3 January 2024

Nuformix plc

("Nuformix", the "Company" or the "Group")

Annual Results for the period ended 30 September 2023

Nuformix plc (LSE: NFX), a pharmaceutical development company targeting unmet medical needs in fibrosis and oncology via drug repurposing, announces its audited results for the eighteen months ended 30 September 2023 following the change in the Company's accounting reference date from 31 March to 30 September.

Non-Executive Directors' Statement

Introduction

The key priority for the directors continues to be to focus on the Company's early-stage pipeline of preclinical assets and ensure strength in the areas of drug development, business development and financial control within the Group. We operate a lean structure with the limited Board and bring in specialists and consultants, experts in their field, to support the business as required.

Pipeline

Nuformix has an early-stage pipeline of preclinical assets in development to address the high unmet medical need in fibrosis and oncology. We target solutions using our expertise to develop and file patent applications on novel crystalline forms of existing, marketed drugs, that have improved physical properties, with the aim of developing novel products in new indications to create attractive commercial opportunities. Importantly, the commercial opportunity is optimised when the repurposed product is differentiated from the original marketed drug by way of either dose, route of administration or presentation.

Drug repurposing is a well-known and successful strategy for enhancing the therapeutic and commercial value of marketed drugs, and their development typically brings a greater probability of success compared to developing newly discovered drugs, due to the existing data that has been generated on the marketed drug. This existence of data may also result in lower overall development costs and shorter development timelines.

The Group's business model is to take these assets to key value inflection points before partnering or licensing. We conduct our R&D activities through out-sourcing, to enable us to access the different types of expertise that are needed for drug R&D and to minimise our operational costs. We have a strong network of external contractors, with whom we have had relationships over many years.

NXP002 (novel proprietary form of tranilast) - Idiopathic Pulmonary Fibrosis ("IPF")

NXP002 is the Group's preclinical lead asset and a potential novel inhaled treatment for IPF and possibly other fibrosing interstitial lung diseases ("ILDs"). It is a proprietary, new form of the drug tranilast, which allows the drug to be delivered in an inhaled formulation.

IPF is a devastating lung disease associated with a higher mortality rate than many cancers. Thus, IPF represents a high unmet medical need such that the requirement for improved treatment options represents a significant commercial opportunity. IPF is classified as a rare disease and presents a global commercial market that is forecast to grow to US$8.8bn by 2027. Sales of standard-of-care therapies OFEV and Esbriet (now off patent) achieved US$3.5bn and US$0.8bn respectively in 2022.

Tranilast has a long history of safe use as an oral drug for asthma, keloids and hypertrophic scarring, but there is growing evidence that supports its potential use in other fibrotic conditions, including IPF. NXP002 is differentiated as it is a patent protected new form of tranilast that has been enabled for formulation and delivery direct to the lungs by inhalation, a new route of administration for this drug. The inhalation route is a well-known strategy for treatment of lung diseases to yield greater efficacy and reduce systemic side-effects compared to oral treatment. Discontinuation rates for standard-of-care IPF therapies can be as high as 80% in certain patient groups due to their debilitating systemic side-effects.

Effective inhalation therapies offer the potential to overcome these limitations of oral therapies. Nuformix owns granted patents protecting new forms of tranilast, in addition to a recently filed patent protecting its use with SoC in IPF, with patent prosecution progressing in major pharmaceutical territories.

As a potential treatment for IPF, which is a rare disease, NXP002 is a likely candidate for Orphan Drug Designation, which could provide additional product protection against potential competitors. The positioning of NXP002 as an inhaled treatment for IPF could be either as added to Standards of Care (SoCs) or administered as a monotherapy for patients non-responsive to SoCs and those declining these therapies due to side effects which impact quality of life.

The preclinical inhalation strategy, initiated by the Company has significantly progressed NXP002 demonstrating:

·    it can be delivered in-vivo by a range of nebulisers at the optimum particle size for delivery to the deep lung;

·    very high doses appear to be well-tolerated; and

·    an in-vivo inhalation dose response was observed for inflammatory and fibrotic biomarkers that is consistent with all ex-vivo human IPF tissue studies to date.

The Company conducted studies in a new iteration of a 3D human IPF lung tissue using a disease and species relevant model that has been advanced to significantly reduce output variability. The results from these studies of NXP002 alone and in combination with current SoC, can be summarised as follows:

·    NXP002 is well tolerated in ex-vivo human lung tissue with no signs of toxicity events;

·    NXP002 alone delivers a strong, consistent anti-fibrotic and anti-inflammatory effect as demonstrated by modulation of the release of multiple biomarkers of fibrosis and inflammatio

·    both high and low concentrations of NXP002 show an additive anti-fibrotic and anti-inflammatory effect to SoC;

·    in particular, the higher concentrations of NXP002 with SoC's deliver a near complete ablation of fibrosis biomarker release, yet at lower concentrations than have been seen in other preclinical models to date; and

·    the clear, pronounced additive benefit of NXP002 on top of SoCs observed suggests that NXP002 will provide additional efficacy, even in patients responding to SoC therapy. This raises the possibility that NXP002 targets additional disease pathways to SoC's when increasing the combined anti-fibrotic and anti-inflammatory response.

As announced on 18 May 2023, following success in suppressing biomarkers of fibrotic disease progression in human IPF lung tissue, the same samples were analysed to assess additional mechanistic and anti-inflammatory benefits on top of SoC's and the results are summarised as follows:

·    NXP002 alone delivers a strong, consistent anti-inflammatory effect as demonstrated by suppression of the release of inflammatory cytokines by over 90% for all cytokines studied; and

·    the results further suggests that NXP002 will provide additional efficacy in combination with SoC's, even in patients responding to SoC therapy alone.

Nuformix has developed a Target Product Profile ("TPP") that is consistent with twice daily inhalation administration. To assess NXP002's duration of action in relation to the TTP, the Company initiated work in an exploratory model in healthy human lung tissue. The model also bridges the Company's successful preclinical work across a variety of LPS-challenge studies. The results are summarised as follows:

·    NXP002 suppresses the release of inflammatory cytokines by healthy human lung tissue following LPS challenge; and

·    a strong anti-inflammatory effect remains at 12 hours post drug dosing demonstrated by continued suppression of the release of inflammatory cytokines following LPS challenge, confirming NXP002 has a suitable duration of action to support its TTP of twice daily dosing.

Overall, the results further strengthen NXP002's potential for development as a new inhaled treatment for IPF either in addition to existing therapies or as a monotherapy. The Board continues to be encouraged by the progress of the studies and the positive data generated to date, in particular the recent duration of action study results and is focused on next steps which include:

·    expansion of the current studies to include further human IPF tissue donors to demonstrate the robustness of NXP002's anti-fibrotic response alone and in SoC combinations; and

·    formally commencing the NXP002 partnering process.

Post-period end on 23 October 2023, the Company announced that it was issued with an Official Decision to Grant Notice of Allowance for Japanese National Phase Patent Application No. 2020-555115 entitled "CRYSTALLINE TRANILAST SALTS AND THEIR PHARMACEUTICAL USE". This patent, which has already been granted in the US, describes proprietary new forms of the drug tranilast being progressed by the Company as a potential novel IPF treatment. These proprietary drug forms uniquely enable delivery via an inhaled nebulised formulation.

NXP004 (novel forms of olaparib) - Oncology

The Group discovered novel forms of olaparib, a drug currently marketed by AstraZeneca, as Lynparza®. Lynparza® was first approved in December 2014 for the treatment of adults with advanced ovarian cancer and deleterious or suspected deleterious germline BRCA mutation. Since then, it has secured similar approvals in breast, pancreatic and prostate cancers with further trials on-going. These approvals have propelled Lynparza® sales to US$2.6bn in 2022 with industry analysts forecasting annual sales of US$9.7bn by 2028.

The Group has filed two patent applications on its novel forms of olaparib with the potential for patent life to 2040/2041.

The Company demonstrated enhanced performance of NXP004 cocrystals compared to olaparib. Subsequently, further preformulation studies allowed the Company to identify lead cocrystals to be progressed for further development.

Results from in vitro dissolution studies demonstrated that the two lead NXP004 cocrystals out-performed Lynparza®, both in terms of rate and extent of dissolution and release of olaparib.

Enhancement of dissolution in the currently marketed formulation of Lynparza® resulted in improved bioavailability versus the initial marketed product. Therefore, the NXP004 programme may offer potential to further increase olaparib bioavailability. In addition, the potential simplicity of NXP004-based formulations may offer improvements in product cost-of-goods versus the currently marketed product, which requires complex manufacturing methods.

These attributes position NXP004 for applications in line-extensions for the currently marketed product, or for possible development in future first-to-generic products.

The Company will now consider the design and execution of suitable preclinical pharmacokinetic models to further investigate and validate NXP004's potential for enhancing the oral absorption of olaparib. Securing these data will enable commencement of discussions with potential commercialisation partners.

This work will direct and support future out-licensing discussions for NXP004.

NXP001 (new form of aprepitant) - Oncology

NXP001 is a proprietary new form of the drug aprepitant that is currently marketed as a product in the oncology supportive care setting (chemotherapy induced nausea and vomiting) exclusively licensed to Oxilio for oncology indications.

On 18 September 2023, the Company announced that Oxilio had acquired ownership of its NXP001 patent estate for which Nuformix received new immediate and near-term undisclosed milestone payments, whilst retaining further development milestones and royalties capped at £2 million per year.

Fundraising

On 13 April 2023, the Company completed a subscription to raise gross proceeds of £70,000 through a subscription for 35,000,000 new ordinary shares of 0.1 pence each in the capital of the Company (the "New Ordinary Shares") at a price of 0.20 pence per share (the "Subscription"). The Subscription was undertaken with a single UK-based FCA regulated institutional investor. The New Ordinary Shares represented approximately 4.7 per cent. of the Company's enlarged issued share capital. 

In addition, the participant in the Subscription was issued with one warrant for every one New Ordinary Share subscribed for with an exercise price of 0.25 pence per warrant. These warrants are exercisable for two years from 21 April 2023 ("Warrants"). If the Warrants are exercised in full, it would result in the issue of an additional 35,000,000 new ordinary shares raising a further £87,500 for the progression of the Company's business activities. The New Ordinary Shares and Warrants were issued pursuant to the Company's existing share issuance authorities.

The net proceeds of the Subscription are being used by the Company primarily to further advance its NXP002 programme for the inhaled treatment of IPF.

Lanstead Subscription and Sharing Agreements

During the period the Company received proceeds from the Company's subscription and associated sharing arrangements with Lanstead Capital Investors L.P. ("Lanstead"), as announced on 14 December 2021, 17 January 2022 and 12 April 2022.  The sharing agreements ended in October 2023, concluding this arrangement and the Company is due no further funds from Lanstead.

Business Development

During the period the Company has switched its focus to business development activities to explore partnering opportunities for both its NXP002 and NXP004 programmes, attending both the European Respiratory Conference in Milan and the IPF Summit in Boston. Those partnering activities are ongoing.

Summary and Outlook

The strategy of the Group is to continue to optimise value from its existing assets while maintaining tight control of costs. The proceeds from the Lanstead Sharing Agreements, the April 2023 fundraise proceeds and the milestone payment received from Oxilio in September 2023 and post-period in December 2023 have enabled the Group to continue to advance and exploit the current assets within the portfolio through selective additional R&D and business development activities as set out above. The Group is conducting business development/licensing activities for all its assets using a structured and data-driven approach, with the goal of seeking global licensing deals. Our focus and emphasis is to progress our NXP002 and NXP004 programmes where required to complete licensing transactions and achieve value creation to generate a return for shareholders.

We would like to thank all stakeholders and in particular our shareholders for their continued support and we look forward to the remainder of the year and beyond with confidence that significant value can be realised from our portfolio of assets over time.

Julian Gilbert                                                                  Madeleine Kennedy

Non-Executive Chairman                                             Non-Executive Director

2 January 2024                                                               2 January 2024

Enquiries:

About Nuformix

Nuformix is a pharmaceutical development company targeting unmet medical needs in fibrosis and oncology via drug repurposing. The Company aims to use its expertise in discovering, developing and patenting novel drug forms, with improved physical properties, to develop new products in new indications that are, importantly, differentiated from the original (by way of dosage, delivery route or presentation), thus creating new and attractive commercial opportunities. Nuformix has a pipeline of preclinical assets with potential for significant value and early licensing opportunities.

Strategic Report

Review of the Business

A review of the period of these accounts is given in the Non-Executive Directors' Statement above.

Risks and uncertainties

The Group's risk management policy is regularly reviewed and updated in line with the changing needs of the business. Risk is inherent in all business. Set out below are certain risk factors which could have an impact on the Group's long-term performance and mitigating factors adopted to alleviate these risks. This does not purport to be an exhaustive list of the risks affecting the Group.

The primary risks identified by the Board are:

Strategic risks

·    Funding the business

The biotechnology and pharmaceutical industries are very competitive, with many major players having substantial R&D departments with greater resources and financial support. The Group aims to execute licensing deals early in the development process in order to generate revenue to support the business. The Group's lead asset is targeted towards IPF, a disease area where there is good precedent for licensing deals at early stages of development. Without licensing revenue, reliance falls on raising funds from investors or potential M&A opportunities. Failure to generate additional funding from these sources, if required, would compromise the Group's ability to achieve its strategic objectives as set out in the outlook on page 6. There is a material uncertainty around achieving early licensing deals and, if needed, raising additional funds. However, it is the Directors' reasonable expectation that the Group has adequate resources to continue to operate as a going concern for at least twelve months from the date of the approval of the accounts. In forming this assessment, the Directors have prepared cashflow forecasts covering the period ending 31 December 2024 that take into account the likely run rate on overheads and research and development expenditure and the prudent expectations of income from out-licensing rights to its programmes or a fundraising. The proceeds from the Lanstead sharing agreements ended in October 2023

·    Feasibility of drug candidates

Pharmaceutical R&D is an inherently risky activity and drug candidates can fail due to a lack of efficacy, lack of potency, unsuitable pharmacokinetic properties, unacceptable toxicology profile, poor stability of the drug or formulation, poor performance of the drug product, or other technical issues unforeseen at the time of candidate selection. This is the main reason that conventional pharmaceutical R&D takes many years and billions of dollars to progress a drug from discovery through to an approved medicine. It is possible that the drug candidates selected by the Group are found to be non- viable for further development although the Group's model of repurposing and working on known drugs allows us to mitigate this risk to a certain extent.

·    Failure to generate and protect our IP

If our IP rights are not adequately secured or defended against infringement, or conversely become subject to infringement claims by others, commercial exploitation could be completely inhibited. The Group constantly monitors its patents and is prepared to defend them rigorously.

By virtue of conducting research on known drugs, competitors may file patent applications on the same drugs as the Group, and thus there is a risk of securing new granted patents. There is a delay of up to 18 months in publishing patent applications and thus it is not always known whether the Group's inventions will be novel. This is mitigated through knowledge and expertise in identifying new IP and promptly filing patent applications.

·    Unrealistic goals and timeframes

The Board has a duty to maintain a realistic view of the chances of success of products, deals and partnerships. Should this not be managed accurately and appropriately, the Group and its Board and staff risk financial, business and reputational damage, whilst its shareholders become exposed to investment risk and uncertainty over the Group's viability and status. The Board continually reviews expectations and communications in the public domain to reduce the risk of misalignment.

·    Reliance on partners

To progress the development of a drug candidate requires resources, financial and otherwise, that are not necessarily available to the Group. The drug candidates that the Group wishes to develop may be of interest to third parties capable of providing these resources, so a partnership (e.g., a co-development partnership) may provide mutual benefits and mitigate risks for the Group. However, the specific strategic focus of a partner may not align totally with the Group's objectives. Maintaining a balance in a partnership is therefore a risk, such as timing, cost sharing, development decisions. Currently the Group is progressing two of its three pipeline assets without external co-development partners and thus this risk is currently minimised.

Operational risks

·    Management, employees, consultants and contractors

With a fully virtual Group operating model with a reliance on consultants and contractors, the Group's ability to manage day to day tasks and its relationships with its customers and suppliers could be undermined by failure to recruit key personnel. The Group endeavours to offer attractive remuneration and a positive working environment for all people involved in its projects. The Board are incentivised as detailed in the Directors' Remuneration Report.

·    Business development risks in terms of timing and success of deal flow

Opportunities to generate value from the portfolio have increased, but there is a need to generate further data to make the assets as attractive as possible to potential licensees. The Group seeks to extract value from its existing pipeline through early licensing deals once sufficient data are generated, to provide revenue. Generation of more robust data packages will lead to a greater probability of successful licensing discussions.

·    Adapting to the external environment

The ability of the Group to quickly adapt to external events such as a pandemic may impact the delivery of our strategy. The pandemic could cause further impact to external research. Our primary focus remains the safety of our employees. The Group follows Government advice whilst allowing employees to work flexibly. The risks are also minimised by the Group's virtual business model, allowing the Board to work remotely and effectively. Close liaison with contractors ensures that Group projects are progressed according to agreed timelines and costs.

Financial risk management

·    Failure to achieve strategic plans or meet targets or expectations

The Group actively and regularly reviews and manages its capital structure to ensure an optimal capital structure and equity holder returns, taking into consideration the future capital requirements of the Group and capital efficiency, prevailing and projected profitability, projected operating cash flows, projected capital expenditures and projected strategic investment opportunities. Further detail on the Group's risk management policies and procedures are set out in Note 18 of the financial statements.

Financial Highlights

·    Net assets at year-end (18 months) of £4,195,033 (2022: £4,737,962) which includes £202,548 cash at bank (2022: £464,095)

·    The Group delivered a loss on ordinary activities (after tax credit) for the 18 months of £859,467 (2022: loss of £1,108,993) and a loss per share of 0.12p (2022: 0.19p). The reported loss is driven mainly by costs related to the further development of pipeline assets

Future outlook

The Non-Executive Directors' Statement above gives information on the outlook of the Group.

Performance

The following are the key performance indicators ("KPIs") considered by the Board in assessing the Group's performance against its objectives. These KPIs are:

Financial KPIs

The Group is currently at a stage where the Board considers availability of cash to fund the planned R&D activities to be the primary KPI. At 30 September 2023 cash balances totalled £202,548 (2022: £464,095). The Board will consider introducing additional KPIs to monitor the Group's development as they become relevant in the future.

·    Meeting financial targets:

The Group actively and regularly reviews and manages its capital structure to ensure an optimal capital structure and equity holder returns, taking into consideration the future capital requirements of the Group and capital efficiency, prevailing and projected profitability, projected operating cash flows, projected capital expenditures and projected strategic investment opportunities. Further detail on the Group's risk management policies and procedures are set out in Note 18 of the financial statements.

·    Revenue from agreements:

During the period of these accounts, the revised Oxilio agreement has provided Nuformix with new immediate and near-term undisclosed milestone payments.

Non-Financial KPIs

·    Progress of Lead Programmes:

The Group strategy is to generate revenue streams through applying and further developing its IP to produce proprietary product opportunities for short-term development and early out-licensing opportunities. Thus, progression of its assets towards licensing is crucial to the business.

NXP002: During the period of these accounts the Group continued to prioritise the development of NXP002, its inhaled candidate for the treatment for IPF, and generated further preclinical data. The Group firstly initiated further preclinical studies confirming preclinical tolerability across a new range of higher doses than previously studied following inhalation of a new nebulised formulation. In response to intelligence gathered following the attendance of key conferences, the Group switched its research focus onto further investigations of NXP002 in combination with current IPF standards of care (SoC) and demonstration of NXP002's duration of action.

This was achieved via new studies in 3D human lung tissue, firstly using a disease and species relevant IPF model, focusing on NXP002 in combination with current SoC. Advancements within this model were designed to significantly reduce output variability. The results continued to confirm that NXP002 is well tolerated in ex-vivo human lung tissue with no signs of toxicity events and that NXP002 alone delivers a strong, consistent anti-fibrotic effect as demonstrated by modulation of the release of multiple biomarkers of fibrosis. Furthermore, both high and low concentrations of NXP002 show an additive anti-fibrotic effect to SoC. In particular, the higher concentrations of NXP002 with SoC's deliver a near complete ablation of fibrosis and inflammation biomarker release, yet at lower concentrations than have been seen in other preclinical models to date.

The results indicated that the clear, pronounced additive benefit of NXP002 on top of SoCs observed offers the potential for additional IPF treatment efficacy, even in patients responding to SoC therapy.  The results also raised the possibility that NXP002 targets additional disease pathways to SoC's when increasing the combined anti-fibrotic response.

Lastly, the Group initiated work using an exploratory healthy human lung tissue model to investigate NXP002's duration of action. Demonstration of a prolonged duration of action is essential in the development of inhaled therapies, whose clearance from the lung can be rapid. Therapies requiring multiple (more than two) daily uses of inhalation devices for effective treatment are less attractive and suffer reduced patient compliance, even in life-threatening conditions such as IPF. Therefore, Nuformix has developed a TPP that is consistent with twice daily inhalation administration.

The exploratory model involves an LPS challenge to healthy human lung tissue, offering numerous advantages in terms of species relevance and the ability to control tissue exposure to drug. The model also bridges the Company's previous successful preclinical work across a variety of LPS-challenge studies. It was found that NXP002 suppresses the release of inflammatory cytokines by healthy human lung tissue following LPS challenge. This effect was seen at one hour post treatment with NXP002, suggesting only a short time is required for lung tissue penetration and activity. In addition, a strong anti-inflammatory effect remained at 12 hours post drug dosing demonstrated by suppression of the release of inflammatory cytokines following

LPS challenge, confirming NXP002 has a suitable duration of action. Lastly, results indicated that anti-inflammatory effect was still observed at 24 hours post removal of drug.

Overall, the combined data generated gives the Group confidence in NXP002's potential as an inhaled therapy for IPF treatment and allows the telling of a more complete preclinical story to potential licensing partners for the first time. The Group continues to pursue opportunities to share this important new data with key players in the rare disease and respiratory disease sectors as it explore all opportunities to progress the NXP002 programme.

NXP001:  On 18 September 2023, the Company announced Oxilio had acquired ownership of its NXP001 patent estate for which Nuformix received new immediate and near-term undisclosed milestone payments, whilst retaining further development milestones and royalties capped at £2 million per year.

NXP004: During the period of these accounts, the Group continued to perform preclinical studies investigating the enhanced performance of NXP004 cocrystals compared to various forms of olaparib.  Pre-formulation studies were first completed confirming the superiority of the Group's recently patented cocrystal forms, allowing lead cocrystals to be identified and progressed to further drug product development studies.

The Group initiated in-vitro dissolution performance studies for its lead cocrystals compared to the marketed Lynparza® tablet product using a biologically relevant dissolution design and with drug loading relevant to human dosing. The results demonstrated that the two lead NXP004 cocrystals selected out-perform Lynparza®, both in terms of rate and extent of dissolution and release of olaparib.

Enhancement of dissolution in the currently marketed formulation of Lynparza® resulted in improved bioavailability versus the initial marketed product. Therefore, the NXP004 programme may offer potential to further increase olaparib bioavailability. In addition, the potential simplicity of NXP004-based formulations may offer improvements in product cost-of-goods versus the currently marketed product, which requires complex manufacturing methods. These attributes position NXP004 for applications in line-extensions for the currently marketed product, or for possible development in future first-to-generic products. The Company has commenced discussions with potential commercialisation partners.

Co-development with third parties:

Co-development of generic products with third parties, where Nuformix's knowhow or IP could provide extended patent protection is a potential business model although the Group is prioritising its resources on progressing its own portfolio to generate licensing revenue.

Section 172

The Board considers the interests of the Group's employees and other stakeholders, including the impact of its activities on the community, environment and the Group's reputation, when making decisions. The Board ensures that its decisions offer the best chance to promote the success of the Group as a whole and consider the likely and long-term consequences for all stakeholders, particularly (though not exclusively) considering the following:

·    How the views and interests of all stakeholders were represented in the boardroom during the period of these accounts. Open and honest discussion at Board level considers the impact on the Group's stakeholders when reviewing items flowing to the Board as part of its activities, whether this is reviewing strategy, budget or a business development opportunity.

·    Given the size and stage of development of the Group, the Board has not formally adopted a mechanism to obtain stakeholder feedback. However, the Group's Directors can be contacted at [email protected] should any stakeholders wish to contact the Group and shareholders may contact the Company's investor relations adviser, IFC Advisory Limited, at [email protected].

·    The Group's strategy and business model detailed in the Non-Executive Directors' Statement above.

·    How the Group manages risks, on pages 9 to 15 of the Annual Report.

·    Corporate governance, on pages 17 to 22 of the Annual Report, including how governance supported the delivery of our strategic objectives in this period.

Carbon Reporting

The Group has opted not to include any Streamlined Energy and Carbon Reporting (SECR) within this report as it does not meet the Large Company threshold or energy consumption threshold requiring additional reporting.

Statement of Directors' Responsibilities

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. The Directors are required by law to prepare the Group and Parent Company financial statements in accordance with UK-adopted international accounting standards. Under Company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and Group and of the profit or loss for that period. In preparing the Company and Group's financial statements, Companies Act 2006 requires that Directors:

·    Select suitable accounting policies and apply them consistently;

·    Make judgements and accounting estimates that are reasonable and prudent;

·    State whether applicable under UK-adopted international accounting standards, have been followed, subject to any material departures disclosed and explained in the financial statements; and

·    Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group transactions and disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

In the case of each person who was a director at the time of this report was approved:

·    So far as that Director is aware, there is no relevant audit information of which the Group's auditor is unaware; and

·    That Director has taken all steps that the director ought to have taken as a director to make himself aware of any relevant audit information and to establish that the Group's auditor is aware of that information.

Auditors

Kreston Reeves LLP were appointed as auditors in the period, and a resolution to reappoint Kreston Reeves LLP as auditors will be presented to the members at the Annual General Meeting in accordance with Section 485(2) of the Companies Act 2006.

On behalf of the board,

Dr Julian Gilbert                                                                               Madeleine Kennedy

Non-Executive Director                                                                   Non-Executive Director

2 January 2024                                                                                  2 January 2024

Independent Auditor's Report

to the Shareholders of Nuformix plc

For the period ended 30 September 2023

Opinion

We have audited the financial statements of Nuformix PLC (the 'parent company') and its subsidiaries (the 'Group') for the year ended 30 September 2023 which comprise the consolidated income statement, consolidated statement of comprehensive income, consolidated and company statements of financial position, consolidated and company statements of changes in equity, consolidated statements of cashflow and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the United Kingdom in accordance with the provisions of the Companies Act 2006.

In our opinion, the financial statements:

·    give a true and fair view of the state of the Group's and of the parent company's affairs as at 30 September 2023 and of the Group's loss for the year then ended;

·    have been properly prepared in accordance with IFRSs adopted by the United Kingdom; and

·    have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material uncertainty relating to going concern

We draw attention to note 2 in the financial statements, which indicates that there is a significant material uncertainty in relation to the going concern status of the group.

Nuformix is a pharmaceutical development company that has undertaken significant research into targeting the pharmaceutical product gap needs in fibrosis and oncology via drug repurposing. In order to complete this work, the company will need to expend significant, and currently unquantifiable, amounts that will be in excess of the cash held at the balance sheet date of £203k (2022: £464k).

Given the stage in the business life cycle the Group is incurring significant losses at present, totalling to £859k in the 18-month period ended 30 September 2023 (2022: year ended loss of £1,109k) resulting in the group's accumulated losses at the balance sheet date of £8,209k (2022: accumulated losses of £7,350k). These losses are attributable to the ongoing drug research programme which is yet to reach commercial production stage where revenue could potentially be generated. The Group is therefore not in a position to self-finance and will require additional external funding which, at the date of this audit report, is unknown in quantum and not secured. Additionally, the ultimate likelihood of the development work being undertaken resulting in an effective product that is commercially viable is also unknown at this stage.

As a result of the material uncertainty with respect to going concern, we have completed the following audit work as part of our evaluation of going concern:

·    Overheads and debt costs assumptions - we considered projected overheads for the 2023/24 and 2024/25 periods to ensure that these were reasonable after considering both the current and expected future profile of the business moving forward. As part of this future profiling, the non-executive directors have elected not to take payment of their salaries until such time as the business holds sufficient funds to enable them to do so.

·    Credit / cash control management assumptions - we identified within the forecasting the most significant cash inflows and ensured that the valuation and timing of these were reasonable.

·    We performed sensitivity analysis to assess the level of working capital headroom should key assumptions be less favourable than assumed in management's model.

·    We considered post year end performance data available, including the group's future commitments, to gain additional assurance over the effectiveness of management's plans to ensure the Company and Group remain a going concern.

Based on the work we have performed we have gained sufficient assurance in order to rely on management's forecasting in forming our assessment. We have also gained assurance over the credibility of management's budgeting strategy over the next 12 months.. This included gaining assurance over the adequacy of working capital available in order to settle external liabilities as they fall due. With respect to further funding of development we have reviewed the director's assessment that they can raise the funding required in the near-term through future share capital raises.

However, whilst we have evaluated future cash inflows as reasonable for meeting current working capital needs, there is significant uncertainty surrounding the ultimate quantum and timing of funding required to reach the production stage and indeed the likelihood this stage will ever be reached. Should all or part of this funding not be received or one or both of their core projects NXP002 and NXP004 not succeed the valuation of the group's goodwill £4,023,484 (2022: £4,023,484), the parent company's valuation of the subsidiary investment £4,023,484 (2022: £4,023,484), the group's carrying value of other intangible assets £57,793 (2022: £126,927) and ultimately the going concern assessment of the Group would be adversely affected.

Management will continue to reduce non-essential costs in the 2024 financial period and has signed an agreement to sell the ownership of the NXP001 patent estate, which allows them to focus on NXP002 and NXP004. As part of this agreement two milestone payments have been achieved and received in the bank since the year end. However, there are further larger milestone payments due, which are unlikely to be received into the bank in the foreseeable future.

The above indicates that a significant material uncertainty exists with respect to going concern. However, as we have obtained sufficient assurance over the availability of financial resources to settle liabilities as they fall due over a period of at least the next 12 months, our opinion is not modified in respect of this matter.

An overview of the scope of our audit

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we looked at where the directors made subjective judgements, for example in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits we also addressed the risk of management override of internal controls, including evaluating whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud.

We tailored the scope of our audit to ensure that we performed sufficient work to be able to give an opinion on the financial statements as a whole, taking into account the structure of the Group and the parent company, the accounting processes and controls, and the industry in which they operate.

Our scoping considerations for the Group audit were based both on financial information and risk. As noted above limited assurance audit work - which is to say the audit of balances and transactions material at a group level - was not utilised due to statutory audit requirements of all group entities. The below table summarises for the parent company and its subsidiaries, the level of assurance gained:

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team.

These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks identified by our audit.

Our application of materiality

We reported all audit differences found in excess of our triviality threshold of £4,900 to the directors and the management board as well as misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.

Other information

The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.  We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

·    the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

·    the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of our knowledge and understanding of the Group and parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:

·    adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

·    the parent company financial statements are not in agreement with the accounting records and returns; or

·    certain disclosures of directors' remuneration specified by law are not made; or

·    we have not received all the information and explanations we require for our audit

Responsibilities of directors

As explained more fully in the directors' responsibilities statement (set out on pages 29 and 30), the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the Group's and parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or parent company or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud.

Based on our understanding of the group and industry, and through discussion with the directors and other management (as required by auditing standards), we identified that the principal risks of non-compliance with laws and regulations related to health and safety, anti-bribery and employment law. We considered the extent to which non-compliance might have a material effect on the financial statements.

We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006, taxation and pension legislation. We communicated identified laws and regulations throughout our team and remained  alert  to  any indications  of  non-compliance  throughout  the  audit.  

We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls) and determined that the principal risks were related to posting inappropriate journal entries to increase revenue or reduce expenditure and management bias in accounting estimates and judgemental areas of the financial statements such as the valuation of intangible assets and investments. Audit procedures performed by the group engagement team included:

·        Discussions with management and assessment of known or suspected instances of non-compliance with laws and regulations and fraud, and review of the reports made by management; and

·        Assessment of identified fraud risk factors; and

·        Challenging assumptions and judgements made by management in its significant accounting estimates; and

·        Performing integrity testing to verify the legitimacy of banking records obtained from management; and

·        Performing analytical procedures to identify any unusual or unexpected relationships, including related party transactions, that may indicate risks of material misstatement due to fraud; and

·        Confirmation of related parties with management, and review of transactions throughout the period to identify any previously undisclosed transactions with related parties outside the normal course of business; and

·        Performing analytical procedures with automated data analytics tools to identify any unusual or unexpected relationships, including related party transactions, that may indicate risks of material misstatement due to fraud; and

·        Reading minutes of meetings of those charged with governance, reviewing internal audit reports and reviewing correspondence with relevant tax and regulatory authorities; and

·        Review of significant and unusual transactions and evaluation of the underlying financial rationale supporting the transactions.

There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it.  Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

As part of an audit in accordance with ISAs (UK), we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

·        Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

·        Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.

·        Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

·             Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's or the parent company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group or the parent company to cease to continue as a going concern.

·         Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

·         Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Use of our Report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Anne Dwyer BSc(Hons) FCA (Senior Statutory Auditor)

For and on behalf of

Kreston Reeves LLP       

Chartered Accountants

Statutory Auditor

London

Date: 2 January 2024

Consolidated Statement of Comprehensive Income

for the Period Ended 30 September 2023

The accompanying notes to the financial statements form an integral part of the financial statements.

These financial statements were approved by the board on 2 January 2024 and signed on its behalf by:

Madeleine Kennedy

Director

The accompanying notes to the financial statements form an integral part of the financial statements.