Full Year Results


C4X Discovery Holdings plc

(“C4XD”, “C4X Discovery” or the “Company”)

Full Year Results 

A Year of Progress Across Key Drug Discovery Programmes

10 December 2020 – C4X Discovery Holdings plc (AIM: C4XD), a pioneering Drug Discovery company, today announces its full year audited results for the year ended 31 July 2020.

Dr Clive Dix, CEO of C4X Discovery, said: “2020 has also been a year of significant and focused progress for C4XD as we continue to advance our key Drug Discovery programmes within our portfolio. With robust finances now in place we are strongly positioned to generate commercially attractive data packages for future partners and to deliver long term value to our shareholders.

“Despite the hurdles that have arisen this year as a result of the COVID-19 pandemic, the pharmaceuticals sector has shown great resilience, and continues to thrive and deliver innovation. This reinforces our belief in the central role and strength of the industry and the opportunity for C4XD in meeting its need for a sustainable source of high-quality assets to build pipelines.” 

Highlights (including post-period end)

Operational Highlights

  • Post-period: Indivior commenced Phase 1 clinical trial for C4XD’s Orexin-1 antagonist, C4X_3256 (also known as INDV-2000), for the treatment of opioid dependence, with first subject dosed
  • NRF-2 lead activator molecule C4X-6746 shown to significantly inhibit disease score in pre-clinical model of inflammatory bowel disease (“IBD”). Candidate nomination studies continue
  • IL-17 oral inhibitor programme for treatment of psoriasis has been shown to significantly reduce inflammation in vivo, and is being optimised towards candidate shortlist
  • α4β7 integrin inhibitor programme for the treatment of IBD demonstrated significant selectivity vs α4β1 in vitro and oral bioavailability in PK studies. Discussions with several potential partners under CDA continue
  • LifeArc risk-share collaboration continues to progress well. C4XD and LifeArc have completed the initial phase of the collaboration to progress a small molecule MALT-1 inhibitor programme, with three novel series identified. Optimisation studies continue
  • Post-period: new collaboration with GEN-COVID Consortium to investigate the role genetics play in the susceptibility, severity and prognosis between different individuals with COVID-19
  • Conformetrix technology patent was granted in the USA

Financial Highlights

  • Revenue was £nil (2019: £nil)
  • Total loss after tax of £7.8 million or 8.10 pence per share (2019: £10.9m or 18.82 pence per share)
  • R&D expenses reduced by 35% to £6.9 million (2019: £10.6m), reflecting focused investment in key Drug Discovery programmes
  • Net assets of £8.1 million (2019: £7.0m)
  • Total fundraising of £24.2 million (before expenses) in three tranches, one post-period end:
    • October 2019 – fundraise of £7.6 million (before expenses) with a total of 50,573,808 shares issued to both new and existing investors
    • May 2020 – £1.6 million investment (before expenses) by key strategic shareholder Polar Capital with total of 10,836,700 Shares issued
    • Post-period end: October 2020 –fundraise of £15.0 million (before expenses) with a total of 107,142,858 Placing Shares and 99,169,286 Warrants issued to new and existing shareholders
  • Cash:
    • Net cash as at 31 July 2020: £5.6 million (31 July 2019: £2.4m)
    • Net cash as at 30 November 2020 following fundraise: £17.3 million

Analyst conference call today

Dr Clive Dix, Chief Executive Officer, and members of the management team will host a webcast for analysts at 10am GMT today. A copy of the final results presentation will be released later this morning on the Company website at www.c4xdiscovery.com.  Please contact Consilium Strategic Communications for details on C4XDiscovery@consilium-comms.com / +44 203 709 5700.

The Annual Report will be sent to shareholders prior to the Annual General Meeting on 19 January 2021 and will be made available on the Company’s website at that time..

C4X Discovery Holdings plc

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C4X Discovery (“C4XD”) is a pioneering Drug Discovery company combining scientific expertise with cutting-edge Drug Discovery technologies to efficiently deliver world‑leading medicines, which are developed by our partners for the benefit of patients.  We have a highly valuable and differentiated approach to Drug Discovery through our enhanced DNA-based target identification and candidate molecule design capabilities, generating small molecule drug candidates across multiple disease areas including inflammation, neurodegeneration, oncology and addictive disorders.  Our commercially attractive portfolio ranges from early stage novel target opportunities to late stage Drug Discovery programmes ready for a commercial deal and to date we have successfully out-licensed two programmes with one candidate in clinical development.

We collaborate with leading pharmaceutical and life sciences companies to enrich our expertise and take our assets through pre-clinical and clinical development.  Through early-stage revenue-generating licensing deals, we realise returns from our high value pre-clinical assets which are reinvested to maximise the value of our Drug Discovery portfolio.  For more information visit us at www.c4xdiscovery.com or follow us on twitter @C4XDiscovery .

NON-EXECUTIVE CHAIRMAN STATEMENT

Building for success

“We are now in a strong position to generate significant value to our shareholders by advancing our proprietary portfolio of programmes and translating some of our key programmes into partnerships.”

The financial year ended 31 July 2020 was a year of significant and focused progress with some key milestones achieved for C4XD. The commitment and dedication of the C4XD team, together with our unique technologies, mean our portfolio of assets has matured significantly during the year.

We have made great strides advancing our early stage Drug Discovery programmes by applying our cutting-edge technologies, which has resulted in a solid portfolio of novel, pre-clinical, small molecule programmes. While our proprietary portfolio is predominantly focused in the area of inflammation, we are actively pursuing other therapeutic areas including oncology and neurology.

The Board fully supports the current business strategy of out-licensing programmes at the pre-clinical stage through partnerships with pharmaceutical companies who have development and commercial capabilities, as well as significant expertise in the relevant therapeutic area. We were therefore pleased to see our first candidate CX_3256 (now INDV-2000), out-licensed to Indivior, entering Phase I clinical trials during the year. This is great news for C4XD and as we continue to drive forward potential partner discussions across the portfolio, the Company routinely assesses the partnering landscape to identify the right opportunities for out-licensing of our other lead programmes.

I am happy to say we have a diverse Board, which continues to be closely aligned with the Company’s strategy and has been particularly supportive during recent months when working practices have had to change. The Company is tracking the COVID-19 pandemic situation closely and is continuously monitoring for any potential challenges that may arise. To date there are no significant implications to our core operations due to the pandemic and we continue to focus on creating long-term value for our shareholders.

In addition, I would like to say how proud we are at C4XD of the work our CEO, Clive Dix, is doing in the fight against COVID-19. His role in the UK Vaccines Taskforce is important for our country. I believe that his appointment reflects his commitment to our industry as a whole, and the respect the industry has for his expertise. Whilst supporting the efforts to find a vaccine for COVID-19, Clive continues to be dedicated to C4XD and I am impressed by his professionalism and drive to build a successful company.

We have completed three successful financings, including an additional £15 million raise in October 2020 supported by our key existing shareholders as well as new shareholders, enabling the Company to further advance its portfolio of unique assets to near term inflection points and to strengthen the balance sheet as partnering discussions and strategic collaborations progress.

On behalf of the Board, I would like to thank our dedicated employees and management team for their ongoing commitment, creativity and hard work to make C4XD a successful global discovery player. I would like to thank our shareholders for their continued support and belief in our vision, and I am thrilled to welcome our new shareholders to the Company.

We are poised for a new and exciting year ahead.

Eva-Lotta Allan
Non-Executive Chairman
9 December 2020

CEO STATEMENT

Portfolio continues to deliver strong value potential

“It is in challenging times such as these that you understand the importance of building a strong, talented and motivated team and it is due to their resilience and fortitude that we have continued to make great progress across the C4XD Drug Discovery portfolio throughout 2020.”

Progress across our portfolio and, in particular, our key Drug Discovery programmes has continued apace. Each of our programmes has advanced, with new data and key milestones met. We were delighted to see our first molecule reach the clinic, with the first subject dosed in Indivior’s Phase 1 clinical trial for opioid dependence. This is a huge milestone for the Company and clearly demonstrates C4XD’s scientific expertise and capabilities to generate, develop and deliver new molecules that the pharmaceutical industry wants and needs to create new medicines. We look forward to the results of this trial next year.

Our oral NRF-2 programme for the treatment of inflammatory diseases continues to make progress, with compounds now showing promise in a number of indications including sickle cell disease, pulmonary arterial hypertension and, more recently, inflammatory bowel disease. More work is underway to identify the right candidate molecule to progress into IND enabling studies. We have also seen important scientific developments in both our IL-17 and α4β7 integrin inhibitor programmes, with our novel oral series of IL-17 inhibitors being optimised towards a candidate shortlist and commercial discussions with potential partners continuing. Whilst at an earlier stage, our α4β7 integrin inhibitor programme has made significant progress in 2020 and we aim to shortly move the lead series into in vivo studies. Furthermore, the identification of a second series of α4β7 integrin inhibitors underlines the value that our Conformetrix technology offers in the Drug Discovery process.

Our partnership with LifeArc® developing novel MALT-1 inhibitors for haematological cancer is progressing nicely and there is now external commercial evidence that validates this as a target in oncology. We have also entered a new partnership focused on studying the genetics of COVID-19 patients with the GEN-COVID consortium in Italy. The understanding of COVID-19 is still very naïve and we do not fully understand how it affects the human physiology and why it affects people differently, such as some ethnic minority patient groups or those with underlying health issues such as obesity. Therefore, understanding the role of genetics in this disease, which our Taxonomy3 platform does, may be key to understanding this disease better. This project has the potential to produce exciting data that may explain the way different people react to the disease and subsequently influence not only how they are treated for COVID-19, but diseases of this type in the future.

What we do is early stage work, but it is at the forefront of the next generation of medicines. Our scientists’ expertise in the Drug Discovery process, combined with our cutting-edge technologies, enable us to seek out and investigate potential targets, and to undertake complex chemistry and biological studies to create what are the beginnings of future drugs. This places us in a strong position to fulfil the pharmaceutical industry’s demand for high quality early stage drug candidates.

Whilst 2020 has presented challenges for all companies that no one could have foreseen, we have been able to adapt quickly and efficiently in how we work. As a result of our decisive initiatives, we have seen limited impact to our day-to-day activities from the COVID-19 pandemic.

Where we work with partners who have been impacted due to COVID-19, we have seen nothing but determination and commitment to enable work to progress. To this effect, our timelines may have been stretched in some cases but as the majority of our work is in the earlier non-clinical stages, we remain on track.

We thank our shareholders for their continued support that enables us to do this important work. The pharmaceutical industry has an opportunity, right now, to demonstrate its value to world health, and with the recent fundraise, we can use our Drug Discovery expertise to support our partners, for the benefit of patients. Polar Capital increased its investment with us earlier this year, and again in a post-period fundraise along with new investors, demonstrating confidence in our strategy. In total we raised £24.2 million which we will use to advance our key programmes towards out-licensing and this money sets us in good stead for the coming year.

Finally, I would like to thank our employees for their continued hard work and flexibility, despite the challenges this year has presented. Without their dedication, we could not have made the progress we have, and because of that progress, received the investment that will allow us to drive our programmes forward.

Portfolio Review

Making significant headway across our portfolio

Despite the challenges across the pharmaceutical industry caused by the COVID-19 pandemic, we have continued to make significant headway across our portfolio. Our first potential drug, discovered by harnessing our Conformetrix technology, has entered the clinic with our partner, Indivior, for the treatment of opioid addiction. In November 2019, C4XD’s Conformetrix technology patent was granted in the USA.

The team at C4XD has worked hard to ensure all discovery programmes remain on track where possible and as a result, our key programmes continue to demonstrate progress and generate positive data. We also entered into a new partnership with the GEN-COVID consortium to study the role genetics plays on how COVID-19 affects different individuals through utilising our proprietary Taxonomy3® platform.

Addictive disorders (Orexin-1)

Entering the clinic

C4XD completed its first licensing deal in March 2018 with Indivior UK Limited (“Indivior”) to further develop and commercialise C4XD’s oral Orexin-1 receptor antagonist C4X_3256, also known as INDV-2000, for the treatment of addiction. Under the terms of the agreement, C4XD received an upfront payment of US$10 million and could receive up to US$284 million in development, regulatory and commercialisation milestones in addition to royalties. In turn, Indivior received a global and exclusive licence to C4X_3256 and all other compounds in the same patent family and is responsible for the cost and execution of the development of C4X_3256 in multiple indications.

In September 2019, Indivior announced that it had been awarded a NIH HEAL grant for “Clinical Evaluation of C4X_3256, a non-opioid, highly-selective Orexin-1 Receptor Antagonist for the Treatment of Opioid Use Disorder”, providing funding for key Phase I and Phase II enabling studies. In July 2020, Indivior commenced a Phase I clinical trial for C4X_3256, for the treatment of opioid dependence, with the first subject now dosed. This single ascending dose study in healthy volunteers is anticipated to complete by the end of 2020, with topline data expected next year. https://www.clinicaltrials.gov/ct2/show/NCT04413552

Inflammation (NRF-2 Activator)

Expanding into new markets

In October 2019, the Company announced progression of a series of novel potent activators of the NRF-2 pathway for the treatment of a variety of inflammatory diseases. The identified series of keap-1 inhibitors has been found to significantly activate NRF-2 following oral dosing, providing anti-inflammatory and anti-oxidant activity.

In C4XD studies, multiple lead compounds show greater than a 12-hour duration of action following low oral dosing on activation of NRF-2 in key tissues such as the lung, the liver and in blood. More recently, one of C4XD’s lead NRF-2 activator molecules has also been shown to significantly inhibit the disease score in a pre-clinical model of IBD in a dose-dependent manner.

The Company has received non-binding term sheets for SCD and IBD indications and is currently under CDA for PAH, however, progression into IND enabling studies is now considered to be required in order to increase value and further differentiate from competitor molecules.

Inflammation (IL-17 Inhibitor)

Progressing towards commercialisation

In October 2019, C4XD announced it had identified small molecules in its oral IL-17 inhibitor programme that can selectively block IL-17 activity whilst maintaining molecular size of the molecule in the traditional “drug-like” range.

A novel, potent oral series of IL-17 inhibitors that significantly reduce IL-17 induced inflammation in vivo is being optimised towards candidate shortlist. A recently filed IND by a pharmaceutical company for the first oral IL-17 inhibitor has intensified the Company’s commercial discussions with potential partners. The oral IL-17 inhibitor programme is a significant opportunity across multiple indications.

Haematological cancer (MALT-1 Inhibitor)

Major milestones met

In November 2018, C4XD entered into a discovery collaboration with LifeArc®, a UK medical research charity, to progress medicinal chemistry efforts on a MALT-1 inhibitor programme with applicability across oncology and inflammation indications. Despite being impacted by COVID-19, the collaboration continues to progress well with the initial phase successfully completed. We note that Johnson & Johnson has progressed its small molecule MALT-1 inhibitor into Phase 1 clinical trials for chronic lymphocytic leukaemia and non-Hodgkin’s lymphoma, with potential to provide the first clinical validation for MALT-1 as a target in oncology.

Three novel series have been identified by harnessing C4XD’s Conformetrix technology and data obtained in 2020 has demonstrated functional cell activity and oral bioavailability. Optimisation studies continue to increase cellular potency with the aim of showing in vivo inhibition of the target for a prototype molecule.

Inflammation (α4β7 Integrin Inhibitor)

Exciting early progress

In August 2020, the Company announced that significant progress has been made on C4XD’s early oral inhibitor programme targeting α4β7 integrin for the treatment of IBD. Effective antibody therapy against this target is already approved, removing the clinical target risk, but effective oral therapy remains highly sought after. C4XD has identified a second series of novel, potent and selective inhibitors providing a further competitive edge for this programme. This reaffirms the capability of C4XD’s Conformetrix technology to discover novel chemical scaffolds for high value challenging drug targets.

Both series have recently demonstrated oral bioavailability in PK studies with the current focus on improving PK properties to demonstrate functional inhibition of α4β7 integrin in vivo following oral dosing. The Company is currently generating improved molecules to move to in vivo studies and, despite being early stage, the Company is in confidential discussions with several potential partners.

COVID-19

Applying Taxonomy3® to understand the genetics of COVID-19

In August 2020, C4XD announced that it had entered a new collaboration with the GEN-COVID consortium, a network of more than 20 hospitals in Italy led by Professor Alessandra Renieri of the University of Siena. The collaboration will use the unique mathematical genetic analysis methodology of Taxonomy3® to investigate the role genetics plays in the widely varied disease susceptibility, severity and prognosis observed between individuals with COVID-19.

Outlook and summary

Overall, we have made significant headway across the portfolio. Our focus for the coming year is to drive our key Drug Discovery programmes, particularly those in our inflammation franchise, to the next milestone. We will continue to build out our network of partnerships and progress our pipeline of proprietary and partnered projects to a strong commercial position.

With robust finances now in place, we can continue to advance our portfolio and deliver shareholder value through the generation of high quality data packages that will be commercially attractive to future partners in the pharmaceutical industry. We remain confident that through the delivery of the next generation of high quality out-licensing opportunities, we can deliver significant value for all our shareholders.

Clive Dix
Chief Executive Officer
9 December 2020

FINANCIAL REVIEW

Continued support from our investors to execute our strategy

“The strong support from our shareholders will enable us to drive forward our portfolio of proprietary assets and to ultimately deliver shareholder value through partnerships and out-licensing opportunities.”

Revenue for the 12 months ended 31 July 2020 was £nil (2019: £nil). Grants secured are accounted for as a reduction to research and development expenses and not included in revenue.

R&D expenses, which comprise invoiced material costs, payroll costs and software costs, have decreased by 35% to £6.9 million for the year ended 31 July 2020 (2019: £10.6m). This reflects focused investment in key Drug Discovery programmes as outlined in the Non-Executive Chairman’s and CEO’s Statements.

Administrative expenses reduced during the year to £2.7 million (2019: £3.0m).

The loss after tax for the year ended 31 July 2020 was £7.8 million or 8.10 pence per share (2019: £10.9m or 18.82 pence per share).

The Group had net assets at 31 July 2019 of £8.1 million (2019: £7.0m) and cash and cash equivalents of £5.6 million (2019: £2.4m).

In November 2019 the Company raised £7.6 million before expenses on the issue of ordinary shares at 15 pence each via a placing, subscription by Directors and open offer. In May 2020, Polar Capital and other shareholders increased their investment in the business by £1.6 million before expenses through a Placing of ordinary shares at 15 pence each. Post-period, in October 2020, the Company raised £15.0 million before expenses on the issue of ordinary shares at 14 pence each via a placing. In total, the Company has raised £24.2 million (before expenses) this year including the post-period fundraise.

Both cash and costs continue to be prudently and tightly managed.

By order of the Board

Brad Hoy
Chief Financial Officer
9 December 2020

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014 (MAR).