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Psych Capital Plc
Annual Report • Oct 31, 2024
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Annual Report
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National Storage Mechanism | Additional information 
RNS Number : 4950K
Shortwave Life Sciences Plc
31 October 2024
SHORTWAVE LIFE SCIENCES PLC
("Shortwave" or "the Company")
ANNUAL REPORT AND ACCOUNTS FOR THE YEAR ENDED 30 APRIL 2024
AND
RESIGNATION OF DIRECTOR
Shortwave Life Sciences Plc, formerly Psych Capital plc., (AQSE: PSY), (or "SWLS", or "the Company") pioneering breakthrough therapies that transform the landscape of mental health care , is pleased to announce its results for the year ended 30 April 2024.
Highlights:
· In June 2023, the Company announced the agreement to acquire 100% of the issued share capital of Shortwave Pharma Inc. ("Shortwave Pharma", or "SWP"), a biopharmaceutical drug-development company, developing breakthrough therapies to address unmet medical needs in the field of mental health, with focus on the area of eating disorders, for £ 2.8 m through a combination of cash and new ordinary shares.
· The Company hosted the second PSYCH Symposium at The British Museum on 6 July 2023, with over 300 delegates in attendance, with Shortwave Pharma CEO Rivki Stern Youdkevich joining Christian Angermayer, Robin Carhart-Harris, Charlotte Nichols, MP and Mikuláš Peksa MEP on stage. The event was supported by Cybin, Compass Pathways, Clerkenwell Health, FTI Consulting and Negev Capital.
· On 7 November 2023, the Company announced the successful completion of the Shortwave Pharma acquisition deal, formally completing the acquisition of Shortwave Pharma, solidifying the Company's position as a leader in the development of transformative therapies and signalling its pivot towards operational drug development in the field of mental health
· The PSYCH platform grew the subscriber base by 50% to 57,000.
DIRECTORS' STATEMENT
We are pleased to present the results for Shortwave Life Sciences Plc (or "SWLS", or "the Company") (formerly Psych Capital Plc) for the year ended 30 April 2024.
SWLS's mission is pioneering breakthrough therapies that transform the landscape of mental health care. It is dedicated to developing novel drug combinations and delivery methods for patients with life-threatening, unmet mental health needs, and to bridging the discovery gap between early-stage drug innovation and established pharma . With a team of dedicated experts and a commitment to innovation, Shortwave Life Sciences is uniquely positioned to introduce and develop solutions for the complex challenges of mental health disorders worldwide.
It is committed to identifying, operating and developing early-stage, breakthrough initiatives which revolutionize treatment strategies in mental health care, with an initial focus on eating disorders.
· During the year, the Company focused on its mission of acquiring companies conducting clinical research programs to develop psychedelic drug development and therapeutic treatments. It was successful in completing its first acquisition in the field.
· The Company continued to develop its business-to-business media, conferencing and content platform (PSYCH) for the psychedelic science and healthcare industry.
Overview
During the year, and after a thorough and exhaustive search of potential candidates for acquisition in the field of innovative treatments and solutions in the field of mental health, and having leveraging its global scope for deal flow, SWLS focused its efforts on completing the acquisition of Shortwave Pharma Inc. ("Shortwave") .
On 19 June 2023, the Company announced the agreement to acquire 100% of the issued share capital of Shortwave, a biopharmaceutical drug-development company, developing breakthrough therapies to address unmet medical needs in the field of mental health, with focus on the area of eating disorders, for £ 2.8 m through a combination of cash and new ordinary shares.
Shortwave Pharma's initial program is a transformative therapy for anorexia nervosa, the most fatal eating disorder, a complex and often underserved area of healthcare. Eating disorders, including anorexia nervosa, bulimia nervosa, and binge-eating disorder, affect millions of individuals worldwide. According to the World Health Organization, it is estimated that approximately 9% of the global population suffers from an eating disorder, highlighting the significant market opportunity for effective treatments.
Shortwave Pharma developed a novel delivery method and drug combination for its initial eating disorders programme for anorexia nervosa. It has completed the preliminary early-stage activities that demonstrate the chemistry, manufacturing, and controls ("CMC") and preclinical abilities of its drug delivery product. The final product meets regulatory requirements for the early phases of the clinical studies. The preclinical programme has so far demonstrated not only the safety profile of the drug, but also the ability of the Shortwave Pharma's product to bring the active ingredients to the blood flow without the first pass metabolism, which, Shortwave Pharma believes, will dramatically improve the efficacy of the drug and will allow a better safety profile.
The terms of the deal incorporated an initial consideration of 71,170,131 new Ordinary Shares, 9,015,100 new Ordinary shares pursuant to deferred consideration shares 9,015,100, new Ordinary Shares of 7,499,998 pursuant to deferred guarantee shares of 7,499,998, and a cash payment of US$120,000. The consideration shares are due to be issued for trading on the AQSE Growth imminently, subject to the completion of regulatory filings with the tax authorities in Israel.
The Company hosted the second PSYCH Symposium at The British Museum on 6 July 2023, with over 300 delegates in attendance, with Shortwave Pharma CEO Rivki Stern Youdkevich joining Christian Angermayer, Robin Carhart-Harris, Charlotte Nichols, MP and Mikuláš Peksa MEP on stage. The event was supported by Cybin, Compass Pathways, Clerkenwell Health, FTI Consulting and Negev Capital.
On 7 November 2023, The Company announced the completion of its acquisition of life science company Shortwave Pharma Inc. ("Shortwave Pharma"). As part of the deal, Rivki Stern Youdkevich joined as CEO of the Company and as Director, and Roy Kait joined the Board of Directors of SWLS as non-executive director. Upon completion of the Shortwave acquisition, Jospeh Colliver, former Chairman of Psych Capital, resigned.
On 5 April 2024, William Potts, co-founder of Psych Capital and Chief Investment Officer, stepped down from his role as a director of the Company but remained as a Strategic Adviser of the Company.
Post year end
On 6 June 2024, the Company strategically rebranded and changed its name from Psych Capital plc to "Shortwave Life Sciences Plc", reflecting the Company's enhanced commitment to the advancement of innovative solutions through drug development for mental health care, including via psychedelics-based therapies, with a focus on eating disorders. Relying on its combined finance and pharma expertise, the Company aims to further identify and grow early stage, best-in class candidates for innovative treatments delivering impactful solutions in mental health care.
On 8 July 2024, the Company announced that its PCT application no. PCT/IL2023/050442 entitled: "A Mucoadhesive Film Comprising a Pharmaceutically Active Agent And Uses Thereof" has received a positive report from the PCT examining authority acknowledging all of its claims as novel, non-obvious and industrially applicable. This major milestone confirming its mucoadhesive buccal film as free of prior art enables the continued development of the Company's first drug product as well as opens it up for additional commercialization opportunities in licensing the film to potential pharma partners.
On 19 September 2024, Shortwave Life Sciences achieved a significant breakthrough in its drug development path, announcing positive safety results from its latest pre-clinical pharmacodynamics study, demonstrating the safety of its proprietary psilocybin-based drug combination at elevated doses. The study results showed no adverse effects, weight changes, or behavioral changes following the psychedelic effects. All subjects remained healthy and unaffected during the trial, marking a strong foundation for future clinical development.
Outlook and prospects
As the gap between effective mental health care treatments, and the growing worldwide need in this area continues to widen, innovative solutions must be found, with psychedelics-based drugs and delivery being strong candidates. Patients and the general public are becoming increasingly aware and exposed to the development, research, and distribution of psychedelic compounds for therapeutic purposes. Backed by growing scientific validation as more companies reach later-stage clinical trials, and with regulations evolving worldwide, psychedelics-based treatments and medication present a unique opportunity within the expanding healthcare industry, and specifically, for mental healthcare.
Analysts, including those at companies like Bloomberg, have predicted that the psychedelic drug market could grow significantly, potentially reaching a market size exceeding $8 billion by 2028. This growth is expected as a result of new state legislation and increased investment in research and development of psychedelic therapies
( Filament Health , 4th Edition of The Psychedelics as Medicine Report. ) With this, the outlook for the psychedelic industry, alongside the biotech sector as a whole, is positive as we broach 2025.
Eating disorders, including anorexia nervosa, bulimia nervosa, and binge-eating disorder, represent a significant global health challenge, affecting millions of individuals worldwide and growing at an alarming rate. Some of these disorders, such as anorexia nervosa, have no approved pharmacological solution to date. Shortwave Life Sciences is committed to leveraging cutting-edge drug design, novel delivery methods, and decades of drug development expertise to develop and support transformative therapies for these debilitating conditions.
It is with this outlook as well as the continually widening gap between supply and demand for effective treatments especially in the field of eating disorders, that the Company has decided to enhance its focus on innovative drug development and to rebrand as "Shortwave Life Sciences Plc". Relying on its combined finance and pharma expertise, the Company will aim to further identify and grow early stage, best-in class candidates for innovative treatments delivering impactful solutions in mental health care.
The directors are confident that the Company's strategy and is set to benefit from the growth in the psychedelic industry in 2025 and beyond.
Financial Review
Shortwave Life Sciences Plc is pleased to announce the Company's annual results for the year to 30 April 2024.
Revenues of £56,694 were reported in the year, a decrease of 70% on the prior year (2023: £188,882) due to the on-going macro-economic environment which has negatively impacted demand for data, content and symposiums and has adversely affected appetite for sponsorships, advertising and marketing in the psychedelic sector. The gross profit margin declined to 8% (2023: 70.4%) which was mainly due to the high fixed cost component of the PSYCH events. Administrative expenses decreased by £34,204 to £644,756 (2023: £678,957), despite the fees incurred and work performed around the SWP acquisition, with a significant decline in consultancy fees, but a minor increase in salaries reflecting a larger executive team for the period around the acquisition. Non-cash charges of £109,168 (2023: £75,000) relating to the amortisation of intangible assets including Goodwill formed through the acquisition of SWP and the continued amortization of the PSYCH media platform during the year. Expenditure on exceptional items of £83,459 in 2023 related to professional fees on the Admission to the AQSE. A share-based payment non-cash charge of £206,136 (2023: £137,253) was recorded in the year, for the award of share options to directors and advisors following the SWP acquisition.
An operating loss of £846,338 (2022: £963,755) was recorded in the year. Non-cash fair value loss on the investment in Awakn Life Sciences Corp of £46,698 (2023: loss of £247,037), combined with an impairment charge of £189,875 on the Psych platform asset which has become external to the Company's new focus on drug development, results in a statutory pre-tax loss of £1,082,911 reported in the year (2023: £1,260,299), and a basic loss per share of £0.0033 (2023: £0.0045).
Net assets for the group totalled £2,626,892 at 30 April 2024 (2023: £805,445), incorporating £72,300 in cash and cash equivalents (2023: £479,491). The fair value of the investment in Awakn declined by £46,698 to £44,807 at the year-end (2023: £91,504). Intangible assets relate to the acquisition of the PSYCH platform, had a net book value of £10,000 (2023: £262,993), after amortisation and impairment, and were increased by £2,903,942 with the acquisition of SWP, representing Intellectual property and goodwill emanating from the acquisition. Trade and other receivables declined to £16,626 (2023: £64,267), predominately relating to reduction in prepayments for the PSYCH Symposium and event activity in the year. Trade and other payables reduced to £77,453 (2023: £92,810).
The group incurred net cash outflows from operations of £492,054 (2023: £623,543), a decrease of £131,489, as a result of larger non-cash impairment and amortisation in the year related to the intangible assets formed by the acquisition of SWP. The Company issued 88,257,427 shares mostly surrounding the share-based acquisition of SWP which includes ordinary and deferred shares.
The Directors have prepared a cashflow forecast which indicates that additional funds will be required during the year to continue to operate as per the forecast. There are ongoing activities to raise the necessary funds but in the absence of the required funding being in place this condition indicates the existence of a material uncertainty which may cast significant doubt over the company's ability to continue as a going concern.
The Company has 370,790,764 ordinary shares in issue.
Stephen Murphy
Director
31 October 2024
Resignation of Director
The Company announces that Roy Kait has resigned from the Company, effective 30 October 2024. Rivki Stern, CEO, commented: "Roy has been pivotal in the founding and advancing of Shortwave, and we extend our deepest thanks to Roy for all his work and dedication."
Extract from the auditor's report:
" Emphasis of matter on investments and intangible assets
We draw attention to the value of intangible assets in the Consolidated Statement of Financial Position and the value of investment in the subsidiary in the Company Statement of Financial Position. The value of intangible assets arises on consolidation and represents the excess between the net asset value of the underlying subsidiary on acquisition and the cost of investment. The value of investment in the subsidiary represents the historic cost of acquisition of investments.
Management's assessment of impairment includes a review of the net present value of future potential cashflows of the underlying assets. The basis of these valuations include a number of variables within the calculations that are subjective and based on professional judgments of the directors. This also includes the expected potential around the success of the future drug development programme and commercialisation of the Group's products.
While we have assessed management's judgements and application of estimates in their calculations and consider these to be reasonable, as set out in the key audit risks below, the projections relate to uncertain future events and outcomes which if unsuccessful could result in a material change to the valuations which could result in an impairment of the investments and intangible assets.
Our opinion is not modified in respect of this matter.
Material uncertainty related to going concern
We draw attention to note 2.2 in the financial statements, which indicates that the Group's ability to continue as a going concern is dependent on future fundraisings within the next twelve months from the approval of the financial statements.
As stated in note 2.2, this event or condition, indicates that a material uncertainty exists that may cast significant doubt on the Group's ability to continue as a going concern. Our opinion is not modified in respect of this matter.
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 ability to continue to adopt the going concern basis of accounting included:
· Reviewing management's assessment of the going concern basis drawn up to 31 December 2025, including their evaluation of future funding requirements and funding availability, while challenging their key assumptions and inputs to ensure reasonableness and appropriateness;
· Assessing the Group's liquidity and the impacts on the reliability of the going concern evaluation;
· Assessing whether key assumptions and inputs to the model were reasonable, in light of the Group's relevant principal risks and uncertainties, and conducting our independent assessment of those risks; and
· Conducting sensitivity analysis on management's key assumptions and inputs against plausible scenarios.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report."
The Directors of the Company accept responsibility for the contents of this announcement.
For media inquiries, please contact:
Enquiries:
Company:
Rivki Stern : +972 547621621
Peterhouse Capital Limited:
Corporate Adviser:
+ 44 (0) 20 7469 0930
Corporate Broker:
+44 (0) 20 7220 9797
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 APRIL 2024
| £ | £ | ||
| Revenue | 56,694 | 188,882 | |
| Cost of sales | (52,140) | (55,944) | |
| Gross profit | 4,554 | 132,938 | |
| Administrative expenses | (644,756) | (678,957) | |
| Exceptional operating items | - | (83,459) | |
| Share based payments | (206,136) | (334,277) | |
| Operating loss | (846,338) | (963,755) | |
| Fair value loss on fixed asset investments | (46,698) | (247,037) | |
| Impairment loss on intangible assets | (189,875) | (49,507) | |
| Loss on ordinary activities before taxation | (1,082,911) | (1,260,299) | |
| Tax credit | 12,203 | - | |
| Total comprehensive loss for the financial year | (1,070,708) | (1,260,299) | |
| Basic loss per share attributable to owners of the company | (0.0033) | (0.0045) |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 30 APRIL 2024
| 2024 | 2023 | ||
| £ | £ | ||
| Non-current assets | |||
| Intangible assets | 2,913,942 | 262,993 | |
| Investments | 44,807 | 91,504 | |
| Total non-current assets | 2,958,749 | 354,497 | |
| Current assets | |||
| Cash and cash equivalents | 72,300 | 479,491 | |
| Trade and other receivables | 16,626 | 64,267 | |
| Total current assets | 88,926 | 543,758 | |
| Current liabilities | |||
| Trade and other payables | (77,453) | (92,810) | |
| Total liabilities | (77,453) | (92,810) | |
| Net current assets | 11,473 | 450,948 | |
| Total assets less current liabilities | 2,970,222 | 805,445 | |
| Provisions for liabilities | |||
| Deferred tax | (343,330) | - | |
| Net assets | 2,626,892 | 805,445 | |
| Issued capital and reserves attributable to owners of the parent | |||
| Issued share capital | 378,290 | 290,033 | |
| Share premium | 4,278,594 | 1,680,832 | |
| Share based payments reserve | 844,948 | 638,812 | |
| Retained earnings | (2,874,940) | (1,804,232) | |
| Total equity | 2,626,892 | 805,445 |
These financial statements were approved and authorised by the Board on 31 October 2024 and signed on its behalf by:
COMPANY STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 30 APRIL 2024
| 2024 | 2023 | ||
| £ | £ | ||
| Non-current assets | |||
| Intangible assets | 10,000 | 262,993 | |
| Investments | 2,811,950 | 91,504 | |
| Total non-current assets | 2,821,950 | 354,497 | |
| Current assets | |||
| Cash and cash equivalents | 22,093 | 479,491 | |
| Trade and other receivables | 28,247 | 64,267 | |
| Total current assets | 50,340 | 543,758 | |
| Current liabilities | |||
| Trade and other payables | (69,605) | (92,810) | |
| Total liabilities | (69,605) | (92,810) | |
| Net current liabilities | (19,265) | (450,948) | |
| Net assets | 2,802,685 | 805,445 | |
| Issued capital and reserves attributable to owners of the parent | |||
| Issued share capital | 378,290 | 290,033 | |
| Share premium | 4,278,594 | 1,680,832 | |
| Share based payments reserve | 844,949 | 638,812 | |
| Retained earnings | (2,699,148) | (1,804,232) | |
| Total equity | 2,802,685 | 805,445 |
These financial statements were approved and authorised by the Board on 31 October 2024 and signed on its behalf by:
S tephen Murphy
Director
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 APRIL 2024
| Share capital |
Share premium |
Share based payments reserve | Retained earnings |
Total equity |
||
| £ | £ | £ | £ | £ | ||
| Transactions with equity owners | ||||||
| As at 30 April 2022 | 183,333 | 836,667 | - | (543,933) | 476,067 | |
| Transactions with equity owners | ||||||
| Share-based payments | 90,500 | 384,500 | - | - | 475,000 | |
| Ordinary shares issued | 16,200 | 793,800 | - | - | 810,000 | |
| Transaction costs | - | (29,600) | - | - | (29,600) | |
| Share options/warrants issued | - | (304,535) | 638,812 | - | 334,277 | |
| Loss for the year | - | - | - | (1,260,299) | (1,260,299) | |
| As at 30 April 2023 | 290,033 | 1,680,832 | 638,812 | (1,804,232) | 805,445 | |
| Transactions with equity owners | ||||||
| Share-based payments | 572 | 11,048 | - | - | 11,620 | |
| Ordinary and deferred shares issued | 87,685 | 2,586,714 | - | - | 2,674,399 | |
| Share based payment charge | - | 206,136 | - | 206,136 | ||
| Loss for the year | - | - | - | (1,070,708) | (1,070,708) | |
| As at 30 April 2024 | 378,290 | 4,278,594 | 844,948 | (2,874,940) | 2,626,892 |
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 APRIL 2024
| Share capital |
Share premium |
Share based payments reserve | Retained earnings |
Total equity |
||
| £ | £ | £ | £ | £ | ||
| Transactions with equity owners | ||||||
| As at 30 April 2022 | 183,333 | 836,667 | - | (543,933) | 476,067 | |
| Transactions with equity owners | ||||||
| Share-based payments | 90,500 | 384,500 | - | - | 475,000 | |
| Ordinary shares issued | 16,200 | 793,800 | - | - | 810,000 | |
| Transaction costs | - | (29,600) | - | - | (29,600) | |
| Share options/warrants issued | - | (304,535) | 638,812 | - | 334,277 | |
| Loss for the year | - | - | - | (1,260,299) | (1,260,299) | |
| As at 30 April 2023 | 290,033 | 1,680,832 | 638,812 | (1,804,232) | 805,445 | |
| Transactions with equity owners | ||||||
| Share-based payments | 572 | 11,048 | - | - | 11,620 | |
| Ordinary and deferred shares issued | 87,685 | 2,586,714 | - | - | 2,674,399 | |
| Share based payment charge | - | - | 206,137 | - | 206,137 | |
| Loss for the year | - | - | - | (894,916) | (894,916) | |
| As at 30 April 2024 | 378,290 | 4,278,594 | 844,949 | (2,699,148) | 2,802,685 |
CONSOLIDATED AND PARENT COMPANY STATEMENT OF CASHFLOWS
FOR THE YEAR ENDED 30 APRIL 2024
| Group 2024 |
Parent Company 2024 |
Group and Parent Company 2023 |
||
| £ | £ | £ | ||
| Cash flows from operating activities | ||||
| Loss before tax | (1,070,708) | (894,916) | (1,260,299) | |
| Adjusted for: | ||||
| Fair value loss on investments | 46,698 | 46,698 | 247,037 | |
| Amortisation of intangible assets | 109,168 | 63,118 | 75,000 | |
| Impairment of intangible assets | 189,875 | 189,875 | 49,507 | |
| Share-based charges - share options and warrants | 217,756 | 217,756 | 334,277 | |
| Decrease in trade and other receivables | 47,641 | 36,020 | 86,302 | |
| Decrease in trade and other payables | (20,281) | (23,205) | (155,367) | |
| Tax credit | (12,203) | |||
| Net cash used in operating activities | (492,054) | (364,654) | (623,543) | |
| Cash flows from investing activities | ||||
| Consideration paid for acquisition of subsidiaries | (92,744) | (92,744) | - | |
| Cash arising on acquisition | 177,607 | - | - | |
| Net cash generated from/(used in) investing activities | 84,863 | (92,744) | - | |
| Cash flows from financing activities | ||||
| Proceeds from the issue of shares | - | - | 780,400 | |
| Shares based payment charges | ||||
| Net cash generated from financing activities | 780,400 | |||
| Net decrease in cash and cash equivalents | (407,191) | (457,398) | 156,857 | |
| Cash and cash equivalents at beginning of year | 479,491 | 479,491 | 322,634 | |
| Cash and cash equivalents at end of year | 72,300 | 22,093 | 479,491 |
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