Tiziana Life Sciences plc — FY 2019 Form 20-F
Reporting period: Year ended December 31, 2019; filed June 17, 2020, after a COVID-19-related filing delay. This is an annual report, not a standalone fourth-quarter filing, and the supplied filing text does not provide separate Q4 financial results. Financial statements are prepared under IFRS and presented in U.S. dollars. Comparative 2018 figures are restated where indicated.
Business context
Tiziana is a pre-revenue, clinical-stage biotechnology company developing treatments and diagnostics for oncology and immune diseases. Its principal programs are Foralumab, an anti-CD3 antibody; Milciclib, a small-molecule kinase inhibitor; TZLS-501, an anti-IL-6R antibody; and StemPrintER, a breast-cancer prognostic test. The company reported no product sales and relied on external financing, tax credits and shareholder funding.
Financial performance and position
| Metric | FY 2019 | FY 2018 (restated) |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense | $3.714 million | $5.510 million |
| General and administrative expense | $6.207 million | $4.357 million |
| Total operating expenses / operating loss | $9.921 million | $9.867 million |
| Finance expense, net | $91,000 | $12,000 |
| Income tax credit | $689,000 | $1.945 million |
| Net loss | $9.323 million | $7.934 million |
| Basic and diluted loss per share | $0.07 | $0.06 |
| Net cash used in operating activities | $6.796 million | $4.602 million |
| Cash and cash equivalents at year-end | $200,000 | $5.304 million |
| Working capital | $(5.846) million | $513,000 |
| Total assets / total liabilities | $2.378 million / $7.892 million | $6.920 million / $6.401 million |
| Shareholders’ equity (deficit) | $(5.514) million | $519,000 |
Gross and operating margins are not meaningful because the company had no revenue. The filing does not provide a clear standalone debt-total measure: the October 2019 $1.85 million, 16%-coupon convertible notes were classified as equity under the stated terms, while the balance sheet separately reports $820,000 of lease liabilities. The filing also discloses a $313,000 Planwise convertible debt balance and a related-party short-term loan facility from OKYO; see verification items below.
Material changes versus the prior comparable period
- Net loss widened by $1.389 million, despite total operating expenses increasing only $54,000. R&D expense fell $1.796 million as major Milciclib and Foralumab trials completed; G&A rose $1.850 million.
- Management attributed higher G&A chiefly to a $600,000 increase in option-related expense versus the prior-year charge, $600,000 of foreign-exchange expense movement, $200,000 of IFRS 16-related expense and $200,000 more insurance expense.
- Operating cash outflow increased $2.194 million. Year-end cash fell $5.104 million from 2018, while financing provided $1.680 million in 2019 versus $10.091 million in 2018.
- Current assets declined to $1.505 million while current liabilities rose to $7.351 million, leaving negative working capital of $5.846 million.
- The company adopted IFRS 16 on January 1, 2019, recognizing a $1.098 million right-of-use asset and lease liability at transition. It also restated prior-period accounting for warrants, affecting reported comparative figures but not total equity at the dates shown.
Liquidity, financing and going concern
The auditor reported a material uncertainty related to going concern: at December 31, 2019, Tiziana had $200,000 cash, $5.514 million net liabilities and a $9.323 million annual loss. The auditor noted that the company raised $12 million in new equity after year-end, but said further substantial funding was required for clinical programs and working capital. The audit opinion was not modified, but the uncertainty remained.
Management said its projections supported meeting liabilities for 12 months from issuance of the financial statements, while acknowledging material uncertainty beyond that period without additional investment. The filing describes an October 2019 $1.85 million convertible financing at 16% per year; the notes were converted into shares in April 2020. The March 2020 follow-on offering raised approximately $10 million gross, and the company later established an ATM program of up to $20 million. These post-year-end proceeds and conversions do not change the reported December 31, 2019 cash balance.
Outlook, management commentary and risks
- Foralumab: Phase 1 nasal and oral studies in healthy volunteers were reported as well tolerated, with biomarker findings for nasal dosing. Management planned a Phase 2 study in progressive MS in Q4 2020 and a Phase 2 Crohn’s disease study in Q2 2021. These were plans, not completed trials or established efficacy.
- Milciclib: The Phase 2a HCC monotherapy study was completed in 2019. Among 28 evaluable patients, the filing reports median time to progression and progression-free survival of 5.9 months, stable disease in 57%, one unconfirmed partial response and a 61% clinical-benefit rate. Management planned a Phase 2b HCC combination study with sorafenib or regorafenib in 2021. Results are from a limited, single-arm study and do not establish comparative benefit.
- TZLS-501: The company accelerated preclinical development and manufacturing for potential COVID-19 and multiple-myeloma applications. Its COVID-19 rationale and comparative claims were based on preclinical evidence and management’s views; the filing provides no clinical efficacy results for TZLS-501.
- StemPrintER: Further independent-cohort validation was in preparation. The company reported favorable comparisons with Oncotype DX, but the diagnostic was not described as approved or commercially validated.
- Principal risks: substantial ongoing funding needs and going-concern uncertainty; clinical, regulatory and patient-enrollment failures or delays; adverse effects; dependence on third-party manufacturers and CROs; limited and licensed intellectual property; competitive and reimbursement pressures; currency exposure without hedging; and possible COVID-19 disruption to trials, suppliers and financing.
- Controls and reporting: Management concluded disclosure controls and internal control over financial reporting were ineffective at year-end because of material weaknesses, including inadequate accounting resources and control-environment deficiencies. Management described remediation plans but gave no assurance they would be completed successfully.
- Other unusual matters: the company disclosed a data-protection legal issue that prevented use of a purchased DNA-sample repository; no contingent liability was recorded because the outcome was uncertain. It also reported no material legal proceedings and no off-balance-sheet arrangements.
Important facts for investors to verify
- Reconcile the auditor’s statement that $12 million of post-year-end equity was raised with the disclosed $10 million March offering, subsequent ATM proceeds and other financing activity; distinguish gross proceeds from net cash received.
- Confirm the full status and accounting of the October 2019 convertible notes after their April 2020 conversion, the $313,000 Planwise balance, the OKYO loan facility and related-party amounts, and the 16% and 20% interest terms disclosed for different financing.
- Track cash runway, payables, negative working capital and lease obligations, and whether additional financing is sufficient to fund the stated clinical plans and liabilities.
- Check remediation of the disclosed material weaknesses and review the restated 2018 figures and warrant-accounting adjustments against the audited statements.
- Assess clinical evidence independently: the small Foralumab Phase 1 studies primarily address safety and biomarkers; the Milciclib HCC study was limited and single-arm; and TZLS-501 had no clinical efficacy data in the filing.
- Verify whether management’s planned trial timelines, manufacturing readiness, regulatory submissions and StemPrintER validation were subsequently achieved.