THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

 

OXFORD BIODYNAMICS PLC
("OBD" or the "Company" and, together with its subsidiaries, the "Group")

INTERIM RESULTS FOR THE SIX-MONTH PERIOD ENDED 31 MARCH 2022 

Transformed fundamentals supporting commercialization of flagship product

 

Oxford, UK - 28 June 2022 - Oxford BioDynamics Plc (AIM: OBD, the Company), a biotechnology company developing precision medicine tests for personalized healthcare based on the EpiSwitch® 3D genomics platform today announces its interim results for the six-month period to 31 March 2022.

CORPORATE AND OPERATIONAL HIGHLIGHTS

·      Launch of EpiSwitch® CiRT (Checkpoint Inhibitor Response Test) (February 2022)

·      Full availability of EpiSwitch® CST (COVID Severity Test) in US (November 2021)

·      Raising of £3.62m ($5m) by way of subscription (October 2021)

·      Opening of US offices in Gaithersburg, MD (October 2021)

 

FINANCIAL HIGHLIGHTS

·      Revenue of £0.09m (H1 2021: £0.25m)

·      Operating loss of £4.1m (H1 2021: £3.5m)

·      Cash and term deposits of £4.6m as at 31 March 2022 (31 March 2021: £8.1m, 30 September 2021: £4.3m)

 

POST-PERIOD END HIGHLIGHTS

·      Encouraging early uptake of CiRT by US oncologists

·      OBD presented data relating to CiRT at ASCO 2022, with significant interest from oncologists, pharma and hospital groups (June 2022)

·      Master service agreement signed by a top-10 pharma company with detailed pricing structure for high volume CiRT testing and translational medicine work in multiple projects (June 2022)

·      Multiple potential agreements with five other pharma groups for the use of CiRT are advancing (June 2022)

·      Launch of EpiSwitch® CiRT in the UK (June 2022)

Commenting on the results, Dr Jon Burrows, Chief Executive Officer of Oxford BioDynamics, said:

"This was another significant period for OBD: we further cemented the Group's fundamentals to focus on commercialization, culminating with the successful launch of our flagship EpiSwitch® CiRT test in February 2022. We have been extremely encouraged by initial uptake of the test by early-adopter oncologists in the US and in the interest shown in it by both oncologists and pharmaceutical partners at the recent ASCO conference in Chicago. We have recently made the CiRT test available to doctors in the UK as we continue to expand its utilization. As we progress through the remainder of 2022, our focus is full square on CiRT: growing adoption of the test and educating stakeholders of the benefits it offers patients, physicians and payors alike. Alongside supporting our growth plans for CiRT, our team will also be engaged in the development of the next product from our pipeline: programs with high potential include prostate cancer, veterinary medicine and colorectal cancer."

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 which is part of domestic UK law pursuant to the Market Abuse (Amendment) (EU Exit) Regulations (SI 2019/310) ("UK MAR"). Upon the publication of this announcement, this inside information (as defined in UK MAR) is now considered to be in the public domain.

Investor presentation

The Company's management team will conduct a live presentation to investors via the Yellowstone Advisory webinar platform at 12.30pm (BST) on 28 June 2022 2022 (please note the time of the presentation was incorrectly stated as 12pm in a previous announcement).

The online presentation is open to both existing and potential shareholders. 

Questions can be submitted both before the presentation by emailing [email protected] and during the presentation, and will be addressed at the end.

To register for the presentation, please visit: https://us02web.zoom.us/webinar/register/1016520892457/WN_HwJq5cd6QTCcL9Tl0FwLrQ

 

For more information:

Oxford BioDynamics Plc	Tel: +44 (0)1865 518910
Jon Burrows, CEO Paul Stockdale, CFO
Shore Capital - Nominated Adviser and Broker	Tel: +44 (0)20 7408 4090
Advisory: Stephane Auton / John More Broking: Fiona Conroy
Instinctif Partners - Financial PR	Tel: +44 (0)20 7457 2020
Melanie Toyne-Sewell / Agnes Stephens / Katie Duffell / Jonjo Cordey	[email protected]
PCG Advisory Group - US Investor Relations	Tel: +1 646 863 6341
Jeff Ramson / Kirin Smith

 

Notes to Editors

About Oxford BioDynamics Plc

Oxford BioDynamics Plc (AIM: OBD) is a global biotechnology company, advancing personalized healthcare by developing and commercializing precision medicine tests for life-changing diseases.

Its flagship product is EpiSwitch® CiRT (Checkpoint Inhibitor Response Test) for cancer, a predictive immune response profile for immuno-oncology (IO) checkpoint inhibitor treatments, launched in February 2022.

In March 2021, the Company launched its first commercial prognostic test, EpiSwitch® CST (Covid Severity Test) and the first commercially available microarray kit for high-resolution 3D genome profiling and biomarker discovery, EpiSwitch® Explorer Array Kit.

The Company has developed a proprietary 3D genomic biomarker platform, EpiSwitch®, which can build molecular diagnostic classifiers for prediction of response to therapy, patient prognosis, disease diagnosis and subtyping, and residual disease monitoring in a wide range of indications.

Oxford BioDynamics has participated in more than 40 partnerships with big pharma and leading institutions including Pfizer, EMD Serono, Genentech, Roche, Biogen, Mayo Clinic, Massachusetts General Hospital and Mitsubishi Tanabe Pharma.

The Company has created a valuable technology portfolio, including biomarker arrays, molecular diagnostic tests, bioinformatic tools for 3D genomics and an expertly curated 3D genome knowledgebase comprising hundreds of millions of data points from over 10,000 samples in more than 30 human diseases.

OBD is headquartered in Oxford, UK and is listed on AIM of the London Stock Exchange. It also has a commercial office in Gaithersburg, MD, USA and a reference laboratory in Penang, Malaysia.

For more information, please visit the Company's website, www.oxfordbiodynamics.com, or follow on Twitter or LinkedIn.

About EpiSwitch®

The 3D configuration of the genome plays a crucial role in gene regulation. By mapping this architecture and identifying abnormal configurations, EpiSwitch® can be used to diagnose patients or determine how individuals might respond to a disease or treatment.

Built on over 10 years of research, EpiSwitch® is Oxford Biodynamics' award-winning, proprietary platform that enables screening, evaluation, validation and monitoring of 3D genomic biomarkers. The technology is fully developed, based on testing of over 10,000 samples in 30 disease areas, and reduced to practice.

In addition to stratifying patients with respect to anticipated clinical outcome, EpiSwitch® data offer insights into systems biology and the physiological manifestation of disease that are beyond the scope of other molecular modalities. The technology has performed well in academic medical research settings and has been validated through its integration in biomarker discovery and clinical development with big pharma.

A copy of this announcement is available on the Company's website at www.oxfordbiodynamics.com.

 

This announcement includes "forward-looking statements" which include all statements other than statements of historical facts, including, without limitation, those regarding the Group's financial position, business strategy, plans and objectives of management for future operations, and any statements preceded by, followed by or that include forward-looking terminology such as the words "targets", "believes", "estimates", "expects", "aims", "intends", "will", "can", "may", "anticipates", "would", "should", "could" or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Group's control that could cause the actual results, performance or achievements of the Group to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Group's present and future business strategies and the environment in which the Group will operate in the future. These forward-looking statements speak only as at the date of this announcement. The Group expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in this announcement to reflect any change in the Group's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. As a result of these factors, readers are cautioned not to rely on any forward-looking statement.

 

CHIEF EXECUTIVE OFFICER'S REVIEW

Introduction

OBD made significant progress over the six months to 31 March 2022. Most importantly, the Group successfully completed the development of its EpiSwitch® CiRT (Checkpoint Inhibitor Response Test), launched in February 2022. The launch of EpiSwitch® CiRT represents the culmination of the transformation of the Group's fundamentals, from a primary focus on R&D to a UK-US commercial organization with its own 3D genomics-based products available, all achieved since the adoption of its expanded strategic focus in late 2020.

EpiSwitch® CiRT

EpiSwitch® CiRT is the Group's flagship product, launched in the US during the period and made available to UK oncologists post-period end in June. EpiSwitch® CiRT is a first-of-its-kind precision medicine test that predicts a patient's likely response to immune checkpoint inhibitor (ICI) therapies.

ICIs offer a different approach to chemotherapy or radiation, working with a patient's own immune system to find and fight cancer. ICIs have been approved as first-line (1L) or second-line (2L) of treatment for over a dozen different cancer indications^[1]. They can show remarkable efficacy in treating cancer, and oncologists have actively adopted the use of these therapies. Across the approved indications, approximately 40% of all patients are eligible for ICI therapy^[2], and within the class of ICIs, anti-PD-1/PDL-1 antibodies have become some of the most widely prescribed and tested anticancer therapies^[1].

Despite their potential efficacy, however, it has been estimated that ICIs are ineffective for up to 70% of patients treated. This can result in futile treatment and debilitating side-effects for some patients^[3], as well as substantial unnecessary costs in both time and money to healthcare systems - a situation which is exacerbated by the high prices of ICIs, e.g. Keytruda costs approximately $190,000 per patient course in the US. It is estimated that annual savings to the US healthcare system through the personalized administration of ICIs following accurate prognosis could amount to as much as $10B+. In the UK, Keytruda has a list price of £84,000 per patient course for the drug alone. The UK's NHS and private healthcare systems could save significant amounts, estimated to be close to £1bn, by avoiding or reducing the administration rate of ineffective treatments, through straightforward personalized testing.

Rapid expansion of the checkpoint inhibitor class (with nine currently approved and many more in the review pipeline) has led to appeals by the FDA and leading oncologists for harmonization and coordination of the latest ICI developments^[4]. Robust and universal prediction of response to ICI treatment is seen as one of the key tools for harmonization: assisting physicians in their decisions on choices of treatment, protecting patients from futile therapy, leading to greater efficiency in drug development, reducing costs and protecting valuable resources^[4]. Currently, there are no predictive tools that accurately report the expected efficacy of ICIs in individual patients.

OBD's EpiSwitch CiRT enables doctors to make an informed decision on whether to recommend beginning or continuing treatment with an ICI. Using a routine blood test rather than an invasive biopsy, CiRT offers fast, personalized guidance. EpiSwitch CiRT has demonstrated best-in-class performance in the prediction of cancer patient response to ICIs, including anti-PD L1 and anti-PD 1 antibodies, with high sensitivity (93%), specificity (82%), and accuracy (85%) across several ICIs from multiple pharmaceutical companies, in 15 key oncological indications.

Initial uptake of the test by oncologists has been very encouraging, with 42 tests processed for six ordering physicians to date. OBD partnered with NEXT Molecular Analytics (VA, USA) to clinically validate EpiSwitch CiRT in its high complexity CLIA-certified† laboratory. EpiSwitch CiRT is offered to physicians as a lab developed test (LDT), allowing OBD to provide immediate access to early adopters, enable clinical utilization for the test and help drive the transformation of how checkpoint-inhibitor immunotherapy is recommended and administered to patients as efficiently as possible. Launching as an LDT is a strategy other diagnostic companies have adopted in the blood-based cancer screening space, including Grail and Guardant^[5]. In addition, OBD has applied and already received approval for a unique descriptor and CPT code^‡ (to be published on or before 1 July 2022) that defines the EpiSwitch 3D genomics platform and the CiRT diagnostic as: "Oncology (pan-tumor), genetic profiling of eight DNA regulatory (epigenetic) markers by quantitative PCR, whole blood, reported as a high or low probability of responding to immune checkpoint inhibitor therapy". This is relevant because private payors may reimburse a generic/miscellaneous code, but only for a limited time period before a unique code is required. More importantly, a unique code represents a step towards seeking an agreed value for CiRT that will be reimbursed by multiple payors and, eventually, establishing coverage policies for the test.

The recent American Society of Clinical Oncology (ASCO) Annual Meeting in Chicago, IL in June 2022, provided the Group's representatives with an excellent opportunity to present the benefits of EpiSwitch CiRT to many oncologists, who reported the significant need for a test like EpiSwitch CiRT. Furthermore, the Group has noted growing interest from pharma companies in the potential to use EpiSwitch CiRT in clinical development programs. At ASCO, OBD representatives held positive meetings with 11 pharma teams, two major US hospital networks, National Cancer Institute-designated comprehensive cancer centers, as well as with clinicians and healthcare investors. During ASCO, the Group signed a master service agreement with a top-10 pharma company. The agreement includes a detailed pricing structure for high volume CiRT testing as well as other translational medicine work. The agreement has been designed to allow multiple anticipated projects to be agreed at pre-determined prices. Individual projects will be announced in due course as these are agreed with the customer.

Commercial and grant-funded projects

During the period the Group was able to restart work on a number of commercial and academic contracts that had been impacted by delays related to the COVID-19 pandemic, including as part of the REFINE-ALS study, sponsored by Mitsubishi Tanabe Pharma America, Inc, which OBD joined in early 2019. OBD is testing patient blood samples from up to 300 patients in the trial, using a biomarker panel developed using its EpiSwitch® technology. The REFINE-ALS trial now has an expected study completion date of March 2023.

The Group announced that it had been awarded a prestigious FNIH Partnership for Accelerating Cancer Therapies (PACT) grant shortly before the period, in August 2021. The grant was awarded to use the EpiSwitch® platform for accurate prediction of a patient's response to Immune Checkpoint Inhibitors (ICIs) from a routine blood sample and is worth $910,000 over two years. The grant funds extended application of the EpiSwitch® technology used in the development of the Group's EpiSwitch® CiRT to the analysis of primary and acquired resistance to ICIs in several trials, including over 186 longitudinal samples from an observational trial, encompassing at least four separate ICI therapies and seven common cancer types.

Work on the project began during the period, with funding recognized in 'other operating income' in the consolidated income statement. Post-period end, in April 2022, the Group's Chief Scientific Officer, Dr Alexandre (Sasha) Akoulitchev presented a report on OBD's progress on work associated with the PACT award, including results of the performance of the Group's EpiSwitch CiRT test. Following the well-received report, OBD has been invited to the 2022 PACT immuno-oncology (IO) Coordination Forum, to be held in July 2022. The Coordination Forum brings together members of the PACT partnership and outside initiatives in immuno-oncology to facilitate coordination, information sharing and outreach across broader IO research efforts. OBD has also been invited by the FNIH (a managing party for the PACT awards), to take part in a public webinar on its PACT results and EpiSwitch CiRT in August 2022. Dr Akoulitchev continues to represent OBD on the Oncology, Inflammation & Immunity and Neuroscience Steering Committees of the FNIH Biomarkers Consortium.

Product Development Pipeline

After over a decade of research, the Group has developed both the world's largest 3D genomics knowledgebase (containing hundreds of millions of datapoints relating to over 30 diseases) and a pipeline of several deployable qPCR diagnostic, prognostic, predictive or monitoring tests across multiple indications.

The Group's knowledgebase offers an increasingly attractive information source for pharma and other partners to provide insights relevant to multiple aspects of disease modelling, drug discovery and clinical development programs. Access to it is already possible both through commercial research contracts and to purchasers of the Group's EpiSwitch Explorer Array Kit. As such, the 3D genomics knowledgebase represents a significant opportunity for future commercialization.

OBD has now successfully developed, validated and launched two of its tests as commercial products, with valuable experience of the process gained with each of EpiSwitch® CST and EpiSwitch® CiRT. This experience provides the Group with increased confidence that the development, technology transfer and validation of subsequent LDTs can proceed to plan.

As previously announced, following review of the likely market opportunities for each of the deployable tests in the pipeline, the Group expects the most promising and lucrative candidates to be diagnostic/prognostic tests for early-stage detection and staging of prostate cancer and colorectal cancer and, in veterinary medicine, a diagnostic/prognostic test for canine lymphoma. The next proprietary test to be launched is anticipated to be in prostate cancer, subject to market conditions probably during 2023/24.

Infrastructure, funding to support growth

The Company moved into its new 24,000 sq ft UK headquarters shortly before the period, in September 2021, completing the commissioning of its purpose-built laboratories shortly thereafter. The new space at the Oxford Business Park (now part of the Advanced Research Clusters Group) provides dedicated robotic processing lines, allowing the business to operate its core activities simultaneously, without having to run (for example) product development and work for pharma customers in the same rooms, which requires time-consuming resetting of laboratory equipment. The much-needed office and meeting space in Oxford has hugely facilitated collaboration within the Group, even during the increased COVID-related guidance around the turn of the calendar year. In October 2021, the Group took possession of its US office space in Gaithersburg, MD. The US office is well-situated for the local team, as well as several customers and collaborators.

In October 2021, the Group raised £3.62 million (US$5 million) by way of a subscription for 7,791,803 new shares at 46.5p per share from Armistice Capital Master Fund Ltd ("Armistice Capital"). Warrants to subscribe for 7,791,803 new ordinary shares at 58.125p per share were also issued to Armistice Capital (the "Subscription"), following approval at the Company's general meeting in November 2021. The fundraise provided short-term funding that supported the commercialization of EpiSwitch® CiRT and also represented the first investment in the Group by a US-based institutional investor.

IP

OBD has continued to extend its broad intellectual property portfolio across the 3D genomics space. As well as multi-layered patents, the Group controls extensive trade secrets and know-how, and owns, develops and protects multiple trademarks and brands. OBD has patents filed or granted in 18 separate families, with four patents granted in various territories since the 30 September 2021 year end.

Future focus

Through the remainder of the financial year and into 2023, the Group's primary focus will be on growing sales and collating evidence of the clinical utility of the EpiSwitch® CiRT test. The team will continue to engage with oncologists in the US and now the UK to outline the benefits of the test and will work with US healthcare payors to establish a unique descriptor and CPT code for the test in due course.

At the same time, product development on the next proprietary precision medicine test, for prostate cancer, will proceed, as will commercial and collaborative work for pharma and other partners and sustained business development activity as markets continue to open up after pandemic-related restrictions.

It is gratifying to look back on much that has been achieved and it is with excitement and determination that we enter the next phase in the Group's development.

Dr Jon Burrows

Chief Executive Officer

 

^[1] Robert, C. A decade of immune-checkpoint inhibitors in cancer therapy. Nat Commun 11, 3801 (2020). https://doi.org/10.1038/s41467-020-17670-y

^[2] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6503493/

^[3] https://www.nature.com/articles/s41571-019-0218-0.

^[4] Beaver, J.A., Pazdur, R. The wild west of checkpoint inhibitor development. New England J Med (2021) Dec 15. doi: 10.1056/NEJMp2116863. Epub ahead of print. PMID: 34910860.

^[5] Ashford, M., 2021. Guardant Health Laying Path for Future in Cancer Screening, Updates Launch Plans for CRC Assay. GenomeWeb. https://www.genomeweb.com/molecular-diagnostics/guardant-health-laying-path-future-cancer-screening-updates-launch-plans-crc (accessed June 24, 2022).

^[6] https://www.statista.com/statistics/241488/population-of-the-us-by-sex-and-age/

^[7] https://translational-medicine.biomedcentral.com/articles/10.1186/s12967-021-02710-y#Abs1

^† CAP-CLIA regulated laboratories are accredited by the College of American Pathologists as being compliant with the Clinical Laboratory Improvement Amendments, 1988 (42 CFR, Part 493).

^‡ A Current Procedural Terminology (CPT) code is used in the US to report medical and diagnostic services to entities such as health care professionals and payers.

 

FINANCIAL REVIEW

Overview

During the six-month period ended 31 March 2022, the Group completed the development and launch of its latest product, EpiSwitch® CiRT. Operating from the Group's brand-new UK headquarters (having moved in shortly before the period), much of the team's focus was on the finalization of product development, technology transfer and validation of the CiRT test. The Group also engaged in research and support of clinical programmes for commercial partners, and on a number of grant-funded and internal R&D projects. Revenue was £85k (H1 2021: £250k) and other operating income (arising from grant-funded projects) was £170k (H1 2021: £1k). In October 2021, the Company raised £3.62m ($5m) by way of a subscription for newly issued shares, which meant that overall cash and term deposits increased by £248k over the period, to £4.59m (30 September 2021: £4.34m).

Financial performance

Revenue for the period of £85k (H1 2021: £250k) was generated by work on projects for pharma and academic partners. Other operating income of £170k (H1 2021: £1k) related to grant funding for research projects. Together, revenue and other operating income reflected the internal focus on EpiSwitch CiRT product development, grant-funded R&D work and a welcome re-initiation of activity on existing commercial contracts that had been impacted throughout the COVID-19 pandemic.

The Group's EpiSwitch CiRT was launched shortly before the end of the period and saw encouraging early orders from oncologists. At least initially, revenue associated with US orders of the test is expected to be recognized on subsequent receipt of funds from healthcare payors. This may change as the level of reimbursement for the test becomes more certain, for example on obtaining a specific CPT code for it in due course.

Ongoing commercial projects were again impacted by some delays in the receipt of blood samples, with clinical trials being affected by the ongoing COVID-19 pandemic. As noted through the prior year, travel restrictions and the Group's internal focus on proprietary product development meant that business development activity with pharma/biotech companies had been constrained: whilst this has been reinitiated, there were no new agreements during the period. Other operating income represents grant funding for research. In total, revenue and other operating income was at a similar level to the equivalent period of the prior year (£255k, H1 2021: £251k).

The Group's operating cost base increased by around 19% compared to the equivalent period in the prior year (£4.4m, H1 2021: £3.7m), reflecting a slightly larger team, and expanded infrastructure in both the UK and US.

Non-staff R&D costs were reduced compared to the equivalent period in the prior year (£191k, H1 2021: £601k) mainly because the first half of the prior year included significant costs associated with investigative lab work for pharma partners and blood samples and lab consumables used in the development of the EpiSwitch CST test. Whilst the development of EpiSwitch CiRT was completed during the period, final stages of development and validation work on this product required less significant consumables usage and did not rely on purchased patient samples.

The increase in staff costs (£2.103m, H1 2021: £1.866m) reflects new recruits to key roles in the US and UK, salary increases and the impact across the whole period of those who joined or left the Group during the previous financial year.

General and administrative costs were increased by 28% (£1.232m, H1 2021: £959k). The most significant cost increases compared to H1 2021 were for property-related costs (£150k), investor and public relations and other predominantly US-based consultants (net increase of £57k), travel-related costs (£44k) and insurance (£28k).

Share options charges for the period were increased and mainly related to options granted during the period and in the second half of the previous financial year. These charges are non-cash in nature and are generally recognized over a period of one, two or three years from each option grant.

Increased depreciation and amortization charges reflect the Group's expanded infrastructure. The Group's new UK headquarters were fitted out and brought into use during the second half of the previous financial year and its US offices were opened early in the period. The increase in depreciation is split between amounts charged in respect of right-of-use assets (i.e. the Group's leased properties), which increased by £228k compared to H1 2021 and tangible fixed assets for which the charge increased by £151k, of which £111k related to leasehold improvements and fixtures and fittings and £40k to charges for lab equipment.

The fair value gain on financial liabilities designated as FVTPL arose on the valuation at 31 March 2022 of the warrants over ordinary shares issued to Armistice Capital during the period (the "Warrants"). As set out in more detail in Note 2 to the interim financial statements, the Warrants are accounted for as liabilities and are valued at each reporting date, with any gains or losses recognized in the income statement. The gain for the period of £795k (H1 2021: nil) is driven by the reduction in the Company's share price since the award of the Warrants. It is anticipated that estimation of the fair value of the Warrants at successive reporting dates is likely lead to the recognition of further material movements in the income statement.

Finance income (£29k, H1 2021: £22k) included interest income on fixed-term deposits and notice accounts and net foreign exchange gains. The Group held lower balances in fixed-term and notice accounts during the period. Exchange gains were mainly driven by the weakening of the pound against the US dollar over the period, which led to an increase in the sterling equivalent of the Group's US dollar-denominated funds. Finance costs included calculated interest charges in respect of the Group's right-of-use assets, and, in the prior year, net foreign exchange losses.

The tax credit for the period (£363k, H1 2021: £426k) includes an estimate of the repayable R&D Tax Credit for the period, offset by local tax charges in respect of certain of the Group's foreign subsidiaries. The slight reduction in the anticipated credit reflects an increased proportion of R&D staff members' time spent on projects that do not qualify for inclusion in the SME R&D tax credit scheme and the lower consumables costs incurred during the period.

Financial position

The most significant balance sheet differences compared to 31 March 2021 related to the expansion of the Group's UK and US infrastructure and the Subscription and award of Warrants that took place during the period. Compared to 30 September 2021, the main differences were driven by the Subscription and Warrant issue.

Non-current assets were increased by £6.6m compared to 31 March 2021 (£8.8m, H1 2021: £2.2m). This predominantly reflected the expansion, including fit-out, of the Group's UK and US office and lab space, as well as purchases of lab and office equipment, and in intangible assets, spend on patents and a clinical order management system.

Inventories were at a broadly similar level to both 31 March 2021 and 30 September 2021, with a slight decrease because in early 2021 the Group had maintained higher levels of certain items to support product development and to mitigate widely reported post-Brexit supply chain risks. The decrease in trade and other receivables compared to 31 March 2021 was driven by a relatively small number of large-value invoices and receipts and is timing-related. At 30 September 2021, the trade and other receivables balance included higher balances due from customers and grant-awarding bodies, twelve rather than six months' tax recoverable and a higher than usual VAT receivable balance, associated with expenditure on the Group's UK infrastructure.

Trade and other payables were at a similar level to 31 March 2021 and were lower than 30 September 2021 mainly because of the timing of staff-related accruals including bonuses. As noted above, other movements in liabilities compared to 31 March 2021 and 30 September 2021 are due to lease liabilities and dilapidation provisions associated with the Group's rental properties and the recognition of a liability in respect of the Warrants issued during the period.

Cash flow

The Group held cash and fixed-term deposits of £4.59m at 31 March 2022 (30 September 2021: £4.34m), with operating cash outflow and capital expenditure broadly offset by the Subscription and warrant issue during the period (which generated £3.62m before transaction costs) and receipt of £942k in repayable R&D Tax Credits in respect of the previous financial year.

Summary and outlook

The Group's activity over the first half of the current financial year is clearly reflected in the interim financial statements for the six-month period ended 31 March 2022, with a slightly larger OBD team operating from the Group's improved and expanded infrastructure, focused on the completion of the development and launch of EpiSwitch® CiRT.

Alongside this progress in the commercialization of the Group's technology and pipeline, the Subscription and warrant issue during the period helped to bolster cash resources and the Group began the second half of the year with slightly increased cash resources compared to 30 September 2021. However, the total cash and fixed-term deposits are relatively low compared to the Group's ongoing cost base and the Group will need to generate increased revenue and/or additional funding during the remainder of the calendar year. Early uptake of EpiSwitch CiRT has been encouraging, as have recent developments such as the signing of a master service agreement with a top-10 pharma company. At the date of this report, the quantum and timing of likely revenue from these developments remains difficult to predict. Accordingly, as explained in more detail in the Note 2 to the interim financial statements, the Board has concluded (as it did in the annual reports for the years ended 30 September 2020 and 30 September 2021) that there continues to be a material uncertainty which may cast significant doubt on the Group's ability to continue as a going concern.

As the remainder of the financial year progresses, the OBD team is therefore focused on growing orders for EpiSwitch CiRT and on generating revenue from pharma and other partners.

Paul Stockdale

Chief Financial Officer

 

 

Consolidated income statement

		Six-month period ended 31 March			Year ended 30 September
		2022		2021		2021
	(unaudited)		(unaudited)			(audited)
	Note	£000		£000		£000
Continuing operations
Revenue	3	85		250		341
Research & development costs (excluding staff costs)	4	(191)		(601)		(898)
Staff costs	4,5	(2,103)		(1,866)		(3,768)
General & other admin costs	4	(1,232)		(959)		(1,850)
Share option charges	12	(223)		(65)		(251)
Depreciation and amortization	7-9	(622)		(215)		(1,088)
Other operating income		170		1		2
Operating loss		(4,116)		(3,455)		(7,512)
Fair value gain on financial liabilities designated as FVTPL		795		-		-
Finance income		29		22		31
Finance costs		(100)		(72)		(148)
Loss before tax		(3,392)		(3,505)		(7,629)
Income tax		363		426		947
Loss for the period from continuing operations		(3,029)		(3,079)		(6,682)
Loss attributable to:
Owners of the Company		(3,029)		(3,079)		(6,682)
Non-controlling interest		-		-		-
		(3,029)		(3,079)		(6,682)
Earnings per share
From continuing operations
Basic and diluted (pence per share)	6	(3.1)		(3.3)		(7.2)

  

Consolidated statement of comprehensive income

		Six-month period ended 31 March			Year ended 30 September
		2022		2021		2021
	(unaudited)		(unaudited)			(audited)
		£000		£000		£000
Loss for the period		(3,029)		(3,079)		(6,682)
Exchange differences on translation of foreign operations   that may be reclassified to the income statement		(6)		(11)		(35)
Total comprehensive income for the period		(3,035)		(3,090)		(6,717)
Total comprehensive income attributable to:
Owners of the Company		(3,036)		(3,090)		(6,716)
Non-controlling interest		1		-		(1)
		(3,035)		(3,090)		(6,717)

 

Consolidated statement of financial position

		31 March		31 March	30 September
		2022		2021		2021
	(unaudited)		(unaudited, restated)			(audited)
		£000		£000		£000
Assets	Note
Non-current assets
Intangible fixed assets	7	1,452		1,005		1,152
Property, plant and equipment	8	2,738		782		2,828
Right-of-use assets	9	4,653		424		4,718
Total non-current assets		8,843		2,211		8,698
Current assets
Inventories		358		379		392
Trade and other receivables		854		1,067		1,951
Fixed term deposits		1,639		3,162		2,163
Cash and cash equivalents		2,947		4,982		2,175
Total current assets		5,798		9,590		6,681
Total assets		14,641		11,801		15,379
Equity and liabilities
Capital and reserves
Share capital	11	1,004		926		926
Share premium		19,283		16,740		16,740
Translation reserve		152		182		159
Share option reserve		3,245		2,837		3,022
Retained earnings		(17,200)		(10,569)		(14,171)
Equity attributable to owners of the Company		6,484		10,116		6,676
Non-controlling interest		18		18		17
Total equity		6,502		10,134		6,693
Current liabilities
Trade and other payables		1,077		1,021		1,661
Warrant liability	13	151		-		-
Lease liabilities	10	711		130		634
Provisions		-		74		-
Current tax liabilities		6		10		-
Total current liabilities		1,945		1,235		2,295
Non-current liabilities
Lease liabilities	10	5,748		348		5,953
Provisions		416		76		408
Deferred tax		30		8		30
Total non-current liabilities		6,194		432		6,391
Total liabilities		8,139		1,667		8,686
Total equity and liabilities		14,641		11,801		15,379

 

Consolidated statement of changes in equity

	Share capital	Share premium	Translation reserve	Share option reserve	Retained earnings	Attributable to share- holders	Non-controlling interest	Total
	£000	£000	£000	£000	£000	£000	£000	£000
At 1 October 2020 as previously stated	926	16,740	193	3,018	(7,314)	13,563	18	13,581
Correction to investments accounted for using the equity method	-	-	-	-	(422)	(422)	-	(422)
At 1 October 2020, restated	926	16,740	193	3,018	(7,736)	13,141	18	13,159
Loss for the period	-	-	-	-	(3,079)	(3,079)	-	(3,079)
Other comprehensive income for the period	-	-	(11)	-	-	(11)	-	(11)
Total comprehensive income for the period	-	-	(11)	-	(3,079)	(3,090)	-	(3,090)
Transactions with owners recorded in equity
Share option credit	-	-	-	65	-	65	-	65
Lapse of vested share options	-	-	-	(246)	246	-	-	-
At 31 March 2021	926	16,740	182	2,837	(10,569)	10,116	18	10,134
At 1 April 2021	926	16,740	182	2,837	(10,569)	10,116	18	10,134
Loss for the period	-	-	-	-	(3,603)	(3,603)	-	(3,603)
Other comprehensive income for the period	-	-	(23)	-	-	(23)	(1)	(24)
Total comprehensive income for the period	-	-	(23)	-	(3,603)	(3,626)	(1)	(3,627)
Transactions with owners recorded in equity
Share option credit	-	-	-	186	-	186	-	186
Lapse of vested share options	-	-	-	(1)	1	-	-	-
At 30 September 2021	926	16,740	159	3,022	(14,171)	6,676	17	6,693
At 1 October 2021	926	16,740	159	3,022	(14,171)	6,676	17	6,693
Loss for the period	-	-	-	-	(3,029)	(3,029)	-	(3,029)
Other comprehensive income for the period	-	-	(7)	-	-	(7)	1	(6)
Total comprehensive income for the period	-	-	(7)	-	(3,029)	(3,036)	1	(3,035)
Subscription for new shares	78	2,600	-	-	-	2,678	-	2,678
Transaction costs for new shares	-	(57)	-	-	-	(57)	-	(57)
Share option credit	-	-	-	223	-	223	-	223
Lapse of vested share options	-	-	-	-	-	-	-	-
At 31 March 2022	1,004	19,283	152	3,245	(17,200)	6,484	18	6,502

  

Consolidated statement of cash flows

		Six-month period ended 31 March				Year ended 30 September
		2022		2021		2021
	(unaudited)		(unaudited)			(audited)
	Note	£000		£000		£000
Loss before tax for the financial period		(3,393)		(3,505)		(7,629)
Adjustments to reconcile loss for the period to net cash flows:
Net interest		92		(14)		83
Depreciation of property, plant and equipment	8	290		140		571
Depreciation of right-of-use assets	9	285		56		404
Amortization of intangible fixed assets	7	48		19		113
Net foreign exchange movements		(40)		59		10
Movement in provisions		8		43		(99)
Share based payments charge	12	223		65		251
Fair value gain on financial liabilities designated as FVTPL	13	(795)		-		-
Working capital adjustments:
Decrease / (increase) in trade and other receivables		527		(219)		(560)
Decrease / (increase) in inventories		34		(56)		(69)
(Decrease) / increase in trade and other payables		(520)		(47)		416
Operating cash flows before interest and tax paid		(3,241)		(3,459)		(6,509)
R&D tax credits received		942		608		608
Tax paid		(1)		(2)		(17)
Net cash used in operating activities		(2,300)		(2,853)		(5,918)
Investing activities
Interest received		8		45		56
Lease incentive received		-		-		2,636
Purchases of property, plant and equipment		(303)		(261)		(2,693)
Purchases of intangible fixed assets		(301)		(155)		(396)
Decrease in fixed-term deposits		523		2,225		3,224
Net cash (used in) / generated by investing activities		(73)		1,854		2,827
Financing activities
Lease payments		(449)		(72)		(804)
Equity issued	13	3,623		-		-
Equity transaction costs		(56)		-		-
Net cash generated by / (used in) financing activities		3,118		(72)		(804)
Net increase / (decrease) in cash and cash equivalents		745		(1071)		(3,895)
Foreign exchange movement on cash and cash equivalents		27		(66)		(49)
Cash and cash equivalents at beginning of year		2,175		6,119		6,119
Cash and cash equivalents at end of period		2,947		4,982		2,175

 

Notes 

1.      General information

The interim financial information was authorized for issue by the Board of Directors on 27 June 2022. The information for the period ended 31 March 2022 has not been audited and does not constitute statutory accounts as defined in section 434 of the Companies Act 2006 and should therefore be read in conjunction with the audited financial statements of the Company and its subsidiaries as at and for the year ended 30 September 2021, which were prepared in accordance with EU Adopted International Financial Reporting Standards and have been delivered to the Registrar of Companies. The Report of the Auditor on the financial statements was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006. This interim information does not comply with IAS 34 Interim Financial Reporting, as is permissible under the rules of AIM.

2.      Basis of accounting

Basis of preparation

These interim consolidated financial statements have been prepared under the historical cost convention, except for, where applicable, the revaluation of financial liabilities at fair value through profit or loss, and in accordance with the recognition and measurement principles of European Union Adopted International Financial Reporting Standards (IFRSs).

Reporting currency

The consolidated financial statements are presented in pounds sterling (GBP), which is also the Company's functional currency.

Going concern

In assessing the appropriateness of adopting the going concern assumption, the Group has prepared a detailed financial forecast ("the forecast") for the period ending 30 September 2023. The forecast includes:

·     estimates of likely revenue arising from the Group's proprietary products (based on the Group's own assessments of market opportunities, initial uptake of EpiSwitch CiRT and ongoing engagement with oncologists)

·      anticipated revenues from contracts with pharmaceutical partners

·     operating costs reflecting a slight expansion of the Group's staff team in the US and increased spend to support the Group's products, particularly EpiSwitch CiRT

·      minimum necessary capital expenditure on lab equipment, software and patents

 

As well as funds already received from investors, the Group is reliant on revenue from customers and income from grant awarding bodies to fund its activities. In the event that sufficient revenue and operating income is not generated, the Group would need to obtain additional funding in order to continue as a going concern.

Revenue during the six months ended 31 March 2022 was at a similar level to the preceding six-month period and was exceeded by operating costs. The Group was able to preserve its cash and fixed term deposit balances over the period, primarily through the raising of £3.62m ($5m) by way of a subscription for new ordinary shares, in October 2021. The Group also sought to control costs, including by delaying planned recruitment to certain positions whilst still supporting product and sales development and business development activity with pharma.

The Directors consider that the forecast represents a reasonable best estimate of the performance of the Group over the period to 30 September 2023. In the forecast, both product and contract revenue are anticipated to be significantly higher than was the case in the period to 31 March 2022. Further, in the forecast, it would be necessary for revenues to continue to grow in subsequent years if the Group were to be able to further expand its staff team to a size sufficient to continue to develop, launch and support successive proprietary products.

The Group has also modelled a reasonably likely "downside scenario", which assumes slower growth in product revenues. 

The Directors are satisfied that in the scenario modelled by the forecast, the Group would be able to continue as a going concern, although this would probably require delaying some planned discretionary spending in early 2023. In the downside scenario, it would be likely that the Group would need either to generate increased revenue or to obtain additional funding, by the end of the first quarter of 2023.

In preparing the forecast, the Directors note the existence of a number of factors that increase the difficulty inherent in predicting the Group's performance, including its cash generation. These include:

·     a continued lack of sufficient historical information from which to reliably predict sales volumes, long-term prices and timing of receipts from customers in respect of the Group's proprietary products (EpiSwitch® CiRT, EpiSwitch® CST and EpiSwitch® Explorer Array Kit). Initial uptake of the EpiSwitch® CiRT test has been encouraging and the test is now available in the UK as well as the US, but there is no guarantee that the Group will be able to generate the level of growth in product sales included in the forecast.

·     as at the date of this report, there is no guarantee that the Group will be able to develop and successfully launch new proprietary products from within its pipeline of deployable tests.

·      whilst the Group has been actively engaged in a number of business development interactions with several pharma partners up to the time of publication of this report, there is no guarantee that the Group will be able to enter into sufficient cash-generating projects to cover its costs. Also, the timing of projects for such customers can be impacted by delays in receipt of blood or other patient samples on which to work, which in turn can lead to delays in receipt of cash payments.

·      cash and fixed term deposits at 31 March 2022 were £4.5m, which represents a relatively low balance compared to the Group's ongoing operating cost base. During and beyond Q4 of 2022, it is therefore likely that the Group may hold relatively low levels of cash in excess of its immediate requirements, depending on the timing of receipts from product sales and revenue-generating projects.

·     although the Group successfully raised £3.62m in equity funding from investors during the period, there is no guarantee that it will be able to access further cash resources. This issue is potentially compounded by current market conditions and the reduction in the Company's share price observed over the period to 31 March 2022.

·     reduced, but ongoing uncertainty regarding the progression of the COVID-19 pandemic, which had a negative impact on business development activity and led to delays in work on clinical programs with pharmaceutical partners in prior periods. In the event of a significant worsening of the impact of the pandemic, anticipated revenue arising from research projects for pharma customers may be delayed or not received.

The Directors do not believe that any of the factors above is unusual or unexpected for the Group at this point in its progress. However, shareholders should be aware that there is uncertainty around its ability to generate sufficient revenues and the timing of receipts from customers, as well as the ability of the Group to raise sufficient finance to meet its expected costs. These conditions present a material uncertainty which may cast significant doubt on the Group and Parent Company's ability to continue as a going concern and, therefore, it may be unable to realize its assets and discharge its liabilities in the normal course of business.

Accounting policies

The interim financial statements have been prepared in accordance with the accounting policies set out in the Annual Report and Accounts for the year ended 30 September 2021, which is available on the Company's website, except for the following policies:

·      financial instruments, which has been updated following the issue of warrants during the period

·      fair value measurement, which is a new policy adopted during the period

 

Each of these policies is shown below.

Financial instruments

a)     Recognition and derecognition of financial assets and financial liabilities

Financial assets and financial liabilities are recognized in the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.

A financial asset is derecognized when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred.

A financial liability is derecognized when it is extinguished, discharged, cancelled or expires.

b)      Classification and initial measurement of financial assets

Except for those trade receivables that do not contain a significant financing component and are measured at the transaction price in accordance with IFRS 15, all financial assets are initially measured at fair value adjusted for transaction costs (where applicable).

Financial assets, other than those designated and effective as hedging instruments, are classified into the following categories:

·      amortized cost

·      fair value through profit or loss (FVTPL)

·      fair value through other comprehensive income (FVOCI).

The classification is determined by both:

·      the entity's business model for managing the financial asset

·      the contractual cash flow characteristics of the financial asset

In the periods presented the Group does not have any financial assets categorized as either FVTPL or FVOCI.

All income and expenses relating to financial assets that are recognized in profit or loss are presented within finance costs or finance income, except for impairment of trade receivables which is presented within other expenses.

c)      Subsequent measurement of financial assets

Financial assets at amortized cost

Financial assets are measured at amortized cost if the assets meet the following conditions and they are not classified as FVTPL:

·      they are held within a business model whose objective is to hold the financial asset and collect its contractual cash flows

·     the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding

After initial recognition, financial assets are measured at amortized cost using the effective interest method. Discounting is omitted where its effect would be immaterial. The Group's cash and cash equivalents, term deposits, trade and other receivables fall into this category.

Effective interest method

The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Income is recognized on an effective interest basis for debt instruments other than those financial assets classified as at FVTPL.

d)      Impairment of financial assets

IFRS 9's impairment requirements use more forward-looking information to recognize expected credit losses - the 'expected credit loss (ECL) model'. Instruments within the scope of the new requirements include loans and other debt-type financial assets measured at amortized cost and FVOCI, trade receivables, contract assets recognized and measured under IFRS 15 and loan commitments and some financial guarantee contracts (for the issuer) that are not measured at fair value through profit or loss.

Recognition of credit losses is no longer dependent on the Group first identifying a credit loss event. Instead the Group considers a broader range of information when assessing credit risk and measuring expected credit losses, including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.

In applying this forward-looking approach, a distinction is made between:

·      financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low credit risk ('Stage 1');

·      financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk is not low ('Stage 2'); and

·      financial assets that have objective evidence of impairment at the reporting date ('Stage 3').

'12-month expected credit losses' are recognized for 'Stage 1' financial instruments, while 'lifetime expected credit losses' are recognized for 'Stage 2' financial instruments. Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses over the expected life of the financial instrument.

e)      Classification and measurement of financial liabilities

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recognized at the proceeds received, net of direct issue costs.

Financial liabilities

The Group's financial liabilities include trade and other payables, lease liabilities, provisions and warrant liability. The Group does not have any borrowings or derivative financial instruments. Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless classified as a financial liability at FVTPL. Subsequently, financial liabilities are measured at amortized cost using the effective interest method except for derivatives and financial liabilities designated at FVTPL, which are carried subsequently at fair value with gains or losses recognized in profit or loss (other than derivative financial instruments that are designated and effective as hedging instruments). All interest-related charges and, if applicable, changes in an instrument's fair value that are reported in profit or loss are included within finance costs or finance income. The Group's warrant liability is classified as a financial liability at FVTPL.

Fair value measurement

When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market.

Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair value measurement.

For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data.

Accounting judgements and estimates

There have been no significant changes to critical accounting judgements or accounting estimates of amounts reported in prior financial periods, except as noted below, in connection with the warrants issued during the period.

Critical accounting judgement in respect of Warrants

On 25 October 2021, the Company raised £3.62m, by way of a Subscription for 7,791,803 newly-issued ordinary shares of 1p each at a price of 46.5p per share, from Armistice Capital Master Fund Ltd ("Armistice Capital"). Subsequently, on 11 November 2021, the issue to Armistice Capital of 7,791,803 warrants to subscribe for new ordinary shares (the "Warrants") was approved by a general meeting of the Company's shareholders. The Warrants were issued pursuant to the terms of a Warrant Instrument dated 11 November 2021 and the Securities Purchase Agreement signed on the Subscription, dated 25 October 2021.

The Directors must exercise judgement in determining the appropriate accounting treatment for the Warrants. The Directors considered the following relevant accounting standards and how these should be applied in the case of the Warrants:

·      IAS 32 Financial Instruments: Presentation deals with the presentation and classification of financial instruments as financial liabilities or equity, and sets out requirements regarding the offset of financial assets and financial liabilities in the statement of financial position;

·      IFRS 9 Financial Instruments: Recognition and Measurement contains the key guidance regarding the recognition and measurement of financial instruments other than equity; and

·      IFRS 13 Fair Value Measurement defines fair value and includes requirements on disclosures regarding assets and liabilities measured at fair value

The determination of the classification of the Warrants as equity or liability requires an assessment of each of the terms and conditions of the Warrant Instrument against the requirements of IAS 32.

The warrants have an exercise price of 58.125p and may be exercised for a period beginning one year and ending five years following the date of issuance by the Warrant Holder exchanging 58.125p per new ordinary share in the Company. This 'fixed for fixed' test would tend to suggest that the Warrants should be classified as equity instruments.

In certain circumstances, the Warrants may be exercised by way of a 'cashless exercise' whereby holders are entitled to receive a number of warrant shares equal to [(A-B) x 7,7941,803]/(A), where A is the value of the Company's ordinary shares at the time, and B is the warrant exercise price of 58.125p. Also, anti-dilution provisions are in place such that if there is an adjustment for any dividends paid or changes to ordinary share capital at any time whilst the warrant is outstanding, the number of shares issued on exercise of the warrant is adjusted to take into account the proportionate change with a limitation on fractional shares. Neither the allowance for cashless exercise nor the anti-dilution provisions require classification as a liability under IAS 32.

However, on the completion of certain "Fundamental Transactions" defined in the Warrant Instrument, the holder of the Warrants may be entitled to "Alternative Consideration" other than shares, such as cash or property. Examples of Fundamental Transactions include: business combinations or mergers; the Company effecting any reclassification, reorganization or recapitalization of Ordinary shares; or any transactions in which the Company disposes of substantially all of its assets. Some events defined as Fundamental Transactions are outside of the control of the Company and could give rise to a contractual obligation on the Company or its successors to deliver cash or another financial asset to the holder of the Warrants. If the Warrant Holder were to choose one of these forms of Alternative Consideration, the settlement of the Warrant may not be for a fixed number of shares at a fixed price. The Directors have therefore concluded that in the case of a Fundamental Transaction, the strict requirements of IAS 32.22 would not be met and the Warrants should therefore correctly be classified within liabilities in the financial statements.

 The Directors also exercised judgement in their determination that:

·    the Warrants should be classed as linked to the issue of the Subscription Shares, and therefore that the consideration received on the issue of the Subscription Shares is considered as consideration for both the Subscription Shares and the Warrants; and

·      the most appropriate approach to allocating the consideration between the Subscription Shares and the Warrants is the "residual value method".

 

Key source of estimation uncertainty: fair value of Warrants

Having determined that the Warrants should be classified as liabilities in the financial statements, the Directors are required to estimate the fair value of the Warrants on issue and at least at each subsequent reporting date.

The fair value of the Warrants issued was derived by the Company using a Black-Scholes model. The resultant value was recognized as a liability on issue, with the balance of the consideration received on the issue of the Subscription Shares allocated to the share premium reserve. At subsequent reporting dates, the fair value of the Warrants is re-measured, with any movement passing through the income statement.

Under IFRS 9, the fair value of an asset or liability is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market. 

In arriving at the fair value for the Warrants using the Black-Scholes model, Directors used judgement in arriving at the estimates of share price volatility and risk-free rate, which are used as key inputs to the model. The Warrant Instrument provides guidance on the use of a Black-Scholes model, and the inputs to be used in it, in the case of a Fundamental Transaction to calculate the value of Alternative Consideration. These include the use of a minimum estimate for volatility of 100% and a risk-free rate based on US Treasury rates for a period commensurate with the remaining life of the Warrants at the time of the Fundamental Transaction. The Directors consider that the value derived by using these inputs to the Black-Scholes model is not likely to correspond to the fair value of the Warrants under IFRS 9, since this would only be the case if such a Fundamental Transaction were to be certain to occur. The Directors must therefore use judgement to select appropriate estimates of inputs to the Black-Scholes model, in order to derive the fair value of the Warrants.

The estimates of volatility and risk-free rate used in arriving at the fair value of the Warrants are shown in Note 13. By far the most significant of these inputs, in terms of its impact on the derived fair value, is the estimate of likely share price volatility over the remaining life of the Warrants. To the extent that this estimate was to be revised, it is possible that there could be a material impact on the statement of financial position and consolidated income statement as follows:

 

	As at 31 March 2022				As at 11 November 2021
	Volatility = 100%		Volatility = +/- 10% of estimate used		Volatility =  100%		Volatility = +/- 10% of estimate used
	£000		£000		£000		£000
Statement of financial position
Impact on fair value of warrants (positive figures indicate increased liability):	+688		+/-80		+1,209		+/-135

 

	Six-month period ended 31 March 2022
	Volatility = 100%		Volatility = +/- 10% of estimate used
	£000		£000
Income statement
Impact on fair value gain on financial liabilities designated as FVTPL:	+521		+/-57

 

 

Prior period adjustment of carrying value of investment

 

On 5 October 2018, the Group exercised its option to acquire a 30% shareholding in Holos Life Sciences (Singapore) Pte Ltd ("Holos"), a Singapore-based company which is not listed on any public exchange, for a nominal amount. The Group subsequently invested $540,000 (£422,000) in that entity as part of an interim fundraising. As at 31 March 2022, the Group owned 28.84% of Holos' issued share capital and the Group is determined to have acquired significant influence over its activities. Accordingly, Holos is accounted for as an associate undertaking, using the equity method.

As noted in the annual report & accounts for the year ended 30 September 2021, under IAS 28 'Investments in Associates and Joint Ventures', an investor's share of losses of an equity-accounted investee is recognized, until the carrying amount of the investor's equity interest in the investee is reduced to zero. Accordingly, the carrying value of the Group's holding in Holos was restated to recognize the Group's share of losses incurred by Holos in the financial years ended 30 September 2019 and 30 September 2020.

As a result, the Group's investment of £422,000 was reduced by £386,000 for the period ended 30 September 2019, being the Group's share of the loss incurred by Holos during that year, as disclosed in the 2019 annual report. The following year, the Group's share of the loss incurred by Holos was £107,000, of which £36,000 was recognized, reducing the carrying amount of the Group's investment in Holos to zero. This restatement had no impact on operating or other cashflows.

Impact of restatement on prior period:

Consolidated statement of financial position	Restated 31 March 2021		As previously stated 31 March 2021
	£000		£000
Investments accounted for using the equity method	-		422
Total non-current assets	2,211		2,633
Total assets	11,801		12,223
Retained earnings	(10,569)		(10,147)
Equity attributable to owners of the Company	10,116		10,538
Total equity	10,134		10,556
Total equity and liabilities	11,801		12,223

 

Interest in associate undertaking	Restated 31 March 2021		As previously stated 31 March 2021
	£000		£000
Carrying amount of the investment	-		422

 

The restatement has no impact on the consolidated income statement, the consolidated statement of total comprehensive income or the consolidated cash flow statement for the six-month period ended 31 March 2021.

3.      Revenue

All revenue is derived from the Group's principal activities, namely sales of proprietary products and biomarker research and development. An analysis of the Group's revenue by segment, geography and pattern of revenue recognition is as follows:

 

		Six-month period ended 31 March			Year ended 30 September
		2022		2021		2021
		£000		£000		£000
Continuing operations:
Sales of proprietary products
USA		-		-		-
Rest of World		-		-		-
		-		-		-
Biomarker research and development
USA		55		250		341
Rest of World		30		-		-
		85		250		341
Consolidated revenue		85		250		341

 

		Six-month period ended 31 March			Year ended 30 September
		2022		2021		2021
		£000		£000		£000
Continuing operations
Revenue recognized at a point in time		-		-		-
Revenue recognized over time		85		250		341
		85		250		341

4.      Business segments

Products and services from which reportable segments derive their revenues

Information reported to the Group's Chief Executive (who has been determined to be the Group's Chief Operating Decision Maker) for the purposes of resource allocation and assessment of segment performance is focused on costs incurred to support the Group's main activities. The Group is currently determined to have one reportable segment under IFRS 8, that of sales and proprietary products and biomarker research and development. This assessment will be kept under review as the Group's activity expands.

The Group's costs and non-current assets (other than investments accounted for using the equity method), analysed by geographical location were as follows:

		Six-month period ended 31 March				Year ended 30 September
		2022		2021		2021
		£000		£000		£000
Staff costs
UK		1,203		1,294		2,516
USA		849		523		1,162
Rest of World		51		49		90
Total staff costs		2,103		1,866		3,768
Research & development costs
UK		189		593		891
USA		-		-		-
Rest of World		2		8		7
Total research & development costs		191		601		898
General & other admin costs
UK		926		744		1,430
USA		284		195		393
Rest of World		22		20		27
Total general & other admin costs		1,232		959		1,850
		31 March 2022		31 March 2021		30 September 2021
Non-current assets		£000		£000		£000
UK		8,257		2,127		8,301
USA		519		1		318
Malaysia		67		83		79
Total non-current assets		8,843		2,211		8,698

Information about major customers

The Group's revenues for the periods covered by this report are derived from a small number of customers, several of which represent more than 10% of the revenue for the period. These are summarized below:

		Six-month period ended 31 March				Year ended 30 September
		2022		2021		2021
		£000		£000		£000
Revenue from individual customers each representing more than 10% of revenue for the period:		83		236		327

5.      Staff costs

		Six-month period ended 31 March				Year ended 30 September
		2022		2021		2021
		£000		£000		£000
Wages and salaries		1,828		1,624		3,313
Social security costs		177		159		283
Other pension costs		98		83		172
		2,103		1,866		3,768

The average number of persons, including executive directors, employed by the Group during the period was as follows:

		Six-month period ended 31 March				Year ended 30 September
		2022		2021		2021
		Number		Number		Number
Management, business development and administration		18		12		13
Laboratory-based		26		27		26
		44		39		39

6.      Loss per share

From continuing operations

The calculation of the basic and diluted earnings per share is based on the following data:

		Six-month period ended 31 March			Year ended 30 September
		2022		2021		2021
		£000		£000		£000
Loss for the purposes of basic earnings per share being net loss attributable to owners of the Company		(3,029)		(3,079)		(6,682)
Loss for the purposes of diluted earnings per share		(3,029)		(3,079)		(6,682)
		No.		No.		No.
Number of shares
Weighted average number of ordinary shares for the purposes of basic and diluted earnings per share*		99,052,940		92,559,771		92,559,771
Weighted average number of potential ordinary shares*		14,968,046		7,618,144		7,903,977
		Pence		Pence		Pence
Loss per share
Basic and diluted loss per share		(3.1)		(3.3)		(7.2)

 *Potential ordinary shares are not treated as dilutive as the Group is loss-making and the potential ordinary shares do not increase the loss per share from continuing operations.

7.      Intangible fixed assets

Group					Website development costs		Software development costs		Patents		Total
					£000		£000		£000		£000
Cost
At 1 October 2021					62		57		1,208		1,327
Additions					-		53		296		349
Exchange differences					-		-		-		-
At 31 March 2022					62		110		1,504		1,676
Amortization
At 1 October 2021					54		36		85		175
Charge for the period					8		10		31		49
Exchange differences					-		-		-		-
At 31 March 2022					62		46		116		224
Carrying amount
At 31 March 2022					-		64		1,388		1,452
At 31 March 2021					19		11		975		1,005
At 30 September 2021					8		21		1,123		1,152

8.      Property, plant and equipment

Group			Leasehold improvements		Office equipment		Fixtures & fittings		Laboratory equipment		Total
			£000		£000		£000		£000		£000
Cost
At 1 October 2021			2,001		160		106		2,140		4,407
Additions			10		17		64		102		193
Disposals			-		-		-		(6)		(6)
Exchange differences			1		1		-		9		11
At 31 March 2022			2,012		178		170		2,245		4,605
Accumulated depreciation
At 1 October 2021			26		102		12		1,439		1,579
Charge for the period			100		21		15		153		289
Eliminated on disposals			-		-		-		(6)		(6)
Exchange differences			1		-		-		4		5
At 31 March 2022			127		123		27		1,590		1,867
Carrying amount
At 31 March 2022			1,885		55		143		655		2,738
At 31 March 2021			447		66		21		248		782
At 30 September 2021			1,975		58		94		701		2,828

9.      Right-of-Use Assets

Group							Buildings		Other		Total
							£000		£000		£000
Cost
At 1 October 2021							4,968		18		4,986
Additions							220		-		220
Derecognition							(8)		-		(8)
Exchange differences							-		-		-
At 31 March 2022							5,180		18		5,198
Accumulated depreciation
At 1 October 2021							263		5		268
Charge for the period							282		2		284
Derecognition							(8)		-		(8)
Exchange differences							-		1		1
At 31 March 2022							537		8		545
Carrying amount
At 31 March 2022							4,643		10		4,653
At 31 March 2021							424		-		424
At 30 September 2021							4,705		13		4,718

10.   Leasing

Group		31 March		31 March		30 September
		2022		2021		2021
Maturity analysis:		£000		£000		£000
Year 1		895		145		824
Year 2		895		145		819
Year 3		859		145		817
Year 4		812		73		813
Year 5+		3,876		-		4,282
		7,337		508		7,555
Less: future interest charges		(878)		(30)		(968)
		6,459		478		6,587
Analyzed as:
Lease liabilities (current)		711		130		634
Lease liabilities (non-current)		5,748		348		5,953
		6,459		478		6,587

The Group has elected not to recognise a lease liability for short term leases (leases with an expected term of 12 months or less) or for leases of low value assets. Payments made under such leases are expensed on a straight-line basis.

11.   Share capital of the Company

	31 March 2022				31 March 2021				30 September 2021
	Number		£		Number		£		Number		£
Authorized shares
Ordinary shares of £0.01 each	100,351,574		1,003,516		92,559,771		925,598		92,559,771		925,598

On 25 October 2021, the Company announced the Subscription for 7,791,803 newly-issued ordinary shares of 1p each at a price of 46.5p per share, from leading US-based healthcare fund, Armistice Capital Master Fund Ltd ("Armistice Capital"). Subsequently, on 11 November 2021, the issue to Armistice Capital of 7,791,803 warrants to subscribe for new ordinary shares was approved by a general meeting of the Company's shareholders (see Note 13). The ordinary shares and warrant s were issued for total consideration of £3.62m ($5m). On initial recognition, £2.68m (£2.62m net of fees) was assigned to the share capital issue and £0.94m to the Warrants, which have been accounted for as a financial liability as shown in Note 13.

The Company has a number of shares reserved for issue under an equity-settled share option scheme: further details are disclosed in Note 12.

The Company has a number of shares reserved for issue in respect of warrants; further details are disclosed in Note 13.

12.   Share-based payments

Equity-settled share option scheme

In November 2016, the Company established an Enterprise Management Incentive ("EMI") share option scheme, under which options have been granted to certain employees, and a non-employee option scheme with similar terms, except that options granted under it may not have EMI status. EMI and non-EMI share options were also previously granted under a share option scheme established in October 2008 ("the 2008 Scheme"). The Company does not intend to grant any further options under the 2008 Scheme. All of the schemes are equity-settled share-based payment arrangements, whereby the individuals are granted share options of the Company's equity instruments, namely ordinary shares of 1 pence each.

The schemes include non-market-based vesting conditions only, whereby the share options may be exercised from the date of vesting until the 10^th anniversary of the grant date. In most cases options vest under the following pattern: one-third of options granted vest on the first anniversary of the grant date; one-third on the second anniversary and one-third on the third anniversary.

The options outstanding as at 31 March 2022 had exercise prices in the range of £0.34 to £2.10.

Options outstanding		Six-month period ended 31 March			Year ended 30 September
		2022		2021		2021
		Unaudited		Unaudited		Audited
		Number		Number		Number
Outstanding at start of period		8,526,484		7,846,519		7,846,519
Granted during the period		725,000		-		1,632,798
Forfeited during the period		(96,667)		(866,167)		(952,833)
Exercised during the period		-		-		-
Outstanding at end of period		9,154,817		6,980,352		8,526,484
Weighted average remaining contractual life (in years) of options outstanding at the period end		4.81		4.35		4.39

 

 

Options exercisable	Number of Options		Weighted average exercise price £		Latest exercise price   £
At 31 March 2022		6,857,019		0.69		0.40
At 31 March 2021		6,702,784		0.57		1.00
At 30 September 2021		5,881,421		0.63		1.00
Share option expense		Six-month period ended 31 March			Year ended 30 September
		2022		2021		2020
		£000		£000		£000
Expense arising from share-based payment transactions		223		65		251

13.   Warrants

The number of shares reserved for issue under warrant options as at 31 March 2022 amounted to 7,791,803 (30 September 2021: nil, 31 March 2021: nil). Warrants over 7,791,803 ordinary shares (the "Warrants") were issued during the period, on 11 November 2021.

The Warrants have an exercise price of 58.125p and may be exercised for a period beginning one year and ending five years following the date of issuance.

In certain circumstances, the Warrants may be exercised by way of a 'cashless exercise' whereby holders are entitled to receive a number of warrant shares equal to [(A-B) x 7,7941,803]/(A), where A is the value of the Company's ordinary shares at the time, and B is the warrant exercise price of 58.125p. Also, anti-dilution provisions are in place such that if there is an adjustment for any dividends paid or changes to ordinary share capital at any time whilst the warrant is outstanding, the number of shares issued on exercise of the warrant is adjusted to take into account the proportionate change with a limitation on fractional shares.

On award and at each subsequent reporting date, the fair value of the Warrants has been estimated using the Black-Scholes option pricing model. Volatility has been estimated by reference to historical share price data over a period commensurate with the expected term of the options awarded. The assumptions used in arriving at the fair value for the Warrants during the period were as follows:          

		31 March 2022	11 November 2021 (Award date)	30 September 2021	31 March 2021
Share price at date of award / value date (p)		20.0	40.0	n/a	n/a
Exercise price (p)		58.125	58.125	n/a	n/a
Expected volatility		52.75%	48.07%	n/a	n/a
Dividend yield		0%	0%	n/a	n/a
Expected life of option		4.61 years	5 years	n/a	n/a
Risk free interest rate		1.401%	0.705%	n/a	n/a
Fair value per Warrant (p)		2p	12p	n/a	n/a

 

		31 March		31 March		30 September
		2022		2021		2021
		£000		£000		£000
Warrant liability		151		-		-

14.   Financial instruments

Financial risk management objectives and policies

The Group is exposed to various risks in relation to financial instruments, the main types of risk being market risk, credit risk and liquidity risk, which are described in more detail below.

The Group's financial assets and liabilities are summarized by category in the table below.

The Group's financial risk management is co-ordinated at its head office by its finance function, in close co-operation with the Board. It co-ordinates access to financial markets, monitors and manages the financial risks relating to the operations of the Group through internal reports which analyse exposures.

The Group does not trade in financial assets for speculative purposes, nor has it entered into derivatives.

Categories of financial instruments

The carrying amounts of financial assets and financial liabilities in each category are as follows:

Group					31 March		31 March		30 September
					2022		2021		2021
		Note			£000		£000		£000
Financial assets
Amortized cost
Cash and cash equivalents					2,947		4,982		2,175
Term deposits					1,639		3,162		2,163
Trade and other receivables					613		877		1,715
Total financial assets					5,199		9,021		6,053
Financial liabilities
Amortized cost
Trade and other payables					808		742		1,168
Lease liabilities		10			6,459		478		6,587
					7,267		1,220		7,755
FVTPL
Warrant liability		13			151		-		-
Total financial liabilities					7,418		1,220		7,755

 

Fair value measurement of financial instruments

Financial assets and financial liabilities measured at fair value in the consolidated statement of financial position are grouped into three levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows:

·      Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities

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

·      Level 3: unobservable inputs for the asset or liability.

 

The following table shows the levels within the hierarchy of financial liabilities measured at fair value on a recurring basis (there were no financial assets measured at fair value on a recurring basis in any of the periods):

Group
			Level 1		Level 2		Level 3		Total
At 31 March 2022		Note	£000		£000		£000		£000
Financial liabilities
Warrant liability		13	-		151		-		151
			-		151		-		151
At 31 March 2021
Financial liabilities
Warrant liability			-		-		-		-
			-		-		-		-
At 30 September 2021
Financial liabilities
Warrant liability			-		-		-		-
			-		-		-		-

Management has assessed that the fair values of cash and term deposits, trade receivables, trade payables and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. Further, the Directors consider that the carrying amounts of other financial assets and financial liabilities recorded at amortized cost in the financial statements approximate to their fair values. Accordingly, none of the bases for valuation under the fair value hierarchy set out in IFRS 13 'Fair Value Measurement' have been deployed in arriving at the values for these items.

Market risk

The Group's activities expose it primarily to the financial risks of changes in foreign currency exchange rates (see below). To mitigate its exposure to foreign currency risk, the Group monitors amounts to be paid and received in specific currencies, and where these are expected largely to offset one another, no further currency hedging activity or forward exchange contracts are entered into.

Foreign currency sensitivity

The Group undertakes transactions denominated in foreign currencies, therefore exposures to exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters, utilising natural hedging as outlined above where possible.

The carrying amounts of the Group's and Company's foreign currency-denominated monetary assets and liabilities at the relevant period end dates are as follows:

		Assets
Group		31 March 2022		31 March 2021		30 September 2021
		£000		£000		£000
US dollar		378		1,555		694
Singapore dollar		231		248		249
Australian dollar		131		128		124
Malaysian ringgit		5		13		17
Outstanding at end of period		745		1,944		1,084
		Liabilities
		31 March 2022		31 March 2021		30 September 2021
		£000		£000		£000
US dollar		(202)		(160)		(272)
Singapore dollar		(4)		(3)		(3)
Euro		(4)		(114)		(4)
Malaysian ringgit		(1)		-		(1)
Outstanding at end of period		(211)		(277)		(280)

 

The Group is mainly exposed to variations in the exchange rate between sterling and the US dollar and, to a lesser extent, the Singapore dollar.

The following table details the Group's sensitivity to a 10% weakening in the pound sterling against the relevant foreign currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management's assessment of a reasonably possible movement in foreign exchange rates over the medium term (3-12 months). The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates.

For a 10% strengthening of the pound sterling against the relevant currency, there would be a comparable impact on the profit and other equity, and the balances below would be negative.

		US dollar impact						Singapore dollar impact
		Six-month period ended				Year ended		Six-month period ended				Year ended
		31 March 2022		31 March 2021		30 September 2021		31 March 2022		31 March 2021		30 September 2021
		£000		£000		£000		£000		£000		£000
Profit		38		155		69		23		25		25

In Management's opinion, the sensitivity analysis is representative of the inherent foreign exchange risk through the year.

Interest rate sensitivity

The Group is not significantly exposed to interest rate risk because it does not have any external borrowings. It does hold funds on deposit in accounts paying variable interest rates. The Group's finance income is therefore affected by variations in deposit interest rates.

Credit risk

Credit risk is the risk that a counterparty fails to discharge its contractual obligations, resulting in financial loss to the Group. The Group is primarily exposed to credit risk in respect of its cash, cash equivalents and term deposits and trade and other receivables.

Credit risk management

The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group makes appropriate enquiries of the counter party and independent third parties to determine credit worthiness. Use of other publicly available financial information and the Group's own trading records is made to rate its banking counterparties and major customers. The Group's exposure and the credit worthiness of its counterparties are continuously monitored and the aggregate value of transactions is spread amongst approved counterparties. Credit exposure is also controlled by counterparty limits that are reviewed and approved by Group management continuously.

The vast majority of the Group's cash and cash equivalents are invested either with systemic UK and global banks or UK banks with a Tier 1 capital ratio significantly in excess of the current regulatory recommendation. Cash in excess of the Group's immediate requirements is predominantly invested in short-term deposits, breakable term deposits or notice accounts which allow for instant access to funds if necessary. The Group holds some deposits in accounts requiring notice of 95 days to access funds.

Trade receivables consist of a small number of customers, spread across various geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable. Expected credit loss rates are based on the Group's historical credit losses during the 48 months prior to 1 April 2022. There were no credit losses during that period, but where appropriate, the historical rates are adjusted to reflect specific current and forward-looking factors that may affect a customer's ability to settle the amount outstanding.

Trade receivables are written off when there is no reasonable expectation of recovery. Failure to make payments within 180 days of an invoice's due date and failure to engage with the Group on alternative payment arrangements would be considered indicative of no reasonable expectation of recovery.

Because the contracts in which the Group is involved tend to be invoiced by means of milestone payments covering a substantial portion of each project, this may distort the credit exposure profile at certain points during the financial period. Accordingly, for the six-month period ended 31 March 2022 the proportion of revenue attributable to one customer was 62% (year ended 30 September 2021: 96%), but the Directors are of the view that this does not signify that there is more than a low to moderate risk in this respect, and this is borne out by the Group's history of having incurred no credit losses throughout the period covered by this report.

The carrying amount recorded for financial assets in the consolidated financial statements is stated net of any impairment losses and represents the Group's maximum exposure to credit risk. No guarantees have been given in respect of third parties.

Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities. To counter this risk, the Group seeks to operate with a high level of cash and no bank debt. The Group monitors forecast cash inflows and outflows and adjusts its term deposits accordingly to ensure that sufficient funds are available to meet cash requirements. The Group benefits from a substantial proportion of revenue being paid in advance when entering into biomarker projects with pharma customers.

The following table details the Group's expected maturity for its non-derivative financial assets. The tables below have been drawn up based on the undiscounted contractual maturities of the financial assets including interest that will be earned on those assets. The inclusion of information on non-derivative financial assets is necessary to understand the Group's liquidity risk management as the liquidity is managed on a net asset and liability basis.

Group	Weighted average effective interest rate			Less than 1 month		1-3 months		3 months to 1 year		1-5 years		5+ years		Total
		%		£000		£000		£000		£000		£000		£000
31 March 2022
Non-interest bearing				3,409		-		-		-		-		3,409
Variable interest rate instruments		0.7%		151		-		1,639		-		-		1,790
				3,560		-		1,639		-		-		5,199
31 March 2021
Non-interest bearing				5,003		-		-		-		-		5,003
Variable interest rate instruments		0.8%		856		-		3,162		-		-		4,018
				5,859		-		3,162		-		-		9,021
30 September 2021
Non-interest bearing				3,435		-		-		-		-		3,435
Variable interest rate instruments		0.3%		455		-		2,163		-		-		2,618
				3,890		-		2,163		-		-		6,053

 

Variable rate instruments above are balances on interest-bearing notice accounts. The amounts included above for variable interest rate instruments for both non-derivative financial assets and liabilities are subject to change if variable interest rates differ to those estimates of interest rates determined at the relevant year-ends presented above.

The following table details the expected maturity of the Group's non-derivative financial liabilities. Figures disclosed in the table are contractual undiscounted cashflows including, for lease liabilities, future interest charges.

 

Group	Weighted average effective interest rate			Less than 1 month		1-3 months		3 months to 1 year		1-5 years		5+ years		Total
		%		£000		£000		£000		£000		£000		£000
31 March 2022
Non-interest bearing				808		-		-		-		-		808
Fixed interest rate instruments		3%		7		224		664		3,379		3,063		7,337
				815		224		664		3,379		3,063		8,145
31 March 2021
Non-interest bearing				742		-		-		-		-		742
Fixed interest rate instruments		3%		-		36		109		363		-		508
				742		36		109		363		-		1,250
30 September 2021
Non-interest bearing				1,168		-		-		-		-		1,168
Fixed interest rate instruments		3%		1		207		616		3,262		3,469		7,555
				1,169		207		616		3,262		3,469		8,723

No amount is included in the table above in respect of the warrant liability (Note 14) because it is not possible to determine either whether a contractual cash outflow will arise or the timing of such a contractual cash outflow. An obligation will potentially arise only on completion of a "Fundamental Transaction" (see Critical accounting judgement in respect of Warrants in Note 2), at which time it would be possible to determine the value and timing of any contractual cash outflow in respect of the Warrants.