Midatech Pharma : Annual Report 2018

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Annual Report & Accounts 2018

Midatech Pharma plc

Annual Report & Accounts 2018

MIDATECH PHARMA IS AN R&D COMPANY FOCUSED ON DELIVERING INNOVATIVE ONCOLOGY AND RARE DISEASE PRODUCTS TO PATIENTS.

We are developing a range of new or improved chemotherapeutics and immunotherapeutics, using our three proprietary platform drug delivery technologies, with the aim of improving patients' lives.

	Total	Statutory
Cash and	revenue
Revenue
deposits
£1.94m
£2.34m	£0.15m
+96%	+0%

Net loss	Tax	Loan
credit
from continuing	repayments
operations
£1.95m
£10.37m	£5.25m

For more information and the latest share price, go to:

www.midatechpharma.com/investors

Overview

1

Financial highlights

• Total revenue(1) for the year from continuing operations up 96% to £1.94m (2017: £0.99m, 2016: £1.32m).
• Statutory Revenue(2) for 2018 was the same as the prior year at £0.15m (2017: £0.15m,
  2016: £0.78m).
• £2.34m cash and deposits at 31 December 2018 (2017: £13.20m, 2016: £17.61m).
• Net loss from continuing operations of £10.37m (2017: £11.71m, 2016: £6.16m) with
  net cash outflow in the year of £10.88m (2017: £4.15m outflow, 2016: £0.97m inflow).
• Tax credit receivable of £1.95m (2017: £1.20m, 2016: £1.44m).
• Repayment of outstanding loan with MidCap Financial Trust of £5.25m (excluding early redemption fees).

Operational highlights including post period end highlights

• MTD201 Q-Octreotide for neuroendocrine tumours and acromegaly: conducted first in- human clinical trial with data read-out in August 2018, indicating that MTD201 compares favourably with the leading product in the market.
• MTX110 for DIPG childhood brain cancer: commenced first in-human clinical trial in May 2018 at University of California San Francisco (study ongoing).
• Sale of US commercial operation, Midatech Pharma US, Inc. ('MPUS') on 1 November 2018, to Barings LLC, effected through Kanwa Holdings LP, which was established solely for the purpose of acquiring MPUS. This achieved proceeds of £10.20m before deal costs.
• Closure of the Group's research and development facility in Abingdon in December 2018, with ongoing gold nanoparticle research activities incorporated into the Group's Cardiff and Bilbao sites.
• Following the year end, strategic investment in the Company by China Medical System ('CMS') of £8m plus agreement to licence the Group's pipeline products in the Greater China Area and certain South East Asian countries.
• In conjunction with the subscription by CMS, the Company concluded a successful Placing and Open Offer, raising an additional £5.4m, approved by shareholders on 25 February 2019.
• Appointment of Dr Craig Cook as Chief Executive Officer, effective from 1 June 2018.

1. Total revenue represents collaboration income from continuing operations plus grant revenue.
2. Statutory Revenue represents total revenue, excluding grant revenue.

Contents

Overview	Financial Statements
1	Highlights	50	Independent Auditor's Report
2	Midatech Pharma at a Glance	55	Consolidated Statement of
4	Investment Proposition		Comprehensive Income
56	Consolidated Statement of
Strategic Report		Financial Position
57	Consolidated Statement of
8	Our Business Model
	Cash Flows
10	Our Development Pipeline
58	Consolidated Statement of
12	Our Vision and Strategy
	Changes in Equity
14	Spotlight on Key Programmes	59	Notes Forming Part of the
18	Chairman and Chief Executive's		Financial Statements
	Statement	101	Company Balance Sheet
22	Financial Review	102	Company Statement of
25	Risk Management		Changes in Equity
		103	Notes Forming Part of the
Governance		Company Financial Statements
109	Company Information
32	Board of Directors

1. Corporate Governance

1. Audit Committee Report

1. Directors' Remuneration Report

1. Directors' Report

2 Midatech Pharma plc

Annual Report & Accounts 2018

MIDATECH PHARMA AT A GLANCE

Midatech is focussed on developing products based on our proprietary drug delivery platform technologies to target diseases with high unmet medical need.

Granted patents

107

Employees

59

Midatech Limited formed in

2000

Overview

Midatech Pharma is focussed on the research and development of medicines for rare cancers, via in- house and partnered programmes. We take existing therapies and 'make them better', using our three proprietary platform drug delivery technologies to improve the bio- delivery and bio-distribution of drugs, through either sustained delivery (Q-Sphera™), direct delivery (MidaSolve™), or targeted delivery (MidaCore™).

Listed on AIM and NASDAQ, Midatech is headquartered in the UK and employs 59 people. We have an R&D facility in Cardiff and a manufacturing site in Bilbao, Spain.

Following the recent sale of Midatech Pharma US, we have now fully focussed our resources and activities on using our technologies to establish our fast-to-market oncology and rare disease product pipeline programmes. These are currently in various stages of pre- clinical and clinical development.

36

Patent families

Estimated

Octreotide market

£2bn

(p.a)

Overview

3

Platform technologies

Midatech's R&D activities utilise our three proprietary platform technologies, designed to allow the delivery of existing therapeutic drugs to the right place at the right time, in the treatment of rare cancers or orphan diseases:

Q-SpheraTM		MidaSolveTM		MidaCoreTM
Our disruptive polymer		Our innovative nanosaccharide		Our leading-edge gold
microsphere technology is		technology is used to dissolve		nanoparticle ('GNP') technology
used for sustained delivery		otherwise insoluble drugs so		is used for targeting sites of
to prolong and control the		that they can be administered in		disease using either
release of therapeutics over		liquid form, directly and locally		(i) chemotherapy - improved
an extended duration, from		into tumours.		and targeted delivery of existing
weeks to months.				chemotherapeutic agents to
				tumour sites, as well as
				(ii) immunotherapy - enhanced
				uptake of new immuno-moieties
				by immune cells that can
				then mount an attack against
				cancer cells.

R&D pipeline

The Company's research and development is focussed on developing a range of high value therapeutics based on its three drug delivery technology platforms (Q-Sphera™, MidaSolve™ and MidaCore™).

Clinical:

We have two key therapeutic products in clinical development:

MTD201 (Q-Octreotide)

a long-acting dose of octreotide for the treatment of acromegaly and neuroendocrine tumours; based on our Q-Sphera™ technology for sustained delivery.

MTX110

a treatment for diffuse intrinsic pontine glioma ('DIPG'), an ultra- rare brain cancer suffered by children, based on our MidaSolve™ technology for direct delivery.

In addition to these two priority programmes, a further programme in the clinic is MTX102, an EU funded project seeking to develop a vaccine for Type I Diabetes, based on our MidaCore™ technology for targeted delivery and uptake by the immune system.

Pre-clinical:

MTD201 and MTX110 are expected to be the priority focus for Midatech in the near term, however, the Company has additional, in-house preclinical programmes, which, pending further funding, the Company may progress in due course, including:

MTR103

for the treatment of glioblastoma multiforme ("GBM") brain cancer, using MidaSolve™ technology to deliver drugs directly into the tumour.

MTD119

a targeted GNP therapy treatment using the Company's MidaCore™ technology for the treatment of hepatocellular carcinoma.

Intellectual property

We have a strong intellectual property base, with 107 granted patents, 83 applications in-process and 36 patent families, covering a range of technologies.

See our R&D Pipeline

on pages 10 and 11