Condensed Consolidated Interim Statement of Changes in Equity for the six months ended 30 June 2023 and 30 June 2022

Condensed Consolidated Interim Statement of Cash Flows for the six months ended 30 June 2023

Notes to the Condensed Consolidated Interim Financial Statements

1.         General Information

The Group's business is preclinical-stage biotechnology focused on the discovery, development and commercialisation of innovative treatments relating to bone marrow/hematopoietic (blood-forming) stem cell (BM/HSC) transplants for blood diseases, including leukaemia, lymphoma and bone marrow failure, and viral infections. The products under development are designed to address a range of problems that occur with the  current standard of care treatments.

The Company's registered office is located at 6th Floor, 60 Gracechurch Street, London, EC3V 0HR, and the Company's shares are listed on the main market of the London Stock Exchange.

2.         Interim financial information

The condensed consolidated interim financial statements are for the six-month period ended 30 June 2023. The condensed consolidated interim financial statements do not include all the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2022, which were prepared under International Financial Reporting Standards (IFRS).

The condensed consolidated interim financial statements have not been audited nor have they been reviewed by the Group's auditors under ISRE 2410 of the Auditing Practices Board. These condensed consolidated interim financial statements do not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The Group's statutory financial statements for the year ended 31 December 2022 prepared under IFRS have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain a statement under Section 498(2) of the Companies Act 2006.

3.         Basis of preparation and changes to the Group's Accounting Policies

The principal accounting policies applied in the preparation of these consolidated interim condensed financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated.

Basis of Preparation

The condensed consolidated interim financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting'. The accounting policies adopted in this report are consistent with those of the annual financial statements for the year to 31 December 2022 as described in those financial statements. Several new or amended standards became applicable for the current reporting period, but they did not have any impact on the group's accounting policies and did not require retrospective adjustments.

Going Concern

The preparation of interim financial statements requires an assessment on the validity of the going concern assumption.

The Company successfully raised £4,056,250 (before expenses) through the allotment and issue of 162,250,000 new ordinary shares at 2.5 pence per share during the period to 30 June 2023 and a further $830,000 (£668,000) through the allotment and issue of 11,066,667 Ordinary Shares, after the period end. These proceeds were raised in order to facilitate the progression of the Company's HEMO-CAR-T product candidate into clinical trials and to enable the Company to continue development of product candidates for the treatment of viral infections based on its CBR platform.

Substantial funding will be required by the Company during the clinical trial phase and further funding will be sought by the Company prior to the commencement of the Phase I clinical trials.

The Company cannot be certain that such additional funding will be available on acceptable terms, or at all. To the extent that the Company raises additional funds by issuing equity securities, the Company's stockholders may experience dilution. Any debt financing, if available, may involve restrictive covenants. If the Company is unable to raise additional capital when required or on acceptable terms, it may have to (i) significantly delay, scale back or discontinue the development and/or commercialisation of one or more product candidates; (ii) seek collaborators for product candidates at an earlier stage than otherwise would be desirable and on terms that are less favourable than might otherwise be available; or (iii) relinquish or otherwise dispose of rights to technologies, product candidates or products that it would otherwise seek to develop or commercialise on unfavourable terms.

However, the Directors are of the opinion that the Company has adequate working capital to execute its operations for the present time and is confident in its ability to access additional financing over the next 12 months. The Directors, therefore, have made an informed judgement, at the time of approving these financial statements, that there is a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. As a result, the Directors have continued to adopt the going concern basis of accounting in preparing the annual financial statements.

Segmental Reporting

The Group's operations are located in New York, USA, with the head office located in the United Kingdom. The main assets of the Group, cash and cash equivalents, are held primarily in the United Kingdom and the United States, while the fixed assets and right of use assets are held in the United States. The Board ensures that adequate amounts are transferred internally to allow all companies to carry out their operations on a timely basis.

The Group currently has one reportable segment: a biotechnology business focused on the discovery, development and commercialisation of innovative treatments relating to bone marrow/hematopoietic (blood-forming) stem cell (BM/HSC) transplants for blood disease and treatment of blood diseases such as AML and autoimmune diseases, and viral infections.

Accounting Policies

The accounting policies, presentation and methods of computation applied by the Group in these condensed interim financial statements are the same as those applied by the Group in its consolidated financial information in its 2022 Annual Report and Accounts. The new standards, described below, will be adopted by the Group when effective, and have had no impact on these half yearly results.

New and amended accounting standards and interpretations

On 12 February 2021 the IASB issued an amendment to IAS 1 concerning accounting policy disclosures, and an amendment to IAS 8 concerning the definition of accounting estimates. On 7 May 2021 the IASB issued an amendment to IAS 12 concerning deferred tax related to assets and liabilities arising from a single transaction. The Company does not expect a material impact from the application of these two amendments, which are effective for annual reporting periods beginning on or after 1 January 2023. The Company adopted these amendments as required, and the impact was not material.

4.         Significant accounting judgments, estimates and assumptions

The preparation of the financial statements in conformity with International Financial Reporting Standards requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company's accounting policies. Actual results may differ from these estimates.

In preparing these condensed interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements for the year ended 31 December 2022.

5.         Earnings per share

Basic and fully diluted earnings per share are calculated by dividing the loss for the        six months from continuing operations of £3,571,992(six months to 30 June 2022: £1,141,304 loss) attributable to equity owners of the Group by the weighted average number of ordinary shares in issue during those periods of 1,042,923,486 and 773,952,166 respectively.

Diluted loss per Ordinary Share equals basic loss per Ordinary Share as, due to the losses incurred in the six months to 30 June 2023 and six months to 30 June 2022, there is no dilutive effect from the subsisting share options.

6.         Property, Plant and Equipment

During the six months ended 30 June 2023, the Group acquired assets with a cost of £13,161 (six months ended 30 June 2022: £1,553) and incurred depreciation expense of £109,769 (six months ended 30 June 2022: £32,233).

7.         Issued capital

During the six months ending 30 June 2023, the Company sold 162,250,000 shares of ordinary stock at a price of 2.5p per share as part of a private placement of its securities.

8.         Share-based payments

Options

During the six months to 30 June 2023, 22,839,986 options with an exercise price of 2.5p per ordinary share and 34,259,980 options with an exercise price of 2.875p per ordinary share were issued under the Company's 2021 Equity Incentive Plan.  The first tranche of 22,839,986 options vests over 5 years and the second tranche of 34,259,980 options vests contingent upon authorisation by the FDA to commence clinical trials of HEMO-CAR-T. No options lapsed during the six months to 30 June 2023.

A schedule of options granted since inception for all plans as at 30 June 2023 is shown below:

For the six months ended 30 June 2023, the Company recognised share-based payment expense in the statement of profit or loss of £40,473 (30 June 2022: £12,079).

9.         Right of use assets and leases

The Group follows IFRS 16 with respect to its leases, whereby the Group recognises right-of-use assets and lease liabilities for all leases on its balance sheet. One of the US subsidiaries has an agreement for the lease of laboratory facilities to which IFRS 16 has been applied.

During the six months ended 30 June 2023, the Group incurred a right of use asset depreciation expense of £210,140 (six months ended 30 June 2022: £4,968), incurred lease liability interest expense of £165,202 (six months ended 30 June 2022: £45) and made lease payments in the amount of £318,079 (six months ended 30 June 2022: £5,441).

10.       Events after the reporting period

On 10 July 2023, the Company announced that it had received a full review letter from the FDA regarding the IND application for the Company's product candidate CAR T-cells for the treatment of AML to the effect that HEMO-CAR-T be put on clinical hold.

On 7 September 2023, the Company's patent under application number "WO2023168292 Chimeric Bait Receptors and Uses Thereof" was published by the World Intellectual Property Organization. It remains to be reviewed and approved by national patent authorities.

On 14 September 2023, the Company announced that the FDA has accepted its plan to address the FDA's concerns that resulted in a clinical hold of the HEMO-CAR-T IND application.

On 18 September 2023, the Company finalised a funding arrangement with investment fund Prevail Partners, LLC, which agreed to invest in the Company through a subscription to 11,066,667 ordinary shares at a price of US$0.075 per share (approximately £0.06) for the total sum of US$830,000 (approximately £668,000).

On the same date, the Company also announced that its wholly owned subsidiary, Hemogenyx Pharmaceuticals LLC, has signed a Master Service and Technology Agreement ("MSTA") with Prevail InfoWorks, Inc., an affiliate of Prevail Partners. Under the terms of the MSTA, Prevail InfoWorks is to provide clinical services and technologies for the Company's upcoming Phase I study of its CAR-T cells in subjects with relapsed/refractory AML over an initial term of 40 months.

The subscription funds will in large part defray the payment made by the Company for the first stage of the work being undertaken by InfoWorks under the MSTA.