Cizzle Biotechnology Holdings plc (LON:CIZ), the UK-based diagnostics developer, has announced its audited results for the year ended 31 December 2022.
Chair’s Statement
The Group has continued throughout 2022 in developing a blood test for the early detection of lung cancer. Its proof-of-concept protype test is based on the ability to measure a stable blood plasma biomarker, a variant of CIZ1. CIZ1 is a naturally occurring cell nuclear protein involved in DNA replication, and the targeted CIZ1B variant is highly correlated with early-stage lung cancer.
Published research led by Professor Coverley previously demonstrated that CIZ1B can be measured with high sensitivity via an ELISA process, which should allow for testing in a high-throughput, hospital-friendly format. The Directors believe that this development overcomes an important barrier to further clinical development and the application of this blood test for the early detection of lung cancer, which is essential to improve a patient’s chance of survival.
In addition to implementing a strategy to develop a regulatory approved commercial, diagnostic laboratory immunoassay for early-stage lung cancer, the Group has broadened its interests to include the detection of a range of other early-stage cancers. It has also expanded its potential customer base to include the pharmaceutical industry through a contract to develop a diagnostic test that can help in the development of personalised medicines, so called “companion diagnostics”, and has secured royalty bearing rights to the sale of such medicines in the longer term.
The Board intends for the Group’s initial product to be a diagnostic immunoassay that can be readily performed by hospitals and reference laboratories, but a potential follow-on product could be a point of care test provided by a primary health care provider.
Research and Development
Throughout 2022, the Company continued to work with external expert partners and suppliers to develop and supply of proprietary key monoclonal antibodies and other detector proteins for its assay platform, and in July 2022 the Company provided an update on the progress of this work. A key milestone was the characterisation of a mouse monoclonal antibody that specifically detects CIZ1B. Assay conditions for its use are being optimised, as well as further work to broaden access to other antibodies that can be used in its proprietary early lung cancer tests, and potentially for a range of other early-stage cancers.
On 11 April 2022 a new 12 month research agreement was signed with the University of York, a member of the Russell Group of research-intensive universities and one of the world’s premier institutions for inspirational and life-changing research, for the development of potential applications in cancer diagnosis and therapy. The agreement, commenced on 25 June 2022 for a period of 12 months, following the successful previous programme announced on 17 September 2021 for the development and validation of molecular tools with potential application in cancer diagnosis or therapy, and their configuration into assays for Cizzle’s proprietary cancer biomarker variants. On 24 April 2023, the Company announced that this research programme had met some critical milestones, especially in optimising the platform and antibodies required to scale up and bring to market our diagnostic tests for earlystage cancer detection. As such a further new agreement has been signed with the University lasting until 25 September 2024. This programme will continue development of its CIZ 1B biomarker technology for early-stage cancer diagnosis and with potential applications in cancer therapy. This includes the evaluation of the biomarker for detecting a range of other cancers in addition to the existing assay for early lung cancer detection.
As in previous agreements, Cizzle Biotechnology will own all intellectual property rights arising from the work which strengthens the Company’s position in creating new solutions for early cancer diagnostics and therapeutic tools.
Development of new future revenue stream
On 14 February 2022 the Group announced a royalty acquisition agreement with Conduit and SGSC to acquire a 5% economic interest in the commercialisation of the AZD1656 asset or such other assets being developed by Conduit or SGSC to treat inflammatory pulmonary and cardiovascular disease, for a total consideration of £1.88m. The initial consideration of £1m was settled through the issue of 25,000,000 new ordinary shares at a price of 4.0p per share, with the remaining consideration of £0.88m settled in September 2022 through the issue of 22,000,000 new ordinary shares at 4.0p per share. Prior to this, in September 2021, the Group entered into a royalty sharing agreement with SGSC to grant the Group potential royalty payments from the commercialisation of SGSC’s therapeutic asset AZD1656 of up to £5m, plus potentially further payments from the use of a companion diagnostic.
In December 2022 the Company announced that it had agreed a put option to sell: (i) its 5% economic interest in the commercialisation of the AZD 1656 asset to treat inflammatory pulmonary and cardiovascular disease (the “Economic Interest”); and (ii) its royalty sharing agreement with St George Street Capital (“SGSC”), the UK-based biomedical charity (the “Royalty Sharing Agreement’) to Conduit Pharmaceuticals Limited, a pharmaceutical company established to fund the development of successful deprioritized clinical assets licensed from large pharmaceutical companies (“Conduit”) for a total consideration of £3.25 million to be satisfied through the issuance of new shares in Conduit (the “Option”).
On 9 November 2022, it was announced that Conduit entered into a definitive business combination agreement with Murphy Canyon Acquisition Corp. (NASDAQ:MURF) (“Murphy”), a blank-check special purpose acquisition company. The combined company’s common stock is anticipated to be listed on NASDAQ under the ticker symbol “CDT”. The combined company is anticipated to have an estimated pro forma enterprise valuation of approximately $700.49 million with cash proceeds from the transactions expected to be the balance of $136.04 million of cash held in Murphy’s trust account less any redemptions by Murphy’s public stockholders and the payment of certain expenses, and approximately $27.00 million attributable to a private investment anchored by new and existing investors of Conduit (the “PIPE Investment”).
The Economic Interest and Royalty Sharing Agreements are valued at cost, totalling £2,080,000, as at 31 December 2022. No profits or revenues were attributable to the assets subject to the Option. The Option is exercisable solely at the discretion of Cizzle and Cizzle has agreed to pay Conduit £120,000 in cash as the premium for the Option, which has a nine-month term.
Reaching Global Markets
During 2022 the Company extended its global reach of the Group’s technology to both China and the USA, where there is much need for the use of the early detection of lung cancer tests:
| • China | On 1 February 2022 a full commercial agreement with International Co-Innovation Center for Advanced Medical Technology (“iCCAMT”) and Shenzen Intelliphecy Life Technologies Co. Ltd was executed to develop and market early lung cancer diagnostic tests in China. This agreement will generate future revenues for the Group via a 10% royalty on the sales of all products and services using its proprietary CIZ1B technology and from payment for monoclonal antibodies and reagents. |
| • USA | On 6 May 2022 the Group announced that it had signed a heads of terms to partner with CorePath Laboratories (“CorePath”), a full service cancer reference laboratory, to develop and offer its proprietary early-stage lung cancer test throughout the USA. The proposal is that the Group would receive a 15% royalty and royalty sharing arrangements on the direct offering of products and services using CIZ1B via CorePath in the USA. On 16 June 2022 a marketing agreement was signed with Behnke Group, USA, to promote, identify and facilitate partnerships for Cizzle with healthcare providers and businesses in the USA. |
Funding
In September 2022 the Company completed a fund raising providing gross proceeds of £500,000 by way of a subscription for its shares and secured a £500,000 facility to draw down on further funds for a term of 18 months, if required. The funds will be used to provide working capital for the Company and to continue development of a laboratory-developed test (“LDT”) accredited service for the early detection of lung cancer and taking the Company’s proprietary CIZ1B biomarker blood test through to UKCA, CE marking and/or FDA 510(k) clearance.
In December 2022 the Company raised net proceeds, before expenses, of £115,000 (gross proceeds: £118,000) to fund the purchase of an option (cost £120,000) to sell its AZD1656 assets as explained above.
Financial overview
The financial results for the year ended 31 December 2022 are summarized below:
| – | Corporate expenses, before share option charge and exceptional items: £823,000 (2021: £552,000); |
| – | Share option charge: £140,000 (2021: £299,000) |
| – | Exceptional corporate expenses relating to the acquisition: £Nil (2021: £3,107,000) which include transaction costs of £Nil (2021: £303,000) and a non-cash share-based expense of £Nil (2021: £2,804,000) (explained in Notes 3 and 5); |
| – | Total comprehensive loss: £912,000 (2021 Loss £3,921,000); and |
| – | Loss per share 0.3 p (2021: Loss 2.4 p). |
Allan Syms
Executive Chair
26 April 2023
