level 3)

$

Available for Sale Financial Assets

 

 

 

 

Cash equivalents(1)

20,321,921

20,321,921

20,321,921

-

-

 

 

 

 

 

 

(1) US Treasury money market fund

 

 

NOTE 4 - Trade Payables and Other Accruals

The Directors believe the carrying amount of trade payables and other accruals approximates their fair value. An analysis of the Group's and the Company's trade payables and other accruals as at 31 December is as follows.

 

Group

Company

 

2017

$

2016

$

2017

$

2016

$

Trade payables

1,008,715

 642,915

60,266

 29,420

Research and development related and other accruals

1,900,097

1,460,440

65,531

 61,360

Other taxes and social security

2,126

 2,364

1,979

 1,910

Supermarket Retail disposal costs payable

 

-

 

1,093,156

 

-

 

92,297

Total trade payables and other accruals

2,910,938

3,198,875

127,776

184,987

 

 

 

 

 

Amounts owed to group undertakings

 -

 -

274,250

 249,788

Trade payables, other accruals and amounts owed to group undertakings

 

 

2,910,938

 

3,198,875

 

402,026

 

434,775

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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