Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for

the Year Ended 31 December 2021

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

Contents

Page

Company Information 1

Chairman’s Statement 3

Board of Directors and Senior Management 8

Strategic Report 10

Directors’ Report 18

Governance Report 24

Directors’ Remuneration Report 31

Independent Auditor’s Report 37

Consolidated Statement of Comprehensive Income 44

Consolidated Statement of Financial Position 45

Company Statement of Financial Position 46

Consolidated Statement of Changes in Equity 47

Company Statement of Changes in Equity 48

Consolidated Statement of Cash Flows 49

Company Statement of Cash Flows 50

Notes to the Financial Statements 51

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

Company Information

Directors

Dr Vladislav Sandler (Chief Executive Officer)

Professor Sir Marc Feldmann (Chairman)

Alexis Sandler (Non-Executive Director)

Peter Redmond (Non-Executive Director)

Company Secretary

Andrew Wright

Registered Office

5 Fleet Place London

EC4M 7RD

Registered Number (England and Wales)

08401609

Joint Brokers

SP Angel Corporate Finance LLP

Prince Frederick House

35-39 Maddox Street

London

W1S 2PP

Peterhouse Capital Limited

80 Cheapside

London

EC2V 6EE

Independent Auditor

PKF Littlejohn LLP

Statutory Auditor

15 Westferry Circus

Canary Wharf

London

E14 4HD

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

UK Solicitors

Cooley (UK) LLP

Dashwood

69 Old Broad Street

London

EC2M 1QS

US Solicitors

Rubin & Rudman LLP

50 Rowes Wharf

Boston

Massachusetts 0211

Principal Bankers

Metro Bank plc

One Southampton Row

London

WC1B 5HA

Registrar

Computershare Investor Services plc

The Pavilions

Bridgwater Road

Bristol

BS13 8AE

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

Chairman’s Statement

We achieved significant progress in our lead projects in 2021, having decided to focus on those

developments which we felt promised progression to human trials or other milestones most quickly. Key

to this was the work we have done on our CAR-T cell therapy for blood cancers, while we have also

taken our CDX antibody project forward following completion of the work carried out by Eli Lilly and

Company (“Lilly”) and the signing of a licensing agreement with Lilly for intellectual property developed

by it. Building on lines of research we had been developing previously, we have also filed a provisional

patent application for our Chimeric Bait Receptor (“CBR”) platform technology, a novel approach which

potentially has the capacity to cure most viral infections, both known and yet to appear, and certain

cancers.

As a result of this programme of activity and outstanding scientific work the Company now has a strong

roster of assets, and is firmly on the path to taking them to market.

Financially, as the accounts show, our operating loss rose to approximately £2.7 million over the period,

up from approximately £2.2 million in 2020. Operating costs remained very low for a biotechnology

company developing such cutting-edge assets as ours, but we have made strong progress largely thanks

to the quality and effectiveness of our scientific team and the expertise of our consultants.

Overall, however, the Group made a loss of £5,108,310 (2020: £2,095,023 loss) during the period under

review. Approximately half this figure arose in connection with the convertible loan facility through

which we raised £12 million during the period, which consisted in part of introductory, legal and exchange

listing fees, and in part of the discount on the market value of the shares issued upon conversion of the

debt to shares; this latter component is a non-cash loss arising for accounting reasons and contributed to

the increased reported loss for the year.

The convertible loan facility did not operate as we expected. Consequently, we decided to terminate the

facility through a partial repayment and replacement of the facility balance with conventional equity,

thanks to the efforts of our brokers. While this has proved to be expensive and our share price has fallen

back substantially, conventional sources of finance on this scale were not available at the time and these

arrangements have crucially enabled us to raise sufficient funds to take our key projects significantly

forward and to bring our lead CAR-T product candidate close to being ready, subject to the work now

being carried out, for human trials in the coming months.

I review progress and developments on our lead projects below. I shall refer to our other projects more

briefly, with the reasons for the priorities that we have selected.

CAR-T cell therapy

Our chimeric antigen receptor T-cells are developed to be a treatment for relapsed/refractory (“R/R”)

Acute Myeloid Leukaemia (“AML”), the most common form of leukaemia and one for which there are

currently no fully effective treatments. AML has a five-year survival rate of less than 30% in adults and

is currently treated using chemotherapy, rather than the potentially more effective form of therapy being

developed by Hemogenyx Pharmaceuticals.

Our CAR-T therapy is expected to be a novel form of immunotherapy that programmes a patient’s own

T-cells to recognise an antigen expressed by cancerous cells and hence destroy these cells. The product

we are developing, which we refer to as HEMO-CAR-T, was constructed using our proprietary humanised

monoclonal antibody against a target, the FLT3 protein, that is over-expressed in AML cells and can be

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

found on their surface. Testing has demonstrated that HEMO-CAR-T is able to effectively programme

human T-cells to identify and destroy human AML-derived cells both in vitro (in non-animal studies) and

in vivo (in animal studies).

We have made strong progress over the past two years in the development of HEMO-CAR-T. The

programme has seen very encouraging results to date and promises to represent a major breakthrough in

the treatment of AML. The Company is now focusing its greatest efforts on this asset, which remains

proprietary and wholly owned by the Company.

In January 2021, we announced that we had entered into a Master Translational Research Services

Agreement with the University of Pennsylvania (“Penn”) to advance HEMO-CAR-T toward and through

clinical trials. The collaboration with Penn, the world’s leading experts in CAR-T therapies, is of vital

importance and demonstrates the potential value of our development. The intended outcome of the

relationship is clinical proof of concept for HEMO-CAR-T.

In preparation for human trials, the Company engaged Quality Systems LLC (“Quality Systems”) to

oversee chemistry, manufacturing and controls processes and to assist with the compilation of regulatory

filings. Quality Systems is an expert in this field and has taken more than 30 cell and gene-based therapies

to Phase I/II of clinical trials.

In December 2021, we engaged leading contract manufacturing organisation WuXi Advanced Therapies

ATU (“WuXi ATU”) for product development and manufacturing of the DNA plasmids and viral vectors

required to manufacture HEMO-CAR-T cells to support Phase I clinical trials. This partnership is key in

accelerating the timeline to deliver this innovative therapy to patients in need of a more effective treatment

for AML. Work on these precursors for the creation of HEMO-CAR-T is now well advanced.

We are now at an advanced stage of completing our application for Investigational New Drug (“IND”)

status. Work on manufacturability, quality, safety and other key parts of the development of HEMO-CAR-

T has continued and we expect to be in a position scientifically to commence trials once the IND

designation has been granted.

CDX antibody

CDX is a bispecific antibody targeting a majority of forms of relapsed/refractory AML, a subset of ALL,

and myelodysplastic syndrome; it may also be used in conditioning patients for bone marrow transplants

in a more benign way compared to traditional chemotherapy and/or radiotherapy protocols. CDX was the

subject of our development collaboration with Lilly which concluded in 2021. The partnership resulted

in the selection of a clone of the antibody that is ready for IND-enabling studies, the final step before

applying for a licence to conduct clinical trials.

Effective and non-toxic conditioning may extend the use of bone marrow transplantation to older and

more frail patients and potentially target additional indications including autoimmune diseases, such as

lupus and multiple sclerosis, for which the risk of conventional bone marrow transplantation has been a

major road-block.

The potential applications of the CDX antibody have far wider potential than initially anticipated, and we

now believe that CDX may be used not only for conditioning for bone marrow transplants but also as a

direct treatment, or when used in combination with other existing treatments, for AML and other blood

cancers.

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

In October 2021 we secured an exclusive worldwide licence for all applications to intellectual property

developed by Lilly related to the final form of the CDX bispecific antibody. With patent protection now

secured (as described below), and following the valuable contributions made by Lilly, we believe that

CDX should attract significant interest from financial or strategic partners in taking the asset forward to

animal toxicology studies and ultimately clinical trials.

Following the year end, in January, the Company announced a partnership with Selexis SA (“Selexis”)

to leverage Selexis’s SUREtechnology Platform™ of protein expression technologies and modular

workflows to advance the Company’s CDX bispecific antibody toward human trials. The service

agreement will help the Company to reduce the time, effort, and costs associated with developing the cell

line for the antibody for the treatment of AML.

CBR

CBR is a novel platform technology that constitutes a new paradigm for treating viral infections and some

forms of cancer. The Company has been working on CBR since before the start of the COVID-19

pandemic, leveraging prior discoveries by the Company, and we have made considerable progress over

the course of 2021.

The essence of the CBR-based approach is to programme immune cells to destroy pathogens using a

novel type of modifiable synthetic receptor. We have ascertained that this approach can also potentially

be used to destroy malignant cells causing certain types of cancer, making it a broadly applicable and

exciting new class of therapy. Detailed work has been undertaken by our scientists to prove the efficacy

and widen the scope of the platform. We have achieved laboratory proof of concept for a CBR construct

that eliminates the SARS-CoV-2 virus responsible for COVID-19. The Company is planning to conduct

in vivo tests of the anti-SARS-CoV-2 CBR construct. Work also continues on a CBR construct for cancer.

Although work to date has been focussed on specific viruses, in particular SARS-CoV-2, the CBR

approach is applicable in principle to almost any form of virus. We believe it is likely to be of particular

value in combatting emerging or rare forms of viral infection, treating sufferers where effective vaccines

or anti-viral drugs have not yet been developed or have failed to be effective. These may include future

mutations of the SARS-CoV-2 virus and also new viruses that may cause new pandemics, referred to as

“Disease X”, which scientists have warned to be highly likely in the coming years.

Major advantages of our CBRs for combatting viral infections are: (1) the use of a bait makes CBRs

insensitive to mutations of the targeted virus, preventing the development of resistance; (2) CBRs are

made from naturally occurring receptors that are responsible for the function of immune cells and endow

the host’s own immune system with the ability to destroy invading pathogens; and (3) CBRs are modular

synthetic receptors that can be rapidly reconfigured to attack almost any virus, bacteria, or malignant

cells.

The Company has said relatively little about its work on CBR to date as it is a potentially broadly

applicable and highly valuable new method of creating immunotherapy treatments that is not comparable

to any other developments taking place, as far as we are aware. Now that we have achieved proof of

concept and a provisional patent application has been filed in relation to CBR we can consider business

development options. We believe that the technology should attract interest from a range of potential

partners with whom we can now hold more substantive conversations.

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Annual Report & Financial Statements for the

Year Ended 31 December 2021

Other assets

The Company’s portfolio also includes its licence to the Hu-PHEC cell therapy approach that was the

subject of CEO and Co-founder Dr Vladislav Sandler’s original discovery while working at Cornell

University, and its Advanced Hematopoietic Chimera (“AHC”) humanised mice that uniquely do not

suffer from graft-versus-host disease. These remain potentially valuable assets. Some work continues in

the background, including collaborations using our AHC as platforms for disease modelling. Shareholders

will be aware that we entered into joint ventures in 2018 to take these projects forward but these were

ultimately without result and the convertible loans to subsidiaries associated with them were repaid during

2021. However, our pragmatic focus has been on our lead assets and on becoming a clinical trial-stage

business.

Patents

The Company continued to strengthen the legal protection of its pipeline assets through 2021.

In June 2021, the Company received US patent approval in relation to CDX, covering its method of use

for conditioning patients for bone marrow/hematopoietic stem cell transplantation. It also covers a subset

of sequences of monoclonal antibodies against target proteins existing on the surface of hematopoietic

stem cells/hematopoietic progenitors and/or a number of leukaemias. This patent solidifies the

Company’s leading position in the development of ground-breaking cancer-related therapies and protects

the Company’s intellectual property in this key asset.

In August 2021, the Company received US patent approval covering sequences of monoclonal antibodies

to the human FLT3/FLK2 receptor protein that is found on the surface of AML cells, hematopoietic (blood

forming) stem cells and progenitors, and dendritic cells. These monoclonal antibodies have allowed the

Company to develop both the bispecific CDX antibody and HEMO-CAR-T as treatments for AML as

well as potential treatments for other types of blood cancers, and CDX as a product for bone marrow

transplant conditioning.

The Company has made further patent applications in relation both to HEMO-CAR-T and to the CDX

bi-specific antibodies, the latter being a joint application with Lilly.

Following the period covered by these accounts, in March 2022, the Company filed a seminal provisional

patent application protecting its intellectual property rights in its CBR platform, as mentioned above.

Scientific and business advisers

The scientific advisory board, which I chair, continues to provide valuable guidance to the Company and

its scientists. During 2021 and into 2022 it has been particularly useful in shaping the Company’s intended

protocol for clinical trials of its CAR-T therapy, leveraging our advisers’ extensive experience. The

Company has now also bolstered its commercial expertise through the appointment in July 2021 of Dr

Alan E. Walts as a business adviser and board observer on an initial 12-month term. Dr Walts is a highly

qualified life sciences industry veteran, having served as a senior manager at Genzyme in a career there

lasting over 25 years. He is now a Venture Partner with Advent Life Sciences, a position he has held since

January 2014, and has positions with several other public, private and charitable life sciences

organisations. Dr Walts’s input has been instrumental in shaping the Company’s strategy for developing

its pipeline of assets, and in introducing the Company to several potential partners.

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

New laboratory premises

The Company recently occupied new premises in the Manhattanville Factory District of New York. The

premises, custom built to our requirements, are significantly larger than our original laboratory and

include two clean rooms, enabling us to carry out some procedures which we have until now had to

outsource to third parties. These will commence with the manufacturing of HEMO-CAR-T cells for

clinical trials in-house, a process that alone can save the Company over US$2 million compared with

outsourcing this work. They also open up the possibility of manufacturing cells for other organisations as

a potential source of revenue. The new laboratory will enable us to grow as we proceed to clinical trials

and commercialisation of our pipeline products, and has other advantages including proximity to

Columbia University and other life sciences institutions. It is gratifying that the Company’s highly

talented and dedicated scientific team now has the space and quality of facilities that it needs to further

its crucial work.

Conclusion

Overall, 2021 was an important year for Hemogenyx Pharmaceuticals in terms of product development

and strategic focus, and the present year has continued this positive progress. It remains for me to thank

our expert and committed team of scientists and our informed and influential group of scientific and

business advisers. We particularly look forward to taking our key CAR-T project toward human trials and

to seeking partnerships and other financing arrangements to further the development of our CDX and

CBR assets over the rest of 2022.

Prof Sir Marc Feldmann AC, FRS

MB BS, PhD, FRCP, FRCPath, FAA, F Med Sci

Chairman

29 April 2022

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

Board of Directors and Senior Management

Professor Sir Marc Feldmann – Non-Executive Director & Chairman – appointed 9 April 2018

Professor Sir Marc Feldmann is a pre-eminent medically trained immunologist at the University of

Oxford where he was Head of the Kennedy Institute of Rheumatology until 2014 and now Emeritus

Professor. He trained in medicine at Melbourne University and then earned a Ph.D. in Immunology at the

Walter & Eliza Hall Institute with Sir Gus Nossal, before working in London at the Imperial Cancer

Research Fund. Sir Marc's main research interests are immunoregulation, understanding mechanisms of

autoimmunity and the role of cytokines in disease, and working out how to fill unmet medical needs.

His work in London led to the generation of a new hypothesis for the mechanism of autoimmunity, linking

upregulated antigen presentation and cytokine expression. Testing this hypothesis led to the discovery,

with colleague Sir Ravinder Maini, of the pivotal role of TNFα (Tumour Necrosis Factor alpha) in the

pathogenesis of rheumatoid arthritis. This major discovery has revolutionised therapy not only of

rheumatoid arthritis but other chronic inflammatory diseases (e.g. inflammatory bowel disease, psoriasis,

and ankylosing spondylitis), and helped change the perception of monoclonal antibodies from niche

products to mainstream therapeutics. Anti-TNF therapeutics are the current leading drug class with 2016

sales exceeding US$36 billion.

This has led to much scientific recognition, for example election to the Royal Society and Academy of

Medical Sciences in London, the National Academy of Sciences USA and the Australian Academy of

Science, and multiple major International prizes including the Crafoord Prize of the Royal Swedish

Academy of Sciences, the Albert Lasker Clinical Research Award (NY), the Ernst Schering Prize, the

Paul Janssen Award for Biomedical Research, and the Canada-Gairdner Award. He was also the first

recipient in biology or medicine of the EU/European Patent Office Inventor of the Year Award in the

Lifetime Achievement category. In addition, Sir Marc has advised more than 20 of the largest

pharmaceutical and biotech companies in the world and has mentored some of the most successful

scientists, many of whom have become senior figures in the commercial pharmaceutical world. Sir Marc

was knighted in the 2010 Queen's Birthday Honours, and was honoured in Australia with the knighthood

equivalent, the Companion of the Order of Australia.

Sir Marc has been at the forefront of promoting effective scientific-medical-pharmaceutical interactions.

He has built up a huge network of friends and collaborators who meet regularly in Oxford and who will

help Hemogenyx Pharmaceuticals to grow and enter clinical trials.

Dr Vladislav Sandler – Chief Executive Officer – appointed 4 October 2017

Dr Vladislav Sandler is the Co-Founder and CEO of Hemogenyx Pharmaceuticals and a research

Assistant Professor at the State University of New York (SUNY) Downstate. Dr Sandler is a widely

published stem cell scientist with decades of experience in scientific research. In particular, Dr Sandler

has extensive experience developing novel methods of direct reprogramming of somatic cells into

functional and engraftable hematopoietic stem cells, as well as developing novel sources of pluri- and

multi-potent cells.

Dr Sandler has conducted his research in Russia, Israel, Canada and the United States, including at the

Children's Hospital at Harvard Medical School, the Salk Institute for Biological Sciences, Harvard

University and Albert Einstein College of Medicine, among others. He also led a team of scientists at

Advanced Cell Technologies, Inc. and was most recently on the faculty of Weill Cornell Medical College.

While at Cornell, Dr Sandler made the significant discovery that the cells that give rise to blood stem

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

cells during mammalian development continue to exist after birth, and he developed the method of

isolation of these cells from humans. As a result of this important work, Dr Sandler was awarded the

inaugural Daedalus Fund Award for Innovation at Cornell. He went on to found Hemogenyx

Pharmaceuticals in order to further pursue this significant scientific discovery and his dedication to the

translation of science into clinical practice.

Dr Sandler has published numerous peer-reviewed papers and has received a number of awards and

fellowships for his scientific research. Dr Sandler received his PhD from the University of British

Columbia. He is a member of the International Society for Stem Cell Research.

Alexis Sandler – Non-Executive Director – appointed 4 October 2017

Alexis M. Sandler is the co-founder of Hemogenyx Pharmaceuticals, for which she has served as the

Chief Operating Officer. Ms Sandler is an attorney specialising in intellectual property, with 20 years of

experience representing a range companies and institutions.

Ms Sandler is the Vice President and General Counsel of Pace University. A talented and respected

attorney with a wide range of experience and expertise, Ms Sandler previously served for nearly a decade

as in-house counsel for The Museum of Modern Art. Prior to that, she worked as the director of business

and legal affairs for a major media and entertainment company, and in private practice for several

prominent law firms.

Ms Sandler received her AB from Harvard University and her JD from the UCLA School of Law and is

a member of the State Bar of New York and the State Bar of California.

Peter Redmond – Non-Executive Director – appointed 4 October 2017

Peter Redmond is a corporate financier with some 40 years’ experience in corporate finance and venture

capital. He has acted on and assisted a wide range of companies to attain a listing over many years on the

former Unlisted Securities Market, the Main Market of the London Stock Exchange and AIM, whether

by IPO or in many cases via reverse takeovers, across a wide range of sectors, ranging from technology

through financial services to natural resources and, in recent years has done so as a director and investor

of the companies concerned.

He was a founder director of Cleeve Capital plc (now BigBlu Operations Limited) and Mithril Capital

plc, both formerly listed on AIM prior to reverse takeovers, and of Silver Falcon plc, the Company into

which Hemogenyx Pharmaceuticals reversed, and he took a leading role in negotiating and effecting the

reverse takeover. He undertook the same role in the rescue, reconstruction and refinancing of AIM-quoted

3Legs Resources plc (now SalvaRx Group plc) and now Standard Listed URA Holdings plc and several

other companies, and took a significant active part in fundraising for the above companies.

He is currently a director of Standard Listed URA Holdings plc.

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

Directors’ Strategic Report for the year ended 31 December 2021

The Directors present their Strategic Report of Hemogenyx Pharmaceuticals plc for the year ended 31

December 2021.

Introduction

This Strategic Report comprises a number of sections, namely: the Group’s objectives, the Group’s

strategy and business model, a review of the Group’s business using key performance indicators, and the

principal risks and uncertainties facing the business. The disclosures under s172 of the Companies Act

2006 are included in the Governance Report.

Objectives

The Group’s objective is to develop breakthrough therapies for the treatment of blood and autoimmune

diseases and of viral infections.

Strategy and Business Model

The Group’s long-term strategy is to create a suite of products to address current problems associated

with the treatment of blood disorders such as cancers and autoimmune diseases, with viral infections, and

with bone marrow – or hematopoietic stem cell – transplants. The latter represents an important part of

the solution to treating blood-related diseases, with the opportunity to improve outcomes through reduced

blood stem cell transplant rejection and relapse, and if successful potentially provides long-term cures for

these diseases.

The Group’s business model aims to advance its therapies through clinical proof-of-concept, taking them

towards a final stage of development. A goal is the licensing of one or more of its therapies to partners in

return for potential upfront payments, research funding support, success milestone and royalty payments.

Operational Review and Outlook

The operational review and outlook are set out in the Chairman’s Statement.

Financial Review

The Group incurred a loss for the year to 31 December 2021 of £5,108,310 (31 December 2020 – loss

of £2,095,023).

In the year to 31 December 2021 the loss mainly arose from operational expenses pursuing the Group’s

objectives listed above as well as salaries, consulting and professional fees, and general administration

expenses. These expenses have been met from the proceeds of the issue of convertible loans and equity

placings. The Group received other income of £99,943 (2020 – £85,237) from collaborations with

partners, and £71,932 (2020: nil) from the forgiveness of a loan under the United States Payment

Protection Program in 2021 for a total of £171,875 (2020 – £85,237). Finance costs connected with the

convertible loan arrangement have been expensed to profit or loss in ull in the year, following the

cessation of that acility, which would otherwise have been deferred and spread over the life of the

convertible loans.

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Annual Report & Financial Statements for the

Year Ended 31 December 2021

Cash flow and cash position

Cash used in operations totalled £2,627,298 (31 December 2020: £1,798,404).

As at 31 December 2021, the Group had a cash balance of £6,840,969 (31 December 2020: £1,812,299).

Key Performance Indicators

The Directors have identified the KPIs below that they feel are the most vital measurements for the Group

to monitor given its current stage of development. KPIs are monitored on an annual basis to ensure that

they remain the most important and relevant measure of performance and progress.

Cash management

The Group supplemented its funding with proceeds totalling £12,000,000 resulting from the issuance of

convertible loans that took place in the year. The lender converted £10,400,000 of such loan into shares

of the Company and we repaid the remaining £1,600,000. We also repaid loans to Orgenesis Inc. during

2021, such that at 31 December 2021 there was no outstanding indebtedness. The cash position at 31

December 2021 was £6,840,969 (31 December 2020: £1,812,299).

The Group carefully plans expenditure with rolling cash flow forecasts and tight financial control. The

Group takes a collaborative cost sharing approach with business partners and avoids long-term

commitments as far as possible.

Intellectual property

The Group will focus on developing new conditioning treatments, drugs and cell therapy products for

blood and autoimmune diseases, HSC/BM transplantation, and viral infections. The Group, or its

licensors, has applied for patents to protect its proprietary technology and future products, which are in

varying stages of development.

The success of the Group will depend largely on the Group’s ability to implement successful drug

development programmes, obtain the required regulatory approvals (in various territories), protect and

exploit its own intellectual property and know-how, and the intellectual property and know-how licensed

to it, and to generate a cash flow in accordance with the strategy of the Group. Intellectual property is

protected by the Group through taking a pro-active approach to filing patents over its products and

technologies, as well as the diligent maintenance and protection of such patents and licences.

The Group patent portfolio currently includes:

CDX bi-specific antibodies

The patent application relating to CDX bi-specific antibodies was filed by Hemogenyx Pharmaceuticals

LLC in the USA on 4 April 2016 ("CDX Patent") and awarded as Patent Number US 11,021,536 B2 on

1 June 2021. The invention summarised in the patent application is a method of eliminating hematopoietic

stem cells/hematopoietic progenitors ("HSC"/"HP") in a patient using bi-specific antibodies specifically

binding to a protein predominantly expressed on the surface of HSC/HP and to a protein uniquely

expressed on a surface of immune cells. The bound bi-specific antibodies redirect immune cells to

eliminate HSC/HP. The invention relates to the required conditioning of a patient prior to a BM/HSC

transplant. In this respect, the invention serves two main purposes:

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Annual Report & Financial Statements for the

Year Ended 31 December 2021

▪ it provides adequate immunosuppression of the patient and clears sufficient niche space in the

bone marrow for the transplant of HSC. This allows transplanted cells to engraft in the recipient;

and

▪ it could potentially help to eradicate the source of malignancy.

On April 4 2017, a PCT (Patent Cooperation Treaty) application was filed by Hemogenyx

Pharmaceuticals which includes additional claims that extend the CDX Patent set out in the provisional

patent application. These claims protect specific sequences of several high-quality clones discovered and

validated by the Group. The claim extension transforms the original "method" provisional patent

application into a "composition of matter" PCT application. An additional composition of matter patent

application (covering novel sequences of the antibodies discovered and validated by the Company in

collaboration with Lilly) has been filed following completion of the Lilly collaboration agreement.

Monoclonal antibodies

In July 2019 the Group filed a composition of matter patent application entitled MONOCLONAL

ANTIBODIES TO HUMAN FLT3/FLK2 RECEPTOR PROTEIN in relation to newly-discovered

monoclonal antibodies against a target protein expressed on the surface of hematopoietic stem

cells/hematopoietic progenitors and a number of leukaemias, such as AML. The patent was granted on

31 August 2021 as Patent Number US 11,104,738. This patent covers composition of matter (sequences)

of monoclonal antibodies to the human FLT3/FLK2 receptor protein that is found on the surface of acute

myeloid leukemia (AML) cells, hematopoietic (blood forming) stem cells and progenitors (HSC/HP),

and dendritic cells. It also covers a method of application of the Group’s bi-specific CDX antibodies for

conditioning patients for bone marrow transplantation.

Hu-PHEC cell therapy

The patent relating to Hu-PHEC was filed by Cornell University ("Cornell Patent") in several

jurisdictions on 13 November 2014. The patent was approved and issued in the United States of America

on 25 February 2020 and published by the European Patent Office on 13 May 2020. The invention

summarises a method of isolation and identification of post-natal hemogenic endothelial cells, as well as

the provision of substantially purified populations of post-natal hemogenic endothelial cells,

compositions of post-natal endothelial cells and methods to utilise post-natal hemogenic endothelial cells

to regenerate the hematopoietic system in a patient.

Advanced Hematopoietic Chimeras

The provisional patent application relating to the Group’s proprietary humanised mouse model, the

Advanced Hematopoietic Chimera, is an application filed by Dr Sandler and Dr Rita Simone in the USA

on 20 February 2018 ("AHC Patent"). The invention summarised in the patent application is mice whose

hematopoietic system is at least 40% humanised and methods for preparing the same. The patent was

assigned to the Group’s subsidiary Immugenyx LLC on 24 May 2018. In June 2019 the Group announced

that Immugenyx LLC has further refined its work to develop the Advanced peripheral blood

Hematopoietic Chimera ("ApbHC") as a research and development tool. The major advantage of the

ApbHC compared to other humanised mouse models known to the Group is the absence of Graft versus

Host Disease, a disease that complicates and often renders impossible the efficient use of peripheral blood

mononuclear cells in transplanted mice. The ApbHC can potentially be used for testing multi-specific

antibodies, including its own bi-specific CDX antibody, as well as for the development and testing of

new cell therapies involving immune cell programming such as CAR-T. ApbHC can also potentially be

used for the modeling of autoimmune diseases, such as Systemic Lupus Erythematosus (aka Lupus), with

a goal of developing fundamentally new treatments for those diseases.

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Annual Report & Financial Statements for the

Year Ended 31 December 2021

Chimeric Bait Receptor

In March 2022, the Company filed a seminal provisional patent application protecting its rights to the

intellectual property covering CBR.

Product development

The Group develops therapies to transform bone marrow and blood stem cell transplant procedures. These

therapies aim to replace the need for existing methods of preparation of patients for transplantation, such

as chemotherapy and radiation treatments, and at the same time address the problem of finding matching

stem cell donors whilst reducing the risk of blood stem cell rejection after transplantation.

The Group’s key products, CDX antibodies, CAR-T therapy, the CBR platform, and Hu-PHEC cell

therapy, are currently in preclinical development. In addition, the Group’s AHC product is currently the

subject of collaborations with other pharmaceutical companies to evaluate AHCs’ effectiveness as

platforms for disease modelling and drug discovery.

The Directors monitor product development through pre-clinical results. The CDX and CAR-T products

have been successfully evaluated in the Group’s proprietary humanised mouse model, achieving proof of

concept. Furthermore, we have achieved a notable demonstration of CDX’s activity versus AML cells in

vitro and in vivo. If successful, the Company may be able to use the CDX and/or CAR-T products to

eliminate R/R AML in patients who qualify for bone marrow transplantation. The Company is also

investigating the possibility of using its CDX antibodies in combination with other treatments for AML

to increase their effectiveness. A CBR construct designed to target SARS-CoV-2 has been tested in vitro.

Diversity

Hemogenyx Pharmaceuticals is committed to workplace diversity which includes but is not limited to

gender, age, ethnicity and cultural background.

Hemogenyx Pharmaceuticals’ Diversity Policy defines initiatives which assist the Company in

maintaining and improving the diversity of its workforce. The table below highlights the proportion of

women engaged by the Group:

Men

Women

Organisation as a whole

Executive management team

Board

Board of Advisors

The Group engages the services of a Board of Advisors who are highly experienced in both the clinical

development of treatments and regulatory processes to commercialisation. In addition to Professor Sir

Marc Feldmann, who runs the Board of Advisors in addition to his role as Chairman, the advisors are:

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

Dr H. Michael Shepard, Ph.D.

SCIENTIFIC ADVISOR

▪ Led the discovery and development of many successful cancer treatments

including Herceptin/trastuzumab – annual sales exceed $6.5 billion worldwide

▪ Received Harvard Medical School's prestigious Warren Alpert Prize in recognition

of contributions to the field of cancer treatment research

▪ Founded NewBiotics, Inc., acquired by Kiadis Pharma

▪ Founded BioLogix, acquired by Symphogen

Dr Koen van Besien M.D.

CLINICAL ADVISOR

▪ Professor of Medicine and Director of the Stem Cell Transplant Program at NYP-Weill Cornell

College of Medicine

▪ Developed novel methods of transplantation for those patients who lack matching donors

▪ >200 publications in peer reviewed journals

▪ Editor in Chief of the journal Leukemia and Lymphoma

Corporate Responsibility

We have defined the scope of our Group’s responsible business practices as falling within the following

key focus areas:

▪ Health and Safety – ensuring the safety and well-being of our staff

▪ Environment – managing our environmental impact areas of waste, energy and water

▪ Employees – supporting our people to develop and flourish within the business

▪ Community – positive interaction with the communities in which we operate

▪ Ethical Standards – operating to the highest ethical standards

We remain committed to ensuring these activities become embedded in how we operate and contribute

towards the success of our business. This includes not only identifying and managing business risk but

exploring opportunities to add value to the business.

Greenhouse Gas Emissions

Given the nature of its activities, there is limited scope for the Group to have a major impact on

environmental matters. Nevertheless, the Directors are mindful of their responsibilities in this regard and

strive to seek opportunities where improvements may be made; these are generally concentrated in areas

of energy conservation, recycling and waste control.

Principal Risks and Uncertainties

The Group operates in an uncertain environment and is subject to a number of risk factors. The Directors

have carried out a robust assessment of the principal risks facing the Group, including those that threaten

its business model, future performance, solvency or liquidity. They consider the following risk factors

are of particular relevance to the Group’s activities and to any investment in the Group. It should be noted

that the list is not exhaustive and that other risk factors not presently known or currently deemed

immaterial may apply.

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

The risk factors are summarised below:

Risks relating to the Group’s business strategy

The Group’s business is relatively undeveloped

The operations of Hemogenyx Pharmaceuticals are at a relatively early stage and, to date, no commercial

sales of its products have been made. The ability of the Group to achieve commercialisation is dependent

on a number of factors, many of which are outside of the Group’s control. Examples of factors outside of

the Group’s control are capital market conditions, FDA approval and competition.

Business strategy of the Group

The development of clinical products for new medical treatments is inherently uncertain, with high failure

rates in clinical studies for both early and late stage development products and such clinical studies can

be expensive, time-consuming and complicated and there is no certainty as to the outcome of such

studies. Even once clinical studies have been successfully carried out, later phase trials may not

successfully replicate or improve on such outcomes.

Staffing and key personnel

The Group is reliant on a number of the key personnel, in particular Dr Vladislav Sandler who is the

founder of Hemogenyx Pharmaceuticals (refer to Corporate Governance Report for further detail). Whilst

the Group has endeavoured to ensure that it has contractual arrangements which include non-compete

restrictions in place with such persons to lessen the risk of them ceasing to be involved with the Group,

in the event that the Group was to lose the services of such individuals, its results could be adversely

affected.

Costs of commercialisation

The ability of the Group to bring its products to first commercial sale will be dependent in part on the

overall costs of manufacturing and the costs involved could be significant and there is no guarantee that

the sale prices achievable for its products will be viable and sustainable.

Clinical studies and timelines risk

Hemogenyx Pharmaceuticals is currently progressing its product candidates through preclinical

development. Although encouraging results have been achieved so far, there can be no certainty that

these results can be reproduced in clinical trials. The monies raised in the Placings and Subscriptions,

as well as the Orgenesis and Mint Capital convertible loans, are intended to support those preclinical

development activities.

The development of clinical products for new medical treatments is inherently uncertain, with high

failure rates in clinical studies for both early- and late-stage development products. Furthermore, such

clinical studies (Phase 1, Phase 2a/2b, Phase 3) are typically expensive, complex, can take considerable

time to complete and have uncertain outcomes.

Furthermore, as a result of adverse, undesirable, unintended or inconclusive results from any testing or

clinical trials (which have yet to be designed), the future progress, planning and potential treatment

outcome of the products and clinical programmes may be affected and may potentially prevent or limit

the commercial use of one, many or all of the Company's products. In addition, later phase clinical trials

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

may fail to show the desired safety and efficacy obtained in earlier studies, and a successful

completion of one stage of clinical development of an investigational clinical product does not ensure

that subsequent stages of clinical development will be successful.

Failure can occur at any stage of clinical development and, as a result, enforced delays to the clinical

development plan could delay or prevent commercialisation of the Company's product candidates.

Various factors associated with the potential failure or delay in completing a clinical programme include,

but are not limited to:

▪ Delays in securing clinical investigators or clinical study sites;

▪ Delays in securing any regulatory authority, hospital ethics committee, or institutional review

board approval or approvals necessary to commence a clinical study;

▪ Delays or failure to recruit a sufficient number of clinical study participants in accordance with

the clinical study protocol;

▪ Difficulty or inability to monitor subjects adequately during or after treatment;

▪ Inability to replicate in Phase 3 controlled studies any safety and efficacy data obtained from

controlled Phase 2a/2b clinical studies;

▪ Difficulty or inability to secure clinical investigator compliance to follow the approved clinical

study protocol; and

▪ Unexpected adverse events or any other safety or related issues.

Research and development risk

The Group operates in the biotechnology and bio-pharmaceutical development sectors and carries out

complex scientific research. If the research or preclinical testing or clinical trials of any of Hemogenyx

Pharmaceuticals’ product candidates fail, meaning that these candidates will not be licensed or marketed,

this would result in a complete absence of revenue from these failed candidates. Positive results from

preclinical and early clinical studies do not guarantee positive results from clinical trials required to

permit application for regulatory approval. Furthermore, the Group may discontinue the development

of candidates if results are not positive or unlikely to further its progress towards a meaningful outcome

or collaboration.

Intellectual property (IP) infringement

The Group may be subject to future litigation concerning its own IP and the IP of others. Adverse

judgements in relation to its IP would likely have negative outcomes for its results of operations.

Intellectual property (IP) control

The Group is partially reliant on an exclusive, world-wide licence of a patent from Cornell University for

its Hu-PHEC line of business. The exclusivity and exploitable territory for this licence depend on the Group

meeting various developmental milestones.

Environmental and other regulatory requirements

The event of a breach with any environmental or regulatory requirements may give rise to reputational,

financial or other sanctions against the Group, and therefore the Board considers these risks seriously and

designs, maintains and reviews its policies and processes so as to mitigate or avoid these risks. Whilst the

Board has a good record of compliance, there is no assurance that the Group’s activities will always be

compliant.

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

Financing

The Group’s ability to develop its product through to commercial sale will depend upon the Group’s

ability to obtain financing primarily through a further raising of new equity capital. Although the Group

has been successful in raising new equity capital, there can be no guarantee that it will be able to do so in

the future. The Group may not be successful in procuring the requisite funds on terms which are

acceptable to it (or at all) and, if such funding is unavailable, would raise questions over its ability to

further develop its products through to commercialisation. Further, Shareholders’ holdings of Ordinary

Shares may be materially diluted if debt financing is not available.

Market conditions

Market conditions, including general economic conditions and their effect on exchange rates, interest

rates and inflations rates, may impact the ultimate value of the Group regardless of its operating

performance. The Group also faces competition from other organisations, some of which may have

greater resources or be more established in a particular territory. The Board considers and reviews all

market conditions to try and mitigate any risks that may arise from these.

Political and country risk – UK departure from the EU

The departure of the UK from the EU is now complete and impact on the business, whose current

operations are principally in the US, has been negligible. Any further changes in international trade, tariff

and import/export regulations as a result of Brexit or otherwise may impose unexpected duty costs or

other non-tariff barriers on the Group. The Company is monitoring matters and will seek advice, where

necessary, as to how to mitigate the risks arising.

Pandemic and business disruption risk

The Company may be affected by disruptions to its operations in one or more locations, particularly in

the near future in light of responses to the novel coronavirus or other potential pandemics. The Company’s

New York operations are classed as an essential business and have not been subject to closure, and work

has continued to date with prudent hygiene and distancing measures in place including limited work in

the laboratory on rota and work from home. All laboratory staff have been fully vaccinated. The Company

is allowing for extended delivery times for some supplies, and for slower progress with collaboration

partners. The Board and UK management continue to operate remotely, as usual. At present the Company

believes that there should be no significant material disruption to its work, but the Board continues to

monitor these risks and the Company’s business continuity plans.

Approved by the Board on 29 April 2022

Dr Vladislav Sandler

CEO

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

Directors’ Report for the year ended 31 December 2021

The Directors present their report with the audited financial statements of the Group for the year ended

31 December 2021.

The Company’s Ordinary Shares were admitted to listing on the London Stock Exchange under the name

Silver Falcon plc, on the Official List pursuant to Chapters 14 of the Listing Rules, which sets out the

requirements for Standard Listings, on 9 November 2015.

On 4 October 2017 the Company’s shareholders voted in favour of acquiring the biotechnology company

Hemogenyx Pharmaceuticals Limited, with shares being readmitted to trading on 5 October 2017 under

the name Hemogenyx Pharmaceuticals plc.

Principal Activity

The Group’s principal activity is the discovery, development and commercialisation of a suite of products

to address current problems associated with the treatment of blood disorders such as cancers and

autoimmune diseases, with viral infections, and with bone marrow, or hematopoietic stem cell,

transplants. The company's leading technologies aim to change the way in which bone

marrow/hematopoietic stem cell ("BM"/"HSC") transplants are performed and improve their efficacy.

Hemogenyx Pharmaceuticals’ distinct and complementary products include immunotherapy product

candidates for the treatment of AML and other blood malignancies and patient conditioning – the CDX

bi-specific antibody and CAR-T therapy, and a cell therapy product for BM/HSC transplantation – the

Hu-PHEC. Each of these products holds the potential to revolutionise the way BM/HSC transplants are

being performed or diseases of the blood are treated, offering solutions that mitigate the dangers and

limitations associated with the current standard of care. Additionally, the Group is developing CBR, a

novel platform technology potentially capable of programming immune cells to attract and destroy a wide

range of viruses and malignant (cancer-causing) cells.

The Group has three companies that are located outside of the UK. The principal laboratory of the Group

is located in Manhattan, New York, USA. The Group also had a subsidiary in Liège, Belgium that was

dissolved on 30 March 2022.

Results and Dividends

The Consolidated Statement of Comprehensive Income set out on page 44 shows a loss for the year

amounting to £5,108,310 (2020: loss of £2,095,023). The Directors do not propose a dividend in respect

of the year ended 31 December 2021 (31 December 2020: nil).

Directors and Directors’ Interests

The Directors who held office during the year and up to the date of this report were as follows:

Date Appointed

Date Resigned

Professor Sir Marc Feldmann

9 April 2018

Dr Vladislav Sandler

4 October 2017

Alexis Sandler

4 October 2017

Peter Redmond

29 July 2015

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

The Directors of the Company who held office at 31 December 2021 had the following beneficial interests

in the Ordinary shares of the Company at 31 December 2021 according to the register of directors’

interests:

Director

At 31 December 2021

At 31 December 2020

Professor Sir Marc Feldmann

Peter Redmond*

5,596,270

Dr Vladislav Sandler

41,544,677

Alexis Sandler

75,090,685

* Peter Redmond holds the majority of these shares through Catalyst Corporate Consultants Ltd of which

he is the sole shareholder.

At the date of this report, there have been no further changes to the Directors’ beneficial interest in the

Ordinary shares of the Company as disclosed in the table above.

According to the Register of Directors’ Interests, no rights to subscribe for shares in or debentures of

Group companies were granted to any of the Directors or their immediate families, or exercised by them,

during the financial year, save for the annual grant of 10,000 ownership units in Immugenyx LLC due to

Dr Vladislav Sandler under the terms of his appointment as CEO and Chief Scientific Officer of that

company. Grants of options are as indicated below (see Note 20 for detail on option plans):

Options

Date of grant

Number of

options at start

of year

Options granted

or acquired

during year

Options lapsed

during year

Number of

options at end of

year

Professor Sir

Marc Feldmann

9 Apr 2018

18,002,568

Dr Vladislav Sandler

20 August 2020

5,000,000

Peter Redmond

13 July 2020

2,200,000

Qualifying Third Party Indemnity Provision

At the date of this report, the Company has a third-party indemnity policy in place for all Directors.

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

Substantial Shareholders

As at 31 December 2021, the total number of issued Ordinary Shares with voting rights in the Company

was 979,749,321 (now: 979,749,321). The Company has been notified of the following interests of 3 per

cent or more in its issued share capital as at the date of approval of this report:

Party Name

Number of Ordinary Shares

% of Share Capital

Alexis Sandler

75,090,685

7.66

Vladislav Sandler

41,544,677

4.24

Relationship Agreement

In accordance with Listing Rule 9.8.4(14)R, the Company has set out below a statement describing the

relationship agreement entered into by the Company with its principal shareholder(s).

On 8 September 2017, the Company entered into a Relationship Agreement with Dr Vladislav Sandler

and Alexis Sandler (the “Controlling Parties”), which came into force at the Company’s re-admission.

The principal purpose of the Relationship Agreement was to ensure that the Company was capable at all

times of carrying on its business independently of the Controlling Parties.

The Relationship Agreement provided that the Controlling Parties undertake to use all reasonable

endeavours to procure that they and their associates shall:

▪ conduct all transactions with the Company on an arm’s length basis and on a normal commercial

basis;

▪ not take any action that would have the effect of preventing the Company from complying with

its obligations under the Listing Rules or the corporate governance principles adopted by the

Group;

▪ not propose or procure the proposal of a shareholder resolution which is intended to, or appears

to be intended to, circumvent the proper application of the Listing Rules; and

▪ not take any action which was intended to, or appeared to be intended to, breach or circumvent

the proper application of the Relationship Agreement, the Listing Rules or the corporate

governance principles adopted by the Group.

The Directors believed that the terms of the Relationship Agreement enabled the Company to carry on

its business independently from the Controlling Parties and their affiliates and ensure that all transactions

and relationships between the Company and the Controlling Parties were at arm’s length and on a normal

commercial basis. The Company has and, in so far as it is aware, the Controlling Parties and their

associates have, complied with the independence provisions set out in the Relationship Agreement from

the date of the agreement, through the relevant period under review. The ordinary shares owned by the

Controlling Parties rank pari passu with the other ordinary shares in all respects.

According to the terms of the Relationship Agreement, if the Company ceases to be admitted to the Main

Market of the London Stock Exchange, or the Controlling Parties (together with their associates) cease

to hold 20 per cent or more of the voting rights over the Company’s shares, the Relationship Agreement

shall terminate save for certain specified provisions. During the course of 2021, the shareholding of the

Controlling Parties fell below 20% and accordingly the Relationship Agreement has now terminated.

Share Capital

Details of the issued share capital, together with details of the movement in issued share capital during

the year, are shown in Note 18 to the financial statements.

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

Financial Instruments

Details of the use of the Company’s financial risk management objectives and policies as well as exposure

to financial risk are contained in the Accounting policies and Note 25 of the financial statements.

Future Developments and Events Subsequent to the Year End

Further details of the Group’s future developments and events subsequent to the year end are set out in

the Chairman’s Statement and Strategic Report.

Corporate Governance

The Corporate Governance report forms part of the Directors’ Report and is disclosed on pages 24-30.

Going Concern

The Company’s business activities, together with facts likely to affect its future operations and financial

and liquidity positions are set out in the Chairman’s Statement and Directors’ Strategic Report. In addition,

Note 25 to the financial statements discloses the Company’s capital risk management policy and Note 2

details further considerations made by the Directors in respect of going concern.

The Directors, having made due and careful enquiry, are of the opinion that the Company has access to

sufficient funding in order to execute its operations over the next 12 months. The Directors therefore have

made an informed judgment, at the time of approving the 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 adopted the going concern basis of accounting in the

preparation of the annual financial statements.

Political Donations

The Group made no political donations during the year (2020: £nil).

Charitable Donations

There were no charitable donations made by the Group in the current or prior year.

Greenhouse Gas Emissions

Greenhouse gas emissions, energy consumption and energy efficiency disclosures have not been provided

because the Company has consumed less than 40,000 kWh of energy during the period, based on

consumption figures derived from utility bills for the Company’s premises.

Auditors

The auditors, PKF Littlejohn LLP, have expressed their willingness to continue in office and a resolution

to reappoint them will be proposed at the Annual General Meeting.

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

Statement of Directors’ Responsibilities

The Directors are responsible for preparing the Annual Report and the financial statements in accordance

with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that

law the Directors have elected to prepare the Group and Company financial statements in accordance

with UK-adopted international accounting standards.

Under Company law the Directors must not approve the financial statements unless they are satisfied that

they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of

the Group for that year.

In preparing these financial statements, the Directors are required to:

▪ Select suitable accounting policies and then apply them consistently;

▪ Make judgments and accounting estimates that are reasonable and prudent;

▪ State whether applicable UK-adopted international accounting standards have been followed,

subject to any material departures disclosed and explained in the financial statements; and

▪ Prepare the financial statements on the going concern basis unless it is inappropriate to presume

that the Group and Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and

explain the Group and parent company’s transactions and disclose with reasonable accuracy at any time

the financial position of the Group and parent company and enable them to ensure that the financial

statements and the Directors’ remuneration report comply with the Companies Act 2006. They are also

responsible for safeguarding the assets of the Group and parent company and hence for taking reasonable

steps for the prevention and detection of fraud and other irregularities. They are also responsible to make

a statement that they consider that the annual report and accounts, taken as a whole, is fair, balanced, and

understandable and provides the information necessary for the shareholders to assess the Group and

parent company’s position and performance, business model and strategy.

The Directors are responsible for the maintenance and integrity of the corporate and financial information

included on the Company’s website. Legislation in the United Kingdom governing the preparation and

dissemination of the financial statements may differ from legislation in other jurisdictions.

Directors’ Responsibility Statement Pursuant to Disclosure and Transparency Rules

Each of the Directors, whose names and functions are listed on page 1, confirms that, to the best of their

knowledge and belief:

▪ the group and company financial statements have been prepared in accordance with UK-adopted

international accounting standards, and give a true and fair view of the assets, liabilities, financial

position and loss of the Group; and

▪ the Annual Report and financial statements, including the Business review, includes a fair review

of the development and performance of the business and the position of the Group and parent

company, together with a description of the principal risks and uncertainties that they face.

Disclosure of Information to Auditors

So far as the Directors are aware, there is no relevant audit information of which the Company’s auditors

are unaware, and each Director has taken all the steps that he ought to have taken as a Director in order

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

to make himself aware of any relevant audit information and to establish that the Company’s auditors are

aware of that information.

Approved by the Board on 29 April 2022

Dr Vladislav Sandler

CEO

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

Governance Report

Introduction

The Company recognises the importance of, and is committed to, high standards of Corporate

Governance. The Company has voluntarily applied the main and supporting principles set out in the UK

Code of Corporate Governance published by the Financial Reporting Council in 2018 ("the Code"). The

Code has been followed to the extent practicable for a company of its size and nature. The Code can be

found at frc.org.uk/our-work/publications/Corporate-Governance. The ways in which the Company has

applied the Code are explained below:

▪ The Code requires that a smaller company should have at least two Independent Non-Executive

Directors. As at 31 December 2021 the Board consisted of an Executive Director and three Non-

Executive Directors. The Non-Executive Directors are interested in either ordinary shares in the

Company, options over ordinary shares in the Company, or both, and cannot therefore be

considered fully independent under the Code. The remuneration of the Non-Executive Directors

includes options and this is contrary to best practice, and thus the Company is not in full

compliance. However, the Directors consider the present structure and arrangements to be

adequate given the size and stage of development of the Company, and all are considered to be

independent in character and judgement.

▪ Directors appointed by the Board are subject to election by shareholders at the Annual General

Meeting of the Company following their appointment and thereafter are subject to re-election in

accordance with the Company’s articles of association. The terms and conditions of appointment

of Non-Executive Directors will be made available upon written request.

The Board has voluntarily adopted a code for Directors’ dealings based on the Model Code contained in

the Listing Rules of the UK Listing Authority that was previously in force. The Board will be responsible

for taking all proper and reasonable steps to ensure compliance with the code by the Directors.

Compliance with the code is being undertaken on a voluntary basis and the FCA will not have the authority

to (and will not) monitor the Company’s voluntary compliance with it, nor to impose sanctions in respect of

any failure by the Company to so comply. In addition, the Company will take all proper and reasonable

steps to ensure compliance by the Founders with the Code for dealings in the Ordinary Shares.

The Company is small with a modest resource base. The Company has a clear mandate to optimise the

allocation of limited resources to support its development plans. As such, the Company strives to maintain

a balance between conservation of limited resources and maintaining robust corporate governance

practices. As the Company evolves, the Board is committed to enhancing the Company’s corporate

governance policies and practices deemed appropriate for the size and maturity of the organisation.

Set out below are the Company’s corporate governance practices for the year ended 31 December 2021.

Committees

The Company has established audit, remuneration and nomination committees.

Audit Committee

The Audit Committee has responsibility for, among other things, the monitoring of the integrity of the

financial statements of the Company and its Group and the involvement of the Group's auditors in that

process. It focuses in particular on compliance with accounting policies and ensuring that an effective

system of external audit and financial control is maintained, including considering the scope of the annual

audit and the extent of the non-audit work undertaken by external auditors and advising on the

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

appointment of external auditors. The ultimate responsibility for reviewing and approving the annual

report and accounts and the half-yearly reports remains with the Board. The Audit Committee will meet

at least three times a year at the appropriate times in the financial reporting and audit cycle.

The members of the Audit Committee are Peter Redmond, who acts as chairman of the committee, and

Professor Sir Marc Feldmann.

The Group’s external auditor is PKF Littlejohn LLP who has served as external auditor for six years. The

role of external auditor last went to tender in 2015. The Audit Committee closely monitors the level of

audit and non-audit services that it provides to the Company and Group.

Having assessed the performance, objectivity and independence of the auditor, the Committee will be

recommending the reappointment of PKF Littlejohn LLP as auditor to the Company at the 2022 Annual

General Meeting.

During the year to 31 December 2021 the Audit Committee considered the following key issues in

relation to the Financial Statements:

Issue

Action

▪ Accounting policies

The Committee reviewed and discussed the significant

accounting policies with management and the external

auditor and reached the conclusion that each policy was

appropriate to the Group.

▪ Carrying value of investment in

Hemogenyx Pharmaceuticals

LLC

The Committee reviewed the impairment assessment

report prepared by management and agreed that given the

reasonable expectation that the Group will achieve its

milestone targets over the next 18 months that no

impairment to the value of the investment in Hemogenyx

Pharmaceuticals LLC was required as at 31 December

2021.

▪ Going concern review

The Committee considered the ability of the Group to

operate as a Going Concern considering cash flow

forecasts for the next 12 months and milestone

achievements. It was determined by the Committee that it

was reasonable to expect that the Group has or will have

access to sufficient funding in order to achieve its 12-

month milestone targets and that it was appropriate for the

Financial Statements to be prepared on a going concern

basis.

▪ Review of audit and non-audit

services and fees

The external auditor is not engaged by the Group to carry

out any non-audit work in respect of which it might, in the

future, be required to express an audit opinion.

The Committee reviewed the fees charged for the

provision of audit and non-audit services and determined

that they were in line with fees charged to companies of

similar size and stage of development.

The Committee considered and was satisfied the external

auditor’s assessment of its own independence.

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

Remuneration Committee

The remuneration committee reviews the performance of the Executive Directors and makes

recommendations to the Board on matters relating to their remuneration and terms of employment. The

committee also makes recommendations to the Board on proposals for the granting of share awards and

other equity incentives pursuant to any share award scheme or equity incentive scheme in operation from

time to time. The Remuneration Committee will meet at least twice a year.

The members of the Remuneration Committee are Peter Redmond, who acts as chairman of the

committee, and Alexis Sandler.

Nomination Committee

The Nomination Committee is responsible for considering and making recommendations to the Board in

respect of appointments to the Board, the Board committees and the chairmanship of the Board

committees. It is also responsible for keeping the structure, size and composition of the Board under

regular review, and for making recommendations to the Board with regard to any changes necessary,

taking into account the skills and expertise that will be needed on the Board in the future. The Nomination

Committee meets at least once a year.

The members of the Nomination Committee are Peter Redmond, who acts as chairman of the committee,

Professor Sir Marc Feldmann, and Alexis Sandler.

Leadership

The Company is headed by an effective Board which is collectively responsible for the long-term success

of the Company.

The role of the Board: the Board sets the Company’s strategy, ensuring that the necessary resources are

in place to achieve the agreed strategic priorities, and reviews management and financial performance. It

is accountable to shareholders for the creation and delivery of strong, sustainable financial performance

and long-term shareholder value. To achieve this, the Board directs and monitors the Company’s affairs

within a framework of controls which enable risk to be assessed and managed effectively. The Board also

has responsibility for setting the Company’s core values and standards of business conduct and for

ensuring that these, together with the Company’s obligations to its stakeholders, are widely understood

throughout the Company. The Board has a formal schedule of matters reserved which is provided later

in this report.

Board Meetings: the core activities of the Board are carried out in scheduled meetings of the Board. These

meetings are timed to link to key events in the Company’s corporate calendar and regular reviews of the

business are conducted. Additional meetings and conference calls are arranged to consider matters which

require decisions outside the scheduled meetings. During the year, the Board met on 24 occasions.

Outside the scheduled meetings of the Board, the Directors maintain frequent contact with each other to

discuss any issues of concern they may have relating to the Company or their areas of responsibility, and

to keep them fully briefed on the Company’s operations.

Matters reserved specifically for the Board: the Board has a formal schedule of matters reserved that can

only be decided by the Board. The key matters reserved are the consideration and approval of:

▪ The Company’s overall strategy;

▪ Financial statements and dividend policy;

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

▪ Management structure including succession planning, appointments and remuneration; material

acquisitions and disposal, material contracts, major capital expenditure projects and budgets;

▪ Capital structure, debt and equity financing and other matters;

▪ Risk management and internal controls;

▪ The Company’s corporate governance and compliance arrangements; and

▪ Corporate policies

Summary of the Board’s work in the year: during the year, the Board considered all relevant matters

within its remit, but focused in particular on the development and risk diversification of the Company.

Attendance at Board meetings

Number held and

entitled to attend

Number

attended

Dr Vladislav Sandler

Professor Sir Marc Feldmann

Alexis Sandler

Peter Redmond

The Board is pleased with the high level of attendance and participation of Directors at Board and

committee meetings.

The Chairman sets the Board Agenda and ensures adequate time for discussion.

Non-Executive Directors: the Non-Executive Directors bring a broad range of business and commercial

experience to the Company and have a particular responsibility to challenge independently and

constructively the performance of the Executive management (where appointed) and to monitor the

performance of the management team in the delivery of the agreed objectives and targets.

All directors with the exception of the CEO and Professor Sir Marc Feldmann were appointed for an

initial term of 12 months. These terms were extended by mutual agreement after satisfactory performance

and re-election by shareholders.

Other governance matters: all of the Directors are aware that independent professional advice is available

to each Director in order to properly discharge their duties as a Director. In addition, each Director and

Board committee has access to the advice of the Company Secretary.

The Company Secretary: the Company Secretary is Andrew Wright. He is responsible for the Board

complying with UK procedures.

Effectiveness

For the period under review the Board comprised a Chief Executive Officer, a Non-Executive Chairman,

and two independent Non-Executive Directors. Biographical details of the Board members are set out on

pages 8-9 of this report.

The Directors are of the view that the Board and its committees consist of Directors with an appropriate

balance of skills, experience, independence and diverse backgrounds to enable them to discharge their

duties and responsibilities effectively.

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

Independence: the Non-Executive Directors bring a broad range of business and commercial experience

to the Company. The Board considers each of the Non-Executive Directors to be independent in character

and judgement.

Appointments: the Board is responsible for reviewing and the structure, size and composition of the Board

and making recommendations to the board with regards to any required changes.

Commitments: all Directors have disclosed any significant commitments to the Board and confirmed that

they have sufficient time to discharge their duties.

Induction: all new Directors received an induction as soon as practical on joining the Board.

Conflict of interest: a Director has a duty to avoid a situation in which he or she has, or can have, a direct or

indirect interest that conflicts, or possibly may conflict with the interests of the Company. The Board had

satisfied itself that there is no compromise to the independence of those Directors who have appointments

on the Boards of, or relationships with, companies outside the Company. The Board requires Directors

to declare all appointments and other situations which could result in a possible conflict of interest.

Board performance and evaluation: Hemogenyx Pharmaceuticals plc has a policy of appraising Board

performance annually. Having reviewed various approaches to Board appraisal, it has concluded that for

a company of its current scale, an internal process in which all Board members submit answers to a

questionnaire that considers the functionality of the Board and its committees is most appropriate at this

stage.

Accountability

The Board is committed to providing shareholders with a clear assessment of the Company’s position

and prospects. This is achieved through this report and as required in other periodic financial and trading

statements.

Going concern: the Company’s business activities, together with factors likely to affect its future

operations, financial position, and liquidity position are set out in the Chairman’s Statement and the

principal risks and uncertainties sections of the Strategic Report. In addition, the Notes to the Financial

Statements disclose the Company’s financial risk management practices with respect to its capital

structure, liquidity risk, interest rate risk, credit risk, and other related matters.

The Directors, having made due and careful enquiry, are of the opinion that the Company has adequate

working capital to execute its operations and has the ability to access additional financing over the next

12 months. The Directors, therefore, have made an informed judgement, at the time of approving 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.

Internal controls: the Board of Directors reviews the effectiveness of the Company’s system of internal

controls in line with the requirement of the Code. The internal control system is designed to manage the

risk of failure to achieve its business objectives. This covers internal financial and operational controls,

compliances and risk management. The Company has necessary procedures in place for the year under

review and up to the date of approval of the Annual Report and financial statements. The Directors

acknowledge their responsibility for the Company’s system of internal controls and for reviewing its

effectiveness. The Board confirms the need for an ongoing process for identification, evaluation and

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

management of significant risks faced by the Company. The Directors carry out a risk assessment before

signing up to any commitments.

Workforce policies and practices

The Board is responsible for ensuring that workforce policies and practices are consistent with the

Group’s values and support its long term sustainable success, and that staff are able to raise any matters

of concern. The Non-executive Director designated to engage with the workforce on these matters is

Alexis Sandler. Ms Sandler, and in turn the Board, review the Group’s policies and procedures, including

anti-harassment and discrimination policies, sexual harassment reporting procedures, and procedures for

reporting grievances or other concerns, and oversee the proportionate and independent investigation of

any matters arising from them. These policies are provided to workers prior to the start of their work with

the Group, and hard copies are posted prominently in the Group’s operating premises together with other

legally required notices.

Relations with stakeholders

The Company is committed to a continuous dialogue with shareholders as it believes that this is essential

to ensure a greater understanding of and confidence amongst its shareholders in the medium and longer

term strategy of the Group and in the Board’s ability to oversee its implementation. It is the responsibility

of the Board as a whole to ensure that a satisfactory dialogue takes place.

Section 172 of the Companies Act 2006 requires Directors to take into consideration the interests of

stakeholders in their decision making. The Board is committed to understanding and engaging with all

key stakeholder groups of the Company in order to maximise value and promote long-term Company

success in line with our strategic objectives. The Board recognises its duties under Section 172 and

continuously has regard to how the Company’s activities and decisions will impact employees, those with

which it has a business relationship, the community and environment and its reputation for high standards

of business conduct. In weighing all of the relevant factors, the Board, acting in good faith and fairly

between members, makes decisions and takes actions that it considers will best lead to the long-term

success of the Company.

During the year, the Board assessed its current activities between the Board and its stakeholders, which

demonstrated that the Board actively engages with its stakeholders and takes their various objectives into

consideration when making decisions. Specifically, actions the Board has taken to engage with its

stakeholders in 2021 include:

▪ Attended the 2021 AGM, which was once again a closed meeting in 2021 due to the restrictions

imposed by the UK government’s response to the COVID-19 pandemic, prepared to answer any

questions raised by shareholders;

▪ Arranged meetings with certain stakeholders to provide them with updates on the Company’s

research and development activities and other general corporate updates;

▪ Made presentations at conferences and published recordings and slide decks on the Company’s

research and development;

▪ Evaluated the relationships with the Company’s various collaborators through management and

identified ways to strengthen relationships and arrangements with key collaborations; and

▪ Monitored company culture and engaged with employees on efforts to continuously improve

company culture and morale.

The Board believes that appropriate steps and considerations have been taken during the year so that each

Director has an understanding of the various key stakeholders of the Company. The Board recognises its

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

responsibility to contemplate all such stakeholder needs and concerns as part of its discussions, decision-

making, and in the course of taking actions, and will continue to make stakeholder engagement a top

priority in the coming years.

The Board’s primary shareholder contact is through Peter Redmond, the Non-Executive Director

responsible for shareholder relations. The Chairman, the CEO and other Directors, as appropriate, make

themselves available for contact with major shareholders and other stakeholders in order to understand

their issues and concerns.

The Company plans to use the AGM as an opportunity to communicate with its shareholders. Notice of

the AGM will be issued shortly and at least 21 days before the date of the meeting. To ensure compliance

with the Governance Code, the Board proposes separate resolutions for each issue, and proxy forms allow

shareholders who are unable to attend the AGM to vote for or against or to withhold their vote on each

resolution. The results of all proxy voting will be published on the Group’s web site after the AGM.

Shareholders who attend the AGM will have the opportunity to ask questions.

The Group’s web site at https://hemogenyx.com is the primary source of information on the Group. The

web site includes an overview of the activities of the Group and all recent Group announcements.

Viability statement

In accordance with the UK Corporate Governance Code published in July 2018, the Directors have

assessed the prospects of the Group and concluded that it is appropriate to adopt the going concern basis

of accounting based on the amount of cash on hand at the end of the year and at the time of publication

of this report. The assessment of going concern is disclosed in Note 2.

The Board’s assessment of the Group’s current position and principal risks are disclosed in the Directors’

Strategic Report on pages 14 to 17.

Dr Vladislav Sandler

CEO

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

Directors’ Remuneration Report

The Company has an established remuneration committee. The Committee reviews the scale and structure

of the Directors’ fees, taking into account the interests of shareholders and the performance of the

Company and directors.

The items included in this report are unaudited unless otherwise stated.

Statement of Hemogenyx Pharmaceutical plc’s Policy on Directors’ Remuneration by the

Chairman of the Remuneration Committee

As Chairman of the Remuneration Committee I am pleased to introduce our Directors’ Remuneration

Report. One of the Remuneration Committee’s aims is to provide clear, transparent remuneration

reporting for our shareholders which adheres to the best practice corporate governance principles that are

required for listed organisations.

The Directors’ Remuneration Policy, which is set out on pages 32 to 36 of this report, will be submitted

to shareholders for approval at our Annual General Meeting.

A key focus of the Directors’ Remuneration Policy is to align the interests of the Directors to the long-

term interests of the shareholders and aims to support a high-performance culture with appropriate reward

for superior performance, without creating incentives that will encourage excessive risk taking or

unsustainable company performance. This is underpinned through the implementation and operation of

incentive plans.

Key Activities of the Remuneration Committee

The key activities of the Remuneration Committee are:

▪ to determine and agree with the Board the framework or broad policy for the remuneration of the

Company's chairman, chief executive, the executive directors, the company secretary and such

other members of the executive management as it is designated to consider;

▪ in determining such policy, take into account all factors which it deems necessary including

relevant legal and regulatory requirements, the provisions and recommendations of the UK

Corporate Governance Code (the "Code") and associated guidance. The objective of such policy

shall be to ensure that members of the executive management of the Company are provided with

appropriate incentives to encourage enhanced performance and are, in a fair and responsible

manner, rewarded for their individual contributions to the success of the Company;

▪ recommend and monitor the level and structure of remuneration for senior management;

▪ when setting remuneration policy for directors, review and have regard to the remuneration

trends across the Company, and review the on-going appropriateness and relevance of the

remuneration policy;

▪ obtain reliable, up-to-date information about remuneration in other companies. To help it fulfil

its obligations the Committee shall have full authority to appoint remuneration consultants and

to commission or purchase any reports, surveys or information which it deems necessary, within

any budgetary restraints imposed by the Board;

▪ be exclusively responsible for establishing the selection criteria, selecting, appointing and setting

the terms of reference for any remuneration consultants who advise the Committee;

▪ approve the design of, and determine targets for, any performance related pay schemes operated

by the Company and approve the total annual payments made under such schemes;

▪ review the design of all share incentive plans for approval by the Board and shareholders. For

any such plans, determine each year whether awards will be made, and if so, the overall amount

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

of such awards, the individual awards to executive directors, company secretary and other

designated senior executives and the performance targets to be used;

▪ ensure that contractual terms on termination, and any payments made, are fair to the individual,

and the Company, that failure is not rewarded and that the duty to mitigate loss is fully

recognised; and

▪ oversee any major changes in employee benefits structures throughout the Company.

Members

The Remuneration Committee comprises the following independent Non-Executive Directors:

Name

Position

Date of

appointment

Peter Redmond

Chairman

5 October 2017

Alexis Sandler

Member

5 October 2017

Remuneration Components

The Company remunerates directors in line with best market practice in the industry in which it operates.

The components of Director remuneration that are considered by the Board for the remuneration of

directors in future years are likely to consist of:

▪ Base salaries

▪ Pension and other benefits

▪ Annual bonus

▪ Share incentive arrangements

The Executive Director has entered into a service agreement with the Company and the Non-Executive

Directors have entered into letters of appointment with the Company.

All such contracts impose certain restrictions as regards the use of confidential information and

intellectual property and the Executive Director’s service contract imposes restrictive covenants which

apply following the termination of the agreement.

The Executive Director Dr Vladislav Sandler is entitled to pay at a rate of £1,500 per day for time spent in

the UK on the Company’s business. In addition, Dr Sandler has a separate contract with Hemogenyx

Pharmaceuticals LLC effective 1 September 2017 appointing him as CEO and Chief Scientific Officer of

that company for an initial three-year term with automatic continuation and setting out his duties in relation

to his day-to-day to work in connection with Hemogenyx Pharmaceuticals’ product candidates. Pursuant

to this contract, Dr Sandler was entitled to receive $225,000 in 2021 and is currently entitled to receive

$275,000 per annum (due to rise to $324,000 in 2023) and four weeks’ holiday a year. Dr Sandler is also

subject to certain non-compete and non-interference covenants in the event of its termination (subject to

certain limited exceptions). Dr Sandler also has a separate contract with Immugenyx LLC effective from 1

January 2019 appointing him as CEO and Chief Scientific Officer of that company for an initial three-year

term with automatic continuation and setting out his duties in relation to his day-to-day work in connection

with Immugenyx’s development of its AHC. Pursuant to this contract, Dr Sandler receives $64,889 (2021:

$60,000) and 10,000 ownership units in Immugenyx LLC per annum. This contract has the same non-

compete and non-interference covenants in the event of its termination as his contract with Hemogenyx

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

Pharmaceuticals LLC.

Other Matters

The Company does not currently have any annual or long-term incentive schemes or any other scheme

interests in place for any of the Directors.

The Company has established a workplace pension scheme but it does not presently have any employees

qualifying under the auto-enrolment pension rules who have not opted out of the scheme. It does not

currently pay pension amounts in relation to Directors’ remuneration. The Company has not paid out any

excess retirement benefits to any Directors or past Directors. The Company has not paid any

compensation to past Directors.

Recruitment Policy

Base salary levels will take into account market data for the relevant role, internal relativities, their

individual experience and their current base salary. Where an individual is recruited at below market

norms, they may be re-aligned over time (e.g. two to three years), subject to performance in the role.

Benefits will generally be in accordance with the approved policy.

For external and internal appointments, the Board may agree that the Company will meet certain

relocation and/or incidental expenses as appropriate.

Payment for Loss of Office

The Committee will honour Executive Directors’ contractual entitlements. Service contracts do not

contain liquidated damages clauses. If a contract is to be terminated, the Committee will determine such

mitigation as it considers fair and reasonable in each case. There is no agreement between the Company

and its Executive Directors or employees, providing for compensation for loss of office or employment

that occurs because of a takeover bid.

The Committee reserves the right to make additional payments where such payments are made in good

faith in discharge of an existing legal obligation (or by way of damages for breach of such an obligation);

or by way of settlement or compromise of any claim arising in connection with the termination of an

Executive Director’s office or employment.

Service Agreements and Letters of Appointment

The Executive Director’s service agreement had an initial term of two years and may subsequently be

terminated by the Company or the Executive Director by giving 6 months’ notice.

Name

Date of service

agreement

Notice period by

Company (months)

Notice period by

Director (months)

Dr Vladislav Sandler

4 October 2017

The Non-Executive Directors of the Company do not have service contracts but are appointed by letters

of appointment. Each Non-Executive Director’s term of office runs for an initial period of one year unless

terminated earlier upon written notice or upon their resignations.

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

The terms of the Non-Executive Directors’ appointments are subject to their re-election by the

Company’s shareholders at any Annual General Meeting at which the Non-Executive Directors stand for

re-election.

The details of each Non-Executive Director’s current term are set out below:

Name

Date of service

agreement

Current

term

(years)

Notice

period by

Company

(months)

Notice

period by

Director

(months)

Date of

resignation

Alexis Sandler

4 October 2017

Peter Redmond

4 October 2017

Professor Sir Marc Feldmann

9 April 2018

* Finalisation of a new service agreement is pending. Sir Marc has indicated his willingness to continue

in office on agreed terms, having put himself forward for re-election by shareholders as a Director at the

2021 Annual General Meeting.

Executive Directors’ Remuneration (audited)

The table below sets out the remuneration received by each Executive Director for the years ended 31

December 2021 and 2020. Dr Vladislav Sandler was the highest paid Director:

Executive Directors

Basic salary

2021

£’000

Pension

2021

£’000

Total

2021

£’000

Dr Vladislav Sandler

206

213

Total

206

213

Executive Directors

Basic salary

2020

£’000

Pension

2020

£’000

Total

2020

£’000

Dr Vladislav Sandler

200

205

Total

200

205

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

Non-Executive Directors’ Remuneration (audited)

The table below sets out the remuneration received by each Non-Executive Director during the years

ended 31 December 2021 and 2020:

Basic salary

2021

£’000

Total

2021

£’000

Alexis Sandler

Peter Redmond

Professor Sir Marc Feldmann

Total

110

Basic salary

2020

£’000

Total

2020

£’000

Alexis Sandler

Peter Redmond

Professor Sir Marc Feldmann

Total

Relative importance of spend on pay

The table below illustrates the year-on-year change in total remuneration compared to distributions to

shareholders and loss before tax for the financial years ended 31 December 2021 and 2020:

Distributions to

shareholders

Total employee

pay (including

stock based

compensation)

Operational cash

outflow

Year ended 31 December 2021

1,007,817

2,627,298

Year ended 31 December 2020

1,130,763

1,798,404

Percentage change

n/a

(10.9%)

46.1%

Total employee pay includes wages and salaries, social security costs, healthcare cost, 401K scheme cost

and share-based payments for employees in continuing operations. Further details on Employee

remuneration are provided in Note 8.

Operational cash outflow has been shown in the table above as cash flow monitoring and forecasting is

an important consideration for the Remuneration Committee and Board of Directors when determining

cash-based remuneration for directors and employees.

Historical share price performance comparison

The chart below compares the share price performance (based on a notional investment of £100) of

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

Hemogenyx Pharmaceuticals plc against the FTSE SmallCap and FTSE Techmark Mediscience for the

period November 2015 to December 2021 calculated on a month end spot basis. The FTSE SmallCap has

been chosen to provide a wider market comparator constituting companies of an appropriate size and the

FTSE Techmark Mediscience chosen due to sector relevance:

Hemogenyx Pharmaceuticals plc was listed in November 2015 (under the name Silver Falcon plc) and

therefore no historical share price data exists prior to this period. There was also no data between

December 2015 and October 2017 pending completion of a transaction. It is for these reasons that the

historical investment performance is not reflective of the current Group.

Consideration of shareholder views

The Board considers shareholder feedback received and guidance from shareholder bodies. This

feedback, plus any additional feedback received from time to time, is considered as part of the Company’s

annual policy on remuneration.

Approved on behalf of the Board of Directors.

Peter Redmond

Director & Remuneration Committee Chairman

29 April 2022

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF HEMOGENYX

PHARMACEUTICALS PLC

Opinion

We have audited the financial statements of Hemogenyx Pharmaceuticals plc (the ‘parent company’) and

its subsidiaries (the ‘group’) for the year ended 31 December 2021 which comprise the Consolidated

Statement of Comprehensive Income, the Consolidated and Company Statements of Financial Position,

the Consolidated and Company Statements of Changes in Equity, the Consolidated and Company

Statements of Cash Flows and notes to the financial statements, including significant accounting policies.

The financial reporting framework that has been applied in their preparation is applicable law and UK-

adopted international accounting standards and as regards the parent company financial statements, as

applied in accordance with the provisions of the Companies Act 2006.

In our opinion:

▪ the financial statements give a true and fair view of the state of the group’s and of the parent

company’s affairs as at 31 December 2021 and of the group’s loss for the year then ended;

▪ the group financial statements have been properly prepared in accordance with UK-adopted

international accounting standards;

▪ the parent company financial statements have been properly prepared in accordance with UK-

adopted international accounting standards and as applied in accordance with the provisions of

the Companies Act 2006; and

▪ the financial statements have been prepared in accordance with the requirements of the

Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and

applicable law. Our responsibilities under those standards are further described in the Auditor’s

responsibilities for the audit of the financial statements section of our report. We are independent of the

group and parent company in accordance with the ethical requirements that are relevant to our audit of

the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public

interest entities, and we have fulfilled our other ethical responsibilities in accordance with these

requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide

a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors’ use of the going concern basis

of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’

assessment of the group’s and parent company’s ability to continue to adopt the going concern basis of

accounting included a review of management’s assessment of the going concern basis, together with

budgets and cashflows for the 12 months following the reporting date. We have reviewed all the key

inputs into the cash flow forecast, with particular emphasis on those areas of judgment and estimation

uncertainty, and ensured they are appropriate, and no evidence of management bias exists. We assessed

the levels of cash available to the group post year-end and how they are sufficient to cover expected

outgoing costs over the cash flow forecast period. We reviewed post-period end RNS announcements and

discussions with management on future plans.

Based on the work we have performed, we have not identified any material uncertainties relating to events

or conditions that, individually or collectively, may cast significant doubt on the group’s or parent

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

company's ability to continue as a going concern for a period of at least twelve months from when the

financial statements are authorised for issue.

In relation to the entity’s reporting on how they have applied the UK Corporate Governance Code, we

have nothing material to add or draw attention to in relation to the directors’ statement in the financial

statements about whether the directors considered it appropriate to adopt the going concern basis of

accounting.

Our responsibilities and the responsibilities of the directors with respect to going concern are described

in the relevant sections of this report.

Our application of materiality

For the purposes of determining whether the financial statements are free from material misstatement, we

define materiality as the magnitude of misstatement that makes it probable that the economic decisions

of a reasonably knowledgeable person, relying on the financial statements, would be changed, or

influenced. We also determine a level of performance materiality which we use to assess the extent of

testing needed to reduce to an appropriately low level the probability that the aggregate of uncorrected

and undetected misstatements exceeds materiality for the financial statements as a whole.

Materiality for the group financial statements as a whole was set at £54,000 (2020: £46,000). This was

calculated based on 2% of total expenses for the year. Using our professional judgement, we have

determined this to be the principal benchmark within the financial statements as it will be most relevant

to stakeholders in assessing the financial performance of the group during its years of development as the

group is not currently revenue generating.

Materiality for the parent company financial statements as a whole was set at £20,000 (2020: £40,000)

based on 2% of total expenses. We have determined this level of materiality for the parent company to

gain sufficient coverage of expenses.

Performance materiality for the group financial statements was set at £37,000 (2020: £32,000) and the

parent company was set at £14,000 (2020: £28,000), being 70% of materiality for the financial statements

as a whole respectively. A benchmark of 70% for performance materiality was applied to provide

sufficient coverage of significant and residual risks.

We agreed to report to those charged with governance all corrected and uncorrected misstatements we

identified through our audit with a value in excess of £2,000 for the group financial statements and £1,000

for the parent company financial statements. We also agreed to report any other audit misstatements

below that threshold that we believe warranted reporting on qualitative grounds.

Our approach to the audit

The scope of our audit was influenced by our application of materiality. The quantitative and qualitative

thresholds for materiality determine the scope of our audit and the nature, timing, and extent of our audit

procedures.

The group includes the listed parent company and its US based subsidiaries. We assessed the structure of

the group, its accounting processes and controls, and the industry in which it operates, in order to

determine the scope of our audit work and ensure that we obtained sufficient and appropriate audit

evidence on which to base our group audit opinion. Those entities of the group which were considered

to be significant components, being Hemogenyx LLC and Immugenyx Pharmaeuticals LLC, were subject

to full scope audit procedures by PKF Littlejohn LLP. We did not rely on the work of any component

auditors. Procedures were performed to address the assessed risks of material misstatement.

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

As part of our planning, we assessed the risk of material misstatement including those that required

significant auditor consideration at the component and group level. Procedures were then performed to

address the risk identified and for the most significant assessed risks of material misstatement. The

procedures performed are outlined below in the key audit matters section of this report.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our

audit of the financial statements of the current period and include the most significant assessed risks of

material misstatement (whether or not due to fraud) we identified, including those which had the greatest

effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of

the engagement team. These matters were addressed in the context of our audit of the financial statements

as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key Audit Matter

How our scope addressed this matter

Carrying value of the intangible assets

(Group - Note 14)

The carrying value of intangible assets of

£441k was recorded in the subsidiary’s books.

There is a risk that the carrying value is

impaired. The intangibles are patent rights

and therefore this will ultimately result in the

main source of income for the group.

The directors concluded that no impairment

was required and amortisation will commence

once these products are ready for marketing.

We performed the following procedures to

address this identified risk:

▪ Substantively tested the additions

recognised during the year and agreed the

purchase price to supporting

documentation.

▪ Reviewed the directors’ assessment for

indicators of impairment and challenging

the underlying assumptions used.

▪ Reviewed the events after the year-end for

indicators of impairment.

Through the performance of the above testing, we

obtained sufficient assurance that the carrying

value of the intangible assets was not impaired,

and no indicators of impairment existed at year-

end.

Carrying Value of investments in, and loans to,

subsidiary undertakings

(Company - Note 16 and Note 15 respectively)

Investments held by the parent company in

subsidiaries, as of 31 December 2021, totals

£8.0m. Loans to those subsidiaries, as of 31

December 2021, are reported as £13.2m.

These are significant balances due to the

parent company. If the subsidiary

undertakings are unable to generate sufficient

We performed the following procedures to

address this identified risk:

▪ Reviewed the directors’ assessment of the

carrying value of investments and loans to

subsidiary undertakings, and their

conclusions thereof.

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

future profits or gains in the foreseeable

future, there is a risk that both the investment

and loans held in those entities are overstated.

▪ Reviewed the subsidiary’s financial

performance and development progress to

corroborate the directors’ assessment of

recoverability.

▪ Reviewed and assessed the current state of

development, and scientific and

commercial progress of the products

under development.

▪ Reviewed board minutes for any

indications of changes in investments held

by the parent company.

▪ Agreed ownership documents of all the

subsidiaries in the group.

▪ Reviewed the market capitalisation of the

group to provide further assurance of the

carrying value of the investments and

loans to subsidiary undertakings

subsequent to the year end.

Through the performance of the above testing,

we obtained sufficient assurance that the

carrying value of investments in, and loans to,

subsidiary undertakings are not materially

overstated.

Other information

The other information comprises the information included in the annual report, other than the financial

statements and our auditor’s report thereon. The directors are responsible for the other information

contained within the annual report. Our opinion on the group and parent company financial statements

does not cover the other information and, except to the extent otherwise explicitly stated in our report,

we do not express any form of assurance conclusion thereon. Our responsibility is to read the other

information and, in doing so, consider whether the other information is materially inconsistent with the

financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be

materially misstated. If we identify such material inconsistencies or apparent material misstatements, we

are required to determine whether this gives rise to a material misstatement in the financial statements

themselves. If, based on the work we have performed, we conclude that there is a material misstatement

of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in

accordance with the Companies Act 2006.

In our opinion, based on the work undertaken in the course of the audit:

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

▪ the information given in the strategic report and the directors’ report for the financial year for

which the financial statements are prepared is consistent with the financial statements; and

▪ the strategic report and the directors’ report have been prepared in accordance with applicable

legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and their

environment obtained in the course of the audit, we have not identified material misstatements in the

strategic report or the directors’ report.

We have nothing to report in respect of the following matters in relation to which the Companies Act

2006 requires us to report to you if, in our opinion:

▪ adequate accounting records have not been kept by the parent company, or returns adequate for

our audit have not been received from branches not visited by us; or

▪ the parent company financial statements and the part of the directors’ remuneration report to be

audited are not in agreement with the accounting records and returns; or

▪ certain disclosures of directors’ remuneration specified by law are not made; or

▪ we have not received all the information and explanations we require for our audit.

Corporate governance statement

We have reviewed the directors' statement in relation to going concern, longer-term viability and that part

of the Corporate Governance Statement relating to the group’s and parent company's voluntary

compliance with the provisions of the UK Corporate Governance Statement specified for our review by

the Listing Rules.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements

of the Corporate Governance Statement is materially consistent with the financial statements and our

knowledge obtained during the audit:

▪ Directors’ statement with regards to the appropriateness of adopting the going concern basis of

accounting and any material uncertainties identified set out on page 28;

▪ Directors’ explanation as to its assessment of the entity’s prospects, the period this assessment

covers and why the period is appropriate set out on page 30;

▪ Directors’ statement on whether it has a reasonable expectation that the group will be able to

continue in operation to meet its liabilities set out on page 54;

▪ Directors' statement that they consider the annual report and the financial statements, taken as a

whole, to be fair, balanced, and understandable set out on page 22;

▪ Board’s confirmation that it has carried out a robust assessment of the emerging and principal

risks set out on page 14;

▪ Section of the annual report that describes the review of effectiveness of risk management and

internal control systems set out on page 28; and

▪ Section describing the work of the audit committee set out on page 24.

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

Responsibilities of directors

As explained more fully in the statement of directors’ responsibilities, the directors are responsible for

the preparation of the group and parent company financial statements and for being satisfied that they

give a true and fair view, and for such internal control as the directors determine is necessary to enable

the preparation of financial statements that are free from material misstatement, whether due to fraud or

error.

In preparing the group and parent company financial statements, the directors are responsible for

assessing the group’s and the parent company’s ability to continue as a going concern, disclosing, as

applicable, matters related to going concern and using the going concern basis of accounting unless the

directors either intend to liquidate the group or the parent company or to cease operations, or have no

realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are

free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that

includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an

audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the

aggregate, they could reasonably be expected to influence the economic decisions of users taken on the

basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design

procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of

irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities,

including fraud is detailed below:

▪ We obtained an understanding of the group and parent company and the sector in which they

operate to identify laws and regulations that could reasonably be expected to have a direct effect

on the financial statements. We obtained our understanding in this regard through discussions

with management and application of our cumulative audit knowledge and experience of the

sector.

▪ We determined the principal laws and regulations relevant to the group and parent company in

this regard to be those arising from the Companies Act 2006, the FCA Listing Rules, the

Disclosure Guidance and Transparency Rules Sourcebook and the UK Corporate Governance

Code.

▪ We designed our audit procedures to ensure the we considered whether there were any

indications of non-compliance by the group and parent company with those laws and regulations.

These procedures included, but were not limited to:

▪ Enquiries of management

▪ Review of minutes

▪ Review of RNS publications

▪ We addressed the risk of fraud arising from management override of controls by performing

audit procedures which included, but were not limited to: the testing of journals; reviewing

accounting estimates for evidence of bias; and evaluating the business rationale of any significant

transactions that are unusual or outside the normal course of business.

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities,

including those leading to a material misstatement in the financial statements or non-compliance with

regulation. This risk increases the more that compliance with a law or regulation is removed from the

events and transactions reflected in the financial statements, as we will be less likely to become aware of

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather

than error, as fraud involves intentional concealment, forgery, collusion, omission, or misrepresentation.

A further description of our responsibilities for the audit of the financial statements is located on the

Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description

forms part of our auditor’s report.

Other matters which we are required to address

We were appointed by the audit committee on 30 April 2021 to audit the financial statements for the

period ending 31 December 2021 and subsequent financial periods. Our total uninterrupted period of

engagement is 7 years, covering the periods ending 31 December 2015 to 31 December 2021.

During the period subject to audit, a non-audit service prohibited by the FRC’s Ethical Standard was

inadvertently provided by the Firm to the parent company. This service involved the preparation of a

valuation of the non-cash consideration of shares for the purposes of Section 593(1) of the Companies

Act 2006 by the Firm’s valuation partner. This non-permitted valuation service was provided without the

knowledge or approval of the Firm’s central ethics function. As the consultation required by the Firm’s

policies and procedures did not take place in respect of this service, this was assessed as an inadvertent

breach. In reviewing the nature of this inadvertent breach, specifically that it involved amounts that would

not be subject to review or consideration in the audit, no judgements were made in providing the valuation

and that it was provided by a partner separate from the audit engagement team, we concluded that this

did not affect our professional judgement or our audit report. Accordingly, in reporting the inadvertent

provision of a prohibited non-audit service to those charged with governance, we determined that our

independence had not been compromised and that we could continue to carry out the audit of the group

and parent company, with their approval.

Our audit opinion is consistent with the additional report to the audit committee.

Use of our report

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16

of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s

members those matters we are required to state to them in an auditor’s report and for no other purpose.

To the fullest extent permitted by law, we do not accept or assume responsibility to anyone, other than

the company and the company's members as a body, for our audit work, for this report, or for the opinions

we have formed.

David Thompson (Senior Statutory Auditor) 15 Westferry Circus

For and on behalf of PKF Littlejohn LLP Canary Wharf

Statutory Auditor London E14 4HD

29 April 2022

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

Consolidated Statement of Comprehensive Income

Group - Continuing Operations

Note

Year Ended 31

December 2021

Year Ended 31

December 2020

Revenue

Administrative Expenses

(2,576,414)

(2,043,633)

Depreciation Expense

(126,340)

(106,753)

Operating Loss

(2,702,754)

(2,150,386)

Other Income

171,875

85,237

Finance Income

17,958

3,365

Finance Costs

(2,595,389)

(33,239)

Loss before Taxation

(5,108,310)

(2,095,023)

Income tax

Loss for the year

(5,108,310)

(2,095,023)

Loss attributable to:

- Owners of Hemogenyx Pharmaceuticals plc

(5,099,228)

(2,082,220)

- Non-controlling interests

(9,082)

(12,803)

(5,108,310)

(2,095,023)

Items that may be reclassified subsequently to profit or loss:

Translation of foreign operations

(18,025)

(61,119)

Other comprehensive income for the year

(18,025)

(61,119)

Total comprehensive income for the year

(5,126,335)

(2,156,142)

Attributable to:

Owners of Hemogenyx Pharmaceuticals plc

(5,117,253)

(2,143,339)

Non-controlling interests

(9,082)

(12,803)

Total comprehensive income for the year

(5,126,335)

(2,156,142)

Basic and diluted earnings per share attributable to the

equity owners of the Company

(0.007)

(0.005)

The Notes to the Financial Statements form an integral part of these Financial Statements.

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

Consolidated Statement of Financial Position

Group

Note

31 December 2021

31 December 2020

Assets

Non-current assets

Property and equipment

787,887

222,858

Right of use asset

9,242

45,885

Security deposits

142,599

Deferred financing costs

223,615

Intangible asset

441,493

254,955

Total non-current assets

1,381,221

747,313

Current assets

Trade and other receivables

298,220

104,972

Cash and cash equivalents

6,840,969

1,812,299

Total current assets

7,139,189

1,917,271

Total assets

8,520,410

2,664,584

Equity and Liabilities

Equity attributable to shareholders

Paid-in Capital

Called up share capital

9,797,493

4,336,363

Share premium

16,808,647

9,990,965

Other reserves

904,226

764,815

Reverse asset acquisition reserve

(6,157,894)

Foreign currency translation reserve

(25,921)

(7,896)

Retained Earnings

(13,134,742)

(8,035,514)

Equity attributable to owners of the Company

8,191,809

890,839

Non-controlling interests

(24,240)

(15,158)

Total Equity

8,167,569

875,681

Liabilities

Non-current liabilities

Lease liabilities

10,028

Total non-current liabilities

10,028

Current liabilities

Trade and other payables

342,689

160,771

Borrowings

1,579,378

Lease liabilities

10,152

38,726

Total Current Liabilities

352,841

1,778,875

Total Liabilities

352,841

1,788,903

Total equity and liabilities

8,520,410

2,664,584

The Notes to the Financial Statements form an integral part of these Financial Statements.

This report was approved by the Board and authorised for issue on 29 April 2022 and signed on its

behalf by:

______________________

Dr Vladislav Sandler

CEO

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

Company Statement of Financial Position

Company

Note

31 December

2021

31 December

2020

Assets

Non-current assets

Loan to subsidiaries

13,214,507

2,766,051

Deferred financing costs

213,472

Investment in subsidiary

8,000,000

Total non-current assets

21,214,507

10,979,523

Current assets

Trade and other receivables

15,478

61,448

Cash and cash equivalents

111,245

1,036,214

Total current assets

126,723

1,097,662

Total assets

21,341,230

12,077,185

Equity and Liabilities

Equity attributable to shareholders

Paid-in Capital

Called up share capital

9,797,493

4,336,363

Share premium

16,808,647

9,990,965

Other reserves

903,122

749,767

Retained Earnings

(6,302,461)

(3,136,290)

Total Equity

21,206,801

11,940,805

Liabilities

Current liabilities

Trade and other payables

134,429

136,380

Total Current Liabilities

134,429

136,380

Total Liabilities

134,429

136,380

Total equity and liabilities

21,341,230

12,077,185

Hemogenyx Pharmaceuticals plc has used the exemption granted under s408 of the Companies Act 2006

that allows for the non-disclosure of the Income Statement of the parent company. The after-tax loss

attributable to Hemogenyx Pharmaceuticals plc for the year ended 31 December 2021 was £3,166,171

(2020: £930,475).

The Notes to the Financial Statements form an integral part of these Financial Statements.

This report was approved by the Board and authorised for issue on 29 April 2022 and signed on its

behalf by:

________________________

Dr Vladislav Sandler

CEO

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

Consolidated Statement of Changes in Equity

Group

Called up

Capital

Premium

Other

reserves

Reverse

acquisition

reserve

Foreign

currency

translation

reserve

Retained

earnings

Non-

Controlling

interests

Total Equity

As at 31 December

2019

3,612,429

7,699,789

399,229

(6,157,894)

53,223

(5,953,294)

(2,517)

(349,035)

Loss in year

(2,082,220)

(12,803)

(2,095,023)

Other

Comprehensive

Income

(61,119)

Total

comprehensive

income for the year

(61,119)

(2,082,220)

(12,803

(2,156,142)

Issue of shares, net

717,254

2,262,786

2,980,040

Exercise of

warrants

6,680

28,390

35,070

Embedded

derivative on

convertible note

2,482

Issue of options

363,104

Purchase of

subsidiary shares

162

As at 31 December

2020

4,336,363

9,990,965

764,815

(6,157,894)

(7,896)

(8,035,514)

(15,158)

875,681

Loss in year

(5,099,228)

(9,082)

(5,108,310)

Other

Comprehensive

Income

(18,025)

Total

comprehensive

income for the

year

(18,025)

(5,099,228)

(9,082)

(5,126,335)

Conversion of debt

to equity

5,373,710

5,026,290

10,400,000

Shares issued to

arrangers of debt

facility

77,420

522,580

600,000

Shares issued to

consultant

10,000

56,337

66,337

Charge recognised

upon conversion of

debt

1,212,475

Issue of options

153,355

Adjustment to

Embedded

derivative on

convertible note

(13,944)

As at 31 December

2021

9,797,493

16,808,647

904,226

(6,157,894)

(25,921)

(13,134,742)

(24,240)

8,167,569

The notes to the financial statements form an integral part of these financial statements.

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

Company Statement of Changes in Equity

Company

Called up

Share Capital

Premium

Other reserves

Retained

earnings

Total Equity

As at 31 December 2019

3,612,429

7,699,789

386,663

(2,205,815)

9,493,066

Loss in year

(930,475)

Other Comprehensive

Income

Total comprehensive income

for the year

(930,475)

Issue of shares

717,254

2,262,786

2,980,040

Exercise of warrants

6,680

28,390

35,070

Issue of options

363,104

As at 31 December 2020

4,336,363

9,990,965

749,767

(3,136,290)

11,940,805

Loss in year

(3,166,171)

Other Comprehensive

Income

Total comprehensive

income for the year

(3,166,171)

Conversion of debt to

equity

5,373,710

5,026,290

10,400,000

Shares issued to arrangers

of debt facility

77,420

522,580

600,000

Shares issued to consultant

10,000

56,337

66,337

Charge recognised upon

conversion of debt

1,212,475

Issue of options

153,355

As at 31 December 2021

9,797,493

16,808,647

903,122

(6,302,461)

21,206,801

The notes to the financial statements form an integral part of these financial statements.

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

Consolidated Statement of Cash Flows

Group

Note

Year Ended

31 December

2021

Year Ended

31 December

2020

Cash flows generated from operating activities

Loss before income tax

(5,108,310)

(2,095,023)

Depreciation

12,13

126,340

106,753

Other non-cash items

172

Interest income

(17,958)

(3,365)

Interest expense

923,361

33,239

Beneficial conversion charge related to convertible debt

1,212,475

Share based payments

153,355

363,104

Foreign exchange gain

(18,025)

(146,772)

Increase/(decrease) in trade and other payables

298,070

(35,738)

Increase in trade and other receivables

(196,683)

(21,397)

Prepaid and deposits

623

Net cash outflow used in operating activities

(2,627,298)

(1,798,404)

Cash flows generated from financing activities

Proceeds from issuance of debt and equity securities

12,000,000

3,148,200

Proceeds from exercise of warrants

35,070

Proceeds from borrowings

461,776

Share issue costs

(168,160)

Repayment of loans and borrowings

(3,183,281)

Deferred financing costs

(223,615)

Payment of lease liabilities

(39,079)

(41,249)

Net cash flow generated from financing activities

8,777,640

3,212,022

Cash flows generated from investing activities

Interest income

17,958

3,365

Payment of security deposit for lease

(138,913)

Payment for intangible assets

(181,743)

Purchase of property & equipment

(636,255)

(173,047)

Net cash flow generated from investing activities

(938,953)

(169,682)

Net increase in cash and cash equivalents

5,211,389

1,243,936

Effect of exchange rates on cash

(182,719)

69,684

Cash and cash equivalents at the beginning of the period

1,812,299

498,679

Cash and cash equivalents at the end of the period

6,840,969

1,812,299

The notes to the financial statements form an integral part of these financial statements.

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

Company Statement of Cash Flows

Company

Note

Year Ended 31

December 2021

Year Ended 31

December 2020

Cash flows generated from operating activities

Loss before income tax

(3,166,171)

(930,475)

Foreign exchange (loss) gain

(184,759)

26,508

Interest expense

883,692

Beneficial conversion charge related to convertible debt

1,212,475

Share based payments

153,355

363,104

(Decrease) in trade and other payables

(13,153)

Decrease/(increase) in trade and other receivables

45,970

(4,194)

Adjustments to net loss for cash items

(5,821)

Net cash outflow used in operating activities

(1,061,259)

(558,210)

Cash flows generated from financing activities

Proceeds from issuance of debt and equity securities

12,000,000

3,148,200

Proceeds from exercise of warrants

35,070

Share issue costs

(168,160)

Repayment of loans and borrowings

(1,600,000)

Deferred financing costs

(213,472)

Net cash flow generated from financing activities

10,400,000

2,801,638

Cash flows generated from investing activities

Loan to related parties

(10,263,778)

(1,221,678)

Net cash flow generated from investing activities

(10,263,778)

(1,221,678)

Net (decrease)/increase in cash and cash equivalents

(925,037)

1,021,750

Effect of exchange rates on cash

(41)

Cash and cash equivalents at the beginning of the period

1,036,214

14,505

Cash and cash equivalents at the end of the period

111,245

1,036,214

The Notes to the Financial Statements form an integral part of these Financial Statements.

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

Notes to the Financial Statements

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, autoimmune disease, and viral infections. The products under development are

designed to address a range of problems that occur with current standard of care treatments.

The Company’s registered office is located at 5 Fleet Place, London EC4M 7RD, and it is listed on

the London Stock Exchange.

Summary of significant accounting policies

The principal accounting policies applied in the preparation of these financial statements are set out

below. These policies have been consistently applied to all the years presented, unless otherwise

stated.

Basis of preparation

The financial statements have been prepared in accordance with UK-adopted international

accounting standards and with requirements of the Companies Act 2006. The financial statements

have been prepared under the historical cost convention.

Basis of consolidation

The consolidated financial statements comprise the financial statements of Hemogenyx

Pharmaceuticals plc and its subsidiaries as at 31 December 2021. The financial statements of the

subsidiaries are prepared for the same reporting period as the parent company, using consistent

accounting policies.

All intra-group balances, transactions, income and expenses and profits and losses resulting from

intra-group transactions that are recognised in assets, are eliminated in full.

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group

obtains control, and continue to be consolidated until the date that such control ceases. Hemogenyx

Pharmaceuticals plc owns the majority of the shareholdings and has operational control over all its

subsidiaries. Please refer to note 4 for information on the consolidation of Hemogenyx

Pharmaceuticals LLC.

Hemogenyx Pharmaceuticals plc has used the exemption granted under s408 of the Companies Act

2006 that allows for the non-disclosure of the Income Statement of the parent company. The after-

tax loss attributable to Hemogenyx Pharmaceuticals plc for the year ended 31 December 2021 was

£3,166,171 (2020: £930,475).

Research and development expenditure

(i)

Research and development

Expenditure on research activities, undertaken with the prospect of gaining new scientific or

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

technical knowledge and understanding, is expensed in profit or loss as incurred. Development

activities involve a plan or design for the production of new or substantially improved products and

processes. Development expenditures are capitalised only if development costs can be measured

reliably, the product or process is technically and commercially feasible, future economic benefits

are probable, and the Company intends to, and has sufficient resources to, complete development

and to use or sell the asset. No development costs have been capitalised to date.

(ii)

Clinical trial expenses

Clinical trial-related expenses are a component of the Company's research and development costs.

These expenses include fees paid to contract research organisations, clinical sites, and other

organisations who conduct development activities on the Company's behalf. The amount of clinical

trial expenses recognised in the period related to clinical agreements is based on estimates of the

work performed using an accrual basis of accounting. These estimates incorporate factors such as

patient enrolment, services provided, contractual terms, and prior experience with similar contracts.

(iii)

Government grants

Government grants relate to financial grants from governments, public authorities, and similar

local, national or international bodies. These are recognised when there is a reasonable assurance

that the Company will comply with the conditions attaching to them, and that the grant will be

received. Government grants relating to research and development are off-set against the relevant

costs.

Intangibles

Research and development

Research expenditure is written off as incurred. Development costs are capitalised only if the

expenditure can be measured reliably, the product or process is technically and commercially

feasible, future economic benefits are probable, the Group intends to and has sufficient resources to

complete development and to use or sell the asset, and it is able to measure reliably the expenditure

attributable to the intangible asset during its development.

The Group’s view is that capitalised assets have a finite useful life and to that extent they should be

amortised over their respective unexpired periods with provision made for impairment when

required. Assets capitalised are not amortised until the associated product is available for use or sale.

Amortisation is calculated using the straight-line method to allocate the costs of development over

the estimated useful economic lives. Estimated useful economic life is assessed by reference to the

remaining patent life and may be adjusted after taking into consideration product and market

characteristics such as fundamental building blocks and product life cycle specific to the category of

expenditure.

Intellectual property (IP)

IP assets (comprising patents, know-how, copyright and licences) acquired by the Group as a result

of a business combination are initially recognised at fair value or as a purchase at cost and are

capitalised.

Internally generated IP costs are written off as incurred except where IAS 38 criteria, as described in

research and development above, would require such costs to be capitalised.

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

The Group’s view is that capitalised IP assets have a finite useful life and to that extent they should

be amortised over their respective unexpired periods with provision made for impairment when

required. Capitalised IP assets are not amortised until the Group is generating an economic return

from the underlying asset and as such no amortisation has been incurred to date as the products to

which they relate are not ready to be sold on the open market. When the trials are completed and the

products attain the necessary accreditation and clearance from the regulators, the Group will assess

the estimated useful economic life and the IP will be amortised using the straight-line method over

their estimated useful economic lives.

Property and equipment

All property and equipment are stated at historical cost less accumulated depreciation or impairment

value. Cost includes the original purchase price and expenditure that is directly attributable to the

acquisition of the items to bring the asset to its working condition. Depreciation is provided at rates

calculated to write off the cost less estimated residual value of each asset over its expected useful

economic life. Right of Use assets are depreciated over their expected useful economic life on the

same basis as owned assets, or where shorter, the lease term. Assets are reviewed for impairment

when events or changes in circumstances indicate that the carrying amount may not be recoverable.

The following rates are used:

Computer equipment

33%

Straight-line

Leasehold improvements

12.5%

Straight-line

Property & equipment

20% – 50%

Straight-line

Impairment of non-financial assets

The Group is required to review, at least annually, whether there are indications (events or changes

in circumstances) that non-financial assets have suffered impairment and that the carrying amount

may exceed the recoverable amount. If there are indications of impairment then an impairment

review is undertaken. An impairment charge is recognised within operating costs for the amount by

which the carrying amount exceeds its recoverable amount. The recoverable amount is the higher of

the asset’s fair value less costs to sell and the value-in-use. In the event that an intangible asset will

no longer be used, for example, when a patent is abandoned, the balance of unamortised expenditure

is written off.

Impairment reviews require the estimation of the recoverable amount based on value-in-use

calculations. Non-financial assets relate typically to investments in related parties and in-process

development and patents, and require broader assumptions than for developed technology. Key

assumptions taken into consideration relate to technological, market and financial risks and include

the chance of product launch taking into account the stage of development of the asset, the scale of

milestone and royalty payments, overall market opportunities, market size and competitor activity,

revenue projections, estimated useful lives of assets (such as patents), contractual relationships and

discount rates to determine present values of cash flows.

Investments

Equity investments in subsidiaries are held at cost, less any provision for impairment. As there is no

quoted price in an active market, fair value cannot be reliably measured.

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

Going concern

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

assumption.

The Directors have given particular thought to the impact on the Group that may result from COVID-

19 and any other potential pandemics that may arise. The Group’s New York operations were classed

as an essential business and were not subject to closure during lockdown periods, and so work

continued with prudent hygiene and distancing measures in place including limited work in the

laboratory on rota and work from home. The Group allowed for extended delivery times for some

supplies, and for slower progress with collaboration partners. The Board and UK management

continued to operate remotely, as usual. At the present time work has returned to normal, and the

Group believes that there should be no material disruption to its work in the event of further

pandemic-related restrictions. The Board continues to monitor these risks and the Group’s business

continuity plans.

The Company raised £12,000,000 before expenses through convertible debt placings during the

period, all of which was converted to equity except for £1,600,000 which was repaid. The Group had

cash and cash equivalents totalling £6,840,969 as at 31 December 2021.

The Directors, having made due and careful enquiry, are of the opinion that the Group and Company

have or will have access to sufficient funding in order to execute its operations over the next 12

months. The Directors therefore have made an informed judgment, at the time of approving the

financial statements, that there is a reasonable expectation that the Group and Company has adequate

resources to continue in operational existence for the foreseeable future. As a result, the Directors

have adopted the going concern basis of accounting in the preparation of the annual financial

statements.

Notwithstanding the Group’s cash balance, should the Group elect to raise additional capital within

the next year, it 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.

Trade and other receivables and payables

Trade and other receivables are amounts due from customers for services performed in the ordinary

course of business. If collection is expected in one year or less (or in the normal operating cycle of

the business if longer), they are classified as current assets. If not, they are presented as non-current

assets.

Trade and other receivables are recognised initially at fair value, and subsequently measured at

amortised cost using the effective interest method, less provision for impairment.

Other liabilities measured at amortised cost are obligations to pay for goods or services that have

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

been acquired in the ordinary course of business from suppliers. The liabilities are classified as

current liabilities if payment is due within one year or less (or in the normal operating cycle of the

business if longer). If not, they are presented as non-current liabilities.

The liabilities are recognised initially at fair value, and subsequently measured at amortised cost using

the effective interest method.

Foreign currencies

Functional and presentation currency

The Company’s presentation currency is the British Pound Sterling (“£”). The functional currency

for the Company, being the currency of the primary economic environment in which the Company

operates, is the British Pound Sterling. The individual financial statements of each of the Company’s

wholly owned subsidiaries are prepared in the currency of the primary economic environment in

which it operates (its functional currency).

The financial statements of Hemogenyx Pharmaceuticals LLC, Immugenyx LLC and Hemogenyx-

Cell SPRL have been translated in to Pounds Sterling in accordance with IAS 21 The Effects of

Changes in Foreign Exchange Rates. This standard requires that assets and liabilities be translated

using the exchange rate at period end, and income, expenses and cash flow items are translated using

the rate that approximates the exchange rates at the dates of the transactions (i.e. the average rate for

the period). The foreign exchange differences on translation of Hemogenyx Pharmaceuticals LLC,

Immugenyx LLC and Hemogenyx-Cell SPRL are recognised in other comprehensive income (loss).

Foreign currency transactions

Foreign currency transactions are translated into the functional currency using the exchange rates

prevailing on the dates of the transactions. Foreign exchange gains and losses resulting from the

settlement of such transactions and from the translation at period-end exchange rates of monetary

assets and liabilities denominated in foreign currencies are recognised in profit and loss.

Share capital

Ordinary Shares are classified as equity. Equity instruments issued by the Hemogenyx

Pharmaceuticals Group are recorded at the proceeds received, net of direct issue costs.

Cash

Cash consists of cash bank deposit balances.

Deferred financing costs

Deferred financing costs at 31 December 2020 represent direct expenditures made by the

Company for the financing transaction completed in January 2021. These costs were offset

against the proceeds received in 2021 from the financing transactions.

Share-based payments

The Group has applied the requirements of IFRS 2 Share-based Payment for all grants of equity

instruments.

The Group issues equity-settled share-based payments to the directors, senior management and

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

employees (“Employee Share Options”), to corporate finance advisers for assistance in raising

private equity, and to its Scientific Advisory Board members (“Non-employee Share Options”). In

2021, the Group adopted the “Hemogenyx Pharmaceuticals plc 2021 Equity Incentive Plan with

Non-Employee Sub-Plan” (the “EIP”) for the grant of options, restricted shares, and restricted share

units to employees, directors and consultants of the Company and its subsidiaries over ordinary

shares in the capital of the Company, to be put to the Company’s shareholders for approval at the

2022 AGM. Equity-settled share-based payments are measured at fair value at the date of grant for

Employee Share Options and the date of service for Non-employee Share Options. The fair value

determined at the grant date or service date, as applicable, of the equity-settled share-based payments

is expensed, with a corresponding credit to equity, on a straight-line basis over the vesting period,

based on the Group’s estimate of shares that will eventually vest. At each subsequent reporting date,

the Group calculates the estimated cumulative charge for each award having regard to any change in

the number of options that are expected to vest and the expired portion of the vesting period. The

change in this cumulative charge since the last reporting date is expensed with a corresponding credit

being made to equity. Once an option vests, no further adjustment is made to the aggregate amount

expensed.

The fair value is calculated using the Black Scholes method for both Employee and Non-employee

Share Options as management views the Black Scholes method as providing the most reliable

measure of valuation. The expected life used in the model has been adjusted, based on management’s

best estimate, for the effects of non-transferability exercise restrictions and behavioural

considerations. The market price used in the model is the issue price of Company shares at the last

placement of shares immediately preceding the calculation date. The fair values calculated are

inherently subjective and uncertain due to the assumptions made and the limitation of the calculations

used.

Taxation

Current tax

Current taxation is based on the results for the year as adjusted for items that are non-assessable or

disallowed. It is calculated using rates that have been enacted, or substantially enacted, by the balance

sheet date. Current income tax assets and liabilities are measured at the amount expected to be

recovered from or paid to the relevant taxation authorities.

Deferred tax

Deferred income tax is recognised on all temporary differences arising between the tax bases of assets

and liabilities and their carrying amounts in the financial statements, with the following exceptions:

▪ where the temporary difference arises from the initial recognition of goodwill or of an

asset or liability in a transaction that is not a business combination and, at the time of the

transaction, affects neither accounting nor taxable profit or loss;

▪ in respect of taxable temporary differences associated with investment in subsidiaries,

associates and joint ventures, where the timing of the reversal of the temporary

differences can be controlled and it is probable that the temporary differences will not

reverse in the foreseeable future; and

▪ deferred income tax assets are recognised only to the extent that it is probable that taxable

profit will be available against which the deductible temporary differences, carried

forward tax credits or tax losses can be utilised.

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

Deferred income tax assets and liabilities are measured on an undiscounted basis at the tax rates that

are expected to apply when the related asset is realised or liability is settled, based on tax rates and

laws enacted or substantively enacted at the statement of financial position date.

The carrying amount of deferred income tax assets is reviewed at each statement of financial position

date. Deferred income tax assets and liabilities are offset, only if a legally enforcement right exists

to set off current tax assets against current tax liabilities, the deferred income taxes related to the

same taxation authority and that authority permits the Company to make a single net payment.

Income tax is charged or credited directly to equity if it relates to items that are credited or charged to

equity. Otherwise income tax is recognised in the statement of comprehensive income.

Financial Assets and Liabilities

Financial assets and liabilities are recognised in the Company’s statement of financial position when

the Company becomes a party to the contractual provisions of the instrument. The Company

currently does not use derivative financial instruments to manage or hedge financial exposures or

liabilities.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that

are not quoted in an active market. They are included in current assets, except for maturities greater

than 12 months after the end of the reporting period. These are classified as non-current assets. The

Company’s loans and receivables comprise Trade and Other Receivables and Cash and Cash

Equivalents in the Statement of Financial Position.

Impairment of Financial Assets

The Company and Group assess at each reporting date whether a financial asset is impaired and will

recognise the impairment loss immediately through the consolidated statement of comprehensive

loss.

Interest Bearing Loans and Borrowings

Borrowings are initially recognised at the fair value of consideration received less directly

attributable transaction costs. After initial recognition, borrowings are subsequently measured at

amortised cost using the effective interest rate method. Where borrowings are provided by

shareholders at an interest rate discounted to market rates, the difference on initial fair value is taken

to equity as a capital contribution.

Where the Group has entered into a hybrid instrument whereby there is a debt instrument and an

embedded derivative financial liability, the fair value of the debt instrument less the fair value of the

derivative financial liability is equal to loan recognised on initial measurement.

IFRS 15, Revenue from Contracts with Customers

The Company follows IFRS 15, which establishes principles for reporting useful information to users

of financial statements about the nature, amount, timing, and uncertainty of revenue and cash flows

arising from an entity’s contracts with customers. The standard establishes a five-step principle-based

approach for revenue recognition and is based on the concept of recognising an amount that reflects

the consideration for performance obligations only when they are satisfied, and the control of goods

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

or services is transferred.

The majority of the Group’s revenue is derived from fees related to collaboration agreements.

Management reviewed contracts where the Group received consideration in order to determine

whether or not they should be accounted for in accordance with IFRS 15. To date, Hemogenyx

Pharmaceuticals has entered into few transactions that meet the scope of IFRS 15. Instead, most

income has been generated through collaboration agreements and grants with counterparties that do

not meet the definition of a customer, and therefore the contracts fall outside the scope of IFRS 15

and have been accounted for in accordance with IAS 20.

Income is recognised at either a point-in-time or over time, depending on the nature of the services

and existence of acceptance clauses.

IFRS 16, Leases

IFRS 16 requires lessees to recognise a lease liability reflecting future lease payments and a ‘right-

of-use asset’ for virtually all lease contracts. IFRS 16 includes an optional exemption for certain

short-term leases and leases of low-value assets; however, this exemption can only be applied by

lessees. For lessors, the accounting remains substantially unchanged. IFRS 16 provides updated

guidance on the definition of a lease (as well as the guidance on the combination and separation of

contracts); under IFRS 16, a contract is, or contains, a lease if the contract conveys the right to control

the use of an identified asset for a period of time in exchange for consideration.

The right-of-use asset and lease liability are both based on the present value of lease payments due

over the term of the lease, with the asset being depreciated in accordance with IAS 16 Property,

Plant and Equipment and the liability increased for the accretion of interest and reduced by lease

payments.

Segmental reporting

The Group’s operations are located in New York, USA and in Liège, Belgium (prior to the

dissolution of Hemogenyx-Cell SPRL in 2022) with the head office located in the United Kingdom.

The main assets of the Group, cash and cash equivalents, are held in the United Kingdom, Belgium

and 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 company focused on the

discovery, development and commercialisation of innovative treatments relating to blood and

immune system disorders and viral infections.

New Accounting Standards and Interpretations issued and applied in the Financial Statements

Amendments to References to the Conceptual Framework in IFRS Standards: included are revised

definitions of an asset and a liability as well as new guidance on measurement and derecognition,

presentation and disclosure.

The Group has applied the following amendments for the first time for the annual reporting period

commencing 1 January 2021:

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

Interest Rate Benchmark Reform – Phase 2, Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and

IFRS 16 became effective from January 1, 2021. These amendments address issues that might affect

financial reporting when an existing interest rate benchmark (i.e. Interbank offered rate – IBOR) is

replaced with an alternative benchmark interest rate. The effects of interest rate benchmark reform

on the Group and Company’s financial instruments and risk management strategies did not have a

material impact on the Group’s consolidated financial statements and are not expected to have a

significant impact in future periods.

On March 31, 2021, the IASB issued COVID-19-Related Rent Concessions beyond June 30, 2021,

an amendment to IFRS 16 effective from August 31, 2021 onwards. The amendment enables lessees,

subject to certain conditions, to opt out of the requirement to determine whether a COVID-19-related

rent concession is a lease modification. Application of this amendment had no material impact on

the Group and Company.

Adoption of the above standards did not have a material impact on the consolidated financial

statements.

New Accounting Standards and Interpretations in issue but not applied in the Financial Statements

The standards and interpretations that are issued, but not yet effective, up to the date of issuance of

the financial statements are listed below. The Group and Company intend to adopt these standards,

if applicable, when they become effective. These are summarised below:

Annual Improvements to IFRS Standards 2018-2020: The pronouncement contains amendments

to four International Financial Reporting Standards (IFRSs) as result of the IASB's annual

improvements project:

▪ IFRS 1 First-time Adoption of International Financial Reporting Standards: subsidiary

as a first-time adopter – The amendment permits a subsidiary that applies paragraph

D16(a) of IFRS 1 to measure cumulative translation differences using the amounts

reported by its parent, based on the parent’s date of transition to IFRSs.

▪ IFRS 9 Financial Instruments – fees in the ‘10 per cent’ test for derecognition of financial

liabilities - The amendment clarifies which fees an entity includes when it applies the ‘10

per cent’ test in IFRS 9 in assessing whether to derecognise a financial liability. An entity

includes only fees paid or received between the entity (the borrower) and the lender,

including fees paid or received by either the entity or the lender on the other’s behalf.

▪ IFRS 16 Leases – Lease incentives – the amendment to Illustrative Example 13

accompanying IFRS 16 removes from the example the illustration of the reimbursement

of leasehold improvements by the lessor in order to resolve any potential confusion

regarding the treatment of lease incentives that might arise because of how lease

incentives are illustrated in that example. Issued 14 May 2020, applicable for annual

periods beginning on or after 1 January 2022 with early application permitted in respect

of IFRS 1, IFRS 9, and IAS 41. The amendment to IFRS 16 only regards an illustrative

example, so no effective date is stated. All subject to EU endorsement.

▪ IAS 41 – This amendment removes the requirement for entities to exclude taxation cash

flows when measuring the fair value of a biological asset using a present value technique.

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

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

liabilities arising from a single transaction. The Company does not expect any 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 will not early adopt these amendments.

On 23 January 2020 the IASB issued Classification of Liabilities as Current or Non-current, an

amendment to IAS 1. On 14 May 2020 the IASB issued Reference to the Conceptual Framework, an

amendment to IFRS 3; Proceeds before Intended Use, an amendment to IAS 16; Onerous Contracts

– Cost of Fulfilling a Contract, an amendment to IAS 37; and Annual Improvements to IFRS

standards 2018-2020. The Company does not expect a material impact from those amendments,

which are effective for annual reporting periods beginning on or after 1 January 2022.

The Group has not early adopted any of the above standards and the directors are assessing the impact

on future financial statements. There are no other IFRS or IFRIC interpretations that are not yet

effective that would be expected to have a material impact on the Group or Company.

Significant accounting judgements, 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.

Estimates and judgements are continually evaluated, and are based on historical experience and other

factors, including expectations of future events that are believed to be reasonable under the

circumstances. The estimates and assumptions that have a significant risk of causing a material

adjustment to the carrying amounts of assets and liabilities within the next financial year are

discussed below.

The principal areas in which judgement is applied are as follows:

Convertible debt

The accounting treatment of the shares issued to Arrangers and Introducers of the debt financing

requires the Group to consider the purpose of the issuance of such shares, and whether they directly

relate to the procurement of the debt facility. Shares issued to such Arrangers and Introducers were

a condition of, and therefore judged to be directly related to, the procurement of the debt facility and

were accordingly capitalised. Shares not issued in relation to the debt financing were not capitalised

and were treated as an administrative expense. The fair value of the shares issued was based upon

the quoted price of the Company’s ordinary shares at the date of issuance. The fair value of the shares

issued upon conversion of the debt to ordinary shares was based upon the quoted price of our ordinary

shares at the date of conversion. The difference between such fair value and the amount of the debt

converted plus related accrued interest is considered a debt discount and is recognised as a non-cash

finance charge to the consolidated statement of comprehensive income. See Note 23 for details.

Fair value disclosure

The embedded derivative elements of the convertible notes were measured using a risk-based pricing

model. The computed fair value was not significant in 2021 and 2020. No convertible notes remained

outstanding at 31 December 2021.

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

Valuation of stock options

Management uses the Black Scholes model to value the share options. The model requires use of

assumptions regarding volatility, risk free interest rate, expected term and a calculation of the value

of the option at the time of the grant. The assumptions are based upon current trends and market

factors. Please see Note 20 for details.

Intangible assets impairment

When there is an indicator of a significant and permanent reduction in the value of intangible assets,

an impairment review is carried out. The impairment analysis is principally based on estimated

discounted future cash flows. The determination of the assumptions is subjective and requires the

exercise of considerable judgement about the outcome of research and development activity,

probability of technical and regulatory success, amount and timing of projected future cash flow or

changes in market conditions. Any changes in key assumptions could materially affect whether an

impairment exists. See Note 14 for further details.

Reverse acquisition and LSE listing

On 4 October 2017, the Company acquired the entire issued share capital of Hemogenyx

Pharmaceuticals LLC, a private company incorporated in the United States, by way of a share for

share exchange. In substance, the shareholders of Hemogenyx Pharmaceuticals LLC acquired a

controlling interest in the Company and the transaction has therefore been accounted for as a reverse

acquisition. Following the completion of the transaction the Company changed its name to

Hemogenyx Pharmaceuticals plc.

The reverse acquisition reserve that arose from the reverse takeover is £6,157,894 at 31 December

2021 and 2020 and is made up of the following:

Components

Pre-acquisition losses of Hemogenyx Pharmaceuticals plc1

(799,763)

Hemogenyx Pharmaceuticals LLC issued capital at acquisition2

1,010,849

Investment in Hemogenyx Pharmaceuticals LLC3

(8,000,000)

Reverse acquisition expense4

1,631,020

As at 31 December 2021 and 2020

(6,157,894)

The movements on the Reverse acquisition reserve are as follows:

(1) These consolidated financial statements present the legal capital structure of the Company.

However, under reverse acquisition accounting rules, the Company was not acquired until 4 October

2017 and therefore the entry above is required to eliminate the initial retained losses of the Company.

(2) Hemogenyx Pharmaceuticals LLC had issued share capital of equivalent to £1,010,849 as at 4

October 2017. As these financial statements present the capital structure of the parent entity, the

issue of equity by Hemogenyx Pharmaceuticals LLC has been recorded in this reserve.

(3) The Company issued 228,571,428 shares at £0.035 each, totalling £8,000,000 for the entire issued

capital of Hemogenyx Pharmaceuticals LLC. The above entry is required to eliminate the balance

sheet impact of this transaction.

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

(4) The entry above represents the difference between the value of the equity issued by the Company,

and the deemed consideration given by Hemogenyx Pharmaceuticals LLC to acquire the Company.

Segment Information

The Group has one reportable segment, the discovery, development and commercialisation of

innovative treatments relating to blood and immune system disorders and viral infections, and

administrative functions in the United Kingdom, and therefore the segmental information is the same

as that presented in the primary statements.

The following tables present expenditure and certain asset information regarding the Group’s

geographical segments for the year ended 31 December 2021 and 2020:

Year Ended

31 December

2021

Year Ended

31 December

2020

SEGMENT ASSETS

United Kingdom

- Non-current

213,472

- Current

126,723

1,097,662

United States

- Non-current

1,381,221

533,841

- Current

6,992,630

798,515

Belgium

- Non-current

- Current

19,834

21,094

Total

- Non-current

1,381,221

747,313

- Current

7,139,187

1,917,271

CAPITAL EXPENDITURE

United Kingdom

United States

636,255

173,047

Belgium

636,255

173,047

Capital expenditure consists of the purchase of property and equipment.

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

Expenses by nature

Group

Year Ended 31

December 2021

Year Ended 31

December 2020

Laboratory expenses

37,583

83,662

Consumable equipment and supplies

283,647

267,057

Contractors & consultants

468,505

(1,459)

Travel

10,603

4,218

Staff Costs

1,023,783

1,130,764

Insurance

56,363

39,303

Other

285,844

80,187

Legal and professional fees

537,954

505,812

Foreign exchange loss/(gain)

(127,868)

(65,910)

Total Administrative Expenses

2,576,414

2,043,633

Other income

Other income during the period ended 31 December 2021 totals £171,875 (2020: £85,537)

comprising £71,932 arising from the forgiveness of a US governmental loan programme (the Payroll

Protection Program) in 2021 and £99,943 received from a third party under a research collaboration

programme relating to humanised mice.

Employees

Group

Company

Year Ended 31

December 2021

Year Ended 31

December 2020

Year Ended 31

December 2021

Year Ended 31

December

2020

Wages and salaries

810,851

713,790

115,000

208,750

Social security

41,377

37,732

1,408

2,506

Share based

Payments

153,356

363,104

137,390

363,104

Pension

contributions

18,199

16,138

250

1,023,783

1,130,764

253,798

574,610

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

Average number of people (including Executive Directors) employed:

Group

Company

Year Ended

31 December

2021

Year Ended

31 December

2020

Year Ended

31 December

2021

Year

Ended 31

December

2020

Research &

development

Administration

Auditor’s remuneration

Group

Year Ended

31 December

2021

Year Ended

31 December

2020

Fees payable to the Company auditor:

Audit of the financial statements of the Group and

Company

45,000

45,090

Other services

3,500

48,500

45,090

10.

Income tax

Group

Year Ended 31

December 2021

Year Ended 31

December 2020

Current Tax:

Tax on loss on ordinary activities

Loss on ordinary activities before tax

(5,108,310)

(2,095,023)

Analysis of charge in the year:

Loss on ordinary activities multiplied by

weighted average tax rate for the group of

22.40% (2020: 23.10%)

(1,145,371)

(483,950)

Disallowed items

81,735

116

US R&D credit and timing differences

(136,371)

68,990

Tax losses carried forward

(1,200,007)

(414,844)

Current tax credit

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

Weighted average tax rate is calculated by reference to the tax rates effective in each of the

jurisdictions. The tax rates effective at 31 December 2021 are 19%, 28% and 28% in the UK, the

USA and Belgium respectively.

The Group has accumulated tax losses arising in the UK of approximately £4,450,000 (2020:

£1,447,000) that should be available, under current legislation, to be carried forward against future

profits. No deferred tax asset has been recognised against these losses. The Group has tax losses

carried forward in the US of approximately US$6,700,000 available under current rules until 2037.

No deferred tax asset has been recognised against these losses.

Sections 382 and 383 of the US Internal Revenue Code, and similar state regulations, contain

provisions that may limit the tax loss carried forward available to be used to offset income in any

given year upon the occurrence of certain events, including changes in the ownership interests of

significant stockholders. In the event of a cumulative change in ownership in excess of 50% over a

three-year period, the amount of the NOL carry forwards that the Company may utilise in any one

year may be limited.

11.

Earnings per share

The calculation of the basic and fully diluted earnings per share is calculated by dividing the loss for

the year from continuing operations attributable to equity owners of the Group of £(5,099,228) (2020:

£(2,082,220)) by the weighted average number of ordinary shares in issue during the year of

773,952,166 (2020: 414,833,093).

Dilutive loss per Ordinary Share equals basic loss per Ordinary Share as, due to the losses incurred

in 2021 and 2020, there is no dilutive effect from the subsisting share options. See Note 20 for

details of stock options and warrants outstanding.

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

12.

Property and equipment

Group

Property &

equipment

Computer

equipment

Leasehold

Improvements

Total

Cost

31 December 2019

270,114

5,379

275,493

Additions

167,007

6,040

173,047

Foreign exchange movement

(12,013)

(462)

(12,475)

31 December 2020

425,108

10,957

436,065

Additions

8,508

627,747

636,255

Foreign exchange movement

5,063

263

16,408

21,734

31 December 2021

430,171

19,728

644,155

1,094,054

Accumulated depreciation and

impairment losses

31 December 2019

150,336

1,235

151,571

Depreciation

67,499

2,360

69,859

Foreign exchange movement

(8,052)

(171)

(8,223)

31 December 2020

209,783

3,424

213,207

Depreciation

84,645

5,322

89,967

Foreign exchange movement

2,881

112

2,993

31 December 2021

297,309

8,858

306,167

Carrying amounts

31 December 2019

119,778

4,144

123,922

31 December 2020

215,325

7,533

222,858

31 December 2021

132,862

10,870

644,155

787,887

13.

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. Each of the two US subsidiaries has an

agreement for the lease of laboratory facilities to which IFRS 16 has been applied.

The key impacts on the Statement of Comprehensive Income and the Statement of Financial Position

are as follows:

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

Group & Company

Right of use

asset

Lease liability

Income

statement

Carrying value at 31

December 2019

109,442

(113,088)

(44,808)

Depreciation

(36,894)

Revaluation

(23,777)

32,031

Interest

(3,637)

Lease payments

39,431

Foreign exchange

movements

(2,886)

(3,491)

Carrying value at 31

December 2020

45,885

(48,754)

(40,531)

Depreciation

(36,373)

Interest

(1,560)

Lease payments

39,079

Foreign exchange

movements

(270)

1,083

Carrying value at 31

December 2021

9,242

(10,152)

(37,932)

14.

Intangible assets

On 15 January 2015, the Company entered into an Exclusive License Agreement with Cornell

University to grant to the Company patent rights to patent PCT/US14/65469 entitled Post-Natal

Hematopoietic Endothelial Cells and Their Isolation and Use and rights to any product or method

deriving therefrom. The Company paid Cornell University USD $347,500 for such licence rights.

In October 2021, the Company entered into a licence with Eli Lilly and Company to use a patented

product relating to the CDX antibody for a term ending on the latest of (a) the twelfth (12th)

anniversary of the date of First Commercial Sale of a particular Licensed Product in a particular

country; (b) the first day on which there is not at least one Licensed Patent having a Valid Claim

Covering the manufacture, use, or sale of such Licensed Product in such country; or (c) the

expiration of the last-to-expire Data Exclusivity Period for such Licensed Product in such country.

The Company paid £181,743 GBP or $250,000 USD as an up-front payment and will make

milestone payments of up to $1 million through to Phase II clinical trials. Lilly is also eligible to

receive substantial additional milestone payments based on the achievement of prespecified

milestones, as well as tiered single-digit royalties on sales and a percentage of any cash payments

received in respect of any sublicence of the licensed intellectual property. Through 31 December

2021, the Company has not incurred any development or sales-based payment obligations to the

licensor.

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

Cost

Intellectual

Property

31 December 2019

262,050

Exchange movements

(7,095)

31 December 2020

254,955

Additions

181,743

Exchange movements

4,795

31 December 2021

441,493

The carrying value of intangible assets is reviewed for indications of impairment whenever events

or changes in circumstances indicate that the carrying value may exceed the recoverable amount. The

products to which they relate are not ready to be sold on the open market. When the trials are

completed and the products attain the necessary accreditation and clearance from the regulators, the

Group will assess the estimated useful economic life and the IP will be amortised using the straight-

line method over their estimated useful economic lives. The directors are of the view that no

impairment is required as the test results to date have been very positive and these products are now

being moved on towards the clinical trial phase. Accordingly, the directors continue to believe that

the products will eventually attain the necessary accreditation and clearance from the regulators and

so no impairment has been considered necessary.

Amortisation will be charged to operating costs in the Statement of Comprehensive Income when

the Group achieves product sales.

15.

Loan to subsidiary

Company

31 December

2021

31 December

2020

Loan to Hemogenyx

Pharmaceuticals LLC

13,213,951

2,765,500

Loan to Immugenyx LLC

556

551

13,214,507

2,766,051

Hemogenyx Pharmaceuticals plc has made cumulative loans to Hemogenyx Pharmaceuticals LLC

of US$17,883,274 (£13,213,951) as at 31 December 2021 (Dec 2020: (US$3,769,332 (£2,765,500))

and Immugenyx LLC of US$17,883,274 (£13,213,951) as at 31 December 2021 (Dec 2020: (US$752

(£551)). The loans are interest free and will be repaid when Hemogenyx LLC’s operational cash

flow allows. Management has undertaken an impairment assessment of the loan as at 31 December

2021 and has determined that that there was no impairment required. The interest rate and impairment

assessment are reviewed on an annual basis.

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

16.

Investment in subsidiary

Name

Address of the registered

office

Nature of

business

Proportion of

ordinary

shares held

directly by

parent (%)

Proportion of

ordinary

shares held

ultimately by

parent (%)

Hemogenyx UK

Limited

5 Fleet Place, London, UK

EC4M 7RD

Holding

Company

100

Hemogenyx

Pharmaceuticals

LLC

9 East Lookerman Street,

Suite 3A, Dover, Kent,

Delaware, USA, 19901

Biomedical

sciences

100

Immugenyx LLC

c/o Corporation Service

Company

251 Little Falls Drive,

Wilmington, Delaware,

USA, 19808

Biomedical

sciences

93.9

Hemogenyx-Cell

SPRL (dissolved in

2022)

Avenue du Parc Industriel

89, 4041 Milmort,

Belgique

Biomedical

sciences

100

The remaining shares in Immugenyx LLC are held by Dr Vladislav Sandler and by a prior employee,

Carina Sirochinsky, as part of their compensation under their respective roles as CEO and Director

of Operations. Ms Sirochinsky’s role as Director of Operations ended on the termination of her

employment on 1 July 2021. Dr Sandler and Ms Sirochinsky receive(d) 10,000 and 1,000 shares

respectively for each year of employment from January 2019. At 31 December 2021, Hemogenyx

Pharmaceuticals LLC, Dr Sandler and Ms Sirochinsky each owns 500,000, 30,000 and 2,500 shares

in Immugenyx LLC, respectively.

17.

Trade and other receivables

Group

Company

31 December

2021

31 December

2020

31 December

2021

31 December

2020

VAT receivable

6,127

50,971

6,127

50,971

Trade and other receivables

1,386

5,297

Prepayments

290,707

48,704

9,351

10,477

Total trade and other receivables

298,220

104,972

15,478

61,448

There are no material differences between the fair value of trade and other receivables and their

carrying value at the year-end. No receivables were past due or impaired at the year-end.

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

18.

Called up share capital

Group & Company

Number of shares

As at 31 December 2019

361,242,853

3,612,429

Issue of shares – placement

71,725,402

717,254

Issue of shares – warrant exercise

668,000

6,680

As at 31 December 2020

433,636,255

4,336,363

Conversion of debt to issue of shares – placement 25 Feb 2021

13,131,313

131,313

Conversion of debt to issue of shares – placement 26 Mar 2021

14,285,714

142,857

Conversion of debt to issue of shares – placement 16 Apr 2021

24,547,803

245,478

Conversion of debt to issue of shares – placement 26 Apr 2021

29,850,746

298,508

Conversion of debt to issue of shares – placement 5 May 2021

22,222,222

222,222

Conversion of debt to issue of shares – placement 18 May 2021

433,333,333

4,333,333

Shares issued as arrangement fees for debt issuance

7,741,935

77,419

Shares issued to consultant

1,000,000

10,000

As at 31 December 2021

979,749,321

9,797,493

During 2020, the Company raised £648,200 before expenses through a placing and subscription of

36,011,116 ordinary shares at a price of 1.8p per share. The Company also raised £2,500,000 before

expenses through a placing and subscription of 35,714,286 ordinary shares at a price of 7p per share.

The Company received £35,070 from the exercise of 668,000 warrants at an exercise price of 5.25p

per share.

During 2021, the Company issued 546,113,066 ordinary shares upon conversion of debt – See Note

20.

19.

Share premium

Group & Company

As at 31 December 2019

7,699,789

Issue of shares – placement

2,430,946

Share issuance costs

(168,160)

Issue of share – warrant exercise

28,390

As at 31 December 2020

9,990,965

Issue of shares – placement

5,548,969

Issues of shares – consultant

66,337

Charge recognised upon conversion of debt

1,212,475

As at 31 December 2021

16,808,647

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

20.

Other reserves

Group:

Year Ended 31

December 2021

Year Ended 31

December 2020

As at start of year

764,815

399,229

Charge for the year - employees

153,355

363,104

Convertible Note embedded derivative

(13,944)

2,482

As at end of year

904,226

764,815

Company:

Year Ended 31

December 2021

Year Ended 31

December 2020

As at start of year

749,767

386,663

Charge for the year - employees

153,355

363,104

As at end of year

903,122

749,767

The expense recognised for employee and non-employee services during the year is shown in the

following table:

Group and Company:

Year Ended 31

December 2021

Year Ended 31

December 2020

Expense arising from equity-settled share-based payment

transactions

153,355

363,104

Total expense arising from share-based payment transactions

153,355

363,104

Employee Plan

Under the Employee Plan (“EMP”) share options are granted to directors and employees at the

complete discretion of the Company. The fair value of the options is determined by the Company at

the date of the grant. Options granted vest in tranches on each of the following events/dates:

(i) Admission to the LSE (“Admission”);

(ii) On the date falling six (6) months after Admission;

(iii) On the date falling twelve (12) months after Admission; and

(iv) On the date falling twenty-four (24) months after Admission

On the provision that the option holder remains an employee of the Group.

Options granted to most other option holders from 4 January 2018 onwards vest in equal tranches of

12.5% every three months from the date of grant, until fully vested.

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

The fair value of the options is determined using the Black Scholes method as stated in Note 2. The

contractual life of each option granted is between two and five years. There are no cash settlement

alternatives.

Options are settled when the Company receives a notice of exercise and cash proceeds from the

option holder equal to the aggregate exercise price of the options being exercised.

Non-Employee Plan

Under the Non-Employee Plan (“NEMP”) share options are granted to non-employees at the

complete discretion of the Company. The exercise price of the options is determined by the Company

at the date of the grant. The options vest at the date of the grant.

The fair value of the options is determined using the Black Scholes method as stated in Note 2 and

not the value of services provided as this is deemed the most appropriate method of valuation. In all

cases non-employee option holders received cash remuneration in consideration for services

rendered in accordance with agreed letters of engagement. The contractual life of each option granted

ranges from two to five years. There are no cash settlement alternatives. Volatility was determined

by calculating the volatility for three similar listed companies and applying the average of the four

volatilities calculated.

Options are settled when the Company receives a notice of exercise and cash proceeds from the

option holder equal to the aggregate exercise price of the options being exercised.

2021 Equity Incentive Plan with Non-Employee Sub-Plan

Under the 2021 Equity Incentive Plan with Non-Employee Sub-Plan” (the “EIP”) share options,

restricted shares, and restricted share units may be granted to employees, directors and consultants

of the Company and its subsidiaries at the discretion of the Company in an aggregate amount up to

30,000,000 shares. The fair value of awards made under this plan is determined in the same way as

for the EMP and NEMP described above.

A schedule of options granted is below:

Number options

Employees, including directors*

30,844,314

Members of the Scientific Advisory Board

14,237,192

Total

45,081,506

* Details of options held by individual directors are disclosed in the Directors’ Report.

Group & Company:

2021

Number

2021

Weighted

Average

Exercise

Price pence

2020

Number

2020

Weighted

Average

Exercise

Price pence

Outstanding at the beginning of the year

42,465,787

4.6

30,553,076

3.5

Granted during the year

3,090,441

2.1

11,912,711

7.4

Lapsed during the year

(474,722)

9.0

Cancelled during the year

Outstanding at end of year

45,081,506

4.4

42,465,787

4.6

Exercisable at end of year

43,278,749

3.5

36,812,610

4.5

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

The weighted average remaining contractual life for the share options outstanding as at 31 December

2021 is 2.08 years (2020: 2.52 years). The weighted average fair value of options granted during the

year was 0.7 pence (2020: 4.2 pence).

The following table lists the inputs to the models used for the two plans for the years ended 31

December 2021 and 31 December 2020:

July 2021

(EMP)

July-Aug 2020

(EMP)

Expected volatility %

64-75

Risk-free interest rate %

0.17

0.52-1.0

Expected life of options

(years)

WAEP – pence

2.1

7.4

Expected dividend yield

Model used

Black Scholes

Warrants

In connection with the share placement that completed on 4 October 2017, warrants were also issued

to the brokers who raised funds for that share placement. The warrants were equal in value to 2% of

the total number of new shares issued for the funds raised by each broker, exercisable at £0.0525 per

warrant for a term of three years from the date of the placing, as prescribed in the Company’s 2017

prospectus. Optiva exercised 668,000 warrants in May 2020. No warrants were issued in 2021 and

no warrants remain outstanding as at 31 December 2021.

21.

Capital and reserves

The nature and purpose of equity and reserves are as follows:

Share capital comprises the nominal value of the ordinary issued share capital of the Company.

Share premium represents consideration less nominal value of issued shares and costs directly

attributable to the issue of new shares.

Other reserves represents the value of options in connection with share-based payments, warrants

connected with share placements issued by the Company, and the value of the deemed embedded

derivative connected with the Convertible Note liability.

Reverse asset acquisition reserve is the reserve created in accordance with the acquisition of

Hemogenyx Pharmaceuticals LLC on 5 October 2017.

Foreign currency translation reserve is used to recognise the exchange differences arising on

translation of the assets and liabilities of foreign branches and subsidiaries with functional currencies

other than Pounds Sterling, as well as the revaluation of intercompany loans.

Retained earnings represent the cumulative retained losses of the Company at the reporting date.

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

22.

Trade and other payables

Group

Company

31 December

2021

31 December

2020

31 December

2021

31 December

2020

Trade and other payables

295,829

113,241

87,569

88,853

Accruals and deferred income

46,860

47,530

46,860

47,527

Total

342,689

160,771

134,429

136,380

Current liabilities

342,689

160,771

134,429

136,380

23.

Borrowings

The borrowings are comprised of borrowings and convertible notes. The Group follows IFRS 9, and

as a result, where the instruments contained liability classified embedded derivatives, an election was

taken to fair value the entire financial instrument through profit or loss rather than split out the

embedded derivative. At 31 December 2020, all borrowings were classified as current due to their

maturity being less than 12 months from the balance sheet date. At 31 December 2021, there were

no borrowings outstanding. Costs incurred in 2020 related to procuring the Mint facility in 2021 were

classified as deferred financing costs on the consolidated statement of financial position at 31

December 2020. The notes payable consist of the following:

Group & Company

Year Ended 31

December 2021

Year Ended 31

December 2020

Borrowings

Balance at 1 January

753,717

571,628

Drawdowns

191,146

Paydowns

(791,641)

Interest expense

14,354

15,206

Value of embedded derivative transferred to Other Reserves

6,972

(1,033)

Foreign exchange movement

16,598

(23,230)

Balance at 31 December

753,717

Convertible Notes

Balance at 1 January

753,065

572,539

Drawdowns

191,161

Paydowns

(791,641)

Interest expense

14,300

15,272

Value of embedded derivative transferred to Other Reserves

6,972

(941)

Foreign exchange movement

17,304

(24,966)

Balance at 31 December

753,065

Balance at 1 January

72,596

Payroll Protection Loan borrowing

79,469

Payroll Protection Loan forgiveness

(71,932)

Foreign exchange movement

(664)

(6,873)

Balance at 31 December

72,596

Total Borrowings at 31 December

1,579,378

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

A summary of the debt facilities is as follows:

Mint Transactions

In November 2020, Mint Capital Limited (“Mint”) and the Company entered into a Financing

Facility agreement (“Financing Facility”) whereby Mint conditionally agreed to subscribe for up to

£60 million in aggregate principal amount of Convertible Loan Notes pursuant to an agreement

entered into with the Company (the “Subscription Agreement”). The shareholders of the Company

approved the facility in January 2021 and a prospectus was published on 29 January 2021.

The key terms of the Convertible Loan Notes included:

▪ A principal amount of up to £60,000,000, split into denominations of £50,000 per Convertible

Loan Note. The Convertible Loan Notes were to be subscribed for at par.

▪ The Convertible Loan Notes were to be issued in up to nine tranches. A tranche of £12,000,000

in principal amount was issued on 3 February 2021. The subsequent eight tranches were to be

issuable at the sole discretion of, and in the amounts determined by, the Company at respective

intervals of 90 days after the Initial Issue Date. The aggregate maximum principal amount of the

Convertible Loan Notes was limited to £60,000,000.

▪ No interest was payable on the Convertible Loan Notes.

▪ The Convertible Loan Notes were unsecured.

▪ Each tranche of Convertible Loan Notes issued was to be redeemable at par on the date falling

36 months after the relevant Issue Date (the “Maturity Date”).

▪ Each of the Convertible Loan Notes was convertible into ordinary shares of £0.01 (1 pence) each

in the capital of the Company (“Ordinary Shares”) at any time during the period commencing on

the fifth business day following the relevant Issue Date and ending at 5.00 p.m. London time on

the business day immediately prior to the relevant Maturity Date (the “Conversion Period”).

▪ The price used for the conversion (the “Conversion Price”) was equal to a 10 per cent discount

to the lesser of (i) 125 per cent. of the closing-bid price as reported by Bloomberg for one

Ordinary Share one trading day before the relevant Issue Date (subject to adjustment to reflect

any sub-division or consolidation of the Ordinary Shares) and (ii) the lowest closing bid-price as

reported by Bloomberg for an Ordinary Share from the three consecutive trading days ending on

the day prior to the date of service of the relevant conversion notice (or if such conversion notice

was served after 4.35pm on any such date, then the three consecutive trading days ending on the

day such conversion notice was served. In no event was the Conversion Price to be less than the

nominal value of an Ordinary Share.

▪ A holder was not permitted to submit a conversion notice in respect of the Convertible Loan

Notes if the total Ordinary Shares held by the holder following the execution of such conversion

notice would exceed 29.9% of the Company’s total Ordinary Shares.

▪ If the Company were to commit an “event of default” then the notes could be redeemed at 114-

120% of the principal amount of the convertible loan at the option of the holder.

▪ The Company had the ability to redeem the convertible loan under certain circumstances at 114%

of the principal amount of the convertible loan.

▪ Subject to limited exceptions, the Convertible Loan Notes were not transferable.

▪ Prior to conversion, the Convertible Loan Notes did not entitle the holder to any voting rights in

the Company.

Arrangement fee

The Company agreed to pay a fee of 5% of the aggregate principal value of the Convertible Loan

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

Notes issued to the arranger for the Facility (the “Arranger”). The company issued 7,741,935 shares

in February 2021 as an arrangement fee to the arranger of the Financing Facility.

Draw Down

The Company received £12,000,000 from the first drawn down of the Financing Facility agreement

in February 2021. The price of the conversion of the convertible loan notes issued under the

Financing Facility agreement into common shares of the Company, as defined by the Financing

Facility agreement, was the lesser of (i) 8.4375p and (ii) 90% of the lowest closing bid price as

reported on Bloomberg from the three closing bid prices immediately preceding a conversion.

The Company received a conversion notice from Mint in respect of £650,000 in principal amount of

Convertible Loan Notes and issued 13,131,313 shares to Mint in March 2021. Further conversion

notices were received from Mint in respect of £900,000 and £950,000 in principal amount of

Convertible Loan Notes. The Company issued a further 14,285,714 shares to Mint in March 2021,

and 24,547,803 shares in April 2021; both of these allotments of shares were admitted to trading on

the London Stock Exchange’s main market in April 2021. Further conversion notices were received

from Mint in respect of £900,000 and £500,000 in principal amount of Convertible Loan Notes. The

Company issued a further 29,850,746 shares to Mint in April 2021, and 22,222,222 shares in May

2021; both of these allotments of shares were admitted to trading on the London Stock Exchange’s

main market in May 2021.

The Company located a new investor to purchase the remaining position of Mint and received a

conversion notice from the new investor in respect of £6,500,000 in principal amount of Convertible

Loan Notes and issued 433,333,333 shares to such investor in May 2021. The Company repaid the

remaining £1,600,000 under the facility and the facility was terminated.

During the year ended 31 December, 2021, the Company recognised £3,883 of financing related

costs related to the stated interest rate on the convertible debt through the date of conversion or

repayment. During the year ended 31 December, 2021, the Company recognized £1,343,245 of

financing related costs, including the fair value of the shares issued to arrangers to obtain the credit

facility from Mint. During the year ended 31 December, 2021, the Company also recognised

£1,208,592 of non-cash financing related costs representing the fair value of shares issued in excess

of the outstanding principal and accrued interest at the date of the conversion.

Convertible Loan Facilities

During 2018 Orgenesis entered in to two debt facility agreements with the Group, one each with

Hemogenyx Pharmaceuticals LLC and Immugenyx LLC:

1) On 7 November 2018 the Group entered into a loan agreement with Orgenesis Inc., an

organisation with which the Group had a collaboration agreement. The loan amount was for not

less than US$1,000,000 with the proceeds of the loan to be used solely for the development of

the cell therapy technology in accordance with the plan of the collaboration agreement.

Drawdowns totalling US$1,000,000 had been made with Hemogenyx Pharmaceuticals LLC

receiving the funds. The loan carried an interest rate of 2% and had a term of three years.

Orgenesis had the option to convert both principal and accrued interest into equity in

Hemogenyx-Cell at any time prior to maturity. Hemogenyx-Cell SPRL (“Hemo-Cell”) was a

wholly owned Belgian entity (dissolved in 2022) and was incorporated in April 2019 at which

point this loan facility was treated as a borrowing in accordance with the provisions of IAS39.

The loan was repaid in full in November 2021.

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

2) On 7 November 2018 the Group entered into a loan agreement, through its wholly owned

subsidiary Immugenyx LLC, with Orgenesis Inc., an organisation with which the Group had a

collaboration agreement. The loan amount was for not less than US$1,000,000 with the proceeds

of the loan to be used solely for the development of the cell therapy technology in accordance

with the plan of the collaboration agreement. Drawdowns totalling US$1,000,000 had been made.

The loan carried an interest rate of 2% and had a term of three years. Orgenesis had the option to

convert both principal and accrued interest into equity in Immugenyx LLC at any time prior to

maturity. This loan has been treated in accordance with the provisions of IAS39. The loan was

repaid in full in November 2021.

In November 2021 the Company repaid a total of US$2,110,761 (£1,583,281) in principal and

interest to settle the convertible loan facilities from Orgenesis Inc.

Paycheck Protection Program Loan

On 1 May 2020, the Company received loan proceeds in the amount of $98,947 under the Paycheck

Protection Program (“PPP”). The PPP, established as part of the Coronavirus Aid, Relief and

Economic Security Act, as amended (“CARES Act”), provides for loans to qualifying businesses for

amounts up to 2.5 times of the average monthly payroll expenses of such qualifying business. The

loans and accrued interest are forgivable after certain time periods further defined in the CARES Act

(the “Covered Period”) as long as the borrower uses the loan proceeds for eligible purposes, including

payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness

will be reduced if the borrower terminates employees or reduces salaries during the Covered Period.

The loan was forgiven in April 2021 by being converted into a grant at the election of the Company.

The Company qualified for this conversion as at least 60% of the amount of the loan was applied to

payroll expenditure and there was no reduction in employee headcount, and it was therefore included

in other income.

24.

Related party disclosures

There were no related party disclosures other than Directors’ remuneration as disclosed in the

Remuneration Report section of the Directors’ Report. There are no key management personnel other

than the Directors and the Company Secretary.

25.

Financial instruments

The Group’s financial instruments consist of cash, amounts receivable, accounts payable and accrued

liabilities and deferred payment.

Fair value of financial assets and liabilities

Fair values have been determined for measurement and/or disclosure purposes based on the following

methods. When applicable, further information about the assumptions made in determining fair

values is disclosed in the notes specific to that asset or liability.

The carrying amount for cash, accounts receivable, and accounts payable and accrued liabilities on

the statement of financial position approximate their fair value because of the limited term of these

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

instruments. The fair value of deferred payment approximates its fair value. The investment is carried

at cost as it is not traded on an active market.

Fair value hierarchy

Financial instruments that are measured subsequent to initial recognition at fair value are grouped in

Levels 1 to 3 based on the degree to which the fair value is observable:

• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active

markets for identical assets or liabilities; and

• Level 2 fair value measurements are those derived from inputs other than quoted prices included

within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or

indirectly (i.e. derived from prices); and

• Level 3 fair value measurements are those derived from valuation techniques that include inputs

for the asset or liability that are not based on observable market data (unobservable inputs).

The Group did not have any financial instruments in Level 1, 2 and 3.

Financial risk management objectives and policies

The Company has exposure to the following risks from its use of financial instruments:

• Credit risk

• Liquidity and funding risk

• Market risk

The following table sets out the amortised costs categories of financial instruments held by the

Company as at the year ended 31 December 2021 and year ended 31 December 2020:

Group

Company

31 December

2021

31 December

2020

31 December

2021

31 December

2020

Assets

Trade and other receivables,

except prepayments and VAT

1,696

5,296

310

Cash and cash equivalents

6,840,969

1,812,299

111,245

1,036,214

6,842,665

1,817,595

111,555

1,036,214

Liabilities

Trade and other payables

(295,829)

(113,241)

(87,569)

(88,853)

Lease liabilities

(10,152)

(48,754)

Borrowings

(1,579,378)

(305,981)

(1,707,741)

(87,569)

(88,853)

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

Group

1 January

2021

Cash flows

Non-cash changes

December

2021

Adjustment to

reserve

PPP Loan

Forgiveness

Foreign

exchange

movements

Interest

charge

Short-term

borrowings

(1)

1,579,378

(1,583,281)

13,944

(71,932)

33,237

28,654

Long-term

borrowings

Total

1,579,378

(1,583,281)

13,944

(71,932)

33,237

28,654

Group

1 January

2020

Cash flows

Non-cash changes

December

2020

Reclassification

to reserve

Foreign exchange

movements

Interest

charge

Short-term

borrowings

(1)

1,144,167

461,776

(1,891)

(54,949)

30,275

1,579,378

Long-term

borrowings

Total

1,144,167

461,776

(1,891)

(54,949)

30,275

1,579,378

(1) Borrowings reclassified to short term since all balance are due within twelve months of

December 31, 2020. At December 31, 2021 the principal and interest on borrowings was paid

in full.

Credit risk

The Group had receivables of £0 owing from customers (31 December 2020: £3,668). All bank

deposits are held with Financial Institutions with a minimum credit rating of B+.

Liquidity and funding risk

The Group regularly reviews its major funding positions to ensure that it has adequate financial

resources in meeting its financial obligations. The Group takes liquidity risk into consideration when

deciding its sources of funds. The principle liquidity risk facing the business is the risk of going

concern which has been discussed in Note 2.

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

Market risk

Interest rate risk

Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in

market interest rates. The Group's income and operating cash flows are substantially independent of

changes in market interest rates as the Group has no significant interest-bearing assets. The

borrowings issued at fixed rates expose the Group to fair value interest rate risk. The Company's

management monitors the interest rate fluctuations on a continuous basis and acts accordingly.

The Company has floating rate financial assets in the form of deposit accounts with major banking

institutions; however, it is not currently subjected to any other interest rate risk.

Based on cash balances as above as at the statement of financial position date, a rise in interest rates

of 1% would not have a material impact on the profit and loss of the Company and such is not

disclosed.

The interest rates on the Convertible Notes are fixed and hence a rise in interest rates of 1% would

not have a material impact on the profit and loss of the Group and such is not disclosed.

In relation to sensitivity analysis, there was no material difference to disclosures made on financial

assets and liabilities.

At the reporting date the interest rate profile of interest-bearing financial instruments was:

Group

Company

31 December

2021

31 December

2020

31 December

2021

31 December

2020

Financial Assets

Cash and cash equivalents

6,840,969

1,812,299

111,245

1,036,214

Financial Liabilities

Borrowings

(1, 579,378)

Foreign currency risk

The Group operates internationally and has monetary assets and liabilities in currencies other than

the functional currency of the operating company involved.

The Group seeks to manage its exposure to this risk by ensuring that where possible, the majority of

expenditure and cash of individual subsidiaries within the Group are denominated in the same

currency as the functional currency of that subsidiary.

The Group has not entered into any derivative instruments to manage foreign exchange fluctuations.

The following table shows a currency of net monetary assets and liabilities by functional currency of

the underlying companies for the years ended 31 December 2021 and 31 December 2020:

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

31 December 2021

Functional Currency

Currency of net

monetary

assets/(liabilities)

Pounds

Sterling

US Dollars

Euro

Total

Pounds Sterling

99,050

US Dollars

12,197

6,709,888

6,722,085

Euros

19,834

Total

111,245

6,709,888

19,834

6,840,969

31 December 2020

Functional Currency

Currency of net

monetary

assets/(liabilities)

Pounds Sterling

US Dollars

Euro

Total

Pounds Sterling

1,024,010

US Dollars

12,204

(70,670)

(58,466)

Euros

(753,623)

Total

1,036,214

(70,670)

(732,623)

232,920

Capital risk management

The Group defines capital as the total equity of the Company. The Group’s objectives when

managing capital are to safeguard the Group’s ability to continue as a going concern in order to

provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital

structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid

to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

Fair value of financial assets and liabilities

There are no material differences between the fair value of the Group’s financial assets and liabilities

and their carrying values in the financial statements.

26.

Commitments

Licences

Milestone and royalty payments that may become due under licence agreements are dependent on,

among other factors, clinical trials, regulatory approvals and ultimately the successful development

of new drugs, the outcomes and timings of which are uncertain.

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

For the licence from Cornell University to the patent of the Hu-PHEC technology, the Group’s

minimum future payments contingent upon meeting certain development, regulatory and

commercialisation milestones total £764,762 ($1,035,000) plus £369,450 ($500,000) on receipt of

marketing approval from each additional market excluding the United States of America and the

European Union. Upon commencement of commercial production, the Group will pay a royalty

between 2 to 5% on all net sales. In addition, the Group pays an annual licence maintenance fee of

up to £55,418 ($75,000) until the commercial sales are achieved.

For the licence to Eli Lilly and Company’s (“Lilly”) contributions to the intellectual property in the

CDX bispecific antibody, future payments will be contingent upon meeting certain similar

development, regulatory and commercialisation milestones and so do not meet the definition of

commitments pending further developments. This licence is subject to an up-front payment to Lilly

of $250,000 and milestone payments of up to $1 million through to Phase II clinical trials. Lilly is

also eligible to receive substantial additional milestone payments based on the achievement of

prespecified milestones, as well as tiered single-digit royalties on sales. In addition, the Company

will pay Lilly a percentage of any cash payments received in respect of any sublicence of the licensed

intellectual property.

Leases

In August 2021, Hemogenyx LLC entered into a lease for a 9,357 square foot purpose-built

laboratory for eight years beginning on January 15, 2022. The lease contains escalating monthly

payments ranging from approximately $64,300 to $76,500 per month over the lease term. The Group

paid a security deposit of £138,913 ($188,005) during the year ended 31 December 2021 for such

facility lease.

Service agreements

In December 2021, Hemogenyx Pharmaceuticals LLC entered into a service agreement to establish

Research Cell Banks (RCBs) for production of the Company’s proprietary recombinant protein(s)

encoded by cDNAs. Under the terms of the agreement, Hemogenyx Pharmaceuticals LLC must pay

(in Swiss Francs) CHF 590,000 in aggregate. After 31 December 2021 through 29 April 2022, which

is the date the financial statements were available to be issued, Hemogenyx Pharmaceuticals LLC

has paid £91,046 (CHF 112,500) under this agreement.

In December 2021, Hemogenyx Pharmaceuticals LLC entered into service agreements to produce

components of the Company’s CAR-T product candidate. Under the terms of the agreement,

Hemogenyx Pharmaceuticals LLC must pay an aggregate of £1,559,005 ($2,109,957) in milestone

payments during the term of production anticipated to be made by the end of 2022. After 31

December 2021 through to 29 April 2022, which is the date the financial statements were available

to be issued, Hemogenyx Pharmaceuticals LLC has paid £628,927 ($851,190) under these

agreements.

Capital equipment

The Company has taken delivery for evaluation purposes of equipment to the value of £428,425

($579,830). This equipment primarily comprises a bioreactor, an automated cell processing system,

and a cell manufacturing system. This would enable the Company to manufacture its cell therapy

products in-house with full control over processes and timing, using the clean rooms in its new

purpose-built laboratory. Based on service fee estimates provided to the Company, having this

capability could save the Company at least $2 million for the cells required for clinical trials of the

Hemogenyx Pharmaceuticals plc

Annual Report & Financial Statements for the

Year Ended 31 December 2021

CAR-T product candidate alone, when compared with outsourcing this work to third parties. It could

additionally give the Company a source of revenue by providing cell manufacturing services to other

biotechnology companies.

27.

Ultimate controlling party

The Directors have determined that there is no controlling party as no individual shareholder holds a

controlling interest in the Company.

28.

Subsequent events

In January 2022, the Company and Selexis SA signed a service agreement to develop the cell line

for the Company’s CDX bispecific antibody for the treatment of acute myeloid leukemia (AML).

Under the agreement, the Company will leverage Selexis’ proprietary SUREtechnology Platform™,

a suite of cell line development tools and technologies that significantly reduces the time, effort, and

costs associated with developing high-performance mammalian cell lines.

In February 2022, the Company received notification from the Food and Drugs Administration

(“FDA”) that the proposed pre-Investigational New Drug (“pre-IND”) meeting relating to the

Company’s lead product candidate Chimeric Antigen Receptor (“CAR”) T-cells (“HEMO-CAR-T”)

is to be deferred until May 2022 as a result of a general FDA policy prioritising work on COVID-

19. The deferment of the meeting is not causing any delay in the development of the product

candidate.

In March 2022, the Company announced that it has achieved proof of concept (“POC”) for its

Chimeric Bait Receptor (“CBR”) platform technology and filed a seminal provisional patent

application protecting its rights to the intellectual property (“IP”) covering CBR.

On 30 March 2022, the Company dissolved Hemogenyx-Cell SPRL. This dissolution will not have

any effect on the financial statements.

29.

Copies of the annual report

Copies of the annual report will be available on the Company’s web site at https://hemogenyx.com

and from the Company’s registered office, 5 Fleet Place London EC4M 7RD.