20-F

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

(Mark One)

☐  REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2021

OR

☐  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to _______________

OR

☐  SHELL COMPANY PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report_________________

Commission File Number 001-37652

____________________________________________________________

MIDATECH PHARMA PLC

(Exact name of Registrant as specified in its charter)

____________________________________________________________

England and Wales

(Jurisdiction of incorporation or organization)

1 Caspian Point

Caspian Way

Cardiff, CF10 4DQ

United Kingdom

(Address of principal executive offices)

Stephen Stamp, Chief Executive Officer and Chief Financial Officer

1 Caspian Point

Caspian Way

Cardiff, CF10 4DQ

United Kingdom

Tel: +44 29 2048 0180

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class	Trading Symbol	Name of each exchange on which registered
Ordinary Shares, nominal value 0.1p each	*	NASDAQ Capital Market
American Depositary Shares, each representing five ordinary shares	MTP	NASDAQ Capital Market

* Not for trading, but only in connection with the registration of the American Depositary Shares

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Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

(Title of Class)

____________________________________________________________

The number of outstanding shares of each of the issuer’s classes of capital or common stock as of December 31, 2021 was: 98,468,387 Ordinary Shares

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer”, and “emerging growth company” in Rule 12b-2 of the Exchange Act (check one):

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Emerging growth company ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal controls over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ☐ International Financial Reporting Standards as issued by the International Accounting Standards Board ☒ Other ☐  

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 ☐ Item 18 ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐   No ☒

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TABLE OF CONTENTS

PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS	7
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE	7
ITEM 3. KEY INFORMATION	7
ITEM 4. INFORMATION ON THE COMPANY	46
ITEM 4A. UNRESOLVED STAFF COMMENTS	77
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS	77
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	86
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	96
ITEM 8. FINANCIAL INFORMATION	98
ITEM 9. THE OFFER AND LISTING	100
ITEM 10. ADDITIONAL INFORMATION	100
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	107
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	108
PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	111
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	111
ITEM 15. CONTROLS AND PROCEDURES	111
ITEM 16. [RESERVED]
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT	112
ITEM 16B. CODE OF ETHICS	112
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES	112
ITEM 16D. EXEMPTIONS FROM LISTING STANDARDS FOR AUDIT COMMITTEES	113
ITEM 16E. PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS	113
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT	113
ITEM 16G. CORPORATE GOVERNANCE	113
ITEM 16H. MINE SAFETY DISCLOSURE	114
ITEM 16I.   DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS	114
PART III
ITEM 17. FINANCIAL STATEMENTS	115
ITEM 18. FINANCIAL STATEMENTS	115
ITEM 19. EXHIBITS	116
SIGNATURES	119

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GENERAL INFORMATION

Midatech Pharma PLC is a public limited company organized under the laws of England and Wales under registered number 09216368. In this annual report, references to “we,” “us,” “our,” “the Group,” “Company,” “company” or “Midatech” means Midatech Pharma PLC and our consolidated subsidiaries.

Our principal executive offices are located at 1 Caspian Point, Caspian Way, Cardiff, CF10 4DQ, United Kingdom. The telephone number at our principal executive office is +44 29 2048 0180.

We maintain an Internet website at www.midatechpharma.com. None of the information contained on our website, or on any other website linked to our website, will be incorporated in this annual report by reference or otherwise be deemed to be a part of this annual report.

The trademarks, trade names and service marks appearing in this annual report are the property of their respective owners.

PRESENTATION OF FINANCIAL AND OTHER DATA

The consolidated financial statement data as of December 31, 2021, 2020 and 2019 and for the years ended December 31, 2021, 2020 and 2019 have been derived from our consolidated financial statements, as presented at the end of this annual report, which have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. We prepare our consolidated financial statements in British pounds sterling. Except as otherwise stated, all monetary amounts in this annual report are presented in British pounds sterling.

In this annual report, unless otherwise specified or the context otherwise requires:

• “$” and “U.S. dollar” each refer to the United States dollar (or units thereof); and

• “£,” “pence” and “p” each refer to the British pound sterling (or units thereof).

References to a particular “fiscal” year are to our fiscal year ended December 31 of such year.

We have made rounding adjustments to some of the figures included in this annual report. Accordingly, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that preceded them.

On March 3, 2020, following shareholder approval, we effected a one-for-20 reverse split of our ordinary shares, nominal value 0.1p per share, or Ordinary Shares, and our Ordinary Shares began trading on AIM, a market operated by the London Stock Exchange plc, or AIM, on a split-adjusted basis as of such date. No fractional shares were issued in connection with the reverse stock split. As a result of the reverse stock split, the number of issued and outstanding Ordinary Shares was reduced to 23,494,981 shares as of March 3, 2020.

Concurrently with the reverse split, and in an effort to bring our American depositary share, or Depositary Shares, price into compliance with The NASDAQ Stock Market LLC’s, or NASDAQ, minimum bid price per share requirement, on March 3, 2020 we effected a ratio change in the number of Ordinary Shares represented by our Depositary Shares from 20 Ordinary Shares per Depositary Share to five Ordinary Shares per Depositary Share, reducing the number of outstanding Depositary Shares, as of the close of business on March 3, 2020 to 988,656.

The change in the number of Ordinary Shares resulting from the reverse stock split and change in the number of Depositary Shares resulting from the change in ratio has been applied retroactively to all share and per share amounts presented in this annual report, to the extent applicable.

INDUSTRY AND MARKET DATA

This annual report contains estimates, projections and other information concerning our industry, our business and the market for our product candidates. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties, and actual events or circumstances may differ materially from events and circumstances that are assumed in this information. Unless otherwise expressly stated, we obtained this industry, business, market and other data from our own internal estimates and research as well as from reports, research surveys, studies and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data and similar sources. While we believe our internal company research as to such matters is reliable and the market definitions are appropriate, neither such research nor these definitions have been verified by any independent source.

In addition, assumptions and estimates of our and our industry’s future performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the section titled “Risk factors.” These and other factors could cause our future performance to differ materially from our assumptions and estimates. See “Cautionary note regarding forward-looking statements.”

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This annual report contains certain forward-looking information about the Company that is intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995. These statements may be made directly in this annual report or may be incorporated into this annual report by reference to other documents. Our representatives may also make forward-looking statements. Forward-looking statements are statements that are not historical facts. Words such as “expect,” “believe,” “will,” “may,” “anticipate,” “plan,” “estimate,” “intend,” “should,” “can,” “likely,” “could” and similar expressions are intended to identify forward-looking statements. Forward-looking statements appear in a number of places throughout this annual report and include statements regarding our intentions, beliefs, assumptions, projections, outlook, analyses or current expectations concerning, among other things, our intellectual property position, research and development projects, results of operations, cash needs, capital expenditures, financial condition, liquidity, prospects, growth and strategies, regulatory approvals and clearances, the markets and industry in which we operate and the trends and competition that may affect the markets, industry or us.

These forward-looking statements are based on currently available competitive, financial and economic data together with management’s views and assumptions regarding future events and business performance as of the time the statements are made and are subject to risks and uncertainties. We wish to caution you that there are some known and unknown factors that could cause actual results to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements, including but not limited to risks related to:

• our requirement for additional financing and our ability to continue as a going concern;

• our estimates regarding losses, expenses, future revenues, and capital requirements;

• our ability to successfully develop, test, and partner with a licensee to manufacture or commercialize products for conditions using our technology platforms;

• the successful commercialization and manufacturing of our any future product candidate we may commercialize or license;

• the success and timing of preclinical studies and clinical trials, if any;

• shifts in our business and commercial strategy;

• the filing and timing of regulatory filings, including investigational new drug applications, with respect to any of our products and the receipt of any regulatory approvals;

• the anticipated medical benefits of our products;

• the difficulties in obtaining and maintaining regulatory approval of our product candidates, and the labeling under any approval we may obtain;

• the success and timing of the potential commercial development of our product candidates and any product candidates we may acquire in the future, including MTX110;

• our plans and ability to develop and commercialize our product candidates and any product candidates we may acquire in the future;

• the ability to manufacture products in third-party facilities;

• the rate and degree of market acceptance of any of our product candidates;

• the successful development of our commercialization capabilities, including our internal sales and marketing capabilities;

• obtaining and maintaining intellectual property protection for our product candidates and our proprietary technology;

• the success of competing therapies and products that are or become available;

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• the success of any future strategic acquisitions;

• cybersecurity and other cyber incidents;

• industry trends;

• the impact of government laws and regulations;

• regulatory, economic and political developments in the United Kingdom, the European Union, the United States and other foreign countries, including any impact from the United Kingdom leaving the European Union;

• the difficulties doing business internationally, including any risks related to the novel strain of coronavirus, COVID-19;

• the ownership of our Ordinary Shares and Depositary Shares;

• our ability to meet the listing criteria required to remain listed on the NASDAQ Capital Market;

• our status as a foreign private issuer;

• our ability to recruit or retain key scientific or management personnel or to retain our senior management;

• the impact and costs and expenses of any litigation we may be subject to now or in the future;

• the performance of third parties, including joint venture partners, our collaborators, third-party suppliers and parties to our licensing agreements; and

• other risks and uncertainties, including those described in “Risk Factors” in this annual report.

Any forward-looking statements that we make in this annual report speak only as of the date of such statement, and we undertake no obligation to update such statements to reflect events or circumstances after the date of this annual report or to reflect the occurrence of unanticipated events. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data. You should, however, review the factors and risks we describe in the reports we will file from time to time with the U.S. Securities and Exchange Commission, or SEC, after the date of this annual report. See “Item 10. Additional Information—H. Documents on Display.”

You should also read carefully the factors described in “Item 3. Key Information—D. Risk Factors” and elsewhere in this annual report to better understand the risks and uncertainties inherent in our business and underlying any forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this annual report will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified timeframe, or at all.

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PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS.

Not Applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE.

Not Applicable.

ITEM 3. KEY INFORMATION.

A. [Reserved].

B. Capitalization and Indebtedness

Not Applicable.

C. Reasons for the Offer and Use of Proceeds

Not Applicable.

D. Risk Factors

Our business has significant risks. In addition to the other information included in this annual report, including the matters addressed in the section of the annual report entitled “Cautionary Note Regarding Forward-Looking Statements” and in our financial statements and the related notes, you should consider carefully the risks described below. The risks and uncertainties described below are not the only risks and uncertainties we may face. Additional risks and uncertainties not presently known to us, or that we currently consider immaterial could also negatively affect our business, financial condition, results of operations, prospects, profits and stock prices. If any of the risks described below actually occur, our business, financial condition, results of operations, prospects, profits and stock prices could be materially adversely affected.

Summary of Risk Factors

The occurrence of one or more of the events or circumstances described in this section titled “Risk Factors,” alone or in combination with other events or circumstances, may materially adversely affect our business, financial condition and operating results. In that event, the trading price of our securities could decline, and you could lose all or part of your investment. Such risks include, but are not limited to:

• We have incurred significant losses since our inception and anticipate that we will continue to incur losses in the future;

• Our requirement for additional financing in the short-term represents a material uncertainty that raises substantial doubt about our ability to continue as a going concern. 

• The effects of health epidemics, including the ongoing global coronavirus COVID-19 pandemic, in regions where we, or the third parties on which we rely, have business operations could adversely impact our business, including our clinical trials, preclinical studies and supply chains, depending on the location, duration and severity of disruptions to the systems affecting our business.

• Our operations are in early-stage development with no sources of recurring revenue and there is no assurance that we will successfully develop and license our product candidates or ever become profitable.

• We are exposed to political, regulatory, social and economic risk relating to the United Kingdom’s exit from the European Union.

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• In 2020, our license agreement related to panobinostat, the active pharmaceutical ingredient in our MTX110 product, was terminated by Secura Bio, Inc., or Secura Bio. Because of this, we believe that the relevant Secura Bio patents may delay a launch of MTX110, which could have a material adverse effect on our business, financial condition and results of operations.

• Our future success is dependent on product development and the ability to successfully license our product candidates to partners who can seek regulatory approval and commercialization of our product candidates.

• Clinical drug development involves a risky, lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results.

• We expect to seek to establish agreements with potential licensing partners and collaborators and, if we are not able to establish them on commercially reasonable terms, we may have to alter our development and commercialization plans.

• Recently enacted and future legislation in the United States and other countries may affect the prices we may obtain for our product candidates and increase the difficulty and cost for us to commercialize our product candidates.

• Our success depends in part on our ability to protect rights in our intellectual property, which cannot be assured.

• We rely on third parties to conduct our preclinical and clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize our product candidates and our business could be substantially harmed.

• We are dependent on third party suppliers, and if we experience problems with any of these third parties, the manufacturing of our product candidates could be delayed, which could harm our results of operations.

• We recently experienced a leadership transition and this transition, along with the possibility that we may in the future be unable to retain and recruit qualified scientists, key executives, key employees or key consultants, may delay our development efforts or otherwise harm our business.

• The price of our Ordinary Shares and Depositary Shares may be volatile.

• Shareholder ownership interests in the Company may be diluted as a result of future financings, additional acquisitions or the exercise of our options and warrants, and may have a material negative effect on the market price of our securities.

• The rights of holders of Depositary Shares are not the same as the rights of holders of Ordinary Shares.

• It may be difficult for you to bring any action or enforce any judgment obtained in the United States against us or members of our Board of Directors, which may limit the remedies otherwise available to you.

• We are a “foreign private issuer” under the rules and regulations of the SEC and, as a result, are exempt from a number of rules under the Exchange Act and are permitted to file less information with the SEC than a company incorporated in the United States.

• If we cannot meet NASDAQ’s continued listing requirements, NASDAQ may delist our Depositary Shares, which could have an adverse impact on the liquidity and market price of our Depositary Shares.

Risks Related to Our Financial Operations and Capital Needs

We have incurred significant losses since our inception and anticipate that we will continue to incur losses in the future.

We are an early-stage biopharmaceutical company. Investment in biopharmaceutical product development is highly speculative because we entail substantial upfront capital expenditures and significant risk that a product candidate will fail in development, will fail to gain regulatory approval or otherwise fail to become commercially viable. We continue to incur significant development and other expenses related to our ongoing operations. As a result, we are not profitable and have incurred substantial losses since our inception. For the year ended December 31, 2021, we had a net loss of £5.46 million and an accumulated deficit of £127.80 million. For the years ended December 31, 2020 and 2019 we had a net loss of £22.19 million and £10.09 million, respectively.

We expect to continue to incur losses for the foreseeable future, and do not expect these losses to reduce as we continue our development of, and work with any licensing partners to seek regulatory approvals for, our product candidates.

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We may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenues. If we fail to find licensing partners, if we abandon any development programs, or if any of our licensed product candidates fail in clinical trials or do not gain regulatory approval, or if approved, fail to achieve market acceptance, we may never become profitable. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. Our prior losses and expected future losses have had and will continue to have an adverse effect on our shareholders’ equity and working capital.

In 2020, we undertook a strategic review of our operations, which may yield uncertain results.

On March 31, 2020, we announced that, due to the prevailing conditions in the capital markets and the prospect of raising additional funds and finding a partner for our assets, the Board of Directors initiated a strategic review of our operations. The objective of the review was to identify ways to maximize value for our stakeholders given the significant challenges faced by our business. We have formed a Finance Committee comprised of Mr. Stamp and Rolf Stahel, our Non-Executive Chairman, to review, analyze and make recommendations to the Board of Directors regarding a possible sale of our business or other strategic transactions, and hired an outside advisor to assist us. We entered into an “offer period” under United Kingdom rules and regulations, which placed certain restrictions and obligations on us. In January 2021, we announced that the strategic review had completed, although the impact of the uncertainty created by the process on all stakeholders, including employees, vendors and shareholders, may not be apparent for some time.

Our requirement for additional financing in the short-term represents a material uncertainty that raises substantial doubt about our ability to continue as a going concern. 

We have experienced net losses and significant cash outflows from cash used in operating activities over the past years as we develop our portfolio. For the year ended December 31, 2021, the Company incurred a consolidated loss from operating activities of £5.46 million and negative cash flows from operations of £6.55 million. As of December 31, 2021, we had an accumulated deficit of £127.80 million.

Our future viability is dependent on our ability to raise cash from financing activities to finance our development plans until commercialization, generate cash from operating activities and to successfully obtain regulatory approval to allow marketing of our development products. Our failure to raise capital as and when needed could have a negative impact on our financial condition and ability to pursue our business strategies.

Our consolidated financial statements have been presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As at December 31, 2021, we had cash and cash equivalents of £10.06 million. We believe we currently have enough cash to fund our planned operations into the first quarter of 2023.

We have prepared cash flow forecasts and considered the cash flow requirement for our next three years, including the period twelve months from the date of the approval of the financial statements. These forecasts show that further financing will be required during the course of the next 12 months, assuming, inter alia, that certain development programs and other operating activities continue as currently planned.  This requirement for additional financing represents a material uncertainty that raises substantial doubt about our ability to continue as a going concern. As a result, our independent registered public accounting firm included an explanatory paragraph in its report on our financial statements as of and for the year ended December 31, 2021 with respect to this uncertainty.

In addition, the global spread of pandemic novel coronavirus, COVID-19, places increased uncertainty over our forecasts. The restrictions placed and being placed on the movement of people will likely cause delays to some of our plans. We have established a COVID-19 task force internally to monitor the impact of COVID-19 on our business and prioritize activities to minimize its effect.

In addition to utilizing the existing cash reserves, we are evaluating a number of near-term funding options potentially available to us, including fundraising and/or the partnering of assets or technologies. After considering the uncertainties, we considered it appropriate to continue to adopt the going concern basis in preparing the financial information.

Our ability to continue as a going concern is dependent upon our ability to obtain additional capital and/or dispose of assets, for which there can be no assurance we will be able to do on a timely basis, on favorable terms or at all.

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Our operations are in early-stage development with no sources of recurring revenue and there is no assurance that we will successfully develop and license our product candidates or ever become profitable.

We are at a relatively early stage of our commercial development. To date, we have generated a minimal amount of revenue from our product candidates. Our ability to generate revenue and become and remain profitable depends, in part, on our ability to successfully find a licensing partner for our product candidates, or other product candidates we may in-license or acquire, and have such candidates successfully commercialized. Our current strategy is, once proof-of-concept of our product candidates has been established, to generate revenue via a partner, thereby earning royalty and/or milestone income; however, this is not expected to materialize in the foreseeable future, and there can be no guarantee we will be able to find a licensing partner for our product candidates. Even if our product candidates were to successfully achieve regulatory approval, we do not know when any of the product candidates will generate revenue, if at all. Our ability to generate revenue from our product candidates also depends on a number of additional factors, including our ability, and the ability of any licensing partners, to:

• successfully complete development activities;

• complete and submit new drug applications to the European Medicines Agency, or the EMA, the Medicines and Healthcare Products Regulatory Agency in the United Kingdom, or the MHRA, the United States Food and Drug Administration , or the FDA, and any other foreign regulatory authorities, and obtain regulatory approval for products for which there is a commercial market;

• set a commercially viable price;

• obtain commercial qualities of the products at acceptable cost levels;

• develop and maintain a commercial organization capable of sales, marketing and distribution in the markets where the product is to be sold; and

• obtain adequate reimbursement from third-parties, including government, departments and healthcare payors.

In addition, because of the numerous risks and uncertainties associated with product development, including that our product candidates may not advance through development or achieve the endpoints of applicable clinical trials, we are unable to predict the timing or amount of increased expenses, or when or if we will be able to achieve or maintain profitability. Even if we are able to complete the process described above, we anticipate incurring significant costs.

Even if we are able to generate royalty and/or milestone revenues from the sale of product candidates, we may not become profitable and may need to obtain additional funding to continue operations. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and may be forced to cease or reduce our operations.

There can be no assurance that we will operate profitably, produce a reasonable return, if any, on investment, or remain solvent. If our strategy proves unsuccessful, stockholders could lose all or part of their investment.

If we require or seek to raise additional capital to fund our operations and we fail to obtain necessary financing, we may be unable to complete the development of our product candidates.

We expect to continue to spend substantial amounts of our cash resources going forward in order to advance the development of our product candidates.

Until such time as we can generate a sufficient amount of revenue from the product candidates we license, if ever, we expect that we may finance future cash needs through, among other things, public or private equity or debt offerings. Such offerings may take place in the United Kingdom, the United States or other foreign countries. However, if we are unable to raise capital when needed, or on terms acceptable to us, our business could be significantly harmed. If we raise additional funds through the issuance of debt or additional equity securities, such issuance could result in dilution to our existing shareholders and/or increased fixed payment obligations. Furthermore, these securities may have rights senior to those of our Ordinary Shares and could contain covenants that would restrict our operations and potentially impair our competitiveness, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. Any of these events could significantly harm our business, financial condition and prospects.

Our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement and involves risks and uncertainties, and actual results could vary as a result of a number of factors, including the factors discussed elsewhere in this “Risk Factors” section. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect. Our future funding requirements, both near and long-term, will depend on many factors, including, but not limited to:

• any acquisitions and the commercialization of other assets, including licensed assets;

• the initiation, progress, timing, costs and results of clinical trials for any product candidates we advance to clinical trials;

• the attainment of milestones and the need to make any royalty payments on any of our product candidates or any other future product candidates;

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• the number and characteristics of product candidates we in-license or acquire and develop;

• the outcome, timing and cost of regulatory approvals by the EMA, the MHRA, the FDA and any other comparable foreign regulatory authorities, including the potential for such regulatory authorities to require that we perform more studies, or more costly studies, than those we currently expect;

• the cost of filing, prosecuting, defending and enforcing any patent claims or other intellectual property rights; and

• the effect of competing technological and market developments.

If a lack of available capital means that we are unable to expand our operations or otherwise capitalize on our business opportunities, our business, financial condition and results of operations could be materially adversely affected.

In previous years, we and our independent registered public accounting firm have identified material weaknesses in our internal control over financial reporting. Any failure by us to maintain an effective system of internal controls or provide reliable financial and other information in the future, may cause investors to lose confidence in our financial statements and SEC filings and the market price of our securities may be materially and adversely affected.  

The Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, requires, among other things, that we maintain effective internal controls for financial reporting and disclosure controls and procedures. We are required, under Section 404 of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting. This assessment includes disclosures of any material weaknesses identified by management in its internal control over financial reporting.

A material weakness is a control deficiency, or combination of control deficiencies, in internal control over financial reporting that results in more than a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis. Section 404 of the Sarbanes-Oxley Act also generally requires an attestation from our independent registered public accounting firm on the effectiveness of our internal control over financial reporting. However, for as long as we remain a non-accelerated filer, we are not required to comply with the independent registered public accounting firm attestation requirement.

In previous years, we and our independent registered public accounting firm have identified material weaknesses in our internal controls over financial reporting. Although we have instituted these remedial measures to address the material weaknesses identified and to continually review and evaluate our internal control systems to allow management to report on the sufficiency of our internal control over financial reporting, we cannot assure you that we will not discover additional weaknesses in our internal control over financial reporting. Any such additional weaknesses or failure to adequately remediate any existing weakness could materially and adversely affect our financial condition and results of operations, as well as our ability to accurately report our financial condition and results of operations in a timely and reliable manner.

Additionally, the material weaknesses previously identified, or other material weaknesses or significant deficiencies we may become aware of in the future, could result in our determining that our controls and procedures are not effective in future periods or could result in a material misstatement of the consolidated financial statements that would not be prevented or detected.

Any failure to maintain effective internal controls over financial reporting could severely inhibit our ability to accurately report our financial condition, results of operations or cash flows. If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have a material weakness or significant deficiency in our internal control over financial reporting once that firm begin its Section 404 reviews, we could lose investor confidence in the accuracy and completeness of our financial statements and reports, the market price of our ordinary shares and/or Depositary Shares could decline, and we could be subject to sanctions or investigations by NASDAQ, the SEC or other regulatory authorities. Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.

We recognized a material intangible asset impairment loss as of December 31, 2020, and we may be required to recognize additional non-cash impairment losses in the future.

As of December 31, 2020, in connection with our decision to terminate further in-house development of MTD201, our Q-Sphera formulation of octreotide, we recognized an impairment loss for in-process research and development of £9.3 million. In addition, because no other Q-Sphera products were advanced beyond the formulation stage as of December 31, 2020, we recognized an impairment of goodwill arising from our acquisition of Q Chip Limited in December 2014 of £2.3 million. Further, in connection with the termination of our license to panobinostat, the active ingredient for our MTX110 product, by Secura Bio, we recognized an impairment of an intangible asset of £0.8 million as of December 31, 2020. We had no impairment loss for the year ended December 31, 2021.

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These charges discussed above and any future impairment charges could materially increase our expenses and reduce our profitability. The process of testing goodwill and intangible assets for impairment involves numerous judgments, assumptions and estimates made by our management including expected future profitability, cash flows and the fair values of assets and liabilities, which inherently reflect a high degree of uncertainty and may be affected by significant variability. If the business climate deteriorates, including the markets in which certain of our product candidates may be sold, then actual results may not be consistent with these judgments, assumptions and estimates, and our goodwill and intangible assets, to the extent not impaired at the time, may become impaired in future periods. This would in turn have an adverse impact on our financial position and results of operations. 

Risks Related to Our Business, Strategy and Industry

The effects of health epidemics, including the ongoing global coronavirus COVID-19 pandemic, in regions where we, or the third parties on which we rely, have business operations could adversely impact our business, including our clinical trials, preclinical studies and supply chains, depending on the location, duration and severity of disruptions to the systems affecting our business.

As of the date hereof, the COVID-19 pandemic, caused by the novel strain of coronavirus SARS-CoV-2, has caused substantial disruptions of economies and human societies worldwide for over two years. Efforts to contain the spread of the pandemic in the United Kingdom, Europe, the United States and in many other countries across the globe, have involved imposing widespread restrictions on travel, periodic quarantines and shelter-in-place orders, limitations on the permitted size of group gatherings, shuttering of businesses, implementation of programs for remote schooling, and other crisis-driven measures. Notwithstanding these efforts and remarkable successes achieved in the development and recent distribution of vaccines, vast portions of the populations in most countries have yet to be inoculated, and numerous nations and regions have experienced multiple surges that have sickened millions of people, strained the capacity of healthcare systems, and caused an estimated six million deaths worldwide. Over the course of the pandemic, government-imposed precautionary measures have been relaxed in certain countries or states as the spread of COVID-19 has decelerated, only to be reinstated in many jurisdictions due to an ensuing resurgence in cases. The concerning emergence of numerous new strains of COVID-19, which the current vaccines were not specifically designed to immunize against, casts more uncertainty over the future effects of the pandemic.

The duration, geographic scope and costs of the societal and economic disruptions caused by the COVID-19 pandemic cannot be reasonably estimated at this time, and it is not possible to accurately predict the extent of the adverse effects of the pandemic on our business. However, we have experienced certain impacts and may experience others which, if they continue for an extended period of time, could have material adverse effects on our operations and the execution of our business plans. Examples of these include the following:

• We have experienced some delays in our clinical trials, in particular our Phase I trials of MTX110 in diffuse intrinsic pontine glioma, or DIPG, at Columbia University and in medulloblastoma at the University of Texas. Individuals defer seeking treatment, physicians have fewer in-person meetings to recruit and enroll patients, and recruited patients are hindered by restrictions in traveling to and accessing clinical sites. In addition, resources at hospitals have been diverted to dealing with the pandemic, causing delays in scheduling screening evaluations, implant procedures, and follow-up monitoring visits. As a result of the foregoing factors, the expected timeline for data readouts of our clinical trials may be negatively impacted, which would adversely affect our business.

• We rely on third party service providers to assist us in managing and otherwise carrying out our nonclinical studies and clinical trials, and the outbreak may affect their ability to devote sufficient time and resources to our programs.

• We rely on third party suppliers and contract manufacturers to produce materials for our clinical trials. We could experience supply chain delays or shortages with respect to these materials, which could impact our ability to meet current timetables for our clinical trials.

• We previously temporarily closed our executive offices and implemented various governmental safety guidelines, including work-from-home policies for most employees. The effects of government orders and our work-from-home policies may negatively impact productivity, disrupt our business and delay our clinical programs and timelines, the magnitude of which will depend, in part, on the length and severity of the restrictions and other limitations on our ability to conduct our business in the ordinary course.

• We have, from time to time, instituted work-from-home policies for certain of our employees, and this could adversely affect our operations, the productivity of our employees and our ability to conduct and complete our nonclinical studies and clinical trials.

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• The pandemic could cause delays in pursuing and obtaining governmental and other third-party reimbursement decisions, as the work of these organizations may be slowed due to personnel work-from-home measures and travel and other scheduling constraints.

• In addition, the ability of the FDA, MHRA, EMA and other regulatory authorities or other bodies to engage in routine regulatory and oversight activities, such as the review and authorization or certification of new products and the inspection of manufacturing and clinical trial sites, may be affected by the COVID-19 pandemic. The FDA, MHRA, EMA and other regulatory authorities or other bodies may have slower response times or be under-resourced. If the global health concerns continue to disrupt or prevent regulatory authorities from conducting their regular reviews, inspections, or other regulatory activities, it could significantly impact the timely review and process our marketing applications, clinical trial authorizations, or other regulatory submissions, which could have a material adverse effect on our business.

• The near- and longer-term future impacts of the COVID-19 pandemic on global and national economies, and related impacts on the availability of investment capital in financial markets, continues to be uncertain. Continued economic disruptions could cause a contraction in equity capital and debt markets, making access to financing unavailable on acceptable terms or at all.

The global COVID-19 pandemic continues to evolve rapidly. We do not yet know the full extent of potential delays or impacts on our business, our licensing efforts, our clinical studies, our research programs, healthcare systems or the global economy. However, these effects could have a material impact on our operations, and we continue to monitor the COVID-19 situation closely. The full extent to which the COVID-19 pandemic will impact our business operations, financial condition, results of operations, and cash flows will depend on future developments, including, but not limited to, the ultimate severity, scope and duration of the pandemic before it is brought under control, the pace at which governmental and private travel and other restrictions and concerns about public gatherings will ease, the rate at which historically large increases in unemployment rates will decrease, and the speed with which national economies recover, all of which are highly uncertain. To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section.

In 2020, our license agreement related to panobinostat, the active pharmaceutical ingredient in our MTX110 product, was terminated by Secura Bio. Because of this, we believe that the relevant Secura Bio patents may delay a launch of MTX110, which could have a material adverse effect on our business, financial condition and results of operations.

We entered into a License Agreement, executed on or about June 6, 2017, or the License Agreement, by and between Midatech Limited and Novartis AG, or Novartis, which Novartis subsequently transferred to Secura Bio, or the Secura License Agreement. Pursuant to the Secura License Agreement, Midatech Limited was granted a worldwide, sublicenseable license to certain patents of panobinostat, the active pharmaceutical ingredient of Midatech’s development product MTX110. Midatech Limited’s rights are limited to the treatment of brain cancer in humans, administered by convection-enhanced delivery. We received a letter dated June 1, 2020, sent on behalf of Secura Bio purporting to terminate the Secura License Agreement “effective immediately,” the reason specified being that we were proposing to liquidate the Company. Despite our assurances to the contrary, and despite our repeated requests that Secura Bio withdraw its termination, Secura Bio reaffirmed the termination and reasons therefor and the agreement was thus terminated. We received a further letter sent on behalf of Secura Bio dated May 21, 2021 purporting to terminate the Secura License Agreement a second time for alleged material breaches of the agreement, and demanding a non-exclusive, fully paid-up, royalty-free, perpetual license to Midatech’s MTX110 intellectual property. This demand was refused based upon, among other things, Secura Bio’s previous termination of the License Agreement in 2020.

We view MTX110 as an important asset and currently have two ongoing clinical trials for MTX110 and intend to commence two further clinical trials as part of our MTX110 clinical program. While we continue to enjoy freedom to use panobinostat for research purposes and we plan to continue to pursue development of MTX110, we believe that the relevant Secura Bio patents may delay a launch of MTX110 for use in patients with DIPG. We do not, however, anticipate it would have any impact on launching MTX110 for use in patients with glioblastoma multiforme. If we are unable to launch a product candidate until the patent expires, there could be a material adverse effect on our business, financial condition and results of operations.

Further, should Secura Bio continue to interfere with our ongoing business by, among other things, challenging the legality of the termination of the Secura License Agreement, the uncertainty and diversion of time and resources associated could have a material adverse effect on our business, financial condition and prospects, and we cannot assure you that we would be successful in resolving such dispute.

We are exposed to political, regulatory, social and economic risk relating to the United Kingdom’s exit from the European Union.

Following the result of a referendum in 2016, the United Kingdom left the European Union on January 31, 2020, commonly referred to as Brexit. Pursuant to the formal withdrawal arrangements agreed between the United Kingdom and the European Union, the United Kingdom was subject to a transition period until December 31, 2020, during which European Union rules continued to apply. The Trade and Cooperation Agreement between the United Kingdom and the European Union, which outlines the future trading relationship between the United Kingdom and the European Union, was agreed in December 2020. The impact of the new trade agreement on the general and economic conditions in the United Kingdom remains uncertain. There may be, for example, additional costs in materials and equipment sourced from the European Union and/or delays that could have a material adverse effect on our business, financial condition and results of operations.

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From a regulatory perspective, the United Kingdom’s withdrawal from the European Union could bear significant complexity and risks.  A basic requirement of European Union law relating to the grant of a marketing authorization for a medicinal product in the European Union is that the applicant is established in the European Union. Following the withdrawal of the United Kingdom from the European Union, marketing authorizations previously granted to applicants established in the United Kingdom may no longer be valid.  Moreover, the scope of a marketing authorization for a medicinal product granted by the European Commission pursuant to the centralized procedure might not, in the future, include the United Kingdom. In these circumstances, an authorization granted by competent United Kingdom authorities would be required to place medicinal products on the United Kingdom market. In addition, the laws and regulations that will apply after the United Kingdom withdraws from the European Union would affect the manufacturing sites that hold a certification issued by the United Kingdom competent authorities, and vice versa.  Our capability to rely on these manufacturing sites for products intended for the European Union market would also depend upon the exact terms of the United Kingdom withdrawal.

Any of these factors could significantly increase the complexity of our activities in the European Union and in the United Kingdom, could depress our economic activity and restrict our access to capital, which could have a material adverse effect on our business, financial condition and results of operations and reduce the price of our Ordinary Shares and Depositary Shares.

We have undertaken in the past, and may in the future undertake, strategic acquisitions. Failure to integrate acquisitions could adversely affect our value.

 One of the ways we have grown our pipeline and business in the past is through strategic acquisitions of other businesses, products, and technologies. We may, from time to time, evaluate additional acquisition opportunities, and may, in the future, strategically make further acquisitions of, and investments in, businesses, products and technologies when we believe the opportunity is advantageous to our prospects. There can be no assurance that in the future we will be able to find appropriate acquisitions or investments. In connection with these acquisitions or investments, we may:

• issue stock that would dilute our shareholders’ percentage of ownership;

• be obligated to make milestone or other contingent or non-contingent payments;

• incur debt and assume liabilities; and

• incur amortization expenses related to intangible assets or incur large and immediate write-offs.

We also may be unable to find suitable acquisition candidates and may not be able to complete acquisitions on favorable terms, if at all, or obtain adequate financing for such acquisitions. If we do complete an acquisition, this may not ultimately strengthen our competitive position or ensure that we will not be viewed negatively by customers, financial markets or investors. Further, acquisitions could also pose numerous additional risks to our operations, including:

• problems integrating the purchased business, products or technologies without substantial costs, delays or other problems;

• increases to our expenses;

• the failure to have discovered undisclosed liabilities of the acquired asset or company for which we may not be adequately indemnified;

• diversion of management’s attention from their day-to-day responsibilities and our core business;

• inability to enforce indemnification and non-compete agreements;

• the failure to successfully incorporate acquired products or technologies into our business;

• the failure of the acquired business, products or technologies to perform as well as anticipated;

• the failure to realize expected synergies and cost savings;

• unexpected safety issues and/or clinical trial failure of the acquisition’s products;

• harm to our operating results or financial condition, particularly during the first several reporting periods after the acquisition is completed;

• entrance into markets in which we have limited or no prior experience; and

• potential loss of key employees or customers, particularly those of the acquired entity.

We may not be able to complete one or more acquisitions or effectively integrate the operations, products or personnel gained through any such acquisition without a material adverse effect on our business, financial condition and results of operations. 

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Our future success is dependent on product development and the ability to successfully license our product candidates to partners who can seek regulatory approval and commercialization of our product candidates.

We continue to conduct research and development for our product candidates and, to a lesser extent, clinical trials for certain of our product candidates; however there can be no assurance that any of our targeted developments will be successful. We must develop functional products that address specific market needs. We must therefore engage in new development activities, which may not produce innovative, commercially viable results in a timely manner or at all. In addition, we may not be able to develop new technologies or identify specific market needs that are addressable by our technologies, or technologies available to us. We may encounter delays and incur additional development and production costs and expenses, over and above those expected, in order to develop technologies and products suitable for licensing. If any of our development programs are curtailed, this may have a material adverse effect on our business and financial conditions.

Our business is dependent on our ability to complete the development of product candidates, and license our product candidates to partners who will seek to obtain regulatory approval for and commercialize our product candidates in a timely manner. Any licensing partner cannot commercialize a product without first obtaining regulatory approval from the appropriate regulatory authorities in a country. Before obtaining regulatory approvals for the commercial sale of any product candidate for a target indication, it must be demonstrated with substantial evidence gathered in preclinical and well-controlled clinical studies that the product candidate is safe and effective for use for that target indication and that the manufacturing facilities, processes and controls are adequate. The process of developing, obtaining regulatory approval for and commercializing product candidates is long, complex and costly. Even if a product candidate were to successfully obtain approval from the EMA, the MHRA, the FDA and/or comparable foreign regulatory authorities, any approval might contain significant limitations related to use restrictions for certain age groups, warnings, precautions or contraindications, or may be subject to burdensome post-approval study or risk management requirements. If our product candidates are unable to obtain regulatory approval in one or more jurisdictions, or any approval contains significant limitations, we may not be able to obtain sufficient funding or generate sufficient revenue to continue the development of any other product candidate. Furthermore, even if a product candidate obtains approval from the regulatory authorities, it is likely that, in order to obtain royalty and/or milestone revenue from any of our licensing partners, our licensing partners may need to expand their commercial operations, establish commercially viable pricing and obtain approval for adequate reimbursement from third parties and government departments and healthcare payors for such products. If our product candidates are unable to successfully be commercialized, we may not be able to earn sufficient revenues to continue our business.

Our development efforts are in the early stages. All of our product candidates are in clinical development or preclinical development phases. If we are unable to advance our product candidates through clinical development, obtain regulatory approval and ultimately commercialize our product candidates, or experience significant delays in doing so, our business will be materially harmed.

Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the clinical trial process. The results of any preclinical studies and early clinical trials of our product candidates may not be predictive of the results of later-stage clinical trials, even after seeing promising results in earlier clinical trials. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through preclinical studies and initial clinical trials. A number of companies in the biopharmaceutical industry, including many with greater resources and experience than us, have suffered significant setbacks in advanced clinical trials due to lack of efficacy or adverse safety profiles, notwithstanding promising results in earlier trials.

In 2018, we embarked on first-in-human clinical trial program for our MTD201 and MTX110 products, with MTD201 completing our Phase I study in the third quarter of 2018, with an additional Phase I study completed in the third quarter of 2019. The MTX110 Phase I clinical study completed in the fourth quarter of 2020. In 2020, Phase I clinical trials of MTX110 were initiated by the University of Texas in medulloblastoma, and by Columbia University in DIPG. In connection with the termination of our MTD201 program, we have determined not to conduct additional clinical trials in humans, other than pilot trials to establish proof of concept in indications other than those for which the drug is approved. We expect our licensing partners will be responsible for future clinical trials. We and any of our current or potential licensing partners may experience delays in ongoing or future clinical trials and we do not know whether planned clinical trials will begin or enroll subjects on time, need to be redesigned or be completed on schedule, if at all.

There is no assurance that clinical trials of MTX110 or any other future clinical trials our other product candidates, will be successful or will generate positive clinical data and we may not receive marketing approval from the FDA, European Commission, or other regulatory authorities for any of our product candidates. We have limited experience submitting new drug applications, or NDAs, biologics license applications, or BLAs, and investigational new drug applications, or INDs, to the FDA, as well as clinical trial applications, or CTAs, or marketing authorization applications, or MAAs, to the EMA. MTX110 is in initial clinical development, currently being studied in an ongoing investigator-initiated study. There can be no assurance that the FDA will permit any of our future NDAs, BLAs, or INDs, including the NDA for MTX110 or any future INDs for our other product candidates, to go into effect in a timely manner or at all. Without an IND or CTA for a product candidate, we will not be permitted to conduct clinical trials in the United States or the European Union, respectively, of such product candidate.

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Drug or biological product development is a difficult, long, time-consuming, expensive and uncertain process, and delay or failure can occur at any stage of any of our clinical trials. Failure to obtain regulatory approval for our product candidates will prevent us from commercializing and marketing them. Clinical trials may be delayed, suspended or prematurely terminated for a variety of reasons, such as:

• delay or failure to complete preclinical studies;

• insufficient financial and other resources to complete the necessary preclinical studies and clinical trials;

• delay or failure in reaching agreement with the applicable regulatory authorities on a trial design;

• delay or failure in obtaining authorization to commence a trial or inability to comply with conditions imposed by a regulatory authority regarding the scope or design of a clinical study;

• delay or failure in reaching agreement on acceptable terms with prospective contract research organizations, or CROs, and clinical trial providers and sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;

• delay or failure in obtaining institutional review board, or IRB, or the approval of other reviewing entities, including foreign regulatory authorities, to conduct a clinical trial at each site;

• failure to recruit, or subsequent withdrawal of, clinical trial sites from clinical trials as a result of changing standards of care or the ineligibility of a site to participate in our clinical trials;

• delay or failure in recruiting and enrolling suitable subjects to participate in a trial;

• delay or failure in having subjects complete a trial or return for post-treatment follow-up;

• clinical sites and investigators deviating from trial protocol, failing to conduct the trial in accordance with regulatory requirements, or dropping out of a trial;

• inability to identify and maintain a sufficient number of trial sites, many of which may already be engaged in other clinical trial programs, including some that may be for the same indication;

• failure of third party clinical trial managers or clinical sites to satisfy contractual duties or meet expected deadlines;

• failure to receive the recommendation of health technology assessment bodies such as the U.S. Agency for Healthcare Research and Quality, and other relevant international bodies or agencies responsible for pricing and utilization determinations;

• delay or failure in adding new clinical trial sites;

• ambiguous or negative interim results, or results that are inconsistent with earlier results;

• from the EMA, the MHRA, the FDA, the IRB, data safety monitoring boards, or other regulatory authority, or results from earlier stage or concurrent preclinical and clinical studies, which might require modification to the protocol for a given study;

• decisions by the EMA, the MHRA, the FDA, the IRB, other regulatory authorities, or us, or recommendation by a data safety monitoring board or other regulatory authority, to suspend or terminate a clinical trial at any time for safety issues or for any other reason;

• unacceptable risk-benefit profile or unforeseen safety issues or adverse side effects;

• failure to demonstrate a benefit from using a drug over existing marketed products;

• manufacturing issues, including problems with manufacturing or obtaining from third parties sufficient quantities of raw materials, active pharmaceutical ingredients, or API, or product candidates for use in clinical trials; and

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• changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial.

Many of these factors are beyond our control. If we experience delays in the completion of, or termination of, any ongoing or future clinical trial of our product candidates, the commercial prospects of our product candidates will be harmed, and our ability to generate product revenues from any of these product candidates will be delayed. In addition, any delays in completing clinical trials may slow down our product candidate development and approval process and jeopardize the ability to commence product sales and generate revenues. Any of these occurrences may harm our business, financial condition and prospects significantly. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates. It is possible that none of our product candidates will ever complete successfully the clinical development process and obtain regulatory approval, even if we expend substantial time and resources seeking such approval.

Negative results in the development of our lead product candidates may also prevent or delay our ability to continue or conduct clinical programs or receive regulatory approvals for our other product candidates. For example, although we believe our preclinical studies and animal testing of MTX110 demonstrate indications of acceptable safety and effectiveness profiles, future clinical trials may fail to demonstrate adequate levels of safety or effectiveness. Moreover, anti-tumor activity may be different in each tumor type that we plan to evaluate in the clinical trial. Therefore, even though we plan to pursue clinical development for multiple tumor types, the tumor response may be low in patients with some cancers compared to others. As a result, we may be required to discontinue development of MTX110 for patients with those tumor types and/or mutations due to insufficient clinical benefit, while continuing development for a more limited population of patients. Consequently, in order to obtain regulatory approval, we may have to reach agreement with the FDA on defining the optimal patient population, study design, and size, any of which may require significant additional resources and delay our clinical trials and ultimately the approval, if any, of any of our product candidates.

We may experience setbacks that could delay or prevent regulatory approval of, or our ability to commercialize, our product candidates, including:

• negative or inconclusive results from our preclinical studies or clinical trials or positive results from the clinical trials of others for product candidates similar to ours leading to their approval, and evolving to a decision or requirement to conduct additional preclinical testing or clinical trials or abandon a program;

• product-related side effects experienced by patients or subjects in our clinical trials or by individuals using drugs or therapeutics that we, the FDA, other regulators or others view as relevant to the development of to our product candidates;

• delays in submitting INDs or comparable foreign applications or delays or failure in obtaining the necessary approvals from regulators to commence a clinical trial, or a suspension or termination of a clinical trial once commenced;

• conditions imposed by the FDA or comparable foreign authorities regarding the scope or design of our clinical trials, including our clinical endpoints;

• inability to maintain compliance with regulatory requirements, including current good manufacturing practices, or cGMP, and complying effectively with other procedures;

• inadequate supply or quality of product candidates or other materials necessary for the conduct of our clinical trials;

• greater than anticipated clinical trial costs;

• inability to compete with other therapies;

• poor efficacy of our product candidates during clinical trials;

• trial results taking longer than anticipated;

• trials being subjected to fraud or data capture failure or other technical mishaps leading to the invalidation of our trials;

• the results of our trials not supporting application for conditional approval in the EU;

• unfavorable FDA or other regulatory agency inspection and review of a clinical trial site;

• failure of our third-party contractors or investigators to comply with regulatory requirements or otherwise meet their contractual obligations in a timely manner, or at all;

• delays related to the impact of the spread of the COVID-19 pandemic, including the impact of COVID-19 on the FDA’s ability to continue its normal operations;

• delays and changes in regulatory requirements, policy and guidelines, including the imposition of additional regulatory oversight around clinical development generally or with respect to our technology in particular; or

• varying interpretations of data by the FDA and similar foreign regulatory agencies.

In addition, because we have limited financial and personnel resources and are focusing primarily on developing our lead product candidates, we may forgo or delay pursuit of other future product candidates that may prove to have greater commercial potential and may fail to capitalize on viable commercial products or profitable market opportunities. If we do not accurately evaluate the commercial potential or target market for a future product candidate, we may relinquish valuable rights to those future product candidates through collaboration, licensing, or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such future product candidates. 

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The results of preclinical studies and early clinical trials are not always predictive of future results. Any product candidate that we advance in clinical trials may not achieve favorable results in later clinical trials, if any, or receive marketing approval.

The research and development of drugs and biological products is expensive and extremely risky. Only a small percentage of product candidates that enter the development process ever receive marketing approval. Before obtaining marketing approval from regulatory authorities for the sale of our product candidates, we must conduct extensive clinical trials to demonstrate the safety and efficacy of the product candidates in humans. The outcome of clinical testing is uncertain. We may face unforeseen challenges in our product candidate development strategy, and we can provide no assurances that any of our clinical trials will be conducted as planned or completed on schedule, or at all, that we will ultimately be successful in our current and future clinical trials, or that our product candidates will be able to receive regulatory approval. A failure of one or more clinical trials can occur at any stage of testing, which may result from a multitude of factors, including, among other things, flaws in study design, dose selection issues, placebo effects, patient enrollment criteria and failure to demonstrate favorable safety or efficacy. The outcome of preclinical testing and early clinical trials may not be predictive of the success of later clinical trials, and preliminary or interim results of a clinical trial do not necessarily predict final results. For example, it is not uncommon for product candidates to exhibit unforeseen safety or efficacy issues when tested in humans despite promising results in preclinical animal models. Accordingly, we cannot assure you that any clinical trials that we may conduct will demonstrate consistent or adequate efficacy and safety to support marketing approval. In general, the FDA and regulatory authorities outside the United States require two adequate and well-controlled clinical trials demonstrating safety and effectiveness, including a Phase III clinical trial, before granting marketing approval of a drug product.

Many companies in the pharmaceutical industry have suffered significant setbacks in late-stage clinical trials even after achieving promising results in preclinical testing and earlier-stage clinical trials, and we cannot be certain that we will not face similar setbacks. Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval of their products. Furthermore, the failure of MTX110 or any other product candidates that we develop to demonstrate safety and efficacy in any clinical trial could negatively impact the perception of other product candidates that we develop or cause regulatory authorities to require additional testing before approving any of our product candidates.

If we are required to conduct additional clinical trials or other testing of MTX110 or our other product candidates, if we are unable to successfully complete clinical trials of MTX110 or our other product candidates or other testing, if the results of these trials or tests are not positive or are only modestly positive, if there are safety concerns or if we determine that the observed safety or efficacy profile would not be competitive in the marketplace, we may:

• incur unplanned costs;

• be delayed in obtaining marketing approval for MTX110 or other product candidates we develop;

• not obtain marketing approval at all;

• obtain marketing approval in some countries and not in others;

• obtain approval for indications or patient populations that are not as broad as intended or desired;

• obtain approval with labeling that includes significant use or distribution restrictions or safety warnings;

• be subject to additional post-marketing testing requirements; or

• have the product removed from the market after obtaining marketing approval.

Our product development costs will also increase if we experience delays in clinical trials or in obtaining marketing approvals. We do not know whether any of our clinical trials will continue or begin as planned, will need to be restructured or will be completed on schedule, or at all. We may also decide to change the design or protocol of one or more of our clinical trials, including to add additional patients or arms, which could result in increased costs and expenses or delays. Significant clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize our product candidates or allow our competitors to bring products to market before we do and impair our ability to successfully commercialize our product candidates and may harm our business and results of operations.

We or our collaborators may experience delays or difficulties in the enrollment and/or retention of patients in clinical trials, which could delay or prevent our receipt of necessary regulatory approvals.

Successful and timely completion of clinical trials will require that we or our collaborators sponsoring trials for our product candidates enroll a sufficient number of patients. Patient enrollment, which is an important factor in the timing of clinical trials, is affected by many factors, including the size and nature of the patient population and competition for patients eligible for our clinical trials with competitors which may have ongoing clinical trials for product candidates that are under development to treat the same indications as one or more of our product candidates, or approved products for the conditions for which we are developing our product candidates.

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Trials may be subject to delays as a result of patient enrollment taking longer than anticipated or patient withdrawal. We may not be able to initiate or continue clinical trials for our product candidates if we are unable to locate and enroll a sufficient number of eligible patients to participate in these trials as required by the FDA, EMA, or comparable foreign regulatory authorities. We cannot predict how successful we or our collaborators will be at enrolling subjects in future clinical trials. Subject enrollment is affected by other factors including:

• the severity and difficulty of diagnosing the disease under investigation;

• the eligibility and exclusion criteria for the trial in question;

• the size of the patient population and process for identifying patients;

• our ability to recruit clinical trial investigators with the appropriate competencies and experience;

• the design of the trial protocol;

• the perceived risks and benefits of the product candidate in the trial in relation to other available therapies, including any new products that may be approved for the indications we are investigating;

• the availability of competing commercially available therapies and other competing therapeutic candidates’ clinical trials for the disease or condition under investigation, including for melanoma and other cancers in a first-line setting;

• the willingness of patients to be enrolled in our clinical trials;

• the risk that subjects enrolled in clinical trials will drop out of our trials before completion;

• our ability to obtain and maintain clinical trial subject informed consents

• the efforts to facilitate timely enrollment in clinical trials;

• potential disruptions caused by the COVID-19 pandemic, including difficulties in initiating clinical sites, enrolling and retaining participants, diversion of healthcare resources away from clinical trials, travel or quarantine policies that may be implemented, and other factors;

• the patient referral practices of physicians;

• the ability to monitor patients adequately during and after treatment; and

• the proximity and availability of clinical trial sites for prospective patients.

Inability to enroll a sufficient number of patients for clinical trials would result in significant delays and could require us to abandon one or more clinical trials altogether. Enrollment delays in these clinical trials may result in increased development costs for our product candidates, which would cause the value of our company to decline and limit our ability to obtain additional financing. Furthermore, we expect to rely on contract research organizations (CROs) and clinical trial sites to ensure the proper and timely conduct of our clinical trials and we will have limited influence over their performance.

The regulatory approval processes in the United States and Europe are lengthy, time consuming and inherently unpredictable, and if we are ultimately unable to obtain regulatory approval for our product candidates, our business may be substantially harmed.

The time required to obtain approval for a product candidate by the EMA, the MHRA, the FDA and other comparable foreign regulatory authorities is unpredictable, and it typically takes many years following the commencement of preclinical studies and clinical trials, if approval is obtained at all, and depends upon numerous factors, including the substantial discretion of the regulatory authorities. In addition, approval policies, regulations, or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s clinical development and may vary among jurisdictions. We have not obtained regulatory approval for any product candidate, and it is possible that we may never obtain regulatory approval for any product candidate we may seek to develop in the future. Neither we nor any current or future collaborator is permitted to market any drug product candidates in the United States until we receive regulatory approval of a NDA from the FDA, and we cannot market it in the European Union or the United Kingdom until we receive a marketing authorization approval from the EMA or the MHRA, respectively, or in any other country until we obtain regulatory authorization as required under the laws of such country.

Our product candidates could fail to receive regulatory approval from the EMA, the MHRA, the FDA and other comparable foreign regulatory authorities for many reasons, including:

• disagreement with the design or implementation of the clinical trials;

• failure to demonstrate that a product candidate is safe and effective for its proposed indication;

• failure of clinical trial results to meet the level of statistical significance required for approval;

• failure to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks;

• disagreement with our interpretation of data from preclinical studies or clinical trials;

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• the insufficiency of data collected from clinical trials of our product candidates to support the submission and filing of a NDA, BLA, MAA or other submission or to obtain regulatory approval;

• regulatory authorities may find deficiencies in good clinical practice, or GCP, compliance or may find our record keeping, or the record keeping of our clinical trial sites, to be inadequate;

• disapproval of the manufacturing processes or facilities of third party manufacturers with whom we or any licensing partner contracts with for clinical and commercial supplies; or

• changes in approval policies or regulations that render the preclinical and clinical data insufficient for approval.

Of the large number of products in development, only a small percentage successfully complete the FDA, EMA, MHRA, or other comparable regulatory approval processes and are commercialized. The lengthy approval and marketing authorization process as well as the unpredictability of future clinical trial results may result in our failing to obtain regulatory approval and marketing authorization to market our product candidates, which would significantly harm our business, financial condition, results of operations and prospects.

In addition, the EMA, the MHRA, the FDA and other comparable foreign regulatory authorities may require more information, including additional preclinical or clinical data to support approval, which may delay or prevent approval and any commercialization plans, or we or any licensing partner may decide to abandon the development program. If approval were to be obtained, regulatory authorities may approve any of our product candidates for fewer or more limited indications than is requested, may grant approval contingent on the performance of costly post-marketing clinical trials, or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate. In addition, if our product candidate produces undesirable side effects or safety issues, the regulatory authorities (the FDA, MHRA, EMA or a comparable foreign regulatory authority) may require the establishment of Risk Evaluation and Mitigation Strategy, or REMS, which may, for instance, restrict distribution of the products and impose burdensome implementation requirements on us or any licensing partner. Any of the foregoing scenarios could materially harm the commercial prospects for our product candidates.

Our product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval and limit the commercial profile of an approved label, and such side effects or other properties could result in significant negative consequences following any marketing approval of any of our product candidates.

Undesirable side effects caused by any of our product candidates could cause us, our licensing partners, if any, or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the EMA, the MHRA, the FDA or other comparable foreign regulatory authority. Results of the clinical trials could reveal a high and unacceptable severity and prevalence of side effects or risks associated with a product candidate’s use. In such an event, our trials could be suspended or terminated and the regulatory authorities could order us to cease further development of or deny approval of our product candidates for any or all targeted indications. The drug-related side effects could affect patient recruitment or the ability of enrolled subjects to complete the trial or result in potential product liability claims. Any of these occurrences may harm our business, financial condition and prospects significantly.

Additionally, if undesirable side effects of our products are identified following marketing approval, a number of potentially significant negative consequences could result, including:

• marketing of such product may be suspended;

• a product recall or product withdrawal;

• regulatory authorities may withdraw approvals of such product or may require additional warnings on the label;

• the requirement to develop a REMS for each product or, if a strategy is already in place, to incorporate additional requirements under the REMS, or to develop a similar strategy as required by a comparable foreign regulatory authority;

• the requirement to conduct additional post-market studies; and

• being sued and held liable for harm caused to subjects or patients.

Consequently, our reputation and business operations may suffer.

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Any of these events could prevent the achievement or maintaining of market acceptance of the particular product or product candidate, if approved, and could significantly harm our business, results of operations and prospects.

Even if we receive regulatory approval of any product candidates, we will be subject to ongoing regulatory oversight and continued regulatory review, which may result in significant additional expense and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with any of our product candidates. 

Our product candidates, if they receive regulatory approval, will be subject to the ongoing requirements of the EMA, the MHRA, the FDA and other regulatory agencies governing the manufacture, quality control, further development, labeling, packaging, storage, distribution, safety surveillance, import, export, advertising, promotion, recordkeeping and reporting of safety and other post-market information. These requirements include submissions of safety and other post-marketing information and reports, establishment registration and listing, as well as continued compliance with cGMP and GCP requirements for any clinical trials that we conduct post-approval. The safety profile of any product is closely monitored by the EMA, the MHRA, the FDA and other regulatory authorities after approval. If the EMA, the MHRA, the FDA or other regulatory authorities become aware of new safety information after approval of any of our products or product candidates, regulatory authorities may require labeling changes or establishment of a risk mitigation strategy or similar strategy, impose significant restrictions on a product’s indicated uses or marketing, or impose ongoing requirements for potentially costly post-approval studies or post-market surveillance.

In addition, manufacturers of drug and biological products and their facilities are subject to continual review and periodic inspections by the EMA, the MHRA, the FDA and other governmental regulatory authorities for compliance with cGMP regulations. If a previously unknown problem with a product, such as adverse events of unanticipated severity or frequency, or a problem with the facility where the product is manufactured is discovered, a regulatory agency may impose restrictions on that product, the manufacturing facility or the party commercializing the product, including requiring recall or withdrawal of the product from the market or suspension of manufacturing. If our product candidates or the manufacturing facilities for our product candidates fail to comply with applicable regulatory requirements, a regulatory agency may:

• issue warning letters or untitled letters;

• mandate modifications to, or the withdrawal of, marketing and promotional materials or require corrective information to be provided to healthcare practitioners;

• require the violating party to enter into a consent decree, which can include the imposition of various fines, reimbursements of inspection costs, required due dates for specific actions and penalties for noncompliance;

• seek an injunction or impose civil or criminal penalties or monetary fines;

• require revisions to the labeling, including limitations on approved uses or the addition of additional warnings, contraindications or other safety information, including boxed warnings;

• suspend, vary or withdraw regulatory approval;

• require additional post-market clinical trials to assess the safety of the product;

• suspend any ongoing clinical studies;

• refuse to approve pending applications or supplements to applications filed by us or any licensing partner;

• suspend or impose restrictions on operations, the products, manufacturing or ourselves;

• require a change to the product labeling; or

• seize or detain products, refuse to permit the import or export of products or require a product recall.

In the EU, the EMA may require an equivalent risk management plan (RMP). Non-compliance with European Union requirements regarding safety monitoring or pharmacovigilance can also result in significant financial penalties. Similarly, failure to comply with the European Union’s requirements regarding the protection of personal information can also lead to significant penalties and sanctions.

The occurrence of any of these events or penalties described above may inhibit our ability to generate revenue from product candidates that are commercialized by any of our licensing partners.

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The FDA’s, EMA’s, MHRA’s, and other comparable foreign regulatory authorities’ policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained, which would adversely affect our business, prospects and ability to achieve or sustain profitability.

Obtaining and maintaining regulatory approval of MTX110 or any of our other product candidates in one jurisdiction does not mean that we will be successful in obtaining regulatory approval of MTX110 or our other product candidates in other jurisdictions.

Obtaining and maintaining regulatory approval of MTX110 or any of our other product candidates in one jurisdiction does not guarantee that we will be able to obtain or maintain regulatory approval in any other jurisdiction, while a failure or delay in obtaining regulatory approval in one jurisdiction may have a negative effect on the regulatory approval process in others. For example, even if the FDA grants marketing approval of a product candidate, similar foreign regulatory authorities must also approve the manufacturing, marketing and promotion of the product candidate in those countries. Approval and licensure procedures vary among jurisdictions and can involve requirements and administrative review periods different from, and greater than, those in the United States, including additional studies or clinical trials as clinical trials conducted in one jurisdiction may not be accepted by regulatory authorities in other jurisdictions. In many jurisdictions outside the United States, a product candidate must be approved for reimbursement before it can be approved for sale in that jurisdiction. In some cases, the price that we intend to charge for our products is also subject to approval.

We may also submit marketing applications in other countries. Regulatory authorities in jurisdictions outside of the United States have requirements for approval of product candidates with which we must comply prior to marketing in those jurisdictions. Obtaining similar foreign regulatory approvals and compliance with similar foreign regulatory requirements could result in significant delays, difficulties and costs for us and could delay or prevent the introduction of our products in certain countries. We do not have any product candidates approved for sale in any jurisdiction, including international markets, and we do not have experience in obtaining regulatory approval in international markets. If we fail to comply with the regulatory requirements in international markets and/or receive applicable marketing approvals, our target market will be reduced and our ability to realize the full market potential of our product candidates will be harmed.

We seek to establish agreements with potential licensing partners and collaborators and, if we are not able to establish them on commercially reasonable terms, we may have to alter our development and commercialization plans.

Our current development and commercialization strategy is to deploy our proprietary drug delivery technologies to formulate a compelling portfolio of novel first-in-class sustained release formulations of products with significant commercial potential for licensing to pharmaceutical company partners at proof-of-concept stage, which would potentially result in revenue generation from product royalty and/or milestone deals. We seek to work with licensing or collaboration partners for the development and commercialization of one or more of our product candidates. For example, in January 2019, we entered into that certain Licensing, Collaboration and Distribution Agreement, or the CMS License Agreement, with China Medical Systems Holdings Limited, or CMS, as guarantor, and two of its wholly owned subsidiaries, CMS Bridging Limited, or CMS Bridging, and CMS Medical Hong Kong Limited, or CMS Medical HK, each a CMS Party, pursuant to which, among other things, we agreed to license certain of our products to the CMS Parties in exchange for, among other things, royalty revenue. In June 2020, we announced a research and development collaboration with Dr. Reddy’s Laboratories Ltd., or Dr. Reddy’s, under which we evaluated the feasibility of applying Q-Sphera technology to molecules nominated by Dr. Reddy’s. The collaboration was subsequently terminated by mutual agreement. In July 2020, we announced a similar collaboration with an unnamed European affiliate of a global healthcare company, which was subsequently extended in January 2022 and the collaboration partner disclosed as Janssen Pharmaceutical NV, a subsidiary of Johnson & Johnson. Likely future collaborators may include large and mid-size pharmaceutical companies, regional and national pharmaceutical companies and biotechnology companies.

We face significant competition in seeking appropriate licensing or collaboration partners. Whether we reach a definitive agreement will depend, among other things, upon our assessment of the partner’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed partner’s evaluation of a number of factors. Those factors may include the potential differentiation of our product candidate from competing product candidates, design or results of clinical trials, the likelihood of approval by the FDA or comparable foreign regulatory authorities and the regulatory pathway for any such approval, the potential market for the product candidate, the costs and complexities of manufacturing and delivering the product to patients and the potential of competing products. The partner may also consider alternative product candidates or technologies for similar indications that may be available for collaboration and whether such collaboration could be more attractive than the one with us for our product candidate.

These agreements are complex and time consuming to negotiate and document. Further, there have been a significant number of recent business combinations among large pharmaceutical companies that have resulted in a reduced number of potential future licensing and collaboration partners.

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We may not be able to negotiate agreements with these potential partners on a timely basis, on acceptable terms, or at all. If we are unable to do so, we may have to curtail the development of the product candidate for which we are seeking to collaborate, reduce or delay its development program or one or more of our other development programs.

If we enter into agreements with a licensing or collaboration partner for the development and commercialization of our product candidates, our prospects with respect to those product candidates will depend in significant part on the success of those collaborations.

Some of our revenues are currently derived from licensing or collaboration agreements with other biopharmaceutical companies, research institutes and universities, and we expect a material amount of our revenue in the future will be derived from these and similar agreement. We may enter into additional agreements with a licensing or collaboration partner for the development and commercialization of certain of our product candidates. If we enter into such agreements, we will have limited control over the amount and timing of resources that our partners will dedicate to the development or commercialization of our product candidates. Our ability to generate revenues from these arrangements will depend on any future licensing partners’ ability to successfully perform the functions assigned to them in these arrangements. In addition, any future licensing or collaboration partner may have the right to abandon research or development projects and terminate applicable agreements, including funding obligations, prior to or upon the expiration of the agreed upon terms.

Agreements involving our product candidates pose a number of risks, including:

• partners have significant discretion in determining the efforts and resources that they will apply to these matters;

• partners may not perform their obligations as expected;

• partners may not pursue development and commercialization of our product candidates or may elect not to continue or renew development or commercialization programs, based on clinical trial results, changes in the their strategic focus or available funding or external factors, such as an acquisition, that divert resources or create competing priorities;

• partners may delay clinical trials, provide insufficient funding for a clinical trial, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing;

• a partner with marketing and distribution rights to one or more products may not commit sufficient resources to the marketing and distribution of such product or products;

• disagreements with partners, including disagreements over proprietary rights, contract interpretation or the preferred course of development, might cause delays or termination of the research, development or commercialization of product candidates, might lead to additional responsibilities for us with respect to product candidates, or might result in litigation or arbitration, any of which would be time-consuming and expensive;

• partners may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation;

• partners may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability; and

• agreements may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates.

Agreements may not lead to development or commercialization of product candidates in the most efficient manner, or at all. If any future partners of ours is involved in a business combination, it could decide to delay, diminish or terminate the development or commercialization of any product candidate licensed to it by us.

The commercial success of any of our product candidates is not guaranteed.

There can be no assurance that any of our product candidates currently in development will be successfully developed into any commercially viable product or products and/or be manufactured in commercial quantities at an acceptable cost or be marketed successfully and profitably. If we, or our partners, encounter delays at any stage, and fail successfully to address such delays, it may have a material adverse effect on our business, financial condition and prospects. In addition, our success will depend on the market’s acceptance of these products and there can be no guarantee that this acceptance will be forthcoming or that our technologies will succeed as an alternative to competing products. If a market fails to develop or develops more slowly than anticipated, we may be unable to recover the costs we may have incurred in the development of particular products and may never achieve profitable royalty or licensing revenues from that product.

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The pharmaceutical and biotechnology industries are highly competitive.

The development and commercialization of new drug products is highly competitive. Our business faces competition from a range of major and specialty pharmaceutical and biotechnology companies worldwide with respect to our product candidates, and will face competition in the future with respect to any product candidates that we may seek to develop or commercialize.

There are a number of pharmaceutical and biotechnology companies that currently market and sell products or are pursuing development of products similar to our technology and product candidates. With respect to our product candidates, from a technology perspective, we believe other companies in the sustained release space include Medincell S.A., GP Pharm, S.A., Peptron, Inc., Graybug Inc. and Nanomi B.V. In addition, other companies using gold nanoparticle technologies include CytImmune Sciences, Inc., and Nanospectra Biosciences, Inc.

Some of these competitive products and therapies are based on scientific approaches that are the same or similar to our approach, and others are based on entirely different approaches. Potential competitors also include academic institutions, government agencies and other public and private research organizations that conduct research, seek patent protection and establish collaborative arrangements for research, development, manufacturing and commercialization.

Our competitors in the biotechnology and pharmaceutical industries may have superior research and development capabilities, products, manufacturing capability or sales and marketing expertise. Many of our competitors may have significantly greater financial and human resources and may have more experience in research and development.

As a result of these factors, our competitors may obtain regulatory approval of their products more rapidly than we are able to or may obtain patent protection of other intellectual property rights that limit our ability to develop or commercialize our product candidates. Our competitors may also develop products that are more effective, more widely used and less costly than our own product candidates, and may be more successful in commercializing their products.

We anticipate that we will face increased competition in the future as new companies enter our markets and alternative products and technologies become available. Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentrated among a smaller number of our competitors. Smaller and other early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These third parties compete with us in recruiting and retaining qualified scientific, management and commercial personnel, as well as in acquiring technologies complementary to, or necessary for, our programs.

Healthcare legislative reform and government price control measures may have a material adverse effect on our business and results of operations

The United States and many foreign jurisdictions have enacted or proposed legislative and regulatory changes affecting the healthcare system that could prevent or delay marketing approval of our current product candidates and any future product candidates, restrict or regulate post-approval activities and affect our ability to profitably sell a product for which we obtain marketing approval. Changes in regulations, statutes or the interpretation of existing regulations could impact our business in the future by requiring, for example: (i) changes to our manufacturing arrangements; (ii) additions or modifications to product labeling; (iii) the recall or discontinuation of our products; or (iv) additional record-keeping requirements. If any such changes were to be imposed, they could adversely affect the operation of our business.

In the United States, there have been and continue to be a number of legislative initiatives to contain healthcare costs. For example, in March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the ACA), was passed, which substantially changed the way healthcare is financed by both governmental and private insurers, and significantly impacted the U.S. pharmaceutical industry. The ACA, among other things, subjected biological products to potential competition by lower-cost biosimilars, addressed a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs and biologics that are inhaled, infused, instilled, implanted or injected, increased the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program and extended the rebate program to individuals enrolled in Medicaid managed care organizations, established annual fees and taxes on manufacturers of certain branded prescription drugs and biologics, and created a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 70% (increased from 50% pursuant to the Bipartisan Budget Act of 2018, effective as of 2019) point-of-sale discounts off negotiated prices of applicable brand drugs and biologics to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs or biologics to be covered under Medicare Part D.

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Since its enactment, there have been judicial, executive and Congressional challenges to certain aspects of the ACA. On June 17, 2021, the U.S. Supreme Court dismissed the most recent judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of the ACA. Prior to the Supreme Court’s decision, President Biden issued an executive order to initiate a special enrollment period from February 15, 2021 through August 15, 2021 for purposes of obtaining health insurance coverage through the ACA marketplace. The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, re-examining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA. It is unclear how other healthcare reform measures of the Biden administration or other efforts, if any, to challenge, repeal or replace the ACA will impact the ACA or our business.

In addition, other legislative changes have been proposed and adopted since the ACA was enacted. On August 2, 2011, the Budget Control Act of 2011 was signed into law, which, among other things, resulted in reductions to Medicare payments to providers of 2% per fiscal year, which went into effect on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through 2030, with the exception of a temporary suspension from May 1, 2020 through June 30, 2022 (a 1% sequester will apply from April 1, 2022 through June 30, 2022) due to the COVID-19 pandemic, unless additional Congressional action is taken. On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, reduced Medicare payments to several providers, including hospitals and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. As another example, the 2021 Consolidated Appropriations Act signed into law on December 27, 2020 incorporated extensive healthcare provisions and amendments to existing laws, including a requirement that all manufacturers of drugs and biological products covered under Medicare Part B report the product’s average sales price, or ASP, to Department of Health and Human Services (HHS) beginning on January 1, 2022, subject to enforcement via civil money penalties.

Further, there has been heightened governmental scrutiny in the United States of pharmaceutical pricing practices in light of the rising cost of prescription drugs. Such scrutiny has resulted in several recent congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for products. Although a number of these and other measures may require additional authorization to become effective, Congress and the current U.S. administration have each indicated that it will continue to seek new legislative and/or administrative measures to control drug costs. Any reduction in reimbursement from Medicare and other government programs may result in a similar reduction in payments from private payors. Moreover, in July 2021, President Biden issued a sweeping executive order on promoting competition in the American economy that includes several mandates pertaining to the pharmaceutical and healthcare insurance industries. Among other things, the executive order directs the FDA to work towards implementing a system for importing drugs from Canada (following on a Trump administration notice-and-comment rulemaking on Canadian drug importation that was finalized in October 2020). The Biden order also called on HHS to release a comprehensive plan to combat high prescription drug prices, and it includes several directives regarding the Federal Trade Commission’s oversight of potentially anticompetitive practices within the pharmaceutical industry. The drug pricing plan released by HHS in September 2021 in response to the executive order makes clear that the Biden Administration supports aggressive action to address rising drug prices, including allowing HHS to negotiate the cost of Medicare Part B and D drugs, but such significant changes will require either new legislation to be passed by Congress or time-consuming administrative actions. Accordingly, there remains a large amount of uncertainty regarding the federal government’s approach to making pharmaceutical treatment costs more affordable for patients.

At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. For example, California requires pharmaceutical manufacturers to notify certain purchasers, including health insurers and government health plans at least 60 days before any scheduled increase in the wholesale acquisition cost (WAC), of their product if the increase exceeds 16%, and further requires pharmaceutical manufacturers to explain whether a change or improvement in the product necessitates such an increase. Similarly, Vermont requires pharmaceutical manufacturers to disclose price information on certain prescription drugs, and to provide notification to the state if introducing a new drug with a WAC in excess of the Medicare Part D specialty drug threshold. In December 2020, the U.S. Supreme Court also held unanimously that federal law does not preempt the states’ ability to regulate pharmaceutical benefit managers, or PBMs, and other members of the healthcare and pharmaceutical supply chain, an important decision that may lead to further and more aggressive efforts by states in this area. Legally mandated price controls on payment amounts by third-party payors or other restrictions could harm our business, results of operations, financial condition and prospects. In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs. This could reduce the ultimate demand for our product candidates, if approved, or put pressure on our product pricing, which could negatively affect our business, results of operations, financial condition and prospects.

We expect that the ACA, the recent laws described above, and other healthcare reform measures that may be adopted in the future may result in additional reductions in Medicare and other healthcare funding, more rigorous coverage criteria, new payment methodologies and additional downward pressure on the price that we receive for any approved product. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize or product candidates, if approved. Further, it is possible that additional governmental action will be taken in response to the COVID-19 pandemic.

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Outside of the United States, particularly in the European Union, the coverage status and pricing of prescription pharmaceuticals and biologics is subject to governmental control. In these countries, pricing negotiations with governmental authorities can take considerable time after the receipt of marketing approval for a product. Furthermore, the requirements may differ across the E.U. Member States. To obtain coverage and reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of our product candidate to other available therapies. If reimbursement of our products is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, our business could be harmed. Also, at national level, actions have been taken to enact transparency and anti-gift laws (similar to the US Physician Payments Sunshine Act) regarding payments between pharmaceutical companies and healthcare professionals.

Coverage and adequate reimbursement may not be available for our current or any future product candidates, which could make it difficult for us to sell profitably, if approved.

Market acceptance and sales of any product candidates that we commercialize, if approved, will depend in part on the extent to which reimbursement for these products and related treatments will be available from third-party payors, including government health administration authorities, managed care organizations and private health insurers. Significant uncertainty exists as to the coverage and reimbursement status of any products for which we may obtain regulatory approval. Third-party payors decide which therapies they will pay for and establish reimbursement levels. Third-party payors in the United States often rely upon Medicare coverage policy and payment limitations in setting their own coverage and reimbursement policies. However, decisions regarding the extent of coverage and amount of reimbursement to be provided for any product candidates that we develop will be made on a payor-by-payor basis. One payor’s determination to provide coverage for a drug does not assure that other payors will also provide coverage for the drug. Additionally, a third-party payor’s decision to provide coverage for a therapy does not imply that an adequate reimbursement rate will be approved. Third-party payors are increasingly challenging the price, examining the medical necessity and reviewing the cost-effectiveness of medical products, therapies and services, in addition to questioning their safety and efficacy. We may incur significant costs to conduct expensive pharmaco-economic studies in order to demonstrate the medical necessity and cost-effectiveness of our product candidates, in addition to the costs required to obtain FDA approvals. Our product candidates may not be considered medically necessary or cost-effective.

Each payor determines whether or not it will provide coverage for a therapy, what amount it will pay the manufacturer for the therapy, and on what tier of its list of covered drugs, or formulary, it will be placed. The position on a payor’s formulary, generally determines the co-payment that a patient will need to make to obtain the therapy and can strongly influence the adoption of such therapy by patients and physicians. Patients who are prescribed treatments for their conditions and providers prescribing such services generally rely on third-party payors to reimburse all or part of the associated healthcare costs. Patients are unlikely to use our products, and providers are unlikely to prescribe our products, unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of our products and their administration. Therefore, coverage and adequate reimbursement is critical to new medical product acceptance.

In the United States, no uniform policy of coverage and reimbursement for products exists among third-party payors. Therefore, coverage and reimbursement for our products can differ significantly from payor to payor. As a result, obtaining coverage and reimbursement approval of a product from a government or other third-party payor is a time-consuming and costly process that could require us to provide to each payor supporting scientific, clinical and cost-effectiveness data for the use of our products on a payor-by-payor basis, with no assurance that coverage and adequate reimbursement will be obtained. Even if we obtain coverage for a given product, the resulting reimbursement payment rates might not be adequate for us to achieve or sustain profitability or may require co-payments that patients find unacceptably high. Additionally, third-party payors may not cover, or provide adequate reimbursement for, long-term follow-up evaluations required following the use of product candidates, once approved.

A primary trend in the U.S. healthcare industry and elsewhere is cost containment. Third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications. We cannot be sure that coverage and reimbursement will be available for any product that we may commercialize and, if reimbursement is available, what the level of reimbursement will be. Even if favorable coverage and reimbursement status is attained for one or more product candidates for which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future. Inadequate coverage and reimbursement may impact the demand for, or the price of, any drug for which we obtain marketing approval. If coverage and adequate reimbursement are not available, or are available only to limited levels, we may not be able to successfully commercialize our current and any future product candidates that we develop.

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We are subject to environmental laws and regulations that govern the use, storage, handling and disposal of hazardous materials and other waste products.

We are subject to environmental laws and regulations governing the use, storage, handling and disposal of hazardous materials and other waste products. We have health and safety policies and procedures in place to assess the risks associated with use of hazardous materials, and the assessment includes information for employees on how the substances should be used to avoid contamination of the environment and inadvertent exposure to themselves and their colleagues. Despite our precautions for handling and disposing of these materials, we cannot eliminate the risk of accidental contamination or injury. In the event of a hazardous waste spill or other accident, we could be liable for damages, penalties or other forms of censure. If we fail to comply with any laws or regulations, or if an accident occurs, we may have to pay significant penalties and may be held liable for any damages that result. This liability could exceed our financial resources and could harm our reputation. We may also have to incur significant additional costs to comply with current or future environmental laws and regulations. Our failure to comply with any government regulation applicable to our laboratory and the materials used in our laboratory may adversely affect our ability to develop, produce, market or partner any products we may commercialize or develop.

Our employees, principal investigators, consultants and commercial partners may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could have a material adverse effect on our business.

We are exposed to the risk of employee fraud or other misconduct by our employees, principal investigators, consultants and commercial partners. Misconduct by such parties could include intentional failures to comply with applicable regulations, provide accurate information to regulatory authorities, comply with manufacturing standards, comply with healthcare fraud and abuse laws and regulations, report financial information or data accurately, or disclose unauthorized activities to us. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Such misconduct could also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. We have adopted a Code of Business Conduct and Ethics, but it is not always possible to identify and deter employee misconduct, and the precautions we have taken to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against us and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business and results of operations, including the imposition of significant fines or other sanctions. 

Unexpected facility shutdowns or system failures may occur and our disaster recovery plans may not be sufficient.

We depend on the performance, reliability and availability of our properties, machinery, and laboratory equipment and information technology systems. We may not be able to access our facilities as a result of events beyond our control, such as extreme weather conditions, quarantines, flood, fire, theft, terrorism and acts of God.

Further, any damage to or failure of our equipment and/or systems could also result in disruptions to our operations. A complete or partial failure of our information technology systems, or those of our CROs and other third parties on which we rely, or corruption of data could result in our inability to access information that we need in order to meet our obligations to our customers or a breach of confidentiality with respect to our or our customers’ proprietary information. If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our drug development programs. For example, the loss of clinical trial data from completed or ongoing clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. Our disaster recovery plans may not adequately address every potential event and our insurance policies may not cover any loss in full or in part (including losses resulting from business interruptions) or damage that we suffer fully or at all. The occurrence of one or more of these events could have a material adverse effect on our business, financial position, reputation or prospects, and might lead to a claim for damages.

Our business may be adversely affected by economic conditions and current economic weakness.

Any economic downturn either globally, regionally or locally, including the economic downturn due to COVID-19 or due to geopolitical instability, in any country in which we operate may have an adverse effect on the demand for any products derived from our product candidates. A more prolonged economic downturn may lead to an overall decline in our sales, limiting our ability to generate a profit and positive cash flow. The markets in which we expect the products to be offered are directly affected by many national and international factors that are beyond our control, such as political, economic, currency, social and other factors.

Our business may be impacted by political events, war, terrorism, business interruptions and other geopolitical events and uncertainties beyond our control.

War, terrorism, geopolitical uncertainties and other business interruptions could cause damage to disrupt or cancel the conduct of our planned clinical trials on a global or regional basis, which could have a material adverse effect on our business, clinical sites or vendors with which we do business. Such events could also decrease patient demand to enroll in our clinical trials or make it difficult or impossible for us to deliver products and services to our clinical investigational sites. In addition, territorial invasions can lead to cybersecurity attacks on companies, such as ours, located far outside of the conflict zone. In the event of prolonged business interruptions due to geopolitical events, we could incur significant losses, require substantial recovery time and experience significant expenditures in order to resume our business or clinical operations. We have no operations in Russia or Ukraine, but we do not and cannot know if the current uncertainties in these geopolitical areas, which are unfolding in real-time, may escalate and result in broad economic and security conditions or rationing of medical supplies, which could limit our ability to conduct clinical trials or result in material implications for our business.

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We are exposed to the risks of doing business internationally.

We have in the past, and may in the future, operate outside of the United Kingdom. These international operations are subject to a number of risks inherent in operating in different countries. These include, but are not limited to, risks regarding:

• currency exchange rate fluctuations;

• restrictions on repatriation of earnings;

• difficulty of effective enforcement of contractual provisions in local jurisdictions;’

• inadequate intellectual property (including confidentiality) protection in foreign countries;

• public health epidemics or outbreaks, such as COVID-19;

• trade-protection measures, import or export licensing requirements and fines, penalties or suspension or revocation of export privileges; and

• changes in a specific country’s or a region’s political or economic conditions, including the implications of the United Kingdom’s withdrawal from the European Union.

The occurrence of any of these events or conditions could adversely affect our ability to increase or maintain our operations in various countries.

We are exposed to risks related to currency exchange rates.

We currently conduct a portion of our operations outside of the United Kingdom. Because we use the British pound sterling as our financial statement reporting currency, changes in currency exchange rates have had and could have a significant effect on our operating results when our operating results are translated from the local currency into the British pound sterling. Exchange rate fluctuations between local currencies and the British pound sterling create risk in several ways, including the following: weakening of the British pound sterling, as seen, for example, following the results of the Brexit referendum, may increase the British pound sterling cost of overseas research and development expenses and the cost of sourced product components outside the United Kingdom; strengthening of the British pound sterling may decrease the value of our revenues denominated in other currencies; the exchange rates on non-sterling transactions and cash deposits can distort our financial results; and commercial pricing and profit margins are affected by currency fluctuations. Future changes in currency exchange rates could have a material adverse effect on our financial results.

We are subject to cybersecurity risks and other cyber incidents, including the misappropriation of our information and other breaches of information security that may result in disruption and the incurrence of costs in an effort to minimize those risks.

In the normal course of conducting our business, we collect and store sensitive data on our networks, including intellectual property, personal information of our employees, and our proprietary business information and that of our customers, vendors and business partners.  Despite the security measures we have in place and any additional measures we may implement in the future to safeguard our systems and to mitigate potential security risks, our facilities and systems, and those of our third-party service providers, could be vulnerable to security breaches, computer viruses, lost or misplaced data, programming errors, human errors, acts of vandalism or other events. Any steps we take to deter and mitigate these risks may not be successful and may cause us to incur increasing costs. Any disruption of our systems or security breach or event resulting in the misappropriation, loss or other unauthorized disclosure of confidential information, whether by us directly or by our third-party service providers, could damage our reputation, result in the incurrence of costs, expose us to the risks of litigation and liability, result in regulatory penalties under laws that protect privacy of personal information, disrupt our business or otherwise affect our results of operations.

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We may incur substantial costs in our efforts to comply with evolving global data protection laws and regulations, and any failure or perceived failure by us to comply with such laws and regulations may harm our business and operations.

We maintain a large quantity of sensitive information, including confidential business and personal information in connection with the conduct of our clinical trials and related to our employees, and we are subject to laws and regulations governing the privacy and security of such information. In the United States, there are numerous federal and state privacy and data security laws and regulations governing the collection, use, disclosure and protection of personal information, including federal and state health information privacy laws, federal and state security breach notification laws, and federal and state consumer protection laws. The legislative and regulatory landscape for privacy and data protection continues to evolve, and there has been an increasing focus on privacy and data protection issues, including with respect to regulatory enforcement and private litigation, which may affect our business and is expected to increase our compliance costs and exposure to liability. In the United States, numerous federal and state laws and regulations could apply to our operations or the operations of our partners, including state data breach notification laws, state health information privacy laws, and federal and state consumer protection laws and regulations, that govern the collection, use, disclosure, and protection of health-related and other personal information. In addition, we may obtain health information from third parties (including research institutions from which we obtain clinical trial data) that are subject to privacy and security requirements under HIPAA, as amended by HITECH and regulations promulgated thereunder. Depending on the facts and circumstances, we could be subject to significant penalties if we obtain, use, or disclose, or are subject to an actual or alleged data breach regarding, individually identifiable health information in a manner that is not authorized or permitted by HIPAA.

In the European Union, the General Data Protection Regulation (EU) 2016/679, or GDPR, lays down the legal framework for data protection and privacy. The GDPR applies directly in all European Union member states (until December 31, 2020, this included the United Kingdom) and applies to companies with an establishment in the European Economic Area, or EEA, and to certain other companies not in the EEA that offer or provide goods or services to individuals located in the EEA or monitor the behavior of individuals located in the EEA. In the United Kingdom, the GDPR has been converted into United Kingdom domestic law, pursuant to the Data Protection, Privacy and Electronic Communications (Amendments etc.)(EU Exit) Regulations 2019 (as amended), which makes some minor technical amendments to ensure the GDPR is operable in the United Kingdom, or the UK GDPR. The UK GDPR is also supplemented by the Data Protection Act 2018. United Kingdom and European Union data protection law is therefore aligned. The GDPR and UK GDPR implement stringent operational requirements for controllers of personal data, including, for example, expanded disclosures about how personal information is to be used, limitations on retention of information, increased requirements pertaining to health data and pseudonymized (i.e., key-coded) data, increased cyber security requirements, mandatory data breach notification requirements and higher standards for controllers to demonstrate that they have obtained a valid legal basis for certain data processing activities. The GDPR provides that European Union member states may make their own further laws and regulations in relation to the processing of genetic, biometric or health data, which could result in differences between member states, limit our ability to use and share personal data or could cause our costs to increase, and harm our business and financial condition.

Failure to comply with European Union laws, including failure under the GDPR and UK GDPR, Data Protection Act 2018, ePrivacy Directive and other laws relating to the security of personal data may result in fines up to €20 million (or £17.5 million under the UK GDPR) or up to 4% of the total worldwide annual turnover of the preceding financial year, if greater, and other administrative penalties including criminal liability, which may be onerous and adversely affect our business, financial condition, results of operations and prospects. The GDPR also confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of the GDPR. In addition, the GDPR includes restrictions on cross-border data transfers. Failure to comply with the GDPR and related laws may lead to increased risk of private actions from data subjects and consumer not-for-profit organizations, including a new form of class action that is available under the GDPR. While we do not routinely handle or process personal data, we do maintain a database of employee information; however, since the GDPR and UK GDPR only came into effect recently, the potential risks associated with non-compliance therewith are uniquely difficult to predict.

We may in the future be unable to retain and recruit qualified scientists, key executives and directors, key employees or key consultants, may delay our development efforts or otherwise harm our business.

Our future development and prospects depend to a large degree on the experience, performance and continued service of our senior management team, including members of our Board of Directors. We have invested in our management team at all levels. We have entered into contractual arrangements with our directors and senior management team with the aim of securing the services of each of them. However, retention of these services or the identification of suitable replacements cannot be guaranteed. There can be no guarantee that the services of the current directors and senior management team will be retained, or that suitably skilled and qualified individuals can be identified and employed, which may adversely impact our ability to develop our technologies and/or provide our services at the time requested by our customers or our ability to market our services and technologies, and otherwise to grow our business, could be impaired. The loss of the services of any of the directors or other members of the senior management team and the costs of recruiting replacements may have a material adverse effect on us and our commercial and financial performance.

The ability to continue to attract and retain employees with the appropriate expertise and skills also cannot be guaranteed. Finding and hiring any additional personnel and replacements could be costly and might require us to grant significant equity awards or other incentive compensation, which could adversely impact our financial results, and there can be no assurance that we will have sufficient financial resources to do so. Effective product development and innovation, upon which our success is dependent, is in turn dependent upon attracting and retaining talented technical and scientific personnel, who represent a significant asset and serve as the source of our technological and product innovations. If we are unable to hire, train and retain such personnel in a timely manner, the development and introduction of our products could be delayed and our ability to sell our products and otherwise to grow our business will be impaired and the delay and inability may have a detrimental effect upon our performance.

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Risks related to our intellectual property

Our success depends in part on our ability to protect rights in our intellectual property, which cannot be assured.

Our success and ability to compete effectively are in large part dependent upon exploitation of proprietary technologies and products that we have developed internally or have acquired or in-licensed. To date, we have relied on copyright, trademark and trade secret laws, as well as confidentiality procedures, non-compete and/or work for hire invention assignment agreements and licensing arrangements with our employees, consultants, contractors, customers and vendors, to establish and protect our rights to our technology and, to the best extent possible, control the access to and distribution of our technology, software, documentation and other proprietary information, all of which offer only limited protection. Where we have the right to do so under our agreements, we seek to protect our proprietary position by filing patent applications in the United States, the United Kingdom and worldwide related to our novel technologies and products that are important to our business. The patent positions of biotechnology and pharmaceutical companies generally are highly uncertain, involve complex legal and factual questions and have in recent years been the subject of much litigation. As a result, the issuance, scope, validity, enforceability and commercial value of our patents, including those patent rights licensed to us by third parties, are highly uncertain. There can be no assurance that:

• the scope of our patents provides and will provide us with exclusivity with respect to any or all of our product candidates and technologies, as well as any other technologies and/or products that address the same problems as our technologies and product candidates by a different means, whether in the same manner as us or not;

• pending or future patent applications will be issued as patents;

• our patents, and/or those patents to which we are licensed, are and will remain valid and enforceable and will not be subject to invalidity or revocation proceedings and that such proceedings will not result in a complete or partial loss of rights;

• our entitlement to exploit patents from time to time (including patents registered solely in our name or our affiliates’ name or in the joint names of Midatech or an affiliate and a third party or patents which are licensed to us) is and will be sufficient to protect our core intellectual property rights against third parties, our commercial activities from competition or to support comprehensively our ability to develop and market our proposed products either now or in the future;

• the lack of any particular patents or rights to exploit any particular patents, and the scope of our patents, will not have a material adverse effect on our ability to develop and market our proposed product candidates, either now or in the future;

• we have or will have the resources to pursue any infringer of: (i) patents registered in our name (whether solely or jointly with a third party) from time to time; or (ii) patents licensed to us where we or an affiliate have the financial responsibility to bring such infringement actions pursuant to the relevant license agreement;

• we will develop technologies or product candidates which are patentable, either alone or in conjunction with third parties;

• the ownership, scope or validity of any patents registered in our name (either solely or jointly) from time to time will not be challenged by third parties, including parties with whom we, or any affiliate, have entered into collaboration projects or co-ownership arrangements and that any such challenge will not be successful;

• any patent or patent application owned solely or jointly by us will not be challenged on grounds that we failed to identify the correct inventors or that we failed to comply with our duty of disclosure to the United States Patent and Trademark Office or any equivalent office in a foreign jurisdiction having a disclosure requirement;

• any issued patent in our sole or joint name from time to time will not be challenged in one or more post-grant proceedings, including but not limited to inter partes review, derivation proceedings, interferences, and that like; and that any such challenge will not result in a complete or partial loss of rights to such issued patent or patents;

• any patent applications in our sole or joint name from time to time will not be opposed by any third party, including parties to collaboration, co-existence and any other contractual relationship with us or any of its members;

• the license agreements between us and third parties are and will be valid and subsisting in the future or until their expiry dates, and that we have complied with our contractual obligations under the license agreements;

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• all intellectual property capable of being commercialized that is or has been generated pursuant to collaboration agreements between us and third parties will be or has been identified;

• all intellectual property generated pursuant to collaboration agreements and to which we have a contractual entitlement or generated by employees has been lawfully assigned into our sole name (or to one of our subsidiaries);

• in respect of all intellectual property generated pursuant to a collaboration agreement between us and a third party to which we and that third party have a joint contractual entitlement, that such intellectual property has been lawfully assigned into joint names and the rights between us and that third party are properly regulated by a co-ownership agreement; and

• beyond contractual warranties, the licensors of intellectual property to us or our affiliates own the relevant patents and that those patents have not and will not be the subject of, or subject to, infringement, invalidity or revocation actions.

 The steps we have taken to protect our proprietary rights may not be adequate to preclude misappropriation of our proprietary information or infringement of our intellectual property rights, both inside and outside of the United Kingdom and United States. The rights already granted under any of our currently issued patents and those that may be granted under future issued patents may not provide us with the proprietary protection or competitive advantages we are seeking. If we are unable to obtain and maintain patent protection for our technology and products, or if the scope of the patent protection obtained is not sufficient, our competitors could develop and commercialize technology and products similar or superior to ours, and our ability to successfully commercialize our technology and products may be adversely affected.

With respect to patent rights, we do not know whether any of the pending patent applications for any of our licensed compounds will result in the issuance of patents that protect our technology or products, or which will effectively prevent others from commercializing competitive technologies and products. Although we have a number of issued patents covering our technology, our pending applications cannot be enforced against third parties practicing the technology claimed in such applications unless and until a patent issues from such applications. Further, the examination process may require us to narrow the claims, which may limit the scope of patent protection that may be obtained. Because the issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, issued patents that we own or have licensed from third parties may be challenged in the courts or patent offices in the European Union, United Kingdom, the United States and other foreign jurisdictions. Overall, such challenges may result in the loss of patent protection, the narrowing of claims in such patents, or the invalidity or unenforceability of such patents, which could limit our ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection for our technology and products. Protecting against the unauthorized use of our patented technology, trademarks and other intellectual property rights is expensive, difficult and may in some cases not be possible. In some cases, it may be difficult or impossible to detect third party infringement or misappropriation of our intellectual property rights, even in relation to issued patent claims, and proving any such infringement may be even more difficult.

The patent prosecution process is expensive and time-consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. It is also possible that we will fail to identify patentable aspects of inventions made in the course of our development and commercialization activities before it is too late to obtain patent protection on them. Further, given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. We expect to seek extensions of patent terms where they are available in any countries where we are prosecuting patents. However, the applicable authorities, including the FDA in the United States, and any equivalent regulatory authority in other countries, may not agree with our assessment of whether such extensions are available, and may refuse to grant extensions to our patents, or may grant more limited extensions than we request. If this occurs, our competitors may be able to take advantage of our investment in development and clinical trials by referencing our clinical and preclinical data and launch their product earlier than might otherwise be the case. Changes in either the patent laws or interpretation of the patent laws in the European Union, the United Kingdom, the United States and other countries may diminish the value of our patents or narrow the scope of our patent protection. The laws of foreign countries may not protect our rights to the same extent as the laws of the United Kingdom or the United States, and these foreign laws may also be subject to change. Publication of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications typically are not published until 18 months after filing or, in some cases, not at all. Therefore, we cannot be certain that we were the first to make the inventions claimed in our owned or licensed patents or pending patent applications, or that we were the first to file for patent protection of such inventions.

Previously, in the United States, assuming the other requirements for patentability are met, the first to make the claimed invention was entitled to the patent. Outside the United States, the first to file a patent application is entitled to the patent. In March 2013, the United States transitioned to a “first to file” system in which the first inventor to file a patent application will be entitled to the patent. Under either the previous or current system, third parties will be allowed to submit prior art prior to the issuance of a patent by the United States Patent and Trademark Office, and may become involved in opposition, derivation, reexamination, inter-partes review or interference proceedings challenging our patent rights or the patent rights of others. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our patent rights, which could adversely affect our competitive position with respect to third parties.

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Our commercial success depends, in part, upon our not infringing intellectual property rights owned by others.

Although we believe that we have proprietary platforms for our technologies and product candidates, we cannot determine with certainty whether any existing third party patents or the issuance of any third party patents in the future would require us to alter our technology, obtain licenses or cease certain activities. We may become subject to claims by third parties that our technology infringes their intellectual property rights, in which case we will have no option other than to defend the allegation, which may be possible to resolve through negotiation or which might result in court proceedings. An adverse outcome in any of these circumstances is that we might be subject to significant liabilities, be required to cease using a technology or to pay license fees (both prospectively and retrospectively); and may be subject to the payment of significant damages. We could incur substantial costs in any litigation or other proceedings relating to patent rights, even if it is resolved in our favor. If the proceedings occur in the United States, it is likely that we will be responsible for our own legal costs, no matter the outcome of the litigation. In contrast, in the United Kingdom, the losing party typically is ordered to pay the winning party’s costs, although it is rare to have a complete recovery of all costs from the losing side. Some of our competitors may be able to sustain the costs of complex litigation more effectively or for a longer time than we can because of their substantially greater resources. In addition, uncertainties or threatened or actual disputes relating to any patent, patent application or other intellectual property right (including confidential information) could have a material adverse effect on our ability to market a product, enter into collaborations in respect of the affected products, or raise additional funds.

The policing of unauthorized use of our patented technologies and product candidates is difficult and expensive. There can be no assurance that the steps we take will prevent misappropriation of, or prevent an unauthorized third party from obtaining or using, the technologies, know-how and products we rely on. In addition, effective protection may be unavailable or limited in some jurisdictions. Any misappropriation of our proprietary technology, product candidates and intellectual property could have a negative impact on our business and our operating results. Litigation may be necessary in the future to enforce or protect our rights or to determine the validity or scope of the proprietary rights of others. Litigation could cause us to incur substantial costs and divert resources and management attention away from our daily business and there can be no guarantees as to the outcome of any such litigation. In addition, a defendant in any such litigation may counterclaim against us, resulting in additional time and expense to defend against such a counterclaim, which defense may not be successful.

We may become involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time consuming and unsuccessful.

Competitors may infringe on our patents or misappropriate or otherwise violate our intellectual property rights. To counter infringement or unauthorized use, litigation may be necessary in the future to enforce or defend our intellectual property rights, to protect our trade secrets or to determine the validity and scope of our own intellectual property rights or the proprietary rights of others. This can be expensive and time consuming. Many of our current and potential competitors have the ability to dedicate substantially greater resources to defend our intellectual property rights than we can. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing upon or misappropriating our intellectual property. Litigation could result in substantial costs and diversion of management resources, which could harm our business and financial results. In addition, in an infringement proceeding, a court may decide that a patent owned by or licensed to us is invalid or unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question. An adverse result in any litigation proceeding could put one or more of our patents at risk of being invalidated, held unenforceable or interpreted narrowly. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation.

Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on the success of our business.

Our commercial success depends upon our ability and the ability of our collaborators and licensing partners to develop, manufacture, market and sell our product candidates, and to use our proprietary technologies without infringing the proprietary rights of third parties. We may become party to, or threatened with, future adversarial proceedings or litigation regarding intellectual property rights with respect to our products and technology. Third parties may assert infringement claims against us based on existing patents or patents that may be granted in the future. If we are found to infringe a third party’s intellectual property rights, we could be required to obtain a license from such third party to continue developing and commercializing our products and technology. However, we may not be able to obtain any required license on commercially reasonable terms or at all. Even if we are able to obtain a license, it may be non-exclusive, thereby giving our competitors access to the same technologies licensed to us. We could be forced, including by court order, to cease commercializing the infringing technology or product. In addition, in any such proceeding or litigation, we could be found liable for monetary damages. A finding of infringement could prevent us from commercializing our product candidates or force us to cease some of our business operations, which could materially harm our business. Any claims by third parties that we have misappropriated our confidential information or trade secrets could have a similar negative impact on our business.

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We may be subject to claims that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.

Many of our employees, including our senior management, were previously employed at other biotechnology or pharmaceutical companies. Some of these employees, including members of our senior management, executed proprietary rights, non-disclosure and non-competition agreements in connection with such previous employment. Although we try to ensure that our employees do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or these employees have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such employee’s former employer. We are not aware of any threatened or pending claims related to these matters or concerning the agreements with our senior management, but in the future litigation may be necessary to defend against such claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a potential distraction to management.

If we are unable to protect the confidentiality of our trade secrets, our business and competitive position could be harmed.

In addition to seeking patents for some of our technology and product candidates, we also rely on trade secrets, including unpatented know-how, technology and other proprietary information, to maintain our competitive position. We seek to protect these trade secrets, in part, by entering into non-disclosure and confidentiality agreements with parties who have access to them, such as our employees, corporate collaborators, outside scientific collaborators, contract manufacturers, consultants, advisors and other third parties. We also enter into confidentiality and invention or patent assignment agreements with our employees and consultants. Despite these efforts, any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches. In addition, a court may determine that we failed to take adequate steps to protect our trade secrets, in which case it may not be possible to enforce our trade secret rights. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some may be less willing or unwilling to protect trade secrets. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent such competitor from using that technology or information to compete with us, which could harm our competitive position.

We may face potential product liability, and, if successful claims are brought against us, we may incur substantial liability and costs. If the use of our product candidates harms patients or is perceived to harm patients even when such harm is unrelated to our product candidates, our regulatory approvals could be revoked or otherwise negatively impacted and we could be subject to costly and damaging product liability claims.

In carrying out our activities, we may potentially face contractual and statutory claims, or other types of claims from customers, suppliers and/or investors. In addition, we are exposed to potential product liability risks that are inherent in the research, development, production and supply of products. Subjects enrolled in our clinical trials, consumers, healthcare providers or other persons administering or selling products based on our and our collaborators’ technology may be able to bring claims against us based on the use of such products. If we cannot successfully defend ourselves against claims that any product candidates commercialized caused injuries, we could incur substantial costs and liabilities. Irrespective of their merits or actual outcome, liability claims may result in:

• decreased demand for any product candidates that we may develop;

• withdrawal of clinical trial participants;

• termination of clinical trials;

• significant negative media attention and injury to our reputation;

• significant costs to defend the related litigation;

• substantial monetary awards to trial subjects or patients;

• loss of revenue;

• diversion of management and scientific resources from our business operations; and

• the inability to commercialize any products that we may develop.

While we have obtained product liability coverage, our insurance coverage may not be sufficient to cover our entire product liability related expenses or losses and may not cover us for any expenses or losses we may suffer. Moreover, insurance coverage is becoming increasingly expensive and, in the future, we may not be able to maintain insurance coverage at a reasonable cost, in sufficient amounts or upon adequate terms to protect us against losses due to product liability. If we determine that it is prudent to increase our product liability, we may be unable to obtain this increased product liability insurance on commercially reasonable terms or at all. Large judgments have been awarded in class action or individual lawsuits based on drugs that had unanticipated side effects, including side effects that may be less severe than those of our products. A successful product liability claim or series of claims brought against us could cause the price of the Ordinary Shares and/or Depositary Shares to decline and, if judgments exceed our insurance coverage, could decrease our cash and have a material adverse effect our business, results of operations, financial condition and prospects.

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Risks Related to our Relationships with Third Parties

We rely on third parties to conduct our preclinical and clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize our product candidates and our business could be substantially harmed.

We are, and may continue to be, reliant on other parties for the successful development and commercialization of many of our product candidates. We rely upon CROs for the conduct of our clinical studies. We rely on these parties for execution of our preclinical and clinical trials, and control only certain aspects of their activities. Nevertheless, we are responsible for ensuring that each of our studies is conducted in accordance with the applicable protocol and legal, regulatory and scientific standards, and our reliance on the CROs or collaboration partners does not relieve us of our regulatory responsibilities. We also rely on third parties to assist in conducting our preclinical studies in accordance with good laboratory practices, or GLP, and requirements with respect to animal welfare. We and our CROs or collaboration or licensing partners are required to comply with GCP, which are regulations and guidelines enforced by the MHRA, the FDA, the EMA and comparable foreign regulatory authorities for all of our products in clinical development. Regulatory authorities enforce these GCP through periodic inspections of trial sponsors, principal investigators and trial sites. If we or any of our CROs or partners fail to comply with applicable GCP, the clinical data generated in our clinical trials may be deemed unreliable and the EMA, the MHPA, the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications. We cannot be assured that upon inspection by a given regulatory authority, such regulatory authority will determine that any of our clinical trials comply with GCP requirements. In addition, our clinical trials must be conducted with product produced under cGMP requirements. Failure to comply with these regulations may require us to repeat preclinical and clinical trials, which would delay the regulatory approval process.

Our CROs are not our employees, and except for remedies available to us under such agreements with such CROs, we cannot control whether or not they devote sufficient time and resources to our on-going clinical, nonclinical and preclinical programs. If CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols, regulatory requirements or for other reasons, then our clinical trials may be extended, delayed or terminated and we may not be able to obtain regulatory approval for or successfully commercialize our product candidates. As a result, our results of operations and the commercial prospects for our product candidates would be harmed, our costs could increase and our ability to generate revenues could be delayed.

If any of our relationships with these third parties terminate, we may not be able to enter into arrangements with alternative third parties on commercially reasonable terms, or at all. Entering into arrangements with alternative CROs, clinical trial investigators or other third parties involves additional cost and requires management focus and time, in addition to requiring a transition period when a new CRO, clinical trial investigator or other third party begins work. If third parties do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the clinical data they obtain are compromised due to the failure to adhere to our clinical protocols, regulatory requirements or for other reasons, any clinical trials such third parties are associated with may be extended, delayed or terminated, and we may not be able to obtain marketing approval for or successfully commercialize our product candidates. As a result, we believe that our financial results and the commercial prospects for our product candidates in the subject indication would be harmed, our costs could increase and our ability to generate revenue could be delayed.

Because we have relied on third parties, our internal capacity to perform these functions is limited. Outsourcing these functions involves risk that third parties may not perform to our standards, may not produce results in a timely manner or may fail to perform at all. In addition, the use of third party service providers requires us to disclose our proprietary information to these parties, which could increase the risk that this information will be misappropriated. We currently have a small number of employees, which limits the internal resources we have available to identify and monitor our third party providers. To the extent we are unable to identify and successfully manage the performance of third party service providers in the future, our business may be adversely affected. Though we carefully manage our relationships with our CROs, there can be no assurance that we will not encounter similar challenges or delays in the future or that these delays or challenges will not have a material adverse impact on our business, financial condition and prospects.

We rely on third parties to manufacture our product candidates, and we expect to continue to rely on third parties for the clinical as well as any future commercial supply of our product candidates and other future product candidates. The development of our current and future product candidates, and the commercialization of any approved products, could be stopped, delayed or made less profitable if any such third party fails to provide us with sufficient clinical or commercial quantities of such product candidates or products, fails to do so at acceptable quality levels or prices or fails to achieve or maintain satisfactory regulatory compliance.

We do not currently have, and we do not plan to build, the infrastructure or capability internally to manufacture current product candidates or any future product candidates for use in the conduct of our clinical trials or, if approved, for commercial supply. We rely on, and expect to continue to rely on, contract manufacturing organizations (CMOs). Reliance on third-party contractors may expose us to more risk than if we were to manufacture our product candidates ourselves. We do not control the manufacturing processes of the CMOs we contract with and are dependent on those third parties for the production of our product candidates in accordance with relevant applicable regulations, such as cGMP, which include, among other things, quality control, quality assurance and the maintenance of records and documentation.

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In complying with the manufacturing regulations of the FDA and other comparable foreign regulatory authorities, we and our third-party manufacturers must spend significant time, money and effort in the areas of design and development, testing, production, record-keeping and quality control to assure that the product candidates meet applicable specifications and other regulatory requirements. If either we or our CMOs fail to comply with these requirements, we may be subject to regulatory enforcement action, including the seizure of product candidates and shutting down of production.

Even if we are able to establish and maintain agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including:

• reliance on the third party for regulatory, compliance and quality assurance;

• the possible breach of the manufacturing agreement by the third party;

• the possible misappropriation of our proprietary information, including our trade secrets and know-how; and

• the possible termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us.

We or our third-party manufacturers may encounter shortages in the raw materials or APIs necessary to produce our product candidates in the quantities needed for our clinical trials or, if our product candidates are approved, in sufficient quantities for commercialization or to meet an increase in demand, as a result of capacity constraints or delays or disruptions in the market for the raw materials or active pharmaceutical ingredients, including shortages caused by the purchase of such raw materials or APIs by our competitors or others. The failure by us or our third-party manufacturers to obtain the raw materials or APIs necessary to manufacture sufficient quantities of our product candidates, may have a material adverse effect on our business.

Our third-party manufacturers are subject to inspection and approval by regulatory authorities before we can commence the manufacture and sale of any of our product candidates, and thereafter are subject to ongoing inspection from time to time. Our third-party manufacturers may not be able to comply with cGMP regulations or similar regulatory requirements outside of the United States. Our failure, or the failure of our third-party manufacturers, to comply with applicable regulations could result in regulatory actions, such as the issuance of notices of inspectional observations, warning letters or sanctions being imposed on us, including clinical holds, fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates or drugs, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of our products. If any of our third-party suppliers fails to comply with cGMP or other applicable manufacturing regulations, our ability to develop and commercialize our product candidates could suffer significant interruptions.

Any disruption, such as a fire, natural hazards or vandalism at our CMOs, or any impacts on our CMOs due to the COVID-19 pandemic, could significantly interrupt our manufacturing capability. We currently do not have alternative production plans in place or disaster-recovery facilities available. In case of a disruption, we will have to establish alternative manufacturing sources. This would require substantial capital on our part, which we may not be able to obtain on commercially acceptable terms or at all. Additionally, we would likely experience months of manufacturing delays as we build facilities or locate alternative suppliers and seek and obtain necessary regulatory approvals. If this occurs, we will be unable to satisfy manufacturing needs on a timely basis, if at all. If changes to CMOs occur, then there also may be changes to manufacturing processes inherent in the setup of new operations for our product candidates and any products that may obtain approval in the future. Any such changes could require the conduct of bridging studies before we can use any materials produced at new facilities or under new processes in clinical trials or, for any products reaching approval, in our commercial supply. Further, business interruption insurance may not adequately compensate us for any losses that may occur and we would have to bear the additional cost of any disruption. For these reasons, a significant disruptive event of any CMOs could have drastic consequences, including placing our financial stability at risk.

Our product candidates and any drugs that we may develop may compete with other product candidates and drugs for access to manufacturing facilities. There are no assurances we would be able to enter into similar arrangements with other manufacturers that operate under cGMP regulations and that might be capable of manufacturing for us. Any performance failure on the part of our existing or future manufacturers could delay clinical development or marketing approval.

If we were to experience an unexpected loss of supply of or if any supplier were unable to meet our clinical or commercial demand for any of our product candidates, we could experience delays in our planned clinical studies or commercialization. For example, the COVID-19 pandemic may impact our ability to procure sufficient supplies for the development of our current and future product candidates, and the extent of such impacts will depend on the severity and duration of the spread of the virus and the actions undertaken to contain COVID-19 or treat its effects. We could be unable to find alternative suppliers of acceptable quality and experience that can produce and supply appropriate volumes at an acceptable cost or on favorable terms. Moreover, our suppliers are often subject to strict manufacturing requirements and rigorous testing requirements, which could limit or delay production. The long transition periods necessary to switch manufacturers and suppliers, if necessary, would significantly delay our clinical trials and, for any product candidates that reach approval, the commercialization of our products, which would materially adversely affect our business, financial condition and results of operation.

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We are dependent on third party suppliers, and if we experience problems with any of these third parties, the manufacturing of our product candidates could be delayed, which could harm our results of operations.

We are dependent upon certain qualified suppliers, of which there are a limited number, for the supply of raw materials, components, devices and manufacturing equipment, some of which are manufactured or supplied by small companies with limited resources and experience to support commercial pharmaceutical and biologics production. Additionally, these suppliers may also have upstream suppliers who supply materials, components, devices and manufacturing equipment, which may indirectly impact our business operations. Thus, the success of our business may be adversely affected by the underperformance of third parties, exploitation by third parties of our commercial dependence and by unforeseen interruptions to third parties’ businesses. Although the existence of several alternative suppliers for each function mitigates the risks associated with this dependence, as does the availability of commercial insurance in respect of the impact of accidental events, the failure of a third party to properly to carry out their contractual duties or regulatory obligations could be highly disruptive to our business. Supply chain failures can result in significant clinical or commercial supply interruptions which could materially hamper our ability to conduct clinical trials or to supply adequate commercial supplies, and efforts to qualify new suppliers can be costly and time consuming. Further, any action taken by a third party that is detrimental to our reputation could have a negative impact on our ability to register our trademarks and/or market and sell our products.

For some of these raw materials, components, devices and manufacturing equipment, we rely and may in the future rely on sole source vendors or a limited number of vendors. The supply of the reagents and other specialty materials and equipment that are necessary to produce our product candidates could be reduced or interrupted at any time. In such case, identifying and engaging an alternative supplier or manufacturer could result in delay, and we may not be able to find other acceptable suppliers or manufacturers on acceptable terms, or at all. Switching suppliers or manufacturers may involve substantial costs and is likely to result in a delay in our desired clinical and commercial timelines. If we change suppliers or manufacturers for commercial production, applicable regulatory agencies may require us to conduct additional studies or trials. If key suppliers or manufacturers are lost, or if the supply of the materials is diminished or discontinued, we may not be able to develop, manufacture and market our product candidates in a timely and competitive manner, or at all. An inability to continue to source product from any of these suppliers, which could be due to a number of issues, including regulatory actions or requirements affecting the supplier, adverse financial or other strategic developments experienced by a supplier, labor disputes or shortages, unexpected demands or quality issues, could adversely affect our ability to satisfy demand for our product candidates, which could adversely and materially affect our product sales and operating results or our ability to conduct clinical trials, either of which could significantly harm our business.

As we continue to develop our product candidates and manufacturing processes, we expect that we will need to obtain rights to and supplies of certain materials and equipment to be used as part of that process. We may not be able to obtain rights to such materials on commercially reasonable terms, or at all, and if we are unable to alter our process in a commercially viable manner to avoid the use of such materials or find a suitable substitute, it would have a material adverse effect on our business. Even if we are able to alter our process so as to use other materials or equipment, such a change may lead to a delay in our clinical development and/or commercialization plans. If such a change occurs for product candidate that is already in clinical testing, the change may require us to perform both in vitro or in vivo comparability studies and to collect additional data from patients prior to undertaking more advanced clinical trials. These factors could cause the delay of studies or trials, regulatory submissions, required approvals or commercialization of product candidates that we develop, cause us to incur higher costs and prevent us from commercializing our product candidates successfully.

Our counterparties may become insolvent.

There is a risk that parties with whom we trade or have other business relationships with (including partners, joint venturers, customers, suppliers, subcontractors and other parties) may become insolvent. This may be due to general economic conditions or factors specific to that company. In the event that a party with whom we trade becomes insolvent, this could have an adverse impact on our revenues and profitability.

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Our relationships with customers, healthcare providers, physicians, prescribers, purchasers, third party payors, charitable organizations and patients are subject to applicable anti-kickback, fraud and abuse and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings.

Although we do not currently have any products on the market, upon commercialization of any of our product candidates, if approved, we will be subject to additional healthcare statutory and regulatory requirements and oversight by federal and state governments in the United States as well as foreign governments in the jurisdictions in which we conduct our business. Healthcare providers, physicians and third-party payors in the United States and elsewhere play a primary role in the recommendation and prescription of drug and biological products. Arrangements with third-party payors and customers can expose pharmaceutical manufacturers to broadly applicable fraud and abuse and other healthcare laws and regulations, including, without limitation, the federal Anti-Kickback Statute, or AKS, and the False Claims Act, or FCA, which may constrain the business or financial arrangements and relationships through which such companies sell, market and distribute pharmaceutical products. In particular, the research of any of our product candidates, as well as the promotion, sales and marketing of healthcare items and services, as well as certain business arrangements in the healthcare industry, are subject to extensive laws designed to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, structuring and commission(s), certain customer incentive programs and other business arrangements generally. Activities subject to these laws also involve the improper use of information obtained in the course of patient recruitment for clinical trials.

The healthcare laws that may affect us include: the federal fraud and abuse laws, including the AKS; false claims and civil monetary penalties laws, including the FCA and Civil Monetary Penalties Law; federal data privacy and security laws, including HIPAA, as amended by HITECH; and the federal Physician Payments Sunshine Act related to ownership and investment interests and payments and/or other transfers of value made to or held by physicians (including doctors, dentists, optometrists, podiatrists, and chiropractors) and teaching hospitals and, beginning in 2022, information regarding payments and transfers of value provided to other healthcare professionals, such as physician assistants and nurse practitioners among others, during the previous year. In addition, many states have similar laws and regulations that may differ from each other and federal law in significant ways, thus complicating compliance efforts. Moreover, several states require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government and may require manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures. Additionally, some state and local laws require the registration of pharmaceutical sales representatives in the jurisdiction.

The scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment of healthcare reform, especially in light of the lack of applicable precedent and regulations. Ensuring business arrangements comply with applicable healthcare laws, as well as responding to possible investigations by government authorities, can be time- and resource-consuming and can divert a company’s attention from other aspects of its business.

It is possible that governmental and enforcement authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law interpreting applicable fraud and abuse or other healthcare laws and regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant civil, criminal and administrative penalties, damages, fines, disgorgement, imprisonment, reputational harm, possible exclusion from participation in federal and state funded healthcare programs, contractual damages and the curtailment or restricting of our operations, as well as additional reporting obligations and oversight if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws. Further, if any of the physicians or other healthcare providers or entities with whom we expect to do business is found not to be in compliance with applicable laws, they may be subject to significant criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs. Any action for violation of these laws, even if successfully defended, could cause a pharmaceutical manufacturer to incur significant legal expenses and divert management’s attention from the operation of the business. Therefore, even if we are successful in defending against any such actions that may be brought against us, our business may be impaired. Prohibitions or restrictions on sales or withdrawal of future marketed products could materially affect business in an adverse way.

Risks Related to Ownership of Our Securities and Our Status as a U.S. Listed Company

The price of our Ordinary Shares and Depositary Shares may be volatile.

The trading price of our Ordinary Shares and Depositary Shares in both the United Kingdom and the United States has fluctuated, and is likely to continue to fluctuate, substantially in response to various factors, some of which are beyond our control, including limited trading volume. The stock market in general, and the market for pharmaceutical and biotechnology stocks in particular, have experienced extreme volatility that has often been unrelated to the operating performance of these companies. As a result of this volatility, investors may not be able to sell their Ordinary Shares or Depositary Shares at or above the price paid for the Ordinary Shares or Depositary Shares, respectively.

In addition to the factors discussed in this “Risk Factors” section and elsewhere in this annual report, the factors that could cause volatility in the market price of each Ordinary Share and the Depositary Shares include:

• the success of competitive products or technologies;

• regulatory actions;

• actual or anticipated changes in our growth rate relative to our competitors;

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• announcements by us or our competitors of new products, significant acquisitions, strategic partnerships, joint ventures, collaborations or capital commitments;

• the progress of preclinical development, laboratory testing and clinical trials of our product candidates or those of our competitors;

• the results from our clinical programs and any future trials we may conduct;

• developments in the clinical trials of potentially similar competitive products;

• EMA, MHRA, FDA or international regulatory or legal developments;

• failure of any of our product candidates, if approved, to achieve commercial success;

• developments or disputes concerning patent applications, issued patents or other proprietary intellectual property rights;

• the recruitment or departure of key personnel;

• the level of expenses related to any of our product candidates or clinical development programs;

• litigation or public concern about the safety of our products;

• actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts;

• actual and anticipated fluctuations in our operating results;

• variations in our financial results or those of companies that are perceived to be similar to us;

• share price and volume fluctuations attributable to inconsistent trading volume levels of our shares;

• announcements or expectations of additional financing efforts;

• rumors relating to us or our competitors;

• sales of our Ordinary Shares or Depositary Shares by us, our insiders or our other shareholders;

• changes in the structure of healthcare payment systems;

• market conditions in the pharmaceutical and biotechnology sectors, or general volatility in the market due to other factors, such as the recent volatility attributed to COVID-19;

• third party reimbursement policies;

• Brexit and any resulting economic or currency volatility;

• developments concerning current or future collaborations, strategic alliances, joint ventures or similar relationships; and

• reviews of long-term values of our assets, which could lead to impairment charges that could reduce our earnings.

These and other market and industry factors may cause the market price and demand for our Ordinary Shares and Depositary Shares to fluctuate substantially, regardless of our actual operating performance, which may limit or prevent investors from selling their Ordinary Shares or Depositary Shares at or above the price paid for the Ordinary Shares or Depositary Shares, respectively, and may otherwise negatively affect the liquidity of our Ordinary Shares and Depositary Shares.  The realization of any of the above risks or any of a broad range of other risks, including those described in these “Risk Factors,” could have a dramatic and material adverse impact on the market price of our Ordinary Shares and Depositary Shares.

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We may be subject to securities litigation, which is expensive and could divert management attention.

The market price of our Ordinary Shares and Depositary Shares may be volatile, and in the past, some companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation.  Any lawsuit to which we are a party, with or without merit, may result in an unfavorable judgment. We also may decide to settle lawsuits on unfavorable terms.

Any such negative outcome could result in payments of substantial damages or fines, damage to our reputation or adverse changes to our business practices. Defending against litigation is costly and time-consuming, and could divert our management’s attention and our resources. Furthermore, during the course of litigation, there could be negative public announcements of the results of hearings, motions or other interim proceedings or developments, which could have a negative effect on the market price of our ADSs and our ordinary shares.

The liquidity of our Depositary Shares and Ordinary Shares may have an adverse effect on our share price.

As at March 31, 2022, we had 98,468,413 Ordinary Shares outstanding. Of these shares, 41,594,935 of our Ordinary Shares were held as Depositary Shares. Some companies that have issued American depositary shares on United States stock exchanges have experienced lower levels of liquidity in their American depositary shares than is the case for their ordinary shares listed on their domestic exchange. Our Depositary Shares are traded on the NASDAQ Capital Market and our Ordinary Shares are traded on AIM. We cannot predict the effect of this dual listing on the value of our Ordinary Shares and Depositary Shares. However, the dual listing of our Ordinary Shares and Depositary Shares may dilute the liquidity of these securities in one or both markets and may adversely affect the development of an active trading market for the Depositary Shares in the United States. The price of the Depositary Shares could also be adversely affected by trading in our Ordinary Shares on AIM. As a result of these and other factors, you may not be able to sell your Depositary Shares. In addition, investors may incur higher transaction costs when buying and selling Depositary Shares than they would incur in buying and selling common stock. An inactive market may also impair our ability to raise capital by selling Depositary Shares and Ordinary Shares and may impair our ability to enter into strategic partnerships or acquire companies or products by using our Ordinary Shares as consideration. 

Our Ordinary Shares and Depositary Shares trade on two different markets, which is costly to maintain and may result in price variations.

Our Depositary Shares are listed for trading on the NASDAQ Capital Market and our Ordinary Shares are traded on AIM.  As long as we are listed on these markets, we will continue to generate additional costs, including increased legal, accounting, investor relations and other expenses, in addition to the costs associated with the additional reporting requirements described elsewhere in this annual report.  Trading in our securities on these markets is made in different currencies and at different times, including as a result of different time zones, different trading days and different public holidays in the U.S. and the United Kingdom. Consequently, the effective trading prices of our securities on these two markets may differ. Any decrease in the trading price of our securities on one of these markets could cause a decrease in the trading price of our securities on the other market.

Shareholder ownership interests in the Company may be diluted as a result of future financings, additional acquisitions or the exercise of our options and warrants, and may have a material negative effect on the market price of our securities.

We may seek to raise additional funds from time to time in public or private issuances of equity and such financings may take place in the near future or over the longer term. Sales of our securities offered through future equity offerings may result in substantial dilution to the interests of our current shareholders. The sale of a substantial number of securities to investors, or anticipation of such sales, could make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales.  

As of March 31, 2022, we had issued 2,881,500 options under the Midatech Pharma PLC Enterprise Management Incentive Plan, and 126,776 non-EMI options. In addition, we assumed options in connection with our acquisition of DARA in 2015, of which 2,835 were still outstanding. Further, as of March 31, 2022, we had issued outstanding warrants exercisable for (i) 630,000 Depositary Shares with an exercise price of $6.25 each (representing 3,1500,000 Ordinary Shares), (ii) 1,318,182 Depositary Shares with an exercise price of $2.05 each (representing 6,590,910 Ordinary Shares), (iii) 29,546 Depositary Shares with an exercise price of $2.0625 each (representing 147,730 Ordinary Shares), (iv) 6,999,999 Ordinary Shares with an exercise price of £0.34 each, and (v) 4,080 Ordinary Shares with a weighted average exercise price of $61.03 per share (assumed pursuant to the acquisition of DARA in 2015). We may also issue Ordinary Shares (and Depositary Shares underlying such Ordinary Shares) or other securities convertible into Ordinary Shares from time to time for future acquisition. The issuance of the securities underlying these instruments, or perception that issuance may occur, will have a dilutive impact on other shareholders and could have a material negative effect on the market price of our Ordinary Shares and Depositary Shares.

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If equity research analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.

The trading market for our Ordinary Shares and Depositary Shares will depend in part on the research and reports that equity research analysts publish about us or our business.  If no or few equity research analysts cover our Company, the trading price for our Ordinary Shares and Depositary Shares would be negatively impacted. We do not have any control over the analysts or the content and opinions included in their reports. The price of our Ordinary Shares and Depositary Shares could decline if one or more equity research analysts downgrade our Ordinary Shares and Depositary Shares or issue other unfavorable commentary or research about us. If one or more equity research analysts ceases coverage of us or fails to publish reports on us regularly, demand for our Ordinary Shares and Depositary Shares could decrease, which in turn could cause the trading price or trading volume of our Ordinary Shares and Depositary Shares to decline. 

The rights of holders of Depositary Shares are not the same as the rights of holders of Ordinary Shares.

We are a public limited company incorporated under the laws of England and Wales. The Depositary Shares represent a beneficial ownership interest in our Ordinary Shares. The rights of holders of Depositary Shares will be governed by English law, our constitutional documents, the listing rules of AIM, or AIM Rules, and the deposit agreement pursuant to which the Depositary Shares are issued. The rights and terms of the Depositary Shares are designed to replicate, to the extent reasonably practicable, the rights attendant to the Ordinary Shares, for which there is currently no active trading market in the United States. However, because of aspects of United Kingdom law, our constitutional documents and the terms of the deposit agreement, the rights of holders of Depositary Shares will not be identical to and, in some respects, may be less favorable than, the rights of holders of Ordinary Shares.

You may not have the same voting rights as the holders of our Ordinary Shares and may not receive voting materials in time to be able to exercise your right to vote.

Holders of our Depositary Shares do not have the same rights as shareholders who hold our Ordinary Shares directly and may only exercise their voting rights with respect to the underlying Ordinary Shares in accordance with the provisions of the deposit agreement. Holders of the Depositary Shares will appoint the depositary or its nominee as their representative to exercise the voting rights attaching to the Ordinary Shares represented by the Depositary Shares. When a general meeting is convened, if you hold Depositary Shares, you may not receive sufficient notice of a shareholders’ meeting to permit you to withdraw the Ordinary Shares underlying your Depositary Shares to allow you to vote with respect to any specific matter. Further, we cannot assure purchasers of Depositary Shares that they will receive voting materials in time to instruct the depositary to vote, and it is possible that they, or persons who hold their Depositary Shares through brokers, dealers or other third parties, will not have the opportunity to exercise a right to vote. Furthermore, the depositary will not be liable for any failure to carry out any instructions to vote, for the manner in which any vote is cast or for the effect of any such vote. As a result, purchasers of Depositary Shares may not be able to exercise their right to vote and they may lack recourse if their Depositary Shares are not voted as they request.

You may not receive distributions on Ordinary Shares represented by Depositary Shares or any value for them if it is illegal or impractical to make them available to holders of Depositary Shares.

The depositary of the Depositary Shares has agreed to pay to you distributions with respect to cash or other distributions it or the custodian receives on Ordinary Shares or other deposited securities after deducting its agreed fees and expenses. You will receive these distributions in proportion to the number of Ordinary Shares your Depositary Shares represent. However, the depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any holders of Depositary Shares. We have no obligation to take any other action to permit the distribution of our Depositary Shares, Ordinary Shares, rights or anything else to holders of our Depositary Shares. As a result, you may not receive the distributions made on Ordinary Shares or any value from them if it is illegal or impractical for us to make them available to you. These restrictions may have a material adverse effect on the value of your Depositary Shares.

You may be subject to limitations on transfer of your Depositary Shares.

Your Depositary Shares are transferable on the books of the depositary. However, the depositary may close its books at any time or from time to time when it deems expedient in connection with the performance of its duties. The depositary may refuse to deliver, transfer or register transfers of your Depositary Shares generally when our books or the books of the depositary are closed, or at any time if we or the depositary deems it advisable to do so because of any requirement of law or government or governmental body, or under any provision of the deposit agreement, or for any other reason.

We have no present intention to pay dividends on our Ordinary Shares in the foreseeable future and, consequently, your only opportunity to achieve a return on your investment during that time may be if the price of Depositary Shares appreciates.

We have no present intention to pay dividends on our Ordinary Shares in the foreseeable future. Any determination by our Board of Directors to pay dividends will depend on many factors, including our financial condition, results of operations, legal requirements and other factors. Accordingly, if the price of the Depositary Shares falls in the foreseeable future and you sell your Depositary Shares, you will lose money on your investment, without the likelihood that this loss will be offset in part or at all by cash dividends.

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We are no longer an “emerging growth company” but remain a non-accelerated filer, and the reduced reporting obligations applicable non-accelerated filers may make our securities less attractive to investors.

We are no longer an “emerging growth company,” as defined under the Jumpstart Our Business Startups Act. However, for as long as we remain a “non-accelerated filer” under the rules of the SEC, our independent registered public accounting firm is not required to deliver an annual attestation report on the effectiveness of our internal control over financial reporting. We will cease to be a non-accelerated filer if (a) the aggregate market value of our outstanding Ordinary Shares held by non-affiliates as of the last business day of our most recently completed second fiscal quarter is $75 million or more and we reported annual net revenues of greater than $100 million for our most recently completed fiscal year or (b) the aggregate market value of our outstanding Ordinary Shares held by non-affiliates as of the last business day of our most recently completed second fiscal quarter is $700 million or more, regardless of annual net revenues. If we cease to be a non-accelerated filer, we would be subject to the requirement for an annual attestation report by our independent registered public accounting firm on the effectiveness of our internal control over financial reporting. We cannot predict whether investors will find our securities less attractive if we rely on this exemption. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and our stock price may be more volatile and may decline.

Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.

We are subject to the periodic reporting requirements of the Exchange Act. We design our disclosure controls and procedures to reasonably assure that information we are required to disclose in reports we file or submit under the Exchange Act is accumulated and communicated to management, recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. We believe that any disclosure controls and procedures or internal controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements or insufficient disclosure due to error or fraud may occur and we may not detect them.

Any failure to maintain effective internal controls and procedures over financial reporting could severely inhibit our ability to accurately report our financial condition, results of operations or cash flows.

We are incurring increased costs as a result of operating as a public company, and management will be required to devote substantial time to new compliance initiatives.

As a public company in the United Kingdom and United States, we are incurring significant legal, accounting and other expenses that we did not incur as a private company, and these expenses may increase even more after we are no longer an “emerging growth company.” We are subject to the reporting requirements of, in the United Kingdom, the AIM Rules, the Market Abuse Regulation, or MAR, and the Disclosure Guidance and Transparency Rules, and in the United States, the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Protection Act, as well as rules adopted, and to be adopted, by the SEC and the NASDAQ. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, we expect these rules and regulations to substantially increase our legal and financial compliance costs and to make some activities more time-consuming and costly. For example, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to incur substantial costs to maintain the sufficient coverage. We cannot predict or estimate the amount or timing of additional costs we may incur to respond to these requirements. The impact of these requirements could also make it more difficult for us to attract and retain qualified persons to serve on our Board of Directors, our board committees or as members of our senior management.

If we cannot meet NASDAQ’s continued listing requirements, NASDAQ may delist our Depositary Shares, which could have an adverse impact on the liquidity and market price of our Depositary Shares.

Our Depositary Shares are currently listed on the NASDAQ Capital Market. We are required to meet certain qualitative and financial tests to maintain the listing of our Depositary Shares on NASDAQ. On April 13, 2022, we received a letter from NASDAQ stating that, for the previous 30 consecutive business days, the bid price for our Depositary Shares had closed below the minimum $1.00 bid price per share requirement for continued listing on the NASDAQ Capital Market under NASDAQ Listing Rule 5550(a)(2). The notice has no immediate effect on the listing or trading of our Depositary Shares and the Depositary Shares will continue to trade on the NASDAQ Capital Market under the symbol “MTP.”

In accordance with NASDAQ Listing Rules, we have a grace period of 180 calendar days, or until October 10, 2022, or the Compliance Period, to regain compliance with the minimum bid price requirement.  To regain compliance, the closing bid price of the Depositary Shares must meet or exceed $1.00 per share for at least 10 consecutive business days during the Compliance Period. If the Depositary Shares do not regain compliance with the minimum bid price requirement during the Compliance Period, we may be eligible for an additional grace period of 180 calendar days provided that we satisfy NASDAQ's initial listing standards for listing on the NASDAQ Capital Market, other than the minimum bid price requirement, and provide written notice to NASDAQ of its intention to cure the delinquency during the second grace period. If we do not regain compliance during the initial grace period and are not eligible for an additional grace period, NASDAQ will provide written notice that the Depositary Shares are subject to delisting from the NASDAQ Capital Market. In that event, we may appeal such determination to a hearing panel.

If we are unable to regain compliance with the minimum bid price requirement, our Depositary Shares may be subject to delisting by NASDAQ. This could inhibit the ability of our holders of Depositary Shares to trade their shares in the open market, thereby severely limiting the liquidity of such shares. Although stockholders may be able to trade their shares of Depositary Shares on the over-the-counter market, there can be no assurance that this would occur. Further, the over-the-counter market provides significantly less liquidity than NASDAQ and other national securities exchanges, is thinly traded and highly volatile, has fewer market makers and is not followed by analysts. As a result, your ability to trade or obtain quotations for these securities may be more limited than if they were quoted on NASDAQ or other national securities exchanges.

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Risks Related to Investing in a Foreign Private Issuer or United Kingdom Company

We are a “foreign private issuer” under the rules and regulations of the SEC and, as a result, are exempt from a number of rules under the Exchange Act and are permitted to file less information with the SEC than a company incorporated in the United States.

We are incorporated as a public limited company in England and Wales and are deemed to be a “foreign private issuer” under the rules and regulations of the SEC. As a foreign private issuer, we are exempt from certain rules under the Exchange Act that would otherwise apply if we were a company incorporated in the United States, including:

• the requirement to file periodic reports and financial statements with the SEC as frequently or as promptly as United States companies with securities registered under the Exchange Act;

• the requirement to file financial statements prepared in accordance with U.S. GAAP;

• the proxy rules, which impose certain disclosure and procedural requirements for proxy or consent solicitations; and

• the requirement to comply with Regulation FD, which imposes certain restrictions on the selective disclosure of material information.

In addition, our officers, directors and principal shareholders are exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and the related rules with respect to their purchases and sales of Ordinary Shares and Depositary Shares. Accordingly, you may receive less information about us than you would receive about a public company incorporated in the United States and may be afforded less protection under the United States federal securities laws than you would be if we were incorporated in the United States.

Additional reporting requirements may apply if we lose our status as a foreign private issuer.

As a foreign private issuer, we are not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act applicable to U.S. domestic issuers. In order to maintain our current status as a foreign private issuer, either (1) a majority of our voting securities must be either directly or indirectly owned of record by non-residents of the United States or (2)(a) a majority of our executive officers or directors cannot be U.S. citizens or residents, (b) more than 50% of our assets must be located outside the United States and (c) our business must be administered principally outside the United States.

If we lose our status as a foreign private issuer, we would be required to comply with the Exchange Act reporting and other requirements applicable to U.S. domestic issuers, which are more detailed and extensive than the requirements for foreign private issuers. We may also be required to make changes in our corporate governance practices in accordance with various SEC and NASDAQ rules. The regulatory and compliance costs to us under U.S. securities laws if we are required to comply with the reporting requirements applicable to a U.S. domestic issuer may be significantly higher than the cost we would incur as a foreign private issuer. As a result, we expect that a loss of foreign private issuer status would increase our legal and financial compliance costs and would make some activities highly time consuming and costly. We also expect that if we were required to comply with the rules and regulations applicable to U.S. domestic issuers, it would make it more difficult and expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These rules and regulations could also make it more difficult for us to attract and retain qualified members of our Board of Directors. 

As a foreign private issuer, we are not required to comply with many of the corporate governance standards of NASDAQ applicable to companies incorporated in the United States.

Our Board of Directors is required to maintain an audit committee comprised solely of three or more directors satisfying the independence standards of NASDAQ applicable to audit committee members. As a foreign private issuer, however, we are not required to comply with most of the other corporate governance rules of NASDAQ, including the requirement to maintain a majority of independent directors, and nominating and compensation committees of our Board of Directors comprised solely of independent directors. Although United Kingdom corporate governance rules which we abide by have comparable requirements, holders of Depositary Shares may not be afforded the benefits of the corporate governance standards of NASDAQ to the same extent applicable to companies incorporated in the United States.

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Securities traded on AIM may carry a higher risk than shares traded on other exchanges that may impact the value of your investment.

Our Ordinary Shares are currently traded on the AIM. Investment in equities traded on the AIM is perceived to carry a higher risk than an investment in equities quoted on exchanges with more stringent listing requirements, such as the Main Market of the London Stock Exchange, New York Stock Exchange or NASDAQ. This is because the AIM imposes less stringent corporate governance and ongoing reporting requirements than those other exchanges. In addition, the AIM requires only semi-annual, rather than quarterly, financial reporting. You should be aware that the value of our Ordinary Shares may be influenced by many factors, some of which may be specific to us and some of which may affect AIM-listed companies generally, including the depth and liquidity of the market, our performance, a large or small volume of trading in our Ordinary Shares, legislative changes and general economic, political or regulatory conditions, and that the prices may be volatile and subject to extensive fluctuations. Therefore, the market price of our Ordinary Shares underlying the Depositary Shares may not reflect the underlying value of the Company.

Your right to participate in any future rights offerings may be limited, which may cause dilution to your holdings.

Under English law, shareholders usually have preemptive rights to subscribe on a pro rata basis in the issuance of new shares for cash. The exercise of preemptive rights by certain shareholders not resident in the United Kingdom may be restricted by applicable law or practice in the United Kingdom and overseas jurisdictions. We may from time to time distribute rights to our shareholders, including rights to acquire our securities. However, we cannot make rights available to shareholders in the United States unless we register the rights and the securities to which the rights relate under the Securities Act or an exemption from the registration requirements is available. Also, under the deposit agreement, the depositary bank will not make rights available to Depositary Share holders unless either both the rights and any related securities are registered under the Securities Act, or the distribution of them to Depositary Share holders is exempted from registration under the Securities Act. We are under no obligation to file a registration statement with respect to any such rights or securities or to endeavor to cause such a registration statement to be declared effective. Moreover, we may not be able to establish an exemption from registration under the Securities Act. If the depositary does not distribute the rights, it may, under the deposit agreement, either sell them, if possible, or allow them to lapse. Accordingly, Depositary Share holders may be unable to participate in our rights offerings and may experience dilution in their holdings. We are also permitted under English law to disapply preemptive rights (subject to the approval of our shareholders by special resolution or the inclusion in our articles of association of a power to disapply such rights) and thereby exclude certain shareholders, such as overseas shareholders, from participating in a rights offering (usually to avoid a breach of local securities laws).

It may be difficult for you to bring any action or enforce any judgment obtained in the United States against us or members of our Board of Directors, which may limit the remedies otherwise available to you.

We are incorporated as a public limited company in England and Wales and all of our assets are located outside the United States. In addition, all of the members of our Board of Directors are nationals and residents of countries, including the United Kingdom, outside of the United States. Most or all of the assets of these individuals are located outside the United States. As a result, it may not be possible for investors to effect service of process within the United States upon such persons or to enforce judgments obtained in U.S. courts against them or us, including judgments predicated upon the civil liability provisions of the U.S. federal securities laws.

The United States and the United Kingdom do not currently have a treaty providing for the reciprocal recognition and enforcement of judgments (other than arbitration awards) in civil and commercial matters. Consequently, a final judgment for payment given by a court in the United States, whether or not predicated solely upon U.S. securities laws, would not automatically be recognized or enforceable in England and Wales. In addition, uncertainty exists as to whether the English and Welsh courts would entertain original actions brought in England and Wales against us or our directors or executive officers predicated upon the securities laws of the United States or any state in the United States. Any final and conclusive monetary judgment for a definite sum obtained against us in U.S. courts would be treated by the courts of England and Wales as a cause of action in itself and sued upon as a debt so that no retrial of the issues would be necessary, provided that certain requirements are met consistent with English law and public policy. Whether these requirements are met in respect of a judgment based upon the civil liability provisions of the U.S. securities laws is an issue for the English court making such decision. If an English court gives judgment for the sum payable under a U.S. judgment, the English judgment will be enforceable by methods generally available for this purpose.

As a result, U.S. investors may not be able to enforce against us or our executive officers, board of directors or certain experts named herein who are residents of the United Kingdom or countries other than the United States any judgments obtained in U.S. courts in civil and commercial matters, including judgments under the U.S. federal securities laws.

We intend to operate so as to be treated exclusively as a resident of the United Kingdom for tax purposes, but the relevant tax authorities may treat us as also being a resident of another jurisdiction for tax purposes.

We are a public limited company incorporated under the laws of England and Wales. Under current English law, the decisions of the English courts and the published practice of Her Majesty’s Revenue and Customs suggest that we are likely to be regarded as being a United Kingdom resident and should remain so if, as we intend that, (i) all major meetings of our Board of Directors and most routine meetings are held in the United Kingdom with a majority of directors present in the United Kingdom for those meetings; (ii) at those meetings there are full discussions of, and decisions are made regarding, the key strategic issues affecting us and our subsidiaries; (iii) those meetings are properly minuted; (iv) at least some of our directors, together with supporting staff, are based in the United Kingdom; and (v) we have permanent staffed office premises in the United Kingdom sufficient to discharge our functions.

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Even if we are considered by Her Majesty’s Revenue and Customs as resident in the United Kingdom for United Kingdom tax purposes, as expected, we would nevertheless not be treated as resident in the United Kingdom if (a) we were concurrently resident in another jurisdiction (applying the tax residence rules of that jurisdiction) that has a double tax treaty with the United Kingdom and (b) there is a tiebreaker provision in that tax treaty which allocates exclusive residence to that other jurisdiction. Because this analysis is highly factual and may depend on future changes in our management and organizational structure, there can be no assurance regarding the final determination of our tax residence. Should we be treated as resident for tax purposes in another jurisdiction other than the United Kingdom, we would be subject to taxation in such jurisdiction in accordance with such jurisdiction’s laws, which could result in additional costs and expenses.

The rights of our shareholders may differ from the rights typically offered to shareholders of a U.S. corporation.

We are incorporated under English law. The rights of holders of Ordinary Shares and, therefore, certain of the rights of holders of our ADSs, are governed by English law, including the provisions of the United Kingdom Companies Act 2006, or the Companies Act, and by our articles of association. These rights differ in certain respects from the rights of shareholders in typical U.S. corporations. See Item 10.B – “Memorandum and Articles of Association—Differences in corporate law” for a description of the principal differences between the provisions of the Companies Act applicable to us and, for example, the Delaware General Corporation Law relating to shareholders’ rights and protections.

Protections found in provisions under the United Kingdom City Code on Takeovers and Mergers may delay or discourage a takeover attempt, including attempts that may be beneficial to holders of our Ordinary Shares and Depositary Shares.

The U.K. City Code on Takeovers and Mergers, or the Takeover Code, applies, among other things, to an offer for a public company whose registered office is in the United Kingdom and whose securities are admitted to trading on a multilateral trading facility in the United Kingdom, which includes AIM. We are therefore currently subject to the Takeover Code.

The Takeover Code provides a framework within which takeovers of certain companies organized in the United Kingdom are regulated and conducted. The following is a brief summary of some of the most important rules of the Takeover Code:

• In connection with a potential offer, if following an approach by or on behalf of a potential bidder, the company is “the subject of rumor or speculation” or there is an “untoward movement” in the company’s share price, there is a requirement for the potential bidder to make a public announcement about a potential offer for the company, or for the company to make a public announcement about its review of a potential offer.

• When interests in shares carrying 10% or more of the voting rights of a class have been acquired by an offeror (i.e., a bidder) in the offer period (i.e., before the shares subject to the offer have been acquired) or within the previous 12 months, the offer must be in cash or be accompanied by a cash alternative for all shareholders of that class at the highest price paid by the offeror or any person acting in concert with them in that period. Further, if an offeror or any person acting in concert with them acquires any interest in shares during the offer period, the offer for the shares must be in cash or accompanied by a cash alternative at a price at least equal to the price paid for such shares during the offer period.

• If after an announcement is made, the offeror or any person acting in concert with them acquires an interest in shares in an offeree company (i.e., a target) at a price higher than the value of the offer, the offer must be increased accordingly.

• The board of directors of the offeree company must appoint a competent independent adviser whose advice on the financial terms of the offer must be made known to all the shareholders, together with the opinion of the board of directors of the offeree company.

• Favorable deals for selected shareholders are not permitted, except in certain circumstances where independent shareholder approval is given and the arrangements are regarded as fair and reasonable in the opinion of the financial adviser to the offeree.

• All shareholders must be given the same information.

• Those issuing documents in connection with a takeover must include statements taking responsibility for the contents thereof.

• Profit forecasts, quantified financial benefits statements and asset valuations must be made to specified standards and must be reported on by professional advisers.

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• Misleading, inaccurate or unsubstantiated statements made in documents or to the media must be publicly corrected immediately.

• Actions during the course of an offer by the offeree company, which might frustrate the offer are generally prohibited unless shareholders approve these plans. Frustrating actions would include, for example, lengthening the notice period for directors under their service contract or agreeing to sell off material parts of the target group.

• Stringent requirements are laid down for the disclosure of dealings in relevant securities during an offer, including the prompt disclosure of positions and dealing in relevant securities by the parties to an offer and any person who is interested (directly or indirectly) in 1% or more of any class of relevant securities.

• Employees of both the offeror and the offeree company and the trustees of the offeree company’s pension scheme must be informed about an offer. In addition, the offeree company’s employee representatives and pension scheme trustees have the right to have a separate opinion on the effects of the offer on employment appended to the offeree board of directors’ circular or published on a website.

If we are deemed or become a passive foreign investment company, or PFIC, for U.S. federal income tax purposes in 2021 or in any prior or subsequent year, this may result in adverse U.S. federal income tax consequences for U.S. taxpayers that are holders of our securities.

We will be treated as a PFIC for U.S. federal income tax purposes in any taxable year in which either (1) at least 75% of our gross income is “passive income” or (2) on average at least 50% of our assets by value produce passive income or are held for the production of passive income. Passive income for this purpose generally includes, among other things, certain dividends, interest, royalties, rents and gains from commodities and securities transactions and from the sale or exchange of property that gives rise to passive income. Passive income also includes amounts derived by reason of the temporary investment of funds, including those raised in a public offering. In determining whether a non-U.S. corporation is a PFIC, a proportionate share of the income and assets of each corporation in which it owns, directly or indirectly, at least a 25% interest (by value) is taken into account.

We do not believe we were a PFIC for 2021, but there can be no assurance that we will not be a PFIC in 2022 or for any other taxable year, as our operating results for any such years may cause us to be a PFIC. If we were to be characterized as a PFIC for U.S. federal income tax purposes in any taxable year during which a U.S. shareholder owns our securities, and such U.S. shareholder does not make an election to treat us as a “qualified electing fund,” or a QEF, or make a “mark-to-market” election, then “excess distributions” to a U.S. shareholder, and any gain realized on the sale or other disposition of our securities will be subject to special rules. Under these rules: (1) the excess distribution or gain would be allocated ratably over the U.S. shareholder’s holding period for the securities; (2) the amount allocated to the current taxable year and any period prior to the first day of the first taxable year in which we were a PFIC would be taxed as ordinary income; and (3) the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year. In addition, if the United States Internal Revenue Service, or the IRS, determines that we are a PFIC for a year with respect to which we have determined that we were not a PFIC, it may be too late for a U.S. shareholder to make a timely QEF or mark-to-market election. U.S. shareholders who hold or have held our securities during a period when we were or are a PFIC will be subject to the foregoing rules, even if we cease to be a PFIC in subsequent years, subject to exceptions for U.S. shareholders who made a timely QEF or mark-to-market election. However, because we do not intend to prepare or provide the information that would permit the making of a valid QEF election, such an election will not be available to United States holders.

Recent and potential future changes to U.S. and non-U.S. tax laws could materially adversely affect our Company and holders of our Ordinary Shares and the Depositary Shares.

The Tax Cut Act, which was legislation bringing about broad changes in the existing U.S. corporate tax system, was enacted in the United States in December 2017. The Tax Cut Act made significant changes to the U.S. federal income tax laws. Certain provisions of the Tax Cut Act could have an adverse effect on the Company or holders of our Ordinary Shares or Depositary Shares. The U.S. Treasury Department and the IRS continue to interpret and issue guidance on how provisions of the Tax Cut Act will be applied and administered. The interpretations of many provisions of the Tax Cut Act are still unclear. We cannot predict when or to what extent any additional U.S. federal tax laws, regulations, interpretations, or rulings clarifying the Tax Cut Act will be issued or the impact of any such guidance on investors or the Company. Holders of Ordinary Shares and Depositary Shares are urged to consult their own tax advisors regarding the effect of the Tax Cut Act and other potential changes to the U.S. federal tax laws.

We are unable to predict what tax changes may be enacted in the future or what effect such changes would have on our business, but such changes could affect our effective tax rates in countries where we have operations and could have an adverse effect on our overall tax position in the future, along with increasing the complexity, burden and cost of tax compliance. In addition, such changes could impact the holders of Ordinary Shares or Depositary Shares.

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ITEM 4. INFORMATION ON THE COMPANY.  

A. History and Development of the Company

We were originally formed as a limited liability company under the laws of England and Wales in 2000 under the name Midatech Limited, which acquired its base nanoparticle technology through an assignment of worldwide commercialization rights and joint ownership of patent rights from Consejo Superior de Investigaciones Cientificas, or CSIC, in Madrid, Spain. Midatech Limited was a research and development focused biotech company which subsequently advanced and developed this gold nanoparticle drug delivery platform technology to enhance the delivery of medicines for major therapeutic indications where clinical therapeutic options are limited, with a particular focus on certain cancers, such as liver and brain cancer.

To better be able to continue the commercial development of the research and development programs of Midatech Limited, Midatech Pharma PLC was incorporated on September 12, 2014 under the laws of England and Wales, to be the public holding company of Midatech Limited and Midatech Pharma (Wales) Limited, or Midatech Wales, under registered number 09216368. On December 8, 2014, we completed our initial public offering of our Ordinary Shares in the United Kingdom.

On March 31, 2020 we announced that, in the context of prevailing conditions in the capital markets, we did not expect to be able to raise capital to fund the continued development of MTD201, including scale-up of MTD201 manufacturing at our Bilbao facilities. We determined to conduct a strategic review of our operations, cease further investment in MTD201 and close our operations in Bilbao, Spain, including making all our employees in Bilbao redundant.

On April 20, 2020, we announced an update to the strategic review of operations including the appointment of Noble Capital Markets, Inc. to advise us on options for extracting value from our technologies, including partnering our clinical stage assets, partnering existing and upcoming proof of concept formulations, partnering or selling one or more of our technologies or selling the entire Company.

On January 26, 2021, we announced, among other things, that the strategic review had completed and that we were now focused on executing our realigned strategy of deploying our technologies to develop more early stage products and seeking licensing partners at proof of concept stage.

Our principal executive office and registered offices are located at 1 Caspian Point, Caspian Way Cardiff, United Kingdom CF10 4DQ, and our telephone number is +44 29 2048 0180. Our authorized representative in the United States is Donald J. Puglisi of Puglisi and Associates. Our agent for service in the United States is Donald J. Puglisi of Puglisi and Associates, located at 850 Library Avenue, Suite 204, Newark, Delaware 19711. Our Ordinary Shares are traded on AIM under the symbol “MTPH,” and our Depositary Shares are traded on the NASDAQ Capital Market under the symbol “MTP.”

We file reports and other information with the SEC. The SEC maintains an Internet website that contains reports, proxy and information statements, and other information regarding issuers, including us, that file electronically with the SEC. Our filings with the SEC are available to the public through the SEC’s website at http://www.sec.gov. Our corporate website is located at www.midatechpharma.com. Information contained on our website is not part of, or incorporated in, this annual report.

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Capital Expenditures

Our capital expenditures amounted to £0.32 million, £0.21 million and £0.31 million for the years ended December 31, 2021, 2020 and 2019, respectively.

For the year ended December 31, 2021, our principal capital expenditures largely related to investment in our laboratory and pilot-scale manufacturing facility in Cardiff, Wales.

For the year ended December 31, 2020, our principal capital expenditures largely related to investment in our laboratory and pilot-scale manufacturing facility in Cardiff, Wales.

For the year ended December 31, 2019, our principal capital expenditures largely related to the purchase of laboratory equipment for our former manufacturing facility in Bilbao, Spain.

B. Business Overview

Business Overview

We are focused on the research and development of medicines which we believe would benefit from improved bio-delivery and/or bio-distribution using our using our proprietary platform drug delivery technologies:

• Q-Sphera™ platform: Our disruptive polymer microsphere microtechnology is used for sustained delivery to prolong and control the release of therapeutics over an extended period of time, from weeks to months.

• MidaSolve™ platform: Our innovative oligosaccharide nanotechnology is used to solubilize drugs so that they can be administered in liquid form directly and locally into tumors.

• MidaCore™ platform: Our leading-edge gold nanoparticle, or GNP, nanotechnology is used for targeting sites of disease by using either chemotherapeutic agents or immunotherapeutic agents

Revenue. Revenue from continuing and discontinued operations for the whole of the Group is set out below.

	Year ended December 31,
(£ in thousands)	2021		2020		2019
Continuing Operations:
Revenue (United States)		--		--		60
Revenue (Europe, including United Kingdom)		578		118		252
Revenue (Rest of World)		--		62		--
Discontinued Operations:
Revenue (United States)		--		--		--
Revenue (Europe, including United Kingdom)		--		--		--
Total Revenue from continuing and discontinued operations		578		180		312

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Recent Developments

Strategic Review

In March 2020, we reviewed the remaining costs necessary to complete the Phase III clinical trial of MTD201, which uses our sustained release platform, Q-Sphera, to formulate a long acting dose of octreotide for the treatment of acromegaly and neuroendocrine tumors, as well as the manufacturing scale-up of our MTD201 manufacturing capabilities at our Bilbao, Spain facilities. We believed the remaining costs to be in the order of $30 million (of which $8.5 million had been raised in loans from the Spanish government, as discussed in more detail herein). Given the state of the financial markets at that time, and our cash runway, we determined we were unlikely to conclude a license transaction or raise sufficient funds to continue the required remaining investment in MTD201 in a timely manner. The Board of Directors made the determination to terminate the further in-house development of MTD201 and, on March 31, 2020, announced a strategic review of our operations.

In connection with the decision to terminate the MTD201 program, we closed our MTD201-dedicated manufacturing facilities in Bilbao, Spain. We have made redundant all of our Midatech Pharma España S.L., or Midatech Spain, employees pursuant to a consultation process as required by Spanish law. We also made redundant five employees located in the United Kingdom in our clinical research and administrative departments.

Following these changes, our strategy has shifted to deploying our proprietary drug delivery technologies to formulate a compelling portfolio of novel first-in-class sustained release formulations of products with significant commercial potential for licensing to pharmaceutical company partners at a proof-of-concept stage. Other than with respect to MTX110, for which pilot clinical trials are required to demonstrate proof of concept due to the fact we are repurposing an existing medicine, we have no plans to undertake additional clinical trials in humans unless a license partner or grant funding has been secured. MTX110 is a direct delivery treatment for diffuse intrinsic pontine glioma, or DIPG, an ultra-rare brain cancer suffered by children, using our MidaSolve technology for direct delivery. For more information regarding our strategy, see “—Our Strategy.”

Additionally, on March 31, 2020, Dr. Craig Cook, our then-Chief Executive Officer, resigned from his position and as a director of Midatech, effective immediately. He was succeeded by Mr. Stephen Stamp, our then-current Chief Financial Officer, who now serves in the combined roles of Chief Executive Officer and Chief Financial Officer. Further, in line with our streamlined strategy and operations, each of Dr. Huaizheng Peng and Mr. Frederic Duchesne resigned from the Board of Directors, effective March 31, 2020.

On January 26, 2021, we announced, among other things, that the strategic review had been completed and that we were now focused on executing our realigned strategy of deploying our technologies to develop more early stage products and seeking licensing partners at proof of concept stage.

Secura License Agreement

Pursuant to the Secura License Agreement, Midatech Limited was granted a non-exclusive worldwide, sublicenseable license to certain patents of panobinostat, the active pharmaceutical ingredient of our development product MTX110. Midatech Limited’s rights are limited to the treatment of brain cancer in humans, administered by convection-enhanced delivery. We received a letter dated June 1, 2020, sent on behalf of Secura Bio purporting to terminate the Secura License Agreement “effective immediately,” the reason specified being that we were proposing to liquidate the Company. Despite our assurances to the contrary, and despite our repeated requests that Secura Bio withdraw its termination, Secura Bio reaffirmed the termination and reasons therefor and the agreement was thus terminated. We received a further letter sent on behalf of Secura Bio dated May 21, 2021 purporting to terminate the Secura License Agreement a second time for alleged material breaches of the agreement, and demanding a non-exclusive, fully paid-up, royalty-free, perpetual license to Midatech’s MTX110 intellectual property. This demand was refused based upon, among other things, Secura Bio’s previous termination of the Secura License Agreement in 2020.

We view MTX110 as an important asset and currently have two ongoing clinical trials for MTX110 and intend to commence two further clinical trials as part of our MTX110 clinical program. We continue to enjoy freedom to use panobinostat for research purposes and we plan to continue to pursue development of MTX110. We believe that the relevant Secura Bio patents may delay a launch of MTX110 for use in patients with DIPG, however we do not anticipate it would have any impact on launching MTX110 for use in patients with glioblastoma multiforme. If we are unable to launch a product candidate until the patent expires, there could be a material adverse effect on our business, financial condition and results of operations.

Impact of COVID-19

With the global spread of the ongoing COVID-19 pandemic, we established a COVID-19 task force in mid-March 2020 with the objectives of safeguarding the health and wellbeing of our staff members and monitoring the impact on our vendors and collaborators. Beginning in mid-March 2020, our employees primarily worked from their homes. Since that time, we have formally implemented a work-from-home policy for our employees, with exceptions being made for essential laboratory personnel. To the extent possible, we have reorganized the layout of our offices and laboratories in Cardiff, Wales to conform to social distancing policies and allow laboratory employees to safely return to the workplace, if allowed by their local government.

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Our expectation is that the COVID-19 pandemic is likely to negatively affect businesses globally for an indeterminate period and that, once the pandemic is under control, recovery to normalization will not be instantaneous. Accordingly, we believe governmental limitations on travel will certainly cause delays to timelines. These delays may be the result of a limitation on the number of staff permitted in our facilities at any one time or delays in our vendor’s supply chains. In addition, delays have occurred in the recruitment and execution of clinical trials as prospective and enrolled patients are unable to visit clinical sites.

It is not currently possible to quantify the impact of COVID-19 and resultant delays on the Company until it becomes clear that the global crisis has abated and a normalization of the business environment can be foreseen with confidence.

United Kingdom Placing 

In July 2021, we, through Turner Pope Investments Limited, a United Kingdom Financial Conduct Authority registered broker, completed a placing with certain investors in the United Kingdom of 35,087,720 Ordinary Shares, or the July 2021 Placing Shares, at an issue price of £0.285 per share, or the 2021 UK Placing.

The July 2021 Placing Shares were offered only outside the United States in reliance upon Regulation S under the Securities Act in an offshore transaction.

MTX110 Updates

The first application of our MidaSolve technology is for the treatment of debilitating childhood brain cancers that have no approved therapies. DIPG is an ultra-rare brain cancer, most commonly found in children. We believe MTX110 (soluble panobinostat), which is a ‘direct-to-brain’ treatment for DIPG and is based on our MidaSolve technology for direct delivery, may be an important advancement in transforming outcomes for patients with this disease.

We have previously completed a Phase I study at the University of California, San Francisco, or UCSF, in seven DIPG patients. The UCSF study met its primary endpoint, supporting a dose of between 60μM and 90μM of MTX110, depending upon patient tolerance in Phase II. We plan to initiate a Phase II study in DIPG in the second half of 2022 to examine efficacy and safety in approximately 20 patients. The Phase II trial will also use a convection enhanced delivery, or CED, system, whereby MTX110 will be infused under slight pressure directly into and around the tumor. We believe the primary endpoint of the study is likely to be patient survival rates after 12 months.

On December 13, 2021, we announced our investigational new drug, or IND, application for a Phase I trial of MTX110 in patients with recurrent glioblastoma multiforme, GBM, (rGBM), had been cleared by the FDA. At that time, the 30-day review period had expired and the IND had been judged safe to proceed. Accordingly, we have initiated preparations for the trial start in the first half of 2022.

We were engaged in tentative discussions with a third party around the potential co-development of MTX110. We subsequently terminated these discussions pending the outcome of our Phase I trial in GBM.

Governmental Loans and Grants

On September 11, 2019, Midatech Spain received a €6.6 million loan from the Spanish Ministry of Industry, Commerce and Tourism, under its Re-industrialisation Programme, or the REINDUS Loan. The loan was fully drawn down in September 2019, and was partially secured by a guarantee by the Company of €3.0 million in the form of a cash bond. The REINDUS Loan was intended to partially fund activities to scale-up the manufacturing capability of our MTD201 program, however, in connection with our decision to terminate the MTD201 program and shut down our Bilbao, Spain manufacturing facilities, we fully repaid this loan in August 2020. The total amount repaid was approximately €3.6 million (net of deposits returned to us). In addition, we repaid other loans from the Spanish government in connection with this termination. As of December 31, 2020, €119,000 of Spanish government loans remained outstanding. This remaining amount was repaid in February 2021. In February 2021, we received a fine of €149,835 from the Spanish tax authorities in relation to the purported late repayment of the loan. We consider the fine without foundation and are currently appealing it.

Collaboration with Janssen

On July 21, 2020, we announced a collaboration with the European affiliate of a global pharmaceutical company to deploy our in-house expertise and proprietary drug delivery platforms towards product candidates nominated by the collaborating company. On January 17, 2022, we announced the extension of this collaboration and disclosed the collaborator as Janssen, an affiliate of Johnson & Johnson. On March 9, 2022, we announced we had extended this collaboration to include another large molecule.

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Nominated Advisor

On March 8, 2022, we announced that Strand Hanson Limited was appointed as our nominated and financial advisor, effective as of such date.

Non-Compliance with NASDAQ Continued Listing Requirements

Our Depositary Shares are currently listed on the NASDAQ Capital Market. We are required to meet certain qualitative and financial tests to maintain the listing of our Depositary Shares on NASDAQ. On April 13, 2022, we received a letter from NASDAQ stating that, for the previous 30 consecutive business days, the bid price for our Depositary Shares had closed below the minimum $1.00 bid price per share requirement for continued listing on the NASDAQ Capital Market under NASDAQ Listing Rule 5550(a)(2). The notice has no immediate effect on the listing or trading of our Depositary Shares and the Depositary Shares will continue to trade on the NASDAQ Capital Market under the symbol “MTP.”

In accordance with NASDAQ Listing Rules, we have a grace period of 180 calendar days, or until October 10, 2022, or the Compliance Period, to regain compliance with the minimum bid price requirement.  To regain compliance, the closing bid price of the Depositary Shares must meet or exceed $1.00 per share for at least 10 consecutive business days during the Compliance Period. If the Depositary Shares do not regain compliance with the minimum bid price requirement during the Compliance Period, we may be eligible for an additional grace period of 180 calendar days provided that we satisfy NASDAQ's initial listing standards for listing on the NASDAQ Capital Market, other than the minimum bid price requirement, and provide written notice to NASDAQ of its intention to cure the delinquency during the second grace period. If we do not regain compliance during the initial grace period and are not eligible for an additional grace period, NASDAQ will provide written notice that the Depositary Shares are subject to delisting from the NASDAQ Capital Market. In that event, we may appeal such determination to a hearing panel.

We intend to monitor the bid price of our Depositary Shares during the Compliance Period and will consider taking such actions as may be necessary and appropriate to achieve compliance with continued listing requirements prior to the expiration of all available grace periods.

For more information, see “Item 3.D—Key Information—Risk Factors— If we cannot meet NASDAQ’s continued listing requirements, NASDAQ may delist our Depositary Shares, which could have an adverse impact on the liquidity and market price of our Depositary Shares.”

Our Strategy

Our development, manufacturing and commercialization strategy is based on advancing our proprietary technology platforms and programs with a view to partnering these assets during the course of their development. This is expected to drive a commercial pipeline of products with improved essential parameters, over and above the currently marketed source or parent compound, including safety, tolerability, efficacy and compliance profiles. We believe that our management team has significant industry and technical experience and is highly capable of, and committed to, building our value.

Since our announcement of a strategic review in March 2020 and the termination of further in-house development of MTD201, we have sought to broaden our research and development pipeline through technology collaborations with third party pharmaceutical companies, initiating new internal programs and adding new indications to MTX110. Our realigned strategy is to advance our development programs to proof-of-concept stage, before seeking license partners to fund further development, manufacturing scale-up and commercialization of such programs.

Development

Our intention is to build a balanced portfolio of Q-Sphera programs employing a strategy to create an:

• internal pipeline of long-acting, injectable products by re-formulating existing, approved therapies; and

• external pipeline by entering into research collaboration with partners to formulate their proprietary products into long-acting injectable products.

We have applied our MidaSolve technology to panobinostat to create our proprietary product MTX110. Our development strategy for MTX110 is to demonstrate its utility in a range of intractable brain cancers with a series of pilot proof-of-concept studies before seeking licensee partners. Once a licensing partner has been secured, we would expect any future development costs to be reimbursed by that partner.

Manufacturing

As part of our strategic review, we decided to close our operations in Bilbao, Spain, including our Q-Sphera dedicated manufacturing facility. To establish proof-of-concept in pre-clinical studies for potential licensees, we are able to manufacture non-GMP Q-Sphera products at pilot scale at our Cardiff, Wales facility. Our intention is to technology transfer the manufacturing of clinical trial supplies and, ultimately, full GMP commercial manufacture to a third party CMO. We would expect a licensee to assume the cost of manufacturing GMP product and commercial scale-up pursuant to a technology transfer agreement.

MTX110 is currently being manufactured to GMP standards at a CMO.

Commercialization

Once proof-of-concept has been established, we intend to seek to license our products to a partner who would complete the development, and subsequently market and sale, of the product in an agreed upon licensed territory. In addition to reimbursement of development costs, the partner would be expected to make milestone payments based on sales targets and royalty payments.   

Our Platform Technologies and Pipeline

Central to our business are our three complementary platform technologies that enable the sustained release, direct local delivery, or targeted delivery improvement to previously approved therapeutic drugs. Individually, these platforms are expected to offer unique advantages that address current therapeutic challenges and needs. Our sustained release “Q-Sphera” technology platform is used for selected applications, and ensures consistently sized monodispersed polymer microparticles that may be engineered for precise and sustained release drug delivery. Our GNP “MidaCore” technology platform may provide improved targeting of chemotherapeutics agents to individual tumors using specific targeting agents in order to deliver a therapeutic payload into the tumor cell, while at the same time decreasing the side effect profile associated with off-target effects of these drugs.  Our nano-inclusion technology platform, “MidaSolve,” used for local delivery of therapeutics, allows for the delivery of generally water insoluble drugs into the site of disease through the creation of water soluble complexes without the efficacy of the active drug compound being affected. Individually and collectively, we believe that these technologies provide platforms that improve bio-delivery and bio-distribution of therapeutic molecules to the right place of disease, at the right time.

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In 2020, following our strategic review, we pivoted from a largely singular focus on the clinical development and manufacturing scale up of MTD201 to a strategy based on a broader, but earlier stage, pipeline designed to optimize opportunities for partnering success. Our development pipeline includes eight projects, of which two are partnered with Janssen Pharmaceutical NV, or Janssen, an affiliate of Johnson & Johnson, and as set forth in more detail below:

 

Sustained Release Technology Platform: Q-Sphera

Technology. Our Q-Sphera technology employs 3-D printing techniques to encapsulate medicines in polymer-based bioresorbable microspheres. Q-Sphera is a precise, scalable, efficient, and environmentally friendly microparticle manufacturing platform. From a clinical perspective, Q-Sphera ensures monodispersed microparticles that release active drug compounds into the body in a tightly controlled, highly predictable and linear manner over an extended period of time.

Q-Sphera is the next generation polymer microsphere technology which simplifies manufacturing, facilitates the sustained release of products and delivers formulations with significant patient, healthcare professional and payor benefits. Our polymer microsphere platform has been developed to enable sustained release delivery solutions for peptide and small-molecule therapeutics through precise definition of the properties of polymer microparticles into which active compounds can be incorporated. Microspheres are small, spherical particles that can be utilized as a time release drug capsule. This technology contributes to our oncology franchise as well as potential applications in endocrinology and other disease areas.

Current reactor-based emulsion manufacturing technology has been in use for over 20 years and, despite several issues, it continues to be used by the vast majority of the market as there are limited alternatives. Reactor-based emulsion processes, used by most existing products, require large infrastructure, are energy intensive, inefficient and wasteful, producing large quantities of unusable particles, and utilize large volumes of toxic organic solvents that are damaging to the environment.

The microspheres may be injected to form depots in the body, which release drugs over predictable, sustained periods from one week up to several months. We believe Q-Sphera offers numerous potential advantages to patients and payors compared with other immediate release products and polymer-based technologies, as set forth below:

		Advantages of Q-Sphera
Features	Benefits	For patients	For payors	Compared with immediate release products	Compared with other polymer- based systems
Biocompatible, bio-degradable microspheres	Safe, sustained release delivery of therapeutics with substantially increased dose intervals	●		●
Homogenous, monodispersed microspheres	Lower dose to dose variability and improved injectability	●	●	●	●
Tunable, predictable drug release	Low variability plasma levels within a targeted therapeutic window	●	●	●	●
Easier reconstitution and adaptable to a wide range of presentations	Nurse or self-administration. Easy to use, safer pre-filled syringe and ‘pen’ presentations	●	●		●
Low viscosity, smaller gauge needles	Reduced severity and frequency of injection site reactions. Higher doses with subcutaneous and/or self-administration	●	●		●
Localized delivery, including intratumoral, intraocular, peritoneal and intraarticular	Reduced systemic side effects	●	●	●
Small footprint, reliable and scalable manufacturing process	Lower cost of manufacture				●
Class 3 solvents in low volume	Less environmental impact and lower cost of manufacture				●

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Pipeline. We have an internal Q-Sphera pipeline comprised of MTD211 and MTD219.

MTD211. We have developed a long-acting formulation of brexpiprazole using Q-Sphera technology. Marketed under the brand name Rexulti® by Otsuka Pharmaceutical Co., Ltd, brexpiprazole is indicated for the treatment of schizophrenia and adjunctive treatment of major depressive disorder, or MDD, and is currently only available as an immediate release oral tablet. The market for anti-psychotic drugs is shifting towards long-acting formulations for reasons of improved patient compliance and lowering of payor costs associated with patient hospitalization events. Sales of long-acting anti-psychotic products in 2020 were approximately $5.7 billion globally.

In in vivo studies, MTD211 was well tolerated and demonstrated that a single dose of MTD211 is expected to deliver therapeutic blood levels of brexpiprazole over a period of three months.

MTD219. We have also developed a long-acting formulation of tacrolimus using our Q-Sphera technology. Marketed under the brand name ProGraf® among others, tacrolimus is an immunosuppressive drug used to lower the risk of organ transplant rejection. It is currently available in once or twice daily oral formulations. Tacrolimus is known to have a relatively narrow therapeutic index and the attendant risk of over- or under-dosing patients may result in significant negative outcomes. MTD219 is designed to address these issues by delivering predictable, sustained blood levels over an extended period.

In our first in vivo studies, MTD219 was well tolerated and demonstrated that a single dose of MTD219 is expected to deliver therapeutic blood levels of tacrolimus over a period of three weeks. MTD219 is expected to undergo a second iteration to further refine the formulation and pharmacokinetic characteristics.

MTD201. Following the announcement of a strategic review, we ceased further in-house development of MTD201, our Q-Sphera formulation of octreotide for acromegaly and neuroendocrine tumors. We completed two clinical trials for MTD201, a 2018 first-in-human Phase I study compared MTD201 with Novartis’ Sandostatin LAR Depot, and second Phase I study of MTD201 completed in January 2020 which compared subcutaneous administration with intramuscular administration in healthy volunteers and showed similar pharmacokinetics and bioavailability in healthy volunteers. Together, the two Phase I studies of MTD201 serve as clinical validation of the Q-Sphera technology, confirming many of Q-Sphera’s features and benefits for patients, payors and licensees.

Q-Sphera Formulations of Proteins. On June 17, 2021, we announced that we had been able to successfully encapsulate a large molecule protein, specifically an exemplar monoclonal antibody, or mAb, and had preserved the functional integrity and antigen binding capacity of the mAb in vitro. We believe there are no other approved long-acting injectable formulations of biologic products such as mAbs or other high molecular weight proteins because they are delicate and easily de-natured in the manufacturing process. We further believe this to be breakthrough data, since, to our knowledge, no other commercial or academic organization has been able to successfully deliver therapeutic proteins over extended periods using methods capable of commercial scaling.

This favorable data led to the expansion of our research and development collaboration with Janssen, as announced on January 17, 2022. We will be seeking to optimize drug loading and the in vitro dissolution profile of Janssen’s proprietary development compound as project MTX213.

We believe the data from experiments on the exemplar mAb and other proteins could potentially open up opportunities for its Q-Sphera technology. A significant number of latest generation medicines are protein based and reformulation as long-acting injectables could provide significant benefits to patients, physicians and payors. In 2020, the top 10 mAbs recorded aggregate sales of $74.9 billion and all mAbs $154 billion globally.

MidaSolve: Local Delivery Technology Platform

Technology. Our MidaSolve nano inclusion technology is utilized for potent, small molecule chemotherapeutics that have minimal solubility in water at biological pH, which means they cannot normally be injected and limits them to oral administration in solid form. When reformulated with MidaSolve technology, the complexed molecules solubilize such that the molecule can be administered in liquid form into the body. This enables local infusion directly into the tumor, thus extending the available routes of administration for drugs that otherwise would be limited to oral forms only.

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The complexed molecules comprise a hydrophobic (‘water-fearing’) inner surface and a hydrophilic (‘water-loving’) outer surface, and as a result are capable of forming host-guest complexes with normally water-insoluble molecules. A hydrophobic, poorly water-soluble drug can associate with the inner, more hydrophobic surface of the MidaSolve host, while the hydrophilic outer surface allows the complex to dissolve at biological pH.

MTX110. Using our MidaSolve technology in combination with panobinostat, an otherwise insoluble drug, MTX110 is designed for direct-to-tumor treatment of intractable brain cancers. The resulting complex is readily soluble in water at therapeutic concentrations, thus enabling liquid administration routes directly into the tumor that otherwise would not be possible. Panobinostat (Farydak®) is a potent, nonselective histone deacetylase inhibitor that was developed for the treatment of multiple myeloma. Given in its natural oral form, panobinostat does not cross the blood-brain barrier, and thus does not reach brain tumors. It is also a highly toxic substance and, when given orally, suffers from significant dose-limiting side effects. MidaSolve allows an alternate means of delivery in liquid form, and MTX110, our soluble form of panobinostat, is infused directly into the tumor. Direct delivery of MTX110 bypasses the blood-brain barrier and ensures adequate drug exposure to tumor cells without exposing the rest of the body to potentially toxic concentrations. MTX110’s intratumoral delivery thus provides a significant potential for treatment of DIPG and, potentially, other forms of brain cancer.

We are currently researching the utility of MTX110 to proof-of-concept stage in the following three indications.

• DIPG. DIPG tumors are located in the pons (middle) of the brain stem and aggressively infiltrate the brainstem such that cancer tissue typically cannot be differentiated from normal brain tissue. Occurring mostly in children, approximately 1,000 patients globally are diagnosed with DIPG per annum and median survival is approximately 10 months. There is no effective treatment as surgical resection is not possible, and radiotherapy and chemotherapy do not improve survival since anti-cancer drugs cannot cross the blood-brain barrier to access the tumor.

On October 24, 2019, we announced that the FDA has granted orphan drug designation for MTX110. Orphan drug designation is granted to support the development of drugs that target rate diseases with high unmet needs, affecting 200,000 or fewer U.S. patients annually, and that are expected to provide significant therapeutics advantages over existing treatments. Orphan designation qualifies a company for benefits that apply across all stages of drug development, including an accelerated approval process, seven years of market exclusivity upon regulatory approval, if received, tax credits for qualified U.S. clinical trials, eligibility for orphan drug grants and exemption from certain administrative fees.

As noted above, in October 2020, we reported the first-in-man study by UCSF of MTX110 in DIPG using a CED system. The Phase I study established a recommended dose for Phase II, a good safety and tolerability profile but also encouraging survival data in the seven patients treated. We plan to initiate a Phase II study in DIPG to examine efficacy and safety in approximately 20 patients. The Phase II trial will also use a CED system, whereby MTX110 will be infused under slight pressure directly into and around the tumor. We believe the primary endpoint of the study is likely to be patient survival rates after 12 months.

• Glioblastoma Multiforme. GBM is one of the most aggressive forms of cancer and glioblastomas usually occur in the white matter of the cerebrum, although metastasis through the cerebrospinal fluid, or CSF, to the spinal cord is rare. Treatments include radiation, surgical resection and chemotherapy although, in most cases, tumors recur. There are approximately two to three new cases of GBM per 100,000 population per annum, with median survival of approximately 12 months.

In December 2021, we received an IND approval for a pilot Phase I study in recurrent GBM. We are currently in the process of planning for the study to start recruitment in the first half of 2022.

• Medulloblastoma. Medulloblastomas are generally located in the fourth ventricle of the brain between the brainstem and the cerebellum. They are invasive and, unlike most brain tumors, spread through CSF and frequently metastasize to different locations in the brain and spinal cord. Treatments include resection, radiation and chemotherapy. Approximately 350 patients in the US are diagnosed with medulloblastoma per annum, and 3,800 people are living with the disease in the United States. The cumulative survival rate is 60%, 52% and 47% at five years, 10 years and 20 years, respectively.

The University of Texas is undertaking a Phase I exploratory study in medulloblastoma using direct administration of MTX110 into the fourth ventricle of the brain, enabling it to circulate through the CSF.

In 2020, our non-exclusive worldwide, sublicenseable license to certain patents of panobinostat was terminated by Secura Bio. We view MTX110 as an important asset and currently have two ongoing clinical trials for MTX110 and intend to commence two further clinical trials as part of our MTX110 clinical program. We continue to enjoy freedom to use panobinostat for research purposes and we plan to continue to pursue development of MTX110. We believe that the relevant Secura Bio patents may delay a launch of MTX110 for use in patients with DIPG, however we do not anticipate it would have any impact on launching MTX110 for use in patients with GBM. If we are unable to launch a product candidate until the patent expires, there could be a material adverse effect on our business, financial condition and results of operations. For more information, see “—Recent Developments—Secura License Agreement.”

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For additional information regarding MTX110, see “—Recent Developments—MTX110 Updates.”

MidaCore: Targeted Delivery Platform

Technology. MidaCore is a leading innovation in ‘ultra-small’ nanomedicine and is designed for targeted delivery to enable improved delivery of therapeutics to tumor cells and the immune system. In oncology treatments MidaCore provides a nano complex (less than 5nm in size, or approximately 80,000 times smaller than the width of a hair) that carries conventional small molecule chemo-therapeutic payloads and delivers these to the tumor site in high concentrations. In immunotherapy, treatments, MidaCore acts as a nanocarrier complex for synthetic immuno-peptides that stimulate the immune system to seek out and destroy cancer cells via immune mediated vaccine processes. These small complexes can enter immune processing cells to induce T-cell mediated immune responses specifically against tumor cells, viral infected host cells or autoimmune disease.

The MidaCore technology platform is based upon ‘ultra-small’ nanoparticle drug conjugates, which at 2-4nm in size are among the smallest particles in biomedical use. They are composed of a core of gold atoms decorated with a permutation of therapeutic and/or targeting molecules. The small size and multi-functional arrangement around the gold core underpin the ability to improve biodistribution, and target tumor and/or immune sites providing a new generation of oncology drugs.

MidaCore design and synthesis GNP technology enables the production of 2nm to 5nm medications, which we believe is roughly five-to-tenfold smaller than any other delivery vehicle in clinical trials. MidaCore’s therapeutics are comprised of a core of gold atoms (approximately 100 gold atoms per GNP) surrounded by an organic layer of carbohydrates that stabilize the metallic core and make the particle water-soluble and biocompatible.

MTX114. Using MidaCore technology, we have developed a re-engineered version of methotrexate, an immuno-suppressant for topical application in psoriasis. If successful, MTX114 would be a first topical formulation of methotrexate, thus avoiding the need for potentially toxic systemic administration. Pre-clinical data suggest MTX114 may reduce inflammation in a psoriatic skin model. There are estimated to be over 100 million people who suffer from psoriasis worldwide.

Commercial Agreements, Strategic Partnerships and Collaborations 

We are currently collaborating with a number of biopharmaceutical companies, research institutes and universities on several of our development programs involving our core technologies.

On July 21, 2020, we announced a collaboration with the European affiliate of a global pharmaceutical company to deploy our in-house expertise and proprietary drug delivery platforms towards product candidates nominated by the collaborating company. On January 17, 2022, we announced the extension of this collaboration and disclosed the collaborator as Janssen, an affiliate of Johnson & Johnson. On March 9, 2022, we announced we had extended this collaboration to include another large molecule.

CMS License Agreement. On January 29, 2019, we entered into the CMS License Agreement with CMS, as guarantor, and the Licensees. The CMS License Agreement was effective as of February 26, 2019. Pursuant to the terms of the CMS License Agreement, we agreed to license to the Licensees the exclusive right to use our technology and our intellectual property rights and information and data related to certain of our clinical and pre-clinical products (i.e. MTD201, MTX110, MTX102, MTR103 and MTD119), together with any other pipeline products or line extensions which are in or which enter pre-clinical or clinical development in the first three years following the effective time of the CMS License Agreement, together the Products, to develop and commercialize the Products in China, including Macau, Hong Kong and Taiwan, with the same rights in certain countries in south east Asia in respect of which the Licensees notifies us that such licensee wants a license after the grant of a regulatory approval of any of the Products by the FDA, EMA or by the regulatory authorities in the United Kingdom, France, Germany or Switzerland, collectively the Territory, such activities to be conducted by the Licensee(s) and affiliates of CMS and local partners as permitted sub-licensees. The Licensees have the exclusive right to import, obtain market approvals and register, market, distribute, promote and sell the Products in the Territory at the Licensees’ sole discretion, and in the event we choose not to or fail to meet the Licensees’ binding orders for the Products under certain circumstances, will be granted the right to manufacture the Products itself. The Licensees will be restricted from supplying the Products to any customers outside of the Territory, while we will be restricted from supplying the Products into the Territory, except through the Licensees.

In addition, we agreed to assist the Licensees (and/or any affiliate of CMS) with their applications for marketing approvals for the Products in the Territory, which approvals, if granted, will be exercised by CMS Bridging or CMS Medical HK, unless it is being transferred to us when we are entitled to terminate the CMS License Agreement for material breach by CMS Bridging or CMS Medical HK. We will manufacture the Products for the Licensees and their sub-licensees, which Products will be subject to exclusive purchase and supply arrangements with the Licensees for the Territory.

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Further, we agreed to permit the Licensees to identify their own product and line extension targets in respect of which, if we agree, we will carry out initial development and then will, for a technology transfer fee, the amount of which will be dependent on the circumstances, transfer the specific program know-how and data to enable the Licensees to continue to develop using our platform technologies and then to commercialize in the Territory. We will receive a low single digit royalty on the Net Sales (as such term is defined in the CMS License Agreement) in the Territory. The Licensees will own any intellectual property rights it creates and any data they collect during the development process and will license such rights and data to us for the purposes of manufacturing the products in question and also to commercialize the products outside the Territory, for which we will pay the Licensees a low double digit royalty.

The Licensees shall pay us lump sum payments on a Product-by-Product basis (in U.S. dollars) upon the achievement of certain regulatory approvals (in six, or potentially seven, figure amounts) and sales performance milestones (in seven, or potentially, eight figure amounts), as well as royalties upon Net Sales (as a low double digit percentage for the Products other than MTX110, for which the royalty will be a single digit percentage) in the Territory.

The CMS License Agreement may be terminated by either party for specific material breaches or insolvency. In particular, our rights to terminate are limited to breaches of certain non-compete restrictions, failure to pay milestones or royalties, insolvency, or a failure to develop and/or commercialize particular Products in particular countries after the grant of an FDA or EMA regulatory approval. In addition, we have the right to terminate the agreement if the Licensee directly or indirectly infringes upon our intellectual property rights or challenges their validity or, in relation to a particular Product and a particular Territory at any time, because the Licensee has made a determination that it no longer wishes to develop and/or commercialize the Product in that country in the Territory. The CMS License Agreement also includes customary indemnification for a transaction of this type.

Sales and Marketing

We do not currently have any internal sales and marketing organization or distribution capabilities.

Research and Development

We have development and pilot scale manufacturing facilities for Q-Sphera and MidaCore products in Cardiff, Wales.

As of December 31, 2021, the research and development staff comprised approximately five Ph.D. scientists, five MSc scientists and eight BSc scientists.

Intellectual Property

Our success depends in large part on our ability to obtain and maintain proprietary protection for our product candidates (and products derived therefrom), technology and know-how, to operate without infringing the proprietary rights of others and to prevent others from infringing our proprietary rights. We strive to protect the proprietary technology that we believe is important to our business by, among other methods, seeking and maintaining patents, where available, that are intended to cover our product candidates (and products derived therefrom), compositions and formulations, their methods of use and processes for their manufacture and any other inventions that are commercially important to the development of our business. We also rely on trade secrets, know-how, continuing technological innovation and in-licensing opportunities to develop and maintain our proprietary and competitive position.

We have developed a strong intellectual property base globally, comprising patents, know-how, and trade secrets. Currently, we have 111 granted patents, 49 applications in process, in each case covering all major world markets, and 31 separate patent families covering all major regions. We continue to strengthen our patent portfolio by strategically submitting new patents and divisional patent applications based on our active research and development activities. Central to our business are our three intellectual property technologies that are designed to enable the targeted delivery, i.e. right place, and controlled sustained release, i.e. right time, of existing therapeutic drugs. These technologies have broad applications in multiple therapeutic areas and offer the potential to create multiple revenue opportunities.

Patent rights have been granted in all the major world markets, including Europe, the United States and Japan, or the Key Markets. They confer a broad position of exclusivity for metal-core glycated-nanoparticles, including our GNPs. Our granted patents in our patent family 1 provide the foundation to the portfolio with product, process and use claims that encompass the GNPs used in all of our major programs and technology platforms, including oncology, nanoparticle technology and sustained release technology. The granted patents and pending patent applications in our patent families are owned solely by us, co-owned with other parties or in-licensed to us. These include:

• Sustained release technology. 10 patent families which protect devices, methods and formulations for sustained release drug delivery.

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• Oncology including Nano-inclusion technology. Eight patent families, which have predicted expiration dates ranging from 2025 to 2040. These patent rights include 19 granted patents and 18 pending applications in Key Markets relating to products and methods for treating and imaging cancers. In addition to the radiative and immune-based therapies contemplated by many of these patent families, our pipeline of GNP-drug conjugates for oncology benefits from protection by the foundation GNP patents of patent family 1.

• Nanoparticle technology. 13 patent families, with expiration dates ranging from 2021 to 2039. These patent families include 49 granted patents and 16 pending patent applications in Key Markets protecting products in our pipeline.

We also have in our portfolio several vaccine and infectious disease related patent families. These relate to GNPs for immune-based therapy and antibiotic-GNP conjugates. We acquired through the Q Chip transaction patent applications directed to the apparatus and methods of “Q-Sphera” technology, which employs a piezoelectric droplet generator to form polymeric microparticles that encapsulate a drug for sustained release. The combination of our GNP technology with Midatech Wales’ sustained release technology has provided possibilities for new formulations of GNP-drug conjugates. Our GNPs, when encapsulated in Midatech Wales’ microparticles, enjoy patent protection conferred by the existing granted patents.

The term of individual patents depends upon the legal term for patents in the countries in which they are obtained. In most countries, including the United States, the patent term is 20 years from the filing date of a non-provisional patent application. In the United States, a patent’s term may, in certain cases, be lengthened by patent term adjustment, which compensates a patentee for administrative delays by the United States Patent and Trademark Office in examining and granting a patent, or may be shortened if a patent is terminally disclaimed over an earlier filed patent.

The term of a United States patent that covers a drug, biological product or medical device approved pursuant to a pre-market approval may also be eligible for patent term extension when FDA approval is granted, provided that certain statutory and regulatory requirements are met. The length of the patent term extension is related to the length of time the drug is under regulatory review while the patent is in force. The Drug Price Competition and Patent Term Restoration Act of 1984 permits a patent term extension of up to five years beyond the expiration date set for the patent. Patent extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval, only one patent applicable to each regulatory review period may be granted an extension and only those claims reading on the approved drug may be extended. Similar provisions are available in Europe and certain other foreign jurisdictions to extend the term of a patent that covers an approved drug, provided that statutory and regulatory requirements are met. Thus, in the future, if and when our product candidates receive approval by the FDA or foreign regulatory authorities, we expect to apply for patent term extensions on issued patents covering those products, depending upon the length of the clinical trials for each drug and other factors. The expiration dates of our patents and patent applications referred to above are without regard to potential patent term extension or other market exclusivity that may be available to us.

In addition to patents, we may rely, in some circumstances, on trade secrets to protect our technology and maintain our competitive position. However, trade secrets can be difficult to protect. We seek to protect our proprietary technology and processes, in part, by confidentiality agreements with our employees, corporate and scientific collaborators, consultants, scientific advisors, contractors and other third parties. We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining physical security of our premises and physical and electronic security of our information technology systems.

Government Regulations

Government authorities in the United States, at the federal, state and local level, and in other countries and jurisdictions, including the European Union and the United Kingdom, extensively regulate, among other things, the research, development, testing, manufacture, quality control, approval, packaging, storage, recordkeeping, labeling, advertising, promotion, distribution, marketing, post-approval monitoring and reporting, and import and export of pharmaceutical products. The processes for obtaining regulatory approvals in the United States and in foreign countries and jurisdictions, along with subsequent compliance with applicable statutes and regulations and other regulatory authorities, require the expenditure of substantial time and financial resources. As we have disclosed herein, we are seeking to license our product candidates and other formulations to licensing partners. While many of the rules and regulations set forth herein do and will apply to us, some are more applicable to any licensing partner who seeks to conduct clinical trials of, obtain regulatory approval for and commercialize any of our product candidates, which could have an impact on any licensing revenue received by us.

Review and Approval of Drugs in the United States

In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act, or the FDCA, and implementing regulations. Failure to comply with the applicable United States requirements at any time during the product development process, approval process or after approval may subject an applicant and/or sponsor to a variety of administrative or judicial sanctions, including refusal by the FDA to approve pending applications, withdrawal of an approval, imposition of a clinical hold, issuance of warning letters and other types of letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement of profits, exclusion from participation in government sponsored insurance programs such as Medicare, or civil or criminal investigations and penalties brought by the FDA and the Department of Justice, or the DOJ, or other governmental entities.

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An applicant seeking approval to market and distribute a new drug product in the United States must typically undertake the following:

• completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practice, or GLP, regulations;

• submission to the FDA of an IND application, which must take effect before human clinical trials may begin;

• approval of clinical protocols by an independent institutional review board, or IRB, or ethics committee representing each clinical site before each site may enroll subjects;

• potential initiation and completion of successive clinical trials that establish safety dose ranges;

• performance of adequate and well-controlled human clinical trials in accordance with good clinical practices, or GCP, and other clinical-trial related regulations to establish the safety and efficacy of the proposed drug product for each indication;

• preparation and submission to the FDA of a new drug application, or NDA, or a biologics license application, or BLA;

• review of the submission by an FDA advisory committee, where appropriate or if applicable;

• satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities at which the product, or components thereof, are produced to assess compliance with cGMP requirements and to assure that the facilities, methods and controls are adequate to preserve the product’s identity, strength, quality and purity;

• satisfactory completion of FDA audits of clinical trial sites to assure compliance with GCPs and the integrity of the clinical data;

• payment of user fees and securing FDA approval of the NDA or BLA;

• agree to comply with any post-approval requirements, including Risk Evaluation and Mitigation Strategies, or REMS, and post-approval studies required by the FDA; and

• FDA review and approval of the NDA or licensure of the BLA.

Preclinical Studies

Preclinical studies include laboratory evaluation of the purity and stability of the manufactured drug substance or API and the formulated finished drug or drug product, as well as in vitro and animal studies to assess the safety and activity of the drug for initial testing in humans and to establish a rationale for therapeutic use. The conduct of preclinical studies is subject to federal and state regulations and requirements, including GLP regulations. The results of the preclinical tests, together with manufacturing information, analytical data, any available clinical data or literature and plans for clinical trials, among other things, are submitted to the FDA as part of an IND. An IND is a request for authorization from the FDA to administer an investigational product to humans and must become effective before human clinical trials may begin. Some long-term preclinical testing, such as animal tests of reproductive adverse events and carcinogenicity, may continue after the IND is submitted.

Human Clinical Trials in Support of an NDA

Clinical trials involve the administration of the investigational product to human subjects under the supervision of qualified investigators in accordance with GCP requirements, which include, among other things, the requirement that all research subjects provide their informed consent in writing before their participation in any clinical trial. Clinical trials are conducted under written study protocols detailing, among other things, the inclusion and exclusion criteria, the objectives of the study, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated. A protocol for each clinical trial and any subsequent protocol amendments must be submitted to the FDA as part of the IND. An IND automatically becomes effective 30 days after receipt by the FDA, unless before that time the FDA raises concerns or questions related to a proposed clinical trial and places the clinical trial on clinical hold. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. Accordingly, submission of an IND may not result in the FDA allowing clinical trials to commence. A separate submission to an existing IND must also be made for each successive clinical trial conducted during product development of a product candidate, and the FDA must grant permission, either explicitly or implicitly by not objecting, before each clinical trial can begin.

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Following commencement of a clinical trial, the FDA may also place a clinical hold or partial clinical hold on that trial. A clinical hold is an order issued by the FDA to the sponsor to delay a proposed clinical investigation or to suspend an ongoing investigation. A partial clinical hold is a delay or suspension of only part of the clinical work requested under the IND. No more than 30 days after imposition of a clinical hold or partial clinical hold, the FDA will provide the sponsor a written explanation of the basis for the hold. Following issuance of a clinical hold or partial clinical hold, an investigation may only resume after the FDA has notified the sponsor that the investigation may proceed.

In addition, an IRB representing each institution participating in the clinical trial must review and approve the plan for any clinical trial before it commences at that institution, and the IRB must conduct a continuing review and reapprove the study at least annually. The IRB must review and approve, among other things, the study protocol and informed consent information to be provided to study subjects. An IRB must operate in compliance with FDA regulations.

Some trials are overseen by an independent group of qualified experts organized by the trial sponsor, known as a data safety monitoring board or committee, or DSMB. This group provides authorization as to whether or not a trial may move forward at designated check points based on access that only the group maintains to available data from the study.

Information about certain clinical trials, including details of the protocol and eventually study results, must be submitted within specific timeframes to the National Institutes of Health for public dissemination on their ClinicalTrials.gov website. Information related to the product, patient population, phase of investigation, study sites and investigators and other aspects of the clinical trial is made public as part of the registration of the clinical trial. Sponsors are also obligated to disclose the results of their clinical trials after completion. Disclosure of the results of these trials can be delayed in some cases for up to two years after the date of completion of the trial. Failure to timely register a covered clinical study or to submit study results as provided for in the law can give rise to civil monetary penalties and also prevent the non-compliant party from receiving future grant funds from the federal government. The NIH’s Final Rule on ClinicalTrials.gov registration and reporting requirements became effective in 2017, and both NIH and FDA have recently begun enforcing those requirements against non-compliant clinical trial sponsors.

Human clinical trials are typically conducted in three sequential phases, Phase I, Phase II and Phase III, which may overlap or be combined:

• Phase I. The product candidate is initially introduced into healthy human subjects and tested for safety, dosage tolerance, absorption, metabolism, distribution and excretion. In the case of some product candidates for severe or life-threatening diseases, especially when the product candidate may be too inherently toxic to ethically administer to healthy volunteers, the initial human testing is often conducted in patients.

• Phase II. The product candidate is evaluated in a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product candidate for specific targeted diseases and to determine dosage tolerance, optimal dosage and dosing schedule.

• Phase III. Clinical trials are undertaken to further evaluate dosage, clinical efficacy, potency, and safety in an expanded patient population at geographically dispersed clinical trial sites. These clinical trials are intended to establish the overall risk/benefit ratio of the product candidate and provide, if appropriate, an adequate basis for approval and product labeling. These trials may include comparisons with placebo and/or other comparator treatments. The duration of treatment is often extended to mimic the actual use of a product during marketing.

Post-approval clinical trials, sometimes referred to as Phase IV clinical trials, may be conducted after initial marketing approval. These clinical trials are used to gain additional experience from the treatment of patients in the intended therapeutic indication, particularly for long-term safety follow-up. In certain instances, the FDA may mandate the performance of Phase IV clinical trials as a condition of approval of an NDA or BLA. 

Progress reports detailing the results of the clinical trials must be submitted at least annually to the FDA and more frequently if serious adverse events occur. In addition, IND safety reports must be submitted to the FDA for any of the following: serious and unexpected suspected adverse reactions; findings from other studies or animal or in vitro testing that suggest a significant risk in humans exposed to the drug; and any clinically important increase in the case of a serious suspected adverse reaction over that listed in the protocol or investigator brochure. Phase I, Phase II and Phase III clinical trials may not be completed successfully within any specified period, or at all. Furthermore, the FDA or the sponsor may suspend or terminate a clinical trial at any time on various grounds, including a finding that the research subjects are being exposed to an unacceptable health risk. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution, or an institution it represents, if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the drug has been associated with unexpected serious harm to patients. The FDA will typically inspect one or more clinical sites to assure compliance with GCP and the integrity of the clinical data submitted.

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Submission of an NDA or BLA to the FDA

Assuming successful completion of required clinical testing and other requirements, the results of the preclinical studies and clinical trials, together with detailed information relating to the product’s chemistry, manufacture, controls and proposed labeling, among other things, are submitted to the FDA as part of an NDA or BLA requesting approval to market the product candidate for one or more indications. Data may come from company-sponsored clinical trials intended to test the safety and effectiveness of a use of a product, or from a number of alternative sources, including studies initiated by investigators. To support marketing approval, the data submitted must be sufficient in quality and quantity to establish the safety and effectiveness of the investigational drug product to the satisfaction of the FDA. In particular, a BLA must contain proof of the biological product candidate’s safety, purity, potency and efficacy for its proposed indication or indications. Under federal law, the submission of most NDAs is additionally subject to an application user fee, currently $3,117,218, and the sponsor of an approved NDA is also subject to annual product and establishment user fees, currently $369,413. These fees are typically increased annually. Certain exceptions and waivers are available for some of these fees, such as an exception from the application fee for products with orphan designation and a waiver of the application fee for the first application filed by a qualifying small business.

The FDA conducts a preliminary review of an NDA within 60 days of its receipt and informs the sponsor by the 74th day after the FDA’s receipt of the submission whether the application is sufficiently complete to permit substantive review. The FDA may request additional information rather than accept an NDA for filing. In this event, the application must be resubmitted with the additional information. The resubmitted application is also subject to review before the FDA accepts it for filing. Once the submission is accepted for filing, the FDA begins an in-depth substantive review. The FDA has agreed to specified performance goals in the review process of NDAs and BLAs. Most such applications are meant to be reviewed within ten months from the date of filing, and most applications for “priority review” products are meant to be reviewed within six months of filing. Despite these review goals, it is not uncommon for FDA review of an NDA or BLA to extend beyond the goal date. For instance, the review process may be extended by the FDA for three additional months to consider new information or clarification provided by the applicant to address an outstanding deficiency identified by the FDA following the original submission.

The FDA may refer applications for novel drug or biological products or drug or biological products which present difficult questions of safety or efficacy to an advisory committee, typically a panel that includes independent clinicians and other experts, for review, evaluation and a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions and typically follows the advisory committee’s recommendations.

Before approving an NDA, the FDA typically will inspect the facility or facilities where the product is or will be manufactured. These pre-approval inspections cover all facilities associated with an NDA or BLA submission, including drug or biologic component manufacturing (such as APIs), finished product manufacturing, and control testing laboratories. The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. Additionally, before approving an NDA, the FDA will typically inspect one or more clinical sites to assure compliance with GCP.

Fast Track, Breakthrough Therapy and Priority Review Designations

The FDA is authorized to designate certain products for expedited review if they are intended to address an unmet medical need in the treatment of a serious or life-threatening disease or condition. These programs are fast track designation, breakthrough therapy designation and priority review designation.

Specifically, the FDA may designate a product for fast track review if it is intended, whether alone or in combination with one or more other drugs, for the treatment of a serious or life-threatening disease or condition, and it demonstrates the potential to address unmet medical needs by providing a therapy where none exists or a therapy that may be potentially superior to existing therapy based on efficacy or safety factors. For fast track products, sponsors may have more frequent interactions with the FDA and the FDA may initiate review of sections of a fast track product’s NDA or BLA before the application is complete. This rolling review may be available if the FDA determines, after preliminary evaluation of clinical data submitted by the sponsor, that a fast track product may be effective. The sponsor must also provide, and the FDA must approve, a schedule for the submission of the remaining information and the sponsor must pay applicable user fees. However, the FDA’s time period goal for reviewing a fast track application does not begin until the last section of the NDA is submitted. In addition, the fast track designation may be withdrawn by the FDA if the FDA believes that the designation is no longer supported by data emerging in the clinical trial process.

The FDA may grant breakthrough therapy designation to a drug or biologic meeting certain statutory criteria upon a request made by the IND sponsor. A product may be designated as a breakthrough therapy if it is intended, either alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the product may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. The FDA may take certain actions with respect to breakthrough therapies, including holding meetings with the sponsor throughout the development process; providing timely advice to the product sponsor regarding development and approval; involving more senior staff in the review process; assigning a cross-disciplinary project lead for the review team; and taking other steps to design the clinical trials in an efficient manner. In addition, breakthrough therapies are eligible for accelerated approval of their respective marketing applications.

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The FDA may designate a product for priority review if it is a drug that treats a serious condition and, if approved, would provide a significant improvement in safety or effectiveness. The FDA determines, at the time that the marketing application is submitted, on a case- by-case basis, whether the proposed drug represents a significant improvement when compared with other available therapies. Significant improvement may be illustrated by evidence of increased effectiveness in the treatment of a condition, elimination or substantial reduction of a treatment-limiting drug reaction, documented enhancement of patient compliance that may lead to improvement in serious outcomes, or evidence of safety and effectiveness in a new subpopulation. A priority designation is intended to direct overall attention and resources to the evaluation of such applications, and to shorten the FDA’s goal for taking action on a marketing application from ten months to six months for an original BLA or for an NME NDA from the date of filing.

Even if a product qualifies for one or more of these programs, the FDA may later decide that the product no longer meets the conditions for qualification or decide that the time period for FDA review or approval will not be shortened. Furthermore, fast track designation, breakthrough therapy designation, and priority review do not change the scientific or medical standards for approval or the quality of evidence necessary to support approval but may expedite the development or review process.

Accelerated Approval Pathway

The FDA may grant accelerated approval to a drug or biologic for a serious or life-threatening condition that provides meaningful therapeutic advantage to patients over existing treatments based upon a determination from well-controlled clinical trials that the drug has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit. The FDA may also grant accelerated approval for such a drug or biologic when the product has an effect on an intermediate clinical endpoint that can be measured earlier than an effect on irreversible morbidity or mortality, or IMM, and that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments. Drugs and biologics granted accelerated approval must meet the same statutory standards for safety and effectiveness as those granted traditional approval.

For the purposes of accelerated approval, a surrogate endpoint is a marker, such as a laboratory measurement, radiographic image, physical sign, or other measure that is thought to predict clinical benefit, but is not itself a measure of clinical benefit. Surrogate endpoints can often be measured more easily or more rapidly than clinical endpoints. An intermediate clinical endpoint is a measurement of a therapeutic effect that is considered reasonably likely to predict the clinical benefit of a drug or biologic, such as an effect on IMM. The FDA has limited experience with accelerated approvals based on intermediate clinical endpoints, but has indicated that such endpoints generally may support accelerated approval where the therapeutic effect measured by the endpoint is not itself a clinical benefit and basis for traditional approval, if there is a basis for concluding that the therapeutic effect is reasonably likely to predict the ultimate clinical benefit of a drug or biologic.

The accelerated approval pathway is most often used in settings in which the course of a disease is long and an extended period of time is required to measure the intended clinical benefit of a drug, even if the effect on the surrogate or intermediate clinical endpoint occurs rapidly. For example, accelerated approval has been used extensively in the development and approval of drugs for treatment of a variety of cancers in which the goal of therapy is generally to improve survival or decrease morbidity and the duration of the typical disease course requires lengthy and sometimes large clinical trials to demonstrate a clinical or survival benefit.

The accelerated approval pathway is usually contingent on a sponsor’s agreement to conduct, in a diligent manner, additional post-approval confirmatory studies to verify and describe the drug’s clinical benefit. As a result, a drug candidate approved on this basis is subject to rigorous post-marketing compliance requirements, including the completion of Phase IV or post-approval clinical trials to confirm the effect on the clinical endpoint. Failure to conduct required post-approval studies, or confirm a clinical benefit during post-marketing studies, would allow the FDA to withdraw the drug from the market on an expedited basis. All promotional materials for drug candidates approved under accelerated regulations are subject to prior review by the FDA.

The FDA’s Decision on an NDA or BLA

The FDA reviews an NDA to determine, among other things, whether a product is safe and effective for its intended use and whether its manufacturing is cGMP-compliant to assure and preserve the product’s identity, strength, quality and purity. The FDA reviews a BLA to determine, among other things whether the product is safe, pure and potent and the facility in which it is manufactured, processed, packed or held meets standards designed to assure the product’s continued safety, purity and potency. The approval process is lengthy and often difficult, and the FDA may refuse to approve an NDA or BLA if the applicable regulatory criteria are not satisfied or may require additional clinical or other data and information. On the basis of the FDA’s evaluation of the NDA and accompanying information, including the results of the inspection of the manufacturing facilities, the FDA may issue an approval letter or a complete response letter. An approval letter authorizes commercial marketing of the product with specific prescribing information for specific indications. A complete response letter indicates that the review cycle of the application is complete and the application will not be approved in its present form. A complete response letter generally outlines the deficiencies in the submission and may require substantial additional testing or information in order for the FDA to reconsider the application. If and when those deficiencies have been addressed to the FDA’s satisfaction in a resubmission of the NDA, the FDA will issue an approval letter. The FDA has committed to reviewing such resubmissions in two or six months depending on the type of information included. Even with submission of this additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.

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If the FDA approves a product, it may limit the approved indications for use for the product, require that contraindications, warnings or precautions be included in the product labeling, require that post-approval studies, including Phase IV clinical trials, be conducted to further assess the drug’s safety after approval, require testing and surveillance programs to monitor the product after commercialization, or impose other conditions, including distribution restrictions or other risk management mechanisms, including REMS, which can materially affect the potential market and profitability of the product. The FDA may prevent or limit further marketing of a product based on the results of post-market studies or surveillance programs. The FDA may also require an applicant to develop a REMS as a condition of approval to ensure that the benefits of the product outweigh its risks and to assure its safe use. REMS use risk minimization strategies beyond the professional labeling to ensure that the benefits of the product outweigh the potential risks. To determine whether a REMS is needed, the FDA will consider the size of the population likely to use the product, seriousness of the disease, expected benefit of the product, expected duration of treatment, seriousness of known or potential adverse events, and whether the product is a new molecular entity. REMS can include medication guides, physician communication plans for healthcare professionals, and elements to assure safe use, or ETASU. ETASU may include, but are not limited to, special training or certification for prescribing or dispensing, dispensing only under certain circumstances, special monitoring, and the use of patient registries. The FDA may require a REMS before approval or post-approval if it becomes aware of a serious risk associated with use of the product. If the FDA concludes a REMS is needed as a condition of approval, the sponsor must submit a proposed REMS during the application review process; the FDA will not approve the NDA without an approved REMS, if required. The requirement for a REMS can materially affect the potential market and profitability of a product. After approval, many types of changes to the approved product, such as adding new indications, manufacturing changes and additional labeling claims, are subject to further testing requirements and FDA review and approval.

Post-Approval Requirements

Drugs or biologics manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to recordkeeping, periodic reporting, product sampling and distribution, advertising and promotion and reporting of adverse experiences with the product. After approval, most changes to the approved product, such as adding new indications or other labeling claims, are subject to prior FDA review and approval. There also are continuing, annual program fee requirements for any marketed products, as well as new application fees for supplemental applications with clinical data.

In addition, drug and biologic manufacturers and other entities involved in the manufacture and distribution of approved drugs or biologics are required to register their establishments with the FDA and state agencies, and are subject to periodic prescheduled or unannounced inspections by the FDA and the relevant state agencies for compliance with cGMP and other regulatory requirements. Changes to the manufacturing process are strictly regulated and often require prior FDA approval before being implemented. FDA regulations also require investigation and correction of any deviations from cGMP and impose reporting and documentation requirements upon the sponsor and any third-party manufacturers that the sponsor may decide to use. Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain cGMP compliance.

Once an approval is granted, the FDA may withdraw the approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information; imposition of post-market studies or clinical trials to assess new safety risks; or imposition of distribution or other restrictions under a REMS program. Other potential consequences include, among other things:

• restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls;

• fines, warning letters or holds on post-approval clinical trials;

• refusal of the FDA to approve pending NDAs or supplements to approved NDAs, or suspension or revocation of product license approvals;

• product seizure or detention, or refusal to permit the import or export of products; or

• injunctions or the imposition of civil or criminal penalties.

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The FDA strictly regulates marketing, labeling, advertising and promotion of products that are placed on the market, and we must comply with the FDA’s advertising and promotion requirements, such as those related to direct-to-consumer advertising, industry-sponsored scientific and educational activities, and promotional activities involving the internet, as well as the prohibition on promoting products for uses or in patient populations that are not described in the product’s approved labeling (known as “off-label use”). Drugs and biologics may be promoted only for the approved indications and in accordance with the provisions of the approved label. Although physicians may prescribe legally available products for off-label uses, manufacturers may not market or promote such uses. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant liability.

In addition, the distribution of prescription pharmaceutical products is subject to the Prescription Drug Marketing Act, or PDMA, which regulates the distribution of drugs and drug samples at the federal level, and sets minimum standards for the registration and regulation of drug distributors by the states. Both the PDMA and state laws limit the distribution of prescription pharmaceutical product samples and impose requirements to ensure accountability in distribution. Furthermore, the Drug Supply Chain Security Act, or DSCSA, was enacted with the aim of building an electronic system to identify and trace certain prescription drugs distributed in the United States, including most biological products. The DSCSA mandates phased-in and resource-intensive obligations for pharmaceutical manufacturers, wholesale distributors, and dispensers over a 10-year period that is expected to culminate in November 2023. From time to time, new legislation and regulations may be implemented that could significantly change the statutory provisions governing the approval, manufacturing and marketing of products regulated by the FDA. It is impossible to predict whether further legislative or regulatory changes will be enacted, or FDA regulations, guidance or interpretations changed or what the impact of such changes, if any, may be.

Abbreviated New Drug Applications for Generic Drugs

In 1984, with passage of the Hatch-Waxman amendments to the FDCA, Congress authorized the FDA to approve generic drugs that are the same as drugs previously approved by the FDA under the NDA provisions of the statute and also enacted Section 505(b)(2) of the FDCA. To obtain approval of a generic drug, an applicant must submit an abbreviated new drug application, or ANDA, to the agency. In support of such applications, a generic manufacturer may rely on the preclinical and clinical testing previously conducted for a drug product previously approved under an NDA, known as the reference listed drug, or RLD.

Specifically, in order for an ANDA to be approved, the FDA must find that the generic version is identical to the RLD with respect to the active ingredients, the route of administration, the dosage form, and the strength of the drug. At the same time, the FDA must also determine that the generic drug is “bioequivalent” to the innovator drug. Under the statute, a generic drug is bioequivalent to a RLD if “the rate and extent of absorption of the drug do not show a significant difference from the rate and extent of absorption of the listed drug.”

Upon approval of an ANDA, the FDA indicates whether the generic product is “therapeutically equivalent” to the RLD in its publication “Approved Drug Products with Therapeutic Equivalence Evaluations,” also referred to as the “Orange Book.” Physicians and pharmacists consider a therapeutic equivalent generic drug to be fully substitutable for the RLD. In addition, by operation of certain state laws and numerous health insurance programs, the FDA’s designation of therapeutic equivalence often results in substitution of the generic drug without the knowledge or consent of either the prescribing physician or patient.

In contrast, Section 505(b)(2) permits the filing of an NDA where at least some of the information required for approval comes from studies not conducted by or for the applicant and for which the applicant has not obtained a right of reference. A Section 505(b)(2) applicant may eliminate the need to conduct certain preclinical or clinical studies, if it can establish that reliance on studies conducted for a previously-approved product is scientifically appropriate. Unlike the ANDA pathway used by developers of bioequivalent versions of innovator drugs, which does not allow applicants to submit new clinical data other than bioavailability or bioequivalence data, the 505(b)(2) regulatory pathway does not preclude the possibility that a follow-on applicant would need to conduct additional clinical trials or nonclinical studies; for example, they may be seeking approval to market a previously approved drug for new indications or for a new patient population that would require new clinical data to demonstrate safety or effectiveness. The FDA may then approve the new product for all or some of the label indications for which the RLD has been approved, or for any new indication sought by the Section 505(b)(2) applicant, as applicable.

In addition, under the Hatch-Waxman amendments, the FDA may not approve an ANDA or 505(b)(2) NDA until any applicable period of non-patent exclusivity for the RLD has expired. These market exclusivity provisions under the FDCA also can delay the submission or the approval of certain applications. The FDCA provides a period of five years of non-patent data exclusivity for a new drug containing a new chemical entity. A drug is a new chemical entity if the FDA has not previously approved any other new drug containing the same active moiety, which is the molecule or ion responsible for the action of the drug substance. In cases where such exclusivity has been granted, an ANDA or 505(b)(2) NDA may not be filed with the FDA until the expiration of five years unless the submission is accompanied by a Paragraph IV certification, in which case the applicant may submit its application four years following the original product approval.

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The FDCA also provides for a period of three years of exclusivity for an NDA, 505(b)(2) NDA or supplement thereto if one or more new clinical investigations, other than bioavailability or bioequivalence studies, that were conducted by or for the applicant are deemed by the FDA to be essential to the approval of the application. This three-year exclusivity period often protects changes to a previously approved drug product, such as a new dosage form, route of administration, combination or indication. This three-year exclusivity covers only the conditions of use associated with the new clinical investigations and does not prohibit the FDA from approving follow-on applications for drugs containing the original active agent. Five-year and three-year exclusivity also will not delay the submission or approval of a traditional NDA filed under Section 505(b)(1) of the FDCA. However, an applicant submitting a traditional NDA would be required to either conduct or obtain a right of reference to all of the preclinical studies and adequate and well-controlled clinical trials necessary to demonstrate safety and effectiveness.

Hatch-Waxman Patent Certification and the 30-Month Stay

Upon approval of an NDA or a supplement thereto, NDA sponsors are required to list with the FDA each patent with claims that cover the applicant’s product or an approved method of using the product. Each of the patents listed by the NDA sponsor is published in the Orange Book. When an ANDA applicant files its application with the FDA, the applicant is required to certify to the FDA concerning any patents listed for the reference product in the Orange Book, except for patents covering methods of use for which the ANDA applicant is not seeking approval. To the extent that the Section 505(b)(2) NDA applicant is relying on studies conducted for an already approved product, the applicant is required to certify to the FDA concerning any patents listed for the approved product in the Orange Book to the same extent that an ANDA applicant would.

Specifically, the applicant must certify with respect to each patent that:

I. the required patent information has not been filed by the original applicant;

II. the listed patent has expired;

III. the listed patent has not expired, but will expire on a particular date and approval is sought after patent expiration; or

IV. listed patent is invalid, unenforceable or will not be infringed by manufacture, use or sale of the new product.

If a Paragraph I or II certification is filed, the FDA may make approval of the application effective immediately upon completion of its review. If a Paragraph III certification is filed, the approval may be made effective on the patent expiration date specified in the application, although a tentative approval may be issued before that time. If an application contains a Paragraph IV certification, a series of events will be triggered, the outcome of which will determine the effective date of approval of the ANDA or 505(b)(2) application.

A certification that the new product will not infringe the already approved product’s listed patents or that such patents are invalid or unenforceable is called a Paragraph IV certification. If the follow-on applicant has provided a Paragraph IV certification to the FDA, the applicant must also send notice of the Paragraph IV certification to the NDA and patent holders once the follow-on application in question has been accepted for filing by the FDA. The NDA and patent holders may then initiate a patent infringement lawsuit in response to the notice of the Paragraph IV certification. The filing of a patent infringement lawsuit within 45 days after the receipt of a Paragraph IV certification automatically prevents the FDA from approving the ANDA or 505(b)(2) NDA until the earlier of 30 months after the receipt of the Paragraph IV notice, expiration of the patent or a decision in the infringement case that is favorable to the ANDA or 505(b)(2) applicant. Alternatively, if the listed patent holder does not file a patent infringement lawsuit within the required 45-day period, the follow-on applicant’s ANDA or 505(b)(2) NDA will not be subject to the 30-month stay.

Reference Product Exclusivity for Biological Products

In March 2010, the Patient Protection and Affordable Care Act, or ACA, was enacted in the United States and included the Biologics Price Competition and Innovation Act of 2009, or the BPCIA. The BPCIA amended the PHSA to create an abbreviated approval pathway for biological products that are biosimilar to or interchangeable with an FDA-licensed reference biological product. To date, the FDA has approved a number of biosimilars, and numerous biosimilars have been approved in Europe. The FDA has also issued several guidance documents outlining its approach to reviewing and approving biosimilars and interchangeable biosimilars.

A biosimilar product is defined as one that is highly similar to a reference product notwithstanding minor differences in clinically inactive components and for which there are no clinically meaningful differences between the biological product and the reference product in terms of the safety, purity and potency of the product. An interchangeable product is a biosimilar product that can be expected to produce the same clinical results as the reference product in any given patient and, for products administered multiple times to an individual, that the product and the reference product may be alternated or switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biological product without such alternation or switch. Upon licensure by the FDA, an interchangeable biosimilar may be substituted for the reference product without the intervention of the healthcare provider who prescribed the reference product, although to date no such products have been approved for marketing in the United States.

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The biosimilar applicant must demonstrate that the product is biosimilar based on data from (1) analytical studies showing that the biosimilar product is highly similar to the reference product; (2) animal studies (including toxicity); and (3) one or more clinical studies to demonstrate safety, purity and potency in one or more appropriate conditions of use for which the reference product is approved. In addition, the applicant must show that the biosimilar and reference products have the same mechanism of action for the conditions of use on the label, route of administration, dosage and strength, and the production facility must meet standards designed to assure product safety, purity and potency.

A reference biological product is granted 12 years of data exclusivity from the time of first licensure of the product, and the first approved interchangeable biologic product will be granted an exclusivity period of up to one year after it is first commercially marketed. If pediatric studies are performed and accepted by the FDA as responsive to a Written Request, the 12-year exclusivity period will be extended for an additional six months. In addition, the FDA will not accept an application for a biosimilar or interchangeable product based on the reference biological product until four years after the date of first licensure of the reference product. “First licensure” typically means the initial date the particular product at issue was licensed in the United States. Date of first licensure does not include the date of licensure of (and a new period of exclusivity is not available for) a supplement for the reference product for a subsequent application filed by the same sponsor or manufacturer of the reference product (or licensor, predecessor in interest or other related entity) for a change (not including a modification to the structure of the biological product) that results in a new indication, route of administration, dosing schedule, dosage form, delivery system, delivery device or strength or for a modification to the structure of the biological product that does not result in a change in safety, purity or potency. Therefore, one must determine whether a new product includes a modification to the structure of a previously licensed product that results in a change in safety, purity or potency to assess whether the licensure of the new product is a first licensure that triggers its own period of exclusivity. Whether a subsequent application, if approved, warrants exclusivity as the “first licensure” of a biological product is determined on a case-by-case basis with data submitted by the sponsor.

The BPCIA is complex and is still being interpreted and implemented by the FDA. In addition, recent government proposals have sought to reduce the 12-year reference product exclusivity period. Other aspects of the BPCIA, some of which may impact the BPCIA exclusivity provisions, have also been the subject of recent litigation. As a result, the ultimate impact, implementation and meaning of the BPCIA is subject to significant uncertainty. 

Pediatric Studies and Exclusivity

Under the Pediatric Research Equity Act, or PREA, amendments to the FDCA, an NDA, BLA or supplement thereto must contain data that are adequate to assess the safety and effectiveness of the drug product for the claimed indications in all relevant pediatric subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective. With enactment of the FDASIA in 2012, PREA was made permanent and sponsors are required submit pediatric study plans to FDA prior to the assessment data. In particular, a sponsor that is planning to submit a marketing application for a product that includes a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration submit an initial Pediatric Study Plan, or PSP, within 60 days of an end-of-Phase II meeting or, if there is no such meeting, as early as practicable before the initiation of the Phase III or Phase II/III study. The initial PSP must contain an outline of the proposed pediatric study or studies the applicant plans to conduct, including study objectives and design, age groups, relevant endpoints and statistical approach, or a justification for not including such detailed information and any request for a deferral of pediatric assessments or a full or partial waiver of the requirement to provide data from pediatric studies along with supporting information. The FDA and the sponsor must reach an agreement on the PSP. A sponsor can submit amendments to an agreed-upon initial PSP at any time if changes to the pediatric plan need to be considered based on data collected from preclinical studies, early phase clinical trials and/or other clinical development programs.

The FDA may, on its own initiative or at the request of the applicant, grant deferrals for submission of some or all pediatric data until after approval of the product for use in adults, or full or partial waivers from the pediatric data requirements. The law now requires the FDA to send a PREA Non-Compliance letter to sponsors who have failed to submit their pediatric assessments required under PREA, have failed to seek or obtain a deferral or deferral extension or have failed to request approval for a required pediatric formulation. It further requires the FDA to publicly post the PREA Non-Compliance letter and sponsor’s response. Unless otherwise required by regulation, the pediatric data requirements do not apply to products with orphan designation, although FDA has recently taken steps to limit what it considers abuse of this statutory exemption in PREA by announcing that it does not intend to grant any additional orphan drug designations for rare pediatric subpopulations of what is otherwise a common disease.

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In addition, pediatric exclusivity is another type of non-patent marketing exclusivity in the United States that, if granted, provides for the attachment of an additional six months of marketing protection to the term of any existing regulatory exclusivity or listed patents. This six-month exclusivity may be granted if an NDA sponsor submits pediatric data that fairly respond to a Written Request from the FDA for such data. The data do not need to show the product to be effective in the pediatric population studied; rather, if the clinical trial is deemed to fairly respond to the FDA’s request, the additional protection is granted. If reports of requested pediatric studies are submitted to and accepted by the FDA within the statutory time limits, whatever statutory or regulatory periods of exclusivity or patent protection cover the product are extended by six months, including orphan drug exclusivity. This is not a patent term extension, but it effectively extends the regulatory period during which the FDA cannot approve another application. The FDA’s issuance of a Written Request does not require the sponsor to undertake the described studies.

Orphan Drug Designation and Exclusivity

Under the Orphan Drug Act, the FDA may designate a drug product as an “orphan drug” if it is intended to treat a rare disease or condition (generally meaning that it affects fewer than 200,000 individuals in the United States, or more in cases in which there is no reasonable expectation that the cost of developing and making a drug product available in the United States for treatment of the disease or condition will be recovered from sales of the product). A company must request orphan product designation before submitting an NDA. If the request is granted, the FDA will disclose the identity of the therapeutic agent and its potential use. Orphan product designation does not convey any advantage in or shorten the duration of the regulatory review and approval process.

If a product with orphan designation subsequently receives the first FDA approval for the disease or condition for which it has such designation or for a select indication or use within the rare disease or condition for which it was designated, the product generally will be receiving orphan product exclusivity. Orphan product exclusivity means that the FDA may not approve any other applications for the same product for the same indication for seven years, except in certain limited circumstances, such as a showing of clinical superiority to the product with orphan exclusivity by means of greater effectiveness, greater safety or providing a major contribution to patient care or in instances of drug supply issues. Competitors, however, may receive approval of either a different product for the same indication for which the orphan product has exclusivity or for the same product but for a different indication (which could then be used off-label in the orphan indication). If a drug or drug product designated as an orphan product ultimately receives marketing approval for an indication broader than what was designated in its orphan product application, it may not be entitled to exclusivity.

Patent Term Restoration and Extension

The term of a United States patent that covers a drug, biological product or medical device approved pursuant to a PMA may also be eligible for patent term extension when FDA approval is granted, provided that certain statutory and regulatory requirements are met. The length of the patent term extension is related to the length of time the product is under regulatory review while the patent is in force. The Hatch-Waxman Act permits a patent term extension of up to five years beyond the expiration date set for the patent. Patent extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval, only one patent applicable to each regulatory review period may be granted an extension and only those claims reading on the approved drug may be extended. Similar provisions are available in Europe and certain other foreign jurisdictions to extend the term of a patent that covers an approved drug, provided that statutory and regulatory requirements are met. The United States Patent and Trade Office reviews and approves the application for any patent term extension or restoration in consultation with the FDA.

Regulation Outside the United States

In order to market any product outside of the United States, a company must also comply with numerous and varying regulatory requirements of other countries and jurisdictions regarding quality, safety and efficacy and governing, among other things, clinical trials, marketing authorization, commercial sales and distribution of drug products. Whether or not it obtains FDA approval for a product, the company would need to obtain the necessary approvals by the comparable foreign regulatory authorities before it can commence clinical trials or marketing of the product in those countries or jurisdictions. The approval process ultimately varies between countries and jurisdictions and can involve additional product testing and additional administrative review periods. The time required to obtain approval in other countries and jurisdictions might differ from and be longer than that required to obtain FDA approval. Regulatory approval in one country or jurisdiction does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country or jurisdiction may negatively impact the regulatory process in others.

Regulation and Marketing Authorization in the European Union

The process governing approval of medicinal products in the European Union follows essentially the same lines as in the United States and, likewise, generally involves satisfactorily completing each of the following:

• preclinical laboratory tests, animal studies and formulation studies all performed in accordance with the applicable European Union good laboratory practice regulations;

• submission to the relevant national authorities of a clinical trial application, or CTA, which must be approved before human clinical trials may begin;

• performance of adequate and well-controlled clinical trials to establish the safety and efficacy of the product for each proposed indication;

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• submission to the relevant competent authorities of a marketing authorization application, or MAA, which includes the data supporting safety and efficacy as well as detailed information on the manufacture and composition of the product in clinical development and proposed labelling;

• satisfactory completion of an inspection by the relevant national authorities of the manufacturing facility or facilities, including those of third parties, at which the product is produced to assess compliance with strictly enforced current cGMP;

• potential audits of the non-clinical and clinical trial sites that generated the data in support of the MAA; and

• review and approval by the relevant competent authority of the MAA before any commercial marketing, sale or shipment of the product.

Preclinical Studies

Preclinical tests include laboratory evaluations of product chemistry, formulation and stability, as well as studies to evaluate toxicity in animal studies, in order to assess the potential safety and efficacy of the product. The conduct of the preclinical tests and formulation of the compounds for testing must comply with the relevant European Union regulations and requirements. The results of the preclinical tests, together with relevant manufacturing information and analytical data, are submitted as part of the CTA.

Clinical Trial Approval

The new Clinical Trials Regulation, (EU) No 536/2014, which took effect on January 31, 2022, aims to simplify and streamline the approval of clinical trials in the European Union. The main characteristics of the regulation include: a streamlined application procedure via a single entry point, the “E.U. Portal and Database”; a single set of documents to be prepared and submitted for the application as well as simplified reporting procedures for clinical trial sponsors; and a harmonized procedure for the assessment of applications for clinical trials, which is divided in two parts. Part I is assessed by the appointed reporting Member State, whose assessment report is submitted for review by the sponsor and all other competent authorities of all European Union Member States in which an application for authorization of a clinical trial has been submitted (Concerned Member States). Part II is assessed separately by each Concerned Member State. Strict deadlines have been established for the assessment of clinical trial applications. The role of the relevant ethics committees in the assessment procedure will continue to be governed by the national law of the Concerned Member State. However, overall related timelines will be defined by the Clinical Trials Regulation.

As in the United States, similar requirements for posting clinical trial information are present in the European Union (EudraCT) website: https://eudract.ema.europa.eu/ and other countries.

PRIME Designation in the European Union

In March 2016, the EMA launched an initiative to facilitate development of product candidates in indications, often rare, for which few or no therapies currently exist. The PRIority MEdicines, or PRIME, scheme is intended to encourage drug development in areas of unmet medical need and provides accelerated assessment of products representing substantial innovation reviewed under the centralized procedure. Products from small- and medium-sized enterprises, or SMEs, may qualify for earlier entry into the PRIME scheme than larger companies. Many benefits accrue to sponsors of product candidates with PRIME designation, including but not limited to, early and proactive regulatory dialogue with the EMA, frequent discussions on clinical trial designs and other development program elements, and accelerated marketing authorization application assessment once a dossier has been submitted. Importantly, a dedicated Agency contact and rapporteur from the Committee for Human Medicinal Products, or CHMP, or Committee for Advanced Therapies, or CAT, are appointed early in PRIME scheme facilitating increased understanding of the product at EMA’s Committee level. A kick-off meeting initiates these relationships and includes a team of multidisciplinary experts at the EMA to provide guidance on the overall development and regulatory strategies.

Marketing Authorization

To obtain a marketing authorization for a product under European Union regulatory systems, an applicant must submit an MAA either under a centralized procedure administered by the EMA, or one of the procedures administered by competent authorities in the European Union Member States (decentralized procedure, national procedure or mutual recognition procedure). A marketing authorization may be granted only to an applicant established in the European Union. Regulation (EC) No 1901/2006 provides that prior to obtaining a marketing authorization in the European Union, applicants have to demonstrate compliance with all measures included in an EMA-approved Paediatric Investigation Plan, or PIP, covering all subsets of the pediatric population, unless the EMA has granted (1) a product-specific waiver, (2) a class waiver or (3) a deferral for one or more of the measures included in the PIP.

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The centralized procedure provides for the grant of a single marketing authorization by the European Commission that is valid across the European Economic Area (i.e., the European Union as well as Iceland, Liechtenstein and Norway). Pursuant to Regulation (EC) No 726/2004, the centralized procedure is compulsory for specific products, including for medicines produced by certain biotechnological processes, products designated as orphan medicinal products, advanced therapy medicinal products and products with a new active substance indicated for the treatment of certain diseases, including products for the treatment of cancer. For products with a new active substance indicated for the treatment of other diseases and products that are highly innovative or for which a centralized process is in the interest of patients, the centralized procedure may be optional. The centralized procedure may at the request of the applicant also be used in certain other cases.

Under the centralized procedure, the CHMP is also responsible for several post-authorization and maintenance activities, such as the assessment of modifications or extensions to an existing marketing authorization. Under the centralized procedure in the European Union., the maximum timeframe for the evaluation of an MAA is 210 days, excluding clock stops, when additional information or written or oral explanation is to be provided by the applicant in response to questions of the CHMP. Accelerated evaluation might be granted by the CHMP in exceptional cases, when a medicinal product is of major interest from the point of view of public health and in particular from the viewpoint of therapeutic innovation. If the CHMP accepts such request, the time limit of 210 days will be reduced to 150 days, but it is possible that the CHMP can revert to the standard time limit for the centralized procedure if it considers that it is no longer appropriate to conduct an accelerated assessment. At the end of this period, the CHMP provides a scientific opinion on whether or not a marketing authorization should be granted in relation to a medicinal product. Within 15 calendar days of receipt of a final opinion from the CHMP, the European Commission must prepare a draft decision concerning an application for marketing authorization. This draft decision must take the opinion and any relevant provisions of European Union law into account. Before arriving at a final decision on an application for centralized authorization of a medicinal product the European Commission must consult the Standing Committee on Medicinal Products for Human Use. The Standing Committee is composed of representatives of the European Union Member States and chaired by a non-voting European Commission representative. The European Parliament also has a related “droit de regard.” The European Parliament's role is to ensure that the European Commission has not exceeded its powers in deciding to grant or refuse to grant a marketing authorization.

The European Commission may grant a so-called “marketing authorization under exceptional circumstances.” Such authorization is intended for products for which the applicant can demonstrate that it is unable to provide comprehensive data on the efficacy and safety under normal conditions of use, because the indications for which the product in question is intended are encountered so rarely that the applicant cannot reasonably be expected to provide comprehensive evidence, or in the present state of scientific knowledge, comprehensive information cannot be provided, or it would be contrary to generally accepted principles of medical ethics to collect such information. Consequently, marketing authorization under exceptional circumstances may be granted subject to certain specific obligations, which may include the following:

• the applicant must complete an identified program of studies within a time period specified by the competent authority, the results of which form the basis of a reassessment of the benefit/risk profile;

• the medicinal product in question may be supplied on medical prescription only and may in certain cases be administered only under strict medical supervision, possibly in a hospital and in the case of a radiopharmaceutical, by an authorized person; and

• the package leaflet and any medical information must draw the attention of the medical practitioner to the fact that the particulars available concerning the medicinal product in question are as yet inadequate in certain specified respects.

A marketing authorization under exceptional circumstances is subject to annual review to reassess the risk-benefit balance in an annual reassessment procedure. Continuation of the authorization is linked to the annual reassessment and a negative assessment could potentially result in the marketing authorization being suspended or revoked. The renewal of a marketing authorization of a medicinal product under exceptional circumstances, however, follows the same rules as a “normal” marketing authorization. Thus, a marketing authorization under exceptional circumstances is granted for an initial five years, after which the authorization will become valid indefinitely, unless the EMA decides that safety grounds merit one additional five-year renewal.

The European Commission may also grant a so-called “conditional marketing authorization” prior to obtaining the comprehensive clinical data required for an application for a full marketing authorization. Such conditional marketing authorizations may be granted for product candidates (including medicines designated as orphan medicinal products), if (i) the risk-benefit balance of the product candidate is positive, (ii) it is likely that the applicant will be in a position to provide the required comprehensive clinical trial data, (iii) the product fulfills an unmet medical need and (iv) the benefit to public health of the immediate availability on the market of the medicinal product concerned outweighs the risk inherent in the fact that additional data are still required. A conditional marketing authorization may contain specific obligations to be fulfilled by the marketing authorization holder, including obligations with respect to the completion of ongoing or new studies, and with respect to the collection of pharmacovigilance data. Conditional marketing authorizations are valid for one year, and may be renewed annually, if the risk-benefit balance remains positive, and after an assessment of the need for additional or modified conditions and/or specific obligations. The timelines for the centralized procedure described above also apply with respect to the review by the CHMP of applications for a conditional marketing authorization.

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The European Union medicines rules expressly permit the European Union Member States to adopt national legislation prohibiting or restricting the sale, supply or use of any medicinal product containing, consisting of or derived from a specific type of human or animal cell, such as embryonic stem cells. While the products we have in development do not make use of embryonic stem cells, it is possible that the national laws in certain European Union Member States may prohibit or restrict us from commercializing our products, even if they have been granted a European Union marketing authorization.

Unlike the centralized authorization procedure, the decentralized marketing authorization procedure requires a separate application to, and leads to separate approval by, the competent authorities of each European Union Member State in which the product is to be marketed. This application is identical to the application that would be submitted to the EMA for authorization through the centralized procedure. The reference European Union Member State prepares a draft assessment and drafts of the related materials within 120 days after receipt of a valid application. The resulting assessment report is submitted to the concerned European Union Member States who, within 90 days of receipt, must decide whether to approve the assessment report and related materials. If a concerned European Union Member State cannot approve the assessment report and related materials due to concerns relating to a potential serious risk to public health, disputed elements may be referred to the European Commission, whose decision is binding on all European Union Member States.

The mutual recognition procedure similarly is based on the acceptance by the competent authorities of the European Union Member States of the marketing authorization of a medicinal product by the competent authorities of other European Union Member States. The holder of a national marketing authorization may submit an application to the competent authority of a European Union Member State requesting that this authority recognize the marketing authorization delivered by the competent authority of another European Union Member State.

Regulatory Data Protection in the European Union

In the European Union, innovative medicinal products approved on the basis of a complete independent data package qualify for eight years of data exclusivity upon marketing authorization and an additional two years of market exclusivity pursuant to Directive 2001/83/EC. Regulation (EC) No 726/2004 repeats this entitlement for medicinal products authorized in accordance to the centralized authorization procedure. Data exclusivity prevents applicants for authorization of generics of these innovative products from referencing the innovator’s data to assess a generic (abridged) application for a period of eight years. During an additional two-year period of market exclusivity, a generic marketing authorization application can be submitted and authorized, and the innovator’s data may be referenced, but no generic medicinal product can be placed on the European Union market until the expiration of the market exclusivity. The overall ten-year period will be extended to a maximum of 11 years if, during the first eight years of those ten years, the marketing authorization holder obtains an authorization for one or more new therapeutic indications which, during the scientific evaluation prior to their authorization, are held to bring a significant clinical benefit in comparison with existing therapies. Even if a compound is considered to be a new chemical entity so that the innovator gains the prescribed period of data exclusivity, another company nevertheless could also market another version of the product if such company obtained marketing authorization based on an MAA with a complete independent data package of pharmaceutical tests, preclinical tests and clinical trials.

Periods of Authorization and Renewals

A marketing authorization has an initial validity for five years in principle. The marketing authorization may be renewed after five years on the basis of a re-evaluation of the risk-benefit balance by the EMA or by the competent authority of the E.U. Member State. To this end, the marketing authorization holder must provide the EMA or the competent authority with a consolidated version of the file in respect of quality, safety and efficacy, including all variations introduced since the marketing authorization was granted, at least six months before the marketing authorization ceases to be valid. The European Commission or the competent authorities of the E.U. Member States may decide, on justified grounds relating to pharmacovigilance, to proceed with one further five-year period of marketing authorization. Once subsequently definitively renewed, the marketing authorization shall be valid for an unlimited period. Any authorization which is not followed by the actual placing of the medicinal product on the E.U. market (in case of centralized procedure) or on the market of the authorizing E.U. Member State within three years after authorization ceases to be valid (the so-called sunset clause).

Pediatric Studies

Prior to obtaining a marketing authorization in the European Union, applicants have to demonstrate compliance with all measures included in an EMA-approved Paediatric Investigation Plan, or PIP, covering all subsets of the pediatric population, unless the EMA has granted a product-specific waiver, a class waiver, or a deferral for one or more of the measures included in the PIP. The respective requirements for all marketing authorization procedures are set forth in Regulation (EC) No 1901/2006, which is referred to as the Paediatric Regulation. This requirement also applies when a company wants to add a new indication, pharmaceutical form or route of administration for a medicine that is already authorized. The Paediatric Committee of the EMA, or PDCO, may grant deferrals for some medicines, allowing a company to delay development of the medicine in children until there is enough information to demonstrate its effectiveness and safety in adults. The PDCO may also grant waivers when development of a medicine in children is not needed or is not appropriate, such as for diseases that only affect the elderly population.

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Before a marketing authorization application can be filed, or an existing marketing authorization can be amended, the EMA determines that companies actually comply with the agreed studies and measures listed in each relevant PIP.

Regulatory Requirements after a Marketing Authorization has been Obtained

In case an authorization for a medicinal product in the European Union is obtained, the holder of the marketing authorization is required to comply with a range of requirements applicable to the manufacturing, marketing, promotion and sale of medicinal products. These include:

• Compliance with the European Union’s stringent pharmacovigilance or safety reporting rules must be ensured. These rules can impose post-authorization studies and additional monitoring obligations.

• The manufacturing of authorized medicinal products, for which a separate manufacturer’s license is mandatory, must also be conducted in strict compliance with the applicable European Union laws, regulations and guidance, including Directive 2001/83/EC, Directive 2003/94/EC, Regulation (EC) No 726/2004 and the European Commission Guidelines for Good Manufacturing Practice. These requirements include compliance with European Union cGMP standards when manufacturing medicinal products and active pharmaceutical ingredients, including the manufacture of active pharmaceutical ingredients outside of the European Union with the intention to import the active pharmaceutical ingredients into the European Union.

• The marketing and promotion of authorized drugs, including industry-sponsored continuing medical education and advertising directed toward the prescribers of drugs and/or the general public, are strictly regulated in the European Union notably under Directive 2001/83EC, as amended, and European Union Member State laws. Direct-to-consumer advertising of prescription medicines is prohibited across the European Union.

Orphan Drug Designation and Exclusivity

The European Commission, following an evaluation by the EMA’s Committee for Orphan Medicinal Products, has designed MTX110 as an orphan medicinal product. Pursuant to Regulation (EC) No 141/2000 and Regulation (EC) No. 847/2000, the European Commission can grant orphan medicinal product designation to products for which the sponsor can establish that it is intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition affecting not more than five in 10,000 people in the European Union, or a life threatening, seriously debilitating or serious and chronic condition in the European Union and that without incentives it is unlikely that sales of the drug in the European Union would generate a sufficient return to justify the necessary investment. In addition, the sponsor must establish that there is no other satisfactory method approved in the European Union of diagnosing, preventing or treating the condition, or if such a method exists, the proposed orphan drug will be of significant benefit to patients.

Orphan drug designation is not a marketing authorization. It is a designation that provides a number of benefits, including fee reductions, regulatory assistance, and the possibility to apply for a centralized European Union marketing authorization, as well as ten years of market exclusivity following a marketing authorization. During this market exclusivity period, neither the EMA, the European Commission nor the member states can accept an application or grant a marketing authorization for a similar medicinal product. A “similar medicinal product” is defined as a medicinal product containing a similar active substance or substances as those contained in an authorized orphan medicinal product and that is intended for the same therapeutic indication. The market exclusivity period for the authorized therapeutic indication may be reduced to six years if, at the end of the fifth year, it is established that the orphan designation criteria are no longer met, including where it is shown that the product is sufficiently profitable not to justify maintenance of market exclusivity. In addition, a competing similar medicinal product may in limited circumstances be authorized prior to the expiration of the market exclusivity period, including if it is shown to be safer, more effective or otherwise clinically superior to the already approved orphan drug. Furthermore, a product can lose orphan designation, and the related benefits, prior to us obtaining a marketing authorization if it is demonstrated that the orphan designation criteria are no longer met.

General Data Protection Regulation

The collection, use, disclosure, transfer, or other processing of personal data regarding individuals in the European Union, including personal health data, is subject to the European Union’s General Data Protection Regulation, or GDPR, which became effective on May 25, 2018. The GDPR is wide-ranging in scope and imposes numerous requirements on companies that process personal data, including requirements relating to processing health and other sensitive data, obtaining consent of the individuals to whom the personal data relates, providing information to individuals regarding data processing activities, implementing safeguards to protect the security and confidentiality of personal data, providing notification of data breaches, and taking certain measures when engaging third-party processors. The GDPR also imposes strict rules on the transfer of personal data to countries outside the European Union, including the U.S., and permits data protection authorities to impose large penalties for violations of the GDPR, including potential fines of up to €20 million or 4% of annual global revenues, whichever is greater. The GDPR also confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of the GDPR. Compliance with the GDPR will be a rigorous and time-intensive process that may increase the cost of doing business or require companies to change their business practices to ensure full compliance.

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Pricing Decisions for Approved Products

In the European Union, pricing and reimbursement schemes vary widely from country to country. Some countries provide that products may be marketed only after a reimbursement price has been agreed. Some countries may require the completion of additional studies that compare the cost-effectiveness of a particular product candidate to currently available therapies or so-called health technology assessments, in order to obtain reimbursement or pricing approval. For example, the European Union provides options for its Member States to restrict the range of products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use. Member States may approve a specific price for a product or it may instead adopt a system of direct or indirect controls on the profitability of the company placing the product on the market. Other Member States allow companies to fix their own prices for products, but monitor and control prescription volumes and issue guidance to physicians to limit prescriptions. Recently, many countries in the European Union have increased the amount of discounts required on pharmaceuticals and these efforts could continue as countries attempt to manage health care expenditures, especially in light of the severe fiscal and debt crises experienced by many countries in the European Union. The downward pressure on health care costs in general, particularly prescription products, has become intense. As a result, increasingly high barriers are being erected to the entry of new products. Political, economic and regulatory developments may further complicate pricing negotiations, and pricing negotiations may continue after reimbursement has been obtained. Reference pricing used by various Member States, and parallel trade, i.e., arbitrage between low-priced and high-priced Member States, can further reduce prices. There can be no assurance that any country that has price controls or reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any products, if approved in those countries.

Patent Term Extension

In order to compensate the patentee for delays in obtaining a marketing authorization for a patented product, a supplementary certificate, or SPC, may be granted extending the exclusivity period for that specific product by up to five years. Applications for SPCs must be made to the relevant patent office in each European Union member state and the granted certificates are valid only in the member state of grant. An application has to be made by the patent owner within six months of the first marketing authorization being granted in the European Union (assuming the patent in question has not expired, lapsed or been revoked) or within six months of the grant of the patent (if the marketing authorization is granted first). In the context of SPCs, the term “product” means the active ingredient or combination of active ingredients for a medicinal product and the term “patent” means a patent protecting such a product or a new manufacturing process or application for it. The duration of an SPC is calculated as the difference between the patent’s filing date and the date of the first marketing authorization, minus five years, subject to a maximum term of five years.

A six month pediatric extension of an SPC may be obtained where the patentee has carried out an agreed pediatric investigation plan, the authorized product information includes information on the results of the studies and the product is authorized in all member states of the European Union.

United Kingdom Regulation

From January 1, 2021, European Union law no longer directly applies in the United Kingdom. The United Kingdom has adopted existing European Union medicines regulation as standalone United Kingdom legislation with some amendments to reflect procedural and other requirements with respect to marketing authorizations and other regulatory provisions.

In order to market medicines in the United Kingdom, manufacturers must hold a United Kingdom authorization. On January 1, 2021, all European Union marketing authorizations were converted to United Kingdom marketing authorizations subject to a manufacturer opt-out. For a transitional period, Great Britain will adopt decisions taken by the European Commission on the approval of new marketing authorizations in the community marketing authorization procedure. Such applications must include all information provided to the EMA during the relevant licensing procedure including the final CHMP opinion. The MHRA’s guidance states that the United Kingdom will have the power to take into account marketing authorizations made under the European Union decentralized and mutual recognition procedures. In addition, the MHRA’s guidance has been updated to refer to new national licensing procedures including new routes of evaluation for novel and biotechnological products.

United Kingdom medicines legislation is subject to future regulatory change under the Medicines and Medical Devices Act 2021. This act sets out a new framework for the adoption of medicines regulation.

Different rules will apply in Northern Ireland following implementation of the Northern Ireland Protocol. In Northern Ireland, European Union central marketing applications will continue to apply.

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The Trade and Cooperation Agreement contains an Annex in relation to medicinal products with the objective of facilitating availability of medicines, promotion of public health and consumer protection in respect of medicinal products between the United Kingdom and the European Union. The Annex provides for mutual recognition of Good Manufacturing Practice (GMP) inspections and certificates, meaning that manufacturing facilities do not need to undergo duplicate inspections for the two markets. The Annex establishes a Working Group on Medicinal Products to deal with matters under the Trade and Cooperation Agreement, facilitate co-operation and for the carrying out of technical discussions. It is expected that further bilateral discussions will continue with respect to regulatory areas not the subject of the Trade and Cooperation Agreement, including pharmacovigilance. The Trade and Cooperation Agreement also does not include reciprocal arrangements for the recognition of batch testing certification. However, the United Kingdom has listed approved countries, including the EEA which will enable United Kingdom importers and wholesales to recognize certain certification and regulatory standards. The European Commission has not adopted such recognition procedures.

It is expected that the establishment of a separate United Kingdom authorization system, albeit with transitional recognition procedures in the United Kingdom, will lead to additional regulatory costs. In addition, additional regulatory costs will be incurred with respect to the lack of mutual recognition of batch testing and related regulatory measures.

Healthcare Law and Regulation

Healthcare providers, physicians and third-party payors play a primary role in the recommendation and prescription of drug products that are granted marketing approval. Arrangements with third-party payors and customers are subject to broadly applicable fraud and abuse and other healthcare laws and regulations. Such restrictions under applicable federal and state healthcare laws and regulations include the following:

• the federal Anti-Kickback Statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made, in whole or in part, under a federal healthcare program such as Medicare and Medicaid;

• the federal False Claims Act imposes civil penalties, and provides for civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government. A person or entity does not need to have actual knowledge of the AKS or specific intent to violate it to have committed a violation. In addition, the government may assert that a claim including items or services resulting from a violation of the AKS constitutes a false or fraudulent claim for purposes of the FCA or federal civil money penalties statute;

• the federal civil and criminal false claims laws and civil monetary penalty laws, including the federal False Claims Act, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, false or fraudulent claims for payment to, or approval by Medicare, Medicaid, or other federal healthcare programs, knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim or an obligation to pay or transmit money to the federal government, or knowingly concealing or knowingly and improperly avoiding or decreasing or concealing an obligation to pay money to the federal government. Manufacturers can be held liable under the FCA even when they do not submit claims directly to government payers if they are deemed to “cause” the submission of false or fraudulent claims. The FCA also permits a private individual acting as a “whistleblower” to bring actions on behalf of the federal government alleging violations of the FCA and to share in any monetary recovery;

• the anti-inducement law, which prohibits, among other things, the offering or giving of remuneration, which includes, without limitation, any transfer of items or services for free or for less than fair market value (with limited exceptions), to a Medicare or Medicaid beneficiary that the person knows or should know is likely to influence the beneficiary’s selection of a particular supplier of items or services reimbursable by a federal or state governmental program;

• the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;

• HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and its implementing regulations, also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information;

• the federal false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services;

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• the federal transparency requirements under the ACA requires manufacturers of drugs, devices, biologics and medical supplies to report to the Department of Health and Human Services information related to payments and other transfers of value to physicians and teaching hospitals or to entities or individuals at the request of, or designated on behalf of, the physicians and teaching hospitals as well as certain ownership and investment interests held by physicians and their immediate family members. Beginning in 2022, applicable manufacturers also will be required to report information regarding payments and transfers of value provided to physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, anesthesiologist assistants, and certified nurse-midwives.; and

• analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers.

In November 2020, HHS finalized significant changes to the regulations implementing the Anti-Kickback Statute, as well as the Physician Self-Referral Law (Stark Law) and the civil monetary penalty rules regarding beneficiary inducements, with the goal of offering the healthcare industry more flexibility and reducing the regulatory burden associated with those fraud and abuse laws, particularly with respect to value-based arrangements among industry participants.

Additionally, similar healthcare laws and regulations in the European Union, United Kingdom and other jurisdictions, including reporting requirements detailing interactions with and payments to healthcare providers and laws governing the privacy and security of certain protected information, such as GDPR and UK GDPR, which imposes obligations and restrictions on the collection and use of personal data relating to individuals located in the European Union (including health data).

Finally, the majority of states also have statutes or regulations similar to the aforementioned federal laws, some of which are broader in scope and apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payor. Some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government in addition to requiring drug manufacturers to report information related to payments to clinicians and other healthcare providers or marketing expenditures. Some states and local jurisdictions require the registration of pharmaceutical sales representatives. State and foreign laws also govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.

Because of the breadth of these laws and the narrowness of their exceptions and safe harbors, it is possible that business activities can be subject to challenge under one or more of such laws. The scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment of healthcare reform, especially in light of the lack of applicable precedent and regulations. Federal and state enforcement bodies have recently increased their scrutiny of interactions between healthcare companies and healthcare providers, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry.

Ensuring that business arrangements with third parties comply with applicable healthcare laws and regulations is costly and time consuming. If business operations are found to be in violation of any of the laws described above or any other applicable governmental regulations a pharmaceutical manufacturer may be subject to penalties, including civil, criminal and administrative penalties, damages, fines, disgorgement, individual imprisonment, exclusion from governmental funded healthcare programs, such as Medicare and Medicaid, contractual damages, reputational harm, diminished profits and future earnings, additional reporting obligations and oversight if subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws, and curtailment or restructuring of operations, any of which could adversely affect a pharmaceutical manufacturer’s ability to operate its business and the results of its operations.

Coverage and Reimbursement

The future commercial success of our product candidate or any of our collaborators' ability to commercialize any approved product candidate successfully will depend in part on the extent to which governmental payor programs at the federal and state levels, including Medicare and Medicaid, private health insurers and other third-party payors provide coverage for and establish adequate reimbursement levels for our product candidate. Government health administration authorities, private health insurers and other organizations generally decide which drugs they will pay for and establish reimbursement levels for healthcare. In particular, in the United States, private health insurers and other third-party payors often provide reimbursement for products and services based on the level at which the government, through the Medicare or Medicaid programs, provides reimbursement for such treatments. In the United States, the United Kingdom, the European Union, and other potentially significant markets for our product candidate, government authorities and third-party payors are increasingly attempting to limit or regulate the price of medical products and services, particularly for new and innovative products and therapies, which often has resulted in average selling prices lower than they would otherwise be. Further, the increased emphasis on managed healthcare in the United States and on country and regional pricing and reimbursement controls in the United Kingdom and European Union will put additional pressure on product pricing, reimbursement and usage, which may adversely affect our future product sales and results of operations. These pressures can arise from rules and practices of managed care groups, judicial decisions and laws and regulations related to Medicare, Medicaid and healthcare reform, pharmaceutical coverage and reimbursement policies and pricing in general.

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Third-party payors are increasingly imposing additional requirements and restrictions on coverage and limiting reimbursement levels for medical products. For example, federal and state governments reimburse covered prescription drugs at varying rates generally below average wholesale price. These restrictions and limitations influence the purchase of healthcare services and products. Third-party payors may limit coverage to specific drug products on an approved list, or formulary, which might not include all of the FDA-approved drug products for a particular indication. Third-party payors are increasingly challenging the price and examining the medical necessity and cost-effectiveness of medical products and services, in addition to their safety and efficacy. We may need to conduct expensive pharmacoeconomic studies in order to demonstrate the medical necessity and cost-effectiveness of our products, in addition to the costs required to obtain the FDA approvals. Our product candidate may not be considered medically necessary or cost-effective. A payor's decision to provide coverage for a drug product does not imply that an adequate reimbursement rate will be approved. Further, one payor’s determination to provide coverage for a drug product does not assure that other payors will also provide coverage for the drug product. Adequate third-party reimbursement may not be available to enable us to maintain price levels sufficient to realize an appropriate return on our investment in drug development. Legislative proposals to reform healthcare or reduce costs under government insurance programs may result in lower reimbursement for our products and product candidate or exclusion of our product candidate from coverage. The cost containment measures that healthcare payors and providers are instituting and any healthcare reform could significantly reduce our revenues from the sale of any approved product candidates. We cannot provide any assurances that we will be able to obtain and maintain third-party coverage or adequate reimbursement for our product candidate in whole or in part.

Healthcare Reform

The United States and some foreign jurisdictions are considering enacting or have enacted a number of additional legislative and regulatory proposals to change the healthcare system in ways that could affect our ability to sell our product candidates profitably, if approved. For example, in December 2016, the 21st Century Cures Act, or the Cures Act, was signed into law. The Cures Act, among other things, was intended to modernize the regulation of drugs and devices and to spur innovation, but its ultimate implementation is uncertain. Legislative proposals continue to be discussed in the U.S. Congress as potentially leading to a future “Cures 2.0” bill that is expected to have bipartisan support. In addition, in August 2017, the FDA Reauthorization Act was signed into law, which reauthorized the FDA’s user fee programs and included additional drug and biological product provisions. The next legislative reauthorization must be completed in 2022, which has the potential to make further changes to FDA authorities or policies pertaining to biopharmaceutical products. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we otherwise may have obtained and we may not achieve or sustain profitability, which would adversely affect our business, prospects, financial condition and results of operations.

In addition, the containment of healthcare costs has become a priority of federal and state governments and the prices of therapeutics have been a focus in this effort. The U.S. government, state legislatures and foreign governments also have shown significant interest in implementing cost-containment programs to limit the growth of government-paid healthcare costs, including price controls, restrictions on reimbursement, and requirements for substitution of generic and biosimilar products for branded prescription drugs and biologics, respectively. In recent years, the U.S. Congress has considered reductions in Medicare reimbursement levels for drugs and biologics administered by physicians. The Centers for Medicare and Medicaid Services, CMS, the agency that administers the Medicare and Medicaid programs, also has authority to revise reimbursement rates and to implement coverage restrictions for some drugs and biologics. Cost reduction initiatives and changes in coverage implemented through legislation or regulation could decrease utilization of and reimbursement for any approved products we may market in the future. While Medicare regulations apply only to drug benefits for Medicare beneficiaries, private payors often follow Medicare coverage policy and payment limitations in setting their own reimbursement rates. Therefore, any reduction in reimbursement that results from federal legislation or regulation may result in a similar reduction in payments from private payors.

The ACA became law in March 2010 and substantially changed the way healthcare is financed by both governmental and private insurers. Among other measures that may have an impact on our business, the ACA established an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents; a new Medicare Part D coverage gap discount program; and a new formula that increases the rebates a manufacturer must pay under the Medicaid Drug Rebate Program. Additionally, the ACA extended manufacturers’ Medicaid rebate liability, expanded eligibility criteria for Medicaid programs, and expanded entities eligible for discounts under the Public Health Service pharmaceutical pricing program. In addition, the 2021 Consolidated Appropriations Act signed into law on December 27, 2020 incorporated extensive healthcare provisions and amendments to existing laws, including a requirement that all manufacturers of drugs and biological products covered under Medicare Part B report the product’s average sales price, ASP, to the DHHS beginning on January 1, 2022, subject to enforcement via civil money penalties.

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There have been executive, judicial and Congressional challenges to certain aspects of the ACA since its enactment, and it is possible that there will be additional challenges and amendments to the ACA in the future. For example, the Tax Cuts and Jobs Act, enacted on December 22, 2017, repealed penalties, starting for not complying with the ACA’s individual mandate to carry health insurance, commonly referred to as the “individual mandate.” Following several years of litigation in the federal courts, in June 2021 the U.S. Supreme Court upheld the ACA when it dismissed a legal challenge to the Act’s constitutionality following that legislative repeal of the individual mandate. Prior to the Supreme Court’s decision, President Biden issued an executive order to initiate a special enrollment period from February 15, 2021 through August 15, 2021 for purposes of obtaining health insurance coverage through the ACA marketplace. The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA. In addition, in December 2020, the U.S. Supreme Court held unanimously that federal law does not preempt the states’ ability to regulate pharmaceutical benefit managers, or PBMs, and other members of the healthcare and pharmaceutical supply chain, an important decision that may lead to further and more aggressive efforts by states in this area.

The Biden Administration, which assumed control of the Executive Branch on January 20, 2021, has indicated that lowering prescription drug prices is a priority. For example, in July 2021, President Biden issued a sweeping executive order on promoting competition in the American economy that includes several mandates pertaining to the pharmaceutical and healthcare insurance industries. Among other things, the executive order directs the FDA to work towards implementing a system for importing drugs from Canada (following on a Trump administration notice-and-comment rulemaking on Canadian drug importation that was finalized in October 2020). The Biden order also called on HHS to release a comprehensive plan to combat high prescription drug prices, and it includes several directives regarding the Federal Trade Commission’s oversight of potentially anticompetitive practices within the pharmaceutical industry. The drug pricing plan released by HHS in September 2021 in response to the executive order makes clear that the Biden Administration supports aggressive action to address rising drug prices, including allowing HHS to negotiate the cost of Medicare Part B and D drugs, but such significant changes will require either new legislation to be passed by Congress or time-consuming administrative actions. It is unclear how other healthcare reform measures of the Biden administration will impact healthcare laws and regulations or our business.

Other legislative changes have been proposed and adopted since passage of the ACA that affect healthcare expenditures. These changes include aggregate reductions to Medicare payments to providers of up to 2% per fiscal year pursuant to the Budget Control Act of 2011, which began in 2013 and will remain in effect through 2030 unless additional Congressional action is taken. However, due to COVID-19 pandemic relief legislation, the 2% Medicare sequester reductions were suspended from May 1, 2020 through June 30, 2021 (a 1% sequester will apply from April 1, 2022 through June 30, 2022), and the sequester was extended in order to offset the added expense of the 2020 suspension. Further legislative and regulatory changes under the ACA remain possible, although the new administration under President Biden has signaled that it plans to build on the ACA and expand the number of people who are eligible for health insurance subsidies under it. President Biden indicated that he intends to use executive orders to undo changes to the ACA made by the former administration and would advocate for legislation to build on the ACA. It is unknown what form any such changes or any law would take, and how or whether it may affect the biopharmaceutical industry as a whole or our business in the future. We expect that changes or additions to the ACA, the Medicare and Medicaid programs, changes allowing the federal government to directly negotiate drug prices, and changes stemming from other healthcare reform measures, especially with regard to healthcare access, financing or other legislation in individual states, could have a material adverse effect on the healthcare industry in the United States.

 There has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several Congressional inquiries, presidential executive orders and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs and reform government program reimbursement methodologies for pharmaceutical and biologic products. Government authorities and other third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medical products and services, implementing reductions in Medicare and other healthcare funding and applying new payment methodologies. In addition to the sweeping reforms contained in the ACA, other legislative changes have been proposed and adopted in the United States that may affect healthcare expenditures. For example, the 2020 Consolidated Appropriations Act (P.L. 116-94) included a piece of bipartisan legislation called the Creating and Restoring Equal Access to Equivalent Samples Act, or the CREATES Act. The CREATES Act aims to address the concern articulated by both the FDA and others in the industry that some brand manufacturers have improperly restricted the distribution of their products, including by invoking the existence of a REMS program for certain products, to deny generic product developers access to samples of brand products. Because generic product developers need samples to conduct certain comparative testing required by the FDA, some have attributed the inability to timely obtain samples as a cause of delay in the entry of generic products. To remedy this concern, the CREATES Act establishes a private cause of action that permits a generic product developer to sue the brand manufacturer to compel it to furnish the necessary samples on “commercially reasonable, market-based terms.” Whether and how generic product developments will use this new pathway, as well as the likely outcome of any legal challenges to provisions of the CREATES Act, remain highly uncertain and its potential effects on our future commercial products are unknown.

At the state level, legislatures are increasingly passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs. These measures could reduce the ultimate demand for our products, once approved, or put pressure on our product pricing.

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We expect that federal, state and local governments in the United States, as well as foreign governments, will continue to consider legislation directed at lowering the total cost of healthcare. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize any product that is ultimately approved, if approved. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative or executive action, either in the United States or abroad. It is also possible that additional governmental action is taken in response to the COVID-19 pandemic.

Competition

Our drug conjugate platform is among the latest generation of nanomedicine technology. Liposomes, an artificially prepared spherical vehicle composed of a lipid bilayer that can be used as vehicle for the administration of nutrients and drugs, followed by various polymeric nanoparticles, were the first nanotechnologies, and now inorganic nanoparticles like our GNPs are emerging as the fastest growing sector within the nanomedicine market. The speed and nature of technological change means that physical science is always evolving and new competition and alternatives are always a possibility, however we believe that we have established competitive advantage over our peers. As a result of the combination of our platform technology, intellectual property and proprietary know-how, we have a protected position in the nanoparticle space which allows the potential for highly differentiated drugs serving high unmet needs like orphan oncology to be rapidly and independently manufactured and scaled.

Competitive Dynamics

Barriers to entry for competitors are high. The significant level of capital, scientific capabilities, and infrastructure required to achieve what we have achieved to date may deter new entrants. A high degree of specialization and expertise in equivalent drug conjugate and sustained release technologies and relevant therapeutic areas is essential for any competitor to succeed, which we have built up over many years since inception. While the power of suppliers has been relatively low given our development manufacturing capabilities, with the reduction in these capabilities the power of suppliers will likely increase. The power of buyers, i.e. pharmaceutical companies, is important insofar as they may be partners for the commercialization and distribution of our product candidates. Even for large pharmaceutical companies, the know-how, manufacturing, and effort involved in developing alternative products to us would potentially see them engage as partners rather than as competitors. Competitive pressures or substitutes for our compounds come from conventional small molecules or biologics (such as antibody drug conjugates). There is a growing trend for drugs to be produced using biotechnologies and it is likely that the main threat in the future will come from this class, albeit the costs of production and development are much higher, and the regulatory pathways more complex.

Competitive Technology

The main competing nanotechnologies are liposomes, polymers, carbon assemblies and other inorganic/metallic platforms. Carbon assemblies are not widely used in healthcare applications. Most nano activity has traditionally involved liposomes and polymers. More recently, the focus has moved to include inorganic nanoparticles using solid cores whereas ours is one of a few companies using gold. To the best of our knowledge, we are the only company using non-colloidal gold (colloidal gold is defined as larger GNPs 10-15nm and more, whereas our core GNP construct is less than 2nm) and are sufficiently progressed with the technology to have undertaken Phase II clinical trials. We believe we are therefore well positioned versus the other technologies and companies providing a differentiated platform that imparts favorable characteristics in drug delivery, including targeting and mobility, solubility (for otherwise non soluble compounds), stability (of peptides), compatibility (inert and biocompatible) and highly controlled delivery and release in the cell.

Competitive Therapeutic Areas

Much of the historical and current focus and activity of the nanomedicine market is oncology. Within this domain, we believe we are well positioned given our focus on selected orphan oncology applications where unmet needs persist, an accelerated regulatory process is possible and fewer companies compete (reflecting the challenges that need to be addressed). With our sustained release technology, the ability to address shortcomings of other controlled technologies such as burst, lag, release profile and consistency enables us to pursue unmet opportunities such as sustained release octreotide, which to date has no generic competition despite being off patent for many years. Our nano inclusion technology conjugates solubilize cancer drugs that could otherwise not be administered directly into tumors.

Competitive Companies

Our Q-Sphera technology for biodegradable sustained-release formulation takes a microsphere-based approach that is based on printing individual microspheres. It enables next-generation formulation and engineering. We believe other companies in the sustained release space include Medincell S.A., GP Pharm, S.A., Peptron, Inc., Graybug, Inc. and Nanomi B.V.

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From a technology perspective, we believe other companies using GNP technologies include CytImmune Sciences, Inc., and Nanospectra Biosciences, Inc. Some companies use larger colloidal GNPs of 10 to 15nm or bigger, whereas we typically use non-colloidal gold cores smaller than 5nm.

Manufacturing

Following the closing of our Bilbao, Spain operating facilities in 2020, we no longer have our own manufacturing facilities.

To establish proof-of-concept for potential licensees, we are able to manufacture non-GMP material at pilot scale at our facility in Cardiff, Wales. We would expect a licensee to assume responsibility for manufacturing GMP material and commercial scale-up pursuant to a technology transfer agreement.

Environmental Matters and Seasonality

We may from time to time be subject to various environmental, health and safety laws and regulations, including those governing air emissions, water and wastewater discharges, noise emissions, the use, management and disposal of hazardous, radioactive and biological materials and wastes and the cleanup of contaminated sites. We believe that our business, operations and facilities are being operated in compliance in all material respects with applicable environmental and health and safety laws and regulations. Based on information currently available to us, we do not expect environmental costs and contingencies to have a material adverse effect on it. The operation of our manufacturing facility, however, entails risks in these areas. Significant expenditures could be required in the future if these facilities are required to comply with new or more stringent environmental or health and safety laws, regulations or requirements.

Our current business does not generally reflect any significant degree of seasonality.

Legal Proceedings

From time to time, we may be subject to various claims or legal proceedings that arise in the ordinary course of our business. Other than as disclosed in this annual report, we currently are not a party to any legal proceedings, which, in the opinion of management, is likely to have or could reasonably possibly have a material adverse effect on our business, financial condition or results of operations.

C. Organizational Structure

We are organized under the laws of England and Wales. We have two wholly owned subsidiaries, as well as several indirectly owned subsidiaries and joint ventures. The following table sets forth a description of our subsidiaries.

Subsidiaries	Country of Incorporation	Voting Interest
Subsidiaries of Midatech Pharma PLC
Midatech Pharma (Wales) Limited	England and Wales		100	%
Midatech Limited	England and Wales		100	%
Joint Ventures with Midatech Limited
MidaSol Therapeutics GP (1)(3)	Cayman Islands		50	%
Syntara LLC (2)(3)	United States (Delaware)		50	%
Subsidiaries of Midatech Limited
Pharmida AG (3)	Switzerland		100	%

    -------

(1)	Joint venture between Midatech Limited and Aquestive Therapeutics, formerly known as MonoSol.
(2)	Joint venture between Midatech Limited and Immunotope Inc. The percentage ownership of the entity is determined by reference to the partnership agreement and varies from time to time depending on capital committed. While 50% is the economic interest, Midatech Limited can currently direct 49% of the voting rights.

(3) Dormant entities

D. Property, Plant and Equipment

Our current headquarters is located at 1 Caspian Point, Caspian Way, Cardiff, Wales, where we also have our laboratories and pilot scale manufacturing facility. We entered into the lease for these premises in April 2021 The new premises comprise 754 square meters (approximately 8,118 square feet). The lease expires in 2026. We believe that our new premises at this facility will be sufficient to meet our current needs.

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ITEM 4A. UNRESOLVED STAFF COMMENTS.

Not applicable.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS.

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes thereto appearing at the end of this annual report. We present our consolidated financial statements in British pounds sterling and in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

The following discussion and analysis contains forward-looking statements. Statements that are not statements of historical fact, including expression of management’s beliefs and expectations, may be forward-looking in nature and based on current plans, estimates, projections and beliefs. Forward-looking statements are applicable only as of the date made, and we undertake no obligation to update any of them in light of new information or future events. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results or outcomes to differ materially from those expressed in any forward-looking statement. These factors include those identified under the headings “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements.”

Information pertaining to fiscal year 2019 was included in our Annual Report on Form 20-F for the year ended December 31, 2020 beginning on page 70 under “Item 5. Operating and Financial Review and Prospects” which was filed with the SEC on April 30, 2021.

Recent Developments

For information regarding our recent developments, please see “Item 4. Information on the Group—B. Business Overview—Recent Developments,” which is incorporated herein by reference.

This section begins with an overview of the principal factors and trends affecting our results of operations. The overview is followed by a discussion of the components of our income statement and our critical accounting policies and estimates that we believe are important to understanding the assumptions and judgments reflected in our reported financial results. We then present an analysis of our results of operations for the last two fiscal years. We contain one reportable segment, referred to as Pipeline Research and Development.

The following discussion should be read in conjunction with our consolidated financial statements included in Item 18 of this annual report and “Item 3.D—Key Information—Risk Factors.” Our financial statements and the financial information discussed below have been prepared in accordance with IFRS.

Principal Factors Affecting Results of Operations

We consider the currency exchange rate between the British pound sterling, Euros and the United States dollar and certain other factors affecting the comparability of results of operations between periods as those most likely to influence our financial condition and results of operations.

Currency Exchange Rate

We report our financial results in British pound sterling and our cash reserves are also largely denominated in British pound sterling. Costs from our Spanish operation are denominated in Euros and revenues and costs from our former United States operations are denominated in United States dollars, which subjects us to currency exchange risks. A strong Euro or United States dollar against the British pound sterling would result in these Euros or United States dollars denominated costs needing a greater amount of cash to settle the cost.

During the periods set forth in our financial statements, incorporated herein by reference, and in particular during 2020 and 2021, there has been considerable volatility in the British pound sterling against the Euro and the United States dollar. During 2020, volatility in the British pound sterling was significant as currency markets fluctuated over the prospect of the United Kingdom and European Union reaching a deal over Brexit. At this time, we do not consider the exposure sufficient to utilize derivatives to manage the forward exchange risk. Certain other costs are denominated in other currencies; however, these are not considered material.

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Components of Consolidated Statement of Comprehensive Income Items

Revenue

Our income streams comprise revenue derived from licensing agreements, supply of goods and services, milestone income from research and development contracts and grant revenue. Revenue is recognized in-line with that set out in Note 1 to our consolidated financial statements for the year ended December 31, 2021.

Operating Expenses

We classify our operating expenses into three categories: (i) research and development, (ii) administrative costs and (iii) distribution costs, sales and marketing. These categories correspond to different functional areas within the Company.

Our operating expenses primarily consist of personnel costs, contract research and development costs, professional service fees and depreciation. Personnel costs for each category of operating expenses include salaries, bonuses, social security, health insurance, other employee benefits and share-based compensation for personnel in that category. We allocate share-based compensation expense resulting from the amortization of the fair value of options. Central overheads, such as rent, computer and other technology costs, are not allocated out to departments.

Research and Development Cost. Research and development costs consist of costs that are directly attributable to our research and development programs associated with the products described herein, including the cost of operating our Spanish manufacturing facility, which produces material exclusively for preclinical and clinical studies. This includes costs of third party contract research organizations, research specialist professional services providers, chemicals and other consumables used in the research and manufacturing process, depreciation of assets related to the research and development function, and payroll costs of staff directly assigned to the research and manufacturing operations.

Administrative Costs. These primarily consist of personnel costs for our executive, finance, corporate development and administrative personnel, as well as legal, accounting and other professional service fees, other corporate expenses, merger and acquisition costs and initial public offering costs that are charged to the consolidated statement of comprehensive income. Administrative costs also include depreciation of administrative assets.

Impairment of Intangible Assets. As of December 31, 2020, in connection with our decision to terminate further in-house development of MTD201, our Q-Sphera formulation of octreotide, we recognized an impairment loss for in-process research and development of £9.3 million. In addition, because no other Q-Sphera products were advanced beyond the formulation stage as of December 31, 2020, we recognized an impairment of goodwill arising from our acquisition of Q Chip Limited in December 2014 of £2.3 million. Further, in connection with the purported termination of our license to panobinostat, the active ingredient for our MTX110 product, by Secura Bio in June 2020, we recognized an impairment of an intangible asset of £0.8 million as of December 31, 2020.

There was no impairment charge in 2021.

Finance Income

Finance income includes all interest receivable on cash deposits. In 2020, finance income comprised bank interest received.

In 2021, finance income also included a gain on an equity settled derivative financial liability. We issued warrants in 2020 and 2019 in connection with registered direct offerings. In 2015, we assumed fully vested warrants and share options on the acquisition of DARA. The number of Ordinary Shares to be issued when the warrants and options are exercised is fixed, however the exercise prices are denominated in United States dollars, which is different from the functional currency of the Company. Therefore, the warrants and share options are classified as equity settled derivative financial liabilities in the consolidated statement of financial position with any gains or losses being recognized through finance income or finance expense in the consolidated statement of comprehensive income.

Finance Expense

Finance expenses include all interest payable on borrowings and loan instruments. In 2021 and 2020, finance expenses were comprised primarily of interest payable on lease liabilities and other loans.

In 2020, finance expenses also included a loss on equity settled derivative financial liability.

Taxation

Taxation represents tax credits receivable by Group companies in respect of qualifying research and development costs incurred.

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A. Operating Results.

Results of Operations

Year Ended December 31, 2021 Compared to Year Ended December 31, 2020

The following table summarizes our consolidated results of operations for the years ended December 31, 2021 and 2020.

	Year Ended December 31,
	2021			2020
	(£ in thousands)
Revenue		578			180
Grant revenue		--			163
Total revenue		578			343
Other income		24			12
Research and development costs		(4,654	)		(6,068	)
Administrative costs		(2,946	)		(4,958	)
Impairment of intangible assets		--			(12,369	)
Loss from operations		(6,998	)		(23,040	)
Finance income		936			1
Finance expense		(44	)		(431	)
Loss before taxation		(6,106	)		(23,470	))
Taxation		646			1,281
Loss from continuing operations		(5,460	)		(22,189	)
Loss for the year attributable to the owners of the parent		(5,460	)		(22,189	)

_________________________

Revenue. For the year ended December 31, 2021, we generated consolidated Revenues from continuing operations of £0.58 million, compared to £0.18 million in 2020, comprising Q-Sphera formulation services under R&D collaboration agreements for customers in each year.

Research and Development Costs. We incurred research and development costs of £4.65 million in 2021, compared to £6.07 million in 2020, a decrease of 23%, primarily due to £1.81 million lower clinical development costs on MTD201 offset by a £0.48 million increase in clinical costs on MTX110 and a £1.21 million increase in preclinical costs spread across several projects, including those under R&D collaboration agreements. Personnel costs, share based payment charge and other items increased by £0.32 million, £0.21 million and £0.22 million, respectively, in 2021 compared with 2020. The prior year included certain items related to the restructuring of the Company following the previously disclosed strategic review in 2020, including redundancy costs, accelerated depreciation and foreign exchange of £0.89 million, £0.85 million and £0.31 million, respectively. 

Administrative costs. For the year ended December 31, 2021, our administrative costs were £2.95 million, as opposed to £4.96 million in 2020, and included decreases in legal, professional fees, insurance and other costs of £0.95 million, and a decrease in personnel costs of £0.51 million, offset by an increase in share based payments of £0.15 million. The prior year included certain items related to the closure of tour operations in Bilbao, Spain, including £0.55 million in interest on repaid Spanish soft loans and £0.17 million related to the settlement of a lawsuit.

Impairment of Intangible Assets. In connection with our decision to terminate further in-house development of MTD201, we recognized an impairment loss for in-process research and development of £9.30 million in 2020. In addition, because no other Q-Sphera products were advanced beyond the formulation stage as of December 31, 2020, we recognized an impairment of goodwill arising from our acquisition of Q Chip Limited in December 2014 of £2.30 million. In connection with the termination of our license to panobinostat by Secura Bio in June 2020, we recognized an impairment of an intangible asset of £0.78 million as of December 31, 2020.

Finance Income. Finance income generally represents interest earned on cash balances. However, in 2021, finance income of £0.94 million was credited to the income statement, compared with none in 2020, and included a gain in respect of an equity settled financial liability of £0.94 million.

Finance Expense. Finance expenses of £0.04 million were charged in 2021, compared to £0.43 million in 2020, a decrease of £0.39 million. In 2020, finance expense included a loss in respect of an equity settled financial liability of £0.40 million.

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B. Liquidity and Capital Resources.

Overview

We have incurred significant net losses and have had negative cash flows from operations during each period from inception through December 31, 2021, and had an accumulated deficit of £127.80 million as of December 31, 2021. We have yet to generate a profit and, excluding share issues, cash flows have been consistently negative from the date of incorporation. Management expects operating losses and negative cash flows to continue for the foreseeable future. We believe our existing balances of cash and cash equivalents will be insufficient to satisfy our working capital needs and other liquidity requirements associated with our existing operations over the next 12 months. Additional funding will have to be obtained, which may include public or private equity or debt offerings. Additional capital may not be available on reasonable terms, if at all. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the development of our product candidates and formulations, as well as consider other strategic alternatives. 

If we raise additional funds through the issuance of debt securities or additional equity securities, it could result in dilution to our existing stockholders, increased fixed payment obligations and these securities may have rights senior to those of our ordinary shares (including the Depositary Shares) and could contain covenants that would restrict our operations and potentially impair our competitiveness, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. Any of these events could significantly harm our business, financial condition and prospects.

As of December 31, 2021, we had cash and cash equivalents of £10.06 million. Historically, we have financed our operations primarily from the net proceeds of public and private share placings. In December 2014, we received net proceeds of £30.6 million from the issuance and sale of 599,250 of our Ordinary Shares in our initial public offering and associated listing on AIM. In October 2016, we received net proceeds of £15.6 million from the issuance and sale of 757,852 of our Ordinary Shares in a placing and open offer outside of the United States. In September 2017, we received net proceeds of £5.7 million from the issuance and sale of 615,733 Ordinary Shares in a placing outside of the United States. In February 2019, we received net proceeds of £12.3 million from the issuance and sale of 17,410,773 Ordinary Shares in a subscription, placing and open offer outside of the United States. In October 2019, we received net proceeds of £1.8 million from the issuance and sale of 600,000 Depositary Shares (representing 3,000,000 Ordinary Shares) and warrants to purchase 600,000 Depositary Shares (representing 3,000,000 Ordinary Shares) in registered direct offering and concurrent private placement in the United States.

In May 2020, we received net proceeds of $2.6 million from the issuance and sale of 1,818,182 Depositary Shares (representing 9,090,910 Ordinary Shares) and warrants to purchase 600,000 Depositary Shares (representing 9,090,910 Ordinary Shares) in a registered direct offering and concurrent private placement in the United States. In addition, in May 2020, we received net proceeds of £1.6 million from the issuance and sale of 6,666,666 Units in the May Placing. In July 2020, we received net proceeds of £5.3 million from the issuance and sale of 21,296,295 Ordinary Shares in a placing to investors in the United Kingdom. Further, in August 2020 and February 2021, we received net proceeds of $1.0 million and $0.1 million, respectively, upon the exercise of warrants issued in the May 2020 private placement. In July 2021, we received net proceeds of £9.0 million from the issuance and sale of 35,087,720 Ordinary Shares in the 2021 UK Placing.

In addition to the potential issuance of any debt securities or additional equity securities, we continue to assess the market value of certain of our assets so that non-dilutive funding could be available, if required, to drive long term value for the Company without a reliance on equity funding.

On September 1, 2018, we were awarded a €1.5 million unsecured loan from the regional government of the Basque region of Spain as part of their Gauzatu Industry program, which is a government funded program to support local small and medium-sized enterprises in establishing infrastructure and capability for global industries. The Basque Loan was intended to be used as part of our commercial scale up for our MTD201 program and Q-Sphera technology platform. We never drew upon the Basque Loan. Due to the termination of the MTD201 program and shut down of our Bilbao, Spain manufacturing facilities, we have terminated this loan agreement.

On September 11, 2019, we were awarded a €6.6 million loan from the Spanish Ministry of Industry, Commerce and Tourism, under its Re-industrialisation Programme, or the REINDUS Loan. The REINDUS Loan was intended to partially fund activities to scale-up the manufacturing capability of our MTD201 program, however, in connection with our decision to terminate the MTD201 program and shut down of our Bilbao, Spain manufacturing facilities, we repaid this loan and the corresponding cash bond was released.

Our current strategy is based on advancing our proprietary technology platforms and programs with a view to partnering these assets during the course of their development, thereby earning royalty income, or working with third party pharmaceutical companies to re-formulate their proprietary medicine on a fee-for-service basis. We are subject to risks incident in the development of new biopharmaceutical products, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business.

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Our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement and involves risks and uncertainties, and actual results could vary as a result of a number of factors, including the timing of clinical trials. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect. If we lack sufficient capital to expand our operations or otherwise capitalize on our business opportunities, our business, financial condition and results of operations could be materially adversely affected.

Cash Flows

The following table presents a summary of the primary sources and uses of cash for the years ended December 31, 2021 and 2020:

	Year ended December 31,
	2021			2020
	(£ in thousands)
Cash used in operating activities		(6,008	)		(9,301	)
Cash (used in) provided by investing activities		(278	)		2,574
Cash provided by financing activities		8,805			3,084
Net increase (decrease) in cash and equivalents		2,519			(3,643	)

Operating Activities

The following table presents a summary of the cash used in operations as of the years ended December 31, 2021 and 2020:

	Year Ended December 31,
	2021			2020
	(£’s in thousands)
Cash flows from operating activities before changes in working capital		(6,548	)		(9,697	)
Changes in working capital		(617	)		(1,558	)
Cash used in operations		(7,165	)		(11,255	)

Cash flows from Operating Activities before Changes in Working Capital. Net cash outflow from operating activities before changes in working capital was £6.55 million in the year ended December 31, 2021, as opposed to £9.70 million during the same period in 2020. This decreased cash outflow of £3.15 million, or 75%, was driven by a decrease in losses attributable to the owners of the Company of £16.73 million, lower tax charge credit of £0.64 million, increased share based payment expense of £0.49 million and decrease in loss on disposal of fixed assets of £0.19 million offset by an increase in net finance income, decreases in depreciation and amortization and an increase in foreign exchange gains of £1.32 million, £0.81 million and £0.39 million, respectively. Included in cash flows from operating activities in 2020 was £12.37 million in respect of impairment of intangibles.

Cash Used in Operations. Working capital increased in cash flow terms by £0.62 million for the year ended December 31, 2021, compared to an increase of £1.56 million for 2020.  The increase in 2021 primarily comprised of an increase in trade and other receivables of £0.49 million and a decrease in trade and other payables of £0.13 million.

Taxes Paid.  Research and development tax credits of £1.16 million were received in 2021, as opposed to £1.95 million in 2020. This related to claims submitted in the prior financial year.

Investing Activities

Purchase of property, plant and equipment of £0.32 million occurred in the year ended December 31, 2021, compared to £0.20 million in 2020. In 2021, capital expenditure was largely related to the purchase of laboratory equipment for our laboratories and pilot scale manufacturing facilities in Cardiff, Wales. The £2.55 million cash-backed guarantee for a Spanish government loan that was put in place in 2019 was repaid in the amount of £2.64 million in 2020.

Financing Activities

 Government loans, grants and subsidies. In connection with the closure of our Bilbao, Spain operations, in 2020, we repaid Spanish government loans and grants of £6.18 million and £0.22 million, respectively.

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Amounts paid on lease liabilities. In 2021 we paid £0.11 million in respect of lease liabilities compared with £0.26 million in 2020. We entered into a lease for new corporate offices in Cardiff in 2021 and surrendered the lease on our former facilities in Cardiff in 2021. We surrendered both our property leases in Bilbao, Spain during 2020.

Shares Issues Including Warrants, Net of Costs. We raised £9.03 million in net proceeds during the year ended December 31, 2021 in cash from the 2021 UK Placing in July 2021 and from the exercise of warrants.

On May 20, 2020, we completed the closing of a registered direct offering with certain Investors for the sale of 1,818,182 Depositary Shares (representing 9,090,910 Ordinary Shares) at a price per Depositary Share of $1.65, for aggregate gross proceeds of $3.0 million. In a concurrent private placement, we sold to the Investors Private Placement Warrants to purchase a total of 1,818,182 Depositary Shares (representing 9,090,910 Ordinary Shares) at an exercise price of $2.05 per Depositary Share. The Private Placement Warrants, which were immediately exercisable, will expire five and one-half years from the issuance date. The closing of the private placement occurred on May 20, 2020. As of December 31, 2020, Private Placement Warrants to purchase 500,000 Depositary Shares had been exercised for an aggregate exercise price of approximately $1.0 million. Wainwright served as the sole placement agent for the transaction. In connection therewith, we also issued to certain designees of Wainwright the Wainwright Warrants for the purchase of a total of 90,909 Depositary Shares (representing 454,546 Ordinary Shares) at an exercise price of $2.0625 per Depositary Share pursuant to the terms of our engagement letter agreement with Wainwright. The Wainwright Warrants became exercisable on May 18, 2020 and expire May 18, 2025.

Concurrently with the registered direct offering, on May 22, 2020, we, through TPI completed a placing with certain investors in the United Kingdom of 6,666,666 Units, with each Unit comprising one new Ordinary Share and one UK Warrant, at an issue price of £0.27 per Unit. The exercise price of the UK Warrants is £0.34 per share, for aggregate gross proceed of £1.8 million. The UK Warrants expire five years and six months from the issuance date. In connection with TPI acting as the placement agent for the May Placing, we issued to TPI UK Warrants to purchase an aggregate of 333,333 Ordinary Shares, or 5.0% of the aggregate UK Warrants issued in the May Placing.

In July 2020, we, through TPI, completed a placing with certain investors in the United Kingdom of 18,518,518 Placing Shares. In addition, 2,777,777 Broker Option Shares were placed by TPI pursuant to a broker option. Each of the Placing Shares and the Broker Option Shares were sold at an issue price of £0.27 per share.

In July 2021, we, through TPI, completed the 2021 UK Placing with certain investors in the United Kingdom of 35,087,720 Placing Shares at an issue price of £0.285 per share.

For the years ended December 31, 2021 and 2020, we issued 25,000 Ordinary Shares in each year to be purchased by the Midatech Pharma Share Incentive Plan, an employee share incentive trust.

Cash and Cash Equivalents

Cash increased for the year ended December 31, 2021 by £2.52 million, before the impact of foreign exchange movements, compared to a decrease of £3.64 million in 2020. This increase was primarily due to continuing trading losses offset by the net proceeds from share issuances and warrant exercises during the year of £9.03 million. As of December 31, 2021, we had cash and cash equivalents of £10.06 million compared to £7.55 million as at December 31, 2020.

Cash Commitments

Our cash resources expected to provide liquidity into the first quarter of 2023, The Company remains focused on tight control of its cash commitments at any given time. As of December 31, 2021 our cash requirements primarily relate to the following:

• lease obligations, related to our office and research and development facility, which are recognized as lease liabilities in the consolidated statement of financial position;

• construction of property, plant and equipment, including leasehold improvements and dilapidations in respect of our former leased facility;

• purchase obligations, under our commercial supply agreements and related activities; and

• research and development activities related to preclinical and clinical trials for our product candidates in development.

The lease on our office and research and development facility commenced in August 2021 and expires in August 2026. Our cash requirements for our lease obligation (on an undiscounted basis) are £0.14 million and £0.68 million, for the short-term (payable within twelve months after the reporting date) and long-term (payable beyond twelve months after the reporting date), respectively. Our lease obligation includes ancillary contractual commitments in relation to utilities, maintenance and other services.

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We built out the office and laboratory space at our new facility in the period April through August 2021. We recognized £0.05 million in respect of leasehold improvements during 2021 and an additional £0.19 million in respect of new laboratory equipment. We expect only modest capital expenditures in the foreseeable future. We have a contingent liability in respect of dilapidations on our former office and laboratory facility expected to be around £0.05 million.

We purchase materials to support out internal Q-Sphera research and development pipeline. As of December 31, 2021, there were outstanding commitments purchases of £nil. We purchase MTX110 clinical supply product from a third-party manufacturer and, while there were no commitments as of December 31, 2021, we expect to order quantities of MTX110 with a value of £0.18 million during 2022.

We undertake formulation work in-house but contract out our pre-clinical and clinical studies to third party contract research organizations, or CROs. As of December 31, 2021, we had committed to preclinical studies with aggregate obligations of £0.12 million. We expect to initiate additional preclinical studies with an aggregate commitment of £0.85 million during 2022. Similarly, at December 31, 2021, we had committed to three clinical studies of MTX110 in GBM, DIPG and medulloblastoma for an aggregate commitment of £0.54 million at that date and we expect to initiate additional studies during 2022 with a total cash commitment of approximately £0.8 million in 2022.

We believe we have sufficient cash resources to fund our commitments and operations into the first quarter of 2023. To maintain operations beyond the first quarter of 2023, additional funding will be required, which may include public or private equity or debt offerings. Additional capital may not be available on reasonable terms, if at all. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the development of our product candidates and formulations, as well as consider other strategic alternatives. 

C. Research and Development, Patents and Licenses, Etc.

For more information regarding our research and development program, see “Item 4. Information on the Company—B. Business Overview—Research and Development.”

D. Trend Information.

Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events that are reasonably likely to have a material adverse effect on our revenues, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.

E. Critical Accounting Estimate.

The preparation of our consolidated financial statements requires us to make estimates, assumptions and judgments that can have a significant impact on the reported amounts of assets and liabilities, revenue and expenses and related disclosure of contingent assets and liabilities, at the respective dates of our financial statements. We base our estimates, assumptions and judgments on historical experience and various other factors that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. Management evaluates estimates, assumptions and judgments on a regular basis and makes changes accordingly, and discusses critical accounting estimates with the Board of Directors.

The following are considered to be critical accounting policies because they are important to the portrayal of our financial condition or results of operations and they require critical management estimates and judgments about matters that are uncertain.

Revenue

There are significant management judgments and estimates involved in the recognition of revenue from the supply of services. Revenue on services is recognized over the contract term, proportionate to the progress in overall satisfaction of the performance obligations (the services performed by the Group), measured by cost incurred to date out of total estimate of costs.

Impairment of Goodwill and Intangible Assets Not Yet Ready for Use

Goodwill and intangibles not yet ready for use are tested for impairment at the cash generating unit level on an annual basis at the year end and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a cash generating unit below its carrying value. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit.

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Application of the goodwill impairment test requires judgment, including the identification of cash generating units, assignment of assets and liabilities to such units, assignment of goodwill to such units and determination of the fair value of a unit and for intangible assets not yet ready for use the fair value of the asset. The fair value of each cash generating unit or asset is estimated using the income approach, on a discounted cash flow methodology. This analysis requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for the business, estimation of the useful life over which cash flows will occur and determination of our weighted-average cost of capital. The carrying value of our goodwill was £0 as of December 31, 2021 and 2020, and intangible assets not yet ready for use was £0 as of December 31, 2021 and 2020.

The estimates used to calculate the fair value of a cash generating unit change from year to year based on operating results and market conditions. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for each such unit.

As a result of our strategic review, an impairment charge of £2.3 million was recognized against goodwill in the year ended December 31, 2020 (2019:£Nil) and an impairment charge against the IPRD of the Midatech Wales cash generating unit of £9.3 million (2019:£Nil). As a result of the purported termination of our license to panobinostat by Secura Bio in June 2020, there was an impairment charge of £0.8 million against the acquired IPRD in relation to MTX110. There were no impairment charges in 2021.

Share-Based Payments

We account for share-based payment transactions for employees in accordance with IFRS 2, Share- Based Payment, which requires it to measure the cost of employee services received in exchange for the options on our ordinary shares, based on the fair value of the award on the grant date. We selected the Black-Scholes-Merton option pricing model as the most appropriate method for determining the estimated fair value of its share-based awards without market conditions. For performance-based options that include vesting conditions relating to the market performance of our ordinary shares, a Monte Carlo pricing model was used in order to reflect the valuation impact of price hurdles that have to be met as conditions to vesting.

The resulting cost of an equity incentive award is recognized as expense over the requisite service period of the award, which is usually the vesting period. Compensation expense is recognized over the vesting period using the straight-line method and classified in the consolidated statements of comprehensive income.

The assumptions used for estimating fair value for share-based payment transactions are disclosed in Note 26 to our consolidated financial statements for the year ended December 31, 2021 and are estimated as follows:

• volatility is estimated based on the average annualized volatility of a number of publicly traded peer companies in the biotech sector;

• the estimated life of the option is estimated to be until the first exercise period, which is typically the month after the option vests; and

• the dividend return is estimated by reference to our historical dividend payments. Currently, this is estimated to be zero as no dividend has been paid in the prior periods.

Financial Liabilities

Fair Value Through Profit and Loss (FVTPL). We have outstanding warrants in the Ordinary Share capital of the company. The number of Ordinary Shares to be issued when exercised is fixed, however the exercise price is denominated in U.S. dollars, being different to the our functional currency. Therefore, the warrants are classified as equity settled derivative financial liabilities recognized at fair value through the profit and loss account.

The financial liability is valued using the either the Monte Carlo model or the Black-Scholes option pricing model. Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on re-measurement recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates any interest paid on the financial liability and is included in the ‘finance income’ or ‘finance expense’ lines item in the income statement. Fair value is determined in the manner described in Note 21 to our consolidated financial statements.

Income Taxes

Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

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In 2021 and 2020, there were £67.2 million and £63.2 million of gross unutilized tax losses carried forward, respectively. No deferred tax asset has been provided in respect of losses, as there was insufficient evidence to support their recoverability in future periods.

Research and Development Cost

Research and development costs are charged to expense as incurred and are typically made up of salaries and benefits, clinical and preclinical activities, drug development and manufacturing costs, and third-party service fees, including for clinical research organizations and investigative sites. Costs for certain development activities, such as clinical trials, are periodically recognized based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations, or information provided by vendors on their actual costs incurred. Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the financial statements as prepaid or accrued expenses.

Leases

IFRS 16, Leases, defines the lease term as the non-cancellable period of a lease together with the options to extend or terminate a lease, if the lessee were reasonably certain to exercise that option. Where the lease includes the option for us to extend the lease term, we make a judgement as to whether it is reasonably certain that the option will be taken. This will take into account the length of time remaining before the option is exercisable, current trading, future trading forecasts as to the ongoing profitability of the organization and the level and type of planned future capital investment. The judgement is reassessed at each reporting period. A reassessment of the remaining life of the lease could result in a recalculation of the lease liability and a material adjustment to the associated balances.

The discount rate used in the calculation of the lease liability involves estimation. The discount rate used is the incremental borrowing rate. This rate represents the rate we would have had to pay to borrow, over a similar term and with similar security, the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment.

During 2020, following the closure of Midatech Spain and the termination of a property lease we occupied, a profit on disposal has been recognized in the accounts of £109,000.

In April 2021 we entered into an agreement to lease new premises at 1 Caspian Point, Caspian Way, Cardiff CF10 4DQ for our corporate offices and laboratories. The agreement to lease allowed the Group to carry out the Category A works and fit out prior to commencement of the lease and occupation in August 2021. The lease is for a five-year term with no break clause and includes a rent-free period of nine months. The lease has been recognized as a right of use asset effective as of April 2021.

Going Concern

We are subject to a number of risks similar to those of other development and early-commercial stage pharmaceutical companies. These risks include, amongst others, generation of revenue from the development portfolio and risks associated with research, development, testing and obtaining related regulatory approvals of our pipeline products. Ultimately, the attainment of profitable operations is dependent on future uncertain events which include obtaining adequate financing to fulfill our commercial and development activities and generating a level of revenue adequate to support our cost structure.

We have experienced net losses and significant cash outflows from cash used in operating activities over the past years as we develop our portfolio. For the year ended December 31, 2021, the Company incurred a consolidated loss from operating activities of £5.46 million and negative cash flows from operations of £6.55 million. As of December 31, 2021, we had an accumulated deficit of £127.80 million.

Our future viability is dependent on our ability to raise cash from financing activities to finance our development plans until commercialization, generate cash from operating activities and to successfully obtain regulatory approval to allow marketing of our development products. Our failure to raise capital as and when needed could have a negative impact on our financial condition and ability to pursue our business strategies.

Our consolidated financial statements have been presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

As of December 31, 2021, we had cash and cash equivalents of £10.06 million. We believe we currently have enough cash to fund our planned operations into the first quarter of 2023.

We have prepared cash flow forecasts and considered the cash flow requirement for our next three years, including the period twelve months from the date of the approval of the financial statements. These forecasts show that further financing will be required during the course of the next 12 months, assuming, inter alia, that certain development programs and other operating activities continue as currently planned.  This requirement for additional financing represents a material uncertainty that raises substantial doubt about our ability to continue as a going concern. As a result, our independent registered public accounting firm included an explanatory paragraph in its report on our financial statements as of and for the year ended December 31, 2020 with respect to this uncertainty.

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In addition, the global spread of pandemic novel coronavirus, COVID-19, places increased uncertainty over our forecasts. The restrictions placed and being placed on the movement of people have caused, and may in the future cause, delays to some of our plans. We have established a COVID-19 task force internally to monitor the impact of COVID-19 on our business and prioritize activities to minimize its effect. It is not currently possible to quantify the impact of COVID-19 and resultant delays on the Company until it becomes clear that the global crisis has abated and a normalization of the business environment can be foreseen with confidence

In addition to utilizing the existing cash reserves, as part of our strategic review, we and our advisors are evaluating a number of near-term funding options potentially available to us, including fundraising, the partnering of assets or technologies or the sale of the Company. After considering the uncertainties, we considered it appropriate to continue to adopt the going concern basis in preparing the financial information.

Our ability to continue as a going concern is dependent upon our ability to obtain additional capital and/or dispose of assets, for which there can be no assurance we will be able to do on a timely basis, on favorable terms or at all.

 Recently Issued and Adopted Accounting Pronouncements

See Note 1 to our consolidated financial statements included elsewhere in this report for recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted as of the dates of the statement of financial position included in this report.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES.

A. Directors and Senior Management

The following table sets forth certain information about our current directors and senior management. The professional address of each of the directors is care of Midatech Pharma PLC, Oddfellows House, 19 Newport Road, Cardiff, CF24 0AA, United Kingdom.  

Name	Age at 12/31/2021	Position/Title	Term (1)
Directors:
Stephen Stamp (2)	60	Chief Executive Officer and Chief Financial Officer, Director	2023
Rolf Stahel (2) (3) (4)	77	Non-Executive Chairman of the Board of Directors	2023
Simon Turton, Ph.D. (2) (3) (4)	54	Senior Independent Non-Executive Director	2022
Sijmen de Vries, M.D. (2) (3) (4)	62	Non-Executive Director	2024
Senior Management (5):
Dmitry Zamoryakhin	42	Chief Scientific Officer	--

__________________________

(1) The term of the Board of Directors will expire immediately after the annual general meeting held in the year set forth next to the director’s name.

(2) Nominations Committee member

(3) Remuneration Committee member

(4) Audit Committee member

(5) Other than directors who are also members of senior management.

Directors

Stephen Stamp has served as our Chief Executive Officer since March 31, 2020, and our Chief Financial Officer and a member of our Board of Directors since September 2019. Prior to joining the Company, Mr. Stamp served as Chief Executive Officer of Ergomed plc (AIM: ERGO) from December 2017 until January 2019 and Chief Financial Officer from January 2016 to July 2018. From March 2013 until July 2015, Mr. Stamp served as the Chief Financial Officer of Assurex Health, Inc. Mr. Stamp served as Chief Financial Officer of EZCORP Inc. (NASDAQ: EZPW) and KV Pharmaceuticals Co. from November 2010 to October 2012 and March 2010 to June 2010. Mr. Stamp has also previously served as Chief Operating Officer of Xanodyne Pharmaceuticals, Inc., and Group Finance Director of Regus PLC (now IWG plc) (LON: IWG) and Shire plc (subsequently acquired by Takeda Pharmaceuticals Company Limited). Mr. Stamp is a Chartered Accountant and qualified with KPMG LLP. Mr. Stamp has a Bachelor’s degree in economics from the University of Manchester.

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Rolf Stahel has served as our Non-Executive Chairman of the Board of Directors and a director (including his service to our predecessor entity) since March 2014. Since December 2016, Mr. Stahel has served as the Non-Executive Chairman and a director of Ampha Limited. Between 2009 and 2016, Mr. Stahel served as the Non-Executive Chairman and a director of Connexios Sciences Pvt. Ltd., and between April 2014 and March 2017 he served as Non-Executive Chairman and a director of Ergomed plc (LON: ERGO). Mr. Stahel is also the sole shareholder and founder of Chesyl Pharma Ltd. From March 1994 to March 2003, Mr. Stahel served as the Chief Executive Officer and a director of Shire plc (subsequently acquired by Takeda Pharmaceuticals Company Limited). Prior to that time, Mr. Stahel worked in various positions with Wellcome plc, the predecessor to GlaxoSmithKline plc (NYSE: GSK), for 27 years. Mr. Stahel has previously served as the Non-Executive Chairman of EUSA, Cosmos Pharmaceuticals SpA (SIX: COPN), PowderMed Ltd. and Newron Pharmaceuticals SpA (SWX: NWRN).

Simon Turton, Ph.D. has served as a non-executive member of our Board of Directors since December 2014. Dr. Turton served as Chairman of Q Chip and OpsiRx Pharmaceuticals from March 2014 until their acquisition by us in December 2014. Since January 2015, he has served as the Managing Director of Gensmile Limited. In 2002, Dr. Turton joined Warburg Pincus’, most recently as head of healthcare investing activities in Europe, until June 2011. Dr. Turton has previously served on the board of Archimedes Pharma, Eurand, ProStrakan Group plc and Tornier, Inc. Dr. Turton has a Master’s of Business Administration from INSEAD and a Ph.D. in pharmacy from the University of London.

Sijmen de Vries, M.D. has served as a non-executive member of our Board of Directors since October 2004 (including his service to our predecessor entity). Since November 2008, Dr. de Vries has served as of the Chief Executive Officer of Pharming Group NV (Euronext: PHARM). Prior to that, Dr. de Vries served as Chief Executive Officer of 4-Antibody and Morphochem AG. Prior to this he worked at Novartis Pharma, Novartis Ophthalmics and at SmithKline Beecham Pharmaceuticals Plc, where he held senior business and commercial positions. Dr. de Vries holds an M.D. degree from the University of Amsterdam and a Masters of Business Administration in General Management from Ashridge Management College (United Kingdom).

Senior Management

Dmitry Zamoryakhin M.D. has served as our Chief Scientific Officer since July 2021. Prior to that time, from February 2021 to July 2021 Dr. Zamoryakhin provided independent consulting services to biotech and pharmaceutical companies in the areas of gene and cell therapy, biologics and small molecules. From September 2018 to January 2021, Dr. Zamoryakhin served as the Chief Medical Officer of Oxford Biomedica plc (LON: OXB). From October 2016 to August 2018, he held positions of increasing responsibility at Grunenthal GmbH, most recently as Vice President, Head of Development and Strategy. Dr. Zamoryahkin has also held various positions at Daiichi Sankyo Company Limited (TYO: 4568), Ono Pharmaceutical Co., Limited (TYO: 4528) and GlaxoSmithKline plc (LON: GSK, NYSE: GSK). Dr. Zamoryakhin has broad experience across all phases of development of drugs and medical devices, working with regulatory authorities including the EMA, FDA, PMDA, and NMPA He qualified as a doctor of medicine at Perm State Medical Academy, Russia, before earning a diploma in Pharmaceutical Medicine at PHARMED, Universite Libre de Bruxelles, and an MBA at Warwick Business School.

For the biographical information of Stephen Stamp, our Chief Executive Officer and Chief Financial Officer, see “—A. Directors and Senior Management—Directors.”

Board Diversity

The table below provides certain information regarding the diversity of our Board of Directors as of the date of this annual report.

Board Diversity Matrix

Country of Principal Executive Offices:	United Kingdom
Foreign Private Issuer	Yes
Disclosure Prohibited under Home Country Law	No
Total Number of Directors	4

	Female	Male	Non- Binary	Did Not Disclose Gender
Part I: Gender Identity
Directors	0	4	0	0
Part II: Demographic Background
Underrepresented Individual in Home Country Jurisdiction
LGBTQ+
Did Not Disclose Demographic Background

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B. Compensation

The following section reports the remuneration of our Board of Directors and senior management and describes our compensation policies and actual compensation for its executive officers as well as our use of equity incentives.

Compensation of Non-Executive Directors

Our non-executive directors receive a fee for their services as a director, which is approved by our Board of Directors, giving due consideration to the time commitment and responsibilities of their roles and of current market rates for comparable organizations and appointments. Non-executive directors are reimbursed for travelling and other incidental expenses incurred on our business in accordance with our expenses policy.

The following table summarizes the compensation paid to our non-employee directors during 2021.

Name	Fees Earned or Paid in Cash (£)(1)		All Other Compensation (£)(2)		Total £
Sijmen de Vries		30,400		-		30,400
Rolf Stahel		40,000		57,040		97,040
Simon Turton (3)		30,400		-		30,400

_____________

(1) Includes annual fees, committee chairpersonship fees and meeting fees.

(2) Includes fees paid to Mr. Stahel in connection with a consultancy agreement with Chesyl Pharma Limited, a company wholly owned by Mr. Stahel.

(3) A portion of the compensation paid to Mr. Turton for his services on the Board of Directors are paid to a consulting firm owned by Mr. Turton; however, we do not receive any consulting services from Mr. Turton’s consulting firm.

The following table sets forth, as of December 31, 2021, the aggregate number of option awards held by those individuals who served as non-executive directors during 2021:

Name	Number of Options		Grant Date	Exercise Price per Share (£)		Expiration Date
Sijmen de Vries		200   (1)	4/20/2012		83.80	4/20/2022
		500   (2)	6/30/2014		1.50	6/30/2024

___________

(1) The stock options are fully vested.

(2) The stock options vest in the following installments: (i) 50% of the stock options vest when our share price is £106.20 a share, (ii) a further 25% of the stock options vest when our share price is £274.40 a share and (iii) the remaining 25% of the stock options vest when our share price is £377.20 a share.

All stock options were granted with an exercise price at or above market value on the date of grant.

Deed of Indemnity

Under a deed poll declared by the Company on August 5, 2015, or a Deed of Indemnity, the Board of Directors and our Company Secretary are indemnified against costs and liabilities incurred in connection with their office, other than any liability owed by such person to the Company itself (or any of its associated entities) and other than indemnification for liabilities in certain circumstances, which are prohibited by virtue of the Companies Act. The Deed of Indemnity provides that a director may also be lent sums to finance any relevant defense costs, provided that, in the event such proceedings involve criminal or civil matters in which the person is convicted or has a judgment made against him or her, then such loan must be repaid.

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Letters of Appointment

Each non-executive director (other than Mr. Stahel) has been appointed to serve on our Board of Directors pursuant to a letter of appointment. The initial term of appointment for each director is three years, unless terminated earlier by either party upon one month’s prior notice or in accordance with the terms of the letters of appointment. The appointment is subject to our articles of association, and is subject to confirmation at any annual general meeting of the Company.

Each non-executive director (other than Mr. Stahel) is paid an annual fee of £30,400, which covers all duties, including committee service or service on the board of a Midatech subsidiary, with the exception of committee chairmanships and certain additional responsibilities, such as taking on the role of senior independent director. In addition, we reimburse each director for reasonable and properly documented expenses incurred in performing their duties. As noted above, we also grant each director a deed of indemnity against certain liabilities that may be incurred as a result of their service, to the extent permitted by the Companies Act.

In addition, without our prior written consent, for a period of six months following a director’s termination from service, such director will not, whether as a principal or agent and whether alone or jointly with, or as a director, manager, partner, shareholder, employee consultant of, any other person, carry on or be engaged, concerned or interested in any business which is similar to or which is (or intends to be) in competition with any business being carried on by Midatech or any subsidiary, as applicable.

Rolf Stahel Letter of Appointment

Pursuant to a term of appointment dated April 15, 2014, as amended on December 2, 2014, or the Stahel Appointment Agreement, Rolf Stahel was appointed Non-Executive Chairman of the Board of Directors, effective as of March 1, 2014. The initial term of appointment for Mr. Stahel expired on February 28, 2015 but Mr. Stahel was subsequently re-elected by the directors of Midatech with the current term expiring in April 2022 In addition, his appointment may be terminated:

• by either party giving at least three months prior written notice;

• by the Board of Directors reasonably determining that Mr. Stahel’s acceptance of any other employment, engagement, appointment, interest or involvement with any business or person competes or conflicts with his appointment and would result in a serious conflict of interest or Mr. Stahel reasonably determines such interest would result in a serious conflict of interest, and Mr. Stahel accepts such employment, engagement, appointment, interest or involvement; or

• in accordance with our articles of association or applicable law.

Pursuant to the terms of the Stahel Appointment Agreement, Mr. Stahel is paid an annual fee of £40,000 (reduced from £50,000 effective as of October 1, 2017). Mr. Stahel is also paid an additional fee of £40,000 under a consultancy agreement (reduced from £50,000 effective as of October 1, 2017). Mr. Stahel is entitled to additional payments depending upon the amount of time he devotes to the Company under the consultancy agreement. See “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Agreement with Chesyl Pharma Limited.” In addition, in connection with the execution of the Stahel Appointment Agreement, we granted to Mr. Stahel options to acquire Ordinary Shares at a price of £1.50 per share, which he subsequently exercised. Mr. Stahel, in accepting the options, agreed to certain restrictions on any disposal and voting rights of such shares. As to 6,122 of such shares held by Mr. Stahel, Mr. Stahel is prohibited from disposing of such shares unless and until the Company reaches certain milestones set forth in the Stahel Appointment Letter. Such shares that are subject to disposal restrictions are unable to be voted upon by Mr. Stahel during the periods described above in respect of the amount of such shares which remain under restriction.

We also are obligated to take out a reasonable directors and officers liability insurance policy, which applies to Mr. Stahel. We also agreed to reimburse Mr. Stahel for reasonable and documented expenses accrued in the course of performing his duties and provide him with up to £7,500 in professional advice in connection with performing his duties. The Stahel Appointment Agreement includes provisions related to the non-disclosure of information and assignment of inventions. Among other things, these provisions obligate Mr. Stahel from disclosing any of our proprietary and confidential information received during the course of employment and to assign to us any inventions conceived or developed during the course of their employment.

In the event we terminate the agreement with Mr. Stahel at any time in accordance with the provisions of the articles of association or applicable laws, Mr. Stahel will have no right to damages or compensation if he:

• is found guilty of any misconduct, gross negligence or dishonesty or acts in a manner which is materially adverse to our interests;

• commits any serious or repeated breach or non-observance of his obligations to the Company;

• becomes bankrupt, has an interim order made against him under the United Kingdom Insolvency Act 1986 or makes any composition or enters into any deed of arrangement with his creditors or the equivalent of any of these under any other jurisdictions;

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• becomes of unsound mind, becomes a patient under any statute relating to mental health or is unable, due to any accident, illness or injury, to undertake his duties for the Company for a period of more than six consecutive months;

• is convicted of a criminal offense (other than a motoring offense for which a non-custodial penalty is imposed);

• is disqualified by law or an order of a court of competent jurisdiction from holding office; or

• has failed to submit his resignation as Non-Executive Chairman and as a director of the Company when required to so pursuant to the terms of the Stahel Appointment Agreement.

In the event we terminate the agreement at any time with immediate effect (other than pursuant to the preceding paragraph), we will pay to Mr. Stahel all fees which are due to him for the following 12 months.

Mr. Stahel may resign from his positions at any time if the Company (i) is guilty of any gross negligence which affects him or any dishonesty towards or concerning him or (ii) becomes insolvent, makes any composition or enters into any deed of arrangement with its creditors or the equivalent. If Mr. Stahel resigns due to these reasons, we will pay to Mr. Stahel all fees which are due to him for the following 12 months. Further, in the event that Mr. Stahel is unable, due to an accident, illness or injury, to undertake his duties for the Company in accordance with the terms of the Stahel Appointment Agreement for a period of more than six consecutive months, he may resign at any time without any rights to damages or compensation. Mr. Stahel is also required to resign in connection with the Board of Directors determination that his acceptance of any other employment, engagement, appointment, interest or involvement with any business or person competes or conflicts with his appointment and would result in a serious conflict of interest or Mr. Stahel reasonably determines such interest would result in a serious conflict of interest, and Mr. Stahel accepts such employment, engagement, appointment, interest or involvement, without any rights to damages or compensation. If Mr. Stahel resigns for any other reason, he must provide 12 months written notice.

Compensation of Executive Officers

The following table summarizes the compensation earned by our senior management during 2021 (including for any service on any our subsidiaries), including one former executive officer.

Name	Salary (£)		Bonus (1)(£)		Option Awards (2) (£)		All Other Compensation (3)(£)		Total (£)
Stephen Stamp		186,590		35,640		95,000		11,637		328,867
Chief Executive Officer &  Chief Financial Officer (4)
Dmitry Zamoryakhin, M.D.		97,244		15,939		47,500		10,054		170,737
Chief Science Officer
Steve Damment, Ph.D.		112,310		--		--		7,286		119,596
Former Executive Vice President, Research and Development
All current and former senior management as a group (3 persons)		396,144		51,579		142,500		28,977		619,200

___________

(1) Mr. Stamp, Dr. Zamoryakhin and Dr. Damment have or had a bonus target of 33%, 30%, and 30%, respectively, of their annual base salary, which bonus is or was payable upon attainment of objectives as determined in the subjective judgment of the Board of Directors or a committee thereof, taking into account various factors without any preassigned weighting. Mr. Stamp’s and Dr. Zamoryakhin’s bonuses for fiscal 2021 were paid in March 2022. Dr. Damment was not eligible to receive a bonus due to his retirement from the Company in September 2021.

(2) The amounts reported in this column represent the aggregate grant date fair value of option awards computed in accordance with IFRS as of the grant date. The grant date fair value of the stock option awards to Mr. Stamp and Dr. Zamoryakhin was £0.2775 per share. Dr. Damment forfeited all his outstanding stock options upon his retirement from the Company in September 2021, other than options granted to him in June 2020.

(3) The amounts reflect the value of benefits payable for medical benefits (£1,137, £832 and £330 for Mr. Stamp, Dr. Damment and Dr. Zamoryakhin, respectively) and pursuant to pension plans (£10,500, £6,454 and £9,724 for Mr. Stamp, Dr. Damment and Dr. Zamoryakhin, respectively).

(4) Dr. Zamoryakhin was appointed as our Chief Scientific Officer effective July 11, 2021.

(5) Dr. Damment retired as Executive Vice President, Research and Development effective September 30, 2021.

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The following table sets forth, as of December 31, 2021, the aggregate number of option awards held by our senior management.

Name	Number of Options			Grant Date			Exercise Price per Share (£)			Expiration Date
Stephen Stamp		30,000(1	)		9/9/2019			1.05			9/9/2029
		300,000(2	)		6/17/2020			0.202			1/17/2030
		500,000(2	)		7/15/2021			0.2775			7/14/2031
Steve Damment, Ph.D. (3)		125,000(2)(3	)		6/17/2020			0.202			3/31/2023
Dmitry Zamoryakhin, M.D.		250,000(2	)		7/15/2021			0.2775			7/14/2031
All senior management as a group (3 persons)		1,205,000(4	)		(5	)		(6	)		(7	)

_________

(1) Of these options, 7,500 previously vested on September 9, 2020, and the remaining 22,500 options have subsequently vested, or will vest, in 12 equal quarterly tranches, over a subsequent three-year period.

(2) Of these options, 25% of the options vest or vested 12 months after the grant date, and the remaining options have subsequently vested, or will vest, in 12 equal quarterly tranches, over a subsequent three-year period.

(3) Dr. Damment forfeited all of his outstanding option awards upon his retirement from the Company effective September 30, 2021, other than 125,000 options granted in June 2020, the vesting of which was extended to December 31, 2022 in recognition of his service to the Company. All unexercised but vested options as of December 31, 2022 must be exercised no later than March 31, 2023 or they will be forfeited.

(4) 434,064 stock options are fully vested.

(5) The grant dates range from September 9, 2019 to July 15, 2021.

(6) The exercise price of the options range from £0.202 to £1.05.

(7) The stock options expire between March 31, 2023 and July 14, 2031.

Agreements with Senior Management

Stephen Stamp. On September 9, 2019, we entered into a service agreement, or the Service Agreement, with Mr. Stamp. The Service Agreement provides for a base salary, incentive compensation benefits, and, in certain circumstances, severance benefits. The Service Agreement may be terminated, subject to certain exceptions, upon six months’ prior notice.

The Service Agreement provides for an initial base salary of £160,000. Mr. Stamp’s base salary is subject to increase each April 1 by the percentage increase, if any, in the “All Items Index of Retail Prices” published by the United Kingdom Office for National Statistics over the previous year. The base salary of Mr. Stamp is to be reviewed annually to consider any increase in salary. In connection with his promotion to Chief Executive Officer, Mr. Stamp’s base salary was increased to £180,000 effective as of April 1, 2020.

The Service Agreements also include a bonus target for Mr. Stamp of 33% of his annual base salary, which bonus is payable upon attainment of objectives as determined in the subjective judgment of the Board of Directors or a committee thereof, taking into account various factors without any preassigned weighting. For the year ended December 31, 2022, the Remuneration Committee determined that in respect of Mr. Stamp, 60% of his bonus objectives had been achieved in 2021 In addition to base salary and bonus, the Service Agreement provides for additional benefits, such as a 10% pension contribution, life insurance, medical insurance, vacation benefits and any other additional benefits as determined by the Board of Directors from time to time.

Pursuant to the terms of the Service Agreement, Mr. Stamp has also agreed that, for a period of six months following his termination, he will not directly or indirectly compete with the Company. The Service Agreement includes provisions related to the non-disclosure of information and assignment of inventions. Among other things, these provisions prohibit Mr. Stamp from disclosing any of our proprietary and confidential information received during the course of employment and obligates him to assign to the Company any inventions conceived or developed during the course of his employment. The Service Agreement also includes customary confidentiality, non-solicitation, non-poaching and non-disparagement provisions.

The Service Agreement also provides Mr. Stamp with certain payments and/or benefits upon certain terminations of employment. If he is terminated due to his inability to perform his duties due to illness or other incapacity for a continuous period of three months, or an aggregate period exceeding 100 working days in any period of 12-months, we may, notwithstanding any other provision of the Service Agreement, terminate Mr. Stamp’s employment upon six months’ written notice. During that period, Mr. Stamp will not be entitled to receive his salary or any bonus payment, but will be entitled to any benefits owed under the Service Agreement. Further, notwithstanding any notice requirements for termination set forth in the Service Agreements, we may, at any time and in our absolute discretion, terminate the Service Agreement and provide Mr. Stamp with a payment in lieu of any required notice. The payment will comprise of his base salary, but will not include any bonus or other benefits, and shall be subject to any tax or insurance deductions. Notwithstanding the foregoing, we may terminate the Service Agreement without notice or payment in lieu thereof if Mr. Stamp:

• is guilty of serious misconduct or any other misconduct which affects, or is likely to affect, prejudicially our interests;

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• fails or neglects to efficiently and diligently discharge his duties or commits any serious or repeated breach or non-observance of any of the provisions of the Service Agreement or any share dealing code we have adopted;

• has an interim receiving order made against him, becomes bankrupt or makes any composition or enters into any deed of arrangement with his creditors;

• is charged with an arrestable criminal offense (other than a road traffic offense in the United Kingdom or elsewhere for which a fine or non-custodial penalty is imposed);

• is disqualified from holding office in any company by reason of an order of a court of competent jurisdiction;

• becomes of unsound mind or becomes a patient under any statute relating to mental health;

• is convicted of an offense under the United Kingdom’s Criminal Justice Act 1993 in relation to insider dealings or under any other present or future statutory enactment or regulations relating to insider dealings;

• is in breach of the Model Code on directors’ dealings in listed securities, including securities trading on AIM, published by the London Stock Exchange (the Model Code has subsequently been replaced by provisions under the MAR, however the employment agreements have not been updated to reflect this); or

• commits any other act warranting summary termination at common law including, but not limited to, any act justifying dismissal without notice in the terms of our generally applicable disciplinary rules.

Dmitry Zamoryakhin. We have entered into a contract of employment, or the Contract of Employment, with Dr. Zamoryakhin.  The Contract of Employment was effective as of July 12, 2021 and provides for Dr. Zamoryakhin’s base salary, incentive compensation benefits, and compensation surrounding a termination of his employment.  The Contract of Employment may be terminated by either Dr. Zamoryakhin or the Company with six months’ prior notice.

The Contract of Employment provides for an initial base salary of £205,000, which is subject to adjustment, and also includes an initial bonus target of 30% of Dr. Zamoryakhin’s annual base salary.  In addition to base salary and bonus, the Contract of Employment provides for additional benefits, such as a 6% pension contribution, medical insurance, vacation benefits and any other additional benefits as determined by the Board of Directors from time to time.

Dr. Zamoryakhin has also agreed that, for a period of six months following his termination (as reduced by any “garden leave” period), he will not compete with the Company, directly or indirectly, or solicit any customer, prospective customer or key employee.  The Contract of Employment includes provisions related to confidentiality and the non-disclosure of information and assignment of inventions.  Among other things, these provisions prohibit Dr. Zamoryakhin from disclosing any of our proprietary and confidential information received during the course of employment and require Dr. Zamoryakhin to assign to us any inventions conceived or developed during the course of his employment.  

The Contract of Employment provides that we will pay Dr. Zamoryakhin his normal salary during any notice period prior to termination.  We are also permitted to terminate Dr. Zamoryakhin’s employment effective immediately, without notice or payment, if Dr. Zamoryakhin is found guilty of any fundamental or repudiatory breach of contract or any breach of the disciplinary rules applicable to Dr. Zamoryakhin.

C. Board Practices

Board of Directors

Our Board of Directors is currently comprised of four directors, one of whom is an executive director and three of whom are non-executive directors, reflecting a blend of different experience and backgrounds. The roles of Chairman of the Board of Directors (which is a non-executive position) and Chief Executive Officer have been split and there is a clear division of responsibility between the two positions. With a view towards maintaining the independence of the Board of Directors, no remuneration is paid to either the Chairman or non-executive directors in the form of shares.

Effective as of September 28, 2018, all AIM listed companies were required to formally apply a recognized corporate governance code. We have chosen to adopt the principles of the Quoted Companies Alliance Corporate Governance Code for Small and Mid-Sized Quoted Companies, or the QCA Code. The QCA Code identifies ten principles to be followed in order for companies to deliver growth in long term shareholder value, encompassing and efficient, effective and dynamic management framework, accompanied by good communication, to promote confidence and trust.

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The Board of Directors is responsible for inter alia, approving interim and annual financial statements, formulating and monitoring our strategy, approving financial plans and reviewing performance, as well as complying with legal, regulatory and corporate governance matters. There is a schedule of matters reserved for the Board of Directors.

The Board of Directors meets regularly to consider strategy, performance and the framework of internal controls. To enable the Board of Directors to discharge its duties, all directors receive appropriate and timely information. Briefing papers are distributed to all directors in advance of board meetings.

Board Committees

We have established audit, nomination, and remuneration committees of the Board of Directors with formally delegated duties and responsibilities. From time to time, separate committees may be set up by the Board of Directors to consider specific issues when the need arises.

Audit Committee

The Audit Committee consists of three members: Simon Turton (Chairman), Sijmen de Vries and Rolf Stahel. The Board of Directors has determined that Messrs. de Vries, Turton and Stahel are independent under Rule 10A-3 of the Exchange Act and the applicable rules of NASDAQ and that Mr. Turton qualifies as an “audit committee financial expert” as defined under in Item 16A of Form 20-F.

The Audit Committee of the Board of Directors assists the Board of Directors in discharging its responsibilities with regard to financial reporting, external and internal audits and controls, including reviewing and monitoring the integrity of the Company’s annual and interim financial statements, advising on the appointment of external auditors, reviewing and monitoring the extent of the non-audit work undertaken by external auditors, overseeing our relationship with our external auditors, reviewing the effectiveness of the external audit process and reviewing the effectiveness of our internal control review function. The ultimate responsibility for reviewing and approving the annual report and accounts and the half-yearly reports remains with the Board of Directors.

In addition, the Audit Committee is responsible, within agreed terms of reference, for ensuring compliance with the AIM Rules, rules and regulations promulgated by the SEC and the rules of NASDAQ, and disclosure of information. The Audit Committee works closely with the Board of Directors to ensure that our nominated adviser is provided with any information it reasonably requests or requires in order for it to carry out its responsibilities under the AIM Rules and the AIM Rules for Nominated Advisers.

The Audit Committee meets not less than twice a year and otherwise as required.

Nomination Committee

The Nomination Committee is chaired by Rolf Stahel and is currently comprised of all other members of the Board of Directors. The Nomination Committee assists the Board of Directors in discharging its responsibilities relating to the composition and make-up of the Board of Directors and any committees of the Board of Directors. It is responsible for periodically reviewing the Board of Director’s structure and identifying potential candidates to be appointed as directors or committee members as the need may arise. The Nomination Committee is responsible for evaluating the balance of skills, knowledge and experience and the size, structure and composition of the Board of Directors and committees of the Board of Directors, retirements and appointments of additional and replacement directors and committee members and will make appropriate recommendations to the Board of Directors on such matters.

The Nomination Committee meets not less than once a year and otherwise as required.

Remuneration Committee

The Remuneration Committee consists of three members: Sijmen de Vries (Chairman), Simon Turton and Rolf Stahel. The Board of Directors has determined that Messrs. de Vries, Turton and Stahel are independent under applicable rules of NASDAQ.

The Remuneration Committee of the Board of Directors is responsible, within agreed terms of reference, for establishing a formal and transparent procedure for developing policy on executive remuneration and setting the remuneration packages of individual directors. This includes agreeing with the Board of Directors on the framework for remuneration of the executive directors, the company secretary and such other members of our executive management as it is designated to consider. It is also responsible for determining the total individual remuneration packages of each director including, where appropriate, bonuses, incentive payments and share options. No director may be involved in any decision as to his/her own remuneration. The Remuneration Committee ensures compliance with the QCA Code in relation to remuneration wherever possible.

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The Remuneration Committee meets not less than twice a year and otherwise as required.

Service Contracts

Except as described herein, we do not have service contracts with any member of our Board of Directors or our senior management.

D. Employees

The number of our employees by geographic location and function as of the end of the period for the fiscal years ended December 31, 2021, 2020 and 2019 were as follows:

	As of December 31,
	2021		2020		2019
Business functional area:
Research and development		15		13		52
General and administration		5		5		13
Total		20		18		65

	As of December 31,
	2021		2020		2019
Geography:
United Kingdom		20		18		24
Spain		--		--		41
Total		20		18		65

To our knowledge, none of our employees are represented by labor unions or covered by collective bargaining agreements. We consider our relationship with our employees to be good.

Following our strategic review in 2020, our facilities in Bilbao, Spain were closed and all employees were made redundant. The redundancy process was implemented under a process under Spanish mediation process that entailed extensive consultation with a worker’s council.

E. Share Ownership

Information with respect to share ownership of members of our Board of Directors and our senior management is included in “Item 7. Major Shareholders and Related Party Transactions—A. Major Shareholders.”

Equity Benefit Plans

Midatech Pharma PLC 2014 Enterprise Management Incentive Scheme

The Board of Directors has established the Midatech Pharma PLC 2014 Enterprise Management Incentive Scheme, or 2014 Plan, to allow us to grant options to purchase Ordinary Shares to qualifying employees and directors of the Group, or Plan Participants, for the purpose of attracting, rewarding and retaining such persons.

Administration. The overall responsibility for the operation and administration of the 2014 Plan is vested in the Board of Directors.

Eligibility. In order to be eligible to participate as a Plan Participant in the 2014 Plan, a person must be an employee or director of the Company or any of its subsidiaries whose “committed time” amounts to at least 25 hours a week or, if less, 75% of his or her “working time,” as each of those terms are defined under the Her Majesty’s Revenue and Customs rules set out in Schedule 5 to the Income Tax (Earnings and Pensions) Act 2003 of the United Kingdom, or Schedule 5. The Board of Directors may exercise its discretion in selecting the Plan Participants to whom stock options will be granted under the 2014 EMI Scheme.

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Grant of Options. Options may be granted from time to time by the Board of Directors, other than when grants are not permitted under the applicable law or there are other restrictions with regards to the Ordinary Shares. No payment will be made for the grant of a stock option.

Form of Options. Stock options granted under the 2014 Plan may be granted either with an exercise price greater than or equal to the market value of Ordinary Share at the date of grant, but not in any event at a price less than the nominal value of such share. The stock options may be stock options to subscribe for new Ordinary Shares.

The participant will have no stockholder rights until such time as he is able to exercise the stock option and acquire Ordinary Shares.

Size of Option Grants and Plan Limits. Stock options shall be granted under, and comply with, Schedule 5. This confers tax benefits on stock options up to a certain threshold. That threshold is currently such that when an employee has received and holds stock options with a value at grant of £250,000 or more, he or she may not have any further granted options for three years. In the event that this threshold is exceeded or the Company ceases to satisfy the qualifying conditions, unapproved options may instead be granted under the terms of the 2014 Plan. The total value of shares subject to unexercised options at any time may not exceed £3.0 million. All options must be exercised within 10 years from the grant date as set out in the rules of the 2014 Plan, or as set forth in the applicable option agreement.

The Board of Directors may from time to time specify the maximum number of Ordinary Shares in respect of which options may be granted.

Vesting of Options. In the normal course, stock options will become eligible for vesting subject to the satisfaction of time and financial performance targets.

If a Plan Participant leaves the employment of the Company or its subsidiaries for any reason, his or her stock option will generally lapse unless the Board of Directors exercises its discretion to allow the exercise of the stock option.

Performance Targets. All stock options granted under the 2014 Plan will be subject to appropriate performance targets determined by the Board of Directors, which may include share price targets, with stock options vesting in part on the attainment of each performance target.

Rights Attaching to Ordinary Shares. Ordinary Shares issued in connection with the exercise of stock options will rank equally with all other Ordinary Shares then in issue (save as regards any rights attaching to Ordinary Shares by reference to a record date prior to entry of the shares on the register of stockholders). Application will be made for admission to trading on AIM of new Ordinary Shares issued under the 2014 Plan.

Adjustments. If there is any adjustment of our issued share capital, the Ordinary Shares subject to a stock option will be subject to appropriate adjustment. The Board of Directors may adjust stock options in such manner as it determines to be appropriate.

Midatech Pharma PLC Employee Share Incentive Plan

In 2017, we set up the Midatech Pharma Share Incentive Plan, or the MPSIP. Under the MPSIP, our employees and directors can acquire our Ordinary Shares via a salary sacrifice arrangement. We grant matching shares for every share bought under the MPSIP. In order to retain these shares, scheme participants must remain employed by the Group for three years from the date of acquisition. All shares purchased by the MPSIP are held by an Employee Benefit Trust that is not under our control. Shares must be left in the plan for five years to qualify for full income tax relief.

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ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS.

A. Major Shareholders

The following table sets forth information, to our knowledge, as of March 31, 2022, regarding the beneficial ownership of Ordinary Shares, including:

• each person that is known by us to be a beneficial owner of 3% or more of Ordinary Shares (based on information in our share register and information provided by such persons);

• each member of our Board of Directors;

• each member of our senior management; and

• all members of our Board of Directors and our senior management, taken as a group.

Beneficial ownership of shares is determined under rules of the SEC and generally includes any shares over which a person exercises sole or shared voting or investment power. Except as noted by footnote, and subject to community property laws where applicable, we believe, based upon the information provided to us, that the persons and entities named in the table below have sole voting and investment power with respect to all Ordinary Shares shown as beneficially owned by them. The percentage of beneficial ownership is based upon 98,468,413 Ordinary Shares outstanding as of March 31, 2022. Ordinary Shares subject to options or warrants currently exercisable or exercisable within 60 days of March 31, 2022 are deemed to be outstanding and beneficially owned by the person holding the options for the purposes of computing the percentage of beneficial ownership of that person and any group of which that person is a member, but are not deemed outstanding for the purpose of computing the percentage of beneficial ownership for any other person. Unless otherwise indicated, the address for each holder listed below is Midatech Pharma PLC, 1 Caspian Point, Caspian Way, Cardiff, CF10 4DQ, United Kingdom. All holders of Ordinary Shares, including those shareholders listed below, have the same voting rights with respect to such shares.

Name of Beneficial Owner	Amount and Nature Of Ownership	Percent of Class
Major Stockholders:
Entities affiliated with Dr. Lam Kong (1)	10,389,610	10.6%
Armistice Capital LLC (2)	4,913,573**	4.9%
Directors and Senior Management:
Sijmen de Vries, M.D. (3)	26,441	*
Rolf Stahel	53,853	*
Stephen Stamp (4)	200,000	*
Simon Turton, Ph.D.	55,325	*
Dmitry Zamoryakhin, M.D.	--	--
Directors and senior management as a group (5 persons) (5)	335,619	*

 __________________

* Less than one percent of the outstanding Ordinary Shares.

** Subject to 4.99% blocker. See Footnote (2) below.

(1) Information in the table and this footnote is based upon information contained in a Schedule 13D filed with the SEC on April 4, 2019 by A&B (HK) Company Limited, A&B Brother Limited, China Medical System Holdings Limited, CMS Medical Venture Investment (HK) Limited, and Dr. Lam Kong. Includes (i) for A&B (HK) Company Limited, 5,194,805 Ordinary Shares held of record, and (ii) for CMS Medical Venture Investment (HK) Limited, 5,194,805 Ordinary Shares held of record. A&B (HK) Company Limited is a wholly owned subsidiary of A&B Brother Limited, which is wholly owned by Dr. Lam Kong. CMS Medical Venture Investment (HK) Limited is a wholly owned subsidiary of China Medical System Holdings Limited, of which Dr. Lam Kong is the President, Chief Executive Officer and Chairman of the Board and maintains a 46.04% indirect ownership interest. Each of A&B (HK) Company Limited and A&B Brother Limited is deemed to be the beneficial owner with shared dispositive and voting power with respect to 5,194,805 Ordinary Shares. Each of China Medical System Holdings Limited and CMS Medical Venture Investment (HK) Limited is deemed to be the beneficial owner with shared dispositive and voting power with respect to 5,194,805 Ordinary Shares. Dr. Lam Kong is deemed to be the beneficial owner with shared dispositive and voting power with respect to 10,389,610 Ordinary Shares. The principal business address of China Medical System Holdings Limited and CMS Medical Venture Investment (HK) Limited is Unit 2106, 21/F, Island Place Tower, 510 King’s Road, North Point, Hong Kong, China. The principal place of business for A&B (HK) Company Limited is Unit A, 11/F, Chung Pont Commercial Building, 300 Hennessy Road, Wanchai, Hong Kong, China. The principal business address for A&B Brother Limited is Trident Chambers, P.O. Box 146, Road Town, Tortola, British Virgin Island. The principal business address of Dr. Lam Kong is Unit 2106, 21/F, Island Place Tower, 510 King’s Road, North Point, Hong Kong, China.

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(2) Information in the table and this footnote is based upon information contained in a Schedule 13G/A filed with the SEC on February 14, 2020 by Armistice Capital, LLC (though amounts included in such Schedule 13G/A have been adjusted in this annual report to give effect to the reverse stock split and Depositary Share ratio change), information provided to us by the direct stockholder, Armistice Capital Master Fund Ltd., or Armistice, and our information and belief. The amounts and percentages in the table give effect to the 4.99% beneficial ownership limitation set forth in warrants held by Armistice. Armistice Capital, LLC, the investment manager of Armistice, and Steven Boyd, the managing member of Armistice Capital, LLC, hold shared voting and dispositive power over the shares held by Armistice. The principal business address of Armistice is c/o Armistice Capital, LLC, 510 Madison Avenue, 7th Floor, New York, New York, 10022.

(3) Shares owned by Dr. de Vries include 200 Ordinary Shares subject to outstanding stock options which are exercisable at March 31, 2022 or will become exercisable within 60 days after such date. Includes 2,957 Ordinary Shares held by Promida Holdings, in which Dr. de Vries has a minority interest.

(4) Shares owned by Mr. Stamp include 150,000 Ordinary Shares subject to outstanding stock options which are exercisable at March 31, 2022 or will become exercisable within 60 days after such date.

(5) Shares owed by all directors and senior management as a group include 150,200 Ordinary Shares subject to outstanding stock options, which are exercisable at March 31, 2022 or will become exercisable within 60 days after such date.

As of March 31, 2022, 46% of our outstanding Ordinary Shares was held by registered shareholders with addresses in the United Kingdom, and we had 323 individual holders of record. The Bank of New York Mellon is the holder of record for our Depositary Share program, pursuant to which each Depositary Share represents five Ordinary Shares. As of March 31, 2022, The Bank of New York Mellon, as depositary for the Depositary Shares, held 41,594,935 Ordinary Shares, representing 42% of the issued share capital held at that date. As of March 31, 2022, we had 26 holders of record with an address in the United States, and such holders held less than one percent of our outstanding Ordinary Shares. The number of holders of record or registered holders in the United States or United Kingdom is not representative of the number of beneficial holders or of the residence of beneficial holders.

Based on our share register, and the limitations set forth in the Relationship Agreement with the CMS Parties or their affiliates, we believe that we are not directly or indirectly controlled by another corporation or government, or by any other natural or legal persons. There are no arrangement that may result in a change of control. Our major shareholders do not have different voting rights than other holders of our Ordinary Shares.

To our knowledge, other than due to the expiration of unexercised warrants held by our shareholders or as otherwise disclosed elsewhere in this annual report, there has been no significant change in the percentage ownership of our Ordinary Shares held by the principal shareholders listed above in the last three years.

B. Related Party Transactions

Agreement with Chesyl Pharma Limited

In April 2014, Midatech Limited entered into a consultancy agreement, or the Consultancy Agreement, with Chesyl Pharma Limited, or Chesyl. Chesyl is wholly owned by Mr. Rolf Stahel, our Non-Executive Chairman of the Board of Directors. The term of the Consultancy Agreement commenced on March 1, 2014, with an initial term of 12 months and continuing thereafter until terminated in accordance with its terms. Chesyl was engaged to provide management consultancy services, including support and assistance to the board of directors of Midatech Limited in relation to operational issues and the provision of advice in relation to corporate strategy, corporate activities, fund raising and mergers and acquisition opportunities, collectively the Services.

Pursuant to the terms of the Consultancy Agreement, Mr. Stahel (or a similarly qualified substitute party, approved by the Midatech Limited) is obliged to procure the services at such times and at such locations as may be reasonably necessary for 10 full working days per year. Mr. Stahel may not sub-contract these obligations. Midatech Limited will pay Chesyl £40,000 per annum for Mr. Stahel’s services (reduced from £50,000 effective as of October 1, 2017), and if engaged for any additional days, a rate of £2,000 will be paid per full working day.

Agreements with the CMS Parties

CMS License Agreement

For information regarding the CMS License Agreement, see “Item 4. Information on the Group—B. Business Overview—Commercial Agreements, Strategic Partnerships and Collaborations—CMS License Agreement.”

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Relationship Agreement

On January 29, 2019, the Company, Panmure Gordon (UK) Limited (our nominated advisor), the CMS Stockholders and certain affiliates of the CMS Stockholders, entered a Relationship Agreement, or the Relationship Agreement, in order to regulate our relationships with the CMS and its affiliated entities, collectively the CMS Parties, and to limit their influence over our corporate actions and activities and the outcome of general matters pertaining to the Group. The Relationship Agreement was effective from February 26, 2019. The Relationship Agreement was subsequently amended on May 12, 2020.

Pursuant to the terms of the Relationship Agreement, the CMS Parties have agreed to (amongst other things):

• conduct all transactions with us on an arm’s length terms and on a normal commercial basis, including in accordance with the related party rules set out in the AIM Rules and any other applicable laws, regulations and stock exchange rules, and only with the prior approval of a majority of independent directors;

• exercise their voting rights or other rights and powers so as to ensure that each member of their respective Groups is capable of carrying on its business and making decisions independently of each of the CMS Parties (and any of their group companies and associates);

• abstain from voting in respect of any resolution concerning any contract, arrangement or transaction with a related party of each of the CMS Parties (or any of their associates); and

• vote, at a general meeting or when an election is required, their shares in the same manner and proportion as all other Ordinary Shares are voted by shareholders other than the CMS Parties.

We further agreed to conduct all transactions, agreements and relationships (whether contractual or otherwise) with the CMS Parties (and any of their group companies and associates) on arm’s length terms and on a normal commercial basis and in accordance with the related party rules set out in the AIM Rules.

The Relationship Agreement provides that any respective dispute between the Company and the CMS Parties and/or any of their respective associates relating to any existing or proposed transaction, arrangement or agreement between each of CMS Parties (or any of their associates) and the Company shall be resolved by a decision of the majority of independent directors.

The obligations of the parties under the Relationship Agreement shall automatically terminate upon:

• the CMS Parties (or any of their associates) ceasing to beneficially hold 10%, in aggregate, of our issued Ordinary Shares; or

• the Ordinary Shares ceasing to be admitted to AIM.

Deed of Indemnity

We have entered into a Deed of Indemnity for the benefit of our Board of Directors and Company Secretary. For more information, see “Item 6. Directors, Senior Management and Employees—B. Compensation—Deed of Indemnity.”

Agreements with Directors and Senior Management

We have previously entered into certain agreements with directors and our senior management related to their service on our Board of Directors or employment with the Company. For more information, see “Item 6. Directors, Senior Management and Employees.”

C. Interests of Experts and Counsel

Not Applicable

ITEM 8. FINANCIAL INFORMATION.

A. Consolidated Statements and Other Financial Information

See “Item 18. Financial Statements.”

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Legal Proceedings

For more information, see “Information on the Group—B. Business Overview—Legal Proceedings”.

Dividend Policy

We have never declared or paid any cash dividends on our shares, and have no present intention of declaring or paying any dividends in the foreseeable future. We may, by ordinary resolution, declare a dividend to be paid to the share owners according to their respective rights and interests in profits, and may fix the time for payment of such dividend. No dividend may be declared in excess of the amount recommended by the directors. The directors may from time to time declare and pay to our share owners such interim dividends as appear to the directors to be justified by our profits available for distribution. There are no fixed dates on which entitlement to dividends arises on our Ordinary Shares.

The share owners may pass, on the recommendation of the directors, an ordinary resolution to direct that all or any part of a dividend to be paid by distributing specific assets, in particular paid up shares or debentures of any other body corporate. The articles also permit, with the prior authority of an ordinary resolution of shareholders, a scrip dividend scheme under which share owners may be given the opportunity to elect to receive fully paid Ordinary Shares instead of cash, or a combination of shares and cash, with respect to future dividends.

By the way of the exercise of a lien, if a share owner owes any money to the Company relating in any way to shares, the Board of Directors may deduct any of this money from any dividend on any shares held by the share owner, or from other money payable by the Company in respect of the shares. Money deducted in this way may be used to pay the amount owed to the Company.

Unclaimed dividends and other money payable in respect of a share can be invested or otherwise used by directors for the benefit of the Company until they are claimed. A dividend or other money remaining unclaimed 12 years after it first became due for payment will be forfeited and shall revert to the Company.

All of the shares represented by the Depositary Shares have the same dividend rights as all of our other outstanding shares.

B. Significant Changes

Other than the information set forth in this annual report, there have been no significant changes since December 31, 2021.

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ITEM 9. THE OFFER AND LISTING.

A. Offer and Listing Details.

Our Ordinary Shares are listed on AIM under the symbol “MTPH” and the Depositary Shares are listed on the NASDAQ Capital Market under the symbol “MTP.”

B. Plan of Distribution

Not applicable.

C. Markets

Our Ordinary Shares are listed on AIM under the symbol “MTPH” and the Depositary Shares are listed on the NASDAQ Capital Market under the symbol “MTP.”

D. Seller Shareholders

Not applicable.

E. Dilution

Not applicable.

F. Expenses of the Issue

Not applicable.

ITEM 10. ADDITIONAL INFORMATION.

A. Share Capital

Not applicable.

B. Memorandum and Articles of Association

We incorporate by reference into this annual report the description of our articles of association contained in Exhibit 2.1 to this annual report.

C. Material Contracts

Except as otherwise disclosed in this annual report, we are not currently, and have not been in the last two years, party to any material contract, other than contracts entered into in the ordinary course of business.

D. Exchange Controls

Other than certain economic sanctions which may in place from time to time, there are currently no United Kingdom laws, decrees or regulations restricting the import or export of capital or affecting the remittance of dividends or other payment to holders of Ordinary Shares who are non-residents of the United Kingdom. Similarly, other than certain economic sanctions which may be in force from time to time, there are no limitations relating only to non-residents of the United Kingdom under English law or our articles of association on the right to be a holder of, and to vote in respect of, the Ordinary Shares.

E. Taxation

Certain United Kingdom Taxation Considerations

The following is a general summary of certain United Kingdom tax considerations relating to the ownership and disposal of our Ordinary Shares or Depositary Shares and does not address all possible tax consequences relating to an investment in our Ordinary Shares or Depositary Shares. It is based on United Kingdom tax law and generally published Her Majesty’s Revenue & Customs, or HMRC, practice as of the date of this Annual Report, both of which are subject to change, possibly with retrospective effect. A United Kingdom tax year runs from April 6th in any year to April 5th in the following year.

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Save as provided otherwise, this summary applies only to a person who is the absolute beneficial owner of our Ordinary Shares or Depositary Shares and who is resident (and, in the case of an individual, domiciled) in the United Kingdom for tax purposes and who is not resident for tax purposes in any other jurisdiction and does not have a permanent establishment or fixed base in any other jurisdiction with which the holding of our Ordinary Shares or Depositary Shares is connected, or a U.K. Holder. A person who is not a U.K. Holder, including a person (a) who is not resident (or, if resident, is not domiciled) in the United Kingdom for tax purposes, including an individual and company who trades in the United Kingdom through a branch, agency or permanent establishment in the United Kingdom to which an Ordinary Share or Depositary Share is attributable, or (b) who is resident or otherwise subject to tax in a jurisdiction outside the United Kingdom, is recommended to seek the advice of professional advisors in relation to their taxation obligations.

This summary is for general information only and is not intended to be, nor should it be considered to be, legal or tax advice to any particular investor. It does not address all of the tax considerations that may be relevant to specific investors in light of their particular circumstances or to investors subject to special treatment under United Kingdom tax law. In particular this summary:

• only applies to an absolute beneficial owner of Ordinary Shares or Depositary Shares and any dividend paid in respect of that Ordinary Share where the dividend is regarded for United Kingdom tax purposes as that person’s own income (and not the income of some other person); and

• (a) only addresses the principal United Kingdom tax consequences for an investor who holds Ordinary Shares or Depositary Shares as a capital asset, (b) does not address the tax consequences that may be relevant to certain special classes of investor such as a dealer, broker or trader in shares or securities and any other person who holds Ordinary Shares or Depositary Shares otherwise than as an investment, (c) does not address the tax consequences for a holder that is a financial institution, insurance company, collective investment scheme, pension scheme, charity or tax-exempt organization, (d) assumes that a holder is not an officer or employee of the company (nor of any related company) and has not (and is not deemed to have) acquired the Ordinary Shares or Depositary Shares by virtue of an office or employment, and (e) assumes that a holder does not control or hold (and is not deemed to control or hold), either alone or together with one or more associated or connected persons, directly or indirectly (including through the holding of Depositary Shares), an interest of 10% or more in the issued share capital (or in any class thereof), voting power, rights to profits or capital of the company, and is not otherwise connected with the company.

This summary further assumes that a holder of Depositary Shares is the beneficial owner of the underlying Ordinary Shares for United Kingdom direct tax purposes.

POTENTIAL INVESTORS IN THE DEPOSITARY SHARES SHOULD SATISFY THEMSELVES PRIOR TO INVESTING AS TO THE OVERALL TAX CONSEQUENCES, INCLUDING, SPECIFICALLY, THE CONSEQUENCES UNDER UNITED KINGDOM TAX LAW AND HMRC PRACTICE OF THE ACQUISITION, OWNERSHIP AND DISPOSAL OF THE ORDINARY SHARES OR DEPOSITARY SHARES, IN THEIR OWN PARTICULAR CIRCUMSTANCES BY CONSULTING THEIR OWN TAX ADVISERS.

Taxation of Dividends

Withholding Tax.      A dividend payment in respect of an Ordinary Share may be made without withholding or deduction for or on account of United Kingdom tax.

Income Tax. An individual holder of Ordinary Shares or Depositary Shares who is not a U.K. Holder will not be chargeable to United Kingdom income tax on a dividend paid by the Company, unless such holder carries on (whether solely or in partnership) a trade, profession or vocation in the United Kingdom through a branch or agency in the United Kingdom to which the Ordinary Shares or Depositary Shares are attributable. In these circumstances, such holder may, depending on his or her individual circumstances, be chargeable to United Kingdom income tax on a dividend received from the Company.

A dividend received by individual U.K. Holders will be subject to United Kingdom income tax. The rate of United Kingdom income tax that is chargeable on dividends received in the tax year 2022/2023 by an individual U.K. Holder who is (i) an additional rate taxpayer is 39.35%, (ii) a higher rate taxpayer is 33.75%, and (iii) a basic rate taxpayer is 8.75%. An individual U.K. Holder may be entitled to a tax-free dividend allowance (in addition to their personal allowance) of £2,000 for the tax year 2022/2023. This means that the relevant individual does not need to pay United Kingdom income tax on their first £2,000 of dividend income received. Dividends within the dividend allowance will still count towards the relevant individual's basic, higher or additional rate bands however. An individual’s dividend income is treated as the top slice of their total income that is chargeable to United Kingdom income tax. Dividends which are covered by an individual’s personal income tax allowance do not count towards and are ignored for the dividend allowance.

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Corporation Tax. A U.K. Holder within the charge to United Kingdom corporation tax may be entitled to exemption from United Kingdom corporation tax in respect of dividend payments in respect of an Ordinary Share. If the conditions for the exemption are not satisfied or such U.K. Holder elects for an otherwise exempt dividend to be taxable, United Kingdom corporation tax will be chargeable on the dividend. The rate of United Kingdom corporation tax is currently 19%. If potential investors are in any doubt as to their position, they should consult their own professional advisers.

A corporate holder of Ordinary Shares or Depositary Shares that is not a U.K. Holder will not be subject to United Kingdom corporation tax on a dividend received from the company, unless it carries on a trade in the United Kingdom through a permanent establishment to which the Ordinary Shares or Depositary Shares are attributable. In these circumstances, such holder may, depending on its individual circumstances and if the exemption from United Kingdom corporation tax discussed above does not apply, be chargeable to United Kingdom corporation tax on dividends received from the Company.

Taxation of Disposals

U.K. Holders. A disposal or deemed disposal of Ordinary Shares or Depositary Shares by an individual U.K. Holder may, depending on his or her individual circumstances, give rise to a chargeable gain or to an allowable loss for the purpose of United Kingdom capital gains tax. The principal factors that will determine the capital gains tax position on a disposal of Ordinary Shares or Depositary Shares are the extent to which the holder realizes any other capital gains in the tax year in which the disposal is made, the extent to which the holder has incurred capital losses in that or any earlier tax year and the level at which the annual exempt amount for United Kingdom capital gains tax (the “annual exempt amount”) is set by the United Kingdom government for that tax year. The annual exempt amount for the 2022/2023 tax year is £12,570. If, after all allowable deductions, an individual U.K. Holder’s total taxable income for the relevant tax year exceeds the basic rate income tax limit, a taxable capital gain accruing on a disposal of an Ordinary Share or a Depositary Shares is taxed at the rate of 20%. In other cases, a taxable capital gain accruing on a disposal of our Ordinary Shares or Depositary Shares may be taxed at the rate of 10% or the rate of 20% or at a combination of both rates.

An individual U.K. Holder who ceases to be resident in the United Kingdom (or who fails to be regarded as resident in a territory outside the United Kingdom for the purposes of double taxation relief) for a period of less than five calendar years and who disposes of Ordinary Shares or Depositary Shares during that period of temporary non-United Kingdom residence may be liable to United Kingdom capital gains tax on a chargeable gain accruing on such disposal on his or her return to the United Kingdom (or upon ceasing to be regarded as resident outside the United Kingdom for the purposes of double taxation relief) (subject to available exemptions or reliefs).

A disposal (or deemed disposal) of Ordinary Shares or Depositary Shares by a corporate U.K. Holder may give rise to a chargeable gain or an allowable loss for such holder for the purpose of United Kingdom corporation tax. Such a holder should be entitled to an indexation allowance, which applies to reduce a capital gain to the extent that such a gain arises due to inflation. The allowance may reduce a chargeable gain but will not create or increase an allowable loss. The indexation allowance was frozen effective as of December 31, 2017, such that for disposals on or after January 1, 2018, the indexation allowance figure only covers the movement in the “retail price index” to December 31, 2017.

Any gain or loss in respect of currency fluctuations over the period of holding Ordinary Shares or Depositary Shares is also brought into account on a disposal.

Non-U.K. Holders. An individual holder who is not a U.K. Holder will not be liable to United Kingdom capital gains tax on capital gains realized on the disposal of Ordinary Shares or Depositary Shares unless such holder carries on (whether solely or in partnership) a trade, profession or vocation in the U.K. through a branch or agency in the United Kingdom to which the Ordinary Shares or Depositary Shares are attributable. In these circumstances, such holder may, depending on his or her individual circumstances, be chargeable to United Kingdom capital gains tax on chargeable gains arising from a disposal of his or her Ordinary Shares or Depositary Shares.

A corporate holder of Ordinary Shares or Depositary Shares that is not a U.K. Holder will not be liable for United Kingdom corporation tax on chargeable gains realized on the disposal of Ordinary Shares or Depositary Shares unless it carries on a trade in the United Kingdom through a permanent establishment to which the Ordinary Shares or Depositary Shares are attributable. In these circumstances, a disposal (or deemed disposal) of Ordinary Shares or Depositary Shares by such holder may give rise to a chargeable gain or an allowable loss for the purposes of United Kingdom corporation tax.

Inheritance Tax

If for the purposes of the Double Taxation Relief (Taxes on Estates of Deceased Persons and on Gifts) Treaty United States of America Order 1979 (SI 1979/1454) between the United States and the United Kingdom an individual holder is at the time of their death or a transfer made during their lifetime, domiciled in the United States and is not a national of the United Kingdom, any Ordinary Shares or Depositary Shares beneficially owned by that holder should not generally be subject to United Kingdom inheritance tax, provided that any applicable United States federal gift or estate tax liability is paid, except where (i) the Ordinary Shares or Depositary Shares are part of the business property of a United Kingdom permanent establishment or pertains to a United Kingdom fixed base used for the performance of independent personal services; or (ii) the Ordinary Shares or Depositary Shares are comprised in a settlement unless, at the time the settlement was made, the settlor was domiciled in the United States and not a national of the United Kingdom (in which case no charge to United Kingdom inheritance tax should apply).

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Stamp Duty and Stamp Duty Reserve Tax

The United Kingdom stamp duty, or stamp duty, and United Kingdom stamp duty reserve tax, or SDRT, treatment of the issue and transfer of, and the agreement to transfer, an ordinary share outside a depositary receipt system or a clearance service is discussed in the paragraphs under “General” below. The stamp duty and SDRT treatment of such transactions in relation to such systems is discussed in the paragraphs under “Depositary Receipt Systems and Clearance Services” below.

General

An agreement to transfer an ordinary share would normally give rise to a charge to SDRT at the rate of 0.5% of the amount or value of the consideration payable for the transfer. SDRT is, in general, payable by the purchaser. However, since April 28, 2014, no SDRT or stamp duty is chargeable in respect of shares that are admitted to trading on a ‘recognized growth market’ and not listed on any ‘recognized stock exchange’, or the AIM Exemption. As our Ordinary Shares are admitted to trading on AIM (which qualifies as a ‘recognized growth market’) and not listed on any market that would qualify as a ‘recognized stock exchange,’ a transfer of an ordinary share is presently exempt from the charge to SDRT.

Subject to the above noted AIM Exemption, a transfer of an Ordinary Share would be subject to stamp duty at the rate of 0.5% of the consideration given for the transfer (rounded up to the next £5). The purchaser is liable to HMRC for the payment of the stamp duty (if any). Under current HMRC guidance, no stamp duty should be payable on a written instrument transferring a Depositary Share or on a written agreement to transfer a Depositary Share, on the basis that the Depositary Share is not regarded as either “stock” or a “marketable security” for United Kingdom stamp duty purposes.

If a duly stamped transfer completing an agreement to transfer is produced within six years of the date on which the agreement is made (or, if the agreement is conditional, the date on which the agreement becomes unconditional) any SDRT already paid is generally repayable, normally with interest, and any SDRT charge yet to be paid is canceled to avoid a double charge as the stamp duty has been paid.

Depositary Receipt Systems and Clearance Services

The Court of Justice of the European Union in C-569/07 HSBC Holdings Plc, Vidacos Nominees Limited v The Commissioners of Her Majesty’s Revenue & Customs and the First-tier Tax Tribunal decision in HSBC Holdings Plc and the Bank of New York Mellon Corporation v The Commissioners of Her Majesty’s Revenue & Customs, have considered the provisions of the European Union Council Directive 69/335/EEC, which was subsequently substituted by the European Union Council Directive 2008/7/EEC, or the E.U. Directives. Following these decisions HMRC has publicly confirmed that issues or transfers of shares of United Kingdom incorporated companies, such as us, to a clearance service (such as, in our understanding, DTC) or a depositary receipt system will not be charged to United Kingdom SDRT at 1.5% where that issue or transfer is an integral part of a raising of new capital.

It was announced as part of the United Kingdom Budget 2017 by the United Kingdom government that the 1.5% stamp duty and SDRT charge will not be enforced on the issue of shares by United Kingdom incorporated companies (and transfers of such shares where the transfer is integral to new capital raising) into clearance services and depositary receipt systems following Brexit. However, the United Kingdom government could potentially introduce new United Kingdom legislation with the effect that a future issue or transfer of our Ordinary Shares into a clearance service or depositary receipt system (even where such an issue or transfer is an integral part of the raising of new capital by the company) may potentially become chargeable to 1.5% stamp duty or SDRT. However, as long as our Ordinary Shares continue to be admitted to trading on AIM and not to be listed on any market that would qualify as a ‘recognized stock exchange,’ it is our understanding that the AIM Exemption should continue to exempt future issues and transfers of our Ordinary Shares into clearance services or depositary receipt systems from any 1.5% stamp duty and SDRT charge.

Subject to the AIM exemption, where an ordinary share is transferred (i) to, or to a nominee for, a person whose business is or includes the provision of clearance services or (ii) to, or to a nominee for a person whose business is or includes issuing depositary receipts and that transfer is not integral to the raising of new capital by the company, stamp duty or SDRT would generally be chargeable at the rate of 1.5% of the amount or value of the consideration given or, in certain circumstances, the value of the shares.

There is an exception from the 1.5% charge on the transfer to, or to a nominee , a clearance service where the clearance service has made and maintained an election under section 97A(1) of the Finance Act 1986, which has been approved by HMRC. If such an election were made by a clearance service, subject to the AIM exemption, SDRT at the rate of 0.5% of the amount or value of the consideration payable for the transfer would arise on any transfer of an ordinary share into such a clearance service and on subsequent agreements to transfer such share within such clearance service. It is our understanding that DTC has not to date made an election under section 97A(1) of the Finance Act of 1986.

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Any liability for stamp duty or SDRT in respect of a transfer into a clearance service or depositary receipt system, or in respect of a transfer within such a service, which does arise, will strictly be accountable to HMRC by the clearance service or depositary receipt system operator or their nominee, as the case may be, but will, in practice, be payable by the participants in the clearance service or depositary receipt system.

Certain United States Taxation Considerations

The following is a summary of material United States federal income tax consequences of the ownership and disposition of Depositary Shares by United States holders (as defined below). This summary is for general information only and is not tax advice. Each investor should consult its tax advisor with respect to the tax consequences of the ownership and disposition of our securities, including the impact of the recently enacted Tax Cut Act.

This summary is based on provisions of the Internal Revenue Code of 1986, as amended, or the Code, United States Treasury regulations promulgated thereunder (whether final, temporary, or proposed), administrative rulings, and judicial interpretations thereof, and the Convention Between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the United States of America for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and on Capital Gains of 2001, as amended, or the United States-U.K. Treaty, all as in effect on the date hereof, and all of which are subject to change, possibly with retroactive effect.

For purposes of this discussion, the term “United States holder” means a holder of our Ordinary Shares or Depositary Shares that is, for United States federal income tax purposes:

• an individual who is a citizen or resident of the United States;

• a corporation or other entity taxable as a corporation that is created or organized in the United States or under the laws of the United States or any state thereof or the District of Columbia;

• an estate the income of which is subject to United States federal income taxation regardless of its source; or

• any trust if (a) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control all substantial decisions of the trust, or (b) such trust has a valid election in effect under applicable United States Treasury regulations to be treated as a United States person.

This summary addresses only the United States federal income tax considerations for United States holders that acquire and hold the Depositary Shares as capital assets within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion does not address all aspects of United States federal income taxation that may be relevant to a holder in light of its particular circumstances, or that may apply to holders that are subject to special treatment under the United States federal income tax laws (including, for example, banks, financial institutions, underwriters, insurance companies, dealers in securities or foreign currencies, traders in securities who elect the mark-to-market method of accounting for their securities, persons subject to the alternative minimum tax, persons that have a functional currency other than the United States dollar, tax-exempt organizations (including private foundations), mutual funds, subchapter S corporations, partnerships or other pass-through entities for United States federal income tax purposes, certain expatriates, corporations that accumulate earnings to avoid United States federal income tax, persons who hold Depositary Shares as part of a hedge, straddle, constructive sale, conversion or other integrated transaction, persons who acquire Depositary Shares through the exercise of options or other compensation arrangements, persons who own (or are treated as owning) 10% or more of our outstanding voting stock, or persons who are not United States holders). In addition, this discussion does not address any aspect of state, local, foreign, estate, gift or other tax law that may apply to holders of Depositary Shares.

The United States federal income tax treatment of a partner in a partnership (including any entity or arrangement treated as a partnership for United States federal income tax purposes) generally will depend on the status of the partner and the activities of the partnership. A partner in such a partnership should consult its tax advisor regarding the associated tax consequences.

Consequences Relating to Ownership and Disposition of Depositary Shares

Ownership of Depositary Shares. For United States federal income tax purposes, a holder of Depositary Shares will generally be treated as if such holder directly owned the ordinary shares represented by such Depositary Shares.

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Distributions on Depositary Shares. Subject to the discussion below under “—Passive Foreign Investment Company Rules,” the gross amount of any distribution on Depositary Shares (including withheld taxes, if any) made out of our current or accumulated earnings and profits (as determined for United States federal income tax purposes) will generally be taxable to a United States holder as dividend income on the date such distribution is actually or constructively received. Any such dividends paid to corporate United States holders generally will not qualify for the dividends received deduction that may otherwise be allowed under the Code. Distributions in excess of our current and accumulated earnings and profits would generally be treated first as a non-taxable return of capital to the extent of the United States holder’s basis in the Depositary Shares, and thereafter as capital gain. However, since we do not calculate our earnings and profits under United States federal income tax principles, it is expected that any distribution on Depositary Shares will be reported as a dividend even if that distribution would otherwise be treated as a non-taxable return of capital or as capital gain under the rules described above.

Dividends paid in currencies other than the United States dollar, if any, will generally be taxable to a United States holder as ordinary dividend income in an amount equal to the United States dollar value of the currency received on the date such distribution is actually or constructively received. Such United States dollar value must be determined using the spot rate of exchange on such date, regardless of whether the non-United States currency is actually converted into United States dollars on such date. The United States holder may realize exchange gain or loss if the currency received is converted into United States dollars after the date on which it is actually or constructively received. In general, any such gain or loss will be ordinary and will be treated as from sources within the United States for United States foreign tax credit purposes.

Subject to the discussion below under “—3.8% Medicare Tax on Net Investment Income,” dividends received by certain non-corporate United States holders (including individuals) from a “qualified foreign corporation” may be eligible for reduced rates of taxation, currently at a maximum rate of 20%, provided that certain holding period requirements and other conditions are satisfied. For these purposes, a foreign corporation will generally be treated as a qualified foreign corporation with respect to dividends paid by that corporation on shares that are readily tradable on an established securities market in the United States. United States Treasury Department guidance indicates that the Depositary Shares, which are listed on the NASDAQ Capital Market, would be considered readily tradable on an established securities market in the United States. However, there can be no assurance that the Depositary Shares will be considered readily tradable on an established securities market in future years. A foreign corporation is also treated as a qualified foreign corporation if it is eligible for the benefits of a comprehensive income tax treaty with the United States which is determined by the United States Treasury Department to be satisfactory for purposes of these rules and which includes an exchange of information provision. The United States Treasury Department has determined that the United States-U.K. Treaty meets these requirements. We would not constitute a qualified foreign corporation for purposes of these rules if we are a passive foreign investment company for the taxable year in which we pay a dividend or for the preceding taxable year, as discussed below under “—Passive Foreign Investment Company Rules.”

Subject to certain conditions and limitations, non-United States taxes, if any, withheld on dividends paid by the Company may be treated as foreign taxes eligible for a credit against a United States holder’s United States federal income tax liability under the United States foreign tax credit rules. The rules governing the United States foreign tax credit are complex, and United States holders should consult their tax advisors regarding the availability of the United States foreign tax credit under their particular circumstances.

Sale of Depositary Shares

A United States holder will generally recognize gain or loss on any sale, exchange, redemption, or other taxable disposition of Depositary Shares in an amount equal to the difference between the amount realized on the disposition and such holder’s tax basis in such securities. Subject to the discussion below under “—Passive Foreign Investment Company Rules,” any gain or loss recognized by a United States holder on a taxable disposition of Depositary Shares will generally be capital gain or loss and will be long-term capital gain or loss if the holder’s holding period in such share exceeds one year at the time of the disposition. The deductibility of capital losses is subject to limitations.

For a cash basis taxpayer, units of foreign currency received will generally be translated into United States dollars at the spot rate on the settlement date of the sale. In that case, no foreign currency exchange gain or loss will result from currency fluctuations between the trade date and the settlement date of such sale. An accrual basis taxpayer may elect to apply the same rules applicable to cash basis taxpayers with respect to the sale of Depositary Receipts that are traded on an established securities market, provided that the election must be applied consistently from year to year and cannot be changed without the consent of the IRS. For an accrual method taxpayer who does not make such an election, units of foreign currency received will generally be translated into United States dollars at the spot rate on the trade date of the sale. Such an accrual basis taxpayer may recognize foreign currency exchange gain or loss based on currency fluctuations between the trade date and the settlement date of such sale. In general, any such gain or loss will be ordinary and will be treated as from sources within the United States for United States foreign tax credit purposes.

Passive Foreign Investment Company Rules

A foreign corporation is a PFIC if either (1) 75% or more of its gross income for the taxable year is passive income or (2) the average percentage of assets held by such corporation during the taxable year that produce passive income or that are held for the production of passive income is at least 50%. For purposes of applying the tests in the preceding sentence, the foreign corporation is deemed to own its proportionate share of the assets, and to receive directly its proportionate share of the income, of any other corporation of which the foreign corporation owns, directly or indirectly, at least 25% by value of the stock.

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Based upon estimates with respect to its income, assets, and operations, it is expected that we will not be a PFIC for the current taxable year. However, because the determination of PFIC status must be made on an annual basis after the end of the taxable year and will depend on the composition of the income and assets, as well as the nature of the activities, of our activities and those of our subsidiaries from time to time, there can be no assurance that we will not be considered a PFIC for any taxable year.

If we were to be classified as a PFIC for any taxable year in which a United States holder held the Depositary Shares, various adverse United States tax consequences could result to such United States holders, including taxation of gain on a sale or other disposition of the shares of the corporation, Depositary Shares at ordinary income rates and imposition of an interest charge on gain or on distributions with respect to the shares, Depositary Shares. Unless a United States holder of PFIC shares elects, in either case if eligible, to be taxed annually on a mark-to-market basis or makes a QEF election and certain other requirements are met, gain realized on the sale or other disposition of PFIC shares would generally not be treated as capital gain. Instead, the United States holder would be treated as if the United States holder had realized such gain ratably over the holder’s holding period for such securities. The amounts allocated to the taxable year of sale or other disposition and to any year before the foreign corporation became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for such year, together with an interest charge in respect of the tax attributable to each such year. Similar rules apply to the extent any distribution in respect of PFIC shares exceeds 125% of the average annual distribution on such PFIC securities received by the shareholder during the preceding three years or holding period, whichever is shorter. With certain exceptions, a foreign corporation is treated as a PFIC with respect to a shareholder (or warrant holder, as applicable) if the corporation was a PFIC with respect to such holder at any time during the holder’s holding period of the foreign corporation’s stock or warrants. Dividends paid to with respect to shares of a PFIC are not eligible for the special tax rates applicable to qualified dividend income of certain non-corporate holders. Instead, such dividend income is taxable at rates applicable to ordinary income.

If we were to be treated as a PFIC, the tax consequences described above could be avoided by a “mark-to-market” election with respect to the Depositary Shares. A United States holder making a “mark-to-market” election (assuming the requirements for such an election are satisfied) generally would (i) be required to include as ordinary income the excess of the fair market value of the Depositary Shares on the last day of the United States holder’s taxable year over the United States holder’s adjusted tax basis in such Depositary Shares and (ii) be allowed a deduction in an amount equal to the lesser of (A) the excess, if any, of the United States holder’s adjusted tax basis in the Depositary Shares over the fair market value of such Depositary Shares on the last day of the United States holder’s taxable year or (B) the excess, if any, of the amount included in income because of the election for prior taxable years over the amount allowed as a deduction because of the election for prior taxable years. In addition, upon a sale or other taxable disposition of Depositary Shares, a United States holder would recognize ordinary income or loss (which loss could not be in excess of the amount included in income because of the election for prior taxable years over the amount allowed as a deduction because of the election for prior taxable years). If we were to be treated as a PFIC, different rules would apply to a United States holder making a QEF election with respect to Depositary Shares. However, we do not intend to prepare or provide the information necessary for United States shareholders to make a QEF election.

United States holders are urged to consult their own tax advisors about the PFIC rules, including the availability of the “mark-to-market” election.

3.8% Medicare Tax on “Net Investment Income”

A 3.8% tax, or “Medicare Tax,” is imposed on all or a portion of “net investment income,” which may include any gain realized or amounts received with respect to Depositary Shares received by (i) United States holders that are individuals with modified adjusted gross income in excess of certain thresholds, and (ii) certain estates and trusts. United States holders should consult their own tax advisors with respect to the applicability of the Medicare Tax resulting from ownership or disposition of Depositary Shares.

Information Reporting and Backup Withholding

United States holders may be subject to information reporting requirements and may be subject to backup withholding with respect to dividends on Depositary Shares and on the proceeds from the sale, exchange, or disposition of Depositary Shares unless the United States holder provides an accurate taxpayer identification number and complies with certain certification procedures or otherwise establishes an exemption from backup withholding. Backup withholding is not an additional tax and amounts withheld may be allowed as a credit against the United States holder’s United States federal income tax liability and may entitle the United States holder to a refund, provided that certain required information is timely furnished to the IRS.

Foreign Asset Reporting

United States holders who are individuals and who own “specified foreign financial assets” with an aggregate value in excess of $50,000 are generally required to file an information statement along with their tax returns, currently on IRS Form 8938, with respect to such assets. “Specified foreign financial assets” include securities issued by a non-United States issuer (which would include an investment in our securities) that are not held in accounts maintained by financial institutions. Higher reporting thresholds apply to certain individuals living abroad and to certain married individuals. Individuals who fail to report the required information could be subject to substantial penalties, and such individuals should consult their own tax advisors concerning the application of these rules to their investment in Depositary Shares.

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F. Dividends and Payment Agents

Not applicable.

G. Statements by Experts

Not applicable.

H. Documents on Display

We are subject to the informational requirements of the Exchange Act. Accordingly, we are required to file reports and other information with the SEC, including annual reports on Form 20-F and reports on Form 6-K. The SEC maintains an Internet website that contains reports and other information about issuers, like us, that file electronically with the SEC. The address of that website is www.sec.gov.

We also make available on our website, free of charge, our annual report and the text of its reports on Form 6-K, including any amendments to these reports, as well as certain other SEC filings, as soon as reasonably practicable after they are electronically filed with or furnished to the SEC. Our website address is www.midatechpharma.com. The information contained on our website is not incorporated by reference in this annual report.

I. Subsidiary Information

Not applicable.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are exposed to a variety of financial risks, including, but not limited to, market risk (including foreign exchange and interest rate risks), credit risks, and liquidity risks. Our overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on its financial performance.

Credit Risk

Credit risk is the risk of financial loss to the Group if a development partner or counterparty to a financial instrument fails to meet its contractual obligations. We are mainly exposed to credit risk from amounts due from collaborative partners which are deemed to be low.

Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. For banks and financial institutions, only independently rated parties with high credit status are accepted.

We do not enter into derivatives to manage credit risk.

The total exposure to credit risk of the Group is equal to the total value of the financial assets held at year end. The consolidated entity recognizes a loss allowance for expected credit losses on financial assets which are either measured at amortized cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon the consolidated entity's assessment at the end of each reporting period as to whether the financial instrument's credit risk has increased significantly since initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to obtain.

Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit loss allowance is estimated. This represents a portion of the asset’s lifetime expected credit losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit losses. The amount of expected credit loss recognized is measured on the basis of the probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate. For financial assets measured at fair value through other comprehensive income, the loss allowance is recognized within other comprehensive income. In all other cases, the loss allowance is recognized in profit or loss.

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Cash in Bank

We are continually reviewing the credit risk associated with holding money on deposit in banks and seek to mitigate this risk by holding deposits with banks with high credit status.

Foreign Exchange Risk

Foreign exchange risk arose in 2021 and prior years because we had a material operation located in Bilbao, Spain, whose functional currency was not the same as our functional currency. Due to significant currency fluctuations during the years ended December 31, 2021, 2020 and 2019, particularly in respect of British pounds sterling against the Euro, our foreign exchange risk was significant. Our net assets arising from such overseas operations were exposed to currency risk resulting in gains or losses on retranslation into British pounds sterling. Given the closure of our Spanish operations and the levels of materiality, and despite this historical volatility, we do not hedge our net investments in overseas operations as the cost of doing so is disproportionate to the exposure.

Foreign exchange risk also arises when our individual entities enter into transactions denominated in a currency other than our functional currency. Our transactions outside the United Kingdom to Europe drive foreign exchange movements where suppliers invoice in currency other than British pounds sterling. These transactions are not hedged because the cost of doing so is disproportionate to the risk.

Interest Rate Risk

We do not hold any derivative instruments, or other financial instruments, that expose us to material interest rate risk

Liquidity Risk

Liquidity risk arises from our management of working capital. It is the risk that we will encounter difficulty in meeting our financial obligations as they fall due.

It is our aim to settle balances as they become due.

In July 2021, we completed a placing in the United Kingdom which raised gross proceeds of £10.0 million. Further, in February 2021, warrants were exercised for our Depositary Shares that raised gross proceeds of approximately £0.09 million. We have prepared cash flow forecasts and considered the cash flow requirement for our next three years, including the period twelve months from the date of the approval of the financial statements. These forecasts show that further financing will be required during the course of the next 12 months, assuming, inter alia, that certain development programs and other operating activities continue as currently planned.  This requirement for additional financing represents a material uncertainty that raises substantial doubt about our ability to continue as a going concern. As a result, our independent registered public accounting firm included an explanatory paragraph in its report on our financial statements as of and for the year ended December 31, 2021 with respect to this uncertainty.

Further, the global spread of pandemic novel coronavirus, COVID-19, places increased uncertainty over our forecasts. The restrictions placed and being placed on the movement of people will likely cause delays to some of our plans. The scale of the impact of COVID-19 is evolving and it is difficult to assess to what extent, and for how long, it will cause delays to our operations. We have established a COVID-19 task force internally to monitor the impact of COVID-19 on our business and prioritize activities to minimize its effect.

In addition to utilizing the existing cash reserves, we are evaluating a number of near-term funding options potentially available to us, including fundraising, and the partnering of assets or technologies. After considering the uncertainties, we considered it appropriate to continue to adopt the going concern basis in preparing the financial information.

Our ability to continue as a going concern is dependent upon our ability to obtain additional capital and/or dispose of assets, for which there can be no assurance we will be able to do on a timely basis, on favorable terms or at all.

For more information, see “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Critical Accounting Estimates and Judgments—Going Concern.”

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES.

A. Debt Securities

Not applicable.

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B. Warrants and Rights

Not applicable.

C. Other Securities

Not applicable.

D. American Depositary Shares

The Bank of New York Mellon, or the Depositary, has acted as depositary in relation to our Depositary Shares program since February 8, 2021. The principal executive office of the Depositary is located at 240 Greenwich Street, New York, New York 10286. Each Depositary Share will also represent any other securities, cash or other property which may be held by the Depositary from time to time. The deposited Ordinary Shares, together with any other securities, cash or other property held by the depositary are referred to as the “deposited securities.”

Fees and Expenses

Persons depositing or withdrawing our Ordinary Shares or Depositary Share holders must pay:	For:
5.00 USD (or less) per 100 Depositary Shares (or portion of 100 Depositary Shares)	Issue of Depositary Shares, including issues resulting from a distribution of our Ordinary Shares or rights or other property
	Cancellation of Depositary Shares for the purpose of withdrawal, including if the deposit agreement terminates
0.05 USD (or less) per Depositary Share	Any cash distribution to Depositary Share holders
A fee equivalent to the fee that would be payable if securities distributed to Depositary Share holders had been our Ordinary Shares and the Ordinary Shares had been deposited for issuance of Depositary Shares	Distribution of securities distributed to holders of deposited securities (including rights) that are distributed by the depositary to Depositary Share holders
0.05 USD (or less) per Depositary Share per calendar year	Depositary services
Registration or transfer fees	Transfer and registration of shares of our Ordinary Shares on our share register to or from the name of the depositary or its agent when persons deposit or withdraw our Ordinary Shares
Expenses of the Depositary	Cable and facsimile transmissions (when expressly provided in the deposit agreement)
	Converting foreign currency to U.S. dollars
Taxes and other governmental charges the depositary or the custodian has to pay on any Depositary Shares or our Ordinary Shares underlying Depositary Shares, such as stock transfer taxes, stamp duty or withholding taxes	As necessary
Any charges incurred by the Depositary or its agents for servicing the deposited securities	As necessary

The Depositary collects its fees for delivery and surrender of Depositary Shares directly from investors depositing our Ordinary Shares or surrendering Depositary Shares for the purpose of withdrawal or from intermediaries acting for them. The Depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The Depositary may collect its annual fee for depositary services by deduction from cash distributions or by directly billing investors or by charging the book-entry system accounts of participants acting for them. The Depositary may collect any of its fees by deduction from any cash distribution payable (or by selling a portion of securities or other property distributable) to Depositary Share holders that are obligated to pay those fees. The Depositary may generally refuse to provide fee-attracting services until its fees for those services are paid.

In performing its duties under the deposit agreement, the Depositary may use brokers, dealers, foreign currency dealers or other service providers that are owned by or affiliated with the depositary and that may earn or share fees, spreads or commissions.

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The Depositary may convert currency itself or through any of its affiliates and, in those cases, acts as principal for its own account and not as agent, advisor, broker or fiduciary on behalf of any other person and earns revenue, including, without limitation, transaction spreads, that it will retain for its own account. The revenue is based on, among other things, the difference between the exchange rate assigned to the currency conversion made under the deposit agreement and the rate that the depositary or its affiliate receives when buying or selling foreign currency for its own account. The Depositary makes no representation that the exchange rate used or obtained in any currency conversion under the deposit agreement will be the most favorable rate that could be obtained at the time or that the method by which that rate will be determined will be the most favorable to Depositary Share holders, subject to the Depositary’s obligations under the deposit agreement. The methodology used to determine exchange rates used in currency conversions is available upon request. 

The Depositary has agreed to reimburse us for a portion of certain expenses it incurs that are related to establishment and maintenance of the American depositary receipt program. There are limits on the amount of expenses for which the Depositary will reimburse us, but the amount of reimbursement available to us is not related to the amounts of fees the Depositary collects from investors. Further, the Depositary has agreed to reimburse us certain fees payable to the Depositary by holders of Depositary Shares. Neither we nor the Depositary can determine the exact amount to be made available to us because (i) the number of Depositary Shares that will be issued and outstanding, (ii) the level of service fees to be charged to holders of Depositary Shares and (iii) its reimbursable expenses related to the program are not known at this time.

Payment of Taxes

Depositary Share holders will be responsible for any taxes or other governmental charges payable on their Depositary Shares or on the deposited securities represented by any of their Depositary Shares. The Depositary may refuse to register any transfer of Depositary Shares or allow a Depositary Share holder to withdraw the deposited securities represented by his or her Depositary Shares until those taxes or other charges are paid. It may apply payments owed to such Depositary Share holder or sell deposited securities represented by such Depositary Share holder’s Depositary Shares to pay any taxes owed and such Depositary Share holder will remain liable for any deficiency. If the Depositary sells deposited securities, it will, if appropriate, reduce the number of Depositary Shares to reflect the sale and pay to Depositary Share holders any proceeds, or send to Depositary Share holders any property, remaining after it has paid the taxes.

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PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES.

Not applicable.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS.

Not applicable.

ITEM 15. CONTROLS AND PROCEDURES.

A. Disclosure Controls and Procedures

We have carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) under the supervision and the participation of the Group’s management, which is responsible for the management of the internal controls, and which includes our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively). The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Group’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.

Based upon our evaluation of our disclosure controls and procedures as of December 31, 2021, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at a reasonable level of assurance.

B. Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed, under the supervision of the Chief Executive Officer and the Chief Financial Officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with International Financial Reporting Standards.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Moreover, projections of any evaluation of the effectiveness of internal control to future periods are subject to a risk that controls may become inadequate because of changes in conditions and that the degree of compliance with the policies or procedures may deteriorate.

Our management has assessed the effectiveness of internal control over financial reporting as of December 31, 2021 based on the Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) 2013.

Based on this assessment, our management concluded that our internal control over financial reporting was effective as of December 31, 2021.

C. Attestation Report of the Registered Public Accounting Firm

This annual report does not include an attestation report of our registered public accounting firm we are a non-accelerated filer.

D. Changes in Internal Control Over Financing Reporting

We regularly review our system of internal control over financial reporting to ensure we maintain an effective internal control environment. Other than the changes discussed herein, there were no changes in our internal control over financial reporting that occurred during the fiscal year ended December 31, 2021 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

111

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT.

The Audit Committee consists of three members: Simon Turton (Chairman), Sijmen de Vries and Rolf Stahel. The Board of Directors has determined that Messrs. de Vries, Turton and Stahel are independent under Rule 10A-3 of the Exchange Act and the applicable rules of NASDAQ and that Dr. Turton qualifies as an “audit committee financial expert” as defined under in Item 16A of Form 20-F.

ITEM 16B. CODE OF ETHICS.

Our Code of Business Conduct and Ethics is applicable to all of our employees, officers and directors and is available on our website at http://www.midatechpharma.com. The Code of Business Conduct and Ethics provides that our directors and officers are expected to avoid any action, position or interest that conflicts with the interests of the Group or gives the appearance of a conflict. Our directors and officers have an obligation under the Code of Business Conduct and Ethics to advance the Group’s interests when the opportunity to do so arises. We expect that any amendment to this code, or any waivers of its requirements, will be disclosed on our website. Information contained on, or that can be accessed through, our website is not incorporated by reference into this document, and you should not consider information on the website to be part of this document.

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The following table sets forth by category of service the total fees for services provided to us by our independent registered public accounting firm during the fiscal years ended December 31, 2021 and 2020.

	2021		2020
	(£ in thousands)
Audit Fees (1)		132		323
Audit-Related Fees(2)		-		-
Tax Fees(3)		-		-
All Other Fees(4)		-		-
Total		132		323

______________

(1) Audit fees consist of the aggregate fees billed in connection with the audit and United Kingdom statutory audit of our annual consolidated financial statements included in this annual report, the issuance of comfort letters, interim reviews of our half-yearly financial information and other services related to SEC filings. For the fiscal year ended December 31, 2020, audit fees include £186,000 in respect of fees paid to BDO LLP, and the balance relates to Mazars LLP.

(2) Audit-related fees are fees for services that are traditionally performed by the independent accountants, including consultations concerning financial accounting and reporting, and employee benefit plan audits, and due diligence on mergers or acquisitions.

(3) Represents the aggregate fees billed for tax compliance, tax advice and tax consulting services.

(4) Represents the aggregate fees billed for all products and services provided that are not included under “audit fees”, “audit related fees or “tax fees,” including, but not limited to, fees billed for services relating to mergers and acquisitions.

112

Audit Committee Pre-Approval Policies and Procedures

The pre-approval of the Audit Committee or member thereof, to whom pre-approval authority has been delegated, is required for the engagement of our independent auditors to render audit or non-audit services. Audit Committee pre-approval of audit and non-audit services will not be required if the engagement for the services is entered into pursuant to pre-approval policies and procedures established by the Audit Committee regarding our engagement of the independent auditor, provided the policies and procedures are detailed as to the particular service, the Audit Committee is informed of each service provided and such policies and procedures do not include delegation of the Audit Committee’s responsibilities under the Exchange Act to management. Audit Committee pre-approval of non-audit services (other than review and attest services) also will not be required if such services fall within available exceptions established by the SEC.

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES.

Not applicable.

ITEM 16E. PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS.

Not applicable.

ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANTS.

Not applicable.

ITEM 16G. CORPORATE GOVERNANCE.

Companies with securities listed on NASDAQ are required to comply with United States federal securities laws, including the Sarbanes-Oxley Act of 2002, as well as certain NASDAQ rules and corporate governance requirements. As a foreign private issuer, however, we are entitled to follow our home country practice in lieu of the NASDAQ corporate governance standards, subject to certain exceptions and except to the extent that such exemptions would be contrary to United States federal securities laws. The United Kingdom laws and practices followed by the Company in lieu of NASDAQ rules are described below:

• We do not follow NASDAQ’s requirement that the Board of Directors be comprised of a majority of Independent Directors, as defined under Rule 5605(a)(2). In accordance with United Kingdom law and practice, we do not require a majority of our Board of Directors to be considered independent.

• We do not follow NASDAQ’s requirements applicable to independent director oversight of director nominations, which require that director nominees either be selected or recommended by independent directors. In accordance with United Kingdom law and practice, our directors are nominated by the Nominations Committee, which is comprised of all of the directors of the Company.

• We do not follow NASDAQ’s requirement that the compensation committee be comprised of Independent Directors, as defined under Rule 5605(a)(2). One of the members of our compensation committee, Mr. Stahel, is not considered independent under the applicable NASDAQ rule. He is, however, considered to be independent under United Kingdom law and practice.

• We do not require that the compensation committee consider the specific factors affecting consultant independence that are set forth in NASDAQ Rule 5605(d)(3)(D). Our compensation committee may engage independent compensation consultants at its discretion.

• We do not follow NASDAQ’s requirements that non-executive directors meet on a regular basis without management present. Our Board of Directors may choose to meet in executive session at their discretion.

• We do not follow NASDAQ’s quorum requirements for stockholder meetings. In accordance with United Kingdom law and practice, our Articles of Association provide alternative quorum requirements that are generally applicable to meetings of shareholders.

• We do not follow NASDAQ’s requirements to seek shareholder approval for the implementation of certain equity compensation plans and issuances of Ordinary Shares. In accordance with the AIM Rules, we are not required to seek shareholder approval in such circumstances.

113

ITEM 16H. MINE SAFETY DISCLOSURE.

Not applicable.

ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

Not applicable.

114

PART III

ITEM 17. FINANCIAL STATEMENTS.

We have elected to provide financial statements pursuant to Item 18 of Form 20-F.

ITEM 18. FINANCIAL STATEMENTS.

The financial statements are filed as part of this annual report beginning on page F-1.

The financial statements of the Company included in this annual report do not constitute statutory financial statements within the meaning of the United Kingdom Companies Act 2006. The Company’s statutory financial statements for the years ended December 31, 2021 and 2020 have been reported on by Mazars LLP, independent auditors, under applicable law and the International Standards on Auditing (United Kingdom), and for the year ended December 31, 2019 have been reported on by BDO LLP independent auditors, under applicable law and the International Standards on Auditing (United Kingdom). The Independent Auditors’ Report of Mazars LLP on the statutory financial statements for the years ended December 31, 2021 and 2020 was unqualified. The Independent Auditors’ Report of BDO LLP on the statutory financial statements for the year ended December 31, 2019 was unqualified. The Independent Auditors’ Report of Mazars LLP on the statutory financial statements for the years ended December 31, 2021 and 2020 included an emphasis of matter regarding material uncertainty over going concern. The Independent Auditors’ Report of BDO LLP on the statutory financial statements for the year ended December 31, 2019 included an emphasis of matter regarding material uncertainty over going concern.

115

ITEM 19. EXHIBITS.

Exhibit Number	Title
1.1	Articles of Association of Midatech Pharma PLC (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form F-4 (File No. 333-206305), originally filed with the SEC on August 11, 2015, as amended).
2.1*	Description of Securities Registered Under Section 12 of the Exchange Act.
2.2	Specimen certificate representing ordinary shares of Midatech Pharma PLC (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form F-4 (File No. 333-206305), originally filed with the SEC on August 11, 2015, as amended).
2.3	Form of Amended and Restated Deposit Agreement by and among Midatech Pharma PLC, The Bank of New York Mellon, as depositary, and all owners and holders from time to time of American Depositary Shares thereunder (incorporated by reference to Exhibit A to the Company’s Registration Statement on Form F-6 (File No. 333-252507), filed with the SECon January 28, 2021).
2.4	Form of American Depositary Receipt (included in Exhibit 2.3 as Exhibit A thereto).
2.5	Form of Warrant Assumption Agreement by and between Midatech Pharma PLC and DARA BioSciences, Inc. (incorporated by reference to Exhibit 4.4 to the Company’s Registration Statement on Form F-4 (File No. 333-206305), originally filed with the SEC on August 11, 2015, as amended).
2.6	Form of “Phase 2b” Common Stock Purchase Warrant issued to General Hospital Corporation d/b/a Massachusetts General Hospital (incorporated by reference to Exhibit 4.1 to DARA BioSciences, Inc.’s Current Report on Form 8-K filed with the SEC on December 15, 2014).
2.7	Form of “FDA Approval” Common Stock Purchase Warrant issued to General Hospital Corporation d/b/a Massachusetts General Hospital (incorporated by reference to Exhibit 4.2 to DARA BioSciences, Inc.’s Current Report on Form 8-K filed with the SEC on December 15, 2014).
2.8	Form of Warrant issued on October 25, 2019 (incorporated by reference to Exhibit 4.1 of the Company’s Report on Form 6-K, filed with the SEC on October 24, 2019).
2.9	Form of Placement Agent Warrant issued on October 25, 2019 (incorporated by reference to Exhibit 4.2 of the Company’s Report on Form 6-K, filed with the SEC on October 24, 2019).
2.10	Form of Warrant issued on May 20, 2020 (incorporated by reference to Exhibit 4.1 of the Company’s Report on Form 6-K, filed with the SEC on May 19, 2020).
2.11	Form of Placement Agent Warrant issued on May 20, 2020 (incorporated by reference to Exhibit 4.2 of the Company’s Report on Form 6-K, filed with the SEC on May 19, 2020).
2.12	Form of Warrant Instrument issued on May 22, 2020 (incorporated by reference to Exhibit 4.3 of the Company’s Report on Form 6-K, filed with the SEC on May 19, 2020).

116

4.1#	Midatech Pharma PLC 2014 Enterprise Management Incentive Scheme (incorporated by reference to Exhibit 10.3 to the Company’s Registration Statement on Form F-4 (File No. 333-206305), originally filed with the SEC on August 11, 2015, as amended).
4.2#	Form of Option Agreement (included in Exhibit 4.1).
4.3#	Consultancy Agreement, dated as of April 15, 2014, by and between Midatech Limited and Chesyl Pharma Limited (incorporated by reference to Exhibit 10.17 to the Company’s Registration Statement on Form F-4 (File No. 333-206305), originally filed with the SEC on August 11, 2015, as amended).
4.4#	Appointment Agreement, dated as of April 15, 2014, by and between Midatech Limited and Rolf Stahel (incorporated by reference to Exhibit 10.20 to the Company’s Registration Statement on Form F-4 (File No. 333-206305), originally filed with the SEC on August 11, 2015, as amended).
4.5#	Revised Appointment Agreement, dated as of December 2, 2014, by and between Midatech Pharma PLC and Rolf Stahel (incorporated by reference to Exhibit 10.21 to the Company’s Registration Statement on Form F-4 (File No. 333-206305), originally filed with the SEC on August 11, 2015, as amended).
4.6#	Form of Appointment Letter between Midatech Pharma PLC and certain directors of Midatech Pharma PLC (incorporated by reference to Exhibit 10.22 to the Company’s Registration Statement on Form F-4 (File No. 333-206305), originally filed with the SEC on August 11, 2015, as amended).
4.7#	Deed of Indemnity dated August 5, 2015 (incorporated by reference to Exhibit 10.23 to the Company’s Registration Statement on Form F-4 (File No. 333-206305), originally filed with the SEC on August 11, 2015, as amended).
4.8†	License, Collaboration and Distribution Agreement, dated as of January 29, 2019, by and between Midatech Pharma PLC, CMS Bridging Limited, CMS Medical Hong Kong Limited and China Medical System Holdings Limited (incorporated by reference to Exhibit 4.17 of the Company’s Annual Report on Form 20-F for the year ended December 31, 2018, as amended, filed with the SEC on May 28, 2019).
4.9	Relationship Agreement, dated January 29, 2019, by and among the Company, certain CMS Concert Party Members and Panmure Gordon (UK) Limited (incorporated by reference to Exhibit 4.18 of the Company’s Annual Report on Form 20-F for the year ended December 31, 2018, filed with the SEC on April 30, 2019).
4.10	Deed of Variation of Relationship Agreement, dated May 12, 2020, between Midatech Pharma PLC, Certain CMS Concert Party Members and Panmure Gordon (UK) Limited (incorporated by reference to Exhibit 4.15 of the Company’s Annual Report on Form 20-F for the year ended December 31, 2020, filed with the SEC on April 30, 2021).
4.11#	The Midatech Pharma Share Incentive Plan (incorporated by reference to Exhibit 4.27 of the Company’s Annual Report on Form 20-F for the year ended December 31, 2018, filed with the SEC on April 24, 2018).

117

4.12†#	Service Agreement dated as of September 9, 2019, by and between Midatech Pharma PLC and Stephen Stamp (incorporated by reference to Exhibit 10.1 of the Company’s Report on Form 6-K, filed with the SEC on September 19, 2019).
4.13	Form of Securities Purchase Agreement, dated as of October 22, 2019, by and between Midatech Pharma PLC and the purchaser identified on the signature page thereto (incorporated by reference to the Company’s Report on Form 6-K, filed with the SEC on October 24, 2019).
4.14	Form of Securities Purchase Agreement, dated as of May 18, 2020, by and between Midatech Pharma PLC and the purchasers identified on the signature page thereto (incorporated by reference to Exhibit 10.1 to the Company’s Report on Form 6-K, filed with the SEC on May 20, 2020.
4.15*#	Service Agreement, dated as of July 12, 2021, by and between Midatech Pharma PLC and Dmitry Zamoryakhin.
8.1*	Subsidiaries of Midatech Pharma PLC.
12.1*	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002.
13.1**	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002.
15.1*	Consent of Mazars LLP, independent registered public accounting firm.
15.2*	Consent of BDO LLP, independent registered public accounting firm.
101. INS	Inline XBRL Instance Document
101.SCH	Inline XBRL Taxonomy Extension Schema Documents
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (embedded within Inline XBRL document)

___________

* Filed herewith.

** Furnished herewith.

# Management contract or compensatory plan or arrangement.

† Certain portions of this exhibit (indicated by asterisks) have been omitted because they are not material and would likely cause competitive harm to Midatech Pharma PLC if publicly disclosed.

118

SIGNATURES

The Registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

MIDATECH PHARMA PLC
By:	/s/ Stephen Stamp
Name:	Stephen Stamp
Title:	Chief Executive Officer and Chief Financial Officer

Date: April 26, 2022

119

MIDATECH PHARMA PLC

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm (Mazars LLP, London, United Kingdom, PCAOB ID 1401)	F-1
Report of Independent Registered Public Accounting Firm (BDO LLP: London, United Kingdom: PCAOB ID#1295)	F-3
Consolidated statements of comprehensive income for the years ended 31 December 2021, 2020 and 2019	F-4
Consolidated statements of financial position at 31 December 2021, 2020 and 2019	F-5
Consolidated statements of cash flows for the years ended 31 December 2021, 2020 and 2019	F-7
Consolidated statements of changes in equity for the years ended 31 December 2021, 2020 and 2019	F-9
Notes forming part of the consolidated financial statements	F-12

120

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (MAZARS LLP, LONDON, UNITED KINGDOM, PCAOB ID 1401)

The Board of Directors and Shareholders of Midatech Pharma plc

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated statements of financial position of Midatech Pharma plc and its subsidiaries (“the Group”) as of December 31, 2021 and 2020, and the related consolidated statements of comprehensive income, changes in equity, and cash flows for each of the two years in the period ended December 31, 2021, including the related notes (collectively, the Consolidated Financial Statements). In our opinion, the Consolidated Financial Statements present fairly, in all material respects, the financial position of the Group as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2021, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Going Concern Uncertainty

The accompanying Consolidated Financial Statements have been prepared assuming that the Group will continue as a going concern. As discussed in note 1 to the financial statements the Group has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in note 1. The Consolidated Financial Statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These Consolidated Financial Statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these Consolidated Financial Statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Consolidated Financial Statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. 

Our audits included performing procedures to assess the risks of material misstatement of the Consolidated Financial Statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the Consolidated Financial Statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the Consolidated Financial Statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the Consolidated Financial Statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the Consolidated Financial Statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the Consolidated Financial Statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

F-1

We have identified one critical audit matter, being the going concern basis of preparation. The nature of the critical audit matter, together with our conclusion, is set out above in the going concern uncertainty paragraph. The circumstances described led us to conclude that the going concern basis of preparation is a critical audit matter.

Our evaluation of the Directors’ assessment of the appropriateness of the going concern basis of preparation of these financial statements included, but was not limited to:

● Undertaking an initial assessment at the planning stage of the audit to identify events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern;

● Obtaining an understand of the relevant controls relating to the Directors’ going concern assessment;

● Reviewing the Directors’ formal going concern assessment, including the supporting cash flow projections that included the twelve months;

● Evaluating the Directors’ assessment of the impact of the invasion of Ukraine by the Russian Federation military;

● Evaluating the key assumptions used and judgements applied by the directors in forming their conclusions on going concern;

● Reviewing the appropriateness of the disclosures made by the Directors in the Consolidated Financial Statements.

We have served as the Group’s auditor since 2020.

/s/ Mazars LLP

Mazars LLP

London, England

April 25, 2022

F-2

Report of Independent Registered Public Accounting Firm

Shareholders and Board of Directors

Midatech Pharma plc

Cardiff, United Kingdom

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated statement of financial position of Midatech Pharma plc (the “Company”) as of 31 December 2019, the related consolidated statements of comprehensive income, changes in equity, and cash flows for the year ended 31 December 2019, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at 31 December 2019, and the results of its operations and its cash flows for the year ended 31 December 2019 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Going Concern Uncertainty

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Adoption of New Accounting Standard

As discussed in Note 1 to the consolidated financial statements, effective on 1 January 2019, the Company changed its method of accounting for leases due to the adoption of IFRS 16, Leases.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.

/s/ BDO LLP

BDO LLP

We have served as the Company's auditor from 2014 through 2020.

Reading, United Kingdom

15 June 2020

F-3

Consolidated StatementS of Comprehensive Income

For the year ended 31 December

	Note		2021 £’000			2020 £’000			2019 £’000
Revenue		3		578			180			312
Grant revenue				–			163			362
Total revenue				578			343			674
Other income				24			12			15
Research and development costs				(4,654	)		(6,068	)		(7,843	)
Distribution costs, sales and marketing				–			–			(323	)
Administrative costs				(2,946	)		(4,958	)		(3,841	)
Impairment of intangible assets		12,13		–			(12,369	)		–
Loss from operations		5		(6,998	)		(23,040	)		(11,318	)
Finance income		7		936			1			492
Finance expense		7		(44	)		(431	)		(97	)
Loss before tax				(6,106	)		(23,470	)		(10,923	)
Taxation		8		646			1,281			1,785
Loss from continuing operations				(5,460	)		(22,189	)		(9,138	)
Loss from discontinued operations net of tax		4		–			–			(947	)
Loss for the year attributable to the owners of the parent				(5,460	)		(22,189	)		(10,085	)
Other comprehensive income:
Items that will or may be reclassified subsequently to profit or loss:
Exchange gains/(losses) arising on translation of foreign operations				–			508			(207	)
Total other comprehensive income/(loss ) net of tax				–			508			(207	)
Total comprehensive loss attributable to the owners of the parent				(5,460	)		(21,681	)		(10,292	)
Loss per share
Continuing operations
Basic and diluted loss per ordinary share - pence		9		(7	)p		(52	)p		(50	)p
Discontinued operations
Basic and diluted loss per ordinary share - pence		9		–			–			(5	)p

The notes form an integral part of these consolidated financial statements.

Distribution costs, sales and marketing are immaterial for 2021 and 2020 and have been included within Administrative costs

F-4

Consolidated statements of financial position

At 31 December

Company number 09216368	Note		2021 £’000		2020 £’000		2019 £’000
Assets
Non-current assets
Property, plant and equipment		10		1,152		542		2,154
Intangible assets		12		–		–		12,379
Other receivables due in greater than one year		15		–		–		2,625
Total Non-Current Assets				1,152		542		17,158
Current assets
Trade and other receivables		15		1,034		572		992
Taxation				670		1,157		1,817
Cash and cash equivalents		16		10,057		7,546		10,928
Total Current Assets				11,761		9,275		13,737
Total assets				12,913		9,817		30,895
Liabilities
Non-current liabilities
Borrowings		18		620		60		5,670
Provisions		19		–		50		–
Total Non-Current Liabilities				620		110		5,670
Current liabilities
Trade and other payables		17		1,092		1,230		4,494
Borrowings		18		146		200		412
Provisions		19		50		–		97
Derivative financial liability		20		553		1,559		664
Total current Liabilities				1,841		2,989		5,667
Total liabilities				2,461		3,099		11,337

The notes form an integral part of these consolidated financial statements.

F-5

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION(continued)

At 31 December

	Note		2021 £’000			2020 £’000			2019 £’000
Issued capital and reserves attributable to owners of the parent
Share capital		23		1,098			1,063			1,023
Share premium		24		83,434			74,364			65,879
Merger reserve		24		53,003			53,003			53,003
Warrant reserve		24		720			720			–
Foreign exchange reserve		24		–			–			(508	)
Accumulated deficit		24		(127,803	)		(122,432	)		(99,839	)
Total equity				10,452			6,718			19,558
Total equity and liabilities				12,913			9,817			30,895

The notes form an integral part of these consolidated financial statements.

F-6

Consolidated statements of cash flows

For the year ended 31 December

	Note		2021 £’000			2020 £’000			2019 £’000
Cash flows from operating activities
Loss for the year				(5,460	)		(22,189	)		(10,085	)
Adjustments for:
Depreciation of property, plant and equipment		10		213			1,089			979
Depreciation of right of use asset		10		190			118			303
Amortisation of intangible fixed assets		12		–			10			3
Profit on disposal of fixed assets				(39	)		(226	)		–
Impairment of intangible assets		12,13		–			12,369			–
Finance income		7		(936	)		(1	)		(492	)
Finance expense		7		44			431			97
Share-based payment charge/(credit)		5		89			(404	)		(34	)
Taxation		8		(646	)		(1,281	)		(1,785	)
Loss from discontinued operations, net of tax		4		–			–			947
Foreign exchange (gains)/losses				(3	)		387			(140	)
Cash flows from operating activities before changes in working capital				(6,548	)		(9,697	)		(10,207	)
Decrease in trade and other receivables				(487	)		493			725
(Decrease)/Increase in trade and other payables				(130	)		(2,004	)		1,141
Decrease in provisions				–			(47	)		(68	)
Cash used in operations				(7,165	)		(11,255	)		(8,409	)
Taxes received				1,157			1,954			1,920
Net cash used in operating activities				(6,008	)		(9,301	)		(6,489	)

The notes form an integral part of these consolidated financial statements.

F-7

Consolidated statements of cash flows(continued)

For the year ended 31 December

	Note		2021 £’000			2020 £’000			2019 £’000
Investing activities
Purchases of property, plant and equipment		10		(320	)		(209	)		(310	)
Proceeds from disposal of fixed assets				42			143			–
Purchase of intangibles		12		–			–			(9	)
Long term deposit for guarantee for Government loan				–			2,639			(2,549	)
Deposit paid in connection with disposed subsidiary		4		–			–			(947	)
Interest received				–			1			8
Net cash (used in)/generated from investing activities				(278	)		2,574			(3,807	)
Financing activities
Interest paid				(15	)		(34	)		(30	)
Receipts from sub-lessee on onerous lease				–			45			107
Amounts paid on lease liabilities				(112	)		(258	)		(450	)
Repayment of Government grants on closure of Spanish operation				–			(229	)		–
Repayment of borrowings				–			–			(577	)
(Repayment)/Proceeds from Government loan		18		(103	)		(6,182	)		4,436
Proceeds from Government subsidy				–			–			1,139
Share issues including warrants, net of costs		16		9,035			9,742			14,108
Net cash generated from financing activities				8,805			3,084			18,733
Net increase/(decrease) in cash and cash equivalents				2,519			(3,643	)		8,437
Cash and cash equivalents at beginning of year				7,546			10,928			2,343
Exchange (losses)/gains on cash and cash equivalents				(8	)		261			148
Cash and cash equivalents at end of year		16		10,057			7,546			10,928

The notes form an integral part of these consolidated financial statements.

F-8

Consolidated statements of changes in equity

For the year ended 31 December

Share capital £’000

Share premium £’000

Merger reserve £’000

Warrant reserve £’000

Foreign exchange reserve £’000

Accumulated deficit £’000

Total equity £’000

At 1 January 2021

1,063

74,364

53,003

720

–

(122,432

)

6,718

Loss for the year

–

–

–

–

–

(5,460

)

(5,460

)

Foreign exchange translation

–

–

–

–

–

–

–

Total comprehensive loss

–

–

–

–

–

(5,460

)

(5,460

)

Transactions with owners

Shares issued on 19 February 2021 – notes 16, 23

–

161

–

–

–

–

161

Costs associated with share issue on  19 February 2021 – notes 16, 23

–

(10

)

–

–

–

–

(10

)

Shares issued on 6 July 2021 – notes 16,23

35

9,965

–

–

–

–

10,000

Costs associated with share issue on 6 July 2021 – notes 16, 23

–

(1,046

)

–

–

–

–

(1,046

)

Share-based payment charge

–

–

–

–

–

89

89

Total contribution by and distributions to owners

35

9,070

–

–

–

89

9,194

At 31 December 2021

1,098

83,434

53,003

720

–

(127,803

)

10,452

The notes form an integral part of these consolidated financial statements.

F-9

Consolidated statements of changes in equity(cONTINUED)

	Share capital £’000		Share premium £’000			Merger reserve £’000		Warrant reserve £’000		Foreign exchange reserve £’000			Accumulated deficit £’000			Total equity £’000
At 1 January 2020		1,023		65,879			53,003		–		(508	)		(99,839	)		19,558
Loss for the year		–		–			–		–		–			(22,189	)		(22,189	)
Foreign exchange translation		–		–			–		–		508			–			508
Total comprehensive loss		–		–			–		–		(508	)		(22,189	)		(21,681	)
Transactions with owners
Shares issued with warrants on 18 May 2020 – notes 16,23		16		2,527			–		720		–			–			3,263
Costs associated with shares issued with warrants on 18 May 2020 – notes 16, 23				(544	)		–		–		–			–			(544	)
Shares issued on 27 July 2020 – notes 16, 23		21		5,729			–		–		–			–			5,750
Costs associated with share issue on 27 July 2020 – notes 16, 23				(489	)		–		–		–			–			(489	)
Shares issued on 19 August 2020 – notes 16, 23		3		1,278			–		–		–			–			1,281
Costs associated with share issue on 19 August 2020 – notes 16, 23				(16	)		–		–		–			–			(16	)
Share-based payment credit		–		–			–		–		–			(404	)		(404	)
Total contribution by and distributions to owners		40		8,485			–		720		–			(404	)		8,841
At 31 December 2020		1,063		74,364			53,003		720		–			(122,432	)		6,718

The notes form an integral part of these consolidated financial statements.

F-10

Consolidated statements of changes in equity(cONTINUED)

	Share capital £’000		Share premium £’000			Merger reserve £’000		Foreign exchange reserve £’000			Accumulated deficit £’000			Total equity £’000
At 1 January 2019		1,003		52,939			53,003		(301	)		(89,720	)		16,924
Loss for the year		–		–			–		–			(10,085	)		(10,085	)
Foreign exchange translation		–		–			–		(207	)		–			(207	)
Total comprehensive loss		–		–			–		(207	)		(10,085	)		(10,292	)
Transactions with owners
Shares issued on 26 February 2019 – note 16		17		13,388			–		–			–			13,405
Costs associated with share issue on 26 February 2019 – note 16		–		(1,120	)		–		–			–			(1,120	)
Shares issued on 29 October 2019 – note 16		3		1,211			–		–			–			1,214
Costs associated with share issue on 29 October 2019 – note 16		–		(539	)		–		–			–			(539	)
Share-based payment credit		–		–			–		–			(34	)		(34	)
Total contribution by and distributions to owners		20		12,940			–		–			(34	)		12,926
At 31 December 2019		1,023		65,879			53,003		(508	)		(99,839	)		19,558

The notes form an integral part of these consolidated financial statements.

F-11

Notes forming part of the financial statements

For the years ended 31 December 2021, 2020 and 2019

1 Accounting policies

General information

Midatech Pharma plc (the ‘Company’) is a company registered and domiciled in England and Wales. The Company was incorporated on 12 September 2014.

The Company is a public limited company, which has been listed on the Alternative Investment Market (‘AIM’), which is a submarket of the London Stock Exchange, since 8 December 2014.

In addition, since 4 December 2015 the Company has American Depository Receipts (‘ADRs’) registered with the US Securities and Exchange Commission (‘SEC’) and is listed on the NASDAQ Capital Market.

The financial statements were approved and authorised for issue by the Board of Directors on 25 April 2022.

Basis of preparation

The Group was formed on 31 October 2014 when Midatech Pharma plc entered into an agreement to acquire the entire share capital of Midatech Limited and its wholly owned subsidiaries through the issue equivalent of shares in the Company which took place on 13 November 2014.

The financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB).

The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the periods presented.

On 2 March 2020 a resolution was passed at a general meeting of shareholders of the Company to consolidate its ordinary shares on a one for 20 basis into new ordinary shares of 0.1p each in the capital of the Company. At the same meeting a resolution was passed to change the ratio of the Company's American Depositary Receipts ("ADRs"). This changed from one ADR representing 20 Existing Ordinary Shares to one ADR representing five new ordinary shares. Comparative numbers of shares and share options/warrants and related exercise/issue prices and earnings per share reflect the impact of the March 2020 share consolidation.

The consolidated financial statements have been prepared on a historical cost basis, except for the following item (refer to individual accounting policies for details):

- Certain financial instruments – fair value through profit or loss.

Certain prior period amounts have been reclassified to conform to the current period presentation with no impact on previously reported net loss or cash flows, and no material impact on financial position

Adoption of new and revised standards

New standards, interpretations and amendments effective from 1 January 2021

The Group in reviewed the new standards, interpretations and amendments effective from 1 January 2021 and deemed none were applicable to the annual financial statements for the year ended 31 December 2021.

New standards, interpretations and amendments not yet effective

There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future accounting periods that the group has decided not to adopt early.

The following amendments are effective for the period beginning 1 January 2022:

• Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37);

• Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16);

• Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1, IFRS 9, IFRS16 and IAS 41); and

• References to Conceptual Framework (Amendments to IFRS 3).

The following amendments are effective for the period beginning 1 January 2023:

• Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2);

• Definition of Accounting Estimates (Amendments to IAS 8); and

• Deferred Tax Related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12).

These new accounting standards and amendments are not expected to have a material impact on the Group.

The Group does not expect any other standards issued by the IASB, but not yet effective, to have a material impact on the group.

F-12

1 Accounting policies (continued)

Basis for consolidation

The Group financial statements consolidate those of the parent company and all of its subsidiaries. The parent controls a subsidiary if it has power over the investee to significantly direct the activities, exposure, or rights to variable returns from its involvement with the investee, and the ability to use its power over the investee to affect the amount of the investor’s returns. All subsidiaries have a reporting date of 31 December.

All transactions and balances between Group companies are eliminated on consolidation, including unrealised gains and losses on transactions between Group companies. Where unrealised losses on intra-Group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a Group perspective. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.

The consolidated financial statements consist of the results of the following entities:

Entity	Summary description
Midatech Pharma plc	Ultimate holding company
Midatech Limited	Trading company
Midatech Pharma (Espana) SL (formerly Midatech Biogune SL)	Liquidated - 2021
PharMida AG	Dormant
Midatech Pharma (Wales) Limited (formerly Q Chip Limited)	Trading company
Midatech Pharma Pty	Dissolved - 2020

Going concern

The Group and Company are subject to a number of risks similar to those of other development and early-commercial stage pharmaceutical companies. These risks include, amongst others, generation of revenue from the development portfolio and risks associated with research, development, testing and obtaining related regulatory approvals of our pipeline products. Ultimately, the attainment of profitable operations is dependent on future uncertain events which include obtaining adequate financing to fulfill our commercial and development activities and generating a level of revenue adequate to support our cost structure.

We have experienced net losses and significant cash outflows from cash used in operating activities over the past years as we develops our portfolio. For the year ended December 31, 2021 the Company incurred a consolidated loss from operations of £5.5million and negative cash flows from operating activities of £6.0million. As of December 31, 2021 the Group had an accumulated deficit of £127.8million.

Our future viability is dependent on our ability to raise cash from financing activities to finance our development plans until commercialisation, generate cash from operating activities and to successfully obtain regulatory approval to allow marketing of our development products. Our failure to raise capital as and when needed could have a negative impact on our financial condition and ability to pursue our business strategies.

Our Group's consolidated financial statements have been presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

As at 31 December 2021, we had cash and cash equivalents of £10.1million. We forecast we currently has enough cash to fund its planned operations into the first quarter of 2023.

We have prepared cash flow forecasts and considered the cash flow requirement for the Company for the next three years including the period twelve months from the date of approval of the consolidated financial statements. These forecasts show that further financing will be required during the course of the next 12 months, assuming, inter alia, that certain development programs and other operating activities continue as currently planned. This requirement for additional financing represents a material uncertainty raises substantial doubt about our ability to continue as a going concern. As a result, our independent registered public accounting firm included an explanatory paragraph in its report on our financial statements as of and for the year ended December 31, 2021 with respect to this uncertainty.

In addition, the global pandemic COVID-19 virus places increased uncertainty over the Directors’ forecasts. The restrictions that have been placed on the movement of people caused delays to some of the Group’s plans. The Directors have established a COVID-19 task force internally to monitor the impact of COVID-19 on the business and prioritize activities to minimize its continuing effect.

In addition to utilizing the existing cash reserves, we and our advisors are evaluating a number of near-term funding options potentially available to us, including fundraising and the partnering of assets and technologies of the Company. After considering the uncertainties, we considered it is appropriate to continue to adopt the going concern basis in preparing these financial information.

Our ability to continue as a going concern is dependent upon our ability to obtain additional capital and/or dispose of assets, for which there can be no assurance we will be able to do on a timely basis, on favorable terms or at all.

F-13

1 Accounting policies (continued)

Revenue

Revenue is accounted for in line with principles of IFRS 15 ‘Revenue from contracts with customers’

Revenue from licensing agreements

The Group entered into a Licence Agreement during 2019. The licence consists of two distinct performance conditions, which is the grant of the license to use of its intellectual property (“IP”) and the supply of Product. After the Company has granted the license, and the Product is granted applicable marketing authorizations in the EU, the US, or the UK, France, Germany or Switzerland and China, there are no further obligations to participate in, or provide additional services to its customer. The transaction price for the grant of the license to use the Company’s IP comprises of fixed and variable payment streams and the grant of the license is considered to be a right to use IP. Upfront fees earned, are recognised as revenue at a point in time, upon transfer of control over the license to the licensee and the grant of the applicable marketing authorisation by the relevant statutory authority. For future royalty payments associated with a license, the Company applies the IFRS 15 exception for sales-based royalties and recognises the revenue only when the subsequent sale occurs.

Supply of Goods

Revenue from sales of goods to customer are recognised when all performance obligations are met. These criteria are considered to be met when the goods are delivered to the customer. Revenue represents the full list price of products shipped to wholesalers and other customers less product returns, discounts, rebates and other incentives based on the sales price.

Supply of Services

Revenue from the supply of services is subject to specific agreement. This is recognised over the contract term, proportionate to the progress in overall satisfaction of the performance obligations (the services performed by the Group), measured by cost incurred to date out of total estimate of costs. The primary input of substantially all work performed under these arrangements is labour. There is normally a direct relationship between costs incurred and the proportion of the contract performed to date.

Where the Group supplies services to a client it generally bills an agreed percentage in advance of the commencement of any work and the balance on completion. Invoices to clients are payable under normal commercial terms.

Grant revenue

Where grant income is received, which is not a direct re-imbursement of related costs, revenue is recognised at the point at which the conditions have been met, this has been recognised within grant revenue. Where grants are received as a re-imbursement of directly related costs they are credited to research and development expense in the same period as the expenditure towards which they are intended to contribute.

The Group previously received government loans that had a below-market rate of interest. These loans were recognised and measured in accordance with IFRS 9. The benefit of the below-market rate of interest was measured as the difference between the initial carrying value of the loan discounted at a market rate of interest and the proceeds received.

The difference was held within deferred revenue as a government grant and released as a credit to grant income or to research and development expense in line with the expenditure to which it related. In a situation where the proceeds were invested in plant and equipment, the deferred revenue was credited to research and development within the income statement in line with the depreciation of the acquired asset.

Business combinations and externally acquired intangible assets

Business combinations are accounted for using the acquisition method at the acquisition date, which is the date at which the Group obtains control over the entity. The cost of an acquisition is measured as the amount of the consideration transferred to the seller, measured at the acquisition date fair value, and the amount of any non-controlling interest in the acquiree. The Group measures goodwill initially at cost at the acquisition date, being:

• the fair value of the consideration transferred to the seller, plus;

• the amount of any non-controlling interest in the acquiree, plus;

• if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree re-measured at the acquisition date, less;

• the fair value of the net identifiable assets acquired and assumed liabilities.

Acquisition costs incurred are expensed and included in administrative costs. Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration, whether it is an asset or liability, will be recognised through the consolidated statement of comprehensive income. If the contingent consideration is classified as equity, it is not re-measured.

F-14

1 Accounting policies (continued)

Business combinations and externally acquired intangible assets (continued)

An intangible asset, which is an identifiable non-monetary asset without physical substance, is recognised to the extent that it is probable that the expected future economic benefits attributable to the asset will flow to the Group and that its cost can be measured reliably. The asset is deemed to be identifiable when it is separable or when it arises from contractual or other legal rights.

Externally acquired intangible assets other than goodwill are initially recognised at cost and subsequently amortised on a straight-line basis over their useful economic lives where they are in use. Goodwill is stated at cost less any accumulated impairment losses.

The amounts ascribed to intangibles recognised on business combinations are arrived at by using appropriate valuation techniques.

In-process research and development (‘IPRD’) programmes acquired in business combinations are recognised as assets even if subsequent expenditure is written off because the criteria specified in the policy for development costs below are not met. IPRD is subject to annual impairment testing until the completion or abandonment of the related project. No further costs are capitalised in respect of this IPRD unless they meet the criteria for research and development capitalisation as set out below.

As per IFRS 3, once the research and development of each defined project is completed, the carrying value of the acquired IPRD is reclassified as a finite-lived asset and amortised over its useful life.

The significant intangibles recognised by the Group and their useful economic lives are as follows:

Goodwill	– Indefinite life
IPRD	– In process, not yet amortising
IT and website costs	– 4 years

The useful economic life of IPRD will be determined when the in-process research projects are completed.

Internally generated intangible assets (development costs)

Expenditure on the research phase of an internal project is recognised as an expense in the period in which it is incurred. Development costs incurred on specific projects are capitalised when all the following conditions are satisfied:

• completion of the asset is technically feasible so that it will be available for use or sale;

• the Group intends to complete the asset and use or sell it;

• the Group has the ability to use or sell the asset and the asset will generate probable future economic benefits (over and above cost);

• there are adequate technical, financial and other resources to complete the development and to use or sell the asset; and

• the expenditure attributable to the asset during its development can be measured reliably.

All internal activities related to the research and development of new projects are continuously monitored by the Directors. The Directors consider that the criteria to capitalise development expenditure are not met for a product prior to that product receiving regulatory approval in at least one country.

Development expenditure not satisfying the above criteria, and expenditure on the research phase of internal projects are included in research and development costs recognised in the Consolidated Statement of Comprehensive Income as incurred. No projects have yet reached the point of capitalisation.

Impairment of non-financial assets

Assets that have an indefinite useful life, for example goodwill, or intangible assets not ready for use, such as IPRD, are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use.

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). The Group at 31 December 2021 had only one cash generating unit (2020: one, 2019: one), as set out in note 13. Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of impairment at each reporting date.

Impairment charges are included in profit or loss, except, where applicable, to the extent they reverse gains previously recognised in other comprehensive income. An impairment loss recognised for goodwill is not reversed.

Patents and trademarks

The costs incurred in establishing patents and trademarks are either expensed in accordance with the corresponding treatment of the development expenditure for the product to which they relate or capitalised if the development expenditure to which they relate has reached the point of capitalisation as an intangible asset.

F-15

1 Accounting policies (continued)

Foreign currency

Transactions entered into by subsidiary entities in a currency other than the currency of the primary economic environment, in which they operate, are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the reporting date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in profit or loss.

The presentational currency of the Group is Pounds Sterling. Foreign subsidiaries use the local currencies of the country where the operate. On consolidation, the results of overseas operations are translated into Pounds Sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations, including goodwill arising on the acquisition of those operations, are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income and accumulated in the foreign exchange reserve.

Exchange differences recognised in the profit or loss of Group entities on the translation of long-term monetary items forming part of the Group’s net investment in the overseas operation concerned are reclassified to other comprehensive income and accumulated in the foreign exchange reserve on consolidation.

On disposal of a foreign operation, the cumulative exchange differences recognised in the foreign exchange reserve relating to that operation up to the date of disposal are transferred to the consolidated statement of comprehensive income as part of the gain or loss on disposal.

Financial assets and liabilities

Assets at amortised cost

The Group does not have any financial assets which it would classify as fair value through profit or loss. Therefore, all financial assets are classed as assets at amortised cost as defined below.

These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of goods and services to customers (e.g. trade receivables), but also incorporate other types of contractual monetary asset. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.

For impairment provisions, the Group applies the IFRS 9 simplified approach to measure expected credit losses using a lifetime expected credit loss provision for trade receivables to measure expected credit losses on a collective basis. Trade receivables are grouped based on a similar credit risk and ageing

The expected loss rates are based on the Group’s historic credit losses experienced over the three-year period prior to the period end. The historic loss rates are then adjusted for current and forward-looking information on macroeconomic factors.

Assets at amortised cost (continued)

The Group’s assets at amortised costs comprise trade and other receivables and cash and cash equivalents in the consolidated statement of financial position.

Cash and cash equivalents include cash in hand, deposits held at call with original maturities of three months or less.

F-16

1 Accounting policies (continued)

Financial liabilities

The Group classifies its financial liabilities into one of two categories, depending on the purpose for which the liability was acquired.

Fair value through profit and loss (‘FVTPL’)

The Group has outstanding warrants in the ordinary share capital of the company. The number of ordinary shares to be issued when exercised is fixed, however the exercise price is denominated in US Dollars being different to the functional currency of the parent company. Therefore, the warrants are classified as equity settled derivative financial liabilities recognised at fair value through the profit and loss account.

The financial liability is valued using the either the Monte Carlo model or the Black-Scholes option pricing model. Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on re-measurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the ‘finance income’ or ‘finance expense’ lines item in the income statement. Fair value is determined in the manner described in note 20.

Other financial liabilities include the following items:

• Borrowings are initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument. Such interest-bearing liabilities are subsequently measured at amortised cost using the effective interest rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the consolidated statement of financial position. Interest expense in this context includes initial transaction costs and premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.

• Government loans received on favourable terms below market rate are discounted at a market rate of interest. The difference between the present value of the loan and the proceeds is held as a government grant within deferred revenue and is released to research and development expenditure or grant income in line with when the asset or expenditure is recognised in the income statement.

• Trade payables and other short-term monetary liabilities are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method.

Share capital

Financial instruments issued by the Group are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset. The Group has two classes of share in existence:

• ordinary shares of £0.001 each are classified as equity instruments;

• deferred shares of £1 each are classified as equity instruments.

On 2 March 2020 a resolution was passed at a general meeting of shareholders of the Company to consolidate its ordinary shares on a one for 20 basis into new ordinary shares of £0.001 each in the capital of the Company.

Comparative figures in these financial statements reflect the impact of the share consolidation.

Retirement benefits: defined contribution schemes

Contributions to defined contribution pension schemes are charged to the consolidated statement of comprehensive income in the year to which they relate.

Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event; it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Share-based payments

The Group operates a number of equity-settled, share-based compensation plans, under which the entity receives services from employees as consideration for equity instruments (options) of the Group. The fair value of the employee services received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed is determined by reference to the fair value of the options granted:

• including any market performance conditions (including the share price);

• excluding the impact of any service and non-market performance vesting conditions (for example, remaining an employee of the entity over a specified time period); and

• including the impact of any non-vesting conditions (for example, the requirement for employees to save).

Non-market performance and service conditions are included in assumptions about the number of options that are expected to vest. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. Where vesting conditions are

F-17

1 Accounting policies (continued)

Share-based payments (continued)

accelerated on the occurrence of a specified event, such as a change in control or initial public offering, such remaining unvested charge is accelerated
to the income statement.

In addition, in some circumstances employees may provide services in advance of the grant date and therefore the grant date fair value is estimated for the purposes of recognising the expense during the period between service commencement period and grant date.

At the end of each reporting period, the Group revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity. When the options are exercised, the Company issues new shares. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium.

Leases

Identifying Leases

The Group accounts for a contract, or a portion of a contract, as a lease when it conveys the right to use an asset for a period of time in exchange for consideration. Leases are those contracts that satisfy the following criteria:

(a) There is an identified asset;

(b) The Group obtains substantially all the economic benefits from use of the asset; and

(c) The Group has the right to direct use of the asset.

The Group considers whether the supplier has substantive substitution rights. If the supplier does have those rights, the contract is not identified as giving rise to a lease.

In determining whether the Group obtains substantially all the economic benefits from use of the asset, the Group considers only the economic benefits that arise from the use of the asset, not those incidental to legal ownership or other potential benefits.

In determining whether the Group has the right to direct use of the asset, the Group considers whether it directs how and for what purpose the asset is used throughout the period of use. If there are no significant decisions to be made because they are pre-determined due to the nature of the asset, the Group considers whether it was involved in the design of the asset in a way that predetermines how and for what purpose the asset will be used throughout the period of use. If the contract or portion of a contract does not satisfy these criteria, the Group applies other applicable IFRSs rather than IFRS 16.

All leases are accounted for by recognising a right-of-use asset and a lease liability except for:

Leases of low value assets; and

Leases with a duration of 12 months or less.

Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the group’s incremental borrowing rate on commencement of the lease.

Right of use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for lease payments made at or before commencement of the lease. The Group has taken advantage of the practical expedient to ignore the requirement to separate non-lease components and instead account for the entire contract as a single lease.

Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease.

When the group revises its estimate of the term of any lease (because, for example, it re-assesses the probability of a lessee extension or termination option being exercised), it adjusts the carrying amount of the lease liability to reflect the payments to make over the revised term, which are discounted using a revised discount rate. An equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortised over the remaining (revised) lease term. If the carrying amount of the right-of-use asset is adjusted to zero, any further reduction is recognised in profit or loss.

In 2018 the Group entered into a sublease agreement to mitigate the impact of an otherwise onerous lease on the closure of its Abingdon site. This has been recognised as a lease receivable as the Group determined that the sublease meets the definition of a finance lease under the transitional provisions of IFRS16 and therefore, no right-of-use asset is recognised. During 2020 the lease and sub-lease ended.

Nature of leasing activities (in the capacity as lessee)

The group leased a number of properties in the jurisdictions from which it operates. In some jurisdictions it is customary for lease contracts to provide for payments to increase each year by inflation or and in others to be reset periodically to market rental rates. As at 31 December 2021 the Group had one property lease in place in the UK.

F-18

1       Accounting policies (continued)

Deferred taxation

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the consolidated statement of financial position differs from its tax base, except for differences arising on:

• the initial recognition of goodwill;

• the initial recognition of an asset or liability in a transaction which is not a business combination and at the time
of the transaction affects neither accounting or taxable profit; and

• investments in subsidiaries and jointly controlled entities where the Group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.

Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised.

The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting date and are expected to apply when the deferred tax assets or liabilities are recovered or settled.

Property, plant and equipment

Items of property, plant and equipment are initially recognised at cost. As well as the purchase price, cost includes directly attributable costs.

Depreciation is provided on all items of property, plant and equipment so as to write off their carrying value over their expected useful economic lives. It is provided at the following rates:

Fixtures and fittings	– 20%- 25% per annum straight line
Leasehold improvements	– the shorter of 10% per annum straight line or over the lease term
Computer equipment	– 25% per annum straight line
Laboratory equipment	– 15% – 25% per annum straight line
Right of use asset	– Economic life of contractual relationship

F-19

2 Critical accounting estimates and judgements

The preparation of these consolidated financial statements requires the Group to make estimates, assumptions and judgments that can have a significant impact on the reported amounts of assets and liabilities, revenue and expenses and related disclosure of contingent assets and liabilities, at the respective dates of our financial statements. The Group bases its estimates, assumptions and judgments on historical experience and various other factors that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. Management evaluates estimates, assumptions and judgments on a regular basis and makes changes accordingly, and discusses critical accounting estimates with the board of Directors.

The following are considered to be critical accounting estimates:

Impairment of goodwill and intangible assets not yet ready for use

Goodwill and intangibles not yet ready for use are tested for impairment at the cash generating unit level on an annual basis at the year end and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a cash generating unit below its carrying value. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit.

The fair value of each cash generating unit or asset is estimated using the income approach, on a discounted cash flow methodology. This analysis requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, including for revenues and development costs, estimation of the long term rate of growth for the business, estimation of the useful life over which cash flows will occur and determination of our weighted-average cost of capital.

The carrying value of goodwill was £Nil (2020: £Nil; 2019: £2.3m) and intangibles not yet ready for use was £Nil (2020: £Nil; 2019:£10.1m) as at 31 December 2021 (note 12).

The estimates used to calculate the fair value of a cash generating unit change from year to year based on operating results and market conditions. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for each such unit.

In March 2020 the Group undertook a Strategic Review to re-evaluate its priorities in the context of available resources. The Board concluded that the Company was unlikely to conclude a license transaction or raise sufficient funds to continue the required remaining investment in MTD201 on a timely basis. The Board therefore decided to terminate further in-house development of the MTD201 programme with immediate effect and, in line with that decision, to close the Company’s MTD201 dedicated manufacturing facilities in Bilbao and offer redundancy to all 42 employees. As a result of the decision to terminate this program the Group recognised an impairment charge of £2.3m in the year to 31 December 2020 (2019: £Nil) against goodwill and an impairment charge against the IPRD of the Midatech Pharma (Wales) Ltd cash generating unit of £9.3m (2019:£Nil).

In June 2020 the Group received a letter from Secura Bio Inc., the licensor of Panobinostat, the active ingredient in the Group’s MTX110 development program, purporting to terminate our license. As a result of this purported termination an impairment charge of £0.8m was recognised in the year to 31 December 2020 against the acquired IPRD in relation to MTX110. See note 12 and 13.

Share-based payments

The Group accounts for share-based payment transactions for employees in accordance with IFRS 2 Share-based Payment, which requires the measurement of the cost of employee services received in exchange for the options on our ordinary shares, based on the fair value of the award on the grant date.

The Directors selected the Black-Scholes-Merton option pricing model as the most appropriate method for determining the estimated fair value of our share-based awards without market conditions. For performance-based options that include vesting conditions relating to the market performance of our ordinary shares, a Monte Carlo pricing model was used in order to reflect the valuation impact of price hurdles that have to be met as conditions to vesting.

The resulting cost of an equity incentive award is recognised as expense over the requisite service period of the award, which is usually the vesting period. Compensation expense is recognised over the vesting period using the straight-line method and classified in the consolidated statements of comprehensive income.

The assumptions used for estimating fair value for share-based payment transactions are disclosed in note 26 to our consolidated financial statements and are estimated as follows:

• volatility is estimated based on the average annualised volatility of a number of publicly traded peer companies in the biotech sector;

• the estimated life of the option is estimated to be until the first exercise period, which is typically the month after the option vests; and

• the dividend return is estimated by reference to our historical dividend payments. Currently, this is estimated to be zero as no dividend has been paid in the prior periods.

F-20

2 Critical accounting estimates and judgements (continued)

Financial liabilities

Fair value through profit and loss (‘FVTPL’)

The Group has outstanding warrants in the ordinary share capital of the company. The number of ordinary shares to be issued when exercised is fixed, however the exercise price is denominated in US Dollars being different to the functional currency of the parent company. Therefore, the warrants are classified as equity settled derivative financial liabilities recognised at fair value through the profit and loss account.

The financial liability is valued using the either the Monte Carlo model or the Black-Scholes option pricing model. Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on re-measurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the ‘finance income’ or ‘finance expense’ lines item in the income statement. Fair value is determined in the manner described in note 20.

The following are considered to be critical accounting judgments:

Revenue

Supply of Services

There are significant management judgements and estimates involved in the recognition of revenue from the supply of services. Revenue on services is recognised over the contract term, proportionate to the progress in overall satisfaction of the performance obligations (the services performed by the Group), measured by cost incurred to date out of total estimate of costs.

Income taxes

Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgment is required to determine the amount of deferred tax assets that can be recognised based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

In 2021, there were approximately £67.2m of gross unutilised tax losses carried forward (2020: £63.2m; 2019: £49.6m). No deferred tax asset has been provided in respect of these losses as there was insufficient evidence to support their recoverability in future periods.

Going Concern

We have has experienced net losses and significant cash outflows from cash used in operating activities over the past years as it develops its portfolio. For the year ended December 31, 2021 the Group incurred a consolidated loss from operations of £5.5million and negative cash flows from operations of £6.0million. As of December 31, 2021 the Group had an accumulated deficit of £127.8million.

Our future viability is dependent on our ability to raise cash from financing activities to finance our development plans until commercialisation, to generate cash from operating activities and to successfully obtain regulatory approval to allow marketing of our development products. Our failure to raise capital as and when needed could have a negative impact on our financial condition and ability to pursue our business strategies.

Our Group's consolidated financial statements have been presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

As at December 31, 2021, the Group had cash and cash equivalents of £10.1million. We forecast that we currently have enough cash to fund our planned operations into the first quarter of 2023.

We have prepared cash flow forecasts and considered the cash flow requirement for the Company for our next three years including the period twelve months from the date of the approval of the financial statements. These forecasts show that further financing will be required during the course of the next 12 months, assuming, inter alia, that certain development programs and other operating activities continue as currently planned. This requirement for additional financing represents a material uncertainty that raises substantial doubt about our ability to continue as a going concern.

In addition, the global pandemic COVID-19 virus places increased uncertainty over the Directors’ forecasts. The restrictions that have been placed on the movement of people caused delays to some of the Group’s plans. The Directors have established a COVID-19 task force internally to monitor the impact of COVID-19 on the business and prioritize activities to minimize its continuing effect.

In addition to utilizing the existing cash reserves, we and our advisors are evaluating a number of near-term funding options potentially available to us, including fundraising and the partnering of assets and technologies of the Company. After considering the uncertainties, we considered it is appropriate to continue to adopt the going concern basis in preparing these financial information.

Our ability to continue as a going concern is dependent upon our ability to obtain additional capital and/or dispose of assets, for which there can be no assurance we will be able to do on a timely basis, on favorable terms or at all.

F-21

3 Segment Information

Revenue from contracts with customers

Geographical analysis of revenue by destination of customer

	2021 £’000		2020 £’000		2019 £’000
Revenue from continuing operations:
United Kingdom		–		4		197
Belgium		578		114		–
Rest of Europe		–		–		55
Rest of the World		–		62		60
		578		180		312

All revenue from continuing operations came from the sale of services in 2021, 2020 and 2019.

In 2021, all revenue from continuing operations came from 1 customer (2020: 3 customers; 2019: 3 customers). Within revenue from discontinued operations for 2018, reported in the consolidated statement of comprehensive income under loss from discontinued operations, four customers each accounted for at least 10% of revenue from discontinued operations:

	2021 £’000			2020 £’000			2019 £’000
Customer A		100	%		64	%		63	%
Customer B		–			34	%		19	%
Customer C		–			2	%		18	%

The Group contains one reportable operating segment, Pipeline Research and Development (‘Pipeline R&D’). This segment seeks to develop products using the Group’s nanomedicine and sustained release technology platforms.

The accounting policies of the reportable segments are consistent with the Group’s accounting policies described in note 1. Segment results represent the result of each segment without the allocation of head office expenses, interest expense, interest income and tax.

No measures of segment assets and segment liabilities are reported to the Group’s Board of Directors in order to assess performance and allocate resources. There is no intersegment activity and all revenue is generated from external customers.

Both the UK and Spanish entities meet the aggregation criteria and have therefore been presented as a single reportable segment under Pipeline R&D. The research and development activities involve the discovery and development of pharmaceutical products in the field of nanomedicine and sustained release technology.

The cost recognised in the year to 31 December 2019 as a discontinued operation relate to a claim made by Midatech Pharma US, Inc. (“MPUS”) under the warranties provided by Midatech under the Stock Purchase Agreement entered into in connection with the disposal of MPUS, see note 4.

In the following segmented results tables, depreciation and amortisation allocated to research and development costs, and administrative costs in the consolidated statements of comprehensive income, are presented separately.

F-22

3 Segment Information (continued)

Segmented results for the year ended 31 December 2021

	Pipeline R&D £’000
Revenue		578
Total revenue		578
Other income		24
Research and development costs (excluding depreciation)		(4,291	)
Administrative costs (excluding depreciation)		(2,906	)
Depreciation		(403	)
Loss from operations		(6,998	)
Finance income		936
Finance expense		(44	)
Loss before tax		(6,106	)
Taxation		646
Loss for the year from continuing operations		(5,460	)

Depreciation in year allocated as follows:

	Depreciation £’000
Research and development costs		363
Administrative costs		40
Total		403

F-23

3 Segment Information (continued)

Segmented results for the year ended 31 December 2020

	Pipeline R&D £’000
Revenue		180
Grant revenue		163
Total revenue		343
Other income		12
Research and development costs (excluding depreciation and amortisation)		(4,886	)
Administrative costs (excluding depreciation and amortisation)		(4,923	)
Depreciation		(1,207	)
Amortisation		(10	)
Impairment		(12,369	)
Loss from operations		(23,040	)
Finance income		1
Finance expense		(431	)
Loss before tax		(23,470	)
Taxation		1,281
Loss for the year from continuing operations		(22,189	)

Depreciation and amortisation in year allocated as follows:

	Depreciation £’000		Amortisation £000
Research and development costs		1,174		8
Administrative costs		33		2
Total		1,207		10

F-24

3 Segment Information (continued)

Segmented results for the year ended 31 December 2019

	Pipeline R&D £’000			Commercial (discontinued) £’000			Consolidated (including discontinued operations) £’000
Revenue		312			–			312
Grant revenue		362			–			362
Total revenue		674			–			674
Other income		15			–			15
Research and development costs (excluding depreciation and amortisation)		(6,624	)		–			(6,624	)
Distribution costs, sales and marketing		(323	)		–			(323	)
Administrative costs (excluding depreciation)		(3,775	)		–			(3,775	)
Loss from discontinued operations, net of tax		–			(947	)		(947	)
Depreciation		(1,282	)		–			(1,282	)
Amortisation		(3	)		–			(3	)
Loss from operations		(11,318	)		(947	)		(12,265	)
Finance income		492			–			492
Finance expense		(97	)		–			(97	)
Loss before tax		(10,923	)		(947	)		(11,870	)
Taxation		1,785			–			1,785
Loss for the year		(9,138	)		(947	)		(10,085	)
Loss from continuing operations								(9,138	)
Loss from discontinued operations								(947	)

All material additions to non-current assets in 2021, 2020 and 2019 were in the Pipeline R&D segment.

Non-current assets by location of assets

	2021 £’000		2020 £’000		2019 £’000
United Kingdom		1,152		542		12,775
Spain		–		–		4,383
		1,152		542		17,158

F-25

4 Discontinued operations

During 2018, the Group made the decision to sell MPUS, its Commercial business based in the US. The sale completed on 1 November 2018 to an affiliate of Barings LLC, a member of the MassMutual Financial Group, for total consideration of up to $19m. This included $6m of consideration contingent payable on the achievement of various net revenue milestones for the MPUS business for the financial years 2018 and 2019. MPUS did not achieve the net revenue milestones in either 2018 or 2019, as a result no contingent consideration was received during 2019.

Under the terms of the Stock Purchase Agreement, the Group agreed to indemnify the Purchaser against, inter alia, any liability related to any prescription drug user fee amounts owed to the United States Food and Drug Administration (“FDA”) under the Prescription Drug Fee User Act (“PDUFA”) by MPUS for the United States government’s fiscal year ended 30 September 2018.

MPUS had successfully obtained waivers for user fees for all prior fiscal periods in which it was liable under PDUFA and entered into the Stock Purchase Agreement with the Purchaser confident that a further waiver would be obtained. However, during 2019 MPUS sought approval from the FDA for a filing relating to one of its commercial products and was informed by the FDA that the approval would not be forthcoming whilst the PDUFA fee remained unpaid. Consequently, MPUS paid the PDUFA fee of £0.95m and then, in accordance with the terms of the Stock Purchase Agreement, Midatech deposited the same amount with MPUS, pending completion of the waiver application process.

At 31 December 2019 Management considered the recoverability of the sum paid under the warranty, and although the waiver process was still on-going, Management concluded, based on third party advice, that the probability of successfully achieving the waiver had diminished and therefore took the decision to expense the cost of the warranty claim in 2019. As a result of Fortovia Theraputics Inc (formerly MPUS) filing for bankruptcy during 2020 the waiver claim is no longer being pursued.

The post-tax loss on disposal of discontinued operations was determined as follows:

Result of discontinued operations	2021 £’000		2020 £’000		2019 £’000
Revenue		–		–		–
Expenses other than finance costs		–		–		(947	)
Finance costs		–		–		–
Impairment		–		–		–
Loss from discontinued operations before tax		–		–		(947	)
Taxation		–		–		–
Loss on disposal of discontinued operations		–		–		–
Loss for the year from discontinued operations after tax		–		–		(947	)

Statement of cash flows	2021 £’000		2020 £’000		2019 £’000
The statement of cash flows includes the following amounts relating to discontinued operations:
Operating activities		–		–		–
Investing activities		–		–		(947	)
Financing activities		–		–		–
Net cash flow from discontinued operations		–		–		(947	)

F-26

5 Loss from operations

	2021 £’000			2020 £’000			2019 £’000
Loss from operations is stated after charging/(crediting):
Depreciation of property, plant and equipment
– From continuing operations		213			1,089			979
Depreciation of right of use asset
– From continuing operations		190			118			303
Amortisation of intangible assets – product and marketing rights		–
– From continuing operations		–			10			3
Impairment of intangible assets		–			12,369			–
Fees payable to the Company’s auditor for the audit of the parent Company		88			87			110
Fees payable to the Company’s subsidiary auditors for the audits of the subsidiary accounts		44			43			48
Fees payable to the Company’s auditor for:
– Other services		–			7			66
Fees payable to the Company’s previous auditor for the audit of the parent Company		–			15			–
Fees payable to the Company’s previous auditor for:
-       Other services		41			171			–
Foreign exchange(gain)/loss		12			96			131
Profit/(Loss) on disposal of property, plant and equipment		(42	)		(226	)		–
Equity settled share-based payment*		89			(404	)		(34	)

• credit recognised in prior years due to employees leaving the company and the subsequent reversal of the cumulative share based payment charge relating to share options under the 2014 Midatech Pharma plc Enterprise Management Incentive Scheme.

F-27

6 Staff costs

Staff costs (including Directors), for continuing and discontinued operations, comprise:

	2021 £’000		2020 £’000			2019 £’000
Wages and salaries		1,354		2,727			2,762
Defined contribution pension cost (note 25)		71		75			90
Social security contributions and similar taxes		152		397			565
Share-based payment charge/(credit)		89		(404	)		(34	)
	1,666		2,795			3,383
Continuing operations		1,666		2,795			3,383
Discontinued operations		–		–			–
	1,666		2,795			3,383

Employee numbers

The average number of staff employed by the Group during the financial year, for continuing and discontinued operations, amounted to:

	2021		2020		2019
Research and development		15		31		52
General and administration		5		9		13
		20		40		65

Key management personnel compensation

	2021 £’000		2020 £’000			2019 £’000
Short term employee benefits		658		472			812
Wages and salaries		–		–			656
Payments made to third parties		–		–			82
Social security contributions and similar taxes		–		–			72
Benefits in kind		–		–			2
Post-employment benefits		27		24			42
Defined contribution pension cost		–		–			42
Termination benefits		–		30			–
Share-based payment		61		(472	)		(58	)
		746		54			796

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group, including the Directors of the Company, Chief Executive Officer and the Chief Scientific Officer .

None of the Directors have exercised share options during the year (2020: nil, 2019: nil).

During the year 1 Directors (2020:2; 2019: 3) participated in a defined contribution pension scheme.

F-28

7 Finance income and expense

	2021 £’000		2020 £’000		2019 £’000
Finance income
Interest received on bank deposits		–		1		8
Gain on equity settled derivative financial liability		936		–		484
Total finance income		936		1		492

	2021 £’000		2020 £’000		2019 £’000
Finance expense
Interest expense on lease liabilities		36		20		30
Other loans		8		14		67
Loss on equity settled derivative financial liability		–		397		–
Total finance expense		44		431		97

The gain/(loss) on the equity settled derivative financial liability in 2021, 2020 and 2019 arose as a result of the movement in share price (note 20).

F-29

8 Taxation

	2021 £’000		2020 £’000			2019 £’000
Current tax credit
Current tax credited to the income statement		646		1,144			1,782
Taxation payable in respect of foreign subsidiary		–		(21	)		–
Adjustment in respect of prior year		–		158			3
	646		1,281			1,785
Deferred tax credit
Reversal of temporary differences		–		–			–
Total tax credit		646		1,281			1,785

There was no tax charge relating to discontinued operations for 2021, 2020 and 2019.

The reasons for the difference between the actual tax charge for the year and the standard rate of corporation tax in the United Kingdom applied to losses for the year are as follows:

	2021 £’000			2020 £’000			2019 £’000
Loss before tax		(6,106	)		(23,470	)		(11,870	)
Expected tax credit based on the standard rate of United Kingdom corporation tax at the domestic rate of 19%		(1,160	)		(4,459	)		(2,255	)
Expenses not deductible for tax purposes		75			596			1,087
Income not taxable		(2	)		(75	)		–
Unrelieved tax losses and other deductions		–			–			(114	)
Adjustment in respect of prior period		–			(158	)		(3	)
Surrender of tax losses for R&D tax refund		(280	)		(491	)		(1,810	)
Foreign exchange differences					–			1
Deferred tax not recognised		721			3,306			1,309
Total tax credited to the income statement		(646	)		(1,281	)		(1,785	)

The taxation credit arises on the enhanced research and development tax credits accrued for the respective periods.

An adjustment has been recognised in 2020 in respect of the prior period of £158k, this is as a result of a more detailed review of cost classification prior to the submission of tax returns to HMRC in 2020.

F-30

9 Loss per share

	2021 £’000			2020 £’000			2019 £’000
Numerator
Loss used in basic EPS and diluted EPS:
Continuing operations		(5,460	)		(22,189	)		(9,138	)
Discontinued operations		–			–			(947	)
Denominator
Weighted average number of ordinary shares used in basic EPS:		80,546,881			42,839,961			18,330,588
Basic and diluted loss per share:
Continuing operations – pence		(7	)p		(52	)p		(50	)p
Discontinued operations – pence		–			–			(5	)p

On 2 March 2020 a resolution was passed at a general meeting of shareholders of the Company to consolidate its ordinary shares on a one for 20 basis into new ordinary shares of 0.1p each in the capital of the Company. The comparative denominator has been calculated to reflect the share consolidation.

The Group has made a loss in the current and previous years presented, and therefore the options and warrants are anti-dilutive. As a result, diluted earnings per share is presented on the same basis for all periods shown.

F-31

10 Property, plant and equipment

	Fixtures and fittings £’000			Leasehold improvements £’000			Computer equipment £’000			Laboratory equipment £’000			Right of use asset £’000			Total £’000
Cost
At 1 January 2019		253			2,013			383			3,651			–			6,300
Adoption of IFRS 16 Leases		–			–			–			–			395			395
Additions		4			137			23			223			822			1,209
Effect of modification to lease terms		–			–			–			–			(82	)		(82	)
Exchange differences		(9	)		(112	)		(3	)		(136	)		(11	)		(271	)
At 31 December 2019		248			2,038			403			3,738			1,124			7,551
Additions		–			58			16			135			–			209
Effect of modification to lease terms		–			–			–			–			(678	)		(678	)
Disposal		(202	)		(2,184	)		(185	)		(2,323	)		(316	)		(5,210	)
Exchange differences		7			92			2			112			58			271
At 31 December 2020		53			4			236			1,662			188			2,143
Additions		57			53			16			194			720			1,040
Transfer		–			–			–			(155	)		155			–
Effect of modification to lease terms		–			–			–			–			(24	)		(24	)
Disposal		(50	)		(4	)		(10	)		(138	)		(164	)		(366	)
At 31 December 2021		60			53			242			1,563			875			2,793
		Fixtures and fittings £’000			Leasehold improvements £’000			Computer equipment £’000			Laboratory equipment £’000			Right of use asset £’000			Total £’000
Accumulated depreciation
At 1 January 2019		241			1,485			265			2,326			–			4,317
Charge for the year		2			400			70			507			303			1,282
Exchange differences		(8	)		(91	)		(3	)		(93	)		(7	)		(202	)
At 31 December 2019		235			1,794			332			2,740			296			5,397
Charge for the year		9			310			50			720			118			1,207
Disposals		(202	)		(2,183	)		(185	)		(2,300	)		(316	)		(5,186	)
Exchange differences		7			81			2			79			14			183
At 31 December 2020		49			2			199			1,239			112			1,601
Transfer		–			–			–			(74	)		74			–
Charge for the year		8			5			22			178			190			403
Disposals		(50	)		(3	)		(8	)		(138	)		(164	)		(363	)
At 31 December 2021		7			4			213			1,205			212			1,641
Net book value
At 31 December 2021		53			49			29			358			663			1,152
At 31 December 2020		4			2			37			423			76			542
At 31 December 2019		13			244			71			998			828			2,154

F-32

11 Leases

Lease Liabilities	2021 £’000			2020 £’000			2019 £’000
At 1 January		76			907			546
Additions		720			–			822
Transfer		77			–			–
Effect of modification to lease terms		(24	)		(788	)		(82	)
Interest expenses		29			15			24
Lease payments		(112	)		(105	)		(391	)
Exchange differences		–			47			(12	)
At 31 December		766			76			907

The right of use asset is disclosed in note 10.

In April 2021 the Group signed an agreement to lease new premises in Cardiff, Wales, to house its corporate offices and laboratories. The agreement to lease allowed the Group to carry out the Cat A works and fit out prior to completion of the lease and its occupation in August 2021. The lease agreed was for a 5 year period with no break clause. The lease has been recognised as a right of use asset during the year from the date of the agreement to lease.

In May 2021 the Group provided notice to terminate its property lease on its historical building in Cardiff. The lease required 6 month’s notice.

During 2020 as a result of the closure of the Group’s operations in Spain two property leases were terminated early, this impacted both the right of use asset and the lease liability.

Management considered the appropriate life of a lease in the UK in 2021, 2020 and 2019 and adjusted the right of use asset and lease liability accordingly.

Low value leases expensed in year:

	2021 £’000		2020 £’000		2019 £’000
Low value leases expensed		2		10		29
	2		10		29

F-33

12 Intangible assets

	In-process research and development £’000		Goodwill £’000		IT/Website costs £’000			Total £’000
Cost
At 1 January 2019		13,378		2,291		28			15,697
Additions		–		–		9			9
Foreign exchange		–		–		(2	)		(2	)
At 31 December 2019		13,378		2,291		35			15,704
Disposal		–		–		(36	)		(36	)
Foreign exchange		–		–		1			1
At 31 December 2020		13,378		2,291		–			15,669
At 31 December 2021		13,378		2,291		–			15,669
		In-process research and development £’000		Goodwill £’000		IT/Website Costs £’000			Total £’000
Accumulated amortisation and impairment
At 1 January 2019		3,300		–		23			3,323
Amortisation charge for the year		–		–		3			3
Foreign exchange		–		–		(1	)		(1	)
At 31 December 2019		3,300		–		25			3,325
Amortisation charge for the year		–		–		10			10
Disposal		–		–		(36	)		(36	)
Impairment		10,078		2,291		–			12,369
Foreign exchange		–		–		1			1
At 31 December 2020		13,378		2,291		–			15,669
At 31 December 2021		13,378		2,291		–			15,669
Net book value
At 31 December 2021		–		–		–			–
At 31 December 2020		–		–		–			–
At 31 December 2019		10,078		2,291		10			12,379

F-34

12 Intangible assets (continued)

The individual intangible assets, excluding goodwill, which are material to the financial statements are:

Carrying amount

Remaining amortisation period

2021 £’000

2020 £’000

2019 £’000

2021 (years)

2020 (years)

2019 (years)

Midatech Pharma (Wales) Limited acquired IPRD

–

–

9,300

n/a

n/a

n/a in process

MTX110 acquired IPRD

–

–

778

n/a

n/a

n/a in process

–

–

10,078

In 2020 an impairment charge of £0.8m was recorded in relation to the acquire IPRD on MTX110. The impairment was as a result of the termination of a License Agreement between the Company and Secura Bio Inc. Pursuant to the License Agreement, Midatech Limited was granted a non-exclusive worldwide, sub-licenseable license to certain patents of Panobinostat, the active pharmaceutical ingredient of the Company’s development product MTX110.

13 Impairment testing

Midatech Pharma (Wales) Ltd

Details of goodwill and IPRD allocated to the acquired cash generating unit and the valuation basis are as follows:

	Indefinite lived
	IPRD carrying amount				Goodwill carrying amount
Name		2021 £’000	2020 £’000	2019 £’000		2021 £’000	2020 £’000	2019 £’000	Valuation Basis
CGU – Midatech Pharma (Wales) Ltd		–	–	9,300		–	–	2,291		Value in use

As a result of the Board’s decision to terminate its MTD201 program in March 2020 an impairment charge of £11.6m was recorded in that year in the assets of Midatech Pharma (Wales) Ltd (‘MPW’) CGU. The impairment charge was £9.3m of IPRD and £2.3m acquired goodwill. See note 2.

The assets of MPW were valued as at 31 December 2019 were found to support the IPRD and goodwill carrying amounts set out above. The IPRD was valued using 12-13 year risk adjusted cash flow forecasts, in line with patent life, that had been approved by the Board. A period longer than 5 years was appropriate on the basis that the investment was long term and the development and commercialisation process is typically in excess of 5 years. Beyond the period from product launch and initial market penetration, a long term growth rate of Nil was used.

The key assumptions used in the valuation model examining the MPW Ltd cash generating unit include the following:

Schedule of key assumptions used

Assumptions	2021		2020		2019
Pre-tax discount rate		n/a		n/a		18.4	%
Cumulative probability of success of projects		n/a		n/a		81	%

The discount rate is an estimated market-based weighted average cost of capital for the MPW business, determined at the date of acquisition. Cumulative probability of success of projects is the product of the probability of success of each remaining major phase of development for each individual IPRD component. These phase probabilities were determined by management with reference to the risks associated with each remaining development stage.

F-35

13 Impairment testing (continued)

Sensitivity analysis

If any one of the following changes were made to the above key assumptions, the carrying value and recoverable amount would be equal.

Assumptions	2021		2020		2019
Pre-tax discount rate for all projects		n/a		n/a		increase to 21%
Cumulative probability of success of project		n/a		n/a		59	%

14 Subsidiaries

The subsidiaries of Midatech Pharma plc, all of which are 100% owned, either directly or through subsidiaries where indicated, and have been included in these financial statements in accordance with the details set out in the basis of preparation and basis of consolidation note 1, are as follows:

Name	Registered Office	Nature of Business	Notes
Midatech Limited	1 Caspian Point, Caspian Way, Cardiff, CF10 4DQ	Trading company
PharMida AG	c/o Kellerhals, Hirschgässlein 11, 4051 Basel, Switzerland	Dormant	(a) (b)
Midatech Pharma (Wales) Limited	1 Caspian Point, Caspian Way, Cardiff, CF10 4DQ	Trading company

Notes:

(a)       Wholly owned subsidiary of Midatech Limited.

(b)       PharMida AG became dormant in January 2016.

(c)       Midatech Pharma PTY was incorporated on 16 February 2015 and dissolved November 2020.

15 Trade and other receivables

	2021 £’000		2020 £’000		2019 £’000
Trade receivables		33		95		22
Prepayments		607		258		151
Other receivables		394		219		3,444
Total trade and other receivables		1,034		572		3,617
Less: non-current portion (rental deposit and on bond)		–		–		(2,625	)
Current portion		1,034		572		992

Trade and other receivables do not contain any impaired assets. The Group does not hold any collateral as security and the maximum exposure to credit risk at the consolidated statement of financial position date is the fair value of each class of receivable.

Book values approximate to fair value at 31 December 2021, 2020 and 2019.

During 2019 a cash-backed guarantee was provided to the Spanish Government in relation to a loan provided to the Group under its Reindustrialization programme, see note 18. As a result of the closure of Midatech Pharma (España) SL during 2020 the cash-back guarantee was released on the repayment of the loan to the Spanish Government.

F-36

16 Cash and cash equivalents and cash flow supporting notes

Cash and cash equivalents for purposes of the consolidated statement of cash flows comprises:

	2021 £’000		2020 £’000		2019 £’000
Cash at bank available on demand		10,057		7,546		10,928

During 2021, 2020 and 2019, cash inflows arose from equity financing transactions, included within financing activities on the face of the cash flow statement. As part of the equity transaction in July 2021 warrants to the value of £Nil (May 2020: £1.0m; October 2019 : £1.1m) were issued as disclosed in note 20.

	2021 £’000			2020 £’000			2019 £’000
Gross proceeds		10,091			10,792			15,767
Transaction costs		(1,056	)		(1,050	)		(1,659	)
		9,035			9,742			14,108

The following changes in loans and borrowings arose as a result of financing activities during the year:

	Non-current liabilities £’000			Current liabilities £’000			Total £’000
At 1 January 2021		60			200			260
Cash flows		–			(215	)		(215	)
Non-cashflows:
Foreign Exchange		–			(4	)		(4	)
New leases		715			5			720
Effect of modification to lease term – IFRS 16		–			(24	)		(24	)
Loans and borrowings classified as non-current 31 December 2020 becoming current in 2021		(178	)		178			–
Interest accruing in period		23			6			29
At 31 December 2021		620			146			766

F-37

16 Cash and cash equivalents and cash flow supporting notes(continued)

	Non-current liabilities £’000			Current liabilities £’000			Total £’000
At 1 January 2020		5,670			412			6,082
Cash flows		(6,182	)		(258	)		(6,440	)
Non-cashflows:
Foreign Exchange		252			23			275
Fair value changes		1,176			–			1,176
Effect of modification to lease term – IFRS 16		(877	)		89			(788	)
Reclassification portion government loan to non-current		51			(51	)		–
Interest accruing in period		(30	)		(15	)		(45	)
At 31 December 2020		60			200			260

	Non-current liabilities £’000			Current liabilities £’000			Total £’000
At 1 January 2019		884			368			1,252
Cash flows		5,575			(1,027	)		4,548
Non-cashflows:
Foreign Exchange		(42	)		(29	)		(71	)
Fair value changes		(1,139	)		–			(1,139	)
Adoption of IFRS16 leases		163			383			546
Effect of modification to lease term – IFRS 16		–			(82	)		(82	)
New leases		805			95			900
Loans and borrowings classified as non-current 31 December 2018 becoming current in 2019		(685	)		685			–
Transfer to grant income		–			(14	)		(14	)
Interest accruing in period		108			34			142
At 31 December 2019		5,670			412			6,082

F-38

17 Trade and other payables

Current	2021 £’000		2020 £’000		2019 £’000
Trade payables		485		337		725
Other payables		5		26		13
Accruals		546		768		1,765
Total financial liabilities, excluding loans and borrowings, classified as financial liabilities measured at amortised cost		1,036		1,131		2,503
Tax and social security		56		31		86
Deferred revenue and government grants		–		68		1,905
Total trade and other payables		1,092		1,230		4,494

Book values approximate to fair value at 31 December 2021, 2020 and 2019.

All current trade and other payables are payable within 3 months of the period end date shown above.

Government grants

The Group received development grant funding from the European Union under the Horizon 2020 ‘Nanofacturing’ project, a European Union funded programme to develop a scalable manufacturing platform for the production of nanopharmaceutical products. Midatech participated in this programme, along with seven other entities, through two Group companies, Midatech Pharma España SL (‘MPE’), which acted as project coordinator, and Midatech Limited (‘MTL’). The project commenced in February 2015 and completed in January 2019. During the year £nil (2020: £nil, 2019: £124k) revenue was recognised in relation to this project and the deferred revenue balance as at 31 December 2021 was £nil (2020: £nil, 2019: £nil).

F-39

18 Borrowings

	2021 £’000		2020 £’000		2019 £’000
Current
Lease liabilities		146		93		233
Government and research loans		–		107		179
Total		146		200		412
Non-current
Lease liabilities		620		60		912
Government and research loans		–		–		4,758
Total		620		60		5,670

During 2021 a euro denominated government and research loan of £103k (2020: £6.2m) was repaid. This amount includes £ nil (2020: £1.2m) of government grants, which is included in the amounts disclosed in note 17. This amount translated at year end rate was £107k (2020: £4.8m).

Book values approximate to fair value at 31 December 2021, 2020 and 2019.

Obligations under finance leases are secured by a fixed charge over the fixed assets to which they relate.

Government loans in Spain

MPE previously had four Spanish government loans, three were repaid in 2020 with the final loan repaid in February 2021 prior to the liquidation of MPE.

Three of the loans were provided for the finance of research, technical innovation and the construction of their laboratory. The loan were term loans which carried an interest rate below the market rate and were repayable over periods through to 2024. As a result of the Group’s decision on 31 March 2020 to terminate further in-house development of MTD201 and the subsequent closure of its dedicated manufacturing facilities in Bilbao two of these loans were repaid in 2020, with the final loan being repaid in 2021.

The fourth loan received by MPE in September 2019 for €6.6m was awarded under the Spanish Government Reindustrialization programme. The Spanish Government required the company to provide a €2.9 million cash-backed guarantee as security for the loan. The funds were to be used to support Midatech’s manufacturing scale-up facilities construction. This loan was terminated and repaid early in 2020 as a result of the Group’s decision on 31 March 2020. As a result of the early termination interest was charged at market rates up to the date of satisfaction of the loan.

The loans carried default interest rates in the event of scheduled repayments not being met. On initial recognition, the loans are discounted at a market rate of interest with the credit being classified as a grant within deferred revenue. The deferred grant revenue is released to the consolidated statement of comprehensive income within research and development costs in the period to which the expenditure is recognised.

The deferred revenue element of the government loans is designated within note 17 as deferred revenue and Government grants, the gross contractual repayment of the loans is disclosed in note 21. As a result of the repayment of the loans these were fully amortised during 2020.

19 Provisions

	2021 £’000		2020 £’000			2019 £’000
Opening provision at 1 January		50		97			165
Utilisation of provision		–		(97	)
Provision recognised/(released) in the year		–		50			(68	)
At 31 December		50		50			97
Less: non-current portion		–		(50	)		–
Current portion		50		–			97

The provision as at 31 December 2021 and 2020 represents management’s best estimate of the ‘making good’ clause on the Cardiff office which was vacated during the fourth quarter of 2021.

The provision as at 31 December 2019 relates to the ‘making good’ clause on the Abingdon office which was vacated in December 2018. The Abingdon office was sub-let for the remaining period of the lease, which terminated in February 2020.

F-40

20 Derivative financial liability – current

Schedule of derivative financial liability

	2021 £’000			2020 £’000			2019 £’000
Equity settled derivative financial liability
At 1 January		1,559			664			–
Warrants issued		–			997			1,148
Transfer to share premium on exercise of warrants		(70	)		(499	)		–
Gain recognised in finance income within the consolidated statement of comprehensive income		(936	)		397			(484	)
At 31 December		553			1,559			664

Equity settled derivative financial liability is a liability that is not to be settled for cash.

May 2020 warrants

In May 2020 the Company issued 9,545,456 warrants in the ordinary share capital of the Company as part of a registered direct offering in the US. The number of ordinary shares to be issued when exercised is fixed, however the exercise price is denominated in US Dollars being different to the functional currency of the Company. Therefore, the warrants are classified as equity settled derivative financial liabilities recognised at fair value through the profit and loss account (‘FVTPL’). The financial liability is valued using the Monte Carlo model. Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on re-measurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the ‘finance income’ or ‘finance expense’ lines item in the income statement. Fair value is determined in the manner described in note 21. A key input in the valuation of the instrument is the Company share price. Exercise price per ADR is $2.05 and $2.0625.

October 2019 warrants

In October 2019 the Company issued 3,150,000 warrants in the ordinary share capital of the Company as part of a registered direct offering in the US. The number of ordinary shares to be issued when exercised is fixed, however the exercise price is denominated in US Dollars. The warrants are classified equity settled derivative financial liabilities and accounted for in the same way as those issued in May 2020. The financial liability is valued using the Monte Carlo model. The exercise price per ADR is $6.25.

DARA warrants and share options

The Group also assumed fully vested warrants and share options on the acquisition of DARA Biosciences, Inc. (which took place in 2015). The number of ordinary shares to be issued when exercised is fixed, however the exercise prices are denominated in US Dollars. The warrants are classified equity settled derivative financial liabilities and accounted for in the same way as those detailed above. The financial liability is valued using the Black-Scholes option pricing model. The exercise price of the warrants and options is $61.03 and $95.17 respectively.

The following table details the outstanding warrants as at 31 December and also the movement in the year:

	At 1 January 2019		Granted		Lapsed			At 31 December 2019		Granted		Exercised			At 31 December 2020		Lapsed			Exercised			At 31 December 2021
May 2020 grant		–		–		–			–		7,545,456		(2,500,000	)		7,045,456		–			(306,815	)		6,738,641
October 19 grant		–		3,150,000		–			3,150,000		–		–			3,150,000		–			–			3,150,000
DARA Warrants		116,206		–		(111,582	)		4,624		–		–			4,624		(544	)		–			4,080
DARA Options		6,167		–		(3,332	)		2,835		–		–			2,835		–			–			2,835

F-41

21 Financial instruments – risk management

The Group is exposed through its operations to the following financial risks:

• Credit risk

• Foreign exchange risk

• Liquidity risk

This note describes the Group’s policies and processes for managing those risks. The policy for managing these risks is reviewed and agreed with the Board, however it has delegated the authority for designing and operating processes that ensure the effective management of the risks to the Group’s management. .

Principal financial instruments

The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:

• Trade and other receivables

• Cash and cash equivalents

• Trade and other payables

• Accruals

• Loans and borrowings

• Derivative financial liability

A summary of the financial instruments held by category is provided below:

Financial assets – amortised cost

	2021 £’000		2020 £’000		2019 £’000
Cash and cash equivalents		10,057		7,546		10,928
Trade receivables		33		95		22
Other receivables		–		–		2,625
Total financial assets		10,090		7,641		13,575

Financial liabilities – amortised cost

	2021 £’000		2020 £’000		2019 £’000
Trade payables		485		337		725
Other payables		5		26		13
Accruals		546		768		1,765
Borrowings		766		260		6,082
Total financial liabilities – amortised cost		1,802		1,391		8,585

Financial liabilities – fair value through profit and loss – current

	2021 £’000		2020 £’000		2019 £’000
Equity settled derivative financial liability		553		1,559		664

F-42

21 Financial instruments – risk management (continued)

Fair value hierarchy

The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

• Level 1: quoted (unadjusted) prices in active markets for identical assets and liabilities;

• Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly; and

• Level 3: techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.

The fair value of the Group’s derivative financial liability is measured at fair value on a recurring basis. The following table gives information about how the fair value of this financial liability is determined, additional disclosure is given in note 20:

Financial liabilities	Fair value as at 31/12/2021		Fair value hierarchy	Valuation technique(s) and key input(s)	Significant unobservable input(s)	Relationship of unobservable inputs to fair value
Equity settled financial derivative liability	£	467,000	Level 3	Monte Carlo simulation model	Volatility rate of 95.0% determined using historical volatility of comparable companies.	The higher the volatility the higher the fair value.
					Expected life between a range of 0.1 and 3.88 years determined using the remaining life of the share options.	The shorter the expected life the lower the fair value.
					Risk-free rate of 0.31% determined using the expected life assumptions.	The higher the risk-free rate the higher the fair value.
Equity settled financial derivative liability	£	86,000	Level 3	Monte Carlo simulation model	Volatility rate of 85.0% determined using historical volatility of comparable companies.	The higher the volatility the higher the fair value.
					Expected life between a range of 0.1 and 3.5 years determined using the remaining life of the share options.	The shorter the expected life the lower the fair value.
					Risk-free rate of 0.71% determined using the expected life assumptions.	The higher the risk-free rate the higher the fair value.
Equity settled financial derivative liability		–	Level 3	Black-Scholes option pricing model	Volatility rate of 85.0% determined using historical volatility of comparable companies.	The higher the volatility the higher the fair value.
					Expected life between a range of 0.10 and 0.9 years determined using the remaining life of the share options.	The shorter the expected life the lower the fair value.
					Risk-free rate of 0.71% determined using the expected life assumptions.	The higher the risk-free rate the higher the fair value.
Total	£	553,000

F-43

21 Financial instruments – risk management (continued)

Financial liabilities	Fair value as at 31/12/2020		Fair value hierarchy	Valuation technique(s) and key input(s)	Significant unobservable input(s)	Relationship of unobservable inputs to fair value
Equity settled financial derivative liability	£	1,187,000	Level 3	Monte Carlo simulation model	Volatility rate of 105.0% determined using historical volatility of comparable companies.	The higher the volatility the higher the fair value.
					Expected life between a range of 0.1 and 4.49 years determined using the remaining life of the share options.	The shorter the expected life the lower the fair value.
					Risk-free rate of 0.07% determined using the expected life assumptions.	The higher the risk-free rate the higher the fair value.
Equity settled financial derivative liability	£	372,000	Level 3	Monte Carlo simulation model	Volatility rate of 105.0% determined using historical volatility of comparable companies.	The higher the volatility the higher the fair value.
					Expected life between a range of 0.1 and 4.888 years determined using the remaining life of the share options.	The shorter the expected life the lower the fair value.
					Risk-free rate of 0.08% determined using the expected life assumptions.	The higher the risk-free rate the higher the fair value.
Equity settled financial derivative liability		–	Level 3	Black-Scholes option pricing model	Volatility rate of 105.0% determined using historical volatility of comparable companies.	The higher the volatility the higher the fair value.
					Expected life between a range of 1.0 and 1.9 years determined using the remaining life of the share options.	The shorter the expected life the lower the fair value.
					Risk-free rate of 0.8% determined using the expected life assumptions.	The higher the risk-free rate the higher the fair value.
Total	£	1,559,000

F-44

21 Financial instruments – risk management (continued)

Financial liabilities	Fair value as at 31/12/2019		Fair value hierarchy	Valuation technique(s) and key input(s)	Significant unobservable input(s)	Relationship of unobservable inputs to fair value
Equity settled financial derivative liability	£	664,000	Level 3	Monte Carlo simulation model	Volatility rate of 78.4% determined using historical volatility of comparable companies.	The higher the volatility the higher the fair value.
					Expected life between a range of 0.1 and 5.68 years determined using the remaining life of the share options.	The shorter the expected life the lower the fair value.
					Risk-free rate between a range of 0.59% and 1.69 % determined using the expected life assumptions.	The higher the risk-free rate the higher the fair value.
Equity settled financial derivative liability		–	Level 3	Black-Scholes option pricing model	Volatility rate of 78.3% determined using historical volatility of comparable companies.	The higher the volatility the higher the fair value.
					Expected life between a range of 2.0 and 2.9 years determined using the remaining life of the share options.	The shorter the expected life the lower the fair value.
					Risk-free rate between a range of 0.0% and 0.26 % determined using the expected life assumptions.	The higher the risk-free rate the higher the fair value.
Total	£	664,000

Changing the unobservable risk free rate input to the valuation model by 10% higher while all other variables were held constant, would not impact the carrying amount of shares (2020 : nil ; 2019: nil).

There were no transfers between Level 1 and 2 in the period.

The financial liability measured at fair value on Level 3 fair value measurement represents consideration relating to warrants issued in May 2020 and October 2019 as part of Registered Direct offerings and also a business combination.

Credit risk

The Group is exposed to credit risk from amounts due from collaborative partners and from cash and cash equivalents and deposits with banks and financial institutions. The risk from collaborative partners is deemed to be low. For banks and financial institutions, only independently rated parties with high credit status are accepted. The Group does not enter into derivatives to manage credit risk. The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery.

The total exposure to credit risk of the Group is equal to the total value of the financial assets held at each year end as noted above.

F-45

21 Financial instruments – risk management (continued)

Foreign exchange risk

Foreign exchange risk arose because the Group had a material operation located in Bilbao, Spain. Given the levels of materiality, the Group did not hedge its net investments in overseas operations as the cost of doing so would be disproportionate to the exposure.

The table below shows analysis of the Pounds Sterling equivalent of year-end cash and cash equivalent balances by currency:

	2021 £’000		2020 £’000		2019 £’000
Cash and cash equivalents:
Pounds Sterling		10,057		7,247		3,153
US Dollar		–		120		2,021
Euro		–		179		5,750
Other		–		–		4
Total		10,057		7,546		10,928

The table below shows the foreign currency exposure that gives rise to net currency gains and losses recognised in the consolidated statement of comprehensive income. As at 31 December, these exposures were as follows:

	2021 £’000		2020 £’000		2019 £’000
Net Foreign Currency Assets/(Liabilities):
US Dollar		–		120		2,021
Euro		22		54		1,460
Other		–		1		7
Total		22		175		3,488

Foreign exchange risk also arises when individual Group entities enter into transactions denominated in a currency other than their functional currency; the Group’s transactions outside the UK to the US and Europe drive foreign exchange movements where suppliers invoice in currency other than sterling. These transactions are not hedged because the cost of doing so is disproportionate to the risk.

F-46

21 Financial instruments – risk management (continued)

Foreign currency sensitivity analysis

The most significant currencies in which the Group transacts, other than Pounds Sterling, are the US Dollar and the Euro. The Group also trades in other currencies in small amounts as necessary.

The following table details the Group’s sensitivity to a 10% change in year-end exchange rates, which the Group feels is the maximum likely change in rate based upon recent currency movements, in the key foreign currency exchange rates against Pounds Sterling:

Year ended 31 December 2021	US Dollar £’000		Euro £’000		Other £’000
Loss before tax		–		2		–
Total equity		–		2		–

Year ended 31 December 2020	US Dollar £’000		Euro £’000			Other £’000
Loss before tax		12		(293	)		(4	)
Total equity		12		(293	)		(4	)

Year ended 31 December 2019	US Dollar £’000		Euro £’000		Other £’000
Loss before tax		202		54		–
Total equity		202		31		1

Liquidity risk

Liquidity risk arises from the Group’s management of working capital. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. It is the Group’s aim to settle balances as they become due.

In February 2021, previously issued warrants were exercised resulting in the Company receiving £0.13m before expenses. In July 2021, the Company completed a UK placing which raised £10.0m before expenses.

The Directors have prepared cash flow forecasts and considered the cash flow requirement for the Company for the next three years including the period twelve months from the date of approval of the consolidated financial statements. These forecasts show that further financing will be required during the first quarter of 2023 assuming, inter alia, that certain development programs and other operating activities continue as currently planned. This requirement for additional financing in the short term represents a material uncertainty that may cast significant doubt upon the Group and parent company’s ability to continue as a going concern.

In addition, the global pandemic COVID-19 virus places increased uncertainty over the Directors’ forecasts. The restrictions that have been placed on the movement of people caused delays to some of the Group’s plans. The Directors have established a COVID-19 task force internally to monitor the impact of COVID-19 on the business and prioritize activities to minimize its continuing effect.

The Directors are evaluating a number of near-term funding options potentially available to the Group, including fundraising and the partnering of assets and technologies of the Company. After considering the uncertainties, the Directors consider it is appropriate to continue to adopt the going concern basis in preparing these financial statements.

F-47

21 Financial instruments – risk management (continued)

The following table sets out the contractual maturities (representing undiscounted contractual cash-flows) of financial liabilities:

2021	Up to 3 months £’000		Between 3 and 12 months £’000		Between 1 and 2 years £’000		Between 2 and 5 years £’000		Over 5 years £’000
Trade and other payables		1,036		–		–		–		–
Lease liabilities		46		171		195		442		–
Total		1,082		171		195		442		–

2020	Up to 3 months £’000		Between 3 and 12 months £’000		Between 1 and 2 years £’000		Between 2 and 5 years £’000		Over 5 years £’000
Trade and other payables		1,131		–		–		–		–
Lease liabilities		25		75		61		8		–
Government research loans		107		–		–		–		–
Total		1,263		75		61		8		–

2019	Up to 3 months £’000		Between 3 and 12 months £’000		Between 1 and 2 years £’000		Between 2 and 5 years £’000		Over 5 years £’000
Trade and other payables		2,503		–		–		–		–
Lease liabilities		79		165		317		735		–
Government research loans		–		272		238		2,851		3,317
Total		2,582		437		555		3,586		3,317

More details with regard to the line items above are included in the respective notes:

• Trade and other payables – note 17

• Borrowings – note 18

As a result of the Strategic Review undertaken in March 2020 the Group repaid all Government Research loans during 2020 and 2021.

F-48

21 Financial instruments – risk management (continued)

Capital risk management

The Group monitors capital which comprises all components of equity (i.e. share capital, share premium, foreign exchange reserve and accumulated deficit).

The Group’s objectives when maintaining capital are:

• to safeguard the entity’s ability to continue as a going concern; and

• to have sufficient resource to take development projects forward towards commercialisation.

The Group continues to incur substantial operating expenses. Until the Group generates positive net cash inflows from the commercialisation of its products it remains dependent upon additional funding through the injection of equity capital and government funding. The Group may not be able to generate positive net cash inflows in the future or to attract such additional required funding at all, or on suitable terms. In such circumstances the development programmes may be delayed or cancelled, and business operations cut back.

The Group seeks to reduce this risk by keeping a tight control on expenditure, avoiding long term supplier contracts (other than clinical trials), prioritising development spend on products closest to potential revenue generation, obtaining government grants (where applicable), maintaining a focussed portfolio of products under development and keeping shareholders informed of progress.

There have been no changes to the Group’s processes for managing capital risk since the previous year.

22 Deferred tax

Deferred tax is calculated in full on temporary differences under the liability method using tax rates applicable in the tax jurisdictions where the tax asset or liability would arise.

The movement on the deferred tax account in 2021 is £nil (2020: £nil, 2019: £nil) as the net credit arising on the amortisation of intangible assets and other timing differences has been matched by a reduction in the deferred tax asset recognised on the losses offsetting the liability remaining.

Unused tax losses carried forward, subject to agreement with local tax authorities, were as follows:

	Gross losses £’000		Potential deferred tax asset £’000
31 December 2021		67,210		16,925
31 December 2020		63,183		13,076
31 December 2019		49,565		8,426

During 2020 the remaining deferred tax asset and liability arising on the business combination of Midatech Pharma (Wales) Ltd (2019: £1.6m) was de-recognised as a result of the impairment of the assets through the Consolidated Statements of Comprehensive Income.

The deferred tax asset which qualifies for offset against the deferred tax liability, mainly arising on the acquisitions of Midatech Pharma (Wales) Limited in 2021 is £nil (2020: £nil, 2019: £1.6m). The remaining potential deferred tax asset of £16.9m (2020 £13.1m, 2019: £9.0m) has not been provided in these accounts due to uncertainty as to whether the asset would be recovered. The losses have arisen as a result of accumulated trading losses.

Deferred tax asset balances disclosed as at 31 December 2021 have been calculated at 25%. The Finance Bill 2021 enacts an increase in the tax rate to 25% from 1 April 2023.

F-49

22 Deferred tax (continued)

Details of the deferred tax liability are as follows:

2021	Asset £’000	Liability £’000	Net £’000
Business Combinations	–	–	–

2020	Asset £’000	Liability £’000	Net £’000
Business Combinations	–	–	–

2019	Asset £’000		Liability £’000			Net £’000
Business Combinations		1,581		(1,581	)		–

23 Share capital

Schedule of detailed information about share capital

Authorised, allotted and fully paid – classified as equity	2021 Number		2021 £		2020 Number		2020 £		2019 Number		2019 £
At 31 December
Ordinary shares of £0.001 each		98,468,387		98,468		63,073,852		63,074		23,494,981		23,495
Deferred shares of £1 each		1,000,001		1,000,001		1,000,001		1,000,001		1,000,001		1,000,001
Total				1,098,469				1,063,075				1,023,496

On 2 March 2020 a resolution was passed at a general meeting of shareholders of the Company to consolidate its ordinary shares on a one for 20 basis into new ordinary shares of 0.1p each in the capital of the Company. The above table reflects the share consolidation in the comparative figures.

In accordance with the Articles of Association for the Company adopted on 13 November 2014, the share capital of the Company consists of an unlimited number of ordinary shares of nominal value £0.001 each. Ordinary and deferred shares were recorded as equity.

Rights attaching to the shares following the incorporation of Midatech Pharma plc

Shares classified as equity

The holders of ordinary shares in the capital of the Company have the following rights:

(a) to receive notice of, to attend and to vote at all general meetings of the Company, in which case shareholders shall have one vote for each share of which he is the holder; and,

(b) to receive such dividend as is declared by the Board on each share held.

The holders of deferred shares in the capital of the Company:

(a) shall not be entitled to receive notice of or to attend or speak at any general meeting of the Company or to vote on any resolution to be proposed at any general meeting of the Company; and

(b) shall not be entitled to receive any dividend or other distribution of out of the profits of the Company.

In the event of a distribution of assets, the deferred shareholders shall receive the nominal amount paid up on such share after the holder of each ordinary share shall have received (in cash or specie) the amount paid up or credited as paid up on such ordinary share together with an additional payment of £100 per share. The Company has the authority to purchase the deferred shares and may require the holder of the deferred shares to sell them for a price not exceeding 1p for all the deferred shares.

F-50

23 Share capital (continued)

		Ordinary Shares Number		Deferred Shares Number		Share Price £		Total consideration £’000
At 1 January 2019			3,059,207		1,000,001			69,870
2019
26 February 2019	Subscription, Placing and Open Offer		17,410,774				0.77	13,406
8 October 2019	Share issue to SIPP trustee (see note 26)		25,000				0.001	–
29 October 2019	Registered Direct Offering		3,000,000				0.7874	2,362
At 31 December 2019			23,494,981		1,000,001			85,638
2020
18 May 2020	Placing & Registered Direct Offering		15,757,576				0.27	4,255
27 July 2020	Placing		21,296,295				0.27	5,750
19 August 2020	Exercise of warrants		2,500,000					783
30 September 2020	Share issue to SIPP trustee (see note 26)		25,000				0.001	–
At 31 December 2020			63,073,852		1,000,001			96,426
19 February 2021 Exercise of warrants			306,815				0.298	91
6 July 2021 Placing			35,087,720				0.285	10,000
At 31 December 2021			98,468,387		1,000,001			106,517

24 Reserves

The following describes the nature and purpose of each reserve within equity:

Reserve	Description and purpose
Share premium	Amount subscribed for share capital in excess of nominal value.
Merger reserve	Represents the difference between the fair value and nominal value of shares issued on the acquisition of subsidiary companies where the Company has elected to take advantage of merger accounting.
Foreign exchange reserve	Gains/losses arising on retranslating the net assets of overseas operations into sterling.
Warrant reserve	Represents the fair value of warrants denominated in £ at the date of grant
Accumulated deficit	All other net gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere.

F-51

25 Retirement benefits

The Group operates a defined contribution pension scheme for the benefit of its employees. The assets of the scheme are administered by trustees in funds independent from those of the Group.

26 Share-based payments

Share Options

The Group has issued options over ordinary shares under the 2014 Midatech Pharma plc Enterprise Management Incentive Scheme, the Midatech Pharma plc 2016 U.S. Option Plan, which is a sub-plan of the approved UK plan, and unapproved share options awarded to non-UK or non-US staff. In addition, certain share options originally issued over shares in Midatech Limited under the Midatech Limited 2008 unapproved share option scheme or Midatech Limited 2013 approved Enterprise Incentive scheme were reissued in 2015 over shares in Midatech Pharma plc under the 2014 Midatech Pharma plc Enterprise Management Incentive Scheme. Exercise of an option is subject to continued employment.

On 2 March 2020 a resolution was passed at a general meeting of shareholders of the Company to consolidate it ordinary shares on a one for 20 basis into new ordinary shares of 0.1p each in the capital of the Company. The following tables reflect the share consolidation in the comparative tables.

Details of all share options granted under the Schemes are set out below:

Date of grant	At 1 January 2021		Granted in 2021		Expired 2021			Forfeited in 2021			At 31 December 2021		Exercise Price
13 September 2011		150		–		(150	)		–			–	£	83.80
20 April 2012		1,589		–		–			–			1,589	£	83.80
9 May 2014		10,000		–		–			–			10,000	£	1.50
30 June 2014		500		–		–			–			500	£	1.50
31 October 2016		7,921		–		–			(890	)		7,031	£	53.60
19 December 2016		10,018		–		–			(2,062	)		7,956	£	24.20
15 December 2017		3,300		–		–			(2,100	)		1,200	£	9.20
24 April 2019		45,500		–		–			(33,000	)		12,500	£	1.46
2 October 2019		30,000		–		–			–			30,000	£	1.05
17 April 2020		100,000		–		–			–			100,000	£	0.24
17 June 2020		1,274,000		–		–			(410,500	)		863,500	£	0.202
15 July 2021		–		1,709,000		–			(280,000	)		1,429,000	£	0.28
2 August 2021		–		50,000		–			–			50,000	£	0.27
1 September 2021		–		120,000		–			–			120,000	£	0.26
		1,482,978		1,879,000		(150	)		(728,552	)		2,633,276

Options exercisable at 31 December 2021		179,632
Weighted average exercise price of outstanding options at 31 December 2021	£	0.538
Weighted average exercise price of options exercised in 2021		n/a
Weighted average exercise price of options lapsed in 2021	£	83.30
Weighted average exercise price of options forfeited in 2021	£	0.447
Weighted average exercise price of options granted in 2021	£	0.276
Weighted average remaining contractual life of outstanding options at 31 December 2021		9.0 years

F-52

26 Share-based payments (continued)

Date of grant	At 1 January 2020		Granted in 2020		Expired in 2020			Forfeited in 2020			At 31 December 2020		Exercise Price
1 April 2010		1,255		–		(1,255	)		–			–	£	80.00
20 August 2010		2,088		–		(2,088	)		–			–	£	83.80
13 September 2011		150		–		–			–			150	£	83.80
20 April 2012		1,589		–		–			–			1,589	£	83.80
9 May 2014		10,000		–		–			–			10,000	£	1.50
30 June 2014		18,500				–			(18,000	)		500	£	1.50
11 July 2014		100		–		(50	)		(50	)		–	£	1.50
31 October 2016		16,271		–		(850	)		(7,500	)		7,921	£	53.60
14 December 2016		400		–		(400	)		–			–	£	31.00
14 December 2016		500		–		(500	)		–			–	£	34.00
14 December 2016		2,000		–		(2,000	)		–			–	£	37.40
14 December 2016		1,625		–		(1,625	)		–			–	£	37.60
15 December 2016		4,600		–		(4,600	)		–			–	£	24.20
19 December 2016		22,391		–		(1,562	)		(10,811	)		10,018	£	24.20
15 December 2017		29,560		–		(13,310	)		(12,950	)		3,300	£	9.20
2 April 2018		997		–		(997	)		–			–	£	16.60
2 April 2018		4,500		–		(4,500	)		–			–	£	24.20
24 April 2019		169,500		–		–			(124,000	)		45,500	£	1.46
2 October 2019		50,000		–		–			(20,000	)		30,000	£	1.05
17 April 2020		–		100,000		–			–			100,000	£	0.24
17 June 2020		–		1,363,000		–			(89,000	)		1,274,000	£	0.202
		336,026		1,463,000		(33,737	)		(282,311	)		1,482,978

Options exercisable at 31 December 2020		195,171
Weighted average exercise price of outstanding options at 31 December 2020	£	0.835
Weighted average exercise price of options exercised in 2020		n/a
Weighted average exercise price of options lapsed in 2020	£	26.183
Weighted average exercise price of options forfeited in 2020	£	3.648
Weighted average exercise price of options granted in 2020	£	0.205
Weighted average remaining contractual life of outstanding options at 31 December 2020		9.2 years

F-53

26 Share-based payments (continued)

Date of grant	At 1 January 2019		Granted in 2019		Exercised in 2019		Forfeited in 2019			At 31 December 2019		Exercise Price
1 April 2010		1,255		–		–		–			1,255	£	80.00
20 August 2010		2,088		–		–		–			2,088	£	83.80
13 September 2011		150		–		–		–			150	£	83.80
20 April 2012		1,589		–		–		–			1,589	£	83.80
9 May 2014		10,000		–		–		–			10,000	£	1.50
30 June 2014		21,500		–		–		(3,000	)		18,500	£	1.50
11 July 2014		100		–		–		–			100	£	1.50
31 October 2016		2,500		–		–		(2,500	)		–	£	34.20
31 October 2016		23,411		–		–		(7,140	)		16,271	£	53.60
14 December 2016		400		–		–		–			400	£	31.00
14 December 2016		500		–		–		–			500	£	34.00
14 December 2016		2,000		–		–		–			2,000	£	37.40
14 December 2016		1,625		–		–		–			1,625	£	37.60
15 December 2016		4,600		–		–		–			4,600	£	24.20
19 December 2016		35,866		–		–		(13,475	)		22,391	£	24.20
15 December 2017		45,885		–		–		(16,325	)		29,560	£	9.20
2 April 2018		997		–		–		–			997	£	16.60
2 April 2018		4,500		–		–		–			4,500	£	24.20
24 April 2019		–		219,000		–		(49,500	)		169,500	£	1.46
2 October 2019		–		50,000		–		–			50,000	£	1.05
		158,966		269,000		–		(91,940	)		336,026

Options exercisable at 31 December 2019		131,094
Weighted average exercise price of outstanding options at 31 December 2019	£	8.48
Weighted average exercise price of options exercised in 2019		n/a
Weighted average exercise price of options forfeited in 2019	£	13.26
Weighted average exercise price of options granted in 2019	£	1.38
Weighted average remaining contractual life of outstanding options at 31 December 2019		7.9 years

F-54

26 Share-based payments (continued)

The following information is relevant in the determination of the fair value of options granted during the year 2021 under the equity share based remuneration schemes operated by the Group.

	July 2021			August 2021			September 2021
Number of options		1,709,000			50,000			120,000
Option pricing models used		Black-Scholes			Black-Scholes			Black-Scholes
Share price	£	0.2775	*	£	0.265	*	£	0.255	*
Exercise price of options issued in year	£	0.2775		£	0.265		£	0.255
Contractual life		10 years			10 years			10 years
Expected life		5 years			5 years			5 years
Volatility		88.63	%**		88.59	%**		88.11	%**
Expected dividend yield		0	%		0	%		0	%
Risk free rate		0.38	%		0.26	%		0.32	%

*         The share price used in the determination of the fair value of the options granted in 2021 was the share price on the date of grant.

**       Volatility was calculated with reference to the historic share price volatility of comparable companies measured over a five-year period.

The following information is relevant in the determination of the fair value of options granted during the year 2020 under the equity share based remuneration schemes operated by the Group.

	April 2020			June 2020
Number of options		100,000			1,363,000
Option pricing models used		Black-Scholes			Black-Scholes
Share price	£	0.24	*	£	0.213	*
Exercise price of options issued in year	£	0.24		£	0.202
Contractual life		10 years			10 years
Expected life		5 years			5 years
Volatility		84.76	%**		92.55	%**
Expected dividend yield		0	%		0	%
Risk free rate		0.11	%		0.10	%

*         The share price used in the determination of the fair value of the options granted in 2020 was the share price on the date of grant.

**       Volatility was calculated with reference to the historic share price volatility of comparable companies measured over a five-year period.

F-55

26 Share-based payments (continued)

The following information is relevant in the determination of the fair value of options granted during the year 2019 under the equity share based remuneration schemes operated by the Group.

	April 2019			October 2019
Number of options		219,000			50,000
Option pricing models used		Black-Scholes			Black-Scholes
Share price	£	2.30	*	£	1.126	*
Exercise price of options issued in year	£	1.46		£	1.05
Contractual life		10 years			10 years
Expected life		5 years			5 years
Volatility		75.3	%**		78.3	%**
Expected dividend yield		0	%		0	%
Risk free rate		0.85	%		0.26	%

*         The share price used in the determination of the fair value of the options granted in 2019 was the share price on the date of grant.

**       Volatility was calculated with reference to the historic share price volatility of comparable companies measured over a five-year period.

All other share options relate to the Midatech Limited 2008 unapproved share option scheme.

Share Incentive Plan

In April 2017 the Group set up the Midatech Pharma Share Incentive Plan (MPSIP). Under the MPSIP, Group employees and Directors can acquire ordinary shares in the Company via a salary sacrifice arrangement. Midatech grants matching shares for every share bought. In order to retain these shares, scheme participants must remain employed by the Group for three years from the date of acquisition. All shares purchased by the MPSIP are held by an Employee Benefit Trust that is not under the control of Midatech. Shares must be left in the plan for 5 years to qualify for full income tax and NIC relief.

27 Capital commitments

The Group had no capital commitments at 31 December 2021, 31 December 2020 and 31 December 2019.

28 Related party transactions

Trading Transactions

The Directors consider BioConnection BV to be a related party by virtue of the fact that there is a common Director with the Company and the Director is identified as having significant influence over the entity. 2019 was the first year where this relationship existed.

During the year Group companies entered into the following transactions with related parties who are not members of the Group.

Purchase of good

Amounts owed by related parties

2021 €’000

2020 €’000

2019 €’000

2021 €’000

2020 €£’000

2019 €’000

BioConnection BV

–

296

18

–

–

8

During 2019 Midatech Pharma (Espana) SL entered into a commercial contract with BioConnection BV in connection with the Group’s MTD201 program, this contract was subsequently terminated in 2020 as a result of the termination of the program.

The Group has not made any allowances for bad or doubtful debts in respect of related party debtors nor has any guarantee been given or received during 2021,2020 or 2019 regarding related party transactions.

F-56

29 Contingent liabilities

As at 31 December 2019 the Group was party to a claim by the estate of a former employee for unfair dismissal. The claim comprised various elements totalling €258,000. During 2020 the case was settled by the Group for €190,000. This has been recognised in Administrative costs in the Consolidated Statement of Comprehensive Income in 2020.

The Group had no contingent liabilities at 31 December 2021 and 31 December 2020.

30 Ultimate controlling party

The Directors do not consider that there is an ultimate controlling party.

31 Results of Midatech Pharma (España) SL

Included within the Group Consolidated Statements of Comprehensive Income for the year to 31 December 2021 and 2020 are the results of the Group’s Spanish operation that was closed on 3 June 2020. The Group appointed a Liquidator to liquidate the company with documentation submitted to the Spanish Authorities in February 2021.

Management assessed whether Midatech Pharma (España) SL should be accounted for as a discontinued operation under IFRS 5 and concluded that it did not meet the criteria as it did not meet the definition of a cash generating unit.

The unaudited results of Midatech Pharma (España) SL for the year to 31 December are as follows:

Schedule Of Unaudited Results Explanatory

	Year ended 31 December 2021 £’000		Year ended 31 December 2020 £’000
Grant revenue		–		163
Total revenue		–		163
Research and development costs		–		(2,820	)
Administrative costs		–		(1,146	)
Loss from operations		–		(3,803	)
Finance expense		–		(11	)
Loss before tax		–		(3,814	)
Taxation		–		(21	)
Loss from operations after tax		–		(3,835	)

F-57

EX-2.1

Exhibit 2.1

DESCRIPTION OF SECURITIES REGISTERED UNDER SECTION 12 OF THE EXCHANGE ACT

The following description of the ordinary shares, nominal value 0.1 pence per share (“ordinary shares”), and American Depositary Shares, each representing five Ordinary Shares (“ADSs”), of Midatech Pharma PLC (“us,” “our,” “we”, the “Group” or the “Company”), which are the only securities of the Company registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), summarizes certain information regarding the Ordinary Shares in our articles of association (the “Articles”), the amended and restated deposit agreement among us, The Bank of New York Mellon, as depositary, Depositary Share holders and all other persons indirectly or beneficially holding ADSs, as amended or supplemented from time to time (the “deposit agreement”), and applicable provisions of corporate law in the United Kingdom, and is qualified by reference to our Articles and the form of deposit agreement, as may be amended and supplemented, which are incorporated by reference as Exhibits 1.1 and 2.3, respectively, to the Annual Report on Form 20-F of which this Exhibit 2.1 is a part.

DESCRIPTION OF SHARE CAPITAL

General

We are a public limited company organized under the laws of England and Wales under registered number 09216368. Our registered office is Oddfellows House, 19 Newport Road, Cardiff, United Kingdom, CF24 0AA. The principal legislation under which we operate and our shares are issued is the United Kingdom Companies Act of 2006 (the “Companies Act”).

Each ordinary share has a nominal value 0.1 pence per share. Each issued ordinary share is fully paid. We currently have 1,000,001 deferred shares and no preference shares in our issued share capital.

There is no limit to the number of ordinary shares or preference shares that we are authorized to issue, as the concept of authorized capital is no longer applicable under the provisions of the Companies Act. There are no conversion rights, redemption provisions or sinking fund provisions relating to any ordinary shares.

We are not permitted under English law to hold our own ordinary shares unless they are repurchased by us and held in treasury. We do not currently hold any of our own ordinary shares.

Articles of Association

Shares and Rights Attaching to Them

Objects

The objects of our Company are unrestricted.

Share Rights

Subject to any special rights attaching to shares already in issue, our shares may be issued with or have attached to them any preferred, deferred or other special rights or privileges or be subject to such restrictions as we may resolve by ordinary resolution of the shareholders or decision of our Board of Director (the “Board”).

Voting Rights

Without prejudice to any rights or restrictions as to voting rights attached to any shares forming part of our share capital from time to time, the voting rights attaching to shares are as follows:

· on a show of hands every shareholder who is present in person and each duly authorized representative present in person of a shareholder that is a corporation shall have one vote;

· on a show of hands, each proxy present in person has one vote for and one vote against a resolution if the proxy has been duly appointed by more than one shareholder and the proxy has been instructed by one or more of those shareholders to vote for the resolution and by one or more other of those shareholders to vote against it;

· on a show of hands, each proxy present in person has one vote for and one vote against a resolution if the proxy has been duly appointed by more than one shareholder entitled to vote on the resolution and either: (1) the proxy has been instructed by one or more of those shareholders to vote for the resolution and has been given any discretion by one or more other of those shareholders to vote and the proxy exercises that discretion to vote against it; or (2) the proxy has been instructed by one or more of those shareholders to vote against the resolution and has been given any discretion by one or more other of those shareholders to vote and the proxy exercises that discretion to vote for it; and

· on a poll every shareholder who is present in person or by proxy shall have one vote for each share of which he is the holder.

At any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless a poll is demanded. Subject to the provisions of the Companies Act, as described in “Differences in Corporate Law - Voting Rights” herein, a poll may be demanded by:

· the chairman of the meeting;

· at least five shareholders present in person or by proxy and entitled to vote;

· any shareholder(s) present in person or by proxy and representing in the aggregate not less than 10% of the total voting rights of all shareholders having the right to vote on the resolution; or

· any shareholder(s) present in person or by proxy and holding shares conferring a right to vote on the resolution on which there have been paid up sums in the aggregate equal to not less than 10% of the total sums paid up on all shares conferring that right.

Restrictions on Voting

No shareholder shall be entitled to vote at any general meeting or at any separate class meeting in respect of any share held by him unless all calls or other sums payable by him in respect of that share have been paid.

The Board may from time to time make calls upon the shareholders in respect of any money unpaid on their shares and each shareholder shall (subject to at least 14 days’ notice specifying the time or times and place of payment) pay at the time or times so specified the amount called on his shares. If a call remains unpaid after it has become due and payable, and the fourteen days’ notice provided by the Board has not been complied with, any share in respect of which such notice was given may be forfeited by a resolution of the Board.

A shareholder’s right to attend general or class meetings of the Company or to vote in respect of his or her shares may be suspended by the Board in accordance with our Articles if he or she fails to comply with a proper request for the disclosure of interests regarding the shares. See “Other United Kingdom Law Considerations—Disclosure of Interest in Shares” herein.

Dividends

We may, by ordinary resolution, declare a dividend to be paid to the share owners according to their respective rights and interests in profits, and may fix the time for payment of such dividend. No dividend may be declared in excess of the amount recommended by the directors. The Board may from time to time declare and pay to our share owners such interim dividends as appear to the directors to be justified by our profits available for distribution. There are no fixed dates on which entitlement to dividends arises on our ordinary shares.

The share owners may pass, on the recommendation of the directors, an ordinary resolution to direct that all or any part of a dividend to be paid by distributing specific assets, in particular paid up shares or debentures of any other body corporate. Our Articles also permit, with the prior authority of an ordinary resolution of shareholders, a scrip dividend scheme under which share owners may be given the opportunity to elect to receive fully paid ordinary shares instead of cash, or a combination of shares and cash, with respect to future dividends.

By the way of the exercise of a lien, if a share owner owes us any money relating in any way to shares, the Board may deduct any of this money from any dividend on any shares held by the share owner, or from other money payable by us in respect of the shares. Money deducted in this way may be used to pay the amount owed to us.

Unclaimed dividends and other money payable in respect of a share can be invested or otherwise used by directors for our benefit until they are claimed. A dividend or other money remaining unclaimed 12 years after it first became due for payment will be forfeited and shall revert to the Company.

A shareholder’s right to receive dividends on his shares may, if they represent more than 0.25% of the issued shares of that class, be suspended by the directors if he fails to comply with a proper request for the disclosure of interests regarding the shares. See “Other United Kingdom Law Considerations—Disclosure of Interests in Shares” herein.

Change of Control

There is no specific provision in our Articles that would have the effect of delaying, deferring or preventing a change of control. We are, however, subject to the provisions of the United Kingdom City Code on Takeovers and Mergers (the “City Code”), which contains detailed provisions regulating the timing and manner of any takeover offer for those of the Company’s shares which confer voting rights. See “Other United Kingdom Law Considerations—City Code on Takeovers and Mergers” herein.

Variation of Rights

Whenever our share capital is divided into different classes of shares, all or any of the rights attached to any class may be varied or abrogated in such manner (if any) as may be provided by those rights or (in the absence of any such provision) either with the consent in writing of the holders of at least 75% of the issued shares of that class or with the authority of a special resolution passed at a separate general meeting of the holders of the shares of that class.

Alteration of Share Capital and Repurchases

Subject to the provisions of the Companies Act, and without prejudice to any relevant special rights attached to any class of shares, we may, from time to time:

· increase our share capital by allotting and issuing new shares in accordance with our Articles and any relevant shareholder resolution;

· consolidate all or any of our share capital into shares of a larger nominal amount (i.e., par value) than the existing shares;

· subdivide any of our shares into shares of a smaller nominal amount (i.e., par value) than our existing shares; or

· redenominate our share capital or any class of share capital.

Preemptive Rights and New Issuance of Shares

Under the Companies Act, the issuance of equity securities (except shares held under an employees’ share scheme) that are to be paid for wholly in cash must be offered first to the existing holders of equity securities in proportion to the respective nominal amounts (i.e., par values) of their holdings on the same or more favorable terms, unless a special resolution to the contrary has been passed or the articles of association otherwise provide an exclusion from this requirement (which exclusion can be for a maximum of five years after which our shareholders’ approval would be required to renew the exclusion). In this context, “equity securities” means Ordinary Shares (and would exclude shares that, with respect to dividends or capital, carry a right to participate only up to a specified amount in a distribution), and any and all rights to subscribe for or convert securities into such ordinary shares. This differs from U.S. law, under which shareholders generally do not have pre-emptive rights unless specifically granted in the certificate of incorporation or otherwise.

By way of resolutions passed at our annual general meeting held on June 30, 2021 (the “2021 AGM”), authorities were given to the directors to allot shares in the Company, or to grant rights to subscribe for or to convert or exchange any security into shares in the Company, up to an aggregate nominal amount of £21,126.88, representing approximately one third of the then issued  share capital of the Company, with such authority set to expire 15 months from the date of passing of said resolution or at the conclusion of the annual general meeting of the Company to be held in 2022, whichever is the earlier. Pursuant to the authority granted at the 2021 AGM, the Company currently has authority to allot up to 21,126,880 ordinary shares, of which the Company has authority to allot 6,338,070 ordinary shares on a non-pre-emptive basis. Renewal of such authorizations is expected to be sought at each of our annual general meetings.

In circumstances where we allot further Ordinary Shares, we must apply for such new Ordinary Shares to be admitted to trading on AIM, a market operated by the London Stock Exchange plc (“AIM”) which in some instances requires the publication of an admission document.

Transfer of Shares

Any certificated shareholder may transfer all or any of his shares by an instrument of transfer in the usual common form or in any other manner which is permitted by the Companies Act and approved by the Board. Any written instrument of transfer shall be signed by or on behalf of the transferor and (in the case of a partly paid share) the transferee.

All transfers of uncertificated shares shall be made in accordance with and subject to the provisions of the Uncertificated Securities Regulations 2001 and the facilities and requirements of its relevant system. The Uncertificated Securities Regulations 2001 permit shares to be issued and held in uncertificated form and transferred by means of a computer-based system.

The Board may decline to register any transfer of any share unless it is:

· a fully paid share;

· a share on which the Company has no lien;

· in respect of only one class of shares;

· in favor of a single transferee or not more than four transferees;

· duly stamped or duly certificated or otherwise shown the satisfaction of the Board to be exempt from any required stamp duty; or

· delivered for registration at our registered office or such other place as the Board may decide, accompanied by the certificate for the shares to which it relates (other than uncertificated shares) and any other evidence the Board may reasonably require to provide the title to such share of the transferor.

If the Board declines to register a transfer it shall, as soon as practicable and in any event within two months after the date on which the transfer is lodged, send to the transferee notice of the refusal, together with reasons for the refusal.

CREST

To be traded on AIM, securities must be able to be transferred and settled through the CREST system. CREST is a computerized paperless share transfer and settlement system which allows securities to be transferred by electronic means, without the need for a written instrument of transfer. The Articles are consistent with CREST membership and, among other things, allow for the holding and transfer of shares in uncertificated form.

Shareholder Meetings

Annual General Meetings

In accordance with the Companies Act, we are required in each year to hold an annual general meeting in addition to any other general meetings in that year and to specify the meeting as such in the notice convening it. The annual general meeting shall be convened whenever and wherever the board sees fit, subject to the requirements of the Companies Act, as described in “Differences in Corporate Law—Annual General Meeting” and “Differences in Corporate Law—Notice of General Meetings” herein.

Notice of General Meetings

The arrangements for the calling of general meetings are described in “Differences in Corporate Law—Notice of General Meetings” herein.

Subject to certain conditions, holders of ADSs are entitled to receive notices under the terms of the deposit agreement relating to the ADSs. See “Description of American Depositary Shares—Voting Rights” herein.

Quorum of General Meetings

No business shall be transacted at any general meeting unless a quorum is present, but the absence of a quorum shall not preclude the appointment, choice or election of a chairman which shall not be treated as part of the business of the meeting. At least two shareholders present in person or by proxy and entitled to vote shall be a quorum for all purposes.

Class Meetings

The provisions in the Articles relating to general meetings apply to every separate general meeting of the holders of a class of shares except that:

· no member, other than a member of the Board, shall be entitled to notice of it or attend such meeting unless he is a holder of shares of that class;

· the quorum for such class meeting shall be two holders in person or by proxy representing not less than one-third in nominal value of the issued shares of the class;

· at the class meeting, a holder of shares of the class present in person or by proxy may demand a poll and shall on a poll be entitled to one vote for every shares of the class held by him;

· if at any adjourned meeting of such holders a quorum is not present at the meeting, one holder of shares of the class present in person or by proxy at an adjourned meeting constitutes a quorum.

Directors

Number of Directors

We may not have less than two directors on our Board. We have no maximum number of directors, though we may fix a maximum number by ordinary resolution of the shareholders. We may, by ordinary resolution of the shareholders, vary the minimum and any maximum number of directors from time to time.

Appointment of Directors

Subject to the provisions of the Articles, we may, by ordinary resolution of the shareholders, elect any person to be a director, either to fill a casual vacancy or as an addition to the existing board.

Without prejudice to the power to appoint any person to be a director by shareholder resolution, the Board has the power to appoint any person to be a director, either to fill a casual vacancy or as an addition to the existing Board. Any director appointed by the Board will hold office only until the earlier to occur of the close of the next following annual general meeting and someone being appointed in his stead at that meeting. Such a director is eligible for re-election at that meeting but shall not be taken into account in determining the directors or the number of directors who are to retire by rotation at such meeting.

Rotation of Directors

At every annual general meeting, one-third of the directors or, if their number is not a multiple of three, then the number nearest to and not exceeding one-third, shall retire from office and each director must retire from office at least once every three years. If there are fewer than three directors, one director shall make himself or herself available for re-election

The directors to retire on each occasion shall be those subject to retirement by rotation who have been longest in office since their last election, but as between persons who became or were re-elected directors on the same day those to retire shall (unless they otherwise agree amongst themselves) be determined by lot.

A director who retires at the annual general meeting shall be eligible for re-election.

The shareholders may, at the meeting at which a director retires, fill the vacated office by electing a person and in default the retiring director shall, if willing to continue to act, be deemed to have been re-elected, unless at such meeting it is expressly resolved not to fill such vacated office or unless a resolution for the re-election of such director shall have been put to the meeting and lost or such director has given notice in writing to us that he is unwilling to be re-elected or such director has attained the retirement age applicable to him as director pursuant to the Companies Act.

Director’s Interests

The Board may authorize, to the fullest extent permitted by law, any matter proposed to them which would otherwise result in a director infringing his duty to avoid a situation in which he has, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with our interests and which may reasonably be regarded as likely to give rise to a conflict of interest. A director shall not, save as otherwise agreed by him, be accountable to us for any benefit which he (or a person connected with him) derives from any matter authorized by the directors and any contract, transaction or arrangement relating thereto shall not be liable to be avoided on the grounds of any such benefit.

Subject to the requirements under Sections 175, 177 and 182 of the Companies Act (which require a director to avoid a situation in which he has, or can have, a direct or indirect interest that conflicts, or possibly conflicts, with our interests, and to declare any interest that he has, whether directly or indirectly, in a proposed or existing transaction or arrangement with us), and provided that he has disclosed to the Board the nature and extent of any interest of his in accordance with the Companies Act and the Articles, a director notwithstanding his office:

· may be a party to, or otherwise interested in, any transaction or arrangement with us or in which we are otherwise interested;

· may be a director or other officer of, or employed by, or a party to any transaction or arrangement with, or otherwise interested in, any body corporate promoted by us or in which we are otherwise interested; and

· shall not, by reason of his office, be accountable to us for any benefit which he derives from any such office or employment or from any such transaction or arrangement or from any interest in any such body corporate and no such transaction or arrangement shall be liable to be avoided on the ground of any such interest or benefit.

In the case of interests arising where a director is in any way, directly or indirectly, interested in (a) a proposed transaction or arrangement with us or (b) a transaction or arrangement that has been entered into by us and save as otherwise provided by the Articles, such director shall not vote at a meeting of the Board or of a committee of the Board on any resolution concerning such matter in which he has a material interest (otherwise than by virtue of his interest in shares, debentures or other securities of, or otherwise in or through, us) unless his interest or duty arises only because the case falls within one or more of the following paragraphs:

· the resolution relates to the giving to him or a person connected with him of a guarantee, security or indemnity in respect of money lent to, or an obligation incurred by him or such a person at the request of or for the benefit of, us or any of our subsidiaries;

· the resolution relates to the giving of a guarantee, security or indemnity in respect of a debt or obligation of ours or any of our subsidiaries for which the director or a person connected with him has assumed responsibility in whole or part under a guarantee or indemnity or by the giving of security;

· the resolution relates in any way to any other company in which he is interested, directly or indirectly and whether as an officer or shareholder or otherwise howsoever, provided that he and any persons connected with him do not to his knowledge hold an interest in shares representing one per cent or more of any class of the equity share capital of such company or of the voting rights available to shareholder of such company;

· the resolution relates in any way to an arrangement for the benefit of our employees or any employees of our subsidiaries which does not award him as such any privilege or benefit not generally awarded to the employees to whom such arrangement relates;

· the resolution relates in any way to the purchase or maintenance for the directors of insurance; or

· the resolution is in respect of any matter in which the interest of the director cannot reasonably be regarded as conflicting.

A director shall not be counted in the quorum present at a meeting in relation to a resolution on which he is not entitled to vote.

If a question arises at a meeting of the Board or of a committee of the Board as to the right of a director to vote or be counted in the quorum, and such question is not resolved by his voluntarily agreeing to abstain from voting or not to be counted in the quorum, the question may, before the conclusion of the meeting, be referred to the chairman of the meeting and his ruling in relation to any director other than himself shall be final and conclusive except in a case where the nature or extent of the interest of the director concerned has not been fairly disclosed.

An interest of a person connected with a director shall be treated as an interest of the director and Section 252 of the Companies Act shall determine whether a person is connected with a director.

Directors’ Fees and Remuneration

Each of the directors shall be paid a fee at such rate as may from time to time be determined by the Board (or for the avoidance of doubt any duly authorized committee of the Board) provided that the aggregate of all such fees so paid to directors shall not exceed £300,000 per annum, or such higher amount as may from time to time be determined by ordinary resolution of shareholders.

Each director may be paid his reasonable traveling, hotel and other expenses of attending and returning from meetings of the Board or committees thereof of or general meetings or separate meetings of the holders class of shares or of debentures and shall be paid all expenses properly and reasonably incurred by him in the conduct of the Company’s business or in the discharge of his duties as a director. Any director who, by request, goes or resides abroad for any purposes required by us or who performs services which in the opinion of the Board go beyond the ordinary duties of a director may be paid such extra remuneration as the Board may determine.

An executive director shall receive such remuneration as the Board may determine, and either in addition to or in lieu of his remuneration as a director as detailed above.

Age Limitations and Share Ownership

We do not have any age limitations for our directors, nor do we have mandatory retirement as a result of reaching a certain age. Our directors are not required to hold any shares in the Company.

Borrowing Power

Our directors may exercise all the powers of the Company to borrow or raise money and mortgage or charge all or any part of our undertaking, property and assets (present and future), and uncalled capital. Subject to the Companies Act, the directors may also create and issue debentures, other loan stock and other securities, whether outright or as collateral security for any debt, liability or obligation of the Company or of any third party. Our directors are required to restrict the borrowings of the Company to ensure that the aggregate principal amount of borrowings at any one time outstanding and all of its subsidiary undertakings (other than intra-Group borrowing) shall not at any time, without the previous sanction of an ordinary resolution of the Company, exceed two times the gross asset value of the Company and our subsidiaries.

Liability of Midatech and its Directors and Officers

Subject to the provisions on indemnities set out in Companies Act, every director, alternate director or former director (and of any associated company) shall be entitled to be indemnified out of our assets against all costs and liabilities incurred by him or her in relation to any proceedings or any regulatory investigation or action which relate to anything done or omitted or alleged to have been done or omitted by him or her as a director so long as the indemnities do not cover liability for breach of duty to the Company or cover any fine, costs or related expense in connection with any proceedings for default on the part of the director. Lawful indemnities extend to the provision of funds to him or her by the Company to meet expenditure incurred or to be incurred by him in defending himself in any proceedings (whether civil or criminal) or in connection with an application for statutory relief or in an investigation by a regulatory authority which must however be repaid where such proceedings, application, investigation or action are in connection with any alleged negligence, default, breach of duty or breach of trust by him or her in relation to the Company (or any associated company of ours) and he or she is convicted or found in default thereof. Under English law, any provision that purports to exempt a director of a company (to any extent) from any liability that would otherwise attach to him in connection with any negligence, default, breach of duty or breach of trust in relation to the company is void.

Under a deed poll declared by us on August 5, 2015 (“Deed of Indemnity”), our Board and our Company Secretary are indemnified against costs and liabilities incurred in connection with their office, other than any liability owed by such person to the Company itself (or any of our associated entities) and other than indemnification for liabilities in certain circumstances, which are prohibited by virtue of the Companies Act. The Deed of Indemnity provides that a director may also be lent sums to finance any relevant defense costs, provided that, in the event such proceedings involve criminal or civil matters in which the person is convicted or has a judgment made against him or her, then such loan must be repaid. Our total aggregate liability under the Deed of Indemnity is £5 million.

Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (the “Securities Act”), may be permitted to our directors, officers and controlling persons pursuant to a charter provision, by-law, contract, arrangements, statute or otherwise, we acknowledge that in the opinion of the U.S. Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

Other United Kingdom Law Considerations

Notification of Voting Rights

A shareholder in a public company incorporated in the United Kingdom whose shares are admitted to trading on AIM is required pursuant to Rule 5 of the Disclosure Guidance and Transparency Rules of the United Kingdom Financial Conduct Authority to notify us of the percentage of his voting rights if the percentage of voting rights which he holds as a shareholder or through his direct or indirect holding of financial instruments (or a combination of such holdings) reaches, exceeds or falls below 3%, 4%, 5%, and each 1% threshold thereafter up to 100% as a result of an acquisition or disposal of shares.

Mandatory Purchases and Acquisitions

Pursuant to Sections 979 to 991 of the Companies Act, where a takeover offer has been made for us and the offeror has acquired or unconditionally contracted to acquire not less than 90% in value of the shares to which the offer relates and not less than 90% of the voting rights carried by those shares, the offeror may give notice to the holder of any shares to which the offer relates which the offeror has not acquired or unconditionally contracted to acquire that he wishes to acquire, and is entitled to so acquire, those shares on the same terms as the general offer. The offeror would do so by sending a notice to the outstanding minority shareholders telling them that it will compulsorily acquire their shares. Such notice must be sent within three months of the last day on which the offer can be accepted in the prescribed manner. The squeeze-out of the minority shareholders can be completed at the end of six weeks from the date the notice has been given, following which the offeror can execute a transfer of the outstanding shares in its favor and pay the consideration to us, and we would hold the consideration on trust for the outstanding minority shareholders. The consideration offered to the outstanding minority shareholders whose shares are compulsorily acquired under the Companies Act must, in general, be the same as the consideration that was available under the takeover offer.

Sell Out

The Companies Act also gives our minority shareholders a right to be bought out in certain circumstances by an offeror who has made a takeover offer for all of our shares. The holder of shares to which the offer relates, and who has not otherwise accepted the offer, may require the offeror to acquire his shares if, prior to the expiry of the acceptance period for such offer, (i) the offeror has acquired or agreed to acquire not less than 90% in value of the voting shares, and (ii) not less than 90% of the voting rights carried by those shares. The offeror may impose a time limit on the rights of minority shareholders to be bought out that is not less than three months after the end of the acceptance period. If a shareholder exercises his rights to be bought out, the offeror is required to acquire those shares on the terms of this offer or on such other terms as may be agreed.

Disclosure of Interest in Shares

Pursuant to Part 22 of the Companies Act, we are empowered by notice in writing to any person whom we know or have reasonable cause to believe to be interested in our shares, or at any time during the three years immediately preceding the date on which the notice is issued has been so interested, requiring such person within a reasonable time to disclose to us particulars of that person’s interest and (so far as is within his knowledge) particulars of any other interest that subsists or subsisted in those shares. The Articles specify that a response is required from such person within 14 days after service of any such notice.

Under the Articles, if a person defaults in supplying us with the required particulars in relation to the shares in question (“Default Shares”) the directors may by notice direct that:

· in respect of the Default Shares, the relevant member shall not be entitled to attend or vote (either in person or by proxy) at any general meeting or of a general meeting of the holders of a class of shares or upon any poll or to exercise any right conferred by the Default Shares; and/or

· where the Default Shares represent at least 0.25% of their class, (a) any dividend (or any part of a dividend) payable in respect of the Default Shares shall be retained by us without liability to pay interest, (b) the shareholder may not be entitled to elect to receive shares instead of a dividend, and (c) no transfers by the relevant member of any Default Shares may be registered (unless the member himself is not in default and the transfer does not relate to Default Shares, the transfer is exempt or that the transfer is permitted under the U.K. Uncertificated Securities Regulations 2001).

Purchase of Own Shares

Under English law, a limited company may only purchase or redeem its own shares out of the distributable profits of the company or the proceeds of a fresh issue of shares made for the purpose of financing the purchase, provided that they are not restricted from doing so by their articles. A limited company may not purchase or redeem its own shares if, as a result of the purchase, there would no longer be any issued shares of the company other than redeemable shares or shares held as treasury shares. Shares must be fully paid in order to be repurchased.

Subject to the above, we may purchase our own shares in the manner prescribed below. We may make a market purchase of our own fully paid shares pursuant to an ordinary resolution of shareholders. The resolution authorizing the purchase must:

· specify the maximum number of shares authorized to be acquired;

· determine the maximum and minimum prices that may be paid for the shares; and

· specify a date, not being later than five years after the passing of the resolution, on which the authority to purchase is to expire.

We may purchase our own fully paid shares otherwise than on a recognized investment exchange pursuant to a purchase contract authorized by resolution of shareholders before the purchase takes place. Any authority will not be effective if any shareholder from whom we propose to purchase shares votes on the resolution and the resolution would not have been passed if he had not done so. The resolution authorizing the purchase must specify a date, not being later than five years after the passing of the resolution, on which the authority to purchase is to expire.

Distributions and Dividends

Under the Companies Act, before a company can lawfully make a distribution or dividend, it must ensure that it has sufficient distributable reserves (on a non-consolidated basis). The basic rule is that a company’s profits available for the purpose of making a distribution are its accumulated, realized profits, so far as not previously utilized by distribution or capitalization, less its accumulated, realized losses, so far as not previously written off in a reduction or reorganization of capital duly made. The requirement to have sufficient distributable reserves before a distribution or dividend can be paid applies to us and to each of our subsidiaries that has been incorporated under English law.

It is not sufficient that we, as a public company, have made a distributable profit for the purpose of making a distribution. An additional capital maintenance requirement is imposed on us to ensure that the net worth of the company is at least equal to the amount of its capital. A public company can only make a distribution:

· if, at the time that the distribution is made, the amount of its net assets (that is, the total excess of assets over liabilities) is not less than the total of its called up share capital and undistributable reserves; and

· if, and to the extent that, the distribution itself, at the time that it is made, does not reduce the amount of the net assets to less than that total.

City Code on Takeovers and Mergers

As a United Kingdom incorporated public company with our registered office in the United Kingdom which is admitted to AIM, we are subject to the City Code, which is issued and administered by the United Kingdom Panel on Takeovers and Mergers (the “Panel”). The City Code provides a framework within which takeovers of companies subject to it are conducted. In particular, the City Code contains certain rules in respect of mandatory offers. Under Rule 9 of the City Code, if a person:

· acquires an interest in our shares which, when taken together with shares in which he or persons acting in concert with him are interested, carries 30% or more of the voting rights of our shares; or

· who, together with persons acting in concert with him, is interested in shares that in the aggregate carry not less than 30% and not more than 50% of the voting rights in us, acquires additional interests in shares that increase the percentage of shares carrying voting rights in which that person is interested,

the acquirer, and depending on the circumstances, its concert parties would be required (except with the consent of the Panel) to make a cash offer for our outstanding shares at a price not less than the highest price paid for any interests in the shares by the acquirer or its concert parties during the previous 12 months.

Exchange Controls

There are no governmental laws, decrees, regulations or other legislation in the United Kingdom that may affect the import or export of capital, including the availability of cash and cash equivalents for use by us, or that may affect the remittance of dividends, interest, or other payments by us to non-resident holders of our ordinary shares or ADSs, other than withholding tax requirements. There is no limitation imposed by English law or in the Articles on the right of non-residents to hold or vote shares. 

Differences in Corporate Law

The applicable provisions of the Companies Act 2006 differ from laws applicable to U.S. corporations and their shareholders. Set forth below is a summary of certain differences between the provisions of the Companies Act applicable to us and the Delaware General Corporation Law relating to shareholders’ rights and protections. This summary is not intended to be a complete discussion of the respective rights and it is qualified in its entirety by reference to English law and Delaware Law.

	England and Wales	Delaware
Number of Directors	Under the Companies Act, a public limited company must have at least two directors and the number of directors may be fixed by or in the manner provided in a company’s articles of association.	Under Delaware law, a corporation must have at least one director and the number of directors shall be fixed by or in the manner provided in the bylaws.
Removal of Directors	Under the Companies Act, shareholders may remove a director without cause by an ordinary resolution (which is passed by a simple majority of those voting in person or by proxy at a general meeting) irrespective of any provisions of any service contract the director has with the company, provided 28 clear days’ notice of the resolution has been given to the company and its shareholders. On receipt of notice of an intended resolution to remove a director, the company must forthwith send a copy of the notice to the director concerned. Certain other procedural requirements under the Companies Act must also be followed such as allowing the director to make representations against his or her removal either at the meeting or in writing.	Under Delaware law, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors, except (a) unless the certificate of incorporation provides otherwise, in the case of a corporation whose board of directors is classified, shareholders may effect such removal only for cause, or (b) in the case of a corporation having cumulative voting, if less than the entire board of directors is to be removed, no director may be removed without cause if the votes cast against his removal would be sufficient to elect him if then cumulatively voted at an election of the entire board of directors, or, if there are classes of directors, at an election of the class of directors of which he is a part.
Vacancies on Board of Directors	Under English law, the procedure by which directors, other than a company’s initial directors, are appointed is generally set out in a company’s articles of association, provided that where two or more persons are appointed as directors of a public limited company by resolution of the shareholders, resolutions appointing each director must be voted on individually.	Under Delaware law, vacancies and newly created directorships may be filled by a majority of the directors then in office (even though less than a quorum) or by a sole remaining director unless (a) otherwise provided in the certificate of incorporation or by-laws of the corporation or (b) the certificate of incorporation directs that a particular class of stock is to elect such director, in which case a majority of the other directors elected by such class, or a sole remaining director elected by such class, will fill such vacancy.
Pre-emptive Rights	Under the Companies Act, “equity securities”, being (i) shares in the company other than shares that, with respect to dividends and capital, carry a right to participate only up to a specified amount in a distribution (“ordinary shares”) or (ii) rights to subscribe for, or to convert securities into, ordinary shares, proposed to be allotted for cash must be offered first to the existing equity shareholders in the company in proportion to the respective nominal value of their holdings, unless an exception applies or a special resolution to the contrary has been passed by shareholders in a general meeting or the articles of association provide otherwise in each case in accordance with the provisions of the Companies Act.	Under Delaware law, shareholders have no preemptive rights to subscribe to additional issues of stock or to any security convertible into such stock unless, and except to the extent that, such rights are expressly provided for in the certificate of incorporation.

	England and Wales	Delaware
Authority to Allot	Under the Companies Act, the directors of a company must not allot shares or grant of rights to subscribe for or to convert any security into shares unless an exception applies or an ordinary resolution to the contrary has been passed by shareholders in a general meeting or the articles of association provide otherwise in each case in accordance with the provisions of the Companies Act.	Under Delaware law, if the corporation’s charter or certificate of incorporation so provides, the board of directors has the power to authorize the issuance of stock. It may authorize capital stock to be issued for consideration consisting of cash, any tangible or intangible property or any benefit to the corporation or any combination thereof. It may determine the amount of such consideration by approving a formula. In the absence of actual fraud in the transaction, the judgment of the directors as to the value of such consideration is conclusive.

Voting Rights Under English law, unless a poll is demanded by the shareholders of a company or is required by the chairman of the meeting or the company’s articles of association, shareholders shall vote on all resolutions on a show of hands. Under the Companies Act, a poll may be demanded by (a) not fewer than five shareholders having the right to vote on the resolution; (b) any shareholder(s) representing not less than 10% of the total voting rights of all the shareholders having the right to vote on the resolution; or (c) any shareholder(s) holding shares in the company conferring a right to vote on the resolution being shares on which an aggregate sum has been paid up equal to not less than 10% of the total sum paid up on all the shares conferring that right. A company’s articles of association may provide more extensive rights for shareholders to call a poll, and in our case the number in clause (a) above is reduced from five to three.   Under English law, an ordinary resolution is passed on a show of hands if it is approved by a simple majority (more than 50%) of the votes cast by shareholders present (in person or by proxy) and entitled to vote. If a poll is demanded, an ordinary resolution is passed if it is approved by holders representing a simple majority of the total voting rights of shareholders present, in person or by proxy, who, being entitled to vote, vote on the resolution. Special resolutions require the affirmative vote of not less than 75% of the votes cast by shareholders present, in person or by proxy, at the meeting. Delaware law provides that, unless otherwise provided in the certificate of incorporation, each stockholder is entitled to one vote for each share of capital stock held by such stockholder.

Shareholder Vote on Certain
Transactions The Companies Act provides for schemes of arrangement, which are arrangements or compromises between a company and any class of shareholders or creditors and used in certain types of reconstructions, amalgamations, capital reorganizations or takeovers. These arrangements require:   ·     the approval at a shareholders’ or creditors’ meeting convened by order of the court, of a majority in number of shareholders or creditors representing 75% in value of the capital held by, or debt owed to, the class of shareholders or creditors, or class thereof present and voting, either in person or by proxy; and   ·     the approval of the court. Generally, under Delaware law, unless the certificate of incorporation provides for the vote of a larger portion of the stock, completion of a merger, consolidation, sale, lease or exchange of all or substantially all of a corporation’s assets or dissolution requires:   ·     the approval of the board of directors; and   ·     approval by the vote of the holders of a majority of the outstanding stock or, if the certificate of incorporation provides for more or less than one vote per share, a majority of the votes of the outstanding stock of a corporation entitled to vote on the matter.

Stockholder Suits Under English law, generally, the company, rather than its shareholders, is the proper claimant in an action in respect of a wrong done to the company or where there is an irregularity in the company’s internal management. Notwithstanding this general position, the Companies Act provides that (i) a court may allow a shareholder to bring a derivative claim (that is, an action in respect of and on behalf of the company) in respect of a cause of action arising from a director’s negligence, default, breach of duty or breach of trust and (ii) a shareholder may bring a claim for a court order where the company’s affairs have been or are being conducted in a manner that is unfairly prejudicial to some of its shareholders Under Delaware law, a stockholder may initiate a derivative action to enforce a right of a corporation if the corporation fails to enforce the right itself. The complaint must:   ·     state that the plaintiff was a stockholder at the time of the transaction of which the plaintiff complains or that the plaintiffs shares thereafter devolved on the plaintiff by operation of law; and   ·     allege with particularity the efforts made by the plaintiff to obtain the action the plaintiff desires from the directors and the reasons for the plaintiff’s failure to obtain the action; or   ·     state the reasons for not making the effort.   Additionally, the plaintiff must remain a stockholder through the duration of the derivative suit. The action will not be dismissed or compromised without the approval of the Delaware Court of Chancery.

DESCRIPTION OF AMERICAN DEPOSITARY SHARES

General

Our ADSs are deposited pursuant to the Amended and Restated Deposit Agreement dated February 8, 2021, among the Company, The Bank of New York Mellon as depositary (the “depositary”), ands owners and holders of ADSs. The depositary registers and delivers the ADSs. Each ADS represents five ordinary shares (or a right to receive five ordinary shares) deposited with The Bank of New York Mellon, London Branch, or any successor, as custodian for the depositary. Each ADS also represents any other securities, cash or other property that may be held by the depositary. The deposited ordinary shares together with any other securities, cash or other property held by the depositary are referred to as the “deposited securities.” The depositary’s office at which the ADSs are administered and its principal executive office are located at 240 Greenwich Street, New York, New York 10286.

You may hold ADSs either (1) directly (a) by having an American Depositary Receipt (“ADR”), which is a certificate evidencing a specific number of ADSs, registered in your name, or (b) by having ADSs registered in your name in the Direct Registration System, or (2) indirectly by holding a security entitlement in ADSs through your broker or other financial institution. If you hold ADSs directly, you are a registered ADS holder, also referred to as an ADS holder. This description assumes you are an ADS holder. If you hold the ADSs indirectly, you must rely on the procedures of your broker or other financial institution to assert the rights of ADS holders described in this section. You should consult with your broker or financial institution to find out what those procedures are.

The Direct Registration System (“DRS”) is a system administered by The Depository Trust Company (“DTC”), pursuant to which the depositary may register the ownership of uncertificated ADSs, which ownership is confirmed by periodic statements sent by the depositary to the registered holders of uncertificated ADSs.

ADS holders are not treated as shareholders and do not have shareholder rights. English law governs shareholder rights. The depositary is the holder of the ordinary shares underlying the ADSs. As a holder of ADSs, you will have ADS holder rights. A deposit agreement among us, the depositary and you, as an ADS holder, and all other persons directly and indirectly holding ADSs sets out ADS holder rights as well as the rights and obligations of the depositary. A copy of the deposit agreement is incorporated by reference as an exhibit to the Company’s Annual Report on Form 20-F. New York law governs the deposit agreement and the ADSs.

The following is a summary of the material provisions of the deposit agreement. For more complete information, you should read the entire deposit agreement and the form of ADS. For directions on how to obtain copies of those documents, see the section titled “Item 19—Exhibits” in our Annual Report on Form 20-F.

Dividends and Other Distributions

How will you receive dividends and other distributions on the ordinary shares?

The depositary has agreed to pay you the cash dividends or other distributions it or the custodian receives on ordinary shares or other deposited securities, after deducting its fees and expenses. As an ADS holder, you will receive these distributions in proportion to the number of ordinary shares your ADSs represent.

Cash. We do not expect to declare or pay any cash dividends or cash distributions on our ordinary shares for the foreseeable future. The depositary will convert any cash dividend or other cash distribution we pay on the ordinary shares or any net proceeds from the sale of any ordinary shares, rights, securities or other entitlements into U.S. dollars if it can do so on a reasonable basis and at the then prevailing market rate, and can transfer the U.S. dollars to the United States. If that is not possible and lawful or if any government approval is needed and cannot be obtained, the deposit agreement allows the depositary to distribute the foreign currency only to those ADS holders to whom it is possible to do so. It will hold the foreign currency it cannot convert for the account of the ADS holders who have not been paid. It will not invest the foreign currency and it will not be liable for any interest. Before making a distribution, any taxes or other governmental charges, together with fees and expenses of the depositary that must be paid, will be deducted. See the section titled “Item 10 E. Additional Information—Taxation” in our Annual Report on Form 20-F for a summary of certain tax consequences in respect of dividends or distributions to holders of ADSs. It will distribute only whole U.S. dollars and cents and will round fractional cents to the nearest whole cent. If the exchange rates fluctuate during a time when the depositary cannot convert the foreign currency, you may lose some or all of the value of the distribution.

Ordinary Shares. The depositary may distribute additional ADSs representing any ordinary shares we distribute as a dividend or free distribution to the extent reasonably practicable and permissible under law. The depositary will only distribute whole ADSs. If the depositary does not distribute additional ADSs, the outstanding ADSs will also represent the new ordinary shares. The depositary may sell a portion of the distributed ordinary shares sufficient to pay its fees and expenses in connection with that distribution.

Elective Distributions in Cash or Shares. If we offer holders of our ordinary shares the option to receive dividends in either cash or shares, the depositary, after consultation with us, may make such elective distribution available to you as a holder of the ADSs. We must first instruct the depositary to make such elective distribution available to you. As a condition of making a distribution election available to ADS holders, the depositary may require satisfactory assurances from us that doing so would not require registration of any securities under the Securities Act. There can be no assurance that you will be given the opportunity to receive elective distributions on the same terms and conditions as the holders of ordinary shares, or at all.

Rights to Purchase Additional Ordinary Shares. If we offer holders of our securities any rights to subscribe for additional ordinary shares or any other rights, the depositary may make these rights available to ADS holders. If the depositary decides it is not legal and practical to make the rights available but that it is practical to sell the rights, the depositary will use reasonable efforts to sell the rights and distribute the proceeds in the same way as it does with cash distributions. The depositary will allow rights that are not distributed or sold to lapse. In that case, you will receive no value for them.

If the depositary makes rights available to you, it will exercise the rights and purchase the ordinary shares on your behalf and in accordance with your instructions. The depositary will then deposit the ordinary shares and deliver ADSs to you. It will only exercise rights if you pay it the exercise price and any other charges the rights require you to pay and comply with other applicable instructions.

U.S. securities laws may restrict transfers and cancellation of the ADSs representing ordinary shares purchased upon exercise of rights. For example, you may not be able to trade these ADSs freely in the United States. In this case, the depositary may deliver restricted depositary shares that have the same terms as the ADSs described in this section except for changes needed to put the necessary restrictions in place.

Other Distributions. The depositary will send to you anything else we distribute to holders of deposited securities by any means it determines is equitable and practicable. If it cannot make the distribution proportionally among the owners, the depositary may adopt another equitable and practical method. It may decide to sell what we distributed and distribute the net proceeds, in the same way as it does with cash. Or, it may decide to hold what we distributed, in which case ADSs will also represent the newly distributed property.

However, the depositary is not required to distribute any securities (other than ADSs) to ADS holders unless it receives satisfactory evidence from us that it is legal to make that distribution. In addition, the depositary may sell a portion of the distributed securities or property sufficient to pay its fees and expenses in connection with that distribution.

Neither we nor the depositary are responsible for any failure to determine that it may be lawful or feasible to make a distribution available to any ADS holders. We have no obligation to register ADSs, ordinary shares, rights or other securities under the Securities Act. This means that you may not receive the distributions we make on our ordinary shares or any value for them if it is illegal or impractical for us to make them available to you.

Deposit, Withdrawal and Cancellation

How are ADSs issued?

The depositary will deliver ADSs if you or your broker deposit ordinary shares or evidence of rights to receive ordinary shares with the custodian. Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or share transfer taxes or fees, and delivery of any required endorsements, certifications or other instruments of transfer required by the depositary, the depositary will register the appropriate number of ADSs in the names you request and will deliver the ADSs to or upon the order of the person or persons that made the deposit.

How can ADS holders withdraw the deposited securities?

You may surrender your ADSs at the depositary’s corporate trust office. Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or share transfer taxes or fees, the depositary will transfer and deliver the ordinary shares and any other deposited securities underlying the ADSs to you or a person designated by you at the office of the custodian or through a book-entry delivery. Alternatively, at your request, risk and expense, the depositary will transfer and deliver the deposited securities at its corporate trust office, if feasible.

How do ADS holders interchange between certificated ADSs and uncertificated ADSs?

You may surrender your ADRs to the depositary for the purpose of exchanging your ADRs for uncertificated ADSs. The depositary will cancel the ADRs and will send you a statement confirming that you are the owner of uncertificated ADSs. Alternatively, upon receipt by the depositary of a proper instruction from a registered holder of uncertificated ADSs requesting the exchange of uncertificated ADSs for certificated ADSs, the depositary will execute and deliver to you an ADR evidencing those ADSs.

Voting Rights

How do you vote?

You may instruct the depositary to vote the number of whole deposited ordinary shares your ADSs represent. The depositary will notify you of shareholders’ meetings or other solicitations of consents and arrange to deliver our voting materials to you if we ask it to. Those materials will describe the matters to be voted on and explain how you may instruct the depositary how to vote. For instructions to be valid, they must reach the depositary by a date set by the depositary.

The depositary will try, as far as practical, and subject to the laws of England and Wales and our Articles of Association, to vote or to have its agents vote the ordinary shares or other deposited securities as instructed by ADS holders.

The depositary will only vote or attempt to vote as you instruct or as described above. If we ask the depositary to solicit the ADS holders’ instructions to vote and an ADS holder fails to instruct the depositary as to the manner in which to vote by the specified date, such ADS holder will be deemed to have given a discretionary proxy to a person designated by us to vote the number of deposited securities represented by its ADSs, unless we notify the depositary that we do not wish to receive a discretionary proxy, there is substantial shareholder opposition to the particular question, or the particular question would have an adverse impact on our shareholders.

We cannot assure you that you will receive the voting materials in time to ensure that you can instruct the depositary to vote your ordinary shares. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for the manner of carrying out voting instructions provided that any such failure is in good faith. This means that you may not be able to exercise your right to vote and there may be nothing you can do if your ordinary shares are not voted as you requested.

In order to give you a reasonable opportunity to instruct the depositary as to the exercise of voting rights relating to deposited securities, if we request the depositary to act, we will try to give the depositary notice of any such meeting and details concerning the matters to be voted upon sufficiently in advance of the meeting date.

Except as described above, you will not be able to exercise your right to vote unless you withdraw the ordinary shares. However, you may not know about the shareholder meeting far enough in advance to withdraw the ordinary shares.

 Fees and Expenses

What fees and expenses will you be responsible for paying?

Pursuant to the terms of the deposit agreement, the holders of ADSs will be required to pay the following fees:

Persons depositing or withdrawing our ordinary shares or depositary share holders must pay:	For:
5.00 USD (or less) per 100 ADSs (or portion of 100 ADSs)	Issue of ADSs, including issues resulting from a distribution of our ordinary shares or rights or other property
	Cancellation of ADSs for the purpose of withdrawal, including if the deposit agreement terminates
0.05 USD (or less) per ADS	Any cash distribution to ADS holders
A fee equivalent to the fee that would be payable if securities distributed to ADS holders had been our ordinary shares and the ordinary shares had been deposited for issuance of ADSs	Distribution of securities distributed to holders of deposited securities (including rights) that are distributed by the depositary to ADS holders
0.05 USD (or less) per ADS per calendar year	Depositary services
Registration or transfer fees	Transfer and registration of shares of our ordinary shares on our share register to or from the name of the depositary or its agent when persons deposit or withdraw our ordinary shares
Expenses of the Depositary	Cable and facsimile transmissions (when expressly provided in the deposit agreement)
	Converting foreign currency to U.S. dollars
Taxes and other governmental charges the depositary or the custodian has to pay on any ADS or our ordinary shares underlying ADSs, such as stock transfer taxes, stamp duty or withholding taxes	As necessary
Any charges incurred by the depositary or its agents for servicing the deposited securities	As necessary

The depositary collects its fees for delivery and surrender of ADSs directly from investors depositing our ordinary shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The depositary may collect its annual fee for depositary services by deduction from cash distributions or by directly billing investors or by charging the book-entry system accounts of participants acting for them. The depositary may collect any of its fees by deduction from any cash distribution payable (or by selling a portion of securities or other property distributable) to ADS holders that are obligated to pay those fees. The depositary may generally refuse to provide fee-attracting services until its fees for those services are paid.

In performing its duties under the deposit agreement, the depositary may use brokers, dealers, foreign currency dealers or other service providers that are owned by or affiliated with the depositary and that may earn or share fees, spreads or commissions.

The depositary may convert currency itself or through any of its affiliates and, in those cases, acts as principal for its own account and not as agent, advisor, broker or fiduciary on behalf of any other person and earns revenue, including, without limitation, transaction spreads, that it will retain for its own account. The revenue is based on, among other things, the difference between the exchange rate assigned to the currency conversion made under the deposit agreement and the rate that the depositary or its affiliate receives when buying or selling foreign currency for its own account. The depositary makes no representation that the exchange rate used or obtained in any currency conversion under the deposit agreement will be the most favorable rate that could be obtained at the time or that the method by which that rate will be determined will be the most favorable to ADS holders, subject to the depositary’s obligations under the deposit agreement. The methodology used to determine exchange rates used in currency conversions is available upon request. 

The depositary has agreed to reimburse us for a portion of certain expenses it incurs that are related to establishment and maintenance of the ADR program. There are limits on the amount of expenses for which the depositary will reimburse us, but the amount of reimbursement available to us is not related to the amounts of fees the depositary collects from investors. Further, the depositary has agreed to reimburse us certain fees payable to the depositary by holders of ADSs. Neither we nor the depositary can determine the exact amount to be made available to us because (i) the number of ADSs that will be issued and outstanding, (ii) the level of service fees to be charged to holders of ADSs and (iii) its reimbursable expenses related to the program are not known at this time.

Payment of Taxes

ADS holders will be responsible for any taxes or other governmental charges payable on their ADSs or on the deposited securities represented by any of their ADSs. The depositary may refuse to register any transfer of ADSs or allow an ADS holder to withdraw the deposited securities represented by his or her ADSs until those taxes or other charges are paid. It may apply payments owed to such ADS holder or sell deposited securities represented by such ADS holder’s ADSs to pay any taxes owed and such ADS holder will remain liable for any deficiency. If the depositary sells deposited securities, it will, if appropriate, reduce the number of ADSs to reflect the sale and pay to ADS holders any proceeds, or send to ADS holders any property, remaining after it has paid the taxes.

Reclassifications, Recapitalizations and Mergers

If we:	Then:
·     Change the nominal or par value of our ordinary shares	The cash, ordinary shares or other securities received by the depositary will become deposited securities.
·     Reclassify, split up or consolidate any of the deposited securities	Each ADS will automatically represent its equal share of new deposited securities.
·     Distribute securities on the ordinary shares that are not distributed to you	The depositary may also deliver new ADSs or ask you to surrender your outstanding ADRs in exchange for new ADRs identifying the new deposited securities. The depositary may also sell the new deposited securities and distribute the net proceeds if we are unable to assure the depositary that the distribution (a) does not require registration under the Securities Act or (b) is exempt from registration under the Securities Act.
·     Recapitalize, reorganize, merge, liquidate, sell all or substantially all of our assets, or take any similar action	Any replacement securities received by the depositary shall be treated as newly deposited securities and either the existing ADSs or, if necessary, replacement ADSs distributed by the depositary will represent the replacement securities. The depositary may also sell the replacement securities and distribute the net proceeds if the replacement securities may not be lawfully distributed to all ADS holders.

Amendment and Termination

How may the deposit agreement be amended?

We may agree with the depositary to amend the deposit agreement and the ADRs without your consent for any reason. If an amendment adds or increases fees or charges, except for taxes and other governmental charges or expenses of the depositary for registration fees, facsimile costs, delivery charges or similar items, or prejudices a substantial right of ADS holders, it will not become effective for outstanding ADSs until 30 days after the depositary notifies ADS holders of the amendment. At the time an amendment becomes effective, you are considered, by continuing to hold your ADSs, to agree to the amendment and to be bound by the ADRs and the deposit agreement as amended.

How may the deposit agreement be terminated?

The depositary will terminate the deposit agreement at our direction by mailing notice of termination to the ADS holders then outstanding at least 30 days prior to the date fixed in such notice for such termination. The depositary may also terminate the deposit agreement by mailing a notice of termination to us and the ADS holders if 60 days have passed since the depositary told us it wants to resign but a successor depositary has not been appointed and accepted its appointment.

After termination, the depositary and its agents will do the following under the deposit agreement but nothing else: collect distributions on the deposited securities, sell rights and other property, and deliver ordinary shares and other deposited securities upon cancellation of ADSs. Four months after termination, the depositary may sell any remaining deposited securities by public or private sale. After that, the depositary will hold the money it received on the sale, as well as any other cash it is holding under the deposit agreement for the pro rata benefit of the ADS holders that have not surrendered their ADSs. It will not invest the money and has no liability for interest. The depositary’s only obligations will be to account for the money and other cash. After termination our only obligations under the deposit agreement will be to indemnify the depositary and to pay fees and expenses of the depositary that we agreed to pay and we will not have any obligations thereunder to current or former ADS holders.

Limitations on Obligations and Liability

Limits on our Obligations and the Obligations of the Depositary; Limits on Liability to Holders of ADSs

The deposit agreement expressly limits our obligations and the obligations of the depositary. It also limits our liability and the liability of the depositary. We and the depositary:

· are only obligated to take the actions specifically set forth in the deposit agreement without negligence or bad faith;

· are not liable if we are or it is prevented or delayed by law or by events or circumstances beyond our or its ability to prevent or counteract with reasonable care or effort from performing our or its obligations under the deposit agreement;

· are not liable if we or it exercises discretion permitted under the deposit agreement;

· are not liable for the inability of any holder of ADSs to benefit from any distribution on deposited securities that is not made available to holders of ADSs under the terms of the deposit agreement, or for any special, consequential or punitive damages for any breach of the terms of the deposit agreement;

· have no obligation to become involved in a lawsuit or other proceeding related to the ADSs or the deposit agreement on your behalf or on behalf of any other person;

· may rely upon any documents we believe or it believes in good faith to be genuine and to have been signed or presented by the proper person;

· are not liable for the acts or omissions of any securities depository, clearing agency or settlement system; and

· the depositary has no duty to make any determination or provide any information as to our tax status, or any liability for any tax consequences that may be incurred by ADS holders as a result of owning or holding ADSs or be liable for the inability or failure of an ADS holder to obtain the benefit of a foreign tax credit, reduced rate of withholding or refund of amounts withheld in respect of tax or any other tax benefit.

In the deposit agreement, we and the depositary agree to indemnify each other under certain circumstances. Additionally, we, the depositary and each owner and holder, to the fullest extent permitted by applicable law, waive the right to a jury trial in an action against us or the depositary arising out of or relating to the deposit agreement.

Requirements for Depositary Actions

Before the depositary will deliver or register a transfer of ADSs, make a distribution on ADSs, or permit withdrawal of ordinary shares, the depositary may require: 

· payment of stock transfer or other taxes or other governmental charges and transfer or registration fees charged by third parties for the transfer of any ordinary shares or other deposited securities;

· satisfactory proof of the identity and genuineness of any signature or other information it deems necessary; and

· compliance with regulations it may establish, from time to time, consistent with the deposit agreement, including presentation of transfer documents.

The depositary may refuse to deliver ADSs or register transfers of ADSs when the transfer books of the depositary or our transfer books are closed or at any time if the depositary or we think it advisable to do so.

Your Right to Receive the Ordinary Shares Underlying your ADSs

ADS holders have the right to cancel their ADSs and withdraw the underlying ordinary shares at any time except:

· when temporary delays arise because: (i) the depositary has closed its transfer books or we have closed our transfer books; (ii) the transfer of ordinary shares is blocked to permit voting at a shareholders’ meeting; or (iii) we are paying a dividend on our ordinary shares;

· when you owe money to pay fees, taxes and similar charges; or

· when it is necessary to prohibit withdrawals in order to comply with any laws or governmental regulations that apply to ADSs or to the withdrawal of ordinary shares or other deposited securities.

This right of withdrawal may not be limited by any other provision of the deposit agreement.

Pre-release of ADSs

The deposit agreement permits the depositary to deliver ADSs before deposit of the underlying ordinary shares. This is called a pre-release of the ADSs. The depositary may also deliver ordinary shares upon cancellation of pre-released ADSs (even if the ADSs are canceled before the pre-release transaction has been closed out). A pre-release is closed out as soon as the underlying ordinary shares are delivered to the depositary.

The depositary may receive ADSs instead of ordinary shares to close out a pre-release. The depositary may pre-release ADSs only under the following conditions: (1) before or at the time of the pre-release, the person to whom the pre-release is being made represents to the depositary in writing that it or its customer owns the ordinary shares or ADSs to be deposited; (2) the pre-release is fully collateralized with cash or other collateral that the depositary considers appropriate; and (3) the depositary must be able to close out the pre-release on not more than five business days’ notice. In addition, the depositary will limit the number of ADSs that may be outstanding at any time as a result of prerelease to 30% of the number of deposited shares, although the depositary may disregard this limit from time to time if it determines it is appropriate to do so.

Direct Registration System

In the deposit agreement, all parties to the deposit agreement acknowledge that the DRS and Profile Modification System (“Profile”) will apply to uncertificated ADSs upon acceptance thereof to DRS by DTC. DRS is the system administered by DTC under which the depositary may register the ownership of uncertificated ADSs and such ownership will be evidenced by periodic statements sent by the depositary to the registered holders of uncertificated ADSs. Profile is a required feature of DRS that allows a DTC participant, claiming to act on behalf of a registered holder of ADSs, to direct the depositary to register a transfer of those ADSs to DTC or its nominee and to deliver those ADSs to the DTC account of that DTC participant without receipt by the depositary of prior authorization from the ADS holder to register that transfer.

In connection with and in accordance with the arrangements and procedures relating to DRS/Profile, the parties to the deposit agreement understand that the depositary will not determine whether the DTC participant that is claiming to be acting on behalf of an ADS holder in requesting registration of transfer and delivery described in the paragraph above has the actual authority to act on behalf of the ADS holder (notwithstanding any requirements under the Uniform Commercial Code). In the deposit agreement, the parties agree that the depositary’s reliance on and compliance with instructions received by the depositary through the DRS/Profile System and in accordance with the deposit agreement will not constitute negligence or bad faith on the part of the depositary.

Shareholder Communications; Inspection of Register of Holders of ADSs

The depositary will make available for your inspection at its office all communications that it receives from us as a holder of deposited securities that we make generally available to holders of deposited securities. The depositary will send you copies of those communications or otherwise make those communications available to you if we ask it to. You have a right to inspect the register of holders of ADSs, but not for the purpose of contacting those holders about a matter unrelated to our business or the ADSs.

EX-4.15

Exhibit 4.15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DATED: 12 July 2021 MIDATECH PHARMA PLC and DMITRY ZAMORYAKHIN SERVICE AGREEMENT THIS AGREEMENT is made on 12 July 2021 BETWEEN: MIDATECH PHARMA PLC (company number 09216368) whose registered office is at Oddfellows House, 19 Newport Road, Cardiff, CF24 OAA, (the "Company"); and DMITRY ZAMORYAKHIN of Flat 24, Warton Court, All Saints Road, London W3 8FR (the "Executive"). RECITALS The Company shall employ the Executive and the Executive shall serve the Company as Chief Scientific Officer of the Company on the following terms and subject to the following conditions (the "Agreement"): IT IS AGREED AS FOLLOWS: 1 DEFINITIONS AND INTERPRETATION 1.1 In this Agreement unless the context otherwise requires the following expressions shall have the following meanings: "AIM" the market of that name operated by the London Stock Exchange PLC; "AIM Rules" the rules applicable to companies whose shares are, or are to be, admitted to trading on the AIM Market as set out in the AIM Rules published by the London Stock Exchange pk; "Board" the board of directors for the time being of the Company; "Group" the Company and its Subsidiaries for the time being and "Group Company" means any one of them; "Regulations" the Working Time Regulations 1998; and "Subsidiary" in relation to a company a subsidiary within the meaning of sl 159 of the Companies Act 2006 and any other company which is a subsidiary (as so defined) of a company which is itself a subsidiary of such holding company. 1.2 Any reference to a statutory provision shall be deemed to include a reference to any statutory modification or re-enactment of it. 1.3 The headings in this Agreement are for convenience only and shall not affect its construction or interpretation. 2 1.4 References in this Agreement to a person include a body corporate and an incorporated association of persons and references to a company include any body corporate. 1.5 Where appropriate, references to the Executive include his personal representatives. 2 TERM OF EMPLOYMENT 2.1 The employment of the Executive in the role of Chief Scientific Officer commenced on 12 July 2021. The employment of the Executive (subject to earlier termination as provided below) shall continue until terminated by either party giving to the other not less than six months' notice in writing at any time. 2.2 The Executive represents and warrants that he is not bound by or subject to any contract, court order, agreement, arrangement or undertaking which in any way restricts or prohibits him from entering into this Agreement or performing his duties under it. 3 DUTIES 3.1 The Executive shall during his employment under this Agreement: 3.1.1 perform the duties and exercise the powers which the Board may from time to time properly assign to him in his capacity as Chief Scientific Officer or in connection with the conduct and management of the business of the Company or the business of any Group Company (including serving on the board of such Group Company or on any other executive body or any committee of such a company), such duties to include those detailed in Schedule 1 hereto; and 3.1.2 do all in his power to promote, develop and protect the business of the Company and at all times and in all respects conform to and comply with the proper and reasonable directions of the Chief Executive Officer ("CEO") and/or the Board. 3.2 Without prejudice to the generality of the foregoing, The Executive shall during his employment under this Agreement: 3.2.1 be an officer of the Company and as an officer of the Company, carry out duties on behalf of any other Group Company including, if so required by the Board, acting as a director of any such Group Company; 3.2.2 comply with the articles of association (as amended from time to time) of any Group Company of which he is an officer or director; 3.2.3 abide by any statutory, fiduciary or common-law duties to any Group Company of which he is an officer or director; 3 .2.4 not do anything that would cause him to be disqualified from acting as an officer or director; 3 3.2.5 as and when relevant, do such things as are necessary to ensure compliance by himself and any relevant Group Company with the QCA Corporate Governance Code (as amended from time to time); 3.2.6 as and when relevant, comply with all requirements, recommendations or regulations, as amended from time to time, of the London Stock Exchange plc, the UK Listing Authority (including the Model Code for transactions in securities by directors and certain senior executives oflisted companies), the FCA and all regulatory authorities relevant to any Group Company and any code of practice issued by the Company (as amended from time to time) relating to dealing in the securities of any Group Company; 3.2.7 as and when relevant comply with the requirements under both legislation and regulation as to the disclosure of inside information; 3.2.8 comply with the Company's anti-corruption and bribery policy and related procedures; 3.2.9 unless prevented by sickness, devote the whole of his time, attention and abilities to the business of the Company and any Group Company of which he is an officer or director; 3.2.10 faithfully and diligently exercise such powers and perform such duties as may from time to time be assigned to him by the CEO or the Board; 3.2.11 comply with all reasonable and lawful directions given to him by the CEO or the Board; 3.2.12 report his own wrongdoing and any wrongdoing or proposed wrongdoing of any other Executive or director of any Group Company to the Board immediately on becoming aware of it; 3.2.13 use his best endeavours to promote, protect, develop and extend the business of the Group; 3.2.14 consent to the Company monitoring and recording any use that he makes of the Company's electronic communications systems for the purpose of ensuring that the Company's rules are being complied with and for legitimate business purposes; and 3.2.15 comply with any electronic communication systems policy that the Company may issue from time to time. 3.3 The Executive shall give to the CEO and/or the Board such information regarding the affairs of the Company as it shall require, and in any event, report regularly and keep the CEO and the Board informed. 4 3.4 The Executive shall carry out his duties and exercise his powers jointly with any other executives appointed by the Board to act jointly with him and the Board may at any time require the Executive to cease performing or exercising the said or any duties or powers. 3.5 The Executive shall be flexibly based at their home but shall attend the Company's head office in Cardiff up to two days every two weeks to attend meetings and/or adequately fulfil his responsibilities. The Executive shall travel to and/or work in any place which the CEO may reasonably require and that is dictated by the needs of the .business. The Executive may be required to travel abroad when required by the Company for the proper performance of his duties. 4 HOURS OF WORK 4.1 The Executive shall have no set hours of work but is required to devote such time to his work as is necessary for the proper performance of his duties and his basic salary referred to in clause 7.1 shall compensate him for this. Normal office hours are 9.00am to 5.30pm with an hour for lunch, Monday to Friday. 5 GRATUITIES AND CODES OF CONDUCT 5.1 The Executive shall not, without prior written consent of the Company, directly or indirectly accept any commission, rebate, discount or gratuity in cash or in kind from any person who has or is having a business relationship with the Company or any Group Company. 5.2 The Executive shall comply (and procure that his spouse and minor children shall comply) with all applicable rules and regulations of the London Stock Exchange including all AIM rules and regulations, the Company's Share Dealing Code Policy and as applicable the Listing Rules of the United Kingdom Listing Authority, and any other codes of conduct of the Company for the time being in force and any other relevant regulatory authority. 6 REMUNERATION 6.1 The Company shall pay to the Executive a salary at the rate of £205,000 gross per year, inclusive of any directors' fees payable to him. 6.2 The basic salary stated in clause 6.1 above will be eligible for increase, subject to performance on an annual basis usually from 1 April. 6.3 The Executive's salary shall accrue from day to day and be payable by equal monthly instalments in arrears on or about the last day of each month. 6.4 The Executive's salary shall be reviewed annually following the finalisation of the relevant calendar year's Annual Reports and Accounts. The undertaking of a salary review does not confer a contractual right (whether express or implied) to any increase in salary and the Executive acknowledges that any salary increase is at the absolute discretion of the Remuneration Committee. 5 7 BONUS AND SHARE OPTION SCHEME 7 .1 The Executive will be eligible to participate in a discretionary bonus scheme (the "Scheme"), which terms may be reviewed by the Remuneration Committee from time to time. Decisions as to the calculation and payment of any bonus under the Scheme shall be made at the absolute discretion of the Remuneration Committee although it is acknowledged that the amount of such bonus will be up to 30% per cent of the Executive's annual salary on the satisfaction of certain performance criteria. Bonuses are calculated on an annual calendar basis and time-apportioned in the first year of employment. Payment of bonus on certain terms at any particular time will not create any entitlement to or expectation of any future payment or the amount or terms of any future payment. The Executive will not have any contractual right to any bonus ifhe has left the Company's employment for whatever reason (whether lawful or unlawful) or has given or received notice of termination, at or prior to the time on which any such bonus would normally be payable. Any bonus awarded will be paid subject to tax and National Insurance in the usual way. 7 .2 The Executive will be eligible to participate in the Company's Share Option Scheme, subject to the approval of the Remuneration Committee, and whose terms may be reviewed from time to time. Immediately after the announcement of the Executive's employment or, if later, as soon as the Company is no longer in a close period, 250,000 share options will be granted to the Executive with vesting as follows: (i) 25% or 62,500 shall vest 12 months following the date of this contract; and (ii) the remaining 75% shall vest over the subsequent 12 quarters in equal tranches of 15,625 per quarter, provided that, in either case, the Executive will not have any contractual right to any share options set out in this clause if he has left the Company's employment for whatever reason (whether lawful or unlawful) or has given or received notice of termination, at or prior to the time on which any such share options would normally vest. 8 OTHER BENEFITS The Executive is entitled to such additional benefits (including, but not limited to, a 10% pension contribution, life insurance and medical insurance) as may be determined by the Board from time to time. The Company pension contribution is conditional upon the Executive contributing not less than 3% to the scheme. 9 EXPENSES 9.1 The Company shall reimburse or procure that the Executive is reimbursed all reasonable travelling, hotel and other expenses wholly and necessarily incurred by him in the performance of his duties under this Agreement on production of appropriate receipts. 6 10 HOLIDAYS 10.1 The Executive is entitled to 25 days' holiday with pay every calendar year in addition to bank and other public holidays. The Company's holiday year runs from 1 January to 31 December. 10.2 The Executive's holiday entitlement is inclusive of his statutory entitlement. When calculating the Executive's statutory entitlement, bank and public holidays are taken into account. A maximum of three days of the statutory entitlement can be carried over from one holiday year to the first three months of the next year. 10.3 During the first year of the Executive's employment the Executive's statutory holiday entitlement will accrue pro rata monthly. Where this calculation results in fractions of days the amount of leave which can be taken is rounded up to the next half day. Any rounded-up element is deducted from the leave remaining. 10.4 Save as provided for in clause 10.3 above, the Executive's entitlement to holiday accrues pro rata throughout each holiday year (disregarding fractions of days). The Executive will be deemed to have taken statutory holiday first. 10.5 Any entitlement to holiday over and above any statutory entitlement remaining at the end of any holiday year shall lapse and no payment in lieu of such holiday will be made for accrued but untaken holiday. 10.5.1 If the Executive has taken holiday in excess of his entitlement on termination of employment he will be required to account for it and the Company will make a deduction from his final salary payment accordingly. If the Executive has accrued holiday owing to him, the Company may at its discretion, require him to take the outstanding holiday during any notice period or make a payment in lieu of it. 10.5.2 For the purposes of clause 10.5.1 above, a day's pay will be calculated as 11260th of basic salary. 10.6 If the Executive's employment is terminated without notice, he will not be entitled to holiday pay for holiday which would have accrued during the notice period, had he continued to be employed throughout that time. 10.7 If the Executive is put on garden leave in accordance with clause 19 any accrued but unused holiday entitlement shall be deemed to be taken during any period of garden leave. 10.8 Holidays should be taken at such times as the CEO shall consider convenient having regard to the requirements of the Company's business. 11 ILLNESS 11.1 The Executive shall continue to be paid during sickness absence (such payment to be inclusive of any statutory sick pay or social security benefits to which he may be entitled) at the discretion of the Company. 7 11.2 The Executive will cease to accrue holiday, subject to any entitlement under the Regulations ifhe has been absent due to sickness, for six consecutive weeks or more. 11.3 If the Executive is incapable of performing his duties by reason of injury sustained wholly or partly as a result of negligence, nuisance or breach of any statutory duty on the part of a third party and the Executive recovers an amount by way of compensation for loss of earnings from that third party, he shall pay to the Company an amount equivalent to the amount of sick pay he has received from the Company or such lesser amount as he received in compensation. 11.4 The Company shall be entitled to require the Executive to undergo examinations by a medical adviser appointed or approved by the Company and the Executive authorises the medical adviser and/or will provide such consents as are necessary to disclose to the Company the results of such examinations. 11.5 The Executive hereby covenants with the Company on behalf of himself and his personal representatives at all times fully and effectively to comply with the terms of any insurance policy taken out by the Company or any Group Company on his life or in respect of his position as a director and/or officer of the Company and further undertakes (notwithstanding that his Agreement has been terminated or has come to an end) to co-operate fully with and assist the Company or any applicable Group Company in relation to any claim(s) made or to be made in connection with such insurance policy (including without limitation submitting to a medical examination). 11.6 In the event that the Executive is unable to perform his duties hereunder through illness or other incapacity for any continuous period of three months or an aggregated period exceeding 100 working days in any period of 12 months, notwithstanding any other provision of this Agreement, the Company may terminate the Executive's employment upon six months' written notice to him and during that period the Executive shall not have any entitlement to receive his salary or any bonus payment but shall otherwise be entitled to his contractual benefits under this Agreement. 12 RESTRICTIONS DURING EMPLOYMENT 12.1 During the continuance of his employment under this Agreement the Executive shall unless prevented by incapacity devote his whole time and attention to the business of the Company and shall not without the prior written consent of the CEO and/or Board: 12.1.1 engage in any other business; or 12.1.2 be concerned or interested in any other business which is or shall be of a similar nature to or competitive with that carried on by the Company or any Group Company or which is a supplier or customer of the Company or Group Company in relation to its services; or 8 12. 1.3 solicit the custom of, canvass, approach or deal with, in competition with the Company or any Group Company, any person (including any company, firm, organisation or other entity) to whom the Company or any Group Company supplies services or with whom the Company or any Group Company is in negotiations or discussions regarding the possible supply of services; or 12. 1.4 discourage any such person referred to in clause 12. 1.3 above from conducting or continuing to conduct business with the Company or any Group Company on the best terms available to the Company or any Group Company; or 12.1.5 induce or attempt to induce any director or senior employee of the Company or any Group Company and with whom the Executive has material dealings in the course of his employment, to leave the employment of the Company or any Group Company; or 12.1.6 take any steps which impair or might reasonably be thought by the Company, to impair the Executive's ability to act at all times in the best interests of the Company, provided that nothing in this clause shall preclude the Executive from holding or being otherwise interested in any shares or other securities of any company which is quoted on any recognised investment exchange (as defined by section 285 Financial Services and Markets Act 2000) so long as the interest of the Executive in such shares or other securities does not extend to more than three per cent, of the total amount of such shares or securities. 13 INTELLECTUAL PROPERTY 13.l In this clause, the following terms shall have the following meanings: "Employment Invention" shall mean any Invention which is made wholly or partially by the Executive at any time during the course of his employment with the Company. "Employment IPRs" shall mean all Intellectual Property Rights created by the Executive in the course of his employment with the Company (whether or not during normal working hours). "Intellectual Property Rights" shall mean all rights to inventions, patents, utility models, rights in computer software, rights in designs (including rights relating to semi-conductor topographies), database rights, copyright and related rights, rights in get-up, goodwill and the right to sue for passing off or unfair competition, rights in trade names and domain names, trade marks, rights to preserve confidentiality of information (including know-how and trade secrets) and any other intellectual property rights, in each case whether registered or unregistered, including all applications (or rights to apply) for and be granted, renewals or extensions of, and rights to claim priority from, such rights and all similar or analogous rights or forms of protection which may now or in the future subsist in any part of the world. 9 "Invention" shall mean any invention, idea, discovery, development, improvement or innovation, whether or not patentable or capable of registration, and whether or not recorded in any medium. 13.2 The Executive acknowledges that all Employment IPRs, Employment Inventions and all materials embodying them shall automatically, on creation, vest in the Company absolutely to the fullest extent permitted by law. To the extent that they do not vest automatically, the Executive holds them on trust for the Company, and the Executive agrees promptly to execute all documents and do all acts as may, in the Company's opinion, be necessary to give effect to this clause 13.2. 13.3 The Executive acknowledges that, because of the nature of his duties and the particular responsibilities arising from those duties, that he has, and shall have at all times while employed by the Company, a special obligation to further its interests. 13.4 The Executive agrees: 13 .4.1 to give the Company full written details of all Employment Inventions, and Business Inventions (as defined in clause 13.6), promptly upon their creation; 13.4.2 at the request of the Company, and in any event on termination of the Executive's employment with the Company, to give the Company all originals and copes of all documents and other materials which record or relate to any Employment IPRs; 13.4.3 not to attempt to register any Employment IPRs or patent any Employment Invention unless requested to do by the Company; 13.4.4 not to attempt to register any Intellectual Property Rights subsisting in Business Inventions nor patent any Business Inventions unless the Company has declined its right of first refusal recorded in clause 13.6, agreed in writing that the Executive may offer them for sale to a third party or it otherwise agrees in writing that the Executive may do so; and 13.4.5 to keep confidential each Employment Invention and Business Invention unless the Company has consented in writing to its disclosure by the Executive, or, in the case of a Business Invention, the Company has declined its right of first refusal recorded in clause 13.6. 13.5 The Company shall not be under any obligation to apply for or maintain protection in respect of any Employment Invention. 13.6 The Executive agrees: 13.6.1 in relation to any Invention, other than an Employment Invention, which is made wholly or partly by the Executive whilst employed by the Company, and which relates to or is useful in connection with the business or any product or service of the Company or Group (such Inventions are referred to in this clause 13 as "Business Inventions"); and 13.6.2 to the extent that legal title in and to any Employment IPRs or Employment Inventions do not vest automatically in the Company as described at clause 13 .2 above, to, immediately upon creation of such rights and Employment and Business Inventions, offer to the Company in writing a right of first refusal to acquire them on arm's length terms to be agreed between the parties. If the parties cannot agree on such terms within 30 days of the Company receiving the offer, the Company shall refer the dispute for determination by an expert who shall be appointed by the President or Deputy President of the Chartered Institute of Arbitrators. The expert's decision shall be final and binding on the parties in the absence of manifest error, and the costs of arbitration shall be borne equally by the parties. The parties will be entitled to make submissions to the expert and will provide ( or procure that others provide) the expert with such assistance and documents as the expert reasonably requires for the purpose of reaching a decision. The Executive agrees that the provisions of this clause shall apply to all such inventions and rights offered to the Company under this clause 13 .6 until such time as the Company has agreed in writing that the Executive may offer them for sale to a third party. 13.7 The Executive shall execute all documents and do all things which are necessary or desirable in the opinion of the Company, before or after his employment with the Company, to vest the Employment IPRs in the Company, or the Group, pursuant to this clause 13 and for obtaining the best possible protection and maintenance in respect of such rights and the Employment Inventions, including registration of them, in the territories specified by the Company. Such documents may, at the Company's request, include waivers of all and any statutory moral rights relating to any copyright works which form part of the Employment IPRs. This clause shall also apply to all Business Inventions, and all Intellectual Property Rights subsisting in the same, purchased by the Company or its Group in accordance with clause 13 .6. 13.8 The Executive irrevocably appoints the Company to be his attorney in his name and on his behalf to sign or execute any document or do anything generally to use his name for the purpose of giving to the Company the full benefit of the provisions of this clause 14. A certificate in writing signed by any director or the secretary of the Company that any document or act falls within the authority conferred by this clause shall be conclusive

 

 

evidence that that is the case. 13.9 The Executive hereby waives all present and future moral rights which arise under the Copyright Designs and Patents Act 1988 and all similar and analogous rights in other territories to the fullest extent permissible under the relevant legislation in each jurisdiction in relation to any copyright which forms part of the Employment IPRs, and agrees not to support, maintain or permit any claim for infringement of moral rights in such copyright works. 11 1 3 . l 0 The Executive warrants that he is not bound by any legally enforceable obligations owed to persons other than the Company which would prevent him from complying with the terms of this Agreement. The Executive shall not use information in breach of any rights of any third parties, copy or adapt copyright works or designs or unlawfully extract or re-utilise all or a substantial part of any databases owned by third parties or otherwise infringe any Intellectual Property Rights owned by third parties in the course of his employment with the Company. 1 3 .1 1 The Executive shall not exploit or attempt to exploit any Intellectual Property Rights which are the property of the Company or any Group Company, including the Employment IPRs, without the prior written consent of the Company nor shall the Executive do anything that would imperil or prejudice any rights in any of the same, and the Executive shall immediately inform the Company if the Executive becomes aware of any infringement or suspected infringement of any such rights. 1 3.12 The Executive agrees to give all necessary assistance to the Company to enable it to enforce its Intellectual Property Rights against third parties, to defend claims for infringement of third party Intellectual Property Rights and to apply for and maintain registration of its Intellectual Property Rights, where appropriate throughout the world, and for the full term of those rights. 1 3.1 3 All the provisions of this clause 1 3 shall survive termination of the Executive's employment insofar as they relate to rights that were created before the date of termination of this Agreement. 14 CONFIDENTIALITY 1 4.1 The Executive shall not (except in the proper performance of his duties) during or after his employment has ended directly or indirectly divulge to any person or otherwise make use of (and shall use his best endeavours to prevent the publication or disclosure of) any trade secret or any confidential information concerning the business or finances of the Company or any Group Company or any of its/their dealings transactions or affairs or any such confidential information concerning any of their suppliers, agents, distributors or clients. 1 4.2 Confidential information includes, but is not limited to: 1 4.2.1 corporate and marketing strategy, business development and plans, sales reports and research results; 1 4.2.2 business methods and processes, manuals and operating procedures, technical information and know-how relating to the Group's business and which is not in the public domain, including inventions, designs, programs, techniques, database systems, formulae and ideas; 1 4.2.3 business contacts, lists of commercial customers, advertisers and suppliers and details of contracts with them and their current or future requirements; 1 2 1 4.2.4 information on employees and their terms of employment; 1 4.2.5 sales, expenditure levels, pricing and discounting policies; 1 4.2.6 budgets, management accounts, trading statements and other financial reports; 1 4.2. 7 unpublished price sensitive information relating to shares or securities listed or dealt in on any recognised stock exchange; and 1 4.2.8 any document marked "confidential", identified to the Executive as confidential or any information not in the public domain. 1 4.3 The restrictions in clauses 1 4.1 and 1 4.2 shall not apply to information which: 1 4. 3 . 1 comes into the public domain otherwise than by a breach by the Executive of his obligations under this Agreement; or 1 4.3.2 is disclosed to the Executive by a third party who has not received it directly or indirectly from the Company or any Group Company; or 1 4.3.3 must be disclosed by any applicable law, to the extent of such required disclosure. 1 4.4 Notwithstanding the obligations and restrictions contained in this clause 1 4, noting in this Agreement shall operate to prevent the Executive making a "protected disclosure" pursuant to Part IV A of the Employment Rights Act 1 996. 15 DATA PROTECTION 15 .1 The Company will process personal data relating to the Executive in accordance with the Company's privacy notice, a copy of which is available from the CEO. The personal data processed by the Company in this respect will include the Executive's employment application, address, references, bank details, performance appraisals, work, holiday and sickness records, next of kin, salary reviews, remuneration details and other records. Such personal data will be processed because it is necessary for the performance of this contract with the Executive, for the Company's legitimate interests and also to enable the Company to comply with its legal obligations. The personal data processed in relation to the Executive may include, where necessary for the performance of the Company's legal obligations or for the exercise specific rights in the field of employment law, special categories of personal data, for example, relating to the Executive's health. 1 5.2 The Executive shall comply with the Company's data protection policy, and any additional data protection or privacy policies and notices which may be implemented throughout the duration of the Executive's employment, when processing personal data in the course of his employment, at all times. The Executive will be sent copies of any new policies that are introduced as soon as they are made effective. 1 3 15.3 The Executive hereby acknowledges that the Company may make his personal data available to its advisers, to third parties providing products and/or services to the Company (such as IT systems suppliers, pensions, benefits and payroll administrators), or to its Group, as required by law, where it is necessary to administer the Executive's working relationship with the Company or where the Company has another legitimate interest in doing so. 16 MONITORING The Executive shall have access to e-mail and the internet for the better performance of his duties and he shall comply with the Company's stated e-mail and internet policy from time to time and in any event the Executive shall not send any e-mails of a defamatory or abusive nature or which constitute sexual, racial or any other form of harassment and he shall be prohibited from downloading any pornographic or other offensive material and the Executive shall indemnify the Company during and after his employment against all liability resulting from the Executive's breach of this clause. The Company reserves the right to monitor all email/internet activity by the Executive. 17 TERMINATION OF EMPLOYMENT 17.1 The Company may at any time and in its absolute discretion (whether or not any notice of termination has been given by the Company or the Executive under clause 3 above) terminate the Agreement with immediate effect and make a payment in lieu of notice. This payment shall comprise solely the Executive's basic salary (at the rate payable when this option is exercised) but shall not include any bonus or other benefits and shall be subject to deductions for income tax and national insurance contributions as appropriate (the "Payment in Lieu"). The Executive will not, under any circumstances, have any right to the Payment in Lieu unless the Company has exercised its option to pay in lieu of notice. 17 .2 The employment of the Executive may be terminated by the Company without notice or payment in lieu of notice if the Executive: 17 .2.1 is guilty of any serious misconduct or any other conduct which affects or is likely to affect prejudicially the interests of the Company or any Group Company; or 17.2.2 fails or neglects efficiently and diligently to discharge his duties or commits any serious or repeated breach or non-observance of any of the provisions contained in this Agreement or any Share Dealing Code adopted by the Company or Group; or 17.2.3 has an interim receiving order made against him, becomes bankrupt or makes any composition or enters into any deed of arrangement with his creditors; or 1 7 .2.4 is charged with any arrestable criminal offence ( other than an offence under road traffic legislation in the United Kingdom or elsewhere for which a fine or noncustodial penalty is imposed); or 17.2.5 is disqualified from holding office in any company by reason of an order of a court of competent jurisdiction; or 14 17.2.6 shall become of unsound mind or become a patient under any statute relating to mental health; or 17 .2. 7 is convicted of an offence under the Criminal Justice Act 1993 in relation to insider dealings or under any other present or future statutory enactment or regulations relating to insider dealings; or 17.2.8 is in breach of the Model Code on directors' dealings in listed securities, including securities trading on AIM, published by the London Stock Exchange Limited; or 17.2.9 commits any other act warranting summary termination at common law including (but not limited to) any act justifying dismissal without notice in the terms of the Company's generally-applicable disciplinary rules. 17.3 Any delay by the Company in exercising the right to terminate without notice is not a waiver thereof. 18 SUSPENSION The Company may suspend the Executive on full pay for such time as is reasonable in all the circumstances, to allow the Company to investigate any complaint made against the Executive in relation to his employment with the Company and/or pending the outcome of any disciplinary proceedings. 19 GARDEN LEAVE 19.1 Provided the Executive continues to enjoy his full contractual benefits and receive his pay in accordance with this Agreement, the Company may in its absolute discretion do all or any of the following during any period of notice or any part of the notice period, after the Executive or the Company has given notice of termination to the other, without breaching this Agreement or incurring any liability or giving rise to any claim against it: 19 .1. 1 exclude the Executive from the premises of the Company and/or the Group; 19 .1.2 require the Executive to carry out only specified duties ( consistent with his status, role and experience) whether or not different to his normal duties or to carry out no duties; 19 .1.3 announce to any or all of its employees, suppliers, customers and business partners that the Executive has been given notice of termination or has resigned (as the case may be); 19.1.4 prohibit the Executive from communicating in any way with any or all of the suppliers, customers, business partners, employees, agents or representatives of the Company or the Group until his employment has terminated except to the extent he is authorised to do so by the CEO and/or Board in writing; 15 19. 1.5 require the Executive to resign his directorship ofany Group Company; and/or 19 .1.6 require the Executive to comply with any other reasonable conditions imposed by the Company. The Executive will continue to be bound by all obligations (whether express or implied) owed to the Company under the terms of the Agreement or as an employee of the Company. Including but not limited to his duty of care, fidelity, obedience and good faith. 20 RESIGNATION AND RETURN OF COMPANY PROPERTY 20. 1 Upon the termination by whatever means of this Agreement the Executive shall: 20.1.1 immediately resign as an officer (and if so appointed, as a director) of the Company and from such offices held by him in any Group Company without claim for compensation; and 20. 1.2 immediately deliver to the Company all credit cards, motor-cars, keys, computer media and other Company property or Group Company property, in whatever form, of or relating to the business of the Company or of any Group Company which may be in his possession or under his power or control. 20.2 If the Executive fails to comply with clause 19 . 1.5 and 20. 1. 1 the Company is hereby irrevocably authorised to appoint some person in his name and on his behalf to sign and complete any documents or do anything necessary to give effect to this clause. 20.3 The Executive shall not without the consent of the Company at any time after the termination of this Agreement represent himself still to be connected with the Company or any Group Company. 21 RECONSTRUCTION OR AMALGAMATION If the employment of the Executive under this Agreement is terminated by reason of the liquidation of the Company for the purpose of reconstruction or amalgamation and the Executive is offered employment with any concern or undertaking resulting from the reconstruction or amalgamation on terms and conditions not less favourable than the terms of this Agreement then the Executive shall have no claim against the Company or any Group Company in respect of the termination of his employment under this Agreement. 22 RESTRICTIONS 22.1 Definitions In this clause the following words shall have the following meanings: "Termination Date" the date on which the Executive's employment terminates; 16 "Person" includes any company, firm, organisation or other entity; "Area" any country where on the Termination Date the Company was supplying services; "Client" any Person to whom the Company or a Group Company supplied services during the six months preceding the Termination Date and with whom at any time during such period the Executive was actively involved in the course of his employment; "Prospective Client" any Person with whom the Company or a Group Company had negotiations or discussions regarding the possible supply of services during the six months immediately preceding the Termination Date and with whom at any time during such period the Executive was actively involved in the course of his employment; "Employee" means any director of the Company or any Group Company and/or any person employed by or who renders services to the Company or any Group Company and who has Client responsibility or influence over Clients or Prospective Clients and/or who is in possession of confidential information (as defined above) and who in any such case was so employed or so rendered services during the period of six months prior to the Termination Date and had dealings with the Executive during that period; and "Supplier" means any person firm or company who is or was at any time during the six months preceding the Termination Date a supplier or procurer of goods and/or services to the Company or any Group Company. 22.2 In order to protect the goodwill, confidential information, trade secrets and business connections of the Company or any Group Company the Executive covenants with the Company (and as trustee for each Group Company) that: 22.2.1 Non-competition The Executive shall not during his employment or for a period of six months from the Termination Date directly or indirectly be interested or concerned in any business which is carried on in the Area and which: (a) concerns the business carried on by the Group in the six months preceding the Completion Date and as carried on or otherwise contemplated by the Group during the Relevant Period; or (b) is competitive or likely to be competitive with the business of the Company or a Group Company being carried on at the Termination Date and with which the Executive was actively involved at any time during the six months ending on the Termination Date. For this purpose, the Executive is concerned in a business if: (a) he carries it on as principal or agent; or 17 (b) he is a partner, director, employee, secondee, consultant or agent in, of or to any Person who carries on the business; or (c) subject to clause 13 above, he has any direct or indirect financial interest (as shareholder or otherwise) in any Person who carries on the business. 22.2.2 Non-solicitation/Dealing The Executive shall not during his employment or for a period of twelve months from the Termination Date in the Area directly or indirectly: (a) canvass or solicit business or approach any Clients or Prospective Clients in respect of services similar to those being provided by the Company or a Group Company as at the Termination Date; (b) seek to do business or deal with any Clients or Prospective Clients in respect of services similar to those being provided by the Company or a Group Company as at the termination Date; or ( c) canvass or solicit business from or make an approach to any supplier of the Company or a Group Company with whQm the Executive was actively involved at any time during the six months ending on the Termination Date to cease to supply, or to restrict or vary the terms of supply to the Company or a Group Company or otherwise interfere with the relationship between such a supplier and the Company or a Group Company. 22.2.3 Non-poaching The Executive shall not during his employment or for a period of twelve months after the Termination Date directly or indirectly: (a) induce or attempt to induce any Employee of the Company or a Group Company to leave the employment of the Company or a Group Company (whether or not this would be a breach of contract by that employee) for the purposes of being involved in or engaged in the types of business referred to in sub-clauses 22.2.l (a) and 22.2. l(b) above; or (b) engage, attempt to engage, employ, attempt to employ or offer employment or work (and in each case whether directly or indirectly, including through an employment agency or other intermediary) to any Employee for the purposes of being involved in or engaged in the types of business referred to in subclauses 22.2. l (a) and 22.2. l(b) above. 22.2.4 Non-interference The Executive shall not during his employment or for a period of twelve months after the Termination Date to the detriment of the Company or any Group Company, 18 directly or indirectly persuade or endeavour to persuade any Relevant Supplier to cease doing business or materially reduce its business with the Company or any Group Company. 22.2.5 Non-disparagement The Executive shall not at any time (whether during or after the termination of his employment) make whether directly or indirectly any untrue, misleading or derogatory oral or written statement concerning the business, affairs, officers or employees of the Company or any Group Company. 22.2.6 Non-association The Executive shall not (except with the prior written consent of the Company) at any time after the termination of his employment represent himself to be connected with or interested in the business of or employed by the Company or any Group Company or use for any purpose the name of the Company or any Group Company or any name capable of confusion therewith. 22.3 The restrictions in this clause are considered by the parties to be reasonable and the validity of each sub-clause shall not be affected if any of the others is judged to be invalid. If any of the restrictions are void but would be valid if some part of the restriction were deleted, the restriction in question shall apply with such modification as may be necessary to make it valid. 22.4 The Executive acknowledges that the provisions of this clause are no more extensive than is reasonable to protect the legitimate business interests of the Company or the Group. 23 SEVERABILITY If any of the provisions of this Agreement become invalid or unenforceable for any reason by virtue of applicable law the remaining provisions shall continue in full force and effect and the Company and the Executive hereby undertake to use all reasonable endeavours to replace any legally invalid or unenforceable provision with a provision which will promise to the parties (as far as practicable) the same commercial results as were intended or contemplated by the original provision. 24 THIRD PARTIES Unless the right of enforcement is expressly granted, it is not intended that a third party should have the right to enforce the provisions of this Agreement pursuant to the Contracts (Rights of Third Parties) Act 1999. 25 NOTICES 25 .1 Any notice required or permitted to be given under this Agreement shall be given in writing delivered personally or sent by first class post pre-paid recorded delivery (air mail if 19 overseas) or by facsimile to the party due to receive such notice at, in the case of the Company, its registered office from time to time and, in the case of the Executive, his address as set out in this Agreement ( or such address as he may have notified to the Company in accordance with this clause). 25.2 Any notice delivered personally shall be deemed to be received when delivered to the address provided in this Agreement and any notice sent by pre-paid recorded delivery post shall be deemed (in the absence of evidence of earlier receipt) to be received two days after posting and in proving the time of despatch it shall be sufficient to show that the envelope containing such notice was properly addressed, stamped and posted. A notice sent by facsimile shall be deemed to have been received on receipt by the sender of confirmation in the transmission report that the facsimile had been sent. 26 GRIEVANCE AND DISCIPLINARY PROCEDURES 26.1 In the event of the Executive wishing to seek redress of any grievance relating to his employment he should lay his grievance before the CEO in writing, who will afford the Executive the opportunity of a full hearing before the Board or a committee of the Board whose decision on such grievance shall be final and binding. 26.2 The Company's usual disciplinary procedures do not apply to the Executive. In the event that any disciplinary action is to be taken against the Executive, any hearing in respect thereof will be conducted by such director of the Company or any Group Company as the Board may in its reasonable discretion nominate. If the Executive seeks to appeal against any disciplinary action taken against him he should do so to the Board submitting full written grounds for his appeal to the Chairman within thirty days of the action appealed against. The decision of the Board or a delegated committee therefore shall be final and binding. For the avoidance of doubt, the Executive has no contractual right to either a disciplinary hearing or appeal. 26.3 The Company may in its absolute discretion suspend the Executive from some or all of his duties and from the Board and/or require him to remain away from work during any investigation conducted into an allegation relation to the Executive's conduct or performance. During such period, the Executive's salary and contractual benefits will continue to be paid and provided. 27 MISCELLANEOUS 27 .1 This Agreement is governed by and shall be construed in accordance with the laws of England. 27.2 The parties to this Agreement submit to the exclusive jurisdiction of the English courts. 27.3 This Agreement contains the entire understanding between the parties and supersedes all previous agreements and arrangements (if any) relating to the employment of the Executive by the Company or any Group Company (which shall be deemed hereby to have been terminated by mutual consent and without compensation). By executing this Agreement, the 20 Executive confirms and warrants that there are no outstanding payments or benefits owed to him under any prior agreement or understanding with the Company or any Group Company. 27.4 The Company is not a party to any collective agreements which affect the Executive's employment. 27.5 The Executive authorises the Company to deduct from any remuneration payable to the Executive under this Agreement any sums due from him to the Company or any Group Company including the cost of repairing any damage to Company or any Group Company property caused by the Executive. 21 Schedule 1 Duties of the Chief Scientific Officer The Executive's Duties/Major Responsibilities Job description: Be the external face and internal leader of all the Company's R&D efforts. Design and communicate an integrated R&D strategy encompassing Q-Sphera, MTXl 10 and MidaCore with defined objectives, deliverables, timelines and budgets. The Executive is responsible for organizing and managing resources (human and technical) to execute the approved R&D plan. Clear and concise communication of the R&D plan to (and endorsement from) the Board, investors, analysts, collaborators, KO Ls, vendors and staff members. Coordination of efforts and analysis to exploit the Company's technologies, expand its R&D pipeline and its IP portfolio. Specific responsibilities: Develop R&D strategies, plans and budgets to ensure achievement of scientific and development objectives for researching and developing the Company's products and technologies; Provide scientific leadership in defining the Company's pipeline and in developing corporate strategies and plans, make recommendations to the CEO and Board based on research findings; Be responsible for drug safety and leading risk-based safety decisions on the Company's products in development. Lead the Company's research staff; manage the R&D organization, leading by example, i.e. with a "hands on" management style. Drive accountability, consistency, quality and process standardization across all phases of research and development; Perform specific, project-related duties as part of leading research and development efforts including leading / participating in Joint Steering Groups and liaison with Key Opinion Leaders; Ensure the Company understands and anticipates market factors during planning and developing products to meet patient needs and ensure competitive TPP in the marketplace; Develop the R&D organization by recruiting/retaining critical scientific skills and managing expansion of technical resources; Assist in the management, development and safeguarding of the Company's intellectual property; and Review new approaches, know how, third party technologies and integrate same into the Company's platforms through research collaborations, commercial partners or sponsored research or grant-funded programmes. 22 Signed as a Deed by MIDATECH PHARMA PLC acting by: Director Director/Company Secretary Signed as a Deed by DMITRY ZAMORY AKHIN m the presence of: Witness signature: Name: Address: Occupation: 3258 1 0 1 v3 23 

EX-8.1

Exhibit 8.1 

Subsidiaries	Country of Incorporation	Voting Interest
Subsidiaries of Midatech Pharma PLC
Midatech Pharma (Wales) Limited	England and Wales	100%
Midatech Limited	England and Wales	100%
Joint Ventures with Midatech Limited
MidaSol Therapeutics GP (1)(3)	Cayman Islands	50%
Syntara LLC (2)(3)	United States (Delaware)	50%
Subsidiaries of Midatech Limited
Pharmida AG (3)	Switzerland	100%

_______________

(1)  Joint venture between Midatech Limited and Aquestive Therapuetics, formerly known as MonoSol.

(2)  Joint venture between Midatech Limited and Immunotope Inc. The percentage ownership of the entity is determined by reference to the partnership agreement and varies from time to time depending on capital committed. While 50% is the economic interest, Midatech Limited can currently direct 49% of the voting rights.

(3)  Dormant entities.

EX-12.1

Exhibit 12.1

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Stephen Stamp, certify that:

1. I have reviewed this annual report on Form 20-F of Midatech Pharma PLC (the “Company”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The Company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5. The Company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

Date: April 26, 2022	/s/ Stephen Stamp
	Name: Stephen Stamp
	Title: Chief Executive Officer & Chief
	Financial Officer

EX-13.1

Exhibit 13.1

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report on Form 20-F of Midatech Pharma PLC (the “Company”) for the year ended December 31, 2021, as filed with the United States Securities and Exchange Commission on the date hereof (the “Report”), the undersigned Stephen Stamp, as Chief Executive Officer and Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: April 26, 2022

/s/ Stephen Stamp

Name: Stephen Stamp

Title: Chief Executive Officer & Chief

Financial Officer

A SIGNED ORIGINAL OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 HAS BEEN PROVIDED TO MIDATECH PHARMA PLC AND WILL BE RETAINED BY MIDATECH PHARMA PLC AND FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION OR ITS STAFF UPON REQUEST.

EX-15.1

Exhibit 15.1

	Tower Bridge House
	St Katharine's Way
	London E1W 1DD
	United Kingdom
	Tel: +44 (0) 20 7063 4000
	www.mazars.co.uk

Private & Confidential 

Midatech Pharma plc

1 Caspian Point

Caspian Way

Cardiff

Wales

CF10 4DQ

Consent of Independent Registered Public Accounting Firm

The Board of Directors of Midatech Pharma plc

We hereby consent to the incorporation by reference in the Registration Statements on Form F-3 (No. 333-233901) and Form S-8 (No. 333-209365) of Midatech Pharma PLC of our report dated 25 April 2022, relating to the consolidated financial statements which appear in this Annual Report on Form 20-F. Our report contains an explanatory paragraph regarding the Company’s ability to continue as a going concern.

/s/ Mazars LLP

Mazars LLP

London, England

April 25, 2022

Mazars LLP

Mazars LLP is the UK firm of Mazars, an integrated international advisory and accountancy organisation. Mazars LLP is a limited liability partnership registered in England and Wales with registered number OC308299 and with its registered office at Tower Bridge House, St Katharine’s Way, London E1W 1DD. Registered to carry on audit work in the UK by the Institute of Chartered Accountants in England and Wales. Details about our audit registration can be viewed at www.auditregister.org.uk under reference number C001139861. VAT number: GB 839 8356 73

EX-15.2

Exhibit 15.2

Consent of Independent Registered Public Accounting Firm

Midatech Pharma PLC

Cardiff, United Kingdom

We hereby consent to the incorporation by reference in the Registration Statements on Form F-3 (No. 333-233901) and Form S-8 (No. 333-209365) of Midatech Pharma PLC of our report dated June 15, 2020, relating to the consolidated financial statements which appear in this Annual Report on Form 20-F. Our report contains an explanatory paragraph regarding the Company’s ability to continue as a going concern.

/s/ BDO LLP

BDO LLP

Reading, United Kingdom

April 25,2022

XML

Cover	12 Months Ended
	Dec. 31, 2021 shares
Entity Addresses [Line Items]
Document Type	20-F
Amendment Flag	false
Document Registration Statement	false
Document Annual Report	true
Document Transition Report	false
Document Shell Company Report	false
Document Period End Date	Dec. 31, 2021
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2021
Current Fiscal Year End Date	--12-31
Entity File Number	001-37652
Entity Registrant Name	Midatech Pharma Plc
Entity Central Index Key	0001643918
Entity Incorporation, State or Country Code	D5
Entity Address, Address Line One	1 Caspian Point
Entity Address, Address Line Two	Caspian Way
Entity Address, City or Town	Cardiff
Entity Address, Country	GB
Entity Address, Postal Zip Code	CF10 4DQ
Title of 12(b) Security	American Depositary Shares
Trading Symbol	MTP
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	false
Document Accounting Standard	International Financial Reporting Standards
Entity Shell Company	false
Entity Common Stock, Shares Outstanding	98,468,387
ICFR Auditor Attestation Flag	false
Auditor Firm ID	1401
Auditor Name	Mazars LLP
Auditor Location	London
Business Contact [Member]
Entity Addresses [Line Items]
Entity Address, Address Line One	1 Caspian Point
Entity Address, Address Line Two	Caspian Way
Entity Address, City or Town	Cardiff, CF10 4DQ
Entity Address, Country	GB
Entity Address, Postal Zip Code	CF10 4DQ
City Area Code	44 29
Local Phone Number	2048 0180
Contact Personnel Name	Stephen Stamp

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - GBP (£) £ / shares in Thousands, £ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Profit or loss [abstract]
Revenue	£ 578	£ 180	£ 312
Grant revenue		163	362
Total revenue	578	343	674
Other income	24	12	15
Research and development costs	(4,654)	(6,068)	(7,843)
Distribution costs, sales and marketing			(323)
Administrative costs	(2,946)	(4,958)	(3,841)
Impairment of intangible assets		(12,369)
Loss from operations	(6,998)	(23,040)	(11,318)
Finance income	936	1	492
Finance expense	(44)	(431)	(97)
Loss before tax	(6,106)	(23,470)	(10,923)
Taxation	646	1,281	1,785
Loss from continuing operations	(5,460)	(22,189)	(9,138)
Loss from discontinued operations net of tax			(947)
Loss for the year attributable to the owners of the parent	(5,460)	(22,189)	(10,085)
Items that will or may be reclassified subsequently to profit or loss:
Exchange gains/(losses) arising on translation of foreign operations		508	(207)
Total other comprehensive income/(loss ) net of tax		508	(207)
Total comprehensive loss attributable to the owners of the parent	£ (5,460)	£ (21,681)	£ (10,292)
Loss per share
Basic and diluted loss per ordinary share - pence	£ (7)	£ (52)	£ (50)
Basic and diluted loss per ordinary share - pence			£ (5)

XML

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION - GBP (£)	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Non-current assets
Property, plant and equipment	£ 1,152,000	£ 542,000	£ 2,154,000
Intangible assets			12,379,000
Other receivables due in greater than one year			2,625,000
Total Non-Current Assets	1,152,000	542,000	17,158,000
Current assets
Trade and other receivables	1,034,000	572,000	992,000
Taxation	670,000	1,157,000	1,817,000
Cash and cash equivalents	10,057,000	7,546,000	10,928,000
Total Current Assets	11,761,000	9,275,000	13,737,000
Total assets	12,913,000	9,817,000	30,895,000
Non-current liabilities
Borrowings	620,000	60,000	5,670,000
Provisions		50,000
Total Non-Current Liabilities	620,000	110,000	5,670,000
Current liabilities
Trade and other payables	1,092,000	1,230,000	4,494,000
Borrowings	146,000	200,000	412,000
Provisions	50,000		97,000
Derivative financial liability	553,000	1,559,000	664,000
Total current Liabilities	1,841,000	2,989,000	5,667,000
Total liabilities	2,461,000	3,099,000	11,337,000
Issued capital and reserves attributable to owners of the parent
Share capital	1,098,000	1,063,000	1,023,000
Share premium	83,434,000	74,364,000	65,879,000
Merger reserve	53,003,000	53,003,000	53,003,000
Warrant reserve	720,000	720,000
Foreign exchange reserve			(508,000)
Accumulated deficit	(127,803,000)	(122,432,000)	(99,839,000)
Total equity	10,452,000	6,718,000	19,558,000
Total equity and liabilities	£ 12,913,000	£ 9,817,000	£ 30,895,000

XML

CONSOLDATED STATEMENTS OF CASH FLOWS - GBP (£) £ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Cash flows from operating activities
Loss for the year	£ (5,460)	£ (22,189)	£ (10,085)
Adjustments for:
Depreciation of property, plant and equipment	213	1,089	979
Depreciation of right of use asset	190	118	303
Amortisation of intangible fixed assets		10	3
Profit on disposal of fixed assets	(39)	(226)
Impairment of intangible assets		12,369
Finance income	(936)	(1)	(492)
Finance expense	44	431	97
Share-based payment charge/(credit)	89	(404)	(34)
Taxation	(646)	(1,281)	(1,785)
Loss from discontinued operations, net of tax			947
Foreign exchange (gains)/losses	(3)	387	(140)
Cash flows from operating activities before changes in working capital	(6,548)	(9,697)	(10,207)
Decrease in trade and other receivables	(487)	493	725
(Decrease)/Increase in trade and other payables	(130)	(2,004)	1,141
Decrease in provisions		(47)	(68)
Cash used in operations	(7,165)	(11,255)	(8,409)
Taxes received	1,157	1,954	1,920
Net cash used in operating activities	(6,008)	(9,301)	(6,489)
Investing activities
Purchases of property, plant and equipment	(320)	(209)	(310)
Proceeds from disposal of fixed assets	42	143
Purchase of intangibles			(9)
Long term deposit for guarantee for Government loan		2,639	(2,549)
Deposit paid in connection with disposed subsidiary			(947)
Interest received		1	8
Net cash (used in)/generated from investing activities	(278)	2,574	(3,807)
Financing activities
Interest paid	(15)	(34)	(30)
Receipts from sub-lessee on onerous lease		45	107
Amounts paid on lease liabilities	(112)	(258)	(450)
Repayment of Government grants on closure of Spanish operation		(229)
Repayment of borrowings			(577)
(Repayment)/Proceeds from Government loan	(103)	(6,182)	4,436
Proceeds from Government subsidy			1,139
Share issues including warrants, net of costs	9,035	9,742	14,108
Net cash generated from financing activities	8,805	3,084	18,733
Net increase/(decrease) in cash and cash equivalents	2,519	(3,643)	8,437
Cash and cash equivalents at beginning of year	7,546	10,928	2,343
Exchange (losses)/gains on cash and cash equivalents	(8)	261	148
Cash and cash equivalents at end of year	£ 10,057	£ 7,546	£ 10,928

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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY - GBP (£) £ in Thousands	Share Capital [Member]	Share premium [member]	Merger reserve [member]	Warrant reserve [member]	Foreign Exchange Reserve [Member]	Retained earnings [member]	Total
At 1 January 2019 at Dec. 31, 2018	£ 1,003	£ 52,939	£ 53,003		£ (301)	£ (89,720)	£ 16,924
IfrsStatementLineItems [Line Items]
Loss for the year						(10,085)	(10,085)
Foreign exchange translation					(207)		(207)
Total comprehensive loss					(207)	(10,085)	(10,292)
Transactions with owners
Share-based payment credit						(34)	(34)
Total contribution by and distributions to owners	20	12,940				(34)	12,926
Shares issued on 26 February 2019 – note 16	17	13,388					13,405
Costs associated with share issue on 26 February 2019 – note 16		(1,120)					(1,120)
Shares issued on 29 October 2019 – note 16	3	1,211					1,214
Costs associated with share issue on 29 October 2019 – note 16		(539)					(539)
At 31 December 2019 at Dec. 31, 2019	1,023	65,879	53,003		(508)	(99,839)	19,558
IfrsStatementLineItems [Line Items]
Loss for the year						(22,189)	(22,189)
Foreign exchange translation					508		508
Total comprehensive loss					(508)	(22,189)	(21,681)
Transactions with owners
Costs associated with share issue on 27 July 2020 – notes 16, 23		(489)					(489)
Share-based payment credit						(404)	(404)
Total contribution by and distributions to owners	40	8,485		720		(404)	8,841
Shares issued on 26 February 2019 – note 16	16	2,527		720			3,263
Costs associated with share issue on 26 February 2019 – note 16		(544)					(544)
Shares issued on 27 July 2020 – notes 16, 23	21	5,729					5,750
Shares issued on 29 October 2019 – note 16	3	1,278					1,281
Costs associated with share issue on 29 October 2019 – note 16		(16)					(16)
At 31 December 2019 at Dec. 31, 2020	1,063	74,364	53,003	720		(122,432)	6,718
IfrsStatementLineItems [Line Items]
Loss for the year						(5,460)	(5,460)
Foreign exchange translation
Total comprehensive loss						(5,460)	(5,460)
Transactions with owners
Shares issued on 19 February 2021 – notes 16, 23		161					161
Costs associated with share issue on  19 February 2021 – notes 16, 23		(10)					(10)
Shares issued on 6 July 2021 – notes 16,23	35	9,965					10,000
Costs associated with share issue on 27 July 2020 – notes 16, 23		(1,046)					(1,046)
Share-based payment credit						89	89
Total contribution by and distributions to owners	35	9,070				89	9,194
At 31 December 2019 at Dec. 31, 2021	£ 1,098	£ 83,434	£ 53,003	£ 720		£ (127,803)	£ 10,452

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Accounting policies

12 Months Ended

Dec. 31, 2021

Accounting policies

1 Accounting policies

General information

Midatech Pharma plc (the ‘Company’) is a company registered and domiciled in England and Wales. The Company was incorporated on 12 September 2014.

The Company is a public limited company, which has been listed on the Alternative Investment Market (‘AIM’), which is a submarket of the London Stock Exchange, since 8 December 2014.

In addition, since 4 December 2015 the Company has American Depository Receipts (‘ADRs’) registered with the US Securities and Exchange Commission (‘SEC’) and is listed on the NASDAQ Capital Market.

The financial statements were approved and authorised for issue by the Board of Directors on 25 April 2022.

Basis of preparation

The Group was formed on 31 October 2014 when Midatech Pharma plc entered into an agreement to acquire the entire share capital of Midatech Limited and its wholly owned subsidiaries through the issue equivalent of shares in the Company which took place on 13 November 2014.

The financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB).

The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the periods presented.

On 2 March 2020 a resolution was passed at a general meeting of shareholders of the Company to consolidate its ordinary shares on a one for 20 basis into new ordinary shares of 0.1p each in the capital of the Company. At the same meeting a resolution was passed to change the ratio of the Company's American Depositary Receipts ("ADRs"). This changed from one ADR representing 20 Existing Ordinary Shares to one ADR representing five new ordinary shares. Comparative numbers of shares and share options/warrants and related exercise/issue prices and earnings per share reflect the impact of the March 2020 share consolidation.

The consolidated financial statements have been prepared on a historical cost basis, except for the following item (refer to individual accounting policies for details):

- Certain financial instruments – fair value through profit or loss.

Certain prior period amounts have been reclassified to conform to the current period presentation with no impact on previously reported net loss or cash flows, and no material impact on financial position

Adoption of new and revised standards

New standards, interpretations and amendments effective from 1 January 2021

The Group in reviewed the new standards, interpretations and amendments effective from 1 January 2021 and deemed none were applicable to the annual financial statements for the year ended 31 December 2021.

New standards, interpretations and amendments not yet effective

There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future accounting periods that the group has decided not to adopt early.

The following amendments are effective for the period beginning 1 January 2022:

• Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37);

• Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16);

• Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1, IFRS 9, IFRS16 and IAS 41); and

• References to Conceptual Framework (Amendments to IFRS 3).

The following amendments are effective for the period beginning 1 January 2023:

• Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2);

• Definition of Accounting Estimates (Amendments to IAS 8); and

• Deferred Tax Related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12).

These new accounting standards and amendments are not expected to have a material impact on the Group.

The Group does not expect any other standards issued by the IASB, but not yet effective, to have a material impact on the group.

Basis for consolidation

The Group financial statements consolidate those of the parent company and all of its subsidiaries. The parent controls a subsidiary if it has power over the investee to significantly direct the activities, exposure, or rights to variable returns from its involvement with the investee, and the ability to use its power over the investee to affect the amount of the investor’s returns. All subsidiaries have a reporting date of 31 December.

All transactions and balances between Group companies are eliminated on consolidation, including unrealised gains and losses on transactions between Group companies. Where unrealised losses on intra-Group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a Group perspective. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.

The consolidated financial statements consist of the results of the following entities:

Entity	Summary description
Midatech Pharma plc	Ultimate holding company
Midatech Limited	Trading company
Midatech Pharma (Espana) SL (formerly Midatech Biogune SL)	Liquidated - 2021
PharMida AG	Dormant
Midatech Pharma (Wales) Limited (formerly Q Chip Limited)	Trading company
Midatech Pharma Pty	Dissolved - 2020

Going concern

The Group and Company are subject to a number of risks similar to those of other development and early-commercial stage pharmaceutical companies. These risks include, amongst others, generation of revenue from the development portfolio and risks associated with research, development, testing and obtaining related regulatory approvals of our pipeline products. Ultimately, the attainment of profitable operations is dependent on future uncertain events which include obtaining adequate financing to fulfill our commercial and development activities and generating a level of revenue adequate to support our cost structure.

We have experienced net losses and significant cash outflows from cash used in operating activities over the past years as we develops our portfolio. For the year ended December 31, 2021 the Company incurred a consolidated loss from operations of £5.5million and negative cash flows from operating activities of £6.0million. As of December 31, 2021 the Group had an accumulated deficit of £127.8million.

Our future viability is dependent on our ability to raise cash from financing activities to finance our development plans until commercialisation, generate cash from operating activities and to successfully obtain regulatory approval to allow marketing of our development products. Our failure to raise capital as and when needed could have a negative impact on our financial condition and ability to pursue our business strategies.

Our Group's consolidated financial statements have been presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

As at 31 December 2021, we had cash and cash equivalents of £10.1million. We forecast we currently has enough cash to fund its planned operations into the first quarter of 2023.

We have prepared cash flow forecasts and considered the cash flow requirement for the Company for the next three years including the period twelve months from the date of approval of the consolidated financial statements. These forecasts show that further financing will be required during the course of the next 12 months, assuming, inter alia, that certain development programs and other operating activities continue as currently planned. This requirement for additional financing represents a material uncertainty raises substantial doubt about our ability to continue as a going concern. As a result, our independent registered public accounting firm included an explanatory paragraph in its report on our financial statements as of and for the year ended December 31, 2021 with respect to this uncertainty.

In addition, the global pandemic COVID-19 virus places increased uncertainty over the Directors’ forecasts. The restrictions that have been placed on the movement of people caused delays to some of the Group’s plans. The Directors have established a COVID-19 task force internally to monitor the impact of COVID-19 on the business and prioritize activities to minimize its continuing effect.

In addition to utilizing the existing cash reserves, we and our advisors are evaluating a number of near-term funding options potentially available to us, including fundraising and the partnering of assets and technologies of the Company. After considering the uncertainties, we considered it is appropriate to continue to adopt the going concern basis in preparing these financial information.

Our ability to continue as a going concern is dependent upon our ability to obtain additional capital and/or dispose of assets, for which there can be no assurance we will be able to do on a timely basis, on favorable terms or at all.

Revenue

Revenue is accounted for in line with principles of IFRS 15 ‘Revenue from contracts with customers’

Revenue from licensing agreements

The Group entered into a Licence Agreement during 2019. The licence consists of two distinct performance conditions, which is the grant of the license to use of its intellectual property (“IP”) and the supply of Product. After the Company has granted the license, and the Product is granted applicable marketing authorizations in the EU, the US, or the UK, France, Germany or Switzerland and China, there are no further obligations to participate in, or provide additional services to its customer. The transaction price for the grant of the license to use the Company’s IP comprises of fixed and variable payment streams and the grant of the license is considered to be a right to use IP. Upfront fees earned, are recognised as revenue at a point in time, upon transfer of control over the license to the licensee and the grant of the applicable marketing authorisation by the relevant statutory authority. For future royalty payments associated with a license, the Company applies the IFRS 15 exception for sales-based royalties and recognises the revenue only when the subsequent sale occurs.

Supply of Goods

Revenue from sales of goods to customer are recognised when all performance obligations are met. These criteria are considered to be met when the goods are delivered to the customer. Revenue represents the full list price of products shipped to wholesalers and other customers less product returns, discounts, rebates and other incentives based on the sales price.

Supply of Services

Revenue from the supply of services is subject to specific agreement. This is recognised over the contract term, proportionate to the progress in overall satisfaction of the performance obligations (the services performed by the Group), measured by cost incurred to date out of total estimate of costs. The primary input of substantially all work performed under these arrangements is labour. There is normally a direct relationship between costs incurred and the proportion of the contract performed to date.

Where the Group supplies services to a client it generally bills an agreed percentage in advance of the commencement of any work and the balance on completion. Invoices to clients are payable under normal commercial terms.

Grant revenue

Where grant income is received, which is not a direct re-imbursement of related costs, revenue is recognised at the point at which the conditions have been met, this has been recognised within grant revenue. Where grants are received as a re-imbursement of directly related costs they are credited to research and development expense in the same period as the expenditure towards which they are intended to contribute.

The Group previously received government loans that had a below-market rate of interest. These loans were recognised and measured in accordance with IFRS 9. The benefit of the below-market rate of interest was measured as the difference between the initial carrying value of the loan discounted at a market rate of interest and the proceeds received.

The difference was held within deferred revenue as a government grant and released as a credit to grant income or to research and development expense in line with the expenditure to which it related. In a situation where the proceeds were invested in plant and equipment, the deferred revenue was credited to research and development within the income statement in line with the depreciation of the acquired asset.

Business combinations and externally acquired intangible assets

Business combinations are accounted for using the acquisition method at the acquisition date, which is the date at which the Group obtains control over the entity. The cost of an acquisition is measured as the amount of the consideration transferred to the seller, measured at the acquisition date fair value, and the amount of any non-controlling interest in the acquiree. The Group measures goodwill initially at cost at the acquisition date, being:

• the fair value of the consideration transferred to the seller, plus;

• the amount of any non-controlling interest in the acquiree, plus;

• if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree re-measured at the acquisition date, less;

• the fair value of the net identifiable assets acquired and assumed liabilities.

Acquisition costs incurred are expensed and included in administrative costs. Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration, whether it is an asset or liability, will be recognised through the consolidated statement of comprehensive income. If the contingent consideration is classified as equity, it is not re-measured.

Business combinations and externally acquired intangible assets (continued)

An intangible asset, which is an identifiable non-monetary asset without physical substance, is recognised to the extent that it is probable that the expected future economic benefits attributable to the asset will flow to the Group and that its cost can be measured reliably. The asset is deemed to be identifiable when it is separable or when it arises from contractual or other legal rights.

Externally acquired intangible assets other than goodwill are initially recognised at cost and subsequently amortised on a straight-line basis over their useful economic lives where they are in use. Goodwill is stated at cost less any accumulated impairment losses.

The amounts ascribed to intangibles recognised on business combinations are arrived at by using appropriate valuation techniques.

In-process research and development (‘IPRD’) programmes acquired in business combinations are recognised as assets even if subsequent expenditure is written off because the criteria specified in the policy for development costs below are not met. IPRD is subject to annual impairment testing until the completion or abandonment of the related project. No further costs are capitalised in respect of this IPRD unless they meet the criteria for research and development capitalisation as set out below.

As per IFRS 3, once the research and development of each defined project is completed, the carrying value of the acquired IPRD is reclassified as a finite-lived asset and amortised over its useful life.

The significant intangibles recognised by the Group and their useful economic lives are as follows:

Goodwill	– Indefinite life
IPRD	– In process, not yet amortising
IT and website costs	– 4 years

The useful economic life of IPRD will be determined when the in-process research projects are completed.

Internally generated intangible assets (development costs)

Expenditure on the research phase of an internal project is recognised as an expense in the period in which it is incurred. Development costs incurred on specific projects are capitalised when all the following conditions are satisfied:

• completion of the asset is technically feasible so that it will be available for use or sale;

• the Group intends to complete the asset and use or sell it;

• the Group has the ability to use or sell the asset and the asset will generate probable future economic benefits (over and above cost);

• there are adequate technical, financial and other resources to complete the development and to use or sell the asset; and

• the expenditure attributable to the asset during its development can be measured reliably.

All internal activities related to the research and development of new projects are continuously monitored by the Directors. The Directors consider that the criteria to capitalise development expenditure are not met for a product prior to that product receiving regulatory approval in at least one country.

Development expenditure not satisfying the above criteria, and expenditure on the research phase of internal projects are included in research and development costs recognised in the Consolidated Statement of Comprehensive Income as incurred. No projects have yet reached the point of capitalisation.

Impairment of non-financial assets

Assets that have an indefinite useful life, for example goodwill, or intangible assets not ready for use, such as IPRD, are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use.

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). The Group at 31 December 2021 had only one cash generating unit (2020: one, 2019: one), as set out in note 13. Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of impairment at each reporting date.

Impairment charges are included in profit or loss, except, where applicable, to the extent they reverse gains previously recognised in other comprehensive income. An impairment loss recognised for goodwill is not reversed.

Patents and trademarks

The costs incurred in establishing patents and trademarks are either expensed in accordance with the corresponding treatment of the development expenditure for the product to which they relate or capitalised if the development expenditure to which they relate has reached the point of capitalisation as an intangible asset.

Foreign currency

Transactions entered into by subsidiary entities in a currency other than the currency of the primary economic environment, in which they operate, are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the reporting date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in profit or loss.

The presentational currency of the Group is Pounds Sterling. Foreign subsidiaries use the local currencies of the country where the operate. On consolidation, the results of overseas operations are translated into Pounds Sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations, including goodwill arising on the acquisition of those operations, are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income and accumulated in the foreign exchange reserve.

Exchange differences recognised in the profit or loss of Group entities on the translation of long-term monetary items forming part of the Group’s net investment in the overseas operation concerned are reclassified to other comprehensive income and accumulated in the foreign exchange reserve on consolidation.

On disposal of a foreign operation, the cumulative exchange differences recognised in the foreign exchange reserve relating to that operation up to the date of disposal are transferred to the consolidated statement of comprehensive income as part of the gain or loss on disposal.

Financial assets and liabilities

Assets at amortised cost

The Group does not have any financial assets which it would classify as fair value through profit or loss. Therefore, all financial assets are classed as assets at amortised cost as defined below.

These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of goods and services to customers (e.g. trade receivables), but also incorporate other types of contractual monetary asset. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.

For impairment provisions, the Group applies the IFRS 9 simplified approach to measure expected credit losses using a lifetime expected credit loss provision for trade receivables to measure expected credit losses on a collective basis. Trade receivables are grouped based on a similar credit risk and ageing

The expected loss rates are based on the Group’s historic credit losses experienced over the three-year period prior to the period end. The historic loss rates are then adjusted for current and forward-looking information on macroeconomic factors.

Assets at amortised cost (continued)

The Group’s assets at amortised costs comprise trade and other receivables and cash and cash equivalents in the consolidated statement of financial position.

Cash and cash equivalents include cash in hand, deposits held at call with original maturities of three months or less.

Financial liabilities

The Group classifies its financial liabilities into one of two categories, depending on the purpose for which the liability was acquired.

Fair value through profit and loss (‘FVTPL’)

The Group has outstanding warrants in the ordinary share capital of the company. The number of ordinary shares to be issued when exercised is fixed, however the exercise price is denominated in US Dollars being different to the functional currency of the parent company. Therefore, the warrants are classified as equity settled derivative financial liabilities recognised at fair value through the profit and loss account.

The financial liability is valued using the either the Monte Carlo model or the Black-Scholes option pricing model. Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on re-measurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the ‘finance income’ or ‘finance expense’ lines item in the income statement. Fair value is determined in the manner described in note 20.

Other financial liabilities include the following items:

• Borrowings are initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument. Such interest-bearing liabilities are subsequently measured at amortised cost using the effective interest rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the consolidated statement of financial position. Interest expense in this context includes initial transaction costs and premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.

• Government loans received on favourable terms below market rate are discounted at a market rate of interest. The difference between the present value of the loan and the proceeds is held as a government grant within deferred revenue and is released to research and development expenditure or grant income in line with when the asset or expenditure is recognised in the income statement.

• Trade payables and other short-term monetary liabilities are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method.

Share capital

Financial instruments issued by the Group are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset. The Group has two classes of share in existence:

• ordinary shares of £0.001 each are classified as equity instruments;

• deferred shares of £1 each are classified as equity instruments.

On 2 March 2020 a resolution was passed at a general meeting of shareholders of the Company to consolidate its ordinary shares on a one for 20 basis into new ordinary shares of £0.001 each in the capital of the Company.

Comparative figures in these financial statements reflect the impact of the share consolidation.

Retirement benefits: defined contribution schemes

Contributions to defined contribution pension schemes are charged to the consolidated statement of comprehensive income in the year to which they relate.

Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event; it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Share-based payments

The Group operates a number of equity-settled, share-based compensation plans, under which the entity receives services from employees as consideration for equity instruments (options) of the Group. The fair value of the employee services received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed is determined by reference to the fair value of the options granted:

• including any market performance conditions (including the share price);

• excluding the impact of any service and non-market performance vesting conditions (for example, remaining an employee of the entity over a specified time period); and

• including the impact of any non-vesting conditions (for example, the requirement for employees to save).

Non-market performance and service conditions are included in assumptions about the number of options that are expected to vest. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. Where vesting conditions are

Share-based payments (continued)

accelerated on the occurrence of a specified event, such as a change in control or initial public offering, such remaining unvested charge is accelerated
to the income statement.

In addition, in some circumstances employees may provide services in advance of the grant date and therefore the grant date fair value is estimated for the purposes of recognising the expense during the period between service commencement period and grant date.

At the end of each reporting period, the Group revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity. When the options are exercised, the Company issues new shares. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium.

Leases

Identifying Leases

The Group accounts for a contract, or a portion of a contract, as a lease when it conveys the right to use an asset for a period of time in exchange for consideration. Leases are those contracts that satisfy the following criteria:

(a) There is an identified asset;

(b) The Group obtains substantially all the economic benefits from use of the asset; and

(c) The Group has the right to direct use of the asset.

The Group considers whether the supplier has substantive substitution rights. If the supplier does have those rights, the contract is not identified as giving rise to a lease.

In determining whether the Group obtains substantially all the economic benefits from use of the asset, the Group considers only the economic benefits that arise from the use of the asset, not those incidental to legal ownership or other potential benefits.

In determining whether the Group has the right to direct use of the asset, the Group considers whether it directs how and for what purpose the asset is used throughout the period of use. If there are no significant decisions to be made because they are pre-determined due to the nature of the asset, the Group considers whether it was involved in the design of the asset in a way that predetermines how and for what purpose the asset will be used throughout the period of use. If the contract or portion of a contract does not satisfy these criteria, the Group applies other applicable IFRSs rather than IFRS 16.

All leases are accounted for by recognising a right-of-use asset and a lease liability except for:

Leases of low value assets; and

Leases with a duration of 12 months or less.

Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the group’s incremental borrowing rate on commencement of the lease.

Right of use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for lease payments made at or before commencement of the lease. The Group has taken advantage of the practical expedient to ignore the requirement to separate non-lease components and instead account for the entire contract as a single lease.

Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease.

When the group revises its estimate of the term of any lease (because, for example, it re-assesses the probability of a lessee extension or termination option being exercised), it adjusts the carrying amount of the lease liability to reflect the payments to make over the revised term, which are discounted using a revised discount rate. An equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortised over the remaining (revised) lease term. If the carrying amount of the right-of-use asset is adjusted to zero, any further reduction is recognised in profit or loss.

In 2018 the Group entered into a sublease agreement to mitigate the impact of an otherwise onerous lease on the closure of its Abingdon site. This has been recognised as a lease receivable as the Group determined that the sublease meets the definition of a finance lease under the transitional provisions of IFRS16 and therefore, no right-of-use asset is recognised. During 2020 the lease and sub-lease ended.

Nature of leasing activities (in the capacity as lessee)

The group leased a number of properties in the jurisdictions from which it operates. In some jurisdictions it is customary for lease contracts to provide for payments to increase each year by inflation or and in others to be reset periodically to market rental rates. As at 31 December 2021 the Group had one property lease in place in the UK.

Deferred taxation

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the consolidated statement of financial position differs from its tax base, except for differences arising on:

• the initial recognition of goodwill;

• the initial recognition of an asset or liability in a transaction which is not a business combination and at the time
of the transaction affects neither accounting or taxable profit; and

• investments in subsidiaries and jointly controlled entities where the Group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.

Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised.

The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting date and are expected to apply when the deferred tax assets or liabilities are recovered or settled.

Property, plant and equipment

Items of property, plant and equipment are initially recognised at cost. As well as the purchase price, cost includes directly attributable costs.

Depreciation is provided on all items of property, plant and equipment so as to write off their carrying value over their expected useful economic lives. It is provided at the following rates:

Fixtures and fittings	– 20%- 25% per annum straight line
Leasehold improvements	– the shorter of 10% per annum straight line or over the lease term
Computer equipment	– 25% per annum straight line
Laboratory equipment	– 15% – 25% per annum straight line
Right of use asset	– Economic life of contractual relationship

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Critical accounting estimates and judgements

12 Months Ended

Dec. 31, 2021

Critical accounting estimates and judgements

2 Critical accounting estimates and judgements

The preparation of these consolidated financial statements requires the Group to make estimates, assumptions and judgments that can have a significant impact on the reported amounts of assets and liabilities, revenue and expenses and related disclosure of contingent assets and liabilities, at the respective dates of our financial statements. The Group bases its estimates, assumptions and judgments on historical experience and various other factors that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. Management evaluates estimates, assumptions and judgments on a regular basis and makes changes accordingly, and discusses critical accounting estimates with the board of Directors.

The following are considered to be critical accounting estimates:

Impairment of goodwill and intangible assets not yet ready for use

Goodwill and intangibles not yet ready for use are tested for impairment at the cash generating unit level on an annual basis at the year end and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a cash generating unit below its carrying value. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit.

The fair value of each cash generating unit or asset is estimated using the income approach, on a discounted cash flow methodology. This analysis requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, including for revenues and development costs, estimation of the long term rate of growth for the business, estimation of the useful life over which cash flows will occur and determination of our weighted-average cost of capital.

The carrying value of goodwill was £Nil (2020: £Nil; 2019: £2.3m) and intangibles not yet ready for use was £Nil (2020: £Nil; 2019:£10.1m) as at 31 December 2021 (note 12).

The estimates used to calculate the fair value of a cash generating unit change from year to year based on operating results and market conditions. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for each such unit.

In March 2020 the Group undertook a Strategic Review to re-evaluate its priorities in the context of available resources. The Board concluded that the Company was unlikely to conclude a license transaction or raise sufficient funds to continue the required remaining investment in MTD201 on a timely basis. The Board therefore decided to terminate further in-house development of the MTD201 programme with immediate effect and, in line with that decision, to close the Company’s MTD201 dedicated manufacturing facilities in Bilbao and offer redundancy to all 42 employees. As a result of the decision to terminate this program the Group recognised an impairment charge of £2.3m in the year to 31 December 2020 (2019: £Nil) against goodwill and an impairment charge against the IPRD of the Midatech Pharma (Wales) Ltd cash generating unit of £9.3m (2019:£Nil).

In June 2020 the Group received a letter from Secura Bio Inc., the licensor of Panobinostat, the active ingredient in the Group’s MTX110 development program, purporting to terminate our license. As a result of this purported termination an impairment charge of £0.8m was recognised in the year to 31 December 2020 against the acquired IPRD in relation to MTX110. See note 12 and 13.

Share-based payments

The Group accounts for share-based payment transactions for employees in accordance with IFRS 2 Share-based Payment, which requires the measurement of the cost of employee services received in exchange for the options on our ordinary shares, based on the fair value of the award on the grant date.

The Directors selected the Black-Scholes-Merton option pricing model as the most appropriate method for determining the estimated fair value of our share-based awards without market conditions. For performance-based options that include vesting conditions relating to the market performance of our ordinary shares, a Monte Carlo pricing model was used in order to reflect the valuation impact of price hurdles that have to be met as conditions to vesting.

The resulting cost of an equity incentive award is recognised as expense over the requisite service period of the award, which is usually the vesting period. Compensation expense is recognised over the vesting period using the straight-line method and classified in the consolidated statements of comprehensive income.

The assumptions used for estimating fair value for share-based payment transactions are disclosed in note 26 to our consolidated financial statements and are estimated as follows:

• volatility is estimated based on the average annualised volatility of a number of publicly traded peer companies in the biotech sector;

• the estimated life of the option is estimated to be until the first exercise period, which is typically the month after the option vests; and

• the dividend return is estimated by reference to our historical dividend payments. Currently, this is estimated to be zero as no dividend has been paid in the prior periods.

Financial liabilities

Fair value through profit and loss (‘FVTPL’)

The Group has outstanding warrants in the ordinary share capital of the company. The number of ordinary shares to be issued when exercised is fixed, however the exercise price is denominated in US Dollars being different to the functional currency of the parent company. Therefore, the warrants are classified as equity settled derivative financial liabilities recognised at fair value through the profit and loss account.

The financial liability is valued using the either the Monte Carlo model or the Black-Scholes option pricing model. Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on re-measurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the ‘finance income’ or ‘finance expense’ lines item in the income statement. Fair value is determined in the manner described in note 20.

The following are considered to be critical accounting judgments:

Revenue

Supply of Services

There are significant management judgements and estimates involved in the recognition of revenue from the supply of services. Revenue on services is recognised over the contract term, proportionate to the progress in overall satisfaction of the performance obligations (the services performed by the Group), measured by cost incurred to date out of total estimate of costs.

Income taxes

Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgment is required to determine the amount of deferred tax assets that can be recognised based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

In 2021, there were approximately £67.2m of gross unutilised tax losses carried forward (2020: £63.2m; 2019: £49.6m). No deferred tax asset has been provided in respect of these losses as there was insufficient evidence to support their recoverability in future periods.

Going Concern

We have has experienced net losses and significant cash outflows from cash used in operating activities over the past years as it develops its portfolio. For the year ended December 31, 2021 the Group incurred a consolidated loss from operations of £5.5million and negative cash flows from operations of £6.0million. As of December 31, 2021 the Group had an accumulated deficit of £127.8million.

Our future viability is dependent on our ability to raise cash from financing activities to finance our development plans until commercialisation, to generate cash from operating activities and to successfully obtain regulatory approval to allow marketing of our development products. Our failure to raise capital as and when needed could have a negative impact on our financial condition and ability to pursue our business strategies.

Our Group's consolidated financial statements have been presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

As at December 31, 2021, the Group had cash and cash equivalents of £10.1million. We forecast that we currently have enough cash to fund our planned operations into the first quarter of 2023.

We have prepared cash flow forecasts and considered the cash flow requirement for the Company for our next three years including the period twelve months from the date of the approval of the financial statements. These forecasts show that further financing will be required during the course of the next 12 months, assuming, inter alia, that certain development programs and other operating activities continue as currently planned. This requirement for additional financing represents a material uncertainty that raises substantial doubt about our ability to continue as a going concern.

In addition, the global pandemic COVID-19 virus places increased uncertainty over the Directors’ forecasts. The restrictions that have been placed on the movement of people caused delays to some of the Group’s plans. The Directors have established a COVID-19 task force internally to monitor the impact of COVID-19 on the business and prioritize activities to minimize its continuing effect.

In addition to utilizing the existing cash reserves, we and our advisors are evaluating a number of near-term funding options potentially available to us, including fundraising and the partnering of assets and technologies of the Company. After considering the uncertainties, we considered it is appropriate to continue to adopt the going concern basis in preparing these financial information.

Our ability to continue as a going concern is dependent upon our ability to obtain additional capital and/or dispose of assets, for which there can be no assurance we will be able to do on a timely basis, on favorable terms or at all.

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Segment Information

12 Months Ended

Dec. 31, 2021

Segment Information

3 Segment Information

Revenue from contracts with customers

Geographical analysis of revenue by destination of customer

	2021 £’000		2020 £’000		2019 £’000
Revenue from continuing operations:
United Kingdom		–		4		197
Belgium		578		114		–
Rest of Europe		–		–		55
Rest of the World		–		62		60
		578		180		312

All revenue from continuing operations came from the sale of services in 2021, 2020 and 2019.

In 2021, all revenue from continuing operations came from 1 customer (2020: 3 customers; 2019: 3 customers). Within revenue from discontinued operations for 2018, reported in the consolidated statement of comprehensive income under loss from discontinued operations, four customers each accounted for at least 10% of revenue from discontinued operations:

	2021 £’000			2020 £’000			2019 £’000
Customer A		100	%		64	%		63	%
Customer B		–			34	%		19	%
Customer C		–			2	%		18	%

The Group contains one reportable operating segment, Pipeline Research and Development (‘Pipeline R&D’). This segment seeks to develop products using the Group’s nanomedicine and sustained release technology platforms.

The accounting policies of the reportable segments are consistent with the Group’s accounting policies described in note 1. Segment results represent the result of each segment without the allocation of head office expenses, interest expense, interest income and tax.

No measures of segment assets and segment liabilities are reported to the Group’s Board of Directors in order to assess performance and allocate resources. There is no intersegment activity and all revenue is generated from external customers.

Both the UK and Spanish entities meet the aggregation criteria and have therefore been presented as a single reportable segment under Pipeline R&D. The research and development activities involve the discovery and development of pharmaceutical products in the field of nanomedicine and sustained release technology.

The cost recognised in the year to 31 December 2019 as a discontinued operation relate to a claim made by Midatech Pharma US, Inc. (“MPUS”) under the warranties provided by Midatech under the Stock Purchase Agreement entered into in connection with the disposal of MPUS, see note 4.

In the following segmented results tables, depreciation and amortisation allocated to research and development costs, and administrative costs in the consolidated statements of comprehensive income, are presented separately.

Segmented results for the year ended 31 December 2021

	Pipeline R&D £’000
Revenue		578
Total revenue		578
Other income		24
Research and development costs (excluding depreciation)		(4,291	)
Administrative costs (excluding depreciation)		(2,906	)
Depreciation		(403	)
Loss from operations		(6,998	)
Finance income		936
Finance expense		(44	)
Loss before tax		(6,106	)
Taxation		646
Loss for the year from continuing operations		(5,460	)

Depreciation in year allocated as follows:

	Depreciation £’000
Research and development costs		363
Administrative costs		40
Total		403

Segmented results for the year ended 31 December 2020

	Pipeline R&D £’000
Revenue		180
Grant revenue		163
Total revenue		343
Other income		12
Research and development costs (excluding depreciation and amortisation)		(4,886	)
Administrative costs (excluding depreciation and amortisation)		(4,923	)
Depreciation		(1,207	)
Amortisation		(10	)
Impairment		(12,369	)
Loss from operations		(23,040	)
Finance income		1
Finance expense		(431	)
Loss before tax		(23,470	)
Taxation		1,281
Loss for the year from continuing operations		(22,189	)

Depreciation and amortisation in year allocated as follows:

	Depreciation £’000		Amortisation £000
Research and development costs		1,174		8
Administrative costs		33		2
Total		1,207		10

Segmented results for the year ended 31 December 2019

	Pipeline R&D £’000			Commercial (discontinued) £’000			Consolidated (including discontinued operations) £’000
Revenue		312			–			312
Grant revenue		362			–			362
Total revenue		674			–			674
Other income		15			–			15
Research and development costs (excluding depreciation and amortisation)		(6,624	)		–			(6,624	)
Distribution costs, sales and marketing		(323	)		–			(323	)
Administrative costs (excluding depreciation)		(3,775	)		–			(3,775	)
Loss from discontinued operations, net of tax		–			(947	)		(947	)
Depreciation		(1,282	)		–			(1,282	)
Amortisation		(3	)		–			(3	)
Loss from operations		(11,318	)		(947	)		(12,265	)
Finance income		492			–			492
Finance expense		(97	)		–			(97	)
Loss before tax		(10,923	)		(947	)		(11,870	)
Taxation		1,785			–			1,785
Loss for the year		(9,138	)		(947	)		(10,085	)
Loss from continuing operations								(9,138	)
Loss from discontinued operations								(947	)

All material additions to non-current assets in 2021, 2020 and 2019 were in the Pipeline R&D segment.

Non-current assets by location of assets

	2021 £’000		2020 £’000		2019 £’000
United Kingdom		1,152		542		12,775
Spain		–		–		4,383
		1,152		542		17,158

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Discontinued operations

12 Months Ended

Dec. 31, 2021

Discontinued operations

4 Discontinued operations

During 2018, the Group made the decision to sell MPUS, its Commercial business based in the US. The sale completed on 1 November 2018 to an affiliate of Barings LLC, a member of the MassMutual Financial Group, for total consideration of up to $19m. This included $6m of consideration contingent payable on the achievement of various net revenue milestones for the MPUS business for the financial years 2018 and 2019. MPUS did not achieve the net revenue milestones in either 2018 or 2019, as a result no contingent consideration was received during 2019.

Under the terms of the Stock Purchase Agreement, the Group agreed to indemnify the Purchaser against, inter alia, any liability related to any prescription drug user fee amounts owed to the United States Food and Drug Administration (“FDA”) under the Prescription Drug Fee User Act (“PDUFA”) by MPUS for the United States government’s fiscal year ended 30 September 2018.

MPUS had successfully obtained waivers for user fees for all prior fiscal periods in which it was liable under PDUFA and entered into the Stock Purchase Agreement with the Purchaser confident that a further waiver would be obtained. However, during 2019 MPUS sought approval from the FDA for a filing relating to one of its commercial products and was informed by the FDA that the approval would not be forthcoming whilst the PDUFA fee remained unpaid. Consequently, MPUS paid the PDUFA fee of £0.95m and then, in accordance with the terms of the Stock Purchase Agreement, Midatech deposited the same amount with MPUS, pending completion of the waiver application process.

At 31 December 2019 Management considered the recoverability of the sum paid under the warranty, and although the waiver process was still on-going, Management concluded, based on third party advice, that the probability of successfully achieving the waiver had diminished and therefore took the decision to expense the cost of the warranty claim in 2019. As a result of Fortovia Theraputics Inc (formerly MPUS) filing for bankruptcy during 2020 the waiver claim is no longer being pursued.

The post-tax loss on disposal of discontinued operations was determined as follows:

Result of discontinued operations	2021 £’000		2020 £’000		2019 £’000
Revenue		–		–		–
Expenses other than finance costs		–		–		(947	)
Finance costs		–		–		–
Impairment		–		–		–
Loss from discontinued operations before tax		–		–		(947	)
Taxation		–		–		–
Loss on disposal of discontinued operations		–		–		–
Loss for the year from discontinued operations after tax		–		–		(947	)

Statement of cash flows	2021 £’000		2020 £’000		2019 £’000
The statement of cash flows includes the following amounts relating to discontinued operations:
Operating activities		–		–		–
Investing activities		–		–		(947	)
Financing activities		–		–		–
Net cash flow from discontinued operations		–		–		(947	)

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Loss from operations

12 Months Ended

Dec. 31, 2021

Loss from operations

5 Loss from operations

	2021 £’000			2020 £’000			2019 £’000
Loss from operations is stated after charging/(crediting):
Depreciation of property, plant and equipment
– From continuing operations		213			1,089			979
Depreciation of right of use asset
– From continuing operations		190			118			303
Amortisation of intangible assets – product and marketing rights		–
– From continuing operations		–			10			3
Impairment of intangible assets		–			12,369			–
Fees payable to the Company’s auditor for the audit of the parent Company		88			87			110
Fees payable to the Company’s subsidiary auditors for the audits of the subsidiary accounts		44			43			48
Fees payable to the Company’s auditor for:
– Other services		–			7			66
Fees payable to the Company’s previous auditor for the audit of the parent Company		–			15			–
Fees payable to the Company’s previous auditor for:
-       Other services		41			171			–
Foreign exchange(gain)/loss		12			96			131
Profit/(Loss) on disposal of property, plant and equipment		(42	)		(226	)		–
Equity settled share-based payment*		89			(404	)		(34	)

• credit recognised in prior years due to employees leaving the company and the subsequent reversal of the cumulative share based payment charge relating to share options under the 2014 Midatech Pharma plc Enterprise Management Incentive Scheme.

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Staff costs

12 Months Ended

Dec. 31, 2021

Staff Costs

Staff costs

6 Staff costs

Staff costs (including Directors), for continuing and discontinued operations, comprise:

	2021 £’000		2020 £’000			2019 £’000
Wages and salaries		1,354		2,727			2,762
Defined contribution pension cost (note 25)		71		75			90
Social security contributions and similar taxes		152		397			565
Share-based payment charge/(credit)		89		(404	)		(34	)
	1,666		2,795			3,383
Continuing operations		1,666		2,795			3,383
Discontinued operations		–		–			–
	1,666		2,795			3,383

Employee numbers

The average number of staff employed by the Group during the financial year, for continuing and discontinued operations, amounted to:

	2021		2020		2019
Research and development		15		31		52
General and administration		5		9		13
		20		40		65

Key management personnel compensation

	2021 £’000		2020 £’000			2019 £’000
Short term employee benefits		658		472			812
Wages and salaries		–		–			656
Payments made to third parties		–		–			82
Social security contributions and similar taxes		–		–			72
Benefits in kind		–		–			2
Post-employment benefits		27		24			42
Defined contribution pension cost		–		–			42
Termination benefits		–		30			–
Share-based payment		61		(472	)		(58	)
		746		54			796

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group, including the Directors of the Company, Chief Executive Officer and the Chief Scientific Officer .

None of the Directors have exercised share options during the year (2020: nil, 2019: nil).

During the year 1 Directors (2020:2; 2019: 3) participated in a defined contribution pension scheme.

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Finance income and expense

12 Months Ended

Dec. 31, 2021

Finance income and expense

7 Finance income and expense

	2021 £’000		2020 £’000		2019 £’000
Finance income
Interest received on bank deposits		–		1		8
Gain on equity settled derivative financial liability		936		–		484
Total finance income		936		1		492

	2021 £’000		2020 £’000		2019 £’000
Finance expense
Interest expense on lease liabilities		36		20		30
Other loans		8		14		67
Loss on equity settled derivative financial liability		–		397		–
Total finance expense		44		431		97

The gain/(loss) on the equity settled derivative financial liability in 2021, 2020 and 2019 arose as a result of the movement in share price (note 20).

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Taxation

12 Months Ended

Dec. 31, 2021

Taxation

8 Taxation

	2021 £’000		2020 £’000			2019 £’000
Current tax credit
Current tax credited to the income statement		646		1,144			1,782
Taxation payable in respect of foreign subsidiary		–		(21	)		–
Adjustment in respect of prior year		–		158			3
	646		1,281			1,785
Deferred tax credit
Reversal of temporary differences		–		–			–
Total tax credit		646		1,281			1,785

There was no tax charge relating to discontinued operations for 2021, 2020 and 2019.

The reasons for the difference between the actual tax charge for the year and the standard rate of corporation tax in the United Kingdom applied to losses for the year are as follows:

	2021 £’000			2020 £’000			2019 £’000
Loss before tax		(6,106	)		(23,470	)		(11,870	)
Expected tax credit based on the standard rate of United Kingdom corporation tax at the domestic rate of 19%		(1,160	)		(4,459	)		(2,255	)
Expenses not deductible for tax purposes		75			596			1,087
Income not taxable		(2	)		(75	)		–
Unrelieved tax losses and other deductions		–			–			(114	)
Adjustment in respect of prior period		–			(158	)		(3	)
Surrender of tax losses for R&D tax refund		(280	)		(491	)		(1,810	)
Foreign exchange differences					–			1
Deferred tax not recognised		721			3,306			1,309
Total tax credited to the income statement		(646	)		(1,281	)		(1,785	)

The taxation credit arises on the enhanced research and development tax credits accrued for the respective periods.

An adjustment has been recognised in 2020 in respect of the prior period of £158k, this is as a result of a more detailed review of cost classification prior to the submission of tax returns to HMRC in 2020.

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Loss per share

12 Months Ended

Dec. 31, 2021

Loss per share

9 Loss per share

	2021 £’000			2020 £’000			2019 £’000
Numerator
Loss used in basic EPS and diluted EPS:
Continuing operations		(5,460	)		(22,189	)		(9,138	)
Discontinued operations		–			–			(947	)
Denominator
Weighted average number of ordinary shares used in basic EPS:		80,546,881			42,839,961			18,330,588
Basic and diluted loss per share:
Continuing operations – pence		(7	)p		(52	)p		(50	)p
Discontinued operations – pence		–			–			(5	)p

On 2 March 2020 a resolution was passed at a general meeting of shareholders of the Company to consolidate its ordinary shares on a one for 20 basis into new ordinary shares of 0.1p each in the capital of the Company. The comparative denominator has been calculated to reflect the share consolidation.

The Group has made a loss in the current and previous years presented, and therefore the options and warrants are anti-dilutive. As a result, diluted earnings per share is presented on the same basis for all periods shown.

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Property, plant and equipment

12 Months Ended

Dec. 31, 2021

Property, plant and equipment

10 Property, plant and equipment

	Fixtures and fittings £’000			Leasehold improvements £’000			Computer equipment £’000			Laboratory equipment £’000			Right of use asset £’000			Total £’000
Cost
At 1 January 2019		253			2,013			383			3,651			–			6,300
Adoption of IFRS 16 Leases		–			–			–			–			395			395
Additions		4			137			23			223			822			1,209
Effect of modification to lease terms		–			–			–			–			(82	)		(82	)
Exchange differences		(9	)		(112	)		(3	)		(136	)		(11	)		(271	)
At 31 December 2019		248			2,038			403			3,738			1,124			7,551
Additions		–			58			16			135			–			209
Effect of modification to lease terms		–			–			–			–			(678	)		(678	)
Disposal		(202	)		(2,184	)		(185	)		(2,323	)		(316	)		(5,210	)
Exchange differences		7			92			2			112			58			271
At 31 December 2020		53			4			236			1,662			188			2,143
Additions		57			53			16			194			720			1,040
Transfer		–			–			–			(155	)		155			–
Effect of modification to lease terms		–			–			–			–			(24	)		(24	)
Disposal		(50	)		(4	)		(10	)		(138	)		(164	)		(366	)
At 31 December 2021		60			53			242			1,563			875			2,793
		Fixtures and fittings £’000			Leasehold improvements £’000			Computer equipment £’000			Laboratory equipment £’000			Right of use asset £’000			Total £’000
Accumulated depreciation
At 1 January 2019		241			1,485			265			2,326			–			4,317
Charge for the year		2			400			70			507			303			1,282
Exchange differences		(8	)		(91	)		(3	)		(93	)		(7	)		(202	)
At 31 December 2019		235			1,794			332			2,740			296			5,397
Charge for the year		9			310			50			720			118			1,207
Disposals		(202	)		(2,183	)		(185	)		(2,300	)		(316	)		(5,186	)
Exchange differences		7			81			2			79			14			183
At 31 December 2020		49			2			199			1,239			112			1,601
Transfer		–			–			–			(74	)		74			–
Charge for the year		8			5			22			178			190			403
Disposals		(50	)		(3	)		(8	)		(138	)		(164	)		(363	)
At 31 December 2021		7			4			213			1,205			212			1,641
Net book value
At 31 December 2021		53			49			29			358			663			1,152
At 31 December 2020		4			2			37			423			76			542
At 31 December 2019		13			244			71			998			828			2,154

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Leases

12 Months Ended

Dec. 31, 2021

Leases

11 Leases

Lease Liabilities	2021 £’000			2020 £’000			2019 £’000
At 1 January		76			907			546
Additions		720			–			822
Transfer		77			–			–
Effect of modification to lease terms		(24	)		(788	)		(82	)
Interest expenses		29			15			24
Lease payments		(112	)		(105	)		(391	)
Exchange differences		–			47			(12	)
At 31 December		766			76			907

The right of use asset is disclosed in note 10.

In April 2021 the Group signed an agreement to lease new premises in Cardiff, Wales, to house its corporate offices and laboratories. The agreement to lease allowed the Group to carry out the Cat A works and fit out prior to completion of the lease and its occupation in August 2021. The lease agreed was for a 5 year period with no break clause. The lease has been recognised as a right of use asset during the year from the date of the agreement to lease.

In May 2021 the Group provided notice to terminate its property lease on its historical building in Cardiff. The lease required 6 month’s notice.

During 2020 as a result of the closure of the Group’s operations in Spain two property leases were terminated early, this impacted both the right of use asset and the lease liability.

Management considered the appropriate life of a lease in the UK in 2021, 2020 and 2019 and adjusted the right of use asset and lease liability accordingly.

Low value leases expensed in year:

	2021 £’000		2020 £’000		2019 £’000
Low value leases expensed		2		10		29
	2		10		29

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Intangible assets

12 Months Ended

Dec. 31, 2021

Disclosure of detailed information about intangible assets [abstract]

Intangible assets

12 Intangible assets

	In-process research and development £’000		Goodwill £’000		IT/Website costs £’000			Total £’000
Cost
At 1 January 2019		13,378		2,291		28			15,697
Additions		–		–		9			9
Foreign exchange		–		–		(2	)		(2	)
At 31 December 2019		13,378		2,291		35			15,704
Disposal		–		–		(36	)		(36	)
Foreign exchange		–		–		1			1
At 31 December 2020		13,378		2,291		–			15,669
At 31 December 2021		13,378		2,291		–			15,669
		In-process research and development £’000		Goodwill £’000		IT/Website Costs £’000			Total £’000
Accumulated amortisation and impairment
At 1 January 2019		3,300		–		23			3,323
Amortisation charge for the year		–		–		3			3
Foreign exchange		–		–		(1	)		(1	)
At 31 December 2019		3,300		–		25			3,325
Amortisation charge for the year		–		–		10			10
Disposal		–		–		(36	)		(36	)
Impairment		10,078		2,291		–			12,369
Foreign exchange		–		–		1			1
At 31 December 2020		13,378		2,291		–			15,669
At 31 December 2021		13,378		2,291		–			15,669
Net book value
At 31 December 2021		–		–		–			–
At 31 December 2020		–		–		–			–
At 31 December 2019		10,078		2,291		10			12,379

The individual intangible assets, excluding goodwill, which are material to the financial statements are:

Carrying amount

Remaining amortisation period

2021 £’000

2020 £’000

2019 £’000

2021 (years)

2020 (years)

2019 (years)

Midatech Pharma (Wales) Limited acquired IPRD

–

–

9,300

n/a

n/a

n/a in process

MTX110 acquired IPRD

–

–

778

n/a

n/a

n/a in process

–

–

10,078

In 2020 an impairment charge of £0.8m was recorded in relation to the acquire IPRD on MTX110. The impairment was as a result of the termination of a License Agreement between the Company and Secura Bio Inc. Pursuant to the License Agreement, Midatech Limited was granted a non-exclusive worldwide, sub-licenseable license to certain patents of Panobinostat, the active pharmaceutical ingredient of the Company’s development product MTX110.

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Impairment testing

12 Months Ended

Dec. 31, 2021

Impairment testing

13 Impairment testing

Midatech Pharma (Wales) Ltd

Details of goodwill and IPRD allocated to the acquired cash generating unit and the valuation basis are as follows:

	Indefinite lived
	IPRD carrying amount				Goodwill carrying amount
Name		2021 £’000	2020 £’000	2019 £’000		2021 £’000	2020 £’000	2019 £’000	Valuation Basis
CGU – Midatech Pharma (Wales) Ltd		–	–	9,300		–	–	2,291		Value in use

As a result of the Board’s decision to terminate its MTD201 program in March 2020 an impairment charge of £11.6m was recorded in that year in the assets of Midatech Pharma (Wales) Ltd (‘MPW’) CGU. The impairment charge was £9.3m of IPRD and £2.3m acquired goodwill. See note 2.

The assets of MPW were valued as at 31 December 2019 were found to support the IPRD and goodwill carrying amounts set out above. The IPRD was valued using 12-13 year risk adjusted cash flow forecasts, in line with patent life, that had been approved by the Board. A period longer than 5 years was appropriate on the basis that the investment was long term and the development and commercialisation process is typically in excess of 5 years. Beyond the period from product launch and initial market penetration, a long term growth rate of Nil was used.

The key assumptions used in the valuation model examining the MPW Ltd cash generating unit include the following:

Schedule of key assumptions used

Assumptions	2021		2020		2019
Pre-tax discount rate		n/a		n/a		18.4	%
Cumulative probability of success of projects		n/a		n/a		81	%

The discount rate is an estimated market-based weighted average cost of capital for the MPW business, determined at the date of acquisition. Cumulative probability of success of projects is the product of the probability of success of each remaining major phase of development for each individual IPRD component. These phase probabilities were determined by management with reference to the risks associated with each remaining development stage.

Sensitivity analysis

If any one of the following changes were made to the above key assumptions, the carrying value and recoverable amount would be equal.

Assumptions	2021		2020		2019
Pre-tax discount rate for all projects		n/a		n/a		increase to 21%
Cumulative probability of success of project		n/a		n/a		59	%

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Subsidiaries

12 Months Ended

Dec. 31, 2021

Subsidiaries

14 Subsidiaries

The subsidiaries of Midatech Pharma plc, all of which are 100% owned, either directly or through subsidiaries where indicated, and have been included in these financial statements in accordance with the details set out in the basis of preparation and basis of consolidation note 1, are as follows:

Name	Registered Office	Nature of Business	Notes
Midatech Limited	1 Caspian Point, Caspian Way, Cardiff, CF10 4DQ	Trading company
PharMida AG	c/o Kellerhals, Hirschgässlein 11, 4051 Basel, Switzerland	Dormant	(a) (b)
Midatech Pharma (Wales) Limited	1 Caspian Point, Caspian Way, Cardiff, CF10 4DQ	Trading company

Notes:

(a)       Wholly owned subsidiary of Midatech Limited.

(b)       PharMida AG became dormant in January 2016.

(c)       Midatech Pharma PTY was incorporated on 16 February 2015 and dissolved November 2020.

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Trade and other receivables

12 Months Ended

Dec. 31, 2021

Trade and other receivables

15 Trade and other receivables

	2021 £’000		2020 £’000		2019 £’000
Trade receivables		33		95		22
Prepayments		607		258		151
Other receivables		394		219		3,444
Total trade and other receivables		1,034		572		3,617
Less: non-current portion (rental deposit and on bond)		–		–		(2,625	)
Current portion		1,034		572		992

Trade and other receivables do not contain any impaired assets. The Group does not hold any collateral as security and the maximum exposure to credit risk at the consolidated statement of financial position date is the fair value of each class of receivable.

Book values approximate to fair value at 31 December 2021, 2020 and 2019.

During 2019 a cash-backed guarantee was provided to the Spanish Government in relation to a loan provided to the Group under its Reindustrialization programme, see note 18. As a result of the closure of Midatech Pharma (España) SL during 2020 the cash-back guarantee was released on the repayment of the loan to the Spanish Government.

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Cash and cash equivalents and cash flow supporting notes

12 Months Ended

Dec. 31, 2021

Cash and cash equivalents and cash flow supporting notes

16 Cash and cash equivalents and cash flow supporting notes

Cash and cash equivalents for purposes of the consolidated statement of cash flows comprises:

	2021 £’000		2020 £’000		2019 £’000
Cash at bank available on demand		10,057		7,546		10,928

During 2021, 2020 and 2019, cash inflows arose from equity financing transactions, included within financing activities on the face of the cash flow statement. As part of the equity transaction in July 2021 warrants to the value of £Nil (May 2020: £1.0m; October 2019 : £1.1m) were issued as disclosed in note 20.

	2021 £’000			2020 £’000			2019 £’000
Gross proceeds		10,091			10,792			15,767
Transaction costs		(1,056	)		(1,050	)		(1,659	)
		9,035			9,742			14,108

The following changes in loans and borrowings arose as a result of financing activities during the year:

	Non-current liabilities £’000			Current liabilities £’000			Total £’000
At 1 January 2021		60			200			260
Cash flows		–			(215	)		(215	)
Non-cashflows:
Foreign Exchange		–			(4	)		(4	)
New leases		715			5			720
Effect of modification to lease term – IFRS 16		–			(24	)		(24	)
Loans and borrowings classified as non-current 31 December 2020 becoming current in 2021		(178	)		178			–
Interest accruing in period		23			6			29
At 31 December 2021		620			146			766

	Non-current liabilities £’000			Current liabilities £’000			Total £’000
At 1 January 2020		5,670			412			6,082
Cash flows		(6,182	)		(258	)		(6,440	)
Non-cashflows:
Foreign Exchange		252			23			275
Fair value changes		1,176			–			1,176
Effect of modification to lease term – IFRS 16		(877	)		89			(788	)
Reclassification portion government loan to non-current		51			(51	)		–
Interest accruing in period		(30	)		(15	)		(45	)
At 31 December 2020		60			200			260

	Non-current liabilities £’000			Current liabilities £’000			Total £’000
At 1 January 2019		884			368			1,252
Cash flows		5,575			(1,027	)		4,548
Non-cashflows:
Foreign Exchange		(42	)		(29	)		(71	)
Fair value changes		(1,139	)		–			(1,139	)
Adoption of IFRS16 leases		163			383			546
Effect of modification to lease term – IFRS 16		–			(82	)		(82	)
New leases		805			95			900
Loans and borrowings classified as non-current 31 December 2018 becoming current in 2019		(685	)		685			–
Transfer to grant income		–			(14	)		(14	)
Interest accruing in period		108			34			142
At 31 December 2019		5,670			412			6,082

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Trade and other payables

12 Months Ended

Dec. 31, 2021

Trade and other payables

17 Trade and other payables

Current	2021 £’000		2020 £’000		2019 £’000
Trade payables		485		337		725
Other payables		5		26		13
Accruals		546		768		1,765
Total financial liabilities, excluding loans and borrowings, classified as financial liabilities measured at amortised cost		1,036		1,131		2,503
Tax and social security		56		31		86
Deferred revenue and government grants		–		68		1,905
Total trade and other payables		1,092		1,230		4,494

Book values approximate to fair value at 31 December 2021, 2020 and 2019.

All current trade and other payables are payable within 3 months of the period end date shown above.

Government grants

The Group received development grant funding from the European Union under the Horizon 2020 ‘Nanofacturing’ project, a European Union funded programme to develop a scalable manufacturing platform for the production of nanopharmaceutical products. Midatech participated in this programme, along with seven other entities, through two Group companies, Midatech Pharma España SL (‘MPE’), which acted as project coordinator, and Midatech Limited (‘MTL’). The project commenced in February 2015 and completed in January 2019. During the year £nil (2020: £nil, 2019: £124k) revenue was recognised in relation to this project and the deferred revenue balance as at 31 December 2021 was £nil (2020: £nil, 2019: £nil).

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Borrowings

12 Months Ended

Dec. 31, 2021

Borrowings

18 Borrowings

	2021 £’000		2020 £’000		2019 £’000
Current
Lease liabilities		146		93		233
Government and research loans		–		107		179
Total		146		200		412
Non-current
Lease liabilities		620		60		912
Government and research loans		–		–		4,758
Total		620		60		5,670

During 2021 a euro denominated government and research loan of £103k (2020: £6.2m) was repaid. This amount includes £ nil (2020: £1.2m) of government grants, which is included in the amounts disclosed in note 17. This amount translated at year end rate was £107k (2020: £4.8m).

Book values approximate to fair value at 31 December 2021, 2020 and 2019.

Obligations under finance leases are secured by a fixed charge over the fixed assets to which they relate.

Government loans in Spain

MPE previously had four Spanish government loans, three were repaid in 2020 with the final loan repaid in February 2021 prior to the liquidation of MPE.

Three of the loans were provided for the finance of research, technical innovation and the construction of their laboratory. The loan were term loans which carried an interest rate below the market rate and were repayable over periods through to 2024. As a result of the Group’s decision on 31 March 2020 to terminate further in-house development of MTD201 and the subsequent closure of its dedicated manufacturing facilities in Bilbao two of these loans were repaid in 2020, with the final loan being repaid in 2021.

The fourth loan received by MPE in September 2019 for €6.6m was awarded under the Spanish Government Reindustrialization programme. The Spanish Government required the company to provide a €2.9 million cash-backed guarantee as security for the loan. The funds were to be used to support Midatech’s manufacturing scale-up facilities construction. This loan was terminated and repaid early in 2020 as a result of the Group’s decision on 31 March 2020. As a result of the early termination interest was charged at market rates up to the date of satisfaction of the loan.

The loans carried default interest rates in the event of scheduled repayments not being met. On initial recognition, the loans are discounted at a market rate of interest with the credit being classified as a grant within deferred revenue. The deferred grant revenue is released to the consolidated statement of comprehensive income within research and development costs in the period to which the expenditure is recognised.

The deferred revenue element of the government loans is designated within note 17 as deferred revenue and Government grants, the gross contractual repayment of the loans is disclosed in note 21. As a result of the repayment of the loans these were fully amortised during 2020.

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Provisions

12 Months Ended

Dec. 31, 2021

Schedule Of Provisions

Provisions

19 Provisions

	2021 £’000		2020 £’000			2019 £’000
Opening provision at 1 January		50		97			165
Utilisation of provision		–		(97	)
Provision recognised/(released) in the year		–		50			(68	)
At 31 December		50		50			97
Less: non-current portion		–		(50	)		–
Current portion		50		–			97

The provision as at 31 December 2021 and 2020 represents management’s best estimate of the ‘making good’ clause on the Cardiff office which was vacated during the fourth quarter of 2021.

The provision as at 31 December 2019 relates to the ‘making good’ clause on the Abingdon office which was vacated in December 2018. The Abingdon office was sub-let for the remaining period of the lease, which terminated in February 2020.

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Derivative financial liability – current

12 Months Ended

Dec. 31, 2021

Derivative financial liability – current

20 Derivative financial liability – current

Schedule of derivative financial liability

	2021 £’000			2020 £’000			2019 £’000
Equity settled derivative financial liability
At 1 January		1,559			664			–
Warrants issued		–			997			1,148
Transfer to share premium on exercise of warrants		(70	)		(499	)		–
Gain recognised in finance income within the consolidated statement of comprehensive income		(936	)		397			(484	)
At 31 December		553			1,559			664

Equity settled derivative financial liability is a liability that is not to be settled for cash.

May 2020 warrants

In May 2020 the Company issued 9,545,456 warrants in the ordinary share capital of the Company as part of a registered direct offering in the US. The number of ordinary shares to be issued when exercised is fixed, however the exercise price is denominated in US Dollars being different to the functional currency of the Company. Therefore, the warrants are classified as equity settled derivative financial liabilities recognised at fair value through the profit and loss account (‘FVTPL’). The financial liability is valued using the Monte Carlo model. Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on re-measurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the ‘finance income’ or ‘finance expense’ lines item in the income statement. Fair value is determined in the manner described in note 21. A key input in the valuation of the instrument is the Company share price. Exercise price per ADR is $2.05 and $2.0625.

October 2019 warrants

In October 2019 the Company issued 3,150,000 warrants in the ordinary share capital of the Company as part of a registered direct offering in the US. The number of ordinary shares to be issued when exercised is fixed, however the exercise price is denominated in US Dollars. The warrants are classified equity settled derivative financial liabilities and accounted for in the same way as those issued in May 2020. The financial liability is valued using the Monte Carlo model. The exercise price per ADR is $6.25.

DARA warrants and share options

The Group also assumed fully vested warrants and share options on the acquisition of DARA Biosciences, Inc. (which took place in 2015). The number of ordinary shares to be issued when exercised is fixed, however the exercise prices are denominated in US Dollars. The warrants are classified equity settled derivative financial liabilities and accounted for in the same way as those detailed above. The financial liability is valued using the Black-Scholes option pricing model. The exercise price of the warrants and options is $61.03 and $95.17 respectively.

The following table details the outstanding warrants as at 31 December and also the movement in the year:

	At 1 January 2019		Granted		Lapsed			At 31 December 2019		Granted		Exercised			At 31 December 2020		Lapsed			Exercised			At 31 December 2021
May 2020 grant		–		–		–			–		7,545,456		(2,500,000	)		7,045,456		–			(306,815	)		6,738,641
October 19 grant		–		3,150,000		–			3,150,000		–		–			3,150,000		–			–			3,150,000
DARA Warrants		116,206		–		(111,582	)		4,624		–		–			4,624		(544	)		–			4,080
DARA Options		6,167		–		(3,332	)		2,835		–		–			2,835		–			–			2,835

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Financial instruments – risk management

12 Months Ended

Dec. 31, 2021

Financial instruments – risk management

21 Financial instruments – risk management

The Group is exposed through its operations to the following financial risks:

• Credit risk

• Foreign exchange risk

• Liquidity risk

This note describes the Group’s policies and processes for managing those risks. The policy for managing these risks is reviewed and agreed with the Board, however it has delegated the authority for designing and operating processes that ensure the effective management of the risks to the Group’s management. .

Principal financial instruments

The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:

• Trade and other receivables

• Cash and cash equivalents

• Trade and other payables

• Accruals

• Loans and borrowings

• Derivative financial liability

A summary of the financial instruments held by category is provided below:

Financial assets – amortised cost

	2021 £’000		2020 £’000		2019 £’000
Cash and cash equivalents		10,057		7,546		10,928
Trade receivables		33		95		22
Other receivables		–		–		2,625
Total financial assets		10,090		7,641		13,575

Financial liabilities – amortised cost

	2021 £’000		2020 £’000		2019 £’000
Trade payables		485		337		725
Other payables		5		26		13
Accruals		546		768		1,765
Borrowings		766		260		6,082
Total financial liabilities – amortised cost		1,802		1,391		8,585

Financial liabilities – fair value through profit and loss – current

	2021 £’000		2020 £’000		2019 £’000
Equity settled derivative financial liability		553		1,559		664

Fair value hierarchy

The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

• Level 1: quoted (unadjusted) prices in active markets for identical assets and liabilities;

• Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly; and

• Level 3: techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.

The fair value of the Group’s derivative financial liability is measured at fair value on a recurring basis. The following table gives information about how the fair value of this financial liability is determined, additional disclosure is given in note 20:

Financial liabilities	Fair value as at 31/12/2021		Fair value hierarchy	Valuation technique(s) and key input(s)	Significant unobservable input(s)	Relationship of unobservable inputs to fair value
Equity settled financial derivative liability	£	467,000	Level 3	Monte Carlo simulation model	Volatility rate of 95.0% determined using historical volatility of comparable companies.	The higher the volatility the higher the fair value.
					Expected life between a range of 0.1 and 3.88 years determined using the remaining life of the share options.	The shorter the expected life the lower the fair value.
					Risk-free rate of 0.31% determined using the expected life assumptions.	The higher the risk-free rate the higher the fair value.
Equity settled financial derivative liability	£	86,000	Level 3	Monte Carlo simulation model	Volatility rate of 85.0% determined using historical volatility of comparable companies.	The higher the volatility the higher the fair value.
					Expected life between a range of 0.1 and 3.5 years determined using the remaining life of the share options.	The shorter the expected life the lower the fair value.
					Risk-free rate of 0.71% determined using the expected life assumptions.	The higher the risk-free rate the higher the fair value.
Equity settled financial derivative liability		–	Level 3	Black-Scholes option pricing model	Volatility rate of 85.0% determined using historical volatility of comparable companies.	The higher the volatility the higher the fair value.
					Expected life between a range of 0.10 and 0.9 years determined using the remaining life of the share options.	The shorter the expected life the lower the fair value.
					Risk-free rate of 0.71% determined using the expected life assumptions.	The higher the risk-free rate the higher the fair value.
Total	£	553,000

Financial liabilities	Fair value as at 31/12/2020		Fair value hierarchy	Valuation technique(s) and key input(s)	Significant unobservable input(s)	Relationship of unobservable inputs to fair value
Equity settled financial derivative liability	£	1,187,000	Level 3	Monte Carlo simulation model	Volatility rate of 105.0% determined using historical volatility of comparable companies.	The higher the volatility the higher the fair value.
					Expected life between a range of 0.1 and 4.49 years determined using the remaining life of the share options.	The shorter the expected life the lower the fair value.
					Risk-free rate of 0.07% determined using the expected life assumptions.	The higher the risk-free rate the higher the fair value.
Equity settled financial derivative liability	£	372,000	Level 3	Monte Carlo simulation model	Volatility rate of 105.0% determined using historical volatility of comparable companies.	The higher the volatility the higher the fair value.
					Expected life between a range of 0.1 and 4.888 years determined using the remaining life of the share options.	The shorter the expected life the lower the fair value.
					Risk-free rate of 0.08% determined using the expected life assumptions.	The higher the risk-free rate the higher the fair value.
Equity settled financial derivative liability		–	Level 3	Black-Scholes option pricing model	Volatility rate of 105.0% determined using historical volatility of comparable companies.	The higher the volatility the higher the fair value.
					Expected life between a range of 1.0 and 1.9 years determined using the remaining life of the share options.	The shorter the expected life the lower the fair value.
					Risk-free rate of 0.8% determined using the expected life assumptions.	The higher the risk-free rate the higher the fair value.
Total	£	1,559,000

Financial liabilities	Fair value as at 31/12/2019		Fair value hierarchy	Valuation technique(s) and key input(s)	Significant unobservable input(s)	Relationship of unobservable inputs to fair value
Equity settled financial derivative liability	£	664,000	Level 3	Monte Carlo simulation model	Volatility rate of 78.4% determined using historical volatility of comparable companies.	The higher the volatility the higher the fair value.
					Expected life between a range of 0.1 and 5.68 years determined using the remaining life of the share options.	The shorter the expected life the lower the fair value.
					Risk-free rate between a range of 0.59% and 1.69 % determined using the expected life assumptions.	The higher the risk-free rate the higher the fair value.
Equity settled financial derivative liability		–	Level 3	Black-Scholes option pricing model	Volatility rate of 78.3% determined using historical volatility of comparable companies.	The higher the volatility the higher the fair value.
					Expected life between a range of 2.0 and 2.9 years determined using the remaining life of the share options.	The shorter the expected life the lower the fair value.
					Risk-free rate between a range of 0.0% and 0.26 % determined using the expected life assumptions.	The higher the risk-free rate the higher the fair value.
Total	£	664,000

Changing the unobservable risk free rate input to the valuation model by 10% higher while all other variables were held constant, would not impact the carrying amount of shares (2020 : nil ; 2019: nil).

There were no transfers between Level 1 and 2 in the period.

The financial liability measured at fair value on Level 3 fair value measurement represents consideration relating to warrants issued in May 2020 and October 2019 as part of Registered Direct offerings and also a business combination.

Credit risk

The Group is exposed to credit risk from amounts due from collaborative partners and from cash and cash equivalents and deposits with banks and financial institutions. The risk from collaborative partners is deemed to be low. For banks and financial institutions, only independently rated parties with high credit status are accepted. The Group does not enter into derivatives to manage credit risk. The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery.

The total exposure to credit risk of the Group is equal to the total value of the financial assets held at each year end as noted above.

Foreign exchange risk

Foreign exchange risk arose because the Group had a material operation located in Bilbao, Spain. Given the levels of materiality, the Group did not hedge its net investments in overseas operations as the cost of doing so would be disproportionate to the exposure.

The table below shows analysis of the Pounds Sterling equivalent of year-end cash and cash equivalent balances by currency:

	2021 £’000		2020 £’000		2019 £’000
Cash and cash equivalents:
Pounds Sterling		10,057		7,247		3,153
US Dollar		–		120		2,021
Euro		–		179		5,750
Other		–		–		4
Total		10,057		7,546		10,928

The table below shows the foreign currency exposure that gives rise to net currency gains and losses recognised in the consolidated statement of comprehensive income. As at 31 December, these exposures were as follows:

	2021 £’000		2020 £’000		2019 £’000
Net Foreign Currency Assets/(Liabilities):
US Dollar		–		120		2,021
Euro		22		54		1,460
Other		–		1		7
Total		22		175		3,488

Foreign exchange risk also arises when individual Group entities enter into transactions denominated in a currency other than their functional currency; the Group’s transactions outside the UK to the US and Europe drive foreign exchange movements where suppliers invoice in currency other than sterling. These transactions are not hedged because the cost of doing so is disproportionate to the risk.

Foreign currency sensitivity analysis

The most significant currencies in which the Group transacts, other than Pounds Sterling, are the US Dollar and the Euro. The Group also trades in other currencies in small amounts as necessary.

The following table details the Group’s sensitivity to a 10% change in year-end exchange rates, which the Group feels is the maximum likely change in rate based upon recent currency movements, in the key foreign currency exchange rates against Pounds Sterling:

Year ended 31 December 2021	US Dollar £’000		Euro £’000		Other £’000
Loss before tax		–		2		–
Total equity		–		2		–

Year ended 31 December 2020	US Dollar £’000		Euro £’000			Other £’000
Loss before tax		12		(293	)		(4	)
Total equity		12		(293	)		(4	)

Year ended 31 December 2019	US Dollar £’000		Euro £’000		Other £’000
Loss before tax		202		54		–
Total equity		202		31		1

Liquidity risk

Liquidity risk arises from the Group’s management of working capital. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. It is the Group’s aim to settle balances as they become due.

In February 2021, previously issued warrants were exercised resulting in the Company receiving £0.13m before expenses. In July 2021, the Company completed a UK placing which raised £10.0m before expenses.

The Directors have prepared cash flow forecasts and considered the cash flow requirement for the Company for the next three years including the period twelve months from the date of approval of the consolidated financial statements. These forecasts show that further financing will be required during the first quarter of 2023 assuming, inter alia, that certain development programs and other operating activities continue as currently planned. This requirement for additional financing in the short term represents a material uncertainty that may cast significant doubt upon the Group and parent company’s ability to continue as a going concern.

In addition, the global pandemic COVID-19 virus places increased uncertainty over the Directors’ forecasts. The restrictions that have been placed on the movement of people caused delays to some of the Group’s plans. The Directors have established a COVID-19 task force internally to monitor the impact of COVID-19 on the business and prioritize activities to minimize its continuing effect.

The Directors are evaluating a number of near-term funding options potentially available to the Group, including fundraising and the partnering of assets and technologies of the Company. After considering the uncertainties, the Directors consider it is appropriate to continue to adopt the going concern basis in preparing these financial statements.

The following table sets out the contractual maturities (representing undiscounted contractual cash-flows) of financial liabilities:

2021	Up to 3 months £’000		Between 3 and 12 months £’000		Between 1 and 2 years £’000		Between 2 and 5 years £’000		Over 5 years £’000
Trade and other payables		1,036		–		–		–		–
Lease liabilities		46		171		195		442		–
Total		1,082		171		195		442		–

2020	Up to 3 months £’000		Between 3 and 12 months £’000		Between 1 and 2 years £’000		Between 2 and 5 years £’000		Over 5 years £’000
Trade and other payables		1,131		–		–		–		–
Lease liabilities		25		75		61		8		–
Government research loans		107		–		–		–		–
Total		1,263		75		61		8		–

2019	Up to 3 months £’000		Between 3 and 12 months £’000		Between 1 and 2 years £’000		Between 2 and 5 years £’000		Over 5 years £’000
Trade and other payables		2,503		–		–		–		–
Lease liabilities		79		165		317		735		–
Government research loans		–		272		238		2,851		3,317
Total		2,582		437		555		3,586		3,317

More details with regard to the line items above are included in the respective notes:

• Trade and other payables – note 17

• Borrowings – note 18

As a result of the Strategic Review undertaken in March 2020 the Group repaid all Government Research loans during 2020 and 2021.

Capital risk management

The Group monitors capital which comprises all components of equity (i.e. share capital, share premium, foreign exchange reserve and accumulated deficit).

The Group’s objectives when maintaining capital are:

• to safeguard the entity’s ability to continue as a going concern; and

• to have sufficient resource to take development projects forward towards commercialisation.

The Group continues to incur substantial operating expenses. Until the Group generates positive net cash inflows from the commercialisation of its products it remains dependent upon additional funding through the injection of equity capital and government funding. The Group may not be able to generate positive net cash inflows in the future or to attract such additional required funding at all, or on suitable terms. In such circumstances the development programmes may be delayed or cancelled, and business operations cut back.

The Group seeks to reduce this risk by keeping a tight control on expenditure, avoiding long term supplier contracts (other than clinical trials), prioritising development spend on products closest to potential revenue generation, obtaining government grants (where applicable), maintaining a focussed portfolio of products under development and keeping shareholders informed of progress.

There have been no changes to the Group’s processes for managing capital risk since the previous year.

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Deferred tax

12 Months Ended

Dec. 31, 2021

Deferred tax

22 Deferred tax

Deferred tax is calculated in full on temporary differences under the liability method using tax rates applicable in the tax jurisdictions where the tax asset or liability would arise.

The movement on the deferred tax account in 2021 is £nil (2020: £nil, 2019: £nil) as the net credit arising on the amortisation of intangible assets and other timing differences has been matched by a reduction in the deferred tax asset recognised on the losses offsetting the liability remaining.

Unused tax losses carried forward, subject to agreement with local tax authorities, were as follows:

	Gross losses £’000		Potential deferred tax asset £’000
31 December 2021		67,210		16,925
31 December 2020		63,183		13,076
31 December 2019		49,565		8,426

During 2020 the remaining deferred tax asset and liability arising on the business combination of Midatech Pharma (Wales) Ltd (2019: £1.6m) was de-recognised as a result of the impairment of the assets through the Consolidated Statements of Comprehensive Income.

The deferred tax asset which qualifies for offset against the deferred tax liability, mainly arising on the acquisitions of Midatech Pharma (Wales) Limited in 2021 is £nil (2020: £nil, 2019: £1.6m). The remaining potential deferred tax asset of £16.9m (2020 £13.1m, 2019: £9.0m) has not been provided in these accounts due to uncertainty as to whether the asset would be recovered. The losses have arisen as a result of accumulated trading losses.

Deferred tax asset balances disclosed as at 31 December 2021 have been calculated at 25%. The Finance Bill 2021 enacts an increase in the tax rate to 25% from 1 April 2023.

Details of the deferred tax liability are as follows:

2021	Asset £’000	Liability £’000	Net £’000
Business Combinations	–	–	–

2020	Asset £’000	Liability £’000	Net £’000
Business Combinations	–	–	–

2019	Asset £’000		Liability £’000			Net £’000
Business Combinations		1,581		(1,581	)		–

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Share capital

12 Months Ended

Dec. 31, 2021

Share capital

23 Share capital

Schedule of detailed information about share capital

Authorised, allotted and fully paid – classified as equity	2021 Number		2021 £		2020 Number		2020 £		2019 Number		2019 £
At 31 December
Ordinary shares of £0.001 each		98,468,387		98,468		63,073,852		63,074		23,494,981		23,495
Deferred shares of £1 each		1,000,001		1,000,001		1,000,001		1,000,001		1,000,001		1,000,001
Total				1,098,469				1,063,075				1,023,496

On 2 March 2020 a resolution was passed at a general meeting of shareholders of the Company to consolidate its ordinary shares on a one for 20 basis into new ordinary shares of 0.1p each in the capital of the Company. The above table reflects the share consolidation in the comparative figures.

In accordance with the Articles of Association for the Company adopted on 13 November 2014, the share capital of the Company consists of an unlimited number of ordinary shares of nominal value £0.001 each. Ordinary and deferred shares were recorded as equity.

Rights attaching to the shares following the incorporation of Midatech Pharma plc

Shares classified as equity

The holders of ordinary shares in the capital of the Company have the following rights:

(a) to receive notice of, to attend and to vote at all general meetings of the Company, in which case shareholders shall have one vote for each share of which he is the holder; and,

(b) to receive such dividend as is declared by the Board on each share held.

The holders of deferred shares in the capital of the Company:

(a) shall not be entitled to receive notice of or to attend or speak at any general meeting of the Company or to vote on any resolution to be proposed at any general meeting of the Company; and

(b) shall not be entitled to receive any dividend or other distribution of out of the profits of the Company.

In the event of a distribution of assets, the deferred shareholders shall receive the nominal amount paid up on such share after the holder of each ordinary share shall have received (in cash or specie) the amount paid up or credited as paid up on such ordinary share together with an additional payment of £100 per share. The Company has the authority to purchase the deferred shares and may require the holder of the deferred shares to sell them for a price not exceeding 1p for all the deferred shares.

		Ordinary Shares Number		Deferred Shares Number		Share Price £		Total consideration £’000
At 1 January 2019			3,059,207		1,000,001			69,870
2019
26 February 2019	Subscription, Placing and Open Offer		17,410,774				0.77	13,406
8 October 2019	Share issue to SIPP trustee (see note 26)		25,000				0.001	–
29 October 2019	Registered Direct Offering		3,000,000				0.7874	2,362
At 31 December 2019			23,494,981		1,000,001			85,638
2020
18 May 2020	Placing & Registered Direct Offering		15,757,576				0.27	4,255
27 July 2020	Placing		21,296,295				0.27	5,750
19 August 2020	Exercise of warrants		2,500,000					783
30 September 2020	Share issue to SIPP trustee (see note 26)		25,000				0.001	–
At 31 December 2020			63,073,852		1,000,001			96,426
19 February 2021 Exercise of warrants			306,815				0.298	91
6 July 2021 Placing			35,087,720				0.285	10,000
At 31 December 2021			98,468,387		1,000,001			106,517

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Reserves

12 Months Ended

Dec. 31, 2021

Reserves

24 Reserves

The following describes the nature and purpose of each reserve within equity:

Reserve	Description and purpose
Share premium	Amount subscribed for share capital in excess of nominal value.
Merger reserve	Represents the difference between the fair value and nominal value of shares issued on the acquisition of subsidiary companies where the Company has elected to take advantage of merger accounting.
Foreign exchange reserve	Gains/losses arising on retranslating the net assets of overseas operations into sterling.
Warrant reserve	Represents the fair value of warrants denominated in £ at the date of grant
Accumulated deficit	All other net gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere.

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Retirement benefits

12 Months Ended

Dec. 31, 2021

Retirement benefits

25 Retirement benefits

The Group operates a defined contribution pension scheme for the benefit of its employees. The assets of the scheme are administered by trustees in funds independent from those of the Group.

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Share-based payments

12 Months Ended

Dec. 31, 2021

Share-based payments

26 Share-based payments

Share Options

The Group has issued options over ordinary shares under the 2014 Midatech Pharma plc Enterprise Management Incentive Scheme, the Midatech Pharma plc 2016 U.S. Option Plan, which is a sub-plan of the approved UK plan, and unapproved share options awarded to non-UK or non-US staff. In addition, certain share options originally issued over shares in Midatech Limited under the Midatech Limited 2008 unapproved share option scheme or Midatech Limited 2013 approved Enterprise Incentive scheme were reissued in 2015 over shares in Midatech Pharma plc under the 2014 Midatech Pharma plc Enterprise Management Incentive Scheme. Exercise of an option is subject to continued employment.

On 2 March 2020 a resolution was passed at a general meeting of shareholders of the Company to consolidate it ordinary shares on a one for 20 basis into new ordinary shares of 0.1p each in the capital of the Company. The following tables reflect the share consolidation in the comparative tables.

Details of all share options granted under the Schemes are set out below:

Date of grant	At 1 January 2021		Granted in 2021		Expired 2021			Forfeited in 2021			At 31 December 2021		Exercise Price
13 September 2011		150		–		(150	)		–			–	£	83.80
20 April 2012		1,589		–		–			–			1,589	£	83.80
9 May 2014		10,000		–		–			–			10,000	£	1.50
30 June 2014		500		–		–			–			500	£	1.50
31 October 2016		7,921		–		–			(890	)		7,031	£	53.60
19 December 2016		10,018		–		–			(2,062	)		7,956	£	24.20
15 December 2017		3,300		–		–			(2,100	)		1,200	£	9.20
24 April 2019		45,500		–		–			(33,000	)		12,500	£	1.46
2 October 2019		30,000		–		–			–			30,000	£	1.05
17 April 2020		100,000		–		–			–			100,000	£	0.24
17 June 2020		1,274,000		–		–			(410,500	)		863,500	£	0.202
15 July 2021		–		1,709,000		–			(280,000	)		1,429,000	£	0.28
2 August 2021		–		50,000		–			–			50,000	£	0.27
1 September 2021		–		120,000		–			–			120,000	£	0.26
		1,482,978		1,879,000		(150	)		(728,552	)		2,633,276

Options exercisable at 31 December 2021		179,632
Weighted average exercise price of outstanding options at 31 December 2021	£	0.538
Weighted average exercise price of options exercised in 2021		n/a
Weighted average exercise price of options lapsed in 2021	£	83.30
Weighted average exercise price of options forfeited in 2021	£	0.447
Weighted average exercise price of options granted in 2021	£	0.276
Weighted average remaining contractual life of outstanding options at 31 December 2021		9.0 years

Date of grant	At 1 January 2020		Granted in 2020		Expired in 2020			Forfeited in 2020			At 31 December 2020		Exercise Price
1 April 2010		1,255		–		(1,255	)		–			–	£	80.00
20 August 2010		2,088		–		(2,088	)		–			–	£	83.80
13 September 2011		150		–		–			–			150	£	83.80
20 April 2012		1,589		–		–			–			1,589	£	83.80
9 May 2014		10,000		–		–			–			10,000	£	1.50
30 June 2014		18,500				–			(18,000	)		500	£	1.50
11 July 2014		100		–		(50	)		(50	)		–	£	1.50
31 October 2016		16,271		–		(850	)		(7,500	)		7,921	£	53.60
14 December 2016		400		–		(400	)		–			–	£	31.00
14 December 2016		500		–		(500	)		–			–	£	34.00
14 December 2016		2,000		–		(2,000	)		–			–	£	37.40
14 December 2016		1,625		–		(1,625	)		–			–	£	37.60
15 December 2016		4,600		–		(4,600	)		–			–	£	24.20
19 December 2016		22,391		–		(1,562	)		(10,811	)		10,018	£	24.20
15 December 2017		29,560		–		(13,310	)		(12,950	)		3,300	£	9.20
2 April 2018		997		–		(997	)		–			–	£	16.60
2 April 2018		4,500		–		(4,500	)		–			–	£	24.20
24 April 2019		169,500		–		–			(124,000	)		45,500	£	1.46
2 October 2019		50,000		–		–			(20,000	)		30,000	£	1.05
17 April 2020		–		100,000		–			–			100,000	£	0.24
17 June 2020		–		1,363,000		–			(89,000	)		1,274,000	£	0.202
		336,026		1,463,000		(33,737	)		(282,311	)		1,482,978

Options exercisable at 31 December 2020		195,171
Weighted average exercise price of outstanding options at 31 December 2020	£	0.835
Weighted average exercise price of options exercised in 2020		n/a
Weighted average exercise price of options lapsed in 2020	£	26.183
Weighted average exercise price of options forfeited in 2020	£	3.648
Weighted average exercise price of options granted in 2020	£	0.205
Weighted average remaining contractual life of outstanding options at 31 December 2020		9.2 years

Date of grant	At 1 January 2019		Granted in 2019		Exercised in 2019		Forfeited in 2019			At 31 December 2019		Exercise Price
1 April 2010		1,255		–		–		–			1,255	£	80.00
20 August 2010		2,088		–		–		–			2,088	£	83.80
13 September 2011		150		–		–		–			150	£	83.80
20 April 2012		1,589		–		–		–			1,589	£	83.80
9 May 2014		10,000		–		–		–			10,000	£	1.50
30 June 2014		21,500		–		–		(3,000	)		18,500	£	1.50
11 July 2014		100		–		–		–			100	£	1.50
31 October 2016		2,500		–		–		(2,500	)		–	£	34.20
31 October 2016		23,411		–		–		(7,140	)		16,271	£	53.60
14 December 2016		400		–		–		–			400	£	31.00
14 December 2016		500		–		–		–			500	£	34.00
14 December 2016		2,000		–		–		–			2,000	£	37.40
14 December 2016		1,625		–		–		–			1,625	£	37.60
15 December 2016		4,600		–		–		–			4,600	£	24.20
19 December 2016		35,866		–		–		(13,475	)		22,391	£	24.20
15 December 2017		45,885		–		–		(16,325	)		29,560	£	9.20
2 April 2018		997		–		–		–			997	£	16.60
2 April 2018		4,500		–		–		–			4,500	£	24.20
24 April 2019		–		219,000		–		(49,500	)		169,500	£	1.46
2 October 2019		–		50,000		–		–			50,000	£	1.05
		158,966		269,000		–		(91,940	)		336,026

Options exercisable at 31 December 2019		131,094
Weighted average exercise price of outstanding options at 31 December 2019	£	8.48
Weighted average exercise price of options exercised in 2019		n/a
Weighted average exercise price of options forfeited in 2019	£	13.26
Weighted average exercise price of options granted in 2019	£	1.38
Weighted average remaining contractual life of outstanding options at 31 December 2019		7.9 years

The following information is relevant in the determination of the fair value of options granted during the year 2021 under the equity share based remuneration schemes operated by the Group.

	July 2021			August 2021			September 2021
Number of options		1,709,000			50,000			120,000
Option pricing models used		Black-Scholes			Black-Scholes			Black-Scholes
Share price	£	0.2775	*	£	0.265	*	£	0.255	*
Exercise price of options issued in year	£	0.2775		£	0.265		£	0.255
Contractual life		10 years			10 years			10 years
Expected life		5 years			5 years			5 years
Volatility		88.63	%**		88.59	%**		88.11	%**
Expected dividend yield		0	%		0	%		0	%
Risk free rate		0.38	%		0.26	%		0.32	%

*         The share price used in the determination of the fair value of the options granted in 2021 was the share price on the date of grant.

**       Volatility was calculated with reference to the historic share price volatility of comparable companies measured over a five-year period.

The following information is relevant in the determination of the fair value of options granted during the year 2020 under the equity share based remuneration schemes operated by the Group.

	April 2020			June 2020
Number of options		100,000			1,363,000
Option pricing models used		Black-Scholes			Black-Scholes
Share price	£	0.24	*	£	0.213	*
Exercise price of options issued in year	£	0.24		£	0.202
Contractual life		10 years			10 years
Expected life		5 years			5 years
Volatility		84.76	%**		92.55	%**
Expected dividend yield		0	%		0	%
Risk free rate		0.11	%		0.10	%

*         The share price used in the determination of the fair value of the options granted in 2020 was the share price on the date of grant.

**       Volatility was calculated with reference to the historic share price volatility of comparable companies measured over a five-year period.

The following information is relevant in the determination of the fair value of options granted during the year 2019 under the equity share based remuneration schemes operated by the Group.

	April 2019			October 2019
Number of options		219,000			50,000
Option pricing models used		Black-Scholes			Black-Scholes
Share price	£	2.30	*	£	1.126	*
Exercise price of options issued in year	£	1.46		£	1.05
Contractual life		10 years			10 years
Expected life		5 years			5 years
Volatility		75.3	%**		78.3	%**
Expected dividend yield		0	%		0	%
Risk free rate		0.85	%		0.26	%

*         The share price used in the determination of the fair value of the options granted in 2019 was the share price on the date of grant.

**       Volatility was calculated with reference to the historic share price volatility of comparable companies measured over a five-year period.

All other share options relate to the Midatech Limited 2008 unapproved share option scheme.

Share Incentive Plan

In April 2017 the Group set up the Midatech Pharma Share Incentive Plan (MPSIP). Under the MPSIP, Group employees and Directors can acquire ordinary shares in the Company via a salary sacrifice arrangement. Midatech grants matching shares for every share bought. In order to retain these shares, scheme participants must remain employed by the Group for three years from the date of acquisition. All shares purchased by the MPSIP are held by an Employee Benefit Trust that is not under the control of Midatech. Shares must be left in the plan for 5 years to qualify for full income tax and NIC relief.

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Capital commitments

12 Months Ended

Dec. 31, 2021

Capital Commitments

Capital commitments

27 Capital commitments

The Group had no capital commitments at 31 December 2021, 31 December 2020 and 31 December 2019.

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Related party transactions

12 Months Ended

Dec. 31, 2021

Related party transactions

28 Related party transactions

Trading Transactions

The Directors consider BioConnection BV to be a related party by virtue of the fact that there is a common Director with the Company and the Director is identified as having significant influence over the entity. 2019 was the first year where this relationship existed.

During the year Group companies entered into the following transactions with related parties who are not members of the Group.

Purchase of good

Amounts owed by related parties

2021 €’000

2020 €’000

2019 €’000

2021 €’000

2020 €£’000

2019 €’000

BioConnection BV

–

296

18

–

–

8

During 2019 Midatech Pharma (Espana) SL entered into a commercial contract with BioConnection BV in connection with the Group’s MTD201 program, this contract was subsequently terminated in 2020 as a result of the termination of the program.

The Group has not made any allowances for bad or doubtful debts in respect of related party debtors nor has any guarantee been given or received during 2021,2020 or 2019 regarding related party transactions.

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Contingent liabilities

12 Months Ended

Dec. 31, 2021

Contingent liabilities

29 Contingent liabilities

As at 31 December 2019 the Group was party to a claim by the estate of a former employee for unfair dismissal. The claim comprised various elements totalling €258,000. During 2020 the case was settled by the Group for €190,000. This has been recognised in Administrative costs in the Consolidated Statement of Comprehensive Income in 2020.

The Group had no contingent liabilities at 31 December 2021 and 31 December 2020.

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Ultimate controlling party

12 Months Ended

Dec. 31, 2021

Ultimate Controlling Party

Ultimate controlling party

30 Ultimate controlling party

The Directors do not consider that there is an ultimate controlling party.

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Results of Midatech Pharma (Espa?a) SL

12 Months Ended

Dec. 31, 2021

Results Of Midatech Pharma Espaa Sl

Results of Midatech Pharma (Espa?a) SL

31 Results of Midatech Pharma (España) SL

Included within the Group Consolidated Statements of Comprehensive Income for the year to 31 December 2021 and 2020 are the results of the Group’s Spanish operation that was closed on 3 June 2020. The Group appointed a Liquidator to liquidate the company with documentation submitted to the Spanish Authorities in February 2021.

Management assessed whether Midatech Pharma (España) SL should be accounted for as a discontinued operation under IFRS 5 and concluded that it did not meet the criteria as it did not meet the definition of a cash generating unit.

The unaudited results of Midatech Pharma (España) SL for the year to 31 December are as follows:

Schedule Of Unaudited Results Explanatory

	Year ended 31 December 2021 £’000		Year ended 31 December 2020 £’000
Grant revenue		–		163
Total revenue		–		163
Research and development costs		–		(2,820	)
Administrative costs		–		(1,146	)
Loss from operations		–		(3,803	)
Finance expense		–		(11	)
Loss before tax		–		(3,814	)
Taxation		–		(21	)
Loss from operations after tax		–		(3,835	)

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Accounting policies (Policies)

12 Months Ended

Dec. 31, 2021

General information

General information

Midatech Pharma plc (the ‘Company’) is a company registered and domiciled in England and Wales. The Company was incorporated on 12 September 2014.

The Company is a public limited company, which has been listed on the Alternative Investment Market (‘AIM’), which is a submarket of the London Stock Exchange, since 8 December 2014.

In addition, since 4 December 2015 the Company has American Depository Receipts (‘ADRs’) registered with the US Securities and Exchange Commission (‘SEC’) and is listed on the NASDAQ Capital Market.

The financial statements were approved and authorised for issue by the Board of Directors on 25 April 2022.

Basis of preparation

Basis of preparation

The Group was formed on 31 October 2014 when Midatech Pharma plc entered into an agreement to acquire the entire share capital of Midatech Limited and its wholly owned subsidiaries through the issue equivalent of shares in the Company which took place on 13 November 2014.

The financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB).

The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the periods presented.

On 2 March 2020 a resolution was passed at a general meeting of shareholders of the Company to consolidate its ordinary shares on a one for 20 basis into new ordinary shares of 0.1p each in the capital of the Company. At the same meeting a resolution was passed to change the ratio of the Company's American Depositary Receipts ("ADRs"). This changed from one ADR representing 20 Existing Ordinary Shares to one ADR representing five new ordinary shares. Comparative numbers of shares and share options/warrants and related exercise/issue prices and earnings per share reflect the impact of the March 2020 share consolidation.

The consolidated financial statements have been prepared on a historical cost basis, except for the following item (refer to individual accounting policies for details):

- Certain financial instruments – fair value through profit or loss.

Certain prior period amounts have been reclassified to conform to the current period presentation with no impact on previously reported net loss or cash flows, and no material impact on financial position

Adoption of new and revised standards

Adoption of new and revised standards

New standards, interpretations and amendments effective from 1 January 2021

The Group in reviewed the new standards, interpretations and amendments effective from 1 January 2021 and deemed none were applicable to the annual financial statements for the year ended 31 December 2021.

New standards, interpretations and amendments not yet effective

There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future accounting periods that the group has decided not to adopt early.

The following amendments are effective for the period beginning 1 January 2022:

• Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37);

• Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16);

• Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1, IFRS 9, IFRS16 and IAS 41); and

• References to Conceptual Framework (Amendments to IFRS 3).

The following amendments are effective for the period beginning 1 January 2023:

• Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2);

• Definition of Accounting Estimates (Amendments to IAS 8); and

• Deferred Tax Related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12).

These new accounting standards and amendments are not expected to have a material impact on the Group.

The Group does not expect any other standards issued by the IASB, but not yet effective, to have a material impact on the group.

Basis for consolidation

Basis for consolidation

The Group financial statements consolidate those of the parent company and all of its subsidiaries. The parent controls a subsidiary if it has power over the investee to significantly direct the activities, exposure, or rights to variable returns from its involvement with the investee, and the ability to use its power over the investee to affect the amount of the investor’s returns. All subsidiaries have a reporting date of 31 December.

All transactions and balances between Group companies are eliminated on consolidation, including unrealised gains and losses on transactions between Group companies. Where unrealised losses on intra-Group asset sales are reversed on consolidation, the underlying asset is also tested for impairment from a Group perspective. Amounts reported in the financial statements of subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.

The consolidated financial statements consist of the results of the following entities:

Entity	Summary description
Midatech Pharma plc	Ultimate holding company
Midatech Limited	Trading company
Midatech Pharma (Espana) SL (formerly Midatech Biogune SL)	Liquidated - 2021
PharMida AG	Dormant
Midatech Pharma (Wales) Limited (formerly Q Chip Limited)	Trading company
Midatech Pharma Pty	Dissolved - 2020

Going concern

Going concern

The Group and Company are subject to a number of risks similar to those of other development and early-commercial stage pharmaceutical companies. These risks include, amongst others, generation of revenue from the development portfolio and risks associated with research, development, testing and obtaining related regulatory approvals of our pipeline products. Ultimately, the attainment of profitable operations is dependent on future uncertain events which include obtaining adequate financing to fulfill our commercial and development activities and generating a level of revenue adequate to support our cost structure.

We have experienced net losses and significant cash outflows from cash used in operating activities over the past years as we develops our portfolio. For the year ended December 31, 2021 the Company incurred a consolidated loss from operations of £5.5million and negative cash flows from operating activities of £6.0million. As of December 31, 2021 the Group had an accumulated deficit of £127.8million.

Our future viability is dependent on our ability to raise cash from financing activities to finance our development plans until commercialisation, generate cash from operating activities and to successfully obtain regulatory approval to allow marketing of our development products. Our failure to raise capital as and when needed could have a negative impact on our financial condition and ability to pursue our business strategies.

Our Group's consolidated financial statements have been presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

As at 31 December 2021, we had cash and cash equivalents of £10.1million. We forecast we currently has enough cash to fund its planned operations into the first quarter of 2023.

We have prepared cash flow forecasts and considered the cash flow requirement for the Company for the next three years including the period twelve months from the date of approval of the consolidated financial statements. These forecasts show that further financing will be required during the course of the next 12 months, assuming, inter alia, that certain development programs and other operating activities continue as currently planned. This requirement for additional financing represents a material uncertainty raises substantial doubt about our ability to continue as a going concern. As a result, our independent registered public accounting firm included an explanatory paragraph in its report on our financial statements as of and for the year ended December 31, 2021 with respect to this uncertainty.

In addition, the global pandemic COVID-19 virus places increased uncertainty over the Directors’ forecasts. The restrictions that have been placed on the movement of people caused delays to some of the Group’s plans. The Directors have established a COVID-19 task force internally to monitor the impact of COVID-19 on the business and prioritize activities to minimize its continuing effect.

In addition to utilizing the existing cash reserves, we and our advisors are evaluating a number of near-term funding options potentially available to us, including fundraising and the partnering of assets and technologies of the Company. After considering the uncertainties, we considered it is appropriate to continue to adopt the going concern basis in preparing these financial information.

Our ability to continue as a going concern is dependent upon our ability to obtain additional capital and/or dispose of assets, for which there can be no assurance we will be able to do on a timely basis, on favorable terms or at all.

Revenue

Revenue

Revenue is accounted for in line with principles of IFRS 15 ‘Revenue from contracts with customers’

Revenue from licensing agreements

The Group entered into a Licence Agreement during 2019. The licence consists of two distinct performance conditions, which is the grant of the license to use of its intellectual property (“IP”) and the supply of Product. After the Company has granted the license, and the Product is granted applicable marketing authorizations in the EU, the US, or the UK, France, Germany or Switzerland and China, there are no further obligations to participate in, or provide additional services to its customer. The transaction price for the grant of the license to use the Company’s IP comprises of fixed and variable payment streams and the grant of the license is considered to be a right to use IP. Upfront fees earned, are recognised as revenue at a point in time, upon transfer of control over the license to the licensee and the grant of the applicable marketing authorisation by the relevant statutory authority. For future royalty payments associated with a license, the Company applies the IFRS 15 exception for sales-based royalties and recognises the revenue only when the subsequent sale occurs.

Supply of Goods

Revenue from sales of goods to customer are recognised when all performance obligations are met. These criteria are considered to be met when the goods are delivered to the customer. Revenue represents the full list price of products shipped to wholesalers and other customers less product returns, discounts, rebates and other incentives based on the sales price.

Supply of Services

Revenue from the supply of services is subject to specific agreement. This is recognised over the contract term, proportionate to the progress in overall satisfaction of the performance obligations (the services performed by the Group), measured by cost incurred to date out of total estimate of costs. The primary input of substantially all work performed under these arrangements is labour. There is normally a direct relationship between costs incurred and the proportion of the contract performed to date.

Where the Group supplies services to a client it generally bills an agreed percentage in advance of the commencement of any work and the balance on completion. Invoices to clients are payable under normal commercial terms.

Grant revenue

Where grant income is received, which is not a direct re-imbursement of related costs, revenue is recognised at the point at which the conditions have been met, this has been recognised within grant revenue. Where grants are received as a re-imbursement of directly related costs they are credited to research and development expense in the same period as the expenditure towards which they are intended to contribute.

The Group previously received government loans that had a below-market rate of interest. These loans were recognised and measured in accordance with IFRS 9. The benefit of the below-market rate of interest was measured as the difference between the initial carrying value of the loan discounted at a market rate of interest and the proceeds received.

The difference was held within deferred revenue as a government grant and released as a credit to grant income or to research and development expense in line with the expenditure to which it related. In a situation where the proceeds were invested in plant and equipment, the deferred revenue was credited to research and development within the income statement in line with the depreciation of the acquired asset.

Business combinations and externally acquired intangible assets

Business combinations and externally acquired intangible assets

Business combinations are accounted for using the acquisition method at the acquisition date, which is the date at which the Group obtains control over the entity. The cost of an acquisition is measured as the amount of the consideration transferred to the seller, measured at the acquisition date fair value, and the amount of any non-controlling interest in the acquiree. The Group measures goodwill initially at cost at the acquisition date, being:

• the fair value of the consideration transferred to the seller, plus;

• the amount of any non-controlling interest in the acquiree, plus;

• if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree re-measured at the acquisition date, less;

• the fair value of the net identifiable assets acquired and assumed liabilities.

Acquisition costs incurred are expensed and included in administrative costs. Any contingent consideration to be transferred by the acquirer is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration, whether it is an asset or liability, will be recognised through the consolidated statement of comprehensive income. If the contingent consideration is classified as equity, it is not re-measured.

Business combinations and externally acquired intangible assets (continued)

An intangible asset, which is an identifiable non-monetary asset without physical substance, is recognised to the extent that it is probable that the expected future economic benefits attributable to the asset will flow to the Group and that its cost can be measured reliably. The asset is deemed to be identifiable when it is separable or when it arises from contractual or other legal rights.

Externally acquired intangible assets other than goodwill are initially recognised at cost and subsequently amortised on a straight-line basis over their useful economic lives where they are in use. Goodwill is stated at cost less any accumulated impairment losses.

The amounts ascribed to intangibles recognised on business combinations are arrived at by using appropriate valuation techniques.

In-process research and development (‘IPRD’) programmes acquired in business combinations are recognised as assets even if subsequent expenditure is written off because the criteria specified in the policy for development costs below are not met. IPRD is subject to annual impairment testing until the completion or abandonment of the related project. No further costs are capitalised in respect of this IPRD unless they meet the criteria for research and development capitalisation as set out below.

As per IFRS 3, once the research and development of each defined project is completed, the carrying value of the acquired IPRD is reclassified as a finite-lived asset and amortised over its useful life.

The significant intangibles recognised by the Group and their useful economic lives are as follows:

Goodwill	– Indefinite life
IPRD	– In process, not yet amortising
IT and website costs	– 4 years

The useful economic life of IPRD will be determined when the in-process research projects are completed.

Internally generated intangible assets (development costs)

Internally generated intangible assets (development costs)

Expenditure on the research phase of an internal project is recognised as an expense in the period in which it is incurred. Development costs incurred on specific projects are capitalised when all the following conditions are satisfied:

• completion of the asset is technically feasible so that it will be available for use or sale;

• the Group intends to complete the asset and use or sell it;

• the Group has the ability to use or sell the asset and the asset will generate probable future economic benefits (over and above cost);

• there are adequate technical, financial and other resources to complete the development and to use or sell the asset; and

• the expenditure attributable to the asset during its development can be measured reliably.

All internal activities related to the research and development of new projects are continuously monitored by the Directors. The Directors consider that the criteria to capitalise development expenditure are not met for a product prior to that product receiving regulatory approval in at least one country.

Development expenditure not satisfying the above criteria, and expenditure on the research phase of internal projects are included in research and development costs recognised in the Consolidated Statement of Comprehensive Income as incurred. No projects have yet reached the point of capitalisation.

Impairment of non-financial assets

Impairment of non-financial assets

Assets that have an indefinite useful life, for example goodwill, or intangible assets not ready for use, such as IPRD, are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use.

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). The Group at 31 December 2021 had only one cash generating unit (2020: one, 2019: one), as set out in note 13. Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of impairment at each reporting date.

Impairment charges are included in profit or loss, except, where applicable, to the extent they reverse gains previously recognised in other comprehensive income. An impairment loss recognised for goodwill is not reversed.

Patents and trademarks

Patents and trademarks

The costs incurred in establishing patents and trademarks are either expensed in accordance with the corresponding treatment of the development expenditure for the product to which they relate or capitalised if the development expenditure to which they relate has reached the point of capitalisation as an intangible asset.

Foreign currency

Foreign currency

Transactions entered into by subsidiary entities in a currency other than the currency of the primary economic environment, in which they operate, are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the reporting date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in profit or loss.

The presentational currency of the Group is Pounds Sterling. Foreign subsidiaries use the local currencies of the country where the operate. On consolidation, the results of overseas operations are translated into Pounds Sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations, including goodwill arising on the acquisition of those operations, are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income and accumulated in the foreign exchange reserve.

Exchange differences recognised in the profit or loss of Group entities on the translation of long-term monetary items forming part of the Group’s net investment in the overseas operation concerned are reclassified to other comprehensive income and accumulated in the foreign exchange reserve on consolidation.

On disposal of a foreign operation, the cumulative exchange differences recognised in the foreign exchange reserve relating to that operation up to the date of disposal are transferred to the consolidated statement of comprehensive income as part of the gain or loss on disposal.

Financial assets and liabilities

Financial assets and liabilities

Assets at amortised cost

The Group does not have any financial assets which it would classify as fair value through profit or loss. Therefore, all financial assets are classed as assets at amortised cost as defined below.

These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of goods and services to customers (e.g. trade receivables), but also incorporate other types of contractual monetary asset. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.

For impairment provisions, the Group applies the IFRS 9 simplified approach to measure expected credit losses using a lifetime expected credit loss provision for trade receivables to measure expected credit losses on a collective basis. Trade receivables are grouped based on a similar credit risk and ageing

The expected loss rates are based on the Group’s historic credit losses experienced over the three-year period prior to the period end. The historic loss rates are then adjusted for current and forward-looking information on macroeconomic factors.

Assets at amortised cost (continued)

The Group’s assets at amortised costs comprise trade and other receivables and cash and cash equivalents in the consolidated statement of financial position.

Cash and cash equivalents include cash in hand, deposits held at call with original maturities of three months or less.

Financial liabilities

The Group classifies its financial liabilities into one of two categories, depending on the purpose for which the liability was acquired.

Fair value through profit and loss (‘FVTPL’)

The Group has outstanding warrants in the ordinary share capital of the company. The number of ordinary shares to be issued when exercised is fixed, however the exercise price is denominated in US Dollars being different to the functional currency of the parent company. Therefore, the warrants are classified as equity settled derivative financial liabilities recognised at fair value through the profit and loss account.

The financial liability is valued using the either the Monte Carlo model or the Black-Scholes option pricing model. Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on re-measurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included in the ‘finance income’ or ‘finance expense’ lines item in the income statement. Fair value is determined in the manner described in note 20.

Other financial liabilities include the following items:

• Borrowings are initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument. Such interest-bearing liabilities are subsequently measured at amortised cost using the effective interest rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the consolidated statement of financial position. Interest expense in this context includes initial transaction costs and premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.

• Government loans received on favourable terms below market rate are discounted at a market rate of interest. The difference between the present value of the loan and the proceeds is held as a government grant within deferred revenue and is released to research and development expenditure or grant income in line with when the asset or expenditure is recognised in the income statement.

• Trade payables and other short-term monetary liabilities are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method.

Share capital

Share capital

Financial instruments issued by the Group are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset. The Group has two classes of share in existence:

• ordinary shares of £0.001 each are classified as equity instruments;

• deferred shares of £1 each are classified as equity instruments.

On 2 March 2020 a resolution was passed at a general meeting of shareholders of the Company to consolidate its ordinary shares on a one for 20 basis into new ordinary shares of £0.001 each in the capital of the Company.

Comparative figures in these financial statements reflect the impact of the share consolidation.

Retirement benefits: defined contribution schemes

Retirement benefits: defined contribution schemes

Contributions to defined contribution pension schemes are charged to the consolidated statement of comprehensive income in the year to which they relate.

Provisions

Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event; it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Share-based payments

Share-based payments

The Group operates a number of equity-settled, share-based compensation plans, under which the entity receives services from employees as consideration for equity instruments (options) of the Group. The fair value of the employee services received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed is determined by reference to the fair value of the options granted:

• including any market performance conditions (including the share price);

• excluding the impact of any service and non-market performance vesting conditions (for example, remaining an employee of the entity over a specified time period); and

• including the impact of any non-vesting conditions (for example, the requirement for employees to save).

Non-market performance and service conditions are included in assumptions about the number of options that are expected to vest. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. Where vesting conditions are

Share-based payments (continued)

accelerated on the occurrence of a specified event, such as a change in control or initial public offering, such remaining unvested charge is accelerated
to the income statement.

In addition, in some circumstances employees may provide services in advance of the grant date and therefore the grant date fair value is estimated for the purposes of recognising the expense during the period between service commencement period and grant date.

At the end of each reporting period, the Group revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity. When the options are exercised, the Company issues new shares. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium.

Leases

Leases

Identifying Leases

The Group accounts for a contract, or a portion of a contract, as a lease when it conveys the right to use an asset for a period of time in exchange for consideration. Leases are those contracts that satisfy the following criteria:

(a) There is an identified asset;

(b) The Group obtains substantially all the economic benefits from use of the asset; and

(c) The Group has the right to direct use of the asset.

The Group considers whether the supplier has substantive substitution rights. If the supplier does have those rights, the contract is not identified as giving rise to a lease.

In determining whether the Group obtains substantially all the economic benefits from use of the asset, the Group considers only the economic benefits that arise from the use of the asset, not those incidental to legal ownership or other potential benefits.

In determining whether the Group has the right to direct use of the asset, the Group considers whether it directs how and for what purpose the asset is used throughout the period of use. If there are no significant decisions to be made because they are pre-determined due to the nature of the asset, the Group considers whether it was involved in the design of the asset in a way that predetermines how and for what purpose the asset will be used throughout the period of use. If the contract or portion of a contract does not satisfy these criteria, the Group applies other applicable IFRSs rather than IFRS 16.

All leases are accounted for by recognising a right-of-use asset and a lease liability except for:

Leases of low value assets; and

Leases with a duration of 12 months or less.

Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined by reference to the group’s incremental borrowing rate on commencement of the lease.

Right of use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for lease payments made at or before commencement of the lease. The Group has taken advantage of the practical expedient to ignore the requirement to separate non-lease components and instead account for the entire contract as a single lease.

Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease.

When the group revises its estimate of the term of any lease (because, for example, it re-assesses the probability of a lessee extension or termination option being exercised), it adjusts the carrying amount of the lease liability to reflect the payments to make over the revised term, which are discounted using a revised discount rate. An equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortised over the remaining (revised) lease term. If the carrying amount of the right-of-use asset is adjusted to zero, any further reduction is recognised in profit or loss.

In 2018 the Group entered into a sublease agreement to mitigate the impact of an otherwise onerous lease on the closure of its Abingdon site. This has been recognised as a lease receivable as the Group determined that the sublease meets the definition of a finance lease under the transitional provisions of IFRS16 and therefore, no right-of-use asset is recognised. During 2020 the lease and sub-lease ended.

Nature of leasing activities (in the capacity as lessee)

The group leased a number of properties in the jurisdictions from which it operates. In some jurisdictions it is customary for lease contracts to provide for payments to increase each year by inflation or and in others to be reset periodically to market rental rates. As at 31 December 2021 the Group had one property lease in place in the UK.

Deferred taxation

Deferred taxation

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the consolidated statement of financial position differs from its tax base, except for differences arising on:

• the initial recognition of goodwill;

• the initial recognition of an asset or liability in a transaction which is not a business combination and at the time
of the transaction affects neither accounting or taxable profit; and

• investments in subsidiaries and jointly controlled entities where the Group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.

Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised.

The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting date and are expected to apply when the deferred tax assets or liabilities are recovered or settled.

Property, plant and equipment

Property, plant and equipment

Items of property, plant and equipment are initially recognised at cost. As well as the purchase price, cost includes directly attributable costs.

Depreciation is provided on all items of property, plant and equipment so as to write off their carrying value over their expected useful economic lives. It is provided at the following rates:

Fixtures and fittings	– 20%- 25% per annum straight line
Leasehold improvements	– the shorter of 10% per annum straight line or over the lease term
Computer equipment	– 25% per annum straight line
Laboratory equipment	– 15% – 25% per annum straight line
Right of use asset	– Economic life of contractual relationship

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Accounting policies (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of entities

The consolidated financial statements consist of the results of the following entities:

Entity	Summary description
Midatech Pharma plc	Ultimate holding company
Midatech Limited	Trading company
Midatech Pharma (Espana) SL (formerly Midatech Biogune SL)	Liquidated - 2021
PharMida AG	Dormant
Midatech Pharma (Wales) Limited (formerly Q Chip Limited)	Trading company
Midatech Pharma Pty	Dissolved - 2020

Schedule of intangibles assets useful economic lives

The significant intangibles recognised by the Group and their useful economic lives are as follows:

Goodwill	– Indefinite life
IPRD	– In process, not yet amortising
IT and website costs	– 4 years

Schedule of depreciation rates of property, plant and equipment

Depreciation is provided on all items of property, plant and equipment so as to write off their carrying value over their expected useful economic lives. It is provided at the following rates:

Fixtures and fittings	– 20%- 25% per annum straight line
Leasehold improvements	– the shorter of 10% per annum straight line or over the lease term
Computer equipment	– 25% per annum straight line
Laboratory equipment	– 15% – 25% per annum straight line
Right of use asset	– Economic life of contractual relationship

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Segment Information (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of revenue by geographical analysis

Geographical analysis of revenue by destination of customer

	2021 £’000		2020 £’000		2019 £’000
Revenue from continuing operations:
United Kingdom		–		4		197
Belgium		578		114		–
Rest of Europe		–		–		55
Rest of the World		–		62		60
		578		180		312

Schedule of commercial segment

	2021 £’000			2020 £’000			2019 £’000
Customer A		100	%		64	%		63	%
Customer B		–			34	%		19	%
Customer C		–			2	%		18	%

Schedule of segmen

Segmented results for the year ended 31 December 2021

	Pipeline R&D £’000
Revenue		578
Total revenue		578
Other income		24
Research and development costs (excluding depreciation)		(4,291	)
Administrative costs (excluding depreciation)		(2,906	)
Depreciation		(403	)
Loss from operations		(6,998	)
Finance income		936
Finance expense		(44	)
Loss before tax		(6,106	)
Taxation		646
Loss for the year from continuing operations		(5,460	)

Depreciation in year allocated as follows:

	Depreciation £’000
Research and development costs		363
Administrative costs		40
Total		403

Segmented results for the year ended 31 December 2020

	Pipeline R&D £’000
Revenue		180
Grant revenue		163
Total revenue		343
Other income		12
Research and development costs (excluding depreciation and amortisation)		(4,886	)
Administrative costs (excluding depreciation and amortisation)		(4,923	)
Depreciation		(1,207	)
Amortisation		(10	)
Impairment		(12,369	)
Loss from operations		(23,040	)
Finance income		1
Finance expense		(431	)
Loss before tax		(23,470	)
Taxation		1,281
Loss for the year from continuing operations		(22,189	)

Depreciation and amortisation in year allocated as follows:

	Depreciation £’000		Amortisation £000
Research and development costs		1,174		8
Administrative costs		33		2
Total		1,207		10

Segmented results for the year ended 31 December 2019

	Pipeline R&D £’000			Commercial (discontinued) £’000			Consolidated (including discontinued operations) £’000
Revenue		312			–			312
Grant revenue		362			–			362
Total revenue		674			–			674
Other income		15			–			15
Research and development costs (excluding depreciation and amortisation)		(6,624	)		–			(6,624	)
Distribution costs, sales and marketing		(323	)		–			(323	)
Administrative costs (excluding depreciation)		(3,775	)		–			(3,775	)
Loss from discontinued operations, net of tax		–			(947	)		(947	)
Depreciation		(1,282	)		–			(1,282	)
Amortisation		(3	)		–			(3	)
Loss from operations		(11,318	)		(947	)		(12,265	)
Finance income		492			–			492
Finance expense		(97	)		–			(97	)
Loss before tax		(10,923	)		(947	)		(11,870	)
Taxation		1,785			–			1,785
Loss for the year		(9,138	)		(947	)		(10,085	)
Loss from continuing operations								(9,138	)
Loss from discontinued operations								(947	)

All material additions to non-current assets in 2021, 2020 and 2019 were in the Pipeline R&D segment.

Schedule of non-current assets by location of assets

Non-current assets by location of assets

	2021 £’000		2020 £’000		2019 £’000
United Kingdom		1,152		542		12,775
Spain		–		–		4,383
		1,152		542		17,158

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Discontinued operations (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of post-tax loss on disposal of discontinued operations

The post-tax loss on disposal of discontinued operations was determined as follows:

Result of discontinued operations	2021 £’000		2020 £’000		2019 £’000
Revenue		–		–		–
Expenses other than finance costs		–		–		(947	)
Finance costs		–		–		–
Impairment		–		–		–
Loss from discontinued operations before tax		–		–		(947	)
Taxation		–		–		–
Loss on disposal of discontinued operations		–		–		–
Loss for the year from discontinued operations after tax		–		–		(947	)

Schedule of amounts related to discontinued operations

Statement of cash flows	2021 £’000		2020 £’000		2019 £’000
The statement of cash flows includes the following amounts relating to discontinued operations:
Operating activities		–		–		–
Investing activities		–		–		(947	)
Financing activities		–		–		–
Net cash flow from discontinued operations		–		–		(947	)

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Loss from operations (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of loss from operations

	2021 £’000			2020 £’000			2019 £’000
Loss from operations is stated after charging/(crediting):
Depreciation of property, plant and equipment
– From continuing operations		213			1,089			979
Depreciation of right of use asset
– From continuing operations		190			118			303
Amortisation of intangible assets – product and marketing rights		–
– From continuing operations		–			10			3
Impairment of intangible assets		–			12,369			–
Fees payable to the Company’s auditor for the audit of the parent Company		88			87			110
Fees payable to the Company’s subsidiary auditors for the audits of the subsidiary accounts		44			43			48
Fees payable to the Company’s auditor for:
– Other services		–			7			66
Fees payable to the Company’s previous auditor for the audit of the parent Company		–			15			–
Fees payable to the Company’s previous auditor for:
-       Other services		41			171			–
Foreign exchange(gain)/loss		12			96			131
Profit/(Loss) on disposal of property, plant and equipment		(42	)		(226	)		–
Equity settled share-based payment*		89			(404	)		(34	)

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Staff costs (Tables)

12 Months Ended

Dec. 31, 2021

Staff Costs

Schedule of staff costs

Staff costs (including Directors), for continuing and discontinued operations, comprise:

	2021 £’000		2020 £’000			2019 £’000
Wages and salaries		1,354		2,727			2,762
Defined contribution pension cost (note 25)		71		75			90
Social security contributions and similar taxes		152		397			565
Share-based payment charge/(credit)		89		(404	)		(34	)
	1,666		2,795			3,383
Continuing operations		1,666		2,795			3,383
Discontinued operations		–		–			–
	1,666		2,795			3,383

Schedule for average number of employed staff

The average number of staff employed by the Group during the financial year, for continuing and discontinued operations, amounted to:

	2021		2020		2019
Research and development		15		31		52
General and administration		5		9		13
		20		40		65

Schedule of Management Personel Compensation

	2021 £’000		2020 £’000			2019 £’000
Short term employee benefits		658		472			812
Wages and salaries		–		–			656
Payments made to third parties		–		–			82
Social security contributions and similar taxes		–		–			72
Benefits in kind		–		–			2
Post-employment benefits		27		24			42
Defined contribution pension cost		–		–			42
Termination benefits		–		30			–
Share-based payment		61		(472	)		(58	)
		746		54			796

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group, including the Directors of the Company, Chief Executive Officer and the Chief Scientific Officer .

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group, including the Directors of the Company, Chief Executive Officer and the Chief Scientific Officer .

None of the Directors have exercised share options during the year (2020: nil, 2019: nil).

During the year 1 Directors (2020:2; 2019: 3) participated in a defined contribution pension scheme.

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Finance income and expense (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of finance income

	2021 £’000		2020 £’000		2019 £’000
Finance income
Interest received on bank deposits		–		1		8
Gain on equity settled derivative financial liability		936		–		484
Total finance income		936		1		492

	2021 £’000		2020 £’000		2019 £’000
Finance expense
Interest expense on lease liabilities		36		20		30
Other loans		8		14		67
Loss on equity settled derivative financial liability		–		397		–
Total finance expense		44		431		97

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Taxation (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of components of income tax expense (benefit)

	2021 £’000		2020 £’000			2019 £’000
Current tax credit
Current tax credited to the income statement		646		1,144			1,782
Taxation payable in respect of foreign subsidiary		–		(21	)		–
Adjustment in respect of prior year		–		158			3
	646		1,281			1,785
Deferred tax credit
Reversal of temporary differences		–		–			–
Total tax credit		646		1,281			1,785

Schedule of difference between actual tax charge and the standard rate of corporation tax

The reasons for the difference between the actual tax charge for the year and the standard rate of corporation tax in the United Kingdom applied to losses for the year are as follows:

	2021 £’000			2020 £’000			2019 £’000
Loss before tax		(6,106	)		(23,470	)		(11,870	)
Expected tax credit based on the standard rate of United Kingdom corporation tax at the domestic rate of 19%		(1,160	)		(4,459	)		(2,255	)
Expenses not deductible for tax purposes		75			596			1,087
Income not taxable		(2	)		(75	)		–
Unrelieved tax losses and other deductions		–			–			(114	)
Adjustment in respect of prior period		–			(158	)		(3	)
Surrender of tax losses for R&D tax refund		(280	)		(491	)		(1,810	)
Foreign exchange differences					–			1
Deferred tax not recognised		721			3,306			1,309
Total tax credited to the income statement		(646	)		(1,281	)		(1,785	)

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Loss per share (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of loss per share

	2021 £’000			2020 £’000			2019 £’000
Numerator
Loss used in basic EPS and diluted EPS:
Continuing operations		(5,460	)		(22,189	)		(9,138	)
Discontinued operations		–			–			(947	)
Denominator
Weighted average number of ordinary shares used in basic EPS:		80,546,881			42,839,961			18,330,588
Basic and diluted loss per share:
Continuing operations – pence		(7	)p		(52	)p		(50	)p
Discontinued operations – pence		–			–			(5	)p

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Property, plant and equipment (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of detailed information about property, plant and equipment

	Fixtures and fittings £’000			Leasehold improvements £’000			Computer equipment £’000			Laboratory equipment £’000			Right of use asset £’000			Total £’000
Cost
At 1 January 2019		253			2,013			383			3,651			–			6,300
Adoption of IFRS 16 Leases		–			–			–			–			395			395
Additions		4			137			23			223			822			1,209
Effect of modification to lease terms		–			–			–			–			(82	)		(82	)
Exchange differences		(9	)		(112	)		(3	)		(136	)		(11	)		(271	)
At 31 December 2019		248			2,038			403			3,738			1,124			7,551
Additions		–			58			16			135			–			209
Effect of modification to lease terms		–			–			–			–			(678	)		(678	)
Disposal		(202	)		(2,184	)		(185	)		(2,323	)		(316	)		(5,210	)
Exchange differences		7			92			2			112			58			271
At 31 December 2020		53			4			236			1,662			188			2,143
Additions		57			53			16			194			720			1,040
Transfer		–			–			–			(155	)		155			–
Effect of modification to lease terms		–			–			–			–			(24	)		(24	)
Disposal		(50	)		(4	)		(10	)		(138	)		(164	)		(366	)
At 31 December 2021		60			53			242			1,563			875			2,793
		Fixtures and fittings £’000			Leasehold improvements £’000			Computer equipment £’000			Laboratory equipment £’000			Right of use asset £’000			Total £’000
Accumulated depreciation
At 1 January 2019		241			1,485			265			2,326			–			4,317
Charge for the year		2			400			70			507			303			1,282
Exchange differences		(8	)		(91	)		(3	)		(93	)		(7	)		(202	)
At 31 December 2019		235			1,794			332			2,740			296			5,397
Charge for the year		9			310			50			720			118			1,207
Disposals		(202	)		(2,183	)		(185	)		(2,300	)		(316	)		(5,186	)
Exchange differences		7			81			2			79			14			183
At 31 December 2020		49			2			199			1,239			112			1,601
Transfer		–			–			–			(74	)		74			–
Charge for the year		8			5			22			178			190			403
Disposals		(50	)		(3	)		(8	)		(138	)		(164	)		(363	)
At 31 December 2021		7			4			213			1,205			212			1,641
Net book value
At 31 December 2021		53			49			29			358			663			1,152
At 31 December 2020		4			2			37			423			76			542
At 31 December 2019		13			244			71			998			828			2,154

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Leases (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of market rental rates

Lease Liabilities	2021 £’000			2020 £’000			2019 £’000
At 1 January		76			907			546
Additions		720			–			822
Transfer		77			–			–
Effect of modification to lease terms		(24	)		(788	)		(82	)
Interest expenses		29			15			24
Lease payments		(112	)		(105	)		(391	)
Exchange differences		–			47			(12	)
At 31 December		766			76			907

Low value leases expensed in year

Low value leases expensed in year:

	2021 £’000		2020 £’000		2019 £’000
Low value leases expensed		2		10		29
	2		10		29

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Intangible assets (Tables)

12 Months Ended

Dec. 31, 2021

Disclosure of detailed information about intangible assets [abstract]

Schedule of reconciliation of changes in intangible assets and goodwill

	In-process research and development £’000		Goodwill £’000		IT/Website costs £’000			Total £’000
Cost
At 1 January 2019		13,378		2,291		28			15,697
Additions		–		–		9			9
Foreign exchange		–		–		(2	)		(2	)
At 31 December 2019		13,378		2,291		35			15,704
Disposal		–		–		(36	)		(36	)
Foreign exchange		–		–		1			1
At 31 December 2020		13,378		2,291		–			15,669
At 31 December 2021		13,378		2,291		–			15,669
		In-process research and development £’000		Goodwill £’000		IT/Website Costs £’000			Total £’000
Accumulated amortisation and impairment
At 1 January 2019		3,300		–		23			3,323
Amortisation charge for the year		–		–		3			3
Foreign exchange		–		–		(1	)		(1	)
At 31 December 2019		3,300		–		25			3,325
Amortisation charge for the year		–		–		10			10
Disposal		–		–		(36	)		(36	)
Impairment		10,078		2,291		–			12,369
Foreign exchange		–		–		1			1
At 31 December 2020		13,378		2,291		–			15,669
At 31 December 2021		13,378		2,291		–			15,669
Net book value
At 31 December 2021		–		–		–			–
At 31 December 2020		–		–		–			–
At 31 December 2019		10,078		2,291		10			12,379

Schedule of individual intangible assets

The individual intangible assets, excluding goodwill, which are material to the financial statements are:

Carrying amount

Remaining amortisation period

2021 £’000

2020 £’000

2019 £’000

2021 (years)

2020 (years)

2019 (years)

Midatech Pharma (Wales) Limited acquired IPRD

–

–

9,300

n/a

n/a

n/a in process

MTX110 acquired IPRD

–

–

778

n/a

n/a

n/a in process

–

–

10,078

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Impairment testing (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of cash generating unit

Details of goodwill and IPRD allocated to the acquired cash generating unit and the valuation basis are as follows:

	Indefinite lived
	IPRD carrying amount				Goodwill carrying amount
Name		2021 £’000	2020 £’000	2019 £’000		2021 £’000	2020 £’000	2019 £’000	Valuation Basis
CGU – Midatech Pharma (Wales) Ltd		–	–	9,300		–	–	2,291		Value in use

Schedule of key assumptions used

The key assumptions used in the valuation model examining the MPW Ltd cash generating unit include the following:

Schedule of key assumptions used

Assumptions	2021		2020		2019
Pre-tax discount rate		n/a		n/a		18.4	%
Cumulative probability of success of projects		n/a		n/a		81	%

Schedule of key assumptions used for carrying value and recoverable amount

If any one of the following changes were made to the above key assumptions, the carrying value and recoverable amount would be equal.

Assumptions	2021		2020		2019
Pre-tax discount rate for all projects		n/a		n/a		increase to 21%
Cumulative probability of success of project		n/a		n/a		59	%

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Subsidiaries (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of subsidiaries

The subsidiaries of Midatech Pharma plc, all of which are 100% owned, either directly or through subsidiaries where indicated, and have been included in these financial statements in accordance with the details set out in the basis of preparation and basis of consolidation note 1, are as follows:

Name	Registered Office	Nature of Business	Notes
Midatech Limited	1 Caspian Point, Caspian Way, Cardiff, CF10 4DQ	Trading company
PharMida AG	c/o Kellerhals, Hirschgässlein 11, 4051 Basel, Switzerland	Dormant	(a) (b)
Midatech Pharma (Wales) Limited	1 Caspian Point, Caspian Way, Cardiff, CF10 4DQ	Trading company

Notes:

(a)       Wholly owned subsidiary of Midatech Limited.

(b)       PharMida AG became dormant in January 2016.

(c)       Midatech Pharma PTY was incorporated on 16 February 2015 and dissolved November 2020.

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Trade and other receivables (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of trade and other receivables

	2021 £’000		2020 £’000		2019 £’000
Trade receivables		33		95		22
Prepayments		607		258		151
Other receivables		394		219		3,444
Total trade and other receivables		1,034		572		3,617
Less: non-current portion (rental deposit and on bond)		–		–		(2,625	)
Current portion		1,034		572		992

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Cash and cash equivalents and cash flow supporting notes (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of cash and cash equivalents

Cash and cash equivalents for purposes of the consolidated statement of cash flows comprises:

	2021 £’000		2020 £’000		2019 £’000
Cash at bank available on demand		10,057		7,546		10,928

Schedule of cash inflows from an equity financing transaction

During 2021, 2020 and 2019, cash inflows arose from equity financing transactions, included within financing activities on the face of the cash flow statement. As part of the equity transaction in July 2021 warrants to the value of £Nil (May 2020: £1.0m; October 2019 : £1.1m) were issued as disclosed in note 20.

	2021 £’000			2020 £’000			2019 £’000
Gross proceeds		10,091			10,792			15,767
Transaction costs		(1,056	)		(1,050	)		(1,659	)
		9,035			9,742			14,108

Schedule of changes in bank loan liabilities

The following changes in loans and borrowings arose as a result of financing activities during the year:

	Non-current liabilities £’000			Current liabilities £’000			Total £’000
At 1 January 2021		60			200			260
Cash flows		–			(215	)		(215	)
Non-cashflows:
Foreign Exchange		–			(4	)		(4	)
New leases		715			5			720
Effect of modification to lease term – IFRS 16		–			(24	)		(24	)
Loans and borrowings classified as non-current 31 December 2020 becoming current in 2021		(178	)		178			–
Interest accruing in period		23			6			29
At 31 December 2021		620			146			766

	Non-current liabilities £’000			Current liabilities £’000			Total £’000
At 1 January 2020		5,670			412			6,082
Cash flows		(6,182	)		(258	)		(6,440	)
Non-cashflows:
Foreign Exchange		252			23			275
Fair value changes		1,176			–			1,176
Effect of modification to lease term – IFRS 16		(877	)		89			(788	)
Reclassification portion government loan to non-current		51			(51	)		–
Interest accruing in period		(30	)		(15	)		(45	)
At 31 December 2020		60			200			260

	Non-current liabilities £’000			Current liabilities £’000			Total £’000
At 1 January 2019		884			368			1,252
Cash flows		5,575			(1,027	)		4,548
Non-cashflows:
Foreign Exchange		(42	)		(29	)		(71	)
Fair value changes		(1,139	)		–			(1,139	)
Adoption of IFRS16 leases		163			383			546
Effect of modification to lease term – IFRS 16		–			(82	)		(82	)
New leases		805			95			900
Loans and borrowings classified as non-current 31 December 2018 becoming current in 2019		(685	)		685			–
Transfer to grant income		–			(14	)		(14	)
Interest accruing in period		108			34			142
At 31 December 2019		5,670			412			6,082

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Trade and other payables (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of trade and other payables

Current	2021 £’000		2020 £’000		2019 £’000
Trade payables		485		337		725
Other payables		5		26		13
Accruals		546		768		1,765
Total financial liabilities, excluding loans and borrowings, classified as financial liabilities measured at amortised cost		1,036		1,131		2,503
Tax and social security		56		31		86
Deferred revenue and government grants		–		68		1,905
Total trade and other payables		1,092		1,230		4,494

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Borrowings (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of borrowings

	2021 £’000		2020 £’000		2019 £’000
Current
Lease liabilities		146		93		233
Government and research loans		–		107		179
Total		146		200		412
Non-current
Lease liabilities		620		60		912
Government and research loans		–		–		4,758
Total		620		60		5,670

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Provisions (Tables)

12 Months Ended

Dec. 31, 2021

Schedule Of Provisions

Schedule of provisions

	2021 £’000		2020 £’000			2019 £’000
Opening provision at 1 January		50		97			165
Utilisation of provision		–		(97	)
Provision recognised/(released) in the year		–		50			(68	)
At 31 December		50		50			97
Less: non-current portion		–		(50	)		–
Current portion		50		–			97

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Derivative financial liability – current (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of derivative financial liability

Schedule of derivative financial liability

	2021 £’000			2020 £’000			2019 £’000
Equity settled derivative financial liability
At 1 January		1,559			664			–
Warrants issued		–			997			1,148
Transfer to share premium on exercise of warrants		(70	)		(499	)		–
Gain recognised in finance income within the consolidated statement of comprehensive income		(936	)		397			(484	)
At 31 December		553			1,559			664

Equity settled derivative financial liability is a liability that is not to be settled for cash.

The following table details the outstanding warrants as at 31 December and also the movement in the year:

The following table details the outstanding warrants as at 31 December and also the movement in the year:

	At 1 January 2019		Granted		Lapsed			At 31 December 2019		Granted		Exercised			At 31 December 2020		Lapsed			Exercised			At 31 December 2021
May 2020 grant		–		–		–			–		7,545,456		(2,500,000	)		7,045,456		–			(306,815	)		6,738,641
October 19 grant		–		3,150,000		–			3,150,000		–		–			3,150,000		–			–			3,150,000
DARA Warrants		116,206		–		(111,582	)		4,624		–		–			4,624		(544	)		–			4,080
DARA Options		6,167		–		(3,332	)		2,835		–		–			2,835		–			–			2,835

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Financial instruments – risk management (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of consolidated derivative financial instruments

	2021 £’000		2020 £’000		2019 £’000
Cash and cash equivalents		10,057		7,546		10,928
Trade receivables		33		95		22
Other receivables		–		–		2,625
Total financial assets		10,090		7,641		13,575

Financial liabilities – amortised cost

	2021 £’000		2020 £’000		2019 £’000
Trade payables		485		337		725
Other payables		5		26		13
Accruals		546		768		1,765
Borrowings		766		260		6,082
Total financial liabilities – amortised cost		1,802		1,391		8,585

Financial liabilities – fair value through profit and loss – current

	2021 £’000		2020 £’000		2019 £’000
Equity settled derivative financial liability		553		1,559		664

Schedule of consolidated financial assets and liabilities at fair value

The fair value of the Group’s derivative financial liability is measured at fair value on a recurring basis. The following table gives information about how the fair value of this financial liability is determined, additional disclosure is given in note 20:

Financial liabilities	Fair value as at 31/12/2021		Fair value hierarchy	Valuation technique(s) and key input(s)	Significant unobservable input(s)	Relationship of unobservable inputs to fair value
Equity settled financial derivative liability	£	467,000	Level 3	Monte Carlo simulation model	Volatility rate of 95.0% determined using historical volatility of comparable companies.	The higher the volatility the higher the fair value.
					Expected life between a range of 0.1 and 3.88 years determined using the remaining life of the share options.	The shorter the expected life the lower the fair value.
					Risk-free rate of 0.31% determined using the expected life assumptions.	The higher the risk-free rate the higher the fair value.
Equity settled financial derivative liability	£	86,000	Level 3	Monte Carlo simulation model	Volatility rate of 85.0% determined using historical volatility of comparable companies.	The higher the volatility the higher the fair value.
					Expected life between a range of 0.1 and 3.5 years determined using the remaining life of the share options.	The shorter the expected life the lower the fair value.
					Risk-free rate of 0.71% determined using the expected life assumptions.	The higher the risk-free rate the higher the fair value.
Equity settled financial derivative liability		–	Level 3	Black-Scholes option pricing model	Volatility rate of 85.0% determined using historical volatility of comparable companies.	The higher the volatility the higher the fair value.
					Expected life between a range of 0.10 and 0.9 years determined using the remaining life of the share options.	The shorter the expected life the lower the fair value.
					Risk-free rate of 0.71% determined using the expected life assumptions.	The higher the risk-free rate the higher the fair value.
Total	£	553,000

Financial liabilities	Fair value as at 31/12/2020		Fair value hierarchy	Valuation technique(s) and key input(s)	Significant unobservable input(s)	Relationship of unobservable inputs to fair value
Equity settled financial derivative liability	£	1,187,000	Level 3	Monte Carlo simulation model	Volatility rate of 105.0% determined using historical volatility of comparable companies.	The higher the volatility the higher the fair value.
					Expected life between a range of 0.1 and 4.49 years determined using the remaining life of the share options.	The shorter the expected life the lower the fair value.
					Risk-free rate of 0.07% determined using the expected life assumptions.	The higher the risk-free rate the higher the fair value.
Equity settled financial derivative liability	£	372,000	Level 3	Monte Carlo simulation model	Volatility rate of 105.0% determined using historical volatility of comparable companies.	The higher the volatility the higher the fair value.
					Expected life between a range of 0.1 and 4.888 years determined using the remaining life of the share options.	The shorter the expected life the lower the fair value.
					Risk-free rate of 0.08% determined using the expected life assumptions.	The higher the risk-free rate the higher the fair value.
Equity settled financial derivative liability		–	Level 3	Black-Scholes option pricing model	Volatility rate of 105.0% determined using historical volatility of comparable companies.	The higher the volatility the higher the fair value.
					Expected life between a range of 1.0 and 1.9 years determined using the remaining life of the share options.	The shorter the expected life the lower the fair value.
					Risk-free rate of 0.8% determined using the expected life assumptions.	The higher the risk-free rate the higher the fair value.
Total	£	1,559,000

Financial liabilities	Fair value as at 31/12/2019		Fair value hierarchy	Valuation technique(s) and key input(s)	Significant unobservable input(s)	Relationship of unobservable inputs to fair value
Equity settled financial derivative liability	£	664,000	Level 3	Monte Carlo simulation model	Volatility rate of 78.4% determined using historical volatility of comparable companies.	The higher the volatility the higher the fair value.
					Expected life between a range of 0.1 and 5.68 years determined using the remaining life of the share options.	The shorter the expected life the lower the fair value.
					Risk-free rate between a range of 0.59% and 1.69 % determined using the expected life assumptions.	The higher the risk-free rate the higher the fair value.
Equity settled financial derivative liability		–	Level 3	Black-Scholes option pricing model	Volatility rate of 78.3% determined using historical volatility of comparable companies.	The higher the volatility the higher the fair value.
					Expected life between a range of 2.0 and 2.9 years determined using the remaining life of the share options.	The shorter the expected life the lower the fair value.
					Risk-free rate between a range of 0.0% and 0.26 % determined using the expected life assumptions.	The higher the risk-free rate the higher the fair value.
Total	£	664,000

Schedule of foreign exchange risk

The table below shows analysis of the Pounds Sterling equivalent of year-end cash and cash equivalent balances by currency:

	2021 £’000		2020 £’000		2019 £’000
Cash and cash equivalents:
Pounds Sterling		10,057		7,247		3,153
US Dollar		–		120		2,021
Euro		–		179		5,750
Other		–		–		4
Total		10,057		7,546		10,928

The table below shows the foreign currency exposure that gives rise to net currency gains and losses recognised in the consolidated statement of comprehensive income. As at 31 December, these exposures were as follows:

	2021 £’000		2020 £’000		2019 £’000
Net Foreign Currency Assets/(Liabilities):
US Dollar		–		120		2,021
Euro		22		54		1,460
Other		–		1		7
Total		22		175		3,488

Schedule of foreign currency exchange rates

The following table details the Group’s sensitivity to a 10% change in year-end exchange rates, which the Group feels is the maximum likely change in rate based upon recent currency movements, in the key foreign currency exchange rates against Pounds Sterling:

Year ended 31 December 2021	US Dollar £’000		Euro £’000		Other £’000
Loss before tax		–		2		–
Total equity		–		2		–

Year ended 31 December 2020	US Dollar £’000		Euro £’000			Other £’000
Loss before tax		12		(293	)		(4	)
Total equity		12		(293	)		(4	)

Year ended 31 December 2019	US Dollar £’000		Euro £’000		Other £’000
Loss before tax		202		54		–
Total equity		202		31		1

Schedule of contractual maturities of financial liabilities

The following table sets out the contractual maturities (representing undiscounted contractual cash-flows) of financial liabilities:

2021	Up to 3 months £’000		Between 3 and 12 months £’000		Between 1 and 2 years £’000		Between 2 and 5 years £’000		Over 5 years £’000
Trade and other payables		1,036		–		–		–		–
Lease liabilities		46		171		195		442		–
Total		1,082		171		195		442		–

2020	Up to 3 months £’000		Between 3 and 12 months £’000		Between 1 and 2 years £’000		Between 2 and 5 years £’000		Over 5 years £’000
Trade and other payables		1,131		–		–		–		–
Lease liabilities		25		75		61		8		–
Government research loans		107		–		–		–		–
Total		1,263		75		61		8		–

2019	Up to 3 months £’000		Between 3 and 12 months £’000		Between 1 and 2 years £’000		Between 2 and 5 years £’000		Over 5 years £’000
Trade and other payables		2,503		–		–		–		–
Lease liabilities		79		165		317		735		–
Government research loans		–		272		238		2,851		3,317
Total		2,582		437		555		3,586		3,317

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Deferred tax (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of unused tax losses carried forward

Unused tax losses carried forward, subject to agreement with local tax authorities, were as follows:

	Gross losses £’000		Potential deferred tax asset £’000
31 December 2021		67,210		16,925
31 December 2020		63,183		13,076
31 December 2019		49,565		8,426

Schedule of deferred tax liability

Details of the deferred tax liability are as follows:

2021	Asset £’000	Liability £’000	Net £’000
Business Combinations	–	–	–

2020	Asset £’000	Liability £’000	Net £’000
Business Combinations	–	–	–

2019	Asset £’000		Liability £’000			Net £’000
Business Combinations		1,581		(1,581	)		–

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Share capital (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of detailed information about share capital

Schedule of detailed information about share capital

Authorised, allotted and fully paid – classified as equity	2021 Number		2021 £		2020 Number		2020 £		2019 Number		2019 £
At 31 December
Ordinary shares of £0.001 each		98,468,387		98,468		63,073,852		63,074		23,494,981		23,495
Deferred shares of £1 each		1,000,001		1,000,001		1,000,001		1,000,001		1,000,001		1,000,001
Total				1,098,469				1,063,075				1,023,496

Schedule Of Ordinary and Deferred Shares

		Ordinary Shares Number		Deferred Shares Number		Share Price £		Total consideration £’000
At 1 January 2019			3,059,207		1,000,001			69,870
2019
26 February 2019	Subscription, Placing and Open Offer		17,410,774				0.77	13,406
8 October 2019	Share issue to SIPP trustee (see note 26)		25,000				0.001	–
29 October 2019	Registered Direct Offering		3,000,000				0.7874	2,362
At 31 December 2019			23,494,981		1,000,001			85,638
2020
18 May 2020	Placing & Registered Direct Offering		15,757,576				0.27	4,255
27 July 2020	Placing		21,296,295				0.27	5,750
19 August 2020	Exercise of warrants		2,500,000					783
30 September 2020	Share issue to SIPP trustee (see note 26)		25,000				0.001	–
At 31 December 2020			63,073,852		1,000,001			96,426
19 February 2021 Exercise of warrants			306,815				0.298	91
6 July 2021 Placing			35,087,720				0.285	10,000
At 31 December 2021			98,468,387		1,000,001			106,517

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Reserves (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of reserves

The following describes the nature and purpose of each reserve within equity:

Reserve	Description and purpose
Share premium	Amount subscribed for share capital in excess of nominal value.
Merger reserve	Represents the difference between the fair value and nominal value of shares issued on the acquisition of subsidiary companies where the Company has elected to take advantage of merger accounting.
Foreign exchange reserve	Gains/losses arising on retranslating the net assets of overseas operations into sterling.
Warrant reserve	Represents the fair value of warrants denominated in £ at the date of grant
Accumulated deficit	All other net gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere.

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Share-based payments (Tables)

12 Months Ended

Dec. 31, 2021

Details of all share options granted under the Schemes are set out below:

Details of all share options granted under the Schemes are set out below:

Date of grant	At 1 January 2021		Granted in 2021		Expired 2021			Forfeited in 2021			At 31 December 2021		Exercise Price
13 September 2011		150		–		(150	)		–			–	£	83.80
20 April 2012		1,589		–		–			–			1,589	£	83.80
9 May 2014		10,000		–		–			–			10,000	£	1.50
30 June 2014		500		–		–			–			500	£	1.50
31 October 2016		7,921		–		–			(890	)		7,031	£	53.60
19 December 2016		10,018		–		–			(2,062	)		7,956	£	24.20
15 December 2017		3,300		–		–			(2,100	)		1,200	£	9.20
24 April 2019		45,500		–		–			(33,000	)		12,500	£	1.46
2 October 2019		30,000		–		–			–			30,000	£	1.05
17 April 2020		100,000		–		–			–			100,000	£	0.24
17 June 2020		1,274,000		–		–			(410,500	)		863,500	£	0.202
15 July 2021		–		1,709,000		–			(280,000	)		1,429,000	£	0.28
2 August 2021		–		50,000		–			–			50,000	£	0.27
1 September 2021		–		120,000		–			–			120,000	£	0.26
		1,482,978		1,879,000		(150	)		(728,552	)		2,633,276

Options exercisable at 31 December 2021		179,632
Weighted average exercise price of outstanding options at 31 December 2021	£	0.538
Weighted average exercise price of options exercised in 2021		n/a
Weighted average exercise price of options lapsed in 2021	£	83.30
Weighted average exercise price of options forfeited in 2021	£	0.447
Weighted average exercise price of options granted in 2021	£	0.276
Weighted average remaining contractual life of outstanding options at 31 December 2021		9.0 years

Date of grant	At 1 January 2020		Granted in 2020		Expired in 2020			Forfeited in 2020			At 31 December 2020		Exercise Price
1 April 2010		1,255		–		(1,255	)		–			–	£	80.00
20 August 2010		2,088		–		(2,088	)		–			–	£	83.80
13 September 2011		150		–		–			–			150	£	83.80
20 April 2012		1,589		–		–			–			1,589	£	83.80
9 May 2014		10,000		–		–			–			10,000	£	1.50
30 June 2014		18,500				–			(18,000	)		500	£	1.50
11 July 2014		100		–		(50	)		(50	)		–	£	1.50
31 October 2016		16,271		–		(850	)		(7,500	)		7,921	£	53.60
14 December 2016		400		–		(400	)		–			–	£	31.00
14 December 2016		500		–		(500	)		–			–	£	34.00
14 December 2016		2,000		–		(2,000	)		–			–	£	37.40
14 December 2016		1,625		–		(1,625	)		–			–	£	37.60
15 December 2016		4,600		–		(4,600	)		–			–	£	24.20
19 December 2016		22,391		–		(1,562	)		(10,811	)		10,018	£	24.20
15 December 2017		29,560		–		(13,310	)		(12,950	)		3,300	£	9.20
2 April 2018		997		–		(997	)		–			–	£	16.60
2 April 2018		4,500		–		(4,500	)		–			–	£	24.20
24 April 2019		169,500		–		–			(124,000	)		45,500	£	1.46
2 October 2019		50,000		–		–			(20,000	)		30,000	£	1.05
17 April 2020		–		100,000		–			–			100,000	£	0.24
17 June 2020		–		1,363,000		–			(89,000	)		1,274,000	£	0.202
		336,026		1,463,000		(33,737	)		(282,311	)		1,482,978

Options exercisable at 31 December 2020		195,171
Weighted average exercise price of outstanding options at 31 December 2020	£	0.835
Weighted average exercise price of options exercised in 2020		n/a
Weighted average exercise price of options lapsed in 2020	£	26.183
Weighted average exercise price of options forfeited in 2020	£	3.648
Weighted average exercise price of options granted in 2020	£	0.205
Weighted average remaining contractual life of outstanding options at 31 December 2020		9.2 years

Date of grant	At 1 January 2019		Granted in 2019		Exercised in 2019		Forfeited in 2019			At 31 December 2019		Exercise Price
1 April 2010		1,255		–		–		–			1,255	£	80.00
20 August 2010		2,088		–		–		–			2,088	£	83.80
13 September 2011		150		–		–		–			150	£	83.80
20 April 2012		1,589		–		–		–			1,589	£	83.80
9 May 2014		10,000		–		–		–			10,000	£	1.50
30 June 2014		21,500		–		–		(3,000	)		18,500	£	1.50
11 July 2014		100		–		–		–			100	£	1.50
31 October 2016		2,500		–		–		(2,500	)		–	£	34.20
31 October 2016		23,411		–		–		(7,140	)		16,271	£	53.60
14 December 2016		400		–		–		–			400	£	31.00
14 December 2016		500		–		–		–			500	£	34.00
14 December 2016		2,000		–		–		–			2,000	£	37.40
14 December 2016		1,625		–		–		–			1,625	£	37.60
15 December 2016		4,600		–		–		–			4,600	£	24.20
19 December 2016		35,866		–		–		(13,475	)		22,391	£	24.20
15 December 2017		45,885		–		–		(16,325	)		29,560	£	9.20
2 April 2018		997		–		–		–			997	£	16.60
2 April 2018		4,500		–		–		–			4,500	£	24.20
24 April 2019		–		219,000		–		(49,500	)		169,500	£	1.46
2 October 2019		–		50,000		–		–			50,000	£	1.05
		158,966		269,000		–		(91,940	)		336,026

Options exercisable at 31 December 2019		131,094
Weighted average exercise price of outstanding options at 31 December 2019	£	8.48
Weighted average exercise price of options exercised in 2019		n/a
Weighted average exercise price of options forfeited in 2019	£	13.26
Weighted average exercise price of options granted in 2019	£	1.38
Weighted average remaining contractual life of outstanding options at 31 December 2019		7.9 years

The following information is relevant in the determination of the fair value of options granted during the year 2021 under the equity share based remuneration schemes operated by the Group.

The following information is relevant in the determination of the fair value of options granted during the year 2021 under the equity share based remuneration schemes operated by the Group.

	July 2021			August 2021			September 2021
Number of options		1,709,000			50,000			120,000
Option pricing models used		Black-Scholes			Black-Scholes			Black-Scholes
Share price	£	0.2775	*	£	0.265	*	£	0.255	*
Exercise price of options issued in year	£	0.2775		£	0.265		£	0.255
Contractual life		10 years			10 years			10 years
Expected life		5 years			5 years			5 years
Volatility		88.63	%**		88.59	%**		88.11	%**
Expected dividend yield		0	%		0	%		0	%
Risk free rate		0.38	%		0.26	%		0.32	%

*         The share price used in the determination of the fair value of the options granted in 2021 was the share price on the date of grant.

**       Volatility was calculated with reference to the historic share price volatility of comparable companies measured over a five-year period.

The following information is relevant in the determination of the fair value of options granted during the year 2020 under the equity share based remuneration schemes operated by the Group.

	April 2020			June 2020
Number of options		100,000			1,363,000
Option pricing models used		Black-Scholes			Black-Scholes
Share price	£	0.24	*	£	0.213	*
Exercise price of options issued in year	£	0.24		£	0.202
Contractual life		10 years			10 years
Expected life		5 years			5 years
Volatility		84.76	%**		92.55	%**
Expected dividend yield		0	%		0	%
Risk free rate		0.11	%		0.10	%

*         The share price used in the determination of the fair value of the options granted in 2020 was the share price on the date of grant.

**       Volatility was calculated with reference to the historic share price volatility of comparable companies measured over a five-year period.

The following information is relevant in the determination of the fair value of options granted during the year 2019 under the equity share based remuneration schemes operated by the Group.

	April 2019			October 2019
Number of options		219,000			50,000
Option pricing models used		Black-Scholes			Black-Scholes
Share price	£	2.30	*	£	1.126	*
Exercise price of options issued in year	£	1.46		£	1.05
Contractual life		10 years			10 years
Expected life		5 years			5 years
Volatility		75.3	%**		78.3	%**
Expected dividend yield		0	%		0	%
Risk free rate		0.85	%		0.26	%

*         The share price used in the determination of the fair value of the options granted in 2019 was the share price on the date of grant.

**       Volatility was calculated with reference to the historic share price volatility of comparable companies measured over a five-year period.

All other share options relate to the Midatech Limited 2008 unapproved share option scheme.

Share Incentive Plan

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Related party transactions (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of related party transactions

During the year Group companies entered into the following transactions with related parties who are not members of the Group.

Purchase of good

Amounts owed by related parties

2021 €’000

2020 €’000

2019 €’000

2021 €’000

2020 €£’000

2019 €’000

BioConnection BV

–

296

18

–

–

8

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Results of Midatech Pharma (Espa?a) SL (Tables)

12 Months Ended

Dec. 31, 2021

Results Of Midatech Pharma Espaa Sl

Schedule Of Unaudited Results Explanatory

The unaudited results of Midatech Pharma (España) SL for the year to 31 December are as follows:

Schedule Of Unaudited Results Explanatory

	Year ended 31 December 2021 £’000		Year ended 31 December 2020 £’000
Grant revenue		–		163
Total revenue		–		163
Research and development costs		–		(2,820	)
Administrative costs		–		(1,146	)
Loss from operations		–		(3,803	)
Finance expense		–		(11	)
Loss before tax		–		(3,814	)
Taxation		–		(21	)
Loss from operations after tax		–		(3,835	)

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Schedule of entities (Details)	12 Months Ended
	Dec. 31, 2021
IfrsStatementLineItems [Line Items]
Entity	Entity
Summary description	Summary description
Midatech pharma plc [member]
IfrsStatementLineItems [Line Items]
Entity	Midatech Pharma plc
Summary description	Ultimate holding company
Midatech limited [member]
IfrsStatementLineItems [Line Items]
Entity	Midatech Limited
Summary description	Trading company
Midatech pharma (espana) SL (formerly midatech biogune SL) [member]
IfrsStatementLineItems [Line Items]
Entity	Midatech Pharma (Espana) SL (formerly Midatech Biogune SL)
Summary description	Liquidated - 2021
PharMida AG [member]
IfrsStatementLineItems [Line Items]
Entity	PharMida AG
Summary description	Dormant
Midatech Pharma Wales Limited 1 [Member]
IfrsStatementLineItems [Line Items]
Entity	Midatech Pharma (Wales) Limited (formerly Q Chip Limited)
Midatech pharma (wales) limited [member]
IfrsStatementLineItems [Line Items]
Entity	Midatech Pharma (Wales) Limited
Summary description	Trading company
Midatech pharma PTY [member]
IfrsStatementLineItems [Line Items]
Entity	Midatech Pharma Pty
Summary description	Dissolved - 2020

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Schedule of intangibles assets useful economic lives (Details)	12 Months Ended
	Dec. 31, 2021
Goodwill [member]
IfrsStatementLineItems [Line Items]
Useful economic lives	Indefinite life
Intangible assets under development [member]
IfrsStatementLineItems [Line Items]
Useful economic lives	In process, not yet amortising
IT and website costs [member]
IfrsStatementLineItems [Line Items]
Useful economic lives	4 years

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Schedule of depreciation rates of property, plant and equipment (Details)	12 Months Ended
	Dec. 31, 2021
Fixtures and fittings [member]
IfrsStatementLineItems [Line Items]
Description of useful life, property, plant and equipment	20%- 25% per annum straight line
Leasehold improvements [member]
IfrsStatementLineItems [Line Items]
Description of useful life, property, plant and equipment	the shorter of 10% per annum straight line or over the lease term
Computer equipment [member]
IfrsStatementLineItems [Line Items]
Description of useful life, property, plant and equipment	25% per annum straight line
Laboratory equipment [member]
IfrsStatementLineItems [Line Items]
Description of useful life, property, plant and equipment	15% – 25% per annum straight line
Right of use asset [member]
IfrsStatementLineItems [Line Items]
Description of useful life, property, plant and equipment	Economic life of contractual relationship

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Accounting policies (Details Narrative) - £ / shares		12 Months Ended
	Mar. 02, 2020	Dec. 31, 2021
IfrsStatementLineItems [Line Items]
Description of stock split	ordinary shares on a one for 20 basis into new ordinary shares of £0.001 each in the capital of the Company	ordinary shares on a one for 20 basis into new ordinary shares of 0.1p each in the capital of the Company. The comparative denominator has been calculated to reflect the share consolidation.
Ordinary shares [member]
IfrsStatementLineItems [Line Items]
Share par value (in dollars per share)	£ 0.001

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Schedule of revenue by geographical analysis (Details) - GBP (£) £ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
IfrsStatementLineItems [Line Items]
Revenue	£ 578	£ 180	£ 312
Continuing operations [member]
IfrsStatementLineItems [Line Items]
Revenue	578	180	312
Continuing operations [member] | U K [Member]
IfrsStatementLineItems [Line Items]
Revenue	0	4	197
Continuing operations [member] | Switzerland [Member]
IfrsStatementLineItems [Line Items]
Revenue			55
Continuing operations [member] | Rest of the world [member]
IfrsStatementLineItems [Line Items]
Revenue	0	62	60
Discontinued operations [member]
IfrsStatementLineItems [Line Items]
Revenue			312
Discontinued operations [member] | BELGIUM
IfrsStatementLineItems [Line Items]
Revenue	578	£ 114	£ 0
Discontinued operations [member] | Switzerland [Member]
IfrsStatementLineItems [Line Items]
Revenue	£ 0

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Schedule of commercial segment (Details)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Loss Per Share
IfrsStatementLineItems [Line Items]
Percentage of revenue in excess of 10%	0.00%	34.00%	19.00%
Impairment Testing
IfrsStatementLineItems [Line Items]
Percentage of revenue in excess of 10%	0.00%	2.00%	18.00%
Customers A [Member]
IfrsStatementLineItems [Line Items]
Percentage of revenue in excess of 10%	100.00%	64.00%	63.00%

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Schedule of segmen (Details) - GBP (£) £ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
IfrsStatementLineItems [Line Items]
Revenue	£ 578	£ 180	£ 312
Total revenue	578	343	674
Other income	24	12	15
Research and development costs	4,654	6,068	7,843
Administrative costs	2,946	4,958	3,841
Depreciation	213	1,089	979
Loss from operations	(6,998)	(23,040)	(11,318)
Finance income	936	1	492
Finance expense	44	431	97
Loss before tax	(6,106)	(23,470)	(10,923)
Taxation	646	1,281	1,785
Loss from continuing operations	(5,460)	(22,189)	(9,138)
Grant revenue		163	362
Impairment		12,369
Loss for the year	(5,460)	(22,189)	(10,085)
Distribution costs, sales and marketing			323
Loss from discontinued operations			(947)
Discontinued operations [member]
IfrsStatementLineItems [Line Items]
Revenue			312
Total revenue			674
Other income			15
Research and development costs		(2,820)	(6,624)
Administrative costs		(1,146)
Depreciation			(1,282)
Loss from operations		(3,803)	(12,265)
Finance income			492
Finance expense		(11)	(97)
Loss before tax		(3,814)	(11,870)
Taxation		(21)	1,785
Loss from continuing operations		(3,835)	(9,138)
Grant revenue		163	362
Loss for the year			(10,085)
Distribution costs, sales and marketing			(323)
Loss from discontinued operations, net of tax			(947)
Loss from discontinued operations			(947)
Pipeline R&D [Member]
IfrsStatementLineItems [Line Items]
Loss from continuing operations	(5,460)
Pipeline R&D [Member]
IfrsStatementLineItems [Line Items]
Revenue	578	180	312
Total revenue	578	343	674
Other income	24	12	15
Research and development costs	(4,291)	(4,886)	(6,624)
Administrative costs	(2,906)	(4,923)	(3,775)
Depreciation	(403)	(1,207)	(1,282)
Loss from operations	(6,998)	(23,040)	(11,318)
Finance income	936	1	492
Finance expense	(44)	(431)	(97)
Loss before tax	(6,106)	(23,470)	(10,923)
Taxation	646	1,281	1,785
[custom:ResearchAndDevelopmentExpense1]	363
Administrative costs	£ 40	33
Grant revenue		163	362
Amortisation		(10)	(3)
Impairment		(12,369)
Loss for the year		(22,189)	(9,138)
Research and development costs		1,174
Research and development costs		8
Administrative costs		£ 2
Distribution costs, sales and marketing			(323)
Loss from discontinued operations, net of tax
Commercial [Member] | Discontinued operations [member]
IfrsStatementLineItems [Line Items]
Revenue
Total revenue
Other income
Research and development costs			0
Administrative costs
Depreciation
Loss from operations			(947)
Finance income
Finance expense
Loss before tax			(947)
Taxation
Grant revenue
Amortisation
Loss for the year			(947)
Distribution costs, sales and marketing
Loss from discontinued operations, net of tax			£ (947)

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Schedule of non-current assets by location of assets (Details) - GBP (£) £ in Thousands	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
IfrsStatementLineItems [Line Items]
Non-current assets	£ 1,152	£ 542	£ 17,158
UNITED KINGDOM
IfrsStatementLineItems [Line Items]
Non-current assets	1,152	542	12,775
SPAIN
IfrsStatementLineItems [Line Items]
Non-current assets	£ 0	£ 0	£ 4,383

XML

Critical accounting estimates and judgements (Details Narrative) - GBP (£)	1 Months Ended	12 Months Ended
	Mar. 31, 2021	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
IfrsStatementLineItems [Line Items]
Intangible assets other than goodwill				£ 10,100,000
Impairment charge on non financial assets		£ 2,300,000
Cash		9,300,000
Unused tax losses for which no deferred tax asset recognised		67,200,000	£ 63,200,000	49,600,000
Profit (loss)		(5,460,000)	(22,189,000)	(10,085,000)
Retained earnings		(127,803,000)	(122,432,000)	(99,839,000)
Intangible assets under development [member] | Midatech pharma (wales) limited [member]
IfrsStatementLineItems [Line Items]
Goodwill				£ 2,300,000
Impairment charge on non financial assets	£ 11,600,000	£ 9,300,000	£ 2,300,000

XML

Schedule of post-tax loss on disposal of discontinued operations (Details) - GBP (£) £ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Revenue
Expenses other than finance costs			(947)
Finance costs
Impairment
Loss from discontinued operations before tax			(947)
Taxation
Loss on disposal of discontinued operations
Loss for the year from discontinued operations after tax			£ (947)

XML

Schedule of amounts related to discontinued operations (Details) - GBP (£) £ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
IfrsStatementLineItems [Line Items]
Operating activities	£ (6,008)	£ (9,301)	£ (6,489)
Investing activities	(278)	2,574	(3,807)
Financing activities	8,805	3,084	18,733
Discontinued operations [member]
IfrsStatementLineItems [Line Items]
Net cash flow from discontinued operations	0	0	(947)
Operating activities
Investing activities	0	0	(947)
Financing activities	£ 0	£ 0	£ 0

XML

Schedule of loss from operations (Details) - GBP (£) £ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Depreciation of property, plant and equipment
– From continuing operations	£ 213	£ 1,089	£ 979
Depreciation of right of use asset
– From continuing operations	190	118	303
Amortisation of intangible assets – product and marketing rights
– From continuing operations		10	3
Impairment of intangible assets		12,369
Fees payable to the Company’s auditor for the audit of the parent Company	88	87	110
Fees payable to the Company’s subsidiary auditors for the audits of the subsidiary accounts	44	43	48
Fees payable to the Company’s auditor for:
– Other services		7	66
Fees payable to the Company’s previous auditor for the audit of the parent Company		15
Fees payable to the Company’s previous auditor for:
-       Other services	41	171
Foreign exchange(gain)/loss	12	96	131
Profit/(Loss) on disposal of property, plant and equipment	(42)	(226)
Equity settled share-based payment*	£ 89	£ (404)	£ (34)

XML

Discontinued operations (Details Narrative) - Barings LLC [Member] £ in Thousands	12 Months Ended
	Dec. 31, 2021 GBP (£)
IfrsStatementLineItems [Line Items]
Total consideration received	£ 19
Contingent payable	£ 6

XML

Schedule of staff costs (Details) - GBP (£) £ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Staff Costs
Wages and salaries	£ 1,354	£ 2,727	£ 2,762
Defined contribution pension cost (note 25)	71	75	90
Social security contributions and similar taxes	152	397	565
Share-based payment charge/(credit)	89	(404)	(34)
Staff costs gross	1,666	2,795	3,383
Continuing operations	1,666	2,795	3,383
Discontinued operations
Staff costs	£ 1,666	£ 2,795	£ 3,383

XML

Schedule for average number of employed staff (Details) - Number	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
IfrsStatementLineItems [Line Items]
Average number of staff employee	20	40	65
Research and Development [Member]
IfrsStatementLineItems [Line Items]
Average number of staff employee	15	31	52
General and Administration [Member]
IfrsStatementLineItems [Line Items]
Average number of staff employee	5	9,000	13

XML

Schedule of Management Personel Compensation (Details) - GBP (£) £ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Staff Costs
Wages and salaries			£ 656
Payments made to third parties			82
Social security contributions and similar taxes			72
Benefits in kind			2
Defined contribution pension cost			42
Termination benefits		30
Share-based payment	61	(472)	(58)
Total	£ 746	£ 54	£ 796

XML

Schedule of finance income (Details) - GBP (£) £ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Finance income
Interest received on bank deposits		£ 1	£ 8
Gain on equity settled derivative financial liability	936		484
Total finance income	936	1	492
Finance expense
Interest expense on lease liabilities	36	20	30
Other loans	8	14	67
Loss on equity settled derivative financial liability		397
Total finance expense	£ 44	£ 431	£ 97

XML

Schedule of components of income tax expense (benefit) (Details) - GBP (£) £ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Current tax credit
Current tax credited to the income statement	£ (646)	£ (1,144)	£ (1,782)
Taxation payable in respect of foreign subsidiary		(21)
Adjustment in respect of prior year		158	3
Total current tax credit	(646)	(1,281)	(1,785)
Deferred tax credit
Reversal of temporary differences
Total tax credit	£ 646	£ 1,281	£ 1,785

XML

Schedule of difference between actual tax charge and the standard rate of corporation tax (Details) - GBP (£) £ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Loss before tax	£ (6,106)	£ (23,470)	£ (11,870)
Expected tax credit based on the standard rate of United Kingdom corporation tax at the domestic rate of 19%	(1,160)	(4,459)	(2,255)
Expenses not deductible for tax purposes	75	596	1,087
Income not taxable	(2)	(75)
Unrelieved tax losses and other deductions			(114)
Adjustment in respect of prior period		158	3
Surrender of tax losses for R&D tax refund	280	491	1,810
Foreign exchange differences			1
Deferred tax not recognised	721	3,306	1,309
Total tax credited to the income statement	£ (646)	£ (1,281)	£ (1,785)

XML

Schedule of loss per share (Details) - GBP (£) £ / shares in Units, £ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Loss used in basic EPS and diluted EPS:
Continuing operations	£ (5,460)	£ (22,189)	£ (9,138)
Discontinued operations			£ (947)
Denominator
Weighted average number of ordinary shares used in basic EPS:	80,546,881	42,839,961	18,330,588
Basic and diluted loss per share:
Continuing operations – pence	£ (7)	£ (52)	£ (50)
Discontinued operations – pence			£ (5)

XML

Schedule of detailed information about property, plant and equipment (Details) - GBP (£) £ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
IfrsStatementLineItems [Line Items]
Balance at beginning	£ 542	£ 2,154
Balance at ending	1,152	542	£ 2,154
Gross Gross Gross Carrying Amount [Member]
IfrsStatementLineItems [Line Items]
Balance at beginning	2,143	7,551	6,300
Additions			1,209
Effect of modification to lease terms			(82)
Charge for the year		271	(271)
Disposals		(5,210)
Balance at ending	2,793	2,143	7,551
Accumulated depreciation and amortisation [member]
IfrsStatementLineItems [Line Items]
Balance at beginning	1,601	5,397	4,317
Additions	1,040	209
Effect of modification to lease terms	(24)	(678)
Charge for the year		183	(202)
Disposals	(363)	(5,186)
Increase (decrease) through transfers, property, plant and equipment
Balance at ending	1,641	1,601	5,397
Charge for the year	403	1,207	1,282
Balance at end	1,152	542	2,154
Fixtures and fittings [member]
IfrsStatementLineItems [Line Items]
Balance at beginning	53
Balance at ending	60	53
Balance at end	53	4	13
Fixtures and fittings [member] | Gross Gross Gross Carrying Amount [Member]
IfrsStatementLineItems [Line Items]
Balance at beginning		248	253
Additions	57		4
Effect of modification to lease terms
Charge for the year	8	7	(9)
Disposals	(50)	(202)
Balance at ending			248
Fixtures and fittings [member] | Accumulated depreciation and amortisation [member]
IfrsStatementLineItems [Line Items]
Balance at beginning	49	235	241
Adoption of IFRS 16 Leases
Effect of modification to lease terms
Charge for the year		7	(8)
Disposals		(202)
Balance at ending	7	49	235
Charge for the year			2
Charge for the year		9
Leasehold improvements [Member]
IfrsStatementLineItems [Line Items]
Balance at beginning	4	2,038
Balance at ending	53	4	2,038
Balance at end	49	2	244
Leasehold improvements [Member] | Gross Gross Gross Carrying Amount [Member]
IfrsStatementLineItems [Line Items]
Balance at beginning			2,013
Additions		58	137
Effect of modification to lease terms
Charge for the year		92	(112)
Disposals	(3)	(2,184)
Leasehold improvements [Member] | Accumulated depreciation and amortisation [member]
IfrsStatementLineItems [Line Items]
Balance at beginning	2	1,794	1,485
Adoption of IFRS 16 Leases
Additions	53
Effect of modification to lease terms
Charge for the year		81	(91)
Disposals		(2,183)
Increase (decrease) through transfers, property, plant and equipment
Balance at ending	4	2	1,794
Charge for the year	5	310	400
Computer equipment [Member]
IfrsStatementLineItems [Line Items]
Balance at beginning	236	403
Balance at ending	242	236	403
Balance at end	29	37	71
Computer equipment [Member] | Gross Gross Gross Carrying Amount [Member]
IfrsStatementLineItems [Line Items]
Balance at beginning			383
Additions		16	23
Effect of modification to lease terms
Charge for the year		2	(3)
Disposals	(8)	(185)
Computer equipment [Member] | Accumulated depreciation and amortisation [member]
IfrsStatementLineItems [Line Items]
Balance at beginning	199	332	265
Adoption of IFRS 16 Leases
Additions	16
Effect of modification to lease terms
Charge for the year		2	(3)
Disposals		(185)
Increase (decrease) through transfers, property, plant and equipment
Balance at ending	213	199	332
Charge for the year	22	50	70
Laboratory equipment [member]
IfrsStatementLineItems [Line Items]
Balance at beginning	1,662	3,738
Balance at ending	1,563	1,662	3,738
Balance at end	358	423	998
Laboratory equipment [member] | Gross Gross Gross Carrying Amount [Member]
IfrsStatementLineItems [Line Items]
Balance at beginning			3,651
Additions			223
Charge for the year		112	(136)
Disposals		(2,323)
Laboratory equipment [member] | Accumulated depreciation and amortisation [member]
IfrsStatementLineItems [Line Items]
Balance at beginning	1,239	2,740
Adoption of IFRS 16 Leases
Additions	194	135
Effect of modification to lease terms
Charge for the year		79	(93)
Disposals	(138)	(2,300)
Increase (decrease) through transfers, property, plant and equipment	(155)
Balance at ending	1,205	1,239	2,740
Balance at beginning			2,326
Charge for the year	178	720	507
Transfer	(74)
Right-of-use assets [member]
IfrsStatementLineItems [Line Items]
Balance at beginning	188	1,124
Balance at ending	875	188	1,124
Balance at end	663	76	828
Right-of-use assets [member] | Gross Gross Gross Carrying Amount [Member]
IfrsStatementLineItems [Line Items]
Balance at beginning
Adoption of IFRS 16 Leases			395
Additions			822
Effect of modification to lease terms	(24)	(678)	(82)
Charge for the year		58	(11)
Disposals	(164)	(316)
Right-of-use assets [member] | Accumulated depreciation and amortisation [member]
IfrsStatementLineItems [Line Items]
Balance at beginning	112	296
Additions	720
Charge for the year		14	(7)
Disposals		(316)
Increase (decrease) through transfers, property, plant and equipment	155
Balance at ending	212	112	296
Charge for the year	190	£ 118	£ 303
Transfer	£ 74

XML

Schedule of market rental rates (Details) - GBP (£) £ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
IfrsStatementLineItems [Line Items]
Interest expenses	£ 36	£ 20	£ 30
Lease payments	(112)	(258)	(450)
Land and buildings [member]
IfrsStatementLineItems [Line Items]
Balance at beginning	76	907	546
Additions	720		822
Transfer to lease liabilities	77		0
Effect of modification to lease terms	(24)	(788)	(82)
Interest expenses	29	15	24
Lease payments	(112)	(105)	(391)
Exchange differences	0	47	(12)
Balance at ending	£ 766	£ 76	£ 907

XML

Low value leases expensed in year (Details) - GBP (£) £ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Low value leases expensed	£ 2	£ 10	£ 29
Total	£ 2	£ 10	£ 29

XML

Loss per share (Details Narrative)		12 Months Ended
	Mar. 02, 2020	Dec. 31, 2021
Description of stock split	ordinary shares on a one for 20 basis into new ordinary shares of £0.001 each in the capital of the Company	ordinary shares on a one for 20 basis into new ordinary shares of 0.1p each in the capital of the Company. The comparative denominator has been calculated to reflect the share consolidation.

XML

Schedule of reconciliation of changes in intangible assets and goodwill (Details) - GBP (£) £ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2021
Disclosure of detailed information about intangible assets [line items]
Balance at beginning	£ 12,379
Balance at end		£ 12,379
Balance at end		12,379
Gross Gross Gross Carrying Amount [Member]
Disclosure of detailed information about intangible assets [line items]
Balance at beginning	15,704	15,697
Additions		9
Foreign exchange	1	(1)
Disposal	(36)
Balance at end	15,669	15,704
Balance at end	15,669	15,704	15,669
Amortisation charge for the year	10	3
Impairment	12,369
Gross Gross Carrying Amount [Member]
Disclosure of detailed information about intangible assets [line items]
Balance at beginning	12,379
Balance at end		12,379
Balance at end		12,379	15,669
Accumulated depreciation and amortisation [member]
Disclosure of detailed information about intangible assets [line items]
Balance at beginning	3,325	3,323
Balance at end	15,669	3,325
Balance at end	15,669	3,325
Intangible assets under development [member]
Disclosure of detailed information about intangible assets [line items]
Balance at end			13,378
Intangible assets under development [member] | Gross Gross Gross Carrying Amount [Member]
Disclosure of detailed information about intangible assets [line items]
Balance at beginning	13,378	13,378
Additions
Foreign exchange
Disposal
Balance at end	13,378	13,378
Balance at end	13,378	13,378
Amortisation charge for the year
Impairment	10,078
Intangible assets under development [member] | Gross Gross Carrying Amount [Member]
Disclosure of detailed information about intangible assets [line items]
Balance at beginning	10,078
Balance at end		10,078
Balance at end		10,078
Intangible assets under development [member] | Accumulated depreciation and amortisation [member]
Disclosure of detailed information about intangible assets [line items]
Balance at beginning	3,300	3,300
Balance at end	13,378	3,300
Balance at end	13,378	3,300	13,378
Goodwill [member] | Gross Gross Gross Carrying Amount [Member]
Disclosure of detailed information about intangible assets [line items]
Balance at beginning	2,291	2,291
Additions
Foreign exchange
Disposal
Balance at end	2,291	2,291
Balance at end	2,291	2,291
Amortisation charge for the year
Goodwill [member] | Gross Gross Carrying Amount [Member]
Disclosure of detailed information about intangible assets [line items]
Balance at beginning	2,291
Balance at end		2,291
Balance at end		2,291	2,291
Goodwill [member] | Accumulated depreciation, amortisation and impairment [member]
Disclosure of detailed information about intangible assets [line items]
Balance at end	2,291
Balance at end	2,291
Impairment	2,291
Goodwill [member] | Accumulated depreciation and amortisation [member]
Disclosure of detailed information about intangible assets [line items]
Balance at beginning
Balance at end
Balance at end			2,291
IT and website costs [member] | Gross Gross Gross Carrying Amount [Member]
Disclosure of detailed information about intangible assets [line items]
Balance at beginning	35	28
Additions		9
Foreign exchange	1	(1)
Disposal	(36)
Balance at end		35
Balance at end		35
Impairment
IT and website costs [member] | Gross Gross Carrying Amount [Member]
Disclosure of detailed information about intangible assets [line items]
Balance at beginning	10
Balance at end		10
Balance at end		10
IT and website costs [member] | Accumulated depreciation, amortisation and impairment [member]
Disclosure of detailed information about intangible assets [line items]
Balance at beginning	25
Balance at end		25
Balance at end		25
Amortisation charge for the year	£ 10	3
IT and website costs [member] | Accumulated depreciation and amortisation [member]
Disclosure of detailed information about intangible assets [line items]
Balance at beginning		£ 23
Balance at end

XML

Schedule of individual intangible assets (Details) - GBP (£) £ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Disclosure of detailed information about intangible assets [line items]
Intangible assets other than goodwill			£ 10,100
Gross Gross Gross Carrying Amount [Member]
Disclosure of detailed information about intangible assets [line items]
Intangible assets other than goodwill			£ 10,078
Product and marketing rights [member] | Midatech pharma (wales) limited [member] | Gross Gross Gross Carrying Amount [Member]
Disclosure of detailed information about intangible assets [line items]
Intangible assets other than goodwill
Product and marketing rights [member] | Midatech pharma US, inc. (formerly DARA biosciences, inc.) [member]
Disclosure of detailed information about intangible assets [line items]
Remaining amortisation period	n/a	n/a
Product and marketing rights [member] | Midatech pharma US, inc. (formerly DARA biosciences, inc.) [member] | Gross Gross Gross Carrying Amount [Member]
Disclosure of detailed information about intangible assets [line items]
Intangible assets other than goodwill
Product and marketing rights [member] | MTX110 acquired IPRD [member]
Disclosure of detailed information about intangible assets [line items]
Remaining amortisation period		n/a	n/a in process
Product and marketing rights [member] | MTX110 acquired IPRD [member] | Gross Gross Gross Carrying Amount [Member]
Disclosure of detailed information about intangible assets [line items]
Intangible assets other than goodwill			£ 778
Intangible assets under development [member]
Disclosure of detailed information about intangible assets [line items]
Remaining amortisation period	In process, not yet amortising
Intangible assets under development [member] | Midatech pharma (wales) limited [member]
Disclosure of detailed information about intangible assets [line items]
Remaining amortisation period			n/a in process
Intangible assets under development [member] | Midatech pharma (wales) limited [member] | Gross Gross Gross Carrying Amount [Member]
Disclosure of detailed information about intangible assets [line items]
Intangible assets other than goodwill			£ 9,300

XML

Schedule of cash generating unit (Details) - Midatech pharma (wales) limited [member] - Cash-generating units [member] - GBP (£) £ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2021	Dec. 31, 2019
IfrsStatementLineItems [Line Items]
IPRD carrying amount			£ 9,300
Goodwill carrying amount			£ 2,291
Valuation Basis	Value in use

XML

Schedule of key assumptions used (Details) - Midatech pharma (wales) limited [member] - Cash-generating units [member]	Dec. 31, 2019
IfrsStatementLineItems [Line Items]
Pre-tax discount rate	18.40%
Cumulative probability of success of projects	81.00%

XML

Schedule of key assumptions used for carrying value and recoverable amount (Details) - Midatech pharma (wales) limited [member] - Cash-generating units [member]	Dec. 31, 2019
IfrsStatementLineItems [Line Items]
Pre-tax discount rate for all projects	21.00%
Cumulative probability of success of all projects	59.00%

XML

Schedule of subsidiaries (Details)	12 Months Ended
	Dec. 31, 2021
IfrsStatementLineItems [Line Items]
Entity name	Entity
Description of nature of entity's operations and principal activities	Summary description
Midatech limited [member]
IfrsStatementLineItems [Line Items]
Entity name	Midatech Limited
Description of nature of entity's operations and principal activities	Trading company
Midatech pharma (wales) limited [member]
IfrsStatementLineItems [Line Items]
Entity name	Midatech Pharma (Wales) Limited
Principal place of business of subsidiary	1 Caspian Point, Caspian Way, Cardiff, CF10 4DQ
Description of nature of entity's operations and principal activities	Trading company
PharMida AG [member]
IfrsStatementLineItems [Line Items]
Entity name	PharMida AG
Principal place of business of subsidiary	c/o Kellerhals, Hirschgässlein 11, 4051 Basel, Switzerland
Description of nature of entity's operations and principal activities	Dormant

XML

Schedule of trade and other receivables (Details) - GBP (£) £ in Thousands	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Trade receivables	£ 33	£ 95	£ 22
Prepayments	607	258	151
Other receivables	394	219	3,444
Total trade and other receivables	1,034	572	3,617
Less: non-current portion (rental deposit and on bond)			(2,625)
Current portion	£ 1,034	£ 572	£ 992

XML

Schedule of cash and cash equivalents (Details) - GBP (£) £ in Thousands	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Cash at bank available on demand	£ 10,057	£ 7,546	£ 10,928	£ 2,343

XML

Schedule of cash inflows from an equity financing transaction (Details) - GBP (£) £ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Gross proceeds	£ 10,091	£ 10,792	£ 15,767
Transaction costs	£ (1,056)	£ (1,050)	£ (1,659)

XML

Schedule of changes in bank loan liabilities (Details) - GBP (£) £ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
IfrsStatementLineItems [Line Items]
Beginning	£ 260	£ 6,082	£ 1,252
Cash Flows	(215)	(6,440)	4,548
Foreign Exchange	(4)	275	(71)
New leases	720		900
Effect of modification to lease term - IFRS 16	(24)		(82)
Loans and borrowings classified as non-current 31 December 2018 becoming current in 2019
Interest accruing in period	29	(45)	142
Ending	766	260	6,082
Fair value changes		1,176	(1,139)
Adoption of IFRS16 leases		(788)	546
Transfer to grant income			(14)
Long-term borrowings [member]
IfrsStatementLineItems [Line Items]
Beginning	60	5,670	884
Cash Flows		(6,182)	5,575
Foreign Exchange		252	(42)
New leases	715		805
Effect of modification to lease term - IFRS 16
Loans and borrowings classified as non-current 31 December 2018 becoming current in 2019	(178)	51	(685)
Interest accruing in period	23	(30)	108
Ending	620	60	5,670
Fair value changes		1,176	(1,139)
Adoption of IFRS16 leases		(877)	163
Transfer to grant income
Short-term borrowings [member]
IfrsStatementLineItems [Line Items]
Beginning	200	412	368
Cash Flows	(215)	(258)	(1,027)
Foreign Exchange	(4)	23	(29)
New leases	5		95
Effect of modification to lease term - IFRS 16	(24)		(82)
Loans and borrowings classified as non-current 31 December 2018 becoming current in 2019	178	(51)	685
Interest accruing in period	6	(15)	34
Ending	£ 146	200	412
Fair value changes
Adoption of IFRS16 leases		£ 89	383
Transfer to grant income			£ (14)

XML

Schedule of trade and other payables (Details) - GBP (£) £ in Thousands	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Current
Trade payables	£ 485	£ 337	£ 725
Other payables	5	26	13
Accruals	546	768	1,765
Total financial liabilities, excluding loans and borrowings, classified as financial liabilities measured at amortised cost	1,036	1,131	2,503
Tax and social security	56	31	86
Deferred revenue and government grants		68	1,905
Total trade and other payables	£ 1,092	£ 1,230	£ 4,494

XML

Impairment testing (Details Narrative) - GBP (£) £ in Millions	1 Months Ended	3 Months Ended	12 Months Ended
	Mar. 31, 2021	Mar. 31, 2021	Dec. 31, 2021	Dec. 31, 2020
IfrsStatementLineItems [Line Items]
Impairment charge on non financial assets			£ 2.3
Intangible assets under development [member] | Midatech pharma (wales) limited [member]
IfrsStatementLineItems [Line Items]
Impairment charge on non financial assets	£ 11.6		£ 9.3	£ 2.3
Description of goodwill and IPRD allocated to the acquired cash generating unit		The assets of MPW were valued as at 31 December 2019 were found to support the IPRD and goodwill carrying amounts set out above. The IPRD was valued using 12-13 year risk adjusted cash flow forecasts, in line with patent life, that had been approved by the Board. A period longer than 5 years was appropriate on the basis that the investment was long term and the development and commercialisation process is typically in excess of 5 years. Beyond the period from product launch and initial market penetration, a long term growth rate of Nil was used

XML

Schedule of borrowings (Details) - GBP (£) £ in Thousands	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
IfrsStatementLineItems [Line Items]
Total	£ 146	£ 200	£ 412
Total	620	60	5,670
Finance Lease [Member]
IfrsStatementLineItems [Line Items]
Total	146	93	233
Total	620	60	912
Government and Research Loans [Member]
IfrsStatementLineItems [Line Items]
Total	0	107	179
Total	£ 0	£ 0	£ 4,758

XML

Trade and other payables (Details Narrative) - GBP (£) £ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
IfrsStatementLineItems [Line Items]
Revenue from government grants		£ 163	£ 362
Government Project [Member]
IfrsStatementLineItems [Line Items]
Revenue from government grants			£ 124

XML

Borrowings (Details Narrative) - Midatech pharma (espana) SL (formerly midatech biogune SL) [member] - Spanish Government Reindustrialization Programme [Member] £ in Thousands	Sep. 30, 2019 GBP (£)
IfrsStatementLineItems [Line Items]
Government grants	£ 6,600
Cash Backed Guarantee [Member]
IfrsStatementLineItems [Line Items]
Government grants	£ 2,900,000

XML

Schedule of provisions (Details) - GBP (£) £ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Schedule Of Provisions
Opening provision at 1 January	£ 50	£ 97	£ 165
Utilisation of provision		(97)
Provision recognised/(released) in the year		50	(68)
At 31 December	50	50	97
Less: non-current portion		(50)
Current portion	£ 50		£ 97

XML

Schedule of derivative financial liability (Details) - GBP (£) £ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
At 1 January	£ 1,559	£ 664
Warrants issued		997	1,148
Transfer to share premium on exercise of warrants	(70)	(499)
Gain recognised in finance income within the consolidated statement of comprehensive income	936	(397)	484
At 31 December	£ 553	£ 1,559	£ 664

XML

The following table details the outstanding warrants as at 31 December and also the movement in the year: (Details) - shares shares in Thousands	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
IfrsStatementLineItems [Line Items]
Granted		7,545,456
Exercised	(306,815)	(2,500,000)
Number of shares outstanding	6,738,641	7,045,456
Warrant One [Member]
IfrsStatementLineItems [Line Items]
Granted			3,150,000
Number of shares outstanding	3,150,000	3,150,000	3,150,000
D A R A Warrant [Member]
IfrsStatementLineItems [Line Items]
Number of shares outstanding	4,080	4,624	116,206
Lapsed			(111,582)
Lapsed	(544)
D A R A Warrant One [Member]
IfrsStatementLineItems [Line Items]
Number of shares outstanding			4,624
D A R A Options [Member]
IfrsStatementLineItems [Line Items]
Number of shares outstanding	2,835	2,835	6,167
Lapsed			(3,332)
D A R A Options One [Member]
IfrsStatementLineItems [Line Items]
Number of shares outstanding			2,835

XML

Schedule of consolidated derivative financial instruments (Details) - GBP (£) £ in Thousands	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Cash and cash equivalents	£ 10,057	£ 7,546	£ 10,928	£ 2,343
Trade receivables	33	95	22
Other receivables			2,625
Total financial assets	10,090	7,641	13,575
Trade payables	485	337	725
Other payables	5	26	13
Accruals	546	768	1,765
Borrowings	766	260	6,082
Total financial liabilities – amortised cost	1,802	1,391	8,585
Equity settled derivative financial liability	£ 553	£ 1,559	£ 664

XML

Schedule of consolidated financial assets and liabilities at fair value (Details) - GBP (£) £ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
IfrsStatementLineItems [Line Items]
Equity settled derivative financial liability	£ 553	£ 1,559	£ 664
Level 3 of fair value hierarchy [member] | Monte Carlo simulation model [member]
IfrsStatementLineItems [Line Items]
Equity settled derivative financial liability	£ 467,000	£ 372,000
Valuation technique (s) and key input(s)	Monte Carlo simulation model	Monte Carlo simulation model	Monte Carlo simulation model
Significant unobservable input(s)	Volatility rate of 95.0% determined using historical volatility of comparable companies.	Volatility rate of 105.0% determined using historical volatility of comparable companies.	Volatility rate of 78.4% determined using historical volatility of comparable companies.
Relationship of unobservable inputs to fair value	The higher the volatility the higher the fair value.	The higher the volatility the higher the fair value.	The higher the volatility the higher the fair value.
Significant unobservable input(s)	Expected life between a range of 0.1 and 3.88 years determined using the remaining life of the share options.	Expected life between a range of 0.1 and 4.888 years determined using the remaining life of the share options.	Expected life between a range of 0.1 and 5.68 years determined using the remaining life of the share options.
Relationship of unobservable inputs to fair value	The shorter the expected life the lower the fair value.	The shorter the expected life the lower the fair value.	The shorter the expected life the lower the fair value.
Significant unobservable input(s)	Risk-free rate of 0.31% determined using the expected life assumptions.	Risk-free rate of 0.08% determined using the expected life assumptions.	Risk-free rate between a range of 0.59% and 1.69 % determined using the expected life assumptions.
Relationship of unobservable inputs to fair value	The higher the risk-free rate the higher the fair value.	The higher the risk-free rate the higher the fair value.	The higher the risk-free rate the higher the fair value.
Equity settled derivative financial liability	£ 86,000	£ 1,187,000	£ 664,000
Significant unobservable input(s)		Expected life between a range of 0.1 and 4.49 years determined using the remaining life of the share options.
Significant unobservable input(s)		Risk-free rate of 0.07% determined using the expected life assumptions.
Significant unobservable input(s)			Volatility rate of 105.0% determined using historical volatility of comparable companies.
Level 3 of fair value hierarchy [member] | Black-Scholes option pricing model [member]
IfrsStatementLineItems [Line Items]
Valuation technique (s) and key input(s)	Black-Scholes option pricing model	Black-Scholes option pricing model	Black-Scholes option pricing model
Significant unobservable input(s)	Volatility rate of 85.0% determined using historical volatility of comparable companies.		Volatility rate of 78.3% determined using historical volatility of comparable companies.
Relationship of unobservable inputs to fair value	The higher the volatility the higher the fair value.
Significant unobservable input(s)	Expected life between a range of 0.10 and 0.9 years determined using the remaining life of the share options.		Expected life between a range of 2.0 and 2.9 years determined using the remaining life of the share options.
Relationship of unobservable inputs to fair value	The shorter the expected life the lower the fair value.	The shorter the expected life the lower the fair value.	The shorter the expected life the lower the fair value.
Significant unobservable input(s)	Risk-free rate of 0.71% determined using the expected life assumptions.	Volatility rate of 105.0% determined using historical volatility of comparable companies.	Risk-free rate between a range of 0.0% and 0.26 % determined using the expected life assumptions.
Relationship of unobservable inputs to fair value	The higher the risk-free rate the higher the fair value.	The higher the volatility the higher the fair value.	The higher the volatility the higher the fair value.
[custom:DescriptionOfInputsUsedInFairValueMeasurementAssets5]		Expected life between a range of 1.0 and 1.9 years determined using the remaining life of the share options.
[custom:DescriptionOfInputsUsedInFairValueMeasurementAssets3]		Risk-free rate of 0.8% determined using the expected life assumptions.
Relationship of unobservable inputs to fair value		The higher the risk-free rate the higher the fair value.	The higher the risk-free rate the higher the fair value.
Level 3 of fair value hierarchy [member] | Number of shares lapsed [Default Label]
IfrsStatementLineItems [Line Items]
Valuation technique (s) and key input(s)	Monte Carlo simulation model
Significant unobservable input(s)	Volatility rate of 85.0% determined using historical volatility of comparable companies.
Relationship of unobservable inputs to fair value	The higher the volatility the higher the fair value.
Significant unobservable input(s)	Expected life between a range of 0.1 and 3.5 years determined using the remaining life of the share options.
Relationship of unobservable inputs to fair value	The shorter the expected life the lower the fair value.
Significant unobservable input(s)	Risk-free rate of 0.71% determined using the expected life assumptions.
Relationship of unobservable inputs to fair value	The higher the risk-free rate the higher the fair value.

XML

Schedule of foreign exchange risk (Details) - GBP (£) £ in Thousands	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
IfrsStatementLineItems [Line Items]
Total	£ 10,057	£ 7,546	£ 10,928	£ 2,343
Total	22	175	3,488
Foreign exchange risk [member] | Pounds Sterling
IfrsStatementLineItems [Line Items]
Total		7,247	3,153
Foreign exchange risk [member] | US Dollar
IfrsStatementLineItems [Line Items]
Total		120	2,021
Foreign exchange risk [member] | Euro
IfrsStatementLineItems [Line Items]
Total		179	5,750
Total	22	54	1,460
Foreign exchange risk [member] | Other
IfrsStatementLineItems [Line Items]
Total			4
Total		£ 1	£ 7

XML

Schedule of foreign currency exchange rates (Details) - GBP (£) £ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
IfrsStatementLineItems [Line Items]
Loss before tax	£ (6,106)	£ (23,470)	£ (10,923)
Total equity	10,452	6,718	19,558	£ 16,924
Foreign currency sensitivity analysis [member] | US Dollar
IfrsStatementLineItems [Line Items]
Loss before tax		12	202
Total equity			202
Foreign currency sensitivity analysis [member] | Euro
IfrsStatementLineItems [Line Items]
Loss before tax		(293)	54
Total equity	2		31
Foreign currency sensitivity analysis [member] | Other
IfrsStatementLineItems [Line Items]
Loss before tax		£ (4)
Total equity			£ 1

XML

Schedule of contractual maturities of financial liabilities (Details) - Liquidity risk [member] - GBP (£)	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Liquidity risk [member]
IfrsStatementLineItems [Line Items]
Total			£ 3,317,000
Not later than three months [member]
IfrsStatementLineItems [Line Items]
Total	1,082,000	1,263,000	2,582,000
Not later than three months [member] | Trade and other payables [member]
IfrsStatementLineItems [Line Items]
Total	1,036,000	1,131,000	2,503,000
Not later than three months [member] | Finance Lease [Member]
IfrsStatementLineItems [Line Items]
Total	46,000	25,000	79,000
Not later than three months [member] | Government and Research Loans [Member]
IfrsStatementLineItems [Line Items]
Total		107,000
Later than three months and not later than one year [member]
IfrsStatementLineItems [Line Items]
Total	171,000	75,000	437,000
Later than three months and not later than one year [member] | Trade and other payables [member]
IfrsStatementLineItems [Line Items]
Total
Later than three months and not later than one year [member] | Finance Lease [Member]
IfrsStatementLineItems [Line Items]
Total			165,000
Later than three months and not later than one year [member] | Government and Research Loans [Member]
IfrsStatementLineItems [Line Items]
Total			272,000
Later than one year and not later than two years [member]
IfrsStatementLineItems [Line Items]
Total	195,000	61,000	555,000
Later than one year and not later than two years [member] | Trade and other payables [member]
IfrsStatementLineItems [Line Items]
Total
Later than one year and not later than two years [member] | Finance Lease [Member]
IfrsStatementLineItems [Line Items]
Total	195,000	61,000	317,000
Later than one year and not later than two years [member] | Government and Research Loans [Member]
IfrsStatementLineItems [Line Items]
Total			238,000
Later than two years and not later than five years [member]
IfrsStatementLineItems [Line Items]
Total	442,000	8,000	3,586,000
Later than two years and not later than five years [member] | Trade and other payables [member]
IfrsStatementLineItems [Line Items]
Total
Later than two years and not later than five years [member] | Finance Lease [Member]
IfrsStatementLineItems [Line Items]
Total	442,000	8,000	735,000
Later than two years and not later than five years [member] | Government and Research Loans [Member]
IfrsStatementLineItems [Line Items]
Total			2,851,000
Later than five years [member] | Trade and other payables [member]
IfrsStatementLineItems [Line Items]
Total
Later than five years [member] | Liquidity risk [member]
IfrsStatementLineItems [Line Items]
Total
Later than five years [member] | Government and Research Loans [Member]
IfrsStatementLineItems [Line Items]
Total			£ 3,317,000

XML

Schedule of unused tax losses carried forward (Details) - GBP (£) £ in Thousands	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Gross losses	£ 67,210	£ 63,183	£ 49,565
Potential deferred tax asset	£ 16,925	£ 13,076	£ 8,426

XML

Derivative financial liability – current (Details Narrative) - Warrants [member] - £ / shares	Oct. 31, 2019	May 30, 2020
IfrsStatementLineItems [Line Items]
Number of warrants issued	3,150,000
Bottom of range [member]
IfrsStatementLineItems [Line Items]
Share price		£ 2.05
Top of range [member]
IfrsStatementLineItems [Line Items]
Share price		£ 2.0625

XML

Schedule of deferred tax liability (Details) - GBP (£) £ in Thousands	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Asset			£ 1,581
Liability			(1,581)
Net

XML

Schedule of detailed information about share capital (Details) - GBP (£) £ in Thousands	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
IfrsStatementLineItems [Line Items]
Amount of allotted and fully paid - classified as equity	£ 1,098	£ 1,063	£ 1,023
Amount of allotted and fully paid - classified as equity	£ 1,098,469	£ 1,063,075	£ 1,023,496
Ordinary shares [member]
IfrsStatementLineItems [Line Items]
Number of authorised shares	98,468,387	63,073,852,000	23,494,981
Amount of allotted and fully paid - classified as equity	£ 98,468	£ 63,074	£ 23,495
Deferred Shares [member]
IfrsStatementLineItems [Line Items]
Number of authorised shares	1,000,001	1,000,001	1,000,001
Amount of allotted and fully paid - classified as equity	£ 1,000,001	£ 1,000,001	£ 1,000,001

XML

Schedule Of Ordinary and Deferred Shares (Details) - GBP (£) £ / shares in Units, £ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
IfrsStatementLineItems [Line Items]
Placing and Open Offer (see note 16) 26 February 2019 (in pound per share)			£ 0.77
Placing and Open Offer (see note 16) 26 February 2019			£ 13,406
Share issue to SIPP trustee (see note 27) 8 October 2019 (in pound per share)			£ 0.001
Registered Direct Offering 29 October 2019 (in pound per share)			£ 0.7874
Registered Direct Offering 29 October 2019			£ 2,362
Balance at end	£ 106,517	£ 96,426	£ 85,638
Placing & Registered Direct Offering 18 May 2020 (in pound per share)		£ 0.27
Placing & Registered Direct Offering 18 May 2020		£ 4,255
Placing 27 July 2020 (in pound per share)		£ 0.27
Placing 27 July 2020		£ 5,750
Exercise of warrants 19 August 2020		£ 783
Share issue to SIPP trustee (see note 27) 30 September 2020 (in pound per share)		£ 0.001
[custom:SharePrice2]	£ 0.298
[custom:AmountOfShareIssuedForConsideration2]	£ 91
[custom:SharePrice3]	£ 0.285
[custom:AmountOfShareIssuedForConsideration3]	£ 10,000
Ordinary shares [member]
IfrsStatementLineItems [Line Items]
Placing and Open Offer (see note 16) 26 February 2019 (in shares)			17,410,774
Share issue to SIPP trustee (see note 27) 8 October 2019 (in shares)		25,000	25,000
Registered Direct Offering 29 October 2019 (in shares)			3,000,000
Balance at end (in shares)	98,468,387	63,073,852	23,494,981
Placing & Registered Direct Offering 18 May 2020 (in shares)		15,757,576
Placing 27 July 2020 (in shares)		21,296,295
Exercise of warrants 19 August 2020 (in shares)		2,500,000
Exercise of warrants		306,815
Placing	35,087,720
Deferred Shares [member]
IfrsStatementLineItems [Line Items]
Balance at end (in shares)	1,000,001	1,000,001	1,000,001

XML

Schedule of reserves (Details)	12 Months Ended
	Dec. 31, 2021
Share premium [member]
IfrsStatementLineItems [Line Items]
Description of nature and purpose of reserves within equity	Amount subscribed for share capital in excess of nominal value.
Merger Reserve [member]
IfrsStatementLineItems [Line Items]
Description of nature and purpose of reserves within equity	Represents the difference between the fair value and nominal value of shares issued on the acquisition of subsidiary companies where the Company has elected to take advantage of merger accounting.
Reserve of exchange differences on translation [member]
IfrsStatementLineItems [Line Items]
Description of nature and purpose of reserves within equity	Gains/losses arising on retranslating the net assets of overseas operations into sterling.
Warrant reserve [member]
IfrsStatementLineItems [Line Items]
Description of nature and purpose of reserves within equity	Represents the fair value of warrants denominated in £ at the date of grant
Retained earnings [member]
IfrsStatementLineItems [Line Items]
Description of nature and purpose of reserves within equity	All other net gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere.

XML

Details of all share options granted under the Schemes are set out below: (Details)	1 Months Ended							12 Months Ended
	Sep. 30, 2021 Number	Aug. 31, 2021 Number	Jul. 31, 2021 Number	Jun. 30, 2020 Number	Apr. 30, 2020 Number	Oct. 31, 2019 Number	Apr. 30, 2019 Number	Dec. 31, 2021 shares £ / shares Number	Dec. 31, 2020 shares Number GBPS / shares £ / shares	Dec. 31, 2019 Number GBPS / shares £ / shares
IfrsStatementLineItems [Line Items]
Beginning of the year								1,482,978,000	336,026,000	158,966,000
Granted	120,000	50,000,000	1,709,000,000	1,363,000,000	100,000,000	50,000,000	219,000,000	1,879,000,000	1,463,000,000	269,000,000
Grant date | shares								(150,000)	(33,737,000)
Forfeited								(728,552,000)	(282,311,000)	(91,940,000)
End of the year									1,482,978,000	336,026,000
End of the year								2,633,276,000
Weighted average exercise price of outstanding options | £ / shares								£ 0.538	£ 0.835	£ 8.48
Weighted average exercise price of options forfeited | £ / shares								83.30	26.183
Weighted average exercise price of options forfeited | £ / shares								0.447	3.648	13.26
Weighted average exercise price of options granted | £ / shares								£ 0.276	£ 0.205	£ 1.38
Weighted average remaining contractual life of outstanding options								9 years	9 years 2 months 12 days	7 years 10 months 24 days
Date Of Grant 6 [Member]
IfrsStatementLineItems [Line Items]
Grant date								Sep. 13, 2011	Sep. 13, 2011	Sep. 13, 2011
Beginning of the year								150	150,000	150
Granted | shares								0
Grant date | shares								(150,000)
Forfeited | shares								0
End of the year								0	150	150,000
Exercise Price								83.80	83.80	83.80
30 June 2014 [member]
IfrsStatementLineItems [Line Items]
Grant date								Apr. 20, 2012	Apr. 20, 2012	Apr. 20, 2012
Beginning of the year								1,589	1,589,000	1,589
Granted | shares								0
Grant date | shares								0
Forfeited | shares								0
End of the year								1,589,000	1,589	1,589,000
Exercise Price								83.80	83.80	83.80
Date Of Grant 8 [Member]
IfrsStatementLineItems [Line Items]
Grant date								May 09, 2014	May 09, 2014	May 09, 2014
Beginning of the year								10,000,000	10,000,000	10,000
Granted | shares								0
Grant date | shares								0
Forfeited | shares								0
End of the year								10,000,000	10,000,000	10,000,000
Exercise Price								1.50	1.50	1.50
Date Of Grant 9 [Member]
IfrsStatementLineItems [Line Items]
Grant date								Jun. 30, 2014	Jun. 30, 2014	Jun. 30, 2014
Beginning of the year								500,000	18,500,000	21,500,000
Granted | shares								0
Grant date | shares								0
Forfeited								0	(18,000,000)	(3,000,000)
End of the year								500,000	500,000	18,500,000
Exercise Price								1.50	1.50	1.50
Date Of Grant 11 [Member]
IfrsStatementLineItems [Line Items]
Grant date								Oct. 31, 2016	Oct. 31, 2016	Oct. 31, 2016
Beginning of the year								7,921,000	16,271,000	2,500,000
Granted | shares								0
Grant date | shares								0	(850,000)
Forfeited								(890,000)	(7,500,000)	(2,500,000)
End of the year								7,031,000	7,921,000	16,271,000
Exercise Price								53.60	53.60	34.20
Date Of Grant 17 [Member]
IfrsStatementLineItems [Line Items]
Grant date								Dec. 19, 2016	Dec. 19, 2016	Dec. 19, 2016
Beginning of the year								10,018,000	22,391,000	35,866,000
Granted | shares								0
Grant date | shares								0	(1,562,000)
Forfeited								(2,062,000)	(10,811,000)	(13,475,000)
End of the year								7,956,000	10,018,000	22,391,000
Exercise Price								24.20	24.20	24.20
1 April 2010 [member]
IfrsStatementLineItems [Line Items]
Grant date								Dec. 15, 2017	Dec. 15, 2017	Dec. 15, 2017
Beginning of the year								3,300,000	29,560,000	45,885
Granted | shares								0
Grant date | shares								0	(13,310,000)
Forfeited								(2,100,000)	(12,950,000)	(16,325,000)
End of the year								1,200,000	3,300,000	29,560,000
Exercise Price								9.20	9.20	9.20
Date Of Grant 21 [Member]
IfrsStatementLineItems [Line Items]
Grant date								Apr. 24, 2019	Apr. 24, 2019	Apr. 24, 2019
Beginning of the year								45,500,000	169,500,000	0
Granted								0		219,000,000
Grant date | shares								0
Forfeited								(33,000,000)	(124,000,000)	(49,500,000)
End of the year								12,500,000	45,500,000	169,500,000
Exercise Price								1.46	1.46	1.46
Date Of Grant 22 [Member]
IfrsStatementLineItems [Line Items]
Grant date								Oct. 02, 2019	Oct. 02, 2019	Oct. 02, 2019
Beginning of the year								30,000,000	50,000,000	0
Granted								0		50,000,000
Grant date | shares								0
Forfeited | shares								0	(20,000,000)
End of the year								30,000,000	30,000,000	50,000,000
Exercise Price								1.05	1.05	1.05
Date Of Grant 23 [Member]
IfrsStatementLineItems [Line Items]
Grant date								Apr. 17, 2020	Apr. 17, 2020
Beginning of the year								100,000,000	0
Granted | shares								0	100,000,000
Grant date | shares								0
Forfeited | shares								0
End of the year								100,000,000	100,000,000	0
Exercise Price								0.24	0.24
Date Of Grant 24 [Member]
IfrsStatementLineItems [Line Items]
Grant date								Jun. 17, 2020	Jun. 17, 2020
Beginning of the year								1,274,000,000	0
Granted | shares								0	1,363,000,000
Grant date | shares								0
Forfeited | shares								(410,500,000)	(89,000,000)
End of the year								863,500,000	1,274,000,000	0
Exercise Price								0.202	0.202
Date Of Grant 29 [Member]
IfrsStatementLineItems [Line Items]
Grant date								Jul. 15, 2021
Beginning of the year								0
Granted | shares								1,709,000,000
Grant date | shares								0
Forfeited | shares								(280,000,000)
End of the year								1,429,000,000	0
Exercise Price | £ / shares								0.28
Date Of Grant 33 [Member]
IfrsStatementLineItems [Line Items]
Grant date								Aug. 02, 2021
Beginning of the year								0
Granted | shares								50,000,000
Grant date | shares								0
Forfeited | shares								0
End of the year								50,000,000	0
Exercise Price | £ / shares								0.27
Date Of Grant 37 [Member]
IfrsStatementLineItems [Line Items]
Grant date								Sep. 01, 2021
Beginning of the year								0
Granted | shares								120,000,000
Grant date | shares								0
Forfeited | shares								0
End of the year								120,000,000	0
Exercise Price | £ / shares								0.26
13 September 2011 [member]
IfrsStatementLineItems [Line Items]
Grant date									Apr. 01, 2010	Apr. 01, 2010
Beginning of the year								0	1,255,000	1,255
Grant date | shares									(1,255,000)
End of the year									0	1,255,000
Exercise Price | GBPS / shares									80.00	80.00
Date Of Grant 5 [Member]
IfrsStatementLineItems [Line Items]
Grant date									Aug. 20, 2010	Aug. 20, 2010
Beginning of the year									2,088,000	2,088
Grant date | shares									(2,088,000)
End of the year										2,088,000
Exercise Price | GBPS / shares									83.80	83.80
Date Of Grant 10 [Member]
IfrsStatementLineItems [Line Items]
Grant date									Jul. 11, 2014	Jul. 11, 2014
Beginning of the year									100,000	100,000
Grant date | shares									(50,000)
Forfeited | shares									(50,000)
End of the year										100,000
Exercise Price | GBPS / shares									1.50	1.50
Date Of Grant 12 [Member]
IfrsStatementLineItems [Line Items]
Grant date									Dec. 14, 2016	Dec. 14, 2016
Beginning of the year									400,000	400,000
Grant date | shares									(400,000)
End of the year										400,000
Exercise Price | GBPS / shares									31.00	31.00
Date Of Grant 13 [Member]
IfrsStatementLineItems [Line Items]
Grant date									Dec. 14, 2016	Dec. 14, 2016
Beginning of the year									500,000	500,000
Grant date | shares									(500,000)
End of the year										500,000
Exercise Price | GBPS / shares									34.00	34.00
Date Of Grant 14 [Member]
IfrsStatementLineItems [Line Items]
Grant date									Dec. 14, 2016	Dec. 14, 2016
Beginning of the year									2,000,000	2,000,000
Grant date | shares									(2,000,000)
End of the year										2,000,000
Exercise Price | GBPS / shares									37.40	37.40
Date Of Grant 15 [Member]
IfrsStatementLineItems [Line Items]
Grant date									Dec. 14, 2016	Dec. 14, 2016
Beginning of the year									1,625,000	1,625,000
Grant date | shares									(1,625,000)
End of the year										1,625,000
Exercise Price | GBPS / shares									37.60	37.60
Date Of Grant 16 [Member]
IfrsStatementLineItems [Line Items]
Grant date									Dec. 15, 2016	Dec. 15, 2016
Beginning of the year									4,600,000	4,600,000
Grant date | shares									(4,600,000)
End of the year										4,600,000
Exercise Price | GBPS / shares									24.20	24.20
Date Of Grant 19 [Member]
IfrsStatementLineItems [Line Items]
Grant date									Apr. 02, 2018	Apr. 02, 2018
Beginning of the year								997,000		997,000
Grant date | shares									(997,000)
End of the year									997,000
Exercise Price | GBPS / shares									16.60	16.60
Date Of Grant 20 [Member]
IfrsStatementLineItems [Line Items]
Grant date									Apr. 02, 2018	Apr. 02, 2018
Beginning of the year								4,500,000		4,500,000
Grant date | shares									(4,500,000)
End of the year									4,500,000
Exercise Price | GBPS / shares									24.20	24.20
Date Of Grant 50 [Member]
IfrsStatementLineItems [Line Items]
Grant date										Oct. 31, 2016
Beginning of the year										23,411,000
Forfeited										(7,140,000)
Exercise Price | GBPS / shares										53.60

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The following information is relevant in the determination of the fair value of options granted during the year 2021 under the equity share based remuneration schemes operated by the Group. (Details) shares in Thousands	1 Months Ended							12 Months Ended
	Sep. 30, 2021 Number GBPS / shares £ / shares	Aug. 31, 2021 Number GBPS / shares £ / shares	Jul. 31, 2021 Number GBPS / shares £ / shares	Jun. 30, 2020 Number GBPS / shares £ / shares	Apr. 30, 2020 Number GBPS / shares £ / shares	Oct. 31, 2019 Number GBPS / shares	Apr. 30, 2019 Number GBPS / shares	Dec. 31, 2021 shares	Dec. 31, 2020 shares	Dec. 31, 2019 Number
Number of options	120,000	50,000,000	1,709,000,000	1,363,000,000	100,000,000	50,000,000	219,000,000	1,879,000	1,463,000	269,000,000
Option pricing models used	Black-Scholes	Black-Scholes	Black-Scholes	Black-Scholes	Black-Scholes	Black-Scholes	Black-Scholes
Share price | GBPS / shares	0.255	0.265	0.2775	0.213	0.24	1.126	2.30
Exercise price of options issued in year | £ / shares	£ 0.255	£ 0.265	£ 0.2775	£ 0.202	£ 0.24
Contractual life	10 years		10 years	10 years	10 years	10 years	10 years
Expected life	5 years	5 years	5 years	5 years	5 years		5 years
Volatility	88.11%	88.59%	88.63%	92.55%	84.76%	7830.00%	7530.00%
Expected dividend yield	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%
Risk free rate	0.32%	0.26%	0.38%	0.10%	0.11%	26.00%	85.00%

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Schedule of related party transactions (Details) - Bio Connection [Member] - GBP (£) £ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
IfrsStatementLineItems [Line Items]
Purchase of good		£ 296	£ 18
Amounts owed by related parties			£ 8

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Deferred tax (Details Narrative) - GBP (£) £ in Millions	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2019
Net deferred tax assets		£ 1.6
Description of deferred tax asset	Deferred tax asset balances disclosed as at 31 December 2021 have been calculated at 25%. The Finance Bill 2021 enacts an increase in the tax rate to 25% from 1 April 2023.

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Contingent liabilities (Details Narrative) - GBP (£) £ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Contingent liabilites	£ 190,000	£ 258,000

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Schedule Of Unaudited Results Explanatory (Details) - GBP (£) £ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
IfrsStatementLineItems [Line Items]
Grant revenue		£ 163	£ 362
Research and development costs	(4,654)	(6,068)	(7,843)
Administrative costs	(2,946)	(4,958)	(3,841)
Loss from operations	(6,998)	(23,040)	(11,318)
Finance expense	(44)	(431)	(97)
Loss before tax	(6,106)	(23,470)	(10,923)
Taxation	(646)	(1,281)	(1,785)
Loss from operations after tax	(5,460)	(22,189)	(9,138)
Discontinued operations [member]
IfrsStatementLineItems [Line Items]
Grant revenue		163	362
Total revenue		163
Research and development costs		2,820	6,624
Administrative costs		1,146
Loss from operations		(3,803)	(12,265)
Finance expense		11	97
Loss before tax		(3,814)	(11,870)
Taxation		21	(1,785)
Loss from operations after tax		£ (3,835)	£ (9,138)