Cizzle Biotechnology plc (LON:CIZ), the UK-based diagnostics developer, has announced its audited results for the year ended 31 December 2021.
Chair’s Statement
I am pleased to report on the Group’s activities and results for 2021 during which we announced the acquisition of Cizzle Biotechnology Limited (“CBL”) on 14 May 2021 and admission to trading on the London Stock Exchange by way of a Standard Listing, raising proceeds of £2,200,000 before expenses from the issue of new shares. We changed the company name from Bould Opportunities plc to Cizzle Biotechnology Holdings plc to better reflect the Group’s ambitions to become a leading biotechnology business focussed on early-stage cancer detection through the commercialisation of its proprietary CIZ1B biomarker technology developed by Professor Dawn Coverley and her team at the University of York for the early detection of lung cancer.
The Group has made significant progress during 2021 and so far in 2022. In addition to implementing our strategy to develop a regulatory approved commercial, diagnostic laboratory immunoassay for early-stage lung cancer, we have broadened our interests in the detection of a range of other early-stage cancers, expanded our potential customer base to include the pharmaceutical industry through diagnostic tests that can help in the development of personalised medicines, so called “companion diagnostics” and secured royalty bearing rights to the sale of such drugs in the longer term.
To achieve this we have entered into a number of strategic supply agreements, extended our research and development programme with the University of York, secured an important companion diagnostic development project for autoimmune diseases worth up to £1m with St George Street Capital (“SGSC”) and invested in royalty arrangements for their therapeutic asset (AZD1656) for the potential treatment of inflammatory diseases, including those linked with COVID 19.
The Group has also begun the process of selecting appropriate industrial development and distribution partners that will facilitate access to major markets globally and we are pleased to announce a royalty bearing strategic partnership in China to help address the country’s challenge of reducing nearly 715,000 deaths caused by lung cancer in 2020.
(Source: https://www.statista.com/statistics/1053667/china-cancer-death-number-by-type/).
Research and Development
The Group is developing a blood test for the early detection of lung cancer. Its proof of concept prototype test is based on the ability to detect a stable plasma biomarker, a variant of CIZ1 known as CIZ1B. 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. Currently the laboratory test developed by Professor Dawn Coverley at The University of York, has been used to validate the use of CIZ1B to detect lung cancer, and a proof of concept prototype test developed, which is compatible with potential use within a hospital laboratory setting.
In June 2021 we entered into a Collaboration Agreement with FairJourney Biologics to develop proprietary antibodies. Along with other key suppliers the Group expects to create a range of monoclonal antibodies and reagents that are the foundation for developing immunoassays, and in the future point of care tests not only for early-stage lung cancer but potentially also for other cancers with unmet clinical need.
In September 2021 we announced a new research agreement with The University of York for developing our blood test for the early detection of lung cancer, and potentially other forms of cancer. A further new agreement was announced in April 2022 that extended this work until June 2022.
A research and development agreement was finalised in October 2021 with “SGSC”, the UK based biomedical charity to develop a companion diagnostic test for autoimmune disease. Its aim is to develop tests that will operate alongside SGSC’s programme for the development of therapeutic assets licensed to SGSC from one of the world’s largest pharmaceutical companies, Astra Zeneca. This seeks to address unmet clinical needs in a variety of autoimmune diseases which will significantly broaden the Company’s product pipeline for which SGSC will pay the Group £200,000 upfront on commencement of the project and then further milestone payments totalling £1m.
China
One of the target markets identified for the Group is in China where we are aware there are serious challenges in being able to detect cancer early, and there is a great need for screening and diagnosing cancers among the Chinese population. Targeted testing can improve timely access to cancer care and save lives. The Group entered into a Memorandum of Understanding (“MOU”) with the International Co-innovation Centre for Advanced Medical Technology (“iCCAMT”) and Shenzhen Intelliphecy Life Technologies Co. Ltd (“Intelliphecy”) to develop and market the Group’s proprietary early lung cancer diagnostic tests based on the CIZ1B biomarker in China.
In February 2022 a full commercial agreement 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.
iCCAMT, founded with German Medical Valley, Robert Bosch GmbH and Sinopharm Group, aims to accelerate global med-tech innovation in the Chinese market, by bringing together world leading expertise. Intelliphecy is aiming to innovate technologies in the hope to win the war against cancer.
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 overall offering of products and services using CIZ1B via CorePath in the USA.
Lung cancer is the leading cause of cancer death in the USA, making up almost 25% of all cancer deaths. The American Cancer Society’s estimates for lung cancer in the USA for 2022 are:
| – | About 236,740 new cases of lung cancer annually and about 130 – 180 deaths from lung cancer each year (Source: https://www.cancer.org/cancer/lung-cancer/about/key-statistics.html); and |
| – | Currently, there are no simple specific blood tests to detect lung cancer early when targeted interventions can improve timely access to cancer care and save lives. Yet it is estimated that about 8 million Americans qualify as high risk of lung cancer and are recommended to receive annual screening with low-dose CT scans and if half of these high risk individuals were screened, over 12,000 lung cancer deaths could be prevented (Source: Cheung LC, Katki HA, Charurvedi AK, Jemal A, Berg CD. Preventing Lung Cancer Mortality by Computed Tomography Screening: The Effect of Risk-Based Versus U.S. Preventative Services Task Force Eligibility Criteria, 2005-2015. Anals of Internal Medicine. 2018; 168(3):229-32. Doi: 10.7326/M17-2067). |
Royalty Investment in AZD1656
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. During the year the Group paid a total of £0.2m for this investment.
This supports the strategy of building a portfolio of early cancer detection tests, companion diagnostics and royalty bearing stakes in significant drug assets. SGSC has reported positive results from its ARCADIA clinical trial for diabetes patients with COVID19 and have indicated this may be through the regulation of the patients’ immune system (via controlling Regulatory T Cells or “Tregs”). Tregs act to suppress immune response and combat damaging cells potentially reducing serious cardiovascular disease, and also lung diseases that are linked with the development of lung cancer.
In February 2022 the Group announced a further royalty deal in Inflammatory Pulmonary and Cardiovascular diseases with Conduit Pharmaceuticals Ltd (“Conduit”) and SGSC to acquire an additional 5% economic interest in the commercialisation of the AZD 1656 asset or such other assets being developed by Conduit or SGSC to treat inflammatory pulmonary and cardiovascular disease. Under the agreement the Group will receive 5% of all sums received by SGSC pursuant to any AstraZeneca (“AZ”) commercialisation or sub-licence commercialisation of the AZD 1656 asset in inflammatory pulmonary and cardiovascular diseases, after the deduction of certain sums. The consideration due to SGSC is £1.88m with the initial consideration of £1m being settled through the issue of 25,000,000 new ordinary shares at a price of 4.0p per share, which was a premium of 56.9% to the Company’s closing mid-market price of 2.55p on 11 February 2022. The remaining consideration of £0.88m will be payable in new ordinary shares at 4.0p per share, on the earlier of receiving shareholder approval to issue the shares or the first anniversary of completion.
Financial overview
Due to reverse acquisition accounting principles, which are explained in more detail in Note 3 to the financial statements, these consolidated financial statements represent a continuation of the consolidated statements of Cizzle Biotechnology Holdings PLC (“the Company”) and its subsidiaries (together referred to as “the Group”) and include:
| – | The assets and liabilities of CBL at their pre-acquisition carrying value amounts and the results for all periods reported: and |
| – | The assets and liabilities of the Company as at 14 May 2021 and its results from the date of reverse acquisition on 14 May 2021 to 31 December 2021. |
As the new Group was not in existence in 2020 the comparative results under reverse acquisition rules are those of the existing company, CBL, that effectively completed the acquisition. The financial results for the period to 31 December 2021 are summarized below:
| – | Corporate expenses, before share option charge and exceptional items: £552,000 (2020 CBL: £14,000); |
| – | Share option charge: £299,000 (2020 CBL: £Nil) |
| – | Exceptional corporate expenses relating to the acquisition: £3,117,000 (2020 CBL: £Nil) which include transaction costs of £303,000 and a non-cash share-based expense of £2,804,000 (explained in Notes 3 and 5); |
| – | Total comprehensive loss: £ 3,921,000 (2020 CBL Loss £ 14,000); and |
| – | Loss per share 2.4 p (2020 CBL Loss 2.8) p. |
