E therapeutics : Annual Report for the year ended 31 January 2021

Accelerating the path to better therapies

Annual Report 2021

We Construct

in-silico Models of Biological Functions

We Identify

Novel Targets and Mechanisms

We Design

Novel Small Molecules and RNAi Therapeutics

Strategic Report

01 Highlights

02 Chairman's Statement

1. Chief Executive Officer's Statement

1. Our Business Model

1. Our Approach

1. Our Strategy

1. Our People

1. Financial Review

1. Key Performance Indicators

1. Risk Management

1. S.172(1) Statement

Governance

28 Executive Team

1. Scientific Advisory Board
2. Board of Directors
3. Directors' Report

1. Corporate Governance Statement

1. Audit Committee Report
2. Directors' Remuneration Report

1. Directors' Responsibilities Statement

Financial Statements

1. Independent Auditor's Report to the Members of e-therapeutics plc

1. Consolidated Income Statement

1. Consolidated Statement of Comprehensive Income
2. Consolidated Statement of Changes in Equity
3. Balance Sheets
4. Consolidated Statement of Cash Flow
5. Company Statement of Cash Flow
6. Notes to the Consolidated Financial Statements

Other

77 Notice of Annual General Meeting

1. Explanatory Notes to the Resolutions

1. Advisers

Highlights

Fundraises during the year are enabling the Group's next stage of growth and value creation

REPORT STRATEGIC

Financial

Revenue

£0.3m

(2020: £0.5m)

Year end cash

£13.0m

(2020: £3.8m)

Increase/(decrease) in cash in the year

£9.2m

(2020: £(2.1)m)

Operational

Management restructure and subsequent appointment of Ali Mortazavi as CEO

Ali Mortazavi joined us as Executive Chairman towards the start of the year with Iain Ross stepping down as Non-Executive Chairman, Ray Barlow stepping down as Chief Executive Officer and Steve Medlicott stepping down as Chief Financial Officer. Reflecting his commitment to e-therapeutics, with effect from 12 October 2020, Ali Mortazavi was appointed as Chief Executive Officer. Post year end, Trevor Jones, who has been an independent Non-Executive Director since 2015, has been appointed as Non-Executive Chairman and Karl Keegan was appointed Chief Financial Officer in March.

Expansion into RNA Interference ("RNAi")

In May 2020, the Company announced expansion into RNAi as a therapeutic modality having designed a novel GalNAc small interfering RNA (siRNA) that will leverage our expertise in network biology and, since the year end, filed a patent application and commenced experiments to characterise the platform. The Company expects to offer this proprietary platform to potential partners in 2021-22.

R&D spend

£2.7m

(2020: £2.1m)

Operating loss

£4.5m

(2020: £2.9m)

R&D tax credit receivable

£0.8m

(2020: £0.6m)

The Company strengthened its financial position raising total gross funds of £13.2m

Collaboration with Galapagos NV ("Galapagos") announced

In June 2020, the Company announced a collaboration with Galapagos to identify new therapeutic approaches to modulate a specific mechanism involved in idiopathic pulmonary fibrosis ("IPF"). Significant progression has been made on this collaboration during the year and post period, this collaboration has achieved two success-based milestones. The Company remains in business development discussions for both network-driven and functional genomics technologies with multiple potential partners.

Scientific Advisory Board ("SAB") launched

During the year, a SAB was created. Headed by Dr Paul Burke, with members Dr Bill Harte and Professor John Mattick, who all have considerable industry experience and will provide strategic advice and insight on transforming the drug discovery process.

COVID-19 project

In response to the COVID-19 pandemic, the Company initiated a project to identify approved and known drugs, both alone and as synergistic combinations, that could rapidly be repositioned for the treatment of COVID-19.

Compounds identified through the Company's network-driven discovery platform have been tested by Wuxi App Tec in cell-based assays and show potent anti-inflammatory and antiviral activity. This activity is expected to be generically applicable, raising the prospect of utility against both existing and new emergent strains of coronavirus.

Completed equity fundraises of £1.6m and £11.6m in February and July 2020 respectively to scale the Group's business model
with focus on further developing the Group's informatics platform capabilities, building and populating an internal pipeline of
high-conviction early assets and expanding the team to support the scale-up.	1
This is the foundation of the Group's strategic aims, as shown on pages 12 and 13

Chairman's Statement

Dear Shareholder,

During the financial year ended 31 January 2021, we have seen good momentum in growing shareholder value, leveraging the funds raised to deliver scientific progress and building upon current and prospective partnerships and collaborations. The Company has ended the period in a secure financial position which will enable it to make significant progress in the year ahead and beyond.

e-therapeutics plc Annual Report 2021

In my first statement as Chairman, I am pleased to report that the Company is now well positioned for future success. Over the last 12 months e-therapeutics has made significant progress across the business and raised significant funding to support its strategy for value creation. The proceeds have facilitated a number of initiatives, with a particular focus on expanding the Company's computational platform capabilities, internal asset pipeline prospects and success in securing partnerships and collaborations.

In light of the recent uncertainty arising from the COVID-19 pandemic, we have been quick to adapt to the changing circumstances and there has been minimal impact on our business. Indeed for our Company, the situation has opened up new opportunities. The speed at which the Company has reacted to changing circumstances and the support it has offered its employees is a credit to the leadership of CEO, Ali Mortazavi and the Executive Leadership Team.

Executing on a focused strategy

e-therapeutics' ambition is to transform the drug discovery process. We are leveraging our computational platform and network biology expertise to accelerate the identification and development of effective therapies, in particular through the synergy between our computational approaches and our recently added proprietary RNAi technology platform.

Our goal is to establish e-therapeutics as the leading platform in computational biology:

1. To win commercial deals and achieve industrial validation of our informatics platform
2. Establish a validated RNAi platform
3. Develop high-conviction internal assets
4. Develop the Company to a sufficient scale through platform development and recruitment
5. Provide guidance, development and feedback to people to enable them to fulfil their role

The period has seen significant delivery against this strategy with the following notable achievements:

• The Company announced a collaboration with Galapagos to identify new therapeutic approaches to modulate a specific mechanism involved in Idiopathic Pulmonary Fibrosis (IPF) and potentially other fibrotic indications. In addition, the Company has existing partnerships with Novo Nordisk and this partnership on Type- 2 diabetes has been extended with the potential to progress to a larger discovery project . The Company expansion into RNA interference (RNAi) and the establishment of a proprietary siRNA platform with siRNA as the drug modality of choice for our internal pipeline was a key achievement during 2020.

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REPORT STRATEGIC

• Significant progress has been made on our GAINAc siRNA platform and we have recently filed a patent application relating to specific hepatocyte targeting for
  liver gene silencing which will provide a competitive advantage in developing our RNAi therapeutic pipeline.
• In addition to its partnerships/ collaborations, the Company intends to extract and retain further value from its platform by building an in-house pipeline of assets to provide out-licensing opportunities, through a data-driven and flexible partnering strategy at the right value inflection points. The Company has developed a proprietary disease-agnostic platform to produce valuable disease biology insights and potential drug targets and candidates.
• In December 2020, the Company announced it had deployed its network biology platform to identify clinical stage compounds that either singly or in combination could be repurposed rapidly to treat COVID-19 and it has generated very encouraging results.
• Innovations continue to be made to our core platform technologies including increased automation and in the area of target identification. Significant headway has been made in recruiting further skilled people to the team.
• In order to support and develop our people, the appointment of our Chief People Officer has resulted in new initiatives, regular interactive learning and cross-team collaboration sessions as well as the implementation of a new HR framework.

Strengthened financial position

During the period under review, the Board and management have continued to implement robust financial control. A particular achievement during the period was the Board's commitment to strengthen the financial position of the Company by securing new investors and raising funds to enable the Company's next stage of growth and value creation.

I am delighted that in the most recent fund raise we welcomed new institutional shareholders and retail shareholders, through a specific Retail Offer via PrimaryBid. As a result the overall size and shape of our shareholder base has significantly changed. I should like to thank

all our new and existing shareholders for their continued support.

The funds raised in the period gives the Company sufficient working capital for at least 12 months and with an element of discretionary spend.

Board and Executive Team

In February 2020, we announced a restructuring of the Board and Executive Team resulting in the appointment of Ali Mortazavi as Executive Chairman. In addition, Michael Bretherton was appointed Non-Executive Director. Subsequently in October 2020, Ali Mortazavi was also appointed Chief Executive of the Company in addition to his role as Chairman.

Post period in March 2021, a further reorganisation of the Board resulted in my appointment to the role of Independent Non- Executive Chairman with Ali Mortazavi continuing in his role as Chief Executive Officer.

The Company continued to build its Executive competencies with the appointments of Laura Roca-Alonso as Chief Business officer, Stephanie Maley as Chief People Officer and, post period, the appointment of Karl Keegan as Chief Financial Officer.

I should like to thank our dedicated staff for their very significant contribution to the Company and for their continued diligence, agility and commitment throughout this difficult time.

In my opinion, the Board restructuring has denoted a turning point in the leadership and direction of e-therapeutics and we are now in a strong position under the leadership of Ali Mortazavi to execute on our strategy. I warmly welcome all the new appointments to our company. I am delighted to have been appointed as Chairman and I now look forward to completing the search for an additional Non- Executive Director to strengthen the Board further and to support the Company's future success.

Professor Trevor Jones CBE

Independent Non-Executive Chairman

12 May 2021

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