HALF-YEARLY FINANCIAL REPORT

Transcription

1 HALF-YEARLY FINANCIAL REPORT 1 st HALF 2017 Activity report Financial statements at 30 June 2017 Notes to the half-yearly financial statements Statutory auditor s report Quantum Genomics French public limited company (Société Anonyme) With a capital of 4,393, euros Registered office: Tour Maine Montparnasse 33, avenue du Maine Paris Registered with the Paris trade and companies register under number

2 1. THE COMPANY S BUSINESS AND HIGHLIGHTS OF THE FIRST HALF OF 2017 During the first half of 2017, Quantum Genomics (the Company ) continued its development plan and also announced the results of the preclinical studies of its first-inclass drug candidate, QGC001, for the monotherapy treatment of hypertension. 1.1 Economic and scientific progress In early 2017, a key patent was granted in Europe concerning the QGC001 programme, an association of the drug candidate QGC001 with the main antihypertensive drugs already prescribed on the market. This patent provides protection until December In March 2017, the company detailed the positive results of the preclinical studies of its drug candidate QGC001 for the monotherapy treatment of hypertension. The results of these preclinical studies, conducted according to FDA (Food & Drug Administration) recommendations, confirmed QGC001 s lack of phototoxicity and its lack of genotoxicity in animals, even at high doses. The Company also recruited a new Medical Director, Mr Bruno Besse. On 19 June 2017, the Company released the details of the positive results of its phase IIa study with QGC001 for the treatment of hypertension. These same results had been presented on 18 June 2017 by the principal investigator of the study, Professor Michel Azizi, Director of the Clinical Investigation Centre and Head of the Hypertension Unit of Georges-Pompidou Hospital (Paris), during the annual meeting of the European Society of Hypertension (ESH) in Milan. In this same period, Professor Toshiro Fujita, an expert in resistant hypertension and the Japanese pharmaceutical market, joined the Company s Scientific Committee. At the end of June 2017, the Company unveiled the design of the next NEW HOPE phase II clinical study in hypertension, with the drug candidate QGC001, on 250 patients with higher cardiovascular risks. At the end of this study, the results of which are expected in the 1 st half of 2019, a phase III clinical study could then be initiated with QGC001. As part of the QUID HF study, since the beginning of 2017, the Company has increased the number of clinical centres participating in the study to 10, with the opening of Ninewells Hospital in Dundee (United Kingdom), the Wroclaw Military Hospital (Poland), Hanover Medical School (Germany), and Klinik für Innere Medizin III in Homburg (Germany). Page 2

3 1.2 Legal operations The Company s internal management structures made certain decisions since 1 January Since this date, the following operations have taken place: - on 18 January 2017, the Company s Remuneration Committee decided on (i) the CEO s remuneration and (ii) the allocation of bonus shares to employees and/or executives of the Company; - on 18 January 2017, the Board of Directors decided on: the CEO s remuneration, the allocation of bonus shares to employees and/or executives of the Company, using the delegation of authority granted by the Annual Ordinary and Extraordinary General Meeting of 15 June 2016, the allocation of bonus shares to employees and/or executives of the Company, using the delegation of authority granted by the Annual Ordinary and Extraordinary General Meeting of 15 June 2016, the review of the 2017 budget and the business plan, and the 2017 financial agenda; - under the terms of decisions dated 20 January 2017, the President and CEO recognised the exercise of 484 BSAR2016 issued by a decision of the Board of Directors dated 14 March 2016, thus increasing the Company s share capital by euros through the creation and issuance of 242 new shares; - on 10 February 2017, the Board of Directors recognised the exercise of 1,980,000 BSAR issued by decisions of the Board dated 30 June 2010 and 5 July 2011, thus increasing the Company s share capital by 43, euros through the creation and issuance of 110,000 new shares; - on 2 March 2017, the Board of Directors recognised (i) the expiry of the vesting period of 244,850 bonus shares allocated by a decision of the Board on 2 March 2016, (ii) the definitive allocation of those bonus shares of the Company to employees and executives of the Company, and (iii) the completion of the capital increase through a corresponding capitalisation of reserves, by deducting 97, euros from the Restricted Reserves account created for this purpose; - on 29 March 2017, the Board of Directors approved the financial statements for the financial year ended 31 December 2016 and took the necessary decisions for the preparation and convening of the Annual Ordinary General Meeting called to rule on the financial statements for that period. It also decided to submit new delegations of authority to the Board of Directors to this General Meeting; Page 3

4 - on 4 May 2017, the Board of Directors: recognised the exercise of 154,000 BSAR issued by decisions of the Board dated 30 June 2010 and 5 July 2011, thus increasing the Company s share capital by 3, euros through the creation and issuance of 8,555 new shares; pronounced the cancellation of the AGA and AGA bonus share allocation plans, decided by the Board of Directors at its meeting on 18 January 2017; decided to allocate bonus shares to employees and/or executives of the Company, using the delegation of authority granted by the Annual Ordinary and Extraordinary General Meeting of 15 June 2016; decided to allocate bonus shares to employees and/or executives of the Company, using the delegation of authority granted by the Annual Ordinary and Extraordinary General Meeting of 15 June 2016; - under the terms of decisions dated 4 May 2017, the President and CEO recognised the exercise of 66 BSAR2016 issued by a decision of the Board of Directors dated 14 March 2016, thus increasing the Company s share capital by euros through the creation and issuance of 33 new shares; - holders of the six categories of equity warrants issued by the Company (i.e., BSA2009, BSA , BSA , BSA , BSA , and BSAR2016) met on 8 June 2017, and each approved, in principle, all the delegations of authority and authorisations that the General Meeting of Shareholders held on the same day wished to grant to the Board of Directors; - the Annual Ordinary and Extraordinary General Meeting of Shareholders on 8 June 2017: reviewed and approved the accounts for the financial year ended 31 December 2016, granted discharge to the Directors, appropriated the result for the period, approved the agreements referred to in Articles L et seq. of the French commercial code, authorised the Board of Directors to carry out operations on the Company s shares, pursuant to the provisions of Article L of the French commercial code, established an obligation in the articles of association to disclose when thresholds of equity holdings are crossed and amended article 10 form of shares of the Company s articles of association, Page 4

5 delegated authority to the Board of Directors to increase the share capital, with elimination of the preferential subscription right and public offering of financial securities, delegated authority to the Board of Directors to decide on the increase in share capital, by issuing with the preferential subscription right maintained shares and/or securities giving access to the Company s capital and/or by issuing securities giving right to the allocation of debt securities, delegated authority to the Board of Directors to decide on the increase in share capital, by issuing with the preferential subscription right eliminated shares and/or securities giving access to the Company s capital and/or by issuing securities giving right to the allocation of debt securities through an offer referred to in Article L II of the French monetary and financial code, particularly to qualified investors or a small circle of investors, delegated authority to the Board of Directors to decide on the increase in share capital, by issuing shares and/or securities giving access to the Company s capital and/or by issuing securities giving right to the allocation of debt securities, with elimination of the preferential subscription right for the benefit of a category of persons (strategic operation), delegated authority to the Board of Directors to decide on the increase in share capital, by issuing shares and/or securities giving access to the Company s capital and/or by issuing securities giving right to the allocation of debt securities, with elimination of the preferential subscription right for the benefit of a category of persons (investment operation), delegated authority to the Board of Directors to decide on the increase in share capital through the capitalisation of issue premiums, reserves, profits, or other items, delegated authority to the Board of Directors to increase the number of securities to be issued in case of a capital increase with or without a preferential subscription right, delegated authority to the Board of Directors to decide on the increase in share capital through the issuance of shares or equity interests reserved for members of savings plans, eliminating the preferential share subscription right for their benefit, delegated authority to the Board of Directors to grant share subscription or purchase options, delegated authority to the Board of Directors to carry out bonus allocations of existing shares or shares to be issued to all or some employees and corporate officers of the group, authorised the Board of Directors to reduce the capital by cancelling shares bought back; Page 5

6 - on 8 June 2017, the Board of Directors: recognised the resignation of two members of the Scientific Committee, including the Chairman of the Scientific Committee; appointed new members of the Scientific Committee; delegate its authority to the Scientific Committee to appoint a new Chairman. As a result of all of the above, the Company s share capital was fixed to the sum of 3,500, euros divided into 8,754,491 shares. 1.3 Dispute As of the date of this report, the Company has only one dispute. 2. ECONOMIC RESULTS AND FINANCIAL SITUATION OF THE FIRST HALF OF Operating result The Company generated no turnover for the first half of the year. Given that total operating income was 8,359 euros versus 4,684 euros in the first half of 2016 and total operating expenses totalled 4,509,353 euros versus 3,080,417 euros in the first half of 2016, the operating result is a loss of (4,500,993) euros. Wages and salaries totalled 754,934 euros, and the corresponding social contributions amounted to 521,484 euros, for a workforce of 13 persons as of 30 June Financial result and earnings before taxes and extraordinary items Financial expenses totalled 155,402 euros compared with 41,355 euros in the first half of Financial income totalled 21,669 euros compared with 21,420 euros in the first half of Earnings before taxes and extraordinary items totalled (4,634,727) euros. 2.3 Extraordinary result The extraordinary result in the first half of 2017 was (27,700) euros. 2.4 Result of the period The interim accounting situation at 30 June 2017 translates into a net loss of (4,037,562) euros, after taking into account the research tax credit of 624,865 euros. Page 6

7 2.5 Change in equity capital and shareholders equity Equity capital was 6,685 K at 30 June 2017, a reduction of 3,838 K compared with the end of Taking into account Bpifrance s conditional advances amounting to 1,268 K, shareholders equity totalled 7,953 K. 2.6 Change in debt and cash The Company had no financial debt as of 30 June Cash totalled 7,319 K, compared with 11,198 K at 31 December Change in working capital requirement (WCR) The working capital requirement increased by 212 K compared with the end of 2016, explained mainly by the difference between the Research Tax Credit for the 1 st half of 2017 ( 625 K) and the decrease in product inventories ( 562 K) 3. EVENTS SUBSEQUENT TO 30 JUNE 2017 Since 30 June 2017, the following notable events have occurred: In July 2017, the Company s shares were admitted for trading on the OTCQX market in the United States, a market segment reserved for non-american companies officially listed on a foreign market. At the end of July 2017, the Company carried out an 8.2 M capital increase, eliminating the preferential subscription right for the benefit of a specific category of investors, by issuing 2,191,698 shares with warrants (ABSA) at a unit price of 3.75 (the Operation ). The amount raised could reach 16 million if all the warrants attached to the new issued shares were fully exercised. The Operation aims to support the Company s development programmes, including the phase II study in hypertension to be launched in autumn 2017 in the United States. In early September 2017, the company received the approval of the FDA (Food & Drug Administration) to launch this study (entitled NEW HOPE). From a legal perspective, it should be noted that: - to carry out the Operation, the Board of Directors decided on 25 July 2017 to make use of delegations of authority granted by the General Meeting of Shareholders of 8 June 2017, particularly the 10 th resolution of that General Meeting, to proceed with the capital increase relating to the Operation, under the following main conditions: the capital increase would be done with an elimination of shareholders preferential subscription right for the benefit of the category of persons meeting the Page 7

8 characteristics referred to below, in France and abroad, by issuing 2,191,698 new ordinary shares of the Company to them, to which 2,191,698 equity warrants would be attached (together, the ABSA ), without nominal value; the 2,191,698 ABSA would be subscribed for a price of 3.75 euros per ABSA, including share issue premiums, i.e., an overall subscription price of 8,218, euros; this issue price of the issued ABSA is equal to the weighted average of the prices of the last twenty (20) trading sessions of the Quantum Genomics share preceding this fixing, minus a discount of approximately 21%, which is consistent with the terms of the delegation referred to in the 10 th resolution of the General Meeting of 8 June 2017; four (4) equity warrants would entitle their holder to three (3) new shares of the Company; the 1,643,772 shares for which the 2,191,698 equity warrants attached to the ABSA are eligible would be subscribed for a price of 4.75 euros per share, including share issue premiums, i.e., an overall subscription price of 7,807,917 euros; this issue price for the shares resulting from the exercise of the 2,191,698 equity warrants attached to the ABSA would be such that the sum collected immediately by the Company, plus any sum that it would likely receive subsequently, would be, for each share issued as a consequence of the issuance of these securities, at least equal to the minimum subscription price defined in the preceding paragraph for each ABSA, which is consistent with the delegation referred to in the 10 th resolution of that General Meeting of 8 June 2017; the preferential subscription right of the 2,191,698 ABSA would be eliminated for the benefit of beneficiaries meeting the following characteristics: Any natural person or legal entity, including industrial or commercial companies, or French or foreign investment funds investing in the pharmaceutical or biotechnology sector, or French or foreign investment service providers, or any foreign institution having an equivalent status, likely to carry out such an operation ; - on 25 July 2017, the same Board of Directors also decided to make use of the delegation of authority granted by the General Meeting of Shareholders of 8 June 2017, provided for in the 12 th resolution of the General Meeting, in order to proceed with, in addition to the above capital increase decided by that Board within the framework of the Operation, a possible implementation of an oversubscription option, according to the following terms: the oversubscription option would be granted for the benefit of any beneficiary meeting the following characteristics: Any natural person or legal entity, including industrial or commercial companies, or French or foreign investment funds investing in the pharmaceutical or biotechnology sector, or French or foreign investment service providers, or any foreign institution having an equivalent status, likely to carry out such an operation ; the shareholders preferential subscription right to the ABSA would be eliminated for the benefit this category of beneficiaries; Page 8

9 the new shares to be issued if this overallocation option is implemented would have the same characteristics as the ABSA to be issued as part of the above capital increase decided by that Board and the equity warrants attached to the ABSA (particularly the subscription price of the shares); the maximum number of additional new ABSA likely to be issued would be limited to 15% of the 2,191,698 ABSA to be issued as part of the above capital increase decided by that Board, or 328,754 ABSA; the overall subscription price of the maximum number of 575,319 new shares, including the 328,754 ABSA and the 246,565 shares that would result from the exercise of the 328,754 warrants attached to the ABSA, would thus be equal to 2,404, euros; - in accordance with the powers given to him by the Board of Directors at its meeting of 25 July 2017, the President and CEO decided, under the terms of decisions dated 26 July 2016 taken at 7:00 a.m., in order to implement the capital increase decided above within the framework of the Operation by the Board of Directors on 25 July 2017 according to the orders and subscription forms received at the Company s headquarters in the final hours, to set the terms and conditions of the capital increase definitively as described above; - in accordance with the powers which given to him by the Board of Directors at its meeting 25 July 2017, the Chairman and CEO recognised, under the terms of decisions dated 26 July 2016 taken at 12:30 p.m., the definitive completion of the capital increase with elimination of the shareholders preferential subscription right for the benefit of the category of persons meeting the characteristics referred to above, decided by that Board on 25 July 2017, the subject of the 1 st resolution adopted by the Board, for an amount of 8,218, euros (including share issue premiums), by issuing 2,191,698 ABSA for a price of 3.75 euros each (including share issue premiums). Independently of the completion of the Operation, the following operations have taken place since 30 June 2017: - on 22 August 2017, the Board of Directors: recognised the exercise of 52,822 BSAR2009 issued by decisions of the Board dated 13 May 2009, thus increasing the Company s share capital by 5, euros through the creation and issuance of 13,205 new shares; recognised the exercise of 450,000 BSAR issued by decisions of the Board dated 30 June 2010 and 5 July 2011, thus increasing the Company s share capital by 9.995,4 euros through the creation and issuance of 25,000 new shares; recognised the consequential amendments to the articles of association; decided to allocate bonus shares to employees and/or executives of the Company, using the delegation of authority granted by the Annual Ordinary and Extraordinary General Meeting of 8 June 2017; Page 9

10 decided to allocate bonus shares to employees and/or executives of the Company, using the delegation of authority granted by the Annual Ordinary and Extraordinary General Meeting of 8 June 2017; - under the terms of decisions dated 19 September 2017, the President and CEO recognised the exercise of 104 BSAR2016 issued by a decision of the Board of Directors dated 14 March 2016, thus increasing the Company s share capital by euros through the creation and issuance of 52 new shares; - on 2 October 2017, the Board of Directors: reviewed and approved the Company s financial statements for the first half of 2017; recognised the exercise of 19,770 BSAR2009 issued by decisions of the Board dated 13 May 2009, thus increasing the Company s share capital by 1.975,89 euros through the creation and issuance of 4,942 new shares; prepared and approved this financial report for the first half of 2017; appointed of a new member of the Scientific Committee. As a result of the operations referred to in paragraphs 1.2 and 3 of this report, the Company s share capital is fixed to the sum of 4,393, euros divided into 10,989,388 shares. 4. OUTLOOK Considering the aforementioned capital increase carried out in July 2017 ( 8.2 M) and the available cash at 30 June ( 7.3 M), the Company has the financial resources to continue its development programmes until mid Page 10

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15 Cash flow statement in K S Net result of the period Non-cash adjustment to net result Adjusted net result Change in inventories Change in Account Receivables 7 Change in Account Payables Change in Tax and employee-related payables Change in Other Liabilities and Deferred Income Change in Other Receivables and Prepaid Expenses Change in Working Capital Requirement CASH FLOW FROM OPERATING ACTIVITES Capital Expenditures (intangible assets) Capital Expenditures (tangible assets) Change in financial assets CASH FLOW FROM INVESTING ACTIVITES Share Capital Increase (net of transaction costs) Loan / Financial debts 0 Loan and current account repayment Others - Subsidies / Grants (BPI France) CASH FLOW FROM FINANCING ACTIVITES Cash position at the beginning of the period Cash position at the end of the period CHANGE IN CASH Page 15

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39 STATUTORY AUDITOR S REPORT Page 39

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