Arix Bioscience plc: Interim Results for the Six Months Ended 30 June 2019

LONDON, Aug. 28, 2019 /PRNewswire/ --

This Announcement Contains Inside Information Within The Meaning Of The EU Market Abuse Regulation No.596/2014

Arix Bioscience plc (LSE: ARIX) ("Arix") a global venture capital company focused on investing in and building breakthrough biotech companies, today announces its interim results for the period ended 30 June 2019.

Operational highlights

    --  £11.4 million commitment to Imara, a new portfolio company focused on
        sickle cell disease and other hemoglobinopathies, with a novel drug
        candidate in human trial
    --  $283 million of proceeds raised by Arix portfolio companies in the first
        half of 2019
        --  Harpoon (T cell engagers) raised net proceeds of $70.7 million in a
            Nasdaq IPO, in which Arix invested $6.0 million (£4.7 million)
        --  Autolus (CAR-T cell immunotherapy) completed a $108.8 million
            follow-on financing in which Arix invested a further $5.0 million
            (£3.8 million)
        --  Aura Biosciences (Choroidal Melanoma) completed a $40.0 million
            Series D financing, in which Arix committed a further $4.5 million
            (£3.4 million)
        --  Imara (Haematology) completed a $63.0 million Series B financing, in
            which Arix committed $15.0 million (£11.4 million)
    --  Continued clinical progress in the portfolio, with 28 clinical trials
        live as at 30 June 2019
        --  Atox Bio completed enrolment of its Phase 3 ACCUTE study for
            necrotising soft tissue infections (NSTI). The company has also
            moved the Phase 2 sepsis associated acute kidney injury (AKI) study
            into a Phase 3 clinical trial, following feedback from the FDA
        --  Aura Biosciences presented further positive safety and efficacy data
            from the ongoing AU-011 Phase 1b/2 study for choroidal melanoma
        --  Autolus reported encouraging initial data from its AUTO1 programme
            in paediatric acute lymphoblastic leukaemia (pALL) and adult acute
            lymphoblastic leukaemia (aALL), as well as early results from its
            AUTO3 programme in diffuse large B-cell lymphoma (DLBCL). In August,
            post period end, Autolus announced the prioritisation of AUTO1 and
            goal of taking this into registration trials for aALL by year end
        --  Harpoon  initiated the HPN536  Phase 1/2a clinical trial  for the
            treatment of ovarian cancer and other mesothelin-expressing solid
            tumours
        --  Imara reported encouraging initial Phase 2 data from its IMR-687
            clinical study for patients with sickle cell disease
        --  Pharmaxis initiated a Phase 1 clinical trial of an anti-fibrotic
            Lysyl Oxidase (LOX) inhibitor focused on treating myelofibrosis
            and/or pancreatic cancer
        --  VelosBio initiated the VLS-101 Phase 1 clinical study for the
            treatment of haematological cancers
        --  Verona initiated a Phase 2b study with nebulized ensifentrine as
            add-on to long-acting bronchodilator and a first Phase 2 study with
            metered-dose inhaler formulation. In August 2019, post-period end,
            Verona reported positive Phase 2 data with dry powder inhaler
            formulation

Financial highlights

    --  Net Asset Value of £231.8 million (December 2018: £270.2 million), 171
        pence per share (FY 2018: 200 pence per share). Equates to 14.5% decline
        in NAV per share for the first six months of 2019 versus a 32% increase
        for in 2018
    --  Net downward gross portfolio revaluation of £34.0 million(1) over the
        period, predominantly due to a 51% decline in Autolus' share price,
        despite the company's strong fundamentals
    --  Gross Portfolio Value of £167.8 million (December 2018: £175.5
        million)
    --  £26.3 million of capital deployed into the gross portfolio during the
        period  (HY 2018: £12.6 million)
    --  Half year loss before tax: £44.8 million (HY 2018: £29.3 million
        profit before tax)

Key anticipated milestones

The company notes key milestones anticipated by its portfolio companies over the next 18 months:

    --  Artios expects to file an investigational new drug (IND) application for
        its lead programme Pol  by the end of 2020
    --  Atox Bio expects to announce results from the ACCUTE Phase 3 clinical
        study in necrotising soft tissue infections in the fourth quarter of
        2019
    --  Atox Bio expects to announce results from the REAKT Phase 3 clinical
        study in acute kidney infections in the second half of 2020
    --  Aura Biosciences expects to initiate the AU-011 Phase 3 clinical study
        for choroidal melanoma in the first half of 2020
    --  Autolus expects to initiate a Phase 2 registration trial of AUTO1 in
        aALL in the fourth quarter of 2019 and present updated Phase 1 data at
        The American Society of Hematology (ASH) in December 2019
    --  Autolus expects to present interim Phase 1 data for the Alexander study
        of AUTO3 in DLBCL at ASH 2019 and initiate a Phase 2 trial in the second
        quarter of 2020, pending regulatory feedback
    --  Autolus expects to present updated Phase 1 results for the CARPALL study
        of AUTO1 in pALL at ASH 2019
    --  Autolus expects next generation (NG) programmes for AUTO1, AUTO2, AUTO3
        and AUTO6 to enter the clinic in 2020
    --  Harpoon expects to present interim results from the HPN424 Phase 1
        clinical study in metastatic castration resistant prostate cancer in the
        first half of 2020
    --  Harpoon expects to present proof of concept data from its HPN536
        Phase1/2a clinical trial for ovarian and other mesothelin-expressing
        solid tumours in 2020
    --  Harpoon expects to initiate the HPN217 Phase 1 trial for the treatment
        of multiple myeloma and the HPN328 Phase 1 clinical study in small cell
        lung cancer in 2020
    --  Imara expects to announce updated results from its IMR-687 Phase 2
        clinical study in sickle cell disease in the second half of 2019
    --  Imara expects to initiate a Phase 2 trial for thalassemia in the first
        quarter of 2020
    --  Iterum expects to announce results from the SURE 2 Phase 3 clinical
        study in complicated urinary tract Infections and the SURE 3 Phase 3
        clinical study in complicated intra-abdominal infections in the second
        half of 2019
    --  Iterum expects to announce results from its SURE 1 Phase 3 clinical
        study in uncomplicated urinary tract infections in the first half of
        2020
    --  LogicBio expects to initiate the LB-001 Phase 1/2 clinical study for the
        treatment of methylmalonic acidemia in the first half of 2020
    --  Pharmaxis expects to announce Phase 1 results from its Systemic LOX
        inhibitor for myelofibrosis and/or pancreatic cancer in the second half
        of 2019
    --  Pharmaxis partner Boehringer for AOC3 inhibitor expected to announce
        results of Phase 2a trials in NASH in the second half of 2019 and
        diabetic retinopathy in the first half of 2020
    --  Pharmaxis expects its Mannitol Business (Aridol and Bronchitol) to turn
        profitable from 2020. If Bronchitol is approved by the FDA for patients
        in the US, Pharmaxis will receive a US$10 million milestone payment on
        the commercial launch of Bronchitol in the US and mid to high teen
        percentage royalties on in?market net sales in the first quarter of 2020
    --  Verona expects to initiate a Phase 3 clinical study for nebulized
        ensifentrine as maintenance treatment for COPD in 2020
    --  Verona expects to announce Phase 2 results from a pressurized
        metered-dose inhaler (pMDI) formulation in the second half of 2019, with
        final data expected in the first quarter of 2020

Joe Anderson, Chief Executive Officer of Arix Bioscience plc, commented:

"Over the period our portfolio has continued to make good progress, with a number of companies reaching important clinical milestones and completing additional financing rounds. The portfolio is well balanced and our companies well capitalised to reach important inflection points.

"In the year ahead, we see key multiple clinical and development milestones scheduled across the portfolio and we look forward to providing regular updates on progress."

Conference Call and Presentation Information

Arix management will host a presentation and conference call today, 28 August, at 12:30 pm BST/ 7:30am EST, to discuss the company's financial results and operational update.

To listen to the webcast and view the accompanying slide presentation, please go to: https://arixbioscience.com/investor-relations/events-presentations

About Arix Bioscience plc

Arix Bioscience plc is a global venture capital company focused on investing in and building breakthrough biotech 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

Arix Bioscience plc

Half-Yearly Report and Condensed Consolidated Interim Financial Statements

Six months ended 30 June 2019

CEO Statement

Overview

In the first half of 2019 the portfolio continued to make good progress, with a number of companies reaching important clinical milestones and completing additional financing rounds, as detailed below.

We invested £26.3 million into the gross portfolio in the period, including co-leading a Series B financing round for new portfolio company Imara and further investments into existing portfolio companies (Aura, Autolus and Harpoon). In aggregate, our portfolio companies raised $283 million during the six month period, putting them in a strong position to execute on their important clinical development programmes.

Notwithstanding these positive developments, our Net Asset Value (NAV) declined by 14.5% over the first six months of 2019 from 200p per share (£270.2 million NAV) to 171p per share (£231.8 million NAV). This followed a strong FY 2018, when our NAV per share increased by 32% (from 152p to 200p per share). The reduction in NAV for the first half of 2019 was principally due to a reduction in the share price of our largest quoted company, Autolus.

Portfolio Performance

Portfolio companies continued to make good clinical and financial progress. Successful financing rounds with valuation uplifts were completed by Aura (+33%) and Harpoon (+30% from November 2018 Series C to February 2019 IPO). In addition, the share prices of portfolio companies that recently floated on the Nasdaq generally performed well during the period, with LogicBio up 25% and Iterum up 37%. However, the valuation increases at these companies and further investments into the portfolio were outweighed by the decline in Autolus' share price (-51%). Despite this, Autolus was still valued at 1.7 times cost at 30 June, given our early investment in this company before it was public (cost £24.6 million, value £42.8 million). This underlines a key aspect of our business model: recognising that biotech is a volatile, high risk sector, we aim to invest in promising technologies early, at relatively low valuations and manage a balanced portfolio. We also take a longer-term view, recognising that real value is driven by clinical data and that along the way individual company valuations can be highly volatile.

Operationally, there was good progress in the portfolio, with notable highlights including positive data readouts from Autolus, Aura and Imara, along with new trial initiations from VelosBio, Pharmaxis and Harpoon. The pipeline also continued to expand, with 28 clinical trials now live across the portfolio and multiple pre-clinical studies under way.

Key Portfolio Company Updates

Imara Therapeutics

During the period we co-led a $63.0 million Series B for new portfolio company Imara, acquiring a 10% stake on a fully diluted basis and committing to invest $15.0 million (£11.4 million), of which £9.3 million has been drawn to date.

Imara is developing novel therapeutics for the chronic treatment of sickle cell disease (SCD) and other haemoglobinopathies. The lead programme, IMR-687, is designed to be a disease-modifying therapy that acts on both red and white blood cells with the potential to create better treatment outcomes for patients. It has a differentiated clinical profile, including a dual mechanism of action on red and white blood cells, once daily dosing, clean safety, and potential impact on foetal haemoglobin.

Imara adds a new therapeutic area and expands the breadth of our portfolio into non-oncology haematology and also adds another later-stage clinical asset to the portfolio. Imara's lead programme, IMR-687, is at an exciting point in its clinical development and is currently being evaluated in a Phase 2a study in sickle cell patients. The company reported encouraging initial safety and efficacy data in June, which demonstrated that treatment with IMR-687 in adult patients was generally well tolerated. The data also support the dual mechanism of action of IMR-687, with activity seen across both red and white blood cell biomarkers. The company expects to report further Phase 2 data later this year and initiate a Phase 2 trial for thalassemia in the first half of 2020.

Harpoon Therapeutics

Harpoon completed a significant milestone this year, raising net proceeds of $70.7 million through a Nadsaq IPO. Arix invested a further $6.0 million (£4.7 million) in the IPO, resulting in a new ownership stake of 12.1% in Harpoon, which was valued at £29.7 million at 30 June 2019. Proceeds from the IPO will be used to advance Harpoon's pre-clinical and clinical trials.

The company continues to make good clinical progress, notably dosing the first patient with HPN536, a mesothelin-targeting T cell engager, in a Phase 1/2a clinical trial for ovarian and other mesothelin-expressing solid tumours. This is the second programme that Harpoon has brought into the clinic, following initiation of a trial in metastatic castration resistant prostate cancer last year. The study is designed to evaluate the safety, tolerability, pharmacokinetics and activity of HPN536.

Harpoon expects to report Phase 1 data from its HPN424 metastatic castration resistant prostate cancer study in the first half of 2020 and advance HPN217 into the clinic for the potential treatment of multiple myeloma in the first quarter of 2020.

Autolus Therapeutics

During the period, the company raised a further $108.8 million through a follow-on financing. Arix invested $5.0 million (£3.8 million) in this round and retains a stake of 7.6%. Autolus also reported encouraging initial data from its AUTO1 programme in paediatric acute lymphoblastic leukaemia (pALL) and adult acute lymphoblastic leukaemia (aALL), as well as positive early results from its AUTO3 programme in diffuse large B-cell lymphoma (DLBCL).

Post period end, Autolus provided an update on its pipeline and anticipated milestones, as well as confirming plans to initiate a Phase 2 registration trial of AUTO1 in adult ALL in the fourth quarter of 2019. Data so far have indicated that AUTO1 has the potential to be a best-in-class CAR T therapy in ALL, showing a potentially differentiated safety profile and high level of clinical activity, compared to the current standard of care. In pALL, Autolus reported that, while its AUTO3 product has shown good clinical activity, data suggest that AUTO1 may have greater durability in this indication, leading to higher overall Event Free Survival. As a result, Autolus is transitioning its focus in pALL to AUTO1 and AUTO1NG, a next generation version of AUTO1, but is progressing AUTO3 in DLBCL where persistence is thought to be of less importance.

Autolus has multiple upcoming milestones and will have data on several of its programmes later this year, but manufacturing delays have impacted clinical readouts on some programmes with data from these now expected in the first half of 2020. Also in 2020 the company expects to progress Next Generation programmes for AUTO1, AUTO2, AUTO3 and AUTO6 into the clinic.

Aura Biosciences

Aura completed a $40.0 million Series D financing in the period, in which Arix committed a further $4.5 million (£3.4 million), to increase our stake to 7.7%. The financing recognised a 33% uplift in the book value of Arix's Series C investment in Aura, with Arix's total interest in Aura increasing to £8.6 million from £3.9 million on a fully committed basis.

Aura plans to use the proceeds from the Series D financing to support the late stage clinical development of its lead asset, light-activated AU-011, for the treatment of primary choroidal melanoma. The currently available treatments for choroidal melanoma come with the risk of vision loss and other long-term sequelae, especially for patients with melanomas located close to the fovea or optic disk. The ongoing Phase 1b/2 study with light-activated AU-011 has shown that the drug is well-tolerated, with clear evidence of tumour control and preservation of visual acuity at long term follow up, even in high risk patients. Aura has been granted Orphan Drug and Fast Track status from the U.S. Food & Drug Administration (FDA) and expects to initiate a Phase 3 trial in 2020.

Atox Bio

Atox Bio completed enrolment of its Phase 3 ACCUTE study for necrotising soft tissue infections (NSTI). This is a rare, life threatening response to infection that results in significant tissue destruction and systemic disease leading to multiple organ dysfunction, failure and death. Data from this study is expected in the second half of this year, taking the company a step closer to a potential cure for this devastating disease. The company has also moved the Phase 2 REAKT clinical study for sepsis associated acute kidney injury (AKI) into a Phase 3 clinical trial, following feedback from the FDA. Data from this clinical study is expected in the second half of 2020.

VelosBio

VelosBio, a next-generation oncology company, developing novel antibody-drug conjugates (ADCs) to treat haematological cancers and solid tumours, has made rapid progress and dosed the first patient in its lead programme VLS-101 for haematological cancers. ADCs are highly potent drugs designed as a targeted therapy for the treatment of people with cancer. In contrast to traditional chemotherapeutic drugs, ADCs only target cancer cells so that healthy cells are less affected.

Elsewhere in the Core Portfolio, further trial initiations were seen from Pharmaxis and Verona. Pharmaxis initiated a Phase 1 clinical trial of an anti-fibrotic Lysyl Oxidase (LOX) inhibitor focused on treating myelofibrosis and pancreatic cancer and Verona initiated a Phase 2b study with nebulized ensifentrine as add-on to long-acting bronchodilator and a first Phase 2 study with metered-dose inhaler formulation.

Discovery Portfolio

Along with these promising developments in our core portfolio companies, we continue to work closely with a handful of very early stage companies in our discovery portfolio. These are smaller investments in start-up technologies and tend to be higher risk situations that we are building towards core companies. Our financial commitments are therefore more modest than with our core portfolio companies, which minimises the downside in the event that these companies do not progress as hoped. In this context we have been working with Mitoconix, which has struggled to reproduce early results in mitochondrial biology.As a consequence, the company is now in liquidation. Arix invested £0.8 million in the company and expects to receive at least £0.3 million following the decision to wind up the company and return surplus cash to shareholders. Elsewhere in the discovery portfolio, we continue to see exciting potential, which we are aiming to translate into future core portfolio companies.

Outlook

30 months on from our IPO I believe Arix is progressing well on its goal of advancing innovation in medicine for the benefit of patients and investors. We have built a promising portfolio of biotech companies developing highly innovative therapies in important areas of medical need. The portfolio is balanced and our companies well capitalised to reach important inflection points. We are working closely with all our companies to help them develop their clinical programmes, finances and options for value realisation. At the same time our flow of new ideas remains strong and we continue to evaluate new investment opportunities. We have an experienced team and Board, and close relationships with pharmaceutical and academic partners.

Our portfolio companies have made significant progress in a relatively short period of time and are moving towards key clinical and development milestones in the year ahead. We expect data from a number of important clinical studies, notably pivotal Phase 3 studies from Iterum and Atox Bio, Phase 2 data from Imara and Phase 1 data from Autolus and Harpoon. Additionally we expect a number of these companies to initiate further clinical studies, including Aura, Harpoon, Imara and LogicBio.

As a listed venture capital company we provide institutional and retail investors access to a balanced portfolio of cutting-edge life science companies, led by some of the most ambitious and brightest minds in biotech. We value the support of all of our shareholders and are working hard to ensure progress across our portfolio companies to build our Net Asset Value per share and, through this, to deliver returns for shareholders.

Joe Anderson, PhD



            
              Condensed Consolidated Interim Statement of Comprehensive Income




                                                                                                                            
         
         Half Year      
         
         Half Year
                                                                                                                                       to 30 June                 to 30 June
                                                                                                                                             2019                        2018

                                                                                                                          
         
         (unaudited)    
         
         (unaudited)


                                                                                                                     Note     
         
           BPS'000      
         
           BPS'000






            Change in fair value of investments                                                                        7                   (39,058)                     34,869



            Revenue                                                                                                                          266                         472



            Administrative expenses                                                                                                      (5,343)                    (5,425)



            
              Operating (loss) / profit                                                                                        (44,135)                     29,916





            Net finance income                                                                                                               480                         276



            Foreign exchange gains                                                                                                           743                         682



            Impairment of right-of-use asset                                                                                               (485)



            Share-based payment charge                                                                                10                    (1,411)                    (1,564)



            
              (Loss) / profit before taxation                                                                                  (44,808)                     29,310





            Taxation                                                                                                   8                      5,883                     (3,636)



            
              (Loss) / profit for the period                                                                                   (38,925)                     25,674





            
              Other Comprehensive Income



            Exchange differences on translating foreign operations                                                                            91                         602



            Taxation                                                                                                   8                                                 (113)



            
              Total comprehensive (loss) / income for the period                                                               (38,834)                     26,163





            
              Attributable to



            Owners of Arix Bioscience plc                                                                                               (38,834)                     26,163





            
              Earnings per share



            Basic earnings per share (BPS)                                                                             6                     (0.30)                       0.24



            Diluted earnings per share (BPS)                                                                           6                     (0.30)                       0.22

    ---




            
              The above condensed consolidated interim statement of comprehensive income should be read in
    conjunction with the accompanying notes.



              
                Condensed Consolidated Interim Statement of Financial Position




                                                                                                                            
          
       30 June    31 December
                                                                                                                                          2019            2018


                                                                                                        Note                         (unaudited)      (audited)


                                                                                                                            
          
       BPS'000        BPS'000




              
                ASSETS



              
                Non-Current Assets



              Investments held at fair value                                                              7                              171,082         183,981



              Intangible assets                                                                                                         1,626           1,770



              Property, plant and equipment                                                                                               221             313



              Right of use asset                                                                                                          213



              Investment property                                                                         2                                  338               -

    ---

                                                                                                                                       173,480         186,064





              
                Current Assets



              Cash and cash equivalents                                                                                                19,647          31,009



              Cash on long-term deposit                                                                                                40,342          60,209



              Trade and other receivables                                                                                               1,037           2,174



              Right of use asset                                                                                                          249


                                                                                                                                        61,275          93,392





              
                TOTAL ASSETS                                                                                               234,755         279,456





              
                LIABILITIES



              
                Current liabilities



              Trade and other payables                                                                                                (1,697)        (3,399)



              Lease liability                                                                                                           (684)



              Deferred tax liability                                                                      8                                             (5,883)


                                                                                                                                       (2,381)        (9,282)





              
                Non-Current liabilities



              Lease liability                                                                                                           (601)





              
                TOTAL LIABILITIES                                                                                          (2,982)        (9,282)





              
                NET ASSETS                                                                                                 231,773         270,174

    ---




              
                EQUITY



              Share capital and share premium                                                             9                              188,585         188,585



              Retained earnings                                                                                                        44,436          82,018



              Other reserves                                                                                                          (1,248)          (429)

    ---

                                                                                                                                       231,773         270,174





              
                TOTAL EQUITY                                                                                               231,773         270,174

    ---




              
                The above Condensed Consolidated Interim Statement of Financial Position should be read in conjunction
    with the accompanying notes.



              
                Condensed Consolidated Interim Statement of Changes in Equity



              For the six months ended 30 June 2019




                                                                                                Share   Other     Other  Retained      Total
                                                                                          Capital and  Equity  Reserves  Earnings
                                                                                              Premium



                                                                                              BPS'000 BPS'000   BPS'000   BPS'000    BPS'000

                                                                                                                                         ---


              
                As at 31 December 2018                                            188,585  (1,211)       782     82,018     270,174



              Loss for the period                                                                  -                    (38,925)   (38,925)



              Other comprehensive income                                                           -               159       (68)         91



              Share-based payment charge                                                           -                       1,411       1,411



              Acquisition of own shares                                                            -   (978)                          (978)



              Issue of own shares to                                                               -      14       (14)
    employees

    ---                                                                                                                                  ---


              
                As at 30 June 2019                                                188,585  (2,175)       927     44,436     231,773
    (unaudited)


                                                                                                    Share   Other    Other  Retained    Total
                                                                                              Capital and  Equity Reserves  Earnings
                                                                                                  Premium



                                                                                                  BPS'000 BPS'000  BPS'000   BPS'000  BPS'000


                                                                                                                                          ---


              
                As at 31 December 2017                                                105,125             (768)    42,088   146,445



              Profit for the period                                                                    -                     25,674    25,674



              Other comprehensive income                                                               -              554       (65)      489



              Contributions of equity, net                                                        83,460                               83,460
    of transaction costs and tax



              Share-based payment charge                                                               -                      1,564     1,564

    ---                                                                                                                                   ---


              
                As at 30 June 2018                                                    188,585             (214)    69,261   257,632
    (unaudited)





              The above Condensed Consolidated Interim Statement of Changes in Equity should be read
    in conjunction with the accompanying notes.



              
                Condensed Consolidated Interim Statement of Cash Flows



              For the six months ended 30 June 2019




                                                                                                                    Half Year       Half Year
                                                                                                                   to 30 June      to 30 June
                                                                                                                         2019             2018


                                                                                                                  (unaudited)     (unaudited)


                                                                                                              
     
         BPS'000 
     
         BPS'000



              
                Cash from operating activities                                                            (5,402)         (7,215)



              Tax paid                                                                                                                  (28)



              Net finance income received                                                                                479              275

    ---


              
                Net cash from operating activities                                                        (4,923)         (6,968)





              
                Cash flows from investing activities



              Purchase of equity investments                                                                        (29,262)        (14,320)



              Disposal of equity and loan investments                                                                  4,254



              Purchase of property, plant and equipment                                                                  (5)             (4)



              Net cash received from / (placed on) long-term                                                          19,867         (40,000)
    deposit



              
                Net cash from investing activities                                                        (5,146)        (54,324)





              
                Cash flows from financing activities



              Net proceeds from issue of shares                                                                                       83,460



              Purchase of own shares by Employee Benefit                                                               (978)
    Trust

    ---


              
                Net cash from financing activities                                                          (978)          83,460





              
                Net (decrease) / increase in cash and cash                                               (11,047)          22,168
    equivalents

    ---




              Cash and cash equivalents at start of period                                                            31,009           74,938



              Effect of exchange rate changes                                                                          (315)              51

    ---


              
                Cash and cash equivalents at end of period                                                 19,647           97,157





              The above Condensed Consolidated Interim Statement of Cash Flows should be read in conjunction
    with the accompanying notes.

Notes to the Financial Statements

1. General information

The principal activity of Arix Bioscience plc (the "Company") and together with its subsidiaries (the "Arix Group" or "the Group") is to source, finance and develop healthcare and life science businesses globally.

The Company is incorporated and domiciled in the United Kingdom. The Company was incorporated on 15 September 2015 as Perceptive Bioscience Investments Ltd and changed its name to Arix Bioscience Ltd. It subsequently re-registered as a public limited company and changed its name to Arix Bioscience plc. The registered office address is 20 Berkeley Square, London, W1J 6EQ. The registered number is 09777975.

These condensed consolidated interim financial statements were approved for issue on 28 August 2019.

These condensed consolidated interim financial statements do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2018 were approved by the board of directors on 28 March 2019 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006.

These condensed consolidated interim financial statements have been reviewed, not audited.

2. Accounting policies

These condensed interim financial statements for the six months ended 30 June 2019 have been prepared on a going concern basis, in accordance with the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority and with IAS 34, 'Interim financial reporting', as adopted by the European Union. The condensed consolidated interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2018, which have been prepared in accordance with IFRSs as adopted by the European Union.

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to the expected total annual profit or loss.

The accounting policies adopted are consistent with those of the previous financial year. Certain new or amended IFRSs became effective for the financial year beginning on 1 January 2019.

IFRS16 'Leases'

The Group has adopted IFRS 16 Leases retrospectively from 1 January 2019, but has not restated comparatives for the 2018 reporting period, as permitted under the specific transitional provisions in the standard. The reclassifications and the adjustments arising from the new leasing rules are therefore recognised in the opening balance sheet on 1 January 2019.

On adoption of IFRS 16, the Group recognised lease liabilities in relation to leases which had previously been classified as 'operating leases' under the principles of IAS 17 Leases. These liabilities were measured at the present value of the remaining lease payments. Right of use assets were measured at the amount equal to the lease liability. There were no onerous lease contracts that would have required an adjustment to the right of use assets at the date of initial application, although one right-of-use asset has subsequently been impaired, in line with IFRS 16.

Assessment for Impairment and Resulting Investment Property

The Group has assessed its right of use assets for impairment, in line with IAS 36 Impairment of Assets. During the period, the Group vacated its New York office at 250 West 55(th) Street, with the intention of sub-letting that space; all US-based staff have relocated to a more flexible and cost effective office location where it continues to run all US-based operations.

The right of use asset at 250 West 55(th) Street has therefore been impaired to its fair value, being the expected proceeds to the Group from sub-letting. As the property no longer contributes to the Group's core business and is able to produce its own independent cash flows it is considered its own cash generating unit, and is therefore required to be classified as an investment property in line with IAS 40 Investment Property. The property is held at its fair value, being the expected proceeds to the Group from sub-letting.

3. Estimates

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing these condensed consolidated interim financial statements, the significant judgements and estimates made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that are set on page 106 of the consolidated financial statements for the year ended 31 December 2018 and no retrospective adjustments were made.

4. Segmental Information

Information for the purposes of resource allocation and assessment of performance is reported to the Arix Group's Chief Executive Officer, who is considered to be the chief operating decision maker, based wholly on the overall activities of the Arix Group. It has therefore been determined that the Arix Group has only one reportable segment under IFRS 8 ('Operating Segments'), which is that of sourcing, financing and developing healthcare and life science businesses globally. The Arix Group's revenue, results and assets for this one reportable segment can be determined by reference to the Condensed Consolidated Interim Statement of Comprehensive Income and Condensed Consolidated Interim Statement of Financial Position.

5. Financial Risk Management and Financial Instruments

The Arix Group's activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, and cash flow interest rate risk), credit risk and liquidity risk.

The condensed consolidated interim financial statements do not include all financial risk management information and disclosures required in the annual financial statements; they should be read in conjunction with the Group's annual financial statements as at 31 December 2018. There have been no changes in the risk management department or in any risk management policies since the year end.

6. Earnings per Share

Basic earnings per share is calculated by dividing the profit/(loss) attributable to equity holders of Arix Bioscience plc by the weighted average number of unrestricted shares.

Potentially dilutive ordinary shares include options and conditional share awards issued under the Company's long term incentive plans. As the Arix Group has incurred a loss in the period, the diluted loss per share is the same as the basic earnings per share as the loss has an anti-dilutive effect.


                                                                               2019              2018


                                                                    
     
         BPS'000 
     
          BPS'000




              (Loss)/profit attributable to equity holders of Arix        (38,834)           26,163
    Bioscience plc



              Weighted average number of shares in issue               129,418,083       110,060,821



              Fully diluted weighted average number of shares          140,864,320       118,805,702

    ---


              Basic (loss)/earnings per share                        
       (BPS0.30)     
        BPS0.24



              Diluted (loss)/earnings per share                      
       (BPS0.30)     
        BPS0.22

7. Investments


                                       
      
         Level 1- 
       
         Level 3 -     Total
                                                  Quoted            Unquoted
                                             Investments         Investments


                                        
      
         BPS'000   
       
         BPS'000   BPS'000



       At 31 December 2018                      113,683               70,298    183,981



       Additions                                  8,485               20,777     29,262



       Disposals                                                    (4,254)   (4,254)



       Transfers                                 23,131             (23,131)



       Unrealised loss on investments          (38,967)                (91)  (39,058)



       Foreign exchange gains                       624                  527      1,151

    ---


       
                At 30 June 2019             106,956               64,126    171,082

Transfers from Level 3 to Level 1 reflects companies which have listed during the period. Level 3 investments are valued with reference to milestone analysis (£62.2m); net asset value (£1.9m); or by discounted cash flow (£nil); the latter used a discount rate of 33%, a discount for marketability (16%) and other assumptions relating to exit values and exit dates; these assumptions are unchanged from those disclosed at 31 December 2018.


                                       
      
         Level 1- 
       
         Level 3 -    Total
                                                  Quoted            Unquoted
                                             Investments         Investments


                                        
      
         BPS'000   
       
         BPS'000  BPS'000




       At 31 December 2017                        2,846               68,485    71,331



       Additions                                  8,769                5,551    14,320



       Transfers                                 29,620             (29,620)



       Unrealised gain on investments            34,183                  686    34,869



       Foreign exchange gains                       659                  602     1,261

    ---


       
                At 30 June 2018              76,077               45,704   121,781

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 30 June 2019, the Arix Group is deemed to have significant influence over the following entities:


                      Company          Country                         Registered Address 
     
           Issued   
              
               Net               Profit /       
              
          Date of
                                                                                                     Share                     Assets /                 (Loss)                       Financial
                                                                                              Capital Held                (Liabilities)                                            Information

    ---

          Depixus SAS         
     France         
              3-5 Impasse Reille,                        20.7% 
       EUR1,948k                
     (EUR1,439k)          
              31 Dec
    (EUR)                                      75014 Paris                                                                                                                                2017


          OptiKira,           
     USA            
              20600 Chagrin                              15.4%                          N/A                    N/A 
              Not
    LLC                                        Blvd., Suite 210,                                                                                               publicly
                                               Cleveland, OH                                                                                                   available
                                                                                    44122


          Quench Bio,         
     USA            
              400 Technology Sq,                         32.4%                          N/A                    N/A 
              Not
    Inc.                                       Cambridge, MA                                                                                                   
              publicly
                                                                                    02139                                                                       available


                                           
       
       31 December  
      
               Net  
       
       Change in   
       
       FX Movement    
       
          30 June     
     
        Fully Diluted      
       
          Funding        
       
        Fully Diluted
                                                    2018 Value       Investment in          Valuation                                  2019 Value          Equity Interest              Committed,               Equity Interest
                                                                            Period                        
       
            BPSm                                                                Not Yet                    When Fully
                                             
       
            BPSm                        
       
          BPSm                            
       
           BPSm        
      
                %                Invested                     Committed
                                                               
      
               BPSm
                                                                                                                                                                                  
       
           BPSm
                                                                                                                                                                                                        
       
       
                  %




       
                Core Portfolio



       Amplyx Pharmaceuticals                             3.2                                                                                 3.2                      2.8%                     1.8                           3.7%



       Artios Pharma                                     10.9                                                                                10.9                     13.4%                     4.3                          12.4%



       Atox Bio                                           3.2                  3.2                                       0.2                    6.6                      6.4%                     0.2                           6.5%



       Aura Biosciences                                   3.9                  1.7                 1.2                    0.1                    6.9                      7.3%                     1.7                           7.7%



       Autolus Therapeutics                              81.5                  3.8              (42.7)                   0.1                   42.7                      7.6%                                                  7.6%



       Harpoon Therapeutics                              23.9                  4.7                 1.1                                         29.7                     12.1%                                                 12.1%



       Imara                                                                  9.3                                       0.4                    9.7                      9.2%                     2.1                           9.9%



       Iterum Therapeutics                                4.3                                     1.5                    0.1                    5.9                      7.8%                                                  7.8%



       LogicBio Therapeutics                             24.3                                     6.0                    0.2                   30.5                     12.9%                                                 12.9%



       Pharmaxis                                          6.4                                   (0.2)                                         6.2                     11.1%                                                 11.1%



       VelosBio                                           5.2                                                                                 5.2                      8.9%                     3.4                          11.3%



       Verona Pharma                                      2.5                                   (1.0)                                         1.5                      2.5%                                                  2.5%

    ---


       
                CORE PORTFOLIO                      169.3                 22.7              (34.1)                   1.1                  159.0                                              13.5





       Discovery Portfolio                                6.2                  3.6               (1.0)                                         8.8                       N/A                                                   N/A



       
                GROSS PORTFOLIO VALUE               175.5                 26.3              (35.1)                   1.1                  167.8





       Other Investments                                  8.5                (1.2)              (4.0)                                         3.3                       N/A                                                   N/A



       
                TOTAL INVESTMENTS                   184.0                 25.1              (39.1)                   1.1                  171.1                                              13.5

    ---

8. Taxation


                                                                                       Half Year       Half Year
                                                                                      to 30 June      to 30 June
                                                                                            2019             2018


                                                                                     (unaudited)     (unaudited)


                                                                                 
     
         BPS'000 
     
         BPS'000





              
                Current period tax charge



              Current Tax



              Deferred tax                                                              (6,824)           3,636

    ---


              
                Total tax (credit)/charge                                    (6,824)           3,636





              
                Statement of Other Comprehensive Income - tax charge



              Current Tax



              Deferred tax                                                                                  113

    ---


              
                Total tax charge                                                                 113





              
                Reconciliation of tax charge

    ---


              (Loss)/profit before tax                                                 (44,808)          29,310




    Expected tax based on 19.00%                                                       (8,514)           5,568





              Effects of:



              Adjustments in respect of prior years                                          55



              Expenses not deductible for tax purposes                                    1,039               83



              Income not taxable                                                        (1,094)              69



              Tax rate changes                                                              809            (640)



              Movement in share based payment deferred tax                                  191



              Recognition of deferred tax asset previously unrecognised                                 (1,616)



              Rolled over gains                                                              53



              Deferred tax not recognised                                                 1,578              172

    ---


              
                Total tax (credit)/charge                                    (5,883)           3,636





              
                Recognised deferred tax (assets)/liabilities

    ---


              Brought forward                                                             5,883



              Adjustment in respect of prior periods                                         55



              Relating to Profit and Loss                                               (5,938)           3,636



              Relating to Other Comprehensive Income                                                        113

    ---


              
                Carried forward                                                                3,749

9. Share Capital


                                                                   As at 30
                                                      June 2019
                                                                                       As at 31
                                                                            Dec 2018





       
                Allotted and called up



       Ordinary shares of BPS0.00001 each (#)                  135,467,601          134,823,243



       Ordinary shares of BPS0.00001 each (BPS'000)                      1                    1



       49,671 Series C shares of BPS1 each (BPS'000)                    50                   50

    ---

10. Share Options

Executive Share Option Plan

On 8 February 2016, options were granted pursuant to the Executive Share Option Plan to two directors at an exercise price of £1.80 per ordinary share. The number of ordinary shares subject to the options are the requisite number of ordinary shares as represents 5.43% of the fully diluted ordinary share capital of the Company immediately following the end of the Company's stabilisation period following admission to the London Stock Exchange. Restricted shares with similar terms were awarded to the founders of the Company constituting 5.00% of the issued share capital of the Company after admission. As such, the number of options granted for both management and founders was confirmed on 20 March 2017. All conditions are unchanged from those disclosed in the 31 December 2018 financial statements.

Executive Incentive Plan

On 22 February 2017, nil cost options were granted pursuant to the Executive Incentive Plan to certain directors and members of staff. The options vested on 22 February 2019 and may be exercised from this date until 21 February 2027. The options are contingent on remaining in employment with a company in the Arix Group, and are subject to malus and clawback provisions.

On 26 May 2017, options were granted pursuant to the Executive Incentive Plan to certain directors and members of staff. The options vest on 26 May 2020, subject to the Company's share value growth over the three-year performance period. The options are contingent on remaining in employment with a company in the Arix Group, and are subject to malus and clawback provisions.

On 17 May 2018, options were granted pursuant to the Executive Incentive Plan to certain directors and members of staff. The options vest on 17 May 2021, subject to the Company's share value growth over the three-year performance period. The options are contingent on remaining in employment with a company in the Arix Group, and are subject to malus and clawback provisions.

On 9 May 2019, options were granted pursuant to the Executive Incentive Plan to certain directors and members of staff. The options vest on 1 January 2022, subject to the Company's share value growth and the Company's net asset value growth over the three-year performance period. The options are contingent on remaining in employment with a company in the Arix Group, and are subject to malus and clawback provisions.

Share based payments

The fair value of options granted under the Executive Share Option Plan was calculated using the Black-Scholes model. The assumptions used in this calculation are unchanged from those disclosed in the 31 December 2018 financial statements.

As the 22 February 2017 options have no performance conditions, the share based payment charge is calculated by reference to the Company's share price on the grant date; the charge is recognised over the two-year vesting period.

The charge associated with the 26 May 2017 options have been calculated using a Monte Carlo simulation, incorporating relevant assumptions for share price (197.5p), expected volatility based on similar quoted companies (44%), risk free interest rate (0.12%) and share option term (three years). The resultant fair value is then spread over the three-year relevant vesting period.

The charge associated with the 17 May 2018 options have been calculated using a Monte Carlo simulation, incorporating relevant assumptions for share price (209.0p), expected volatility based on similar quoted companies (37%), risk free interest rate (0.93%) and share option term (three years). The resultant fair value is then spread over the three-year relevant vesting period.

The charge associated with the 9 May 2019 options relating to share price growth have been calculated using a Monte Carlo simulation, incorporating relevant assumptions for share price (157.5p), expected volatility based on similar quoted companies (40%), risk free interest rate (0.72%) and time to vesting (two years, eight months) rather than the performance period (three years). The resultant fair value is then spread over the vesting period. The options relating to net asset value growth have a fair value based upon the share price at grant date (157.5p) and the expected likelihood of vesting (currently considered to be 50%), spread across the vesting period, with a true-up/down as the expected likelihood of vesting changes.

For the six months to 30 June 2019, a share based payment charge of £1,411,000 (30 June 2017: £1,564,000) has been recognised for a variety of share based payment schemes offered by the Group.

Charges of £153,000 and £179,000 were recognised in relation to the management options and founder incentive options respectively, granted under the Executive Share Option Plan. A charge of £213,000 was recognised in relation to the 22 February 2017 Executive Incentive Plan award; £213,000 in relation to the 26 May 2017 award; £476,000 in relation to the 17 May 2018 award; £107,000 in relation to the 9 May 2019 award; and £70,000 in relation to shares issued to non-executive directors in accordance with the Company's Remuneration Policy and the compensation agreed at their appointments.

11. Related Party Transactions

During the period, consultancy fees amounting to £130,262 (inclusive of VAT) (30 June 2018: £374,400) were payable to Merlin Scientific LLP, a partnership controlled by Sir Christopher Evans, a former director and substantial shareholder of the Company. At 30 June 2019, no amount (inclusive of VAT) was owed to Merlin Scientific LLP by the Company in respect of these fees (30 June 2018: £nil). All consultancy arrangements with Merlin Scientific have been closed.

During the period, Arix Capital Management Limited, as manager of The Wales Life Sciences Investment Fund LP, recognised management fee income totalling £248,000 (six months to 30 June 2018: £454,000). Arix Capital Management Limited is also a limited partner of the fund. As at 30 June 2019, £71,000 was outstanding (30 June 2018: £409,000).

12. Events After the Reporting Period

On 19 August 2019, the Group concluded a renegotiation of its terms with BioMotiv, LLC. Under the new arrangement, the Group has been released from its ongoing commitment to BioMotiv, the undrawn element of which had stood at $10,625,000. As part of the agreement, the Group's holding in BioMotiv has been reduced from 2,500 units to 1,078 units. The Group retains visibility over BioMotiv's pipeline and the right to fund BioMotiv projects which are seeking third party investment.

<hr/>

(1) Including FX

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SOURCE Arix Bioscience plc