ARIX BIOSCIENCE PLC Financial Results for the Year Ended 31 December 2022, Publication of Annual Report & Notice of AGM
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Arix Bioscience PLC (ARIX)
Arix Bioscience plc
Financial Results for the Year Ended 31 December 2022, Publication of Annual Report and Notice of Annual General Meeting
LONDON, UK, 25 April 2023: Arix Bioscience plc (“Arix” or the “Company”) (LSE: ARIX), a global venture capital company focused on investing in breakthrough biotechnology companies, today announces its financial results for the full year ended 31 December 2022 (the “Period”) alongside the Annual Report and Accounts together with its Notice of 2023 Annual General Meeting (the “AGM”).
Financial highlights
Corporate, strategic and operational progress
Portfolio highlights
Post-Period end
Outlook
Robert Lyne, CEO of Arix, commented:
“As for many, 2022 proved more challenging than we had hoped at the start of the year. Markets were performing worse in the fourth quarter than in the same period in 2021 when life sciences stocks first began a steep fall. In the ensuing market correction, we are seeing a more conservative environment and a flight to quality, with the market oriented more towards value.
“Despite these uncertain times, the factors driving growth in the pharmaceutical industry remain unchanged: an ageing population, a rising prevalence of chronic conditions, and an increasing per capita spend on healthcare in developed and emerging markets underscore the inherent value that the sector has to offer.
“For investors such as Arix, unlocking this value requires recovery in the biotechnology sector markets and an increase in licensing and M&A activity. We are confident that the fundamentals will play through when the macro challenges are no longer weighing as heavily on the markets.”
Analyst Briefing: 10:00am BST today, Tuesday 25 April 2023 Management will host a virtual briefing for Analysts at 10:00am BST today. Analysts wishing to join should register their interest by contacting Powerscourt on arix@powerscourt-group.com or on +44 (0)20 7290 1050.
Investor Presentation: 4:00pm BST today, Tuesday 25 April 2023 Management will be hosting a live presentation and Q&A session via the online platform, Investor Meet Company, at 4:00pm BST today.
The presentation is open to analysts and all existing and potential shareholders. Questions can be submitted pre-event via the Investor Meet Company dashboard or at any time during the live presentation via the "Ask a Question" function.
Investors can sign up to Investor Meet Company for free via: https://www.investormeetcompany.com/arix-bioscience-plc/register-investor
Investors who already follow Arix on the Investor Meet Company platform will automatically receive an invitation to the event.
Annual General Meeting
The following documents have today been posted or otherwise made available to shareholders by the Company:
3. Annual Report and Accounts 2022
The Form of Proxy is publicly available on the Company's website: https://arixbioscience.com/investor-relations/document-library The Annual Report and Notice of AGM is also publicly available on the Company’s website: https://arixbioscience.com/investor-relations/document-library
Copies of the above documents have been submitted to the UK National Storage Mechanism. The documents will therefore shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism and at the following address:
Arix Bioscience Plc Duke Street House, 50 Duke Street, London, W1K 6JL, United Kingdom
[ENDS]
Enquiries: For more information on Arix, please contact:
Registrar and Receiving Agent: Equiniti Limited +44 (0) 371 384 2030
Company Secretary: Kin Company Secretarial Limited +44 20 8819 6486
Arix Bioscience plc +44 (0) 20 7290 1050
Powerscourt Group Sarah MacLeod, Ibrahim Khalil, Nick Johnson +44 (0)20 7250 1446
About Arix Bioscience plc Arix Bioscience plc is a global venture capital company focused on investing in breakthrough biotechnology companies around cutting-edge advances in life sciences.
We collaborate with exceptional entrepreneurs and provide the capital, expertise, and global networks to help accelerate their ideas into important new treatments for patients. As a listed company, we are able to bring this exciting growth phase of our industry to a broader range of investors. www.arixbioscience.com
INVESTING IN LIFE CHANGING SCIENCE Annual report and accounts 2022 Arix Bioscience plc is a global venture capital company focused on investing in breakthrough biotechnology companies to deliver superior risk-adjusted returns to shareholders. OUR PURPOSE OUR GOAL OUR VALUES AND EXPECTATIONS Integrity Respect Transparency Collaboration Discipline Accountability CONTENTS
STRATEGIC REPORT HIGHLIGHTS Performance snapshot NAV per share Gross Portfolio net revaluation* Business highlights Capital pool Capital raised by portfolio companies in 2022 Operational highlights > Agreement to acquire Twelve Bio by Ensoma in an all share transaction with concurrent financing which was completed in February 2023 > Reverse merger of Disc Medicine onto Nasdaq completed in December 2022, 15 months after first Arix investment > Cost run rate below 2% of Net Asset Value * Year on year net movement includes investments, FX, and impairment. AT A GLANCE Who we are: We collaborate with experienced entrepreneurs and provide the capital, expertise and global networks to help accelerate the science they have developed into important new treatments for patients. As a listed company, we are able to bring this exciting growth phase of our industry to a broader range of investors. We are here for two key reasons. To generate superior returns for our investors and to make a tangible difference to patients’ lives. Investment strategy providing resilience through market cycles Diverse portfolio Therapeutic split Development stage split NAV per share Capital Pool Rolling 36 month goals Double Digit NAV per share Growth 2 x Successful exits 2 x IPOs Maintain cost base within 2% of NAV Read more in the Chairman’s statement in this report. STRONG CLINICAL TRIALS PIPELINE Clinical trials Read more on our Pipeline below. * NAV Per Share = NAV / Total Number of Issued Shares less those held in treasury. Investment proposition 1 Large, high-growth industry Arix provides unique exposure to a portfolio of high growth global biotech companies, both private and public, through a listed vehicle. Read more in Market Insight below. 2 High impact and value creation potential Multiple near to mid-term milestones anticipated with the potential to deliver significant returns, including: new data readouts, initiation of new trials, further funding rounds and potential for IPOs and M&A. Read more in the Portfolio Review below. 3 Expertise and networks Arix’s global networks and transatlantic team provide access to a large pool of opportunities across the full spectrum of biotech disciplines and a deep understanding of the industries and markets in which we invest. 4 Active, disciplined capital management Active management of public portfolio positions to manage risk and optimise returns. Transparent valuation policy; valuations adhere to IPEV Guidelines. Read more in the Financial Review below. To see how our investment case works in practice, please see our Business Model below. 5 Uncorrelated returns Our core purpose is to help translate scientific innovation into new medicines for patients. Through the portfolio of companies that we back and build, we aim to address significant challenges in healthcare in the areas of oncology, genetic diseases, immunology and anti-infectives. At Arix we focus on outcomes beyond financial performance and through our portfolio companies we hope to make a tangible difference to patients’ lives. To date, we have invested more than £200m into innovative biotech companies in our Gross Portfolio, which, in turn, have since raised more than $3bn of funding. CHAIRMAN’S STATEMENT Introduction Our NAV during 2022, continued to be affected by the protracted weakness in public markets that began in late 2021. Our response to those challenging conditions was to adopt a judicious approach to the deployment of cash and pause our core investing activity of taking large positions in unlisted companies. Instead, with a significant disconnect between depressed public valuations and elevated private valuations, we created a “public opportunities” portfolio of between 5% and 10% of NAV to invest in undervalued listed companies, many of which we had assessed when they were still private. Across the entirety of the portfolio, we took decisive action to exit positions that we felt no longer offered compelling prospects, either for their growth potential or as M&A targets. We also strengthened the Board with new additions which, as well as improving corporate governance, brought deep and complementary life sciences sector expertise from which we continue to benefit. Performance Our decision to conserve cash has served us well. While the market price and discount to NAV of our shares reflect considerable risk aversion with regards to venture investments in biopharmaceutical companies, our strategy has helped to protect the downside on our shares. We ended the year with £122.8 million in cash compared to £134.2 million in the prior year. In view of the considerable market uncertainties, we continued to focus on the optimised management of our existing portfolio. This was borne out by our participation in the Disc Medicine fundraising in support of its merger with Gemini Therapeutics, and the merger of Imara with Enliven which we continue to hold. The maturation of the portfolio enables us to demonstrate our strategy in action, along with our ability to identify and support businesses with products and technologies that are attractive to large pharmaceutical company buyers. Corporate Governance The appointments were coincidental with the resignation of Sir Michael Bunbury. I am thankful to Sir Michael for the stewardship he provided and for his contribution to improving corporate governance at Arix during his tenure. Together with Maureen O’Connell and Isaac Kohlberg, Non-Executive directors proposed by Acacia Research Corporation, we have a Board that encompasses a breadth and depth of investment and sector expertise, and a collegiate group of highly experienced and competent individuals who are all aligned on achieving success for Arix. Progress on key targets Following IPOs from Aura and Pyxis Oncology in 2021, Disc Medicine completed a reverse merger in 2022, exceeding our target of achieving two IPOs over a 36-month period. We have maintained costs to within 2% of NAV (under normal market conditions) and anticipate that we will continue to do so. Having already achieved two strategic exits ahead of our 2023 target, there were no exits in 2022 beyond the sale of legacy positions in some of our listed company holdings. We are attuned to the vagaries of market sentiment and its impact on sector activity, and we will not seek to achieve exits where they compromise our ability to generate a return in order to achieve an arbitrary, short-term target. As ever, we are focused on one over-arching objective: to deliver significant returns to shareholders through double-digit Net Asset Value growth over the long term. We believe that this can be achieved through a range of different portfolio events, the timing of which may vary. Market overview Inevitably smaller biotech companies felt the effects more acutely. Even those companies with positive clinical trial data often failed to impress investors. The number of biotech companies trading below cash remains far in excess of the pre-COVID normal. It is indicative of how the industry has reset valuations and is positioned for a recovery. The IPO window remained mainly shut, with Evaluate Vantage reporting only 19 flotations over the year. The closing of the IPO window also hit the biotech venture world, with sums deployed markedly lower than in 2021. While many private companies seized the opportunity to raise capital prior to the slow-down, ongoing economic and geopolitical concerns will impact the timing of a recovery in 2023, affecting both private and public financings. This has created an environment of ‘haves’ and ‘have nots’; those companies with clinical data will have an easier time raising capital and doing strategic deals while those without such data will find fundraising increasingly difficult, requiring other avenues such as mergers to stay afloat. The result has been a forced consolidation in the market, where companies with cash combine with those in need of capital. In recent months we have seen some signs of interest in those companies at the larger, late-stage development end of the scale, notably Amgen’s $28.3 billion acquisition of Horizon Therapeutics and Pfizer’s agreement to acquire Seagen for $43 billion. Inevitably, the proceeds from these large deals will be recycled in the market, and we anticipate a trickle-down effect in time. We have already seen two meaningful mid-cap M&A deals in CinCor Pharma (acquired by AstraZeneca) and Amryt (acquired by Chiesi) since the start of 2023 and expect more to come. Following the banking crisis that resulted in the collapse of Silicon Valley Bank, and the subsequent Federel Reserve announcements about interest rates, it seems likely that we will have a sustained period of stable interest rates without further, major, increases which will allow valuations to settle and some confidence to return to parts of the equity market during this year. After the incontinence of monetary policy during the years 2019 through 2021, the Fed has for historic reasons been reluctant to halt rate increases while US employment statistics remain strong, in spite of declines in money supply measures M1 and M2 over the past 15 months. With total US bank deposits continuing to fall week by week, it is likely that inflation will drop further, creating improved market conditions for our sector. Applying our flexible investment strategy While we continue to see value in the public markets, we are beginning to see some attractive valuations for high quality companies in the private market and expect to add to this part of our portfolio very selectively. Our support of Ensoma at the beginning of 2023 is one such example. While in previous years, we have sought to take a lead or co-lead position on private company financings, we now prefer to take smaller positions to increase our number of potential successful outcomes and overall portfolio liquidity. This strategy has become more viable now that the market has become increasingly selective and that we are being given access to a wide-ranging number of opportunities. While we anticipate that 2023 will be a more propitious environment for exits, we also note that unlisted company valuations have come down. We are seeing a number of compelling opportunities to make smaller private equity investments, with smaller follow-on commitments, where we will have the ability to exit in a relatively short time period without having to commit a substantial portion of NAV. The Board considers the importance of diversifying risk by ensuring we have a greater spread of opportunities within the portfolio, giving us more ‘shots on goal’ and introducing more liquidity into the Core Portfolio. We will also continue to invest in listed companies through our Public Opportunities Portfolio, being approximately 5-10% of NAV. While initially we looked at this strategy as being defensive in case of a speedier reversion to more normal valuation metrics, our positioning has become more aggressive in seeking stakes in companies with attractive M&A potential in the near term. Overall, we will take a very balanced view of capital deployment. We will be led by our perception not only of pharma interest in general but also of the level of pharma interest in our holdings in particular. Share Repurchases Outlook We are navigating the headwinds facing the bio-pharmaceutical sector with careful adjustments to our portfolio, based on expected risk and return. With signs that M&A activity is returning to the sector, we are well placed to achieve our goal of generating superior returns with our portfolio of diverse companies developing innovative treatments which will make a tangible difference to patients’ lives. PEREGRINE MONCREIFFE Chief Executive Officer’s Review Introduction Our decision to be selective with capital deployment proved well-judged. During the Period, we committed £11.1 million to the Core Portfolio and ended the year with a £13.5 million exposure in our Public Opportunities Portfolio. We began 2023 in a strong position to be able to support our existing portfolio and invest in new opportunities that can improve outcomes for millions of patients and achieve healthy returns for shareholders. We welcomed the Government’s intervention in the rapidly evolving situation at Silicon Valley Bank (SVB) in the UK in March 2023 which resulted in its rescue by HSBC and demonstrated the strategic importance of the life sciences sector to the UK economy. At Arix, we had a de minimis exposure to SVB, through brokerage accounts at SVB Leerink. While we have no direct exposure to SVB, the swift action by the US authorities ensured that none of our investee companies encountered any banking problems. Our portfolio companies have a range of banking relationships, some of which include SVB. We worked closely with affected portfolio companies through the period to support them in their efforts to mitigate any risk from SVB. We were pleased that the situation was resolved with no disruption to the trading or prospects of Arix or our portfolio companies. Performance At the year end, we reported a decline in NAV to £226 million (31 December 2021: £255 million), or 175p per share (31 December 2021: 198p per share) representing a reduction of 11%. The decline was driven by a reduction in the valuation of the Gross Portfolio of £18.6 million to £99.6 million predominantly as a result of downward movement in our Core Portfolio public company holdings. In common with many of our listed peers, risk aversion in the market affected our share price, which also came under pressure. While the discount to NAV was stable during the year, this is an area of focus for us as we seek to ensure that shareholders benefit from the value of our assets. In a year when public markets were markedly subdued it is unsurprising that both the NAV and the share price did not perform as hoped. Weak public markets have limited the funding opportunities for many biotech companies and in turn reduced the competitive tension which drives the M&A market. This combination impacted the performance of the Core Portfolio. Within the Core Portfolio, the most significant movement was Harpoon, where the value of our holding reduced from £12.2m at the start of the year to £1.3m at year end. Clearly this was a very disappointing performance reflecting a significant downrating of the company by public investors. Harpoon began significant action in November 2022 to restructure and refocus the business, which we expect to bear fruit in 2023 as important data read-outs are announced. Aura is another public holding which suffered from the challenges of the public biotech markets in 2022, despite the impressive clinical progress it made. The valuation of our holding in Aura fell over the period from £20.0m to £13.2m. We feel that this downrating is unwarranted and look forward to an improved appreciation of Aura’s progress as confidence returns to the sector. By contrast, Imara saw a doubling of valuation during 2022, rising from £3.9m to £7.8m at year-end. Although this holding value is still below the original cost, the improvement over the period is testament to the management team’s handling of the clinical failures suffered in April 2022. After these setbacks, and to preserve capital, Imara diligently cut costs and positioned itself as a prime merger candidate, executing a successful reverse merger with Enliven at the end of 2022. This has been well received by the market and provides us with an interesting new prospect for value creation and realisation in the Core Portfolio. In the unlisted portfolio, a write down of STipe Therapeutics of £3.7 million was partially offset by a write up of our holding in Twelve Bio of £1.2 million following its acquisition by Ensoma. We began our Public Opportunities Portfolio in February 2022, investing in a range of undervalued public biotech companies. This is a dynamic portfolio of liquid positions which we actively manage in response to market conditions and individual company performance. By the end of 2022, the value of the Public Opportunities Portfolio was broadly flat at £13.5m against a cost of £13.6m. This compares favourably with the XBI which had fallen 9.6% from when we began the Public Opportunities Portfolio, to 2022 year-end. As of 13 April 2023, we had maintained this out performance with the Public Opportunities Portfolio recording only a marginal fall in value of 0.4% against a drop in the XBI of 13.5% over the same period. The Public Opportunities Portfolio is well placed to benefit from the individual progress of the companies we have selected and a future change in sentiment towards these public stocks more generally. Since the beginning of 2023, NAV performance has decreased by approximately 2%, to £222m, primarily as a result of weak public equity markets impacting our listed investments. At year end we held cash of £122.8 million, slightly down from £134.2 million at the end of 2021, with new investments of £11.1 million deployed into new and existing portfolio companies during the year. This healthy cash balance, which can be attributed to previous realisations, leaves us well placed to make new investments to refresh the portfolio while we separately exit legacy positions. Portfolio Overview While we adopted a highly selective approach to capital deployment during the period, we demonstrated our commitment to developing the portfolio with our investment in Ensoma at the end of the year, alongside two important public mergers in the portfolio, Disc Medicine and Imara Inc. The former of these two was a validation of our capital commitment, occurring within 15 months of our initial investment. Disc now holds enough cash to advance its clinical programmes well into 2025 and beyond. Our $9 million investment in Ensoma as part of a financing we co-led with 5AM Ventures coincided with the acquisition of portfolio company Twelve Bio for a modest uplift. These types of transactions demonstrate our readiness to pursue the right deals at the right time. Portfolio progress Disc Medicine announced positive Phase 1 data of DISC-0974 in healthy volunteers, thus de-risking further clinical development and paving the way for Phase 2 studies. Based on the successful Phase 1 trial, Disc initiated a Phase 1b/2 clinical trial of DISC-0974 in myelofibrosis patients with severe anaemia. In addition, Disc started two Phase 2 studies of bitopertin in patients with erythropoietic protoporphyria and X-linked protoporphyria, respectively. Disc completed a merger with Gemini Therapeutics to create a NASDAQ-listed company with sufficient financing through all upcoming clinical data readouts and well into 2025. Artios Pharma advanced its two clinical-stage assets through clinical trials and entered Phase 2 clinical development. For the first time Artios announced clinical data from human studies, highlighting encouraging safety and early signs of clinical activity. Notably, one of the initiated clinical trials is a Phase 2 study with PolØ inhibitor, ART4215, in combination with Pfizer’s PARP inhibitor talazoparib in patients with BRCA deficient breast cancer. Aura Biosciences presented positive interim data from its ongoing Phase 2 trial evaluating suprachoroidal administration of AU-011 for the first-line treatment of patients with early-stage choroidal melanoma. The data showed encouraging efficacy as well as safety. Based on this data, Aura aligned with regulatory agencies and finalised the design of the planned global Phase 3 trial. The trial will evaluate the efficacy and safety of AU-011 with suprachoroidal administration, for the first-line treatment of early-stage choroidal melanoma. In addition, Aura received FDA Fast Track Designation for AU-011 for the treatment of non-muscle invasive bladder cancer and announced the first patient dosed in its Phase 1 study. To support the ongoing clinical development of AU-011 in bladder cancer as well as the pivotal Phase 3 study, Aura raised $80 million through a public offering at $12 a share, to finance the company through these clinical milestones. Arix chose not participate given our significant existing position. Harpoon Therapeutics presented interim data from the ongoing clinical trial of HPN328 demonstrating clinical activity and a favourable safety profile in patients with solid tumours. Harpoon also announced revised strategic priorities for its pipeline, shifting focus to ongoing clinical programs, HPN217, HPN328, and HPN601, to reduce operating expense and to extend cash runway through the end of 2023. Post-period end, we participated in a $25m private placement round with a $3.5m (£2.8m) investment to continue to support Harpoon with its ongoing clinical trials. Following its acquisition by Ensoma, Twelve Bio’s novel gene editing technology is now well placed to progress as part of the wider Ensoma platform. This is a testament for the outstanding efforts by the Twelve Bio team. We are excited to welcome Ensoma to the Arix portfolio and looking forward to working together with the Ensoma team and investors. Depixus has made good progress since raising the Series A in 2021 and the technology for developing their platform for fast, accurate and straightforward extraction of multiomic information from DNA, RNA and proteins, continues to progress well as they approach significant milestones, including prototype development and early preparation for commercialisation. Sorriso continued to advance its pipeline of anti-inflammatory therapies through preclinical development and is on track to start firstin-human trials over the course of 2023. Post period end we have been pleased to add another company to the Core Portfolio with an $8.1m investment into Evommune, a clinical stage company developing treatments for chronic inflammatory disease. As I outlined in my statement last year, we deliberately took a selective approach to new private investments in 2022. We have been following the Evommune story since inception and were impressed at the progress the company made to reach the high bar we set for new investments. Together with the $3.5m (£2.8m) we invested in Harpoon’s March 2023 financing, this investment demonstrates our commitment to continuing to support and develop the portfolio where we see risk-adjusted opportunities for significant capital growth. The year ahead will be significant for a number of our portfolio companies as they reach important clinical and development milestones throughout 2023. Our portfolio companies are collectively running 11 clinical trials, a number of which are expected to read out over the next 12 months with the potential for value inflection if the results are positive. There is already significant value in these companies and with multiple clinical milestones on the horizon, we see substantial growth potential across this portfolio in the near future. In addition to clinical milestones, there is potential for M&A activity, strategic partnerships as well as other financing events across the portfolio, which could greatly increase the value of our companies, and in turn our NAV. Active management of the portfolio Investment expertise Outlook Despite these uncertain times, the factors driving growth in the pharmaceutical industry remain unchanged: an ageing population, a rising prevalence of chronic conditions, and an increasing per capita spend on healthcare in developed and emerging markets underscore the inherent value that the sector has to offer. All of these factors serve to support our founding purpose: to provide public market investors with access to the abundant opportunities that exist within the healthcare and life sciences industries through a liquid, evergreen vehicle. For investors such as Arix, unlocking this value requires recovery in the biotechnology sector markets and an increase in licensing and M&A activity. We are confident that the fundamentals will play through when the macro challenges are no longer weighing as heavily on the markets. ROBERT LYNE Market insight The coming years are rich with opportunity for companies in life sciences, as a series of key drivers combine with the continuing realities of the pandemic to demonstrate the enormous value of the sector – to investors, to economies and ultimately to the health and wellbeing of every person on our planet. 1 Scientific discovery continues at pace 2 The increased number of ongoing clinical trials is likely to result in the development of breakthrough medicines addressing high unmet needs and underserved disease areas. Amongst new 2022 drug approvals was UK-based ImmunoCore’s Kimmtrak, a bispecific T cell engager protein, that was approved for unresectable or metastatic uveal melanoma. Moreover, in August 2022 bluebird bio’s Zynteglo became the first FDA-approved stem cell-based gene therapy for patients with ß-thalassemia. The year 2022 also saw emerging developments in the radiopharmaceutical space. Novartis’s Pluvicto was approved in March for prostate-specific membrane antigen-positive metastatic castration-resistant prostate cancer. 2022 also saw a number of approvals in the metabolic space, an area of increasingly high medical need. The first new drug to slow the onset of type 1 diabetes, Provention Bio’s Tzield, was approved in November 2022. This anti-CD3 monoclonal antibody binds to T lymphocytes and dampens their attack on insulin-producing pancreatic beta cells. 3 Demographics are driving demand 4 The regulatory environment is increasingly favourable 5 The route to exit is clear 37 55% 38,035 $78bn Sources: FDA, clinicaltrials.gov, SVB Leerink, Nature Publishing. Our Investment strategy Our focus: We focus on true innovation and partner with the most experienced entrepreneurs, management teams and investors to develop treatments that can significantly improve patients’ lives. High impact innovation Focused Geographies Therapeutics focus Clinical and late pre-clinical opportunities Our approach We have a global network across top tier biotech investors and world-leading management teams with a proven track record of success in biotech. This network of excellence ensures that we have access to top tier syndicates and premier deals across Europe and the US. We have a renowned group of advisors, including serial drug developers and biotech executives, who aid in the sourcing and assessment of potential investment opportunities. We take a proactive approach when we invest, frequently either leading or co-leading financing rounds and joining the board of portfolio companies. We can help secure funding, develop business strategy, make connections and recruit experienced and talented management teams. How we allocate capital and manage risk We also retain the flexibility to invest in companies which are late pre-clinical. These companies would have the goal of advancing their lead asset into clinical development within 12 to 18 months of investing. As these companies are not yet assessing their drug candidates in patients, these opportunities are of higher translational risk and therefore we allocate a minority of our capital to such opportunities. However, the increased risk is typically offset by greater return multiples than late-stage investments. We minimise that risk by investing into clinically de-risked programmes based upon well-understood biology. Sorriso Pharmaceuticals is a recent example of such an investment. PIPE (Private Investment in Public Equity) Types of companies we invest in Business model Key strengths and resources 1. Discover 2. Evaluate 3. Invest 4. Develop 5. Exit 6. Reinvest Value created and shared Flexible, long-term capital. Deep industry and capital markets expertise. Access to a broad range of co-investment opportunities. Introduction to potential acquisition targets. Due diligence and company building support. For society We invest in companies that address serious unmet needs in healthcare and have the potential to transform patient outcomes. New company creation and job creation. For shareholders Investing in a business that has a meaningful impact on society. A diverse portfolio of opportunities and exposure to disruptive, high-growth biotech companies. Financial returns. Balanced portfolio. For employees Employee engagement. Talent development. Working for a business that helps create companies which address serious unmet needs in healthcare. Diversity, equity and inclusion Underpinned by our values Integrity. Respect. Transparency. Discipline. Collaboration. Accountability.
Our strategic objectives To generate superior returns for investors and to make a tangible difference to patients’ lives by investing in a focused portfolio of innovative biotechnology companies addressing areas of high unmet need in healthcare.
Key performance indicators
KEY 1 Clinical trial risks 2 Unlisted investments 3 Taxation 4 Personnel 5 Macroeconomic conditions 6 Legislation and Regulation Portfolio review At year end, our portfolio companies were collectively running 11 clinical trials and conducting 9 pre-clinical studies, providing Arix with multiple shots on goal for value creation. Overall, the portfolio made good progress in 2022, with several companies reaching important clinical milestones and securing financing, as detailed below. Operationally, there was continued progress across the portfolio. Disc Medicine announced positive Phase 1 data of DISC-0974 in healthy volunteers, thus de-risking further clinical development and paving the way for Phase 2 studies. Based on the successful Phase 1 trial, Disc initiated a Phase 1b/2 clinical trial of DISC-0974 in myelofibrosis patients with severe anemia. In addition, Disc started two Phase 2 studies of bitopertin in patients with erythropoietic protoporphyria and X-linked protoporphyria, respectively. Disc completed a merger with Gemini Therapeutics to create a NASDAQ-listed company with sufficient financing through all upcoming clinical data readouts. Our portfolio company Artios Pharma advanced its two clinical-stage assets through clinical trials and entered Phase 2 clinical development. For the first time Artios announced clinical data from human studies, highlighting encouraging safety and early signs of clinical activity. Notably, one of the initiated clinical trials is a Phase 2 study with Pol0 inhibitor, ART4215, in combination with Pfizer’s PARP inhibitor talazoparib in patients with BRCA deficient breast cancer. Aura Biosciences presented positive interim data from its ongoing Phase 2 trial evaluating suprachoroidal administration of AU-011 for the first-line treatment of patients with early-stage choroidal melanoma. The data showed encouraging efficacy as well as safety. Based on this data, Aura aligned with regulatory agencies and finalized the design of the planned global Phase 3 trial. The trial will evaluate the efficacy and safety of AU-011 with suprachoroidal administration, for the first-line treatment of early-stage choroidal melanoma. In addition, Aura received FDA Fast Track Designation for AU-011 for the treatment of non-muscle invasive bladder cancer and announced the first patient dosed in its Phase 1 study. To support the ongoing clinical development of AU-011 in bladder cancer as well as the pivotal Phase 3 study Aura did a public offering to finance the company through these clinical milestones. Harpoon Therapeutics presented interim data from the ongoing clinical trial of HPN328 demonstrating clinical activity and a favourable safety profile in patients with solid tumours. Harpoon announced revised strategic priorities for its pipeline, shifting focus to ongoing clinical programs, HPN217, HPN328, and HPN601, to reduce operating expense and to extend cash runway through the end of 2023. Post period end, Arix participated in a $25m private placement round with a £2.8m ($3.5m) investment in redeemable preferred stock to continue to support Harpoon with its ongoing clinical trials within the current subdued markets. Following period end, Twelve Bio announced that it entered into a definitive agreement to be acquired by Ensoma, a Boston-based genomic medicines company developing one-time in vivo treatments that precisely engineer any cell of the hematopoietic system. A concurrent Series B financing for Ensoma was announced on the same day and included Arix Bioscience as a co-lead investor. The Twelve Bio team had made continuous progress to advance its novel gene editing technology and the acquisition by Ensoma is a testament for the outstanding efforts by the Twelve Bio team. We are also excited to welcome Ensoma to the Arix portfolio and looking forward to working together with the Ensoma team and investors. Another deal completed post period end was Evommune, a clinical stage company developing therapeutics for the treatment of chronic inflammatory disease. Evommune has four programmes under development, one of which is already in the clinic and targeting patients with atopic dermatitis, a common form of eczema with a large potential patient opulation. The company is lead by Luis Pena, who cofounded Dermira and served as Chief Development Officer before it was acquired by Eli Lily. Arix contributed £6.6m ($8.1m) to the round which will see the funds progress their programs through the clinic. The year ahead will be significant for a number of our portfolio companies as they reach important clinical and development milestones throughout 2023. Our portfolio companies are collectively running 11 clinical trials, a number of which are expected to read out over the next 12 months with the potential for value inflection if the results are positive. There is already significant value in these companies and with multiple clinical milestones on the horizon, we see significant growth potential across this portfolio in the near future. In addition to clinical milestones, there is potential for M&A activity, strategic partnerships, and other financing events across the portfolio, which could greatly increase the value of our companies, and in turn our NAV. AN OVERVIEW OF 2022 IN NUMBERS $134m 11 1 1 1 Broad and rich clinical pipeline Across our portfolio at year-end we have 11 studies in the clinic, focusing on areas of high unmet medical need.
Multiple undisclosed preclinical programmes Phase 1 – This is the first time a product is tested in humans. The focus at this stage is testing the side effects and safety. Phase 2 – Phase 2 involves further trials testing the efficacy and safety and different dosing levels. Phase 3 – This is the final stage of testing before registration. Phase 3 trials focus on testing the effectiveness of the new product compared to existing treatments or to a placebo. * Intravitreal ** Suprachoroidal Core Portfolio Artios Pharma Limited
The year of 2022 was a successful year for Artios as it advanced its two clinical-stage assets through clinical trials and entered Phase 2 clinical development. Artios announced initial positive data from the Phase 1a study with its small molecule ATR inhibitor, ART0380, in patients with advanced or metastatic solid tumours in April 2022. The Phase 1a data demonstrated a predictable safety profile, preliminary clinical activity, and supported the initiation of a Phase 1b dose expansion study targeting ATM deficient tumours. Based on the encouraging initial Phase 1b data, Artios announced, post period end, in February 2023 the initiation of a Phase 2 randomised trial for ART0380 in combination with gemcitabine in patients with platinum resistant ovarian cancer. Preliminary Phase 2 data will become available in 1H 2025. The company initiated a Phase 2 study of its Pol0 inhibitor, ART4215, in combination with the PARP inhibitor talazoparib in patients with BRCA deficient breast cancer. Phase 1 safety and tolerability data for ART4215 in advanced solid tumours is expected in 1H 2023 and Phase 2 data in BRCA deficient breast cancer patients is expected in 2024. Artios further expanded its board with the appointment of Samantha Truex, a seasoned biotechnology executive, in June 2022. Aura Biosciences (NASDAQ: AURA)
Aura’s drug binds to malignant tumour cells with high specificity and once the dye is activated by a short laser treatment there is an acute tumour cell necrosis. AU-11, Aura’s lead asset, is being developed for the first line treatment of indeterminate lesions and small choroidal melanoma, a life and vision threatening and rare disease with no approved therapies besides radiation. During the period, Aura presented positive interim data from its ongoing Phase 2 trial evaluating suprachoroidal administration of AU-011 for the first-line treatment of patients with early-stage choroidal melanoma. The data showed encouraging efficacy as well as safety. Based on this data, Aura aligned with regulatory agencies and finalised the design of the planned global Phase 3 trial. The trial will evaluate the efficacy and safety of AU-011 with suprachoroidal administration, for the first-line treatment of early-stage choroidal melanoma. The company also reported topline data from a retrospective study of AU-011 versus plaque radiotherapy supporting the value of a vision preserving therapy for the treatment of patients with early-stage choroidal melanoma. AU-011 demonstrated statistically significant vision preservation compared to the current standard of care, which highlights the potential clinical benefit of Aura’s therapy for patients. Aura also announced that the European Commission granted Orphan Drug Designation to AU-011 for the treatment of uveal melanoma, which includes choroidal melanoma. In addition, Aura received FDA Fast Track Designation for AU-011 for the treatment of non-muscle invasive bladder cancer and announced the first patient dosed in its Phase 1 study. Notably, Aura announced the pricing of a public offering of Common Stock in November 2022, sufficient to finance the company through the global Phase 3 study in choroidal melanoma. Disc Medicine
In mid-2022, Disc announced positive Phase 1 data of DISC-0974 in healthy volunteers. The clinical trial demonstrated good safety, pharmacokinetics and encouraging effects on hepcidin levels as well as iron metabolism. Importantly, DISC-0974 achieved robust increases in serum iron and hemoglobin. Based on the successful Phase 1 trial, Disc initiated a Phase 1b/2 clinical trial of DISC-0974 in myelofibrosis patients with severe anemia in June 2022. In August 2022, Disc initiated two Phase 2 studies of bitopertin in patients with erythropoietic protoporphyria (EPP) and X-linked protoporphyria (XLP), respectively. During the period, Disc announced a merger agreement with Gemini Therapeutics to create a NASDAQ-listed company focused on advancing Disc’s clinical pipeline. A concurrent financing of $53.5m restricted to Disc’s existing investors was announced alongside the merger. The combined cash provides Disc with financial runway into 2025. The completion of the merger was announced in December 2022, when Disc started to trade on the Nasdaq Global Marker under the ticker symbol IRON. Disc appointed Jay Backstrom to its board of directors and Rahul Khara as General Counsel. Depixus
Having closed the Series A financing in December 2021, during the period, the company has continued to make good progress and plans to provide further updates in 2023. Imara (NASDAQ: IMRA)
In October 2022, Imara and Enliven Therapeutics announced a merger agreement to create a Nasdaq-listed, clinical-stage biopharmaceutical company focused on advancing Enliven’s portfolio of precision oncology programs. Enliven is advancing two parallel lead product candidates: ELVN-001, a highly selective small molecule BCR-ABL inhibitor for the treatment of chronic myeloid leukemia, and ELVN-002, a potent, selective and irreversible HER2 and pan-HER2 mutant kinase inhibitor for the treatment of HER2 mutant lung cancer and other HER2-driven tumor types. Upon completion of the merger, which is subject to approval by Imara’s and Enliven’s stockholders, the combined company is expected to operate under the name Enliven Therapeutics, Inc. and trade on the Nasdaq Global Select Market under the ticker symbol ELVN. In support of the merger, Enliven also intends to raise approximately $165m in a concurrent private financing. The combined company is expected to have a cash balance of approximately $300m at close, which is expected to provide cash runway through multiple clinical milestones and into early 2026. Sorriso Pharmaceuticals
During the period the company has made good progress preparing for initiation of Phase 1 clinical development in 2023. The company remains on track to enter clinical trials in 2023. Sorriso has made key additions to its team to strengthen its leadership. The company appointed Jeffrey W. Sherman, Chief Medical Officer and Executive Vice President at Horizon Therapeutics, to its board of directors. In addition, Jackie Benson, former Vice President of Immunology Scientific Innovation at Johnson & Johnson, joined Sorriso as Chief Scientific Officer. Twelve Bio
During the period, Twelve Bio has made continuous progress to advance its CRISPR-Cas12a toolbox. Following period end, on 5 January 2023, Twelve Bio announced that it entered into a definitive agreement to be acquired by Ensoma, a Boston-based a genomic medicines company developing one-time in vivo treatments that precisely engineer any cell of the hematopoietic system. A concurrent Series B financing for Ensoma was announced on the same day, and included Arix Bioscience as a co-lead investor. Closing of the acquisition of Twelve Bio by Ensoma was announced on 9 February 2023. STipe Therapeutics
STipe has a differentiated approach from other programmes targeting the STING pathway since it does not rely on direct overstimulation and therefore has the potential to be a systemically delivered therapy with broader applications. STipe continues its preclinical work on the lead program, however based upon the challenging funding environment for preclinical companies such as STipe, we have taken a view to further adjust the holding of value of STipe following the write down at the half year, as at year-end the holding value is £1.3m. Harpoon Therapeutics (NASDAQ: HARP)
During the period, Harpoon received FDA Fast Track Designation for HPN217 for the treatment of patients with relapsed, refractory multiple myeloma. In November and December 2022, Harpoon presented interim results from the Phase 1 trial of HPN217 in heavily pre-treated patients with relapsed/refractory multiple myeloma. This data established a clinical proof of concept, demonstrating strong as well as durable efficacy and favourable safety. Moreover, Harpoon was granted Orphan Drug Designation for HPN328 for the treatment of small cell lung cancer. Notably, Harpoon and Roche announced a collaboration on clinical trials to study HPN328 in combination with the anti-PD-L1 antibody atezolizumab in patients with small cell lung cancer. In May 2022 Harpoon presented interim data from the ongoing dose escalation of HPN328. The data showed clinical activity and a favourable safety profile in patients with solid tumours. In November 2022, Harpoon announced revised strategic priorities for its pipeline. The company noted its strategic realignment to focus resources on ongoing clinical programs, HPN217, HPN328, and HPN601. This step involved a restructuring in workforce to support prioritized clinical development and resulted in reduced operating expense, and an extended cash runway through the end of 2023. On a corporate level, Harpoon announced the departure of Chief Medical Officer Natalie Sacks and later in the period announced the expansion of its leadership team with the appointment of Wendy Chang to SVP HR, Banmeet Anand to SVP Translational Medicine, and Luke Walker to Chief Medical Officer. In addition, Harpoon appointed Lauren Silvernail, a highly experienced industry veteran, to its board of directors. Pyxis Oncology (NASDAQ: PYXS)
Arix fully exited its position in Pyxis Oncology in 2022 at a loss of £10.3m against original cost. LogicBio Therapeutics (NASDAQ: LOGC)
Arix fully exited its position in LogicBio in 2022. Autolus (NASDAQ: AUTL)
Arix fully exited its position in Autolus in 2022. Public Opportunities Portfolio Public Opportunities Portfolio
Each of the companies selected for the Public Opportunities Portfolio (POP) is a clinical stage drug development company with near-term clinical trial read-outs and the potential for acquisition by big pharma. Whilst this is consistent with our investment philosophy for private companies, the liquid nature of public market investments allows for dynamic trading of these positions which are deliberately kept at a size which allows for rapid liquidation. By comparison, our Core Portfolio public holdings are inevitably prone to illiquidity due to the significant percentage holdings we have as a legacy of being a pre-IPO investor. Whilst these Core Portfolio positions provide significant exposure to potential big wins, the Public Opportunities Portfolio provides a more balanced opportunity for us to generate value from volatile markets. A successful example of one of our POP selections has been Ventyx Biosciences which we first invested in during July 2022. At the time of first investing, Ventyx’s pipeline included three clinical-stage programs targeting TYK2, S1P1R and NLRP3, all of which are clinically validated targets that have strong prospect of becoming impactful oral therapies in the immunology space. It was the TYK2 program as well as the strong cash position and experienced Ventyx team that attracted Arix to this investment. We viewed the wholly owned TYK2 inhibitor as a potential best-in-class agent that could differentiate from Bristol-Myers Squibb (BMY) and others. Therefore, we viewed BMY’s imminently expected deucravacitinib approval by the FDA as well as Ventyx’s near-term Phase 1 safety/tolerability and PK/PD data in early Q3 2022 as potential positive catalysts. In August 2022, Ventyx presented highly encouraging Phase 1 data for its TYK2 inhibitor and in September 2022, the FDA approved BMY’s deucravacitinib without a black box warning. Given the significant return that resulted from this positive news, we decided to partially sell down our position in Q4 2022, however, we remain excited about the return prospect of the stock. Financial review YEAR ENDED 31 DECEMBER 2022 2022 highlights Net Asset Value (NAV) At year end, NAV totalled £226 million, a decrease of £29.5 million, or 11%, compared to 2021’s £255.4 million. The loss for the year was £27.6 million (2021: loss of £61.1 million), while cash decreased by 8.5% to £122.8 million (2021: £134.2 million) per note 16, following net investments made of £12.8 million, and operational cash movements. 2022 saw a more challenging macro-economic environment than we had hoped for at the start of the year. The war in Ukraine has exacerbated inflationary pressures leading central banks to tighten monetary policy and increase the cost of capital. This has contributed to the challenges facing biotech companies seeking funding during the period and has kept pressure on public valuations. Nonetheless, the portfolio is well funded as we enter 2023, with Core Portfolio companies Aura Bioscience and Disc Medicine having collectively raised $133.9m on the public markets in the second half of 2022. Portfolio revaluations In the private portfolio, a further write down of STipe Therapeutics (£1.3 million) was partially offset by a 20% increase in our holding in Twelve Bio to £1.2 million. This was as a result of Twelve Bio’s all share transaction-acquisition by Ensoma and the resultant conversion of an outstanding Twelve Bio convertible loan to 20%. Portfolio realisations Portfolio investment The focus of new capital deployment was into the Public Opportunities Portfolio which began in February 2022. This is a dynamic portfolio which adjusts to conditions in the market as well as individual opportunities. At its peak there was £22.5 million invested in this portfolio. By year end, the value of the holdings in the Public Opportunities Portfolio was £13.5 million. Foreign exchange Arix continues to expect that the majority of future investment cash flows, both in and out, will be in US dollars and as such, does not consider hedging strategies to be appropriate at this time, particularly given the uncertainty over the quantum and timing of these movements. Cash and deposits Counterparty risk is managed by holding cash across financial institutions, all of which have a credit rating of at least F1, according to Fitch ratings. Returns on cash have been historically low but Arix continues to target yield where possible, weighed against the anticipated timing and quantum of the needs of the portfolio. The Company’s Treasury Policy is overseen by the Audit and Risk Committee. Net operating costs Fund management fee income of £0.01 million, (2021: £0.3m) received from managing The Wales Life Sciences Investment Fund, continues to reduce in line with expectation as the fund reached the end of its tenure in February 2023. Finance income of £1.6 million was generated in the year reflecting the significantly increased interest rate environment compared to £0.1m last year when interest rates were considerably lower. The share–based payment was a charge in the year of £0.3m compared to the credit in the previous year (£0.3 million). Taxation Where investment gains are unrealised and are not expected to qualify for SSE, the anticipated tax due based on the current valuation of the underlying investment is reflected in a deferred tax balance. These factors, combined with the ability to utilise certain brought forward losses, reduce the Group’s tax expense in any given year. The tax expense for 2022 was £nil (2021: £nil). Valuation policy Further information is available in Note 2 to the financial statements. Post Year End Investment summary
Risk Management The Group monitors a number of principal risks and uncertainties that may impact the business. These include financial, non-financial, internal and external concerns. Risk management framework Board Key committees The Remuneration Committee ensures incentives and reward are balanced and appropriate for achieving the strategy. The Nomination Committee addresses the need for continuing strength at the senior levels of the Company and is responsible for succession planning. The Strategy & Investment Committee reviews investment and divestment proposals for management and recommends actions to the Board for approval. It also formulates strategy for the Group for ratification by the Board. Executive management Portfolio company boards and independent assurance Independent assurance is provided by industry experts when required. For example, external advisers are engaged to provide regulatory compliance support to the board of Arix Capital Management, Arix Bioscience’s FCA-regulated fund management subsidiary.
Risks and mitigants
Viability statement A robust assessment of the principal and emerging risks and their mitigants has been carried out. The Board assessed Arix’s business model, particularly its approach to capital which is legally committed to, and provisionally reserved for further investment into existing portfolio companies. Key judgements reflected how future cash requirements may change from restrictive regulations and how the availability of capital may be impacted by ability to raise further capital on the public markets. Having initially started with a base case scenario considering Arix’s finances over the assessment period, the estimated impacts on the Group’s cash flow, as described above, are modelled, creating a range of adverse scenarios. An extreme downside case is then considered, reflecting the estimated cash flow impact of all considered risks occurring concurrently. Finally, the analysis considers the mitigating actions the Group could take to reduce the financial impact of the noted risks. Based on its review, and the consideration of any changes that had occurred post year-end, including the risk of additional market volatility due to the emerging conflict in Ukraine (note 24), the Board has a reasonable expectation that Arix will be able to continue in operation and meet its liabilities as they fall due over a three-year period from the date of this report and confirm that preparing the financial statements on a going concern basis is appropriate. Our stakeholders The views and interests of our Stakeholders remain of paramount importance to the Board and continue to inform Board discussions and decision-making. Stakeholder Engagement Statement by the Board in accordance with s172 Companies Act 2006 The Directors of the Board are cognisant of their duties under s172 of the Companies Act and consider that they have acted in a way they each consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole. In doing so they have had regard to those stakeholders identified under s172, as well as the additional stakeholders set out here. Shareholders The Company engages with its shareholders on a regular basis with significant engagement in 2022. Whilst physical meetings were restricted for the first half of the year, virtual meetings have continued to be held and with a return to physical meetings there has been the opportunity to engage with shareholders throughout the year. The results of this Investor Engagement are reported to the Board to help inform our communications and strategy. Colleagues The Board are proud of the small team of employees which work collaboratively and continuously to deliver for our investors. As a result of the culture at Arix, and the small number of employees, each colleague has open and continuous access to engage with our Board of Directors and they meet with the Board throughout the year both virtually and face to face to discuss any matters arising. 2022 saw further evolution of the management team which enabled internal progression for some employees, whilst strengthening the Company’s ability to deliver on its strategy. The Board, in collaboration with the Remuneration Committee, have had particular regard to employees as they have considered the Company’s long-term incentive arrangements as part of its strategy to attract, retain and motivate colleagues in order to deliver value for shareholders. These actions were consistent with the Board’s commitment to investing in and responsibility rewarding employees as they deliver on the Company’s strategy. Service Providers Portfolio companies Decisions Cost control: 2022 saw a continued focus on managing the run-rate net operating costs of the business. In ensuring that costs are kept low, the Board had particular regard to Arix’s shareholders but also the interests of its employees and portfolio companies in building a sustainable business which can deliver superior returns over the longer term. Imara: The Board was engaged and supportive of Imara’s merger with Enliven Therapeutics. Following the disappointing clinical failure at Imara in early 2022, the successful reverse merger with Enliven will not only provide liquidity for Arix as in investor in due course, but also allows Imara’s capital to support Enliven’s important clinical programs. This transaction is consistent with Arix’s goal of maximizing return on investment, even after a disappointing clinical outcome, and delivering new treatments for patients. Environment, Employees, Human Rights and Social Matters Sustainability The section below includes our mandatory Streamlined Energy and Carbon Reporting requirements. The reporting period is the same as the Group’s financial year, 1 January 2022 to 31 December 2022. Emissions An operational control approach has been used in order to define our organisational boundary. This is the basis for determining the Scope 1 and 2 emissions for which the Group is responsible. The emissions sources that constitute our boundary for the year to 31 December 2022 are: Scope 1: natural gas combustion within boilers and refrigerant gas losses; and Scope 2: purchased electricity for our own use. All carbon dioxide emissions and energy consumption figures relate to emissions in the United Kingdom (UK), accounting for 73% of total emissions, and the United States of America (USA), accounting for 27% of total emissions. Methodology The following methodology was applied by Verco in the preparation and presentation of this data: The Greenhouse Gas Protocol published by the World Business Council for Sustainable Development and the World Resources Institute (the “WBCSD/WRI GHG Protocol”); application of appropriate emission factors to the Group’s activities to calculate GHG emissions; application of 2 reporting methods, location-based and market-based emission factors, for electricity supplies; inclusion of all the applicable Kyoto gases, expressed in carbon dioxide equivalents, or CO2e; presentation of gross emissions as the Group does not purchase carbon credits (or equivalents); presentation of global annual energy use; where data was missing, values were estimated using an extrapolation of available data or available benchmarks; and calculation of electricity and gas consumption using CIBSE energy benchmarks where data was not available. Absolute Emissions 8.1 tonnes of CO2 equivalent (tCO2e) using a ‘location-based’ emission factor methodology for Scope 2 emissions; and 8.9 tonnes of CO2 equivalent (tCO2e) using a ‘market-based’ emission factor methodology for Scope 2 emissions. The Group's GHG emissions have been separated by those generated inside of the UK and those generated outside of the UK - the USA in this case. The breakdown is as follows: • 61% of emissions were generated in the UK and 39% were generated in the USA using the 'location-based' emissions factor methodology for Scope 2 emissions; • 71% of emissions were generated in the UK and 29% were generated in the USA using the 'market-based' emissions factor methodology for Scope 2 emissions. Total Energy Use
Intensity Ratio The intensity metrics for FY2022 were as follows: 1.01 tonnes of CO2e per employee (location-based method) and 1.11 tonnes of CO2e per employee (market-based method); and 0.004 tonnes of CO2e per square foot of occupied space (location-based method) and 0.004 tonnes of CO2e per square foot of occupied space (market-based method). Change in Emissions Sustainability continued Key Figures Arix Bioscience plc – Breakdown of emissions by scope
1 Scope 1 being emissions from the Group’s combustion of fuel and operation of facilities. 2 Scope 2 being emissions from electricity (from location-based calculations), heat, steam and cooling purchased for the Group’s own use. 3 Scope 2 being emissions from electricity (from market-based calculations), heat, steam and cooling purchased for the Group’s own use. 4 Employee numbers: 8 (FY2022); varies throughout FY2021: 9 9 (FY2020). Intensity ratio not calculated for 2021 due to an office move and absolute figures not being obtained. 5 Occupied office space: 2,077 ft2 (FY2022; varies throughout FY2021 due to office move; 2,844 ft2 (FY2020). Intensity ratio not calculated for FY2021 due to an office move and absolute figures not being obtained. 6 Location based emissions are UK only. Energy Efficiency Actions Corporate Governance Corporate Governance Report Chairman’s Governance Overview Turbulent Times New Leadership On behalf of the Board, I would like to thank Sir Michael Bunbury personally for his contributions to the Board and Committees of the Company and his significant contribution to improving corporate governance at Arix throughout 2022. Peregrine Moncreiffe UK Corporate Governance Code Provision 5 – The Company operates a lean business model employing only 9 employees across Europe and the USA (at 31 December 2022); this scale means that the Board has not felt it necessary to designate a Non-Executive Director to specially engage with the workforce, as the Board has regular and Direct contact with its employees as discussed later in this report. Provision 11 – During the year, the Non-Executive Director Appointments of Debra Barker, Benny Soffer and Andrew meant that the Company were compliant with this provision as over 50% of the NEDs were independent upon appointment (excluding the Chair), however Benny Soffer’s departure on 31 January this year meant that only one third of the Board is currently comprised of independent non-executive directors. The Board is looking to add a further independent non-executive director in 2023 to address this balance. Key areas of Board Focus and Consideration during the year under review are set out in the table below
Board leadership and company purpose An effective Board The Board operates in accordance with the Company’s Articles of Association and its own written schedule of matters reserved for Board decision-making. The Board has established a number of committees, each with its own defined terms of reference, which are reviewed at least annually and are publicly available on the Company’s website at: www.arixbioscience.com/investrorelations Assessing and monitoring culture Stakeholder and employee engagement A full description of the Company’s engagement with its stakeholders is set out further below with specific description of engagement with employees on remuneration in the Remuneration Report. As described further below, the Company has kept its Whistleblowing Policy and arrangements under review during 2022. External relationships Conflicts of interest Board attendance
* Sir Michael Bunbury resigned from the Board of Directors on 9 August 2022. Debra Barker, Andrew Smith and Benny Soffer were appointed to the Company’s Board and its Committees on 10 August 2022. ** Maureen O’Connell stepped down as Chair of the Remuneration Committee and resigned from the Company’s Board Committees during the year. Attendance is expressed as the number of scheduled meetings attended out of the number of such meetings possible or applicable for the Director to attend. Board independence Isaac Kohlberg (having been proposed by and a non-executive director of the Company’s largest shareholder, Acacia), appointed 29 April 2021 Maureen O’Connell (having been proposed by and the non-executive Chair of the Company’s largest shareholder, Acacia), appointed 29 April 2021 Independent Dr. Debra Barker, appointed 10 August 2022 Andrew Smith, appointed 10 August 2022 Dr. Benny Soffer, appointed 10 August 2022 and resigned on 31 January 2023, after the reporting date. Sir Michael Bunbury, appointed 6 October 2021 and resigned on 9 August 2022. Board Process All Directors are expected to attend all meetings of the Board, and any committees of which they have been appointed and to devote sufficient time to the Company’s affairs to fulfil their duties as Directors. Where Directors are unable to attend a meeting, they will be encouraged to submit to the Chairman any comments on papers to be considered at the meeting in advance, to ensure their views are recorded and taken into account. The Non-Executive Directors meet at least once per year without the Chairman present and on such additional times as are required. Training and development of Board Directors Information and support The information supplied to the Board and its committees will be kept under review to ensure it is fit and proper for purpose, and that it enables sound decision-making. The Company has adopted a formal procedure through which Directors may obtain independent professional advice at the Company’s expense. The Directors also have unrestricted access to the services of the Company Secretary.
Division of responsibilities The Board has established certain principal committees to assist it in fulfilling its oversight responsibilities, providing dedicated focus on particular areas as described in the reports of the Nomination, Remuneration, Strategy & Investment and Audit & Risk Committee reports incorporated in this Annual Report. The Chair of each committee reports to the Board on the committee’s activities after each meeting. Role of the Chairman In particular, the formulation of strategy and its alignment with culture, governance (having regard to best practice); Board changes and succession planning. Ensuring constructive relations between Non-Executive Directors and the Chief Executive Officer and senior management. Ensuring that new Directors receive a full, formal and tailored induction on joining the Board. Monitoring and actively participating in stakeholder engagement. Ensuring that the Company Secretary is effective and supported. Chairing the Company’s AGM and all other formal shareholder meetings. Role of the Senior Independent Director The SID will meet other Non-Executive Directors without the Chairman present at least once a year, to appraise the Chairman’s performance, taking into account the views of any Executive Directors, plus on such other occasions as are deemed appropriate. The SID is also available to shareholders should they wish to discuss concerns they have failed to resolve through the normal channels of the Chairman or any Executive Director or for which such contact is inappropriate. Role of the Chief Executive Officer Driving the execution of the Company’s strategy. Chairing the Strategy and Investment Committee. Ensuring implementation of the Board’s decisions. Ensuring the timely communication of information to the Board in sufficient detail to allow it to monitor the performance of the Group’s business as a whole. Communicating to the Board their own views and those of the management team, on business issues facing the Group such that the Board may have a full and balanced view of the issues and factors it should consider when making decisions. Managing their direct reports and ensuring that the overall team is motivated and develops in order to deliver on the Group’s strategy. Ensuring the effective implementation of the Company’s wider stakeholder engagement programmes. Board Composition Commitment The quality of information and resources available to the Board has enabled us to operate effectively and efficiently throughout the year. Peregrine Moncreiffe Board of Directors Peregrine Moncreiffe Peregrine received an undergraduate degree from the University of Oxford. Peregrine is a member of the Strategy & Investment, Audit, Nomination and Remuneration Committees for Arix. Debra Barker, MD Debra is currently serving as a Non-Executive Director for three public Biotechnology companies listed in UK, EU & USA namely Destiny Pharma PLC, BergenBio ASA and CureVac NV. Debra has a Diploma in Pharmaceutical Medicine and received a MSc in Immunology from the King’s College in London and a Medical Degree from the Queens’ College, Cambridge, UK. Debra joined the Arix Board in August 2022 as Senior Independent Director and is Chair of the Remuneration Committee, a member of the Audit & Risk Committee, the Nomination Committee and the Strategy & Investment Committee. Robert Lyne Robert has a BA from the University of Oxford and an LLB from Oxford Brookes University. Isaac Kohlberg Isaac currently serves as a non-executive director of Acacia, Arix’s largest shareholder, and received his M.B.A. from INSEAD and LL.B. from Tel Aviv University. Isaac joined the Arix Board in April 2021 and is a member of the Strategy & Investment Committee. Maureen O’Connell From 2007 to 2017, Maureen served as the Chief Financial Officer of Scholastic Corporation, the world’s largest publisher and distributor of children’s books. In her role as Chief Financial Officer, where she had significant experience licensing rights, partnering with trademark and copyright owners, and overseeing the protection and assertion of rights on a world basis. Earlier in her career, Maureen served as President and Chief Operating Officer of the Gartner Group the world’s leading research and advisory company which has developed more than 300,000 business case studies of intellectual property since 1979. Maureen has received numerous and diverse awards including CFO Studio’s CFO World Class Award in 2017, Treasury and Risk magazine’s 30 Outstanding Women in Business in 2012 and Irish Voice’s Top 75 Influential Women in 2009. Maureen also served as an independent director, audit committee chair and transaction committee chair at Sucampo Pharmaceuticals, a biopharmaceutical company focused on the development and commercialization of highly specialized medicines, from 2013 to 2018 when it was acquired by Mallinckrodt in a $1.2 billion transaction. At Sucampo, Maureen played a key role in evaluating the acquisition of highly specialized medicines in development resulting in the acquisition of two companies. She was previously an independent director at Harte-Hanks Inc. and previously served on the board of directors of Beazer Homes USA Inc. Maureen currently serves as a Director of Acacia, Arix’s largest shareholder. Maureen graduated Magna Cum Laude with a B.S. in Accounting and Economics (dual major) from New York University Stern School of Business in 1985 and is a Certified Public Accountant. Maureen joined the Arix Board in April 2021 and is a member of the Strategy & Investment Committee. Andrew Smith Together with previous senior financial and operations roles focusing on business improvement and transformation he has gained significant exposure to European and US markets working in public and private organizations with a focus on start-ups, spinoffs and growth and has been involved in a number of capital market transactions in excess of $800 million. Andrew is a Fellow of the Chartered Institute of Management Accountants and a Chartered Global Management Accountant. He studied Business and Accounting at Liverpool John Moores University and Durham University Business School. Andrew joined the Arix Board in August 2022 and is Chair of the Audit Committee and a member of the Nomination Committee. Sir Michael Bunbury Benny Soffer Report of the Nomination Committee Peregrine Moncreiffe Composition Dear Shareholders, Key areas of focus for the committee in 2022 included: Non-Executive Director appointments. Executive Team succession planning. Diversity & inclusion. Key areas of focus for 2023 Diversity & inclusion. Management Team diversity and succession planning. Role and responsibilities The Nomination Committee assists the Board in discharging its responsibilities relating to the composition and make-up of the Board and its committees. Specific duties of the Nomination Committee include: Reviewing the composition of the Board and the Board’s committees. Reviewing the balance of skills required by the Board and its committees and the business as a whole. Considering the need for succession planning within the Board and the Board’s committees. Setting and managing the process for the search for new Non-Executive Directors (NEDs). Key areas of focus for the committee in 2022 included: Effectiveness and succession planning The committee reviewed the results of the Board performance evaluation process and agreed actionable items arising to take forward to 2023. The committee reviewed the time commitments of all Non-Executive Directors to ensure all members of the Board are devoting sufficient time to fulfil their duties. The committee met to discuss and assist with succession planning, advised by the CEO about any strategic and commercial changes affecting the Company and satisfied itself that appropriate processes and plans are in place for succession planning. Appointments The committee actively participated in the recruitment process, and actively contributed to the onboarding and induction of each of the newly appointed Non-Executive Directors assisted by the Company Secretary. The committee made recommendations to the Board regarding the re-election of Directors by shareholders at the company’s Annual General Meeting. Board and Committee composition The committee reviewed the structure, size and composition of the Board and its committees and made recommendations for changes to the membership of the committees. The committee evaluated the balance of skills, knowledge, experience and diversity of the Board. The committee reviewed suitable candidates for the role of the Senior Independent Director and recommended the appointment of Dr. Debra Barker as SID with her appointment effective as at 10 August 2022. The committee reviewed the appropriateness of the Board’s policy on diversity and expanded it accordingly. Meetings Only members of the Nomination Committee have the right to attend meetings, but we may invite other Directors, executives or advisers to attend all or part of any meeting as appropriate. Board changes Debra Barker is a seasoned international life sciences executive with more than 25 years’ senior and board experience from start-up biotech to big pharma companies, having held a number of senior drug development, strategic and operational roles in Novartis, Roche, SmithKline Beecham and Knoll. Debra is currently Non-Executive Director of three publicly listed biotechnology companies: Destiny Pharma plc, BergenBio in Norway and most recently, CureVac AG in Germany. Debra has a Diploma in Pharmaceutical Medicine and received a MSc in Immunology from the King’s College in London and a Medical Degree from the Queens’ College, Cambridge, UK. Benny Soffer, MD is Co-Founder and Chief Investment Officer of Consonance Capital Management, a healthcare-focused public equity investment management firm. He previously completed a residency in internal medicine at Yale and served in a variety of managerial roles at Yale-New Haven Hospital. Dr Soffer is a Clinical Assistant Professor of Medicine at Weill Cornell Medicine, receiving his MD at Emory University and his MBA at Yale University. Benny Soffer resigned from the Board on 31 January 2023 in order to spend more time on his other business interests. Andrew Smith is an internationally experienced chief financial officer with strong financial and operational experience in US, Swiss and UK-based biotech and pharmaceutical companies. Andrew is currently Chief Financial Officer of Santhera Pharmaceuticals, the Swiss-based speciality pharmaceutical company, having previously held a number of senior operational and financial roles in companies including Allecra Therapeutics, Sucampo Pharmaceuticals Inc., and Retroscreen Virology (Now HVIVO Ltd). He is a Fellow of the Chartered Institute of Management Accountants and a Chartered Global Management Accountant. He studied business and accounting at Liverpool John Moores University and Durham University Business School. The range of skills and experience of the newly appointed NEDs are a welcomed change to the Arix Board and serve to further reinforce and focus our investment strategy, particularly following the creation of the Public Opportunities Portfolio earlier this year, and we look forward to benefitting from their international industry, financial and operational expertise. The Nomination Committee has worked throughout 2022 to ensure that the Board and its committees continue to have the necessary balance of skills and appropriate succession plans in place to ensure its continued effectiveness. The Nomination Committee in conjunction with the rest of the Board also keeps the necessary balance of skills amongst management under regular review to inform succession plans for executive roles. In accordance with past practice, and the Code, all Directors will be subject to re-election at each AGM. Diversity Policy During the period under review, The Committee consulted with a number of reputable external search consultants before selecting Nurole to carry out a search for new Non-Executive Directors. This process resulted in the appointment of Debra Baker as a Non-executive director and Senior independent Director of the Company. Annual Effectiveness Evaluation Peregrine Moncreiffe BOARD EFFECTIVENESS Review of Board and Committees Having onboarded three new Non-Executive Directors in the latter half of 2022, we decided that it would be appropriate to carry out an internal review to set a new baseline. The effectiveness of each of the Board’s committees were taken into account as part of the evaluation and the output will assist the Nomination Committee in its thinking as it develops and keeps under review the composition of the Board Committees in 2023. The review took the form of an online questionnaire, designed with assistance from Kin with input from the Chairman and Senior Independent Director. Kin provided an anonymised report following the evaluation and the Chairman, in discussion with the Board, have agreed an action plan for 2023. In addition to this review, during a private meeting of the Non-Executive Directors, the Senior Independent Director led an initial review of the Chairman’s performance, by way of an additional questionnaire. Assisted by the company secretary, the NEDS together with the SID discussed and agreed the Chairman’s objectives for 2023. Each Committee chair considers feedback for the Committees for which they are responsible. Each reviewed the effectiveness and processes to support their Committees and introduced a number of changes for how those Committees operate. Stages of the Board Effectiveness Evaluation August 2022 Appointment of new NEDS December 2022 Decision reached to undertake an internal Board effectiveness evaluation and a plan of action was established to support the process. December 2022 Both the Board Effectiveness Review and the Chairman’s Evaluation questionnaires were drafted and circulated to the Board January 2023 Responses received and reviewed by the Company Secretary and draft action plan for 2023 prepared and shared with the Chairman and SID. March 2023 Board reviewed and approved the proposed action plan for the year ahead Key outcomes boardroom dynamics and processes; leadership Succession; strategy and Purpose; and board Diversity and Committee Composition. Overall, the Board have a collaborative working relationship and the recently appointed Directors have been contributing positively to the overall effectiveness of the Board. The key emerging themes from the evaluation have highlighted a few key areas of focus which require the Board’s attention and which the Board, together with the Committee Chairs have agreed an action plan for 2023. The broard areas in which the Board will continue to focus on during 2023 will include: Determining the Company’s core purpose and setting and agreeing an appropriate strategy to align with these values. Determining the Company’s Investment Strategy and rationale for Board-Level decision-making on Investments and communicating this strategy to the Investment Team. With input from the Nomination Committee, establishing a sufficient succession plan for the Board, Executive and senior management team. Keeping the Board’s Diversity Policy under review to ensure it remains appropriate and evolves with the legislation in this area. Report of the Audit and Risk Committee Andrew Smith Composition Dear Shareholders, The Committee is chaired by an independent non-executive director and including the Committee chair, it is comprised solely of independent non-executive directors. The Board considers that I have recent and relevant financial experience as recommended under Provision 24 of the UK Corporate Governance Code (the Code) as it applies to the Company. In line with the Code, the Audit and Risk Committee as a whole is deemed to have competence relevant to the sector in which the Company operates. The Committee’s role is to assist the Board with the discharge of its responsibilities in relation to internal and external audits and controls, including reviewing the Group’s annual financial statements, considering the scope of the annual audit and the extent of the non-audit work undertaken by external auditors, advising on the appointment of external auditors and reviewing the effectiveness of the internal control systems in place within the Group. During the year in review the Committee has met once during my chairmanship and five times in 2022 prior to my appointment on 10 August. Further details on the activities of the Committee during the year and how it has discharged its responsibilities are provided in the report below. Andrew Smith Duties and responsibilities Internal controls and risk management Monitor and review the adequacy and effectiveness of the Company’s internal financial controls and risk management systems. Review and recommend to the Board the disclosures in the Annual Report concerning internal controls and risk management. Promote sound risk management and internal control systems. Monitor and keep under review the policies and overall process for identifying and assessing business risk. Whistleblowing, fraud, bribery and other compliance Review the Company’s arrangements for its employees and contractors to raise concerns in confidence. Review procedures for detecting fraud and preventing bribery. Review the Company’s code of corporate conduct/ business ethics. Financial and narrative reporting Monitor the integrity of the financial statements. Review and report to the Board on significant financial issues and judgements. Review and challenge accounting policies, methods used to account for significant or unusual transactions, clarity and completeness of disclosure. External audit Recommend the appointment, reappointment or removal of the auditors, including conducting a tender for new appointments. Oversee the relationship, make recommendations on their remuneration, approve terms of engagement and review independence and objectivity. Meet regularly without management present. Develop policy on the supply of non-audit services. Ensure the audit contract is tendered at least every ten years. Review and approve the audit plan. Review the findings of the audit. Internal audit If an internal audit function is appointed: – Approve the appointment or termination of the head of internal audit. – Consider and approve the Terms of Reference for the internal audit. – Monitor and review the operation and the effectiveness. – Review and assess the internal audit plan and reports. Meetings and attendees The external auditors are invited to attend the majority of the meetings. Outside of the formal meeting programme, the Audit and Risk Committee chairman maintains a dialogue with key individuals involved in the Company’s governance, including the Chairman, the Group Head of Finance and the external audit lead partner. Activity during the year Reviewing the Committee’s terms of reference and recommending changes to the Board. Reviewing the Company’s internal controls and risk management processes and procedures and assessing and keeping under review their appropriateness. Reviewing the Company’s Whistleblowing Policy. Reviewing the Company’s Treasury Policy for recommendation to the Board. Considering the Group’s policy on the provision of non-audit services by the external auditors. Reviewing the going concern and viability assessment of the Company and the Group. Reviewing the external auditor’s audit plan, process and scope. Reviewing the independence of the external auditor. Reviewing the significant issues in the external audit report. Reviewing the Annual Report and Accounts and recommending their approval by the Board. Reviewing the need for an internal audit function and concluding that it is not required. Significant issues considered in relation to the financial statements
Risk management and internal control The Group’s system of internal control comprises entity-wide high level controls, controls over business processes and centre level controls. Policies and procedures are clearly defined. Levels of delegated authority have been communicated across the Group and management has identified the key operational and financial processes which exist within the business and implemented internal controls over these processes, in addition to the higher level review and authorisation based controls. Policies cover defined lines of accountability and delegation of authority; financial reporting procedures; and preparation of monthly management accounts; these facilitate the accuracy and reliability of financial reporting and govern the preparation of financial statements. The Board is ultimately responsible for the Group’s system of internal controls and risk management. It has discharged its duties in this area by: holding regular Board meetings to consider the matters reserved for its consideration; receiving regular management reports which provide an assessment of key risks and controls; scheduling annual Board reviews of strategy, including reviews of the material risks and uncertainties facing the business; ensuring there is a clear organisational structure, with defined responsibilities and levels of authority; ensuring there are documented policies and procedures in place; and reviewing regular reports containing detailed information regarding financial performance, rolling forecasts, actual and forecast covenant compliance and financial and non-financial KPIs. In reviewing the effectiveness of the system of internal controls, the Audit and Risk Committee: reviews the risk register compiled and maintained by senior management within the Group and questions and challenges where necessary; reviews the system of financial and accounting controls regularly; and reports to the Board on the risk and control culture within the Group. No significant failings or weaknesses were identified. Internal audit External auditors This includes the ongoing assessment of the auditors’ independence and the effectiveness of the external audit process, by regular meetings and assessment of non-audit engagements. The results of this inform the Committee’s recommendation to the Board as to the auditors’ appointment (subject to shareholder approval) or otherwise. Appointment and tenure Regulations require the rotation of the lead audit partner every five years for a listed client. Therefore, we expect a new lead audit partner to be selected for the 2025 audit. In accordance with retained EU legislation, the Committee intends to put the external audit out to tender at least every ten years. Non-audit services The policy recognises that certain non-audit services may not be carried out by the external auditors (in accordance with the EU Statutory Audit regime). During the year ended 31 December 2022, BDO provided non-audit services in relation to reviewing the Group’s Interim financial statements (£18,400); and performing an FCA CASS Audit of Arix Capital Management Limited, a 100% subsidiary of Arix Bioscience plc (£5,050). The fees paid to BDO for non-audit services during the year totalled £23,400 representing 14% of the total audit fee. Whistleblowing Andrew Smith Directors’ Remuneration Report Debra Barker Composition Annual Statement by the Chair of the Remuneration Committee This is my first report as Chair of the Committee having joined the Board as Senior Independent Director and succeeding Maureen O’Connell on 10 August 2022. I would like to thank Maureen for her support over the course of the year. Board changes Andrew Smith and Benny Soffer joined the Board as Non-Executive Directors on 10 August 2022. Benny Soffer subsequently stepped down effective 31 January 2023. I joined the Board as the Senior Independent Director on 10 August 2022. Sir Michael Bunbury stepped down from the Board and from the role of Senior Independent Director on 9 August 2022. No payments for loss of office were made to Non-Executive Directors that stepped down from the board. Pay for performance 2022 Annual bonus 2020 EIP awards Whilst conscious of the formulaic out-turn of the 2020 EIP awards, following extensive discussion with the Board (excluding Robert Lyne), which unanimously supported the approach, the Committee determined that it would be appropriate to exercise its discretion to increase the vesting under this award to 43.2% of maximum, based on the following three key principles: 1. To reward the CEO for his performance in the role to date. 2. To increase the alignment of the CEO with shareholders. 3. To support in the retention of the CEO. Further details of the Committee’s considerations under each of the three principles noted above are set out below. 1. To reward the CEO for his performance in the role to date Strengthening the reputation of the Company with key stakeholders, including through a re-organisation of key internal functions related to investor and public relations. Leading a successful investor outreach, resulting in two new significant investors into the business over the course of FY22. Completing a successful cost reduction exercise following appointment, resulting in the cost base being lowered by 25%. Playing a pivotal role in ensuring the retention and successful recruitment of key personnel to the business, including (i) a pivotal role in the recruitment and retention of members of the investment team that are considered key talent for the future; and (ii) developing staff in the back office and multi-skilling them to cover wider responsibilities, including investor relations. Managing the company through a period of significant change in Director composition, with 10 changes in Directors over the past 22 months. 2. To increase the alignment of the CEO with shareholders The Committee believes alignment to shareholders, through the building of a shareholding, is an important factor in successfully motivating management and as such has sought to reward the CEO’s performance in a way that further aligns the CEO with shareholders, both on the upside and on the downside. In order to further support this principle, the Committee has determined that a two-year holding period will apply to any shares vesting under the 2020 EIP, a feature not originally attached to the award made to Robert on account of it having been granted prior to his appointment to the Board. Robert will therefore not be able to sell any shares vesting from the award (subject to settling any taxes due) until 30 June 2025. 3. To support in the retention of the CEO Whilst the Board is confident that Robert is both committed to and is best placed to deliver Arix’s long-term strategic goals, it is acutely aware that Robert has gained invaluable experience as the CEO of Arix and if the remuneration arrangements in place do not continue to motivate and align Robert with shareholders over the longer-term, there is a risk that he could move to a role within an alternative asset management firm that would benefit from significantly increased upside potential through mechanisms such as carried interest that are not generally accepted in the listed market, but are a common feature of competitor firms. Reflecting on the above principles, the Committee considered that increasing the vesting under the EIP was the most effective route to recognising the CEO’s performance since appointment while still ensuring alignment with shareholders on the basis the EIP is paid in Company shares. The Committee has been in dialogue with the Company’s largest shareholders, who have expressed support for the proposal set out above. I would like to place on record my thanks to shareholders for engaging proactively with the Committee on this issue. 2022 EIP awards
In determining the performance targets, the Committee sought to ensure that the award would be both stretching and achievable to ensure that participants are appropriately incentivised to achieve the Company’s strategic goals. The Committee is mindful of windfall gains and as such, the Committee will review the 2022 EIP award on vesting to ensure against windfall gains. The Committee will disclose the factors considered in determining whether any windfall gains have arisen at the time of vesting. Implementation in 2023 He will remain eligible for an annual bonus, with the maximum opportunity unchanged at 125% of salary. The 2023 annual bonus will be based on the achievement of specific financial, strategic and personal goals, which will be disclosed retrospectively as part of the 2023 annual report due to targets being considered commercially sensitive. An award of up to 225% of salary will be made under the EIP. In line with the Directors’ Remuneration Policy, a two-year post-vesting holding period will apply to the EIP award. Details of the performance targets attached to the 2023 EIP award is set out further below. Alignment of executive and employee pay Arix has a small number of employees and as a result is not required to publish the ratio of the CEO remuneration relative to that of employees more widely. The Committee is confident that there is considerable alignment between the structure of the CEO pay and the arrangements in place for other employees, with all employees participating in a similar bonus structure. While the Company does not directly consult with employees as part of the process of reviewing executive pay and formulating the Remuneration Policy, the Committee receives updates from the CEO on his discussions and reviews with senior management and employees. Looking ahead Given the uniqueness of Arix’s business, where we compete with firms that are typically private and operate a very different remuneration structure (often driven through carried interest arrangements), over the course of the year, the Committee intends to review the current Policy, and in particular the use of an EIP which requires setting of long-term performance targets which are not fully aligned to the Group’s investment life cycle, to ensure that it remains fit for purpose. Where any changes are considered appropriate, the Committee will consult with key shareholders prior to implementing the proposed approach. I hope that you find the information contained in this report helpful, thoughtful and clear. The Committee continues to welcome dialogue with shareholders on remuneration matters and any questions or feedback you have would be gratefully received. At the forthcoming AGM, shareholders will be asked to approve an advisory resolution on the contents of the Annual Report on Remuneration. I hope the Committee can count on your continued support. Debra Barker
Remuneration snapshot
Annual Report on Remuneration Remuneration Committee The Committee met 3 times during the year under review. Meeting attendance is shown in the Corporate Governance Report. The Board considers a majority of the members of the Committee to be independent when considered against the UK Corporate Governance Code (“the Code”). The CEO attended meetings of the Committee by invitation, but was not present when matters relating to his remuneration were discussed.
Role of the Remuneration Committee The Committee’s role includes: Setting the Remuneration Policy for all Executive Directors of the Company, the Chairman of the Board and key management (being the Executive Committee (including the Company Secretary) and all personnel receiving an annual basic salary of £250,000 or more). Within the terms of the Remuneration Policy and in consultation with the Chairman of the Board and/or the CEO, where appropriate, determining the total individual remuneration package of the CEO, the Chairman and other designated senior executives including bonuses, incentive payments and share option or other share awards. Approving the design of, and determining targets for, any performance-related pay schemes operated by the Company and approving total annual payments made under such schemes. Ensuring that contractual terms on termination, and any payments made, are fair to the individual and the Company, that failure is not rewarded, that the duty to mitigate loss is fully recognised and that any payments are consistent with the shareholder-approved Remuneration Policy. In carrying out its duties the Remuneration Committee takes into account any legal and regulatory requirements, including the Code and the UK Listing Rules, as well as good practice guidance issued by investors and investor representative bodies. The Committee believes that its approach to Executive Director remuneration is consistent with the factors set out in Provision 40 of the Code: Clarity: the Remuneration Policy and its implementation are set out in extensive detail in this report; Simplicity: Remuneration is based on a mix of fixed and variable pay, and is well understood by both participants and shareholders. Incentives involve an annual bonus scheme based on the achievement of key corporate objectives, and a long-term plan which rewards the generation of long-term value for shareholders; Risk: Performance targets for incentive schemes are calibrated carefully to ensure that the ultimate rewards will correspond closely with an appropriate level of performance. For example, EIP awards will only vest if a certain level of share price; invested NAV per share growth; and NAV per share growth is achieved. Malus and Clawback provisions apply to both the Annual Bonus and EIP; Predictability: annual participation in the bonus scheme and the EIP is capped (as a percentage of basic salary), and awards cannot exceed these levels. Our Remuneration Policy contains details of threshold, target and maximum opportunity levels under the Annual Bonus and EIP, with potential outcomes in different performance scenarios illustrated by the charts in the 2021 Directors’ Remuneration Report. The ultimate value of any vested EIP award will depend on the share price at the time which cannot be predicted but is simple to calculate; Proportionality: there is a clear link between the delivery of strategy and individual awards through the annual bonus scheme. The EIP rewards the successful delivery of long-term outperformance. If there is little or no growth in share price or NAV, awards will not vest; and Alignment to culture: Arix’s high performance culture and the awareness within the Company of what ultimately drives shareholder value are reflected in the incentive schemes operated and the choice of performance metrics. Key matters considered by the Remuneration Committee Review and approval of the 2022 Directors’ Remuneration Report. Review of Executive Director and senior manager salaries for 2023. Review of Executive Director and senior manager bonuses and equity incentive awards for 2022. Pay benchmarking for key roles within the organisation and a review of alternative incentive structures. Advisers to the Committee The Committee is satisfied that the advice received during the year was objective and independent. Deloitte is a founding member of the Remuneration Consultants Group. Deloitte received fees of £85,700 for its advice during the year (fees charged on a costs incurred basis). Deloitte also provided Group tax advice during the year. Single figure table – Executive Directors (audited)
1 Joined the Board on 29 April 2021 as Interim CEO and was appointed as Chief Executive Officer on 6 October 2021. 2021 values shown above relate to remuneration received since appointment to the Board. Basic salary: amount earned for the year. Benefits: the taxable value of benefits received in the year, including life assurance, long-term sickness insurance, private healthcare and company car cash allowance. Pension: the value of the Company’s contribution in the year: 7.5%. Annual Bonus: see separate section below for explanation of determination of bonus amounts. Subject to Board approval, the Company allows its Executive Directors to hold non-executive positions outside of the Company that complement and enhance their current role. Any fees may be retained by the Director. Robert Lyne did not hold any external directorships during the year. Single figure table – Non-Executive Directors (audited)
1 Joined the Board on 29 April 2021. 2021 remuneration relates to fees received between 29 April 2021 and 31 December 2021. 2 Joined the Board on 10 August 2022. 2022 remuneration relates to fees received between 10 August 2022 and 31 December 2022. 3 Joined the Board on 6 October 2021 and stepped down from the Board on 10 August 2022. 2021 remuneration relates to fees received between 6 October 2021 and 31 December 2021 and 2022 remuneration relates to fees received between 1 January 2022 to 10 August 2022. Other relates to use of office. Annual bonus payout table (audited)
The Committee considered the appropriateness of the annual bonus outcome for Robert Lyne in the context of the overall Company performance and his individual performance and determined that the bonus outcome was appropriate. LTIPs vesting in the year (audited)
As set out in further detail in the Chair’s statement, the Committee, with the full Board’s support, determined that it would be appropriate to exercise its discretion as provided for in the Directors’ Remuneration Policy to increase the vesting under this award to 43.2% of maximum, based on the following three principles: 1. To reward the CEO for his performance in the role to date. 2. To increase the alignment of the CEO with shareholders. 3. To support in the retention of the CEO. As the award was granted to Robert Lyne prior to being appointed to the Board, the 2020 EIP would ordinarily not be subject to a post-vesting holding period. However, in order to further support the alignment and retention principles noted above, the Committee determined that a two year holding period will apply to vested awards. Further details in relation to the rationale are set out in the Chair’s statement. The award value shown in the single figure is based on the average share price over the last three months of the financial year ended 31 December 2022 of £1.07. 24% of the value of this award is attributable to the growth in share price since grant. Scheme interests awarded in 2022 (audited)
1 Starting price based on the 30 day rolling average to the start of the performance period. The Committee is mindful of windfall gains and as such, the Committee will review the 2022 EIP award on vesting to ensure against windfall gains. The Committee will disclose the factors considered in determining whether any windfall gains have arisen at the time of vesting. Any awards vesting will be subject to a two-year holding period. Payments for loss of office/payments to past Directors (audited) Executive Directors’ shareholdings and share interests (audited) Executive Directors will normally be required to hold shares with a value of 100% of their incumbent shareholding requirement (or their actual shareholding, excluding personal investment, on cessation if lower) for two years post cessation as an Executive Director. The Committee retains the discretion to operate this policy flexibly and waive part or all of the policy, for example in compassionate circumstances. No options were exercised during the year.
1 Awards are nil-cost options. The 2021 and 2022 EIP Awards include performance conditions which must be met prior to vesting. Details of the specific performance targets in place for each grant are included in the relevant year’s Annual Report on Remuneration. 2 Reflects value of ordinary shares, as well as value of 2020 EIP awards no longer subject to performance conditions on a net of tax basis, calculated at closing share price on 31 December 2022 (£1.075). There has been no change in the Executive Directors’ shareholdings since the balance sheet date. NON-EXECUTIVE DIRECTORS’ SHAREHOLDINGS (AUDITED)
1 Reflects position as at the date of his departure from the Board (10 August 2022). Since the Balance Sheet Date, Peregrine Moncreiffe’s holdings have increase from 259,000 to 459.000 following the purchase of 200,000 shares on 6 February 2023. Comparison of overall performance and pay Comparison of overall performance and pay Source: Datastream (Thomson Reuters) CEO – historic remuneration information (audited)
Comparison of Directors’ and employees’ pay The average employee change has been calculated by reference to the median of employee pay. Debra Barker, Andrew Smith and Benny Soffer were appointed to the Board and Sir Michael Bunbury stepped down from the Board during the year ended 31 December 2022. Accordingly, they have been excluded from the table below. Peregrine Moncreiffe, Sir Michael Bunbury, Isaac Kohlberg and Maureen O’Connell were appointed in 2021.
1 Robert Lyne was appointed to the Board on 29 April 2021 as interim CEO and was appointed as Chief Executive Officer on 6 October 2021. To enable comparison and to provide meaningful reflection of the annual percentage change, his fees for the year ended 31 December 2021 have been annualised. 2 Peregrine Moncreiffe, Isaac Kphlberg and Maureen O’Connell were appointed to the Board on 29 April 2021. To enable comparison and to provide meaningful reflection of the annual percentage change, their fees for the year ended 31 December 2021 have been annualised. Relative importance of spend on pay Total Group spend on remuneration decreased by 30% compared to the previous year:
Statement of voting on remuneration
DIRECTORS’ REMUNERATION POLICY (SUMMARY) REMUNERATION POLICY TABLE (EXECUTIVE DIRECTORS)
SERVICE AGREEMENTS AND LETTERS OF APPOINTMENT
The Non-Executive Directors of the Company do not have service contracts but are appointed by letters of appointment. Each Non-Executive Director’s term of office runs for an initial term of up to and including the next AGM after their appointment unless terminated earlier upon written notice or upon their resignations. The terms of the Non-Executive Directors’ appointments are subject to their re-election by the Company’s shareholders at the 2022 AGM and to re-election at any subsequent AGM at which the Non-Executive Directors stand for re-election. The details of each Non-Executive Director’s term are set out below:
DIRECTOR’S REPORT FOR THE YEAR ENDED 31 DECEMBER 2022 The Directors present their report for the year ended 31 December 2022. Additional information which is incorporated by reference into this Directors’ Report, including information required in accordance with the Companies Act 2006, can be found as follows:
For the purposes of LR 9.8.4CR, the information required to be disclosed by LR 9.8.4R can be found in the following locations:
The Strategic Report and this Directors’ Report have been drawn up and presented in accordance with, and in reliance upon, applicable English company law and any liability of the Directors in connection with these reports shall be subject to the limitations and restrictions provided by such law. DIRECTORS Peregrine Moncreiffe Sir Michael Bunbury Isaac Kohlberg Robert Lyne Maureen O’Connell Dr Debra Barker Dr. Benny Soffer Andrew Smith Results and dividend The Board is not recommending a dividend for the year ended 31 December 2022. Articles of Association Share capital 135,609,653 Ordinary Shares of £0.00001 each of which 6,428,853 are held in Treasury; and 49,671 C Shares of £1.00 each. Ordinary shareholders are entitled to receive notice of, and to attend and speak at, any general meeting of the Company. On a show of hands every shareholder present in person or by proxy (or being a corporation represented by a duly authorised representative) shall have one vote, and on a poll every shareholder who is present in person or by proxy shall have one vote for every share they hold. The Notice of Annual General Meeting specifies deadlines for exercising voting rights and appointing a proxy or proxies. Ordinary Shares held as Restricted Shares pursuant to the Restrictive Share Agreement are disenfranchised and, accordingly, holders of such Restricted Shares are not entitled to vote, attend the meetings of the Company or receive dividends or other distributions made or paid on the Ordinary Share capital of the Company. No voting rights attach to the C Shares and their holders are not entitled to receive notice of, or to attend and speak at, any general meeting of the Company. Holders of C Shares are not entitled to receive any dividend or distributions made or paid on the Ordinary Share capital of the Company. Other than the general provisions of the Articles of Association (and prevailing legislation), there are no specific restrictions of the size of a holding or on the transfer of any class of shares in the Company except as follows: Prior consent of the Directors is required for the transfer of C Shares. Holders of Restricted Shares may not dispose of Restricted Shares until and unless the relevant Restricted Shares are released from their respective undertakings pursuant to the Restrictive Share Agreement. Other than as set out above, the Directors are not aware of any other agreements between holders of the Company’s shares that may result in the restriction of the transfer of securities or on voting rights. No shareholder holds securities carrying any special rights or control over the Company’s share capital. Authority for the Company to purchase its own shares At the AGM on 7 June 2022, the Company was generally and unconditionally authorised by its shareholders to make market purchases (within the meaning of section 693 of the Companies Act 2006) of up to a maximum of 12,918,080 of its Ordinary Shares. The Company repurchased 6,428,853 of its Ordinary Shares under this authority before the programme was suspended on 18 October 2021. The authority is due to expire on the earlier of the date of this year’s AGM or 30 June 2023. Directors’ interests Directors’ indemnities The Company maintains Directors’ and Officers’ liability insurance cover and this is in place for all the Company’s Directors at the date of this report. The Company will review its level of cover annually. Overseas offices Political donations Change of control – significant agreements None of these are considered to be significant in their likely impact on the business as a whole. Audit information access to all information of which the Directors are aware that is relevant to the preparation of the financial statements such as records, documentation and other matters; additional information that has been requested for the purpose of the audit; and unrestricted access to persons within the Group from whom it was determined necessary to obtain audit evidence. Significant interests
So far as each Director is aware, there is no relevant audit information of which the auditors are unaware. The confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006. Independent auditors Annual General Meeting Statement of Directors’ Responsibilities Company law requires the directors to prepare financial statements for each financial year. Under that law the directors are required to prepare the group financial statements and have elected to prepare the 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 group and company and of the profit or loss for the group for that period. In preparing these financial statements, the directors are required to: select suitable accounting policies and then apply them consistently; make judgements and accounting estimates that are reasonable and prudent; state whether they have been prepared in accordance with UK adopted international accounting standards, subject to any material departures disclosed and explained in the financial statements; prepare the financial statements on the going concern basis, unless it is inappropriate to presume that the group and the company will continue in business; and prepare a directors’ report, a strategic report and directors’ remuneration report which comply with the requirements of the Companies Act 2006. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company 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 company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for ensuring that the annual report and accounts, taken as a whole, are fair, balanced, and understandable and provides the information necessary for shareholders to assess the group’s performance, business model and strategy. Website publication Directors’ responsibilities pursuant to DTR4 The financial statements have been prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit and loss of the group. The annual report includes a fair review of the development and performance of the business and the financial position of the group and company, together with a description of the principal risks and uncertainties that they face. BY ORDER OF THE BOARD FINANCIAL STATEMENTS INDEPENDENT AUDITORS’ REPORT OPINION ON THE FINANCIAL STATEMENTS 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 December 2022 and of the Group’s loss for the year then ended; the Group financial statements have been properly prepared in accordance with UK adopted international accounting standards; the Parent Company financial statements have been properly prepared in accordance with UK adopted international accounting standards and as applied in accordance with the provisions of the Companies Act 2006; and the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. We have audited the financial statements of Arix Bioscience plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for the year ended 31 December 2022 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Cash Flows, the Company Statement of Financial Position, the Company Statement of Changes in Equity 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 and as regards the Parent Company financial statements, as applied in accordance with the provisions of the Companies Act 2006. Basis for opinion Independence Conclusions relating to going concern Reviewing the latest Board approved forecasts covering 3 years from the year-end date of the financial statements. Considering the appropriateness and accuracy of these forecasts, corroborating the key inputs such as cash inflows to our knowledge of the entity and evidence obtained from our work on other areas of the financial statements, as well as reviewing the Board’s stress test to ascertain the likelihood of the Group and Parent Company not having the ability to meet their obligations as they fall due. Challenging the Board about the implications of the ongoing conflict in Ukraine, current economic climate and inflation on the business. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group and the Parent Company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report. Overview
An overview of the scope of our audit We identified six components in the Group, three of which are significant, five operate in the United Kingdom (‘UK’) and one in the United States (‘US’). All five UK components were subject to full scope audits by the Group Engagement Team to our component materiality. The material balances and transactions of the US component were audited to our component materiality by the Group Engagement Team for group purposes. Climate change Enquiries and challenge of management to understand the actions they have taken to identify climate-related risks and their potential impacts on the financial statements and adequately disclose climate-related risks within the annual report; Our own qualitative risk assessment taking into consideration the sector in which the Group operates and how climate change affects this particular sector; and Review of the minutes of Board and Audit Committee meeting and other papers related to climate change and performed a risk assessment as to how the impact of the Group’s commitment as set out in Note 21 may affect the financial statements and our audit. We challenged the extent to which climate-related considerations, including the expected cash flows from the initiatives and commitments have been reflected, where appropriate, in management’s going concern assessment and viability assessment. We also assessed the consistency of managements disclosures included as ‘Other Information’ within the financial statements and with our knowledge obtained from the audit. Based on our risk assessment procedures, we did not identify there to be any Key Audit Matters materially impacted by climate-related risks and related commitments. Key audit matters
Our application of materiality In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole. Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows:
Component materiality Reporting threshold Other information We have nothing to report in this regard. Corporate governance statement Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is materially consistent with the financial statements or our knowledge obtained during the audit.
Other Companies Act 2006 reporting
Responsibilities of Directors 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 Extent to which the audit was capable of detecting irregularities, including fraud Non-compliance with laws and regulations Our understanding of the Group and the industry in which it operates; Discussion with management and those charged with governance; Obtaining and understanding of the Group’s policies and procedures regarding compliance with laws and regulations; and we considered the significant laws and regulations to be Companies Act 2006, the FCA listing and DTR rules, the principles of the UK Corporate Governance Code, requirements of PAYE and VAT legislation and IFRS. Our procedures in respect of the above included: Review of minutes of meeting of those charged with governance for any instances of non-compliance with laws and regulations; Review of correspondence with regulatory and tax authorities for any instances of non-compliance with laws and regulations; Review of financial statement disclosures and agreeing to supporting documentation; Involvement of tax specialists in the audit; and Review of legal expenditure accounts to understand the nature of expenditure incurred. Fraud Enquiry with management and those charged with governance regarding any known or suspected instances of fraud; Obtaining an understanding of the Group’s policies and procedures relating to: – Detecting and responding to the risks of fraud; and – Internal controls established to mitigate risks related to fraud. Review of minutes of meeting of those charged with governance for any known or suspected instances of fraud; Discussion amongst the engagement team as to how and where fraud might occur in the financial statements; Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud; and Considering remuneration incentive schemes and performance targets and the related financial statement areas impacted by these. Based on our risk assessment, we considered the areas most susceptible to fraud to be valuation of unquoted investments and management override of controls. Our procedures in respect of the above included: Testing a sample of journal entries throughout the year, which met a defined risk criteria, by agreeing to supporting documentation; Assessing significant estimates made by management for bias in relation to valuation of unquoted investments. The key audit matters section of our report explains this matter in more detail and also describes the specific procedures we performed in response to that key audit matter; and Agreement of the financial statements disclosures to underlying supporting documentation. We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members who were all deemed to have appropriate competence and capabilities and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit. Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it. A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. Use of our report VANESSA-JAYNE BRADLEY (Senior Statutory Auditor) BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127). CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2022
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes. * In the current year the foreign exchange gain has been moved to be included within operating expenses and the share-based payment is now included within Administrative expenses. CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2022
The accompanying notes form an integral part of the financial statements. The financial statements were approved by the Board of Directors and authorised for issue on 24 April 2023, and were signed on its behalf by PEREGRINE MONCREIFFE CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR 31 DECEMBER 2022
FOR THE YEAR 31 DECEMBER 2021
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2022
NOTES TO THE FINANCIAL STATEMENTS 1. GENERAL INFORMATION The Company is incorporated and domiciled in the United Kingdom. Arix Bioscience plc was incorporated on 15 September 2015 as Perceptive Bioscience Investments Limited and changed its name to Arix Bioscience Limited. It subsequently re-registered as a public limited company and changed its name to Arix Bioscience plc. The address of its registered office is Duke Street House, 50 Duke Street, London, W1K 6JL. The registered number is 09777975. The Company is the ultimate parent company into which the results of all subsidiaries are consolidated. 2. ACCOUNTING POLICIES The financial statements have been prepared on a historical cost basis, except for certain financial assets which have been measured at fair value through profit or loss. The financial statements are presented in British pounds sterling, which is the functional and presentational currency of the Company, and the presentational currency of the Group; balances are presented in thousands of British pounds sterling unless otherwise stated. The Arix Group has applied all standards and interpretations issued by the IASB and endorsed by the UKEB that were effective at the period end date. The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented. Use of judgements and estimates Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively. Significant estimates are made by the Arix Group when applying the appropriate methodology for valuing investments (see Note 2(I)), share-based payments (see Note 2(P) and Note 19). Sensitivity of the investment portfolio is disclosed in Note 12. In preparing these financial statements, the Directors have concluded that the Company meets the definition of an investment entity as per IFRS 10, as it has the typical characteristics set out in the standard, including holding more than one investment and having more than one investor which is not a related party of the entity. Going concern B. Basis of consolidation Subsidiaries are therefore measured at Fair Value through profit or loss in accordance with IFRS 13 “Fair Value measurement” and IFRS 9 “Financial Instruments”. Notwithstanding this, IFRS 10 requires subsidiaries that provide services that relate to the investment entity’s investment activities to be consolidated. Accordingly, the financial statements consolidate the results of the entities listed in the table below. This table contains the disclosures required by Section 409 of the Companies Act 2006 for subsidiaries:
Subsidiaries are fully consolidated from the date on which control is transferred. They are deconsolidated from the date that control ceases. The acquisition method of accounting is used to account for business. All companies are involved in investing in and building breakthrough biotech companies around cutting edge advances in life sciences, other than Arix Capital Management and the Arthurian Life Sciences companies, which are engaged in fund management activity, and Arthurian Life Sciences Carried Interest Partner LP, which holds a financial interest in a limited partnership. Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Associates No associates are presented on the Statement of Financial Position as the Group elects to hold such investments at fair value through profit and loss. This treatment is permitted by IAS 28 Investment in Associates and Joint Ventures, which permits investments held by entities that are akin to venture capital organisations to be excluded from its measurement methodology requirements where those investments are designated, upon initial recognition, at fair value through profit or loss and accounted for in accordance with IFRS 9 Financial Instruments. Changes in fair value of associates are recognised in the Statement of Comprehensive Income in the period in which the change occurs. The Group has no interests in associates through which it carries on its business. The disclosures required by Section 409 of the Companies Act 2006 for associated undertakings are included in Note 12 to the financial statements. Similarly, those investments which may not have qualified as an associate but fall within the wider scope of significant holdings and so are subject to Section 409 disclosure acts are also included in Note 12 to the financial statements. WLSIF is considered neither a subsidiary (as detailed in Note 2(A)) nor an associate, as the Group does not have a 20-50% interest in the entity nor is considered to have significant influence. In preparing these financial statements, the Directors have considered the relationship that the Group has with The Wales Life Sciences Investment Fund LP (the “WLSIF”) and specifically as to whether the Group controls WLSIF. The Directors note that while Arix Capital Management Limited (a 100% subsidiary of Arix Bioscience plc), in its role as fund manager to WLSIF, and Arthurian Life Sciences SPV GP Limited (a 100% subsidiary of Arix Bioscience plc) in its role as general partner of the WLSIF, both exercise power over the activities of WLSIF, they do not have sufficient exposure to variability of returns from WLSIF to meet the definition of control. Accordingly, WLSIF has not been consolidated into these financial statements. C. Adoption of new and revised standards D. Revenue recognition E. Foreign currency translation F. Leases G. Exceptional items H. Property, plant and equipment Office equipment Three years Fixtures and fittings Five years I. Right-of-use asset J. Financial assets Amortised cost assets are non-derivative financial assets with fixed or determinable payments that are not listed in an active market. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period, which are classified as non-current assets. The Arix Group’s loans and receivables comprise trade and other receivables and cash and cash equivalents in the Consolidated Statement of Financial Position. Regular purchases and sales of financial assets are recognised on the trade date – the date on which the Arix Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Arix Group has transferred substantially all risks and rewards of ownership. Equity investments Valuation of investments The fair value of listed investments is based on bid prices at the period end date. Upon investment, the fair value of unlisted securities is recognised at cost. Similarly, following a further funding round with participation by at least one third party, the price paid by the external investor is generally considered to represent the investment’s fair value at the transaction date, although the specific terms and circumstances of each funding round must always be considered. Following the transaction date, each investment is observed for objective evidence of an increase or impairment in its value. This reflects the fact that investments made in seed, start-up and early stage biotech companies often have no current and no short-term future revenues or positive cash flows; in such circumstances, it can be difficult to gauge the probability and financial impact of the success or failure of development or research activities and to make reliable cash flow forecasts. As such, the Group carries out an enhanced assessment based on milestone analysis, which seeks to determine whether there is an indication of a change in fair value based on changes to the company’s prospects. A milestone event may include, but is not limited to, technical measures, such as clinical trial progress; financial measures, such as a company’s availability of cash; and market measures, such as licensing agreements agreed by the company. Indicators of impairment might include significant delays to clinical progress, technical complications or financial difficulties. Often qualitative milestones provide a directional indication of the movement of fair value. Calibrating such milestones may result in a fair value equal to the transaction value. Any ultimate change in valuation reflects the assessed impact of the progress against milestones and the consequential impact on a potential future external valuation point, such as a future funding round or initial public offering. When forming a view of the fair value of its investment, the Arix Group takes into account circumstances where an investment’s equity structure involves different class rights on a sale or liquidity event. The valuation metrics used in these financial statements are discussed in Note 12. Although the Directors use their best judgement, there are inherent limitations in any valuation techniques. Whilst fair value estimates presented herein attempt to present the amount the Arix Group could realise in a current transaction, the final realisation may be different, as future events will also affect the current estimates of fair value. The effects of such events on the estimates of fair value, including the ultimate realisation of investments, could be material to the financial statements. Treatment of gains and losses arising on fair value Recognition of financial assets Loans and receivables are subsequently carried at amortised cost using the effective interest method. Impairment of financial assets Financial assets and liabilities are offset when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Arix Group or the counterparty. Where these conditions are met, the net amount is reported in the Statement of Financial Position. K. Cash and cash equivalents L. Goodwill and intangible assets It is the policy of the Arix Group to amortise these fair values over the period in which the Arix Group is expected to obtain economic benefit from the related intangible assets. The excess of consideration transferred over the fair value of net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the business acquired, the difference is recognised directly in the Statement of Comprehensive Income as a bargain purchase. The asset is assessed for impairment periodically and marked down appropriately if an indication of impairment is noted. M. Share capital Own shares represent shares of Arix Bioscience plc that are held by an employee share trust for the purpose of fulfilling obligations in respect of various employee share plans. Own shares are treated as a deduction from equity until the shares are cancelled, reissued or disposed of. When they vest, they are transferred from own shares to retained earnings at their weighted average cost. N. Trade payables If not, they are presented as non-current liabilities. Trade payables are initially recognised at fair value, generally being the invoiced amount and are subsequently measured at amortised cost, using the effective interest method. O. Current and deferred taxation The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Arix Group operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Deferred income tax is recognised on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the balance sheets, using the liability method. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the Statement of Financial Position date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis. The Group primarily seeks to generate capital gains from its portfolio company investments, which would ordinarily be subject to UK corporation tax. However, where the Group holds or has held in excess of 10% of the share capital of a portfolio company, and those companies are themselves trading or preparing to carry on a trade, the Directors continue to believe that these holdings will qualify for the UK’s Substantial Shareholdings Exemption (“SSE”), which exempts taxable gains or losses from corporation tax. For unrealised gains and losses that are expected to meet the qualifying criteria, no deferred tax provision will be made in the Group’s financial statements. Where investment gains or losses are unrealised and are not expected to qualify for SSE, the anticipated tax due based on the current valuation of the underlying investment is reflected in a deferred tax balance, to the extent that these exceed the Group’s historical operating losses from time to time. SSE has not been applied to any realised gains in the year (2021: £nil). The Directors have taken what they consider to be all necessary steps to support the determination that the gains in 2022 in the Arix portfolio qualify for SSE, including close collaboration with their appointed tax advisers and further consultation and receipt of written opinion from a Queen’s Counsel Barrister at a leading tax chambers. P. Share-based payments Q. Other reserves R. Treasury share reserve S. Financial risk management The Board of Directors review and agree the policies for managing each of these risks, which are summarised below: Market risk Price risk – the Arix Group is exposed to equity securities price risk because investments are held at fair value through profit or loss. The Group’s strategy is to deploy long-term capital into innovative companies which have novel, high-impact outcomes; Arix believes that such companies are less susceptible to macroeconomic cycles. The Group monitors the availability of its capital closely, ensuring sufficient balances are available for the continuing operation of the business throughout the period assessed in the viability statement. Interest rate risk The Arix Group’s income is substantially independent of changes in market interest rates. Interest-bearing assets include only cash and cash equivalents and cash on long-term deposit, which earn interest at variable rates. The Arix Group has a treasury policy to manage cash and cash equivalents. In the year ended 31 December 2022, a 10% change in underlying interest rates would have impacted Arix’s finance income by £158k (2021: £16k). Credit risk Risk of counterparty default arising on cash and cash equivalents is controlled within a framework of dealing with high quality institutions. As at 31 December 2022, 100% of cash and cash equivalents was deposited with institutions that have a short-term credit rating of at least F1, according to Fitch Ratings. No counterparty has failed to meet its obligations over the period. The maximum exposure to credit risk is represented by the carrying amount of each asset. Management does not expect any significant counterparty to fail to meet its obligations. Liquidity risk
Capital risk management 3. REVENUE
The total revenue for the Arix Group has been derived from its principal activity of investing in breakthrough biotechnology companies. All of this revenue relates to trading undertaken in the United Kingdom. 4. SEGMENTAL INFORMATION 5. LOSS BEFORE TAXATION
Non-audit services in the year relate to the Arix Bioscience plc interim review (£18k) and an FCA Client Asset Report (£5k) (2021: interim review £16k; FCA Client Asset Report £4k). 6. ADMINISTRATIVE EXPENSES
7. FINANCE INCOME
8. EXCEPTIONAL COSTS
Items that are of exceptional size or material in size and unusual in nature are included in administrative expenses and disclosed separately to provide a more accurate indication of underlying performance. The shareholder engagement process resulted in a change to the composition of the Board. Restructuring costs include the costs of separation pay and payments in lieu of notice. 9. EMPLOYEE COSTS
The average number of employees during the year was 7 (2021: 11) (investment team: 3 (2021: 5); non-investment team: 4 (2021: 6)). 10. INCOME TAX
The corporation tax rate for the year was 19%. The UK corporation tax rate will increase from 19% to 25% from 1 April 2023 for companies with annual profits exceeding £250k but remain at 19% for annual profits below £50k whilst companies with profits between £50k and £250k will pay tax at the main rate of 25% reduced by marginal relief. This change has been enacted at the balance sheet date and therefore the deferred tax assets and liabilities as at 31 December 2022 have been measured using the rates that would be expected to apply in the periods when the underlying timing differences, on which deferred tax is recognised, are expected to unwind. The Group is subject to UK corporation tax on the majority of its activities, which can include gains arising on investments. However, where possible the Group aims to take advantage of the UK’s Substantial Shareholding Exemption (“SSE”), which exempts taxable gains or losses arising from the disposal of shares, where certain conditions are met. Where SSE has been applied in prior years, the Directors have taken what they consider to be all necessary steps to support the determination that these gains and losses in the Arix portfolio qualify for SSE, including close collaboration with their appointed tax advisers and further consultation and receipt of written opinion from a Queen’s Counsel Barrister at a leading tax chambers. The Directors continue to believe that the application of SSE to the tax computation remains appropriate. 11. Loss per Share Basic earnings per share is calculated by dividing the profit attributable to equity holders of Arix Bioscience plc by the weighted average number of enfranchised shares (as adjusted for capital subscription in accordance with the terms of the restrictive share agreement) in issue during the period. Potentially dilutive ordinary shares include options and conditional share awards issued under the Company’s long-term incentive plans. At the year end date, the weighted average number of shares in relation to: (i) options and conditional share awards was 3,181,859; and (ii) ordinary shares subject to restrictions was 5,080,582. Restricted ordinary shares are not entitled to vote, attend meetings or to receive dividends or other distributions. Consequently, they have been excluded from the calculation of the weighted average number of shares in issue.
* n/a as anti-dilutive. 12. INVESTMENTS HELD AT FAIR VALUE
Equity Investments 2022
* Disc Medicine listed on 29 December 2022 Level 3 investments are valued with reference to either the most recent funding round (£47.2m, 2021: £53.3m); net asset value (£3.1m, 2021: £1.0m); market-based write-up (£5.0m, 2021: £nil); discretionary write-down (£1.3m, 2021: £1.4m) or deferred consideration (£1.3m, 2021: £1.2m). See Note 2(I) for further details on the valuation of Level 3 investments. The Group’s milestone valuation approach cannot be readily sensitised and therefore the Group has not disclosed sensitivity analysis for Level 3 inputs. A 10% movement in the share price of Level 1 inputs would result in a £4.5m (2021: £6.4m) movement in the investment portfolio value.
Equity investments – 2021
As permitted by IAS 28 ‘Investment in Associates’ and in accordance with the Arix Group accounting policy, investments are held at fair value even though the Arix Group may have significant influence over the companies. Significant influence is determined to exist when the Group holds more than 20% of the holding or when less than 20% is held but in combination with a certain level of board representation is deemed to be able to exert significant influence. As at 31 December 2022, the Arix Group is deemed to have significant influence over the following entities:
In addition, at 31 December 2022, the Group held the following investments in companies where it is not considered to have significant influence:
The Arix Group has an interest in one structured entity, The Wales Life Sciences Investment Fund (registered address: Sophia House, 28 Cathedral Road, Cardiff, Wales, CF10 4PL). The fund has interests in Welsh life sciences opportunities. A structured entity is an entity that is structured in such a way that voting or similar rights are not the dominant factor in deciding who controls the entity. The Arix Group is not deemed to have control over this fund for the reasons disclosed in Note 2(A). The Group’s interest is £0.2m (2021: £1.0m). 13. INTANGIBLE ASSETS
An intangible asset arose on Arix Bioscience plc’s acquisition of Arthurian Life Sciences entities, relating to management fees due to Arix Capital Management Limited as a result of managing The Wales Life Sciences Investment Fund. At the date of acquisition, the fees for the remaining life of the fund were calculated and then amortised over the remaining life of the fund. 14. Property, Plant and Equipment
Year ended 31 December 2021
14B. RIGHT OF USE ASSET
15. OTHER ASSETS
Trade and other receivables are recognised at amortised cost in accordance with IFRS 9, which includes the requirement to calculate expected credit losses. The maximum exposure to credit risk at the reporting date is the carrying value of each asset class listed above and the fair value is akin to book value. The Arix Group does not hold any collateral as security. 16. Cash and Cash Equivalents
The carrying value of cash and cash equivalents approximates to its fair value. 17. Trade and Other Payables
18. Share Capital and Share Premium
6,428,853 shares were held in Treasury at 31 December 2022 (2021: 6,428,853 shares). The maximum number of Treasury Shares in the year was 6,428,853 and this represents 4.7% of Ordinary Share Capital. 19. SHARE OPTIONS
Executive Incentive Plan In May 2018, the former Executive Directors and certain employees were awarded options or conditional awards which, in case of options, will become exercisable at nil cost and, in the case of the conditional share awards, were scheduled to vest at nil cost on the third anniversary of their grant, on 17 May 2021, subject to performance criteria. This required the share price to have grown by a set percentage over the assessment period, with the quantum of shares vesting dependent on the level of share price growth; all options lapsed during 2021. In the year ended 31 December 2022, £nil (2021: credit £186k) was recognised in relation to the Executive Incentive Plan. In May 2019, the former Executive Directors and certain employees were awarded options or conditional awards which, in case of options, will become exercisable at nil cost and, in the case of the conditional share awards, will vest at nil cost at the end of the three year performance period, subject to performance criteria. This required the net asset value and the share price to have grown a minimum of 7% pa compound over the assessment period to 1 January 2022, and up to 15% pa compound to achieve 100% of the award. All options lapsed during the year due to performance conditions not being met. In the year ended 31 December 2022, £nil (2021: credit £108k) was recognised in relation to the Executive Incentive Plan. In June 2020, the Executive Directors and certain employees were awarded options or conditional awards which, in case of options, will become exercisable at nil cost and, in the case of the conditional share awards, will vest at nil cost at the end of the three year performance period, subject to performance criteria. This requires the net asset value and the share price to have grown by a minimum of 7% pa compound over the assessment period to 1 January 2023, up to 21% pa compound to achieve 100% of the award. 1,658,441 are unvested at year end (2021: unvested 1,658,441) £97k (2021: £14k) was recognised in relation to the Executive Incentive Plan. In August 2021, the Executive Directors and certain employees were awarded options or conditional awards which, in case of options, will become exercisable at nil cost and, in the case of the conditional share awards, will vest at nil cost at the end of the three year performance period, subject to performance criteria. This requires the net asset value and the share price to have grown by a minimum of 7% pa compound over the assessment period to 1 January 2024, and up to 15% pa compound to achieve 100% of the award. 408,460 options were issued in 2021, all of which are unvested at year-end. In the year ended 31 December 2022, a share-based payment charge of £68k (2021: £42k) was recognised in relation to the Executive Incentive Plan. The charge relating to net asset value growth was calculated based upon the share price at grant of £1.82, and the assessed likelihood of vesting 50% reducing to 10% from July 2022 onwards (2021: 50%). The charge relating to share price growth was calculated using a Monte Carlo simulation model, using assumptions relating to share price at grant (£1.82); risk-free interest rate (-0.08%); time to vesting (2 years and 6 months); and expected volatility based on comparable listed investments 23.5%). In November 2022, the Executive Director and certain employees were awarded options which will become exercisable at nil cost at the end of the three-year performance period, subject to performance criteria. The scheme in three part relates to growth of net asset value, invested net asset value and share price growth. Net asset value and separately the invested net asset value must grow by a minimum of 5% pa (for Nav) and 7% pa (for invested NAV) compound over the assessment period to 1 January 2024, and up to 12% pa (NAV) , 15% pa (invested NAV) compound to achieve 100% of the award. Additionally, a third element relating to share price growth from start point of £1.27 must grow by minimum of 5% pa compound over the performance period and up to 15% pa compound to achieve 100% of the award. 648,584 options were issued in 2022, all of which are unvested at year-end. In the year ended 31 December 2022, a share-based payment charge of £16k was recognised in relation to the Executive Incentive Plan. The charge relating to net asset value growth was calculated based upon the share price at grant of £1.27, with an assessed likelihood of vesting of 50%. The charge relating to share price growth was calculated using a Monte Carlo simulation model, using assumptions relating to share price at grant (£1.27); risk-free interest rate (-2.4%); time to vesting (2 years and 4 months); and expected volatility based on comparable listed investments 23.5%). Executive Share Option Plan and Founder Incentive Shares No options have been exercised to date. In the year ended 31 December 2022, a share-based payment charge of £nil (2021: £nil) was recognised in relation to the Executive Share Option Plan, calculated using the Black–Scholes model. Assumptions used in the model relating to the risk-free interest rate and expected volatility were unchanged from those used in the prior period. Restricted shares with identical terms, including a £1.80 price for the lifting of restrictions, were offered to the founders of the Company, totalling 5,080,582 shares. A charge of £nil was recognised in the year ended 31 December 2022 (2021: £nil). The charge was calculated using the Black–Scholes model. Assumptions used in the model relating to the risk-free interest rate and expected volatility were unchanged from those used in the prior period. Non-Executive Director Awards 20. NET CASH FROM OPERATING ACTIVITIES
21. FINANCIAL COMMITMENTS 22. FINANCIAL INSTRUMENTS
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (if available) or to historical information about counterparty default rates. The Arix Group’s cash and cash equivalents are deposited with F1 or above rated institutions. Investments and other receivables do not have a credit rating. However, the Group does not believe these to be past due nor impaired. Financial Liabilities
23. RELATED PARTY TRANSACTIONS 24. Events After the Reporting Date On 8 February 2023, Ensoma completed its acquisition of Twelve Bio. This had been agreed prior to year-end but was subject to routine foreign direct investment clearance in Denmark. The acquisition resulted in a £1.2m uplift in our previous holding value of Twelve Bio, which was exchanged for shares in Ensoma at the Series B round price. 90% of this uplift was reflected in the 31 December 2022 valuation of Twelve Bio. On 28 March 2023, Harpoon announced it closed a private placement to raise $25 million from redeemable preferred stock and warrants for the purchase of common stock. Arix participated with a $3.5 million (£2.8m) investment in redeemable preferred stock which is not convertible into common stock but is redeemable on the occurrence of certain events, including the receipt of proceeds in connection with certain strategic transactions. On 28 March 2023, Arix invested £6.6m ($8.1m) into Evommune Inc. as part of an equity transaction. Company statement of financial position As at 31 December 2022
Company statement of changes in equity For the year 31 December 2022
FOR THE YEAR 31 DECEMBER 2021
NOTES TO THE COMPANY FINANCIAL STATEMENTS 1. ACCOUNTING POLICIES In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements of International Financial Reporting Standards in conformity with the requirements of the Companies Act 2006 and prepared in accordance with FRS 101. The Company has set out below where advantage of the FRS 101 disclosure exemptions has been taken. Under section 408 of the Companies Act 2006 the Company is exempt from the requirement to present its own profit and loss account. In these financial statements, the Company has applied the exemptions available under FRS 101 in respect of the following disclosures: Statement of Cash Flows and related notes; disclosures in respect of transactions with wholly owned subsidiaries; disclosures in respect of capital management; the effects of new but not yet effective IFRSs; and disclosures of transactions with a management entity that provides key management personnel services to the Company. As the consolidated financial statements include the equivalent disclosures, the Company has also taken the exemptions under FRS 101 available in respect of the following disclosures: IFRS 2 Share Based Payments; certain disclosures required by IFRS 13 Fair Value Measurement; and the disclosures required by IFRS 7 Financial Instrument Disclosures. The Company proposes to continue to adopt the reduced disclosure framework of FRS 101 in its next financial statements. The accounting policies set out below have been applied consistently. Where relevant, the accounting policies of the Arix Group have been applied to the Company. Investments in subsidiary undertakings Amounts due from subsidiary undertakings 2. Investments in Subsidiary Undertakings
The Company’s subsidiary undertakings are detailed in Note 2(B) to the Group financial statements. 3. Cash and Cash Equivalents
The carrying value of cash and cash equivalents approximates to its fair value. 4. Amounts Due from Subsidiary Undertakings
The amounts due from subsidiary undertakings are interest free and unsecured. Arix Bioscience plc currently has no intention to request repayment of any amounts due. 5. EMPLOYEES OTHER INFORMATION SHAREHOLDER INFORMATION WARNING ABOUT UNSOLICITED APPROACHES TO SHAREHOLDERS AND ‘BOILER ROOM’ SCAMS These ‘brokers’ can be very persistent and persuasive. Arix Bioscience plc shareholders are advised to be extremely wary of such approaches and are advised to only deal with firms authorised by the FCA. You can check whether an enquirer is properly authorised and report scam approaches by contacting the FCA on www.fca.org.uk/scams (where you can also review the latest scams) or by calling the FCA Consumer Helpline: 0800 111 6768. If you have already paid money to share fraudsters then contact Action Fraud on 0300 123 2040. REGISTRAR Shareholders can also view and manage their shareholdings online by registering at www.shareview.co.uk. FORWARD-LOOKING STATEMENTS By their nature, the statements concerning the risks and uncertainties facing the Group in this Annual Report involve uncertainty since future events and circumstances can cause results and developments to differ materially from those anticipated. The forward-looking statements reflect knowledge and information available at the date of preparation of this Annual Report and the Company undertakes no obligation to update these forward-looking statements. Nothing in this Annual Report should be construed as a profit forecast. DIRECTORS COMPANY SECRETARY REGISTERED OFFICE COMPANY NUMBER ADVISORS Joint Broker LEGAL ADVISERS One Financial Center Boston INDEPENDENT AUDITORS REGISTRAR GLOSSARY ANTI-PD-L1 ANTIBODY ATR INHIBITOR BCR-ABL BLA CORE PORTFOLIO CRISPR-CAS12A GROSS PORTFOLIO HEMATOLOGY HEMATOPOIETIC SYSTEM HER2 MYELOMA NET ASSET VALUE (NAV) NET ASSET VALUE PER SHARE NSTI PARP INHIBITOR PHASE 1 PHASE 2 PHASE 3 PRECLINICAL Polθ INHIBITOR PUBLIC OPPORTUNITIES PORTFOLIO SCD SOLID TUMOUR TRITAC Printed on FSC® certified paper. 100% of the inks used are vegetable oil based 95% of press chemicals are recycled for further use and on average 99% of any waste associated with this production will be recycled. The FSC® logo identifies products which contain wood from well-managed forests certified in accordance with the rules of the Forest Stewardship Council®. This document is printed on Cocoon Silk; a paper made using 50% recycled fibre from genuine waste paper and 50% virgin fibre. The unavoidable carbon emissions generated during the manufacture and delivery of this document, have been reduced to net zero through a verified, carbon offsetting project. Duke Street House +44 (0)20 7290 1050 info@arixbioscience.com
Dissemination of a Regulatory Announcement, transmitted by EQS Group. The issuer is solely responsible for the content of this announcement. |
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| ISIN: | GB00BD045071 |
| Category Code: | FR |
| TIDM: | ARIX |
| LEI Code: | 213800OVT3AHQCXNIX43 |
| OAM Categories: | 1.1. Annual financial and audit reports |
| 3.1. Additional regulated information required to be disclosed under the laws of a Member State | |
| Sequence No.: | 239154 |
| EQS News ID: | 1615697 |
| End of Announcement | EQS News Service |
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