Half-year Results

Verici Dx plc (AIM: VRCI), a developer of advanced clinical diagnostics for organ transplant, announces its unaudited interim results for the six months ended 30 June 2024 ("H1 2024"). Comparative data is for the unaudited six months ended 30 June 2023 ("H1 2023") unless stated otherwise.

Focus on three distinct revenue streams

The Company has transitioned from a purely research stage business to one with three distinct revenue streams: licensing revenues, direct sales, and other income from our Services Business. In the period, this resulted in total revenues of $3.3m (FY23: $1.0m):

Each of these income streams is further supported going forward by our newly expanded, in-house bioinformatics capability which supports further product development and commercialisation, as well as identifying and underpinning additional value in the Company's research assets.

Significant progress across our lead products

The Company has continued to make significant progress with each of its lead products:

Continued and consistent strong delivery against multiple operational milestones

The Company has established a strong track record of delivery across multiple projects and initiatives, and we are pleased this has continued throughout the first half of 2024:

The financial effects of the Thermo Agreement and the equity fundraise, together with our business modelling assumptions which remain unchanged, mean that the Company's cash runway now extends into 2026.

Strategic update and outlook

At the time of the equity fundraise in early 2024, we set out our strategic priorities. The team has continued to deliver strong progress against each of these areas and is confident regarding the outlook for each of these areas.

Sara Barrington, Chief Executive Officer of Verici Dx, said:

"This has been another busy period, with the focus of the business upon revenue generation from our three separate income streams together with the delivery of many significant commercial and operational milestones. I am delighted with the progress from the team and welcome the increased pace that the fundraise enabled."

"The steps we took at the start of the year to bolster our balance sheet positioned us well to progress our strategic ambitions. The focus through the remainder of 2024 remains to advance multiple growth and value creation initiatives over the short, medium and longer term, whilst maintaining our strong financial discipline. I am pleased with the strong start we have made across these multiple revenue generation initiatives, and we will continue to update the market on progress as appropriate."

Investor briefing

Sara Barrington, Chief Executive Officer, and David Anderson, Chief Financial Officer, will provide a live presentation relating to the interim results via the Investor Meet Company platform on Tuesday 16 July at 4.30pm BST. This presentation is open to all existing and potential shareholders. Questions can be submitted at any time during the live presentation. Investors can sign up to Investor Meet Company for free and add to meet VERICI DX PLC via:

Investors who already follow Verici Dx on the Investor Meet Company platform will automatically be invited.

A copy of the Company's interim results report will shortly be made available on the Company's website.

Chief Executive Officer's Report

I am pleased to report that the momentum gained in 2023 continued throughout the first half of 2024. We successfully achieved all the key milestones expected during the period under the Thermo Agreement. Concurrently, we have advanced multiple other projects and initiatives, demonstrating delivery across the full breadth of our strategy.

Continued execution on our commercial pathway

Direct Revenues

While the commercial rollout of Tutivia™ encountered some initial short-term delays during 2023, due in part to clinical centres assessing the broader market implications of certain CMS announcements. Recent engagement with centres indicates increased clarity on these issues and is reflected in the rapid expansion of adopting centres in 1H 2024. Tutivia™ is now offered in fifteen leading transplant centres across the United States and, with our more recently expanded sales team, we continue to work with other leading US transplant centres to support the adoption and integration of Tutivia™ into their clinical pathways to encourage consistent and recurring utilisation.

We presented new performance data on Tutivia™ in the setting of delayed graft function ("DGF") and generated interest from practitioners at the June American Transplant Congress ("ATC") meeting. DGF is a condition that can lead to a higher risk of rejection and identifying which patients are likely to experience rejection in this population is a currently unmet need in transplantation. This has been reflected in part in the increase of adoption of Tutivia™ in the period.

As previously announced, the national payment rate of $2,650 per test for our two lead tests became effective from 1 January 2024. Having this rate published by CMS was an important step towards securing reimbursement for testing of patients covered by Medicare insurance.

We submitted the Technical Assessment (TA) file for Tutivia™ in Q1 2024. We are now actively engaged in the next stage in this process, addressing questions raised by the initial review. Revenue recognition from Tutivia™ remains dependent upon securing the LCD for Medicare under this pathway and we expect to have a determination by the end of 2024. The Company will be able to apply for retrospective reimbursement on testing to date and during the assessment period once the Local Coverage Determination (LCD) is granted.

Licensing Revenues

In June, the Company successfully completed the transfer and all transfer-related activities for the pre-transplant prognostic testing technology in accordance with the terms of the Thermo Agreement. This achievement now enables Thermo Fisher to use the technology to develop a Laboratory Developed Test ("LDT") using its own labs. We will continue to provide support as required to Thermo Fisher as they move towards a full commercial launch. As a reminder, under the terms of the agreement, the Company will receive future milestone payments one being a commercial milestone to be met by Thermo Fisher, and royalties on the tests sold going forward.

Other products

With the exclusive license over the deceased donor version of Clarava™ granted to Thermo Fisher, we remain interested in the potential to develop a living donor version of Clarava™. To this end, the Company is exploring multiple approaches to expanding its testing cohort to maximize cost and time efficiencies.

Turning to our third product, Protega™, we have now completed the 12-month visits as part of the clinical validation study assessing long-term outcomes for kidney transplant patients. We remain on track and initial data from this part of the study is expected to be available in H1 2025. As stated at the time of our recent fundraising, the cohort has been expanded to increase the robustness of results and improve commercialisation over the longer term. The study will therefore continue to follow-up at the 24-month stage to provide additional data and further potential validation on longer-term outcomes.

Services Business

Collectively, these activities demonstrate the clinical validity of the underlying technology, research assets and expertise in RNA signatures. The Company remains alert to the potential opportunities in its technology, expertise and approach in other disease areas.

Consistent delivery of operational milestones

In addition to the above progress across our lead products, the Company achieved a number of key operational milestones during the period.

Foremost amongst these was the successful transfer of all data relating to a portion of the Company's urine samples to Thermo Fisher. This completed a key element of the Thermo Agreement and demonstrates the additional value in the Company's Services Business through its data and sample assets for research.

As previously announced, during 2023 we solidified our commercial position by progressing our laboratory registration status to CLIA Certificate of Compliance by the Centers for Medicare & Medicaid ("CMS"), meaning that the Company is currently fully accredited in all except one state. We have now submitted for review the application for the final US state, New York, which involves several additional stages prior to accreditation compared to the process in the other states.

In May 2024, we were delighted to launch a new interactive patient-focused educational tool, the Patient Journey, which provides a detailed overview of all stages of the kidney transplant journey. This aligns with the Company's goal to enhance patient care and support by ensuring that patients and caregivers have access to the latest information and best practices for kidney transplant care.

We continue to add to our existing portfolio of quality assurance awards and recognition as we gained accreditation from the internationally recognised College of American Pathology (CAP) for the testing laboratory in Franklin, TN, following the completion of an on-site audit. No deficiencies, findings, or recommendations were identified, and this accomplishment affirms our commitment to operating at the highest standards that healthcare providers, patients, and regulatory bodies expect. With our testing laboratory already CLIA certified, we voluntarily sought this further accreditation as part of our on-going commitment to maintaining best-in-class quality systems.

Collaborations remain an integral part of our strategy. This can be evidenced through the growing international recognition and reach in our newest collaboration with The Westmead Institute for Medical Research based in Sydney, Australia, on a newly awarded, 4-year federal research grant. This will expand our international reach. We are currently engaged in a number of other opportunities for collaborations going forward.

Management and staff

During the period, we hired five additional members of staff in our bioinformatics and commercial teams in line with our growth plans articulated at the time of the fundraising in February 2024, such that as of 30 June 2024 we have a team of 19 in total.

Financials

We ended the period with a cash balance as of 30 June 2024 of $7.0m (31 December 2023: $2.6m). This balance reflects the net raise of $7.5m from the February 2024 share issue of 72,222,222 shares, and the further $1.3m received during the period under our agreement with Thermo Fisher. To date, we have received a total $2.8m of the $5.0m payments expected in the first 12 months of the agreement and are on track for the remainder.

In the period we recognised revenue of $3.3m. Our ability to recognise revenues from Tutivia™ sales in the current year is dependent upon the successful award of the Local Coverage Determination from Medicare, expected later this year.

Our largest item of expenditure remains employment costs, being $1.9m (H1 2023: $1.8m). We began the year with 14 members of staff and ended the period with 19, having added to our bioinformatics and commercial teams in the period. As we have passed the peak of our clinical trial costs, our second highest spend on research and development has reduced, with the cost in the period of $1.0m (H1 2023: $1.6m).

Despite the challenging global financing environment, we significantly strengthened our financial position through both the Thermo Agreement announced in November 2023, and the early 2024 equity fundraise which raised a total of £6.5m ($8.2m) in gross proceeds (£6.0 m/ $7.5m net) through the issue of 72,222,222 new ordinary shares. We are grateful to existing shareholders for their continued support and delighted to welcome those new to the register. Based on our balance sheet at 30 June 2024, together with our continuing assumptions relating to the timing and/or quantum of the additional milestone payments under the Thermo Agreement, the ongoing rollout of Tutivia™ as well as other licensing revenues and research collaborations, our cash runway extends into 2026

Business Model Overview

The Company is focused upon three distinct revenue streams: licensing opportunities, direct sales, and promotion of a services business line which recognises the tangible assets of samples and data as well as the expertise of the team in this complex area of product development and is applicable in multiple disease areas.

Licensing is a capital-efficient approach to clinical adoption for the multiple products within the portfolio and the Company has already demonstrated its ability to complete significant milestones on time with a major collaborator. The Company will continue to assess future opportunities on a deal-by-deal basis to maximize shareholder return.

The direct sales approach is appropriate for our lead product, Tutivia™, where the Company has chosen to seek coverage under the Local Coverage Determination issued by MolDx for Medicare, as this pathway offers a fuller and more accelerated reimbursement than other pathways. Nationally, 65% of transplant patients are covered by Medicare and Medicaid. Part of the process of obtaining this LCD is the submission of a Technical Assessment ("TA") file which was completed in Q1 2024. A coverage determination for Medicare reimbursement is now expected by the end of 2024, but it is important to note that there is a route for retrospective reimbursement to be applied on tests ordered during the LCD approval process.

Underlying our mainstream product development in kidney transplant, the Company has developed an expertise in RNA sequencing and RNA signature development within a regulatory environment that is now monitored by the FDA. This, coupled with the physical samples collected in multiple biological materials and the wide applicability of the data generated both for diagnostic and therapeutic collaborations, has now coalesced into an additional Services Business line.

Outlook

Through the ongoing agreement with Thermo Fisher and with the focus from our recently enlarged sales team on both direct sales of Tutivia™ and the Services Business, we are positive regarding the outlook for further attainment of our objectives and value creation across all our business lines. In addition, the Company has a longer-term product development in the pipeline plus additional optionality from the potential to expand into other related areas.

On behalf of the Company, I would like to thank our shareholders for their ongoing support and look forward to providing further updates in due course.

Sara Barrington

Chief Executive Officer

Consolidated condensed statement of profit or loss and other comprehensive income

for the six months ended 30 June 2024

Earnings per share attributable to the ordinary equity holders of the parent

Loss per share

The results reflected above relate to continuing operations.

Consolidated statement of financial position

as at 30 June 2024

The principal accounting policies adopted in the preparation of the financial information of the Company, which have been applied consistently to the period presented, are set out below:

Basis of preparation

The accounting policies adopted in the preparation of the interim consolidated financial information are consistent with those of the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2023. No new IFRS standards, amendments or interpretations became effective in the six months to 30 June 2024.

Revenue

Testing revenues

Other revenues

Where a sales-based license is entered into which is conditional on future performance criteria, revenue is recognised once the performance obligation to which some or all of the sales-based criteria has been allocated has been satisfied.

Statement of compliance

This interim consolidated financial information for the six months ended 30 June 2024 has been prepared in accordance with IAS 34, 'Interim financial reporting' and the AIM Rules for Companies. This interim consolidated financial information is not the Group's statutory financial statements and should be read in conjunction with the annual financial statements for the year ended 31 December 2023, which have been prepared in accordance with UK adopted International Accounting Standards (UK IFRS) and have been delivered to the Registrar of Companies. The auditors have reported on those accounts; their report was unqualified and did not contain statements under section 498(2) or (3) of the Companies Act 2006.

Measurement convention

Basis of consolidation

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

The preparation of the Company's historical financial information under IFRS requires the Directors to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. 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. Actual results may differ from these estimates.

The Directors consider that the following estimates and judgements are likely to have the most significant effect on the amounts recognised in the financial information.

Carrying value of intangible assets, property, plant and equipment

Going concern

The Group has one division being the development of prognostic and diagnostic tests for kidney transplant patients. The directors consider that all activities relate to this segment. All the non-current assets of the Group are located in, or primarily relate to, the USA.

The Company has one category of dilutive potential ordinary share, being share options. The potential shares were not dilutive in the period as the Group made a loss per share in line with IAS 33.

The Company acquired an asset under capital lease financing arrangements.

The Share Option Plan has a non-employee sub-plan for the grant of Options to the Company's advisors, consultants, non-executive directors, and entities providing, through an individual, such advisory, consultancy, or office holder services. In addition there is a US sub-plan for the grant of Options to eligible participants in the Share Option Plan and the Non-Employee Sub-Plan who are US residents and US taxpayers.

With the exception of options over 10,631,086 shares, which vested immediately on grant, the options vest equally over twelve quarters from the grant date. If options remain unexercised after the date one day before the tenth anniversary of grant such options expire. The Options are subject to exercise conditions such that they shall, subject to certain exceptions, vest in equal quarterly instalments over the three years immediately following the date of grant, which vesting shall accelerate in full in the event of a change of control of the Company.

Weighted

average

exercise

The Group recognised total expenses of $36,000 (six months to 30 June 2023 - $99,000) as administrative expenses relating to equity-settled share-based payment transactions during the period to 30 June 2024.