UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| QUARTERLY REPORT pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For
the quarterly period ended
or
| Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transaction period from _____________ to _____________
Commission
File No.
(Exact Name of Registrant as Specified in Its Charter)
| (State
or other jurisdiction of incorporation or organization) |
(I.R.S.
Employer Identification No.) |
Scotland,
|
N/A | |
| Address of Principal Executive Offices | Zip Code |
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The Stock Market LLC | ||||
| The Stock Market LLC |
Indicate
by check mark whether the registrant: (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large Accelerated Filer ☐ | Accelerated Filer ☐ |
| Smaller
Reporting Company | |
| Emerging
Growth Company |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12(b)-2 of the Exchange Act). Yes ☐ No
As of May 9, 2024, shares of the registrant’s ordinary shares, £0.0001 par value per share were outstanding. Ordinary shares included in this amount, totaling 96,001,408, had been deposited with the depositary bank and in turn represented 4,800,070 American Depository shares.
TC BIOPHARM (HOLDINGS) PLC
2024 QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
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Unless we state otherwise or the context otherwise requires, the terms “TC Biopharm,”, “TCB”, “we,” “us,” “our” and the “Company” refer to TC Biopharm (Holdings) plc.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, or Quarterly Report, contains forward-looking statements that involve risks and uncertainties. We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. All statements other than statements of historical facts contained in this Quarterly Report are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “expects”, “intends”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential”, “continue” or the negative of these terms or other comparable terminology.
Forward-looking statements are neither historical facts nor assurances of future performance, and are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following:
| ● | the sufficiency of our existing cash and cash equivalents to meet our working capital and capital expenditure needs over the next 12 months and our need to raise additional capital; | |
| ● | our ability to generate revenue from products; | |
| ● | our limited operating history; | |
| ● | our ability to maintain proper and effective internal financial controls; | |
| ● | our ability to continue to operate as a going concern; | |
| ● | changes in laws, government regulations and policies and interpretations thereof; | |
| ● | our ability to obtain and maintain protection for our intellectual property; | |
| ● | our ability to attract and retain qualified employees and key personnel; | |
| ● | our ability to manage our rapid growth and organizational change effectively; | |
| ● | the possibility of security vulnerabilities, cyberattacks and network disruptions, including breaches of data security and privacy leaks, data loss, and business interruptions; | |
| ● | our compliance with data privacy laws and regulations; | |
| ● | our ability to develop and maintain our brand cost-effectively; and | |
| ● | the other factors set forth elsewhere in this Quarterly Report and in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2023. |
These forward-looking statements speak only as of the date of this Form 10-Q and are subject to business and economic risks. We do not undertake any obligation to update or revise the forward-looking statements to reflect events that occur or circumstances that exist after the date on which such statements were made, except to the extent required by law.
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PART I – FINANCIAL INFORMATION
| Item 1. | Financial Statements |
TC BIOPHARM (HOLDINGS) PLC
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, 2024 | December 31, 2023 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | £ | £ | ||||||
| Corporation tax receivable | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Non-current assets: | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right of use assets | ||||||||
| Intangible assets, net | ||||||||
| Total assets | ||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | ||||||||
| Derivative liability | ||||||||
| Current portion of operating lease liability | ||||||||
| Total current liabilities | ||||||||
| Non-current operating lease liability | ||||||||
| Total liabilities | ||||||||
| Shareholders’ Equity: | ||||||||
| Ordinary shares, £ par value, and authorized, issued and outstanding as of March 31, 2024 and December 31, 2023, respectively | ||||||||
| Deferred shares, £ par value, and authorized, issued, and outstanding as of March 31, 2024 and December 31, 2023, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total shareholders’ equity | ||||||||
| Total liabilities and shareholders’ equity | £ | £ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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TC BIOPHARM (HOLDINGS) PLC
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended | For the Three Months Ended | |||||||
| March 31, 2024 | March 31, 2023 | |||||||
| Operating expenses: | ||||||||
| Research and development expenses | ||||||||
| Administrative expenses | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Other income (expense): | ||||||||
| Change in fair value of derivative liability | ||||||||
| Other expense, net | ( | ) | ( | ) | ||||
| Total other income (expense), net | ||||||||
| Net loss before income taxes | ( | ) | ( | ) | ||||
| Income tax credit | ||||||||
| Net loss | £ | ( | ) | £ | ( | ) | ||
| Weighted-average common shares outstanding, basic and diluted | ||||||||
| Basic and diluted net loss per share | £ | ) | £ | ) | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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TC BIOPHARM (HOLDINGS) PLC
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
| Ordinary shares | Deferred shares | Additional Paid-in | Accumulated | Total Shareholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
| Balance, January 1, 2023 | £ | £ | £ | £ | ( | ) | £ | |||||||||||||||||||||
| Share-based compensation expense | - | |||||||||||||||||||||||||||
| Issuance of ordinary shares, net of issuance costs | ||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, March 31, 2023 | £ | £ | £ | £ | ( | ) | £ | |||||||||||||||||||||
| Ordinary shares | Deferred shares | Additional Paid-in | Accumulated | Total Shareholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
| Balance, January 1, 2024 | £ | £ | £ | £ | ( | ) | £ | |||||||||||||||||||||
| Share-based compensation expense | - | |||||||||||||||||||||||||||
| Shares issued in connection with Series D warrant exercise, net of issuance costs | - | |||||||||||||||||||||||||||
| Issuance of ordinary shares | ||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balance, March 31, 2024 | £ | £ | £ | £ | ( | ) | £ | |||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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TC BIOPHARM (HOLDINGS) PLC
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended | For the Three Months Ended | |||||||
| March 31, 2024 | March 31, 2023 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | £ | ( | ) | £ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | ||||||||
| Amortization of intangible assets | ||||||||
| Share-based compensation expense | ||||||||
| Change in fair value of derivative liability | ( | ) | ( | ) | ||||
| Offering costs satisfied by issue of Series C Placement Agent Warrants | ||||||||
| Net foreign exchange loss | ( | ) | ||||||
| Noncash interest expense | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Change in corporation tax receivable | ( | ) | ( | ) | ||||
| Change in prepaid expenses and other current assets | ||||||||
| Change in operating lease right of use assets | ||||||||
| Change in accounts payable and accrued liabilities | ||||||||
| Change in lease liabilities | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of property and equipment | ( | ) | ||||||
| Purchase of intangible assets | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Series D warrant exercises | ||||||||
| Proceeds from sale of warrants | ||||||||
| Issuance of ordinary shares | ||||||||
| Ordinary shares and warrant issuance costs | ( | ) | ( | ) | ||||
| Net cash provided by financing activities | ||||||||
| NET CHANGE IN CASH | ( | ) | ||||||
| Cash - Beginning of period | ||||||||
| Cash - End of period | £ | £ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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TC BIOPHARM (HOLDINGS) PLC
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – NATURE AND DESCRIPTION OF BUSINESS
TC BioPharm (Holdings) plc (“TC BioPharm” or the “Company”) was incorporated on October 25, 2021 as a Public limited company, limited by shares, in Scotland and domiciled in the United Kingdom and has the following wholly owned subsidiaries: TC BioPharm Limited, TC BioPharm (North America) Inc. and TC BioPharm BV (together the “Group” and “Company”).
The principal activity of the Company is as a clinical stage immuno-therapy company pioneering commercialization of allogeneic, ‘off-the-shelf’ gamma-delta T cell (‘GD-T’) therapies, ranging from unmodified GD-T therapies to treat haematological cancers and viral infections, to sophisticated proprietary GD-T CAR-T products designed to reach and treat solid tumors.
The Company has historically been classified as a foreign private issuer (“FPI”). However, as of June 30, 2023, the Company determined that, pursuant to the definition provided in Rule 405 of the Securities Act of 1933, it no longer satisfied the criteria to be considered an FPI. Pursuant to section 6120 of the Securities and Exchange Commission’s (“SEC”) financial reporting manual (“FRM”) the Company was permitted to continue to use forms applicable to FPIs for the remainder of its fiscal year ended December 31, 2023. However, starting on January 1, 2024, the Company began using the forms prescribed for domestic registrants. Further, the Company filed a Form 10-K for its fiscal year ended December 31, 2023.
During January
of 2023, the Company issued or ordinary shares, par value £ per share of Company, based on a price per
share of £ on exercise of pre-funded warrants that had been issued in prior financing rounds. As the pre-funded warrants
contained a nominal exercise price, the exercise of the pre-funded warrants resulted in nominal proceeds to the Company. On March
27, 2023, the Company, entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Investors, pursuant
to which the Company agreed to issue and sell an aggregate of
On March 27, 2023 the Company also agreed that certain existing warrants
to purchase up to an aggregate of
On
March 12, 2024, the Company issued ADSs representing ordinary shares of the Company upon exercise of outstanding warrants
resulting in gross cash proceeds to the Company of £
Risks and Uncertainties
The Company is exposed to a variety of risks in the ordinary course of business, including, but not limited to, currency risk, liquidity risk, equity price risk and credit risk. The Company regularly assesses each of these risks to minimize any adverse effects on the business as a result of those factors.
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Going Concern
The Company has been focused on the development of therapeutic products based around its gamma delta T cell platform technology, with the objective of conducting clinical trials to demonstrate safety and efficacy and eventually being granted regulatory approval to market and sell its products since its incorporation. This activity was expected to be in development for several years and has incurred considerable expenditures to date in research and development expenses and in conducting clinical trials. Similar to most development and/or clinical stage biotechnology companies, the Company has not yet generated any revenues from sales of products, but has obtained cash to finance its research, development and clinical trial activities from equity, debt and grant financings and from receipts from partners under collaborative co-development agreements. The Company is expected to continue in this clinical development phase for a number of years before any product becomes marketable. The Company therefore expects to continue to incur significant losses in the foreseeable future.
As
of March 31, 2024, the Company’s cash and cash equivalents amounted to approximately £
Similar to many clinical development stage biotechnology companies, the Company’s future liquidity needs, and ability to address them, will largely be determined by the availability of capital, both generally and in particular to fund product candidates and key development and regulatory projects. As a pre-revenue biotechnology Company, operations have been financed though continuously raising capital, and management expects to continue to raise capital routinely. The Company is currently and continuously progressing various funding options to fill the projected working capital gap, which could be in the form of an equity raise or other forms of financings such as debt funding, collaborations or licensing arrangements. Management believes that the ongoing financing initiatives should provide sufficient capital to finance planned operations through 2024, and thereafter we would expect to be in a position to raise significantly greater capital as the clinical program progresses. However, there can be no certainty that these initiatives will be successful and, if they are not, management will seek to deploy alternative plans, which could have a potentially significant negative impact on stockholder and asset value. Such plans could include all or any of the following: raising additional capital through low priced and/or complex equity and/or debt financings, entering transactions involving sales, joint venturing or licensing of intellectual property, reducing and/or deferring discretionary spending on research and development or clinical programs, restructuring our operating model to take advantage of our manufacturing capability to generate short term revenues or reducing our cash burn rate through reduction in planned operating costs.
The accompanying financial statements have been prepared on the basis that the Company will continue as a going concern, which assumes the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has not established a source of revenues sufficient to cover its operating costs, and as such, has been dependent on ongoing funding operations primarily through ongoing initiatives to raise capital. The Company expects to require substantially more capital to fund its clinical, development and operational requirements, and therefore incur further losses over the next several years as it develops its clinical products. The Company has utilized, and expects to continue to utilize, substantial amounts of funding to implement its business strategy. If the Company is unable to maintain adequate liquidity, future operations will need to be scaled back or discontinued. Based on these circumstances, management has determined that there is substantial doubt about the Company’s ability to continue as a going concern. These unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NEW ACCOUNTING STANDARDS
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the period ended December 31, 2023, as filed with the SEC on April 1, 2024. The interim results for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024, or for any future periods.
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Principals of Consolidation
The unaudited condensed consolidated financial statements include the accounts of TC BioPharm and its 100% controlled subsidiaries, TC BioPharm Limited, TC BioPharm Inc. and TC BioPharm BV. All significant intercompany balances and transactions have been eliminated. “TC BioPharm”, the “Company”, “we”, “our” or “us” is intended to mean TC BioPharm (Holdings) plc, including the subsidiaries indicated above, unless otherwise indicated.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s unaudited condensed consolidated financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of these unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Segment Reporting
The Company operates in one operating segment. Operating segments are reported in a manner consistent with the internal reporting provided to the Company’s chief operating decision maker (“the CODM”). The Company’s CODM, its Chief Executive Officer, views the Company’s operations and manages its business as a single operating segment, which is the business of a clinical stage immunotherapy Group pioneering commercialization of allogeneic, ‘off-the-shelf’ gamma-delta T cell (‘GD-T’) therapies.
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Income and Other Taxes
Income taxes are accounted for using the asset and liability method in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 740, Income Taxes (“ASC 740”), which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.
The Company records net deferred tax assets to the extent they believe these assets will more-likely-than-not be realized. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. In the event the Company was to determine that it would be able to realize its deferred income tax assets in the future in excess of its net recorded amount, the Company would make an adjustment to the valuation allowance which would reduce the provision for income taxes.
Income Tax Credit
The
Company carries out extensive research and development activities, where it benefits from the United Kingdom’s research and development
tax relief and expenditure credit regimes. The Company is able to surrender some of its income tax losses for a cash rebate of up to
Cash and cash equivalents
The
Company defines cash and cash equivalents as cash on hand, deposits held on call with banks and other short-term liquid investments with
maturities of three months or less. As of March 31, 2024 and December 31, 2023, cash and cash equivalents was £
Concentration of Risk
Financial instruments that subject the Company to significant concentrations of credit risk primarily consist of cash and cash equivalents. The Company maintains substantially all of its cash and cash equivalents with financial institutions, which, at times, may exceed federally insured limits. The Company has not incurred any losses associated with this concentration of deposits.
The
Company currently has bank deposits with financial institutions in the U.S. of approximately £
Foreign currency transactions
The Company uses the British pound sterling as the reporting currency for its financial statements. Functional currency is the currency of the primary economic environment in which an entity operates. The functional currency of the Company’s subsidiaries are the local currencies. The Company has transactions denominated in various currencies, with the principal currency exposure being fluctuations in U.S. Dollars and Euros against pound sterling. The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the limited number of supplier agreements denominated in currencies other than pound sterling.
Property and Equipment
Property and equipment consist of computer equipment, facility, and scientific equipment and office equipment, which are stated at cost, net of accumulated depreciation and amortization, and depreciated over their estimated lives using the straight-line method.
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Depreciation is provided for by the straight-line method over the estimated useful lives as follows:
| Property and Equipment | Estimated Useful Life | |
| Scientific equipment | ||
| Computer equipment | ||
| Office equipment |
Expenditures for repairs and maintenance are expensed as incurred. When assets have been retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations.
Intangible assets
Intangible
assets consist of software, patents and licenses. Intangible assets are recognized where it is probable that there will be a future economic
benefit and that this can be reliably measured. Software represents the historical cost of installation of third-party software used
within the Company to maintain and control the Company’s quality system. The software is hosted and controlled on the Company’s
servers and can be used independently of the related hardware. Software is amortized, on a straight-line basis, over the life of the
relevant license of three to four years. Patent costs represent the costs of securing patents in relation to the Company’s intellectual
property. Patent costs are amortized, on a straight-line basis, over the remaining legal life of the relevant patents, which has an average
estimated patent life of
The
Company reviews the carrying amounts of its tangible and intangible assets where there is any indication that those assets have suffered
an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). The recoverable amount is determined for an individual asset, unless the asset does not generate cash
inflows that are largely independent of those from other assets or groups of assets in which case the Company estimates the recoverable
amount of the cash-generating unit to which the asset belongs. Recoverable amount is the higher of fair value less costs to sell and
value-in-use. In assessing value-in-use, the estimated future cash flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates
of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less
than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment
loss is recognized immediately in the statement of operations. There was
Fair Value Measurements
The fair value of the Company’s assets and liabilities which qualify as financial instruments under ASC 820, Fair Value Measurement, which primarily includes cash and cash equivalents and accounts payable and accrued expenses, which approximate the carrying amounts represented in the accompanying consolidated balance sheets due to the liquid nature. The Company also has certain liability classified warrants that are being remeasured to fair value at the end of each reporting period and are categorized in Level 2 of the fair value hierarchy. However, the balance of the liability classified warrants was not material as of either March 31, 2024 or December 31, 2023 (see Note 12).
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Basic net loss per share ordinary share is calculated based on the weighted-average number of ordinary shares outstanding in accordance with ASC Topic 260, Earnings per Share. Diluted net loss per share is calculated based on the weighted-average number of ordinary shares outstanding plus the effect of dilutive potential ordinary shares. When the Company reports a net loss, the calculation of diluted net loss per share excludes potential ordinary shares as the effect would be anti-dilutive. Potential ordinary shares are composed of ordinary shares issuable upon the exercise of options and warrants. The following table shows the basic and diluted loss per share for the three months ended March 31, 2024 and 2023:
| For the Three Months Ended | For the Three Months Ended | |||||||
| March 31, 2024 | March 31, 2023 | |||||||
| Net loss | £ | ( | ) | £ | ( | ) | ||
| Basic and diluted weighted average number of shares outstanding | ||||||||
| Basic and diluted loss per share | £ | ) | £ | ) | ||||
The Company accounts for share-based compensation arrangements with employees, directors, and consultants and recognizes the compensation expense for share-based awards based on the estimated fair value of the awards on the date of grant. Compensation expense for all share-based awards is based on the estimated grant-date fair value and recognized in earnings over the requisite service period (generally the vesting period).
Research & Development Expenses
Research expenditure is expensed in the year in which it is incurred. Identifiable development expenditure is capitalized to the extent that the technical, commercial and financial feasibility can be demonstrated. The Company has not capitalized any development expenditures since inception.
Commitments and Contingencies
The Company accounts for contingencies in accordance with ASC 450-20, Contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or un-asserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
| 13 |
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Further details are included within Note 7 to the financial statements.
Recent Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect and that may impact its consolidated financial statements. Further, during December 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-09-Income Taxes (Topic 740)-Improvements to Income Tax Disclosures, which requires entities to provide additional information in the rate reconciliation and additional disclosures about income taxes paid. The guidance should be applied prospectively and is effective for annual periods beginning after December 15, 2024. The Company does not expect the issued standard to have a material impact on its financial statements or results of operations.
NOTE 3. PROPERTY, PLANT AND EQUIPMENT
The Company’s property, plant and equipment balances consist of the following:
| Facilities & Scientific Equipment | Computer Equipment | Office Equipment | Total | |||||||||||||
| At December 31, 2023 | £ | £ | £ | £ | ||||||||||||
| Additions | ||||||||||||||||
| Disposals | ||||||||||||||||
| At March 31, 2024 | ||||||||||||||||
| Depreciation | ||||||||||||||||
| At December 31, 2023 | ||||||||||||||||
| Depreciation expense | ||||||||||||||||
| At March 31, 2024 | ||||||||||||||||
| Net book value | ||||||||||||||||
| At March 31, 2024 | £ | £ | £ | £ | ||||||||||||
| At December 31, 2023 | £ | £ | £ | £ | ||||||||||||
Depreciation
expense on these assets for the three months ended March 31 2024 and 2023, was £
| 14 |
NOTE 4. INTANGIBLE ASSETS
The Company’s intangible assets consist of the following:
| Software | Patents and Licenses | Total | ||||||||||
| Cost | ||||||||||||
| At December 31, 2023 | ||||||||||||
| Additions | ||||||||||||
| At March 31, 2024 | ||||||||||||
| Amortization | ||||||||||||
| At December 31, 2023 | ||||||||||||
| Amortization expense | ||||||||||||
| At March 31, 2024 | ||||||||||||
| Net book value | ||||||||||||
| At March 31, 2024 | £ | £ | £ | |||||||||
| At December 31, 2023 | £ | £ | £ | |||||||||
Amortization
expense on these assets for the three months ended March 31, 2024 and 2023, was £
NOTE 5. PREPAID EXPENSES AND OTHER CURRENT ASSETS
The Company’s prepaid expenses and other current assets consist of the following:
| March 31, 2024 | December 31, 2023 | |||||||
| Other receivables | £ | £ | ||||||
| VAT owed to the Company | ||||||||
| Prepaid clinical trial costs | ||||||||
| Deferred clinical trial testing costs | ||||||||
| Other prepayments | ||||||||
| £ | £ | |||||||
The fair value of trade and other receivables are not materially different to the book value.
NOTE 6. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
The Company’s accounts payable and accrued liabilities consist of the following:
| March 31, 2024 | December 31, 2023 | |||||||
| Accounts payable | £ | £ | ||||||
| Other tax and social security | ||||||||
| Accrued expenses | ||||||||
| Amounts accrued in respect to clinical trial testing | ||||||||
| Other payables | ||||||||
| £ | £ | |||||||
The fair value of accounts payable and accrued expenses are not materially different to the book value.
NOTE 7. COMMITMENTS AND CONTINGENCIES
From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm business.
| 15 |
In
accordance with the terms of a Convertible Loan Note (‘Note’) on August 9, 2022 (the Conversion Date) the Company issued
Ordinary Shares and
NOTE 8. LEASES
The
Company leases certain office space under operating leases for use in operations. The Company recognizes operating lease expense on a
straight-line basis over the lease term. Management determines if an arrangement is a lease at contract inception. Lease and non-lease
components are accounted for as a single component for all leases. Operating lease right to use (ROU) assets and liabilities are recognized
at the lease commencement date based on the present value of the future lease payments over the expected lease term, which includes optional
renewal periods if we determine it is reasonably certain that the option will be exercised. As our leases do not provide an implicit
rate, the discount rate used in the present value calculation represents our incremental borrowing rate determined using information
available at the commencement date. Operating lease expense is included as a component of research and development and administrative
expenses in the unaudited condensed consolidated statements of operations. For the three months ended March 31, 2024 and 2023, the Company
recorded operating lease expense of £
| March 31, 2024 | December 31, 2023 | |||||||
| Weighted-average remaining lease term | ||||||||
| Weighted-average discount rate | % | % | ||||||
The following is a maturity analysis of the annual undiscounted cash flows reconciled to the carrying value of the operating lease liabilities as of March 31, 2024:
| Years Ended December 31, | ||||
| 2024 | £ | |||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| Less imputed interest | ( | ) | ||
| Total | £ | |||
NOTE 9. CONVERTIBLE LOAN
The
Company entered into a $
(i) The convertible loan’s initial fair value was the residual amount of the consideration received, net of attributable costs, after separating out the fair value of the embedded conversion option derivative. The loan was subsequently measured at its amortized cost.
| 16 |
(ii) The embedded conversion option derivative was initially measured at fair value and was subsequently remeasured to fair value at each reporting date. The embedded derivative could have been classified as a component of equity only if in all cases the contract would be settled by the Company delivering a fixed number of its own equity instruments in exchange for a fixed amount of cash or debt redemption. That is, had the embedded instrument satisfied the “fixed-for-fixed” criteria outlined in ASC 815-40. However, the convertible accounting outlined in ASC 815-40). Changes in the fair value (gains or losses) of the derivative at the end of instrument included a conversion feature resulting in settlement in a variable number of shares and consequently, was not considered indexed to the company’s shares (i.e. it did not qualify for the scope exception to derivative each period were recorded in the consolidated statements of operations) for the year ended December 31, 2023:
| Residual loan | Embedded Derivative | Total | ||||||||||
| Balance at December 31, 2022 | £ | £ | £ | |||||||||
| Accrued interest | ||||||||||||
| Repayment | ( | ) | ( | ) | ( | ) | ||||||
| Modification of loan notes | ( | ) | ( | ) | ||||||||
| Currency adjustment | ( | ) | ( | ) | ||||||||
| Balance at December 31, 2023 | £ | £ | £ | |||||||||
The value of the embedded derivative was remeasured to fair value at each reporting date, based on the Black-Scholes valuation model, with recognition of the changes in fair value in the consolidated statements of operations. As noted above, the value of the embedded derivative liability as of December 31, 2023 was $0.
NOTE 10. SHAREHOLDERS’ EQUITY
Ordinary shares
The Ordinary shares have no specific rights, preferences or restrictions attached to them.
Deferred shares
Deferred shares have the following properties:
| a. | do not entitle their holders to receive any dividend or other distribution; | |
| b. | do not entitle their holders to receive a share certificate in respect of the relevant shareholding; | |
| c. | do not entitle their holders to receive notice of, nor to attend, speak or vote at, any general meeting of the Company; |
| 17 |
| d. | entitles their holders on a return of capital on a winding up of the Company (but not otherwise) only to the repayment of the amount paid up on that share after payment of the capital paid up on each Ordinary Share in the share capital of the Company and the further payment of £ on each ordinary share; | |
| e. | do not entitle their holders to any further participation in the capital, profits or assets of the Company. The Deferred Shares shall not be capable of transfer at any time other than with the prior written consent of the directors of the Company. |
A Ordinary shares
The A Ordinary shares ranked equally with all other shares in issue in that on a vote every member has one vote for each share held. The A ordinary shares contain preferential economic rights such that, in the event of a share or asset sale (as defined in the Articles of Association), they provide a return to the holders of the A Ordinary Shares of an amount greater than or equal to 1.5x the price paid by the investors for A Ordinary Shares. The A Ordinary shares have an anti-dilution provision where shares are subsequently issued at a price below £ per share, whereby the existing A Ordinary shareholders receive additional compensation shares in line with the formula set out in the Articles of Association. The A Ordinary shares rank equally with all other shares in issue with respect to dividends.
Immediately prior to the completion of the IPO, ordinary shares were issued, under the terms of the Articles of Association to certain shareholders who, prior to the IPO, owned A Ordinary shares which carried the right, to subscribe at nominal value for a certain number of additional shares, calculated by reference to the pre-money valuation of the IPO. As part of the IPO share issue, the Company re-organized its share capital whereby all of the outstanding series A ordinary shares were re-designated as ordinary shares of the Company on a one for one basis and as such no anti-dilution provisions are included within the issued shares.
Reorganization and IPO
Immediately
prior to completion of the IPO, the Company re-organized its share capital whereby all of the outstanding series A ordinary shares were
re-designated as ordinary shares of TC BioPharm (Holdings) plc on a one for one basis. Immediately prior to the completion of the offering,
a further ordinary shares were issued, under the terms of the Articles of Association to certain shareholders who, prior to the
IPO, owned A ordinary shares which carried the right, to subscribe at nominal value for a certain number of additional shares, calculated
by reference to the pre-money valuation of the IPO. The fair value of the shares issued was £
Share Issuances
During January of 2023, the Company issued or ordinary shares, par value £ per share of Company, based on a price per share of £ on exercise of pre-funded warrants that had been issued in prior financing rounds. As the pre-funded warrants contained a nominal exercise price, the exercise of the pre-funded warrants resulted in nominal proceeds to the Company.
On March 27, 2023,
the Company, entered into a Second Securities Purchase Agreement with Investors, pursuant to which the Company agreed to issue and sell
an aggregate of
| 18 |
On
March 27, 2023, the Company also agreed that certain existing warrants to purchase up to an aggregate of
During January of 2024, the Company issued or ordinary shares, par value £ per share of Company, based on a price per share of £ on exercise of pre-funded warrants that had been issued in prior financing rounds. As the pre-funded warrants contained a nominal exercise price, the exercise of the pre-funded warrants resulted in nominal proceeds to the Company.
On March 11,
2024, the company issued ADSs or
ordinary shares, par value £
per share of Company, based on a price per share of £
on exercise of share options that had been issued to a consultant as part of the consideration for undertaking consulting
services. The issued shares options were recognized as non-employee compensation expense in accordance with ASC 718. Further,
the fair value of the shares (as determined utilizing the Black Scholes valuation model) will be recognized over the estimated one-year
consulting service period. Approximately £
On March 11,
2024, the Company issued
ADSs or ordinary
shares, par value £per
share of Company to Bryan Kobel, the Chief Executive Officer of the Company following an agreement to convert an aggregate amount of
approximately £
| 19 |
On March 12, 2024,
the Company issued
ADSs representing
ADS Ratio Change
As a result of the ratio change, all references in these unaudited condensed consolidated financial statements and accompanying notes to units of ordinary shares underlying ADSs are reflective of the ratio change for all periods presented. In addition, the exercise prices and the numbers of ordinary shares issuable upon the exercise of any outstanding options to purchase ordinary shares were proportionally adjusted pursuant to the respective anti-dilution terms of the share-based payment plans.
Enterprise Management Incentive (EMI) share option scheme
The Company operates an HMRC Approved Enterprise Management Incentive (“EMI”) share option scheme for employees. Effective December 16, 2014, the Company approved a share option scheme under which the Board of Directors of the Company can award options to directors, officers, employees and consulting personnel of the Company. The Board of Directors will determine the terms, limitations, restrictions and conditions of the options granted under the plan.
| Number of Share Options | Weighted Average Exercise Price | |||||||
| Outstanding at December 31, 2023 | £ | |||||||
| Granted during the period | ||||||||
| Exercised during the period | ||||||||
| Forfeited during the period | ||||||||
| Outstanding at March 31, 2024 | £ | |||||||
| Exerciseable at March 31, 2024 | £ | |||||||
| Unexerciseable at March 31, 2024 | ||||||||
| 20 |
The estimated fair value of the options outstanding in the period was calculated by applying a Monte Carlo Simulation for those options issued in 2020 and 2019 and a Black Scholes Model for those options issued in prior periods. The most appropriate approach is selected with reference to the share capital structure at the time of grant. The expense recognized for share-based payments in respect of employee services received during the three months ended March 31, 2024 was £ as all options were fully vested as of March 31, 2024.
2021 Share Option Scheme
Effective immediately prior to completion of the IPO on February 10, 2022, the Company adopted a new share option scheme, or the 2021 Share Option Scheme, for the purpose granting share options to incentivize the Company’s directors, employees and consultants. The 2021 Share Option Scheme incorporates a sub-plan for option holders subject to taxation in the United States, or the 2021 U.S. Sub-Plan, to provide for the grant of U.S. qualified incentive options.
| * | Number of Share Options | Weighted Average Exercise Price | ||||||
| Outstanding at December 31, 2023 | $ | |||||||
| Granted during the period | ||||||||
| Exercised during the period | ( | ) | ||||||
| Cancelled during the period | ) | |||||||
| Outstanding at March 31, 2024 | $ | |||||||
| Exerciseable at March 31, 2024 | $ | |||||||
| Unexerciseable at March 31, 2024 | ||||||||
The totals of options and related exercise price are for options over ADSs and reflect the ratio change on December 15, 2023.
The estimated fair value of the options outstanding in the period was calculated by applying a Black Scholes Model. The most appropriate approach is selected with reference to the share capital structure at the time of grant. The weighted average grant-date fair value of options granted during the three month period ended March 31, 2024 was $. options were granted during the threemonth period ended March 31, 2023. The expense recognized for share-based payments in respect of employee and non-employee services received during the three months ended March 31, 2024 was £.
The options granted under the 2021 share option scheme will typically vest over three years after the date of grant. In some cases, options granted to senior management vested immediately. As of March 31, 2024, there were remaining unvested options.
| 21 |
Modifications
During March of 2024, share options that had been granted to five grantees, including one of our executive officers and all of our non-employee directors, were cancelled and replaced by new options with different terms. The company determined that the option cancellations and subsequent re-issuances should be considered award modifications and be recognized in accordance with the guidance in ASC 718-20. As the new awards vested immediately, the Company fully recognized the incremental fair value of the awards of £.
Additional Right to Subscribe for Shares
On August 25, 2020, the Company issued Ordinary shares, which included an additional right to subscribe for a fixed number () of shares at £ per share at a future date based on certain clinical and commercial milestones. The estimated fair value of the right to subscribe was calculated by applying a Black Scholes Model. This was deemed the most appropriate approach due to the future liquidity event being date-uncertain and could take one of many forms.
NOTE 12. FAIR VALUE MEASUREMENTS
The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
| Level 1: | Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. | |
| Level 2: | Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. | |
| Level 3: | Unobservable inputs based on the Company’s assessment of the assumptions that market participants would use in pricing the asset or liability. |
The
Company had cash and cash equivalents of £
In addition, the Company also had numerous outstanding warrants that were classified in Level 2 due to our use of implied volatility in determining the expected volatility input for purposes of determining the instruments fair value via the Black-Scholes valuation model. The details of the issued warrants were as follows:
| 22 |
Unlisted warrants in issue
Series A warrants
The fair value of each of the warrants was approximately $ and $ as of March 31, 2024 and December 31, 2023, respectively.
The inputs associated with calculating the fair value of the warrants are considered to be Level 2 and were valued using a Black-Scholes valuation model. The inputs were as follows:
| March 31, 2024 | December 31, 2023 | |||||||
| Exercise price | $ | $ | ||||||
| Share price | $ | $ | ||||||
| Time to maturity | ||||||||
| Expected volatility | % | % | ||||||
| Risk free interest rate (US treasury bond) | % | % | ||||||
| Dividend yield | ||||||||
Series B warrants
The fair value of each of the warrants was approximately $ and $ as of March 31, 2024 and December 31, 2023, respectively.
The inputs associated with calculating the fair value of the warrants are considered to be Level 2 and were valued using a Black-Scholes valuation model. The inputs were as follows:
| March 31, 2024 | December 31, 2023 | |||||||
| Exercise price | $ | $ | ||||||
| Share price | $ | $ | ||||||
| Time to maturity | ||||||||
| Expected volatility | % | % | ||||||
| Risk free interest rate (US treasury bond) | % | % | ||||||
| Dividend yield | ||||||||
| 23 |
Series A-B placement agent warrants
The fair value of each of the warrants was $ and $ as of March 31, 2024 and December 31, 2023, respectively.
The inputs associated with calculating the fair value of the warrants are considered to be Level 2 and were valued using a Black-Scholes valuation model. The inputs were as follows:
| March 31, 2024 | December 31, 2023 | |||||||
| Exercise price | $ | $ | ||||||
| Share price | $ | $ | ||||||
| Time to maturity | ||||||||
| Expected volatility | % | % | ||||||
| Risk free interest rate (US treasury bond) | % | % | ||||||
Series C placement agent warrants
The
fair value of each of the warrants was $
The inputs associated with calculating the fair value of the warrants are considered to be Level 2 and were valued using a Black-Scholes valuation model. The inputs were as follows:
| March 31, 2024 | December 31, 2023 | |||||||
| Exercise price | $ | $ | ||||||
| Share price | $ | $ | ||||||
| Time to maturity | ||||||||
| Expected volatility | % | % | ||||||
| Risk free interest rate (US treasury bond) | % | % | ||||||
| Dividend yield | ||||||||
Series D warrants
The
fair value of each of the warrants was $
NOTE 13. SUBSEQUENT EVENTS
Management evaluated subsequent events and transactions that occurred after the balance sheet date, up to the date that the financial statements were issued. Based upon this review, other than as set forth below, management did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.
On May 6, 2024, the Company, entered into a letter agreement (the “Inducement Letter”) with certain holders (the “Holders”)
of existing Series E warrants (the “Existing Warrants”) to purchase ordinary shares represented by american depositary shares
(the “ADSs”) of the Company. The Existing Warrants were issued on December 21, 2023 and have an exercise price of £
Pursuant to the Inducement Letter,
the Holders agreed to exercise for cash their Existing Warrants to purchase an aggregate of
The Company engaged H.C. Wainwright
& Co., LLC (the “Placement Agent”) to act as its exclusive placement agent in connection with the transactions summarized
above and has agreed to pay the Placement Agent a cash fee equal to
| 24 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report and our audited financial statements and related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on April 1, 2024. This discussion and analysis and other parts of this Quarterly Report contain forward-looking statements based upon current beliefs, plans and expectations that involve risks, uncertainties and assumptions, such as statements regarding our plans, objectives, expectations, intentions and projections. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those set forth under Part II, Item 1A, “Risk Factors” and elsewhere in this Quarterly Report. You should carefully read the “Risk Factors” section of this Quarterly Report and of our Annual Report on Form 10-K for the year ended December 31, 2023, to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements. Please also see the section entitled “Special Note Regarding Forward-Looking Statements.”
Overview
We are a clinical-stage biopharmaceutical company with a cell-based product pipeline capable of treating a variety of disorders including cancer and infectious disease. We are currently developing a pipeline of unmodified allogeneic GD-T therapies and next generation GD CAR-T treatments with a number of advantages over conventional approaches. We own our main patent families in the GD CAR-T space, providing robust IP protection and manufactures all products in-house, leading to a much lower cost of goods than competitor products.
In-house clinical studies have demonstrated that our unmodified allogeneic GD-T products are (i) well tolerated and (ii) show preliminary evidence of disease modification in patients with the late-stage blood cancer, known as acute myeloid leukemia – AML. Based on clinical data generated by us, we believe that unmodified GD-Ts have the potential to treat all blood cancers.
The Company’s lead product, TCB-008, is now in phase 2b-into-pivotal (phase 3) clinical studies with a view to launching its first oncology product for the treatment of AML. Clinical results generated thus far have enabled us to obtain FDA orphan drug status for treatment of AML.
In addition to unmodified allogenic GD-Ts for treatment of blood cancers, we are also developing an expanded platform for TCB-008 use case in anti-fungal, anti-viral and anti-microbial diseases. We believe TCB-008 can be impactful in immune-suppressed and immune-compromised patient populations, including cancer patients, to treat and act as a prophylactic in these disease verticals.
In order to manufacture our portfolio of allogeneic products, we select the highest quality GD-T cells from healthy donors, activate the cells and grow them in large numbers at our in-house GMP-compliant manufacturing facility before administration to a patient in order to target and then destroy malignant or virally-infected tissues. We believe that we have introduced a step-change to our manufacturing platform by implementing a freeze-thaw process that will allow product to be shipped from cleanroom to patient without any shelf-life issue. Resulting products, we believe, will be more cost-effective and straightforward to ship from cleanroom to clinic. Our team continues to improve and optimize our process based on data and new technologies being developed globally.
Components of Our Results of Operations
Revenues
We do not have any approved products. Accordingly, we have not generated any revenue from the sale of products, and we do not expect to generate any such revenue unless and until we obtain regulatory approvals for, and commercialize any of, our product candidates. In the future, we will seek to generate revenue primarily from product sales and, potentially, regional or global collaborations with strategic partners, which may produce license fee income.
Since inception through March 31, 2024, the Company has received £14.5 million in pre-clinical payments connected with CAR-T development partnerships. These partnerships are no longer actively being progressed and it is unlikely that we will receive any future milestone revenues.
Operating Expenses
We classify our operating expenses into two categories: research and development expenses and administrative expenses. Personnel costs, including salaries, benefits, bonuses and share-based payment expense, comprise a significant component of each of these expense categories. We allocate expenses associated with personnel costs based on the function performed by the respective employees.
Research and Development Expenses
The largest component of our total operating expenses since inception has been costs related to our research and development activities, including the preclinical and clinical development of our product candidates.
Research and development costs are expensed as incurred, with our development activities not yet at the point at which capitalization can occur under GAAP. Our research and development expense primarily consist of:
| ● | consumable costs related to research and development of pharmaceutical or biologic therapy products for preclinical studies and clinical trials; | |
| ● | costs related to manufacturing active pharmaceutical or biologic therapy products for preclinical studies and clinical trials; | |
| ● | salaries and personnel-related costs, including bonuses, benefits and any share-based payment expense, for our personnel performing research and development activities or managing those activities that have been out-sourced; | |
| ● | fees paid to consultants and other third parties who support our product candidate development; |
| 25 |
| ● | third party costs incurred in connection with preclinical studies and clinical trials from investigative sites and contract research organizations, or CROs; | |
| ● | other costs incurred in seeking regulatory approval of our product candidates; | |
| ● | costs of related office space allocated to our research and development function, materials and equipment; and | |
| ● | payments under our license agreements. |
The successful development of our product candidates is highly uncertain. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. In addition, the cost of development of our CAR-T range of products is likely to be substantially higher than costs incurred historically in the development of our unmodified products. Accordingly, we expect research and development costs to increase significantly for the foreseeable future as programs progress. However, we do not believe that it is possible at this time to accurately project total program-specific expenses through commercialization. We are also unable to predict when, if ever, material net cash inflows will commence from our product candidates to offset these expenses. Our expenditures on current and future preclinical and clinical development programs are subject to numerous uncertainties in timing and cost to completion.
The duration, costs and timing of clinical trials and development of our product candidates will depend on a variety of factors including:
| ● | the scope, rate of progress, results and expenses of our ongoing and future clinical trials, preclinical studies and research and development activities; | |
| ● | the potential need for additional clinical trials or preclinical studies requested by regulatory agencies; | |
| ● | potential uncertainties in clinical trial enrolment rates or drop-out or discontinuation rates of patients; | |
| ● | competition with other drug development companies in, and the related expense of, identifying and enrolling patients in our clinical trials and contracting with third-party manufacturers for the production of the drug product needed for our clinical trials; | |
| ● | the achievement of milestones requiring payments under in-licensing agreements; | |
| ● | any significant changes in government regulation; | |
| ● | the terms and timing of any regulatory approvals; | |
| ● | the expense of filing, prosecuting, defending and enforcing patent claims and other intellectual property rights; and | |
| ● | the ease, cost and ability to market, commercialize and achieve market acceptance for any of our product candidates, if approved. |
We track research and development expenses on a program-by-program basis for both clinical-stage and preclinical product candidates. Manufacturing, clinical trial and preclinical research and development expenses are assigned or allocated to individual product candidates. We do not allocate employee costs or facility expenses, including depreciation or other indirect costs, to specific programs because these costs are deployed across multiple programs and, as such, are not separately classified. We use internal resources primarily to oversee research and development as well as for managing our preclinical development, process development, manufacturing and clinical development activities.
| 26 |
Administrative Expenses
Administrative expenses consist of personnel costs, other administrative expenses and other expenses for outside professional services, including legal, audit and accounting services. Personnel costs consist of salaries, bonuses, benefits and share-based compensation expense. Other administrative expenses include office space-related costs not otherwise allocated to research and development expense, professional fees and costs of our information systems. We anticipate that our administrative expenses will increase in the future as we increase our headcount to support our continued research and development and potential commercialization of our product candidates. We expect to continue to incur additional expenses as a public company, including expenses related to compliance with the rules and regulations of the SEC and Nasdaq, additional insurance expenses, and expenses related to investor relations activities and other administrative and professional services.
Change in fair value of derivative liability
The gain/loss relates to the movement in the estimated fair value of the embedded derivative related to the issue of Convertible Loan Notes, calculated by using a Black Scholes option pricing model at the end of each reporting period. The gain/loss relates to the movement in the estimated fair value of our warrants, calculated by using a Black Scholes option pricing model at the end of each reporting period. As it pertains to the issued warrants, it is important to note that as of March 31, 2024 and December 31, 2023 they were primarily equity classified and therefore are no longer required to be re-measured to fair value at the end of each reporting period.
Interest Expense
Interest expense includes the effective interest charge accrued in relation to the Convertible Loan Notes. Interest expense is offset by interest income related to interest earned on our cash and cash equivalents and short-term deposits.
Income Tax Credit
We are subject to corporate taxation in the United Kingdom. Due to the nature of our business, we have generated losses since inception. Our income tax credit recognized represents the sum of the research and development tax credits recoverable in the United Kingdom.
As a company that carries out extensive research and development activities, we benefit from the United Kingdom research and development tax credit regime and are able to surrender some of our losses for a cash rebate of up to 20% of expenditures related to eligible research and development projects. Qualifying expenditures largely comprise clinical trial and manufacturing costs, employment costs for relevant staff and consumables incurred as part of research and development projects. A large portion of costs relating to our research and development, clinical trials and manufacturing activities are eligible for inclusion within these tax credit cash rebate claims.
There can be no certainty that we will be able to continue to claim research and development tax credits in the future. Tax losses that have not been utilized to offset taxable income or surrendered in connection with the aforementioned research and development tax credits are carried forward to be offset against future taxable profits. In the event we generate revenues in the future, we may benefit from the United Kingdom’s government’s “patent box” initiative that allows profits attributable to revenues from patents and/or patented products registered in the United Kingdom or European Union to be taxed at a lower rate than other streams of revenue. The current rate of tax for relevant streams of revenue for companies receiving this relief is 10%.
| 27 |
Results of Operations
Comparison of the Three Months Ended March 31, 2024 and 2023
The following table summarizes our results of operations:
For the Three Months Ended March 31, 2024 | For the Three Months Ended March 31, 2023 | £ Change | % Change | |||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development expenses | 1,298,942 | 1,934,304 | (635,362 | ) | (32.8 | )% | ||||||||||
| Administrative expenses | 2,142,714 | 2,231,461 | (88,747 | ) | (4.0 | )% | ||||||||||
| Total operating expenses | 3,441,656 | 4,165,765 | (724,109 | ) | (17.4 | )% | ||||||||||
| Loss from operations | (3,441,656 | ) | (4,165,765 | ) | 724,109 | (17.4 | )% | |||||||||
| Other income (expense): | ||||||||||||||||
| Change in fair value of derivatives | 11,446 | 3,148,648 | (3,137,202 | ) | (99.6 | )% | ||||||||||
| Other expense, net | (2,386 | ) | (17,794 | ) | 15,408 | (86.6 | )% | |||||||||
| Total other income (expense), net | 9,060 | 3,130,854 | (3,121,794 | ) | (99.7 | )% | ||||||||||
| Net loss before income taxes | (3,432,596 | ) | (1,034,911 | ) | (2,397,685 | ) | 231.7 | % | ||||||||
| Income tax credit | 110,742 | 400,000 | (289,258 | ) | (72.3 | )% | ||||||||||
| Net loss | £ | (3,321,854 | ) | £ | (634,911 | ) | £ | (2,686,943 | ) | 423.2 | % | |||||
Research and Development Expenses
For the Three Months Ended March 31, | ||||||||||||||||
| 2024 | 2023 | |||||||||||||||
| £’000’s | £’000’s | £ Change | % Change | |||||||||||||
| Direct research and development expenses by program: | ||||||||||||||||
| Unmodified cell therapy programs(1) | £ | 316 | £ | 446 | £ | (130 | ) | (29.2 | )% | |||||||
| Other research and development programs(2) | 21 | 188 | (167 | ) | (88.9 | )% | ||||||||||
| Total direct research and development expense | 337 | 634 | (298 | ) | (46.9 | )% | ||||||||||
| Research and development and unallocated costs: | ||||||||||||||||
| Personnel related (including share-based compensation) | 620 | 896 | (277 | ) | (30.9 | )% | ||||||||||
| Indirect research and development expense(3) | 343 | 404 | (61 | ) | (15.1 | )% | ||||||||||
| Total research and development expenses | £ | 1,299 | £ | 1,934 | £ | (635 | ) | (32.8 | )% | |||||||
| (1) | Unmodified cell therapy programs include OmnImmune® and ImmuniStim® | |
| (2) | Other research and development programs include expenditure on areas such as our CAR-T program and induced pluripotent stem cells (iPSCs). | |
| (3) | Indirect research and development expense includes property related costs and depreciation and amortization. |
Research and development expenses decreased by 33% to £1.3 million for the three months ended March 31, 2024 from £1.9 million for the three months ended March 31, 2023, which was primarily driven by a decrease in direct and indirect research expenses due to a refocus of the clinical strategy and consequently a decrease in personnel.
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General and administrative
| For the Three Months Ended March 31, | ||||||||||||||||
| 2024 | 2023 | £ Change | % Change | |||||||||||||
| £’000’s | £’000’s | |||||||||||||||
| Share-based compensation expense | 785 | 100 | £ | 685 | 686.9 | )% | ||||||||||
| Employee-related costs | 464 | 688 | (224 | ) | (32.6 | )% | ||||||||||
| Legal & professional fees | 827 | 1,345 | (517 | ) | (38.5 | )% | ||||||||||
| Other expenses | 67 | 99 | (32 | ) | (32.5 | )% | ||||||||||
| Total administrative expenses | 2,143 | 2,231 | (89 | ) | (4.0 | )% | ||||||||||
Administrative expenses decreased by 4% to £2.1 million for the three months ended March 31, 2024 from £2.2 million for the three months ended March 31, 2023. The decrease was primarily driven by a decrease in employee-related costs and a decrease in legal and professional fees, offset by an increase in share-based compensation expense.
Change in fair value of derivative liability
The change in fair value of derivative liability is comprised of the change in fair values of the convertible loan derivative, warrant derivative, and other derivatives. The change in the fair value of the embedded convertible loan derivatives relates to the movement in the estimated fair value of the embedded derivatives during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.
The change in fair value of the warrant derivatives for the three months ended March 31, 2024 relates to the movement in the estimated fair value of our issued detachable warrants. The warrants were issued at the time of the IPO and at various times during each of the two years ended December 31, 2023. In addition, certain warrants were both modified and induced over the course of our fiscal year ended December 31, 2023. All of our issued warrants are valued by using the Black Scholes option pricing model.
Other expense, net
Other expense, net is comprised of foreign currency (losses) gains and interest (expense) income. Interest expense decreased by 100% during the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The decrease was due to the Convertible Loan Note being paid off during 2023. Interest expense was partially offset by interest income earned on cash accounts. The change in foreign currency (losses) increased during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 primarily due to a higher foreign exchange rate during 2024.
Income tax credit
The research and development tax credit of £0.1 million was 72% lower for the three months ended March 31, 2024 compared to £0.4 million for the three months ended March 31, 2023. This was due to lower levels of expenditure eligible for research and development tax credits and changes in the UK tax rules around research and development tax credits.
After accounting for tax credits receivable, there were accumulated tax losses for carry forward in the United Kingdom of £18.3 million as of March 31, 2024. Unrecognized deferred tax assets totaling £4.9 million as of March 31, 2024 consist of temporary differences on tax losses and share-based compensation arrangements. No deferred tax asset is recognized in respect of accumulated tax losses or temporary differences on share-based compensation arrangements because future profits are not sufficiently certain.
Going Concern
Our existing cash of £1.0 million as of March 31, 2024 will not be sufficient to enable us to conduct our business 12 months from the issuance of these financial statements. We will need additional funding to complete the development and research of our products. If we are unable to raise capital when needed or on acceptable terms, we would be forced to delay, reduce, or eliminate our research and development efforts.
On May 8, 2023, the Group had cash on hand of $4.0 million (£3.2 million), which will not be sufficient to enable the Group to meet the cash requirements required to enable it to conduct its business plan through the going concern period (being to May 15, 2025) (“Going Concern Period”). With existing resources, we expect to be able to fund current operations into July 2024.
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As a result of the Company’s recurring losses from operations, and the need for additional financing to fund its operating and capital requirements, there is uncertainty regarding the Company’s ability to maintain liquidity sufficient to operate its business effectively, which raises substantial doubt as to the Company’s ability to continue as a going concern.
Liquidity and Capital Resources
For the three months ended March 31, 2024 and 2023, we incurred net losses of £3.3 million and £0.6 million, respectively. We used £2.4 million of cash in operating activities during the three months ended March 31, 2024 and used £2.9 million of cash in operating activities during the three months ended March 31, 2023.
As of March 31, 2024 and December 31, 2023, we had cash and cash equivalents of £1.0 million and £2.5 million, respectively. From incorporation through March 31, 2024, we have financed our operations primarily through our IPO, private placements of equity securities, convertible loans, government grants, research and development tax credits, and receipts from partner for collaborative research and development services totaling £83.0 million.
While we work towards obtaining regulatory approval to advance any of our GD-T cell therapeutic candidates into pivotal clinical trials or to commercialization, we will incur significant research and development expenses, and also commercialization expenses related to product sales, marketing, manufacturing and distribution and additional funding would be required. Where appropriate, we will seek to fund our operations through milestone payments under our agreements with collaboration partners and additional equity financings.
Cash Flows
The following tables summarize the results of our cash flows for the below respective periods:
For the Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Net cash provided by (used in): | ||||||||
| Operating activities | £ | (2,408,593 | ) | £ | (2,911,247 | ) | ||
| Investing activities | £ | (5,618 | ) | £ | (145,233 | ) | ||
| Financing activities | £ | 932,557 | £ | 3,954,238 | ||||
| Change in cash | £ | (1,481,654 | ) | £ | 897,758 | |||
Operating Activities
Net cash used in operating activities was £2.4 million for the three months ended March 31, 2024. The net loss for the three months ended March 31, 2024 was £3.3 million, which was offset by noncash items of £0.9 million, consisting of £0.1 million in depreciation and amortization, £0.8 million in share-based compensation expense, and less than £0.1 million in the change in the fair value of the derivative liability. Changes in working capital amounted to less than £0.1 million, which consisted of a decrease in the corporation tax receivable and lease liabilities, offset by an increase in prepaid expenses, operating lease right of use assets, and accounts payable and accrued expenses.
Net cash used in operating activities was £2.9 million for the three months ended March 31, 2023. The net loss for the three months ended March 31, 2023 was £0.6 million, which was offset by noncash items of £2.6 million, consisting of £0.2 million in depreciation and amortization, £0.1 million in share-based compensation expense, a £3.1 million change in the fair value of the derivative liability, and £0.2 million in offering costs related to the Series C Placement Agent Warrants. Changes in working capital provided £0.3 million in cash.
Investing Activities
Net cash used in investing activities was immaterial for the three months ended March 31, 2024 and £0.1 million for the three months ended March 31, 2023. These amounts relate primarily to purchases of property and equipment related to our facility and patent filing costs.
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Financing Activities
Net cash from financing activities was £0.9 million and £3.9 million for the three months ended March 31, 2024 and 2023, respectively. For the three months ended March 31, 2024, these amounts consisted of net proceeds from sale of own shares and warrants for £1.0 million offset by issuance costs of £0.1 million. For the three months ended March 31, 2023, these amounts consisted of net proceeds from sale of own shares and warrants for £4.1 million offset by issuance costs of £0.2 million.
Funding Requirements
We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance the preclinical activities and clinical trials of our product candidates. Our expenses will increase as we (i) advance our product candidates through phases of clinical development and, potentially, registration, (ii) fund our research and development activities to further expand our GD-T cell technologies and develop future product candidates and follow-on versions of our more advanced product candidates, (iii) fund our manufacturing activities and the expansion of our plant to support our ongoing and future clinical trials and potential commercial launch; and (iv) fund our general operations.
Since February 10, 2022, we have been a publicly traded company and incur significant legal, accounting and other expenses that we were not required to incur as a private company. In addition, the Sarbanes-Oxley Act of 2002, as well as rules adopted by the SEC and The Nasdaq Stock Market, requires public companies to implement specified corporate governance practices. We expect to continue to incur substantial legal and financial compliance costs, which may make some activities more time-consuming and costly.
We will require additional capital to continue to conduct our business and implement our business plans.
Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical product candidates, we are unable to estimate the amount of our future working capital requirements, which will depend on and are likely to increase significantly as a result of many uncertain factors, including:
| ● | the scope, progress, outcome and costs of our clinical trials and other research and development activities; | |
| ● | the costs, timing, receipt and terms of any marketing approvals from applicable regulatory authorities; | |
| ● | the costs of future sales and marketing activities, including cost of product sales, medical regulatory affairs, marketing, manufacturing and distribution, for any of our product candidates for which we receive marketing approval; | |
| ● | the amount and timing of the receipt of any future revenue from commercial sale of our products, should any of our product candidates receive marketing approval and become successful in the market; | |
| ● | the impact of the COVID-19 pandemic on our ability to progress research and development and clinical trials; | |
| ● | the costs and timing of hiring new employees to support our future growth; | |
| ● | the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; and | |
| ● | the cost of and extent to which we in-license or acquire additional product candidates or technologies. |
Until such time, if ever, that we can generate product revenue sufficient to achieve profitability, we expect to finance our future cash needs through equity offerings and debt and a combination thereof, including securities convertible into ordinary shares and through development collaborations with partners. To the extent that we raise additional capital through the sale of equity, our shareholders’ ownership interest will be diluted.
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If we raise additional funds through other third-party funding, collaborations agreements, strategic alliances, licensing arrangements or marketing and distribution arrangements, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us.
If we are unable to raise additional funds when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market products or product candidates that we would otherwise prefer to develop and market ourselves. If we raise funding through borrowings, we may have to enter into onerous covenants which may adversely impact our operations and our ability to obtain further funding.
There is no assurance that we will be able to raise any further funding, or if further funding is offered, it will be on terms that are acceptable to us and may bring dilution which is unacceptable to our shareholders.
The source, timing, and availability of any future financing will depend principally upon market conditions, and, more specifically, on the progress of our clinical development program. Funding may not be available when needed, at all, or on terms acceptable to us. Lack of necessary funds may require us to, among other things, delay, scale back or eliminate expenses including some or all our planned development, including our clinical trials. While we may need to raise funds in the future, we believe the current cash reserves should be sufficient to fund our operation for the foreseeable future. Because of these factors, we believe that this creates doubt about our ability to continue as a going concern.
Contractual Obligations
The following table summarizes our contractual obligations as of March 31, 2024 and the effects that such obligations are expected to have on our liquidity and cash flows in future periods:
| Payments due by period | ||||||||||||||||||||
| Total | Less Than 1 Year | –1 - 3 Years | –4 - 5 Years | More Than 5 Years | ||||||||||||||||
| Trade payables | £ | 1,927,612 | £ | 1,927,612 | £ | – | £ | – | £ | – | ||||||||||
| Lease liabilities | 2,123,321 | 335,261 | 894,030 | 894,030 | – | |||||||||||||||
| Payables related to clinical trial testing | 1,177,500 | 1,177,500 | – | – | – | |||||||||||||||
| Other payables | 1,348,335 | 1,348,335 | – | – | – | |||||||||||||||
| Total commitments | £ | 6,576,768 | £ | 4,788,708 | £ | 894,030 | £ | 894,030 | £ | - | ||||||||||
Lease liabilities
Amounts shown as lease liabilities and similar reflect minimum payments due for our leases of office, laboratory and manufacturing space. We entered into a lease for our corporate headquarters in April 2014 and, as part of this agreement, exercised an option to lease additional space in January 2017 and March 2019. The overall lease expires in February 2029.
Other commitments
We enter into contracts in the normal course of business with third parties who support us in the conduct of certain specialist aspects of clinical trials and preclinical research studies and testing. These contracts are generally cancellable by us upon prior notice. Payments due upon cancellation consist only of payments for services provided or expenses incurred, including noncancelable obligations of our service providers, up to the date of cancellation. These payments are not included in the preceding table, as the amount and timing of such payments are not known.
We have not included any contingent payment obligations that we may incur upon achievement of clinical, regulatory and commercial milestones, as applicable, or royalty payments that we may be required to make under in-licensing agreements which we have or may enter into which could be payable if any of our products generate future sales or license revenue as the amount, timing and likelihood of such payments are not known and are not anticipated in the near term or before we generate significant revenues.
Critical Accounting Estimates
Management’s discussion and analysis of financial condition and results of operations is based upon our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements required the use of estimates and judgments that affect the reported amounts of our assets, liabilities, revenues, and expenses. Management bases estimates on historical experience and other assumptions it believes to be reasonable under the circumstances and evaluates these estimates on an on-going basis. Actual results may differ from these estimates. There have been no significant changes to the critical accounting estimates included in our Annual Report on Form 10-K for the year ended December 31, 2023.
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| Item 3. | Quantitative and Qualitative Disclosures about Market Risk |
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
| Item 4. | Controls and Procedures |
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were not effective at a reasonable assurance level due to a material weakness in our internal control over accounting for complex financial instruments (including in determining the appropriate valuation basis in areas requiring significant judgement) and in the accounting for our property leases on conversion from IFRS to GAAP. The Company’s disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and (ii) accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely discussions regarding required disclosure. We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the period ended March 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
| Item 1. | Legal Proceedings |
From time to time, we are involved in various disputes, claims, suits, investigations, and legal proceedings arising in the ordinary course of business. We believe that the resolution of current pending legal matters will not have a material adverse effect on our business, financial condition, results of operations or cash flows. Nonetheless, we cannot predict the outcome of these proceedings, as legal matters are subject to inherent uncertainties, and there exists the possibility that the ultimate resolution of these matters could have a material adverse effect on our business, financial condition, results of operations or cash flows.
In accordance with the terms of a Convertible Loan Note (‘Note’) on August 9, 2022 (the Conversion Date) the Company issued 183,820 Ordinary Shares and 367,640 listed warrants to the Note holder in full satisfaction of the Note in the aggregate amount of $781,233. The holder filed a claim in the English courts on June 19, 2023 asserting that notice was provided such that the Company should have paid it the value of the Note in cash, rather than by settling it through the issuance of Ordinary Shares and listed warrants. The holder is demanding payment of the face value of the Note, together with interest, (approximately $860,000 as at the time of the initial filing of the claim). The litigation process is in its early stages and is not expected to conclude until late 2024 or later. The Company has retained English solicitors and is contesting the claim in its entirety. The Company believes that it acted correctly under the terms of the Note and has accounted for the transaction on that basis, and that no further amounts are payable to the holder.
| Item 1A. | Risk Factors |
In addition to the information set forth in this Form 10-Q, you should carefully consider the risk factors disclosed under the heading “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023. There have been no material changes to our risk factors from those included in our Annual Report on Form 10-K for the year ended December 31, 2023.
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Not applicable.
Issuer Purchases of Equity Securities
We did not repurchase any of our equity securities during the three months ended March 31, 2024.
| Item 3. | Defaults Upon Senior Securities |
None.
| Item 4. | Mine Safety Disclosures |
None.
| Item 5. | Other Information |
10b5-1 Trading Plans
During
the fiscal quarter ended March 31, 2024, no Section 16 director or officer
There were no “non-Rule 10b5-1 trading arrangements” (as defined in Item 408 of Regulation S-K of the Exchange Act) adopted, modified or terminated during the fiscal quarter ended March 31, 2024 by our directors and Section 16 officers.
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| Item 6. | Exhibits |
The exhibits required by Item 601 of Regulation S-K and Item 15(b) of this Quarterly Report are listed in the Exhibit Index below. The exhibits listed in the Exhibit Index are incorporated by reference herein.
*The certification attached as Exhibit 32.1 and 32.2 that accompanies this Quarterly Report on Form 10-Q is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Form 10-Q, irrespective of any general incorporation language contained in such filing.
| 101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (formatted in IXBRL, and included in exhibit 101). |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| TC BIOPHARM (HOLDINGS) PLC | ||
| By: | /s/ Bryan Kobel | |
Bryan Kobel Chief Executive Officer | ||
| By: | /s/ Martin Thorp | |
Martin Thorp Chief Financial Officer | ||
Date: May 15, 2024
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