15 July 2021

Nuformix plc

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

Final results for the year ended 31 March 2021

 

Nuformix plc (LSE:NFX), a pharmaceutical development company targeting unmet medical needs in fibrosis and oncology via drug repurposing to provide enhanced benefit, announces its audited results for the year ended 31 March 2021.

 

Highlights

 

·    Net assets at year-end of £5,686,261 (2020: £4,742,520) which includes £1,669,780 cash at bank as at 31 March 2021 (31 March 2020: £543,772)

 

·    The Group delivered a loss on ordinary activities (after tax credit) of £1,253,497 (2020: loss of £756,376) and a loss per share of 0.22p (2020: 0.16p). The reported loss is driven mainly by costs related to the further development of pipeline assets

 

·    Total revenue of £195,550 (2020: £535,000)

 

·    Successful equity fundraises of £1.565m and £0.65m, both before expenses, completed in March 2021 and October 2020 respectively - funds being used to advance and exploit the current assets within the portfolio, focussing on R&D activities for NXP002 and NXP004

 

·    Exercise of option by Oxilio in March 2021 to acquire a licence for NXP001 to allow them to develop NXP001 for oncology - both parties continuing to work together to finalise a global licensing agreement

 

·    Strengthening of the board through the appointments of Dr Anne Brindley as Chief Executive Officer and Dr Julian Gilbert and Maddy Kennedy as Non-Executive Directors adding significant industry and financial experience to the Board and, post period end, appointment of Dr Alastair Riddell as Non-Executive Chairman

 

 

Dr Anne Brindley, Chief Executive Officer, said: "Our ambition is to repurpose existing, marketed drugs, with improved physical properties in order to develop novel products in new indications to create attractive commercial opportunities. The successful fundraises during the year are enabling us to perform further R&D on our proprietary assets, focussing on NXP002 and NXP004, which will allow us to move to the next stage of growth and value creation for the Company. As we continue to execute on our strategy, we are building momentum with the ultimate aim of delivering value to shareholders."

 

Dr Alastair Riddell, Non-Executive Chairman, said: "It is an exciting period for Nuformix and I am very pleased to have been recently appointed as Non-Executive Chairman to serve the Group. This has been a year of change and progression for the Company and its leadership. The team remains energised by the potential of our pipeline and business strategy to address the devastating and typically progressive disease burden associated with fibrosis and oncology.

 

"We remain highly encouraged by the outlook for the business and look forward to providing further updates as we execute on our strategy."

 

Enquiries:

 

Nuformix plc	+44 (0)1223 627222
Dr Anne Brindley, CEO
Allenby Capital Limited	+44 (0)203 328 5656
Nick Athanas / George Payne (Corporate Finance)
Stefano Aquilino / Matt Butlin (Sales and Corporate Broking)
Walbrook PR	+44 (0)207 933 8780
Anna Dunphy / Paul McManus / Kiki Zaccagnini	or nuformix@walbrookpr.com

 

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 an early-stage pipeline of preclinical and Phase 1-ready assets with potential for significant value and early licensing opportunities.

 

Nuformix plc shares are traded on the London Stock Exchange's Official List under the ticker: NFX.

 

For more information, please visit www.nuformix.com.

 

References to page numbers and notes to the accounts made in this section refer to page numbers and notes to the accounts in the Company's 2021 Annual Report.

 

 

Chairman's Statement

 

Introduction

 

I am delighted to write my first statement as Chairman having recently joined Nuformix in May 2021. This has been a year of change and progression for the Company and its leadership. At the end of 2020, the team was enhanced with the appointment of Dr Anne Brindley as CEO and Executive Director of the Company and this followed the earlier appointments of two Non-Executive Directors in November and December, respectively, of Dr Julian Gilbert and Ms. Madeleine Kennedy. A key priority for the Group was to establish strength in the areas of drug development, business development and financial control and with these key appointments we can now look forward to driving the value we all see in Nuformix.  In February 2021 Dr Chris Blackwell resigned as Non-Executive Chairman for personal reasons and post period in May 2021 further Board changes were announced confirming Dr Karl Keegan's resignation to focus on his other executive role and Dr Joanne Holland resigned as a Director and employee of the Company from the end of May 2021 in order to pursue other opportunities. Jo remains as a consultant to Nuformix to advise, in particular, on solid form science and patenting.

In December 2020, the Company was pleased to announce the appointment of Allenby Capital Limited as the Company's sole broker, providing access for Nuformix to a broad spectrum of investors including institutional investors, family offices, private client brokers and high net worth individuals. The appointment of Allenby also brought, for the first time, initiation of research for the Company.

In the period, the Company completed two equity fundraises of £0.65m, before expenses in October 2020 and £1.56m, before expenses in March 2021 and these funds are being used to continue to advance and exploit the current assets within the portfolio. These raises enable the foundation of the Company's strategic aims under the new leadership that has been established over the last 9 months.

The Group currently has three assets in its pipeline with a focus in fibrosis and oncology and more detail is given in the CEO statement. This is an early-stage pipeline of preclinical and Phase 1-ready assets with potential for significant value and early licensing opportunities and our focus is now to take each of our assets to key value inflection points before partnering or licensing. The Group conducts its R&D via a fully virtual operating model, outsourcing to a network of external contractors (CROs, consultants) with whom the company has long-standing relationships. This lean model helps minimise the cost base and prioritise use of funds for project activities.

I am delighted to be able to join Nuformix at this exciting time in its history as it develops its portfolio of new versions of established products for new and important therapeutic indications and I look forward to helping the Group progress these opportunities to value creation for shareholders in the next few years. I recognise there has been a series of changes over the years and what is needed now is stability and growth. I feel there is real optimism and commitment in the new team to progress our products to significant value creation, helped by the recent fund raise, which puts the company on a solid foundation. From my perspective the company has the strategic skills and expertise to reduce development risk with its portfolio of products and a plan to achieve considerable commercial interest in the next few years and thus generate real return for shareholders.

On behalf of the Board, I would like to thank all stakeholders and shareholders for their support and I look forward to the next year with optimism.

 

Dr Alastair Riddell

Non-Executive Chairman

14 July 2021

 

 

 

 

Chief Executive Officer's Statement

 

Overview

 

At Nuformix, we are targeting high unmet medical needs in fibrosis and oncology via drug repurposing. We do this through 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. Although we specialise in fibrosis and oncology, our repurposing technology and know-how can be universally applied to any therapy area.

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.

Nuformix has an early-stage pipeline of preclinical and Phase 1-ready assets with potential for significant value and early licensing opportunities. Our lead programme is NXP002 and is in the pre-clinical stage of development. It is a new form of the drug tranilast, that we are developing as an inhaled product to address unmet needs in Idiopathic Pulmonary Fibrosis (IPF). The other portfolio assets are targeted towards oncology and are NXP001, in the Phase 1-ready stage and NXP004 in the research phase. The Group's business model is to take these assets to key value inflection points before partnering or licensing. We conduct all 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.

Pipeline

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. It is a proprietary, new form of the drug tranilast, to be delivered in an inhaled formulation. 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. 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 filed two patent applications on new forms of tranilast, one of which is granted globally and a second, which is at an earlier stage in its examination, for which, post period, we received a Notice of Allowance in the US. 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 Group has undertaken preclinical studies, through its continued collaboration with the Newcastle Fibrosis Research Group (a multi-disciplinary research group at Newcastle University, UK), to determine the ability of NXP002 to inhibit key markers of fibrosis and inflammation in a preclinical model utilising human lung slices taken from IPF patients post-lung transplant. These studies have yielded positive data underpinning the potential of NXP002 as an IPF treatment, including potential for use in combination with Standard of Care therapy and data generated support continuing to develop this asset. The raising of £1.56 million, before expenses, in March 2021 will fund the continued preclinical development of NXP002 to generate a more robust data package with the goal of increasing the value of this asset and rendering it more attractive to licensing partners. The funds raised will enable the Company to determine the feasibility of NXP002 as an inhaled formulation. Post-fund raise (and post-period), work has commenced on manufacturing further supplies of NXP002 to be used in formulation development activities, nebulisation feasibility studies and in vivo studies. In addition, contracts are in place for and work is ongoing on a programme of preclinical pharmacokinetic and pharmacodynamic studies in relevant in vivo models designed to demonstrate that NXP002 has appropriate properties for use as an inhaled therapy for IPF. These studies, once complete, will collectively form an inhalation feasibility package, referred to as the first inflection point in the future development plan for NXP002. If positive data are generated, this package may be used as a platform for further business development and licensing discussions with suitable globally focused partners (pharma companies, biotech).

Although business development discussions in Asia have taken place during the period, the Group's strategy, to maximise the value of this asset, is to generate a more robust preclinical data package for NXP002, to provide a more attractive licensing package to facilitate a structured out-licensing approach to include all territories.

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). A disadvantage of aprepitant is that its sub-optimal properties necessitate a complex formulation. The Group has discovered new forms of aprepitant (NXP001) with improved properties and it has granted patents on its new forms. Literature data suggests that aprepitant could have benefits in oncology, i.e., beyond the currently marketed indications.

To date, the Group has conducted preclinical studies and a Phase 1 study, which demonstrated bioavailability of NXP001, similar to the marketed product but without requiring a complex formulation. Further refinement of the formulation will be required ahead of initiating any future Phase 1 studies.

On 23 September 2020, Oxilio, a privately held pharmaceutical development company, was granted a 6-month option to license NXP001 globally for repurposing in oncology. On 23 March 2021 Oxilio exercised the option and a global license deal is under negotiation. Once agreed, Nuformix will license its patent estate and know-how on NXP001 in return for an upfront payment, development milestones and a royalty on net sales, capped at £2 million per annum.

 

 

NXP004 (new forms of undisclosed drug) - Oncology

The Group has discovered novel forms of an undisclosed marketed oncology drug that has significant sales (more than £1 billion per annum in 2020) and is showing further growth. The Group has filed one patent application on these novel forms and post-fund raise, further research on other new forms and their properties is ongoing. Should the data from this further research warrant it, the Group may file an additional patent application and, if the patent applications on these new forms are granted, there is potential for patent expiry to extend to 2040/2041. Further research is ongoing and if it is positive, the Group will seek to license NXP004 to the originator of the marketed drug to potentially extend their patent protection, thus potentially adding significant value for the originator.

While there is literature data and preliminary preclinical data generated by the Group providing evidence for this drug's potential activity in fibrosis, it is the Group's strategy that in order to derive most value from the NXP004 asset, the opportunities in oncology (the original marketed indication) should be exploited as a priority.

Capital

The success of the two fundraises in the year will enable us to continue to advance and exploit the current assets within the portfolio through additional R&D and business development activities as set out above. R&D studies are actively continuing on both NXP002 and NXP004, while business development activities are focused on securing the license agreement for NXP001.

The Group is also continuing to seek non-dilutive grant funding for its early-stage assets that, if successful, will enable further investment in the Group's pipeline to accelerate development. The Group applied for an Innovate UK Smart Award grant in January 2021 and, due to the highly competitive nature of these grants, it was, unfortunately, unsuccessful. However, post-period we have re-submitted the application, taking into account feedback and the outcome is expected in Q3, 2021.

Current prospects and outlook

The current strategy of the Group is to optimise value from its existing assets while maintaining tight control of costs. The Group plans to achieve this by progressing activities on its three priorities:

-              progressing further preclinical work on its lead asset, NXP002, to deliver a more robust data package to potentially increase this asset's value and attractiveness to partners/licensees. Should the data be positive, this would facilitate further licensing or partnering activities;

-              pursuing licensing of NXP001; and

-              conducting further research/patent application filing on NXP004 to provide a potential IP licensing opportunity.

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

The past year has been one of significant re-focus for the Group. Including post-period events, the Board and Executive Management has completely changed and I believe we have a strong leadership in place to take the company forward. However, we have ensured that, despite these changes, we have retained continuity and expertise and I am pleased that Dr Joanne Holland, who resigned post-period and was a co-founder of Nuformix and CSO for many years, is remaining as a consultant to the Group to provide expertise on solid form science and patenting as needed.

Finally, on behalf of the Board, I am grateful to all our shareholders for their patience as the new leadership reshapes the company to deliver on its new strategy and I would like to sincerely thank all of you for your ongoing support.

 

Dr Anne Brindley

Chief Executive Officer

 

14 July 2021

 

 

 

Strategic Report

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

o  Potential impact and mitigation:

The biotechnology and pharmaceutical industries are very competitive, with many major players having substantial R&D departments with greater resources and financial support. The Group aims to execute licensing deals early in the development process in order to generate revenue to support the business. The Group's lead asset is targeted towards IPF, a disease area where there is good precedent for licensing deals at early stages of development. Without licensing revenue, reliance falls on raising funds from investors or potential M&A opportunities. Failure to generate additional funding from these sources, if required, would compromise the Group's ability to achieve its strategic objectives as set out in the outlook on page 9. 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 2023 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.
 

·    Feasibility of drug candidates

o  Potential impact and mitigation:

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

 

o  Potential impact and mitigation:

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

o  The Group's executive management has a duty to the Board and the Group's shareholders 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 executive management's expectations and communications in the public domain to reduce the risk of misalignment.
 

·    Reliance on partners

o  Potential impact and mitigation:

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 its 3 pipeline assets without external co-development partners and thus this risk is currently minimised.
 

Operational risks

·    Management and employees

o  Potential impact and mitigation:

With a fully virtual Group operating model with few employees, the Group's ability to manage day to day tasks and its relationships with its customers and suppliers could be undermined by failure to retain or recruit key Executives or employees. The Group endeavours to offer attractive remuneration and a positive working environment for staff. Board Directors are incentivised as detailed in the Directors' Remuneration Report. 

 

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

o  Potential impact and mitigation:

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

o  Potential impact and mitigation:

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 Executive management and Board to work remotely and effectively. Close liaison with contractors ensures that Group projects are progressed according to agreed timelines and costs.

 

·    UK's departure from European Union ("Brexit")

The impact of the UK's departure from the European Union is not yet clear but it may significantly affect the fiscal, monetary and regulatory landscape in the UK, and could have a material impact on the UK's economy and the future growth of its industries, including the pharmaceutical and biotechnology industries. Depending on the free trade agreement terms negotiated between EU Member States and the UK following Brexit, the UK could lose access to the single European Union market and to the global trade deals negotiated by the European Union on behalf of its members. Although it is not possible at this point in time to predict fully the effects of the free trade agreement with the European Union, it could have a material adverse effect on the Group's business, financial condition and results of operations. In addition, it may impact the Group's ability to comply with the extensive government regulation to which it is subject and impact the regulatory approval processes for its product candidates. This is an area the Executive Management monitors closely.

Financial risk management

·    Failure to achieve strategic plans or meet targets or expectations

o  Potential impact and mitigation:

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 22 of the financial statements.
 

Financial Highlights

·    Net assets at year-end of £5,686,261 (2020: £4,742,520) which includes £1,669,780 cash at bank (2020: £543,772)
 

·    The Group delivered a loss on ordinary activities (after tax credit) of £1,253,497 (2020: loss of £756,376) and a loss per share of 0.22p (2020: 0.16p). The reported loss is driven mainly by costs related to the further development of pipeline assets
 

·    Total revenue of £195,550 (2020: £535,000)

 

Future outlook

The Chief Executive Officer's Statement on pages 7 to 10 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 2021 cash balances totalled £1,669,780 (2020: £543,772). 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 22 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.

During the year, collaborations / fee for service work was completed with Ebers Tech Inc. and Vistagen Inc. However, 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. Progression of the planned R&D and potential licensing discussions (if the data are positive) are important performance indicators.

NXP001: Following successful completion of initial Phase 1 studies of this new form of aprepitant, the Group secured an Option agreement with Oxilio to license the IP for oncology indications. Securing the full licensing agreement is an important performance indicator.

NXP004: During the year, the Group discovered new forms of an undisclosed oncology drug and has filed one patent application. Further research is ongoing and completing this and potentially filing a further patent application is an important performance indicator. The Group also performed pre-clinical pilot studies to investigate the potential of this drug as a treatment for fibrosis with Newcastle Fibrosis Research Group (NFRG). However, it is the opinion of the Group that the priority is to evaluate the opportunity in oncology as an improved version of the existing drug.

·    Co-development with third parties:

Co-development of generic products with third parties, where Nuformix's know how 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 between management and the Directors 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 Senior Independent Director can be contacted at info@nuformix.com should any stakeholders wish to contact the Group

 

·    The Group's strategy and business model detailed in the Chief Executive Officer's Statement, on pages 7 to 10

 

·    How the Group manages risks, on pages 11 to 13

 

·    Corporate governance, on pages 19 to 24, including how governance supported the delivery of our strategic objectives in this period

 

Employment without discrimination

The Group is committed to recruitment of employees based on aptitude and ability. We hire and promote our people regardless of gender, orientation, origin, creed, disability or any other inappropriate discrimination.

Environmental and social

In our day-to-day business, we commit to comply with applicable environmental laws. The direct impact of our operations is low. We also aim to undertake good housekeeping practices such as reducing energy consumption, using sustainable resources and recycling waste.

 

 

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 financial statements in accordance with International Financial Reporting Standards ("IFRSs") adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union and international accounting standards in conformity with the requirements of the Companies Act 2006 and Article 4 of the International Accounting Standards ("IAS") regulation and have also elected to prepare the Parent Company financial statements under IFRSs in conformity with the requirements of the Companies Act 2006 and as applied in accordance with the provisions of the Companies Act 2006. 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, IAS Regulation requires that Directors:

·    Select suitable accounting policies and apply them consistently;

 

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

 

·    State whether applicable International Financial Reporting Standards (IFRSs), as adopted by the European Union, 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.

 

 

Independent Auditor's Report

Opinion

We have audited the financial statements of Nuformix plc (the 'Parent Company') and its subsidiary (the 'Group') for the year ended 31 March 2021 which comprise the consolidated income statement and statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of changes in equity, consolidated statement 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 International Financial Reporting Standards (IFRSs) as adopted by the European Union.

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 2021 and of the Group's loss for the year then ended;

•       have been properly prepared in accordance with IFRSs as adopted by the European Union; 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

 

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 reviewing and challenging cash flow forecasts prepared by management covering the period to March 2023, assessing management's past forecasting accuracy and reviewing sensitivity analyses of these same cashflow forecasts.

 

We draw attention to note 2 in the financial statements, which indicates that the Group 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.  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's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

 

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

Our audit was scoped by obtaining an understanding of the Group and its environment, including internal controls, and assessing the risks of material misstatement.

The Group includes the listed Parent Company, Nuformix PLC, and its trading subsidiary, Nuformix Technologies Limited. The Group's accounting function is outsourced to a third party accountancy firm. We included the outsourcer in our planning discussions with management and established a dedicated portal where the outsourcer could share the accounting records and supporting documentation with us. We discussed with management events that had taken place during the year in order to obtain an understanding of any changes in the Group's environment that might impact on our audit. Our tests included, but were not limited to, discussions with the outsourcer as well as the Group management.

Both companies were audited by the same audit engagement team and, accordingly, all revenue, total assets and loss before tax of the Group were subject to audit by Haysmacintyre LLP. The main trading entity is the focus of our audit, but, at the Parent Company level, we also tested the consolidation process and challenged the directors' view on the carrying value of the investment in subsidiary and the Group intangible assets. We also carried out analytical procedures to confirm our conclusion that there were no significant risks of material misstatement.

We did not identify any key audit matters relating to irregularities, including fraud. We also introduced variability into our audit tests and assessed the risk of management override on internal controls, including testing journals and evaluating whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud.

Based on our understanding of the Group our audit was focused on the key risks as described above.

 

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.

Key Audit Matter	How our scope addressed this matter	Key observation
Carrying value of intangible assets	-              We have reviewed and challenged the impairment review prepared by management. This included: ·    comparison of the Group's net assets against its market value as indicated by its share price; ·    review of management assumptions underpinning their forecasts of future earnings which provided indicative values in use; and ·    obtaining evidence of the commercial and technical feasibility of the capitalised patents.	-              We obtained sufficient comfort from our audit work to conclude that the valuation of intangible assets was materially correct.
Valuation of share options	Valuation models assessed and reperformed where possible.  The competence and independence of management's expert valuer, whose valuation is rolled forward into the current year, was appraised last year. Assumptions inherent to valuation models assessed as to whether they were reasonable.   Review of option and warrant agreements to ensure that terms have been appropriately reflected within the calculations and assumptions.	We obtained sufficient comfort from our audit work to conclude that the valuation of share options was materially correct.

 

Our application of materiality

We define materiality as the magnitude of misstatement that could reasonably be expected to influence the readers and the economic decisions of the users of the financial statements. We use materiality both in planning our audit and in evaluating the results of our work.

We determined materiality for the Group to be £29,000, which is approximately 2% of total expenditure, before the share option charge for the year.  Overall performance materiality (i.e. our tolerance for misstatement in an individual account or balance) for the Group was 75% of materiality, namely £21,750.

 

 

We have agreed to report to the Audit Committee all audit differences in excess of £1,450, as well as differences below that threshold that, in our view, warrant reporting on qualitative grounds. We also report to the Audit Committee on disclosure matters that we identified when assessing the overall presentation of the financial statements.

 

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 the Parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.

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

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

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

•       the Parent Company financial statements and the part of 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 set out on pages 33 and 34, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

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

 

Auditor's responsibilities for the audit of the financial statements

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

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.

 

Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud. 

 

We identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and then design and perform audit procedures responsive to those risks, including obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion.

 

Identifying and assessing potential risks related to irregularities

In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we considered the following:

•     the nature of the industry and sector, control environment and business performance including the design of the Group's remuneration policies, key drivers for directors' remuneration, bonus levels and performance targets;

•     results of our enquiries of management and the audit committee about their own identification and assessment of the risks of irregularities;

•     any matters we identified having obtained and reviewed the Group's documentation of their policies and procedures relating to:

o           identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;

o           detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;

o           the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;

•     the matters discussed among the audit engagement team regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.

 

As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the following areas: impairment of intangibles (including goodwill), revenue recognition, and valuation of share options. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override. We also obtained an understanding of the legal and regulatory frameworks that the Group operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context included the UK Companies Act and Listing Rules, UK Bribery Act as well as pensions legislation and tax legislation.

 

Audit response to risks identified

As a result of performing the above, we identified the following key audit matters: impairment of intangibles (including goodwill) and valuation of share options as key audit matters related to the potential risk of fraud. The key audit matters section of our report explains the matters in more detail and also describes the specific procedures we performed in response to those key audit matters. In addition to the above, our procedures to respond to risks identified included the following:

•     reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the financial statements;

•     enquiring of management and the audit committee concerning actual and potential litigation and claims;

•     performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;

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

•     in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.

We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

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 Directors to audit the financial statements for the period ending 31 March 2016. Our total uninterrupted period of engagement is six years, covering the period ending 31 March 2016 and the years ended 31 March 2017, 2018, 2019, 2020 and 2021. The non-audit services prohibited by the FRC's Ethical Standard were not provided to the Group or the Parent Company and we remain independent of the Group and the Parent Company in conducting our audit.  Our audit opinion is consistent with the additional report to the audit committee.

 

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an Auditor'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 company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

 

 

 

Consolidated Income Statement and Statement of Comprehensive Income

For the year-ended 31 March 2021

 

	Note	31 March 2021 £	31 March 2020 £
Revenue	3	195,550	535,000
Cost of sales		(62,307)	(333,595)
Gross profit		133,243	201,405
Administrative expenses		(1,507,221)	(1,119,580)
Other operating income	4	1,300	4,130
Operating loss	5	(1,372,678)	(914,045)
Finance costs	6	(3,054)	(15,837)
Loss before tax		(1,375,732)	(929,882)
Income tax credit	10	122,235	173,506
Loss for the year and total comprehensive income for the year		(1,253,497)	(756,376)
Loss per share - basic and diluted	11	(0.22)p	(0.16)p
The above results were derived from continuing operations.

 

 

 

Consolidated Statement of Financial Position
as at 31 March 2021

Registration number: 09632100	Note	31 March 2021 £	31 March 2020 £
Assets
Non-current assets
Property, plant and equipment	12	957	82,912
Intangible assets	13	4,186,868	4,247,862
		4,187,825	4,330,774
Current assets
Trade and other receivables	15	32,260	79,496
Income tax asset		121,020	172,391
Cash and cash equivalents	16	1,669,780	543,772
		1,823,060	795,659
Total assets		6,010,885	5,126,433
Equity and liabilities
Equity
Share capital	17	591,609	490,145
Share premium		6,384,835	4,480,400
Merger relief reserve		10,950,000	10,950,000
Reverse acquisition reserve		(8,005,195)	(8,005,195)
Share option reserve		2,005,952	1,814,613
Retained earnings		(6,240,940)	(4,987,443)
Total equity		5,686,261	4,742,520
Non-current liabilities
Loans and borrowings	19	0	37,257
Current liabilities
Trade and other payables	21	324,624	308,525
Loans and borrowings	19	0	38,131
		324,624	346,656
Total equity and liabilities		6,010,885	5,126,433