Quarterly Report • Sep 7, 2023
Quarterly Report
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This interim financial report is prepared in accordance with article 13 of the Royal Decree on the obligations of issuers of financial instruments admitted to trading on a regulated market.
BioSenic SA publishes its interim financial report in English. A French translation of the report will also be made available. In the event of differences between the English and the French versions of the report, the French version will prevail.
Dear Shareholders,
We are pleased to present to you our half-year report including the consolidated financial statements for the accounting period that ended 30 June 2023 prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union.
● In August 2023, BioSenic received a Chinese patent protecting the combined use of metal ions and arsenic salts. This patent (ZL202080040613.1) covers the use of its ATO platform in combination with metal ions like copper, which has the potential to improve the treatment of autoimmune diseases.
The income statement for 2023 comprises the consolidated accounts of Medsenic and BioSenic. Conversely, in 2022, only Medsenic' s accounts are included.
During the first six months of 2023, total operating income amounted to € 0.37 million compared to € 0.13 million for the first half of 2022. Income resulted mainly on tax credit on investments (for € 0.29 million) and from partial exemption of withholding tax payable on R&D salaries and other income (€ 0.08 million).
The research and development expenses for the first six months amounted to € 2.45 million compared to € 0.27 million over the same period last year. The increase in expenses is mainly related to the fact that the expenses for the previous period only include that of Medsenic as the reverse acquisition only occurred in October 2022. The expenses are mainly related to the ALLOB clinical trial.
General and administrative expenses for the first six months amounted to € 1.81 million compared to € 0.34 million over the same period last year. The increase is mainly explained by the expenses occurred in the realization of the Prospectus and the preparation of the fund raise. This increase is also explained by the fact that, as a listed company, BioSenic has a certain number of expenses linked to legal obligations (such as communications or financial reporting).
As a result, the operating loss amounted to € 3.90 million in the first half of 2023, compared to € 0.48 million in the same period in 2022.
The net financial loss amounted to € 1.07 million compared with a net financial loss of € 0.05 million over the same period last year. The large increase in the financial expenses during the period was mainly due to interests on the various financial convertible and non-convertible bonds.
The company also recognized the impairment of the ALLOB, the allogeneic bone cell therapy intangible asset, for an amount of € 14.91 million and the impairment of goodwill for an amount of € 1.80 million.
The net loss for the period amounted to € 21.09 million during the first six months ended 30 June 2023 compared to € 0.53 million in 2022.
The Group's total assets amounted to € 10.39 million on 30 June 2023 compared with € 29.32 million at the end of December 2022 mainly explained by the decrease of the non-current assets. Non-Current assets decreased by 68% to € 7.85 million at the end of June 2023 (€ 24.70 million in 2022).
On 19 June 2023, the Company announced its decision to suspend its interventional trial on fracture healing using the allogeneic bone cell therapy intangible asset, ALLOB. As a result, the goodwill and the ALLOB intangible asset was fully impaired during the period, which contributed to the recognition of an impairment expense of € 16.09 million.
At the beginning of the period, the Company commenced a sub-leasing contract with Vesale Biosciences for part of the offices and laboratories in Mont-Saint-Guibert. The contract has a duration of 4 years, until 31 December 2026.
The current assets decreased from € 4.63 million to € 2.54 million. The decrease is mainly explained by the decrease of the cash and cash equivalents of € 1.33 million showing a cash position of € 0.52 million on 30 June 2023.
The decrease of the current assets is also impacted by the receipt of € 0.94 million in relation to the license agreement with Link Health-Pregene.
The Group's equity decreased from € 3.12 million at the end of December 2022 to a negative amount of € 17.53 million on 30 June 2023, as a result of the incorporation of the loss for the period (amounting to € 21.09 million).
Liabilities amounted to € 27.92 million in 2023 compared with € 26.20 million at the end of December 2022 representing an increase of € 1.72 million.
The non-current liabilities remained stable compared to last year and amounted to € 15.76 million. The noncurrent liabilities are mainly composed by the non-convertible bonds for an amount of € 10.43 million, the debts to be repaid to the Walloon Region in relation of Recoverable cash advances for € 2.80 million, the bank debt for € 0.95 million, the leasing debts for € 0.88 million and the interest-free advances for € 0.64 million.
Current liabilities increased by € 1.80 million and amounted to € 12.16 million on 30 June 2023 (compared to € 10.35 million at the end of 2022). The interest-bearing borrowings increased with € 1.33 million mainly explained by the convertible bonds with ABO Securities subsidiary, Global Tech Opportunities 15 with € 0.82 million. The current liabilities are mainly composed by the non-convertible bonds for an amount of € 3.79 million, the convertibles bonds from ABO and the Insurance company for € 3.89 million, the debts to be repaid to the Walloon Region in relation of Recoverable cash advances for € 0.80 million, the bank debt for € 0.29 million, the leasing debts for € 0.29 million and the interest-free advances for € 0.25 million.
The table in section 2.4 (see below) sets forth the Group's consolidated cash flow statement for the six-month periods ended 30 June 2023 and 30 June 2022.
Cash used for operating activities amounts to € 1.93 million for the first six months of 2023 compared to €0.25 million for the first six months of 2022.
Total operating loss for the period amounts to € 3.90 million compared to a loss of € 0.48 million over the same period in 2022. The net positive impact of adjustments for non-cash items and working capital amounted to € 0.33 million compared to € 0.04 million during the previous year relating to depreciation and recognition of tax credits.
The company also received an amount of € 0.94 million in relation to the license agreement with Link Health and an amount of € 0.70 million in relation to the tax credit.
The company has very limited Cash flow from investing activities.
Cash flow generated from financing activities amounts to a cash in of € 0.60 million for the first six months of 2023 compared with a use of cash of € 0.14 million for the first six months of 2022.
Financial cash inflows during H1 2023 are as follows:
● Convertible Bonds from ABO for an amount of € 1.00 million.
Financial cash outflows during H1 2023 are as follows:
For a detailed description of the risks associated to the activities of the Group, we refer to the Annual Report 2022 available on the Company's website.
| Consolidated Assets IFRS per: (in thousands of euros) |
Note | 30/06/2023 | 31/12/2022 |
|---|---|---|---|
| Non-current assets | 7,848 | 24,698 | |
| Goodwill | 13 | 0 | 1,802 |
| Intangible assets | 13 | 2,995 | 17,293 |
| Property, plant and equipment | 14 | 786 | 1,419 |
| Finance lease receivable | 14 | 469 | 0 |
| Investments in associates | 12 | 12 | |
| Other non-current assets | 135 | 136 | |
| R&D Tax Credits | 1 | 3,452 | 4,036 |
| Current assets | 2,544 | 4,626 | |
| Trade and other receivables | 2 | 1,676 | 2,490 |
| Other current assets | 214 | 290 | |
| Finance lease receivable | 14 | 135 | 0 |
| Cash and cash equivalents | 3 | 519 | 1,846 |
| TOTAL ASSETS | 10,392 | 29,324 |
| Consolidated Equity & Liabilities IFRS per: (in thousands of euros) |
Note | 30/06/2023 | 31/12/2022 |
|---|---|---|---|
| Equity attributable to owners of the parent | (16,882) | 3,526 | |
| Share capital | 5,224 | 4,774 | |
| Share premium | 4,594 | 4,517 | |
| Accumulated losses and other reserves | (26,652) | (5,723) | |
| Other reserves | (48) | (42) | |
| Non-controlling interests | (646) | (402) | |
| Total Equity | 4 | (17,528) | 3,124 |
| Non-current liabilities | 15,764 | 15,847 | |
| Interest bearing borrowings | 5 | 15,696 | 15,779 |
| Other non-current liabilities | 7 | 68 | 68 |
| Current liabilities | 12,156 | 10,353 | |
| Interest bearing borrowings | 5 | 9,339 | 8,013 |
| Trade and other payables | 6 | 2,728 | 2,236 |
| Other current liabilities | 7 | 89 | 104 |
| Total liabilities | 27,920 | 26,200 | |
| TOTAL EQUITY AND LIABILITIES | 10,392 | 29,324 |
The above condensed consolidated statement of financial position should be read in conjunction with the accompanying notes.
| Note (in thousands of euros) |
For the six-months period ended |
|||
|---|---|---|---|---|
| 30/06/2023 | 30/06/2022 | |||
| Revenues | 0 | 0 | ||
| Other operating income | 8 | 365 | 125 | |
| Total revenues and operating income | 365 | 125 | ||
| Research and development expenses | 9 | (2,452) | (267) | |
| General and administrative expenses | 10 | (1,813) | (336) | |
| Other operating expenses | (1) | 0 | ||
| Operating profit/(loss) | (3,900) | (478) | ||
| Financial Income | 11 | 35 | 0 | |
| Interest income | 11 | 30 | 0 | |
| Impairment expenses | 13 | (16,094) | 0 | |
| Financial expenses | 11 | (1,136) | (49) | |
| Exchange gains/(losses) | 1 | 0 | ||
| Result Profit/(loss) before taxes | (21,063) | (527) | ||
| Income taxes | (24) | - | ||
| Result Profit/(loss) for the Period | (21,087) | (527) | ||
| Thereof attributable to: | ||||
| Owners of the Company | (20,843) | (527) | ||
| Non-controlling interests | (244) | 0 | ||
| Other comprehensive income | 0 | 0 | ||
| TOTAL COMPREHENSIVE INCOME/(LOSS) OF THE PERIOD | (21,087) | (527) | ||
| Thereof attributable to: | ||||
| Owners of the Company | (20,843) | (527) | ||
| Non-controlling interests | (244) | 0 | ||
| Basic and diluted loss per share (in euros) | 12 | (0,17) | (7,49) |
The above condensed consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
| Attributable to owners of the parent | ||||||
|---|---|---|---|---|---|---|
| (in thousands of euros) |
Share capital |
Share premium |
Accumulated Losses & other reserves |
Other elements of comprehensive income |
Non-controlling interests |
TOTAL EQUITY |
| BALANCE AT 1 JANUARY 2022 |
664 | 3,969 | (7,298) | (5) | 0 | (2,670) |
| Total comprehensive income of the period |
0 | 0 | (527) | 0 | 0 | (527) |
| Issue of share capital | 74 | 3,837 | 0 | 0 | 0 | 3,911 |
| BALANCE AT 30 JUNE 2022 |
738 | 7,806 | (7,825) | (5) | 0 | 714 |
| BALANCE AT 1 JANUARY 2023 |
4,774 | 4,517 | (5,723) | (42) | (402) | 3,124 |
| Total comprehensive income of the period |
0 | 0 | (20,843) | 0 | (244) | (21,087) |
| Issue of share capital | 450 | 158 | 0 | 0 | 0 | 609 |
| Transaction costs for equity issue |
0 | (81) | 0 | 0 | 0 | (81) |
| Other | 0 | 0 | (85) | (6) | 0 | (91) |
| BALANCE AT 30 JUNE 2023 |
5,224 | 4,594 | (26,652) | (48) | (646) | (17,528) |
The above condensed consolidated statement of changes in shareholders' equity should be read in conjunction with the accompanying notes.
| Consolidated Statement of Cash Flows (in thousands of euros) |
For the six-month period ended 30 June |
||
|---|---|---|---|
| 2023 | 2022 | ||
| CASH FLOW FROM OPERATING ACTIVITIES | |||
| Operating profit/(loss) | (3,900) | (478) | |
| Adjustments for: | |||
| Depreciation and Amortisation | 101 | 5 | |
| Grants income related to tax credit | (115) | 0 | |
| Grants income related to withholding tax | (47) | ||
| Other | (68) | 0 | |
| Movements in working capital: | |||
| (Increase)/Decrease in Trade and other receivables (excluding government grants) | (34) | 14 | |
| Increase/(Decrease) in Trade and other Payables | 492 | 22 | |
| Cash used by operations | (3,570) | (438) | |
| Cash received from license agreement | 940 | 0 | |
| Cash received from grants related to tax credit | 700 | 187 | |
| Net cash used in operating activities | (1,930) | (251) | |
| CASH FLOW FROM INVESTING ACTIVITIES | |||
| Disposal of intangible assets | 17 | 0 | |
| Disposal of property, plant and equipment Purchases of property, plant and equipment |
3 (12) |
0 0 |
|
| Purchases of intangible assets | (1) | 0 | |
| Net cash generated from investing activities | 7 | 0 | |
| CASH FLOW FROM FINANCING ACTIVITIES | |||
| Repayment of borrowings | (150) | (45) | |
| Proceeds from convertible borrowings | 550 | 0 | |
| Repayment of lease liabilities | (84) | (2) | |
| Repayment of other financial liabilities | (75) | (75) | |
| Interests paid | (13) | (16) | |
| Transaction costs | (81) | ||
| Proceeds from issue of equity instruments | 450 | 0 | |
| Net cash generated from financing activities | 596 | (137) | |
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (1,327) | (388) | |
| CASH AND CASH EQUIVALENTS at beginning of the period | 1,846 | 759 | |
| CASH AND CASH EQUIVALENTS at end of the period | 519 | 371 |
The above condensed consolidated statement of cash flows should be read in conjunction with the accompanying notes.
BioSenic SA (the "Company" alone or the "Group" together with Medsenic) is a limited liability company governed by Belgian law. The address of its registered office is Rue Granbonpré 11 - Bâtiment H (bte 24), 1435 Mont-St-Guibert, Belgium. The shares of the Company are publicly listed on NYSE Euronext Brussels and Paris since 6 February 2015.
The Company is registered with the legal entities register (Walloon Brabant) under number 0882.015.654 and was incorporated in Belgium on 16 June 2006 (under the name Bone Therapeutics), for an indefinite period of time.
BioSenic SA is an innovative company with the objective of addressing important unmet medical needs in the areas of innate immunity, inflammation and organ/function repair. The Company is a biopharmaceutical startup that aims to exploit the new possibilities offered by the therapeutic use of arsenic trioxide (As203) and through this, to provide a treatment to patients with autoimmune diseases. BioSenic has a broad and diverse portfolio of solutions in clinical development in a variety of therapeutic areas targeting markets characterized by significant unmet medical needs and limited innovation.
The interim consolidated financial statements of BioSenic SA for the six-month period ended 30 June 2023 were authorized for issue by the Board of Directors on 6 September 2023.
BioSenic had acquired 51% of the shares of Medsenic SAS ("Medsenic") on 24 October 2022. Medsenic is a privately held, clinical stage biopharmaceutical company incorporated in France and specialized in the development of optimized formulations of arsenic salts and their application in inflammatory conditions and other potential new indications.
Acquisitions of 51% of shares in Medsenic from the shareholders of Medsenic was completed based on the exchange of 90,668,594 new shares, issued by BioSenic (Bone Therapeutics at the time). In addition, the Subscription Agreement also stipulated that BioSenic shall benefit from a call option right over the remaining 49% of the shares in Medsenic (i.e., the non-controlling interest), which may be exercised within a period of 3 years as from the completion of this transaction. The call option exercise price will be redetermined in case of a material adverse change in the assets, liabilities, or clinical trial of Medsenic, or if Medsenic obtains extended development and commercialisation rights for e.g., US, UK, Japan from Phebra under economically favorable terms for Medsenic before the execution of the call option.
This acquisition qualifies as a reverse acquisition under IFRS (IFRS3.B19), as by issuing 90,668,594 new shares in exchange for 51% of the shares in Medsenic, the original shareholders of Bone Therapeutics no longer control the combined entity as their shares represent only 19% of the total number of shares in the combined entity and 51% of the shareholders of Medsenic hold 81% of the shares of the combined entity. Therefore, under IFRS, the legal acquirer (Bone Therapeutics) is considered to be the accounting acquiree and the legal acquiree (Medsenic) is considered to be the accounting acquirer. Therefore, the interim consolidated financial statements represent the continuation of the financial statements of the former company Medsenic SAS (legal acquiree, accounting acquirer), and the interim consolidated financial statements as of and for the six-month period ended 30 June 2023 are prepared on the basis of the accounting policies of Medsenic. The comparative information as of and for the six-month period ended 30 June 2022 is of Medsenic only.
In accordance with IFRS 3.B23 owners of the legal acquiree (the accounting acquirer) that do not exchange their equity interest for the equity interests of the legal parent (the accounting acquiree) are treated as a noncontrolling interest in the interim consolidated financial statements after the reverse acquisition. In the Transaction the shareholders of the legal acquiree/accounting acquirer (Medsenic) exchanged 51% of their Medsenic shares in exchange for the new shares issued by BioSenic (the legal acquirer/accounting acquiree).
The Group's interim consolidated financial statements for the six-month period ended 30 June 2023 have been prepared in accordance with International Financial Reporting Standards as endorsed by the European Union ("IFRS") and with IAS 34 Interim Financial Reporting. The condensed interim consolidated financial statements do not include all disclosures that would otherwise be required in a complete set of financial statements and should be read in conjunction with the 2022 financial statements.
The same accounting policies and methods of computation are followed in these interim consolidated financial statements as were applied in the consolidated financial statements of the Group for the year ended 31 December 2022.
During the current financial period, the Group has adopted all the new and revised Standards and Interpretations issued by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB as adopted by the European Union and effective for the accounting year starting on 1 January 2023. The Group has not applied any new IFRS requirements that are not yet effective as per 30 June 2023.
The following new Standards, Interpretations and Amendments issued by the IASB and the IFRIC as adopted by the European Union are effective for the financial period:
The adoption of these new standards and amendments has not led to major changes in the Group's accounting policies.
The Group elected not to early adopt the following new Standards, Interpretations and Amendments, which have been issued by the IASB and the IFRIC but are not yet effective as per 30 June 2023 and/or not yet adopted by the European Union as per 30 June 2023 and for which the impact might be relevant:
None of the other new standards, interpretations and amendments, which are effective for periods beginning after 1 January 2023 which have been issued by the IASB and the IFRIC but are not yet effective as per 30 June 2023 and/or not yet adopted by the European Union as per 30 June 2023, are expected to have a material effect on the Group's future financial statements.
The consolidated financial statements are presented in thousands of euros, unless otherwise stated. Euro is also the functional currency of the Company and the Group. The functional currency is the currency of the economic environment in which an entity operates. The consolidated financial statements have been prepared on a historical cost basis, unless otherwise stated.
In June 2023, BioSenic entered into an agreement with the ABO Securities subsidiary, Global Tech Opportunities 15, to secure short term financing on the basis of the existing convertible bond program. Subject to the terms and conditions of the agreement, BioSenic was entitled to draw down three tranches of each EUR 0.3 million in June, July and August under the existing convertible bond program, for an aggregate principal amount of EUR 0.9 million. The parties will discuss how to draw down the remaining EUR 0.6 million of the existing program and have initiated discussions with a view to a possible renewal of the program.
In July 2023, BioSenic has obtained an official appointment of Yves Brulard to reach a negotiated agreement with certain main creditors to preserve the value of BioSenic for the benefit of all stakeholders. This will enable BioSenic to find the optimal route to continue delivering therapies to patients as quickly as possible. Confidential negotiations with certain main creditors are ongoing.
Given these ongoing discussions with the main creditors, the agreement obtained in June 2023 with Global Tech Opportunities 15 to secure short-term financing on the basis of the existing convertible bond program and the remaining EUR 0.6 million available for drawdown under this program, BioSenic anticipates having sufficient cash to carry out its business objectives until November 2023.
BioSenic ended the first six months of 2023 with EUR 0.52 million in cash and cash equivalent. The Company is in the process of closing the program ALLOB, with many actions to be carried out to follow up the last patients recruited at the end of last year and the beginning of 2023, as well as the regulatory closure of the 24 European centers involved. BioSenic is making every effort to launch Phase 3 clinical trials in cGvHD. BioSenic anticipates having sufficient cash to carry out its main short term strategic objective, considering the following relevant assumptions:
The assumptions made above comprise various risks and uncertainties.
As the cash runway of the Company is currently expected into November 2023, BioSenic Group will continue to require additional financing to continue its operations in the longer turn. BioSenic Group therefore continues to evaluate other options with a potential positive impact on going concern, including as follows:
the Walloon Region and Mr Bastianelli in 2022. The agreement with the Walloon Region has since been resumed, but there is still no agreement with Mr Enrico Bastianelli, which could give rise to coownership problems.
• Potential partnership to develop and commercialize of ALLOB. In October 2022, BioSenic regained worldwide rights to develop, manufacture and commercialised ALLOB following the termination by Shenzhen Pregene Biopharma Co., Ltd ("Pregene") of the exclusive license agreement entered into between BioSenic, Pregene and Link Health Pharma Co., Ltd ("LinkHealth") in October 2020. Following the recovery of the worldwide rights to ALLOB, BioSenic received a final payment of € 1.00 million from Pregene linked to the achievement of a development milestone which represents a significant impact for BioSenic. Although regulatory changes in China have halted establishment of ALLOB in the Chinese market, BioSenic continues preliminary discussions with Pregene, LinkHealth and other potential partners to reach an agreement for the development and commercialization of ALLOB in other geographies, including in the U.S.
In case part or/all the above options were to materialize, the cash runway of the Company would be expected at least into Q1 2024, or even further depending on the size of the fundraising.
However, all of the above circumstances and events are however subject to material uncertainties, which may cast significant doubt about the Company's ability to continue as a going concern.
Nevertheless, the interim financial statements for the period from 1 January to 30 June 2023 have been prepared on a going concern basis. This is based on an assessment of liquidity risk in relation to the 2023 cash flow forecasts, and on the assumption that BioSenic's financial restructuring will be satisfactorily implemented, so that it will have sufficient financing to meet its estimated cash requirements for the next 12 months. In view of the legal steps still to be taken to implement the financial restructuring, the situation as of today is uncertain as to the Company's ability to continue as a going concern.
The Group does not make the distinction between different operating segments, neither on a business or geographical basis in accordance with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker is the Board of Directors of the Company.
The R&D tax credits are detailed as follows:
| R&D tax credits | Total | ||
|---|---|---|---|
| (in thousands of euros) | 30/06/2023 | 31/12/2022 | |
| Non-current assets portion | 3,452 | 4,036 | |
| Current assets portion | 0 | 0 | |
| Total R&D tax credits | 3,452 | 4,036 |
The total of the R&D tax credits amount to € 3.52 million and show a decrease of € 0.58 million, which is due to the receipt in February 2023 of an amount of € 0.70 million from the tax authorities and offset by the recognition of the amount relating to the 1st half of the year. Note 2 –Trade and other receivables
The trade and other receivables are detailed as follows:
| Trade and other receivables | Total | ||
|---|---|---|---|
| (in thousands of euros) | 30/06/2023 31/12/2022 |
||
| Trade receivables | |||
| Trade receivables | 67 | 1,036 |
| Write-downs on trade receivables | 0 | 0 |
|---|---|---|
| Total trade receivables | 67 | 1,036 |
| Other receivables | ||
| Receivable related to taxes | 207 | 255 |
| Receivable related to tax credit | 1,119 | 946 |
| Receivable related to recoverable cash advances | 82 | 82 |
| Receivable related to Non-refundable subsides | 0 | 0 |
| Receivable related to patent grants | 171 | 171 |
| Others | 30 | 0 |
| Total other receivables | 1,609 | 1,454 |
| Total trade and other receivables | 1,676 | 2,490 |
Trade and other receivables amounted to € 1.68 million showing a decrease of € 0.81 million compared to the end of December 2022. The main reason for the decrease was due to the cash receipt of € 0.94 million in relation to the license agreement with Link Health-Pregene.
The cash position at the end of June 2023 amounted to € 0.52 million compared to € 1.85 million on 31 December 2022. The Company has used € 1.93 million in operating, generated € 7K in investing, and generated € 0.60 million in financing activities.
The Group's equity decreased from a positive amount of € 3.12 million at the end of December 2022 to a negative amount of € 17.53 million on 30 June 2023. The variation is mainly explained by the recognition of impairment expenses on the ALLOB intangible asset and on goodwill during the period.
The Group's share capital increased from € 4.77 million at the end of December 2022 to € 5.22 million on 30 June 2023. The difference is due to € 0.45 million of ABO Securities convertible bonds that were converted into shares for a total of 5,236,111 shares. Following the capital increase, the share capital of € 5.22 million is represented by 127,133,857 shares. There has been no change to the share capital or share premium of MedSenic since 31 December 2022.
The share premium increased from € 4.52 million at the end of December 2022 to € 4.59 million on 30 June 2023 due to the ABO bond conversion into shares during the period.
The evolution of the financial liabilities is detailed as follows:
| (in thousands of euros) | 31/12/2022 | Cash flows (net) |
Non-cash changes | 30/06/2023 |
|---|---|---|---|---|
| Finance lease liabilities | 1,232 | (84) | 23 | 1,171 |
| Government loans | 3,593 | 0 | 15 | 3,608 |
| Loans from related parties | 25 | (25) | 12 | 12 |
| Public Investment Bank borrowings |
1,114 | (200) | 112 | 1,026 |
| Bank debt | 250 | (13) | (24) | 213 |
| Convertible bonds – ABO | 952 | 919 | (94) | 1,776 |
|---|---|---|---|---|
| Convertible bonds - Integrale | 2,004 | 0 | 115 | 2,119 |
| Non-convertible bonds | 13,671 | 0 | 545 | 14,216 |
| Interest-free advances | 949 | 0 | (56) | 893 |
| Total financial liabilities | 23,790 | 596 | 649 | 25,035 |
Financial liabilities amounted to € 25.03 million as of 30 June 2023 compared to € 23.79 million at the end of December 2022, representing an increase of 5.2%.
Non-current financial liabilities amounted to € 15.70 million compared to € 15.78 million on 31 December 2022 and are mainly composed of non-convertible bonds (€ 10.43 million).
Current financial liabilities amounted to € 9.34 million representing an increase of € 1.32 million. The current financial liabilities are also mainly composed of convertible and non-convertible bonds (€ 7.68 million). The variation is mainly explained by the receipt of two tranches of € 0.5 million each from ABO Securities of which € 0.45 million was converted into shares. During the period, the Company also settled the outstanding Novallia loans of K€ 25.
Trade and other payables are detailed as follows:
| (in thousands of euros) | 30/06/2023 | 31/12/2022 |
|---|---|---|
| Trade payables Other payables |
2,491 237 |
1,990 246 |
| Total | 2,728 | 2,236 |
Trade payables (composed of supplier's invoices and accruals for supplier's invoices to receive at reporting date) are non-interest bearing and are in general settled 30 days from the date of invoice.
The increase of € 0.5 million is mainly related to important invoices related to the Contract Research Organizations ("CRO") for the ongoing clinical studies (ALLOB) and some costs for the ongoing preparation of possible fundings.
Other liabilities consist of long-term employee benefits and deferred income related to the government grants as detailed in the following table:
| Non-current | Current | Total | ||||
|---|---|---|---|---|---|---|
| (in thousands of euros) | 30/06/2023 | 31/12/2022 | 30/06/2023 | 31/12/2022 | 30/06/2023 | 31/12/2022 |
| Long-term employee benefits | 68 | 68 | 44 | 44 | 112 | 112 |
| Deferred income on grants related to recoverable cash advances RW |
0 | 0 | 0 | 16 | 0 | 16 |
| Deferred income on grants related to patents |
0 | 0 | 45 | 44 | 45 | 44 |
| Total other liabilities | 68 | 68 | 89 | 104 | 157 | 172 |
Note 8 – Other operating income The other operating income relate to the different grants received by the Group:
| (in thousands of euros) | 30/06/2023 | 30/06/2022 |
|---|---|---|
| Grants income related to recoverable cash advances | 0 | 0 |
| Grants income related to exemption on withholding taxes | 47 | 0 |
| Grants income related to tax credit | 288 | 125 |
| Grants income related to patents | 0 | 0 |
| Other grants income | 30 | 0 |
| Total | 365 | 125 |
Note 9 – Research and development expenses
The research and development expenses are described as follows:
| (in thousands of euros) |
30/06/2023 | 30/06/2022 |
|---|---|---|
| Staff cost | (662) | (136) |
| Studies | (1,259) | (125) |
| Other external costs | (316) | (7) |
| Patent costs | (123) | 0 |
| Building and equipment amortization | (91) | (0) |
| Total | (2,452) | (267) |
The research and development expenses for the first six months amount to € 2.45 million compared to € 0.27 million over the same period last year. The increase in expenses is mainly related to the fact that the expenses for the previous period only include that of Medsenic as the reverse acquisition only occurred in October 2022.
The general and administrative expenses are described as follow:
| (in thousands of euros) | 30/06/2023 | 30/06/2022 |
|---|---|---|
| Staff Cost | (595) | (159) |
| Fees | (394) | (109) |
| Other external costs | (75) | (42) |
| Depreciation and amortization | (9) | (5) |
| Other operation costs | (740) | (21) |
| Total | (1,813) | (336) |
General and administrative expenses for the first six months amount to € 1.81 million compared to € 0.34 million over the same period last year. The increase is mainly explained by the expenses occurred in the realization of the Prospectus and the preparation of the fund raise. This increase is also explained by the fact that, as a listed company, BioSenic has a certain number of expenses linked to legal obligations (such as communications or financial reporting).
The net financial loss amounted to € 1.07 million compared with a net financial loss of € 0.05 million over the same period last year. The large increase in the financial expenses during the period was mainly due to interests on the various financial convertible and non-convertible bonds.
The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows:
| (in thousands of euros) | 30/06/2023 | 30/06/2022 |
|---|---|---|
| Profit/(loss) for the period attributable to the owners of the Company | (20,843) | (527) |
| Weighted average number of ordinary shares for basic loss per share (in number of shares) |
124 495 582 | 70 382 |
| Basic/diluted loss per share (in euros) | (0.17) | (7.49) |
On 19 June 2023, the Company announced its decision to suspend its interventional trial on fracture healing using the allogeneic bone cell therapy intangible asset, ALLOB. As a result, the goodwill and the ALLOB intangible asset were fully impaired during the period, which contributed to the recognition of an impairment expense of € 16.09 million.
At the beginning of the period, the Company commenced a sub-leasing contract with Vesale Biosciences for part of the offices and laboratories in Mont-Saint-Guibert. The contract has a duration of 4 years, until 31 December 2026.
The sub-lease is classified as a finance lease and the Company recognised a net investment in sublease equivalent to the lease payments receivable from Vesale discounted at the interest rate implicit in the lease. During the six months to 30 June 2023, the Company recognised interest income of K€ 30 and other income of K€ 92 representing the difference between the portion of the head right-of-use asset derecognised (€ 0.5 million) and the net investment in sublease recognised.
The following table provides the category in which financial assets and financial liabilities are classified in accordance with IFRS 9 – Financial Instruments: Recognition and Measurement. There were no changes in the classification of financial instruments.
| (in thousands of euros) | IFRS 9 Category | 30/06/2023 | 31/12/2022 |
|---|---|---|---|
| Non-current financial assets | |||
| Other non-current assets | At amortised cost | 135 | 136 |
| R&D Tax credits | At amortised cost | 3,451 | 4,036 |
| Current financial assets | |||
| Trade and other receivables | At amortised cost | 1,676 | 2,490 |
| Cash and cash equivalents | At amortised cost | 519 | 1,846 |
| Total financial assets | 5,781 | 8,507 | |
| Non-current financial liabilities | |||
| Finance lease liabilities | At amortised cost | 879 | 1,000 |
| Government loans (RCA) | At amortised cost | 2,803 | 2,788 |
| Bank debt | At amortised cost | 144 | 176 |
| Public Investment Bank borrowings Non-Convertible Bonds – EIB & |
At amortised cost | 801 | 938 |
| Patronale | At amortised cost | 10,426 | 10,125 |
| Interest-free advances | At amortised cost | 643 | 749 |
| Current financial liabilities | |||
| Finance lease liabilities | At amortised cost | 292 | 232 |
| Government loans (RCA) | At amortised cost | 805 | 805 |
| Loans from related parties Bank debt |
At amortised cost At amortised cost |
13 69 |
25 74 |
|---|---|---|---|
| Public Investment Bank borrowings Non-Convertible Bonds – EIB & |
At amortised cost | 225 | 176 |
| Patronale | At amortised cost | 3,790 | 3,546 |
| Convertible Bonds - ABO |
At fair value through profit and loss | 1,775 | 952 |
| Convertible Bonds - Integrale |
At fair value through profit and loss | 2,119 | 2,004 |
| Interest-free advances | At amortised cost | 250 | 200 |
| Trade and other payables | |||
| Trade payables | At amortised cost | 2,728 | 2,236 |
| Total financial liabilities | 27,764 | 26,026 |
The fair value of financial instruments can be classified into three levels (1 to 3) based on the degree to which the inputs to the fair value measurements are observable:
The following table presents the financial assets and liabilities for which the fair value differs from the carrying amount. The non-convertible bonds include warrants which are measured at fair value in the consolidated statement of the financial position. The government loans related to the recoverable cash advances are measured at amortized cost (fair value is disclosed below and is also a Level 3 measurement). The carrying amounts of the remaining financial assets and financial liabilities approximate their fair values.
| (in thousands of euros) | 30/06/2023 | |||
|---|---|---|---|---|
| Carrying amount | Fair value | Fair value level | ||
| Non-current financial liabilities | ||||
| Government loans (RCA) | 2,803 | 2,786 | Level 3 | |
| Non-Convertible Bonds | 10,426 | 11,591 | Level 2 |
| (in thousands of euros) |
31/12/22 | |||
|---|---|---|---|---|
| Carrying amount | Fair value | Fair value level | ||
| Non-current financial liabilities | ||||
| Government loans (RCA) | 2,788 | 4,090 | Level 3 | |
| Non-Convertible Bonds | 10,125 | 10,558 | Level 2 |
The fair value of the non-convertible bonds has been measured based on a discounted cash-flow methodology, using a market interest rate reflecting the current market conditions and the risk profile of the Company.
The following table presents the changes in the government loans (RCA) for the half-year ended 30 June 2023:
| Reconciliation | |
|---|---|
| (in thousands of euros) | 30/06/2023 |
| Opening balance 31 December 2022 | 3,593 |
| Other | 15 |
| Closing balance | 3,608 |
The fair value has been calculated as the weighted average of a best case, base case, and worst-case scenario for each project. The weight given to each scenario is as follows:
Based on those scenarios, the fair value, after discounting fixed commitments at rates between 1.08% and 2,91% and the turnover dependent reimbursements at a rate of 17.10% (average rate used by the analysts following the Company) amounts to € 3.42 million.
When applying a sensitivity analysis on the above varying the ponderations between the best and base case scenario (decreasing/increasing the PoS of the projects) and varying the discount rate used for discounting the turnover dependent reimbursements (using a discount rate for a more mature biotech company) we obtain the following results:
| Impact of PoS* | |||||
|---|---|---|---|---|---|
| in thousands € | -40% | -20% | 0 | +20% | +40% |
| DCF with discount rate of 17,10% used for turnover dependent reimbursement |
3,390 | 3,404 | 3,423 | 3,446 | 3,470 |
| DCF with discount rate used for turnover dependent reimbursement reduced to 12,5%** |
3,463 | 3,485 | 3,516 | 3,554 | 3,591 |
| * decrease/increase of best case versus increase/decrease of base case with the worst-case scenario remaining at the same level | |||||
| ** DCF used for turnover dependent reimbursements |
Balances and transactions between the Company and its subsidiary, which is a related party of the Company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed below.
As a result of the relationship of the government (i.e., Walloon Region) with some shareholders of the Group and the extent of financing received, the Group judges that the government is a related party. In total up to 30 June 2023, an amount of € 35.30 million was granted by the Walloon Region in recoverable cash advances ("avances récupérables"), patent subsidies and other operational subsidies (no change compared to last year). Next to the government grants, government agencies granted loans to the Group for a total amount of € 3.97 million.
2.5.7.2. Remuneration of Key Management and Transactions with the Non-Executive Directors
| Period ended 30 June | |||
|---|---|---|---|
| (in thousands of euros) | 2023 | 2022 | |
| Number of management members | 5* | 2** | |
| Short-term benefits as member of the executive committee | 450 | 129 | |
| Short-term benefits as executive director | 43 | 0 |
| Share-based payments | 0 | 0 |
|---|---|---|
| Total | 493 | 129 |
| Cumulative number of warrants granted (in units) on 30 June | 0 | 0 |
| Shares owned (in units) on 30 June | 39,895,482 | 0 |
*the Executive Committee is composed by François Rieger (CEO), Véronique Pomi (Deputy CEO), Carole Nicco (CSO), Lieven Huysse (CMO) and Alexia Rieger (IR).
**the Executive Committee at Medsenic was composed of François Rieger et Véronique Pomi.
| Period ended 30 June | ||
|---|---|---|
| (in thousands of euros) | 2023 | 2022 |
| Share-based payments | 0 | 0 |
| Management fees | 58 | 0 |
| Total | 58 | 0 |
| Number of warrants granted (in units) on 30 June | 64,498 | 0 |
| Shares owned (in units) on 30 June | 112,418 | 0 |
The interim financial report of 30 June 2023 was authorized for issue by the Board of Directors of the Company on 6 September 2023. Accordingly, events after the reporting period are those events that occurred between 1 July 2023 and 6 September 2023.
In August 2023, BioSenic received a Chinese patent protecting the combined use of metal ions and arsenic salts. This patent (ZL202080040613.1) covers the use of its ATO platform in combination with metal ions like copper, which has the potential to improve the treatment of autoimmune diseases.
From 1 June 2023 till 6 September 2023, a total of € 0.45 million was converted into shares for a total of 10,214,284 shares. Following the conversions, the total of shares as of 6 September 2023 amounted to 137,348,141 shares and the total of share capital amounted to EUR 34.5 million.
The Board of Directors, represented by all its members, declares that, to the best of its knowledge, the condensed consolidated financial statements for the six-month period ended 30 June 2023, which have been prepared in accordance with IAS 34 'Interim Financial reporting' as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and loss of the Company and the undertakings included in the consolidation as a whole, and that the interim report includes a fair review of the important events that have occurred during the first six months of the financial year and of the major transactions with the related parties, and their impact on the condensed consolidated financial statements, together with a description of the principal risks and uncertainties for the remaining six months of the financial year.
On behalf of the Board of Directors,
CEO Deputy CEO
François Rieger, Véronique Pomi,
Certain statements, beliefs and opinions in this report are forward-looking; they reflect the Company or, as appropriate, the Company directors' current expectations and projections about future events. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and events described herein. A multitude of factors including, but not limited to, changes in demand, competition and technology, can cause actual events, performance or results to differ significantly from any anticipated development. Forward looking statements contained in this report regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. As a result, the Company expressly disclaims any obligation or undertaking to release any update or revisions to any forward-looking statements in this report as a result of any change in expectations or any change in events, conditions, assumptions or circumstances on which these forward-looking statements are based. Neither the Company nor its advisers or representatives nor any of its subsidiary undertakings or any such person's officers or employees guarantees that the assumptions underlying such forward-looking statements are free from errors nor does either accept any responsibility for the future accuracy of the forward-looking statements contained in this document or the actual occurrence of the forecasted developments. The reader is advised not to place any undue reliance on forward-looking statements, which speak only as of the date of this document.
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