Interim Results for six months ended 31 July 2020
Business highlights for H1
- On 11 February 2020, Ali Mortazavi was appointed Executive Chairman in a management restructure that saw Ray Barlow stepping down as CEO and Steve Medlicott stepping down as CFO along with a gross £1.6m fundraise to cover working capital requirements
- A further £11.6m gross fundraise was successfully completed in July 2020 to enable the Company's next stage of growth and value creation
- A collaboration agreement has been entered into with Galapagos NV ("Galapagos") to identify new therapeutic approaches to modulate a specific mechanism involved in idiopathic pulmonary fibrosis ("IPF")
- A Scientific Advisory Board ("SAB") has been launched with Dr Paul Burke as the Chair
- The Company has announced its expansion into RNA interference ("RNAi") as a therapeutic modality
Post period highlights
- Commenced IP landscaping of RNAi platform. Anticipate in vivo testing of proprietary GAlNAc siRNA platform early 2021
- Dedicated informatics biology group to be setup for gene targets in the liver
- Progress continues across all collaborations
- Increased functionality of current informatics platform significantly, including the addition of target identification to our NDD (Network-driven Drug Discovery) and GAINs (Genome-Associated Interaction Networks) products
- Platform engineering activity focused on scalability of our core business processes
- Significant recruitment drive and Ali Mortazavi appointed as CEO
- Remain in active discussions with large pharmaceutical and biotechnology companies
- Cash of £15.1m at 31 July 2020 (£3.8m as at 31 January 2020), driven by the placing of new Ordinary Shares to raise a gross aggregate total of £13.2m during H1
- Revenue of £0.04m (H1 to 31 July 2019: £0.2m) relates to the spreading of certain revenue to be recognised under the collaboration agreement with Galapagos, the majority of which will be recognised in future periods
- Operating loss of £2.7m (H1 to 31 July 2019: £1.6m), the increase of which is largely due to one-off costs associated with the fundraises.
Chairman & CEO statement
Firstly, I should like to express delight at my appointment as the CEO of e-therapeutics. What started off as an investment in Q3/Q4 2019 when I bought a 15% stake, rapidly progressed to an Executive Chairman role in February 2020 after my extensive due diligence into the Company's technology. Since then, we have completed two capital raises that have materially changed the prospects of the Company and, having spent more than nine months inside the organisation, it became even more clear to me that e-therapeutics has the potential to have a game-changing impact in the emerging field of computational biology-driven drug discovery.
Our platform addresses some of the key risk factors in the drug discovery/development process. We can capture the complexity of biology via our network biology-based approach to generate informatics outputs that can be tested with either small molecule compounds or other modalities such siRNAs. We believe that any biological data, when analysed in a network biology context, will yield insights into biological processes, mechanisms and targets that are not visible by other analytical techniques. As world leaders in the field of network biology, we are uniquely placed to utilise this expertise and to offer our solutions to biopharmaceutical and biotechnology companies who are increasingly looking for a deeper understanding of complex diseases.
Significant progress has been made on our GAlNAc siRNA platform. Extensive IP diligence has been conducted and we anticipate commencing in vivo studies at the beginning of 2021. These studies will benchmark the e-therapeutics GAlNAc siRNA platform against established RNAi companies. In parallel, a dedicated biology group has been setup to leverage our informatics platform specifically at target genes in hepatocytes that are amenable to GalNAc delivery. We believe that as well as a competitive RNAi platform, our informatics platform and expertise in network biology will be a significant added value offering to potential collaborators. Subject to successful benchmarking, we anticipate material business development opportunities in the second half of calendar year 2021 in RNAi.
Our NDD approach, combined with translatable phenotypic screening, has been very successful in identifying small molecule hit compounds suitable as drug starting points. We continue to enhance our informatics approaches to target deconvolution and are making good progress. The identification of the targets of hit compounds can simplify medicinal chemistry as well as providing the opportunity to deploy other therapeutic modalities.
In addition, we have built on the success of NDD to develop a modality-independent target identification approach based on network biology. We continue to grow and enhance this capability and it will be a strong focus over the coming months. These approaches to network-aware target identification are complementary and both will feed into our RNAi work as well as being available to collaborators.
Genetic support for drug target choices is seen as extremely important by the pharmaceutical industry since it can increase the likelihood of clinical success. For mono- and oligogenic diseases this is relatively straightforward to obtain. However, many of our greatest challenges currently are in complex diseases such as diabetes, neurodegeneration and fibrosis (to name only a few) where such support is much harder to establish. GWAS studies have shown us that these diseases are typically associated with hundreds of weakly contributing effects on genes. These multiple effects collectively result in the disruption of key biological processes that affect risk of developing disease; but no individual gene variant can explain the disease susceptibility and generally none of the weakly affected genes can be relied upon to be an efficacious target.
Our GAINs approach enables us to consider a collection of weakly modulated genes (derived from a GWAS study) as a unit by putting them in their network context. We are able to infer how they act in concert in a complex disease to affect one or more biological processes and to identify those processes. Once the key processes are known we can identify potential drug targets (and molecules) likely to have a large impact in the disease. Typically, these targets cannot be inferred from the GWAS data alone and are only found by applying our GAINs approach. GAINs enables us to propose genetically supported, process-focussed intervention strategies for complex disease using either small molecule or modality-independent strategies. We regard our GAINs approach as a key component of any discovery effort. It has the potential to identify important targets de novo and to provide critical genetic support for targets selected based on complementary approaches. GAINs will be a key part of our internal hepatocyte-focussed RNAi strategy as well as being available to collaborators who wish to seek genetic support for their target choices.
The speed at which we have been able to setup RNAi as a drug modality within e-therapeutics is attributable not only to our in-house knowledge of the sector but also to the consultants and contacts, primarily in the US, to whom our Scientific Advisory Board has introduced us. In addition to RNAi, the Board has and will give us deep expertise in small molecule drug discovery, development, and genomics. Their experience and support forms a strong complement to our internal scientific and industry knowledge positioning us for future success.
Informatics Platform development and recruitment
During the period and post the July capital raise, we have significantly added to our platform functionality. As well as important upgrades to both our NDD and GAINs products, we have added and committed capital to a target nomination effort. As stated above, a specific hepatocyte target identification group has been created to investigate gene targets within the liver where our RNAi platform is focussed. We have seen significant interest in the addition of target nomination to NDD and GAINs. The addition of network-driven target nomination allows us to offer a three pronged solution to our collaborators: NDD to generate small molecule compounds to interrogate the biology in question; GAINs to add genetic support by analysing genetic data such as Genome Wide Association Studies (GWAS); and target nomination allowing specific testing of drug targets to be used in DNA/RNA editing and silencing assays.
Platform engineering efforts focusing on scalability to support planned expansion of the business have been significantly increased. These requirements will also inform recruitment.
In terms of recruitment, additions have already been made in business development, business analysis, data science/machine learning and systems development. We remain in active recruitment for further resource in all areas of our business and as stated during our capital raise, the recruitment of strong talent with the diversity of knowledge and skillsets required for our Company is one of our key objectives.
Partnerships and Collaborations
During the period, we announced a collaboration agreement with Galapagos to identify new therapeutic approaches to modulate a specific mechanism involved in IPF and potentially in other fibrotic indications. I am pleased to report that the collaboration is on schedule and we look forward to compound testing early in 2021. We have extended our collaboration with Novo Nordisk until March 2021 to evaluate results that have been generated so far and to decide if further compounds need to be tested to explore the findings to date. Our neurodegeneration pilot with a US-based, top 5 pharmaceutical company has generated small molecule hits in relevant phenotypic assays. An assessment is currently being made of the data generated so far to take these compounds to the next stage of the pilot. Our project to find compounds for the treatment of COVID-19 using our proprietary NDD platform has generated encouraging results. We await the final read outs in SARS-COV2 assays from WuXi AppTec to decide next steps. As a base case, the project will be published as a case study and validation of our platform, highlighting the ability of our network approach and expertise to go beyond pure in silico predictions and identify potentially clinically viable interventions with supporting laboratory data.
Internal drug discovery programmes
As stated during our capital raise in July, it is not the intention of the Company to undertake and spend capital on internal drug development programmes. Both in RNAi and small molecules however, we have budgets that allow the development of high conviction internal projects using our informatics platform to a value inflection point. Notwithstanding exceptional data, each of these projects has a defined cost and a goal of generating a dataset that can lead to a possible business development transaction.
Despite novel and challenging business conditions relating to the COVID-19 situation, we have made material strides since the capital raise in July. We remain in active discussions with large pharmaceutical and biotechnology companies and look forward to the future with confidence.