The board of e-therapeutics plc (the “Company”) is responsible for the Company’s corporate governance policies and recognises the importance of high standards of integrity. The Company has adopted the Quoted Companies Alliance Code for Small & Mid-sized Quoted Companies 2018 (the “QCA Code”). This statement sets out how the Company complies with the 10 principles of the QCA Code.

QCA PRINCIPLES

1. Establish a strategy and business model which promote long-term value for shareholders

We bring to the biotechnology and pharmaceutical industries the power to discover new and better drugs in a more efficient and effective way through our expertise in network biology and our proprietary network-driven drug discovery (“NDD”) platform. We offer a different starting point to drug discovery than the traditional pharma model, the benefits of which flow through the entire process.

We are using our approach to develop the internal, preclinical drug discovery programmes that we believe offer the best long-term potential for our shareholders. However, we do not have the cash resources to develop all our programmes. Therefore, we have several programmes that are ready to be advanced with the right partner. Our NDD platform can also be used to unlock inherent value within partners’ existing datasets. Such partnerships offer quicker returns to our shareholders. Continued investment in our NDD platform builds on this strategy.

The challenge is finding the right partner. We continue to focus on the right assets, with a relentless effort in business development and marketing. We remain proactive and open to considering all potential organic and non-organic opportunities that could augment our core technology platform or provide downstream skills, capabilities or cash to accelerate our NDD-derived assets, thereby ultimately adding value to our shareholders.

More detailed information on our business model and strategy can be found in the 2018 Annual Report and Accounts.

2. Seek to understand and meet shareholder needs and expectations

The Board is keen to promote greater awareness of the Company, and recent Company announcements may be found here.  Responsibility for shareholder liaison ultimately lies with the Executive Directors. The Board communicates with shareholders regularly throughout the year, seeking to build on a mutual understanding of objectives and providing information in a balanced and understandable way. The Board is always willing to discuss long-term issues with shareholders and obtain their views. Annual and interim results presentations are made to institutional shareholders, and the Annual General Meeting offers an opportunity for all shareholders to ask questions of the Board.

The Non-Executive Directors are available to discuss any matter stakeholders might wish to raise, and the Chairman and the other Non-Executive Directors will attend meetings with investors and analysts if required. 

At every Board meeting, the Chief Executive Officer provides a summary of the content of any engagement the Executive Directors have had with investors to ensure that major shareholders’ views are communicated to the Board as a whole. The Board is also provided with brokers’ and analysts’ reports on a regular basis. This process enables the Chairman and the other Non-Executive Directors to be kept informed of major shareholders’ opinions on strategy and governance, and for them to understand any issues or concerns.

The Company maintains an email address and telephone number which investors may use to contact the Company which, together with the Company’s address, are prominently displayed here

3. Take into account wider stakeholder and social responsibilities and their implications for long-term success

In addition to its shareholders, the Company believes its main stakeholder groups are its employees and suppliers. 

Employees

Our staff give us the knowledge that feeds into our network biology expertise and our core technological capabilities, and that knowledge flows through our business model to directly create value for our shareholders.  Accordingly, the long-term success of the Company relies upon the knowledge and dedication of our staff. The Board, therefore, understands the importance of employee engagement. This is not only by offering a beneficial remuneration package and professional development support, but in engaging employees with the strategy of the Group.  The Board benefits from the fact that e-therapeutics has a relatively small number of employees and, therefore, the Directors have the opportunity to know every individual employee and promote a culture of openness. We want each employee to understand that they play a vital role in the business and that talent recruitment and retention is both a key risk and a key opportunity to the Group. Ray Barlow, the Chief Executive Officer, has shared his own performance objectives with the whole team, demonstrating to the team how his objectives align with the corporate strategy, and we seek to ensure that the staff’s performance objectives have the same goal.

The Board understands that the inherent uncertainty around the long-term outlook of an R&D company can impact moral and addresses this by being honest about the Group’s prospects, emphasising that the contribution of each individual counts and is recognised.  Every month a meeting is held, to which every member of staff is invited, where the Executive Directors provide updates on the Group and its strategy. Both Executive Directors are based in our head office and operate an ‘open-door’ policy. Employees are encouraged to provide any feedback on any issues, whether it be to an Executive or Non-Executive Director or to our independent HR consultant who is available to offer confidential support and advice.   In response to feedback received from a number of employees, a programme of social events has been introduced and all staff members and Directors are encouraged to attend.

Suppliers

Regular meetings are held with key suppliers and expert advisors to engage in open discussions to review progress made on work performed within the Group’s internal discovery programmes, platform technology and corporate functions. Following such meetings, the Group often makes improvements in its processes and detailed scientific work with the aim that such stakeholder engagement ensures that the work undertaken fits with the Group’s long-term success.  An important part of our culture is to establish and maintain relationships of trust.

Health and safety

The Directors are committed to high standards of health and safety at work. The Company seeks to meet legal requirements aimed at providing a healthy and secure working environment to all employees and understands that successful health and safety management involves integrating sound principles and practice into its day-to-day management arrangements and requires the collaborative effort of all employees. All employees are positively encouraged to be involved in consultation and communication on health and safety matters that affect their work. 

4. Embed effective risk management. considering both opportunities and threats, throughout the organisation

The Board has overall responsibility for the Company’s internal control systems and for monitoring their effectiveness. The Board is committed to understanding, analysing and addressing risk. The Board is accountable for identifying procedures to minimise risk impact and implementing these at every level of the business in an ongoing process overseen by the Audit Committee.  Risks are not only assessed by a bottom-up approach, but also examined from a top-down perspective which is closely aligned with the Company’s strategy.

Business Continuity Management strategy, including business impact analysis, business continuity plan, IT disaster recovery plan and a categorised and ranked risk register is reviewed at least annually by senior management and the Board and is distributed to all employees.

As part of the risk management process the Company engages with a number of external experts including the areas of: Health and Safety, Legal (including IP), IT Security and Auditing. When expert reports are received by the company they are made available to the Board and the report recommendations are discussed.

The Company’s system of risk management and internal control is designed to safeguard the Company’s assets and to ensure the reliability of information within the business, ensuring that opportunities as well as risks are identified and that the Board has the correct information to drive shareholder value.  Annual budgets and forecasts and monthly management accounts are reviewed by the Board and the Board reviews and approves all significant contracts and decides on which NDD-derived assets to internally develop, with support from senior management.

Further details of the principal risks and the Company’s internal control and risk management are contained in the 2018 Annual Report and Accounts.

5. Maintain the Board as a well-functioning, balanced team led by the chair

Iain Ross, as Non-Executive Chairman, is responsible for organising the business of the Board, ensuring its effectiveness and setting its agenda, and has no involvement in the day-to-day business of the Company. He facilitates the effective contribution of the Directors and ensures that they receive accurate, timely and clear information and that they communicate effectively with shareholders. The Company is satisfied that the current Board is sufficiently resourced to discharge its governance obligations on behalf of all stakeholders.

To enable the Board to discharge its duties, all Directors receive appropriate and timely information. Briefing papers are distributed to all Directors in advance of Board and Committee meetings.  All Directors have access to the advice and services of the Chief Financial Officer and the Company Secretary, who are responsible for ensuring that the Board procedures are followed, and that applicable rules and regulations are complied with. In addition, procedures are in place to enable the Directors to obtain independent professional advice in the furtherance of their duties, if necessary, at the Company’s expense.

The Board is responsible to the shareholders and sets the Company’s strategy for achieving long-term success.  It is ultimately responsible for the management, governance, controls, risk management, direction and performance of the Company.  Further details of the composition of the Board, directors’ independence, time commitment required from the Directors are set out in the 2018 Annual Report and Accounts. The Directors’ attendance records for the year ended 31 January 2018 at Board and Committee meetings are set out below.

Name

Position

Board

Committee membership

 

 

Maximum possible attendance

Meetings attended

Remuneration

Audit

Considered independent

Iain Ross

Non-exec Chairman

7

7

Yes

Yes

Yes

Ray Barlow

CEO

6

6

 

 

No

Steve Medlicott

CFO

7

7

 

 

No

Professor Trever Jones

Non-Exec Director

7

7

Yes

Yes

Yes

Christine Soden

Non-Exec Director

2

2

Yes

Yes

Yes

 

6. Ensure that between them the Directors have the necessary up-to-date experience, skills and capabilities

The Board currently comprises two Executive and three Non-Executive Directors with an appropriate balance of sector, financial and public market skills and experience.  The individual Directors skills and experience are set out below. The experience and knowledge of each of the Directors gives them the ability to constructively challenge the Company’s strategy and to scrutinise performance. Directors may also take independent professional advice at the Company’s expense where necessary in the performance of their duties. The Directors relevant skills and experience are set out below.

Name

Position

Committee membership

Relevant skills and experience

 

 

Remuneration

Audit

 

Iain Ross

Non-Exec Chairman

Yes

Yes

Iain Ross has over 40 years’ experience in the international life sciences and technology sectors where he has completed multiple financing transactions, and >25 years in cross-border management as a Chairman and CEO.  He has led and participated in 5 Initial Public Offerings, and has direct experience of M&A transactions in Europe, USA and Pacific Rim. Currently he is Executive Chairman of Redx Pharma plc (LSE) and Non-Executive Chairman of Kazia Therapeutics Limited (ASX & NASDAQ). Also, he is a Non-Executive Director of Biomer Technology Limited and Anatara LifeSciences Ltd (ASX). He is a qualified Chartered Director and former Vice Chairman of the Council of Royal Holloway, London University. Previously, he has held significant roles in multi-national companies including Sandoz, Hoffman La Roche, Reed Business Publishing and Celltech Group plc where as Chief Executive Officer of Celltech Biologics plc, he moved the company from a loss-making position to reporting a net profit before the sale to Lonza. He has advised banks and private equity groups on numerous company turnarounds. These include as CEO of Quadrant Healthcare taking the Company public, signing numerous collaborations before selling the business to Elan in 2001. As Chairman and Chief Executive Officer, at Allergy Therapeutics, he re-structured the Company Balance Sheet to position Allergy Therapeutics as a virtually debt free cash generative company prior to its subsequent IPO. As Executive Chairman at Silence Therapeutics Plc (formerly SR Pharma plc), he turned the business around through M&A and established collaborations with Pfizer, Astra Zeneca and Dainippon Sumitomo before completing a merger with Intradigm Inc. Iain was appointed to the Board of e-Therapeutics in January 2016. He continues to consult for private equity groups on biotech & technology company turnarounds.

Dr Ray Barlow

CEO

No

No

Ray brings the experience, knowledge and personal network from more than 20 highly productive years in regional and global leadership positions spanning the complete value chain in the Pharmaceutical and Biotechnology industries. Having completed his PhD at University of Manchester, UK in 1994 and a post-doctoral fellowship at McGill University in Canada, Ray joined the Technology Access and Strategic Alliances Team at Zeneca in 1995, becoming the Team Leader only a few years later. After the merger with Astra, Ray took a global management role, in-licensing new technologies and developing molecules in oncology, cardiovascular, respiratory and inflammatory disease areas, while concurrently obtaining an MBA (with distinction) at the Manchester Business School. He then moved into Business Development as a Senior Analyst and then Director of Corporate Development, where he spearheaded a number of transactions and contributed to shaping AstraZeneca’s strategic roadmap, including its entry into biologics. Following a period leading regional commercial operations for AstraZeneca in 14 European countries and Russia, Ray moved to senior business development roles in the biotech sector, where he out-licensed a portfolio of Meningitis B assets to Sanofi, and was involved in successfully listing Emergent Solutions, Inc. (EBS) on NASDAQ. Ray also ran his own business (BD Solutions Limited) for five years, advising clients on corporate development and commercialisation, including as CEO of Asterion Limited, where he successfully closed deals with Genzyme Inc. and Ipsen. Ray joined Crucell NV in 2010 and was part of the team instrumental in its sale to Johnson & Johnson, for whom he orchestrated deals in infectious diseases and vaccines before becoming Executive Director of Corporate Development at Amgen in 2012. In this role, Ray closed immuno-oncology deals with Boehringer Ingelheim, negotiated international commercial deals with GSK, Mitsubishi Tanabe and Novartis, and played a key part in the acquisition of Onyx Pharmaceuticals Inc. and Dezima Pharma BV. Ray took up the role of Chief Executive Officer at e-therapeutics on 6 April 2017.

Steve Medlicott

CFO

No

No

After qualifying as a Chartered Accountant Steve spent the following 20 years working in the City of London in investment banking. During this time he was involved in numerous fund raises and corporate transactions and has significant experience talking to professional investors and advising companies. He advised the Company on the £40m fund raise in 2013 and joined as CFO the following year.

Professor Trevor Jones

Non-Exec Director

Yes

Yes

Trevor has over 40 years’ distinguished experience in the pharmaceutical and biotech industry as well as in academia. He is currently Chairman of the international CRO, Simbec-Orion Group Limited, and a Non-Executive Director of the Welsh investment company, Arthurian Life Sciences Limited and the global health and life sciences investment company, Perceptive Bioscience Investments Ltd. He is also Visiting Professor at King’s College, London and holds honorary degrees and Gold Medals from seven universities. Previously, Trevor held significant roles in industry including Director of Allergan Inc from 2005 to 2015 and R&D Director of The Wellcome Foundation from 1987-1994, where he was responsible for the development of AZT, Zovirax, Lamictal, Malarone and other medicines. Trevor has also held a number of advisory and regulatory roles including Director General of the Association of the British Pharmaceutical Industry (ABPI), board member of the European Federation of Pharmaceutical Industry Associations (EFPIA) and the International Federation of Pharmaceutical Manufacturers Associations (IFPMA), a member of the UK Government regulatory agency, The Medicines Commission, a member of the UK Government Pharmaceutical Industry Ministerial Strategy Working Group on Pharmaceuticals, an adviser to the Cabinet Office on the Human Genome Project, a member of the Prime Minister’s Task Force on the Competitiveness of the Pharmaceutical Industry (PICTF) and Chair of the Government Advisory Group on Genetics Research. He joined the e-Therapeutics board in October 2015.

Christine Soden

Non-Exec Director

Yes

Yes

Christine, a chartered accountant,  has some 30 years' experience in the life sciences sector, spanning a broad range of technologies and products from genetic discovery through drug development, branded pharmaceuticals and generics and medical devices. She has served as Chief Financial Officer and Chief Operating Officer and as non-executive director in a range of public and private companies and completed several public and private financing transactions and been instrumental in completing numerous M&A and licensing transactions and business restructurings, both in the UK and internationally. Christine is currently Chief Financial Officer of Acacia Pharma Group plc and a non-executive director of Fertility Focus Limited and Futurenova Limited. Previously, Christine served as Chief Financial Officer and then non-executive director of AIM-listed Electrical Geodesics, Inc.  which was recently acquired by Philips NV,  following roles as CFO of Optos plc, BTG plc, Oxagen Limited and Celltech-Chiroscience Group plc having started her life-sciences career as Financial Controller of Medeva plc. She joined the board of e-Therapeutics on 1 November 2017.

Throughout their period in office the Directors are continually updated on the Company’s business, the competitive and regulatory environments in which it operates, corporate social responsibility matters and other changes affecting the Company and the industry it operates in as a whole by written briefings and meetings with senior executives. Directors are also advised on appointment of their legal and other duties and obligations as a Director of a listed company, both in writing and in face-to-face meetings with the Company Secretary. They are reminded of these duties and they are also updated on changes to the legal and governance requirements of the Company and upon themselves as Directors.

Resources are made available to the Board to undertake regular and ad hoc conferences, seminars and training courses as part of their professional and personal development.

7. Evaluate board performance based on clear and relevant objectives, seeking continuous improvement

The Chairman is responsible for the annual performance assessment of the Chief Executive with any performance-related remuneration being determined by the Remuneration Committee. The Chief Executive reviews the performance of the other Executive Director, with any performance-related remuneration again being determined by the Remuneration Committee. The Executive Directors and the other Non-Executive Directors are responsible for evaluating the performance of the Chairman.

The Board is mindful that it needs to continually monitor and identify ways in which it might improve its performance and recognises that board evaluation is a useful tool for enhancing a board’s effectiveness. Alongside the formal annual evaluation, the Chairman routinely assesses the performance of the Board and its members and discusses any problems or shortcomings with the relevant Directors.

In conducting the formal annual evaluation, the Board undertakes a rigorous assessment of its own performance, balance of skills, experience, independence, diversity (including gender diversity) and other factors relevant to its effectiveness (and also of that of its Committees) and the performance of its individual Directors. During this review, the Chairman undertakes a formal discussion with the other Non-Executive Directors regarding the performance of the Board and its Committees, and the other Non-Executive Directors’ own individual contribution and performance. In preparation, the Chairman solicits the views of the other Directors, including the completion by each Director of a confidential questionnaire.

With regard to the evaluation of the Board itself, the discussions focus in particular on:

Board roles and responsibilities;

  • the Board’s contribution to developing and testing strategy and to risk management;
  • the composition of the Board (i.e. mix of skills, experience and expertise);
  • the effectiveness of internal and external relationships and communication;
  • the effectiveness in anticipating and responding to challenges and crises;
  • the effectiveness of Board Committees; and
  • the flexibility of the Board in dealing with a wide range of

 The evaluation of the performance of individual Directors encompasses:

  • preparation and meeting attendance;
  • preparedness to understand key Company issues;
  • quality of contribution at Board and Committee meetings;
  • contribution to the development of strategy and risk management;
  • use of previous experience to contribute to key issues and strategy;
  • effectiveness in challenging assumptions, in maintaining own views and opinions and in following up main areas of concern;
  • building successful relationships with other Board members, management and advisers; and
  • communication with and influence on other Board members, management and key

In addition to the above, the Chairman is evaluated on his:

  • effective leadership of the Board;
  • management of relationships and communications with shareholders;
  • identification of development needs of individual Directors with a view to enhancing the overall effectiveness of the Board as a team;
  • promotion of the highest standards of corporate governance;
  • management of Board meetings and ensuring effective implementation of Board decisions.

Following the reviews, the Chairman shares his observations and any actions arising, where appropriate, with the other Non-Executive Directors and the Executive Directors. These individual evaluations aim to confirm that each Director continues both to contribute effectively and to demonstrate commitment to the role (including the allocation of necessary time for preparation and attendance at Board and Committee meetings and any other duties).

The outcome of the last annual evaluation was published in the 2018 Annual Report and Accounts.

The Board as a whole is responsible for succession planning of the executive leadership team and for the appointment and re-appointment of any Non-Executive Directors if and when necessary.   Succession planning is reviewed on an ongoing basis alongside the capability of the senior management and Directors.

8. Promote a corporate culture that is based on ethical values and behaviours

The Company adopts a policy of equal opportunities and diversity in the recruitment and engagement of staff, as well as during the course of their employment. It endeavours to promote the best use of its human resources on the basis of individual skills and experience, matched against those required for the work to be performed.

The Company recognises the importance of investing in its employees and, as such, it provides opportunities for training and personal development and encourages the involvement of employees in the planning and direction of their work. The Company also recognises that commercial success depends on the full commitment of all its employees, and commits to respecting their human rights, to providing them with favourable working conditions that are free from unnecessary risk, and to maintaining fair and competitive terms and conditions of service at all times. These values are applied regardless of age, race, religion, gender, sexual orientation or disability.

The benefits of diversity in the workforce are also recognised and, whilst the Company will continue to make all appointments based on the best candidate for the role, it is acknowledged that it is not just gender diversity that supports the strength and future success of the business, and the Company remains focused on achieving the right level of diversity whether related to ethnicity, gender, creed or culture.

Regular all-staff meetings are held at which employees have an opportunity to discuss any matters that they wish to raise in an open forum. The Executives also have an ‘open-door’ policy enabling employees to discuss more sensitive or personal matters where necessary. The all-staff meetings are also used to update employees on the underlying corporate strategy and current performance against that strategy together with feedback from stakeholders. This meeting is also used by the Company to outline overall objectives which are then used to establish the individual’s personal objectives against which they are measured at least annually. 

9. Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board

The Chairman, Iain Ross, is responsible for leadership of the Board, ensuring its effectiveness on all aspects of its role, setting its agenda and ensuring that the Directors receive accurate, timely and clear information.  The Chairman also ensures effective communication with shareholders and facilitates the effective contribution of Non-Executive Directors.  Ray Barlow, as Chief Executive Officer, is responsible for the operational management of the Company and the implementation of Board strategy and policy.  The Chief Financial Officer is responsible financial oversight, for health and safety matters of the Company and acts as the Company’s Data Protection Officer.

There is a formal schedule of matters reserved for decision by the Board in place which enables the Board to provide leadership and ensure effectiveness, a copy of which may be found here.  Such matters include business strategy and management, financial reporting (including the approval of the annual budget), Company policies, corporate governance matters, major capital expenditure projects, material acquisitions and divestments and the establishment and monitoring of internal controls.

Board Committees

The Board has established Audit and Remuneration Committees.  Given the size of the Board a nomination committee has not been established. New appointments of Directors are considered by the Board as a whole. The appointment of senior executives is considered by the Board upon the recommendation of the Executive Directors.

Audit Committee

The Audit Committee’s primary responsibilities are to review the financial statements, to ensure that there are suitable internal control and risk management systems in place, to consider the appointment of the external auditor and their independence and to review audit effectiveness. The Audit Committee consists entirely of independent Non-Executive Directors. Christine Soden, a Chartered Accountant and Chief Financial Officer of Acacia Pharma Group plc, chairs the Audit Committee. The other members of the Committee are Iain Ross and Trevor Jones. With the consent of the Committee chairman, meetings are attended by the Chief Financial Officer and representatives of the Company’s independent auditor. Time is set aside for discussions between the Non-Executive Directors and the independent auditor in private. The audit committee’s terms of reference are available here.

A report on the duties of the Audit Committee and how it discharges its responsibilities is provided in the 2018 Annual Report and Accounts.

Remuneration committee

The Remuneration Committee makes recommendations to the Board on strategy and policy for executive remuneration. It also sets the remuneration packages for the Executive Directors and is also responsible for the granting of options under the Company’s share option schemes to Executive Directors. No Executive Director takes part in discussions regarding their own remuneration. The Remuneration Committee considers that inclusion of fluctuating emoluments, which include performance bonuses, is an important element of the Company’s employment of Executive Directors and senior managers. The remuneration of the Non-Executive Directors is set by the Board, led by the Executive Directors. The Chairman of the Remuneration Committee is Trevor Jones and the other members are Iain Ross and Christine Soden. The remuneration committee’s terms of reference are available here.

A report on the duties of the Remuneration Committee and how it discharges its responsibilities is provided in the 2018 Annual Report and Accounts.

The corporate governance framework adopted is appropriate for the relatively small Company that e-therapeutics’ is, at a pre-revenue generating stage of development. The Board considers that this framework can grow with the Company, yet it is considered premature to plan for an evolution of the governance framework at this stage. If the Company undertakes significant transactions that would require growth, then the Board will consider the implication of this on the corporate governance structure at that point in time.

10. Communicate how the Company is governed and is performing

The Board has established an Audit Committee and a Remuneration Committee.  The work of each of the Board Committees undertaken during the year ended of 31 January 2018 is detailed in the 2018 Annual Report and Accounts.  The work undertaken by each of the Board Committees during year ending 31 January 2019 will be reported on in the 2019 Annual Report and Accounts.

The results of the proxy votes received in relation to the 2018 Annual General Meeting are available here.  No resolutions had a significant proportion (>20%) of votes cast against them at that meeting.

The Board has a healthy dialogue with all of its stakeholders. Throughout the course of the financial year the Board communicates with shareholders to seek their views, concerns and expectations.

The following range of corporate information is available in the Investors’ section of the Company’s website:

 

 

Last updated: 14 September 2018