28 July 2022

Nuformix plc

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

Annual Results for the year ended 31 March 2022

Nuformix plc (LSE: NFX), a pharmaceutical development company targeting unmet medical needs in fibrosis and oncology via drug repurposing, is pleased to announce its audited results for the year ended 31 March 2022.

Non-executive Directors' Statement

Introduction

Following the departure of Dr Anne Brindley as Chief Executive Officer, and post period end, Dr Alastair Riddell as Executive Chairman, both to pursue other opportunities, the key priority for the directors continues to be to focus on the Company's early-stage pipeline of preclinical assets and ensure strength in the areas of drug development, business development and financial control within the Group. We operate a lean structure with the limited Board and bring in specialists and consultants, experts in their field, to support the business as required.

To enhance the Group's funding position to allow the continued work on the three assets in the pipeline, in December 2021, the Company undertook an equity fundraise, together with related sharing agreements, with Lanstead Capital Investors L.P. ("Lanstead"), an institutional investor.

Pipeline

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

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

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

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

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

Idiopathic Pulmonary Fibrosis ("IPF") is a devastating lung disease associated with a higher mortality rate than many cancers and where there is a need for additional treatment options. Thus, IPF represents a high unmet medical need and a significant commercial opportunity. IPF is classified as a rare disease and presents a global commercial market that is forecast to grow to US$8.8bn by 2027. Sales of standard-of-care therapies OFEV and Esbriet achieved US$2.5bn and US$1bn respectively in 2021.

Tranilast has a long history of safe use as an oral drug for allergies, but there is evidence that supports its potential in fibrosis, including IPF. NXP002 is differentiated as it is a new form of tranilast that is being formulated for delivery direct to the lungs by inhalation, a new route of administration for this drug. The inhalation route is a well-known strategy for treatment of lung diseases to yield greater efficacy and reduce systemic side-effects compared to oral treatment. Nuformix has two patent families protecting new forms of tranilast, some members of which have been granted in major pharmaceutical territories, while others are still in prosecution. In addition, in March 2022 a method of use patent application was filed.

NXP002, as a potential treatment for IPF, is a likely candidate for Orphan Drug Designation which could provide additional product protection against potential competitors. The positioning of such an inhaled treatment for IPF could be either added to standard of care or administered as a monotherapy.

The Company has already generated positive preclinical data on NXP002, demonstrating that:

-      NXP002 can be formulated in a simple and stable solution suitable for inhaled delivery via nebulisation;

-      NXP002 formulations for nebulisation can be efficiently delivered to the lung; and

-   NXP002 can dose-dependently regulate the production of mediators relevant to lung fibrosis and inflammation following a lipopolysaccharide ("LPS") challenge.

However, as announced post-period end on 30 May 2022, no conclusions could be drawn from an additional study undertaken to investigate the duration of action of NXP002 formulations. Subsequently further studies have been initiated to generate a robust pre-clinical data package to support the progression of NXP002, both in terms of product development and business development discussions.

These studies will directly address issues faced in the duration of action studies. Firstly, the Company will investigate a new formulation of NXP002 for inhalation, delivered using an alternative method designed to ensure consistent and controlled exposure is achieved. Secondly, the Company will explore a new range of doses to best optimise efficacy of treatment. The eventual aim of the studies is to confirm the formulation's positive pharmacological profile towards the treatment of lung fibrosis and inflammation via inhalation and to assess its duration of action. Data from these inhalation studies will add to the Company's current compelling pre-clinical dataset, to best support the development of NXP002 as a treatment for IPF and potentially other poorly treated fibrosing interstitial lung diseases.

Post-period, two abstracts describing NXP002 were peer-reviewed and accepted for presentation at the European Respiratory Society ("ERS") International Congress 2022 being held in Barcelona on 4-6 September 2022.

NXP001 (new form of aprepitant) - Oncology

NXP001 is a proprietary new form of the drug aprepitant that is currently marketed as a product in the oncology supportive care setting (chemotherapy induced nausea and vomiting). On 23 September 2020, Nuformix granted an exclusive option to Oxilio Ltd ("Oxilio"), a privately held pharmaceutical development company, to license NXP001 globally for oncology indications on terms previously disclosed. The option was executed on 13 September 2021. Oxilio is investigating aprepitant for the potential new treatment of cancer indications. Oxilio has entered into a service agreement with Quotient Sciences and is conducting formulation development of NXP001 to determine whether it can achieve the bioavailability and subsequent dosing regimen required for this new indication. 

NXP004 (novel forms of olaparib) - Oncology

The Group has discovered novel forms of olaparib, a drug currently marketed by AstraZeneca, under the Lynparza® brand name. Lynparza® was first approved in December 2014 for the treatment of adults with advanced ovarian cancer and deleterious or suspected deleterious germline BRCA mutation. Since then, Lynparza® has secured similar approvals in breast, pancreatic and prostate cancers with further trials on-going. These approvals have propelled Lynparza® sales to US$2.7bn in 2021 with industry analysts forecasting annual sales of US$9.7bn by 2028.

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

The Company previously demonstrated the enhanced performance of NXP004 cocrystals compared to olaparib. Subsequently further preformulation studies have allowed the Company to identify lead cocrystals from its patent estate to be progressed for further development.

Post-period, the Company reported that it initiated a programme of work to progress the NXP004 programme in three key areas:

·    Commence the scale-up of lead cocrystal production processes;

·    Directly compare in-vitro dissolution performance of lead co-crystals to the marketed Lynparza product; and

·    Based on the results from these studies a formulation development programme may be initiated. The aims of this work will be to develop prototype formulations that offer the potential to be both bioequivalent and 'bio-better' versus the Lynparza product.

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

Summary and Outlook

The strategy of the Group is to continue to optimise value from its existing assets while maintaining tight control of costs. In particular, the fundraise with Lanstead has enabled the Group to continue to advance and exploit the current assets within the portfolio through additional R&D and business development activities as set out above.

At the appropriate time for each asset, the Group plans to conduct business development/licensing activities for all its assets using a structured and data-driven approach, with the goal of seeking global licensing deals.

The Chairman last year acknowledged that there had been a series of changes over the years which we also experienced in the past year and more recently, however our focus and emphasis is on stability to progress the studies and achieve significant value creation to generate a real return for shareholders.

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

Julian Gilbert and Maddy Kennedy

Non-Executive Directors

27 July 2022

Enquiries:

About Nuformix

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

Strategic Report

Review of the Business

A review of the year is given in the Non-Executive Directors' Statement above.

Risks and uncertainties

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

The primary risks identified by the Board are:

Strategic risks

·    Funding the business

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

The Subscription proceeds from the Lanstead Sharing Agreements pursuant to which the Company is entitled to receive back those proceeds on a pro rata monthly basis over a period of 20 months, subject to adjustment upwards or downwards each month depending on the Company's share price at the time. The Sharing Agreement provides the opportunity for the Company to benefit from positive future share price performance. Notwithstanding the Subscription Price of 1.5 pence, shareholders should note that the share price of the Company needs to be on average over the 20 months of the Sharing Agreement at or above the Benchmark Price of 2 pence per share for the Company to receive at least, or more than, the gross Subscription of £1.65million.

·    Feasibility of drug candidates

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

·    Failure to generate and protect our IP

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

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

·    Unrealistic goals and timeframes

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

·    Reliance on partners

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

Operational risks

·    Management, employees, consultants and contractors

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

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

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

·    Adapting to the external environment - COVID-19

The ability of the Group to quickly adapt to external events such as the outbreak of COVID-19 may impact the delivery of our strategy. The pandemic could cause further impact to external research. Our primary focus remains the safety of our employees. The Group follows Government advice whilst allowing employees to work flexibly. The risks are also minimised by the Group's virtual business model, allowing the Board to work remotely and effectively. Close liaison with contractors ensures that Group projects are progressed according to agreed timelines and costs.

Financial risk management

·    Failure to achieve strategic plans or meet targets or expectations

The Group actively and regularly reviews and manages its capital structure to ensure an optimal capital structure and equity holder returns, taking into consideration the future capital requirements of the Group and capital efficiency, prevailing and projected profitability, projected operating cash flows, projected capital expenditures and projected strategic investment opportunities. Further detail on the Group's risk management policies and procedures are set out in Note 20 of the financial statements.

Financial Highlights

·    Net assets at year-end of £4,737,962 (2021: £5,686,261) which includes £464,095 cash at bank (2021: £1,669,780)

·    The Group delivered a loss on ordinary activities (after tax credit) for the year of £1,108,993 (2021: loss of £1,253,497) and a loss per share of 0.19p (2021: 0.22p). The reported loss is driven mainly by costs related to the further development of pipeline assets

·    Total revenue for the year of £50,000 (2021: £195,550)

Future outlook

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

Performance

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

Financial KPIs

The Group is currently at a stage where the Board considers availability of cash to fund the planned R&D activities to be the primary KPI. At 31 March 2022 cash balances totalled £464,095 (2021: £1,669,780). The Board will consider introducing additional KPIs to monitor the Group's development as they become relevant in the future.

·    Meeting financial targets:

The Group actively and regularly reviews and manages its capital structure to ensure an optimal capital structure and equity holder returns, taking into consideration the future capital requirements of the Group and capital efficiency, prevailing and projected profitability, projected operating cash flows, projected capital expenditures and projected strategic investment opportunities. Further detail on the Group's risk management policies and procedures are set out in Note 20 of the financial statements.

·    Revenue from collaborative technology licensing agreements:

During the year, collaborative agreements with third parties entailed providing fee-for-service work and applying Nuformix know how to their proprietary products. This has provided Nuformix with limited short-term revenue streams.

The future Group strategy is to prioritise its resources on progressing its own portfolio to generate licensing revenue.

Non-Financial KPIs

·    Progress of Lead Programmes:

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

NXP002: During the year the Group prioritised the development of NXP002, its IPF candidate, and generated further preclinical data. Post-period, studies are ongoing to provide a more robust data package for potential early licensing. In addition, two abstracts describing the NXP002 were peer-reviewed and accepted for presentation at the European Respiratory Society ("ERS"). Progression of the planned R&D, filing a patent application and peer reviewed acceptance of submitted abstracts are important performance indicators.

NXP001: In the Group signed an exclusive global licensing agreement with Oxilio to license the NXP001 IP for oncology indications. Securing the full licensing agreement is an important performance indicator.

NXP004: During the year, the Group discovered new forms of olaparib, a commercially attractive oncology drug, and filed an additional patent application, an important performance indicator.

·    Co-development with third parties:

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

Section 172

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

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

·    Given the size and stage of development of the Group, the Board has not formally adopted a mechanism to obtain stakeholder feedback. However, the Group's Directors can be contacted at info@nuformix.com should any stakeholders wish to contact the Group and shareholders may contact the Company's investor relations adviser, IFC Advisory Limited, at nuformix@investor-focus.co.uk.

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

·    How the Group manages risks is set out in the full annual report

·    Corporate governance including how governance supported the delivery of our strategic objectives in this period is set out in the annual report

Statement of Directors' Responsibilities

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

·    Select suitable accounting policies and apply them consistently;

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

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

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

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

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

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

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

Auditors

A resolution to reappoint Jeffreys Henry Audit Limited as auditors will be presented to the members at the Annual General Meeting in accordance with Section 485(2) of the Companies Act 2006.

Independent Auditor's Report to the Members of Nuformix plc

Opinion

We have audited the financial statements of Nuformix plc ("Parent Company") and its subsidiary (together the "Group") for the year ended 31 March 2022 which comprise the statement of comprehensive income, the statements of financial position, the statements of changes in equity, the statements of cash flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and UK-adopted International Accounting Standards.

In our opinion, the financial statements:

•             give a true and fair view of the state of the Group's and of the Parent Company's affairs as at 31 March 2022 and of the loss for the year then ended;

•             have been properly prepared in accordance with UK-adopted International Accounting Standards; and

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

Basis for opinion

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

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material uncertainty related to going concern

We draw attention to note 2 in the financial statements, which indicates that the Group and Parent Company is not in a position where is it self-financing and will require further funding which has not yet been secured.  Whilst management are confident that such funding will be achieved there is an inherent material uncertainty surrounding this.  As stated in note 2, these events or conditions, along with other matters set out in note 2, indicate that a material uncertainty exists that may cast significant doubt on the Group and Parent Company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

In auditing the financial statements, we have concluded that the Directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.  Our evaluation of the Directors' assessment of the Group's ability to continue to adopt the going concern basis of accounting included, as part of our risk assessment, review of the nature of the business of the Group, its business model and related risks including where relevant the impact of the COVID-19 pandemic, the requirements of the applicable financial reporting framework and the system of internal control. We evaluated the Directors' assessment of the Group's ability to continue as a going concern, including challenging the underlying data and key assumptions used to make the assessment, and evaluated the Directors' plans for future actions in relation to their going concern assessment.

Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.  

An overview of the scope of our audit

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

How we tailored the audit scope

We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole, taking into account the structure of the Group, its accounting processes, its internal controls and the industry in which it operates.

Key audit matters

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

In addition to the matter described in the material uncertainty related to going concern section above, we have determined the matters below to be the key audit matters to be communicated in our report.

Below is not a complete list of all risks identified by our audit.

Our application of materiality

The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole.

Based on our professional judgment, we determined materiality for the financial statements as a whole as follows:

We agreed with the Board of Directors that we would report to them misstatements identified during our audit above £3,150 as well as misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.

Other information

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

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

Opinions on other matters prescribed by the Companies Act 2006

In our opinion the part of the directors' remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006.

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

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

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

Matters on which we are required to report by exception

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

We have nothing to report in respect of the following matters in relation to which the Companies Act

2006 requires us to report to you if, in our opinion:

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

•             the Group financial statements and the directors' remuneration report to be audited are not in agreement with the accounting records and returns; or

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

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

Responsibilities of directors

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

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

Auditor's responsibilities for the audit of the financial statements

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

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council's website, to detect material misstatements in respect of irregularities, including fraud.

The extent to which our procedures are capable of detecting irregularities, including fraud

Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:

•    the senior statutory auditor ensured the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;

•    we identified the laws and regulations applicable to the Group through discussions with the Directors, and from our commercial knowledge and experience of the biotech sector;

•    we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the group, including Companies Act 2006, taxation legislation, data protection, anti-bribery, employment, environmental, health and safety legislation and anti-money laundering regulations;

•    we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and

•    identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.

We assessed the susceptibility of the group's financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

•    making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud;

•    considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.

To address the risk of fraud through management bias and override of controls, we:

•    performed analytical procedures to identify any unusual or unexpected relationships;

•    tested journal entries to identify unusual transactions;

•    assessed whether judgements and assumptions made in determining the accounting estimates set out in Note 2 of the financial statements were indicative of potential bias;

•    investigated the rationale behind significant or unusual transactions.

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

•    agreeing financial statement disclosures to underlying supporting documentation;

•    reading the minutes of meetings of those charged with governance;

•    enquiring of management as to actual and potential litigation and claims;

•    reviewing correspondence with HMRC and the group's legal advisor.

There are inherent limitations in our audit procedures described above. The more removed the laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.

Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Other matters we are required to address

We were appointed by the Board of Directors on 18 February 2022 to audit the financial statements for the year ended 31 March 2022. Our total uninterrupted period of engagement is 1 year, covering the year ended 31 March 2022.

The non-audit services prohibited by the FRC's Ethical Standard were not provided to the Group and we remain independent of the Group in conducting our audit. 

Our audit opinion is consistent with the additional report to the Board of Directors.

Use of our report

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

Sanjay Parmar

(Senior statutory auditor)

For and on behalf of Jeffreys Henry Audit Limited (Statutory Auditor)

Finsgate

5-7 Cranwood Street

London EC1V 9EE

Date: 27 July 2022

Financial Statements

Consolidated Statement of Comprehensive Income

for the year-ended 31 March 2022

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

Consolidated Statement of Financial Position

As at 31 March 2022

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