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Interim Results for the Six Months Ended 30 June 2023
Arix Bioscience PLC (ARIX)
Arix Bioscience plc
Interim Results for the Six Months Ended 30 June 2023
LONDON, 27 September 2023: Arix Bioscience plc (“Arix” or the “Company”) (LSE: ARIX), a transatlantic venture capital company focused on investing in breakthrough biotechnology companies, announces its interim results for the six months ended 30 June 2023.
Financial Highlights
Operational and Strategic Highlights
Portfolio Highlights
Post Period-end
Robert Lyne, CEO of Arix, commented:
“Following the announcement of the strategic review in July 2023, the Board has been exploring a range of strategic options for the Company. Currently, a number of options remain under active consideration and the Board is focused on evaluating these in conjunction with its advisers. The Board expects to have concluded this process soon and will provide a further update to shareholders as soon as possible.” Analyst Briefing: 9:00am BST Today, Wednesday 27 September 2023 Management will host a virtual briefing for Analysts at 9:00am BST today. Analysts wishing to join should register their interest by contacting Powerscourt on arix@powerscourt-group.com or on +44 (0) 20 7290 1050. Investor Presentation: 1:00pm BST Today, Wednesday 27 September 2023 Management will be hosting a live presentation and Q&A session via the online platform, Investor Meet Company, at 1:00pm BST today. The presentation is open to analysts and all existing and potential shareholders. Questions can be submitted pre-event via the Investor Meet Company dashboard or at any time during the live presentation via the "Ask a Question" function. Investors can sign up to Investor Meet Company for free via: https://www.investormeetcompany.com/arix-bioscience-plc/register-investor Investors who already follow Arix on the Investor Meet Company platform will automatically receive an invitation to the event.
[ENDS] Enquiries For more information on Arix, please contact:
Arix Bioscience plc +44 (0)20 7290 1050
Powerscourt Group Sarah MacLeod, Ibrahim Khalil, Nick Johnson +44 (0)20 7250 1446
About Arix Bioscience plc Arix Bioscience plc is a transatlantic venture capital company focused on investing in breakthrough biotechnology companies around cutting-edge advances in life sciences.
We collaborate with exceptional entrepreneurs and provide the capital, expertise, and global networks to help accelerate their ideas into important new treatments for patients. As a listed company, we are able to bring this exciting growth phase of our industry to a broader range of investors. www.arixbioscience.com
Half-Yearly Report and Condensed Consolidated Interim Financial Statements
Six months ended 30 June 2023
Chief Executive Statement
Overview
The first half of the 2023 financial year saw an improvement in the NAV of £13 million, from £226 million at 31 December 2022 to £239 million at 30 June 2023. This translated to a NAV per share movement from 175p per share to 185p per share, driven by an increase in the underlying value of our listed portfolio. Over the period 1 January 2023 to 30 June 2023, there were mark to market gains in Aura Biosciences (£2.2 million), Disc Medicine (£12.7 million) and Enliven (£1.9 million) as well as a £3.5 million gain in the Public Opportunities Portfolio. To put these strong gains into context, during the same period, our benchmark index, the XBI, rose by only 2%. These positive evaluations were only marginally offset by a cumulative negative FX movement of £2.3 million. £16.8 million was deployed into new listed investments during the period, £16.4 million of which was into the Public Opportunities Portfolio and £0.4 million into Disc Medicine after its IPO. The investment into Disc Medicine was realised later in the period at more than 2x, realising £1.1 million. The cumulative effect of these gains, investments and realisations saw the total value of our listed portfolio increase by 41% to £68 million at period-end (31 Dec 2022: £45 million).
The unlisted portfolio saw only two minor changes in fair value, with the remaining holding value of STipe written-off at the half-year, resulting in a £1.2 million impairment. The decision to write-off this investment through the sale of shares back to the company at nominal value reflects the challenge facing STipe in executing its preclinical work. This loss was offset by a £1.2 million increase in the value received from Ensoma’s acquisition of Twelve Bio, which completed during the period. The £6.2 million value of Ensoma equity received by Arix in exchange for the holding in Twelve Bio is priced at the December 2022 Series B round, in which Arix also participated, and reflects all shares received as part of the acquisition. There was a significant new addition to the unlisted portfolio during the period, with £6.6 million invested in Evommune. Together with a £2.9 million investment in Harpoon’s redeemable preference share issue and the £4.0 million draw down of the second tranche of Sorriso’s Series A, investment into the unlisted portfolio totalled £13.5 million in the period, excluding the impact of the Twelve Bio acquisition. With a cumulative negative FX impact of £1.7 million, the total value of our unlisted portfolio, legacy assets and other interests increased to £69 million at period-end (31 Dec 2022: £58 million).
Net investments of £6.0 million into the Public Opportunities Portfolio, and £13.5 million into the unlisted portfolio, together with a £0.7 million net gain on our Disc Medicine purchase and sale, contributed to a net cash reduction of £21.8 million to £101.0 million at period-end (31 Dec 2022: £122.8 million).
Strategic Review
In light of the unfavorable prevailing market conditions and in response to engagement with shareholders following release of the Annual Report to 31 December 2022, a strategic review was announced in July 2023 which would include a consideration of:
The Board has been exploring a range of alternatives as part of this review. Currently, a number of options remain under active consideration and the Board is focused on evaluating these in conjunction with its advisers. The Board expects to have concluded this process soon and will provide a further update to shareholders as soon as possible.
Leadership Change
As announced separately today, I will be stepping down from my position as CEO and leaving the company by the end of the year. The Board will determine the appropriate Board and management arrangements following the outcome of the strategic review and update shareholders accordingly.
Portfolio Update for the six months to 30 June 2023: a robust performance
Prolonged uncertainty, volatile market conditions and depressed biotech valuations have resulted in fewer new investments during the period with a continued focus on cash conservation. Weak public markets have limited the funding opportunities for many biotech companies and in turn reduced the competitive tension which drives the M&A market. Despite these pressures, we are delighted to see our portfolio companies trading well relative to peers in their respective stages in the clinical process and therapeutic areas.
Overall, the portfolio made good operational progress in the period, with several companies reaching important clinical milestones. Three portfolio companies raised funds totalling $327.5 million. We co-led a $50 million Series B financing for new portfolio company Evommune, a clinical-stage biotechnology company inventing new ways to treat inflammatory diseases. Subsequently, Evommune announced the closing of an additional $7.5 million extension to its Series B financing from new investor Verition Fund Management, bringing the total raised in the Series B round to $57.5m. Meanwhile, Disc Medicine enjoyed two further rounds of funding, raising a total of $220 million in 2023, and Ensoma completed a Series B extension, raising an additional $50 million.
Clinical Companies
Artios Pharma - £24.9m (31 Dec 2022: £24.9m), 10.4% of NAV, 8.8% ownership stake
Artios Pharma is pioneering the development of novel small molecule therapeutics that target the DNA damage response (DDR) process to treat patients suffering from a broad range of cancers.
During the period, Artios initiated a Phase 2 randomised trial for its ATR inhibitor ART0380 plus Gemcitabine in Patients with Platinum Resistant Ovarian Cancer. The initiation of the Phase 2 trial follows the successful Phase 1 dose escalation demonstrating a favourable safety and tolerability profile, clinical activity, and preferred pharmacokinetics in advanced solid tumours.
The company also launched a national project with IUCT-Oncopole, a cancer care, research and training centre in Toulouse, France, to overcome resistance to therapies for familial breast cancer.
Aura Biosciences - £14.7m (31 Dec 2022: £13.1m), 6.2% of NAV, 4.0% ownership stake
Aura Biosciences is a Nasdaq listed, clinical-stage company developing a novel class of virus-like drug conjugate (VDC) therapies for multiple oncology indications, including ocular and urologic cancers.
During the period, Aura announced positive interim Phase 2 safety and efficacy data of Belzupacap Sarotalocan (bel-sar) that showed an excellent response to therapy with 89-100% tumour control in patients with early-stage Choroidal Melanoma with suprachoroidal (SC) administration. The interim data provides strong confidence to support the launch of the global Phase 3 trial which is on track to dose the first patient this year.
Bel-sar was granted Fast Track Designation by the FDA for the treatment of Choroidal Metastasis, its second ocular oncology indication to receive this designation, highlighting the need for vision preserving treatment options.
The Phase 1 trial of bel-sar for the treatment of non-muscle invasive bladder cancer is currently ongoing, and Aura expects to report Phase 1 data in 2024.
Disc Medicine - £20.7m (31 Dec 2022: £9.0m), 8.7% of NAV, 2.6% ownership stake
Disc Medicine is a clinical stage company dedicated to the discovery and development of novel therapeutic candidates for serious and debilitating haematological diseases based on fundamental pathways of red blood cell biology.
Following the completion of its merger with Gemini Therapeutics in December 2022, Disc became a Nasdaq-listed company trading as Disc Medicine and focused on advancing Disc’s pipeline of haematology programmes. During the first half of 2023, the company raised total gross proceeds of $220 million from a $62.5 million registered direct offering and $157.9 million upsized public offering, providing the company with cash runway well into 2026.
The company also announced:
Evommune - £6.4m, 2.7% of NAV, 3.4% ownership stake
Evommune is a private clinical-stage company inventing new ways to treat inflammatory diseases. The company is evolving immunology through its unique and dynamic human tissue-based approach to discovering, developing, and delivering therapies that address symptoms and halt progressive disease.
In April, Arix co-led the $50 million Series-B for Evommune alongside existing investors EQT Life Sciences and SymBiosis and invested £6.6 million in the round.
In June 2023, Evommune announced the closing of an additional $7.5 million to its Series B financing from new investor Verition Fund Management, bringing the total raised in the Series B round to $57.5 million.
The capital raised will support Evommune’s pipeline of programs, including EVO101, a novel small molecule inhibitor of interleukin 1 receptor-associated kinase 4 (IRAK4), currently in Phase 2a trials, with data expected in Q4 2023. The financing will also advance EVO756, a small molecule inhibitor of the mast cell receptor MRGPRX2, through clinical data readouts.
Harpoon Therapeutics - £4.0m (31 Dec 2022: £1.3m), 1.7% of NAV, 5.8% ownership stake
Harpoon Therapeutics is a clinical-stage immunotherapy company developing a novel class of T cell engagers that harness the power of the body’s immune system to treat patients suffering from cancer and other diseases.
During the period, Harpoon completed a $25 million private placement of redeemable preferred stock and warrants to purchase common stock to certain institutional and other accredited investors.
Harpoon also completed enrolment of patients in their Phase 1 study of HPN217 in Relapsed/Refractory Multiple Myeloma, with data presentation and selection of Phase 2 dose expected by year end.
Post-period in September 2023, Harpoon announced that Abbvie will not exercise the exclusive license option in connection with Harpoon’s HPN217 program, which targets B cell maturation antigen, or BCMA. The program will remain exclusively owned by Harpoon, and the company plans to complete the ongoing Phase I clinical trial with data to support the next phase of development.
Also in September, the company began dosing the first patients with small cell lung cancer (SCLC) in an ongoing Phase 1/2 trial of HPN328, a DLL3 targeting TriTAC®, in combination with atezolizumab (Tecentriq®) as supplied by F. Hoffmann-La Roche as part of a Master Clinical Supply Agreement.
Imara now Enliven - £9.4m (31 Dec 2022: £7.8m), 3.9% of NAV, 1.4% ownership stake
In February 2023, Enliven entered the public market via reverse merger with Imara Inc. (previously Nasdaq: IMRA). Concurrent with the merger, Enliven completed a $165 million private placement with participation from new and existing investors. Following the transaction, Enliven is expected to have a cash runway into early 2026 with multiple clinical milestones along the way.
Enliven continues to progress its parallel lead programs, ELVN-001 and ELVN-002, through dose escalation in Phase 1 trials, with initial proof of concept data for both programs expected in 2024.
Preclinical Companies
Sorriso Pharmaceuticals - £10.2m (31 Dec 2022: £6.6m), 4.3% of NAV, 26.1% ownership stake
Sorriso Pharmaceuticals is a biotechnology company advancing a pipeline of disease-modifying antibodies for the treatment of inflammatory diseases, including Crohn’s disease and ulcerative colitis.
During the period the company has made good progress preparing for initiation of Phase 1 clinical development in 2023. The company remains on track to enter clinical trials in H2 2023.
Drug Discovery and research-stage companies (8.8% of NAV)
These companies are start-ups in the initial stages of research and development.
Depixus - £8.0m (31 Dec 2022: £8.2m), 3.3% of NAV, 14.2% ownership stake
Depixus is developing technology for the fast, accurate and inexpensive extraction of genetic and epigenetic information from single molecules of DNA and RNA.
Having closed the Series A financing in December 2021, during the period, the company continued to make good progress and plans to provide further updates in H1 2024.
Twelve Bio now Ensoma - £13.0m (31 Dec 2022: £12.5m), 5.4% of NAV, 6.0% ownership stake
Twelve Bio was acquired by Ensoma as of 8 February 2023.
Ensoma is a genomic medicines company developing one-time in vivo treatments that precisely engineer any cell of the hematopoietic system. The company’s Engenious™ platform combines innovative delivery technology with the full DNA editing toolkit to tackle diseases that affect millions around the world, such as cancer and autoimmune disease, as well as inherited conditions.
Following Ensoma’s $85 million financing led by Arix in January, Ensoma closed a Series B extension financing in May, raising a further $50 million, bringing the total round to $135 million. The $50 million was contributed by new investors Kite, a Gilead company (Nasdaq: GILD), Bioluminescence Ventures and Delos Capital and by existing investor SymBiosis.
Stipe Therapeutics
As part of our ongoing process to align our investments with our strategy, and following adjustments to its carrying value in prior years, a decision was made in the period to fully exit our position in Stipe for a nominal amount.
Public Company Investments
Public Opportunities Portfolio - £22.1m (31 Dec 2022: £13.4m), 9.2% of NAV
During the period we have invested £16.4 million into the Public Opportunities Portfolio (“POP”), investing across seven companies that we believe have the potential to deliver positive clinical data over the next 6 to 18 months. Given the challenging state of the public markets for biotech funding, a key criterion has been that all of these businesses are well funded through to these milestones, to reduce the risk of dilutive new fundraising. Through the half year we have had multiple positive data read-outs from this portfolio. In a period of continued volatility, this has helped the POP to increase to its current value of £22.1 million at the half year, reflecting an unrealised gain of £3.5 million against the cost to date. The POP has subsequently recorded an overall gain and we see significant upside potential as further milestones and data read-outs are reached.
Outlook
The last two years have seen one of the biotech sector’s longest and most sustained reductions in both valuations and M&A activity. This has inevitably impacted Arix’s financial and stock market performance since 2021 and informed the Board’s decision to maintain significant cash balances to provide downside protection for investors during this time.
Despite this wider macro environment, improvements in the Group’s NAV, in listed and unlisted assets, demonstrates both the value of this strategy as well as positive signs of recovery in the broader biotech sector. Underpinned by a robust balance sheet and improving NAV, Arix remains well positioned to further fund the portfolio, where necessary, while it strives to reach a resolution to its strategic review.
Robert Lyne
Chief Executive Officer
Condensed Consolidated Interim Statement of Comprehensive Income
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