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4basebio UK Societas - Final Results

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3 June 2021

4basebio UK Societas
("4basebio", the "Company" or the “Group”)

Final Results

The Board of 4basebio UK Societas is pleased to report the results for the financial year ended 31 December 2020.

Highlights

  • Spin out of DNA operations from 4basebio AG (now 2Invest AG) before year end

  • Expansion into 12,000 square foot freehold office, laboratory and warehousing space near Cambridge in Q3 2020

  • Development of UK DNA and nanoparticle scaling and validation team Q4 2020

  • Admission of newly formed 4basebio UK Societas Group to AIM in February 2021

  • Signed research collaboration and evaluation license agreements with Royal Holloway University of London for development of a non-viral vector for treatment of Duchenne muscular dystrophy in April 2021

Overview

The 4basebio UK Societas group of companies (“the Group”) was spun out of 4basebio AG, a German listed company, on 8 December 2020. The Company seat was subsequently transferred to the UK and the Company was admitted to AIM on 17 February 2021.

The Group is a specialist life sciences group of companies focused on supplying therapeutic DNA for gene therapies and gene-based vaccines and providing solutions for effective and safe delivery of these DNA/RNA based products to patients.

Its focus is the validation, scaling and supply of proprietary high quality GMP (Good Manufacturing Practice) grade synthetic DNA as well as proprietary non-viral nanoparticles which can efficiently and safely deliver fully functional genes to patients. These products and technologies are also available for customers and partners with whom we endeavour to combine our capabilities and know-how to develop gene therapy solutions for clinical development and commercialisation.

This announcement contains inside information for the purposes of the UK Market Abuse Regulation and the Directors of the Company are responsible for the release of this announcement.

For further enquiries, please contact:

4basebio UK Societas

+44 (0)12 2396 7943

Heikki Lanckriet, CEO

+44 (0)20 7213 0880

Cairn Financial Advisers LLP (Nominated Adviser)

Jo Turner / Sandy Jamieson

finnCap Ltd (Broker)

Geoff Nash/Richard Chambers/Charlotte Sutcliffe

+44 (0)20 7220 0500

Walbrook PR

+44 (0)20 7933 8780 or 4basebio@walbrookpr.com

Anna Dunphy / Paul McManus

Mob: +44 (0)7876 741 001 / +44 (0)7980 541 893

Chairman’s statement

I am delighted to be able to deliver my first statement as Chairman of the newly formed 4basebio UK Societas Group of companies. Since the decision was taken by the 4basebio AG board in 2020 to spin out the DNA assets of that group into 4basebio UK Societas and admit its shares to trading on AIM, the Company and Group has witnessed significant change.

4basebio UK Societas, formally 4basebio SE, was a German registered European stock corporation which was used to facilitate the spin out from 4basebio AG. Following approval of the spin out by the 4basebio AG Extraordinary General Meeting of 3 November 2020 and subsequent confirmation by the German commercial register on 8 December 2020, its registered seat was moved to the UK on 22 December 2020.

Following Brexit and the requisite change to the SE legislation, the Company’s status was automatically changed to a UK stock corporation, a UK Societas. The Company will seek shareholder approval at the forthcoming Annual General Meeting to become a UK PLC. This will not affect its quoted status on AIM.

This process followed acknowledgement by the Board of 4basebio AG that the market valuation of its DNA business would benefit over time from a separate listing, distinct from 4basebio AG which now acts as an investment company. To that end, the AIM Market of London Stock Exchange (AIM) was identified as a highly suitable market due to the breadth of peer companies, London’s large and sophisticated investor base and the UK operational footprint of the Company, with its Head Office near Cambridge.

With the spin out and flotation process now completed, the focus of the Board is now very much on the commercialisation of the Group’s technology and growing stakeholder value over time.

During the latter part of 2020, the Group made the decision to accelerate its development activities by establishing a UK science group alongside the existing Spanish team. That UK group now stands at seven staff with further hires planned over coming months.

The Group continues to focus on its validation and scaling programmes, both in house and with selected academic and commercial partners. Near term objectives are centred on the Group’s proprietary synthetic hpDNA™ being validated for use in AAV (adeno-associated viral vectors) and in vitro transcription (IVT), as well as delivering GMP readiness. While we remain relatively early in this process, it is becoming increasingly clear that these specific areas present a significant supply challenge for large pharma and biotech which are seeking alternative DNA solutions, both due to existing supply constraints and certain challenges in using plasmid DNA.

The Group remains fundamentally at a pre revenue stage but the Board is optimistic that this approach will prove fruitful with revenue and market opportunities opening up during the course of 2021 and 2022 in particular.

Tim McCarthy
Chairman
2 June 2021

Consolidated statement of profit or loss and other comprehensive income
for the year ended 31 December

2020
£‘000

2019
£‘000

Revenues

462

202

Cost of goods sold

(188)

(230)

Gross profit

274

(28)

Sales and marketing expenses

(141)

(118)

Administration expenses

(516)

(237)

Research and non-capitalised development expenses

(343)

(254)

Other operating expenses

(1)

(11)

Other operating income

105

228

Loss from operations

(622)

(420)

Finance expense

(94)

(109)

Financial result

(94)

(109)

Loss before tax

(716)

(529)

Income tax expense

(3)

106

Loss for the period

(719)

(423)

Loss per share

(0.08)

(0.05)

Items that may be reclassified to the income statement in subsequent periods

Exchange rate adjustments

162

-

Total comprehensive income

(557)

(423)

Consolidated statement of financial position
31 December

2020
£’000

2019
£’000

Assets

Intangible assets

785

450

Property, plant and equipment

1,478

78

Other non-current assets

34

29

Non-current assets

2,297

557

Inventories

131

102

Trade receivables

39

77

Other current assets

341

339

Cash and cash equivalents

15,001

80

Current assets

15,512

598

Total assets

17,809

1,155

Liabilities

Financial liabilities

(416)

(446)

Trade payables

(96)

(101)

Other current liabilities

(301)

(19)

Current liabilities

(813)

(566)

Financial liabilities

(1,301)

(2,142)

Other liabilities

(237)

(337)

Non-current liabilities

(1,538)

(2,479)

Total liabilities

(2,351)

(3,045)

Net assets

15,458

(1,890)

Share capital

11,130

6,362

Share premium

706

0

Merger reserve

688

0

Capital reserve

13,099

1,356

Foreign exchange reserve

175

13

Accumulated loss

(10,340)

(9,621)

Total Equity

15,458

(1,890)

Consolidated statement of changes in equity
for the year ended 31 December 2020

in £‘000

Share capital

Share premium

Merger reserve

Capital reserve

Foreign exchange

Profit and loss reserve

Total equity

Balance at 1 January 2020

6,362

-

-

1,356

13

(9,621)

(1,890)

Capital contributions from 4basebio AG (now 2Invest AG)

-

-

-

11,743

-

-

11,743

Combination accounting

(6,258)

-

688

-

-

-

(5,570)

Capital contributions from 4basebio AG (now 2Invest AG)

Loss after income tax

-

-

-

-

-

(719)

(719)

Shares issued for cash

3,209

706

-

-

-

-

3,915

Foreign Exchange difference arising on translation of 4basebio S.L.U.

-

-

-

-

162

-

162

Shares issued to acquire subsidiaries

7,817

-

-

-

-

-

7,817

Balance at 31 December 2020

11,130

706

688

13,099

175

(10,340)

15,458

in £‘000

Share capital

Share premium

Merger reserve

Capital reserve

Foreign exchange

Profit and loss reserve

Total equity

Balance at 1 January 2019

6,362

-

-

1,356

13

(9,198)

(1,467)

Loss after income tax and total comprehensive income for the period

-

-

-

-

-

(423)

(423)

Balance at 31 December 2019

6,362

-

-

1,356

13

(9,621)

(1,890)

Consolidated statement of cash flows
for the year ended 31 December

2020
£’000

2019
£’000

Net loss for the period

(719)

(423)

Adjustments to reconcile net loss for the period to net cashflows

Income taxes

3

(106)

Interest charge

94

104

Depreciation of property, plant and equipment

83

15

Amortisation and impairment of intangible assets

4

194

236

Other non-cash items

11

25

(57)

Working capital changes:

Trade receivables and other current assets

91

116

Trade payables and other current liabilities

(876)

(167)

Inventories

(24)

13

Tax receipt

107

-

Net Cash flows from operating activities

(1,022)

(269)

Investments in property, plant and equipment and intangible assets

(351)

(3)

Investments in capitalised development

(498)

(200)

Cash acquired with 4basebio Limited (now 4basebio UK Limited)

2,295

0

Cash flows from investing activities

1,446

(203)

Cash in(out)flow due to changes in financing

(1,024)

629

Capital contributions by way of cash

15,626

0

Interest paid

(116)

(104)

IFRS16 leases

(59)

(37)

Cash flows from financing activities

14,427

487

Net change in cash and cash equivalents

14,851

16

Exchange differences

70

(4)

Cash and cash equivalents at the beginning of the period

80

69

Cash and cash equivalents at the end of the period

15,001

80

Notes to the financial statements

1. Basis of preparation

The consolidated financial statements of 4basebio UK Societas (or “the Group”) for the financial year ending 31 December 2020 have been prepared in accordance with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

The directors, having considered the circumstances giving rise to the formation of the Group and relevant guidance in IFRS 3.B13 to IFRS 3.B17, have concluded that the combination in which the Company issued 8,622,231 shares to the shareholders of its former parent entity as consideration for the spin-off assets comprising shareholdings in 4basebio S.L.U. and 4basebio Limited (now 4basebio U.K. Limited), should be treated as a continuation of 4basebio S.L.U. at historic book values. Further details of this consideration are set out in note 13.

Therefore, although these consolidated financial statements have been issued in the name of 4basebio UK Societas, the legal acquirer, the Group’s activity is in substance the continuation of the financial information of 4basebio S.L.U., to which the comparative financial information presented, for the year ended 31 December 2019, relates. The consolidated financial statements comprise the results of 4basebio S.L.U. and 4basebio UK Societas for the full year and 4basebio UK Limited from 8 December 2020 the date of the transaction.

The financial information included as comparatives for the year ended 31 December 2019 reflect the results and position of 4basebio S.L.U.; consequently, the financial information included as comparatives within these consolidated financial statements does not constitute statutory accounts, but has been prepared under IFRS and in accordance with the group accounting policies disclosed.

The financial statements have been prepared on the historical cost basis. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. For calculation reasons, rounding differences of +/- one unit (£’000, % etc.) may occur in the information presented in these financial statements.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, except for leasing transactions that are within the scope of IFRS 16.

2. Going concern

The directors have, at the time of approving the financial statements, a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements.

3. Earnings per share

2020

2019

Numerator [in £‘000]

Result for the period

(719)

(423)

Denominator [number of shares]

Weighted average number of registered shares in circulation (ordinary shares) for calculating the undiluted earnings per share


9,197,913


8,622,231

Diluted and Undiluted earnings per share

(0.08)

(0.05)

4basebio UK Societas was incorporated on 11 October 2019 with issued share capital of 120,000 ordinary shares. On 11 November 2020, a further 3,575,242 ordinary shares were issued for cash. On 8 December 2020 a further 8,622,231 ordinary shares were issued in consideration for the acquisition of 4basebio S.L.U. and 4basebio Limited (now 4basebio UK Limited).

The calculation of the diluted and undiluted earnings per share for continuing operations was based on the weighted average number of shares as determined above. The numerator is defined as result after tax from continuing operations.

The comparative has been restated to reflect the number of shares prior to the combination which is considered to be 8,622,231; this is the number of shares adjusted for the exchange ratio of the combination. See note 13 for further details relating to the business combination.

4. Events after the reporting period

Admission to AIM
On 17 February 2021, the Company’s shares were admitted to trading on the AIM market of London Stock Exchange.

Forward exchange contracts
Subsequent to year end and prior to the approval of these financial statements, the Group entered into a number of foreign exchange forward contracts to sell Euros and buy Pounds. The Group’s cash balances are primarily held in Euros following the spin out of activities from 4basebio AG, while a significant proportion of its expenditure is incurred in Pounds. During the remainder of 2021, the Group is contracted to sell €2 million at an average price of £0.8659.

Legal action versus Company
Subsequent to year end, the Company received notification in respect of four separate legal actions being commenced by shareholders in 4basebio AG (now 2Invest AG) in relation to the spin out process of 4basebio SE (now 4basebio UK Societas). These actions are being pursued in Germany.

The spin out process approved by the Extraordinary General Meeting of 4basebio AG provided for shareholders in 4basebio AG to receive one share in 4basebio SE for every six shares held by each shareholder in 4basebio AG on the specified settlement date. Under German law, shareholders of 4basebio AG were entitled to seek compensation in lieu of receiving shares in 4basebio SE, such compensation set at €1.30 per share where an objection was made at the time of the Extraordinary General Meeting. Shareholders with about 40,000 shares objected to the spin out at the time. Consequently, these claims are seeking from 4basebio UK Societas compensation in excess of the €1.30 per share, such amount yet to be specified.

The directors note that such claims processes are common in Germany and are often prolonged and consider these actions to be without merit. The Company has engaged German legal counsel to advise on these matters.

Royal Holloway evaluation licence and research and collaboration agreement
On 27 April 2021, 4basebio Discovery signed an evaluation licence and research and collaboration agreement with Royal Holloway University of London to enable collaboration on a payload and vector and to evaluate their efficacy for treatment of muscular dystrophy. The initial project is expected to extend over two years, with an option for 4basebio Discovery to enter into a commercial licence under terms already agreed between the parties.

5. Approval of the financial statements

The financial statements were approved by the board of directors and authorised for issue on 2 June 2021. A copy of the financial statements, together with the Notice of AGM which will be announced separately, will shortly be sent to all shareholders and will be available from the Company’s website.

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