Preliminary results for the year ended 31 July 2015

28 October, 2015 – C4X Discovery Holdings plc (“C4XD”), a leader in rational drug discovery and design, is pleased to announce its preliminary results for the year ended 31 July 2015.

Corporate Highlights

  • Successful IPO on AIM completed in October 2014 raising £11.0 million before expenses
  • Orexin programme candidate drug progressed into formal pre-clinical and safety studies
  • Renewal of our collaboration with Evotec AG (“Evotec”) providing access to C4XD’s conformational design technology
  • Renewal of our collaboration with Takeda Cambridge Ltd (“Takeda”) providing access to C4XD’s conformational design technology
  • Entered into research agreement with Evotec to develop back up series for C4XD’s Orexin programme
  • Expansion of senior team to provide biology, pre-clinical and early stage clinical expertise

Financial highlights

  • Cash, cash equivalents and deposits at 31 July 2015 of £7.5 million (31 July 2014: £0.7 million)
  • Total assets at 31 July 2015 of £8.7 million (31 July 2014: £1.2 million)

Progress since year end

  • Collaboration with the University of Oxford’s Structural Genomics Consortium department (“SGC-Oxford”), providing access to protein structural information, expressed protein and assays
  • Identified novel lead molecules that activate GPR142, a key factor in the production of insulin
  • Designed novel activators for the NRF-2 pathway, important in mediating diseases such as Chronic Obstructive Pulmonary Disease (“COPD”) and Multiple Sclerosis (“MS”)

Chairman’s statement

“With the successful IPO, C4XD has secured the funding that enables us to advance our lead programme in Orexin, for the treatment of addiction, into formal pre-clinical safety and toxicity studies,” stated Clive Dix, Chairman of C4XD. “We have also designed lead compounds against multiple targets, further validating our platform. The support and confidence of our collaboration partners, AstraZeneca, Evotec and Takeda, now joined by the Structural Genomics Consortium provides independent recognition of the significant impact our novel approach can make in enabling ultra rational drug design. I am delighted with the progress made since IPO and believe the business is well positioned to deliver future value for shareholders.”

For further information please contact:
C4X Discovery Holdings plc
Piers Morgan, CEO 07912 293832

Zeus Capital
Dan Bate / Jonathan Sharp 0161 831 1512
Dominic Wilson 020 3829 5000

FTI Consulting
Matthew Cole / Brett Pollard / Rob Winder / Matthew Moss 020 3727 1000

C4XD began trading on the AIM market of the London Stock Exchange in October 2014 under the ticker symbol C4XD. For further information please visit: www.c4xdiscovery.com.

CHAIRMAN’S AND CHIEF EXECUTIVE OFFICER’S JOINT REVIEW

C4XD is a drug discovery and development company with a unique platform that enables us to develop therapies to treat a wide range of diseases. We are currently working on proprietary programmes against certain targets to treat:

  • addiction via Orexin-1 (Ox-1);
  • Chronic Obstructive Pulmonary Disease (COPD) and inflammation via NRF-2;
  • diabetes via GPR142 and GLP-1; and
  • inflammation and autoimmune diseases via Interleukin 17 (IL-17),

all of which represent multi-billion dollar market opportunities and where there is substantial unmet medical need.
C4XD’s proprietary platform enables it to generate better and safer drug candidates much faster and more affordably than is generally possible using conventional small molecule pharmaceutical industry approaches.

The C4XD platform is the only technology in the world that can generate accurate, experimentally-derived dynamic solution 3D structures of drug molecules in just a matter of days, helping to accelerate product development. Our conformational insights can be used in conjunction with existing technologies for rational drug design and can make a particularly high impact when protein crystallography for the drug target is not routinely available, as is the case for GPCRs (G-protein-coupled receptors, such as Orexin receptors) and ion channels.

Addiction

The treatment of addiction represents a substantial area of unmet medical need, forecast to be worth an estimated $13 billion per annum by 2018. C4XD’s lead programme, targeting Orexin-1, could represent a major new method of treating addiction. We have patented a number of distinct chemical series, providing us with a lead programme and multiple follow-up programmes. We expect to file the application for our lead programme to enter clinical development by the end of 2016, and we continue development of other follow-up programmes. We believe this broad approach will underpin a substantial licensing transaction with a pharmaceutical company in the future.

The Orexin-1 receptor is of particular interest to the pharmaceutical industry for the development of treatments for stress-related addictive disorders (e.g. binge eating, alcohol, nicotine, cocaine and opiate addictions). However, to date no drug candidate that specifically targets Orexin-1 has progressed into clinical development, in large part due to the difficulty in identifying candidates that are specific only to Orexin-1. In particular, there is another receptor, Orexin-2, that appears to be structurally very similar to Orexin-1 but which has a very different biological function, and it has proved highly challenging to develop drug candidates which will target Orexin-1 selectively, without targeting Orexin-2.

C4XD’s programme has identified multiple lead compounds with more than 1,000-fold selectivity for Orexin-1 over Orexin-2. From these we have selected a candidate drug which we have progressed into formal development. This represents a key step for the Company and we expect to file with regulatory authorities by the end of 2016 to enable clinical development.

Chronic Obstructive Pulmonary Disease (COPD)

COPD, an umbrella term for a group of progressive lung diseases including chronic bronchitis and emphysema (or smokers cough), is another area of substantial unmet medical need, and the market opportunity is estimated at $44-48 billion per annum.

The pathway targeted by C4XD, the NRF-2/Keap-1 protein complex (“NRF-2”), plays a significant role in COPD, and which also has other potential applications in areas such as Inflammatory Bowel Disease, Multiple Sclerosis, Rheumatoid Arthritis and Cancer.

C4XD has already developed some of the most potent compounds so far reported against NRF-2, based on searches of scientific literature. We expect to test our compounds in a disease model during 2015 and, if the results are encouraging, this programme could progress to clinical development over the next two years.

Diabetes

Diabetes is a large and growing market, estimated to be worth $50 billion per annum by 2016. Although current treatments exist, healthcare professionals would prefer more oral treatments to replace current therapies which require injection. Oral therapies offer the opportunity of lower cost, easier administration, and improved patient compliance. C4XD currently holds two separate grants from the UK’s innovation agency, Innovate UK, to research new therapies to treat diabetes, targeting GPR142 and GLP-1 respectively.

GPR142, is a key factor in the production of insulin. Targeting GPR142 may stimulate insulin production in a glucose-dependent manner, avoiding the hypoglycaemia risk associated with existing diabetes therapies. GPR142 has recently become the focus of considerable research and patent activity within the pharma industry. Using its proprietary technology, C4XD has identified critical drug design principles, enabling us to generate potent, orally available compounds in just a few months.

GLP-1 is another important diabetes target. The market leader for GLP-1 agonists, Victoza®, achieved 2014 sales of $2.4 billion. However it is a monoclonal antibody which requires injection and is expensive to manufacture. C4XD believes there is a significant opportunity to develop a more convenient oral therapy.

Inflammation and autoimmune diseases

IL-17 is implicated in multiple inflammatory and autoimmune diseases and is the subject of numerous clinical studies. Current attempts to target IL-17 are largely based around monoclonal antibodies, which have the necessary size required to inhibit the IL-17/IL-17R engagement. Historically, identifying small molecules that specifically inhibit the IL-17 pathway has been extremely challenging, but our technology has identified small molecules that can selectively block the IL-17/IL-17R interaction with high potency. These are conventional, drug-like compounds, for oral and/or topical use, which would offer benefits over injectable therapies such as IL-17 antibodies. We aim to advance our IL-17 programme towards optimisation and in vivo validation over the coming months.

The first significant market to be targeted by IL-17 antibodies is psoriasis, which is estimated to be worth $6bn per annum. Other significant IL-17 market opportunities include psoriatic arthritis and ankylosing spondylitis, together estimated to be worth a further $6bn per annum.

Conformational Design Platform

C4XD’s platform enables the accurate measurement of the shapes of small molecules in solution. This is particularly relevant for the shapes of small molecule drugs in the human body because we can mimic the actual bodily conditions at the site where the drug will act, including temperature, pH and other factors.

The ability to measure molecular shapes enables C4XD to better understand how the small molecule binds to the target protein. C4XD uses this to design novel shapes that may bind more effectively to make better, more potent lead molecules. C4XD can also learn which shapes risk binding to other proteins, which could give rise to off-target effects (side effects), and can design lead molecules to exclude these conformations, giving safer lead molecules.

The C4XD proprietary software analyses data from conventional Nuclear Magnetic Resonance (“NMR”) equipment through proprietary software, including a patented algorithm, to provide the conformational information which can then be used to drive medicinal chemistry structural design. C4XD is the only company able to generate this level of experimentally derived conformational information, giving it an advantage in efficiently designing and optimising novel small molecule candidate drugs.

Collaborations

C4XD has collaborations with AstraZeneca, Evotec and Takeda which enable them to access our conformational approach for use in their own programmes. These relationships validate the power and utility of our technology platform.

After the year end, C4XD has also signed an agreement with the University of Oxford’s Structural Genomics Consortium department (“SGC-Oxford”). SGC-Oxford is part of the Nuffield Department of Clinical Medicine and consists of around 100 scientists who collaborate widely with major pharma companies and the worldwide academic network, including several other University Departments, such as the Kennedy Institute of Rheumatology, the Botnar Research Centre and the Nuffield Department of Orthopaedics, Rheumatology and Musculoskeletal Sciences (NDORMS). These scientists combine world-class expertise in therapeutic target validation, protein expression, assay development and protein structural information. To date, SGC has been funded by the members of a consortium of major pharmaceutical companies and public health bodies, including Abbvie, Bayer, Boehringer Ingelheim, Johnson & Johnson, Merck, Novartis, Pfizer, Takeda and the Wellcome Trust, each of whom donates $8 million towards running costs.

Under the terms of the collaboration C4XD will be granted access to structural, biological and therapeutic information that SGC-Oxford holds in relation to various therapeutic targets and related assays, as well as initial ‘hit’ molecules that SGC-Oxford has identified against these targets. C4XD’s expertise in ligand design will be used to complement SGC-Oxford’s expertise in x-ray crystallography, screening and chemical biology in the identification of new and improved hit molecules against the SGC-Oxford targets.

Improvements made to SGC-Oxford’s existing hit molecules will be the exclusive property of SGC-Oxford, which will make them freely available in line with SGC-Oxford policy, while new compounds independently identified by C4XD will belong to C4XD. There are no cash payments due under the collaboration.

Other applications

The C4XD platform can also be used to predict and control the different crystalline forms which small molecules are able to adopt. These different forms have different properties and these insights are valuable in the development of robust, consistent manufacturing processes for small molecule therapies which are administered in solid form; different crystalline forms often dissolve at different rates which alters the effective dosing for patients. Control and consistency of solid formulations is therefore an important part of pharmaceutical supply.

Management

C4XD has expanded its management team during the year adding expertise in biology, pre-clinical and clinical development, and Project Management. Dr Almond has informed the company that he has stepped down as CTO to pursue his full-time academic career at Manchester University and has resigned as Chief Technology Officer (“CTO”) of the company with immediate effect; the company has entered into a consultancy agreement on arm’s length terms with Dr Almond to secure continued access to his expertise in the future. Dr Charles Blundell has taken on the role of CTO, and is succeeded as CSO by Dr Craig Fox, who joined the company in June 2015. C4XD believes it has the right balance of skills to progress the business.

Outlook

C4XD has made significant progress since IPO and the business is well positioned to deliver future value for shareholders. In particular, the progression of the Orexin-1 programme has shown that the Company is able to generate candidate drugs for important clinical targets more efficiently than conventional approaches, with savings of up to 90%; part of this cost saving derives from the faster progress which can reduce the time required by up to 50%. The Company is well on the way to replicating this success in its other programmes with exciting progress announced since the year end in IL-17 for inflammation and autoimmune diseases, GPR142 for diabetes, and NRF-2 for COPD. The Company believes that these programmes have the potential to deliver significant returns to investors.

Clive Dix                                                   Piers Morgan
Chairman                                                  Chief Executive Officer

FINANCIAL REVIEW

Results

Revenue for the twelve months ended 31 July 2015 amounted to £312,000 (2014: £619,000). These revenues are largely generated through collaborations with our partners. Grants secured are accounted for as a reduction in research and development (“R&D”) expenses.

R&D expenses were £3,159,000 for the year ended 31 July 2015 (2014: £1,180,000), reflecting the increase in activity and headcount following the successful move to AIM and the positive progress being made, particularly with our Orexin programme.

Administrative expenses were £904,000 for the year ended 31 July 2015 (2014: £636,000) reflecting, amongst other things, additional operating costs incurred by C4XD as an AIM listed company. The cost of issuing new share capital on the move to AIM, which amounted to £877,000, has been charged against the share premium account.

The loss after tax for the year ended 31 July 2015 was £3,064,000 or 10.77 pence per share (2014: £1,118,000 or 5.60 pence per share).

The Company had net assets at 31 July 2015 of £7,968,000 (2014: net liabilities of £1,333,000) and cash, cash equivalents short term investments and deposits of £7,485,000 (2014: £673,000).

C4XD expects to continue to increase its expenditure on research and development as its programmes, including the Orexin-1 programme, progress through further pre-clinical development during the subsequent years. The Orexin-1 programme has entered into formal pre-clinical safety and toxicity testing which is significantly more expensive than early stage discovery. C4XD expects to file for approval to commence clinical studies by the end of 2016; these subsequent studies in man will be more costly than pre-clinical work.

Both cash and costs continue to be prudently and tightly managed.

Piers Morgan
Chief Executive Officer