Evgen Pharma plc

 (the "Company")

Full year Results

7 June 2023 - Evgen Pharma plc (AIM: EVG), the clinical stage drug development company developing sulforaphane-based medicines for the treatment of multiple diseases, announces its audited results for the year ended 31 March 2023.

Operational summary

Financial highlights

·      Financial performance in-line with expectations:

o  Post tax loss of £4.0m (2022: loss of £2.7m)

o  Cash outflow from operations of £4.1m (2022: outflow of £2.6m)

o  Cash and short-term investments and cash on deposit at 31 March 2023 of £5.0m
(31 March 2022: £9.0m)

Dr Huw Jones, CEO of Evgen Pharma, said:

"The last year has seen substantial progress in both our science and in our stated aim of out-licensing our technology in cash-generating partnerships. Of particular note is our partnership with STALICLA in Autism Spectrum Disorder that could generate substantial non-dilutive income over a long period.

Our new commercial scale formulation of SFX-01 has performed well in our Phase 1b healthy volunteer study, showing release commensurate with the enteric coat, absence of SAEs and total active and active metabolite levels in the range seen in vitro where substantial biological activity was observed.

In our pre-clinical collaborations, we were pleased to see evidence of radio-sensitisation by SFX-01 in a further tumour type (rhabdomyosarcoma), complementing results seen previously in models of glioblastoma. The coming year promises even more evaluation of SFX-01 in the clinic and the receipt of substantial milestone payments, positioning us well to continue to progress our programmes at all levels.

On a personal note, I would like to express my sincere thanks to our CFO Richard who is retiring at the AGM. His steadfast support and well considered judgements have been invaluable both to the Company and to me personally. I wish him and his family the very best as they enjoy considerably more leisure time that will no doubt fill up very quickly."

Enquiries:

Notes to Editors

About Evgen Pharma plc 

Evgen Pharma is a clinical stage drug development company developing sulforaphane based medicines for the treatment of multiple diseases. The Company's core technology is Sulforadex®, a method for synthesising and stabilising the highly biologically active compound sulforaphane and novel proprietary analogues based on sulforaphane. 

The Company's lead asset, SFX-01, is a patented composition of synthetic sulforaphane and alpha-cyclodextrin and has undergone clinical trials for oestrogen-positive (ER+) metastatic breast cancer and recently a Phase 1b study of the Company's new enteric coated tablet formulation. The FDA has granted Orphan Drug status to SFX-01 in malignant glioma. SFX-01 will be investigated initially in this indication as an investigator sponsored study in the Netherlands.

The Company also has a wide number of collaborations with leading academic centres in the UK, Europe and the US as part of the continuing strategy to build the scientific data for the compound. With respect to areas outside of oncology and inflammation, Evgen signed an out-licensing deal with JuvLife, the dietary products and functional foods division of Juvenescence Ltd, for the development of a naturally-sourced sulforaphane nutritional health supplement, stabilised using Evgen's Sulforadex® technology. More recently Evgen completed an out-licensing transaction with Stalicla SA, a Swiss specialist company in neurodevelopmental disorders, commencing with autism spectrum disorder. The deal, if successful, will generate milestone payments of $160.5m and a double-digit royalty on sales.

The Company has its headquarters and registered office at Alderley Park, Cheshire. It is listed on AIM in London and trades under the ticker symbol EVG. 

For further information, please visit: www.evgen.com

STRATEGIC REPORT

CHAIRMAN'S STATEMENT

The most significant achievements in the last year were the substantial out-licensing deal with STALICLA, creating an opportunity for the use of SFX-01 in autism spectrum disorder (ASD), and clinical completion of the Phase Ib human volunteer trial on schedule.

Strategy update

The aim for the financial year was to drive the progress of the clinical programmes, whilst building further value through additional partnering and scientific collaborations.

Academic collaborations have made good progress during the period with encouraging data, particularly in breast cancer and radio-sensitisation.

The clinical stage of the healthy volunteer pharmacokinetic/pharmacodynamic (''PK/PD'') study of the new SFX-01 formulation was completed to plan, and analysis of the data is progressing well. To date, the analyses have shown timely absorption of sulforaphane into the body (pharmacokinetics) as well as further evidence of SFX-01's strong safety and tolerance profile.

On the advice of key opinion leaders, additional pre-clinical work and an early-stage clinical trial of SFX-01 in patients with glioblastoma ('GBM') will be conducted to generate more data on how SFX-01 enters the brain tumour tissue and interacts with molecular targets. This early clinical work should further de-risk the Phase II clinical trial, as well as extending the cash runway since the trial will be run as an investigator sponsored study (ISS).

The ongoing scale-up and production of the new formulation of SFX-01 to GMP standards has been a major focus of activity, and is a key development which will be important for future clinical studies conducted by Evgen and its partners. This project has and continues to generate considerable know-how in the scale up of synthetic sulforaphane.

Work in our collaboration with STALICLA has commenced; we are supporting product supply and regulatory requirements for their clinical programmes of SFX-01.

Conclusion

The very substantial out-licensing deal, announced in October 2022, extends the application of SFX-01 into neurodevelopmental disorders and underpins the potential of the lead compound beyond oncology and inflammation. This reduces the Company's risk profile, and the non-dilutive upfront payments and initial milestones may also significantly extend the Company's cash runway, leaving it well positioned to execute further on its growth strategy.

The Board looks forward to continuing to progress its strategy which remains clearly focused on commercialising the considerable potential of SFX-01.

Barry Clare

Chairman

CHIEF EXECUTIVE'S REVIEW OF PERFORMANCE

We are pleased with the progress made operationally and strategically in the past year, including starting and finishing a clinical trial and signing a substantial out-licensing deal.

We have focused on pre-clinical projects, scale-up of manufacturing, business development and conducting the PK/PD Phase Ib human volunteer trial. In particular, two new pre-clinical programmes were commenced, PK/PD data is currently being analysed from the Phase Ib trial and we are actively supporting the ASD programme for STALICLA's proposed Phase II clinical trial in ASD patients. More details are described below.

Looking forward, the GBM clinical trial is expected to commence in 2024, subject to grant funding. The goal is to generate sufficiently compelling efficacy data to allow partnering of the programme and progress into a registration study(ies). Equally, the pre-clinical work in metastatic breast cancer ('mBC') is designed to attract a partner to support the next clinical development in this indication. At the same time, we will continue seeking new partnerships and collaborations.

CLINICAL STAGE PROGRAMMES

Glioma/glioblastoma

Glioma is the most common form of brain tumour affecting around 5 per 100,000 people. The more severe, grade IV classification, glioblastoma, is a very serious form of malignant brain tumour representing 45% of all cases and has a poor prognosis, with median survival of around 14 months. The five-year survival of the severe grades is 5%. Therapeutic options for glioma are limited to surgery, radiotherapy and the one drug widely available, temozolomide. There is a clear unmet need for more treatments for use in conjunction with the current standard of care.

Evgen has consulted widely with world-renowned experts in the treatment of brain cancers with regards to the planned study. These key opinion leaders have advised that further pre-clinical work and an early-stage clinical trial of SFX-01 in patients with GBM should be conducted, to acquire more clarity on sulforaphane entering the brain tumour tissue and its interaction with molecular targets in the tumour tissue of GBM patients. The Company expects that this approach will further de-risk the Phase II clinical trial and facilitate earlier partnering discussions.

This preliminary clinical work will be conducted as an Investigator Sponsored Study ('ISS'), led by Dr Marjolein Geurts, neuro-oncologist at the Erasmus University Medical Centre, the Netherlands. The Erasmus group has extensive experience in glioblastoma research, with several studies and numerous publications in this field. Evgen has already received positive and supportive regulatory scientific advice from the Dutch Medicines Evaluation Board, which also stated that there are no specific concerns related to the clinical safety profile of SFX-01 based on available data.

Grant applications to fund the study have been made and the result is anticipated during H2. The clinical trial would then be expected to commence in 2024. If the pre-clinical and ISS clinical work is successful, the trial programme is likely to be continued as an Evgen-sponsored trial.

Metastatic breast cancer

Breast cancer remains the biggest cause of cancer deaths in women worldwide, and ER+ve/HER2-ve breast cancer accounts for circa two thirds of all such cancers. The drugs used increasingly in first line treatment of ER+ve/HER2-ve mBC patients, being CDK4/6 inhibitors, which since first approved for general use in the US in 2017, now have global sales in excess of $5 billion per annum.

Since the completion of our positive phase IIa trial of SFX-01 in metastatic breast cancer conducted in 2016 to 2019, CDK4/6 inhibitors have grown in acceptance and are becoming standard of care in first line mBC treatment. These drugs provide an extended period of progression free survival, but invariably patients become resistant to them. Accordingly, Evgen is conducting further pre-clinical work with its collaborators at the University of Manchester's Manchester Breast Centre to assess the impact of SFX-01 in CDK4/6 resistance models. To date this work has demonstrated encouraging in vitro data. A number of experiments are ongoing in different CDK4/6 resistant mBC pre-clinical models, particularly in relation to the reduction of pSTAT3, believed to have an important role in a number of cancers. Data is expected from these experiments in Q2 and Q3 2023.

Our objective from the extended collaboration with the Manchester team is to generate sufficient in vitro and in vivo models to provide the optimum support for clinical trial design and/or licensing in patients with ER+ve/HER2-ve breast cancer, where CDK4/6 inhibitors such as palbociclib are showing reducing effectiveness.

Phase I/Ib Human volunteer study

An important use of proceeds from the fundraise completed in March 2021 was to conduct a Phase I/Ib study in healthy volunteers of our new SFX-01 formulation. The trial comprised three cohorts of 8 volunteers each, of which two in each cohort received a placebo. The trial was randomised and double-blinded.

The first volunteers for the trial were recruited in October 2022 and all participants had received their final dose on schedule by the end of January 2023. Analysis of the pharmacokinetic (PK) data is complete and the analysis of the pharmacodynamic (PD) data will be completed in Q2/Q3.

The PK data show reliable absorption of sulforaphane at a time scale consistent with the objective for the new formulation. They also show release in the small intestine and protection by the enteric coat on the tablet and the reliable conversion in the body to active metabolites. The total sulforaphane and active metabolite levels were found at concentrations that, in the test tube, are responsible for profound biological activity. Analysis of PD data is ongoing and a full data set is expected to be completed in Q2/Q3 2023.

PRE-CLINICAL PROGRAMMES

We continue to support academic research to broaden the potential range of applications for SFX-01 and increase our mechanistic understanding in various disease areas of high unmet medical need.

Università Sapienza di Roma

Based on previous findings from pre-clinical work in glioma, in May 2022 Evgen commenced a collaboration with Prof. Francesco Marampon, of Università Sapienza di Roma to investigate the hypothesis that SFX-01 could enhance the action of radiotherapy in cancer patients. The scientific work evaluated the anti-tumour activity of SFX-01 in two preclinical cellular models of rhabdomyosarcoma (RMS) tumours, the most frequent soft tissue sarcoma in childhood. This disease is mostly diagnosed in children under 10 years old.

The in vitro data showed that SFX-01 reduced tumour cell growth by inducing G2 cell cycle arrest and triggering early-apoptosis (cell death). In addition, SFX-01 was shown to be effective both as a single agent and in combination with radiotherapy where it was found to be synergistic; it created a more positive outcome than would be expected by simply adding the two agents together.

The results also showed that SFX-01 was able to reduce tumour cell growth in clinically relevant radioresistant RMS cells, substantially inhibiting the formation of cancer stem cell-derived tumourspheres (rabdospheres). The results were presented in a poster at the ESMO Sarcoma and Rare Cancers Congress (March, 2023), in Lugano Switzerland.

Prof. Marampon is now extending the work to in vivo models, the results of which are likely to be available in the third quarter of 2023.

University of Michigan

A further collaboration commenced in June 2022 with Dr Grace Chen of the University of Michigan to investigate the potential anti-tumour effects of SFX-01 in colorectal cancer. Specifically, the collaboration seeks to evaluate the in vivo effects of SFX-01 in models of colorectal cancer. The activity and mechanism of action of SFX-01 on organoid growth, morphology, stemness and inflammatory markers will also be investigated using normal and malignant patient-derived organoids and tumour tissue. Initial results are expected at the end of 2023.

Colorectal cancer is considered to be the third most common form of cancer worldwide, with between 1.5-2 million annual diagnoses, and the second leading cause of cancer-related deaths.  There has also been an alarming global rise in early-onset colorectal cancer occurring in individuals under 50 years of age.  Treating colorectal cancers can be difficult and does not always lead to a cure especially in advanced stages.  Therefore, there is a strong need to develop chemoprevention strategies as well as better treatment options.

OUTLICENSING

STALICLA partnership

In October 2022, the Company licensed the global rights for lead asset SFX-01 in neurodevelopmental disorders and schizophrenia to STALICLA, a Swiss company specialising in the identification of specific phenotypes of ASD, using its proprietary precision medicine platform. Evgen retains the global rights for all other indications.

The financial terms include a signing fee of $0.5m to acquire the license and $0.5m on completion of the human volunteer Phase 1/1b study (anticipated during Q2 2023); the latter will provide data to support STALICLA'S clinical trials and both will contribute to the costs of supplying SFX-01 for these trials. Thereafter, milestone payments that reflect progress by STALICLA in their development programme up to commercial launch amount to $26.5m, including $5m on grant of IND by the FDA (anticipated by the end of 2024.  Total milestones of up to $160.5m are payable. Royalties payable to Evgen on sales are in the low to medium double-digit range in all scenarios, including on-licensing by STALICLA and use of SFX-01 in further licensed indications.

Previous studies with other sources of sulforaphane have shown evidence of clinical efficacy in improving symptoms of ASD (e.g., Singh et al 2014). However, patient heterogeneity provides a challenge in identifying those individuals likely to respond to therapy.  STALICLA has a unique, proprietary technology to identify ASD patients who are most likely to respond to SFX-01. This screening approach has already been used successfully to identify ideal patients for other ASD drug trials and is a key differentiator for STALICLA in developing drugs for such a wide spectrum disorder as ASD.

Our collaboration with STALICLA has commenced well; we are supporting product supply and regulatory requirements for their clinical programmes of SFX-01 and liaising on a regular basis. The partnership will enable the targeting of patient groups most likely to benefit from SFX-01, not only de-risking the clinical development but potentially bringing a therapeutic option to those individuals who are currently underserved, in a quick and efficient manner.

Juvenescence partnership

The partnership with Juvenescence continues to make progress and Evgen is supporting its development with the know-how and expertise we have in making sulforaphane-based compounds for human use.  It is envisaged that product launch will occur in around two years' time at which point milestone payments of over £1m will have been received.

MANUFACTURING PROGRAMME

Following a competitive process, a new supplier of the key intermediate material for the synthesis of SFX-01 was contracted. The new manufacturer has extensive facilities and capabilities. Circa 25kg of product has been successfully manufactured in good time and at a competitive price.  A further 25kg is expected in H2. This will be sufficient for clinical requirements in the foreseeable future.

Contracts have been signed for the manufacture of active drug and placebo for the forthcoming STALICLA Phase II trial and the glioblastoma Investigator Sponsored Study. This production will take place in Q2-Q4 of the current year.

Further work has been directed at understanding the nuances of synthesising SFX-01. The stabilisation process is complex and not easily understood at the molecular level. Accordingly, our extensive amount of know-how generated by this project provides a high barrier to competition and augments our patent estate.

PEOPLE

Richard Moulson, CFO, has decided to retire from executive roles and accordingly has resigned from Evgen after over 6 years of service. He will leave following the AGM on 20 July 2023. A search for a replacement is ongoing through an executive search company with promising candidates undergoing second interviews. Interim arrangements are in place should an appointment not be made until after the AGM.

OUTLOOK

Since the 2021 fundraise we have achieved a number of key clinical, operational and commercial milestones that should lead to the commencement of two clinical trials around the end of the calendar year, with the generation of data from 2024. Potentially we will also have pre-clinical data sets to support further our breast cancer programme and which may point to trials in other indications such as radio-sensitisation in brain cancer, and others where radiotherapy is the mainstay of treatment.

Our partner Juvenescence is progressing well towards market launch within the next two years and our more recent partner STALICLA is making good progress on clinical trial design in ASD, which will generate further milestones. Both partnerships will provide milestones and commercial revenues to defray a material part of our cost base. In the meantime, we will be advancing preclinical studies and our business development strategy.

I would like to thank our shareholders for their continued support and to the team for their efforts in driving the strategy forward. We believe the next 12 months will be extremely busy and that we will build further value through R&D and our substantial commercial partnerships.

In closing I would like to thank Richard Moulson for his personal support of the Company and myself, from my smooth transition into the organisation and the constant and steadfast support for the Company and myself on a daily basis.

Dr Huw Jones

Chief Executive Officer

KEY PERFORMANCE INDICATORS

Key Performance Indicators include a range of financial and other measures (such as clinical trial progress). Details about the progress of our development programmes (non-financial measures) are included elsewhere in this Strategic Report, and below are the other indicators (financial measures) considered pertinent to the business.

The decrease in year-end cash reflects corporate costs, and in particular the extensive manufacturing work and execution of the Phase I/Ib clinical trial, less receipt of the R&D tax credit (£0.48m). There was no fundraising activity in the year.

The net cash outflow reflects corporate costs and the costs incurred in manufacturing scale up, pre-clinical and clinical expenditures.

The increase in operating loss compared with 2022 reflects escalation of manufacturing activity and commencement and completion of the clinical work in the Phase I/Ib trial, less £442k in revenue from the Stalicla deal. 

Financial Review

The financial performance for the year ended 31 March 2023 was in line with expectations.

Losses

The total loss for the year was £4.0m (31 March 2022: £2.7m) including a charge for share-based compensation of £0.2m (2022: £0.1m). Operating expenses excluding share-based compensation were higher than in 2022 at £5.4m (2022: £3.0m) due to clinical trial costs not incurred in 2022, and more substantial work on manufacturing.

Research and development (R&D) expenditure

External spend on R&D expenditure increased by £1.8m on the prior year to £3.3m (31 March 2022: £1.5m). This reflects the extensive work on product manufacture and scale up together with the costs of the Phase Ib PK/PD trial.

Share-based compensation

Accounting standards require a charge to be made against the grant of share options and recognised in the Consolidated Statement of Comprehensive Income. Where such options lapse ahead of their vesting date the relevant charges are written back. There was an overall charge for the year in relation to share-based payments of £0.2m (2022 £0.1m), which has no impact on cash flows.

Headcount

Average headcount of the Group for the year was 10 (2022: 9).

Taxation

The Group has elected to claim research and development tax credits under the small or medium enterprise research and development scheme of £0.93m (2022: £0.44m).

Share capital

No issues of shares were made during the year. At 31 March 2023 and 31 March 2022 there were 274,888,117 shares of 0.25p each in issue.

Cash flows and financial position

The cash position (including short term deposits) at 31 March 2023 decreased to £5.0m (31 March 2022: £9.0m) reflecting R&D and corporate costs, less £0.48m received from R&D tax credits and £0.44m received from the STALICLA signing fee to acquire the license rights.

GOVERNANCE

Employee engagement

As a very small company in terms of staff, Board members have multiple points of contact with staff; through Board participation, Board meeting feedback, and ad hoc interactions in relation to specific matters.

These forums provide staff with an opportunity to give their views which can then be taken into account in making decisions likely to affect their interests.

Specific matters of concern to employees are dealt with in management meetings and by email. Corporate developments and Company performance are discussed weekly in management meetings.

All staff are eligible for the Group's share option scheme and this drives involvement in the Company's performance.

Stakeholder Engagement

The Group has a small number of major suppliers and consultants that support its delivery of strategy and corporate goals. The selection of, relationships with, and execution of, contracted work by these parties is considered at least weekly by the Executive Directors and at each Board meeting by all Directors. Where appropriate, the Chairman and/ or non-executive directors participate in engagement with these parties, and where appropriate, Board members are involved in meetings with such parties.

PRINCIPAL RISKS AND UNCERTAINTIES

Evgen is a biopharmaceutical company and, in common with other companies operating in the sector, is subject to a number of risks. The principal risks and uncertainties identified by the Group for the year ending 31 March 2023 are set out below.

Development

The Group is at a relatively early stage of development and may not be successful in its efforts to develop approved or marketable products. Technical risk is present at each stage of the development process which is a highly regulated environment which presents technical and operational risk. There can be no guarantee that the Group will be able to, or that it will be commercially advantageous for the Group to, develop its Intellectual Property through entering into licensing deals with pharmaceutical companies.

Commercial and competition

The biotechnology and pharmaceutical industries are very competitive. The Group's competitors include major multinational pharmaceutical companies, biotech and early stage companies developing novel approaches to treat disease in Evgen's chosen fields of interest, and research institutions. Many of its competitors have substantially greater financial, technical and other resources. The Group's competitors may succeed in developing, acquiring or licensing drug product candidates that are more effective or less costly than those the Group is developing, or may develop, and this may have a material adverse impact on the Group.

Regulatory

The Group's operations are subject to laws, regulatory approvals, and certain government directives, recommendations and guidelines. There can be no assurance that future legislation will not impose further government regulation which may adversely affect the business or financial condition of the Group.

Intellectual property (IP)

The Group's success depends in part on its ability to obtain and maintain patent protection for its technology and potential products in the United States, Europe and other countries, and then defend and enforce such IP. If the Group is unable to obtain and maintain patent protection for its technology and potential products, or if the scope of patent protection is not sufficiently broad, competitors could develop and commercialise similar technology and products, which could materially affect the Group's ability to successfully commercialise its technology and potential products. The Group is exposed to additional IP risks, including infringement of IP rights, involvement in lawsuits and the inability to protect the confidentiality of its trade secrets which could have an adverse effect on the success of the Group.

Financial

The Group has a limited operating history, has incurred significant losses since its inception and does not have any approved or revenue generating products. The Group expects to incur losses for the foreseeable future, and there is no certainty that the business will generate a profit. The Group may not be able to raise additional funds that will be required to support its product development programs or commercialisation efforts, and any additional funds that are raised may cause dilution to existing shareholders.

Operational

The Group's future development and prospects depend to a material extent on the experience, performance and continued service of its senior management team including the Directors. The Directors believe the senior management team is appropriately structured for the Group's size and stage of development and is not overly dependent on any one individual. The Group has entered into contractual arrangements with these individuals with the aim of securing the services of each of them. Retention of these services or the identification of suitable replacements cannot be guaranteed. The loss of the service of any of the Directors or senior management and the cost of recruiting replacements may have a material adverse effect on the Group and its commercial and financial performance.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 March 2023

CONSOLIDATED AND COMPANY STATEMENTS OF FINANCIAL POSITION

as at 31 March 2023

No Statement of Comprehensive Income is presented in these financial statements for the parent company as provided by Section 408 of the Companies Act 2006. The loss for the financial year dealt with in the financial statements of the parent company was £3,739k (2022: £2,428k).

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 March 2023

CONSOLIDATED AND COMPANY STATEMENTS OF CASH FLOWS

for the year ended 31 March 2023

There were no cash flows from financing activities in the current or prior financial years.

NOTES TO THE FINANCIAL STATEMENTS

1. General information

Evgen Pharma plc ('the Company') is a public limited company incorporated in England & Wales and whose shares are traded on the AIM market of the London Stock Exchange under the symbol EVG. The address of its registered office is Alderley Park, Congleton Road, Nether Alderley, Cheshire, United Kingdom, SK10 4TG. The principal activity of the Company is clinical stage drug development.

2. Significant accounting policies and basis of preparation

Basis of preparation

The financial information does not include all information required for full annual financial statements and therefore does not constitute statutory accounts within the meaning of section 435(1) and (2) of the Companies Act 2006 or contain sufficient information to comply with the disclosure requirements of UK-adopted International Accounting Standards. These should be read in conjunction with the Financial Statements of the Group for the year ended 31 March 2023 which were approved by the Board of Directors on 07 June 2023.

The report of the auditor for the year ended 31 March 2023 and 31 March 2022 financial statements was unqualified, did not contain a statement under Section 498(2) or Section 498(3) of the Companies Act 2006 and did not include a matter to which the auditors drew attention by way of emphasis without qualifying their report.

The consolidated financial statements have been prepared under the historical cost convention.

The consolidated financial statements are presented in Sterling (£) and rounded to the nearest £'000. This is the functional currency of the Group, and is the currency of the primary economic environment in which it operates. Foreign transactions are accounted for in accordance with the policies set out below.

Basis of consolidation

The financial statements incorporate the financial statements of the Company and entities controlled by the Company. Control is achieved when the Company has the power over the investee; is exposed, or has rights, to variable return from its involvement with the investee; and, has the ability to use its power to affect its returns. The Company reassesses whether it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, the results of subsidiaries acquired or disposed of during the period are included in the Consolidated Statement of Comprehensive Income from the date the Company gains control until the date when the Company ceases to control the subsidiary.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with the Group's accounting policies.

All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between the members of the Group are eliminated on consolidation.

3. Going concern

At 31 March 2023, the Group had cash and cash equivalents of £5.0 million.

The Directors have prepared detailed financial forecasts and cash flows looking beyond 12 months from the date of the approval of these financial statements. In developing these forecasts, the Directors have made assumptions based upon their view of the current and future economic conditions that will prevail over the forecast period.

The Directors estimate that the cash held by the Group together with known receivables will be sufficient to support the current level of activities into the fourth quarter of 2024. They have therefore prepared the financial statements on a going concern basis.

4. Share-based payment charge

During the years ended 31 March 2023 and 31 March 2022, the Group issued a number of share options to certain employees. A Black-Scholes model was used to calculate the appropriate charge for these periods. The use of this model to calculate a charge involves using a number of estimates and judgements to establish the appropriate inputs to be entered into the model, covering areas such as the use of an appropriate risk-free rate and dividend rate, exercise restrictions and behavioural considerations. A significant element of judgement is therefore involved in the calculation of the charge. The total charge recognised in the year to 31 March 2023 was £156,809 (year to 31 March 2023: £146,125).

5. Operating loss

An analysis of the Group's operating loss has been arrived at after charging/(crediting)

The Group has one reportable segment, namely the development of pharmaceutical products all within the United Kingdom.

6. Loss per share

Basic loss per share is calculated by dividing the loss for the period attributable to equity holders by the weighted average number of ordinary shares outstanding during the year.

As at 31 March 2023 the Group had 20,730,037 (2022: 10,587,665) share options outstanding which are potentially dilutive.

The calculation of the Group's basic and diluted loss per share is based on the following data:

The weighted average numbers of ordinary shares for the years ended 31 March 2022 and 2023 used for calculating the diluted loss per share are identical to those for the basic loss per share. This is because the outstanding share options would have the effect of reducing the loss per ordinary share and would therefore not be dilutive under the terms of International Accounting Standard (''IAS'') No 33.

Basic loss per share is calculated by dividing the loss for the period attributable to equity holders by the weighted average number of ordinary shares outstanding during the year.

7. Issued capital and reserves

There were no new shares issued in the year ending 31 March 2023.

The ordinary shares rank pari passu in all respects in relation to dividends and repayment of capital and have equal voting rights with one vote per share. There are no restrictions on the transferability of the shares.

The Group and Company do not have an authorised share capital as provided by the Companies Act 2006.

Other reserves

The share premium reserve represents the difference between the net proceeds of equity issues and the nominal share capital of the shares issued.

The merger reserves at 31 March 2023 and 2022 arose from the acquisition of Evgen's sole subsidiary, Evgen Ltd, in 2014 which is accounted for using the merger method of accounting.

The share-based compensation reserve reflects the aggregate fair value of equity-settled share-based payment transactions.

Reserves classified as retained deficit represent accumulated losses. None of the reserves are distributable.

8. Related party transactions

Group

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.

During the year ended 31 March 2023, the Group purchased consultancy services totalling £nil (year ended 31 March 2022: £15,995) from FD Consult Ltd, a company controlled by Richard Moulson. The amount owed to FD Consult Ltd at 31 March 2023 was £nil (31 March 2022: £nil).

During the year the Group purchased services from OBN, a company for which Huw Jones acts as a non-executive director, totalling £1,440 (2022: £1,282). The amount owed to OBN at 31 March 2023 was £nil (31 March 2022: £nil).

Company

The Company is responsible for financing and setting Group strategy. The Company's subsidiary carried out the Group's development strategy and managed the Group's intellectual property. The Company provides interest free and unsecured funding to its subsidiary with no fixed date of repayment.

9. Report and accounts

A copy of the Annual Report and Accounts will shortly be sent to all shareholders shortly with notice of the Annual General Meeting and will also be available to download from the Group's website at www.evgen.com.